ctci annual report

Tel: (886)2-2833-9999 Fax: (886)2-2833-8833

www.ctci.com.tw

11155台北市中山北路六段89號Tel: (886)2-2833-9999 Fax: (886)2-2833-8833

www.ctci.com.tw

11155台北市中山北路六段89號

2015 Annual Report

CTCI Corporation

89, Sec. 6, Zhongshan N. Rd., Taipei 11155, Taiwan, R.O.C.Tel: (886)2-2833-9999 Fax: (886)2-2833-8833

www.ctci.com.tw

54600

文字方塊

Stock Code : 9933 Taiwan Stock Exchange Market Observation Post system: http://mops.twse.com.tw

54600

文字方塊

Printed on April 30, 2016

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vveerrssiioonn aanndd CChhiinneessee vveerrssiioonn,, tthhee CChhiinneessee vveerrssiioonn sshhaallll pprreevvaaiill.. Spokesperson Name: Ming-Cheng Hsiao Title: Executive Vice President Tel: 886-2-2833-9999 ext. 10099 E-mail: MC.Hsiao @ctci.com.tw Deputy Spokesperson Name: Patrick Lin Title: Chief Financial Officer Tel: 886-2-2833-9999 ext. 16015 E-mail: [email protected] Headquarters and Branches Headquarters Address: 89, Sec. 6, Zhongshan North Rd., Taipei, Taiwan Tel: 886-2- 2833-9999 Branch CTCI CORPORATION ABU DHABI BRANCH Address: Shaikh Sultan Bin Srour Al Dhaheri Building, Al Salam Street, Abu Dhabi Tel: 971-26711572 CTCI CORPORATION ITALY BRANCH Address: Via G. Carducci, 1221013 Gallarate(VA), Italy Tel: 39- 0331 771026 CTCI CORPORATION QATAR BRANCH Address: Office No.6 , 1st Floor, Al-Emadi Business Centre, C-Ring Road, Doha City,State of Qatar. P.O Box: 30261 Tel: (+974) 4451-7383 Stock Transfer Agent KGI Securities Co. Ltd. Address: 5th Fl., 2, Sec. 1, Chung Ching South Rd., Taipei, Taiwan Website: http://www.kgieworld.com.tw/ Tel: 886-2-2389-2999 Auditors PriceWaterHouseCoopers Auditors: Shyh-Rong Ueng, Huei-Shyang Wang Address: 27th Fl., 333, Sec. 1, Keelung Rd., Taipei, Taiwan Website: http://www.pwc.com/tw Tel.: 886-2-2729-6666 Corporate Website http://www.ctci.com.tw

mailto:[email protected]

mailto:[email protected]

Contents I. Letter to Shareholders ........................................................................................................ 1

II. Company Profile 2.1 Date of Incorporation .................................................................................................................. 4 2.2 Company History .......................................................................................................................... 4

III. Corporate Governance Report 3.1 Organization ................................................................................................................................. 5 3.2 Directors and Management Team ............................................................................................... 9 3.3 Remuneration of Directors and Management Team ................................................................. 21 3.4 Implementation of Corporate Governance ............................................................................... 26 3.5 Public Expenses of CPA .............................................................................................................. 71 3.6 Information for change of CPA .................................................................................................. 71 3.7 The Company's Chairman, President and Managers Responsible for Finance or

Accounting who have Held a Post in the CPA Office or its Affiliated within the Latest Year .... 71 3.8 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders ......... 72 3.9 Information Disclosing the Relationship between any of the Company’s Top Ten

Shareholders .............................................................................................................................. 75 3.10 Shareholdings of the Company Directors, Supervisors, Managements, and Direct and

Indirect Investments of the Company in Affiliated Companies ................................................. 76 IV. Capital Overview 4.1 Capital and Shares ...................................................................................................................... 77 4.2 Issuance of Corporate Bonds ..................................................................................................... 81 4.3 Preferred Shares ........................................................................................................................ 81 4.4 Issuance of Depository Receipt .................................................................................................. 81 4.5 Employee Stock Options ............................................................................................................ 82 4.6 New Restricted Employee Shares .............................................................................................. 84 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions ......................... 84 4.8 Financing Plans and Implementation ......................................................................................... 84 V. Operational Highlights 5.1 Business Activities ...................................................................................................................... 85 5.2 Market and Sales Overview ....................................................................................................... 92 5.3 Human Resources ...................................................................................................................... 96 5.4 Environmental Protection Expenditure ..................................................................................... 98 5.5 Labor Relations........................................................................................................................... 99 5.6 Important Contracts ................................................................................................................. 105 VI. Financial Information 6.1 Five-Year Financial Summary ................................................................................................... 106 6.2 Five-Year Financial Analysis ..................................................................................................... 114 6.3 Audit Committee’s Review Report in the Most Recent Year ................................................... 120 6.4 Consolidated Financial Statements and Independent Auditors’ Report in the Most

Recent Year .............................................................................................................................. 121 6.5 Financial Statements and Independent Auditors’ Report in the Most Recent Year ............... 121 6.6 Impact of the Financial Distress Occurred to the Company and Affiliates in the Recent

Years until the Annual Report being published ....................................................................... 121

VII. Review of Financial Conditions, Financial Performance, and Risk Management 7.1 Analysis of Financial Status ...................................................................................................... 122 7.2 Analysis of Financial Performance ........................................................................................... 123 7.3 Analysis of Cash Flow ............................................................................................................... 123 7.4 Major Capital Expenditure Items ............................................................................................. 124 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans

and the Investment Plans for the Coming Year ....................................................................... 124 7.6 Analysis of Risk Management .................................................................................................. 124 7.7 Other ........................................................................................................................................ 130 VIII. Special Disclosure 8.1 Summary of Affiliated Companies ........................................................................................... 131 8.2 Private Placement Securities in the Most Recent Years .......................................................... 152 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years .. 152 8.4 Other Supplementary Information .......................................................................................... 156 Appendices 1 Consolidated Financial Statements and Independent Auditors’ Report in the Most

Recent Year .............................................................................................................................. 157 2 Financial Statements and Independent Auditors’ Report in the Most Recent Year ............... 279

1

I. Letter from the Chairman & CEO Dear Shareholders, Friends and Colleagues, In 2015, with all the dedication and hard work of our staff, we continue to grow and make business breakthroughs. I would hereby like to report the 2015 business review, the 2016 strategic plan and blueprint for CTCI as follows:

2015 Business Review a) Operation Results

The consolidated sales revenue for 2015 amounted to NTD67.05 billion, increased by NTD9.36 billion, or a 16.23% growth compared to that of 2014. The consolidated operating expenses were NTD2.43 billion, while the consolidated non-operating income was NTD318.7 million. The consolidated net income was reported at NTD2.04 billion, and the earnings per share (EPS) was at NTD2.69.

b) Business Achievement

The year 2015 has been filled with challenges for all international engineering companies. With a sharp decline in crude oil price, we had seen a substantial recession of refinery and petrochemical markets. In spite of this, we still managed to produce outstanding results. Last year, we were able to secure over NTD64.45 billion worth of new contracts, while the backlog of contracts hitting a record high of NTD190.5 billion. Revenue and profit both remained at a high level of performance as well.

Particularly worth noting, the joint venture of CTCI and CB&I was awarded an 870 KTA steam cracker and U&O package project in Oman. The contract amount is worth USD2.8 billion, marking a grand victory for our company in overseas EPC market. Not only was it the first successful alliance with an American engineering company but also was it the largest overseas project CTCI ever acquired. This great achievement marks the successful entrance to the Oman market, a gratifying achievement for all of us. In addition to Oman, we have also demonstrated outstanding business achievement by entering the U.S. market, a monumental milestone for CTCI in the shale gas market.

C) Innovation and R&D

In 2015, CTCI’s Innovation R&D Center kept up its efforts to enhance core design capability and improve the efficiency of project execution through continuous research and development in information integration between multiple disciplines, expansion for the breadth and depth of engineering technologies, as well as design automation.

To create competitive differentiation and advantage, development of iEPC is undergoing to shift the manner of EPC operation from batch processing to micromanagement, so that each design modification can be supervised in time, allowing all operations to be fully integrated and effectively managed. The engineering-object-oriented Tag Platform, acting as the foundation of iEPC, improves project control capability and increases the efficiency of project execution by organizing associated documents, 3D models, material take-off, material requisition, installation quantities, and layout across stages of engineering, procurement, construction and commission, into a chain of project engineering information, and agile data. Also, job site efficiency is enhanced with continuous promotion of mobile devices and applications utilized at key job sites, so that construction information is more accessible via portable e-form. Regarding sites ISO layout control, we implemented QR code to ensure each installation is done in correct layout, and on top of that, Intergraph SPC is applied to construction management, offering construction planning simulation, availability of layout drawings and materials, as well as actual installation progress, to be displayed in 4D visualization, so that construction schedule is managed more effectively.

2

For technology expertise, we have completed the research of Failure Mode and Effect Analysis & Criticality Analysis (FMEA/CA), the basic design of applying thin-film technology to zero-liquid discharge system, the design of stud bolts welded to the steel column embedded in RC piers, truss supported conical roof tank structure design, pulsation and piping vibration analysis for reciprocating compressor, and cathodic protection application for offshore structure and facility and so on. In the meantime, our internal design guidelines and existing engineering software have been revised according to the updated code/standard and other information collected for engineering practices from domestic or abroad.

As for design automation, we further refined pump seal plan selection system, and developed more applications for Revit BIM 3D. We have also completed the automated control room layout design, typical piping modeling for unit equipment, and CAD program for power system, all of which greatly enhanced the quality, speed, and accuracy in EPC project execution.

2016 Outlook Looking forward to the year 2016, we will actively and firmly move towards the existing goals and schedule through continuous advancement, thereby, extending brighter records for a better future.

In terms of hydrocarbon business, we must expand market territory while following the growth objectives of “keeping revenue at current level and raising the rate of return.” Last year, we successfully exploited the Oman market and formally entered the shale gas market. Additionally, we signed strategic cooperation framework agreement with a Chinese enterprise to jointly explore hydrocarbon projects, and currently Russia and Commonwealth of Independent States have joined the program. Besides, we must bridge the gap in high-threshold technology development by picking up the pace to acquire and merge foreign engineering companies.

The objectives of Infrastructure, Environment & Power Business Operations (IEPBO) is to “increase revenue and maintain profitability”. The aim of Chinese government’s Public-Private Partnership (PPP) policy being to “introduce private-sector funds, invest in infrastructure and expanding domestic market”, this coincides with CTCI’s policy in developing a stable long-term business. “The Belt and Road” (B&R) initiative, on the other hand, utilizes foreign reserves for the excessive capacity. Thus, to grasp the enormous business opportunities for PPP and the B&R initiative of China, we must maintain a keen sensitivity and take initiatives.

The mission of CTCI in the pursuit of sustainability is to provide optimized engineering services, while process optimization for EPC services is the foundation to improve technological expertise. Accordingly, we have specifically conducted review and improvement on operation process for engineering design, procurement, and construction dimensions respectively. Presently, some have been reached with preliminary outcome and are currently in the commissioning phase. We expect all colleagues to work together and continue to advance capabilities. Optimizing EPC process, however, is not the only way we can do to perfect our engineering services. We also expect to collect clients’ practical requirement and opinions for our proposed design or services in after-sales services for projects completed and handed over to clients. Consequently, we intend to grasp the future business opportunities in new plant constructions for existing clients while accumulating more experience in high-quality engineering services so that we could be prepared to develop new potential customers.

Strategy and Blueprint The speed and scope of economic fluctuations, industry changes and market shifts have accelerated and expanded in recent years, propelling us to stand up against the challenge of grasping trends of the future and prepare ourselves to establish a foundation for the global market. Looking ahead into the future, with the view of “envisioning with innovation and insight to the future”, we could be well-equipped to grasp the dynamic in the global engineering market with broader horizon and an open mind, taking challenges with positive and proactive mentality and continue to create new prospects, fly higher and see further.

3

With the successful extraction of shale gas in the United States, the global oil and petrochemical outlook has changed dramatically. As a result, the most booming and brisk market for petrochemical investment has shifted from OPEC to the United States. Additionally, we consider the B&R initiative of China to be equally important as it brings massive business opportunities for infrastructure projects. Over the past 30 years, China was fully committed to infrastructure development, accumulating solid technical capabilities and experiences to start exporting its capacity under the strategic support from the Chinese Government. The establishment of Asian Infrastructure Investment Bank ensures stable financing of EPC projects. The presence of technical capabilities and funds has invigorated this emerging market.

The two key points of our business: maximization of existing business and development of new ventures aim to trigger growth in revenue and expand the business scale. The business opportunities brought by the U.S. market and B&R initiative have intensified our confidence. To maximize existing business and develop new ventures not only requires us to grasp the market dynamics, more importantly; we have to possess the skills and capabilities to handle these tasks. The key to success lies in formidable integration capacity and sophisticated management capabilities. We need to be faster, better and more competitive in order to differentiate ourselves from the competitors. To improve our skills, we must strengthen the four managerial topics, including service optimization, talent fostering, establishing corporate brand image, and bring the overall group synergy into full practice. In terms of service optimization, we started incorporating the concept of Industry 4.0 to EPC management so that management becomes more exquisite and real time while changing our work processing methods from stage-wise to immediate, meaning a change or issue is dealt with at the time of happening. As for talent fostering, we must pick up the pace of talent fostering in order to quickly pass down the skills and experiences, while carrying out smooth transition and succession, enhancing our capabilities with a younger core. To comprehensively strengthen marketing, we exhibit professional and international brand image to the greater global communities to acquaint with CTCI. Last but not least, we drafted the development strategy related to the establishment of core products of each business operation unit and real-time exquisite project management, so that our resources will be utilized more effectively.

The international market is always full of challenges and opportunities. In the midst of the ever moving world trends and industrial environment, only continually upgrading our capabilities and envision with innovation would maintain the competitive advantage of CTCI. As long as we can sustain the value of innovative engineering service, drive towards the mission of “To Satisfy Our Customers with Optimized Engineering Services,” and complete all works for each owner with our best effort, CTCI will be able to maintain sustainable growth. To realize the vision of becoming “The Most Reliable Global Engineering Service Provider”, we must meet global customer satisfaction so that they will recognize CTCI’s services as Number One. Meanwhile, as higher capacity represents more responsibilities, we will remain dedicated to CTCI’s corporate principles of “Professionalism, Integrity, Teamwork, Innovation” to deliver more state-of-the-art quality projects, making greater contribution and giving back to the society. This is the best approach for us to fulfill our corporate social responsibilities.

Sincerely,

John T. Yu Chairman & CEO

4

II. Company Profile 2.1 Date of Incorporation: April 6, 1979 2.2 Company History

Year Milestones

2015.03 CTCI Honored with the 4th "National Industrial Innovation Award--Deep Development of Industry Fundamental Technology Award"

2015.04 CTCI Corporation, Advanced Control & Systems Inc., and KD Holding Corporation ranked as "Grade A++" in the "2014 Information Disclosure and Transparency Rankings".

2015.05 In terms of the overall ranking in the Top 650 Service Enterprises by CommonWealth Magazine 2015, CTCI ranked as 28th, and retained Top 1 spot in the contractor sector for years in a row. It also ranked as 35rd in Top 50 Most Profitable Companies (net profit after tax).

2015.06 CTCI Corporation, Advanced Control & Systems Inc., and KD Holding Corporation Evaluated as Top 5% in the “2014 Corporate Governance Evaluation System”

2015.08 CTCI and KD Holding ranked the 29th and 4th in the categories of “large enterprise” and “mid-size enterprise” respectively in Corporate Social Responsibility” by CommonWealth Magazine in 2015.

2015.09 From the latest evaluation results of the Dow Jones Sustainability Index (DJSI), CTCI was selected for Emerging Markets Index Membership with excellent performance and, therefore, became a pioneer enterprise in the field of Engineering & Construction Industry in Taiwan

2015.10 CTCI group ranked the 103rd among “The International Design Firms”, the 122nd among “The International Contractors”, the 136th among “The Global Design Firms”, and the 149th among “The Global Contractors” in the 2015 ENR Rankings.

2015.11 CTCI and KD Holding recognized by the Taiwan Institute for Sustainable Energy with “Silver Award” and “Bronze Award” of services industry respectively under the Taiwan Top 50 Corporate Sustainability Report Award. CTCI was also granted the honors of “Transparency and Integrity Awards” and “Growth through Innovation Awards”.

2015.11 CTCI Won the 15th Public Construction Golden Quality Award for CPC Talin Flare Gas Recovery System (FGRS) Project

5

Chairman

Management Strategy

Committee

President

Audit Dept.

Board of Directors

Secretariat of the Board

Infrastructure, Environment & Power Business Operations

(IEPBO)

Business DevelopmentDivision

Infrastructure Division

Power & EnvironmentResources Division

Vice Chairman

Executive ManagementOperations

(EMO)

Hydrocarbon Business Operations (HBO)

EPC Operations(EPCO)

Procurement Division

Construction Division

Construction Logistics Dept.

Construction Operation

Dept.

Project Engineering Manager Dept.

Logistics Dept.

Subcontracting

Dept.

Purchasing

Dept.

Project Procurement Management Dept.

Environment & ResourcesBusiness Operations (ERBO)

KD Holding Corp.

Administration Center

Sino EnvironmentalServices Corp.

Leading Energy Corp .

HD ResourcesManagement Corp.

Fortune Energy Corp .

Innovation R&D Center

IT Division

QHSE Division

Overseas

Subsidiaries

Domestic

Subsidiaries

IT Dept. I

IT Dept. II

HSE ManagementDept.

Quality ManagementDept.

Plant Maintenance Business Operations (PMBO)

Marketing & SalesDepartment

Maintenance Department

ReliabilityDepartment

Engineering Management

Division

Engineering Division

Civil & Building

Engineering Dept.

Mechanical & Equipment

Engineering Dept

Instrumentation & Control

System EngineeringDept.

Piping EngineeringDept.

Electrical Engineering Dept.

Process EngineeringDept.

Plant CommissioningDept.

Marketing & SalesDivision

Marketing & SalesDept. II

(SEA, India , Australia)

Marketing & SalesDept. III (ME, Africa)

Project Division Ⅰ(Taiwan, China)

Marketing & SalesDept. IV

Marketing & SalesDept. I (Taiwan)

Project Division Ⅱ(S.E. Asia, India)

Proposal & Estimating

Division

Technology

Development Division

Project Division Ⅲ(M.E. )

Project Service

Division

Proposal Dept.

Estimating Dept.

LNG Project Division

Managing Directorof the Board

Regional Heads

Administration & PR Division

Corporate Administration Dept.

Human ResourcesDept.

AGS & PR Office Dept.

Legal Dept.

InvestmentRelation Office

F/A & Strategic Planning Division

Finance Dept.

Accounting Dept.

Strategy and Business Development Dept.

Legal and Compliance Division

BrandManagement Dept.

Human ResourcesDivision

Contract ManagementDept.

Project SiteAdministration Dept.

Infrastructure Dept. I

Infrastructure Dept. II

Infrastructure Dept. Ⅲ

Power & EnvironmentResources Dept. Ⅰ

Power & EnvironmentResources Dept. Ⅱ

Power & EnvironmentResources Dept. Ⅲ

Project Control Dept.

Estimating Dept.

Power & EnvironmentResources

Marketing & Sales Dept.

Infrastructure

Marketing & Sales

Dept.

Technology

Development

Dept.

Audit

Committee

Corporate Governance Committee

Remuneration Committee

III. Corporate Governance Report 3.1 Organization 3.1.1 Organization Chart

6

3.1.2 Operations and functions of the various departments

Department Operations & Functions

Immediate Board of Directors

Secretariat of The Board

Responsible for conducting the operations related to the boards of directors, shareholders meetings, commissions and employee stock warrant, stock affairs and M.O.P.S matters of the various member companies

Auditing Office Responsible for inspecting and reviewing defects in the internal control systems for the Company and its subsidiaries’ business continuity, providing timely recommendations for improvements to reasonably ensure the sustained operating effectiveness of the systems

Immediate President

QHSE Division Responsible for establishing the Company’s quality management system, guiding various projects to establish the quality activity documents, leading the quality auditing operation of various permanent departments and projects, and researching various corrective actions against quality

IT Division Responsible for defining the company’s information policy, planning and promoting the information systems, supervising the information dept. affairs of various affiliates

Innovation R&D Center

Responsible for developing new products, innovating procedures and developing new operating technology

Executive Management Operations (EMO)

Legal Dept. Responsible for handling disputes, litigation, arbitration, non-litigation

Contract Management Dept.

Responsible for contract reviewing

Investment Relation Office

Responsible for liaising with shareholders, corporate investors and the media, and providing investors with timely and correct information about the company’s operation

Corporate Administration Dept.

Responsible for auditing the project cost, releasing commodity price information and helping the cost-related system development

Finance Dept. Responsible for supporting the project’s achievement of financial objectives, planning and executing important financial tasks and controlling the project risk to increase the company’s earnings

Accounting Dept. Responsible for verifying the company’s income, providing the actual accounting information in a timely manner, and well-founding various financial management systems

Strategy and Business Development Dept.

Responsible for corporate strategy and developing new business

Human Resources Dept.

Responsible for human resource’s strategies and management, providing the talents corporate needs to meet corporate’s mission

AGS & PR Office Dept.

Responsible for managing the general affairs, administration, and external public relations to ensure corporate administration running well and keep good relations with external customers and medias.

Project Site Administration Dept.

Responsible for the administrative general affairs of overseas and domestic construction project sites to ensure the operation of administrative management at the site

Brand Management Dept.

Responsible for Corporate brand strategy and external communication

7


Hydrocarbon Business Operations (HBO)

Marketing & Sales Division

Responsible for developing the market, collecting business information, establishing cooperative relations, striving for bidding and winning opportunities, analyzing competitors’ status, planning strategic alliances, preparing qualification proposals and reviewing & suggesting tender documentation, participating in tender opening, negotiating for contracts and maintaining after-sales service

Project Division I Responsible for executing various projects in Taiwan and Mainland China

Project Division II Responsible for executing various projects in South East Asia and India

Project Division III Responsible for executing various projects in the Middle East

LNG Project Division

Responsible for developing and integrating LNG projects related business

Project Service Division

Responsible for controlling the various information about refining and petro-chemical projects, and achieving the objectives together with the projects

Proposal & Estimating Division

Responsible for defining the quotation strategies and work plans, organizing the quotation taskforce, drafting the project execution strategies and development execution plan, executing the project risk assessment, preparing technical and business tender documentation, clarifying and negotiating after tender submission, and preparing case closure report of the quotation

Technology Development Division

Responsible for collecting refining and petro-chemical production process technical information, providing technical advice, assisting projects/business to seek jobs, assisting the project planning test run taskforce of the Business Dept., executing the test run to complete projects as scheduled

Infrastructure, Environment & Power Business Operations (IEPBO)

Business Development Division

Responsible for developing the market, collecting business information, establishing cooperative relations, striving for bidding and winning opportunities, analyzing competitors’ status, planning strategic alliances, preparing qualification proposals and reviewing & suggesting tender documentation, participating in tender opening, negotiating for contracts and maintaining after-sale service

Infrastructure Division

Responsible for executing the projects and developing the business about MRT, HSR, light rail, steel plant, air separation plant, desulfuration and De-NOx

Power & Environment Resources Division

Responsible for executing the projects and developing the business about gas power plants, cogeneration plants, coal-fired power plants, incinerators, sewage and pure water treatment plants, water recycling and seawater desalination plants

Technology Development Division

Responsible for collecting infrastructure and energy & environment production process technical information, providing technical advice, assisting projects/business to seek jobs, assisting the project planning test run taskforce of the Business Dept., executing the test run to complete projects as scheduled

8


EPC Operations

Engineering Management Division

Responsible for executing quality, HSE and cost control of project engineering management

Engineering Division

Responsible for coordinating and integrating the human resources, quotation, execution of projects, and multi-departmental technology of various design departments and Hydrocarbon projects’ commissioning, also planning and executing the training programs for various projects

Procurement Division

Responsible for the procurement, inspection and transportation business, and supervising and confirming the quality/SHE requirements about all of the procurement documents

Construction Division

Responsible for supporting interaction of various business divisions and subsidiaries, and supervising the compliance of various quotations and project site operations with the company’s requirement

Plant Maintenance Business Operations

Responsible for hydrocarbon plants maintenance business

9

3.2 Directors and Management Team 3.2.1 Directors

April 30th

, 2016

Title Nationality Name Date

Elected Term

(Years)

Date First

Elected (Rep. of juridical person)

Shareholding when Elected

Current Shareholding

(Rep. of juridical person)

Spouse & Minor Shareholding

Shareholding by Nominee

Arrangement Experience (Education)

Other Position

Executives, Directors or Supervisors who

are spouses or within two degrees

of kinship

Shares % Shares % Shares % Shares % Title Name Relation

Chairman R.O.C.

John T. Yu (Rep. of GRQ Investment

Corporation)

Jun. 26, 2014

3

Feb. 8, 2002

(Feb. 9, 1999)

912,170 0.12 912,170

(1,103,471) 0.12

(0.14) 2,000,000 0.26 0 0

-PMD 61, Harvard Business School, USA -B.S., Electrical Engineering, National Taiwan University -Senior Vice President / Executive Vice President / President, CTCI Corporation

Note 1 - - -

Vice Chairman

R.O.C.

John H. Lin (Rep. of Innovest

Investment Corporation)

Jun. 26, 2014

3

Feb. 8, 2002

(Jun. 25, 2002)

344,436 0.05 344,436

(363,355) 0.05

(0.05) 450,000 0.06 0 0

-MBA, EMBA program in International Business Management, National Taiwan University -B.S., Mechanical Engineering, National Cheng Kung University - Senior Vice President / Executive Vice President / President, CTCI Corporation

Note 2 - - -

Managing Director

R.O.C.

Andy Sheu (Rep. of Sino

Environmental Services

Corporation)

Jun. 26, 2014

3

Jun. 23, 2006

(Jun. 26, 2014)

1,028 0.00 1,028

(1,031,281) 0.00

(0.14) 1,966 0.00 0 0

-MBA, EMBA Program in International Business Management, National Taiwan University -B.S., Power Mechanical Engineering, National Tsing-Hua University -Managing Director, CTCI (Thailand) Co., Ltd. - Senior Vice President / Executive Vice President / President, CTCI Corporation

Note 3 - - -

10

Independent Director

R.O.C. Johnny Shih Jun. 26,

2014 3

Jun. 26, 2014

(Note 4)

0 0 0 0 0 0 0 0

-Columbia University, USA. Master in Computer Science and Business Administration -Vice Chairman, Far eastern International Bank

Note 5 - - -


R.O.C. Jack Huang Jun. 26,

2014 3

Jun. 26, 2014

0 0 0 0 0 0 0 0 S.J.D., Harvard University

Note 6 - - -


R.O.C. Frank Fan Jun. 26,

2014 3

Jun. 26, 2014

0 0 0 0 0 0 0 0

-M.S., Institute of traffic and Transportation, National Chiao Tung University -Minister without Portfolio & Chairperson of Public Construction Commission, Executive Yuan

-National Policy Advisor to the President

- - -

Director R.O.C. Quintin Wu Jun. 26,

2014 3

Jun. 23, 2006

0 0 0 0 0 0 0 0 -Chairman, USI Corporation Note 7 - - -

Director R.O.C. Yancey Hai Jun. 26,

2014 3

Feb. 8, 2002

0 0 0 0 0 0 0 0

-MA, the University of Texas at Dallas -Country Manager, G.E. Capital -Vice President, Citibank, Taipei Branch -CEO, Delta Electronics Foundation

-Chairman, Delta Electronics Inc. -Director, Delta Networks, Inc.

- - -

Director R.O.C. Leslie Koo Jun. 26,

2014 3

Jun. 14, 2005

0 0 0 0 0 0 0 0

-MBA, Wharton School, University of Pennsylvania -Chairman & President, Taiwan Cement Corporation

Note 8 - - -

Director R.O.C. Wenent Pan Jun. 26,

2014 3

Apr. 1, 2012

0 0 0 0 0 0 0 0

-M.S. & Ph.D., Chemical Engineering, University of Wyoming, USA -President & Chairman, CPC Corporation -Chairman & CEO, Kuo Kuang Power Co.

-Chairman, CTCI Foundation -Chairman, Gintech Energy Corporation

- - -

11

Director R.O.C. Bing Shen Jun. 26,

2014 3

Mar. 26, 1999

(Note 9)

0 0 0 0 0 0 0 0

-MBA, Harvard Business School -Executive Director, Morgan Stanley Group -Executive Vice President, China Development Industrial Bank -President, CDIB & Partners Investment Holding Corp.

-Independent Director, Far Eastern International Bank -Independent Director, Far Eastern New Century Corporation

- - -

Director R.O.C. Teng-Yaw Yu

(Rep. of CTCI Foundation)

Jun. 26, 2014

3

Apr. 6, 1979

(Jun. 26, 2014)

60,862,051 7.97 60,862,051

(36,650) 7.97

(0.00) 818 0.00 0 0

-MBA, University of Leicester, UK -CEO, Taiwan Green Productivity Foundation

- CEO,CTCI Foundation - - -

Director R.O.C.

Michael Yang (Rep. of Crown

Asia 2 Investment

Limited)

Jun. 26, 2014

3

Jun. 22, 2011

(Mar. 7, 2016)

500 0.00 500 (0)

0.00 (0)

347,097 0.05 0 0

-EMBA, Business Administration, National Taiwan University of Science and Technology -M.S., Mechanical Engineering, National Taiwan University -B.S., Mechanical engineering, Tatung University - Senior Vice President/ Executive Vice President, CTCI Corporation

Note 10 - - -

Note 1: Chairman, CTCI Corporation / Chairman, CTCI Overseas Corp., Ltd. / Director, Jing Ding Engineering & Construction Co., Ltd. / Director, Pan Asia Corporation / Director, TSC Venture Capital Corporation / Director, Gintech Energy Corporation / Director, Utech Solar Co., Ltd. / Director, Taiwan Cement Co., Ltd. / Supervisor, China Steel Chemical Corporation / Director, TSRC Corporation / Chairman, CTCI Education Foundation / Director, Taiwan Foundation for Heavy Ion Radiotherapy Note 2: Vice Chairman, CTCI Corporation / Chairman, KD Holding Corporation / Chairman, CTCI (Thailand) Co., Ltd. / Deputy Chairman, CTCI Overseas Corp., Ltd. / Director, CIMAS Engineering Co., Ltd. / Director, Shang Ding Engineering & Construction Co., Ltd. / Chairman, Universal Engineering (BVI) Corporation / Director, Superiority (Thailand) Co., Ltd. / Chairman, CTCI Singapore Pte. Ltd. / Chairman, G.D. Development Corporation / Vice Chairman, BORETECH Resource Recovery Engineering Co., Ltd. (Cayman) Note 3: Managing Director, CTCI Corporation / Director, CTCI (Thailand) Co., Ltd. / Chairman, CTCI Overseas (BVI) Corporation / Director, CTCI Overseas Corp., Ltd. / Vice Chairman, CIMAS Engineering Co., Ltd. / Chairman, CTCI Americas, Inc. / Director, CTCI Arabia Ltd. Note4: Mr. Johnny Shih is not the director or supervisor of the Company during the period from Jun. 15, 2005 to Jun. 25, 2014.

Note5: Vice Chairman, Far Eastern New Century Corporation / Vice Chairman, Oriental Union Chemical Corporation / Chairman, Everest Textile Company Limited / Director, Asia Cement Corporation

12

Note 6: Partner-in-Charge, Jones Day Taipei Office / Independent director, Taiwan Mobile Co., Ltd / Independent director, WPG Holdings Limited / Independent director, Systex Corporation / Director, Yulon Motor Co., Ltd Note 7: -Chairman, USI Corporation, China General Plastics Corp., Taita Chemical Co., Ltd, Asia Polymer Corporation, Union Polymer International Investment Corporation, Acme Electronics Corporation, USI Optronics

Corporation, Swanson Plastics Corporation, Swanson Technologies Corporation, Chong Loong Trading Co. Ltd., USIFE Investment Co., Ltd., CGPC Polymer Corporation, APC Investment Corporation, Taiwan United Venture Capital Corp., USI Management Consulting Corp., Taiwan United Venture Management Corporation, Thintec Materials Corporation, Acme Electronics (Cayman) Corp., INOMA Corporation, USI Education Foundation

-Director, Taiwan VCM Corporation, China General Terminal & Distribution Company, USI (Hong Kong) Company Limited, Swanlake Traders Ltd., USI International Corporation, Acme Components (Malaysia) Sdn. Bhd., Forever Young Co., Ltd., Curtana Company Limited, Swanson Plastics (Singapore) Pte. Ltd., Swanson Plastics (Malaysia) Sdn. Bhd., Swanson International Limited, Swanson Plastics (India) Private Limited, Swanson Plastics (Nantong) Co., Ltd., Swanson Plastics (Kunshan) Co., Ltd., Golden Amber Enterprises Ltd., ACME Electronics (BVI) Corporation, ACME Electronics (Kunshan) Co., Ltd., ACME Electronics (Guangzhou) Co., Ltd., Forum Pacific Trading Ltd., Taita (BVI) Holding Co., Ltd., APC (BVI) Holding Co., Ltd., CGPC (BVI) Holding Co., Ltd., CGPC America Corporation, China General Plastics (Hong Kong) Ltd., Krystal Star International Corporation, A.S. Holdings (UK) Limited, ASK-Swanson (Kunshan) Company Limited, Acme Ferrite Products Sdn. Bhd., Swanson Plastics (Tianjin) Co., Ltd., USIM Corporation Sdn. Bhd., Cypress Epoch Limited, Ever Conquest Global Limited, Ever Victory Global Limited, Dynamic Ever Investments Ltd., USIG (Shanghai) Co., Ltd., PT. Swanson Plastics Indonesia, Emerald Investment Corporation, KHL Venture Capital Co., Ltd., KHL IB Venture Capital Co., Ltd.

-President, Union Polymer International Investment Corporation, USI Management Consulting Corp. -CEO, USI Corporation, Asia Polymer Corporation, China General Plastics Corp., Taita Chemical Company Limited., Acme Electronics Corporation, USI Optronics Corporation -Executive Supervisors, Chinese National Federation of Industries Note 8: Chairman & President, Taiwan Cement Corporation / Chairman & President, China Synthetic Rubber Corp. / Chairman, Taiwan Prosperity Chemical Corporation / Chairman, E-ONE Moli Energy Corp. / Chairman, TA-HO Maritime Corporation / Chairman, Ho-Ping Power Company / Managing Director, Industrial Bank of Taiwan / Director, China Steel Chemical Co., Note9: Mr. Bing Shen is not the director or supervisor of the Company during these periods: Nov. 28, 2001 ~ Jun. 13, 2005 / May 16, 2006 ~ Jun. 22, 2006 / May 11, 2011 ~ Jun. 21, 2011. Note10: Director & President, CTCI Corporation / Chairman, Innovest Investment Corporation / Director, KD Holding Corporation / Director, Resources Engineering Services Inc. / Director, CTCI Overseas Corp., Ltd. / Director, CTCI Chemicals Corporation / Director, CINDA Engineering & Construction Pvt., Ltd. / Director, Pan Asia Corporation / Chairman, Crown Asia 2 Investment Limited

13

Major shareholders of the institutional shareholders April 30

th, 2016

Name of institutional shareholders Major shareholders of the institutional shareholders

GRQ Investment Corporation CTCI Corporation (100%)

Innovest Investment Corporation CTCI Corporation (100%)

Sino Environmental Services Corporation KD Holding Corporation (93.15%), A-Lang, Chang (0.94%), Tsung-Chih, Tseng (0.29%), Wei-Hsiung, Chan (0.29%), Ching-Yao, Teng (0.23%), Ssu-Jung, Tsai (0.20%), Shu-Hui , Wu (0.20%), Yu-Ling, Teng (0.18%), Sen-Ming, Lu (0.17%), Hui-Ching, Lin (0.15%)

Crown Asia 2 Investment Limited GRQ Investment Corporation (100%)

CTCI Foundation N/A

Major shareholders of the major shareholders that are juridical persons

April 30th

, 2016

Name of juridical persons Major shareholders of the juridical persons

CTCI Corporation

Chiyoda Corporation(9.17%), Chinatrust Commercial Bank Trust (8.09%), CTCI Foundation(7.97%), Fubon Life Insurance Co., Ltd.(5.80%), Cathay Life Insurance Co., Ltd.(2.29%), American Funds Developing World Growth and Income Fund(2.18%), Chunghwa Post Co., Ltd.(2.14%), USI Corporation(1.99%), Asia Polymer Corporation(1.90%), KGI Bank(1.88%)

KD Holding Corporation

CTCI Corporation(58.05%), Fubon Life Insurance Co., Ltd. (6.89%), Nan Shan Life Insurance Co., Ltd.(3.93%), Parkwell Investment Limited(1.60%), Julius Baer Multipartner(0.73%), Fubon Financial Holding Venture Capital Corp.(0.71%), Deutsche Invest I- Deutsche Invest I Asian Small/Mid Cap (0.57%), Taiwan Life Insurance Co, Ltd.(0.51%), SinoPac Securities Corporation Co., Ltd.(0.47%), Wang Sheng song(0.42%)

GRQ Investment Corporation CTCI Corporation (100%)

14

Professional qualifications and independence analysis of directors and supervisors April 30

th, 2016

Criteria Name

Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience

Independence Criteria(Note) Number of

Other Public Companies in

Which the Individual is

Concurrently Serving as an Independent

Director

An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University

A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company

Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company

1 2 3 4 5 6 7 8 9 10

John T. Yu - - V V V V V V 0 John H. Lin - - V V V V V V 0 Andy Sheu - - V V V V V V 0

Johnny Shih - - V V V V V V V V V V V 0

Jack Huang - V V V V V V V V V V V V 3

Frank Fan - - V V V V V V V V V V V 0

Quintin Wu - - V V V V V V V V V V V 0

Yancey Hai - - V V V V V V V V V V V 1

Leslie Koo - - V V V V V V V V V V V 0

Wenent Pan - - V V V V V V V V V 2

Bing Shen - - V V V V V V V V V V V 2

Teng-Yaw Yu - - V V V V V V V V V 0

Michael Yang - - V V V V V V 0

1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company’s affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company,

or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate

amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares

ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the

Company. 7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal,

financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, provided that this restriction does not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies Whose Stock is Listed on the TWSE or Traded on the GTSM.

8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

15

3.2.2 Management Team April 30

th, 2016

Title Nationality Name Date

Effective Shareholding

Spouse & Minor

Shareholding


Arrangement Experience(Education) Other Position

Managers who are Spouses or

Within Two Degrees of

Kinship

Shares % Shares % Shares % Title Name Relation

President R.O.C. Michael

Yang Jun. 26 ,

2014 0 0 347,097 0.05 0 0

-EMBA, Business Administration, National Taiwan University of Science and Technology -M.S., Mechanical Engineering, National Taiwan University -B.S., Mechanical engineering, Tatung University -Vice President/ Senior Vice President/ Executive Vice President, CTCI Corporation

-Chairman, Innovest Investment Corporation -Director, KD Holding Corporation -Director, Resources Engineering Services Inc. -Director, CTCI Overseas Corp., Ltd. -Director, CTCI Chemicals Corporation -Director, CINDA Engineering & Construction Pvt., Ltd. -Director, Pan Asia Corporation -Chairman, Crown Asia 2 Investment Limited

- - -

Executive Vice

President R.O.C.

Mark W. H. Yang

Jan. 1 , 2010

408,732 0.05 150,205 0.02 0 0

-MBA, Global EMBA of National Chengchi University -Mechanical Engineering, National Taipei Institute of Technology -Vice President/ Senior Vice President, CTCI Corporation

-Chairman, GRQ Investment Corporation -Director, Jingding Engineering &Construction Co., Ltd. -Director, CTCI (Thailand) Co., Ltd. -Director, CTCI Overseas (BVI) Corporation

- - -

Executive Vice

President R.O.C.

M. H. Wang

Jan. 1 , 2013

10,000 0.00 201,431 0.03 0 0

-MBA, Chulalongkorn University, Thailand -B.S., Civil Engineering, Feng-Chia University -Vice President/ Senior Vice President, CTCI Corporation -Deputy Managing Director/ Managing Director, CTCI (Thailand) Co., Ltd.

-Chairman, CTCI Arabia Ltd. -Director, CTCI (Thailand) Co., Ltd. -Director, CTCI Americas, Inc. -Director, CTCI Overseas (BVI) Corporation -Director, CCJV P1 Engineering & Construction Sdn. Bhd. -Director, MIE Industrial Sdn. Bhd.

- - -

16

Executive Vice

President R.O.C.

Pao-Yao Pan

Jan. 1 , 2006

12,628 0.00 326,000 0.04 0 0

-M.S., Management, National Sun Yat-sen University -B.S., Mechanical Engineering, Tatung University - Vice President/ Senior Vice President, CTCI Corporation

-Chairman, CINDA Engineering & Construction Private Limited -Director, E&C Engineering Corporation -Director, Innovest Investment Corporation -Director, Pan Asia Corporation -Director, Metro Consulting Service Corporation

- - -

Executive Vice

President R.O.C.

Ming-Cheng Hsiao

Jan. 1 , 2006

2,000 0.00 69,000 0.01 0 0

-Ph.D., Chemical Engineering, National Tsin Hua University -MBA, EMBA Program in Accounting, National Taiwan University -M.S., Chemical Engineering, National Tsin Hua University -B.S., Chemical Engineering Tamkang University - Senior Vice President, CTCI Corporation

-Chairman, CTCI Engineering & Construction Sdn. Bhd. -Director, KD Holding Corporation -Director, Sino Environmental Services Corporation -Director, Powertec Energy Corporation -Director, Unisurpass Technology Co.,Ltd -Director, Unimighty Co., Ltd. -Director, Crown Asia 2 Investment Limited

- - -

Senior Vice

President R.O.C.

Tien-Nan Pan

(Note 1)

Jan. 1 , 2005

127,000 0.02 437,863 0.06 0 0

-MBA, EMBA Program in Finance, National Taiwan University -B.S., Business Administration, National Taiwan University -Vice President, CTCI Corporation

None - - -

Senior Vice

President R.O.C.

Ching-Lin Hsu

Jan. 1 , 2012

278,000 0.04 300,559 0.04 0 0

-B.S., Mechanical Engineering, Tam-Kang University -Vice President, CTCI Corporation -President, Jingding Engineering & Construction Co., Ltd.

-Chairman, Jingding Engineering & Construction Co., Ltd.

- - -

17

Senior Vice

President R.O.C.

Andrew Tsai

Jan. 1 , 2013

30,250 0.00 229,575 0.03 0 0

-Ph.D., Business Administration, Macau University of Science and Technology -M.S., Business Administration, Macau University of Science and Technology -Executives Program, Graduate School of Business Administration, NCCU -B.S., Feng Chia University -President, E&C Engineering Corporation -Chairman, Shang Ding Engineering & Construction Co., Ltd.

-Supervisor, Resources Engineering Services Inc. -Supervisor, Level Biotechnology Inc.

- - -

Senior Vice

President R.O.C.

Brad Chen (Note 2)

Jul. 1 , 2013

24,000 0.00 0 0 0 0

-EMBA, Executive Master of Business Administration, National Central University -B.S. Mechanical Engineering, TamKang University -General Manager, Inner Mongolia Dongyuan Science and Technology Co., Ltd. -Senior Vice President, Oriental Petrochemical (Shanghai) Corp.

None - - -

Senior Vice

President R.O.C.

Jung-Yu Han

Jan. 1 , 2016

604 0.00 211,000 0.03 0 0

-B.S., National Taipei University of Technology -Senior General Manager/ Vice President, CTCI Corporation

-Supervisor, HD Resource Management Corporation

- - -

Senior Vice

President R.O.C.

Chen-San Hu

Jan. 1 , 2016

348,116 0.05 152,000 0.02 0 0

-B.S., Department of Naval Architecture, National Kaohsiung Marine University -Senior General Manager/Vice President, CTCI Corporation

-Director, Pan Asia Corporation - - -

Senior Vice

President R.O.C. Todd Chen

Jan. 1 , 2016

67,099 0.01 8,000 0.00 0 0

-M.S., Mechanical Engineering, National Chiao Tung University -B.S., Mechanical Engineering, National Chiao Tung University -Senior General Manager/ Vice President, CTCI Corporation

-Director, Sino Environmental Services Corporation

- - -

Vice President

R.O.C. Kai Lee (Note 3)

Jan. 1 , 2009

0 0 206,000 0.03 0 0

-B.S., Chemical Engineering, Tunghai University -Senior General Manager, CTCI Corporation

None - - -

18

Vice President

R.O.C. C. F. Chiou

(Note 4) Jan. 1 , 2007

334,401 0.04 0 0 0 0

-M.S., Chemical Engineering, National Cheng Kung University -B.S., Chemical Engineering, National Central University, Taiwan -Senior General Manager, CTCI Corporation

None - - -

Vice President

R.O.C. Teh-Ming

Tao Jan. 1 , 2006

316,064 0.04 0 0 0 0

-Ph.D., Chemical Engineering, TAMU, USA -M.S., Chemical Engineering, TAMU, USA -B.S., Chemistry, National Tsing-Hua University, Taiwan -Senior Research Engineer, Dowell Schlumberger (USA) SR-RE -CEO, CTCI Foundation -Project Manager, CTCI Foundation -Director, Industrial Safety and Health, CPC Corporation

-Supervisor, CTCI Chemicals Corporation

- - -

Vice President

R.O.C. Steve Jean Jan. 1 , 2011

1,668 0.00 151,000 0.02 0 0

-EMBA, Executive Master of Business Administration of National Cheng Chi University -M.S., Mechanical Engineering, National Central University -B.S., Civil Engineering , National Taipei Institute of Technology -General Director, CIMAS Engineering Co., Ltd.

-Director, GRQ Investment Corporation

- - -

Vice President

R.O.C. M. G. Lee Jan. 1 , 2013

0 0 113,029 0.01 0 0

-M.S., Management, National Taiwan University of Science and Technology -B.S., Ming Chi University of Technology -Senior General Manager, CTCI Corporation

-Director, CTCI Engineering & Construction Sdn. Bhd.

- - -

Vice President

R.O.C. Po-Chien

Wang Jan. 1 , 2013

117,144 0.02 0 0 0 0

-LL.M., Legal Studies, University of Illinois Springfield -LL.B., Department of Law, Soochow University -Senior General Manager, CTCI Corporation

-Director, Fortune Energy Corporation

- - -

19

Vice President

R.O.C. Ching-Hsiang

Tseng Jan. 1 , 2014

244,904 0.03 30,000 0.00 0 0

-B.S., Civil Engineering, National Cheng Kung University -Senior General Manager, CTCI Corporation

-Supervisor, E&C Engineering Corporation

- - -

Vice President

R.O.C. Shen-Peng

Liao Apr. 1 , 2014

10,000 0.00 175,289 0.02 0 0

-M.S., Mechanical Engineering, National Taiwan University of Science and Technology -Mechanical Engineering, St. John's University of Technology -Executive Vice President, JDEC Corporation

-Director, Jingding Engineering & Construction Co., Ltd.

- - -

Vice President

R.O.C. Tsai-Ming

Wang Apr. 1 , 2014

303,912 0.04 12,855 0.00 0 0

-B.S., Mechanical Engineering, Tamkang University -Chemical Engineering, National Taipei Institute of Technology -Senior General Manager, CTCI Corporation

-Director, CTCI Arabia Ltd. - - -

Vice President

R.O.C. Min-Li Lee Apr. 1 , 2014

95,156 0.01 18,000 0.00 0 0

-M.S., Chemical Engineering, National Central University -B.S., Chemical Engineering, Chung-Yuan Christian University -Senior General Manager, CTCI Corporation

-Chairman, CIPEC Construction, Inc. -Chairman, Accuracy International, Inc.

- - -

Vice President

R.O.C. Jing-Shing

Wu Apr. 1 , 2014

258,307 0.03 0 0 0 0

-Executive Master of Business Administration, National Sun Yat-Sen University -Chemical Engineering, National Taipei University of Technology -Senior General Manager, CTCI Corporation

-Supervisor, GRQ Investment Corporation

- - -

Vice President

R.O.C. J.H. Chen Jan. 5 , 2015

24,000 0.00 0 0 0 0

-EMBA, Executive Master of Business Administration of National Central University -B.A., Economics, Soochow University, Taiwan -VP, Human Resources Center, Integrated Business Services Center, Coretronic Corporation -CHO, WPG Holdings

-Supervisor, Gintech Energy Corporation

- - -

20

Vice President

R.O.C. Y. S. Liao Mar. 12,

2015 98,000 0.01 0 0 0 0

-B.S. in Nuclear Engineering, National Tsing-Hua University -President, E&C Engineering Corporation

-Director, Innovest Investment Corporation

- - -

Vice President

& CFO R.O.C. Patrick Lin

Mar. 28, 2007

57,280 0.01 240,000 0.03 0 0

-MBA, EMBA Program in Finance, National Taiwan University -MBA, University of Massachusetts-Boston, USA -B.S., Business Administration, Tamkang University -Director, Financial Division, Coretronic Corporation -Manager, Financial Division, Powerchip Technology Corporation -Director, Societe Generale Corporate & Investment Banking

-Director, Shang Ding Engineering & Construction Co., Ltd. -Director, SINOGAL - Waste Services Co., Ltd. -Supervisor, Yuan Ding Resources Management Corp. -Supervisor, Xiang Ding Environmental Consultant (shanghai) Co., Ltd. -President, GRQ Investment Corporation -President, Innovest Investment Corporation

- - -

Accounting Officer

R.O.C. SH Lin Jun. 13,

2008 5,000 0.00 156,649 0.02 0 0

-EMBA, National Chengchi University -B.S., Accounting, Soochow University -General Manager, CTCI Corporation

-Supervisor, Sino Environmental Services Corporation -Supervisor, G.D. Development Corporation

- - -

Note1: SVP Tien-Nan Pan is dismissed on Jan. 4, 2016. Note2: SVP Brad Chen is dismissed on April 1, 2015. Note3: VP Kai Lee is dismissed on Oct. 6, 2015. Note4: VP C. F. Chiou is dismissed on Nov. 15, 2015.

21

3.3 Remuneration of Directors, President, and Vice President 3.3.1 Remuneration of Directors

December 31st, 2015; Unit: NT$ thousands; thousand shares

Title Name

Remuneration Ratio of total remuneration (A+B+C+D) to

net income (%)

Relevant remuneration received by directors who are also employees Ratio of total compensation

(A+B+C+D+E+F+G) to net

income(%)

Compensation paid to

directors from an invested company

other than the company’s subsidiary

Base Compensation

(A) Pension Fund(B) Directors’

Compensation (C) Allowances(D) Salary, Bonuses, and Allowances

(E) Pension Fund(F) Employees’ Compensation

(G)

Exercisable Employee Stock

Options (H)

New Restricted Employee Shares

(I)

CTCI All

Consolidated Entities

CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All Consolidated Entities CTCI

All Consolidated

Entities CTCI

All Consolidated

Entities CTCI

All Consolidated

Entities Cash Stock Cash Stock

Chairman

John T. Yu (Rep. of GRQ Investment

Corporation)

10,800 11,000 0 0 15,000 15,000 28,668 33,405 2.67 2.91 8,498 9,937 667 667 116 0 116 0 2,247 2,247 0 0 3.12 3.44 0

Vice Chairman


Investment Corporation)

Managing Director

Andy Sheu (Rep. of Sino

Environmental Services

Corporation) (Note1)


Johnny Shih Jack Huang Frank Fan

Director

Quintin Wu Yancey Hai Leslie Koo

Wenent Pan Bing Shen

Teng-Yaw Yu (Rep. of CTCI Foundation) Takao Kamiji

(Rep. of Crown Asia 2 Investment

Limited)

Note 1: NT$ 667 thousands are allocated to the pension plan in 2015.

22

Bracket

Name of Directors

Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)

CTCI All Consolidated

Entities CTCI

All Consolidated Entities

Under NT$ 2,000,000 Takao Kamiji Takao Kamiji Takao Kamiji Takao Kamiji

NT$2,000,000 ~ NT$5,000,000

Andy Sheu / Johnny Shih / Jack Huang / Frank Fan /

Quintin Wu / Yancey Hai / Leslie Koo / Wenent Pan / Bing Shen / Teng-Yaw Yu

Andy Sheu / Johnny Shih / Jack Huang / Frank Fan /

Quintin Wu / Yancey Hai / Leslie Koo / Wenent Pan / Bing Shen / Teng-Yaw Yu

Johnny Shih /Jack Huang / Frank Fan / Quintin Wu / Yancey Hai / Leslie Koo /

Wenent Pan / Bing Shen / Teng-Yaw Yu

Johnny Shih /Jack Huang / Frank Fan / Quintin Wu / Yancey Hai / Leslie Koo /

Wenent Pan / Bing Shen / Teng-Yaw Yu

NT$5,000,000 ~ NT$10,000,000

NT$10,000,000 ~ NT$15,000,000 John H. Lin John H. Lin Andy Sheu

Andy Sheu

NT$15,000,000 ~ NT$30,000,000 John T. Yu John T. Yu John H. Lin

John T. Yu John T. Yu John H. Lin

NT$30,000,000 ~ NT$50,000,000

NT$50,000,000 ~ NT$100,000,000

Over NT$100,000,000

Total

23

3.3.2 Compensation of President and Executive Vice President December 31

st, 2015; Unit: NT$ thousands; thousand shares

Title Name

Salary(A) Pension Fund (B) Bonuses and

Allowances (C) Employees’

Compensation (D)

Ratio of total compensation

(A+B+C+D) to net income (%)

Exercisable Employee Stock

Options

New Restricted Employee Shares

Compensation paid to the

president and executive vice

president from an invested company

other than the company’s subsidiary

CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


Cash Stock Cash Stock

President Michael

Yang

8,313 11,823 1,448 1,448 16,083 16,083 245 0 245 0 1.28 1.45 1,487 1,487 0 0 0 Executive Vice

President

Mark W. H. Yang

M. H. Wang

Note: Pension contributed according to actuaries’ report and resolution of the board of directors’ meeting.

Bracket Name of President and Executive Vice President

CTCI All Consolidated Entities

Under NT$ 2,000,000

NT$2,000,000 ~ NT$5,000,000

NT$5,000,000 ~ NT$10,000,000 Michael Yang / Mark W. H. Yang / M. H. Wang Michael Yang / Mark W. H. Yang / M. H. Wang

NT$10,000,000 ~ NT$15,000,000

NT$15,000,000 ~ NT$30,000,000

NT$30,000,000 ~ NT$50,000,000

NT$50,000,000 ~ NT$100,000,000

Over NT$100,000,000

Total

24

Employees’ Compensation Granted to Management Team Unit: NT$ thousands

Title Name

Employee Bonus - in Stock

(Fair Market Value)

Employee Bonus - in Cash

Total Ratio of Total

Amount to Net Income (%)

Executive Officers

Managing Director Andy Sheu

0 1,395 1,395 0.07

President Michael Yang

Executive Vice President Mark W. H. Yang

Executive Vice President M. H. Wang

Senior Vice President Ching-Lin Hsu

Senior Vice President Andrew Tsai

Senior Vice President Ming-Cheng Hsiao

Senior Vice President Pao-Yao Pan

Vice President Teh-Ming Tao

Vice President M. G. Lee

Vice President Steve Jean

Vice President Chen-San Hu

Vice President Jung-Yu Han

Vice President Po-Chien Wang

Vice President Ching-Hsiang Tseng

Vice President Shen-Peng Liao

Vice President Tsai-Ming Wang

Vice President Min-Li Lee

Vice President Todd Chen

Vice President Jing-Shing Wu

Vice President J.H. Chen

Vice President Y. S. Liao

Vice President & CFO Patrick Lin

Accounting Officer SH Lin Note: The distributed amount is based on the total amount approved by Board of Directors and calculated accordingly to each executive officers’ on-job days in the

previous year.

25

3.3.3 Comparison of Remuneration for Directors, Supervisors, Presidents and Executive Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Executive Vice Presidents

Unit: NT$ thousands

Year Title

2014 2015

CTCI All Consolidated Entities CTCI All Consolidated Entities

Total remuneration

Ratio to net income (%)

Total remuneration


Total remuneration


Total remuneration


Directors

99,360 5.28 106,160 5.64 89,838 4.40 99,724 4.89 Supervisors

Presidents and Executive Vice President

A. The compensation of Directors and Supervisors

Directors and Supervisors are paid traveling allowance, Directors/Supervisors remuneration and Committee remuneration annually. Therefore, the compensation of each year keeps steady with total amount paid less than 3% of the annual net income after income tax. The traveling allowance is stipulated with reference to other public listed companies and companies within the similar industry field. The remuneration is stipulated per the section of profit allocation in Articles of Incorporation. The remuneration of Directors/Supervisors who hold concurrent positions in the affiliates is stipulated under the same standard.

B. The compensation of the President and Executive Vice Presidents The annual compensation includes payroll, awards, bonus and Directors’/Supervisors’ fee. Payroll is stipulated with the approval of the Personnel Committee, Remuneration Committee and the Board of Directors referring to the Company operation, budgeted increase rate and personal key performance. The overall incremental rates for the recent years are around 3%. Awards are stipulated with the approval of the Personnel Committee, Remuneration Committee and the Board of Directors referring to the Company operation, budget and personal key performance. The award of the recent years is similar. Bonus is stipulated per the section of profit allocation in Article of Incorporation. The total amount of bonus is distributed in proportion to the overall payroll, which corresponds to the bonus distribution of all the other employees. The Directors’/Supervisors’ fee (applicable to all affiliates) is at a fixed number with reference to the average level of the companies within the similar industry field.

C. Future risks association The standard, structure and system of the compensation of Directors, Supervisors, President and Executive Vice Presidents are subject to future risk factors and will not encourage Directors, Supervisors, President and Executive Vice Presidents to risk danger in desperation for pursuit of rewards in order to avoid the Company loss suffering even after the compensation payment.

26

3.4 Implementation of Corporate Governance 3.4.1 Board of Directors A total of 7 meetings of the board of directors were held in the previous period, Directors’ attendance was as follows: (As of March 31, 2016)

Title Name Attendance

in Person By Proxy

Attendance rate (%)

Remarks

Chairman John T. Yu

(Rep. of GRQ Investment Corporation)

7 0 100

Vice Chairman


Investment Corporation) 7 0 100

Managing Director

Andy Sheu (Rep. of Sino Environmental

Services Corporation) 7 0 100


Johnny Shih 6 1 86


Jack Huang 7 0 100


Frank Fan 7 0 100

Director Quintin Wu 5 2 71

Director Yancey Hai 5 2 71

Director Leslie Koo 4 3 57

Director Wenent Pan 5 2 71

Director Bing Shen 7 0 100

Director Takao Kamiji

(Rep. of Crown Asia 2 Investment Limited)

5 0 83

Be dismissed on March 6,

2016 and shall present 6

times.

Director Michael Yang

(Rep. of Crown Asia 2 Investment Limited)

0 1 0

Be newly appointed on March 7, 2016

and shall present 1

times.

Director Teng-Yaw Yu

(Rep. of CTCI Foundation) 7 0 100

27

Other mentionable items: 1. If there are the matters referred to in Article 14-3 of Securities and Exchange Act and resolutions of

the directors’ meetings objected to by Independent Directors or subject to qualified opinion and recorded or declared in writing, the dates of meetings, sessions, contents of motions, all independents’ opinion and the Company’s response to independent directors’ opinion should be specified: None

2. If there is Directors’ avoidance of motions in conflict of interest, the Directors’ names, contents of motions, causes for avoidance and voting should be specified: (1) Directors’ Names: Andy Sheu

Contents of motion: The 8th meeting of the 13th term Board of Directors (2015.06.22): Approval of the increase of employee’s monthly meal allowance. Causes for avoidance and voting should be specified: Manager Director Andy Sheu recused himself during discussion of and voting on this item because of the interested party relationship.

(2) Directors’ Names: Takao Kamiji Contents of motion: The 10th meeting of the 13th term Board of Directors (2015.11.06): Approval of increase shareholding ratio of CCJV P1 Engineering & Constructions Sdn. Bhd. Causes for avoidance and voting should be specified: Director Takao Kamiji recused himself during discussion of and voting on this item because of the interested party relationship.

(3) Directors’ Names: Andy Sheu Contents of motion: The 11th meeting of the 13th term Board of Directors (2015.12.18): Approval of the average salary increase rate of 2016. Causes for avoidance and voting should be specified: Manager Director Andy Sheu recused himself during discussion of and voting on this item because of the interested party relationship.

(4) Directors’ Names: Andy Sheu Contents of motion: The 11th meeting of the 13th term Board of Directors (2015.12.18): Approval of enhance employee incentive programs. Causes for avoidance and voting should be specified: Manager Director Andy Sheu recused himself during discussion of and voting on this item because of the interested party relationship.

(5) Directors’ Names: Andy Sheu Contents of motion: The 11th meeting of the 13th term Board of Directors (2015.12.18): Approval of the remuneration of the management officers of the Company. Causes for avoidance and voting should be specified: Manager Director Andy Sheu recused himself during discussion of and voting on this item because of the interested party relationship.

(6) Directors’ Names: John T. Yu, John H. Lin Contents of motion: The 11th meeting of the 13th term Board of Directors (2015.12.18): Approval of the amendment to the remuneration of the Chairman and Vice Chairman of the Company. Causes for avoidance and voting should be specified: Chairman John T. Yu and Vice Chairman John H. Lin recused themselves during discussion of and voting on this item because of the interested party relationship.

3. Measures taken to strengthen the functionality of the Board: (1) The Company has elected three independent directors and established the Audit Committee

which is composed of all independent directors on June 26, 2014. Please refer to the section 3.4.2 “The State of Operations of the Audit Committee”.

(2) From 2011, the Company has disclosed the major resolutions of the Board meeting voluntarily on the Company website.

(3) In accordance with the Articles of Association, the Company has purchased D&O insurance for directors and supervisors in order to reduce and diversify major damage risks of the Company and the shareholders.

28

3.4.2 The State of operations of the Audit Committee or the State of participation in board meetings by the supervisors (1) The Company has elected three independent directors and established the Audit Committee in

lieu of supervisors on June 26, 2014. (2) A total of 6 meetings of the Audit Committee were held in the previous period. Independent

Directors’ attendance was as follows: (As of March 31, 2016)

Title Name Attendance in

Person By Proxy

Attendance rate (%)

Remarks


Johnny Shih 6 0 100


Jack Huang 6 0 100


Frank Fan 6 0 100

Other mentionable items: 1. If there are the matter referred to in Article 14-5 of Securities and Exchange Act and

resolution that was not approved by the Audit Committee but be undertaken upon the consent of two-thirds or more of all directors, the dates of meetings, sessions, contents of motions, the Audit Committee’ resolutions and the Company’s response to the Audit Committee’s opinion should be specified: None

2. If there is Independent Directors’ avoidance of motions in conflict of interest, the Independent Directors’ names, contents of motions, causes for avoidance and voting should be specified: None

3. Communications between Independent Directors and the Company's Internal Audit officer and CPA A. After having presented the audit and follow-up reports to the Chairman, the Internal

Audit officer submits the same reports via e-mail for review by the Independent Directors on a monthly basis. The Internal Audit officer communicates with the Independent Directors in person quarterly. There was no further issue after responding their comments in 2015.

B. The Internal Audit officer presents the findings of audit reports in the meetings of the Audit Committee and the Board of Directors. All the Independent Directors have adequate access to how audit performs. During 2015, the communication channel between Independent Directors and the Internal Audit officer functioned well.

C. The CPAs present audit reports and findings to the Independent Directors. CFO, Finance manager, Accounting manager and Internal Audit officer attend the Audit Committee meetings and reply to Independent Directors immediately if they have any questions. During 2015, the communication channel between Independent Directors and CPAs functioned well.

29

3.4.3 Corporate Governance and Operation, Differences from the Corporate Governance Best Practice Principles for the TWSE/ GTSM Listed Companies and Reasons

Evaluation Item

Operation Status Deviations from “Corporate Governance Best-Practice

Principles for TWSE/GTSM Listed Companies” and reasons

Yes No Summary Statement

1. Does the Company establish and disclose the Corporate Governance Practice Principals in accordance with the Corporate Governance Best Practice Principles for the TWSE/ GTSM Listed Companies?

V In the 10th meeting of the 10th board of directors, the establishment of the Corporate Governance Practice Principals was decided on 24 July 1996, which had been modified in accordance with the regulations and real practice in these years. The latest revision was made in the 18th meeting of the 12th board of directors on 28 March 2014 and was published in the Market Observatory Post System (MOPS) and the website of the Company.

None

2. Ownership structure and shareholder’s equity (1) Does the Company set up the internal

standard operation procedure to handle issues such as shareholder’s advices, questions, disputes and accusations for implementation accordingly?

(2) Does the Company have control over the major shareholders, who control the Company and have the name list of the major shareholders who have the ultimate control over the Company?

(3) Does the Company set up and implement the risk control and firewall mechanism with the subsidiaries and affiliates?

V

(1) The Company has set up spokesman and investor

relation office as the liaison channel to handle issues like the shareholders’ advices or disputes.

(2) The Company has been submitting monthly report to

the Market Observatory Post System, assigned by the Securities and Futures Bureau about the change of the shareholding of the insiders (directors, managers and shareholders who have more than 10% of the total shares) in accordance with the 25th article of the Securities and Exchange Act.

(3) In addition to establishing the “Supervision and

Management of Subsidiaries” based on the “Regulations Governing Establishment of Internal Control System by Public Companies” set by the Financial Supervisory

None

30

Evaluation Item




(4) Does the Company stipulate internal regulation, prohibiting the insiders of the company to make use of the unpublished information for the trading of securities?

Committee, the Company also stipulated the internal basic principles for cooperation between the parent company and the subsidiaries like the Basic Principles for Joint- Venture contract and Cooperation between the Parent Company and Subsidiaries of the CTCI Group, the Common Operation Procedure to maintain the rights and interest of the CTCI Group…etc, which are inspected by departments like the Auditing Department and QHSE Division to ensure the thorough implementation of the system and good mechanism of the risk- control for the subsidiaries and affiliates.

(4) The Company has set up the “Measures to Prevent

Insider Trading”, “Code of Business Conduct and Ethics for the Board of Directors and Managers” and “Employee Code of Ethics and Conduct”, prohibiting use of the unpublished information for the trading of securities.

3. Composition and Responsibilities of the Board of Directors (1) Is there establishment of the

diversification and thorough implementation about the composition of the board of directors?

(2) In addition to the establishment of the Remuneration Committee and Audit Committee, does the Company have other functional committees?

V

V

(1) In consideration of diversity and fairness, the members

of the board of directors include practicing lawyer, business professionals, and listed company operators from various industries such as electronics, plastics, optoelectronic, textile, cement, etc.

(2) In addition to the establishment of the Remuneration

Committee and Audit Committee regulated by the law, the Company also set up the Corporate Governance Committee whose major jobs include the programming

None The tasks of the Corporate Governance Committee include the function of nomination committee.

31

Evaluation Item




(3) Is there performance appraisal of the board of directors, which is carried out annually?

(4) Is there regular assessment of the

independence of the certified public accountant every year?

V

V

of the composition of the board of directors/ functional committees, the qualification assessment of the independent directors, the programming of the succession of the managing echelon, the assessment of the company risk control policy and risk evaluation criteria/ tracing of the major risk accidents and revision of the performance regarding the implementation of the company governance system…etc. The committee is composed of 10 directors and has held 31 meetings since its establishment. It works strictly and plays a decisive role in the major company policy decisions.

(3) The Company does not set up the criteria for the

performance appraisal of the board of directors. (4) Beginning Dec 20, 2012, the Company set up a scheme

in order to enhance independence and capability of engaged Certified Public Accountant. The Company exams and evaluates CPA’s independence and capability. After the result is approved by Board of Directors and Audit committee in March 2016. CPAs Shyh-Rong Ueng and Huei-Shyang Wang from PricewaterhouseCoopers were qualified. Both CPAs do not have any direct interest relationship with either the Board of Directors or the Company, and believed to have more than sufficient capabilities on auditing, taxation and time cost efficiency.

It may be done in accordance with the result of the evaluation when required. None

32

Evaluation Item




4. Does the Company establish communication channel for stakeholders, set up a dedicated section in its corporate website for stakeholders, and properly respond to CSR-related issues concerned by stakeholders?

V The Company establishes "CSR" and "Investor Relations" sections in its corporate website to explain to stakeholders the conducts for fulfilling CSR and may be contacted via its corporate website when needed. The Company will give proper feedback to any reasonable concerns raised by the stakeholders.

None

5. Does the Company entrust the professional stock affair agency for the shareholder affairs?

V The Company has entrusted the department of the stock affair agency of the KGI Securities Co. Ltd. to assist us in the stock affairs.

None

6. Information Disclosure (1) Does the Company set up a website to

disclose information regarding the Company’s finance, business and corporate governance status?

(2) Is there any other information disclosure

channels (e.g., maintaining an English-language website, appointing responsible people to handle information collection and disclosure, appointing spokespersons, webcasting investors conference)?

V (1)

a) The Company has set up a Chinese/English website (www.ctci.com.tw) to disclose information regarding the Company’s finance and business status and update information regularly.

b) The Company has disclosed information regarding the organization and function of Internal Auditing Dept., “Rules Governing Procedure for Making of Endorsements or Guarantees”, “Rules Governing Acquisition and Disposal of Assets” and “Rules Governing Procedure for Loaning of Funds” on the Company website.

(2) a) The Company has set up a Chinese/English website

and has appointed Brand Management Dept. to handle information collection and disclosure.

b) The Company has appointed the Head of Executive Management Office as the spokesperson, CFO as deputy spokesperson and they are responsible for speaking to the public. The Company will hold

None

33

Evaluation Item




investors conference presentation according to practical needs.

c) The audio-visual record of investor conference has been posted on the Company website. The Company has disclosed finance and business information revealed in inventor conference on the Company website and the Market Observation Post System pursuant to regulations of Taiwan Stock Exchange.

7. Is there other important information, which helps to understand the governance and operation of the company, which includes but not limited to the rights and interest of the staff, cares for the employees, investor relations, relation with the suppliers, rights of the stakeholders, trainings received by the directors and supervisors, the implementation of the risk management policy and risk assessment criteria, the liability insurance policies taken out for the directors and supervisors…etc?

V Please refer to the【Note】 None

8. Does the Company conduct the self- assessment for corporate governance or does the company entrust other professional organization to assess the company governance? (If yes, please specify the opinion of the board of directors, result of the self- assessment or assessment conducted by the entrusted professional organization, the major defects, suggestions and improvement…etc.)

V The Company has conducted the self-evaluation through the corporate governance evaluation system which is developed by the TWSE Corporate Governance Center and report to the Corporate Governance Committee on March 2016.

None

34

【Note】

1. The system about employee rights and interests and the care for the employees adopted by the Company is implemented in accordance with the related regulations and specified clearly in the working regulations of the employee manual, which include the gender equality at work, sexual harassment prevention and treatment, the compensation and pension for the disaster, injury and disease, subsidy principals the for weddings /funerals…etc. The labor management meeting is held as well to communicate with each other for issues concerned by the labor regularly each quarter. There are other measurements like the mail box for the employee opinion and special line against the sexual harassment to give trust to the employees thoroughly and to carry out the self- governance of the employee.

2. The first principle for the sound corporate administration is to protect the shareholder rights and interests and to treat all shareholders fairly. To encourage the investors to participate in the corporate governance and to implement the shareholder activism, the Company has uploaded the minute of the shareholder meeting on the website and released the major information in English and Chinese simultaneously to protect the rights and interests of the domestic and international investors. Moreover, the Company holds the corporate conference regularly and uploads the video of the conference to the website to increase the understanding of the corporation about the Company to maintain the shareholder rights and interests accordingly.

3. The Company offers the relevant laws and regulations requiring attention and seminar information for further study to directors and supervisors and make presentation about the business regularly in the meeting of the board of directors. (For detailed information, please refer to the important information concerning the corporate governance and operation.)

4. All directors and supervisors should attend the meeting of the board of directors except for special situation and their presence of the meeting will be registered in the Market Observatory Post System.

5. To recuse themselves to avoid conflicts of interests is the basic consensus for directors of the Company. 6. The Company purchased D&O insurance for its directors and supervisors. 7. We strictly conduct supplier management. Only those qualified and registered in the CTCI Group PSSCM System have the chance for quote and to be

contracted for plant construction. Issues regarding the scope of the integration work, the work regulation, the project schedule, the quality inspection, QHSE Management are well- explained to the contractors during the inquiry and quote for them to understand completely the content of work, responsibilities and obligations in the contract. The total amount of the contract, the payment term, the responsibilities, obligations and penalties for the mutual parties are specified in the contract as base for the implementation of the contract of the corporative contractor. With the sound finance of the company, all contractors get paid in due course and according to the payment term. Besides, the function to check the payment is established for the contractors to know the review procedure of the invoice. The company treats all contracted contractors fairly and honestly and negotiates with them for cooperation, mutual harmony and prosperity.

8. “Implementation of risk management policies and risk measuring criteria” Risk management policies: Declarations: All kinds of risks will affect the achievement of objective of the company. The understanding and management of risk can assist the

company to prepare countermeasure and improve performance, so as to achieve stable growth and pursue the sustainable operation. Descriptions: Through constructing proper risk management procedure, the risk management of the company will integrate into the daily operating

activities to manage the operating risks effectively. For this purpose, the company will:

35

Establish enterprise risk management system consistent with company strategy; Define the roles and responsibilities of all employees in enterprise risk management, and communicate with all employees; Prepare systematized enterprise risk assessment method to ensure that risks significantly affecting the company can be identified effectively; Ensure that information related to enterprise risk can be passed through explicit and effective channel; Integrate enterprise risk management mechanism into daily operating activities. Enterprise risk management is a continuous activity; all employees of the company are responsible for understanding and carrying out risk management system of the company. All colleagues shall properly perform the duty of risk management; each management level shall also comply with relevant requirements of this risk management system. CTCI follows the “Risk Management Procedure” which defines the risk management process and risk measuring criteria to perform the risk management tasks. Each risk management unit regularly performs risk identification and risk evaluation and proposes the improvement plan. The report is submitted to the Risk Management Executive Committee to control and to reduce the risks.

9. “Exquisite Works Award, Customer Satisfaction” is the standard of CTCI and provides customer assurance. In addition to complying with regulations of international standards (ISO, OHSAS), the Company has regularly designated a third party to authenticate credibility. In addition customer satisfaction is periodically surveyed particularly about Company work for clients being on schedule, within budget and of proper quality meeting environmental standards.

36

3.4.4 The Remunerate committee’s composition, responsibilities and operation: A. Remuneration Committee members’ information

Identity (Note1)

Criteria Name

Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience

Independence Criteria(Note 2) Number of

Other Public Companies in

Which the Individual is

Concurrently Serving as a member of

Remuneration Committee

Remark (Note 3)

An Instructor or Higher Position in a Department of Commerce,

Law, Finance, Accounting, or Other Academic Department

Related to the Business Needs of the Company in a Public or Private Junior College, College

or University

A Judge, Public Prosecutor, Attorney, Certified Public

Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination

and been Awarded a Certificate in a Profession Necessary for the

Business of the Company

Have Work Experience in the Areas of Commerce,

Law, Finance, or Accounting, or Otherwise

Necessary for the Business of the Company

1 2 3 4 5 6 7 8


Johnny Shih - - V V V V V V V V V 0 N/A


Jack Huang - V V V V V V V V V V 3 N/A


Frank Fan - - V V V V V V V V V 0 N/A

Note 1: Please fill out director, independent director, or other. Note 2: 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent

company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount

of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking

in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal,

financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. 8. Not been a person of any conditions defined in Article 30 of the Company Law. Note 3: Does the member comply with the provision of Article 6, paragraph 5 of the “Regulations Governing the Appointment and Exercise of Powers by the Remunerat ion Committee of a

Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter” if he/she is a director of the Company.

37

B. The state of operations of the Remuneration Committee a. This committee is comprised of 3 members. b. The term of current committee members is from June 26, 2014 to June 25, 2017:

A total of 4 meetings of the Remuneration Committee were held in the previous period: (As of March 31, 2016)

Title Name Attendance in

Person By Proxy

Attendance rate (%)

Remarks

Convener Johnny Shih 4 0 100

Member Jack Huang 4 0 100

Member Frank Fan 4 0 100

Other mentionable items: 1. If the board of directors declined to adopt, or modified, a recommendation of the remuneration

committee, the dates of meetings, sessions, contents of motions, resolutions of the Board Meeting and the Company’s response to remuneration committee’ opinion should be specified(If the remuneration passed by the board of directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None

2. If there are objections or reservations to any discussion matters or extraordinary motions expressed by any member of the Committee, recorded or provided in written forms, the dates of meetings, sessions, contents of motions, all members’ opinion and the Company’s response to members’ opinion should be specified: None

38

3.4.5 Corporate Social Responsibility (CSR)

Evaluation Item

Implementation Status Deviations from

“Corporate Governance Best-Practice

Principles for

TWSE/GTSM Listed

Companies” and reasons


1. Corporate Management Practices (1) Does the Company formulate

CSR policy or systems and review the implementation status?

(2) Does the Company arrange CSR

trainings regularly? (3) Does the Company establish

exclusively (or concurrently) dedicated units with senior management authorized by the Board to be in charge of CSR Promotion and report to the Board?

(4) Does the Company make a reasonable remuneration policy; combine performance assessment of employees with CSR policy; and regulate an

V (1) CTCI established the CSR Promotion and CSR Report Publication Procedure in November 2009

to define the organizational framework, responsibility and authority of the CSR Committee, and to specify the cautions and rules for promoting CSR within CTCI. When setting issues to be promoted within CTCI, these issues are considered in accordance with the Global Reporting Initiatives (GRI) G4 Guidelines in terms of corporate governance, environmental protection and social participation as well as AA1000 International Standards, including the concern for stakeholders and impacts on CTCI; and systematic procedures for determining such have been established.

(2) The Company holds environmental education courses irregularly, and promotes the concept of corporate social responsibilities through various approaches, such as trainings, public announcement and activities held.

(3) In the end of 2008, CTCI CSR Committee was established, under which three working groups were set up. The CSR Committee administers the planning, promotion, implementation, data consolidation, review and improvement of the CSR work of CTCI. The CSR Committee shall report to the Board on a regular basis.

(4) CTCI values employee welfare and care. Apart from offering a base salary higher than the

minimum local wage, CTCI also appeals in internal and external fairness as well as individual fairness. In terms of external fairness, we have external professionals surveying the salary and benefit survey with fully understanding of the market rate while analyzing the employment environment as the foundation of our salary design. For internal fairness, the salary structure

None

39

Evaluation Item



Principles for

TWSE/GTSM Listed



explicit and effective system of reward and punishment?

is designed based on the evaluation of skills and duties of employees so as to insure that the salary standard is appropriate and irrespective of gender difference. To encourage better performance of colleagues, CTCI also combines one's payment with his/her performance, especially for variable bonus, to realize individual fairness in salary with one's organizational performance, departmental performance, and personal performance. Additionally, salary review is performed according to the market salary survey and personal performance ever year. Aside from specifying in Topic 1, Performance, Rewards and Discipline of Chapter 6 Work Rule in the Employees Manual, we also speculated CTCI Employees Reward and Punishment Regulations accordingly, so as to boost morale and strengthen disciplines with fairness, justice, openness, and rationality.

2. Sustainable Environment Development (1) Does the company dedicate

itself to improve the efficiency of all kinds of resources and use the renewable materials that impact on the environment less?

(2) Does the company set up an environmental management system that suits the nature of industry?

V (1) As a member of the society, CTCI shall spare no pain to save energy and reduce carbon

emissions. In terms of engineering expertise, CTCI has been making continuous innovation of engineering technologies to reduce energy consumption and reduce pollution. For routine affairs, CTCI urges employees to save energy and resources and emphasize the importance of saving paper, electricity, water and petroleum consumption.

(2) CTCI has long been dedicating to the R&D of green engineering technologies. The aims are to

provide owners with economical, feasible environmental and energy-saving solutions, to reduce pollution, to lower impacts to human health and environment risk, and to bring innovation and enhance the industry’s green competitiveness based on the core technology of CTCI, with a full life cycle perspective starting from engineering design, procurement, construction, commissioning, operation and decommissioning. Hence, we can attain a multi-win scenario among CTCI, cooperative partners, stakeholders and social environment.

None

40

Evaluation Item



Principles for

TWSE/GTSM Listed



(3) Does the Company pay attention to the impact of climate change on its operations; carry out the investigation of greenhouse gas inventory; and make strategies of energy efficiency, carbon and greenhouse gas reduction for the company?

(3) (a) In paper usage, we continuously urge employees to reduce unnecessary printing. If it is

necessary to print, employees are encouraged to print data on both sides of the paper to reduce paper consumption. In 2015, the total paper consumption at the headquarters was 65,810kg, which was decreased by 32,834kg (33.29%) when compared with 2014. In 2015, the paper recycling volume was 21,045, at a recycling rate of 31.98%. In 2016, we will continuously reinforce the appeal for paper conservation with better implementation in double-sided printing and reuse paper which has been printed on one side.

(b) In terms of electricity (power) saving, at CTCI headquarters, the total electricity consumption in 2015 was 6,113,805 kWh, decreased by 2.3% compared with the previous year, with an annual accumulative consumption at 3,100 kWh per person. The considerably decreased power consumption and bill was not only a result of energy-efficient habits cultivated by colleagues, but also the intelligent use of hardware, such as Inverter Air Conditioner, LED, and T5 lighting, and the AC and lighting setting centrally controlled.

(c) In the aspect of water consumption, besides installing a large quantity of water-saving facets, we save water by controlling the water output volume, time and regular inspection of water usage, stickers were also designed as a reminder for water saving. In 2014, the total water consumption was 22,093m3, decreased by 2.33% when compared with the previous year with an annual accumulative consumption of 11.21m3 per person. In 2016, except for continuous promotion of water conservation, we would actively seek out effective water saving practice.

(d) In addition to promoting energy saving concepts, CTCI also supported the Earth Hour activity and turned off all lights in CTCI from 20:30 to 21:30 on 28 March 2015. For one thing, it is an act to restate our support for energy saving and carbon reduction; for another, it is an example to encourage employees to save energy and reduce carbon emissions from small things, in order to do our part to mitigate global warming.

41

Evaluation Item



Principles for

TWSE/GTSM Listed



3. Social Welfare Protection (1) Does the company formulate

management policies and procedures in accordance with relevant regulations as well as International Covenant on Human Rights?

(2) Does the company create a

mechanism and channel for employees’ complaint and settle it properly?

(3) Does the company provide

employees with a safe and healthy working environment as well as the regular tutorials regarding the knowledge of safety and health?

V (1) In compliance with the United Nations Global Compact regarding regulations over human

rights, labor standards, environment and anti-corruption, in addition to ensuring all daily operations conforming to corporate ethics, CTCI develops basic conduct standards of compliance for all board directors, managers, employees and procurement staff. This set of standards Corporate Governance Norms, Business Ethical Behavior Norms for Board Members and Managers, Code of Employee Ethics and Behavior, and Work Ethical Behavior Rules for Procurement Staff.

(2) The company established an investigation team and complaint hotline for corruption and briberies, which accept reporting from persons inside and outside of the organization at all time. The reporting and consulting hotline is (02-2835-5936) or the email address: [email protected]. The department in charge of the complaints is the Human Resource Department. We encourage employees to notify any infringement of law, regulation or staff regulations through named reporting. The company should by any means hold confidentiality of the identity of the person submitting this report to avoid threats. In cases that one is suspicious of corrupt practices but could not be verified of the action violating the law, the consulting hotline is available for immediate report. Colleagues can even write e-mails to the feedback box, which will be directly responded by the manager of Human Resource Department or related departments for further handling.

(3) Establishing a friendly workplace and continuously activating health promotion program: CTCI established a health center in 2013. We advocate health promotion through inviting physicians or nutritionists as well as other experts to hold health promotion seminars and provide physician on-site services every month. The topics of health promotion seminars feature mental, physical and spiritual wellbeing. Related contents will be published on CTCI Monthly and posted on the corporate website as well. Moreover, to create a friendly

None

42

Evaluation Item



Principles for

TWSE/GTSM Listed



(4) Does the company create a

mechanism of regular communication for employees and notify them of any significant operational changes that might impact on them?

workplace, we set up a breastfeeding room in 2012 for female colleagues who become new moms. In 2015, there were totally 931 people benefitted from physicians’ on-site service and healthcare provided by the registered nurses; accumulatively 1,566 people used the breastfeeding room, and 1,092 people participated in the 12 health promotion seminars held.

(4) At present, there are 3,379 employees in CTCI (new recruits in 2015 were at about 14.12%, totally 477 employees). In appointment and promotion, we have no limit or restriction of any kind or in any form on gender, ethnic origin, political orientation, and religion (belief). Those who are qualified for the post are given equal opportunities to fill the post. The equal rights and obligations of employees are specified in the Employee Handbook and continuously published on the corporate Intranet. In employment age, we strictly follow the regulatory requirements prescribed in the Labor Standard Law. That is to say, no child labor incident has happened or has been reported at CTCI. At CTCI, eliminating sexual harassment and sexual discrimination is a commitment. In order to prevent workplace sexual harassment, apart from specifying the relevant rules in the Employee Handbook and educating employees, we have established a hotline and a dedicated e-mail for employees to report and make suggestions for eliminating sexual harassment. In 2011, the “Sexual Harassment Complaint Handling Committee” was set up. Responsible for the handling of sexual harassment cases or probable events, the committee should protect the confidentiality and privacy of the parties involved and set forth the findings within 3 months after the case is raised. The Sexual Harassment Complaint Handling Committee has 7 committee members in total with the chairman being the supervisor of the HR Division. Other committee members are selected from employees in different departments by the heads of each business operation unit. The proportion of female committee members should not be less than 1/2. In 2015, we received one complaint on a construction site related to physical harassment. The sexual harassment complaint handling committee held 5 meetings to discuss the matter and also inspected the site for further

43

Evaluation Item



Principles for

TWSE/GTSM Listed



(5) Does the company draw up

workable plans of vocational skills development for

details. The complainant of this incident had also reported to the police and the matter was investigated by the Prosecutors Office. After it was declared to be valid by the Criminal Court, our Company has also carried out punishments according to Company Policy. To enhance the industrial relation and guarantee rights of the labor, CTCI sets up a “Employment Coordination Meeting” on a quarterly basis (i.e., 4 meetings for a year). Issues concerned by employees of the quarter are reported or discussed in the meetings. Major issues raised are CTCI business development and the employees’ health, safety, welfare, salary, reward and punishments. The “Employment Coordination Meeting” is composed of 6 management representatives and 6 labor representatives. The executive vice president in the management representatives is the chairman to assign personnel familiar with business operations and labor situations as management representatives. The 6 labor representatives are elected by the constituency (units of business operations) and each term is 3 years. Wherein, supervisors above the rank of senior vice president are not allowed to serve as labor representatives, and female representatives must not be less than one-third of the total labor representatives. In internal communication, we hold “Forum with Executives” each quarter for employees to discuss with higher level supervisors face to face and raise opinions and questions about company operation or management. The forum attracts 50 to 60 employees to participate each time. During the discussion, employees raised questions enthusiastically and feedbacks are directly provided. At the forum, managers can hear the voice of employees, and employees can understand better about company policy and direction. Furthermore, higher-level supervisors will also discuss with recruits regularly to understand opinions and ideas of them through face to face communications.

(5) To provoke the passion for work in every employee and in consideration of the need for the organization to satisfy employees with self-realization, CTCI started promoting Individual Development Plant (IDP) for all employees since 2014. Each employee may develop different

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employees? (6) Does the company formulate

policies and a complaint procedure regarding consumer rights protection based on the workflow of R&D, procurement, production, operation and service?

(7) Does the Company abide by relevant regulations and international standards in the marketing and labeling of their products and services?

(8) Does the Company check if the suppliers had any record of affecting environment and society in the past before doing business with them?

learning development plans according to the corporate development, competency required for the function and individual development intent, which urges the employees to increase their own KSA (knowledge, skill and attitude) while employees can develop training, experience, disciplines, and refinement based on their own strength and weakness through communication with the coach. Consequently the overall competitiveness in employees is enhanced to reach win-win situation between the employees and the company, which forms an unconstrained work environment with infinite development opportunities.

(6) The company conducts customer satisfaction survey on the projects in progress and the projects during its closing to warrantee period semiannually. The Brand Management Department will send out the questionnaire to customers. Then, the “Customers Services Feedback Group” will make analysis on the survey results and seek effective solutions for further improvement by respective departments following acquiring approval by the President. This has ensured CTCI's quality standard can win customers' trust and meet their expectations.

(7) A commitment to quality is the key that enables CTCI to operate sustainably, it is also a promise that CTCI has kept to its clients. To do so, we established Quality Management System based on ISO 9001:2008 to make sure all vital stages of project management, engineering, procurement, construction, fabrication, commissioning and maintenance are in compliance with engineering and regulation requirements. We had been certified since 1996.

(8) For new vendors requested by the management to undergo plant visiting survey, "Self-Assessment Sheet of Contractor's Corporate Sustainable Management" will be distributed and filled in beforehand for evaluations of their social and environmental performances. Vendors that do not undergo plant visits will have to sign "Contractor’s Commitments on Corporate Sustainable Management", promising to be in compliance with the sustainable operation practice. As of 2015, the 596 vendors listed in Tier 1 will have to

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(9) Do the contracts signed

between the Company and suppliers contain the terms that the contract can be terminated or canceled at any time if the supplier violate against its policy of CSR and has significant impact on environment and society?

fill in "Self-Assessment Sheet of Contractor's Corporate Sustainable Management" every year. We are scheduled to complete the survey within 3 years by surveying over 200 vernders each year to evaluate the possible environmental and social impacts of the Tier 1 suppliers.

(9) Since 2011, we began to incorporate "Corporate Social Responsibilities" with vendor evaluations; while beginning with 2014, we add more items including "Environmental Management", "Labor Conditions", "Human Rights" and "Social Impact" to the list to ensure the vendor is qualified with ISO14001/OHSAS 18001certification, and comply with requirements for quality, price, delivery period, safety, health, environmental management, labor conditions, health management, and employee welfare. Disqualified vendors will be suspended for cooperation following such stringent review process.

4. Information Disclosure Enhancement (1) Does the Company disclose any

relevant and reliable information regarding CSR on its official website and Market Observatory Post System?

V (1) (a) Being one of the leading transparent companies, we participated in the “Information

Disclosure and Transparency Ranking System” launched by TWSE and GreTai since 2004, and were ranked as a listed company with rather transparent information disclosure. After reformation of the evaluation system in 2006, we were ranked as a Grade A listed company in information disclosure. In 2010 and 2011, an A+ Grade for listed company in information disclosure was issued. Moreover, from 2012 to 2015, CTCI has been ranked as an A++ company, the top ranking a company can ever receive, for four years in a row. The fact proved our rigor in corporate governance and effort to maintain information transparency.

(b) CTCI has been providing correct, open and transparent important operational information for investors to make the correct choice. We also assign a spokesperson, organize conference

None

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calls, publish periodic reports, and make important announcements over the CTCI website to make active communication with investors. In addition to the corporate website, we also disclose relevant information over the Market Information Post System of the Taiwan Stock Exchange. Since March 2010, the English version of important announcements has been made available. We also organize overseas investor conferences for foreign investors or participate in the investor conferences organized by securities companies, in order to improve and increase communication and exchange with overseas corporate investors.

(c) In order to communicate with stakeholders and allow them to better understand our way of operation, we began publishing on an annual basis the CTCI CSR Report in 2008 to disclose the information concerning our materiality issues according to the GRI Guideline. We also regularly submit the report to the British Standards Institution (BSI) for verification. In fact, we are the first private business in Taiwan to have our CSR report pass the BSI verification. For more details, Please refer to the item 7 “If the corporate social responsibility reports have received assurance from external institutions, they should state so below“ of this table

5. If the Company has established corporate social responsibility principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” please describe any discrepancy between the principles and their implementation: verified by BSI, a third party, CTCI CSR Report is in compliance with the three major principles of AA1000 Assurance Standard, which are Inclusivity, Materiality and Responsiveness.

6. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices (1) Environmental Protection:

To strengthen and carry out environmental protection policies, we reorganized the CSR Committee and set up Environmental Protection Group in the beginning of 2013. Uniting senior staff in engineering project management and experts in related fields, we regulated guiding principles and work procedures for environmental protection with general manager of Innovation R&D Center serving as the group supervisor. The major responsibility of Environmental Protection Group is to strengthen and integrate environmental measures and convene meetings to track the execution progress. Moreover, CSR-related works are listed as Key Performance Indicators of each business operation unit of CTCI. With the focus being Green Engineering, CTCI is dedicating efforts to minimize pollution, and lower the impacts made to human health and the

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environment during the whole Life Cycle of engineering projects, including engineering (E), procurement (P), construction (C), commissioning (K), selection of materials and equipments, and maintaining work after plant turn over to the owners. All the procedures are taken with approaches that are economical and viable and that can realize multi-win situation among CTCI, cooperative partners, stakeholders and the social environment by enhancing the green competitiveness of the industry. To ensure projects undertaken to be environmentally friendlier, we have been engaging in technology R&D and new technology implementation to prevent air pollution, enhance energy efficiency rate (EER), and protect the ecosystem and environment. In air pollution control, the oil hydrodesulfurization technology and SCR deNOx technology are the most commonly used deSOx and deNOx technologies to significantly reduce pollutants emitting into the air. With experience in air pollution control accumulated for more than 23 years, besides applying the hydrodesulfurization technology and SCR deNOx technology, we select deNOx, deSOx, dust removal and wastewater treatment units based on the waste gas cleaning system (WGCS) or air quality control system (AQCS) concepts to reduce pollutant emissions from the off-site waste gas discharge outlet and flue, in order to provide customers with the best package equipment and optimal system operation design to significantly reduce GHG emissions. In recent years, the world is looking into the impacts of greenhouse effect on the Earth brought by climate change. As a leading enterprise of environmental protection, the total sales of electricity sold back to Taiwan Power Company in 2015 for waste incineration plants operated by ERBO of CTCI is approximately at 872,684.86 MWh, which can supply 250,000 households with electricity. Based on the public information provided by Taiwan Power Company in 2015, an average of 291 kWh is consumed by each household every month. Thanks to the transference of electricity, CO2 emission was reduced around 456,000 Mt, which equals to a reduction of 184,000 Mt of coal (1 Mt coal can produce 2.48 Mt. CO2), equivalent to the volume of CO2 absorbed by 1,172 Daan Forest Park for one year (the CO2 absorbency of Daan Forest Park for one year is 389 Mt). A total waste of 6,622,070.62 Mt was processed in 24 incineration plants around Taiwan in August 2015 out of these 24 plants were operated by ERBO of CTCI with a total waste of 2,159,940.22 Mt received and 2,150,800.49 Mt of them being treated. 1,679,678.01 Mt of the waste was general solid waste whereas 480,262.21 Mt was classified as industrial waste, equal to the total waste generated by 5.426 million people per year (based on the statistics of Monthly Report (325 Issue) by Department of Waste Management, Environmental Protection Administration, Executive Yuan, approx.0.848 kg waste are produced by each person everyday from January to October of 2015) as well as the industrial waste produced by around 17,000 factories. We implemented the green building concept right from the beginning of building the CTCI Headquarters Building. We emphasize environmental greening, site water conservancy, energy saving, water conservation, resource recycling and other designs. Therefore, it is an all-round energy-saving green building. In fact, we won the National Architecture Gold Award for the planning and design and construction of the building. Besides the building

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itself, greening work was performed for the surroundings. For example, there is a park in front of the building and open space with trees on both sides for employees to enjoy leisure. According to the law, the building coverage rate in this district is 55%. However, we built only 48.9% to voluntarily increase the space for greening. At CTCI, we have preserved the old trees and green space originally standing there. When greening the space, we have specifically planted different kinds of native trees, such as the Formosan ash, Formosan beech, and the Taiwan incense cedar. We also adopted mixed plantation in multiple layers to preserve species diversity." Honor Events: Environmental Protection

Awards Description Premium Award in EPA 2014 Annual Appraisal for incineration plants

Keelung Incineration Plant operated and managed by ERBO was honored with the Premium Award in Environmental Protection Administration (EPA) 2014 annual appraisal.

Excellence Award in EPA 2014 Annual Appraisal for incineration plants

Xindian Plant, Taonan Plant, Miaoli Plant, and Houli Plant operated and managed by ERBO were honored with the Excellence Awards in EPA 2014 annual appraisal.

Honorable Mention for Innovative Environmental Education Materials

Miaoli Plant, operated and managed by ERBO, was awarded an Honorable Mention for 2015 Innovative Environmental Education Materials by EPA.

Energy Conservation Excellence Award Tainan Incinerator Plant, operated and managed by ERBO, was honored with the Energy Conservation Excellence Award of Southern Taiwan Science Park by Ministry of Science and Technology, ROC.

ROC Enterprise Environmental Protection Silver Award by Environmental Protection Administration

Tainan incinerator plant, operated by ERBO, was honored with the 23rd ROC Enterprise Environmental Protection Silver Award for Environmental Protection Administration.

ROC Enterprise Environmental Protection BronzeAward by Environmental Protection Administration

Xindian incinerator plant, operated by ERBO, was honored with the 23rd ROC Enterprise Environmental Protection Bronze Award for Environmental Protection Administration.

Environmental Education Facilities and Venues

Tainan plant was certified as an environmental education facility and venue by Environmental Protection Administration in 2015.

Excellent Performance Award for Agency of Air Quality Purification Area Adoption

Tainan WtE plant, operated by ERBO, participated in selection of “Excellent adopting agency of air quality purification area” held by Environmental Protection Administration, Executive Yuan and honored with excellent performance award.

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(2) Community Participation: CTCI has devoted itself to engineering for over 30 years and has contributed considerably to the society. Recently, upholding the concept “To spend what is taken from society in the best interest of society,” we took part in many charitable activities to fulfill corporate society responsibilities. After moving into the Shilin headquarters in March 2009, we has been holding CSR activities on an annual basis and invited charity organizations and community residents in Shilin and Tianmu to join us. Since 2011, we started long-term cooperation with Zhishan Cultural and Ecological Garden to hold Shilin Cultural Festival under the supervision of Ministry of Culture and Department of Cultural Affairs, Taipei City Government so as to promote local art activity and protect local environment and maintain a harmonious relationship with the neighborhood. Hopefully, we can foster regional development and improve the relationship between the enterprise and neighboring communities. Take the “The 2015 Shilin International Cultural Festival: Scenic Zhishan” as an example, we, for one thing, encouraged the CTCI colleagues to attend charity activities in the clubs basing on personal interests; for another, started the first step to promote culture rooting in local communities. The activity started from August, 2015 and lasted for two months. Besides musical shows, other activities include Birds Specimens Exhibit and guide trips by kids. During the cultural festival, representatives from Department of Cultural Affairs, Taipei City Government and Shilin District Head joined the event in person. Local citizens, students and parents also participated in the event enthusiastically. Nearly all activities were fully packed. This year, we organized an environmental experience tournament, aiming to strengthen environmental education by means of interesting games and defeating challenges. The whole event attracted about 3,933 participants. In the future, CTCI will continue the cooperation plan with Zhishan Cultural and Ecological Garden and combine the issues of environmental protection and energy saving with the activities and promote local culture so as to bring larger CSR effect into play. Honor Events: Community Participation

Award Description

Certificate of Appreciation by Taipei City Government

CTCI was awarded a certificate of appreciation by Taipei City Government for Supporting the Sheltered Workshop.

Certificate of Appreciation from the Wild Bird Society of Taipei

To foster regional development and improve the relationship between the enterprise and neighboring communities, we again cooperated with Zhishan Cultural and Ecological Garden to hold the “2015 Shilin International Cultural Festival : Scenic Zhishan,” and was awarded the Certificate of Appreciation from its management unit, the Wild Bird Society of Taipei.

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Certificate of Appreciation from Taipei Society for Traffic Safety

CTCI was awarded a certificate of appreciation by Taipei Society for Traffic Safety for sponsoring its annual meeting.

Appreciation Trophy from the Chinese Institute of Engineers

CTCI was awarded an appreciation trophy by the Chinese Institute of Engineers for sponsoring the 31st Sino-Japanese Modern Engineering and Technology Symposium.

(3) Contribution & Service to Society:

Over time we have been actively participating in engineering-related associations and institutes and public construction projects to contribute our engineering expertise and services. To us, it is very important to fulfill CSR by integrating our core expertise and advantages. In 2015, we participated in 47 engineering-related associations and institutes (71 for all subsidiaries and affiliates) and was the chairperson or supervisor of some of them. This way, we could promote the development of these associations and institutes with our professional knowledge and skills and thereby enhance the overall standard of the industry along with competitors. In order to encourage employees to improve related skills by participating in professional groups, we have established a subsidization mechanism. In 2015, we subsidized 810 employees to participate in respective professional groups with a total spending of NT$543,916 (including subsidiaries and affiliates). We aggressively participate in public constructions, aiming to enhance national development standard and bring citizens convenient life and transportation with the best construction quality, and thereby effectively accomplish the goal of energy conservation and carbon reduction. In public constructions, we engage in the MRT system, power plant and sewerage works. Although many projects are difficult in engineering, we make continuous breakthroughs and innovations to seek the optimal solutions. As a result, apart from winning approval from the government for engineering quality, we have made excellent contribution to Taiwan and other countries. Take resource recycling plants (or incineration plants) for example, ERBO operates eight incineration plants in Taiwan; each plant site created more than 60 local job opportunities, totally about 500 job opportunities in Taiwan for the employment of operation and maintenance personnel, security guards and janitors. In the annual repair period, these plants offer 60 more additional job opportunities for maintenance personnel. Altogether, we created more than 1,000 job opportunities a year. Honor Events :Social Contribution and Service

Award Description

Outstanding Engineer Award by by Chinese Institute of Engineers

CTCI EVP Mark W. H. Yang and VP C.F. Chiou were honored with Outstanding Engineer Award by Chinese Institute of Engineers.

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Prof. Yen-Ping Shih Engineering Paper Award

CTCI Senior Engineer I-Hua Chung was honored with Prof. Yen-Ping Shih Engineering Paper Award.

Outstanding Electrical Engineer Award by The Chinese Institute of Electrical Engineering

CTCI Associate Chief Engineer Yu-Chih Huang was honored with Outstanding Electrical Engineer Award by The Chinese Institute of Electrical Engineering.

Outstanding Contribution Award CTCI Assistant Chief Engineer Jia-Xing Wang was honored with 2015 “Outstanding Contribution Award” by Taiwan Welding Society.

Chemical Engineering Technology Award CTCI Assistant Chief Engineer Kuo-Fu Chuang received the 2015 Chemical Engineering Technology Award from the Taiwan Institute of Chemical Engineering.

Trophy for the 31st Sino-Japanese Modern Engineering and Technology Symposium

CTCI was awarded a trophy for sponsoring the 31st Sino-Japanese Modern Engineering and Technology Symposium.

(4) Social and Public Interests:

“To spend what is taken from society in the best interest of society” is a common Taiwanese saying. At CTCI, we have made it a reality, wholeheartedly. We provide a safe part-time job opportunity with learning value to the children of disadvantaged families. Besides relieving the financial pressure of these families, we broaden their career horizon and accumulate experience for them with our education and training system. In 2015, we offered 16 summer part-time job opportunities. To show concern for the disadvantaged in line with the “People with Disabilities Rights Protection Act,” we hire physically or mentally disabled citizens with working abilities. By the end of 2015, the number of physically or mentally disabled employees we have hired is 36. We also spare no effort to support disadvantaged groups. Besides inviting Genesis Social Welfare Foundation and Children Are Us Foundation to join and organize charity sales, we have established long-term cooperation with other social welfare groups. In 2011, we began cooperation with Children Are Us Foundation by organizing the Children Are Us Bakery Charity Sales at the headquarters every two weeks. The event earned tremendous employee support. As a result, employees bought bread from them vigorously to let those children feel the extra love and warmth from us. In the future, we will continue to organize charity sales and promote products for Children Are Us Foundation. We understand that these disadvantaged children need more than materials. They need job opportunities for them to walk out of their mishap, to grow in interpersonal interactions, and to earn respect and a sense of achievement. Whether it is cleaning work or bread charity sales, we always pay more concern to them voluntarily. As some employees said,

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“When we can pay, we suddenly discovered that we are that rich!” Information technology advances every day. We need to upgrade hardware and software equipment regularly to ensure computer-aided design (CAD) quality. Therefore, we donate the replaced computer equipment to social charity groups for continuous use in order to reduce environmental burdens and to contribute to education in Taiwan. Over the years, we have donated replaced computer equipment with the assistance of Triple E-Institute. After proper maintenance, Triple E delivers the equipment to the charity groups or individuals in need of them. In 2015, we donated a total of 82 PCs, 80 monitors, 2 printers, 262 laptops, and 2 servers. We promise that we will continue to participate in social welfare plans to enforce social concern and fulfill CSR. Honor Events : Social Concern

Awards Description

Certificate of Appreciation from Sunshine Social Welfare Foundation

CTCI received a Certificate of Appreciation from Sunshine Social Welfare Foundation for donating to victims of Formosa Fun Coast dust explosion incident for rehabilitation.

Certificate of Appreciation from Triple-E Institute

CTCI received a Certificate of Appreciation from Tripe-E Institute for supporting the second-hand computer recycling activity, “Your old computer, his new hope.”

Received a Letter of Appreciation from Taipei City Government

CTCI awarded by Taipei City Government for supporting the sheltered workshop.

Certificate of Appreciation from CPC CTCI was awarded a Certificate of Appreciation from CPC for Participation in Winter Charity Auction.

Certificate of Appreciation from Homeless Taiwan

CTCI was awarded a Certificate of Appreciation from Homeless Taiwan for donating laptops.

Certificate of Appreciation from Chingshan Egolife

CTCI was awarded a Certificate of Appreciation for sponsoring Chingshan Egolife orphanage.

(5) Consumer Rights and Interests:

Quality is one of the keys to sustainable operations and our most important commitment. We understand that however much cost we have saved and lead-time we have shortened, if we lose the trust of customers and the image and reputation of the corporation is damaged, nothing can compensate these. To ensure and assure quality, we have established the quality management system (QMS) for project management, design, procurement, construction, manufacture, commissioning and maintenance according to the ISO9001 International Standard so as to ensure the results of construction

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conform to the design and designated quality objectives. In fact, such quality management system already passed the certification in 1996 and has been effectively implemented. We value customer privacy. Apart from signing the Non-Disclosure Agreement with customers, we request all project members to follow the non-disclosure terms. The project manager is even requested to sign the Project Non-Disclosure Agreement. In 2015, no infringement of customer privacy of any kind or in any form or loss of customer data was reported. To show our great emphasis on information security and information security risk management, also to continuously satisfy our customers with the optimized security and high quality IT services, we set up a special project implementing ISO/IEC 27001 system and rebuilding Information Security Management System from June 2014. After several months of hard work, CTCI was successfully certified with zero non-conformity by British Standards Institute on December 12, 2014.We also set up various channels, including telephone lines, e-mail and fax lines, to facilitate customers to communicate with us. Furthermore, we have discovered, collected, responded to, processed, and collated customer feedback according to the Reinforcement of Customer Service Policy. We have also established the Customer Services Feedback Group chaired by the president to conduct the customer satisfaction survey on backlog or projects whose warranty is still valid on a biannual basis. The Customer Services Feedback Group will discuss and review the survey results, analyze the causes of problems and suggest improvement actions. After being reviewed and approved by the president, these improvement actions will be delivered to the relevant departments for implementation to ensure that project quality conforms to the customer requirements and expectations. In addition to the feedback of external customers, we started the internal customer satisfaction survey in 2009. We also conducted a contrastive study with results in the external customer satisfaction surveys to exactly locate the problems, advantages and disadvantages of the organization and thereby to improve implemental ability and service quality of various work items and to continuously enhance customer satisfaction. Honor Events : Consumer Rights and Interests

Awards Description

The 15th Public Construction Golden Quality Award

CTCI won the 15th Public Construction Golden Quality Award for CPC Talin Flare Gas Recovery System (FGRS) Project

2015 MOEA Public Construction Excellent Quality Award

CTCI won the 2015 MOEA Public Construction Excellent Quality Award for CPC Talin Flare Gas Recovery System (FGRS) Project

Excellent Performance Contractor Award from CPC

CTCI Won the annual Excellent Performance Contractor Award from CPC for excellent construction quality and safety record for Talin #10 SRU Project.

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Outstanding Engineering Award by the Chinese Institute of Engineers

Taipei MRT Xinyi Songshan Line Systemwide Electrical & Mechanical Work--Power Supply System Project contracted by CTCI won Outstanding Engineering Award by the Chinese Institute of Engineers.

(6) Human Rights:

Apart from what is specified in Social Welfare Protection (1), based on the Act of Gender Equality in Employment and the Regulations for Implementing Unpaid Parental Leave for Raising Children announced by the competent authorities, we have established the policy of “unpaid parental leave for raising children” in the Employee Handbook. According to our policy, employees, after working at CTCI for one full year, may apply for the unpaid parental leave for raising children for each child under 3 years of age until he/she is 3 years old; provided that the length of leave should not be longer than two years. In 2015, 26 employees applied for “unpaid parental leave for raising children” (including 16 female employees and 10 male employees). At present, we have outsourced the management of the CTCI Building to a professional property management company. In addition to the basic duty training, we have arranged education on human rights for the security guards. In the periodic training, we have also included the Unidentified Person Intrusion Standard Operating Procedure, Civilian Protest Standard Operating Procedure, CPR Administration Procedure, and Etiquette Education. Honor Events : Human Rights Protection

Awards Description

Certificate of Appreciation from Labor Affairs Department, New Taipei City Government

CTCI was awarded a certificate of appreciation for organizing the 5th Sepak Takraw and Songkran Festival in New Taipei City.

Awarded a Medal from Thailand Labor Affairs Department

Awarded a certificate of recognition for taking care of Thai laborers.

Taipei City Excellent Healthy Workplace Prize

CTCI was awarded Taipei City Excellent Healthy Workplace Prized to recognized its dedication and resolution to create a healthy workplace and improve upon employees’ health.

Certificate of Excellent Breastfeeding Room by Department of Health, Taipei City Government

CTCI headquarters building was awarded the Certificate of Excellent Breastfeeding Room by Department of Health, Taipei City Government (Duration: September 2013 to August 2016).

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(7) Safety, Health & Environment Management: The safety and health of employees, sub-contractors and customers and environmental protection are very important to us. Therefore, we have established an HSE management system according to the ISO 14001 and OHSAS 18001 international standards. Also, the president of CTCI proclaimed the organization’s HSE Policy Statement and implemented the new management system applicable to the office area at the headquarters to all project sites. CTCI HSE Policy was cosigned by CTCI President and heads of business operation units. Aside from requiring every colleague to comply with such policies, we also demonstrate our determination and emphasis on HSE. Every year, we also regularly hold HSE auditing. In the end of 2008, we further passed Taiwan Occupational Safety & Health Management System (TOSHMS) certification emphasizing labor participation, procurement safety management, contracting management etc. Since 2012, CNS 15506:2011 Occupational Safety and Health Management System Certificate had been implemented replacing TOSHMS. In November of 2014, we have passed review and successfully renewed HSE Management system certification which is due every three years. We have even established the Labor Safety and Health Committee with a total of 18 committee members while 6 of them are labor representatives (1/3). The committee holds a meeting every three months to review and discuss issues relating to labor safety and health management and communicates the results to all employees. In the engineering design phase for project execution, based on “Hazardous Work Place Review and Inspection Rules” and International Regulations (API, IEC), we conduct safety inspection reviews of work to improve operation safety and quality durability of the entire site. During construction for project, suppliers are requested to comply with the labor safety and health organization and personnel laws in the assembly work site and form a construction site labor safety and health organization to coordinate, communicate and resolve issues relating to labor safety and health of subcontractors and vendors. We also follow local laws and regulations when executing projects overseas. The QHSE Division of the headquarters draws up suitable management goals in accordance with the operation situation of the HSE management system every year. The execution progress of the goals set will be measured regularly and reported at the Management Review Meeting every quarter. In that way, the management level can allocate resources and make decisions according to the actual implementation status. Also, the overall HSE performance will be utilized as reference when setting up goals of the next year. With constant editing, we can set more effective goals and enhances the operation of HSE management system.To actually accomplish the annual HSE goals, we adopt various objectives to measure HSE performance at the project sites besides internal auditing. Considering the fact that the HSE performance at the project sites were only evaluated by HSE incident records as well as reward and punishment from external units, while management system, execution condition at the project sites, and corrective actions were not reviewed, the HSE Management Dept. hence formulated and optimized the HSE performance evaluation system for project site. Hopefully, the effectiveness and objectivity of the evaluation of the project HSE performance will be upgraded. To revise the evaluation indicators for HSE performance,

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except for consulting existing standards in CTCI and related indicators by Ministry of Labor and Public Construction Commission, we further combined international documents of HSE performance evaluation and examination standards for HSE rewards, and stipulated four major aspects to enhance the overall project HSE evaluation mechanism, including “management system,” “on-site execution,” “evaluation by project owners,” and “governing agencies.” Also, consulting to statistical model, we formulated respective weight of each indicator to enhance the effectiveness and objectivity of the overall evaluation mechanism for project HSE performance. Certifications CTCI has passed: 1. CNS 15506:2011 Occupational Safety and Health Management System Certificate 2. ISO 9001:2008 Quality Management System Certificate 3. OHSAS 18001:2007 HSE Management System Certificate 4. ISO 14001:2004 HSE Management System Certificate Honor Events : Quality, Health, Safety and Environment

Awards Description

Certificate of Accident Free Man-hours by Industrial Safety & Health Association of the ROC, Taiwan

CTCI Corp. participated in the Accident Free Man-hours activity hosted by Ministry of Labor and was award a Certificate of Accident Free Man-hours by Industrial Safety &Health Association of the ROC, Taiwan (with accumulated 33,891,274 accident free man-hours from Jan. 18, 2007 to Nov. 30, 2015).

Excellent Performance Award for Air Quality Purification Area Adoption by Environmental Protection Bureau of Tainan City Government

Tainan WtE Plant operated and managed by Environment & Resources Business Operations (ERBO) honored with the Excellent Performance Award for Air Quality Purification Area Adoption by Environmental Protection Bureau of Tainan City Government.

Silver and Bronze Medal from Environmental Protection Administration, Executive Yuan

Tainan Science Park Resource Recycling Center and Hsintien Refuse Incineration Plant operated and managed by ERBO were honored with ROC Enterprise Environmental Protection Silver and Bronze Medal from Environmental Protection Administration, Executive Yuan.

Award of 2015 Outstanding Environmental Protection Units from Southern Taiwan Science Park

Tainan Science Park Resource Recycling Center operated and managed by ERBO was recognized with Award of 2015 Outstanding Environmental Protection Units from Southern Taiwan Science Park.

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Premium and Excellence Awards in EPA 2014 Annual Appraisal

The result of 2014 appraisal held by Environmental Protection Administration, Executive Yuan has been announced. Keelung Plant won the premium award and Xindian Plant, Taonan Plant, Miaoli Plant, and Houli Plant were recognized with the excellence awards.

7. If the corporate social responsibility reports have received assurance from external institutions, they should state so below: In order to communicate with stakeholders and allow them to better understand our way of operation, we began publishing on an annual basis the CTCI Corporate Sustainability Report in 2008 to disclose the information concerning our materiality issues and according to the GRI Guidelines. We also regularly submit the report to the British Standards Institution (BSI) for verification. In fact, we are the first private business in Taiwan to have our CSR report pass the BSI verification. In the G4.0 Guidelines proclaimed in 2014, the GRI advised organizations that they should disclose information more comprehensively and more transparently. Upholding the attitude of being responsible and the spirit of information accessibility and transparency, we disclosed corporate information using the G4.0 Guidelines. Also, we passed the AA1000:2008 High Level accreditation from BSI and the GRI G4.0 Guidelines. All these point to one thing: We were a pioneer reporter using the GRI G4.0 Guidelines. In addition, to ensure that stakeholders at home and abroad can better understand the actual CSR activities at CTCI and to connect with the world, contents of this report also correspond to the Ten Principles of the UN Global Compact, the Seven Core Subjects in ISO2600:2010, and the Determination Items of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies. All these show that the CSR activities and information disclosed in this report are complete and transparent. With the concerted effort of Company’s managers and all employees, we won numerous awards and credits in 2015 to prove our achievements in promoting CSR. Honor Events : Corporate Social Responsibility

Awards Description

Emerging Markets Index Membership for Dow Jones Sustainability Indices (DJSI)

CTCI was selected for Emerging Markets Index Membership for DJSI with excellent performance and, therefore, became a pioneer enterprise in the field of Engineering & Construction Industry in Taiwan.

Ranked as Grade A++ in the Information Disclosure and Transparency Rankings for TWSE-listed and GTSM-listed Companies

CTCI has been performing rather well regarding information disclosure, and was awarded Grade A+ in 2010 and 2011, while the top ranking Grade A++ was issued from 2012 to 2015. Such an achievement demonstrates that CTCI’s efforts have been well recognized.

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Principles for

TWSE/GTSM Listed



Evaluated as Top 5% in the “2014 Corporate Governance Evaluation System”

CTCI was evaluated as top 5% of the TWSE listed companies and the Taipei Exchange (TPEx) listed companies.

Top 50 for Excellence in Corporate Social Responsibilities by CommonWealth Magazine

CTCI’s accomplishment of CSR activities was recognized by the CommonWealth Magazine, listed 29th among Top 50 of the Excellence in Corporate Social Responsibilities Award this year for the group of large enterprises (with annual turnover exceeding NT$10 billion). With good performance in the aspects of corporate governance, corporate commitment, social participation, and environmental protection, CTCI was able to stand out from various large enterprises and well-recognized with its achievement in corporate sustainability.

Listed among the Top 2000 Enterprises by CommonWealth Magazine and retains Top 1 in the contractor sector

The ranking of 2015 Taiwan's Top 2000 Enterprises was based on the consolidated revenues and profits of the companies for 2014, a result of the survey conducted by CommonWealth Magazine. In terms of the overall ranking in the Top 650 Service Enterprises, CTCI Corporation ranked as the 28th this year, retained Top 1 in the contractor sector for years in a row, and ranked as the 35th in the Top 50 Most Profitable Companies in the service sector.

BSI 2015 Green Enterprise Award With the determination and actions in carrying out sustainable development and fulfilling corporate social responsibilities, CTCI has been awarded 2015 Green Enterprise Award by BSI.

Recognized by the Taiwan Institute for Sustainable Energy (TAISE) with the Honor of Taiwan Corporate Sustainability Awards

CTCI is recognized by TAISE and honored with “Services Industry Silver Award” under the Taiwan Top 50 Corporate Sustainability Report Award, “Growth through Innovation Awards,” as well as “Transparency and Integrity Awards” in 2015. CTCI will continue to improve the transparency of corporate governance, build reliable quality engineering, and take care of employees to form a harmonious partnership, while also focusing on environmental protection, reduction of resources waste, corporate image enhancement and achieving sound financial performance to fulfill CSR.

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3.4.6 The Ethical Corporate Management

Evaluation Item

Implementation Status Deviations from “Ethical

Corporate Management Best Practice Principles for TWSE/GTSM-

Listed Companies” and reasons


1. Establishment of ethical corporate management policies and programs

(1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?

(2) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?

(3) Does the company establish appropriate precautions against high-potential unethical conducts or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?

V The Company established “Corporate Governance Principles”, “Ethical Corporate Management Best Practice Principles“, “Code of Ethics for Directors and Managers”, “Employee Code of Ethics and Conduct”, and “Procurement Personnel Code of Conduct”. Directors, and managers should obey the “Code of Ethics for Directors and Managers”, when they execute their function. All employees are requested to follow the laws and ethics standard and behavior principles clearly defined in “Employee Code of Ethics and Conduct”.

None

2. Fulfill operations integrity policy (1) Does the company evaluate business partners’

ethical records and include ethics-related clauses in business contracts?

(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity?

V The Company concluded the commerce contracts based on mutual trust and good faith management principles.

The Company assigned Human Resources Department to be in charge of corporate integrity related matter and report to the board meeting periodically.

It is forbidden to have preferential affairs between employee and party. All employees can’t pay or ask for present, entertainment, commission or bribe

None

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Evaluation Item





(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?

(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis?

(5) Does the company regularly hold internal and external educational trainings on operational integrity?

for the advantage of themselves or third party, when they conduct their work.

The Company set up effective and faultless accounting system and internal control program to manage out of ordinary affairs. The Company also set up a specialized independent audit unit to execute yearly auditing plans and report the audit results to supervisors every month. The audit unit also has to attend the Audit Committee and Board of Directors to report the faults and extraordinary affairs in their internal control inspection, and push related units to take modified measures and trace the results quarterly until they are fully- modified.

The principles of the Company are professionalism, integrity, teamwork and innovation. We delivered the related training coursed to train our employees and posted the poster at office and site to remind our employees as well.

3. Operation of the integrity channel (1) Does the company establish both a

reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?

(3) Does the company provide proper whistleblower protection?

V The Company has the Accusation management regulation with a special telephone line and an investigation team to deal with the graft and bribe events.

The Company has the regulation of Reward and Punishment to deal with the above cases.

None

4. Strengthening information disclosure (1) Does the company disclose its ethical corporate

management policies and the results of its

V The Company has disclosed the “Ethical Corporate Management Best Practice Principles” on its website and MOPS.

None

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Evaluation Item





implementation on the Company’s website and MOPS?

5. If the company has established its own ethical corporate principles based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, please describe the difference between operation practice and the ethical corporate principles: According to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, the Company has obtained the approval of the “Ethical Corporate Management Best Practice Principles” (the “Principle”) in the 5th meeting of the 13th term Board of Directors in December 17th, 2014. The all employees, officers and board members should comply with the Principle.

6. Other important information to facilitate understanding of the company’s good faith management implementation.(e.g. To announce the company’s determination to implement good faith management to business vendors, to invite vendors to participate in related education, and to review and revise the company’s ethical corporate management best practice principles) The Company strictly observed “Company Act”,” Securities and Exchange Act”, related rules for TWSE/GTSM-Listed Companies and other commerce ordinances to implement the good faith management. Review and revise the Company’s internal management principles including “Corporate Governance Principles”, “Ethical Corporate Management Best Practice Principles“, “Code of Ethics for Directors and Managers”, “Employee Code of Ethics and Conduct”, and “Procurement Personnel Code of Conduct” based on the development of ethical corporate management principles.

3.4.7 Corporate Governance Guidelines and Regulations

Please refer to the Company’s website at www.ctci.com.tw

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3.4.8 Other Important Information Regarding Corporate Governance A. Training program for directors

Title Name Study period

Sponsoring Organization Course Training

hours From To

Chairman John T. Yu 2015/08/07 2015/08/07

Taiwan Corporate Governance Association

Legal Liability of Directors and Supervisors arising in Mergers and Acquisitions

3.0

2015/11/06 2015/11/06 Taiwan Corporate Governance Association

Enterprise Group Governance 3.0

Vice Chairman

John H. Lin 2015/08/07 2015/08/07



3.0



Managing Director

Andy Sheu 2015/08/07 2015/08/07



3.0




Johnny Shih

2015/09/22 2015/09/22 Taiwan Academy of Banking and Finance

From Creation to Business Innovation 3.0


Capital Market Analysis, Responsibilities of Directors and Supervisors arising in Corporate Governance / Insider Trading

3.0


Jack Huang


Corporate Governance 2.0 3.5


Functional Responsibilities and Performance Appraisal of the Board of Directors

3.0

2015/06/26 2015/06/26 Taiwan Stock Exchange Corporation

「Corporate Governance、Financial

Supervision and Law」Seminar 6.0


How to Improve Efficacy of Board of Directors

3.0


Frank Fan 2015/08/07 2015/08/07



3.0



63

Director Quintin Wu 2015/08/21 2015/08/21

Securities & Futures Institute

Business Models and Regulations for Prevention：Starts with Corporate

Governance / integrity

3.0

2015/11/18 2015/11/18 Securities & Futures Institute

Master the trend of CSR and Corporate Governance to make winning opportunities

3.0

Director Yancey Hai 2015/08/07 2015/08/07



3.0


Hostile Takeover Case Study：ASE vs. SPIL 3.0

Director Wenent Pan 2015/01/22 2015/01/22

Securities & Futures Institute

「Corporate Social Responsibility –

Sustainable Values Reveal」Seminar 3.0


How CSR Drives Corporate Competitive Advantage

3.0

Director Bing Shen 2015/08/07 2015/08/07



3.0



Director Teng-Yaw Yu 2015/08/07 2015/08/07



3.0



B. Internal Material Information Disclosure Procedure

According to the letter of Financial Supervisory Commission dated March 16th, 2009 and consulting with “Internal Material Information Disclosure Procedure” which is announced by Taiwan Stock Exchange Corporation (TWSE), the Company has obtained the approval of the “Regulations Governing Prevention of Insider Trading” (the “Regulation”) in the 9th meeting of the 11th term Board of Directors in August 28th, 2009. The Regulation is the code of conduct for Directors, Supervisors, Managerial personnel, and the persons regulated under the Regulation and it includes the scope of Internal Material Information, and the laws, regulations, orders that people forenamed should comply with. The Company has provided the Regulation to all Directors and Supervisors, and also disseminates all employees.

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C. Code of Business Conduct and Ethics for the Board of Directors and Managers

CTCI CORPORATION

Code of Business Conduct and Ethics for the Board of Directors and Managers Amended on December 19

th, 2007

Amended on August 8th

, 2014

Article 1 (Objectives & Basis) This Code is formulated and approved by the Board of Directors pursuant to Article 6 of the Company’s Regulations on Corporate Governance in the greatest interest of the Company and for its sustained development, as well as to allow parties with interest in the company understand the ethical and behavioral standards for the Board of Directors and Managers.

Article 2 (Scope) Managers herein shall refer to all officers with the rank of Vice President and above, and Heads of the Finance and Accounting Departments.

Article 3 (Duty of Care) Directors and Managers shall comply with the law and provisions of this Code and shall lead by example in promoting the implementation of this Code and pursuing the highest ethical and behavioral standards. Directors and Managers shall have a duty of care during the performance of their duties; furthermore they shall not harm the rights and interests of the company for the benefit of any specific individual or organization, but shall aim to pursue the Company’s overall interest. All shareholders shall be treated equally during the exercise of their duties by the aforesaid.

Article 4 (Prevention of conflict of interest) Where the motions/issues tabled in the Board of Directors’ meetings are related to the interest of a Director which may pose a risk to the interest of the company, the said Director shall recuse himself from voting; furthermore he shall not represent other Directors in the exercise of their voting rights. Directors and Managers who enter into sale and purchase deals or loans or engage in other legal actions for themselves or on behalf of others should reveal the relevant items and issues and provide explanations to the Audit Committee.

Article 5 (Prohibition of Business Competition) Directors engaging in businesses which are in competition with those of the Company shall give prior report to the Shareholders’ Assembly and obtain approval in accordance with the provisions of the Company Law; Managers engaging in businesses which are in competition with those of the Company shall give prior report to the Board of Directors and obtain prior approval in accordance with the provisions of the Company Law.

Article 6 (Prevention of Personal Benefits) Any information obtained by Directors and Managers during the execution of their duties in relation to procurement, supply, business cooperation, strategic alliance or other business opportunities or other opportunities of profits shall be provided to the company as a matter of priority so as to maintain the interests of the company; the same shall not be used for personal or third-party gains.

Article 7 (Fair Trading) Directors and Managers should treat all counterparties and its workers fairly. They are prohibited from obtaining information through manipulation, non-disclosure and abuse of powers and from making false representations or from undertaking other unfair trading practice to obtain irregular benefits.

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Article 8 (Insider Trading) Directors and Managers who in the course of work have access to information which may have a serious impact on the Company’s share price, shall maintain strict confidentiality of the said information prior to its public disclosure in accordance with the Securities Trading Act; utilization of the said information for insider trading is strictly prohibited.

Article 9 (Duty of Confidentiality) Directors and Managers who in the course of work have access to confidential information shall maintain the same. Save where the said confidential information has been publicly disclosed or provided on a need-to-know basis in the execution of work, they shall not disclose the said confidential information to anyone or use the same for any non work-related purposes. The duty of confidentiality shall continue to apply after the termination of the service of the Directors, Supervisors and Managers. Information which should be kept confidential includes all staff and customer information, inventions, trade secrets, technical information, product designs, specialized manufacturing knowledge, financial and accounting information, intellectual property rights and other relevant undisclosed information which may be useful to competitors or which may cause harm to the Company or its customers upon the disclosure of the same.

Article 10 (Protection and Appropriate Use of Company Assets) Directors and Managers shall have the duty to protect the Company’s assets and shall ensure the appropriate and lawful use of such assets in the Company’s business to prevent affecting the profitability of the business.

Article 11 (Compliance with the Law) Directors and Mangers shall comply with the law and the relevant Company policies and rules.

Article 12 (Political donations and activities) Directors and Managers shall in every way avoid influencing company staff in respect of political donations, supporting specific political parties and/or candidates or their participation in other political activities.

Article 13 The company should strengthen internal propagation of work ethics and encourage employees to report any cases of violations and the person(s) involved. The identity of the reporter shall be protected and kept confidential by the company to prevent any possible threats.

Article 14 (Violations) Directors and Managers shall refer all violations to the Corporate Governance Committee for its deliberation; incidents of severe violations shall be submitted to the Board of Directors for its deliberations. The persons concerned may make representations and appeals to the Company’s Corporate Governance Committee.

Article 15 (Procedures for waiver) Directors and Managers may be exempted from being subjected to the regulations as stated herein, if they have valid reasons, subject to the approval by the Board.

Article 16 (Implementation and Disclosure Methods) The Code shall be implemented after the board of directors grants the approval. The same procedure shall be followed when the Code has been amended.

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D. Accusation Management Regulations

CTCI CORPORATION

Accusation Management Regulations

1.0 Purpose This regulation is specially formulated in order to effectively control the accusation case of the company and establish smooth accusation channel and fair investigation procedure, so as to prevent blackmail and correct possible undue behavior.

2.0 Scope

2.1 Accuser Including official, contracted and dispatched in-service employee of the company, however, if external personnel of the company finds any significant malpractice, such personnel can be included as accuser.

2.2 Scope of accusation Accusation may be proposed if the accused object violates laws and decrees, rules and regulations of the company, or has other undue behaviors affecting the rights and interests of the company.

3.0 Definition

3.1 Individual accusation A employee proposes real-name accusation independently in his/her own name.

3.2 Joint accusation Two (inclusive) or more employees propose real-name accusation jointly.

3.3 Blackmail The accusation letter proposed anonymously.

4.0 Responsibility

4.1 Human Resources Department Responsible for accepting accusation case and proposing suggestion on preliminary examination, sending the case for Rewards and Punishment Committee for hearing, and handing subsequent matters thereof according to hearing result.

4.2 Investigation group The trans-department group formed by the members as approved by Rewards and Punishment Committee, which will be responsible for investigating whether the accusation contents are true and proposing investigation report.

4.3 Rewards and Punishment Committee Responsible for hearing the accusation case preliminary examination proposal and accusation case investigation report, and proposing suggestions on punishment.

4.4 Each Department Relevant personnel of each department shall coordinate to assist investigation group to execute relevant investigation works.

5.0 Activity

5.1 Operation procedure Subject to Attachment 1 - Flow Chart of this Regulation.

5.2 Accusation The accuser shall fill in "Accusation Letter" (Attachment 2), the accusation matter must conform to the scope as prescribed in Article 2.2 hereof, besides, accuser shall provide specific descriptions and relevant evidences on the concerned person, matter, time, place and object etc., and submit the such letter to the special accusation e-mail box of Human Resources Department or send it in confidential paper copy. Employee may use accusation special line to

67

report the accusation case, provided such employee shall still provide relevant accusation documents and evidences as mentioned above. When accepting joint accusation, it will be handled as single case, and representative shall be elected upon accusation for the convenience of contact. When the accusation case comes from outside the company, the unit or employee that receiving the accusation materials shall submit the complete accusation materials to Human Resources Department at first time for subsequent handling, if the affiliated department of accused object has any concealment or delay that causing impact on the handling time and affecting the rights and interests of the company, it shall be punished according to relevant regulations of the company.

5.3 Case acceptance After Human Resources Department has accepted the accusation case, if necessary, it may ask the accuser to supplement relevant descriptions or evidences, conduct preliminary examination according to relevant contents of accusation materials, propose suggestions on whether or not to establish trans-department investigation group for investigation, fill in "Accusation Preliminary Examination Proposal" (Attachment 3) ans submit it to CTCI Rewards and Punishment Committee together with other case materials for review and approve whether or not to open a case for investigation. If it is not belong to the scope of accusation or the evidences proposed by accuser are not detailed and true, Human Resources Department shall ask the accuser for supplement. If the accusation case is blackmail, Human Resources Department may not handle it.

5.4 Investigation If the CTCI Rewards and Punishment Committee decides to open a case for investigation, it shall designate relevant unit representatives to form investigation group and assign group convenor to start investigation according to the situation of accusation case. In the course of investigation, Human Resources Department shall inform relevant units that shall cooperate to assist in investigation according to the investigation plan of the investigation group. When necessary, investigation group may interview relevant personnel or ask relevant personnel to provide relevant materials to assist in investigation. After the completion of investigation, investigation group shall submit investigation report to Human Resources Department.

5.5 Punishment After Human Resources Department has received the investigation report, it shall convene the meeting of Rewards and Punishment Committee pursuant to "CTCI Employees Reward and Punishment Regulations" to hear the accusation case, and propose punishment suggestions according to the preceding Regulation. Then Human Resources Department will submit the complete report contents to the Chairman for review and decision.

5.6 Response For any accusation case, Human Resources Department shall respond to the accuser in writing on the handling result thereof. For false accusation or fling abuses, the responding content shall include the reminder on relevant legal responsibility.

5.7 Confidentiality obligation Responsible employee of Human Resources Department and all members of Rewards and Punishment Committee and investigation group shall bear confidentiality obligation for the materials of accuser.

6.0 Reference document

CP-319-B CTCI Employees Reward and Punishment Regulations 7.0 Attachment

Attachment 1 Work Flow Chart Attachment 2 Accusation Letter Attachment 3 Accusation Preliminary Examination Proposal

68

3.4.9 Internal Control System A. Statement of Internal Control System

69

B. Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report: None

3.4.10 In Recent Years until the Annual Report being Published, Violation of Internal Control Policies

by Employees：None

3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings A. Major resolutions of Shareholders’ Meeting of Year 2015

Date Resolutions of Shareholders’ Meeting Action Arisen

2015.06.22

1. Adoption of the Company’s 2014 Business Report, Financial Statements and Consolidated Financial Statements.

The resolution has been made and implemented.

2. Adoption of the Company’s distribution plan of 2014 earnings

The ex-dividend date was on August 3rd, 2015, and cash dividend was paid on August 21st, 2015. In accordance with the total amount of common shares outstanding, the cash dividend per share had been adjusted to NT$ 2.23344690 actually.

B. Major resolutions of the Board Meeting in recent years until the annual report being published: 2015.03.17 Approval of the Fiscal 2014 business report, financial reports and consolidated reports.

Approval of the distribution plan of Fiscal 2014 earnings. Approval of “Statement of Internal Control System for the Year 2014”. Approval of the convening of the 2015 Annual General Meeting. Approval of the update of the Company’s paid-in capital registration. Approval on loans to subsidiaries for working capital requirement granted by the

Company. Approval of the adjustment of a managerial officer of the Company. Approval of the removing the non-competition restrictions on a new managerial

officer. 2015.05.08 Report on Consolidated financial reports as of March 31, 2015.

Approval of the update of the Company’s paid-in capital registration. 2015.06.22 Approval of the ex-dividend record date of 2014.

Approval of the increase of employee’s monthly meal allowance. 2015.08.07 Report on Consolidated financial reports as of June 30, 2015

Approval of the update of the Company’s paid-in capital registration. Approval on loans to subsidiaries for working capital requirement granted by the

Company.

2015.11.06 Report on Consolidated financial reports as of September 30, 2015 Approval of increase shareholding ratio of CCJV P1 E&C Sdn. Bhd. Approval on loans to subsidiaries for working capital requirement granted by the

Company. Approval of the CTCI Education Foundation scheduled to be established in 2016 Approval of the incorporation of a joint venture in Malaysia. Approval of the incorporation of a joint venture and a branch in the Netherlands as

well as the incorporation of a branch in Oman. Approval of the update of the Company’s paid-in capital registration.

2015.12.18 Approval of the budget of 2016. Approval of the Year 2016 Audit Plan. Approval on loans to subsidiaries for working capital requirement granted by the

Company.

70

Approval of the incorporation of a joint venture in Italy. Approval of the prescription/amendment to the Company’s “Internal Control Systems”

and the internal rules.

Approval of the “Plan for Improving Capability of Producing Financial Report”. Approval of the adjustment of managerial officers of the Company. Approval of the average salary increase rate of 2016. Approval of enhance employee incentive programs. Approval of the remuneration of the management officers of the Company. Approval of the amendment to the remuneration of the Chairman and Vice Chairman

of the Company. 2016.03.18 Approval of amendment to the “Articles of Incorporation” of the Company.

Approval of the distribution plan of the 2015 directors’ and employees’ remuneration. Approval of the Fiscal 2015 business report, financial reports and consolidated reports. Approval of the distribution plan of Fiscal 2015 earnings.

Approval of “Statement of Internal Control System for the Year 2015”. Approval on loans to subsidiaries for working capital requirement granted by the

Company. Approval of the convening of the 2016 Annual General Meeting. Approval of the update of the Company’s paid-in capital registration. Approval of the adjustment of member and assistants of the Functional Committee.

3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to

Important Resolutions Passed by the Board of Directors None

3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, President,

and Heads of Accounting, Finance, Internal Audit and R&D None

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3.5 Professional fee of CPA 3.5.1 Information of CPA

Accounting Firm Name of CPA Audit Period Note

PriceWaterHouseCoopers Shyh-Rong Ueng Huei-Shyang Wang 2015.01.01-2015.12.31 -

3.5.2 Scale of professional fee of CPA Unit: NT$ thousands

Item Amount (NTD)

Audit Fee Non-audit Fee Total

1 Less than 2,000

2 2,000 ~ 4,000 (inclusive of 2,000) 2,314 2,314

3 4,000 ~ 6,000 (inclusive of 4,000) 5,664

5,664 4 6,000 ~ 8,000 (inclusive of 6,000)

5 8,000 ~ 10,000 (inclusive of 8,000)

6 More than 10,000 (inclusive of 10,000)

Unit: NT$ thousands

Accounting Firm Name of CPA Audit Fee

Non-audit Fee

Audit Period Note System Design

Registration Human

Resource Other

(Note1) Total

PriceWaterHouseCoopers Shyh-Rong Ueng

5,664 510 574 0 1,230 2,314 2015.01.01~2015.12.31

Note 1 Huei-Shyang Wang 2015.01.01~2015.12.31

Note 1: The (other) professional fees except audit fee include: transfer-pricing report NT$680 thousand, translation fee of financial reports NT$550 thousand. Note 2: In the event that the CPA firm is changed and the audit fees paid by the company in the concurrent year are lower than the preceding year: None Note 3: In the event that the audit fees paid by the company are reduced by 15% compared to the preceding year: None 3.6 Information on replacement of CPA : None 3.7 The Company's Chairman, President and Managers Responsible for Finance or Accounting who have Held a Post in the CPA Office or its Affiliated

within the Latest Year : None

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3.8 Changes in Shareholding of Directors, Managers and Major Shareholders Unit: Share

Title Name

2015 As of April 30, 2016

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Chairman

GRQ Investment Corporation

0 0 0 0

Representative: John T. Yu

(2,370,000) 0 0 0

Vice Chairman

Innovest Investment Corporation

0 0 0 0

Representative: John H. Lin

(950,000) 0 0 0

Managing Director

Sino Environmental Services Corporation

0 0 0 0

Representative: Andy Sheu

(132,000) 0 230,000 0


Johnny Shih 0 0 0 0


Jack Huang 0 0 0 0


Frank Fan 0 0 0 0

Director Quintin Wu 0 0 0 0

Director Yancey Hai 0 0 0 0

Director Leslie Koo 0 0 0 0

Director Wenent Pan 0 0 0 0

Director Bing Shen 0 0 0 0

Director

Crown Asia 2 Investment Limited

0 0 0 0

Representative: Takao Kamiji Note1

0 0 0 0

Representative: Michael Yang Note2

0 0 0 0

Director

CTCI Foundation 0 0 0 0

Representative: Teng-Yaw Yu

0 0 0 0

Managerial Officers John T. Yu (2,370,000) 0 0 0

Managerial Officers John H. Lin (950,000) 0 0 0

Managerial Officers Andy Sheu (132,000) 0 230,000 0

Managerial Officers Michael Yang (263,597) 0 (61,750) 0

Managerial Officers Mark W. H. Yang (150,000) 0 120,000 0

Managerial Officers M. H. Wang (152,181) 0 10,000 0

Managerial Officers Pao-Yao Pan (296,500) 0 0 0

Managerial Officers Ming-Cheng Hsiao (26,000) 0 0 0

Managerial Officers Tien-Nan PanNote3 (181,863) 0 0 0

Managerial Officers Ching-Lin Hsu (254,949) 0 0 0

Managerial Officers Andrew Tsai (204,575) 0 20,250 0

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Managerial Officers Brad Chen Note4 14,000 0 0 0

Managerial Officers Jung-Yu Han (176,500) 0 0 0

Managerial Officers Chen-San Hu 19,500 0 0 0

Managerial Officers Todd Chen 24,500 0 0 0

Managerial Officers Kai LeeNote5 (278,250) 0 0 0

Managerial Officers C. F. ChiouNote6 7,000 0 0 0

Managerial Officers Teh-Ming Tao 22,000 0 48,000 0

Managerial Officers Steve Jean (125,500) 0 0 0

Managerial Officers M. G. Lee (80,029) 0 0 0

Managerial Officers Po-Chien Wang 19,000 0 2,000 0

Managerial Officers Ching-Hsiang Tseng 20,000 0 0 0

Managerial Officers Shen-Peng Liao (141,289) 0 0 0

Managerial Officers Tsai-Ming Wang 10,000 0 23,000 0

Managerial Officers Min-Li Lee 9,250 0 0 0

Managerial Officers Jing-Shing Wu 19,500 0 0 0

Managerial Officers J.H. Chen Note7 12,000 0 12,000 0

Managerial Officers Y. S. Liao Note8 9,500 0 0 0

Managerial Officers & CFO

Patrick Lin (208,000) 0 48,000 0

Accounting Officer SH Lin (153,649) 0 5,000 0

Note1: Be Dismissed on March 7, 2016 Note2: On Board on March 7, 2016 Note3: On Dismissed on January 4, 2016 Note4: Be Dismissed on April 1, 2015 Note5: Be Dismissed on October 6, 2015 Note6: Be Dismissed on November 15, 2015 Note7: On Board on January 5, 2015 Note8: On Board on March 12, 2015

74

3.8.1 Shares Trading with Related Parties Unit: Share

3.8.2 Shares Pledge with Related Parties

None

Name Reason

for Transfer

Date of Transaction

Transferee

Relationship between Transferee

and Directors, Supervisors,

Managers and Major Shareholders

Shares Transaction Price (NT$)

Ching-Lin Hsu Donation 2015.04.23 Jui-Je Hsieh Spouse 300,199 NA

John T. Yu Donation 2015.05.27 Hsiao-Yen Hsu Spouse 2,000,000 NA

Michael Yang Donation 2015.06.01 Chih-Min Lo Spouse 275,347 NA

John H. Lin Donation 2015.06.23 Li-Hua Hsu Spouse 450,000 NA

M. H. Wang Donation 2015.06.23 Su-Hua Wu Spouse 187,181 NA

Mark W. H. Yang

Donation 2015.07.03 Ping-Ping Cheng Spouse 150,000 NA

Pao-Yao Pan Donation 2015.07.06 Yueh-Hsiang

Cheng Spouse 310,000 NA

Ming-Cheng Hsiao

Donation 2015.07.09 Hsing-Liang

Hsieh Spouse 26,000 NA

Patrick Lin Donation 2015.07.13 Hui-Tzu Lin Spouse 240,000 NA

Kai Lee Donation 2015.07.13 I-Fen Liu Spouse 207,000 NA

Steve Jean Donation 2015.07.13 I-Fen Lin Spouse 140,000 NA

Andrew Tsai Donation 2015.07.14 Chung-Ying

Wang Spouse 229,575 NA

Tien-Nan Pan Donation 2015.07.16 Yueh-E Tseng Spouse 437,863 NA

SH Lin Donation 2015.07.17 Chih-Chuan Liu Spouse 153,649 NA

Jung-Yu Han Donation 2015.07.21 Kuei-Fen Chiu Spouse 192,000 NA

Shen-Peng Liao Donation 2015.07.22 Shu-Mei Cheng Spouse 163,289 NA

M. G. Lee Donation 2015.11.13 Shu-Ling Chou Spouse 103,029 NA

Michael Yang Donation 2015.01.22 Chih-Min Lo Spouse 61,750 NA

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3.9 Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

Name Shareholding

Spouse & Minor


Arrangement

The relationship between any of the Company’s Top Ten Shareholders

Remarks

Shares % Shares % Shares % Name Relation

Chiyoda Corporation

69,994,000 9.17 0 0 0 0 None None

Chinatrust Commercial Bank Trust

61,735,112 8.09 0 0 0 0 None None

CTCI Foundation 60,862,051 7.97 0 0 0 0 None None

Fubon Life Insurance Co., Ltd.

44,265,000 5.80 0 0 0 0 None None

Chairman: Oliver Cheng

0 0 0 0 0 0 None None

Cathay Life Insurance Co., Ltd.

17,508,000 2.29 0 0 0 0 None None

Chairman: Hong-Tu Tsai

0 0 0 0 0 0 None None

American Funds Developing World Growth and Income Fund

16,667,000 2.18 0 0 0 0 None None

Chunghwa Post Co., Ltd.

16,322,000 2.14 0 0 0 0 None None

Chairman: Wen-Chi Weng

0 0 0 0 0 0 None None

USI Corporation 15,180,656 1.99 0 0 0 0 Asia

Polymer Corporation

Subordinate company of

USI Corporation’s

subsidiary

Chairman: Quintin Wu

0 0 0 0 0 0 Asia

Polymer Corporation

Chairman of Asia Polymer Corporation

Asia Polymer Corporation

14,496,107 1.90 0 0 0 0 USI

Corporation

Parent company of

Asia Polymer Corporation’s shareholder

Chairman: Quintin Wu

0 0 0 0 0 0 USI

Corporation

Chairman of USI

Corporation

KGI Bank 14,372,000 1.88 0 0 0 0 None None

Chairman: Mark Wei

0 0 0 0 0 0 None None

76

3.10 Shareholdings of the Company Directors, Supervisors, Managements, and Direct and Indirect Investments of the Company in Affiliated Companies

As of April 30, 2016

Affiliated Company

Investment of the Company

Directors, Supervisors,

Managements Direct and Indirect

Investment of the Company

Total Investment

Share % Share % Share %

E&C Engineering Corporation 59,098,624 97.09 99,841 0.16 59,198,465 97.25

Resources Engineering Services Inc.

16,765,048 93.14 1,000 0.01 16,766,048 93.15

Advanced Control & Systems Inc. 11,444,842 48.72 338,833 1.44 11,783,675 50.16

GRQ Investment Corporation 169,000,000 100.00 0 0.00 169,000,000 100.00

Innovest Investment Corporation 114,000,000 100.00 0 0.00 114,000,000 100.00

KD Holding Corporation 38,457,105 58.05 306,957 0.46 38,764,062 58.51

CTCI (Thailand) Co., Ltd. 1,249,500 49.00 1,300,500 51.00 2,550,000 100.00

CTCI Overseas (BVI) Corporation 6,740,000 100.00 0 0.00 6,740,000 100.00

CTCI Engineering & Construction Sdn. Bhd.

450,000 60.00 300,000 40.00 750,000 100.00

CTCI Arabia Ltd. 500 50.00 500 50.00 1,000 100.00

CTCI Machinery Corporation 20,000,000 100.00 0 0.00 20,000,000 100.00

SINOGAL - Waste Services Co., Ltd. *0 30.00 *0 30.00 0 60.00

CTCI Americas, Inc. 100,000 100.00 0 0.00 100,000 100.00

Pan Asia Corporation 39,219,509 34.27 0 0.00 39,219,509 34.27

CTCI Singapore Pte., Ltd. 5,100,000 100.00 0 0.00 5,100,000 100.00

CTCI & Partners Co., Ltd. 2,000,000 40.00 3,000,000 60.00 5,000,000 100.00

CCJV P1 Engineering & Construction Sdn. Bhd.

247,500 99.00 2,500 1.00 250,000 100.00

*SINOGAL - Waste Services Co., Ltd. doesn’t issue any stock related certificates.

77

IV. Capital Overview 4.1 Capital and Shares 4.1.1 Source of Capital A. Issued Shares


Year /Month

Par Value (NT$)

Authorized Capital Paid-in Capital Remark

Shares Amount

(NT$) Shares

Amount (NT$)

Sources of Capital

Capital Increased

by Assets Other

than Cash

Other

1997.07 10 300,000,000 3,000,000,000 288,417,000 2,884,170,000 Retained Earnings

None

1998.07~

2000.06 10 520,000,000 5,200,000,000 476,000,000 4,760,000,000

Retained Earnings

None

2001.06 10 720,000,000 7,200,000,000 547,600,000 5,476,000,000 Retained Earnings

None

2003.12~

2004.03 23.38 720,000,000 7,200,000,000 571,620,484 5,716,204,840 ECB None

2004.08~

2006.08 10 720,000,000 7,200,000,000 598,000,000 5,980,000,000

Retained Earnings

None

2007.09~

2008.08 10 900,000,000 9,000,000,000 631,438,000 6,314,380,000

Retained Earnings

None

2010.01~

2011.04 10 900,000,000 9,000,000,000 698,666,648 6,986,666,480 CB & ESOP None

2011.07~

2014.12 10 900,000,000 9,000,000,000 755,945,348 7,559,453,480 ESOP None

2015.04 10 900,000,000 9,000,000,000 757,530,348 7,575,303,480 ESOP None Note 1

2015.06 10 900,000,000 9,000,000,000 758,645,098 7,586,450,980 ESOP None Note 2

2015.08 10 900,000,000 9,000,000,000 759,959,098 7,599,590,980 ESOP None Note 3

2015.12 10 900,000,000 9,000,000,000 760,508,848 7,605,088,480 ESOP None Note 4

2016.04 10 900,000,000 9,000,000,000 761,107,598 7,611,075,980 ESOP None Note 5

Note 1: 2015.04.19 MOEA Ruling Ref.No. 10401061210 Note 2: 2015.06.03 MOEA Ruling Ref.No. 10401101020 Note 3: 2015.08.25 MOEA Ruling Ref.No. 10401182450 Note 4: 2015.12.01 MOEA Ruling Ref.No. 10401251700 Note 5: 2016.04.13 MOEA Ruling Ref.No. 10501068390

B. Type of Stock

Share Type Authorized Capital

Remarks Issued Shares Un-issued Shares Total Shares

Common Share 761,107,598 138,892,402 900,000,000 Listed stock

78

4.1.2 Status of Shareholders As of April 24, 2016

Item Government

Agencies Financial

Institutions

Other Juridical Person

Domestic Natural Persons

Foreign Institutions & Natural Persons

Total

Number of Shareholders

0 50 76 21,349 291 21,766

Shareholding (shares)

0 188,010,968 149,534,262 111,189,642 314,538,976 763,273,848

Percentage (%) 0.00 24.63 19.59 14.57 41.21 100

4.1.3 Shareholding Distribution Status

Common Shares (The par value for each share is NT$10) As of April 24, 2016

Class of Shareholding (Unit : Share)

Number of Shareholders

Shareholding (Shares) Percentage (%)

1 ~ 999 8,951 2,044,321 0.27

1,000 ~ 5,000 8,822 19,249,658 2.52

5,001 ~ 10,000 1,787 13,406,447 1.76

10,001 ~ 15,000 619 7,650,757 1.00

15,001 ~ 20,000 351 6,359,577 0.83

20,001 ~ 30,000 378 9,388,741 1.23

30,001 ~ 40,000 171 6,009,392 0.79

40,001 ~ 50,000 107 4,855,800 0.64

50,001 ~ 100,000 224 15,818,161 2.07

100,001 ~ 200,000 139 18,939,568 2.48

200,001 ~ 400,000 71 20,491,340 2.68

400,001 ~ 600,000 41 20,635,827 2.70

600,001 ~ 800,000 15 10,312,136 1.35

800,001 ~ 1,000,000 15 13,664,360 1.79

1,000,001 or over 75 594,447,763 77.89

Total 21,766 763,273,848 100.00

4.1.4 List of Major Shareholders


Shareholder's Name Shareholding

Shares Percentage (%)

Chiyoda Corporation 69,994,000 9.17

Chinatrust Commercial Bank Trust 61,735,112 8.09

CTCI Foundation 60,862,051 7.97

Fubon Life Insurance Co., Ltd. 44,265,000 5.80

Cathay Life Insurance Co., Ltd. 17,508,000 2.29

American Funds Developing World Growth and Income Fund 16,667,000 2.18

Chunghwa Post Co., Ltd. 16,322,000 2.14

USI Corporation 15,180,656 1.99

Asia Polymer Corporation 14,496,107 1.90

KGI Bank 14,372,000 1.88

79

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Item 2015 2014 As of March 31, 2016

Market Price per Share

Highest Market Price 55.50 56.00 45.80

Lowest Market Price 33.05 39.70 34.60

Average Market Price 46.57 48.93 38.56

Net Worth per Share

Before Distribution 22.45 22.53 23.04

After Distribution 20.04 20.27 NA

Earnings per Share

Weighted Average Shares 758,195 750,959 760,360

Diluted Earnings Per Share 2.69 2.79 0.62

Dividends per Share

Cash Dividends 2.40 2.2334469 NA

Stock Dividends

Dividends from Retained Earnings 0 0 0

Dividends from Capital Surplus 0 0 0

Accumulated Undistributed Dividends 0 0 0

Return on Investment

Price / Earnings Ratio 17.31 17.54 15.55

Price / Dividend Ratio 19.40 21.91 NA

Cash Dividend Yield Rate 0.05 0.05 NA Note 1: The Board of Directors has approved the 2015 earnings distribution and has not been

resolved by the Shareholder’s Resolution in 2016 Note 2: Financial Report was reviewed by CPA in March 31, 2016 4.1.6 Dividend Policy and Implementation Status A. Dividend Policies under Articles of Incorporation

When net profit occurs in the annual accounts, the Company shall first pay the profit-seeking enterprise income taxes and offset its losses in previous years and set aside a legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has equaled the total capital of the Company; then set aside a special capital reserve in the amount equivalent to the balance of shareholders’ equity deficit of the current fiscal year. After having paid the corporate taxes and off-set past losses, 10% of the profit earned by the Company of each fiscal year shall be set aside as statutory reserve, except where such reserve has reached the total authorized capital of the Company. Furthermore, a special reserve shall be set aside. If there is recovery of the balance of shareholders’ equity deficit, the recovered amount shall be included in the distribution of the profit for the current year. The allocable profit for the current year, which is the balance after the profit distribution and covering losses aforementioned, together with the cumulative undistributed profit of the previous year shall be referred to as cumulative allocable profit, which shall be distributed according to shareholders’ resolutions. In order to meet the requirements in business expansion and industry growth, fulfilling future operating needs and stabilizing financial structure is the priority of the Company's dividend policy. Thus, the distribution of the cumulative allocable profit according to the shareholders’ resolutions Besides, the amount of shareholders’ bonus shall not be less than 50% of cumulative allocable profit of the Company, in particular cash dividend shall not be less than 20%.

80

B. Proposed Distribution of Dividend: Cash dividend: NT$2.40 per share C. The Company adopts a dividend policy of high earnings appropriation rate, and stipulates that at

least 80% of total attributable earnings should be appropriated as dividends. In recent years, the Company distributes all of its dividends in the form of cash. Historical information about dividends distribution is available on the Company’s website.

4.1.7 Impact of Stock Dividend Distribution on Business Performance, EPS and Return on

Investment: Not Applicable. 4.1.8 Employee and Directors' Remuneration A. Information Relating to Employee and Directors’ Remuneration in the Articles of Incorporation

When net profit occurs in the annual accounts, the Company may, after reserving a sufficient amount of the income before tax to cover the accumulated losses, with the resolution of the board of directors, distribute 1.5%~5% of the income before tax to pay to the employees as remuneration, and distribute no more than 1.5% of the income before tax to pay to the board of directors as remuneration. The remuneration could be stock or cash, and the employee remuneration could be distributed to the employees of subsidiaries of the Company under certain conditions. A report of the distribution of employee remuneration or the board of directors remuneration shall be submitted to the shareholders’ meeting.

B. The estimation basis on remuneration to Employees and Directors, the calculating basis on the

number of shares for share bonus and accounting treatment for the differences between the actual distributing amounts and estimations: Estimation of employee and Directors’ remuneration is based on prior experience and is recognized as current expenses. In case of a significant change (per Article 6 of Securities and Exchange Act Enforcement Rules, the amount is over NT$10,000 thousand while reaching 1% of audited net operating revenue or 5% of paid-in capital), the expense shall be adjusted accordingly in the year where the employee bonus was recorded. When the change is not significant, it shall be recorded in the following year as change in accounting estimation. If the amount remains variable at the date of Shareholders’ meeting in the following year, it shall be recorded in the following year as change in accounting estimation.

C. Profit Distribution of Year 2015 Approved in Board of Directors Meeting for Employee and

Directors’ Remuneration a. Recommended Distribution of Directors’ Remuneration is NT$ 15 million, and Employee

Remuneration in cash is NT$55.111 million. b. Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings: N/A c. Recounted EPS after Recommended Distribution of Employee and Directors’ and Supervisors’

Remuneration: NT$2.69 per share

81

D. Information of 2014 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:

Unit: NT$

Actual Distribution A

Recognized Estimated Amount B

Variance C=A-B

Bonuses for Employees (Cash) 51,092,053 51,092,053 0

Remuneration for Directors (Cash)

15,000,000 13,752,000 1,248,000

The Estimation for 2014 Employee Bonus and Directors’ Remuneration is based on the percentage of earnings after tax and legal reserve consideration in the Articles of Incorporation. The difference between the actual 2014 Employee Bonus and Directors’ Remuneration distributed according to the resolution of the stockholders’ meeting and the Estimated Amount has been adjusted in the Income Statement of 2015.

E. The Information of Top Ten Recipients of Employee Bonuses in 2014:

Name Title Amount(NT$)

Andy Sheu Managing Director

698,276

Michael Yang President

Mark W. H. Yang Executive Vice President

M. H. Wang Executive Vice President

Andrew Tsai Senior Vice President

Tien-Nan Pan Senior Vice President

Ming-Cheng Hsiao Senior Vice President

Patrick Lin Vice President

Teh-Ming Tao Vice President

Ching-Lin Hsu Vice President

4.1.9 Buyback of Treasury Stock None 4.2 Issuance of Corporate Bonds None 4.3 Preferred Shares None 4.4 Issuance of Depository Receipt None

82

4.5 Employee Stock Options 4.5.1 Issuance of Employee Stock Options As of April 30, 2016

Type of Stock Option 3rd Tranche

(Expired on 2015/7/7) 4th Tranche

(Note)

Effective Date by Regulatory Agency

2009/06/18 2010/06/09

Issue date 2009/07/08 2010/06/18

Units issued 21,000 units 22,000 units

Option shares to be issued as a percentage of

outstanding shares (%) 2.77 2.90

Duration

The duration for options is 6 years, during which employees may not transfer, pledge, or gift their options except to heirs. Upon the expiration of the grant period, unexercised options are deemed forfeited and the subscribers may no longer claim right to exercise the option and purchase those shares.

Conversion measures issue new share

Conditional conversion periods and percentages

Subscribers may exercise their options by the following schedule and proportion: The availability period The ceiling of option exercisable

(accumulate)

Regular Reward Less than 2 years 0% 0% In 2 years after the grant 50% 25% In 3 years after the grant 75% 50% In 4 years after the grant 100% 100%

Converted shares 20,040,750 Shares 20,296,750 Shares

Exercised amount NT$450,422,948 NT$532,089,714

Number of shares yet to be converted

0 Shares 0 Shares

Adjusted exercise price for those who have yet to

exercise their rights N/A N/A

Unexercised shares as a percentage of total issued

shares (%) 0 0

Impact on possible dilution of shareholdings

Dilution to Shareholders’ Equity is limited.

Note: The expiration date of the 4th Tranche Employee Stock Options is Jun 17th 2016. The exercise date is rescheduled to April 22nd 2016 due to 2016 shareholders’ meeting.

83

4.5.2 List of Executives Receiving Employee Stock Options and the Top 10 Employees As of April 30, 2016

Title Name

No. of Option Shares

(thousand shares)

Option Shares as a Percentage of Shares issued (%)

Exercised Unexercised No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)

Converted Shares as a

Percentage of Shares issued

(%)

No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)



(%) Managing Director Andy Sheu

4,290 0.56 3,894

3rd: NT$20.6

4th:

NT$23.9-25.0

91,757 0.86

The expiration date of the 4th Tranche Employee Stock Options is Jun 17th 2016. The exercise date is rescheduled to April 22nd 2016 due to 2016 shareholders’ meeting. Any unexercised options shall be deemed forfeited.

President Michael Yang

Executive Vice President Mark W. H. Yang

Executive Vice President M. H. Wang

Executive Vice President Pao-Yao Pan

Senior Vice President Tien-Nan PanNote1

Senior Vice President Ching-Lin Hsu

Senior Vice President Andrew Tsai

Senior Vice President Jung-Yu Han

Senior Vice President Chen-San Hu

Senior Vice President Todd Chen

Vice President Kai LeeNote2

Vice President C. F. ChiouNote3

Vice President Teh-Ming Tao

Vice President Steve Jean

Vice President M. G. Lee

Vice President Po-Chien Wang

Vice President Ching-Hsiang Tseng

Vice President Shen-Peng Liao

Vice President Tsai-Ming Wang

Vice President Min-Li Lee

Vice President Jing-Shing Wu

Vice President Y. S. Liao

Vice President & CFO Patrick Lin

Accounting Officer SH Lin Note1: Be dismissed on January 4, 2016. Note2: Be dismissed on October 6, 2015. Note3: Be dismissed on November 15, 2015.

84

Title Name

No. of Option Shares

(thousand shares)

Option Shares as a Percentage of Shares issued (%)

Exercised Unexercised No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)



(%)

No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)



(%)

Senior General Manager H.C. LEE

468 0.06 468

3rd: NT$20.6

4th:

NT$23.9-25.0

11,386 0.06

The expiration date of the 4th Tranche Employee Stock Options is Jun 17th 2016. The exercise date is rescheduled to April 22nd 2016 due to 2016 shareholders’ meeting. Any unexercised options shall be deemed forfeited.

Special Assistant William Chen

Chief Engineer S. J. Chiang

Senior General Manager K. T. Chang

Chief Engineer Leon Chen

Senior General Manager Tyrone Tsai

Senior General Manager Michael Chang

Senior General Manager Jim-D Chen

General Manager L. A. Leu

Deputy Chief Engineer Joe Chen

4.6 Status of New Restricted Employee Shares

None 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions

None 4.8 Financing Plans and Implementation

None

85

V. Operational Highlights 5.1 Business Activities 5.1.1 Business Scope A. Main areas of business operations

a. Hydrocarbon: Gas Processing, Petroleum Refining, Petrochemical, Chemical, Terminal, Polysilicon.

b. Infrastructure, Environment & Power: Infrastructure, Transportation, Power, Steel & Nonferrous, Environmental Protection, Incineration & Energy Recovery, Water & Waste Water, Air Pollution Control.

c. Environmental Resources: Investment and Development, O&M/Management of Incineration Plants, O&M/Management of Infrastructure, Resources Collection/Recycling Management, Renewable Energy, Renewal and Upgrade of Mechatronics System.

d. Plant Maintenance Service: Maintenance Strategy, Maintenance Planning, Maintenance Execution, Asset Integrity Management, Overhaul management

B. Revenue distribution

Unit；NT$ thousands

Major Divisions Total Sales in Year 2015 (%) of total sales

Engineering 62,985,942 93.93

Environment 3,628,146 5.41

General Trade 155,446 0.23

Others 288,106 0.43

Total 67,057,640 100.00

C. Main Services:

The main services of the Company include feasibility study & planning, project management, engineering, procurement, fabrication, construction, plant commissioning, QA & HSE, operation & maintenance, and information technology.

D. New products development: Not Applicable 5.1.2 Industry Overview A. Macro Business Outlook:

Based on the latest International Monetary Fund (IMF) report, the global economy kept growing in 2015 .The GDP growth rate in 2015 is 3.1%.The outlook of global economic growth will keep improving in 2016 and 2017. The global GDP growth rate is estimated to achieve 3.4% in 2016 and 3.6% in 2017.IMF think the growth of global economy will be slower, especially for emerging countries and developing countries. In advanced countries, the modest and unbalanced recovery will sustained, with a gradual further narrowing of output gap. The picture for emerging market and developing economies is diverse but in many cases challenging. The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016 to 2017 .Even though, IMF expects the economy will keep growing in 2016 to 2017, primarily reflects forecasts of a gradual improvement of growth rates in countries currently in economic distress. According to data compiled by the International Monetary Fund (IMF), the global economic growth rate in 2015 was 3.1%, with 1.9% of advance countries, and 4.0% of emerging countries. The IMF predicts that the global economic growth rate is 3.4% in 2016, with 2.1% of advance countries, and 4.3% of emerging countries. The Company is engaged in the engineering, procurement and construction (“EPC”) industry, which is closely tied to the overall economic conditions of our target markets. Many projects are initiated by government and consumption demands arising from the

86

private sector. Therefore, the economic growth of the Company’s target markets is a good indicator of potential business opportunities amount in those areas. The following table is IMF’s predictions of the economic growth rates in our major markets, and we find the economy growth are improving in our major markets the forecast economic growth rates of 2015 in these countries are expect to outperform than 2015, such as Taiwan, Singapore, Indonesia, Thailand, India ,USA, United Arab Emirates, Qatar and Kuwait. Most of the growth rates in the target markets also expect to outperform than average of the global, especially China, Indonesia, Vietnam and India are estimated to grow more than 5% in 2015. Overall, there are abundant business opportunities in those target markets of the Company. The Company will maintain the progressive and cautious mindset to participate the bidding.

Forecast of Economic Growth Rate

Country 2015 2016

Global 3.1% 3.4%

Taiwan 2.6% 2.8%

China 6.9% 6.3%

Singapore 2.2% 2.9%

Indonesia 2.2% 2.9%

Malaysia 4.7% 4.5%

Thailand 2.5% 3.2%

Vietnam 6.5% 6.4%

India 7.3% 7.5%

United States 2.5% 2.6%

Mexico 2.3% 2.8%

Saudi Arabia 3.4% 2.2%

United Arab Emirates 3.0% 3.1%

Qatar 4.7% 4.9%

Kuwait 1.2% 2.5%

Oman 4.4% 2.8% Sources: International Monetary Fund (IMF) - Data and Statistics

B. Market Overview and Future Development: The Company is mainly engaged in the field of engineering design, procurement and construction. As a professional EPC lump sum turn-key provider, the Company is the only enterprise in Taiwan with a paid-in capital over NT$7.6 billion out of more than 510 companies registered with the Chinese Association of Engineering Consultants. The Company is the largest representative company of EPC industry in Taiwan. Besides, the majority of domestic engineering consultant companies focus on domestic market which is limited and competitive. When the large-scale projects are under the tendency of lump sun turn-key type and opening for international bidding, there is only a few companies can compete or alliance with international companies. The developments of small-scale companies will be constrained. For the Company entered the international markets and then built up the significant reputations in the industry for years, CTCI has become a designated partner for many internationally well-known companies to collaborate with in various domestic projects. Moreover, being the leader in Taiwan market with highly competitive advantages, the Company alone is capable of bidding projects with single contract amount up to USD 1 billion.

C. The EPC Industry:

Major clients of the Company are either state-owned company or private conglomerate in different countries in areas of refinery, petrochemical, general chemical, utility, infrastructure, environmental protection, steel manufacturing, incinerator, storage, pharmaceutical and etc... The main service of the Company is to provide the EPC works in accordance to clients’ requirements. The EPC project is a

87

professional-based integration, which requires an intensive engineers’ capability in completion timely and efficiently as required by the clients. For this reason, the entry barrier to enter this industry is high. More specifically, the Company’s services include feasibility study, engineering, procurement services, equipment supply, construction management, and commissioning services. The upstream of this industry is the clients with plant construction demands. The midstream is the EPC turnkey companies. (The Company is at this section)The downstream is the third-party vendors, such as materials, equipment suppliers and construction firms.

D. Market Trend and Competition:

a. The Trend (1) Large Projects

Given a trend of incessant businesses expansion overtime, requirements from client are getting more complicated. In order to minimize the risks associated with large projects and reduce the transaction cost, clients turn to be reluctant to award specific sub-projects to different contractors and prefer EPC contractors instead.

(2) Turnkey Solution Clients’ requirements today request not only engineering design, procurement and construction, but advance planning, project financing, operation management … etc. To complete the project with low cost, high quality and timely are preferred by the clients. It’s undoubtedly a challenge to EPC contractors.

(3) Increasing BOT projects in Public Sector In the public sector, the governments tend to boost economic growth by investing infrastructure projects. In order to reduce the government fiscal burden and encourage private sector to get involve with government’s projects, it’s becoming popular to announce BOT (Build-Operate-Transfer) projects for public sector projects. In the future, we will also introduce BOT model to emerging markets’ clients. After Taiwan joined the World Trade Organization and signed government purchase agreements with other countries, the domestic market in Taiwan is now available to foreign construction companies on an equal basis. Taiwanese engineering companies aim business potentials in emerging markets overseas via collaboration with other engineering firms worldwide, and strengthening the capability in finance and legal resources to cope with the ever-changing environment.

(4) Technical Innovation Technical innovation becomes increasingly important to viability of EPC contractors. Generating value-added solutions to satisfy clients’ demands is a key challenge to engineering firms worldwide for maintaining competiveness on the market.

b. Competition There are around 16 EPC competitors globally, mainly in South Korea, Japan and Europe. In domestic market, there is not too much competitors with similar size. When the projects opened

Suppliers(Materials、

Equipments and

Construction)

Downstream

CTCI

Midstream

Client

(Owner)

Upstream

Engineering

diagrams,

Construction

procedures and

standards,

Construction

management

Requirement and

Specification

Completion of

construction or

installation

Completion

Certificate

88

for international bidding, the competitors are mainly from Korea and Japan. However, the Company still has the geographically advantages in Taiwan. In oversea markets, the Company has no obvious differences on technologies. The keys to award the contracts are the experience of project construction and the ability to control the cost. The Company has the advantage by developing China and South East Asia markets and setting local subsidies for years. In 2015, South East Asia is the biggest market of the Company. As for the petrochemical business in Middle East, the rigid competition from South Korea companies remains unchanged. Since the Company returned to middle east market in 2006, the Company already awarded projects in Oman, Saudi Arabia and Qatar. In 2015, The Company joint ventured with CB&I awarded a mega petrochemical plant in Oman. The Company plans to bid projects selectively in Middle East market and enhances the market share in overseas market.

5.1.3 Research and Development Overview A. Research and Development Expenses in Past Three Years

Unit；NT$ thousands

Item/Year 2013 2014 2015

Operating Revenue 31,446,326 38,060,203 42,049,227

R&D Expense 92,576 81,630 81,217

R&D Expense as percentage of Operating Revenue (%)

0.29 0.21 0.19

Note: Independent Financial Statements were under IFRS B. Research and Development Projects Completed in Recent Years and Successful Technology or

Products Developed in Past Two Years

a. RD Projects Completed in Recent Years:

Item 2014 Projects 2015 Projects

1 The Application Research of Mobile Device Associated with Smart Tag in A Turnkey Project

The Innovation of Management

2 The Integration Research of Visualization Plant and Engineering Technology Information

The Implementation, Promotion and Extending Application of Existing Innovation Product

3 The Application Research of System Turnover Information Management Platform

The Research of Distributed Forestage and Centralized Backstage Information Management System

4 The Integration and Application of Turnkey Project Engineering Material Information

The Research of QR Code Application

5 The Research of Using Quantitative Risk Assessment to Improve Process Safety

The Research of the Integration and Handover Technology of EPC Lump Sum Engineering Design Information

6 The Application and Research of Amine Absorber Design

The Research of Applying Big Data Technology to Engineering Material Information Analysis

7 The Creation of Process FEED Procedure The Research of Failure Mode and Effect Analysis & Criticality Analysis (FMEA/CA)

8 The Economic Design of Structure in line with New Specification

The Research of Process Design Software Application

9 The Integration Application and Research of BIM Technology for Architecture Engineering

The Establishment of Hydraulic Calculation Guide for High Viscosity Fluid and Slurry

10 Connection Design for Steel Tube Column and Beam

The Basic Design of Applying Thin-film Technology to Zero-liquid Discharge System

89

11 Equipment System Development for Project Application

The New Technology and New Method for Civil and Building Engineering

12 Pressure Vessel Design Program Enhancement BIM 3D/4D Technology Research and Application

13 Tank Design Program Enhancement The Design of Stud Bolts Welded to The Steel Column Embedded in RC Piers

14 The Research and Development of Instrument Material and Man Hour Estimation Management System

The Development of Equipment Design Operation and Application System

15 The Application of Industry Instrument Wireless Control Technology

The Development of Welding Document Review Tools and High Pressure Equipment Design

16 The Research and Development of Instrument Underground Wiring Diagram Automation Design Technology

Truss Supported Conical Roof Tank Structure Design

17 Modulation Data Bank Establishment for Unit Equipment Piping Design

The Automation Design Technology Development for Instrument Control Room Layout

18 5D Engineering Design Development and Application

The Application and Research of New Instrument Design Operation System

19 Automatic Piping Material Take-off Program Development for Quotation Stage

The Integration and Development of Project Drawing and Material Information for Instrument Design

20 Electrical Design Data Integration and CAD Application Research

The Application Research of Bentley OpenPlant 3D

21 The Optimization Design Application of MRT Main Transformer Station Filter

The Automatic Modeling of The Typical Piping Around Unit Equipment

22 Pulsation and Piping Vibration Analysis for Reciprocating Compressor

23 Power System CAD Development

24 The Research and Development of Power System Design Data Integration System

25 Cathodic Protection Application for Offshore Structure and Facility

26 Seamless Integration between Startup and EPCK (STARTUP FLAWLESS)

b. Successful Technology or Products Developed in Past Two Years

Only the most important technology or products are listed below due to approximate 30 projects in a year.

Year RD Achievements

2014 1. Visualization Engineering Technology Information Development and Research 2. The Research of Using Quantitative Risk Assessment to Improve Process Safety 3. Amine Absorber Design Research and Application 4. Structure Automation and Economization Design Research 5. Connection Design for Steel Tube Column and Beam 6. Precast Concrete Method Research for Pipe Rack 7. Tank Design Program Enhancement 8. Industry Instrument Wireless Control Technology Application 9. The Optimization Design Application of MRT Main Transformer Station Filter 10. The Automation and System Integration Research of Instrument Secondary

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Cable Length Material Take-off 11. The Automatic Checking Development for Design Drawing’s Cable , Cable Tray

and Conduit Length 12. The Cable List Automation Development of Cable Tray Cross Section 13. Instrument Underground Wiring Diagram Automation Design Development 14. Optimum Typical Unit Equipment of Piping Design Data Bank Establishment 15. SP3D Graphic Clash Reports 16. Automatic QR Code generation from ISO Drawing 17. Material Take-off Automation Development for Electrical Lighting Design

Drawing 18. The Analysis Development between Each Time Piping Bulk Material and

Requisition Information

2015 1. The Analysis and Research of Applying Big Data Technology to Engineering Material Information

2. SPE DI Related Technology Development

3. BIM 3D/4D Technology Research and Application

4. The Integration and Development of Project Drawing and Material Information for Instrument Design

5. Automatic 3D modeling of Typical Piping Design Around Equipment

6. Integrate P6, CMS and SPC to apply to 4D Construction Planning and Simulation

7. The Research of Failure Mode and Effect Analysis & Criticality Analysis

8. The Establishment of Hydraulic Calculation Guide for High Viscosity Fluid and Slurry

9. The Basic Design of Applying Thin-film Technology to Zero-liquid Discharge System

10. The Research of Super High Pressure Plant Design

11. The Design of Stud Bolts Welded to The Steel Column Embedded in RC Piers

12. Truss Supported Conical Roof Tank Structure Design

13. Pulsation and Piping Vibration Analysis for Reciprocating Compressor

14. Cathodic Protection Application for Offshore Structure and Facility

15. The establishment of Startup Flawless Guide C. 2016 RD Direction and Major Technology Development

a. 2016 RD Direction is to (1) Develop iEPC technology to increase intelligentized lump sum engineering operation (2) Develop the application of expertise technology to strengthen core design capability (3) Develop visualization engineering technology information to enhance project control capability (4) Develop HSE mobile system to carry out HSE management at job site (5) Establish the commissioning procedure to make a smooth handover for the project

b. Major Technology developments are as follows: (1) Develop iEPC technology

‧ Provide micro and agile management according to project request ‧ Automation of engineering, procurement, construction operation ‧ Set up the intelligent application platform

(2) Develop expertise technology application ‧ Build up the dynamic calculation and program simulation of Blowdown ‧ Develop the technology of fireproof, insulation applications of vitreous particle of fluorite ‧ Build up European code tank design technology ‧ The research of reliability, availability and maintainability analysis ‧ The research of Bow-Tie/ ALARP analysis ‧ The Risk Assessment and Analysis of Lighting Protection ‧ The Analysis of No-load Tap Changer(NLTC) from Step-up Transformer in Power Plant

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(3) Develop the integrated information platform of visualization technology ‧ Continuous improvement of applying CMS to 4D ‧ Apply QR Code/RFID to construction engineering ‧ Apply visualization technology to pipe rack design and construction management system

(4) Develop HSE mobile system (5) Establish start up procedure

‧ Continuous establishing commissioning expert system ‧ Set up the procedure of Pre-Start-up Safety Review (PSSR) ‧ Set up the standardization of shaft seal clean and maintenance of rotary machines

D. Current Project or New Product Being in process Refer to Section 7.6.3 for current RD project list

5.1.4 Short & Long Term Development Plans A. Short Term Goals:

a. Engage in overseas projects aggressively and range into tier one engineering firms in the world. Following the Middle East, Southeast Asia and the North America market will be the main markets in the global petrochemical industry. The Company will maintain the progressive and cautious mindset to participate the bidding. The Company expects to establish a solid foundation in the global petrochemical industry and become the tier one international engineering company. The Company also evaluates to enter the new markets, such as Commonwealth of Independent States.

b. Become one of the major players in the utility market. In recent years, the Company awarded the Lin Kou, Talin and Tung-Hsiao power plant expansion projects from Taiwan Power Company and overseas small power producer project from Thai Oil. According to a planned schedule of Taiwan Power Company, several power plant renovation projects will be released in the coming years. As the economy growing south-east Asia, power demand also increases simultaneously; potential power plants projects is foreseen recently in Malaysia, India, Vietnam Indonesia and Thailand. The Company will be bidding power plant projects progressively.

B. Long Term Goals a. Emerging Markets

Looking forward, to expand market share in the international petrochemical market is still one of the Company’s primary goals, and extend to emerging markets in north Africa, east Europe, Commonwealth of Independent States ,north America and south America from the regions of south-east Asia and middle-east. The Company also devoted to share successful experiences in non-hydrocarbon projects such as power plants, public transportation and incinerator to overseas markets, form China, south-east Asia and middle-east to rest of the world.

b. New Techniques and New Areas The Company is planning to invest in new areas such as carbon-reducing techniques and alternative energy sources to complement our existing lines of services. These new businesses will contribute increasingly to the Company’s profitability and growth potential.

In all, the Company aims: to become one of the top 30 engineering companies in the world, and to create an esteemed brand name for the Taiwanese engineering consulting service industry.

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5.2 Market and Sales Overview 5.2.1 Market Analysis The Company signed contracts amounted NT$ 52.4 billion, while CTCI Group signed of NT$ 64.5 billion totally in 2015. The sales revenues of the Company amounted NT$ 42.0 billion, while the CTCI Group consolidated sales revenues amounted NT$ 67.1 billion totally in 2015. A. Sales Analysis by Major Services:

a. By Area

Area Group New Contracts Consolidated Sales Revenues

Middle East 69% 19%

Taiwan 18% 56%

Malaysia 6% 10%

China 4% 5%

Others 3% 1%

Thailand 0% 6%

Singapore 0% 3%

Total 100% 100%

b. By Industry

Industry Group New Contracts Consolidated Sales Revenues

Refinery/Petrochemical 75% 41%

Others 6% 5%

Infrastructure 6% 10%

Steel and Non-Ferrous metals 6% 0%

Hi-Tech 4% 2%

Air Pollution Control 3% 0%

Power 0% 37%

Incineration 0% 5%

Total 100% 100%

B. Market Share The Company has ranked No.1 in the domestic EPC market in Taiwan for years. Common Wealth Magazine has placed the Company as No.1 in the top 650 service company survey within the engineering service provider category since 2005. Within all companies under engineering service provider category, the revenues of the Company account for 15.8% of the total amount. On the global scene, the Company is well recognized by the U.S. Magazine Engineering News-Record in its annual rankings. For the year 2015, the Company is ranked, No.136 in Top 150 Global Design Firms Rankings, No.103 in Top 225 International Design Firms Rankings, No.148 in Top 250 Global Contractors Rankings, and No.122 in Top 250 International Contractors Rankings.

C. Industry Trend Overview a. Short Term Market Trend

The global economic has been recovered in 2015 comparing to 2014. The advanced countries and emerging counties have the same path of recovery. The Middle East region still releases petrochemical projects and countries in the Southeast Asia region release National projects. The Company predicts such project investments in advanced and emerging countries will continue in 2016. Our views on the global market are briefed as following: (1) Taiwan

We expect the government to maintain its policy on expanding domestic consumption, from which we target local projects as one of priorities in the coming years. Domestic power demand is increasing with economic growth, so the Taiwan Power Company begins to execute

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renewal and expansion plans for many fire power plants approaching to their service life in northern, middle and southern Taiwan to satisfy the demand. Besides, for hydrocarbon projects, there are CPC’s petrochemical plants which joint venture with foreign companies, LNG receiving terminal project and other private-owned petrochemical plants expansion projects to strive for. For infrastructure projects, the Company is seeking to bid power supply and track work projects of mass rapid transportation (MRT) system, sewerage projects and ext.

(2) South East Asia and India Malaysian National oil Company, PETRONAS, has started an integrated refinery and petrochemical industry in May 2012. In 2014, the Company already awarded an upstream refinery plant contract. The contract amount is more than US$ 1 billion. The downstream plants will be the Company’s main target projects. India performed relatively stable in BRIC countries. With the supports of Modi government, the willingness to invest in oil refineries, petrochemical plants, LNG receiving terminals and Re-gas facilities projects will be higher. Indonesian National oil Company, the PERTAMINA, are talking with many foreign investors, such as Aramco, Kuwait Petroleum International, PTTGC etc. for building new refinery plants or renew existing ones for satisfying domestic demand in 2020. The major opportunities in Thailand are mega power plants, small private-owned gas power plants, bio-fuel power plants, and municipal waste incineration power plants. The Company will seek for the business of combined-cycle power plants as well. The major opportunities in Vietnam will be the municipal waste incineration power plants and coal-fired power plants. Besides, the Company will also seek the coal-fired power plants subcontracting opportunities from renowned international EPC companies. Many new petrochemical projects will be available in Singapore along with several large infrastructure projects, including power supply and track work projects of MRT System projects.

(3) China For both communications between straits increasing and the global economy recovering continuously, many Taiwanese companies are investing in downstream petrochemical plants in China, such as potential petrochemical and refinery project in Gulei Peninsula which has been approved by Taiwanese government. The Company’s primary goal now is to strength the capabilities of its subsidiaries in both Shanghai and Beijing for obtaining upcoming projects of Taiwanese petrochemical companies. Besides the petrochemical industry, benefited by the twelfth five-year economy plan of China, new opportunities are derived from the environmental protection, industrial wastewater treatment, and the metropolis refuse incineration markets. The Company plans to collaborate with local partners for such booming sectors. Moreover, there are also waste incineration power plant revamping opportunities in Macau.

(4) Middle East and North Africa We are working on several EPC projects in Qatar and Saudi Arabia. Having build-up our experience in the region, we continue to be active for petrochemical EPC project bidding in the other countries of Middle East, such as Kuwait, Omen, Bahrain. In addition to the petrochemical industry, more bidding opportunities are available in the fields of power, desalination, waste water treatment, and MRT Systems…etc., while the competition is still intensive. Moreover, the Company will increase marketing efforts in North Africa. The national oil company of Algeria is planning to build more refineries plants. The Company will continue to track the relevant trends and developments.

(5) USA Due to the promising shale gas development in US, there are many companies plan to do more investment. The company will keep collecting relevant information and select proper bidding opportunities. In 2015, The Company already awarded detailed design projects from Formosa Group in USA.

http://en.wikipedia.org/wiki/Government-owned

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b. Long Term Market Trend The Company expects that refinery business would be promising in the coming few years. Emerging markets such as China, Indonesia, Vietnam, India, and Malaysia also contribute to this upward trend as their economy grows and creates new demands. As the notion of conserving energy is gaining momentum around the world, industries related to alternative energy and environmental protection are set to become mainstream in the years to come. Accordingly, the Company is trying to be more involved into new techniques and new areas such as LNG, alternative energy and other energy conservation items.

D. Competitive Advantage

CTCI Corporation has been existed in the industry for more than 30 years. However, facing competition from engineering firms around the world, it is becoming increasingly crucial to utilize the resources on a global basis. That’s why the Company is setting up subsidiaries throughout Asia, in places like Beijing, Shanghai, Bangkok, Delhi and Hanoi, to develop more engineering talents at competitive costs. The Company also established a subsidiary in India in 2008 to assist the group to execute the numerous projects currently in progress. Looking ahead, the Company is on course to expand in more places such as Singapore to maintain its competitive advantages it has enjoyed to this date. In all, facing with stiffening competition, the Company is constantly trying to sustain efficient solutions by strengthening our global logistic network to lower down procurement costs, and strengthening capabilities in project management and risk control as well.

E. Advantages and Disadvantages for Long-Term Development & Corresponding Strategies

a. Advantages (1) Domestic market is recovering

Taiwan government continues to push ahead for a new national development plan. CPC Corporation and Taiwan Power Company continue execution their plans for renewal and expansion plans which provide stable source of domestic opportunities. Taiwanese petrochemical companies still invest in new capacity expansion in China; it is another potential business of the Company too.

(2) Bidding for mega projects with professional capabilities. The Company is now the only engineering Company in Taiwan to be able to carry out projects with amount up to USD 1 billion without any partner. The Company has valuable experience in teamed up with foreign partners for project both for local and overseas for EPC project. Also by collaborating with these international firms, The Company has established itself in the global market place for future opportunities overseas.

(3) Entering into Overseas Markets with Strategic Partners. With our successful strategic alliances, the Company now has world-class patented processes and techniques at its disposal. These advantages will not only serve existing projects, but they can also be utilized globally such as China, Thailand, Vietnam, Malaysia, India, Singapore and the Middle East. The Company will integrate all the available resources to expand globally.

(4) Strengthening Competiveness through Global Resources Management The Company’s subsidiaries in China (Beijing & Shanghai), Thailand, and Vietnam and India have contributed significantly to the projects carried out in Taiwan. The engineers in these subsidiaries have also gained invaluable experiences throughout the process. These subsidiaries will continue to serve the Company favorably in the years to come with low cost and work efficiency advantages. The Company established a subsidiary in Singapore in 2011 to continue its global expansion.

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b. Disadvantages & Corresponding Strategies

Item Corresponding Strategies

Severe competition from Korean competitors

The Company plans to do the following to increase its chances of winning projects: Strengthen cost control and project management capabilities Technical Improvement: Continuous process re-engineering and

innovation through the R&D center Human Resources Development: Global expansion by integrating

local talents

Fluctuations in commodity prices

The Company has adopted the following internal control mechanisms to deal with commodity price fluctuations: Shortening design timeframe, better control of procurement supply

quantities and shipment schedule. Multiple hedging mechanisms to reduce the associated risks to the

minimum. Purchasing commodity swaps to lock-in the prices of basic materials required such as copper and nickel.

Arranging long-term supply contracts with suppliers. Enhancing relationships with major equipment manufacturers.

To reduce the procurement costs of the projects, actively seeking for low cost regional suppliers with stable quality.

Difficulties in executing overseas projects

The Company has established a risk management committee to monitor and control all the relevant risks at both the project and the corporate levels.

Better integration of local resources and cost control for higher efficiency.

5.2.2 The Company’s Main Services Purposes and Service Sequences

The Company’s main services are EPC and consulting-oriented, including all sorts of professional services such as feasibility study, design, equipment supply, equipment fabrication, construction services, construction management, commissioning, and maintenance. A. Main Services and Purposes

a. Refinery/Petrochemical: For the manufacturing of oil-related and petrochemical products. b. Utilities: Nuclear power plant, natural-gas power plant, coal-fired power plant, and

combined-cycle power plant. c. Infrastructure: MRT system, high speed railway…etc. d. Environmental: Incinerators operation and maintenance, waste management, water

treatment, air pollution processing…etc. e. General Industry: Steel manufacturing plant, storage and docking facilities f. High tech and bio-related: electronic plant, pharmaceutical plant…etc.

B. Service Sequences: Feasibility study and initial design → Engineering → Procurement →Construction → Construction Management → Commissioning → Service and Maintenance

5.2.3 Major Materials Used and Supply Status:

A. Commodities: specially-formed steel, steel plates, steel rods, cement, various pipes and accessories, electricity cables, and special paints. These materials are sourced by qualified suppliers in the region close to the project job sites.

B. Equipments: reactor, storage tank, heat exchanger, heat boiler…etc. These major equipments are supplied by specialized companies throughout the world.

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5.2.4 Major Suppliers and Clients A. Major Clients (each commanding 10%-plus share of annual order volume) Information for the Last

Two Calendar Years Unit：NT$ thousands

Item

2014 2015 As of March 31, 2016

Company Name

Amount % Relation

with Issuer

Company Name

Amount % Relation

with Issuer

Company Name

Amount % Relation

with Issuer

1 TPC 17,788,270 31 None TPC 19,864,146 30 None TPC 4,213,417 31 None

2 Others 39,903,667 69 None Others 47,193,494 70 None Others 9,420,272 69 None

Total 57,691,937 100 Total 67,057,640 100 Total 13,633,689 100

B. Major Suppliers Information for the Last Two Calendar Years N/A

5.2.5 Production over the Last Two Years

Unit: NT$ thousands

2014 2015

Engineering 50,096,146 58,301,255

Environment 2,891,796 3,018,765

General Trade 113,958 113,549

Others 215,672 187,993

Total 53,317,572 61,621,562

5.2.6 Shipments and Sales over the Last Two Years

Unit: NT$ thousands

2014 2015

Local Export Local Export

Engineering 43,527,493 10,157,629 53,017,613 9,968,329

Environment 3,522,118 13,214 3,017,909 610,237

General Trade 155,664 0 155,446 0

Others 315,819 0 288,106 0

Total 47,521,094 10,170,843 56,479,074 10,578,566

5.3 Human Resources 5.3.1 The information about employees employed for the most recent two fiscal years and up to the

date of printing of the annual report

Year 2014 2015 As of March 31, 2016

Number of Employees

Permanent employee 2,590 2,581 2,582

Temporary employee 185 204 198

Total 2,775 2,785 2,780

Average Age 41.5 41.6 41.7

Average service seniority 10.8 10.8 12.5

Number of employees at each level of

educational degree

Doctor 15 18 18

Master 1,200 1,236 1,237

Bachelor 1,416 1,383 1,361

Senior High School 105 104 108

Senior High School below

39 44 56

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Certification details of employees whose Jobs are related to the Release of the Company’s Financial Information

Certification Number of Employees

Certified Internal Auditor(CIA) 4

Test of the Enterprise Internal Control Basic Ability 4

Test of the Bank Internal Control Basic Ability 1

Certified Securities Investment Analyst(CSIA) 2

The Accountant of R.O.C. 2

5.3.2 Work Environment and Occupational Safety and Health A. HSE Policy

CTCI’s HSE Policy Statements are set forth below: ‧ Insist Safety as the first priority; ‧ Promote personnel Health and Well-being; ‧ Protect Environment and Sustainability; ‧ Implement risk management system; ‧ Fulfill with legal and contract requirements; ‧ Engage in trainings and personnel participation; ‧ Improve HSE management system continuously. CTCI Corporation is always dedicated to creating and maintaining a sound working condition of health, safety, and environment protection (HSE). CTCI regards HSE as the priority among all of our activities. Also, we are enthusiastic to promote health management in workplace, to create a health working environment that free of harms to body and mind. We provide professional services with obligation to environment protection, aim for energy saving, carbon reduction, and prevent possible pollutions. We implement risk management mechanism, while prevention of occupational injuries and diseases as well as the environmental protection remains our highest concern among others. All of the projects related to planning, engineering design, procurement, construction and commissioning must be carried out in conformance with governments HSE legislations and the requirement specified in the contracts with customers is our commitment. To improve all personnel and collaborators’ knowledge on safety, health and environment protection, CTCI regularly held HSE training programs and often support HSE related activities and conferences, which personnel and collaborators are encouraged to participate actively. Moreover, CTCI spare no efforts on continuous improvement of each HSE activity to make sure the applicability and effectiveness of HSE management system.

B. HSE Organization To ensure a safe and healthy environment provided by CTCI Corporation to our employees, also to ensure the project execution do not harm the environment, the company established HSE Management Department. CTCI also set up QHSE division. Under the direction of the group president, and the QHSE division, the HSE Management Department is in charge of formulating, planning, promoting and monitoring the corporate-level HSE activities, and instructing every department, project, subsidiaries in implementation. HSE Management Department also conducts internal auditing, monitors HSE performance of the corporation, and ensures the performance of HSE management work of every project activities, in order to prevent occupational accidents, protect employees’ safety and health, and conserve the environment.

C. HSE Management System CTCI acquired ISO 14001 Environment Management System Certificate and OHSAS 18001 Occupational Health & Safety Management System Certificate in 2006, and has been continuously updating the latest version of international guidelines. For 3 years routine review in 2014, we successfully demonstrate our management systems’ compliance to OHSAS standards, thereby certification remain valid up to date. CTCI also acquired a TOSHMS (Taiwan Occupational Safety and Health Management System) Certificate in year 2009, and in 2012 it was approved with CNS 15506:2011.

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To achieve continuous improvement of HSE management system, CTCI regularly review HSE performances, propose practical corrective actions and put into action, and annually revise the HSE objectives, to lower potential risk on safety, health and environment. Moreover, CTCI emphasizes concerns on safety management, incident prevention, energy conservation, and occupational health promotion.

D. Operation of HSE Management System The operation of HSE management system followed the P-D-C-A process, scopes includes engineering design, procurement, construction, commissioning, emergency response, and headquarters etc.

E. Statistic of Occupational Incidents CTCI as an international engineering corporation, in response to international clients’ requirements, the occupational injury statistics is conducted by the formula of TRCR, Disabling Injury or DARTR proclaimed by United State of Labor Department Occupational Safety and Health Administration (OSHA). Furthermore, the Root Cause Analysis (RCA) is conducted by the company in order to develop corrective and preventive and effective actions. Meanwhile, issues that are inter-departmental or systematic are documented, monitored and controlled.

Note1: Traffic incident are not included in the statistic number Note2: The United State of Labor Department Occupational Safety and Health Administration (OSHA)

Note3: Total recordable case rate ,TRCR＝

Note4: Days away from work, days of restricted work activity or job transfer incidence rate,

DARTR=

F. Awards

To recognize its achievements in HSE, CTCI Corporation in 2015 received several awards from government authorities and clients. These are listed as follows: a. CTCI headquarters acquired Certificate of Zero Accident Proof from Ministry of Labor (totally 33.89

million accident free man-hours from January of 2007 to November of 2015) b. CTCI recognized by Taipei City Fire Department as the 2014 Outstanding Workplace for Fire

Prevention Self-Management c. Talin Power Plant Project received an Appreciation of Zone Defense from Labor Standards

Inspection Office Labor, Affairs Bureau, Kaohsiung City d. Talin Power Plant project awarded as the 2015 Excellent Company of Road Adopting Program from

Environmental Protection Bureau, Kaohsiung City

5.4 Environmental Protection Expenditure CTCI Corporation is in the industry of engineering service, which that the workplace including the Headquarters building and job sites. Described respectively as following: 1. Headquarters building: Mostly office works, no polluting events happened ever. To dedicate to

energy saving for environment protection, we replaced lighting of indoor offices and stair rooms with LED tubes, and replaced lighting in drinking area and parking lot with automatic sensor lighting system.

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2. Job sites: Located in industrial zone in most cases, no influence to nearby residents is always the top demand. During construction process, all sub-contractors are requested to execute the environmental protection measures like waste management or any other to eliminate impacts on air, water, and soil to comply with regulations. No improper records happened before.

5.5 Relations between labor and employer 5.5.1 Employee benefit plans, continuing education, training, retirement systems, and the status of

their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests

A. Employees’ benefits a. Labor insurance

(1) The Company’s employees are enrolled in the labor insurance program pursuant to laws. (2) The labor insurance premium includes the premium of the insurance against ordinary incident

and occupational disaster. 70% of the insurance premium for ordinary incident will be borne by the Company, 20% thereof borne by the insured, 10% thereof borne by the government. The insurance premium for occupational disaster will be borne by the Company in full.

b. National health insurance (1) The Company’s employees and their dependents are enrolled in the national health insurance

program pursuant to laws. (2) The payable national health insurance premium shall be subject to the government’s relevant

requirements. c. Group insurance

(1) The Company’s employees are entitled to the additional group insurance purchased by the Company from the life insurance company externally.

(2) The Company’s employees will be enrolled in the group insurance program immediately on the hiring date. The group insurance covers life insurance and accidental injury insurance, which will be borne by the Company in full.

(3) The Company’s employees and their dependents may select the medical care insurance programs at their sole discretion, and 60% of the insurance premium will be borne by the Company.

d. Annual bonus The Company will allocate the incentive bonus subject to the annual operation overview, and will grant the bonus with respect to individual performance, attendance record and seniority in accordance with the relevant operating procedure.

e. Workers’ Welfare Commission The Company establishes the Workers’ Welfare Commission pursuant to laws, and allocates the welfare fund periodically. The colleagues may elect the commission members openly, and organize tours and club activities and give birthday coupons and festival gifts, subsidies and consolation money periodically.

f. Incentive payment for shareholding trust To support the employees’ shareholding committee incorporated by employees and encourage employees to save funds and hold the Company’s shares permanently, the Company specially agrees that the colleagues who have served more than one year and been enrolled in the employees’ shareholding committee may be granted the incentive payment on a pro rata basis subject to the fund allocated on a monthly basis.

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B. Top Management advanced studies: a. EMBA:

Title Name Course Name Status

President Michael Yang EMBA, National Taiwan University of Science and Technology, Taiwan

Graduated in 2008

Executive Vice President

Mark W. H. Yang

EMBA, National Chengchi University, Taiwan Graduated

in 2011


M. H. Wang EMBA, Chulalongkorn University, Thailand Graduated

in 2009


Pao-Yao Pan EMBA, National Sun Yat-sen University Graduated

in 2010

Senior Vice President

Andrew Tsai

EMBA, Macau University of Science and Technology

Graduated in 2008

Doctor of Business Administration, Macau University of Science and Technology

Graduated in 2013


Jung-Yu Han EMBA, National Chengchi University, Taiwan Studied in

2009

Vice President & CFO

Patrick Lin EMBA, National Taiwan University, Taiwan Graduated

in 2013

Vice President Steve Jean EMBA, National Chengchi University, Taiwan Graduated

in 2013

Vice President M. G. Lee EMBA, National Taiwan University of Science and Technology

Graduated in 2008

Accounting Officer

SH Lin EMBA, National Chengchi University Graduated

in 2008

b. Top Management program:

Title Name Course Name Status

Executive Vice

President

Ming-Cheng Hsiao

Executive Management Training Program, National Taiwan University, Taiwan

During the period of Apr. to Jul. 2013

Executive Vice

President

Pao-Yao Pan

Top Management Training Course by National Taiwan University, Taiwan

During the period of Mar. to June 2013


Andrew Tsai

National ChengChi University Business Executive Program

During the period of Sep. 2005 to Apr. 2008

Executive Management Training Program, National Taiwan University, Taiwan

During the period of Mar. to June 2013


Jung-Yu Han

Participated in Advanced Executive Program for Senior Manager of National Taiwan University, Taiwan

During the period of Nov. 2005 to Jun. 2006




Chen-San Hu



Vice President

Steve Jean

Participated in Advanced Executive Program for Senior Manager of National Taiwan University, Taiwan

During the period of Dec. 2008 to Aug. 2009

Participated in Advanced Seminar on General Management of National Taiwan University, Taiwan

During the period of Sep. 2009 to Mar. 2010

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Vice President

Teh-Ming Tao


During the period of Feb. 2009 to Jul. 2009



Vice President

M. G. Lee Top Management Training Course by National Taiwan University, Taiwan


Vice President

& CFO Patrick Lin





Accounting Officer

SH Lin





c. Training program about Corporate Governance:

Name Date Sponsoring

Organization Course Hours

Michael Yang / Ming-Cheng Hsiao / Mark W. H. Yang / Patrick Lin / SH Lin / Po-Chien Wang

2015/08/07 Taiwan Corporate Governance Association


3

Michael Yang / Ming-Cheng Hsiao / Mark W. H. Yang / Patrick Lin / SH Lin / Po-Chien Wang / J.H. Chen / Ai-ling Hsu

2015/11/06 Taiwan Corporate Governance Association

Enterprise Group Governance 3

C. Employees’ training:

The Company establishes the workers’ training system in accordance with the Company’s view, mission and long-term business objectives, and plans the training development blueprint for various professional areas and job ranks. In addition to enhancing the workers’ professional ability, the Company also works hard to train their multi-departmental integration professional ability. The training programs include traditional lecturing courses, and also OJT, Lesson & Learnt, e-Learning and knowledge database in order to upgrade the employees’ knowledge about the know-how and skill, language, computer, management and leadership. As of June 2010, the Company started to perform the Mentor & Mentee (M&M) plan with respect to new employees in order to assist new employees to adapt to the enterprise culture and rapidly acquire the professional attitude and ability required by independent operation through structured (professional guidance) and non-structured (environmental adaption) one-on-one instruction. The training management applies the omnibus training management system, GTS (Global Training System), to enhance the e-Learning function and enable colleagues around the world to learn the expertise synchronously, and hopes to fulfill the workers’ training systems and development blueprint effectively through the strong control mechanism. The Company’s personnel committee will recommend excellent colleagues to take

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on-the-job advanced studies in domestic and foreign colleges/universities on a yearly basis, and will offer them the chance to co-work with staff of foreign engineering companies on a non-scheduled basis, so as to upgrade their expertise and solidify their international competitive ability. The employees’ training costs will be NT$10.655 millions approximately per year. The average training hours will be more than 63.9 hours per person/year (177,930 hours/2,785 persons). The various training hours and costs are specified as following:

Type Number of class Total number of

attendees Total hours (hour) Total costs (NT$)

Orientation training 53 468 57,165 4,653

Competence training 1,305 26,445 119,011 3,298,557

Management training 29 496 1,454 6,486,183

General knowledge training 39 107 168 759,129

Self-development training 3 3 132 107,368

Total 1,429 27,519 177,930 10,655,890

a. Orientation training: Including the introduction to the overview, work rules and QHSE

management regulations of the Company, Orientation, and Mentor & Mentee (M&M) plan; b. Competence training: The various departments conduct the specialty training programs by

instructing the employees and offering the employees with the chance to practice subject to the nature of work, the Company’s business needs or requirements under contracts and laws, and have employees participate in the actual operation adequately to upgrade their competence;

c. Management training: HR Dept. arranges the management programs subject to the Company’s status and development needs, and makes the programs available to the various departments’ management.

d. General knowledge training: The employees’ specialty training committee plans general knowledge training programs together with relevant units in accordance with the employees’ training policy, objective and strategy, and make the programs available to the whole employees;

e. Self-development training: Including English comprehension training arranged in order to upgrade the colleagues’ international language ability, and on-the-job advanced studies in domestic and foreign colleges/universities to advance employees’ competence; The operations related to the employees’ training programs shall be conducted in accordance with the “CTCI Employee Training Management Procedure” and “CTCI Employee's Professional Competency Assessment and Management Procedure”.

D. Retirement system and implementation thereof:

The Company enforces the workers' retirement rules pursuant to the Labor Standard Law and allocates the pension reserve on a monthly basis. The rules are outlined as following: a. All of the Company’s employees shall comply with the rights and obligations defined in the

workers’ retirement rules. b. The Company allocated the pension reserve equivalent to 5% of the total salary on a monthly basis

before the end of September 2002, and 6.5% thereof after October 2002. The pension reserve will be deposited to the exclusive account maintained at the Bank of Taiwan. As of July 2005, the Company has executed the new system according to the employees’ will and choice, and allocated the pension fund according to the Labor Pension Act.

c. Payment of pension fund: The Company paid the pension fund pursuant to the Labor Standard Act or Labor Pension Act pursuant to laws subject to the employees’ choice as of July 1, 2005.

103

E. Other important agreements: a. The Company is engaged in the engineering service and possesses qualified personnel, a definite

management philosophy, and a well-founded management system. In addition to the ordinary organization and system, the communication channels also include employees’ forums and labor and employer meetings held on a scheduled or non-scheduled basis, and installation of a suggestions box, so as to establish common consensus and a harmonious relationship between the employees and employer through the various channels.

b. The Company is engaged in the business where the Labor Standard Law may apply and, therefore, it shall operate in accordance with the Labor Standard Law.

c. Written undertaking for non-disclosure, non-competition and intellectual property right To secure the going concern, protect the group members’ interest and complete the corporate governance, the Company amends the “written undertaking for non-disclosure and copyright & patent right” to the “written undertaking for non-disclosure, non-competition and intellectual property right” and hopes that all employees may comply with the undertaking. All employees of CTCI and its domestic affiliates and overseas companies have already signed the undertaking.

5.5.2 Loss suffered by the Company due to dispute between labor and employer in the most recent

fiscal years The Company is used to valuing the employees’ benefits and calling a labor and employer meeting and welfare committee meeting on a quarterly basis, and also installs the suggestions box to make a two-way communication channel available to employees. Therefore, the relationship between labor and employer is harmonious and no dispute over labor has arisen in the past. No material loss or punishment has been suffered by the Company due to dispute between labor and employer in the past three years. In the future, the Company will continue to adhere to the same principle and solidify the relationship between labor and employer further.

5.5.3 Employee Code of Ethics and Conduct

1. Objective This Code of Ethics and Conduct is established according to the resolutions made by the board of directors to provide a reference for employees to behave themselves and to let interested parties understand the ethical standards and code of conduct that CTCI employees shall follow when carrying out their duties. All CTCI employees shall read this Code carefully, understand it, and carry it out.

2. Scope Employee under this Code shall mean all CTCI employees. Where there are independent codes of ethics and codes of conduct established for directors, supervisors, and managers, the directors, supervisors, and managers of CTCI shall follow such codes.

3. Principle of Good Faith When carrying out their duties, employees shall pay attention to team spirit and disregard ego-centrism. Employees shall follow the principle of good faith and maintain an aggressive, serious, and responsible attitude.

4. Principle of Equality Under no circumstances shall employee discriminate and reject others in any form as a result of differences in gender, race, religions and beliefs, political party, aptitude, position, nationality, or age.

5. Work Environment Employees shall maintain a healthy and safe work environment together. No act of sexual harassment, violence or intimidation of any form or in any manner is allowed.

6. Refusal of Conflict of Interest and Opportunities for Personal Benefits CTCI employees are responsible to maintain and increase the profits legally gained by the organization and shall avoid: (1) opportunities to gain personal benefits or the benefits of a third party using the

organizational property, information and/or benefits of their duties; and (2) competition with the organization.

104

7. Fair Trade (1) Employees shall treat customers fairly and shall avoid concessions in trades with the

interested party. (2) When carrying out their duties, employees shall not request, ask for in return, deliver or

accept gifts, treatments, kickbacks or bribes in any form or engage in other act of pursuing unjust enrichment for the benefit of themselves or a third party; except for gifts or treatments as part of the social custom or those approved by the organization.

8. Internal Transaction Employees shall keep absolutely confidential information that may critically influence the stock transaction price of the organization they acknowledge or hold from work according to the Stock Exchange Act prior to the disclosure made by the organization. Employees shall also not engage in internal transaction with such information.

9. Non-disclosure Responsibility Employees shall respect the privacy of one another and shall not spread rumors or libel others. Either in service or after the termination of employment, employees shall carefully handle sensitive information obtained from work and shall not disclose such information to a third party or for use other than in work, except when such information is disclosed by the organization or for the purpose of carrying out one’s duty. Sensitive information specified in the foregoing paragraph shall include personnel and customer data, inventions, trade secrets, technical data, product design, manufacturing know-how, financial and accounting data, and intellectual properties of the organization, as well as unpublished information that can be used by competitors or damage the organization or its customers after disclosure.

10. Correct Documentation, Records and Reports Employees shall ensure the correctness and integrity of documentation and data of any kind processed by them and shall retain them properly.

11. Protection and Suitable Use of Organizational Property When carrying out their duties, employees shall avoid intercepting, interference, damage and/or intrusion of the organization data, information systems and network equipment to ensure the confidentiality, integrity and availability of organizational information.

12. Political Donation and Activity Under no circumstances shall employees influence other employees to make political donations, support specific political parties or candidates, or participate in any political activities. Employees shall also avoid any political activities during office hours and in the workplace.

13. Copyright Employees shall respect laws and regulations concerning intellectual property rights. Illegal use or duplication of copyrighted intellectual property is prohibited, including books, magazines and/or software.

14. Encouragement of Reporting Crimes or Offences of This Code of Conduct Supervisors shall reinforce the ethical education for employees and encourage them to report any crime or offence of this code of conduct in a signed report at any time. The organization shall keep confidential the identity and protect any informants to protect them against threat or retaliation.

15. Procedure of Exemption Employees may be exempted from particular items in this code of conduct with proper reason approved by the audit committee and the board of directors meeting.

16. Implementation This Code and its revisions shall be implemented after being reviewed by the audit committee and passed by the board of directors meeting. It shall be disclosed in the annual report, shareholder’s report, and the Market Observation Post System.

105

5.6 Important Contracts

Agreement Counterparty Period Major Contents Restrictions

Engineering Jia Xing Petrochemical Co., Ltd.

2015/07/01 2016/10/01

Jia Xing PTA Phase II, BDE and DDE

According to contract content stipulation

EPC CPC Corporation, Taiwan Project & Construction Division

2015/04/15 2017/04/15

CPC Talin #3 RDS & #8 SRU Revamping Project


Engineering Formosa Plastics Corporation, Texas

2015/08/11 2017/02/11

FPC LDPE Project, DDE According to contract content stipulation

Engineering Nan ya Plastics Corporation, America

2015/08/04 2017/04/15

NPCA 828KTA EG2 Expansion Project, DDE


EPC Oman Oil Refineries and Petroleum Industries Company SAOC (ORPIC)

2015/12/17 2019/12/17

Oman ORPIC PKG-1 Steam Cracker and U&O, EPC


EPC BASF Chemical Co., Ltd. 2015/03/19 2016/06/30

BASF 12 KTA EGSA Project, EPC


EPC Land Transport Authority 2015/04/08 2019/11/30

Gali Batu Depot Stabling Trackworks, EPC


EPC Taiwan Power Co., Ltd. Taichung Power Plant

2015/12/31 2020/12/31

TPC Taichung Power Plant 550MWX4 Existing Unit 1~4 AQCS Retrofit Project, EPC


106

VI. Financial Information

6.1 Condensed Financial Statement for the Recent 5 Years

6.1.1 Condensed Consolidated Balance Sheet - International Financial Reporting Standards

Unit: NT$ thousands

Year Item

Five-Year Financial Summary As of March 31, 2016 (Note 4)

2011 2012 2013 2014 2015

Current Assets N/A 39,644,718 35,132,199 42,090,608 45,298,807 45,326,991

Property, Plant and Equipment

N/A 7,288,315 7,150,831 7,026,878 7,001,676 6,958,097

Intangible Assets N/A 106,859 114,766 118,638 121,469 102,434

Other Assets N/A 6,750,308 6,551,449 7,647,224 7,808,634 7,768,999

Total Assets N/A 53,790,200 48,949,245 56,883,348 60,230,586 60,156,521

Current Liabilities

Before distribution

N/A 28,679,088 23,657,670 31,033,931 34,389,605 33,676,615

After distribution

N/A 30,781,491 25,156,119 32,732,020 Note 3 Note 3

Non-current Liabilities N/A 6,546,811 6,893,439 6,365,262 6,112,898 5,857,754

Total Liabilities

Before distribution

N/A 35,225,899 30,551,109 37,399,193 40,502,503 39,534,369

After distribution

N/A 37,328,302 32,049,558 39,097,282 Note 3 Note 3

Equity Attributable to Shareholders of The Parent

N/A 16,408,354 15,950,640 16,918,949 17,019,448 17,516,347

Capital Stock N/A 7,349,960 7,474,343 7,575,303 7,611,076 7,625,146

Capital Surplus N/A 2,757,865 3,070,085 3,230,033 3,297,703 3,326,729

Retained Earnings

Before distribution

N/A 6,170,655 5,188,509 5,874,885 6,097,988 6,565,982

After distribution

N/A 4,068,252 3,690,060 4,176,796 Note 3 Note 3

Other Equities N/A 141,709 229,538 250,563 24,516 10,325

Treasury Stocks N/A (11,835) (11,835) (11,835) (11,835) (11,835)

Non-controlling Interests

N/A 2,155,947 2,447,496 2,565,206 2,708,635 3,105,805

Total Equity

Before distribution

N/A 18,564,301 18,398,136 19,484,155 19,728,083 20,622,152

After distribution

N/A 16,461,898 16,899,687 17,786,066 Note 3 Note 3

Note1: Condensed Consolidated Balance Sheets were under GAAP in 2011, hence not applicable. Note2: The post-distribution numbers are based on the Shareholder’s Resolution in the following year Note3: The 2015 earnings distribution has not been resolved by the Shareholder’s Meeting, hence not

applicable Note4: The 2016 1Q consolidated financial statements have been reviewed by CPA. Asset revaluation

has not been made.

107

Condensed Balance Sheet - International Financial Reporting Standards

Unit: NT$ thousands

Year Item

Five-Year Financial Summary

2011 2012 2013 2014 2015

Current Assets N/A 24,682,142 21,723,839 27,948,158 27,683,068

Property, Plant and Equipment

N/A 404,883 376,216 354,847 344,367

Intangible Assets N/A 92,630 99,555 108,317 112,131

Other Assets N/A 11,687,557 11,461,708 12,721,418 12,983,703

Total Assets N/A 36,867,212 33,661,318 41,132,740 41,123,269

Current Liabilities

Before distribution

N/A 18,250,272 14,278,377 20,713,133 20,493,816

After distribution

N/A 20,352,675 15,776,826 22,411,222 Note 3

Non-current Liabilities N/A 2,208,586 3,432,301 3,500,658 3,610,005

Total Liabilities

Before distribution

N/A 20,458,858 17,710,678 24,213,791 24,103,821

After distribution

N/A 22,561,261 19,209,127 25,911,880 Note 3

Equity Attributable to Shareholders of The Parent

N/A 16,408,354 15,950,640 16,918,949 17,019,448

Capital Stock N/A 7,349,960 7,474,343 7,575,303 7,611,076

Capital Surplus N/A 2,757,865 3,070,085 3,230,033 3,297,703

Retained Earnings

Before distribution

N/A 6,170,655 5,188,509 5,874,885 6,097,988

After distribution

N/A 4,068,252 3,690,060 4,176,796 Note 3

Other Equities N/A 141,709 229,538 250,563 24,516

Treasury Stocks N/A (11,835) (11,835) (11,835) (11,835)

Non-controlling Interests N/A 0 0 0 0

Total Equity

Before distribution

N/A 16,408,354 15,950,640 16,918,949 17,019,448

After distribution

N/A 14,305,951 14,452,191 15,220,860 Note 3

Note1: Condensed Consolidated Balance Sheets were under GAAP in 2011, hence not applicable. Note2: The post-distribution numbers are based on the Shareholder’s Resolution in the following

year Note3: The 2015 earnings distribution has not been resolved by the Shareholder’s Meeting, hence

not applicable

108

Condensed Consolidated Income Statement - International Financial Reporting Standards

Unit: NT$ thousands

Year Item

Five-Year Financial Summary As of March 31, 2016 (Note 2)

2011 2012 2013 2014 2015

Operating Revenues N/A 60,522,162 52,221,958 57,691,937 67,057,640 13,633,689

Gross Profit N/A 5,159,479 4,217,053 4,374,365 5,436,078 1,457,215

Operating Income N/A 3,237,648 2,365,775 2,702,331 3,001,912 1,001,598

Non-Operating Income & Expenses

N/A 215,739 144,135 462,501 318,740 135,609

Income Before Income Tax

N/A 3,453,387 2,509,910 3,164,832 3,320,652 1,137,207

Net Income from continuing operations

N/A 2,850,215 2,035,776 2,536,396 2,570,143 857,389

Net Income(Loss) N/A 2,850,215 2,035,776 2,536,396 2,570,143 857,389

Other Comprehensive Income (Income after tax)

N/A (24,852) 86,584 114,414 (393,515) (15,436)

Total Comprehensive Income

N/A 2,825,363 2,122,360 2,650,810 2,176,628 841,953

Net Income Attributable to Shareholders of The Parent

N/A 2,445,282 1,641,730 2,092,199 2,040,610 467,994

Net Income Attributable to Non-controlling Interests

N/A 404,933 394,046 444,197 529,533 389,395

Total Comprehensive Income (Loss) Attributable to Shareholders of the Parent

N/A 2,438,974 1,729,559 2,205,850 1,695,145 453,803

Total Comprehensive Income (Loss) Attributable to Non-controlling Interests

N/A 386,389 392,801 444,960 481,483 388,150

Earnings Per Share (NT$)

N/A 3.39 2.22 2.79 2.69 0.62

Note1: Condensed Consolidated Income Statements were under GAAP in 2011, hence not applicable. Note2: The 2016 1Q consolidated financial statements have been reviewed by CPA.

109

Condensed Income Statement - International Financial Reporting Standards

Unit: NT$ thousands

Year Item


2011 2012 2013 2014 2015

Operating Revenues N/A 34,824,383 31,446,326 38,060,203 42,049,227

Gross Profit N/A 2,356,663 2,169,180 2,068,143 2,827,102

Operating Income N/A 1,303,017 1,129,995 1,282,847 1,193,000

Non-Operating Income & Expenses

N/A 1,406,827 657,006 1,084,562 1,271,157

Income Before Income Tax N/A 2,709,844 1,787,001 2,367,409 2,464,157

Net Income from continuing operations

N/A 2,445,282 1,641,730 2,092,199 2,040,610

Net Income(Loss) N/A 2,445,282 1,641,730 2,092,199 2,040,610

Other Comprehensive Income (Income after tax)

N/A (6,308) 87,829 113,651 (345,465)

Total Comprehensive Income

N/A 2,438,974 1,729,559 2,205,850 1,695,145

Net Income Attributable to Shareholders of The Parent

N/A - - - -

Net Income Attributable to Non-controlling Interests

N/A - - - -

Total Comprehensive Income (Loss) Attributable to Shareholders of the Parent

N/A - - - -

Total Comprehensive Income (Loss) Attributable to Non-controlling Interests

N/A - - - -

Earnings Per Share (NT$) N/A 3.39 2.22 2.79 2.69

Note1: Condensed Income Statements were under GAAP in 2011, hence not applicable.

110

6.1.2 Condensed Consolidated Balance Sheet - ROC GAAP Unit: NT$ thousands

Year Item


2011 2012 2013 2014 2015

Current assets 39,093,410 39,698,734 N/A N/A N/A

Funds and Investments 1,424,355 1,274,120 N/A N/A N/A

Fixed assets 10,691,671 10,508,302 N/A N/A N/A

Intangible Assets 190,905 194,496 N/A N/A N/A

Other assets 459,212 466,861 N/A N/A N/A

Total assets 51,859,553 52,142,513 N/A N/A N/A

Current liabilities

Before distribution

29,160,780 28,433,813 N/A N/A N/A

After distribution

31,156,211 30,536,216 N/A N/A N/A

Long-term liabilities 4,920,695 4,255,113 N/A N/A N/A

Other liabilities 1,980,962 2,277,652 N/A N/A N/A

Total liabilities

Before distribution

36,062,437 34,966,578 N/A N/A N/A

After distribution

38,057,868 37,068,981 N/A N/A N/A

Capital stock 7,126,540 7,349,960 N/A N/A N/A

Capital Reserves 2,565,458 2,955,935 N/A N/A N/A

Retained Earnings

Before distribution

4,538,695 4,935,700 N/A N/A N/A

After distribution

2,543,264 2,833,297 N/A N/A N/A

Unrealized gain or loss on financial instruments

148,017 183,088 N/A N/A N/A

Cumulative translation adjustments

133,625 92,246 N/A N/A N/A

Unrecognized pension cost (338,227) (212,565) N/A N/A N/A

Treasury stock (11,835) (11,835) N/A N/A N/A

Total stockholders' equity of parent company

Before distribution

14,162,273 15,292,529 N/A N/A N/A

After distribution

12,166,842 13,190,126 N/A N/A N/A

Minority interest 1,634,843 1,883,406 N/A N/A N/A

Total Shareholders’ Equity

Before distribution

15,797,116 17,175,935 N/A N/A N/A

After distribution

13,801,685 15,073,532 N/A N/A N/A

Note1: The post-distribution numbers are based on the Shareholder’s Resolution in the following year.

Note2: Condensed Consolidated Balance Sheet was under IFRS during 2013 to 2015, hence not applicable.

111

Condensed Balance Sheet - ROC GAAP

Unit: NT$ thousands

Year

Item


2011 2012 2013 2014 2015

Current assets 25,380,199 24,988,128 N/A N/A N/A

Funds and Investments 8,164,176 8,720,265 N/A N/A N/A

Fixed assets 458,645 404,883 N/A N/A N/A

Intangible Assets 91,753 92,630 N/A N/A N/A

Other assets 430,328 1,313,123 N/A N/A N/A

Total assets 34,525,101 35,519,029 N/A N/A N/A

Current liabilities

Before distribution

18,719,196 18,250,272 N/A N/A N/A

After distribution

20,714,627 20,352,675 N/A N/A N/A

Long-term liabilities - - N/A N/A N/A

Other liabilities 1,643,632 1,976,228 N/A N/A N/A

Total liabilities

Before distribution

20,362,828 20,226,500 N/A N/A N/A

After distribution

22,358,259 22,328,903 N/A N/A N/A

Capital stock 7,126,540 7,349,960 N/A N/A N/A

Capital Reserves 2,565,458 2,955,935 N/A N/A N/A

Retained Earnings

Before distribution

4,538,695 4,935,700 N/A N/A N/A

After distribution

2,543,264 2,833,297 N/A N/A N/A

Unrealized gain or loss on financial instruments

148,017 183,088 N/A N/A N/A

Cumulative translation adjustments

133,625 92,246 N/A N/A N/A

Unrecognized pension cost (338,227) (212,565) N/A N/A N/A

Treasury stock (11,835) (11,835) N/A N/A N/A

Total Shareholders’ Equity

Before distribution

14,162,273 15,292,529 N/A N/A N/A

After distribution

12,166,842 13,190,126 N/A N/A N/A

Note1: The post-distribution numbers are based on the Shareholder’s Resolution in the following year.

Note2: Condensed Balance Sheet was under IFRS during 2013 to 2015, hence not applicable.

112

Condensed Consolidated Income Statement - ROC GAAP

Unit: NT$ thousands

Year Item


2011 2012 2013 2014 2015

Operating revenues 56,279,714 60,738,850 N/A N/A N/A

Gross profit 4,655,171 5,116,066 N/A N/A N/A

Operating income 2,780,166 3,154,153 N/A N/A N/A

Non-operating income 676,436 468,172 N/A N/A N/A

Non-operating expenses 184,826 252,908 N/A N/A N/A

Income from continuing operations before income tax

3,271,776 3,369,417 N/A N/A N/A

Income from operations of continued segments - after tax

2,612,656 2,780,419 N/A N/A N/A

Income from discontinued departments

- - N/A N/A N/A

Extraordinary gain or loss - - N/A N/A N/A

Cumulative effect of accounting principle changes

- - N/A N/A N/A

Equity holders of the Company 2,262,733 2,392,436 N/A N/A N/A

Minority interest 349,923 387,983 N/A N/A N/A

Earnings Per Share (NT$) 3.22 3.32 N/A N/A N/A

Note1: Condensed Consolidated Income Statement was under IFRS during 2013 to 2015, hence not applicable.

113

Condensed Income Statement - ROC GAAP

Unit: NT$ thousands

Year Item


2011 2012 2013 2014 2015

Operating revenues 33,000,979 34,824,383 N/A N/A N/A

Gross profit 2,114,201 2,356,663 N/A N/A N/A

Operating income 1,111,933 1,264,354 N/A N/A N/A

Non-operating income 1,501,392 1,548,955 N/A N/A N/A

Non-operating expenses 66,164 162,884 N/A N/A N/A

Income from continuing operations before income tax

2,547,161 2,650,425 N/A N/A N/A

Income from operations of continued segments - after tax

2,262,733 2,392,436 N/A N/A N/A

Income from discontinued departments

- - N/A N/A N/A

Extraordinary gain or loss - - N/A N/A N/A

Cumulative effect of accounting principle changes

- - N/A N/A N/A

Net income 2,262,733 2,392,436 N/A N/A N/A

Earnings Per Share (NT$) 3.22 3.32 N/A N/A N/A

Note1: Condensed Income Statement was under IFRS during 2013 to 2015, hence not applicable.

6.1.3 Auditors’ Opinions in Past Five Years:

CPA Firm/Year 2011 2012 2013 2014 2015

PriceWaterhouseCoopers

Huei-Shyang Wang

Shyh-Rong Ueng

Shyh-Rong Ueng

Shyh-Rong Ueng

Shyh-Rong Ueng

Shyh-Rong Ueng

Huei-Shyang Wang

Huei-Shyang Wang

Huei-Shyang Wang

Huei-Shyang Wang

Auditing Opinion modified

unqualified opinion

modified unqualified

opinion


opinion


opinion


opinion

114

6.2 Financial Analysis for the Recent 5 Years

6.2.1 Consolidated Financial Ratio Analysis -International Financial Reporting Standards

Year Item

Five-Year Financial Summary As of March 31, 2016 2011 2012 2013 2014 2015

Financial Structure

(%)

Debt to Asset Ratio N/A 65.49 62.41 65.75 67.25 65.72

Long-term Funds to Properties, Plants and Equipment Ratio

N/A 308.32 353.69 367.86 369.07 380.56

Liquidity (%)

Current ratio N/A 138.24 148.50 135.63 131.72 134.59

Quick ratio N/A 125.54 135.43 122.90 121.46 122.00

Interest Coverage Ratio

N/A 3,632.33 2,465.03 3,655.79 3,811.55 4,071.67

Operating Performance

Accounts Receivable Turnover (times)

N/A 13.05 8.83 8.24 9.85 8.44

Average Collection Period (days)

N/A 27.96 41.33 44.29 37.05 43.24

Inventory Turnover (times)

N/A N/A N/A N/A N/A N/A

Accounts Payable Turnover (times)

N/A 4.92 3.93 3.67 3.88 3.20

Average Inventory Turnover Period (Days)

N/A N/A N/A N/A N/A N/A

Properties, Plant and Equipment Turnover (times)

N/A 8.30 7.23 8.14 9.56 7.81

Total Assets Turnover (times)

N/A 1.13 1.02 1.09 1.15 0.91

Profitability

Return on Assets (%) N/A 4.71 3.37 4.09 3.61 3.27

Return on Equity (%) N/A 15.40 10.15 12.73 12.03 10.84

Income before tax to Capital Ratio (%)

N/A 46.99 33.58 41.78 43.63 59.66

Net Margin (%) N/A 4.04 3.14 3.63 3.04 3.43

Earnings per share (NT$)

N/A 3.39 2.22 2.79 2.69 0.62

Cash flow

Cash flow Ratio (%) N/A 6.43 (13.54) 16.27 (14.79) 22.71

Cash flow adequacy Ratio (%)

N/A 173.39 112.88 126.58 18.90 61.53

Cash reinvestment Ratio (%)

N/A (1.92) (13.15) 12.15 (27.10) 28.31

Leverage Operating leverage N/A 4.10 5.24 4.60 4.48 3.57

Financial leverage N/A 1.03 1.05 1.03 1.03 1.03

Note1: Consolidated Financial Ratio Analysis was under GAAP in 2011, hence not applicable.

115

Financial Ratio Analysis -International Financial Reporting Standards

Year Item


2011 2012 2013 2014 2015

Financial Structure (%)

Debt to Asset Ratio N/A 55.49 52.61 58.87 58.61

Long-term Funds to Properties, Plants and Equipment Ratio

N/A 4,052.62 5,152.08 5,754.48 5,990.54

Liquidity (%)

Current ratio N/A 135.24 152.15 134.93 135.08

Quick ratio N/A 122.38 137.83 122.37 124.86

Interest Coverage Ratio N/A N/A N/A N/A N/A



N/A 13.82 9.39 9.40 11.67

Average Collection Period (days)

N/A 26.42 38.88 38.82 31.27

Inventory Turnover (times) N/A N/A N/A N/A N/A


N/A 4.23 3.28 3.27 3.54


N/A N/A N/A N/A N/A

Properties, Plant and Equipment Turnover (times)

N/A 86.01 80.52 104.12 120.28

Total Assets Turnover (times)

N/A 0.94 0.89 1.02 1.02

Profitability

Return on Assets (%) N/A 6.73 4.66 5.59 4.97

Return on Equity (%) N/A 15.40 10.15 12.73 12.03

Income before tax to Capital Ratio (%)

N/A 36.87 23.91 31.25 32.38

Net Margin (%) N/A 7.02 5.22 5.50 4.85

Earnings per share (NT$) N/A 3.39 2.22 2.79 2.69

Cash flow

Cash flow Ratio (%) N/A (5.68) (20.37) 6.66 (18.21)

Cash flow adequacy Ratio (%)

N/A 188.63 98.99 75.28 (33.08)

Cash reinvestment Ratio (%)

N/A (17.22) (26.80) (0.61) (27.28)

Leverage Operating leverage N/A 4.74 5.27 4.50 5.15

Financial leverage N/A 1.00 1.00 1.00 1.00

Note1: Financial Ratio Analysis was under GAAP in 2011, hence not applicable.

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The formulas for the above table:

1. Financial Structure

(1) Debts to Assets Ratio = Total Liabilities / Total Assets

(2) Long-term Funds to Properties, Plants and Equipment Ratio = (Total Shareholders' Equity plus Noncurrent Liabilities) / Net of Properties, Plants and Equipment

2. Liquidity

(1) Current Ratio = Current Assets / Current Liabilities

(2) Quick Ratio = (Current Assets - inventory - Prepaid Expense) / Current Liabilities

(3) Interest Coverage Ratio = (Net Income before Income Tax and Interest Expenses) / Interest Expense

3. Operating Performance

(1) Account Receivable Turnover = Net Sales / Average Accounts Receivable

(2) Average Collection Period = 365/ Accounts Receivable Turnover

(3) Inventory Turnover = Costs of Goods Sold / Average Inventory

(4) Accounts Payable Turnover = Costs of Goods Sold / Average Accounts Payable

(5) Average Inventory Turnover Period = 365 / Inventory Turnover

(6) Properties, Plant and Equipment Turnover = Net Sales / Average of Net Properties, Plants and Equipment.

(7) Total Assets Turnover Ratio = Net Sales / Average of Total Assets

4. Profitability Analysis

(1) Return on Assets =[Net Income +Interest Expense×(1-Tax Rate)] / Average Total Assets

(2) Return on Equity =Net Income / Average Shareholders' Equity

(3) Net Margin = Net Income / Net Sales

(4) Earnings per Share = (Net Income Attribute to Controlling Interest - Preferred Stock Dividend) / Weighed-average Number of Outstanding Shares

5. Cash Flow

(1) Cash Flow Ratio = Cash Flows from Operating Activities / Current Liabilities

(2) Cash Flow adequacy Ratio = Net Cash Flow from Operating Activities for the past 5 years / (Capital Expenditure + Increase in Inventory + Cash Dividends) for the past 5 years

(3) Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities - Cash Dividends) / (Gross Properties, Plants and Equipment + Long-term Investment + Other Noncurrent Assets + Working Capital)

6. Leverage Ratio

(1) Operating Leverage = (Net Sales - Variable Operating Costs and Expenses) / Operating Income

(2) Financial Leverage = Operating Income / (Operating Income-Interest Expenses)

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6.2.2 Consolidated Financial Ratio Analysis - ROC GAAP

Year Item

Financial analysis in the past five years

2011 2012 2013 2014 2015

Financial structure (%)

Debt to Asset Ratio 69.54 67.06 N/A N/A N/A

Long-term Funds to Fixed Assets Ratio

193.78 203.94 N/A N/A N/A

Liquidity (%)

Current ratio 134.06 139.62 N/A N/A N/A

Quick ratio 121.07 125.82 N/A N/A N/A

Interest Coverage Ratio 34.20 34.99 N/A N/A N/A



12.50 13.73 N/A N/A N/A

Average Collection Period (days) 29.20 26.58 N/A N/A N/A



4.25 4.94 N/A N/A N/A


N/A N/A N/A N/A N/A

Fixed Assets Turnover (times) 5.26 5.78 N/A N/A N/A

Total Assets Turnover (times) 1.09 1.16 N/A N/A N/A

Profitability

Return on Assets (%) 4.63 4.76 N/A N/A N/A

Return on Stockholders' Equity (%)

16.73 16.24 N/A N/A N/A

Ratio to issued capital (%)

Operating Income 39.01 42.91 N/A N/A N/A

Pre-tax Income 45.91 45.84 N/A N/A N/A

Net Margin (%) 4.02 3.94 N/A N/A N/A

Earnings per share (NT$) 3.22 3.32 N/A N/A N/A

Cash flow

Cash flow Ratio (%) 12.96 3.18 N/A N/A N/A

Cash flow adequacy Ratio (%) 147.11 162.95 N/A N/A N/A

Cash reinvestment Ratio (%) 8.14 (4.03) N/A N/A N/A

Leverage Operating leverage 4.40 4.13 N/A N/A N/A

Financial leverage 1.04 1.03 N/A N/A N/A

Note1: Consolidated Financial Ratio Analysis was under IFRS during 2013 to 2015, hence not

applicable.

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Financial Ratio Analysis - ROC GAAP

Year Item

Financial analysis in the past five years

2011 2012 2013 2014 2015

Financial structure (%)

Debt to Asset Ratio 58.98 56.95 N/A N/A N/A

Long-term Funds to Fixed Assets Ratio

3,087.85 3,777.02 N/A N/A N/A

Liquidity (%)

Current ratio 135.58 136.92 N/A N/A N/A

Quick ratio 125.31 122.71 N/A N/A N/A

Interest Coverage Ratio 11,172.76 N/A N/A N/A N/A



11.08 13.82 N/A N/A N/A

Average Collection Period (days) 32.95 26.41 N/A N/A N/A



4.56 4.23 N/A N/A N/A


N/A N/A N/A N/A N/A

Fixed Assets Turnover (times) 71.95 86.01 N/A N/A N/A

Total Assets Turnover (times) 0.96 0.98 N/A N/A N/A

Profitability

Return on Assets (%) 6.89 6.83 N/A N/A N/A

Return on Stockholders' Equity (%)

16.73 16.24 N/A N/A N/A

Ratio to issued capital (%)

Operating Income 15.60 17.20 N/A N/A N/A

Pre-tax Income 35.74 36.06 N/A N/A N/A

Net Margin (%) 6.86 6.87 N/A N/A N/A

Earnings per share (NT$) 3.22 3.32 N/A N/A N/A

Cash flow

Cash flow Ratio (%) 16.65 (5.49) N/A N/A N/A

Cash flow adequacy Ratio (%) 210.91 187.69 N/A N/A N/A

Cash reinvestment Ratio (%) 8.78 (17.02) N/A N/A N/A

Leverage Operating leverage 5.42 4.88 N/A N/A N/A

Financial leverage 1.00 1.00 N/A N/A N/A

Note1: Financial Ratio Analysis was under IFRS during 2013 to 2015, hence not applicable.

119

The formulas for the above table:

1. Financial Structure

(1) Debts to Assets Ratio = Total Liabilities / Total Assets

(2) Long-term Funds to Fixed Assets Ratio = (Total Shareholders' Equity plus Long-term Liabilities) / Net Fixed Assets

2. Liquidity

(1) Current Ratio = Current Assets / Current Liabilities

(2) Quick Ratio = (Current Assets - inventory - Prepaid Expense) / Current Liabilities

(3) Interest Coverage Ratio = (Net Income before Income Tax and Interest Expenses) / Interest Expense

3. Operating Performance

(1) Account Receivable Turnover = Net Sales / Average Receivables (including accounts and notes receivable)

(2) Average Collection Period = 365/ Accounts Receivable Turnover

(3) Inventory Turnover = Costs of Goods Sold / Average Inventory

(4) Accounts Payable Turnover = Costs of Goods Sold / Average Payables (including accounts and notes payable)

(5) Average Inventory Turnover Period = 365 / Inventory Turnover

(6) Fixed Assets Turnover = Net Sales / Net Fixed Assets

(7) Total Assets Turnover = Net Sales / Total Assets

4. Profitability Analysis

(1) Return on Assets =[Net Income +Interest Expense×(1-Tax Rate)] / Average Total Assets

(2) Return on Shareholders' Equity =Net Income / Average Shareholders' Equity

(3) Net Margin = Net Income / Net Sales

(4) Earnings per Share = (Net Income - Preferred Stock Dividend) / Weighed-average Number of Outstanding Shares.

5. Cash Flow

(1) Cash Flow Ratio = Cash Flows from Operating Activities / Current Liabilities

(2) Cash Flow adequacy Ratio = Net Cash Flow from Operating Activities for the past 5 years / (Capital Expenditure + Increase in Inventory + Cash Dividends) for the past 5 years

(3) Cash reinvestment Ratio = (Net Cash Flow from Operating Activities - Cash Dividends) / (Gross Fixed Assets + Long-term Investment + Other Assets + Working Capital)

6. Leverage Ratio

(1) Operating Leverage = (Net Sales - Variable Operating Costs and Expenses) / Operating Income

(2) Financial Leverage = Operating Income / (Operating Income-Interest Expenses)

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6.3 Audit Committee’s Review Report in the Most Recent Year

121

6.4 Consolidated Financial Statements and Independent Auditors’ Report in the Most Recent Year Please refer to the Appendix 1

6.5 Financial Statements and Independent Auditors’ Report in the Most Recent Year Please refer to the Appendix 2

6.6 Impact of the Financial Dist ress Occurred to the Company and Affiliates in the Recent Years

until the Annual Report being published: None

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VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status 7.1.1 Analysis of Financial Status Unit: NT$ thousands

Year Item

2015 2014 Difference Remark

(Note 1) Amount %

Current Assets 45,298,807 42,090,608 3,208,199 7.62

Properties, Plants and Equipment 7,001,676 7,026,878 (25,202) -0.36

Intangible Assets 121,469 118,638 2,831 2.39

Other Assets 7,808,634 7,647,224 161,410 2.11

Total Assets 60,230,586 56,883,348 3,347,238 5.88

Current Liabilities 34,389,605 31,033,931 3,355,674 10.81

Non-current Liabilities 6,112,898 6,365,262 (252,364) -3.96

Total Liabilities 40,502,503 37,399,193 3,103,310 8.30

Equity attributable to owners of the parent

17,019,448 16,918,949 100,499 0.59

Capital stock 7,611,076 7,575,303 35,773 0.47

Capital surplus 3,297,703 3,230,033 67,670 2.10

Retained Earnings 6,097,988 5,874,885 223,103 3.80

Other equity interest 24,516 250,563 (226,047) -90.22 Note 2

Treasury stocks (11,835) (11,835) 0 0.00

Non-controlling interest 2,708,635 2,565,206 143,429 5.59

Total Equity 19,728,083 19,484,155 243,928 1.25

Note 1: The analysis is not applicable when the difference percentage does not exceed 20% and is less NT10, 000 thousands.

Note 2: Other equity interest decreases, mainly due to accumulative translation transaction differences of foreign operations and fluctuation in the value of financial assets in held-to-maturity.

7.1.2 The evaluation basis of the balance sheet valuation items Item B/S valuation item Evaluation reference Evaluation basis 1 Monetary assets

denominated in foreign currency

Spot rate on balance sheet date

Compute exchange gain or loss based on the spot rate

2 Financial instruments carried at fair value, available for sales and derivatives

Fair market value on balance sheet date

Evaluate based on the fair market value

3 Allowances for doubtful accounts

Historical records and credit references

The recognition and valuation of allowance-for-bad-debts are based on the controlling credit risks of our clients which are categorized such as low risk, medium-high risk, foreign owners..etc. A certain percentage of allowances for bad debts are determined according to the valuation of aging of accounts receivable in each category. Note: The accounts receivables from related

parties are not subject for allowances-for-bad-debts. However if special credit risk prevails, the allowance for bad debts will be evaluated according to the risk.

4 Allowances for inventory valuation and obsolescence losses

Not applicable to the Company

Not applicable to the Company

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7.2 Analysis of Financial Performance 1. Analysis of Financial Performance

Unit: NT$ thousands

Year Item

2015 2014 Difference Remark

(Note) Amount %

Operating Revenue 67,057,640 57,691,937 9,365,703 16.23

Operating Costs (61,621,562) (53,317,572) 8,303,990 15.57

Gross Profit 5,436,078 4,374,365 1,061,713 24.27 Note 3

Operating Expenses (2,434,166) (1,672,034) 762,132 45.58 Note 2

Operating Income 3,001,912 2,702,331 299,581 11.09

Non-operating Income and expenses 318,740 462,501 (143,761) -31.08 Note 2

Profit before Income Tax 3,320,652 3,164,832 155,820 4.92

Income Tax Expense (750,509) (628,436) 122,073 19.42

Non-controlling Interest (529,533) (444,197) 85,336 19.21

Income attributable to owners of the parent 2,040,610 2,092,199 (51,589) -2.47

Note: The analysis is not applicable when the difference percentage does not exceed 20% and is less NT10,000 thousands.

2. The analysis of the differences：

(1) The consolidated operating expense for 2015 increased compared to 2014 is mainly due to set aside allowance for doubtful account.

(2) The consolidated non-operating revenue for 2015 decreased compared to 2014 is mainly due to the decrease of interest revenue and other non-operating revenue.

3. Analysis of gross profit: The consolidated revenue for 2015 increase compared to the previous year. This is mainly because domestic major projects are in the high-peak of construction revenue recognition.

4. The explanation of occurred or expected operational, policy, market status, economic environment and other internal and external: None

5. The drivers of the following year that affect company expected operating revenue: The operating revenue of the following year is expected to be flat compared to 2015 accounting to the backlog.

7.3 Analysis of Cash Flow 7.3.1 Cash Flow Analysis for the Past 2 Year

Unit: NT$ thousands

Year Item

2015/12/31 2014/12/31 Difference ratio (%)

Cash Flow Ratio (%) -14.79 16.27 -190.90

Fund Flow Adequacy Ratio (%) 18.90 126.58 -85.07

Cash Re-investment Ratio (%) -27.10 12.15 -323.05

Explanation to changes: 1. Cash flow ratio decreased due to net cash used in operating activities. 2. Fund flow adequacy ratio decreased due to net cash used in operating activities. 3. Cash re-investment ratio decreased due to net cash used in operating activities.

7.3.2 Analysis of Cash Liquidity

The cash outflow of Year 2015 is NT$4,221.297 Millions. The cash balance in the end of the year is NT$5,589.006 Millions. Cash liquidity is fine.

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7.3.3 Analysis of Cash Liquidity for the Coming Year Unit: NT$ thousands

Cash Balance at Beginning for the Year

Expected Net Cash Flow from

Operating Activities

Expected Cash Inflow

(Outflow)

Expected Cash Surplus (Deficit)

Leverage of Expected Cash Deficit

Investment Plans Investment Plans

5,589,006 3,511,210 2,493,998 8,083,004 - -

1. Analysis of change in cash flow in Year 2016: (1) Operating activities: The sufficient backlog of CTCI Group and cost down policy will create net

cash inflow. (2) Investing activities: The cash outflow is mainly due to new business investment. (3) Financing activities: The cash outflow is mainly due to cash dividends distribution.

2. Liquidity analysis and remedial measures against cash deficit: N/A

7.4 Major Capital Expenditure Items: None 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the

Investment Plans for the Coming Year The Company has established subsidiaries in China, Thailand, Malaysia, Vietnam, India, the Middle East, U.S.A., Singapore; branches in Italy and Qatar; CTCI Co. Korea Liaison Office and CTCI Indonesia representative office. The Company established CCJV P1 Engineering & Construction Sdn. Bhd. in Malaysia in 2014. To strengthen global market position, CTCI would keep assessing overseas markets and future growth, and expand its global footprints timely to enhance the international competitiveness.

7.6 Analysis of Risk Management 7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance,

and Future Response Measures A. Interest rate

Unit：NT$ Thousands

Item 2015 2014

Net Interest Income/Expense (A1) 31,545 60,175

Investment gain on money market fund (A2)

6,342 7,842

Sales(B) 67,057,640 57,691,937

Net Income before Tax(C) 3,320,652 3,164,832

A1/B(%) A2/B(%) 0.05 0.01 0.10 0.01

A1/C(%) A2/C(%) 0.95 0.19 1.90 0.25

Besides equity products and deposits, the Company invests inactive money mainly in money market funds, which highly correlate with market interest rates. However, the investment gain on money market fund is not credited to interest income but to gain on disposal of investment. Therefore, to analyze the effects of changes in interest rates should consolidate interest income/expense and gain on disposal of money market fund. As CBC cut the TWD interest rates in 2015, the sum of net interest income and investment gain on money market fund in 2015 is NT$ 37,887 thousand, which is lower than it was in 2014. For inactive money, the Company will continue to look for higher-yield financial products with safety and proper liquidity to achieve the purpose of earning stable investment profits.

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B. Foreign exchange rates Unit：NT$ Thousands

Item 2015 2014

Net Foreign Exchange Gain/Loss(A) 109,098 274,536

Sales (B) 67,057,640 57,691,937

Net Income before Tax (C) 3,320,652 3,164,832

A/B(%) 0.16 0.48

A/C(%) 3.29 8.67

The business line of CTCI includes engineering design, procurement, fabrication, construction, supervision, project management, test & commissioning and environmental protection. All business work can be separated into two parts as domestic projects and overseas projects according to its location. For cash-in side, domestic projects are usually signed in Taiwan dollar, and sometimes in other foreign currencies; overseas projects are usually signed in US dollar and local currency. For cash-out side, the currencies of payment are usually decided by service location or procurement region. Therefore, the Company must keep appropriate foreign assets and liabilities to operate general activities. Thus the appreciation or depreciation of major currencies, like US dollar, Japanese Yen, and Euro, will influence foreign exchange profit/loss of the Company. To lower the influence on changes in foreign exchange rates, the Company adopts natural hedge strategy, concluding contracts in different currencies or asking multiple-currency contracts to cover major payment in different currencies. For other FX exposure, the Company also has concrete methods to hedge the risks. Thus, the changes in foreign exchange rates little affect the income of the Company. According to above table, the ratios of foreign exchange profit/loss to sales and net income before tax are slight. That means the changes in foreign exchange rates have limited influence on the sales and net income before tax. The concrete methods to hedge FX risks as below, a. To know well update trends of major currencies, and adjust FX position timely. b. To create internal hedge effect by netting foreign receivables and payables. c. For payment in foreign currencies, to forecast the direction of payment currencies and analyze the

potential profit and loss of foreign exchange, and then choose leads or lags strategy to hedge FX risks and achieve the goal of saving costs.

d. In order to allocate optimal capital position, to open foreign currency deposit accounts to collect foreign income and convert it into new Taiwan dollar or other strong currencies based on actual cash flow demand or FX tendency.

e. To use forward contracts or other tools to hedge FX risks. C. Inflation

Item 2015 2014

CPI 103.65 103.97

Annual Change of CPI -0.31 1.20

Construction Cost Indices 99.44 102.33

Annual Change of Construction Cost Indices -2.82 1.83

profit margin 8.11 7.22 Source：Directorate General of Budget, Accounting and Statistics, Executive Yuan, R.O.C.(Taiwan)/ Base year 2011

Due to the industry nature, the analysis of inflation should be referred to not only CPI but also Construction Cost Indices. The Consumer Price Index of 2015 fell to 103.65, and the annual change of it declined by -0.31%. DGBAS estimates the annual change of CPI of 2016 will be 0.69%. But Taiwan Institute of Economic Research expect the CPI level of 2016 will not have a significant growth due to the prolonged downtrend of crude oil price and the downward revised forecasts for Taiwan's economic growth.. The total Construction Cost Indices of 2015 declined by 2.82% mainly due to the decrease of 5.02% of its material category index and the increase of 1.28% of its service category index. The causes include

http://eng.stat.gov.tw/public/Data/1151634271.xls




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the downtrend of international raw material prices, the reduction in domestic scalar river dredging, the lack of domestic supply of sand and cement, and the increase of minimum wages. The Company would do the best to take potential inflation into account during whole project period in bidding stage. However the profits will still be eroded once the price increase is more than expected. The Company will continue to watch price changes closely, and reflect them to project contract quotation simultaneously; furthermore the Company also executes derivatives to hedge operational risks from potential inflation.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions The Company is devoted to develop EPC service business and does not engage in high-risk and high-leveraged investment. As for lending to others, guarantees and derivatives transactions all are executed according to the Company’s “Rules Governing Procedure for Loaning of Funds”, ”Rules Governing Procedure for Making of Endorsements or Guarantees” and “The Procedure for Acquisition and Disposition of Assets”.

7.6.3 Future Research & Development Projects and Corresponding Budget A. Current Project Progress (as of end of March, 2016), Budget and Estimated Time to Finish

Item Project Name Current Progress

(%) Budget

Estimated Time

to Finish

1 The development of Project Information Dashboard Application

26 2,244,000 105.12.31

2 The Maintenance and Implementation of Existing Innovation RD Products

25.2 20,180,000 105.12.31

3 Mobilization Application Research at Job Site(2016) 21 4,084,000 105.12.31

4 The Research and Development of Intelligent Application Platform (Tag Platform)

18 18,468,000 105.12.31

5 The Research and Development of Intelligent System Handover

16.8 2,376,000 105.12.31

6 The Research and Application of intelligent Tag in Lump Sum Engineering

21 3,668,000 105.12.31

7 AP Service 15 396,000 105.12.31

8 The Maintenance, Promotion and Extension of Material Management System

25 5,940,000 105.12.31

9 The Development of Integration and Application for SmartPlant Design Information

25 3,960,000 105.12.31

10 The Research of Process Risk and Equipment Completed Assessment

25 2,310,000 105.12.31

11 The Intelligent Development and Optimization of Process Design Data

25 5,280,000 105.12.31

12 A Discussion of Dynamic Calculation and Program Simulation of Blowdown

25 990,000 105.12.31

13 The Programmed Coding for Safety Valve Sizing 25 1,320,000 105.12.31

14 The Development of Civil & Building Common Database Operation System

25 5,280,000 105.12.31

15 The Research and Development of Civil & Building Design Flow Enhancement

25 5,280,000 105.12.31

16 The Research of The Fireproof, Insulation Applications of Vitreous Particle of Fluorite

70 3,965,000 105.12.31

17 Equipment Common Database Operation Platform 22 1,980,000 105.12.31

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Item Project Name Current Progress

(%) Budget

Estimated Time

to Finish

18 Project Equipment Data Integration System 25 1,980,000 105.12.31

19 European Code Tank Design System 22 2,640,000 105.12.31

20 The Research and Development of Instrument Common Database Operation Platform

21 3,960,000 105.12.31

21 The Research of Integrated Database of intelligentized Instrument Design Information

21 4,488,000 105.12.31

22 Piping Operation Workflow Enhancement 25 5,965,000 105.12.31

23 Agile Piping Design 25 11,905,000 105.12.31

24 The Advance Application of Power Information Integration Platform

24 4,533,000 105.12.31

25 The Development of Electrical Drawing Digitization Application

22 4,092,000 105.12.31

26 The Risk Assessment and Analysis of Lightning Protection

22 2,292,000 105.12.31

27 The Analysis of No-load Tap Changer(NLTC) from Step-up Transformer in Power Plan

20 830,000 105.12.31

28 A Plan to Enhance Procurement Supply Chain 13.56 5,214,000 105.12.31

29 Integrating P6, CMS and SPC to Apply to 4D Construction Planning and Simulation

15 1,320,000 105.12.31

30 Construction HSE Mobile System 20 1,272,000 105.12.31

31 The Development of Integrated, Intelligent Construction Information Platform

12 1,320,000 105.12.31

32 Establishing Start-up Expert System 25 739,200 105.12.31

33 The Research and Promotion of SPPID Application 45 1,320,000 105.07.31

B. Major Factor to Influence Future RD Success

a. Right RD strategy and definition of key performance Index b. Good communication with users to make sure production meet market requirement c. Stable RD resource to accomplish development task effectively d. Accurate progress control to ensure the timeliness of RD results

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance

and Sales None

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance

and Sales None

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s

Response Measures None

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans

None 7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans

Not Applicable

128

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive

Customer Concentration None

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings

by Directors, or Shareholders with Shareholdings of over 10% The fluctuated security price and the possibility of changing directors are the effect and risk, and strengthening company’s information transparency is the countermeasure. The Company has established functional committees beneath Board of Directors, such as Corporate Governance Committee, Audit Committee and Remuneration Committee, to strengthen Board of Directors functions, furthermore, to promote the corporate governance.

7.6.11 Effects of, Risks Relating to and Response to Changes in Control over the Company None

7.6.12 Litigation or Non-litigation Matters A. CTCI Corporation and Mitsubishi Heavy Industries, Ltd. were joint venture in the Kaohsiung Country

Ren-Wu Resource Recovery Plant Project. The project completed on February 19, 2000 and accepted by Environmental Protection Administration on May 16, 2000. CTCI claimed for release of the guarantee bond in the amount of NTD 141,690 thousands, Environmental Protection Administration, however, declined the request due to one unsolved dispute between Kaohsiung City Government and O&M Contractor. After CTCI remitted in NTD 73,253 thousands to bank for exempting from the execution of the guarantee bond and filed a lawsuit to Taiwan Kaohsiung District Court, Environmental Protection Administration returned the amount of NTD 9,299 thousands to CTCI. As a result, CTCI reduced the claim amount to NTD 63,954 thousands, with the interest in the amount of NTD 117 thousands and the liquated damages in the amount of NTD 2,421 thousands. CTCI was then awarded a winning adjudication except for the liquated damages in the amount of NTD 1,708 thousands has been rejected. Afterwards, the Environmental Protection Administration appealed to the Taiwan High Court but failed. Further, the Environmental Protection Administration continued to appeal to the Taiwan Supreme Court. This lawsuit is remanded by Taiwan Supreme Court twice and now is under the trial of Taiwan High Court. The judgment of Taiwan High Court didn’t sustain the claim of Environmental Protection Administration and appealed to Taiwan Supreme Court by Environmental Protection Administration. The judgment of Taiwan Supreme Court remanded this case to Taiwan High Court. This lawsuit now is under the trial of Taiwan High Court. There is no material impact to CTCI’s finance as well as business development so far.

B. CTCI Corporation, Ishikawajima-Harima Heavy Industries Co., Ltd., Resource Engineering Services Inc. and East Construction Industry Co., Ltd were joint venture in the CPC Northern LNG Receiving Terminal Project and entered into a contract on July 23, 2004. CTCI claimed for additional costs, including direct and indirect costs, in the total amount of NTD 82,390 thousands for delay resulted from CPC Corporation’s contractor for another project and filed a lawsuit to Taipei District Court on March 5, 2010. After reviewing related document itself, CTCI reduced the claim amount to NTD 71,448,016 on March 1, 2011. The judgments of Taipei District Court and Taiwan High Court were not awarded to CTCI. CTCI appealed to Taiwan Supreme Court. The judgment of Taiwan Supreme Court sustained CTCI’s appeal and remanded for retrial. This lawsuit now is under the trial of Taiwan High Court. However, Taiwan High Court did not award to CTCI. CTCI appealed to Taiwan Supreme Court again. Finally Taiwan Supreme Court rejected CTCI’s appeal. There is no material impact to CTCI’s finance as well as business development so far.

129

C. CTCI Corporation, Ishikawajima-Harima Heavy Industries Co., Ltd., Resource Engineering Services Inc. and East Construction Industry Co., Ltd were joint venture in the CPC Northern LNG Receiving Terminal Project and entered into a contract on July 23, 2004. CPC Corporation alleged it has limited budget and cannot pay the compensation of price escalation, so CTCI claimed for compensation of price escalation in the amount of USD 7,983 thousands and NTD 384,159 thousands and filed a lawsuit to Taipei District Court on March 5, 2010. The judgment of Taipei District Court is not awarded to CTCI. CTCI appealed to Taiwan High Court but was overruled. CTCI appealed to Taiwan Supreme Court. This lawsuit now is under the trial of Taiwan Supreme Court. There is no material impact to CTCI’s finance as well as business development so far.

7.6.13 Risk management organization framework A. Organization chart

Note: The dashed line indicates the communication mechanism between Risk Management Executive Committee

and Auditing department rather than the reporting relationship.

B. Responsibility: a. Risk Management Executive Committee

The Risk Management Executive Committee is the major monitoring mechanism for risk management of the company, its members mainly include President and Head of Executive Management Operations, Business Operations and Supporting Operations, President is the Chairman of committee, and the convener is Head of Executive Management Operations. Major responsibilities are as follows: - Approve risk management policy and rules of the company; - Examine risk management report and strategy of the company, and improvement plan; - Supervise execution of risk control measure and improvement plan, communicate and deliver

risk management affairs with and to all employees; - Examine and assess the effectiveness of risk management measure and ask relevant unit to

propose improvement plan.

b. Risk Management Secretary Service The convener of Risk Management Executive Committee will designate dedicated personnel (or unit) to be responsible for overall risk management secretary service to ensure continuous effectiveness of risk management mechanism. Major responsibilities are as follows: - Contact window of risk management mechanism of the company; - Summarize and submit the risk management report, real time report and other works related

to risk management; - Issue relevant procedures; - Convene risk management review meeting.

風險管理執行委員會

Risk Management Executive Committee 稽核室

Auditing Department

Risk Management Representative of Division/Department

全體員工 All Employees

秘書業務 Secretary Service

130

c. Auditing Department Auditing Department makes and executes annual audit plan in accordance with the result of risk evaluation.

d. Risk Management Representative

Similar functions of divisions/ departments can be combined to a risk management unit and designate risk management representative to undertake relevant affairs and contact windows. Roles and responsibilities of risk management representative are as follows: - Promote the supervision, identification and management of significant risks on behalf of

division/department Head; - Summarize and prepare risk registers and improvement plan of the risk management unit; - Collect and monitor significant risk event of the division/department and evaluate the impact; - Assist division/department Head to report significant risk and relevant improvement plan to

Head of Business Operations and provide a copy to the unit of risk management secretary service;

- Deliver the notice on risk management to members of the division/department on behalf of division/department Head;

e. All Employees

Comply with company policy, perform duty in accordance with the R&R, implement relevant operations of risk management, and report to the supervisor immediately in case of a risk.

7.6.14 Other Major Risks

Competiveness is enhanced with CTCI tracking international business and economic conditions and assessing the impact on corporate finance, sales and business implementation which is responded to through various means including the control of cash flows to facilitate capital turnover; development of new markets for added business; and strengthened core technology which including project management and quality control.

7.7 Other: None

131

VIII. Special Disclosure 8.1 Summary of Affiliated Companies 8.1.1 Consolidated Business Report of Affiliates

(1) Organizational chart of the affiliates

100%

InnovestInvestment Corporation

100%


100%

CTCI Machinery Corporation

100%

HD Resources Management Corporation

23.34%

CTCI Chemicals Corporation

9.24%

9.24%

6.77%

26.90%

98%

Leading Energy Corporation

2%

93.14%


0.01%

58.05%


0.05%

0.37%

60%

Yuan Ding Resources

Management Corporation

40%

CTCI Group Companies Organization (Domestic) April 30, 2016

CTCI Corporation

93.15%

Sino Environmental

Services Corporation

0.01%

100%

Crown Asia 2 Investment

Limited

74.999%

Fortune Energy Corporation

0.001%

97.09%

E&C Engineering Corporation

0.002%

48.72%

Advanced Control &

Systems Inc.

1.38%

132

Ad

vance

d

Co

ntro

l &

System

s Inc.

E&C

En

gine

erin

g

KD

Ho

ldin

g C

orp

oratio

n

Sino

En

viron

me

ntal

Service

s C

orp

oratio

n

CTC

I C

he

micals

Co

rpo

ration

Inn

ove

stIn

vestm

en

t C

orp

oratio

n

100%Ce

ntu

ry Ah

ead

Ltd.

100%

Ad

vance

d C

on

trol

& In

form

ation

Te

chn

olo

gies Ltd

.

100%

Shan

ghai X

uan

LiTrad

ing C

o.,Ltd

19.24%

Shan

g Din

g En

gine

erin

g &

Co

nstru

ction

Co

., Ltd

.

80.76%

30%

SINO

GA

L -W

aste

Service

s Co

., Ltd.

30%

CTC

I Co

rpo

ration

Q

atar Bran

ch

CTC

I Co

rpo

ration

AB

U D

HA

BI B

ranch

50%

CTC

I Arab

ia Ltd.

50%

100%CTC

I Ove

rseas (B

VI)

Co

rpo

ration

60%CTC

I Engin

ee

ring &

C

on

structio

n Sd

n.

Bh

d.

40%

49%CTC

I (Thailan

d) C

o.,

Ltd.

51%

100%

CTC

I Am

ericas, In

c.

CTC

I Co

rpo

ration

Ko

rea Liaiso

n O

ffice

CTC

I Co

rpo

ration

Italian

Bran

ch

100%

Ch

un

g din

g C

he

micals C

orp

.

100%CTC

I Singap

ore

Pte

.Ltd

.

100%

CTC

I Ove

rseas C

o.,

Ltd.

100%

Un

iversal

Engin

ee

ring (B

VI)

Co

rpo

ration

50%C

IMA

S En

gine

erin

g Co

., Ltd

.

100%

CIN

DA

En

gine

erin

g &

Co

nstru

ction

Pvt.

Ltd.

100%

Jingd

ing

Engin

ee

ring &

C

on

structio

n C

o.,

Ltd.

49%

Sup

erio

rity(Th

ailand

)20%

CTC

I Malaysia Sd

n.

Bh

d.

100%

Xian

g Din

g En

viron

me

ntal

Co

nsu

ltant

(shan

ghai) C

o., Ltd

.

40%CTC

I & P

artne

rs Co

., Ltd

.

60%

39.99%

CIP

EC

Co

nstru

ction

Inc.

CTCI Group Companies Organization (Overseas) April 30, 2016

CTCI Corporation

CTC

I Ind

on

esia

Re

pre

sen

tative O

ffice

99%

CC

JV P

1

Engin

ee

ring &

C

on

structio

n Sd

n.

Bh

d.

CTC

I Overseas C

om

pan

ies

100%

CTC

I Ne

the

rland

s B

.V.

133

(2) General information of the affiliates: April 30

th, 2016 ; Unit : $Thousands

Company Date of

Incorporation Address

Common Stock Issued

Major Business Activities

E&C Engineering Corporation 1980.05.27 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 608,720 Planning and design of construction projects


1984.05.29 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 180,000 Planning, design and supervision of mechanical and electrical engineering projects

Advanced Control & Systems Inc.

1987.08.03 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 234,695 Design and installation of software


1994.05.24 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 151,000 Environmental engineering

GRQ Investment Corporation 1999.02.24 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 1,690,000 Real estate and leasing business


1999.02.05 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 1,140,000 Investments

KD Holding Corporation 1999.12.13 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 658,394 Investments

Leading Energy Corporation 2000.05.19 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 680,000 Environmental engineering

Fortune Energy Corporation 2002.11.07 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 750,000 Environmental engineering

CTCI Chemicals Corporation. 1999.08.04 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 71,000 Manufacturing of chemical products


2001.06.01 No.69, Ln. 373, Changchun St., Wuri Dist., Taichung City, Taiwan

NTD 20,000 Environmental engineering

CTCI (Thailand) Co., Ltd. 1987.08.15

19th Floor, 400 Phairojkijja Tower, Bangna-Trad Road KM.4, Tambol Bangna, Amphoe Prakanong, Bangkok 10260 Thailand

THB 255,000 Planning and design of construction projects

CTCI Overseas (BVI) Corporation

1997.04.30 P.O.Box 662, Road Town, Tortola British Virgin Islands

HKD 67,400 Investment, planning and design of construction

134

CTCI OVERSEAS CORPORATION LIMITED

1993.06.01 Suite 1801-5,18/F.,Tower 2,China Hong Kong City, 33 Canton Road,Tsim Sha Tsui, Kowloon Hong Kong

HKD 67,400 Planning and design of construction projects

Jingding Engineering & Construction Co., Ltd.

1993.02.17 10F Royal City International Centre, No. 136, Andingmenwai Street, Dongcheng District, Beijing

USD 10,600 Planning and design of construction projects


1998.08.17 SUITE 22-03B, 22nd Fl., Menara Tan & Tan 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 750 Planning and design of construction projects

CIMAS Engineering Company Limited

2001.03.28 6th Floor, Charmvit Building 117Tran Duy HungCau Giay District Hanoi, Vietnam


Century Ahead Ltd. 2000.10.12 Offshore Chambers, P.O.Box 217, Apia, Samoa

USD 750 Investments

Chung Ding Chemicals Corporation

1999.02.12 Offshore Chambers, P.O.Box 217, Apia, Samoa

USD 1,400 Trading of chemical materials

CTCI Arabia Ltd. 2002.10.27 P.O.Box 1962 Al Khobar 31952 Kindom of Saudi Arabia

SAR 5,000 Design and construction of chemical factories

Shang Ding Engineering & Construction Co., Ltd.

2003.09.24 Room.12, Floor.8, No.441, He Nang Bai Road, Zhabei District, Shanghai

USD 16,680 Consulting services for construction projects

Advanced Control & Information Technologies Ltd.

2001.09.21 Room 704, 7Fl, 26, Lane 168, Daduhe Road, Putuo District, Shanghai

USD 750 Computer skills services

CTCI Machinery Corporation 2007.03.14 5, Xinggong Rd., Dashe Dist., Kaohsiung NTD 200,000 Planning and design of construction projects

Superiority (Thailand) Co., Ltd 2006.01.01 19th Floor, Phairojkijja Tower, No. 400 Bangna-Trad Road, K.M.4, Bangna, Bangkok 10260 Thailand

THB 350 Planning and design of construction projects

Universal Engineering(BVI) Co., 2003.03.06 Akara Bldg.,24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.

USD 50 Planning and design of construction projects

CIPEC Construction Inc. 2003.07.03 Unit 402 SEDCCO 1 Building Roda St. Legaspi Village Makati City, Philippine.

PHP 2,500 Planning and design of construction projects

CINDA Engineering & Construction Pvt. Ltd.

2008.08.08 B-92, 9th Floor, Himalaya House, 23 Kasturba Gandhi Marg, New Delhi – 110001

INR 80,000 Planning and design of construction projects

135

CTCI Malaysia Sdn. Bhd. 2002.06.04 SUITE 22-03B, 22nd Fl., Menara Tan & Tan 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 750 Planning and design of construction projects

SINOGAL - Waste Services Co., Ltd.

2009.06.25 Rua Dr. Pedro Jose Lobo, ns 1-3, Edificio Banco Luso Internacional,15 andar, salas 1501 e 1510, em Macau

MOP 4,000 Environmental engineering

Shanghai XuanLi Trading Co.,Ltd 2009.07.17 Room 701, 7Fl, 26, Lane 168, Daduhe Road, Putuo District, Shanghai

CNY 5,000 General trade.

CTCI Americas, Inc. 2009.10.02 9555 West Sam Houston Pkwy South, Suite 420 Houston, Texas 77099

USD 100 Business development and related engineering services and planning

CTCI and Partners Company Limited

2009.09.14 P.O.Box 1962 Al Khobar 31952 Kindom of Saudi Arabia

SAR 5,000 Planning and design of construction projects

CTCI Singapore Pte. Ltd. 2011.01.10 80 Robinson Road #02-00 Singapore(068896)


Yuan Ding Resources Management Corp.

2013.12.13 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 45,000 Environmental engineering

Xiang Ding Environmental Consultant (shanghai) Co., Ltd.

2013.10.25 Room 2206-G,NO.89,East Yunling Rd., Putuo District, Shanghai city

USD 140 Environmental engineering


2014.05.20 SUITE D23, 2nd Floor, Plaza Pekeliling, No.2, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 250 Planning of construction projects


2011.04.21 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei NTD 250 Investments

CTCI Netherlands B.V. 2016.01.04 Jan Pietersz. Coenstraat 7, 2595WP's-Gravenhage

EUR 300 Engineers and other technical design and consultancy

136

(3) Common Shareholders of the Company and Its Subsidiaries or Its Affiliates with Actual of Deemed Control: None

(4) Industries covered by the business operated by all affiliates:

The business of the Company and its subsidiaries and affiliates provide include engineering, environmental, chemical and investment.

(5) Directors, supervisors, and general managers of the Company and affiliates

April 30th

, 2016

Company Title Name of Representative Shareholding

Shares %


Chairman CTCI Corporation Representative: Shou-Wei Lou

59,098,624 97.09

Director CTCI Corporation Representative: Pao-Yao Pan S. C. Chun Ting-Kuo Li S. L. Yang Shuh-Gong Lou Yang-Ting Chen

59,098,624 97.09

Supervisor Innovest Investment Corporation Representative: Ching-Hsiang Tseng

1,000 0.00

President S. C. Chun


Chairman CTCI Corporation Representative: Kuo-Ann Wu

16,765,048 93.14

Director CTCI Corporation Representative: Michael Yang Michael Chung Ming-Shan Yu Tian-Shyh Lee Tsung-Hsin Li Chi-Min Chien

16,765,048 93.14

Supervisor GRQ Investment Corporation Representative: Andrew Tsai

1,000 0.01

President Michael Chung

Advanced Control & Systems Inc.

Chairman CTCI Corporation Representative: Hwei-Nan Yih

11,444,842 48.72

Director CTCI Corporation Representative: Yin-Fan Liu

11,444,842 48.72

Charles Y. Huang

Bao-Lang Chen

Hou-Sheng Chan

Hung-I Chen 389,000 1.66


Ray Chang

Hsi-Peng Lu

Amy Lee

President Yin-Fan Liu 72,022 0.31

137


Shares %


Chairman KD Holding Corporation Representative: J.J. Liao

14,065,936 93.15

Director KD Holding Corporation Representative: Ming-Cheng Hsiao Todd Chen Eric Tiao B.J. Liang Daniel Hsin-I Ting Shane Shieh

14,065,936 93.15

Supervisor HD Resource Management Corporation Representative: SH Lin

1,000 0.01

President Eric Tiao


Chairman CTCI Corporation Representative: Mark W. H. Yang

169,000,000 100.00

Director CTCI Corporation Representative: Jin-Wen Chang Ho-Chuang Lee Steve Jean Jim-Druan Chen

169,000,000 100.00

Supervisor CTCI Corporation Representative: J.S. Wu

169,000,000 100.00

President Patrick Lin


Chairman CTCI Corporation Representative: Michael Yang

114,000,000 100.00

Director CTCI Corporation Representative: Pao-Yao Pan Sharon Chiang Leon Chen Y. S. Liao

114,000,000 100.00

Supervisor CTCI Corporation Representative: James Wang

114,000,000 100.00

President Patrick Lin


Chairman CTCI Corporation Representative: John H. Lin

38,457,105 58.05

Director CTCI Corporation Representative: Michael Yang Ming-Cheng Hsiao

38,457,105 58.05

Wen-Whe Pan

Yang-Min Liu

Parkwell Investment Limited Representative: Kuan-Shen Wang

1,060,000 1.60


Sidney Hsin-Huai Chow

Shean-Bii Chiu

Eugene Chien

President J.J. Liao

138


Shares %

CTCI Chemicals Corporation.

Chairman Innovest Investment Corporation Representative: Steven Chang

1,657,207 23.34

Director Innovest Investment Corporation Representative: Michael Yang Kevin S.P. Jen Mark H.C. Jen Michael C. Chang Joe C.L. Chen

1,657,207 23.34

Shirley Chou 576,910 8.13

Supervisor GRQ Investment Corporation Representative: Teh-Ming Tao

480,661 6.77

Roentec Company Limited Representative: Han-Bin Li

407,396 5.74

President Kevin S.P. Jen

Leading Energy Corporation


66,640,000 98.00

Director KD Holding Corporation Representative: Jin-Yiu Hsueh Weapon Wu Cheng-Shen Wang Chen-Chin Chen

66,640,000 98.00

Supervisor Sino Environmental Services Corporation Representative: Chang-Hong Lin

1,360,000 2.00

President Jin-Yiu Hsueh



2,000,000 100.00

Director KD Holding Corporation Representative: Yun-Peng Shih Ai-Cheng Ho Chun-Jung Hung Sheng-Jung Chiang

2,000,000 100.00

Supervisor KD Holding Corporation Representative: Jung-Yu Han

2,000,000 100.00

President Yun-Peng Shih

Fortune Energy Corporation


56,249,000 75.00

Director KD Holding Corporation Representative: Forest M.H. Lin Po-Chien Wang Feng-Hui Lee

56,249,000 75.00

Topco Scientific Co., Ltd. Representative: Fa-Siang Tan

18,700,000 24.93

Supervisor Sino Environmental Services Corporation Representative: Yan-Long Lee

1,000 0.00

Topco International Investment Co., Ltd. Representative: Su-Qing Lu

50,000 0.07


139


Shares %

CTCI Machinery Corporation

Chairman CTCI Corporation Representative: Tung-Chih Huang

20,000,000 100.00

Director CTCI Corporation Representative: Chey-Chan Lee Michael Shih Rong-Ting Chen Tzu-Jung Tseng Ivan Chang Wen-Shen Hsueh

20,000,000 100.00

Supervisor CTCI Corporation Representative: Yuan-Shuang Kuan

20,000,000 100.00

President Chey-Chan Lee

CTCI (Thailand) Co., Ltd.

Director CTCI Corporation Representative: John H. Lin Andy Sheu Mark W. H. Yang M. H. Wang Jeff Hsu Michael Hong

1,249,500 49.00

Superiority (Thailand) Co.,Ltd Representative: Rungthip Chin Thira Jaturonrassamee

1,300,500 51.00

CTCI Overseas (BVI) Corporation

Director CTCI Corporation Representative: Andy Sheu M. H. Wang Mark W. H. Yang

6,740,000 100.00

Jingding Engineering & Construction Co., Ltd.

Chairman CTCI Overseas Corporation Limited Representative: Ching-Lin Hsu

USD 10,600,000 100.00

Director CTCI Overseas Corporation Limited Representative: John T. Yu Mark W. H. Yang Tieh-Shih Chang Shen-Peng Liao

USD 10,600,000 100.00

Supervisor CTCI Overseas Corporation Limited Representative: Hen-Hsin Ko

USD 10,600,000 100.00

President Tieh-Shih Chang


Chairman CTCI Overseas Corporation Limited Representative: Shou-Wei Lou

USD 13,470,000 80.76

Director E&C Engineering Corporation Representative: John H. Lin Patrick Lin

USD 3,210,000 19.24

CTCI Overseas Corporation Limited Representative: Chang Ning Tzou

USD 13,470,000 80.76

Supervisor CTCI Overseas Corporation Limited Representative: David Wang

USD 13,470,000 80.76

President Chang Ning Tzou

140


Shares %

CTCI Overseas Corporation Limited

Director CTCI Overseas (BVI) Corporation Representative: John T. Yu John H. Lin Andy Sheu Michael Yang

6,740,000 100.00


Chairman CTCI Corporation Representative: Ming-Cheng Hsiao

450,000 60.00

Director CTCI Corporation Representative: Ming-Gen Lee Steven C.H. Wu Hope Sun Eric Chiu

450,000 60.00

CTCI Overseas Corporation Limited 300,000 40.00

President Eric Chiu

CTCI Arabia Ltd. Chairman CTCI Corporation Representative: M. H. Wang

SAR 2,500,000 50.00

Director CTCI Corporation Representative: Andy Sheu C.L. Yen

SAR 2,500,000 50.00

CTCI Overseas Corporation Limited Representative: Scott Chen T.M. Wang En-Cheng Lin

SAR 2,500,000 50.00

President Scott Chen

CIMAS Engineering Company Limited

Chairman Vietnam Machinery Erection Corporation Representative: Hoang Minh Khoi

USD 1,188,000 33.00

Vice Chairman

CTCI Overseas Corporation Limited Representative: Andy Sheu

USD 1,800,000 50.00

BOM Members

CTCI Overseas Corporation Limited Representative: John H. Lin Ming-Shyan Lee

USD 1,800,000 50.00

Vietnam Machinery Erection Corporation Representative: Nguyen Viet Hung

USD 1,188,000 33.00

Sincerity Engineering Co., Ltd. Representative: Yang Yi-Chung

USD 612,000 17.00

General Director Ming-Shyan Lee

Chung Ding Chemicals Corporation

Chairman CTCI Chemicals Corporation Representative: Steven Chang

1,400,000 100.00

Director Richard Yao

Century Ahead Ltd.

Director Advanced Control & Systems Inc. Representative: Hwei-Nan Yih Yin-Fan Liu Ai-Cheng Ho

USD 750,000 100.00

President Hwei-Nan Yih

Superiority (Thailand) Co., Ltd

Director Universal Engineering BVI Representative: John H. Lin Jeff Hsu

THB 171,500 49.00

3 independent shareholders Representative: Rungthip Chin

THB 178,500 51.00

141


Shares %


Chairman Century Ahead Ltd. Representative: Hwei-Nan Yih

USD 750,000 100.00

Director Century Ahead Ltd. Representative: Yin-Fan Liu Benjamin C. N. Tsai

USD 750,000 100.00

Supervisor Century Ahead Ltd. Representative: Chuan-Ju Shen

USD 750,000 100.00

President Zong-Kuan Su

CTCI Malaysia Sdn. Bhd.

Chairman Sumber Mampu Sdn. Bhd. Representative: Mohamed Nor Bin Abu

Bakar

600,000 80.00

Director CTCI Engineering & Construction Sdn. Bhd. Representative: Frank Wu Ting-Chuang Li

150,000 20.00

Sumber Mampu Sdn. Bhd. Representative: Kamaruddin Bin Anuer, Muhammad Anas Bin

Marjunit

600,000 80.00

SINOGAL - Waste Services Co., Ltd.

Chairman Helder Jose Moura Dos Santos MOP 800,000 20.00 Director Pereira Taveira Pinto, Carlos Manuel MOP 800,000 20.00 CTCI Corporation MOP 1,200,000 30.00 Sino Environmental Services Corporation MOP 1,200,000 30.00 Director J.J. Liao

Eric Tiao Patrick Lin

President Jeng-Long Su CIPEC Construction Inc.

Chairman CTCI Overseas Corporation Limited Representative: M.L. Lee

9,998 40.00

Director CTCI Overseas Corporation Limited Representative: Wen-Pin Lo

9,998 40.00

Accuracy International Inc. Representative: Romuel Consunji Randolph Ang Grace Z. Fernandez

14,997 60.00

President Romuel Consunji

CINDA Engineering & Construction Pvt. Ltd.

Chairman Director

Pao-Yao Pan Michael Yang Tim Lin Dingo Ku Jsh-hong Tsai

INR 80,000,000 100.00

Managing Director

Tim Lin

Shanghai XuanLi Trading Co.,Ltd

Chairman Shang Ding Engineering & Construction Co., Ltd. Representative: Shou-Wei Lou

CNY 5,000,000 100.00

Director Shang Ding Engineering & Construction Co., Ltd. Representative: Chang Ning Tzou Yu-Li Zhu

Supervisor Shang Ding Engineering & Construction Co., Ltd. Representative: S. C. Chun

President Chang Ning Tzou

142


Shares %

CTCI Americas, Inc.

Chairman Director

Andy Sheu M. H. Wang Sean Hsu Ebrahim Fatemizadeh

100,000

100.00

President Sean Hsu

CTCI and Partners Company Limited

Chairman CTCI Overseas Corporation Limited Representative: John H. Lin

3,000,000 60.00

CTCI Corporation 2,000,000 40.00 Universal Engineering (BVI) Co.,

Chairman John H. Lin 50,000 100.00

CTCI Singapore Pte. Ltd.

Chairman John H. Lin 5,100,000 100.00

Director Steven C.H. Wu Eric Chiu Lee Wei Hsiung

Managing Director

Steven C.H. Wu

Yuan Ding Resources Management Corp.


2,700,000 60.00

Director KD Holding Corporation Representative: Yun-Peng Shih Yu-Jheng Huang

2,700,000 60.00

Supervisor HD Resource Management Corporation Representative: Patrick Lin

1,800,000 40.00

President Yun-Peng Shih


Chairman Sino Environmental Services Corporation Representative: J.J. Liao

USD 140,000 100.00

Supervisor Sino Environmental Services Corporation Representative: Patrick Lin

USD 140,000 100.00



CTCI Corporation 247,500 99.00 Chiyoda Corporation 2,500 1.00

Director M. H. Wang Steven C.H. Wu Rick Wu

Takahashi Akemi

CTCI Netherlands B.V.

CTCI Singapore Pte. Ltd. EUR 300,000 100.00

Director David Wang


Chairman GRQ Investment Corporation Representative: Michael Yang

TWD 250,000 100.00

Director GRQ Investment Corporation Representative: Ming-Cheng Hsiao

143

8.1.2 Operation overview of the Company and affiliates

December 31st, 2015; Unit: NT$ Thousands

Company Common

Stock Issued Total Assets

Total Liabilities

Total Stockholders’

Equity

Total Operating Revenue

Operating Income (Loss)

Net Income (Loss)


E&C Engineering Corporation $ 608,720 $ 3,318,163 $ 2,497,949 $ 820,214 $ 4,344,867 $ 157,164 $ 135,937 $ 2.23

Resources Engineering Services Inc. 180,000 853,173 546,197 306,976 1,570,167 (5,066) 627 0.03

Advanced Control & Systems Inc. 234,695 1,168,289 651,898 516,391 1,405,126 79,012 79,749 3.40

Sino Environmental Services Corporation 151,000 2,033,935 1,196,361 837,574 2,779,033 333,203 338,612 22.42

GRQ Investment Corporation 1,690,000 5,077,810 2,569,771 2,508,039 329,380 157,721 110,579 0.65

Innovest Investment Corporation 1,140,000 1,087,863 5,995 1,081,868 (53,008) (55,070) (55,825) (0.49)

KD Holding Corporation 658,394 4,457,596 18,642 4,438,954 731,917 685,246 710,370 10.84

Leading Energy Corporation 680,000 1,737,454 202,504 1,534,950 629,132 298,619 251,011 3.69

Fortune Energy Corporation 750,000 1,969,265 630,170 1,339,095 366,722 187,325 178,088 2.37

CTCI Chemicals Corporation 71,000 294,181 84,444 209,737 430,466 58,516 72,452 10.20

HD Resources Management Corporation 20,000 329,736 255,347 74,389 880,309 30,139 26,337 13.17

CTCI (Thailand) Co., Ltd. 232,356 1,171,359 920,575 250,783 3,109,575 14,953 16,965 6.65

CTCI Overseas (BVI) Corporation 328,621 2,438,548 128 2,438,420 - (616) 306,893 -

CTCI Overseas Corporation Limited 284,443 4,392,280 1,979,958 2,412,322 1,702,991 147,893 307,287 45.59

Jingding Engineering & Construction Co., Ltd. 365,920 2,212,776 476,527 1,736,249 2,333,495 92,064 113,574 1.55

CTCI Engineering & Construction Sdn. Bhd. 5,752 91,230 10,785 80,445 80,353 62,063 62,782 83.69

CIMAS Engineering Company Limited 95,271 162,593 48,035 114,558 174,041 14,267 11,547 -

Century Ahead Ltd. 23,678 29,552 - 29,552 - (60) 6,166 -

Chung Ding Chemicals Corporation 315 422 100 322 - (177) 26,107 -

CTCI Arabia Ltd. 43,831 2,044,939 3,404,108 (1,359,169) 2,548,590 86,710 71,562 -

144

Company Common

Stock Issued Total Assets

Total Liabilities

Total Stockholders’

Equity

Total Operating Revenue

Operating Income (Loss)

Net Income (Loss)



616,408 1,385,061 947,045 438,016 778,255 15,595 3,212 -


26,593 33,263 5,092 28,171 42,365 8,185 6,172 -

CTCI Machinery Corporation 200,000 1,831,707 1,373,930 457,777 2,328,074 88,016 69,346 17.51

Superiority (Thailand) Co., Ltd 319 53,132 60,513 (7,381) - (231) 7,891 4,025.84

Universal Engineering(BVI) Corporation 1,645 119,912 7,509 112,403 - (28,985) (20,215) -

CIPEC Construction Inc. 1,753 16,095 18,294 (2,199) - (1,371) (2,497) -

CINDA Engineering & Construction Pvt. Ltd. 39,592 446,612 243,716 202,896 212,108 10,444 90 0.01

CTCI Malaysia Sdn. Bhd. 5,752 251,119 180,782 70,337 114,707 3,124 48,638 64.85

SINOGAL - Waste Services Co., Ltd. 16,477 827,561 712,394 115,167 570,227 80,589 86,392 -

Shanghai XuanLi Trading Co.,Ltd 24,974 307,992 274,754 33,238 392,955 7,051 4,836 -

CTCI Americas, Inc. 3,290 31,546 23,948 7,599 29,624 (20,702) 222 -

CTCI and Partners Company Limited 43,831 48,449 19,289 29,160 - (5,501) (5,501) (1.10)

CTCI Singapore Pte. Ltd. 150,501 871,973 959,156 (87,183) 1,006,358 (265,045) (254,466) -

Yuan Ding Resources Management Corp. 45,000 39,796 798 38,998 - (345) 1,029 0.23


4,294 23,694 15,615 8,079 39,212 2,875 2,155 -

CCJV P1 ENGINEERING & CONSTRUCTION SDN. BHD.

1,899 1,556,225 1,355,108 201,117 2,883,366 171,758 176,897 707.56

145

8.1.3 The related information on the endorsements or guarantees for others, lending to others and derivative financial instruments of affiliates: A. Endorsements or guarantees for others: (as of March 31st, 2016) Unit: NT$ thousands

No. (Note 1)

Guarantor

Guarantee

The Ceiling on guarantee for single

enterprise

The highest balance

during the period (Note 4)

Ending balance

as of March

31st,2016

Assets pledged for guarantee

Ratio of the accumulated guarantee to the net asset value of the

Company as of March

31st,2015

Ceiling on total guarantee amount (Note 3) Name

Relationship with the company

(Note 2)

1

Advanced Control &

Systems Inc. (ACS)

Century Ahead Limited 2

100% of the net worth from the latest

audited financial statements of ACS

20,097 19,308 - 3.63

The ceiling for total guarantee is $1,032,782, 200% of the net

worth from the latest audited financial statements of ACS.

2 E&C

Engineering Corporation

Shanghai XuanLi Trading Co., Ltd 5


audited financial statements of E&C Engineering Corp.

235,889 230,743 - 28.13


worth from the latest audited financial statements of E&C

Engineering Corp.

2 E&C

Engineering Corporation

Shang Ding Engineering & Construction

Co., Ltd

5


audited financial statements of E&C Engineering Corp.

404,034 395,220 - 48.19


worth from the latest audited financial statements of E&C

Engineering Corp.

3 CTCI

Machinery Corporation

E&C Engineering Corporation 5


audited financial statements of CTCI

Machinery Corporation

19,343 19,343 - 4.23


worth from the latest audited financial statements of CTCI

Machinery Corp.

4 CTCI

Chemicals Corporation

CTCI Corporation 4


audited financial statements of CTCI


18,817 18,817 - 8.97


worth from the latest audited financial statements of CTCI

Chemicals Corporation.

146

5

Shang Ding Engineering

& Construction

Co., Ltd

Shanghai XuanLi Trading Co., Ltd. 2


audited financial statements of Shang Ding Engineering &

Construction Co., Ltd

110,534 106,194 - 24.06


worth from the latest audited financial statements of Shang

Ding Engineering & Construction Co., Ltd.

6 CTCI

Overseas Corp. Ltd.

CTCI Americas, Inc.

3


audited financial statements of CTCI Overseas Corp. Ltd.

51,870 49,834 - 2.11

The ceiling for total guarantee is $14,159,330, 600% of the net worth from the latest audited financial statements of CTCI

Overseas Corp. Ltd.

7 Resources

Engineering Services Inc.


5


audited financial statements of


1,760 1,760 - 0.57


worth from the latest audited financial statements of Resources

Engineering Services Inc.

8 KD Holding Corporation

G.D. Development Corporation

6


audited financial statements of KD

Holding Corporation

635,076 621,926 - 13.14

The ceiling for total guarantee is $13,316,862, 300% of the net worth from the latest audited

financial statements of KD Holding Corporation.

Note 1: 1.Company：0

2.Subsidiaries：Please fill in the number with a sequence.

Note 2: Eligibility of endorsements or Guarantees：

1. A company with which it does business. 2. A company in which the company directly or indirectly holds more than 50%of the voting shares. 3. A company and subsidiaries totally holds more than 50% of the voting shares. 4. A company directly and indirectly holds more than 50% of the voting shares in the company. 5. Contract required. 6. The relationship of Joint venture.

Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s “Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.

Note 4: Fill in the maximum outstanding balance of endorsements/guarantees provided during the year ended March 31, 2015.

147

B. Lending to others: (as of March 31st, 2016)

No. (Note 1)

Lender Borrower Account item

(Note 2)

The highest balance during period

(Note 3)

Ending balance

as of March

31st,2015 (Note 8)

Interest rate

Nature of

Lending (Note 4)

Amount for

operation (Note 5)

Reason of short-term financing (Note 6)

Allowance for bad debts

Collateral Limit on lending

for single enterprise (Note 7)

Ceiling for total

amount (Note 7)

Name Value

1

Advanced Control &

Systems Inc. (ACS)

CTCI Corporation

Accounts receivable-related

parties 49,000 49,000 - 2 0

For operational

needs 0 NA 0 53,243 212,972

2 CTCI

Overseas Corp. Ltd.

Shang Ding Engineering

& Construction

Co., Ltd


parties 391,222 375,862

1.1%~ 1.269%

2 0 For

operational needs

0 NA 0 943,955 943,955

2 CTCI

Overseas Corp. Ltd.

Superiority (Thailand) Company Limited


parties 61,403 60,265 1.100% 2 0

For operational

needs 0 NA 0 943,955 943,955

2 CTCI

Overseas Corp. Ltd.

CIPEC Construction

Inc.


parties 18,163 17,450 1.100% 2 0

For operational

needs 0 NA 0 943,955 943,955

2 CTCI

Overseas Corp. Ltd.

CTCI Americas, Inc.


parties 40,194 38,616 - 2 0

For operational

needs 0 NA 0 943,955 943,955

3

Universal Engineering

(BVI) Corporation

CIPEC Construction

Inc.


parties 1,673 1,673 1.278% 2 0

For operational

needs 0 NA 0 43,984 43,984

4 CTCI


CTCI Corporation


parties 18,000 18,000 - 2 0

For operational

needs 0 NA 0 20,974 83,895

148

4 CTCI




parties 18,000 18,000 1.090% 2 0

For operational

needs 0 NA 0 20,974 83,895

4 CTCI


CTCI Machinery

Corporation


parties 18,000 18,000 - 2 0

For operational

needs 0 NA 0 20,974 83,895

5 KD Holding Corporation

G.D. Development Corporation


parties 30,000 30,000 1.600% 2 0

For operational

needs 0 NA 0 473,287 1,893,149

6 HD Resources Management Corporation

CTCI Corporation


parties 7,000 7,000 - 2 0

For operational

needs 0 NA 0 8,491 33,963




parties 7,000 7,000 1.090% 2 0

For operational

needs 0 NA 0 8,491 33,963


CTCI Machinery

Corporation


parties 7,000 7,000 1.090% 2 0

For operational

needs 0 NA 0 8,491 33,963

7

Sino Environment


CTCI Corporation


parties 78,000 78,000 - 2 0

For operational

needs 0 NA 0 102,885 411,539

7

Sino Environment




parties 78,000 78,000

1.07%~1.09%

2 0 For

operational needs

0 NA 0 102,885 411,539

7

Sino Environment


CTCI Machinery

Corporation


parties 78,000 78,000 1.090% 2 0

For operational

needs 0 NA 0 102,885 411,539

7

Sino Environment




parties 78,000 78,000 1.090% 2 0

For operational

needs 0 NA 0 102,885 411,539

149

8

Jingding Engineering

and Construction

Co., Ltd.

Shanghai XuanLi

Trading Co., Ltd.


parties 116,923 114,372 1.755% 2 0

For operational

needs 0 NA 0 547,711 547,711

Note 1： Number for items explain as follows：

■Company：0

■ Subsidiaries：Please fill in the number with a sequence.

Note 2： This item is for account receivable-related parties, owner’s equity, prepayments, temporary payments etc. If any item belong to Lending to others

needs to be filled in this column. Note 3： The highest balance during period

Note 4： Description for Lending to others as follows：

■1：Having business relationship

■2：Operational needs

Note 5： Belongs to item 1, please fill in the amount for operation.

Note 6： Belongs to item 2, please explain the reason and lending purpose of short-term financing. For example, repayment for loans, purchasing equipments,

or needs for operations and working capital, etc. Note 7： Please fill in the limit of amount on lending to single enterprise and total limit of amount on lending to others by the Company, according to the

stipulation of the Procedures of Lending to Others, and express the calculation of the aforesaid figures in the column of remarks. Note 8： The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14,

Item 1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has authorized the chairman to loan funds in installments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

150

C. Derivative Transactions Information: a. Derivatives transactions by the Dec. 31, 2015

(1) Up to December 31, 2015, CTCI Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 8,169,146 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid forward contracts is 47,868 thousand, listed in non-operating income, and the exchange gain of aforesaid forward contracts is 5,625 thousand, credited to operating cost.

(2) Up to December 31, 2015, CTCI Corporation engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 577,178 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid SWAP contracts is 1,235 thousand, listed in non-operating income, and the exchange gain of aforesaid SWAP contracts is 1,510 thousand, credited to operating cost.

(3) Up to December 31, 2015, CTCI Corporation engaged in Commodity SWAP transactions to hedge the risks from fluctuation in raw material prices. Total contract amount is 326,619 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid SWAP contracts is 20,578 thousand, listed in non-operating expense.

(4) Up to December 31, 2015, CTCI Overseas Corporation Limited engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 32,719 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 1,076 thousand, listed in non-operating income.

(5) Up to December 31, 2015, CTCI Overseas Corporation Limited engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 116,382 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid SWAP contracts is 3,254 thousand, listed in non-operating income.

(6) Up to December 31, 2015, CTCI Chemicals Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 173,607 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 2,552 thousand, listed in non-operating income.

(7) Up to December 31, 2015, E&C Engineering Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 373,376 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 2,310 thousand, listed in non-operating expense.

(8) Up to December 31, 2015, CTCI(Thailand) Company Limited engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 284,158 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 1,111 thousand, listed in non-operating expense.

(9) Up to December 31, 2015, CTCI Machinery Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 315,581 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 578 thousand, listed in non-operating expense.

(10) Up to December 31, 2015, CTCI Machinery Corporation engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 97,573 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 174 thousand, listed in non-operating

151

expense. (11) Up to December 31, 2015, CCJV P1 Engineering & Construction Sdn. Bhd. engaged in FX

forward transactions to hedge the risks from FX commitment. Total contract amount is 724,251 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 7,139 thousand, listed in non-operating expense.

b. Derivatives transactions by the Mar. 31, 2016

(1) Up to March 31, 2016, CTCI Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 3,835,350 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 13,596 thousand, listed in non-operating expense, and the exchange gain of aforesaid forward contracts is 6,503 thousand, credited to operating cost.

(2) Up to March 31, 2016, CTCI Corporation engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 281,640 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid SWAP contracts is 8,125 thousand, listed in non-operating expense

(3) Up to March 31, 2016, CTCI Overseas Corporation Limited engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 208,662 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 5,076 thousand, listed in non-operating income.

(4) Up to March 31, 2016, CTCI Overseas Corporation Limited engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 58,135 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid SWAP contracts is 1,569 thousand, listed in non-operating expense.

(5) Up to March 31, 2016, CTCI Chemicals Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 34,705 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 1,298 thousand, listed in non-operating income

(6) Up to March 31, 2016, E&C Engineering Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 19,689 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 232 thousand, listed in non-operating expense.

(7) Up to March 31, 2016, CTCI Machinery Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 59,349 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid forward contracts is 977 thousand, listed in non-operating expense.

(8) Up to March 31, 2016, CCJV P1 Engineering & Construction Sdn. Bhd. engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 3,497,726 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 239,786 thousand, listed in non-operating income

8.1.4 Consolidated Financial Statements of Affiliated Enterprises of the Company: None

8.1.5 Affiliation Report: None

152

8.2 Private Placement Securities in the Most Recent Years: None 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years:

Unit: NT$ thousands; Shares; %

Name of subsidiary

Stock capital

collected

Fund source

Shareholding ratio of the

company (%)

Date of acquisition or

disposition

Shares and

amount acquired

Shares and amount disposed

of

Investment gain (loss)

Shareholdings & amount in the most recent

year

Mortgage

Endorsement amount made

for the subsidiary

Amount loaned to

the subsidiary


$ 151,000 own reserves

93.16 1997.08

50,000 $1,764

1,028

$61 None None None

1997.10 50,000 $2,021

$258

1997.10 50,000 $1,893

1997.12 50,000 $1,780

1997.12 100,000

$3,673 $185

1998.08 50,000 $3,092

1998.12

Stock dividend 11,500

1998.12 61,000 $3,112

$45

1999.12 971,160 $31,475

1999.12 831,560 $26,951

$721

2001.12 505,871 $13,256

2002.12 645,000

2004.08

Stock dividend 9

2005.10

Stock dividend 9

153

Name of subsidiary

Stock capital

collected

Fund source


company (%)


disposition

Shares and

amount acquired


of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary

2006.10

Stock dividend 7

2007.10

Stock dividend 20

2008.09

Stock dividend 12


$1,690,000 own reserves

100 1999.03 550,000 $21,878

912,170 $53,818

None None None

1999.03 200,000

$8,104 $303

1999.04 450,000 $19,056

1999.04 450,000 $18,791

$586

1999.05 350,000 $14,677

1999.05 620,000 $27,053

$831

1999.06 776,000 $28,919

1999.07


1999.07 15,000

$584 $18

1999.08 100,000

$3,044

2000.02 427,000 $14,663

$1,274

2000.07


154

Name of subsidiary

Stock capital

collected

Fund source


company (%)


disposition

Shares and

amount acquired


of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary

2001.07


2004.08


2005.10


2006.10


2007.10


2008.09



$1,100,000 own reserves

100 1999.04

328,000 $14,198

344,436 $20,322

None None None

1999.04 105,000

$4,582 $108

1999.05 350,000 $14,826

1999.05 400,000 $17,881

$769

1999.06 250,000

$9,659

1999.07


2000.02 308,840

$8,841 $420

2000.07


2001.07


155

Name of subsidiary

Stock capital

collected

Fund source


company (%)


disposition

Shares and

amount acquired


of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary

2004.08


2005.10


2006.10


2007.10


2008.09


Crown Asia 2 Investment Limited Note

$ 250 Donation 100 2011.04 500 $18

500 $18

None None None

Note: Acquired in March 2016, the funding source is by donation.

156

8.4 Other Supplementary Information 8.4.1 KPI by industry:

A. CTCI Group budget for conclusion of contract, operating revenue and gross profit Unit: NT$100 million

Item Budget in 2015 Performance

New Order 860.12 644.57

Operating Revenue 631.25 670.58

Gross Profit 52.57 54.36

B. Utilization of information

a. Implemented ISO 27001:2013 information security standard to all subsidiaries, to enhance CTCI Group information security management.

b. Integrated all subsidiaries’ managing related IT systems to fulfill the intention of entire group’s sustainability operation.

c. Built up a fully functioned Southeast Asia and Middle East communication network; allowing all meetings, calls, information between different places communicating smoothly.

d. Implemented SAP-HR system for HR Department as well as all subsidiaries for them to establish the Successor Factors Plan.

e. Established the myVideoKM System to enhance the knowledge training for all employees at job sites and all subsidiaries.

C. Corporate governance

a. To enhance the risk audit operation and project enforcers’ risk concept b. To enhance the Company’s governance with higher rating.

D. Social responsibility

a. Concern about safety and health environment, carry out HSE management system. b. Aggressively build positive ties throughout the community and promote local activities of

culture and education. c. Foster engineering expertise with close attention employee training and education and the

exchange of knowledge which also enhances Industry-academic cooperation d. Provide employment opportunities, assist job related activities and build long term ties with

marginally listed workers. e. Offer a friendly workplace, health promotion activities in order to improve the physical and

mental health of the employee. f. KPI for energy saving and carbon reduction and health management:

Item KPI in 2015 Performance

Water consumption in the workplace

Less than 10.98M3/person (average water consumption over the past two years)

11.21 M3/person

Power consumption in workplace

Less than 3,173 degree/person (average amount consumed electricity over the past two years)

3,100 degree/person

Health management - Promotion

More than 12 seminars 12 seminars

g. To enhance the urgent response ability, there are a total of 35 qualified first-aid personnel.

8.4.2 Material Event Impact on Shareholders' Equity or Share Price in Recent Years until the Annual

Report being published None

157

Appendix 1

CTCI CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2015 AND 2014

------------------------------------------------------------------------------------------------------------------------------------

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying

financial statements have been translated into English from the original Chinese version prepared and used in

the Republic of China. In the event of any discrepancy between the English version and the original

Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’

report and financial statements shall prevail.

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

160

December 31, 2015

(Adjusted) December 31, 2014

(Adjusted) January 1, 2014

Assets Notes AMOUNT % AMOUNT % AMOUNT %

Current assets

1100 Cash and cash equivalents 6(1) $ 5,589,006 9 $ 9,810,303 17 $ 9,327,026 19

1110 Financial assets at fair value

through profit or loss - current

6(2)

804,392 1 1,783,575 3 843,215 2

1125 Available-for-sale financial

assets - current

6(3)

674,916 1 680,181 1 604,730 1

1150 Notes receivable, net 6(5) 33,036 - 11,774 - 3,244,527 7

1160 Notes receivable - related

parties

7

586,246 1 1,411,400 3 - -

1170 Accounts receivable, net 6(5) 6,579,269 11 4,964,255 9 4,367,870 9

1180 Accounts receivable - related

parties

7

32,679 - 3,927 - 4,136 -

1190 Due from customers for

contract work

6(6)

26,890,108 45 18,758,973 33 12,372,269 25

1200 Other receivables 359,333 1 283,345 1 175,433 1

1210 Other receivables - related

parties

7

32,450 - 38,008 - 67,235 -

1220 Current income tax assets 3,372 - 170,268 - 163,728 -

130X Inventories 141,462 - 316,169 1 89,661 -

1410 Prepayments 6(7) 3,387,189 6 3,632,839 6 3,002,991 6

1470 Other current assets 8 185,349 - 225,591 - 869,378 2

11XX Current Assets 45,298,807 75 42,090,608 74 35,132,199 72

Non-current assets

1543 Financial assets measured at

cost - non-current

6(4)

543,670 1 574,622 1 584,153 1

1550 Investments accounted for

using equity method

6(8)

2,436,736 4 2,065,874 4 675,002 1

1600 Property, plant and equipment 6(9) and 8 7,001,676 12 7,026,878 12 7,150,831 15

1760 Investment property 6(10) and 8 822,392 1 827,635 2 833,141 2

1780 Intangible assets 121,469 - 118,638 - 114,766 -

1840 Deferred income tax assets 6(26) 517,930 1 540,924 1 561,828 1

1900 Other non-current assets 6(11) and 8 3,487,906 6 3,638,169 6 3,897,325 8

15XX Non-current assets 14,931,779 25 14,792,740 26 13,817,046 28

1XXX Total assets $ 60,230,586 100 $ 56,883,348 100 $ 48,949,245 100

(Continued)

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS


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

See report of independent accountants dated March 18, 2016.

161

December 31, 2015



Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowings 6(12) $ 4,284,834 7 $ 353,618 1 $ 991,965 2 2120 Financial liabilities at fair value

through profit or loss - current 6(2)

9,469 - 14,907 - 20,061 - 2150 Notes payable 21,306 - 19,397 - 5,518 - 2170 Accounts payable 6(13) 15,019,223 25 15,454,053 27 13,348,156 27 2180 Accounts payable - related

parties 7

1,030,827 2 189,299 - 16,134 - 2190 Due to customers for contract

work 6(6)

8,876,451 15 9,989,561 18 5,427,224 11 2200 Other payables 6(14) 2,586,401 4 2,523,644 4 2,688,807 6 2230 Current income tax liabilities 330,877 - 375,668 1 172,416 - 2300 Other current liabilities 6(15) 2,230,217 4 2,113,784 4 987,389 2 21XX Current Liabilities 34,389,605 57 31,033,931 55 23,657,670 48 Non-current liabilities 2540 Long-term borrowings 6(16) 2,611,950 4 2,926,350 5 3,296,297 7 2570 Deferred income tax liabilities 6(26) 496,941 1 440,049 1 422,653 1 2600 Other non-current liabilities 6(17) 3,004,007 5 2,998,863 5 3,174,489 6 25XX Non-current liabilities 6,112,898 10 6,365,262 11 6,893,439 14 2XXX Total Liabilities 40,502,503 67 37,399,193 66 30,551,109 62 Equity attributable to owners of

parent

Share capital 6(20) 3110 Common stock 7,611,076 13 7,575,303 13 7,474,343 15 Capital surplus 6(19)(21) 3200 Capital surplus 3,297,703 5 3,230,033 6 3,070,085 6 Retained earnings 6(22)(26) 3310 Legal reserve 2,852,010 5 2,663,798 5 2,499,625 5 3320 Special reserve 768,286 1 778,162 2 778,162 2 3350 Unappropriated retained

earnings

2,477,692 4 2,432,925 4 1,910,722 4 Other equity interest 3400 Other equity interest 24,516 - 250,563 - 229,538 1 3500 Treasury stocks 6(20) ( 11,835 ) - ( 11,835 ) - ( 11,835 ) - 31XX Equity attributable to

owners of the parent

17,019,448 28 16,918,949 30 15,950,640 33 36XX Non-controlling interest 2,708,635 5 2,565,206 4 2,447,496 5 3XXX Total equity 19,728,083 33 19,484,155 34 18,398,136 38 Significant contingent liabilities

and unrecognised contract 9

Significant events after balance

sheet date 11

3X2X Total liabilities and equity $ 60,230,586 100 $ 56,883,348 100 $ 48,949,245 100

CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE AMOUNTS)



162

For the years ended December 31 2015 2014 (adjusted)

Items Notes AMOUNT % AMOUNT % 4000 Operating revenue 6(23) and 7 $ 67,057,640 100 $ 57,691,937 100 5000 Operating costs 6(24)(25) and 7 ( 61,621,562 ) ( 92 ) ( 53,317,572 ) ( 92 ) 5900 Gross Profit 5,436,078 8 4,374,365 8 Operating expenses 6(24)(25) 6200 General & administrative

expenses

( 2,329,266 ) ( 3 ) ( 1,568,040 ) ( 3 ) 6300 Research and development

expenses

( 104,900 ) - ( 103,994 ) - 6000 Total operating expenses ( 2,434,166 ) ( 3 ) ( 1,672,034 ) ( 3 ) 6900 Operating income 3,001,912 5 2,702,331 5 Non-operating income and

expenses

7010 Other income 231,356 - 352,471 1 7020 Other gains and losses 171,698 - 167,836 - 7050 Finance costs ( 89,468 ) - ( 89,005 ) - 7060 Share of profit of associates and

joint ventures accounted for under equity method

6(8)

5,154 - 31,199 - 7000 Total non-operating income

and expenses

318,740 - 462,501 1 7900 Profit before income tax 3,320,652 5 3,164,832 6 7950 Income tax expense 6(26) ( 750,509 ) ( 1 ) ( 628,436 ) ( 1 ) 8200 Profit for the year $ 2,570,143 4 $ 2,536,396 5 Other comprehensive income Components of other

comprehensive income that will not be reclassified to profit or loss

8311 Other comprehensive income,

before tax, actuarial (losses) gains on defined benefit plans

( $ 151,730 ) - $ 137,081 - 8349 Income tax related to

components of other comprehensive income that will not be reclassified to profit or loss

6(26)

24,708 - ( 23,250 ) - Components of other

comprehensive income that will be reclassified to profit or loss

8361 Cumulative translation

differences of foreign operations

( 165,171 ) ( 1 ) 87,199 - 8362 Unrealized loss on valuation of

available-for-sale financial assets 6(3)

( 101,322 ) - ( 86,616 ) - 8300 Total other comprehensive (loss)

income for the year

( $ 393,515 ) ( 1 ) $ 114,414 - 8500 Total comprehensive income for

the year

$ 2,176,628 3 $ 2,650,810 5 Profit attributable to: 8610 Owners of the parent $ 2,040,610 3 $ 2,092,199 4 8620 Non-controlling interest 529,533 1 444,197 1 Total $ 2,570,143 4 $ 2,536,396 5 Comprehensive income

attributable to:

8710 Owners of the parent $ 1,695,145 2 $ 2,205,850 4 8720 Non-controlling interest 481,483 1 444,960 1 Total $ 2,176,628 3 $ 2,650,810 5 9710 Basic earnings per share 6(27) $ 2.69 $ 2.79 9810 Diluted earnings per share 6(27) $ 2.68 $ 2.76


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Equity attributable to owners of the parent

Retained Earnings Other equity interest

Notes

Common

stock

Capital

surplus

Legal reserve

Special reserve

Unappropriated

earnings

Cumulative

translation

differences of

foreign

operations

Unrealized gain or

loss on

available-for-sale

financial assets

Treasury

stocks

Total

Non-controlling

interest

Total equity



163

For the year ended December 31, 2014 Balance at January 1, 2014 $ 7,474,343 $ 3,070,085 $ 2,499,625 $ 778,162 $ 2,432,195 $ 7,178 $ 222,360 ( $ 11,835 ) $ 16,472,113 $ 2,473,376 $ 18,945,489 The effects of retrospective application

and restatement

- - - - ( 521,473 ) - - - ( 521,473 ) ( 25,880 ) ( 547,353 ) Restated balance at January 1, 2014 7,474,343 3,070,085 2,499,625 778,162 1,910,722 7,178 222,360 ( 11,835 ) 15,950,640 2,447,496 18,398,136 Appropriation of 2013 earnings 6(22) Legal reserve - - 164,173 - ( 164,173 ) - - - - - - Cash dividends - - - - ( 1,498,449 ) - - - ( 1,498,449 ) ( 381,582 ) ( 1,880,031 ) Profit for the year - - - - 2,092,199 - - - 2,092,199 444,197 2,536,396 Employee stock options excercised by

subsidiary 6(21)

- 11,961 - - - - - - 11,961 47,098 59,059 Convertible bonds transferred to common

stock 6(21)

- ( 683 ) - - - - - - ( 683 ) ( 457 ) ( 1,140 ) Share-based payment transactions 6(21) - 15,610 - - - - - - 15,610 7,691 23,301 Employee stock options exercised 6(21) 100,960 133,060 - - - - - - 234,020 - 234,020 Cumulative translation differences of

foreign operations

- - - - - 95,209 - - 95,209 ( 8,010 ) 87,199 Unrealized loss on valuation of


- - - - - - ( 74,184 ) - ( 74,184 ) ( 12,432 ) ( 86,616 ) Other comprehensive income for the year - - - - 92,626 - - - 92,626 21,205 113,831 Balance at December 31, 2014 $ 7,575,303 $ 3,230,033 $ 2,663,798 $ 778,162 $ 2,432,925 $ 102,387 $ 148,176 ( $ 11,835 ) $ 16,918,949 $ 2,565,206 $ 19,484,155 For the year ended December 31, 2015 Balance at January 1, 2015 (adjusted) $ 7,575,303 $ 3,230,033 $ 2,663,798 $ 778,162 $ 2,432,925 $ 102,387 $ 148,176 ( $ 11,835 ) $ 16,918,949 $ 2,565,206 $ 19,484,155 Appropriation of 2014 earnings 6(22) Legal reserve - - 188,212 - ( 188,212 ) - - - - - - Special reserve - - - ( 9,876 ) 9,876 - - - - - - Cash dividends - - - - ( 1,698,089 ) - - - ( 1,698,089 ) ( 382,095 ) ( 2,080,184 ) Profit for the year - - - - 2,040,610 - - - 2,040,610 529,533 2,570,143 Employee stock options excercised by

subsidiary 6(21)

- 19,556 - - - - - - 19,556 40,539 60,095 Convertible bonds transferred to common

stock 6(21)

- ( 819 ) - - - - - - ( 819 ) ( 572 ) ( 1,391 ) Share-based payment transactions 6(21) - 2,950 - - - - - - 2,950 4,074 7,024 Employee stock options exercised 6(21) 35,773 45,983 - - - - - - 81,756 - 81,756 Cumulative translation differences of

foreign operations

- - - - - ( 135,403 ) - - ( 135,403 ) ( 29,768 ) ( 165,171 ) Unrealized loss on valuation of


- - - - - - ( 90,644 ) - ( 90,644 ) ( 10,678 ) ( 101,322 ) Other comprehensive income for the year - - - - ( 119,418 ) - - - ( 119,418 ) ( 7,604 ) ( 127,022 ) Balance at December 31, 2015 $ 7,611,076 $ 3,297,703 $ 2,852,010 $ 768,286 $ 2,477,692 ( $ 33,016 ) $ 57,532 ( $ 11,835 ) $ 17,019,448 $ 2,708,635 $ 19,728,083


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended December, 31

Notes 2015 2014

164

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated profit before tax for the year $ 3,320,652 $ 3,164,832 Adjustments to reconcile profit before income tax to net cash

provided by operating activities

Income and expenses having no effect on cash flows (Gain) loss on valuation of financial assets 6(2) ( 54,530 ) 6,864 Loss on reduction of capital of investments 26,671 2,397 Loss on disposal of property, plant and equipment 359 3,477 Share of profits of associates and joint ventures accounted for

under equity method 6(8)

( 5,154 ) ( 31,199 ) Depreciation 6(24) 333,511 325,305 Amortization 6(24) 147,740 153,205 Provision for (reversal of) allowance for doubtful accounts 797,612 ( 61,714 ) Interest income ( 121,013 ) ( 149,180 ) Dividends income ( 42,962 ) ( 45,825 ) Interest expense 89,468 89,005 Impairment losses 6(4) 30,733 86,756 Compensation costs for employee stock options 6(25) 9,259 28,507 Discount on convertible bonds recognised as interest expense 182 492 Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss 798,114 ( 1,071,643 ) Notes receivable (including related parties) 16,990 1,821,353 Accounts receivable (including related parties) ( 1,654,476 ) ( 534,462 ) Due from customers for contract work ( 8,131,135 ) ( 6,386,704 ) Other receivables ( 88,752 ) ( 93,420 ) Other receivables - related parties 5,550 29,227 Inventories 174,707 ( 226,508 ) Prepayments 245,650 ( 629,848 ) Other current assets 40,242 643,787 Other non-current assets 184,935 247,639 Net changes in liabilities relating to operating activities Notes payable 1,909 13,879 Accounts payable ( 434,830 ) 2,105,897 Accounts payable - related parties 841,528 173,165 Due to customers for contract work ( 1,113,110 ) 4,562,337 Other payables 60,404 ( 165,163 ) Other current liabilities 116,433 1,310,277 Other non-current liabilities ( 201,662 ) ( 93,937 ) Cash (used in) generated from operations ( 4,604,975 ) 5,278,798 Interest received 133,321 134,206 Dividends received 90,169 117,115 Interest paid ( 87,701 ) ( 89,393 ) Income tax paid ( 616,329 ) ( 392,663 ) Net cash (used in) provided by operating activities ( 5,085,515 ) 5,048,063

(Continued)


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended December, 31

Notes 2015 2014



165

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received $ 463 $ 482

Increase in available-for-sale financial assets ( 75,540 ) ( 159,765 )

Decrease (increase) in financial assets measured at cost-non

current

27 ( 79,225 )

Proceeds from reduction of capital of investee company - 1,995

Increase in investments accounted for under the equity method 6(8) ( 419,922 ) ( 1,390,933 )

Proceeds from disposal of subsidiary shares 11,380 -

Acquisition of property, plant and equipment 6(9) ( 356,509 ) ( 139,460 )

Proceeds from disposal of property, plant and equipment 8,454 8,352

Increase in intangible assets ( 75,529 ) ( 76,881 )

Increase in refundable deposits ( 11,912 ) ( 11,946 )

Decrease (increase) in other non-current assets 22,760 ( 38,134 )

Net cash used in investing activities ( 896,328 ) ( 1,885,515 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term borrowings 3,931,216 ( 638,347 )

Repayment of long-term borrowings ( 314,400 ) ( 553,829 )

Increase in deposits received (recognized in other non-current

liabilities)

64,470 65,608

Proceeds from employee stock options exercised 159,444 327,328

Cash dividends paid ( 2,080,184 ) ( 1,880,031 )

Net cash provided by (used in) financing activities 1,760,546 ( 2,679,271 )

(Decrease) increase in cash and cash equivalents ( 4,221,297 ) 483,277

Cash and cash equivalents at beginning of year 9,810,303 9,327,026

Cash and cash equivalents at end of year $ 5,589,006 $ 9,810,303

166


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANIZATION

CTCI Corporation (the ―Company‖) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China on April 6, 1979 and commenced its

operations on May 1, 1979. The main business activities of the Company are the design, survey,

construction and inspection of various engineering and construction projects, plants, machinery and

equipment and environmental protection projects. The Company‘s shares have been listed and traded

on the Taiwan Stock Exchange since May 1993.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on

March 18, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (―IFRS‖) as endorsed by the Financial Supervisory Commission (―FSC‖)

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3,

2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei

Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9,

‗Financial instruments‘) as endorsed by the FSC and Regulations Governing the Preparation of

Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the

―2013 version of IFRS‖) in preparing the consolidated financial statements. The impact of adopting

the 2013 version of IFRS is listed below:

A.IAS 19 (revised), ‗Employee benefits‘

The revised standard makes amendments that net interest amount, calculated by applying the

discount rate to the net defined benefit asset or liability, replaces the finance charge and expected

return on plan assets. The revised standard eliminates the accounting policy choice that the actuarial

gains and losses could be recognised based on corridor approach or recognised in profit or loss. The

revised standard requires that the actuarial gains and losses can only be recognised immediately in

other comprehensive income when incurred. Past service cost will be recognised immediately in the

period incurred and will no longer be amortised using straight-line basis over the average period

until the benefits become vested. An entity is required to recognise termination benefits at the

earlier of when the entity can no longer withdraw an offer of those benefits and when it recognises

any related restructuring costs, rather than when the entity is demonstrably committed to a

167

termination. Additional disclosures are required for defined benefit plans. Based on the Group‘s

assessment, the impact of the standard is in the following table.

Significant effects of applying the 2013 version of IFRS to the consolidated financial statements

are summarized in the following table:

Consolidated balance sheet 2010 version Effect of 2013 version

Affected items IFRSs amount transition IFRSs amount Remark

January 1, 2014

Deferred income tax assets 449,881$ 111,947$ 561,828$ (1)

Others 48,387,417 - 48,387,417

Total assets 48,837,298$ 111,947$ 48,949,245$

Other non-current liabilities 2,515,189$ 659,300$ 3,174,489$ (1)

Others 27,376,620 - 27,376,620

Total liabilities 29,891,809 659,300 30,551,109

Retained earnings 2,432,195 521,473)( 1,910,722 (1)

Non-controlling interests 2,473,376 25,880)( 2,447,496 (1)

Others 14,039,918 - 14,039,918

Total equity 18,945,489 547,353)( 18,398,136

Total equity and liabilities 48,837,298$ 111,947$ 48,949,245$

Consolidated balance sheet 2010 version Effect of 2013 version


December 31, 2014

Deferred income tax assets 495,877$ 45,047$ 540,924$ (1)

Others 56,342,424 - 56,342,424

Total assets 56,838,301$ 45,047$ 56,883,348$


Others 34,400,330 - 34,400,330



Non-controlling interests 2,565,293 87)( 2,565,206 (1)

Others 14,486,024 - 14,486,024

Total equity 19,703,009 218,854)( 19,484,155

Total equity and liabilities 56,838,301$ 45,047$ 56,883,348$

168

Descriptions:

(1)The Group recognised previously unrecognised past service cost and as a consequence of

elimination of the corridor approach to recognise prior unrecognised actuarial losses by

increasing net defined benefit liabilities by $659,300, and deferred tax assets by $111,947 and

decreasing retained earnings by $521,473, and non-controlling interest by $25,880 at January 1,

2014, respectively; net defined benefit liabilities, deferred tax assets, operating costs and

operating expenses were decreased by $395,399, $66,900, $208,942, and $49,694, respectively,

and income tax expense, other comprehensive income, non-controlling interest and

non-controlling interest profit were increased by $43,968, $92,626, $25,793 and $4,588 at

December 31, 2014, respectively.

B.IAS 1, ‗Presentation of financial statements‘

The amendment requires entities to separate items presented in OCI classified by nature into two

groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently

when specific conditions are met. If the items are presented before tax then the tax related to each

of the two groups of OCI items (those that might be reclassified and those that will not be

reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the

statement of comprehensive income.

Consolidated statement of comprehensive income 2010 version Effect of 2013 version


Year ended December 31, 2014

Operating revenue 57,691,937$ -$ 57,691,937$

Operating costs 53,526,514)( 208,942 53,317,572)( (1)

Operating expenses 1,721,728)( 49,694 1,672,034)( (1)

Non-operating income and expenses 462,501 - 462,501

Net income before tax 2,906,196 258,636 3,164,832

Income tax expense 584,468)( 43,968)( 628,436)( (1)

Profit for the period 2,321,728 214,668 2,536,396

Other comprehensive income, net of tax 583 113,831 114,414 (1)

Total comprehensive income

for the period 2,322,311$ 328,499$ 2,650,810$

Profit attributable to:

Owners of the parent 1,882,119$ 210,080$ 2,092,199$ (1)

Non-controlling interest 439,609 4,588 444,197 (1)

Profit for the period 2,321,728$ 214,668$ 2,536,396$

Comprehensive income attributable to:

Owners of the parent 1,903,144$ 302,706$ 2,205,850$ (1)

Non-controlling interest 419,167 25,793 444,960 (1)

Total comprehensive income 2,322,311$ 328,499$ 2,650,810$

Earnings per share (in dollars):

Basic 2.51$ 0.28$ 2.79$

Diluted 2.48$ 0.28$ 2.76$

169

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the

Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013

version of IFRS as endorsed by the FSC:

The Group is assessing the potential impact of the new standards, interpretations and amendments

above. The impact will be disclosed when the assessment is complete.

New Standards, Interpretations and Amendments

Effective date by

International Accounting

Standards Board

IFRS 9, ‗Financial instruments' January 1, 2018

Sale or contribution of assets between an investor and its associate or

joint venture (amendments to IFRS 10 and IAS 28)

To be determined by


Standards Board

Investment entities: applying the consolidation exception (amendments

to IFRS 10, IFRS 12 and IAS 28)

January 1, 2016

Accounting for acquisition of interests in joint operations

(amendments to IFRS 11)

January 1, 2016

IFRS 14, 'Regulatory deferral accounts' January 1, 2016

IFRS 15, ‗Revenue from contracts with customers' January 1, 2018

IFRS 16, 'Leases' January 1, 2019

Disclosure initiative (amendments to IAS 1) January 1, 2016


Recognition of deferred tax assets for unrealised losses (amendments to

IAS 12)

January 1, 2017

Clarification of acceptable methods of depreciation and amortisation

(amendments to IAS 16 and IAS 38)

January 1, 2016

Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016

Defined benefit plans: employee contributions (amendments to IAS

19R)

July 1, 2014

Equity method in separate financial statements (amendments to IAS 27) January 1, 2016

Recoverable amount disclosures for non-financial assets (amendments

to IAS 36)

January 1, 2014

Novation of derivatives and continuation of hedge accounting

(amendments to IAS 39)

January 1, 2014

IFRIC 21, ‗Levies‘ January 1, 2014

Improvements to IFRSs 2010-2012 July 1, 2014


Improvements to IFRSs 2012-2014 January 1, 2016

170

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless

otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the

―Regulations Governing the Preparation of Financial Reports by Securities Issuers‖, International

Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC

Interpretations as endorsed by the FSC (collectively referred herein as the ―IFRSs‖).

(2) Basis of preparation

A.Except for the following items, the consolidated financial statements have been prepared under

the historical cost convention:

(a)Financial assets and financial liabilities (including derivative instruments) at fair value

through profit or loss.

(b)Available-for-sale financial assets measured at fair value.

(c)Liabilities on cash-settled share-based payment arrangements measured at fair value.

(d)Defined benefit liabilities recognised based on the net amount of pension fund assets less

present value of defined benefit obligation.

B.The preparation of financial statements in conformity with IFRSs requires the use of certain

critical accounting estimates. It also requires the management to exercise its judgment in the

process of applying the Group‘s accounting policies. The areas involving a higher degree of

judgment or complexity, or areas where assumptions and estimates are significant to the

consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A.Basis for preparation of consolidated financial statements:

(a)All subsidiaries are included in the Group‘s consolidated financial statements. Subsidiaries

are all entities (including structured entities) controlled by the Group. The Group controls an

entity when the Group is exposed, or has rights, to variable returns from its involvement with

the entity and has the ability to affect those returns through its power over the entity.

Consolidation of subsidiaries begins from the date the Group obtains control of the

subsidiaries and ceases when the Group loses control of the subsidiaries.

(b)Inter-company transactions, balances and unrealized gains or losses on transactions between

companies within the Group are eliminated. Accounting policies of subsidiaries have been

adjusted where necessary to ensure consistency with the policies adopted by the Group.

(c)Profit or loss and each component of other comprehensive income are attributed to the owners

of the parent and to the non-controlling interests. Total comprehensive income is attributed to

the owners of the parent and to the non-controlling interests even if this results in the

non-controlling interests having a deficit balance.

171

(d)Changes in a parent‘s ownership interest in a subsidiary that do not result in the parent losing

control of the subsidiary (transactions with non-controlling interests) are accounted for as

equity transactions, i.e. transactions with owners in their capacity as owners. Any difference

between the amount by which the non-controlling interests are adjusted and the fair value of

the consideration paid or received is recognized directly in equity.

(e)When the Group loses control of a subsidiary, the Group remeasures any investment retained

in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial

recognition of a financial asset or the cost on initial recognition of the associate or joint

venture. Any difference between fair value and carrying amount is recognized in profit or loss.

All amounts previously recognized in other comprehensive income in relation to the

subsidiary are reclassified to profit or loss, on the same basis as would be required if the

related assets or liabilities were disposed of. That is, when the Group loses control of a

subsidiary, all gains or losses previously recognized in other comprehensive income in

relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or

losses would be reclassified to profit or loss when the related assets or liabilities are disposed

of.

172

B.Subsidiaries included in the consolidated financial statements:

Name of Investor Name of Subsidiary Main Business Activities December 31, 2015 December 31, 2014 January 1, 2014 Description

CTCI Corp. Advanced Control

& System Inc.

Design and installation

of software

48.76 49.04 49.80 Note 1

CTCI Corp. GRQ Investment

Corp.

Real estate and leasing

business

100.00 100.00 100.00

CTCI Corp. Innovest Investment

Corp.

Investments 100.00 100.00 100.00

CTCI Corp. E&C Engineering

Corp.

Planning and design of

construction projects

97.09 97.09 97.09

CTCI Corp. Resources

Engineering

Service Inc.

Planning, design and

supervision of

mechanical and

electrical engineering

projects

93.14 93.14 93.14

CTCI Corp. CTCI Americas, Inc. Business development and

related engineering services

and planning

100.00 100.00 100.00

CTCI Corp. CTCI Singapore

Pte. Ltd.



100.00 100.00 100.00

Innovest Investment

Corp.

GRQ Investment

Corp.

Sino Environmental

Service Corp.

E&C Engineering

Corp.

Resources Engineering

Service Inc.

CTCI Chemical

Corp.

Manufacturing of

chemical products

75.49 75.49 75.49

CTCI Corp.

Innovest Investment

Corp.

GRQ Investment

Corp.

KD Holding Corp. Investments 58.88 59.75 61.10

KD Holding Corp.

Sino Environmental

Service Corp.

Leading Energy

Corp.

Environmental engineering 100.00 100.00 100.00

KD Holding Corp. HD Resources

Management

Corp.


KD Holding Corp.

HD Resources

Management Corp.

Sino Environmental

Services Corp.


KD Holding Corp.

Sino Environmental

Service Corp.

Fortune Energy

Corp.


KD Holding Corp.

HD Resources

Management Corp.

Yuan Ding

Resources

Management

Corp.


Sino Environmental

Services Corp.

Xiang Ding

Environment

Consultant

(Shanghai) Co.,

Ltd.


Ownership (%)

173


CTCI Corp.

Sino Environmental

Services Corp.

Sinogal – Waste

Services Co., Ltd.


CTCI Chemical

Corp.

Chung Ding

Chemical Corp.

Trading of chemical

materials

100.00 100.00 100.00

Chung Ding

Chemical Corp.

Zhuhai Chung Ding

Chemical Corp.

Trading of chemical

materials

- 100.00 100.00 Note 6

CTCI Corp. CTCI Overseas

(BVI) Corp.

Investment, planning and

design of construction

100.00 100.00 100.00

CTCI Overseas

(BVI) Corp.

CTCI Overseas Co.,

Ltd.


Construction projects

100.00 100.00 100.00

CTCI Overseas Co.,

Ltd.

Jing Ding

Engineering &

Construction Co.,

Ltd.



100.00 100.00 100.00

CTCI Overseas Co.,

Ltd.

CIMAS

Engineering

Company



50.00 50.00 50.00 Note 1、2

CTCI Overseas Co.,

Ltd.

Universal

Engineering (BVI)

Corp.



100.00 100.00 100.00

CTCI Overseas Co.,

Ltd.

CIPEC

Construction

Company Inc.



40.00 40.00 40.00 Note 1、2

CTCI Overseas Co.,

Ltd.

CINDA

Engineering &

Construction

Private Limited



100.00 100.00 100.00 Note 2

CTCI Corp.

CTCI Overseas Co.,

Ltd.

CTCI and Partners

Company Limited



100.00 100.00 100.00 Note 2

CTCI Corp.

CTCI Overseas Co.,

Ltd.

CTCI Arabia Ltd. Design and construction of

chemical factories

100.00 100.00 100.00

E&C Engineering

Corp.

CTCI Overseas Co.,

Ltd.

Shang Ding

Engineering &

Construction Co.,

Ltd.

Consulting services for


100.00 100.00 100.00

Shang Ding

Engineering &

Construction Co.,

Ltd.

Shanghai XuanLi

Trading Co., Ltd.

General trade 100.00 100.00 100.00

CTCI Corp.

CTCI Overseas Co.,

Ltd.

CTCI Engineering

& Construction

Sdn. Bhd.



100.00 100.00 100.00 Note 2

CTCI Engineering &

Construction Sdn.

Bhd.

CTCI MALAYSIA

Sdn. Bhd.



20.00 20.00 20.00 Note 1、2

CTCI Corp.

Superiority

(Thailand) Co., Ltd.

CTCI (Thailand)

Co., Ltd.



100.00 100.00 100.00

Advanced Control &

System Inc.

Century Ahead Ltd. Investments 100.00 100.00 100.00

Century Ahead Ltd. Advanced Control

& Information

Technologies Ltd.

Computer skills services 100.00 100.00 100.00

Ownership (%)

174

Note 1： Being the Company‘s controlled entities, these subsidiaries that were under 50%

owned by the Company directly or indirectly were included in the consolidated

financial statements.

Note 2：The company was audited by other independent accountants for the year ended

December 31, 2015.

Note 3：Excluding Note 2, CTCI Qatar Branch and CTCI Abu Dhabi Branch were audited

by other independent accountants.

Note 4：Established as a new investment on September, 2014.

Note 5：Liquidation procedures in 2014 and dissolution on January 28, 2015.

Note 6：Disposal in August, 2015.

C.Subsidiaries not included in the consolidated financial statements：None.

D.Adjustments for subsidiaries with different balance sheet date：None.

E.Significant restrictions：None.

F.Subsidiaries that have non-controlling interests that are material to the Group:

As of December 31, 2015, December 31, 2014, and January 1, 2014, the non-controlling interest

amounted to $2,708,635, $2,565,206 and $2,447,496, respectively. The information of

non-controlling interest and respective subsidiaries is as follows:


E&C Engineering

Corp.

Synergy

Engineering Corp.



- - 100.00 Note 5

Universal

Engineering (BVI)

Corp.

Superiority

(Thailand) Co.,Ltd



100.00 100.00 100.00

CTCI Corp. CTCI Machinery

Corp.



100.00 100.00 100.00

CTCI Corp. CCJV P1

Engineering &

Construction

Sdn. Bhd.

Planning of construction

projects

99.00 80.00 - Note 2、

3、4

Ownership (%)

Name of

subsidiary

Principal

place of

business Amount

Ownership

(%) Amount

Ownership

(%) Amount

Ownership

(%)

KD Holding

Corp.

Taiwan 2,256,737$ 41.12% 2,155,935$ 40.25% 2,032,857$ 38.90%

Non-controlling interest

December 31, 2015 December 31, 2014 January 1, 2014

175

Summarized financial information of the subsidiaries:

Balance sheets

Statements of comprehensive income

Statements of cash flows

(4) Foreign currency translation

Items included in the financial statements of each of the Group‘s entities are measured using the

currency of the primary economic environment in which the entity operates (the ―functional

currency‖). The consolidated financial statements are presented in New Taiwan Dollars, which is

the Company‘s functional and the Group‘s presentation currency.


Current assets 3,883,204$ 3,323,216$ 3,218,309$

Non-current assets 3,772,910 3,912,267 3,820,171

Current liabilities 1,949,874)( 1,638,459)( 1,479,002)(

Non-current liabilities 794,592)( 912,233)( 1,128,803)(

Total net assets 4,911,648$ 4,684,791$ 4,430,675$

KD Holding Corp.

Year ended December 31,

2015


2014

Revenue 4,078,753$ 3,925,027$

Profit before income tax 968,879 933,033

Income tax expense 130,320)( 135,809)(

Profit for the period 838,559 797,224

Other comprehensive income,

net of tax 5,678 32,935

Total comprehensive income

for the period 844,237$ 830,159$

KD Holding Corp.


2015


2014

Net cash provided by operating

activities

1,221,033$ 1,197,031$

Net cash used in investing activities 107,034)( 395,301)(

Net cash used in financing activities 784,920)( 976,364)(

Increase (decrease) in cash and cash

equivalents 329,079 174,634)(

Cash and cash equivalents, beginning

of period 1,830,051 2,004,685

Cash and cash equivalents, end of

period 2,159,130$ 1,830,051$

KD Holding Corp.

176

A.Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange

rates prevailing at the dates of the transactions or valuation where items are remeasured.

Foreign exchange gains and losses resulting from the settlement of such transactions are

recognized in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are

re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences

arising upon re-translation at the balance sheet date are recognized in profit or loss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

through profit or loss are re-translated at the exchange rates prevailing at the balance sheet

date; their translation differences are recognized in profit or loss. Non-monetary assets and

liabilities denominated in foreign currencies held at fair value through other comprehensive

income are re-translated at the exchange rates prevailing at the balance sheet date; their

translation differences are recognized in other comprehensive income. However,

non-monetary assets and liabilities denominated in foreign currencies that are not measured

at fair value are translated using the historical exchange rates at the dates of the initial

transactions.

B.Translation of foreign operations

(a) The operating results and financial position of all the group entities, associates and join

arrangements that have a functional currency different from the presentation currency are

translated into the presentation currency as follows:

i) Assets and liabilities for each balance sheet presented are translated at the closing

exchange rate at the date of that balance sheet;

ii) Income and expenses for each statement of comprehensive income are translated at

average exchange rates of that period; and

iii) All resulting exchange differences are recognized in other comprehensive income.

(b) When a foreign operation partially disposed of or sold is an associate or joint arrangements,

exchange differences that were recorded in other comprehensive income are proportionately

reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the

Group still retains partial interest in the former foreign associate or joint arrangements after

losing significant influence over the former foreign associate, or losing joint control of the

former joint arrangements, such transactions should be accounted for as disposal of all

interest in these foreign operations.

(5) Classification of current and non-current items

A. As the operating cycle for construction contracts usually exceeds one year, the Group uses the

operating cycle (typically 3～4 years) as its criteria for classifying current and non-current assets

and liabilities related to construction contracts. For other assets and liabilities, the criterion is

one year.

B. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to be

sold or consumed within the normal operating cycle;

177

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realized within twelve months from the balance sheet date;

(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

to be exchanged or used to pay off liabilities more than twelve months after the balance sheet

date.

C. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise

they are classified as non-current liabilities:

(a) Liabilities that are expected to be paid off within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be paid off within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date. Terms of a liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits

that meet the definition above and are held for the purpose of meeting short-term cash commitments

in operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets held for trading or financial

assets designated as at fair value through profit or loss on initial recognition. Financial assets

are classified in this category of held for trading if acquired principally for the purpose of selling

in the short-term. Derivatives are also categorized as financial assets held for trading unless they

are designated as hedges. Financial assets that meet one of the following criteria are designated as

at fair value through profit or loss on initial recognition:

(a) Hybrid (combined) contracts; or

(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

(c) They are managed and their performance is evaluated on a fair value basis, in accordance with

a documented risk management or investment strategy.

B. On a regular way of purchase or sale basis, financial assets held for trading are recognized and

derecognized using trade date accounting.

C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related

transaction costs are expensed in profit or loss. These financial assets are subsequently

remeasured and stated at fair value, and any changes in the fair value of these financial assets are

recognized in profit or loss.

178

(8) Available-for-sale financial assets

A. Available-for-sale financial assets are non-derivatives that are either designated in this category or

not classified in any of the other categories.

B. On a regular way of purchase or sale basis, available-for-sale financial assets are recognized and


C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs.

These financial assets are subsequently remeasured and stated at fair value, and any changes in

the fair value of these financial assets are recognized in other comprehensive income.

Investments in equity instruments that do not have a quoted market price in an active market and

whose fair value cannot be reliably measured or derivatives that are linked to and must be settled

by delivery of such unquoted equity instruments are presented in ‗financial assets measured at

cost‘.

(9) Accounts receivable

Accounts receivable are loans and receivables originated by the entity. They are created by the entity

by selling goods or providing services to customers in the ordinary course of business. Accounts

receivable are initially recognized at fair value and subsequently measured at amortized cost using

the effective interest method, less provision for impairment. However, short-term accounts

receivable without bearing interest are subsequently measured at initial invoice amount as effect of

discounting is immaterial.

(10) Impairment of financial assets

A. The Group assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more events that

occurred after the initial recognition of the asset (a ‗loss event‘) and that loss event (or events)

has an impact on the estimated future cash flows of the financial asset or group of financial

assets that can be reliably estimated.

B. The criteria that the Group uses to determine whether there is objective evidence of impairment

loss is as follows:

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

(b)A breach of contract, such as a default or delinquency in interest or principal payments;

(c)The Group, for economic or legal reasons relating to the borrower‘s financial difficulty,

granted the borrower a concession that a lender would not otherwise consider;

(d)It becomes probable that the borrower will enter bankruptcy or other financial

reorganization;

(e)The disappearance of an active market for that financial asset because of financial

difficulties;

(f)Observable data indicating that there is a measurable decrease in the estimated future cash

flows from a group of financial assets since the initial recognition of those assets, although

the decrease cannot yet be identified with the individual financial asset in the group,

including adverse changes in the payment status of borrowers in the group or national or

local economic conditions that correlate with defaults on the assets in the group;

179

(g)Information about significant changes with an adverse effect that have taken place in the

technology, market, economic or legal environment in which the issuer operates, and

indicates that the cost of the investment in the equity instrument may not be recovered;

(h)A significant or prolonged decline in the fair value of an investment in an equity instrument

below its cost.

C. When the Group assesses that there has been objective evidence of impairment and an

impairment loss has occurred, accounting for impairment is made as follows according to the

category of financial assets:

(a) Financial assets measured at amortized cost

The amount of the impairment loss is measured as the difference between the asset‘s

carrying amount and the present value of estimated future cash flows discounted at the

financial asset‘s original effective interest rate, and is recognized in profit or loss. If, in a

subsequent period, the amount of the impairment loss decreases and the decrease can be

related objectively to an event occurring after the impairment loss was recognized, the

previously recognized impairment loss is reversed through profit or loss to the extent that

the carrying amount of the asset does not exceed its amortized cost that would have been at

the date of reversal had the impairment loss not been recognized previously. Impairment

loss is recognized and reversed by adjusting the carrying amount of the asset directly.

(b) Financial assets measured at cost


carrying amount and the present value of estimated future cash flows discounted at current

market return rate of similar financial asset, and is recognized in profit or loss.

Impairment loss recognized for this category shall not be reversed subsequently.

Impairment loss is recognized by adjusting the carrying amount of the asset through the use

of an impairment allowance account.

(c) Available-for-sale financial assets


acquisition cost (less any principal repayment and amortization) and current fair value, less

any impairment loss on that financial asset previously recognized in profit or loss, and is

reclassified from ‗other comprehensive income‘ to ‗profit or loss‘. If, in a subsequent

period, the fair value of an investment in a debt instrument increases, and the increase can

be related objectively to an event occurring after the impairment loss was recognized, then

such impairment loss is reversed through profit or loss. Impairment loss of an investment

in an equity instrument recognized in profit or loss shall not be reversed through profit or

loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the

asset through the use of an impairment allowance account.

(11) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows from

the financial asset expire.

180

(12) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the

moving average method. The item by item approach is used in applying the lower of cost and net

realizable value. Net realizable value is the estimated selling price in the ordinary course of

business, less the estimated cost of completion and applicable variable selling expenses.

(13) Construction contracts

A.IAS 11, ‗Construction Contracts‘, defines a construction contract as a contract specifically

negotiated for the construction of an asset. If the outcome of a construction contract can be

estimated reliably and it is probable that this contract would make a profit, contract revenue

should be recognized by reference to the stage of completion of the contract activity, using the

percentage-of-completion method of accounting, over the contract term. Contract costs are

expensed as incurred. The stage of completion of a contract is measured by the proportion of

contract costs incurred for work performed to date to the estimated total costs for the contract.

An expected loss where total contract costs will exceed total contract revenue on a construction

contract should be recognized as an expense as soon as such loss is probable. If the outcome of a

construction contract cannot be estimated reliably, contract revenue should be recognized only to

the extent of contract costs incurred that it is probable will be recoverable.

B.Contract revenue should include the revenue arising from variations from the original contract

work, claims and incentive payments that are agreed by the customer and can be measured

reliably.

C.The excess of the cumulative costs incurred plus recognized profits (less recognized losses) over

the progress billings on each construction contract is presented as an asset within ‗due from

customers for contract work‘. While, the excess of the progress billings over the cumulative costs

incurred plus recognized profits (less recognized losses) on each construction contract is

presented as a liability within ‗due to customers for contract work‘.

(14) Investments accounted for using the equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In

general, it is presumed that the investor has significant influence, if an investor holds, directly

or indirectly 20 percent or more of the voting power of the investee. Investments in associates

are accounted for using the equity method and are initially recognized at cost.

B. The Group‘s share of its associates‘ post-acquisition profits or losses is recognized in profit or

loss, and its share of post-acquisition movements in other comprehensive income is recognized

in other comprehensive income. When the Group‘s share of losses in an associate equals or

exceeds its interest in the associate, including any other unsecured receivables, the Group does

not recognize further losses, unless it has incurred legal or constructive obligations or made

payments on behalf of the associate.

C. When changes in an associate‘s equity that are not recognized in profit or loss or other

comprehensive income of the associate and such changes not affecting the Group‘s ownership

percentage of the associate, the Group recognizes change in ownership interests in the associate

in ‗capital surplus‘ in proportion to its ownership.

181

D. Unrealized gains on transactions between the Company and its associates are eliminated to the

extent of the Company‘s interest in the associates. Unrealized losses are also eliminated unless

the transaction provides evidence of an impairment of the asset transferred. Accounting policies

of associates have been adjusted where necessary to ensure consistency with the policies

adopted by the Group.

E. In the case that an associate issues new shares and the Group does not subscribe or acquire new

shares proportionately, which results in a change in the Group‘s ownership percentage of the

associate but maintains significant influence on the associate, then ‗capital surplus‘ and

‗investments accounted for using the equity method‘ shall be adjusted for the increase or

decrease of its share of equity interest. If the above condition causes a decrease in the

Group‘s ownership percentage of the associate, in addition to the above adjustment, the

amounts previously recognized in other comprehensive income in relation to the associate are

reclassified to profit or loss proportionately on the same basis as would be required if the

relevant assets or liabilities were disposed of.

(15) Investment accounted for using equity method- joint ventures

The Group accounts for its interest in a joint venture using equity method. Unrealised profits and

losses arising from the transactions between the Group and its joint venture are eliminated to the

extent of the Group‘s interest in the joint venture. However, when the transaction provides evidence

of a reduction in the net realisable value of current assets or an impairment loss, all such losses

shall be recognised immediately. When the Group‘s share of losses in a joint venture equals or

exceeds its interest in the joint venture together with any other unsecured receivables, the Group

does not recognise further losses, unless it has incurred legal or constructive obligations or made

payments on behalf of the joint venture.

(16) Property, plant and equipment

A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the

construction period are capitalized.

B.Subsequent costs are included in the asset‘s carrying amount or recognized as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the item

will flow to the Group and the cost of the item can be measured reliably. The carrying amount

of the replaced part is derecognized. All other repairs and maintenance are charged to profit or

loss during the financial period in which they are incurred.

C.Land is not depreciated. Other property, plant and equipment apply cost model and are

depreciated using the straight-line method to allocate their cost over their estimated useful lives.

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 must be depreciated separately.

182

D.The assets‘ residual values, useful lives and depreciation methods are reviewed, and adjusted if

appropriate, at each financial year-end. If expectations for the assets‘ residual values and useful

lives differ from previous estimates or the patterns of consumption of the assets‘ future

economic benefits embodied in the assets have changed significantly, any change is accounted

for as a change in estimate under IAS 8, ―Accounting Policies, Changes in Accounting

Estimates and Errors”, from the date of the change. The estimated useful lives of property,

plant and equipment are as follows:

Buildings 3 ~ 50 years

Machinery 2 ~ 20 years

Transportation equipment 2 ~ 10 years

Office equipment 2 ~ 10 years

(17) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost

model. Except for land, investment property is depreciated on a straight-line basis over its

estimated useful life of 48 years.

(18) Intangible assets

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful

life of 3 to 5 years.

(19) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there

is an indication that they are impaired. An impairment loss is recognised for the amount by which

the asset‘s carrying amount exceeds its recoverable amount. The recoverable amount is the higher

of an asset‘s fair value less costs to sell or value in use. When the circumstances or reasons for

recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be

reversed to the extent of the loss previously recognized in profit or loss.

(20) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs)

and the redemption value is recognised in profit or loss over the period of the borrowings using the

effective interest method.

(21) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in

the ordinary course of business from suppliers. They are recognized initially at fair value and

subsequently measured at amortized cost using the effective interest method. However, short-term

accounts payable without bearing interest are subsequently measured at initial invoice amount as

the effect of discounting is immaterial.

183

(22) Financial liabilities at fair value through profit or loss

A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading or

financial liabilities designated as at fair value through profit or loss on initial recognition.

Financial liabilities are classified in this category of held for trading if acquired principally for

the purpose of repurchasing in the short-term. Derivatives are also categorized as financial

liabilities held for trading unless they are designated as hedges.

B. Financial liabilities at fair value through profit or loss are initially recognized at fair value.

Related transaction costs are expensed in profit or loss. These financial liabilities are

subsequently remeasured and stated at fair value, and any changes in the fair value of these

financial liabilities are recognized in profit or loss.

(23) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract

is discharged or cancelled or expires.

(24) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when

there is a legally enforceable right to offset the recognized amounts and there is an intention to

settle on a net basis or realize the asset and settle the liability simultaneously.

(25) Financial liabilities and equity instruments

Bonds payable

Convertible corporate bonds issued by the Group contain conversion options (that is, the

bondholders have the right to convert the bonds into the Group‘s common shares by exchanging a

fixed amount of cash for a fixed number of common shares), call options and put options. The

Group classifies the bonds payable and derivative features embedded in convertible corporate

bonds on initial recognition as a financial asset, a financial liability or an equity instrument (‗capital

surplus—stock warrants‘) in accordance with the substance of the contractual arrangement and the

definitions of a financial asset, a financial liability and an equity instrument. Convertible corporate

bonds are accounted for as follows:

A.Call options and put options embedded in convertible corporate bonds are recognized initially at

net fair value as ‗financial assets or financial liabilities at fair value through profit or loss‘. They

are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss

is recognized as ‗gain or loss on valuation of financial assets or financial liabilities at fair value

through profit or loss‘.

B.Bonds payable of convertible corporate bonds is initially recognized at fair value and

subsequently stated at amortized cost. Any difference between the proceeds and the redemption

value is accounted for as the premium or discount on bonds payable and presented as an addition

to or deduction from bonds payable, which is amortised in profit or loss as an adjustment to the

‗finance costs‘ over the period of bond circulation using the effective interest method.

C.Conversion options embedded in convertible corporate bonds issued by the Group, which meet

the definition of an equity instrument, are initially recognized in ‗capital surplus—stock warrants‘

at the residual amount of total issue price less amounts of ‗financial assets or financial liabilities

at fair value through profit or loss‘ and ‗bonds payable—net‘ as stated above. Conversion options

are not subsequently remeasured.

184

D.Any transaction costs directly attributable to the issuance of convertible corporate bonds are

allocated to the liability and equity components in proportion to the allocation of proceeds.

E.When bondholders exercise conversion options, the liability component of the bonds (including

‗bonds payable‘ and ‗financial assets or financial liabilities at fair value through profit or loss‘)

shall be remeasured on the conversion date. The book value of common shares issued due to the

conversion shall be based on the adjusted book value of the above-mentioned liability component

plus the book value of capital surplus - stock warrants.

(26) Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and

are subsequently remeasured at their fair value.

(27) Provisions

Provisions (decommissioning) are recognized when the Group has a present legal or constructive

obligation as a result of past events, and it is probable that an outflow of economic resources will

be required to settle the obligation and the amount of the obligation can be reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle

the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that

reflects the current market assessments of the time value of money and the risks specific to the

obligation. When discounting is used, the increase in the provision due to passage of time is

recognized as interest expense. Provisions are not recognized for future operating losses.

(28) Employee benefits

A.Short-term employee benefits

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

to be paid in respect of service rendered by employees in a period and should be recognized as

expenses in that period when the employees render service.

B.Pensions

(a)Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expenses when

they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent

of a cash refund or a reduction in the future payments.

(b)Defined benefit plans

i)Net obligation under a defined benefit plan is defined as the present value of an amount of

pension benefits that employees will receive on retirement for their services with the Group

in current period or prior periods. The rate used to discount is determined by using interest

rates of high-quality corporate bonds that are denominated in the currency in which the

benefits will be paid, and that have terms to maturity approximating the terms of related

pension liability; when there is no deep market in high-quality corporate bonds, the Group

uses interest rates of government bonds (at the balance sheet date) instead.

ii)Remeasurement arising on defined benefit plans are recognised in other comprehensive

income in the period in which they arise and are recorded as retained earnings.

185

iii)Past service costs are recognised immediately in profit or loss.

C.Employees‘, directors‘ and supervisors‘ remuneration

Employees‘ remuneration and directors‘ and supervisors‘ remuneration are recognised as

expenses and liabilities, provided that such recognition is required under legal obligation or

constructive obligation and those amounts can be reliably estimated. Any difference between

the resolved amounts and the subsequently actual distributed amounts is accounted for as

changes in estimates.

(29) Employee share-based payment

For the equity-settled share-based payment arrangements, the employee services received are

measured at the fair value of the equity instruments granted at the grant date, and are recognized as

compensation cost over the vesting period, with a corresponding adjustment to equity. The fair

value of the equity instruments granted shall reflect the impact of market vesting conditions and

non-market vesting conditions. Compensation cost is subject to adjustment based on the service

conditions that are expected to be satisfied and the estimates of the number of equity instruments

that are expected to vest under the non-market vesting conditions at each balance sheet date. And

ultimately, the amount of compensation cost recognized is based on the number of equity

instruments that eventually vest.

(30) Income tax

A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or

loss, except to the extent that it relates to items recognized in other comprehensive income or

items recognized directly in equity, in which cases the tax is recognized in other comprehensive

income or equity.

B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the balance sheet date in the countries where the Company and its subsidiaries operate

and generate taxable income. Management periodically evaluates positions taken in tax returns

with respect to situations in accordance with applicable tax regulations. It establishes provisions

where appropriate based on the amounts expected to be paid to the tax authorities. An

additional 10% tax is levied on the unappropriated retained earnings and is recorded as income

tax expense in the year the stockholders resolve to retain the earnings.

C.Deferred tax is recognized, using the balance sheet liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that have been

enacted or substantially enacted by the balance sheet date and are expected to apply when the

related deferred tax asset is realized or the deferred income tax liability is settled.

D.Deferred tax assets are recognized only to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilized. At each balance

sheet date, unrecognized and recognized deferred tax assets are reassessed.

E.Current tax assets and liabilities are offset and the net amount reported in the balance sheet when


settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax

assets and liabilities are offset on the balance sheet when the entity has the legally enforceable

right to offset current tax assets against current tax liabilities and they are levied by the same

186

taxation authority on either the same entity or different entities that intend to settle on a net basis

or realize the asset and settle the liability simultaneously.

F.A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from

research and development expenditures, to the extent that it is possible that future taxable profit

will be available against which the unused tax credits can be utilised.

G.The interim period income tax expense is recognised based on the estimated average annual

effective income tax rate expected for the full financial year applied to the pretax income of the

interim period, and the related information is disclosed accordingly.

(31) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

B. Where the Company repurchases the Company‘s equity share capital that has been issued, the

consideration paid, including any directly attributable incremental costs (net of income taxes) is

deducted from equity attributable to the Company‘s equity holders. Where such shares are

subsequently reissued, the difference between their book value and any consideration received,

net of any directly attributable incremental transaction costs and the related income tax effects,

is included in equity attributable to the Company‘s equity holders.

(32) Dividends

Dividends are recorded in the Company‘s financial statements in the period in which they are

approved by the Company‘s shareholders. Cash dividends are recorded as liabilities.

(33) Revenue recognition

The Group provides construction services. Revenue from delivering services is recognized under

the percentage-of-completion method when the outcome of services provided can be estimated

reliably. The stage of completion of a service contract is measured by the proportion of contract

costs incurred for services performed as of the financial reporting date to the estimated total costs

for the service contract. If the outcome of a service contract cannot be estimated reliably, contract

revenue should be recognized only to the extent that contract costs incurred are likely to be

recoverable.

(34) Service concession arrangements

A.The Group contracted with the government (grantor) a service concession arrangement whereby

the Group shall provide construction of the government‘s infrastructure assets for public services

and operate those assets during the term of the arrangement, and when the term of the operating

period expires, the underlying infrastructure assets will be transferred to the government without

consideration. The Group allocates the fair value of the consideration received or receivable in

respect of the service concession arrangement between construction services and operating

services provided based on their relative fair values, and recognizes such allocated amounts as

revenues in accordance with IAS 11, ‗Construction Contracts‘, and IAS 18, ‗Revenue‘,

respectively.

187

B.The consideration received or receivable from the grantor in respect of the service concession

arrangement is recognized at its fair value. Such considerations are recognized as a financial

asset or an intangible asset based on how the considerations from the grantor to the operator are

made as specified in the arrangement. The Group recognizes a financial asset to the extent that it

has an unconditional contractual right to receive cash or another financial asset from or at the

direction of the grantor for the construction services.

(35) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that

the Group will comply with any conditions attached to the grants and the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which

the Group recognises expenses for the related costs for which the grants are intended to

compensate.

(36) Operating segments

The Group‘s operating segments are reported in a manner consistent with the internal reporting

provided to the chief operating decision-maker. The chief operating decision-maker, who is

responsible for allocating resources and assessing performance of the operating segments, has been

identified as the Board of Directors that makes strategic decisions.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical

judgements in applying the Group‘s accounting policies and make critical assumptions and estimates

concerning future events. Assumptions and estimates may differ from the actual results and are

continually evaluated and adjusted based on historical experience and other factors. Such assumptions

and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year; and the related information is addressed below:

Critical accounting estimates and assumptions

A.Realisability of deferred tax assets

Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will

be available against which the deductible temporary differences can be utilized. Assessment of the

realisability of deferred tax assets involves critical accounting judgements and estimates of the

management, including the assumptions of expected future sales revenue growth rate and profit rate,

tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic

environment, industry environment, and laws and regulations might cause material adjustments to

deferred tax assets.

The Group‘s recognised deferred tax assets amounted to $517,930 as of December 31, 2015.

B.Calculation of net defined benefit liabilities

When calculating the present value of defined pension obligations, the Group must apply judgements

and estimates to determine the actuarial assumptions on balance sheet date, including discount rates

and future salary growth rate. Any changes in these assumptions could significantly impact the

carrying amount of defined pension obligations.

As of December 31, 2015, the carrying amount of net defined benefit liabilities was $ 2,522,092.

188

C. Financial assets – impairment assessment of financial assets without active market

The Group assesses the impairment of an investment of financial instruments as soon as there is any

indication that it might have been impaired and its carrying amount cannot be recoverable. The

Group assesses the recoverable amounts of financial assets without active market based on the

present value of expected cash dividends receivable from the investee and future cash flows from

the disposal of the investee, with present value of similar financial instruments at balance sheet date,

and analyses the reasonableness of related assumptions.

As of December 31, 2015, the Group recognised financial assets measured at cost, net of impairment

loss, amounting to $543,670.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1)Cash and cash equivalents

A.The Group transacts with a variety of financial institutions all with high credit quality to disperse

credit risk, so it expects that the probability of counterparty default is remote.

B.Details of the Group‘s cash and cash equivalents pledged to others as collateral are provided in

Note 8.

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

A.The Group recognized net gain (loss) of $54,530 and ($6,864) for the years ended December 31,

2015 and 2014, respectively.


Cash on hand and petty cash 102,741$ 136,428$ 323,018$

Checking accounts and

demand deposits

2,455,114 3,030,915 2,233,221

Time deposits 3,031,151 6,642,960 6,770,787

5,589,006$ 9,810,303$ 9,327,026$

Items December 31, 2015 December 31, 2014 January 1, 2014

Current items:

Financial assets held

for trading

Mutual funds 780,610$ 1,720,760$ 805,250$

Non-hedging derivatives 29,120 61,972 37,209

809,730 1,782,732 842,459

Valuation adjustment of

financial assets

held for trading

5,338)( 843 756

Total 804,392$ 1,783,575$ 843,215$

Financial liabilities held for

trading non-hedging derivatives $ 9,469 $ 14,907 20,061$

189

B.As of December 31, 2015, December 31, 2014 and January 1, 2014, the trading items and

contract information of derivatives are as follows:

Contract Period

Foreign exchange swap contract (6 items) JPY 550,000,000 2015.09.02~2016.06.23

Foreign exchange swap contract (1 item) THB 65,942,000 2015.06.02~2016.06.06

Non-delivery of forward exchange contract-

buy (3 items)

USD 36,100,000 2015.07.31~2016.03.09

Forward exchange contract-buy (1 item) CHF 1,000,000 2015.11.30~2016.01.07

Forward exchange contract-buy (3 items) EUR 8,000,000 2015.12.03~2016.01.07

Forward exchange contract-buy (1 item) SEK 8,687,000 2015.12.03~2016.01.07

Forward exchange contract-buy (7 items) MYR 94,391,000 2015.11.25~2016.08.11

December 31, 2015

Contract Amount

Contract Period

Forward exchange contract-buy (5 items) USD 5,300,000 2014.10.01~2015.05.22


sell (10 items)

USD 50,207,000 2013.07.22~2015.05.26


buy (4 items)

USD 2,100,000 2014.07.01~2015.08.21


buy (2 items)

USD 3,500,000 2014.10.17~2015.03.20

Foreign exchange swap contract (1 item) AUD 780,000 2014.06.18~2015.04.17

Foreign exchange swap contract (1 item) THB 65,140,000 2014.06.06~2015.06.10

Commodity swap contract (10 items) USD 5,842,000 2014.03.07~2015.04.22

December 31, 2014

Contract Amount

Contract Period


sell (5 items)

USD 3,775,000 2013.07.22~2015.03.24


buy (1 item)

CHF 1,000,000 2013.10.22~2014.03.03


buy (7 items)

USD 3,600,000 2013.04.24~2014.07.18


buy (1 item)

MYR 3,509,000 2013.11.25~2014.04.21

Forward exchange contract-buy (1 item) GBP 1,000,000 2013.09.13~2014.09.17

Forward exchange contract-buy (3 items) JPY 400,000,000 2013.11.21~2014.02.25

Forward exchange contract-sell (2 items) SGD 2,000,000 2013.07.18~2014.01.27

Forward exchange contract-buy (5 items) CHF 9,000,000 2013.07.10~2014.09.15

Forward exchange contract-sell (1 item) THB 64,100,000 2013.07.22~2014.06.16

Foreign exchange swap contract (4 items) USD 29,500,000 2013.09.24~2014.08.12


January 1, 2014

Contract Amount

190

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of

import or export proceeds. However, these forward foreign exchange contracts are not adopting

the hedging accounting because these do not conform to all the conditions.

C.Due to the global financial crisis in year 2008, listed (TSE and OTC) stocks amounting to

$165,417 which were initially classified as ―financial assets at fair value through profit or loss‖

were reclassified to ―available-for-sale financial assets‖ on July 1, 2008, in accordance with

paragraph 50 (c) of IAS 39. The relevant information is set forth below:

(a)The above reclassified assets which have not yet been disposed of were as follows:

(b)The changes in fair value of the above listed stocks that were recognized in profit or loss and

other comprehensive income were $0 and ($72,612), respectively, for the year ended

December 31, 2015, were $0 and ($20,167), respectively, for year ended December 31, 2014.

The accumulated total changes in fair value of the above listed stocks that were recognized in

profit or loss and other comprehensive income before January 1, 2014 were $0 and $76,536,

respectively.

(c)If the above listed stocks had not been reclassified to ―available-for-sale financial assets‖ on

July 1, 2008, the gain (loss) from change in fair value of those assets should have been

recognized for the following periods:

(3)Available-for-sale financial assets

The amounts that the Group recognized profit or loss in other comprehensive income due to the

changes in fair value were ($101,322) and ($86,616) for the years ended December 31, 2015 and

2014, respectively.


Book value/Fair value Book value/Fair value Book value/Fair value

Listed (TSE or OTC) stocks 149,174$ 221,786$ 241,953$

For the year ended For the year ended

December 31, 2015 December 31, 2014

Listed (TSE or OTC) stocks 72,612)($ 20,167)($


Current items:


Bonds 241,141 163,935 -

Valuation adjustment 1,517)( 80,755 166,589

674,916$ 680,181$ 604,730$

191

(4)Financial assets measured at cost

A.Based on the Group‘s intention, its investment in stocks should be classified as available-for-sale

financial assets. However, as these investments are not traded in active markets, the fair value of

the investment cannot be measured reliably. The Group classified those stocks as ‗financial assets

measured at cost‘.

B.As the operating results of investee companies accounted for using the cost method had

deteriorated, their net worth has declined significantly. The Company expects that the probability

of a recovery in their net worth is remote. As a result, loss on decline in market value of $30,733

and $86,756 were recognized for the years ended December 31, 2015 and 2014, respectively.

C.As of December 31, 2015, December 31, 2014, and January 1, 2014, no financial assets measured

at cost held by the Group were pledged to others.

(5)Notes and accounts receivable

For the long-term receivables due in one year, please refer to Note 6 (11) for detailed information.

(6)Construction in progress


Non-current items:

Unlisted stocks 1,038,994$ 1,044,914$ 967,689$

Accumulated impairment 495,324)( 470,292)( 383,536)(

543,670$ 574,622$ 584,153$


Notes receivable 33,233$ 11,781$ 3,244,527$

Accounts receivable 6,386,320 4,770,175 4,257,970

Long-term receivable due

in one year

247,257 237,678 228,507

Less:Allowance for bad

debts 54,505)( 43,605)( 118,607)(

6,612,305$ 4,976,029$ 7,612,397$


Aggregate costs incurred

plus recognised profits

(less recognised losses)

370,569,237$ 337,599,930$ 316,567,430$

Less: progress billings 352,555,580)( 328,830,518)( 309,622,385)(

Net balance sheet position

for construction in progress 18,013,657$ 8,769,412$ 6,945,045$

Presented as:

Due from customers for

contract work

26,890,108$ 18,758,973$ 12,372,269$

Due to customers for

contract work 8,876,451)( 9,989,561)( 5,427,224)(

18,013,657$ 8,769,412$ 6,945,045$

192

As of December 31, 2015, December 31, 2014 and January 1, 2014, the retentions relating to

construction contracts amounted to $0, $0, and $ 13,068, respectively; the advances received before

the related construction work is performed amounted to $87,771, $998,183, and $0, respectively.

(7)Prepayments

(8)Investments accounted for under the equity method

A.Associates

(a)The basic information of the associates that are material to the Group is as follows:


Prepayment for materials 2,345,587$ 2,801,490$ 1,847,244$

Prepayment for construction

in progress 349,011 304,804 823,694

Others 692,591 526,545 332,053

3,387,189$ 3,632,839$ 3,002,991$

Year ended December 31, 2015 Year ended December 31, 2014

At January 1 2,065,874$ 675,002$

Addition of investments accounted

for under the equity method

419,922 1,390,933

Share of profit or loss of investments

accounted for under the equity method

5,154 31,199

Earnings distribution of investments

accounted for under equity method

47,207)( 63,802)(

Changes in capital surplus 9)( 21)(

Changes in other equity items 6,998)( 32,563

At December 31 2,436,736$ 2,065,874$

Associates December 31, 2015 December 31, 2014 January 1, 2014

Pan Asia Corp. 558,796$ 550,550$ 565,307$

GranSino Environmental

Technology Co., Ltd. 6,339 10,711 18,007

TECA Engineering Pte. Ltd. 1,841 2,622 669

Powertec Energy Corp. 792,196 897,924 -

Boretech Resource

Recovery Engineering

Co., Ltd. (Cayman) 492,872 500,714 -

MIE Industrial SDN. BHD 370,649 - -

Joint ventures

G.D. Development Corp. 214,043 103,353 91,019

2,436,736$ 2,065,874$ 675,002$

Company name

Principal place

of business December 31, 2015 December 31, 2014 January 1, 2014

Nature of

relationship

Methods of

measurement

Powertec Energy Corp. Taiwan 18.18% 18.18% - Associates Equity method

Shareholding ratio

193

(b)The summarized financial information of the associates that are material to the Group is as

follows:

Balance sheet

Statement of comprehensive income

(c)The carrying amount of the Group‘s interests in all individually immaterial associates and the

Group‘s share of the operating results are summarized below:

As of December 31, 2015, December 31, 2014 and January 1, 2014, the carrying amount of

the Group‘s individually immaterial associates amounted to $1,430,497, $1,064,597, and

$583,983, respectively.

B.Joint venture

(a)The basic information of the joint ventures that are material to the Group is as follows:


Current assets 301,436$ 1,409,366$ -$

Non-current assets 19,096,090 18,818,474 -

Current liabilities 2,142,727)( 2,434,128)( -

Non-current liabilities 9,963,985)( 9,921,409)( -

Total net assets 7,290,814$ 7,872,303$ -$

Share in associate's

net assets 1,325,470$ 1,431,185$ -$

Carrying amount of

the associate 792,196$ 897,924$ -$

Powertec Energy Corp.


Revenue -$ -$

Total comprehensive income 581,489)($ 385,158)($

Powertec Energy Corp.


Total comprehensive income 223,972$ 223,461$

Company name

Principal place

of business December 31, 2015 December 31, 2014 January 1, 2014

Nature of

relationship

Methods of

measurement

G.D. Development Corp. Taiwan 50.00% 50.00% 50.00% Joint ventures Equity method

Shareholding ratio

194

(b)The summarized financial information of the joint ventures that are material to the Group is as

follows:

Balance sheet


C.The Group holds 50% equity in the joint venture – G.D. Development Corp. and its main activity

is environmental engineering.


Cash and cash equivalents 26,151$ 12,182$ 5,721$

Other current assets 44,725 3,058 3,562

Current assets 70,876 15,240 9,283

Non-current assets 782,366 632,222 571,812

Total assets 853,242$ 647,462$ 581,095$

Current financial liabilities 128,006$ 172,709$ 115,175$

Other current liabilities 70,684 61,451 60,521

Current liabilities 198,690 234,160 175,696

Non-current liabilities 226,466 206,614 223,361

Total liabilities 425,156$ 440,774$ 399,057$

Total net assets 428,086$ 206,688$ 182,038$

Share in associate's

net assets 214,043$ 103,344$ 91,019$

Carrying amount of

the associate 214,043$ 103,353$ 91,019$

G.D. Development Corp.


2015


2014

Revenue 43,014$ 34,862$

Depreciation and amortisation 14,900)($ 12,716)($

Interest income 966$ 548$

Interest expense 6,798)($ 5,952)($

Profit before income tax 23,916$ 13,066$

Income tax expense 515)( 882)(

Profit or loss for the period 23,401 12,184

Other comprehensive income

- net of tax 13,767 12,466


Dividends received from

joint venture 2,474$ -$

G.D. Development Corp.

195

D.The Group invested and owned 18.18% equity of the Powertec Energy Corp. amounting to

$926,700 on July, 2014.

E.The Board of Directors had resolved to invest in Boretech Resource Recovery Engineering Co.,

Ltd. (Cayman) in July, 2014. The Group invested and owned 30% equity of the Boretech

Resource Recovery Engineering Co., Ltd. (Cayman) amounting to $464,233 (US$15,547,000).

F. The Board of Director had resolved to invest in G.D. Development Corp. amounting to $94,500

in February, 2015.

G. The Board of Directors had resolved to invest in MIE Industrial SDN.BHD. in May, 2015. The

Group invested and owned 49% equity of MIE Industrial SDN. BHD. amounting to $325,422

(MYR $39,231,000).

H.The above investments accounted for using the equity method, Pan Asia Corp., TECA

Engineering Pte. Ltd., and Powertec Energy Corp. were recognized based on the financial

statements which have been audited by other auditors as of December 31, 2014.

The above investments accounted for using the equity method, Pan Asia Corp., TECA

Engineering Pte. Ltd., Powertec Energy Corp., and MIE Industrial SDN. BHD. were recognized

based on the financial statements which have been audited by other auditors as of December 31,

2015.

196


(9)Property, plant and equipment

Land Buildings Machinery

Transportation

equipment

Office

equipment

Prepayments

for equipment Others Total

At January 1, 2015

Cost 3,197,216$ 4,464,626$ 855,243$ 177,282$ 229,960$ 10,469$ 388,719$ 9,323,515$

Accumulated depreciation - 1,088,925)( 694,857)( 135,724)( 169,833)( - 207,298)( 2,296,637)(

3,197,216$ 3,375,701$ 160,386$ 41,558$ 60,127$ 10,469$ 181,421$ 7,026,878$

2015

Opening net book amount 3,197,216$ 3,375,701$ 160,386$ 41,558$ 60,127$ 10,469$ 181,421$ 7,026,878$

Additions 13,245 17,000 48,484 17,664 1,941 97,789 160,386 356,509

Disposals - 11,786)( 3,596)( 3,799)( 253)( - 846)( 20,280)(

Depreciation charge - 171,657)( 63,519)( 14,846)( 25,233)( - 53,013)( 328,268)(

Net exchange differences 3,264)( 34,665)( 1,741 2,920 621)( 304)( 1,030 33,163)(

Closing net book amount 3,207,197$ 3,174,593$ 143,496$ 43,497$ 35,961$ 107,954$ 288,978$ 7,001,676$

At December 31, 2015

Cost 3,207,197$ 4,422,811$ 897,891$ 189,506$ 230,559$ 107,954$ 548,002$ 9,603,920$


3,207,197$ 3,174,593$ 143,496$ 43,497$ 35,961$ 107,954$ 288,978$ 7,001,676$

197

A.The Group had no borrowing costs capitalized for the years ended December 31, 2015 and 2014.

B.Please refer to Note 8 for the details of pledged property, plant and equipment.


Transportation

equipment

Office

equipment

Prepayments

for equipment Others Total

At January 1, 2014

Cost 3,194,122$ 4,330,883$ 676,097$ 217,137$ 259,150$ 29,025$ 295,027$ 9,001,441$

Accumulated depreciation - 870,237)( 494,431)( 177,521)( 178,369)( - 130,052)( 1,850,610)(

3,194,122$ 3,460,646$ 181,666$ 39,616$ 80,781$ 29,025$ 164,975$ 7,150,831$

2014

Opening net book amount 3,194,122$ 3,460,646$ 181,666$ 39,616$ 80,781$ 29,025$ 164,975$ 7,150,831$

Additions - 21,974 53,500 21,848 3,148 8,586 30,404 139,460

Disposals - - 4,016)( 1,137)( 4,127)( - 2,549)( 11,829)(

Depreciation charge - 175,537)( 66,332)( 21,028)( 25,770)( - 31,132)( 319,799)(

Reclassifications - 12,036 - - - 27,142)( 15,106 -

Net exchange differences 3,094 56,582 4,432)( 2,259 6,095 - 4,617 68,215

Closing net book amount 3,197,216$ 3,375,701$ 160,386$ 41,558$ 60,127$ 10,469$ 181,421$ 7,026,878$


Cost 3,197,216$ 4,464,626$ 855,243$ 177,282$ 229,960$ 10,469$ 388,719$ 9,323,515$


3,197,216$ 3,375,701$ 160,386$ 41,558$ 60,127$ 10,469$ 181,421$ 7,026,878$

198

(10)Investment property

A.Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:

Land Buildings Total

At January 1, 2015

Cost 718,428$ 126,572$ 845,000$

Accumulated depreciation - 17,365)( 17,365)(

718,428$ 109,207$ 827,635$

2015

Opening net book amount 718,428$ 109,207$ 827,635$

Depreciation charge - 5,243)( 5,243)(

Closing net book amount 718,428$ 103,964$ 822,392$


Cost 718,428$ 126,572$ 845,000$


718,428$ 103,964$ 822,392$


At January 1, 2014

Cost 718,428$ 126,572$ 845,000$


718,428$ 114,713$ 833,141$

2014





Cost 718,428$ 126,572$ 845,000$


718,428$ 109,207$ 827,635$

Year Ended Year Ended


Rental income from investment property 16,610$ 16,923$

Direct operating expenses arising from

the investment property that generated

rental income in the period 2,568$ 2,698$

Direct operating expenses arising from

the investment property that did not

generate rental income in the period 2,674$ 2,808$

199

B.The fair value of the investment property held by the Group as at December 31, 2015 and 2014

was both $920,000, which was valued by independent appraisers. Valuations were made using

the income approach with key assumptions as follows:

C.Information about the investment property that was pledged to others as collaterals is provided

in Note 8.

(11)Other non-current assets

A.Long-term receivables:

The Group contracted with the government (grantor) a service concession arrangement. The

consideration receivable from the grantor in respect of the service concession arrangement is

recognized at its fair value. Such consideration is recognized as a financial asset based on the

way of the consideration from the grantor to the operator being made as specified in the

arrangement. The consideration receivable from the grantor is recognized as accounts

receivable if it is expected to be realized within 12 months after the balance sheet date (please

refer to Note 6(5)), and is recognized as long-term accounts receivable if it is expected to be

realized more than 12 months after the balance sheet date. The major terms of the arrangement

are as follows:

(a)The subsidiary, Leading Energy Corp., obtained the operation for the construction of Wujih

Refuse Incineration Plant by build - operate - transfer (BOT) mode since April, 2000. In

September, 2000, the ―Taichung City Waste incineration, commission contract‖ between

Leading Energy Corp. and Taichung Government had been signed. The operating period is

for 20 years starting from September 6, 2004. However, according to the contract, if it is

expired in advance or extended during construction or operation, duration of the operation

will be deemed to be matured or extended, but not to exceed 50 years. In order to work the

―Waste incineration Taichung City commission contract‖, Leading Energy Corp. obtained the

land-use right that has continued for 20 years since the plant began operation.


Gross margin 2.59% 2.58%

Growth rate 12.22% 11.00%

Discount rate 3.50% 3.63%


Long-term receivables 3,187,165$ 3,424,843$ 3,653,350$

Less: Long-term receivable

due in one year 247,257)( 237,678)( 228,507)(

2,939,908 3,187,165 3,424,843

Long-term prepaid rents 55,250 63,919 69,877

Restricted bank deposits 181,687 110,696 107,868

Refundable deposits 143,724 131,812 119,866

Others 167,337 144,577 174,871

3,487,906$ 3,638,169$ 3,897,325$

200

(b)The subsidiary, Fortune Energy Corp., obtained the operation for the construction of Miaoli

County Refuse Incineration Plant by build - operate - transfer (BOT) mode since August,

2002. In September, 2002, the ―Waste incineration commission contract‖ between Fortune

Energy Corp. and Miaoli County Government had been signed. The operating period is for

20 years starting from February 29, 2008. However, according to the contract, if it is expired

in advance or extended during construction or operation, duration of the operation will be

deemed to be matured or extended. In order to work the ―Waste incineration Miaoli County

commission contract‖, Fortune Energy Corp. obtained the land-use right of Miaoli Refuse

Incineration Plant. Therefore duration of the land – use right is from September 13, 2002 to

March 12, 2026.

(c)Leading Energy Corp. and Fortune Energy Corp. need to comply with the guarantee tonnage

of waste from government according to the contract during construction or operation.

(d)Per service cost is calculated and adjusted based on the ―Waste incineration commission

contract‖, ―Index of average regular earnings of employees-manufacturing‖ and ―Consumer

price index‖.

B.Long – term prepaid rents were due to the land-use rights obtained by Leading Energy Corp.

and Fortune Energy Corp. according to the ―BOT Agreement‖.

C.Information about the restricted bank deposits and refundable deposits that were pledged to

others as collaterals is provided in Note 8.

(12)Short-term borrowings

Type of borrowings December 31, 2015 Interest rate range Collateral

Unsecured borrowings

Citibank 898,557$ 0.92%~4.21% -

HSBC 700,000 0.85% -

Bank SinoPac 536,000 0.87%~1.08% -

The Bank of Tokyo-Mitsubishi UFJ 527,000 0.88% -

Mega International Commercial Bank 455,600 2.63% -

Mizuho Bank, Ltd. 373,014 0.88%~8.80% -

Taipei Fubon Commercial Bank 350,000 0.85%~1.12% -

First Bank 295,000 1.12%~1.14% -

DBS Bank 71,581 0.68%~1.67% -

Sumitomo Mitsui Banking Corporation 65,746 1.04% -

Ctbcbank 12,336 9.10% -

4,284,834$



Citibank 105,401$ 1.43%~4.47% -

Mizuho Bank, Ltd. 248,217 9.65% -

353,618$

201

(13)Accounts payable

(14)Other payables

Type of borrowings January 1, 2014 Interest rate range Collateral


Sumitomo Mitsui Banking Corporation 74,625$ 0.87% -

Citibank 815,790 0.85%~4.14% -

Mizuho Bank, Ltd. 101,550 9.65% -

991,965$


Materials payable 7,123,433$ 9,134,190$ 8,463,885$

Sub-contract costs payable 7,267,602 5,731,710 4,432,621

Maintenance costs payable 540,243 397,927 278,086

Equipment burying costs

payable 43,519 37,639 31,436

Others 44,426 152,587 142,128

15,019,223$ 15,454,053$ 13,348,156$


Accrued payroll 1,622,375$ 1,590,641$ 1,462,643$

Accrued employee bonuses,

directors' and supervisors'

remuneration 110,282 100,423 115,441

Accrued insurance 70,192 86,391 80,905

Accrued pension 38,977 41,457 36,771

Accrued building costs - - 238,609

Others 744,575 704,732 754,438

2,586,401$ 2,523,644$ 2,688,807$

202

(15)Other current liabilities/Bonds payable

A.KD Holding Corp. issued unsecured convertible bonds in November, 2010. Relevant

information is as follows:

The Company issued zero-coupon, five-year unsecured convertible bond with the principal

amount of $500,000. The outstanding period of the bond is from November 15, 2010 to

November 15, 2015. The bonds were listed on the GreTai Securities Market.

(a)Conversion right and objectives: The bonds shall be converted using the conversion price at

the conversion time.

(b)Conversion periods: The bonds are convertible at anytime from December 15, 2010 to

November 5, 2015.

(c)Conversion price adjustment: The initial conversion price per share was set at NT$135.58 (in

dollars). After the issuance of the bonds, the conversion price can be adjusted downward

based on the terms of the contract. As of November 5, 2015, the conversion price of the

convertible bond is adjusted to NT$103.06 (in dollars).

(d)Redemption:

i. Redemption at maturity: The bonds will be redeemed at the principal amount.

ii. Redemption at the option of the Company: The Company may redeem the bonds, in whole

but not in part, on or after December 16, 2010 to October 6, 2015 at the principal amount,

provided that the bonds may not be so redeemed, unless (i) the closing price of the shares

on the Taiwan Over-The-Counter Securities Exchange, for a period of 30 consecutive

trading days, is at least 30% of the conversion price or (ii) at least 90% in principal amount

of the bonds has already been converted, redeemed or purchased and cancelled.

iii.Redemption at the option of bondholders: The Company will redeem the bonds, in whole

or in part, at the option of the holder of any bond on November 15, 2013.

(e)Under the terms of the bonds, the rights and obligations of the new shares converted from

convertible bonds are the same as the issued and outstanding common stock.


Current items:

Long-term liability- current

portion

314,400$ 314,400$ 498,282$

Receipt in advance 201,862 160,722 90,544

Adjustment of electricity

sales 580,336 411,804 256,220

Joint venture 969,913 1,096,463 -

Others 163,706 111,171 109,143

2,230,217 2,094,560 954,189

Unsecured convertible bonds

payable - 19,500 34,200

Less: Discount of bonds

payable - 276)( 1,000)(

2,230,217$ 2,113,784$ 987,389$

203

(f)The fair value of convertible option was separated from bonds payable, while related

transaction costs were proportionately allocated into the debt and equity element of such

bonds payable based on the amount initially recognized in accordance with IAS No. 32.

The fair value of put options and call options due to market value change of conversion

object embedded in bonds payable was separated from bonds payable, and was recognized

in ―financial assets/liabilities as fair value through profit or loss‖ in net amount in

accordance with IAS No. 39, because the economic characteristics and risks of the

embedded derivatives were not closely related to those of the host contracts. The effective

interest rate of bonds payable was 1.57% after separation.

B.As of December 31, 2015, December 31, 2014, and January 1, 2014, the fair value of put and

call options embedded in bonds payable was recognized in“Financial assets at fair value

through profit or loss - current‖ amounting to $0, $176 and $520, respectively.

C.Adjustments of electricity sales of KD Holding Corp. is the amount of revenue deduction for

electricity sales determined by the project price calculation and the related index under the

subcontract of Provision of Services for Operation and Maintenance of the Macao Refuse

Incineration Plant to SINOGAL – Waste Service Co., Ltd.

D.As of December 31, 2015, due to the accumulated cost was greater than the accumulated capital

injection, the joint venture was recognized in ―other current liabilities‖.

204

(16)Long-term loans

Borrowing period Interest Financing Actual using

Type of borrowings

Borrowing period

and repayment term

Interest

rate range Collateral

Financing

amount

Actual using

amount December 31, 2015 December 31, 2014 January 1, 2014 Note

Mega International

Commercial Bank

secured borrowings

Borrowing period is

from November,

2012 to November,

2015; interest is

repayable monthly.

1.50% Machineries

and other

equipment

constructed

or acquired

550,000$ 466,640$ -$ -$ 211,094$ Leading Energy Corp. commits to maintain the

following financial ratios and criteria during the

period of the contract when the refuse incineration

plant has been already operating successfully for 2

years since the operating period:

i) Current ratio is above 100%,

ii) Debt ratio is under 190%,

iii) Time interest earned is above 120%.

Borrowing period is

from September ,

2010 to April,

2019; interest is

repayable monthly.

1.50% Machineries

and other

equipment

constructed

or acquired

and time

deposits

681,600$ 681,600$ 523,200 681,600 840,000 Fortune Energy Corp. committed to maintain the

following financial ratios and criteria during the

period of the contract:


ii) Debt ratio is under 190%,

iii) Time interest earned is above 150%.

The Shanghai

Commercial and

Savings Bank

secured borrowings

Borrowing period is

from December 22,

2009 to December

22, 2014; interest is

repayable monthly.

1.481% Buildings and

equipment

USD 4,000,000 USD 4,000,000 - - 28,335 Shang Ding Engineering & Construction Co., Ltd.

commits to maintain the following financial ratios

and criteria during the continuing period of the

contract:


ii) Financial debt ratio is under 190%,

iii) Net asset value is above RMB$100 million. Taiwan Cooperative

Bank secured

borrowings

Borrowing period is

from April 23, 2009

to April 23, 2029;

interest is repayable

monthly.

1.5085%~1.5811% Land and

Buildings

3,600,000$ 3,433,150$ 2,403,150 2,559,150 2,715,150

2,926,350 3,240,750 3,794,579

Less: Current portion 314,400)( 314,400)( 498,282)(

2,611,950$ 2,926,350$ 3,296,297$

205

(17)Other non-current liabilities

(18)Pensions

A.Defined benefit pension plan

(a)The Company and its domestic subsidiaries have a defined benefit pension plan in

accordance with the Labor Standards Law, covering all regular employees‘ service years

prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years

thereafter of employees who chose to continue to be subject to the pension mechanism under

the Law. Under the defined benefit pension plan, two units are accrued for each year of

service for the first 15 years and one unit for each additional year thereafter, subject to a

maximum of 45 units. Pension benefits are based on the number of units accrued and the

average monthly salaries and wages of the last 6 months prior to retirement. The Company

contributes monthly an amount equal to 2% of the employees‘ monthly salaries and wages to

the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the

independent retirement fund committee. Also, the Company would assess the balance in

the aforementioned labor pension reserve account by the end of December 31, every year. If

the account balance is insufficient to pay the pension calculated by the aforementioned

method, to the employees expected to be qualified for retirement next year, the Company

will make contributions to cover the deficit by next March.

(b)The amounts recognised in the balance sheet are as follows:


Net defined benefit liabilities 2,522,092$ 2,550,962$ 2,862,006$

Deposits received 337,616 273,146 207,538

Accrued recovery costs 110,895 104,406 98,405

Others 33,404 70,349 6,540

3,004,007$ 2,998,863$ 3,174,489$


Present value of defined

benefit obligations

4,664,105$ 4,648,944$ 4,882,811$

Fair value of plan assets 2,142,013)( 2,097,982)( 2,020,805)(

Net defined benefit liability 2,522,092$ 2,550,962$ 2,862,006$

206

(c)Movements in net defined benefit liabilities are as follows:

(d)The Bank of Taiwan was commissioned to manage the Fund of the Company‘s and domestic

subsidiaries‘ defined benefit pension plan in accordance with the Fund‘s annual investment

and utilisation plan and the ―Regulations for Revenues, Expenditures, Safeguard and

Utilisation of the Labor Retirement Fund‖ (Article 6: The scope of utilisation for the Fund

includes deposit in domestic or foreign financial institutions, investment in domestic or

foreign listed, over-the-counter, or private placement equity securities, investment in

domestic or foreign real estate securitization products, etc.). With regard to the utilisation of

the Fund, its minimum earnings in the annual distributions on the final financial statements

Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability


Balance at January 1 4,648,944$ 2,097,982)($ 2,550,962$

Current service cost 52,491 - 52,491

Interest expense (income) 88,538 40,073)( 48,465

4,789,973 2,138,055)( 2,651,918

Remeasurements:

Return on plan assets - 10,490)( 10,490)(

Change in financial assumptions 76,050 - 76,050

Experience adjustments 82,937 3,158)( 79,779

158,987 13,648)( 145,339

Pension fund contribution - 127,847)( 127,847)(

Paid pension 284,855)( 137,537 147,318)(

Balance at December 31 4,664,105$ 2,142,013)($ 2,522,092$

Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability





5,035,421 2,059,811)( 2,975,610

Remeasurements:

Return on plan assets - 5,398)( 5,398)(

Change in financial assumptions 83,371)( - 83,371)(

Experience adjustments 46,644)( 1,349)( 47,993)(

130,015)( 6,747)( 136,762)(


Paid pension 256,462)( 117,212 139,250)(


207

shall be no less than the earnings attainable from the amounts accrued from two-year time

deposits with the interest rates offered by local banks. If the earning is less than

aforementioned rates, government shall make payment for the deficit after authorized by the

Regulator. The Company has no right to participate in managing and operating that fund and

hence the Company is unable to disclose the classification of plan asset fair value in

accordance with IAS 19 paragraph 142. The constitution of fair value of plan assets as of

December 31, 2015 and 2014 is given in the Annual Labor Retirement Fund Utilisation

Report announced by the government.

(e)The principal actuarial assumptions used were as follows:

Assumptions regarding future mortality experience are set based on actuarial advice in

accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit

obligation is affected. The analysis was as follows:

The sensitivity analysis above is based on other conditions that are unchanged but only one

assumption is changed. In practice, more than one assumption may change all at once. The

method of analysing sensitivity and the method of calculate net pension liability in the

balance sheet are the same.

(f)Expected contributions to the defined benefit pension plans of the Group for the year ended

December 31, 2016 amounts to $134, 276.

B.Defined contribution pension plan

(a)Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined

contribution pension plan (the ―New Plan‖) under the Labor Pension Act (the ―Act‖),

covering all regular employees with R.O.C. nationality. Under the New Plan, the Company

and its domestic subsidiaries contribute monthly an amount based on 6% of the employees‘

monthly salaries and wages to the employees‘ individual pension accounts at the Bureau of

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of

employment.

(b)The pension costs under defined contribution pension plans of the Group for the years ended

December 31, 2015 and 2014 were $196,535 and $201,618, respectively.

(c)Some overseas subsidiaries adopted a defined benefit pension plan, covering all regular

employees. Appropriation of pension cost for the years ended December 31, 2015 and 2014

were $72,366 and $81,347, respectively.


Discount rate 1.70% 1.90%~2.00%

Future salary increases 1.50%~3.00% 1.50%~3.00%

Increase 1% Decrease 1% Increase 1% Decrease 1%

December 31, 2015

Effect on present value of

defined benefit obligation 350,112)($ 396,008 337,376 306,105)($

Discount rate Future salary increases

208

(19)Share-based payment-employee compensation

A.The Company

(a) As of December 31, 2015 and 2014, the Company‘s share-based payment arrangements were

as follows:

(b)The above employee stock options are set forth below:

i.The first plan of employee stock options was already complete .

ii.Details of the second plan of employee stock options outstanding as of Dcember 31, 2015

and 2014 are set forth below:

As a result of employee stock options exercised based on the exercise price of NT$14.30, the

outstanding capital stock increase amounted to 991,000 shares and capital surplus-common

stock amounted to $4,266 for the year ended December 31, 2014. Each warrant could

subscribe to 1,000 shares of common stock.

Type of arrangement Grant date

Quantity

granted

Contract

period

Vesting

conditions

First plan of employee

stock options

2007.09.28 16,000

units

6 years Service of 2 years

Second plan of employee

stock options

2008.08.27 21,000

units


Third plan of employee

stock options

2009.07.08 21,000

units


Fourth plan of employee

stock options

2010.06.18 22,000

units


No. of units Weighted-average No. of units Weighted-average

(shares in exercise price (shares in exercise price

Stock options thousand) (in dollars) thousand) (in dollars)

Options outstanding at

beginning of period - - 1,071.00 NT$14.60

Options waived - - 80.00)( -

Options exercised - - 991.00)( NT$14.30

Options revoked - - - -

Options outstanding

at end of period - - - NT$14.00

Options exercisable


For the years ended December 31,

2015 2014

209

iii.Details of the third plan of employee stock options outstanding as of Dcember 31, 2015


As a result of employee stock options exercised based on the exercise price of NT$20.60

and NT$21.30, the outstanding capital stock increase amounted to 1,542,250 shares and

2,999,250 shares and capital surplus-common stock amounted to $16,348 and $33,759 for

the years ended December 31, 2015 and 2014, respectively. Each warrant could subscribe to

1,000 shares of common stock.

iv.Details of the fourth plan of employee stock options outstanding as of Dcember 31, 2015


As a result of employee stock options exercised based on the exercise price of NT$24.56 and

NT$25.60, the outstanding capital stock increase amounted to 2,035,000 shares and




(c)The weighted-average stock price of stock options at exercise dates for the years ended

December 31, 2015 and 2014 was NT$46.80 and NT$59.60, respectively.





beginning of period 1,703.75 NT$20.60 4,713.75 NT$21.50

Options waived 161.50)( - 10.75)( -

Options exercised 1,542.25)( NT$20.60 2,999.25)( NT$21.30


Options outstanding

at end of period - - 1,703.75 NT$20.60

Options exercisable



2015 2014






Options waived 18.25)( - 37.00)( -



Options outstanding

at end of period 2,816.50 NT$23.90 4,869.75 NT$25.00

Options exercisable



2015 2014

210

(d)As of December 31, 2015, December 31, 2014 and January 1, 2014, the range of exercise

prices of stock options outstanding was NT$20.60～NT$24.56, NT$14.00～NT$25.60, and

NT$14.60～NT$26.00, respectively; the weighted-average remaining contractual period was

as follows:

(e)For the stock options granted after January 1, 2008 with compensation cost accounted for

using the fair value method, their fair value on the grant date is estimated using the

Black-Scholes option-pricing model. The information was as follows:

(f)Expenses incurred on share-based payment transactions are shown below:

B.Subsidiary – Advanced Control & System Inc.

(a)As of December 31, 2015 and 2014, the subsidiary‘s share-based payment transactions are

set forth below:

Type of arrangement December 31, 2015 December 31, 2014 January 1, 2014


stock options- - 0.66 year


stock options- 0.50 year 1.50 years


stock options0.50 year 1.50 years 2.50 years

Type of

arrangement

Grant

date

Stock

price

Exercise

price

Expected

price

volatility

rate

Expected

vesting

period

Expected

dividend

yield

rate

Risk free

interest

rate

Fair value

per unit

Second plan of

employee stock

options

2008.8.27 NT$ 21.9 NT$ 21.9 36.05% 4.5 years 0% 2.41% NT$ 7.37

Third plan of

employee stock

options

2009.7.08 NT$ 28.9 NT$ 28.9 36.45% 4.5 years 0% 0.94% NT$ 9.13

Fourth plan of

employee stock

options

2010.6.18 NT$ 32.8 NT$ 32.8 36.22% 4.5 years 0% 0.93% NT$ 10.30



Equity-settled -$ 5,266$


Quantity

granted

Contract

period

Vesting

conditions


stock options

2008.10.17 600 units 6 years Service of

2 to 4 years


stock options


2 to 4 years


stock options


2 to 4 years

Fifth plan of employee

stock options


2 to 4 years

211


i.The first plan of employee stock options was already complete.

ii.Details of the second plan of employee stock options outstanding as of December 31, 2015


ii.Details of the third plan of employee stock options outstanding as of December 31, 2015






beginning of period - - 8.75 NT$11.20

Options waived - - - -




end of period

- - - NT$10.50

Options exercisable at

end of period

- - - NT$10.50


2015 2014





beginning of period 46.50 NT$18.30 109.00 NT$19.60

Options waived 3.50)( - - -

Options exercised 43.00)( NT$18.30 62.50)( NT$19.20



end of period

- - 46.50 NT$18.30


end of period

- - 46.50 NT$18.30


2015 2014

212

iii.Details of the fourth plan of employee stock options outstanding as of December 31, 2015


iv.Details of the fifth plan of employee stock options outstanding as of December 31, 2015



December 31, 2015 and 2014 were NT$47.71 and NT$58.40, respectively.






Options waived 6.00)( - 6.50)( -




end of period

193.00 NT$41.50 242.75 NT$41.50


end of period

193.00 NT$41.50 242.75 NT$41.50


2015 2014




Options outstanding

at beginning of period 421.75 NT$47.50 515.50 NT$50.90

Options waived 14.50)( - 10.25)( -




end of period

398.00 NT$44.90 421.75 NT$47.50


end of period

398.00 NT$44.90 235.75 NT$47.50


2015 2014

213

(d)As of December 31, 2015, December 31, 2014, and January 1, 2014, the range of exercise

prices of stock options outstanding were NT$41.50～NT$47.50, NT$18.30～NT$47.50,

and NT$11.20～NT$50.90, respectively; the weighted-average remaining contractual

period was as follows:

(e)For the stock options granted after January 1, 2008 with compensation cost accounted for


Black-Scholes option-pricing model. The information is as follows:






stock options- 0.58 years 1.58 years


stock options0.50 years 1.50 years 2.50 years



Type of

arrangement Grant date Stock price

Exercise

price

Expected

price

volatility

rate

Expected

vesting

period

Expected

dividend

yield

rate

Risk

free

interest

rate

Fair value

per unit

Second plan of

employee stock

options

2008.10.17 NT$ 15.20 NT$ 15.20 43.75% 4.55 years 0% 1.86% NT$ 5.88

Third plan of

employee stock

options

2009.08.14 NT$26.55 NT$ 26.55 43.64% 4.55 years 0% 0.84% NT$ 9.84

Fourth plan of

employee stock

options

2010.06.23 NT$58.10 NT$ 58.10 45.68% 4.55 years 0% 0.93% NT$ 22.49

Fifth plan of

employee stock

options

2011.06.22 NT$63.40 NT$ 63.40 44.41% 4.50 years 0% 1.07% NT$ 23.95



Equity-settled 547$ 2,503$

214

C.Subsidiary – KD Holding Corp.

(a)As of December 31, 2015 and 2014, the subsidiary‘s share-based payment transactions are

set forth below:


i.Details of the first plan of employee stock options outstanding as of December 31, 2015 and

2014 are set forth below:

Type of arrangement Grant date Quantity granted Contract period

Vesting

conditions


stock options


2 years


stock options


2 years


stock options


2 years


stock options


2 years


stock options


2 years





beginning of period - - 32.25 NT$33.20





end of period - - - NT$31.50


end of period- - -

NT$31.50


2015 2014

215

ii.Details of the second plan of employee stock options outstanding as of December 31, 2015


iii.Details of the third plan of employee stock options outstanding as of December 31, 2015











end of period - NT$53.90 75.75 NT$53.90


end of period - NT$53.90 75.75 NT$53.90


2015 2014










end of period 131.75 NT$67.50 220.75 NT$71.40




2015 2014

216

iv.Details of the fourth plan of employee stock options outstanding as of December 31, 2015


v.Details of the fifth plan of employee stock options outstanding as of December 31, 2015 and

2014 are set forth below:








Options waived 1.50)( - 15.75)( -








2015 2014





beginning of period 974.00 NT$122.80 1,189.00 NT$129.40

Options waived 6.75)( - 28.00)( -








2015 2014

217

(d)As of December 31, 2015, December 31, 2014, and January 1, 2014, the range of exercise


NT$33.20～NT$129.40, respectively; the weighted-average remaining contractual period was

as follows:

(e)For the stock options granted after January 1, 2008 with compensation cost accounted for using

the fair value method, their fair value on the grant date is estimated using the Black-Scholes

option-pricing model. The information is as follows:

Note: Subsidiary – KD Holding Corp. has been officially listed in the OTC market on May

27, 2010 whose net value was measured at fair value before being listed in the OTC

market and measured at market value after being listed in the OTC market. The

compensation cost for employee stock options in 2008 and 2009 had been adjusted

retroactively.





stock options- 0.58 year 1.58 years


stock options0.50 year 1.50 years 2.50 years





Type of


Exercise

price

Expected

price

volatility

rate

Expected

vesting

period

Expected

dividend

yield

rate

Risk free

interest

rate

Fair value

per unit

First plan of

employee stock

options

2008.9.12 NT$91.5 NT$41.5 33.68% 2.58

years

0% 0.49% NT$51.50

Second plan of

employee stock

options

2009.7.16 NT$91.5 NT$ 71.0 33.68% 3.42

years

0% 0.67% NT$ 32.56

Third plan of

employee stock

options

2010.6.18 NT$94.0 NT$ 94.0 33.68% 4.50

years

0% 0.93% NT$ 27.66

Fourth plan of

employee stock

options

2011.6.17 NT$146.0 NT$146.0 38.65% 4.50

years

0% 1.05% NT$48.82

Fifth plan of

employee stock

options

2012.06.28 NT$145.0 NT$ 145.0 33.63% 4.60

years

0% 1.00% NT$42.79

218


(20)Share capital

A.As of December 31, 2015, the Company‘s authorized capital was $9,000,000, (including

800,000 thousand shares reserved for employee stock options), the paid-in capital was

$7,611,076 consisting of 761,107,598 shares with a par value of NT$10 per share.

Movements in the number of the Company‘s ordinary shares outstanding are as follows:

Note: The number of the Company‘s ordinary shares outstanding which was held by its

subsidiaries had not been reduced.

B.Treasury shares

(a)Reason for share reacquisition and movements in the number of the Company‘s treasury

shares are as follows:



Equity-settled 8,712$ 20,738$


December 31, 2015 (Note) December 31, 2014 (Note)

At January 1 757,530,348 747,434,298

Employee stock

options exercised 3,577,250 10,096,050

At December 31 761,107,598 757,530,348

Name of company holding

the shares Reason for reacquisition

Number of

shares Carrying amount

Subsidiary-Sino Environmental

Services Corp.

To maintain

stockholders' equity

1,028 $ 10

Subsidiary-Innovest Investment

Corp.

" 344,436 3,241

Subsidiary-GRQ Investment Corp. " 912,170 8,584

December 31, 2015



Number of



Services Corp.

To maintain


1,028 $ 10


Corp.

" 344,436 3,241


December 31, 2014

219

(b)Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as

treasury share should not exceed 10% of the number of the Company‘s issued and

outstanding shares and the amount bought back should not exceed the sum of retained

earnings, paid-in capital in excess of par value and realised capital surplus.

(c)Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to

the employees within three years from the reacquisition date and shares not reissued within

the three-year period are to be retired. Treasury shares to enhance the Company‘s credit rating

and the stockholders‘ equity should be retired within six months of acquisition.

(21)Capital surplus

A.Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of

par value on issuance of common stocks and donations can be used to cover accumulated deficit

or to issue new stocks or cash to shareholders in proportion to their share ownership, provided

that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange

Law requires that the amount of capital surplus to be capitalised mentioned above should not

exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover

accumulated deficit unless the legal reserve is insufficient.

B.Please refer to Note 6 (19) for the capital reserve – employee stock options.



Number of



Services Corp.

To maintain


1,028 $ 10


Corp.

" 344,436 3,241


January 1, 2014

Difference between proceeds on

Treasury share acquisition of disposal of equity interest Employee stock Stock

Share premium transactions in a subsidiary and its carrying amount options options Others Total

At January 1, 2015 2,737,464$ 5,043$ 184,615$ 296,048$ 3,303$ 3,560$ 3,230,033$

Employee stock options excercised by - - 19,556 - - - 19,556

subsidiary

Convertible bonds transferred to

common stock by subsidiary

- - - - 819)( - 819)(

Share-based payment transaction - - - 2,950 - - 2,950

Employment stock options exercised 78,021 - - 32,038)( - - 45,983

Employee stock options revoked - - - 1,296)( - 1,296 -

At December 31, 2015 2,815,485$ 5,043$ 204,171$ 265,664$ 2,484$ 4,856$ 3,297,703$




At January 1, 2014 2,488,469$ 5,043$ 172,654$ 397,019$ 3,986$ 2,914$ 3,070,085$

Employee stock options excercised by - - 11,961 - - - 11,961

subsidiary

Convertible bonds transferred to - - - - 683)( - 683)(

common stock by subsidiary

Share-based payment transaction - - - 15,610 - - 15,610

Employment stock options exercised 248,995 - - 115,935)( - - 133,060

Employee stock options revoked - - - 646)( - 646 -

At December 31, 2014 2,737,464$ 5,043$ 184,615$ 296,048$ 3,303$ 3,560$ 3,230,033$

220

(22)Retained earnings

A.In accordance with the Company‘s Articles of Incorporation, 10% of the Company‘s annual net

income, after paying all taxes and dues and deducting losses of prior years, if any, should be set

aside as legal reserve, except when the legal reserve is over total assets. Subsequently, when the

reduction in equity is reversed, the Company may return the special reserve to undistributed

earnings in the current year. The remaining balance and the cumulative undistributed earnings

from prior years are called disposable cumulative undistributed earnings. The net income after

legal reserve shall be allocated as follows:

(a)At least 2% of the balance as employees‘ bonus;

(b)2% of the balance as remuneration to directors and supervisors; and

(c)After paying employees‘ bonus and remuneration to directors and supervisors, the remaining

balance may be distributed as stockholders‘ dividends.

(d)No less than 50% of the remaining balance and the cumulative undistributed earnings from

prior years may be distributed as stockholders‘ dividends, of which at least 20% shall be in

the form of cash dividends, upon the approval of the stockholders.

B.Legal reserve can only be used to cover the losses and issue new stocks or cash dividends

proportionately according to the stock ratio. The latter should be by an amount under 25% of

legal reserve exceeding issued and outstanding capital.

C.The new Taiwan imputation tax system requires that any undistributed current earnings derived

on or after January 1, 1998 of the Company are subject to an additional 10% corporate income

tax if the earnings are not distributed in the following year.

D.Special reserve

(a)In accordance with the regulations, the Company shall set aside special reserve from the

debit balance on other equity items at the balance sheet date before distributing earnings.

When debit balance on other equity items is reversed subsequently, the reversed amount

could be included in the distributable earnings.

(b)The amounts previously set aside by the Company as special reserve on initial application of

IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6,

2012, shall be reversed proportionately when the relevant assets are used, disposed of or

reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the

assets are investment property of land, and reversed over the use period if the assets are

investment property other than land.

2015 2014

At January 1 2,432,925$ 1,910,722$

Profit for the period 2,040,610 2,092,199

Set aside as legal reserve 188,212)( 164,173)(

Cash dividends 1,698,089)( 1,498,449)(

Reversal of special reserve 9,876 -

Remeasurement of post-employment benefit

obligations, net of tax 119,418)( 92,626

At December 31 2,477,692$ 2,432,925$

221

E.The appropriaton of 2014 and 2013 earnings had been resolved at the stockholders meeting on

June 22, 2015 and June 26, 2014, respectively. Details are summarized below:

F.The Company appropriation of 2015 earnings had been resolved at the Board of Directors‘

meeting on March 18, 2016. Details are summarized below:

As of March 18, 2016, the abovementioned appropriation of 2015 earnings has not been

approved by the stockholders.

G. On June 22, 2015, the abovementioned 2014 earnings appropriation and capitalization of capital

surplus was approved by the Board of Directors with the issue date on August 3, 2015. In

addition, during the Board of Directors‘ meeting in July 13, 2015, since outstanding stocks will

be influenced by convertible bonds and employees‘ share rights, the stockholders approved the

adjustment of the rate of distributed dividends from NT$2.24 per share to NT$2.2334469 per

share.

H. For information relating to employees‘ remuneration (bonuses) and directors‘ and supervisors‘

remuneration, please refer to Note 6(25).

(23)Operating revenue

Amount

Dividends

per share

(in NT dollars) Amount

Dividends

per share

(in NT dollars)

Set aside as legal reserve 188,212$ -$ 164,173$ -$

Reversal of special reserve 9,876)( - - -

Cash dividends 1,698,089 2.24 1,498,449 2.00

1,876,425$ 2.24 1,662,622$ 2.00

2014 2013

Amount

Dividends per share

(in NT dollars)

Set aside as legal reserve 204,061$ -$

Reversal of special reserve 166)( -

Cash dividends 1,828,815 2.40

2,032,710$ 2.40

2015



Construction contract revenue 62,985,942$ 53,685,122$

Service revenue 3,628,146 3,535,332

Other operating revenue 443,552 471,483

Total 67,057,640$ 57,691,937$

222

(24)Expenses by nature

(25)Employee benefit expense

A.According to the Articles of Incorporation of the Company, when distributing earnings, the

Company shall distribute bonus to the employees and pay remuneration to the directors and

supervisors that should be 1.5% to 5% and not be higher than 1.5%, respectively, of the total

distributed amount.

However, in accordance with the Company Act amended in May 20, 2015, a company shall

distribute employee compensation, based on the profit of the current year distributable, in a

fixed amount or a ratio of profits. If a company has accumulated deficit, earnings should be

channeled to cover losses. A company may, by a resolution adopted by a majority vote at a

meeting of board of directors attended by two-thirds of the total number of directors, have the

profit distributable as employees' compensation distributed in the form of shares or in cash; and

in addition thereto a report of such distribution shall be submitted to the shareholders' meeting.

Qualification requirements of employees, including the employees of subsidiaries of the

company meeting certain specific requirements, entitled to receive aforementioned stock or cash

may be specified in the Articles of Incorporation. The Board of Directors of the Company has

approved the amended Articles of Incorporation of the Company on March 18, 2016. According

to the amended articles, a ratio of profit of the current year distributable, after covering

accumulated losses, shall be distributed as employees' compensation and directors‘ and

supervisors‘ remuneration. The ratio shall be 1.5% to 5% for employees‘ compensation and shall

not be higher than 1.5% for directors‘ and supervisors‘ remuneration. The amended articles will

be resolved at the shareholders‘ meeting in 2016.



Subcontract costs 21,466,285$ 20,188,292$

Materials 21,663,659 18,428,565

Employee benefit expense 9,628,934 8,876,038

Amortisation charges on buried

equipment 340,852 366,993

Temporary equipment 929,057 517,834

Depreciation charges on

property plant and equipment 333,511 325,305

Amortisation on intangible 147,740 153,205

Joint ventures 4,685,483 2,698,449

Others 4,860,207 3,434,925

Total 64,055,728$ 54,989,606$



Salaries and wages 8,227,015$ 7,420,347$

Employee stock options 9,259 28,507

Labor and health insurance fees 683,915 671,879

Pension costs 369,857 396,569

Other personnel expenses 338,888 358,736

9,628,934$ 8,876,038$

223

B.For the years ended December 31, 2015 and 2014, employees‘ bonus was accrued at $55,111

and $51,092, respectively; directors‘ and supervisors‘ remuneration was accrued at $15,000 and

$13,752, respectively. The aforementioned amounts were recognized in salary expenses.

The employees‘ compensation and directors‘ and supervisors‘ remuneration were estimated and

accrued based on an amount 1.5% to 5% and not higher than 1.5% of distributable profit of

current year for the year ended December 31, 2015. The employees‘ compensation and the

directors‘ and supervisors‘ remuneration have not been resolved at the shareholders‘ meeting.

The employees‘ compensation will be distributed in the form of shares or cash.

The expenses recognized for the year of 2014 were accrued based on the net income of 2014 for

employees‘ compensation of $51,092 and directors‘ and supervisors‘ remuneration of $13,752,

taking into account other factors such as legal reserve. The employees‘ compensation and

directors‘ and supervisors‘ remuneration resolved at the shareholders‘ meeting were $51,092 and

$15,000, respectively. The difference between employees‘ bonus (directors‘ and supervisors‘

remuneration) as resolved at the shareholders‘ meeting and the amount recognized in the 2014

financial statements by $1,248, mainly caused by estimate adjustment, had been adjusted in the

profit or loss of 2015.

Information about employees‘ compensation and directors‘ and supervisors‘ remuneration of the

Company as resolved at the Board of Directors‘ meeting will be posted in the ―Market

Observation Post System‖ at the website of the Taiwan Stock Exchange.

(26)Income tax

A.Components of income tax expense:

B.Reconciliation between income tax expense and accounting profit:



Current tax:

Current tax on profits for the period 679,853$ 599,919$

Prior year income tax (overestimation)

underestimation 36,346)( 13,906

Total current tax 643,507$ 613,825$

Deferred tax:

Origination and reversal of temporary differences 104,594 15,050

Impact of change in tax rate 2,408 439)(

Total deferred tax 107,002 14,611

Income tax expense 750,509$ 628,436$



Tax calculated based on profit before tax and

statutory tax rate 869,817$ 703,582$

Effects from items disallowed by tax regulation 48,605)( 52,186)(

Prior year income tax (overestimation)

underestimation 36,346)( 13,906

Tax-exempt income 25,078)( 28,683)(

Reduction of expense for R&D investments 9,279)( 8,183)(


224

C.Amounts of deferred tax assets or liabilities as a result of temporary difference, loss

carryforward and investment tax credit are as follows:

Recognised in

January 1

Recognised in

profit or loss

other

comprehensive

income December 31

Temporary differences:

-Deferred tax assets:

Unrealized (gain) loss on financial

instruments 6,464$ 10,145)($ -$ 3,681)($

Unrealized construction loss 44,869 6,641)( - 38,228

Unrealized bad debts 24,063 - - 24,063

Short-term paid absences

(holiday leave) 32,527 2,441 - 34,968

Unrealized repair cost 9,609 672 - 10,281

Unrealized loss for market

price decline and slow- moving

inventories 241 17 - 258

Unrealized membership fees

of the golf club 918 - - 918

Unrealized accrued expense 10,579 8,891)( - 1,688

Pension provision 388,276 35,356)( 24,708 377,628

Others 23,378 10,201 - 33,579

Subtotal 540,924 47,702)( 24,708 517,930

-Deferred tax liabilities:

Unrealized exchange (gain) loss 18,091)($ 9,281$ -$ 8,810)($

Unrealized investment income

from foreign equity investments 234,708)( 46,475)( - 281,183)(

Unrealized gain on concession 152,021)( 3,493)( - 155,514)(

Others 35,229)( 16,205)( - 51,434)(

Subtotal 440,049)( 56,892)( - 496,941)(

Total 100,875$ 104,594)($ 24,708$ 20,989$

For the year ended December 31, 2015

225

D.Expiration dates of unused taxable loss and amounts of unrecognised deferred tax assets are as

follows:

Recognised in

January 1

Recognised in

profit or loss

other

comprehensive

income December 31


-Deferred tax assets:

Unrealized loss on financial

instruments 510$ 5,954$ -$ 6,464$

Unrealized construction loss 18,223 26,646 - 44,869

Unrealized bad debts 17,321 6,742 - 24,063


(holiday leave) 36,281 3,754)( - 32,527

Unrealized repair cost 8,935 674 - 9,609

Unrealized impairment loss 3,606 3,606)( - -

Unrealized labor contract loss 9,029 9,029)( - -

Unrealized loss for market

price decline and slow- moving

inventories 591 350)( - 241

Unrealized membership fees

of the golf club 918 - - 918

Unrealized accrued expense 9,505 1,074 - 10,579

Pension provision 439,794 28,268)( 23,250)( 388,276

Others 17,115 6,263 - 23,378

Subtotal 561,828 2,346 23,250)( 540,924

-Deferred tax liabilities:

Unrealized exchange gain 8,848)($ 9,243)($ -$ 18,091)($

Unrealized investment income

from foreign equity investments 253,643)( 18,935 - 234,708)(

Unrealized gain on concession 146,870)( 5,151)( - 152,021)(

Others 13,292)( 21,937)( - 35,229)(

Subtotal 422,653)( 17,396)( - 440,049)(

Total 139,175$ 15,050)($ 23,250)($ 100,875$


Year incurred

Amount filed/

assessed Unused amount

Unrecognised

deferred tax assets Usable until year

2012 34,223$ 23,408$ 23,408$ 2022

2013 154,975 154,975 154,975 2023

2014 98,149 98,149 98,149 2024

287,347$ 276,532$ 276,532$


226

E.The amounts of deductible temporary difference that are not recognised as deferred tax assets

are as follows:

F.As of December, 2015, the Company‘s income tax returns through 2013 have been assessed and

approved by the Tax Authority.

G.The Company and its subsidiaries obtained income tax exemption as follows:

Year incurred

Amount filed/


Unrecognised


2010 2,342$ 144$ 144$ 2020

2012 34,617 29,529 29,529 2022

2013 154,975 154,975 154,975 2023

2014 101,219 101,219 101,219 2024

293,153$ 285,867$ 285,867$


Year incurred

Amount filed/


Unrecognised


2010 2,342$ 144$ 144$ 2020

2012 34,617 32,784 32,784 2022

2013 154,975 154,975 154,975 2023

191,934$ 187,903$ 187,903$

For the year ended January 1, 2014


Deductible temporary

Differences 67,949$ 69,793$ 45,042$

Period of tax

Applicable laws exemption 2015 2014

The Company Regulations governing the application

of the incentive for a five-year

exemption from profit- seeking

enterprise income tax to the

investments made by enterprise in the

manufacturing industry and the

technical service industry between

July 1, 2008 and December 31, 2009

2011.01.01~

2015.12.31

$ 23,277 $ 32,048

Tax exemption amount

for the years ended December 31,

227

H.Unappropriated retained earnings:

I.As of December 31, 2015, December 31, 2014 and January 1, 2014, the balance of the

imputation tax credit account was $186,080, $203,969 and $301,536, respectively. The

creditable tax rate was 18.47% for 2014 and is estimated to be 20.88% for 2015.

Period of tax

Applicable laws exemption 2015 2014

Fortune Energy

Corp.

Regulations Governing Application of

Profit-seeking Enterprise Income Tax

Exemption to Private Institutions

Participation in Public Infrastructure

Projects

2011.01.01~

2015.12.31

$ 167,751 $ 172,118

Advance Control

& System Inc.

Regulations for Encouraging

Manufacturing Enterprises and

Technical Service Enterprises in the

Newly Emerging, Important and

Strategic Industries

2011.01.01~

2015.12.31

- 6,829




Earnings generated in

and before 199747,819$ 47,819$ 47,819$


and after 1998 2,429,873 2,385,106 1,862,903

228

(27) Earnings per share

Weighted-average

Amount number of ordinary shares Earnings per share

after tax outstanding (share in thousands) (in dollars)

Basic earnings per share

Profit attributable to the ordinary

shareholders of the parent 2,040,610$ 758,195 2.69NT$

Diluted earnings per share

Assumed conversion of all

dilutive potential

ordinary shares

Employee bonus - 1,443

Employee stock options - 2,225

Profit attributable to ordinary

shareholders of the parent plus

assumed conversion of all

dilutive potential

ordinary shares 2,040,610$ 761,863 2.68NT$


Weighted-average




Profit attributable to the ordinary

shareholders of the parent 2,092,199$ 750,959 2.79NT$


Assumed conversion of all

dilutive potential

ordinary shares




shareholders of the parent plus

assumed conversion of all

dilutive potential

ordinary shares 2,092,199$ 757,983 2.76NT$


229

(28) Operating leases

The Group‘s future aggregate minimum lease payments under non-cancellable operating leases are

as follows:

7. RELATED PARTY TRANSACTIONS

Significant transactions and balances with related parties

(1) Sales of services

A.The price on the construction contracts entered into with related parties are set through

negotiation by both parties. The collection terms were approximately the same as those with third

parties.

B.The subsidiary, Innovest Investment Corp. invested in Powertec Energy Corporation which

became an associated enterprise on August, 2014. As of December 31, 2015 and 2014, the

Company recognized total operating revenue amounting to $9,776,664 and $9,624,895,

respectively. As of December 31, 2015 and 2014, notes receivable amounted to $586,246 and

$1,411,400, which had been reduced by allowance for doubtful accounts of $800,000 and

$13,288, respectively, and accounts receivable amounted to $17,328 and $186. For the years

ended December 31, 2015 and 2014, the bad debt expenses were $786,712 and $13,288,

respectively.

(2) Purchases of services

A.The terms of sub-contracting projects with related parties were approximately the same as those

with third parties.


Not later than one year 76,181$ 65,825$ 38,026$

Later than one year but not

later than five years97,727 109,418 142,103

Later than five years 66,056 148,407 134,103

239,964$ 323,650$ 314,232$



Associates 177,208$ 86,524$

Entities with significant

influence over the entity 12,153 1,773

Other related parties 10,990 85)(

Joint ventures 880 -

201,231$ 88,212$



Associates 2,279,207$ 664,821$


influence over the entity 1,262 -

2,280,469$ 664,821$

230

B.The subsidiaries, Innovest Investment Corp. and CTCI MALAYSIA SDN. BHD., invested in

MIE Industrial SDN. BHD. in May, 2015. The sub-contracting projects with of MIE Industrial

SDN. BHD. was included in the above related party transactions after May 1, 2015.


(4) Accounts payable

(5) Other receivables

Note 1 : Other receivables-related parties consist of dividend receivable.

Note 2 : Other receivables-related parties consist of due from personnel transfer and system usage.

(6) Loans to related parties

A.Receivables from related parties

B.Interest income

The loans to associates are repayable monthly and carry interest at 1.6% per annum for the years

ended December 31, 2015 and 2014, respectively.

(7) Rental expense

(8) Provision for endorsements and guarantees


Other related parties 6,426$ - -

Associates 22,053 2,656 3,448

Entities with

significant influence

over the entity 4,200 1,271 688

32,679$ 3,927$ 4,136$


Associates 1,030,827$ 189,299$ 16,134$


Joint ventures (Note 1) 3,001$ -$ -$

Associates (Note 2) 439 8,990 38,199

3,440$ 8,990$ 38,199$


Joint ventures 29,010$ 29,018$ 29,036$



Joint ventures 455$ 464$

Lessor Leased assets Rental amount

Entities with significant Land / Buildings $698/month/ 2015 2014

influence over the entity semiannual payment 8,372$ 8,372$



Joint ventures 629,076$ 248,253$ 254,853$

231

(9) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

In addition to those items which have been disclosed in Note 6 (16), (28), the significant contingent

liabilities and unrecognised contract commitments of the Group as of December 31, 2015 were as

follows:

(1)Guarantee

A.The Group had outstanding notes payable for security deposits under various construction

projects amounting to $8,356,043.

B.The Group had outstanding notes payable for bank financing amounting to $67,245,582.

(2)The Group had unused and outstanding letters of credit of $2,191,744.

(3)The Group had outstanding commitments for construction subcontracts and services contracts

amounting to $14,359,851.

(4)The Group had issued contracts for acquisition of inventory amounting to $827,838.

(5)The Company had a joint procurement project with Mitsubishi Heavy Industries, Ltd. in 1997. The

construction was completed on February 19, 2001 and accepted by the Environmental Protection

Administration (the ―EPA‖) on May 16, 2011. According to the contract, the Company provided

warranty deposit amounting to $141,690 on the materials of the equipment. As the Kaohsiung

2015 2014

Salaries and other short-term 232,640$ 247,250$

employee benefits

Post-employment benefits 3,633 7,389

Share-based payments 2,581 7,324

Other long-term benefits 771 322

239,625$ 262,285$


Pledged assets December 31, 2015 December 31, 2014 January 1, 2014 Purpose

Other current assets

Pledged bank deposits -$ -$ 981$

Guarantee for wages 18,962 24,515 57,383 Guarantee for wages

Other non-current assets

Pledged time deposits 100,762 52,448 50,300 Guarantee for oil expense, long-term

borrowings and litigation deposits

Refundable deposits 143,724 131,812 119,866 Guarantee for oil expense, rent, golf

certificates, tender bonds,

construction contracts, and wages

Long-term prepaid rent 23,450 25,756 67,201 Guarantee for long-term borrowings

Property, plant and Guarantee for construction

equipment 3,885,128 3,941,007 4,341,544 contracts, tender bond, short-term

and long-term borrowings

Investment property 822,393 827,635 833,141 Guarantee for long-term borrowings

4,994,419$ 5,003,173$ 5,470,416$

Book value

Guarantee for oil expense, bank

guarantee, construction contracts

and tender bonds

232

County government, the user of the incineration, had a dispute with the operating manufacturer, the

EPB rejected to repay the deposit. The EPA availed of the warranty deposit on February 4, 2010.

As a result, the Company had to remit $73,253 to the procurement department of Bank of Taiwan

Co., Ltd. Consequently, the Company took action to cancel the deposit of $141,690 and filed a

lawsuit requiring EPA to repay the $73,253. The EPA indicated that it had repaid $9,299 to the

Company in 2010. Therefore, the Company reduced the lawsuit claim to $63,954 plus interest of

$117 and damage loss of $2,421. The case was reverted back to the Taiwan High Court after being

handled by the Supreme Court. The Taiwan High Court then reverted the case the case back again

to the Supreme Court to the Supreme Court. Thus, the case is currently pending with the Supreme

Court as of December 31, 2015.

According to the Company‘s lawyer, the outcome of the case is still uncertain and it is difficult to

estimate any potential gain or loss on the case.

(6)The subsidiary, E&C Engineering Corp. (E&C), has entered into an electrical and mechanical

contract with RPTI International Ltd. (RPTI) on behalf of the joint venture by RSEA Engineering

Corporation and E&C Engineering Corp. for partial permanent work of electrical and mechanical

engineering. However, as RPTI International Ltd. was far behind the schedule, it agreed that E&C to

hire others to carry out the pending construction. Also, both E&C and RPTI agreed to terminate

partial contract and to hire JEHNG LONG ENGINEERING CO., LTD. to work on the terminated

work because RPTI was unable to perform the air conditioning construction as stated the contract.

The aforementioned construction expenses for hiring others and for working on the terminated

construction were expected to be paid using RPTI‘s estimated assessment amount and retention

payment. Surprisingly, RPTI filed a lawsuit to Taiwan Taipei District Court, alleging improper

deduction by E&C and requesting construction payment of $72,024 along with an interest at 5% per

annum from November 28, 2007 until the date of repayment. The case was at trial and E&C filed a

counter-claim on August 8, 2008, for alleging RPTI‘s estimated assessment amount and retention

amount were insufficient to cover all payables, and requesting payment of $94,569. The amount of

$22,947 of the requested payment of $94,569 shall be paid along with an interest at 5% per annum

from July 16, 2008 until the date of repayment, while the remaining request amount shall be paid

along with an interest at 5% per annum from the date when RPTI receives the transcription of

counter-complaint until the date of repayment. RPTI expanded its claim to request a payment of

$111,079 along with an interest. On April 27, 2015, Taiwan Taipei District Court rendered a

judgment (Year 2008, Zian-Zi No. 21, Civil case) that E&C needs to pay RPTI an amount of

$84,305 which comprises of $72,574 along with an interest at 5% per annum from November 28,

2007 and of remaining $11,731 along with an interest at 5% per annum from December 15, 2010

until the date of repayment. RPTI‘s remaining appeal and E&C‘s counter-claim were refuted. E&C

disagreed with the verdict and filed an appeal to Taiwan High Court in the prescribed time, asking

for rejection to RPTI‘s claim and judgment of the counter-claim. The counter-claim is requesting

RPTI to pay an amount of $75,166 which comprises of $22,947 along with an interest at 5% per

annum from July 16, 2008 and of remaining $52,219 along with an interest at 5% per annum from

August 9, 2008 until the date of repayment. RPTI filed an incidental appeal for requesting E&C to

pay another amount of $7,092 along with an interest at 5% per annum from November 28, 2007

until the date of repayment. According to the Company‘s appointed lawyers, the case is under the

judgment of Taiwan High Court, and the case number is Year 2015, Chong-Shang-Zi No. 518.

10. SIGNIFICANT DISASTER LOSS

None.

javascript:openwindow('86698478%20',%20'4238')

233

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Please see Note 6 (22) F. for detailed information on the apporopriation of 2015 earnings that had

been resolved at the Board of Directors‘meeting on March 18, 2016.

12. OTHERS

(1) Capital risk management

The Group‘s objectives of managing capital are to safeguard the Group‘s ability to continue as a

going concern in order to provide returns for shareholders and to maintain an optimal capital

structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the

Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,

issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the

gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as

total borrowings (including ‗current and non-current borrowings‘ as shown in the consolidated

balance sheet) less cash and cash equivalents. Total capital is calculated as ‗equity‘ as shown in the

consolidated balance sheet.

The gearing ratios as of December 31, 2015, December 31, 2014, and January 1, 2014, were as

follows:

(2) Financial instruments

A.Fair value information of financial instruments

Except for those listed in the table below, the carrying amounts of the Group‘s financial

instruments not measured at fair value (including cash and cash equivalents, notes receivable,

accounts receivable, other receivables, short-term loans, notes payable, accounts payable and

other payables) are approximate to their fair values. The fair value information of financial

instruments measured at fair value is provided in Note 12(3).

B.Financial risk management policies

(a)The Group‘s activities expose it to a variety of financial risks: market risk (including foreign

exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group‘s

overall risk management programme focuses on the unpredictability of financial markets

and seeks to minimise potential adverse effects on the Group‘s financial position and

financial performance.

(b)Risk management is carried out by a treasury department (Group treasury) under policies

approved by the Board of Directors. Group treasury identifies, evaluates and hedges

financial risks in close co-operation with the Group‘s operating units. The Board provides

written principles for overall risk management, as well as written policies covering specific

areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of

derivative financial instruments and non-derivative financial instruments, and investment of

excess liquidity.


Total borrowings 7,211,184$ 3,613,592$ 4,819,744$

Total equity 19,728,083$ 19,484,155$ 18,398,136$

Gearing ratio 36.55% 18.55% 26.20%

234

C.Significant financial risks and degrees of financial risks

(a)Market risk

Foreign exchange risk

A.The Group operates internationally and is exposed to foreign exchange risk arising from

various currency exposures, primarily with respect to the USD and EUR. Foreign

exchange risk arises from future commercial transactions, recognised assets and

liabilities and net investments in foreign operations.

B.Management has set up a policy to require group companies to manage their foreign

exchange risk against their functional currency. The group companies are required to

hedge their entire foreign exchange risk exposure with the Group treasury. To manage

their foreign exchange risk arising from future commercial transactions and recognised

assets and liabilities, entities in the Group transact with Group treasury by using forward

foreign exchange contracts, transacted with Group treasury. Foreign exchange risk

arises when future commercial transactions or recognised assets or liabilities are

denominated in a currency that is not the entity‘s functional currency.

C.The Group has certain investments in foreign operations, whose net assets are exposed to

foreign currency translation risk.

D.The Group‘s businesses involve some non-functional currency operations (the

Company‘s and certain subsidiaries‘ functional currency: NTD; other certain subsidiaries‘

functional currency: USD, RMB, etc.). The information on assets and liabilities

denominated in foreign currencies whose values would be materially affected by the

exchange rate fluctuations is as follows:

235

Foreign Currency

Amount

(In Thousands) Exchange Rate Book Value

(Foreign currency:

functional currency)

Financial assets

Monetary items

USD：NTD 55,455$ 32.8950 1,824,192$

EUR：NTD 8,173 35.9378 293,720

JPY：NTD 112,563 0.2731 30,741

THB：NTD 2,227 0.9112 2,029

MOP：NTD 15,630 4.1193 64,385

SGD：NTD 732 23.2613 17,027

AUD：NTD 184 24.0035 4,417

RMB : NTD 23,831 4.9947 119,029

SEK : NTD 413 3.9084 1,614

JYP：USD 3,595 0.0083 982

THB：USD 454 0.0277 414

USD：RMB 1,811 6.5860 59,573

USD：VND 1,535 21,930.0000 50,494

USD：THB 1,427 36.1007 46,941

USD：SAR 612 3.7525 20,132

USD：MYR 28,197 4.2895 927,540

Financial liabilities

Monetary items

USD：NTD 13,897 32.8950 457,142

EUR：NTD 3,719 35.9378 133,653

JPY：NTD 54,233 0.2731 14,811

THB：NTD 4,193 0.9112 3,821

EUR：USD 2,772 1.0925 99,620

CHF：USD 1,620 1.0112 53,885

SEK：THB 1,590 4.2893 6,214

EUR：THB 1,902 39.4401 68,354

USD：MYR 25,474 4.2895 837,967

USD：VND 204 21,930.0000 6,711

USD：SGD 2,638 1.4142 86,777

USD：PHP 542 46.9124 17,829

USD：INR 6,580 66.4680 216,449

NTD：THB 396 1.0975 396

December 31, 2015

236

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 80,843$ 31.6200 2,556,256$

EUR：NTD 8,374 38.5500 322,818

JPY：NTD 490,183 0.2653 130,046

THB：NTD 4,191 0.9650 4,044

SGD：NTD 1,580 23.9900 37,904

HKD：NTD 465 4.0900 1,902

RMB : NTD 531,747 5.1010 2,712,441

SEK : NTD 898 4.0900 3,673

CHF：NTD 113 32.0600 3,623

CAD：NTD 6,188 27.3300 169,118

THB：USD 66,213 0.0305 63,896

RMB：USD 14,683 0.1613 74,898

USD：THB 1,723 32.7668 54,481

USD：SAR 1,877 3.7500 59,351

USD：MYR 25,310 3.4948 800,302


Monetary items

USD：NTD 9,788 31.6200 309,497

EUR：NTD 277 38.5500 10,678

JPY：NTD 14,866 0.2653 3,944

THB：NTD 959 0.9650 925

MOP：NTD 153 3.9050 597

CHF：NTD 369 1.0139 11,830

GBP : USD 186 1.5610 9,181

USD：THB 2,840 32.7668 89,801

EUR : THB 1,072 39.9482 41,326

USD：SAR 17,000 3.7500 537,540

December 31, 2014

237

E.The unrealised exchange gain (loss) arising from significant foreign exchange variation

on the monetary items held by the Group for the years ended December 31, 2015 and

2014 amounted to $62,079 and $203,939, respectively.

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 41,330$ 29.8500 1,233,701$

EUR：NTD 10,698 41.2600 441,399

JPY：NTD 501,549 0.2852 143,042

GBP：NTD 64 49.4500 3,165

THB：NTD 49,555 0.9140 45,293

MOP：NTD 8,564 3.6810 31,524

HKD：NTD 705 3.8600 2,721

SGD：NTD 2,365 23.6700 55,980

CAD：NTD 71 28.1200 1,997

RMB : NTD 345,611 4.9380 1,706,627

SEK : NTD 554 4.5800 2,537

CHF：NTD 2,099 33.6600 70,652

EUR：USD 1,764 1.3822 72,783

USD：VND 8,261 23,514.2857 271,952

USD：RMB 1,396 6.0450 41,671

USD：THB 152 32.6586 4,537

USD：SAR 4,534 3.7500 135,340

USD：SGD 3,034 1.2611 90,565

USD：MYR 244 3.2788 7,283

EUR： SAR 54 5.1834 2,228


Monetary items

USD：NTD 11,869 29.8500 354,290

EUR：NTD 1,122 41.2600 46,294

JPY：NTD 53,940 0.2852 15,384

SAR：NTD 286 7.8987 2,259

THB：NTD 2,612 0.9140 2,387

CHF：NTD 47 33.6600 1,582

USD：RMB 3,000 6.0450 89,550

January 1, 2014

238

F.Analysis of foreign currency market risk arising from significant foreign exchange

variation:

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% $ 18,242 -$

EUR：NTD 1% 2,937 -

JPY：NTD 1% 307 -

THB：NTD 1% 20 -

MOP：NTD 1% 644 -

SGD：NTD 1% 170 -

AUD：NTD 1% 44 -

RMB : NTD 1% 1,190 -

SEK : NTD 1% 16 -

JYP：USD 1% 10 -

THB：USD 1% 4 -

USD：RMB 1% 596 -

USD：VND 1% 505 -

USD：THB 1% 469 -

USD：SAR 1% 201 -

USD：MYR 1% 9,275 -


Monetary items

USD：NTD 1% 4,571 -

EUR：NTD 1% 1,337 -

JPY：NTD 1% 148 -

THB：NTD 1% 38 -

EUR：USD 1% 996 -

CHF：USD 1% 539 -

SEK：THB 1% 62 -

EUR：THB 1% 684 -

USD：MYR 1% 8,380 -

USD：VND 1% 67 -

USD：SGD 1% 868 -

USD：PHP 1% 178 -

USD：INR 1% 2,164 -

NTD：THB 1% 4 -

December 31, 2015

Sensitivity Analysis

239

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 25,563$ -$

EUR：NTD 1% 3,228 -

JPY：NTD 1% 1,300 -

THB：NTD 1% 40 -

SGD：NTD 1% 379 -

HKD：NTD 1% 19 -

RMB : NTD 1% 27,124 -

SEK : NTD 1% 37 -

CHF：NTD 1% 36 -

CAD：NTD 1% 1,691 -

THB：USD 1% 639 -

RMB：USD 1% 749 -

USD：THB 1% 545 -

USD：SAR 1% 594 -

USD：MYR 1% 8,003 -


Monetary items

USD：NTD 1% 3,095 -

EUR：NTD 1% 107 -

JPY：NTD 1% 39 -

THB：NTD 1% 9 -

MOP：NTD 1% 6 -

CHF：NTD 1% 118 -

GBP : USD 1% 92 -

USD：THB 1% 898 -

EUR : THB 1% 413 -

USD：SAR 1% 5,375 -

December 31, 2014


240

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 12,337$ -$

EUR：NTD 1% 4,414 -

JPY：NTD 1% 1,430 -

GBP：NTD 1% 32 -

THB：NTD 1% 453 -

MOP：NTD 1% 315 -

HKD：NTD 1% 27 -

SGD：NTD 1% 560 -

CAD：NTD 1% 20 -

RMB：NTD 1% 17,066 -

SEK：NTD 1% 25 -

CHF：NTD 1% 707 -

EUR：USD 1% 728 -

USD：VND 1% 2,720 -

USD：RMB 1% 417 -

USD：THB 1% 45 -

USD：SAR 1% 1,353 -

USD：SGD 1% 906 -

USD：MYR 1% 73 -

EUR：SAR 1% 22 -


Monetary items

USD：NTD 1% 3,543 -

EUR：NTD 1% 463 -

JPY：NTD 1% 154 -

SAR：NTD 1% 23 -

THB：NTD 1% 24 -

CHF：NTD 1% 16 -

USD：RMB 1% 896 -

January 1, 2014


241

Price risk

The Group is exposed to equity securities price risk because of investments held by the

Group and classified on the consolidated balance sheet either as available-for-sale or at fair

value through profit or loss. The Group is not exposed to commodity price risk. To manage

its price risk arising from investments in equity securities, the Group diversifies its portfolio.

Diversification of the portfolio is done in accordance with the limits set by the Group.

Interest rate risk

The Group‘s interest rate risk arises from borrowings. Borrowings issued at variable rates

expose the Group to cash flow interest rate risk which is partially offset by cash and cash

equivalents held at variable rates. As of December 31, 2015 and 2014, the Group‘s

borrowings at variable rate were denominated in NTD and USD.

(b)Credit risk

i.Credit risk refers to the risk of financial loss to the Group arising from default by the clients

or counterparties of financial instruments on the contract obligations. According to the

Group‘s credit policy, each local entity in the Group is responsible for managing and

analysing the credit risk for each of their new clients before standard payment and delivery

terms and conditions are offered. Internal risk control assesses the credit quality of the

customers, taking into account their financial position, past experience and other factors.

ii.The credit quality information of financial assets that are neither past due nor impaired is as

follows:

Group 1：Government or state- owned enterprises.

Group 2：Listed companies.

Group 3：The company does not belong to either group 1 or group 2.

Group 1 Group 2 Group 3

Notes and accounts receivable 3,213,443$ 768,300$ 2,064,167$

December 31, 2015



December 31, 2014



January 1, 2014

242

iii.Movements on the Group‘s provision for impairment of accounts receivable are as

follows:

iv.The ageing analysis of financial assets that were past due but not impaired is as follows:

(c)Liquidity risk

i.Cash flow forecasting is performed in the operating entities of the Group and aggregated

by Group treasury. Group treasury monitors rolling forecasts of the Group‘s liquidity

requirements to ensure it has sufficient cash to meet operational needs so that the Group

does not breach borrowing limits or covenants on any of its borrowing facilities. Such

forecasting takes into consideration the Group‘s debt financing plans, covenant

compliance, compliance with internal balance sheet ratio targets.

ii.The table below analyses the Group‘s non-derivative financial liabilities and net-settled

derivative financial liabilities into relevant maturity groupings based on the remaining

period at the balance sheet date to the contractual maturity date for non-derivative

financial liabilities and to the expected maturity date for derivative financial liabilities.

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

2015 2014

At January 1 56,893$ 118,607$

Reversal of impairment 2,291)( 108,564)(

Provision for impairment 799,903 46,850

At December 31 854,505$ 56,893$


Notes and accounts

receivable

Up to 30 days 48,637$ 6,024$ 821,836$

31 to 90 days 236,991 68,118 2,702,545

91 to 180 days 68,398 13,707 14,882

Over 181 days 831,294 2,702,847 372,340

1,185,320$ 2,790,696$ 3,911,603$

Non-derivative financial liabilities:

December 31, 2015 Less than 1 year More than 1 year

Short-term borrowings 4,284,834$ -$

Notes payable 21,306 -

Accounts payable (including related parties) 16,050,050 -

Other payables (including related parties) 2,586,401 -

Long-term borrowings

(including current portion)

314,400 2,611,950

243

(d)Cash flow risk from variations of rates

There is no significant cash flow risk from variations of rates since accounts payable are due

less than one year.



Short-term borrowings 353,618$ -$


Accounts payable (including related parties) 15,643,352 -


Bonds payable 19,224 -



314,400 2,926,350


January 1, 2014 Less than 1 year More than 1 year

Short-term borrowings 991,965$ -$


Accounts payable (including related parties) 13,324,589 39,701


Bonds payable 33,200 -



498,282 3,296,297

Derivative financial liabilities:

December 31, 2015

Interest rate swaps (net-settled) $ 1,575 $ 119

Forward exchange contracts - 7,775

Less than

3 months

Between 3 months

and 1 year


December 31, 2014

Interest rate swaps (net-settled) $ 401 $ -

Forward exchange contracts 295 15

Commodity swap contracts 7,756 6,440

Less than

3 months

Between 3 months

and 1 year


January 1, 2014

Interest rate swaps (net-settled) $ - $ 11,151

Forward exchange contracts 3,423 673

Commodity swap contracts - 4,814

Less than

3 months

Between 3 months

and 1 year

244

(3)Fair value information

A.Details of the fair value of the Group‘s financial assets and financial liabilities not measured at

fair value are provided in Note 12(2)A.

B.The different levels that the inputs to valuation techniques are used to measure fair value of

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active if it meets all

the following conditions: the items traded in the market are homogeneous; willing

buyers and sellers can normally be found at any time; and prices are available to the

public. The fair value of the Group‘s investment in listed stocks, beneficiary certificates

with quoted market prices is included in Level 1.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset

or liability, either directly or indirectly. The fair value of the Group‘s investment in

most derivative instruments is included in Level 2.

Level 3: Inputs for the asset or liability that are not based on observable market data.

C.The following table presents the Group‘s financial assets and liabilities that are measured at fair

value as of December 31, 2015, December 31, 2014, and January 1, 2014.

December 31, 2015 Level 1 Level 2 Level 3 Total

Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 775,272$ -$ -$ 775,272$

　Derivative financial

assets

- 29,120 - 29,120

Available-for-sale

financial assets

　Equity securities 438,508 - - 438,508

Bond securities - 236,408 - 236,408

Total 1,213,780$ 265,528$ -$ 1,479,308$

Financial liabilities:

Financial liabilities at

fair value through

profit or loss


liabilities -$ 9,469$ -$ 9,469$

245


Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 1,721,603$ -$ -$ 1,721,603$


assets

- 61,796 176 61,972

Available-for-sale

financial assets


Bond securities - 169,518 - 169,518

Total 2,232,266$ 231,314$ 176$ 2,463,756$



fair value through

profit or loss


liabilities -$ 14,907$ -$ 14,907$

January 1, 2014 Level 1 Level 2 Level 3 Total

Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 806,006$ -$ -$ 806,006$


assets

- 36,689 520 37,209

Available-for-sale

financial assets


Total 1,410,736$ 36,689$ 520$ 1,447,945$



fair value through

profit or loss


liabilities -$ 20,061$ -$ 20,061$

246

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

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

listed below by characteristics:

(b)Except for financial instruments with active markets, the fair value of other financial

instruments is measured by using valuation techniques or by reference to counterparty quotes.

The fair value of financial instruments measured by using valuation techniques can be refer

to current fair value of instruments with similar terms and characteristics in substance,

discounted cash flow method or other valuation methods, including calculated by applying

model using market information available at the consolidated balance sheet date (i.e. yield

curves on the Taipei Exchange, average commercial paper interest rates quoted from

Reuters).

E.If one or more of the significant inputs is not based on observable market data, the instrument is

included in level 3.

F.Specific valuation techniques used to value financial instruments include:

(a)Quoted market prices or dealer quotes for similar instruments.

(b)The fair value of forward foreign exchange contracts is determined using forward exchange

rates at the balance sheet date, with the resulting value discounted back to present value.

(c)Other techniques, such as discounted cash flow analysis, are used to determine fair value for

the remaining financial instruments.

13.SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

and joint ventures): Please refer to table 3.

D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or

20% of the Company‘s paid-in capital: Please refer to table 4.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in

capital or more: Please refer to table 5.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Please refer to table 6.

Listed shares Open-end fund

Market quoted price Closing price Net asset value

247

I. Derivative financial instruments undertaken during the reporting periods: Please refer to Notes

6(2), 6(15) and 12(2).

J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland

China)：Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 9.

B. Significant transactions, either directly or indirectly through a third area, with investee

companies in the Mainland Area: None.

14.SEGMENTAL FINANCIAL INFORMATION

(1) General information

A.The Company has identified which segments should be reported based on the information used

by the Board of Directors to make decisions.

B.The Board of Directors classify reportable segments as construction engineering department,

environmental resource department, sales department and other operating departments.

(2) Measurement of segmental financial information

The Board of Directors evaluates the performance of segments based on segmental income.

Interest income and expenses cannot be attributed to any segment because such activity is handled

by the Company‘s financial department.

(3) Segmental income, assets and liabilities of segments

The segmental financial information provided to the Board of Directors is as follows:

Construction

Engineering

Department

Environmental

Resource

Department

Sales

Department

Other

Operating

Departments Total

External revenues 62,985,942$ 3,628,146$ 155,446$ 288,106$ 67,057,640$

Internal revenues 4,121,842 1,638,066 - 471,740 6,231,648

Segmental revenues 67,107,784$ 5,266,212$ 155,446$ 759,846$ 73,289,288$

Segmental income 1,763,056$ 894,115$ 18,934$ 282,179$ 2,958,284$

Depreciation and

amortization 337,908$ 30,744$ 498$ 112,101$ 481,251$


248

(4) Reconciliation information of segmental income

Intra-segment sales are arm‘s length transactions. The measurement of external revenues reported

to the Board of Directors is consistent with revenues in the statement of comprehensive income.

The reconciliation information of income from continuing operations before income tax and

segmental income is as follows:

Construction

Engineering

Department

Environmental

Resource

Department

Sales

Department

Other

Operating

Departments Total

External revenues 53,685,122$ 3,535,332$ 155,664$ 315,819$ 57,691,937$

Internal revenues 3,057,398 1,496,022 - 426,086 4,979,506

Segmental revenues 56,742,520$ 5,031,354$ 155,664$ 741,905$ 62,671,443$

Segmental income 1,556,831$ 862,831$ 18,493$ 239,142$ 2,677,297$

Depreciation and

amortization 323,667$ 31,253$ 486$ 123,104$ 478,510$




Segmental income 2,958,284$ 2,677,297$

Adjustment and elimination 43,628 25,034

Investment income accounted for

under the equity method 5,154 31,199

Interest income 121,013 149,180

Foreign exchange gain 109,098 274,536

Interest expense 89,468)( 89,005)(

Others 172,943 96,591

Income from continuing

operations before income tax 3,320,652$ 3,164,832$

249

(5) Financial information by product and service

Detail of the revenue is as follows:

(6) Financial information by geographic area

The geographic area information of 2015 and 2014 is as follows:

(7) Major customers‘ information

The customers accounting for more than 10% of the Company‘s operationg revenues for the years

ended December 31, 2015 and 2014 are as follows:



Construction engineering service

revenue 62,985,942$ 53,685,122$

Environmental resource service

revenue 3,628,146 3,535,332

Sales revenue 155,446 155,664


Total 67,057,640$ 57,691,937$

Revenue Non-current asset Revenue Non-current asset

Areas 56,479,074$ 9,219,696$ 47,521,094$ 10,531,777$

Asia 10,549,704 2,213,584 10,156,299 1,079,253

America 28,862 163 14,544 290

Total 67,057,640$ 11,433,443$ 57,691,937$ 11,611,320$

For the year ended December 31, 2015 For the year ended December 31, 2014

Customer Revenue Segment Revenue Segment

F 19,864,146$

Construction

Engineering

Department

17,788,270$

Construction

Engineering

Department

For the year ended December 31, 2015 For the year ended December 31, 2014

Item Value

0 CTCI Corp. CTCI

(Thailand)

CO., Ltd.

Other

receivables-

related

parties

Yes 315,800$ 213,818$ -$ - 2 -$ For

operational

need

-$ - -$ 3,403,890$ 6,807,779$ -

0 CTCI Corp. CTCI Arabia

Ltd.

Other

receivables-

related

parties

Yes 1,024,075 986,850 986,850 0.82%-0.881% 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. CTCI

Machinery

Corp.

Other

receivables-

related

parties

Yes 1,250,000 700,000 541,000 0.88%-1% 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. E & C

Engineering

Corp.

Other

receivables-

related

parties

Yes 200,000 200,000 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. Resources

Engineering

Service Inc.

Other

receivables-

related

parties

Yes 400,000 400,000 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. ShangDing

Engineering &

Construction

Co., Ltd.

Other

receivables-

related

parties

Yes 98,685 98,685 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -

1 CTCI Overseas

Co., Ltd.

ShangDing

Engineering &

Construction

Co., Ltd.

Other

receivables-

related

parties

Yes 384,506 384,214 230,265 0.919%-0.983% 2 - For

operational

need

- - - 964,929 964,929 -

CTCI Corporation and its subsidiaries

Loans to others

December 31, 2015

Table 1 Expressed in thousands of NTD

(Except as otherwise indicated)

Reason

for short-term

financing

（Note 6）

No.

（Note 1） Creditor Borrower

General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

the year ended

December 31,

2015

（Note 3）

Balance at

December 31,

2015

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

Allowance

for

doubtful

accounts

CollateralLimit on loans

granted to

a single party

（Note 7）

Ceiling on

total loans

granted

（Note 7） Footnote

~250~

Item Value

Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

the year ended

December 31,

2015

（Note 3）

Balance at

December 31,

2015

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


1 CTCI Overseas

Co., Ltd.

Superiority

(Thailand)

Co., Ltd

Other

receivables-

related

parties

Yes 63,407$ 60,086$ 60,086$ 0.929% 2 -$ For

operational

need

-$ - -$ 964,929$ 964,929$ -

1 CTCI Overseas

Co., Ltd.

CIPEC

Construction

Inc.

Other

receivables-

related

parties

Yes 17,852 17,838 17,838 0.936% 2 - For

operational

need

- - - 964,929 964,929 -

1 CTCI Overseas

Co., Ltd.

CTCI Americas,

Inc.

Other

receivables-

related

parties

Yes 39,474 39,474 - - 2 - For

operational

need

- - - 964,929 964,929 -

2 KD Holding Corp. G.D.

Development

Corporation

Other

receivables-

related

parties

Yes 30,000 30,000 29,000 1.60% 2 - For

operational

need

- - - 443,895 1,775,582 -

3 Jing Ding

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Co.,

Ltd.

Other

receivables-

related

parties

Yes 119,002 114,878 114,878 1.755%-2.1% 2 - For

operational

need

- - - 694,500 694,500 -

~251~

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Fill in the name of account in which the loans are recognised, such as receivables-related parties, current account with stockholders, prepayments, temporary payments, etc.

Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2015.

Note 4:.The numbers filled in for the nature of loans are as follows:

(1) Business association is labeled as “1”

(2) Short-term financing is labeled as “2”.Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of business transactions occurred between the creditor and borrower in the current year.

Note 6: Fill in purpose of loan when nature of loan belongs to short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc.

Note 7: The calculation and amount on ceiling of loans are as follows:

[The company]

(1) The limit on loans granted to a single party shall not exceed 20% of the Company's net assets value.

(2) The ceiling on total loans shall not exceed 40% of the Company's net assets value.

[Domestic subsidiaries and overseas subsidiaries]

(1) The limit on loans granted to a single party by domestic subsidiaries and overseas subsidiaries shall not exceed 10% and 40% of the Company's net value, respectively.

(2) The ceiling on total loans shall not exceed 40% of the Company's net assets value.Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Govering Loaning of Funds and Making

of Endorsements/Guarantees by public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they

have not yet been appropriated. However, this balance should excluded the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has

authorised the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2,of the “Regulations Governing Loaning of Funds and Making of Endorsements/

Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be

excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

~252~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

0 CTCI Corp. CTCI (Thailand)

Co., Ltd.

3 51,058,344$ 3,143,897$ 3,138,420$ 1,067,364$ -$ 18.44% 102,116,688$ Y N N -

0 CTCI Corp. CTCI Overseas

Co., Ltd.

3 51,058,344 5,698,729 4,514,222 1,154,307 - 26.52% 102,116,688 Y N N -

0 CTCI Corp. Jing Ding

Engineering &

Construction

Co., Ltd.

3 51,058,344 843,615 703,023 79,766 - 4.13% 102,116,688 Y N Y -

0 CTCI Corp. CINDA Engineering

& Construction

Private Limited.

3 51,058,344 2,290,673 2,231,320 503,800 - 13.11% 102,116,688 Y N N -


Engineering &

Construction

Co., Ltd.

3 51,058,344 577,492 561,708 18,847 - 3.30% 102,116,688 Y N Y -

0 CTCI Corp. CTCI Arabia Ltd. 3 51,058,344 5,503,573 5,416,968 4,172,703 - 31.83% 102,116,688 Y N N -

0 CTCI Corp. CTCI Singapore Pte.

Ltd.

2 51,058,344 1,743,479 1,743,479 868,599 - 10.24% 102,116,688 Y N N -

0 CTCI Corp. CTCI Machinery

Corp.

2 51,058,344 371,497 371,497 292,752 - 2.18% 102,116,688 Y N N -

0 CTCI Corp. CIMAS Engineering

Co., Ltd.

3 51,058,344 409,630 32,895 6 - 0.19% 102,116,688 Y N N -

0 CTCI Corp. CTCI Chemical

Corp.

3 51,058,344 22,128 21,563 1,797 - 0.13% 102,116,688 Y N N -

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）


Provision of endorsements and guarantees to others

December 31, 2015

Table 2

Number

（Note 1）

Endorser/

guarantor

Party being

endorsed/guaranteedLimit on

endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

Expressed in thousands of NTD


Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

~253~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

0 CTCI Corp. E&C Engineering

Corp.

2 51,058,344$ 31,431$ 31,431$ -$ -$ 0.18% 102,116,688$ Y N N -

0 CTCI Corp. Universal

Engineering (BVI)

Corporation

3 51,058,344 32,920 32,895 - - 0.19% 102,116,688 Y N N -

0 CTCI Corp. CTCI Malaysia Sdn.

Bhd.

3 51,058,344 1,607,010 1,381,590 90,491 - 8.12% 102,116,688 Y N N -

0 CTCI Corp. CCJV P1 E&C Sdn.

Bhd.

2 51,058,344 657,900 657,900 120,615 - 3.87% 102,116,688 Y N N -

0 CTCI Corp. CB&I-CTCI B.V. 6 51,058,344 253,771 253,771 253,771 - 1.49% 102,116,688 N N N -

1 Advanced

Control &

System Inc.

Century Ahead

Ltd.

2 516,391 19,752 19,737 - - 3.82% 1,032,782 N N N -

2 E&C

Engineering

Corp.

CTCI Machinery

Corp.

5 2,460,642 1,230,407 1,230,407 1,230,407 - 150.01% 4,921,284 N N N -

2 E&C

Engineering

Corp.

Shanghai XuanLi

Trading Co.,

Ltd.

5 2,460,642 64,168 61,944 61,944 - 7.55% 4,921,284 N N Y -

2 E&C

Engineering

Corp.

ShangDing

Engineering &

Construction

Co., Ltd.

5 2,460,642 130,978 117,765 117,765 - 14.36% 4,921,284 N N Y -

2 E&C

Engineering

Corp.

Resources

Engineering

Service Inc.

5 2,460,642 22,803 - - - 0.00% 4,921,284 N N N -

3 CTCI Machinery

Corp.

E&C Engineering

Corp.

5 1,373,331 426,323 426,323 426,323 - 93.13% 2,746,662 N N N -

4 CTCI Chemical

Corp.

CTCI Corp. 4 629,211 18,817 18,817 18,817 - 8.97% 1,258,422 N Y N -

~254~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

4 CTCI Chemical

Corp.

Resources

Engineering

Service Inc.

5 629,211$ 12,766$ -$ -$ -$ 0.00% 1,258,422$ N N N -

4 CTCI Chemical

Corp.

CTCI Machinery

Corp.

5 629,211 230,473 - - - 0.00% 1,258,422 N N N -

5 ShangDing

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Co.,

Ltd.

2 1,314,047 276,051 108,554 - - 24.78% 2,628,094 N N Y -

6 KD Holding

Corp.

G.D.

Development

Corporation

6 8,877,908 640,017 629,076 395,612 - 14.17% 26,633,724 N N N -

7 Resources

Engineering

Service Inc.

E&C Engineering

Corp.

5 920,926 1,760 1,760 1,760 - 0.57% 1,841,852 N N N -

8 CTCI Overseas

Co., Ltd.

CTCI Americas, Inc. 3 7,236,967 50,941 50,941 50,941 - 2.12% 14,473,934 N N N -

8 CTCI Overseas

Co., Ltd.

CTCI Singapore Pte.

Ltd.

3 7,236,967 37,160 13,836 11,069 - 0.57% 14,473,934 N N N -

~255~

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:



Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

(1)Having business relationship.

(2)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(4)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

(5)Mutual guarantee of the trade as required by the construction contract.

(6)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s

“Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on

total amount of endorsements/guarantees provided in the footnote.

[The company]

(1)The limit on endorsements and guarantees granted to a single party shall not exceed 300% of the Company’s net assets value in last financial statements which was reviewed or audited by accountant.

(2)The ceiling on total endorsements and guarantees shall not exceed 600% of the Company’s net assets value in last financial statements which was reviewed or audited by accountant.


(1)The limit on endorsements and guarantees granted to a single party shall not exceed 100% to 300% of the Company's net assets value in last financial statements which was reviewed or audited by accountant.

(2)The ceiling on total endorsements and guarantees shall not exceed 200% to 600% of the Company's net assets value in last financial statements which was reviewed or audited by accountant.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other events involve

endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

~256~

Type of marketable

securities Name of Investee company

Number of shares/

denominations

Book value

(Note 3) Ownership (%) Market value

CTCI Corp. Fund Fuh Hwa China New

Economy Balance

N/A Financial assets at fair

value through profit or

loss-current

1,000,000 10,000$ - 8,740$ -

CTCI Corp. Fund BlackRock Global Fund - US

Basic Value Fund



loss-current

13,372 31,421 - 30,496 -

CTCI Corp. Fund MIRAE ASSET ASIA

GREAT CONSUMER

EQUITY FUND



loss-current

67,708 31,346 - 28,999 -

CTCI Corp. Fund Aberdeen Global-Japanese

Smaller Companies Fund A2

Base Currency Exposure USD



loss-current

40,236 21,532 - 21,141 -

CTCI Corp. Fund BlackRock Global Fund -

European Value Fund A2

USD Hedged



loss-current

24,876 9,204 - 9,206 -

CTCI Corp. Fund Janus Global Life Sciences A

USD



loss-current

16,680 16,372 - 15,797 -

CTCI Corp. Fund Fidelity America A-USD N/A Financial assets at fair


loss-current

23,403 6,580 - 6,934 -

CTCI Corp. Fund Allianz Global Investors

Target IncA TWD



loss-current

1,000,000 10,000 - 9,614 -

136,455 130,927$

Adjustment 5,528)(

130,927$

Footnote

（Note 4）


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

December 31, 2015

Table 3

Securities held by

(Note 1)

Relationship with the

securities issuer

(Note 2)

General

ledger account

As of December 31, 2015



~257~

Type of marketable


Number of shares/

denominations

Book value


Footnote

（Note 4）Securities held by

(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Corp. Bonds GUOSEN SECURITIES

OVERSEAS CO. LTD.

N/A Available-for-sale

financial assets-current

5,000,000 25,220$ - 24,991$ Note 5

CTCI Corp. Bonds BP Capital PLC. N/A Available-for-sale


2,000,000 10,132 - 9,716 Note 5

CTCI Corp. Bonds BOC Aviation PTE. LTD. N/A Available-for-sale


2,000,000 9,973 - 9,804 Note 5

CTCI Corp. Bonds Cayman Ton Yi Industrial N/A Available-for-sale


15,000,000 75,540 - 75,126 Note 5

120,865 119,637$

Adjustment 1,228)(

119,637$

CTCI Corp. Common Stock China Steel Chemical Corp. The Company's

President is the

supervisor

Available-for-sale


1,776,916 100,615$ - 189,242$ -

CTCI Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


1,827,629 82,206 - 58,575 -

CTCI Corp. Common Stock CHIYODA The subsidiary is the

Board of director

Available-for-sale


38,000 12,607 - 9,579 -

195,428 257,396$

Adjustment 61,968

257,396$

CTCI Corp. Common Stock Core Pacific City Co., Ltd. N/A Financial assets

measured at cost

- non-current

36,000,000 360,000$ 2.26 190,000$ -

CTCI Corp. Common Stock Utech Solar Corp. The Company is the

Board of director

Financial assets

measured at cost

- non-current

31,920,000 409,200 14.51 96,980 -

CTCI Corp. Common Stock CDIB & Partners

Investment Holding

Corp.

The Company is the

Board of director

Financial assets

measured at cost

- non-current

27,000,000 250,000 2.48 250,000 -

CTCI Corp. Common Stock Metro-consultant Co.,

Ltd.

The Company is the

Board of director

Financial assets

measured at cost

- non-current

300,000 3,000 6.00 3,000 -

CTCI Corp. Common Stock Heng Keng Corp. N/A Financial assets

measured at cost

- non-current

20,000 3,000 5.12 - -

Less: Accumulated

impairment

485,220)( 539,980$

539,980$

~258~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Sino Environmental

Services Corp.

Fund Mega Diamond Money

Market Fund



loss-current

407,439 5,043$ - 5,043$ -

Sino Environmental

Services Corp.

Fund Jih Sun Money Market Fund N/A Financial assets at fair


loss-current

7,047,945 103,052 - 103,052 -

Sino Environmental

Services Corp.

Fund Capital Money Market Fund N/A Financial assets at fair


loss-current

1,255,209 20,000 - 20,000 -

Sino Environmental

Services Corp.

Common Stock CTCI Corp. The Company Available-for-sale


1,028 37 - 37 -

Sino Environmental

Services Corp.

Common Stock Taiwan Cement Corp. The president is

the Company's

director

Available-for-sale


438,156 11,962 - 11,962 -

Sino Environmental

Services Corp.

Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


575,000 18,428 - 18,428 -

Sino Environmental

Services Corp.

Bonds BP Capital PLC N/A Available-for-sale


6,000,000 29,147 - 29,147 Note 5

Sino Environmental

Services Corp.

Bonds BOC Aviation PTE LTD N/A Available-for-sale


6,000,000 29,414 - 29,414 Note 5

Advanced Control &

System Inc.

Fund FSITC Taiwan Money Market N/A Financial assets at fair


loss-current

2,650,762 40,019 - 40,019 -

Advanced Control &

System Inc.



loss-current

1,192,755 19,005 - 19,005 -

Advanced Control &

System Inc.

Fund Allianz Global Investors

Taiwan Money Market Fund



loss-current

3,243,957 40,127 - 40,127 -

Advanced Control &

System Inc.


the Company's

director

Available-for-sale


825,980 22,549 - 22,549 -

~259~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Advanced Control &

System Inc.


President is

the director

Available-for-sale


737,000 23,621$ - 23,621$ -

Advanced Control &

System Inc.

Bonds BANK OF CHINA LTD

PARIS



6,000,000 28,864 - 28,864 Note 5

Advanced Control &

System Inc.

Bonds SINOCHEM OFFSHORE

CAPITA



6,000,000 29,346 - 29,346 Note 5

E&C Engineering Corp. Fund Capital Money Market Fund N/A Financial assets at fair


loss-current

9,413,950 150,000 - 150,000 -

Innovest Investment Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


277,000 8,878 - 8,878 -

Innovest Investment Corp. Common Stock CTCI Corp. The Company Available-for-sale

financial assets-non-current

344,436 12,348 0.05 12,348 -

Innovest Investment Corp. Common Stock Global Strategic Investment

Inc.

N/A Financial assets

measured at cost

- non-current

283,500 962 0.65 962 -

GRQ Investment Corp. Common Stock CTCI Corp. The Company Available-for-sale


912,170 32,701 0.12 32,701 -

GRQ Investment Corp. Common Stock Advanced Control &

System Inc.

Subsidiary Available-for-sale


324,417 13,301 1.42 13,301 -

GRQ Investment Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


759,000 24,326 - 24,326 -

GRQ Investment Corp. Fund JPMorgan Investment Funds -

Global Income Fund



loss-current

2,800 14,574 - 14,574 -

GRQ Investment Corp. Fund Schroder ISF Global Dividend N/A Financial assets at fair


loss-current

46,374 14,461 - 14,461 -

~260~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


GRQ Investment Corp. Fund Fidelity Funds - Global

Financial Services Fund



loss-current

18,265 6,531$ - 6,531$ -

GRQ Investment Corp. Fund Invesco Global Leisure Fund N/A Financial assets at fair


loss-current

5,419 6,531 - 6,531 -

GRQ Investment Corp. Fund BlackRock Global Fund -

World Healthscience Fund



loss-current

5,500 6,385 - 6,385 -

GRQ Investment Corp. Fund Taishin 1699 Money Market N/A Financial assets at fair


loss-current

374,378 5,000 - 5,000 -

HD Resources

Management

Corp.

Fund Mega Diamond Money Market

Fund



loss-current

1,705,065 21,103 - 21,103 -

HD Resources

Management

Corp.



loss-current

685,443 10,022 - 10,022 -

HD Resources

Management

Corp.



loss-current

1,066,928 17,000 - 17,000 -

HD Resources

Management

Corp.


the Company's

director

Available-for-sale


435,310 11,884 - 11,884 -


Service Inc.


president is the

director

Available-for-sale


872,000 27,948 - 27,948 -


Service Inc.

Common Stock Global Strategic Investment

Inc.

N/A Financial assets measured at

cost - non-current

567,000 1,924 1.29 1,924 -

~261~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Leading Energy Corp. Fund Mega Diamond Money

Market Fund



loss-current

1,431,550 17,718$ - 17,718$ -

Leading Energy Corp. Fund Prudential Financial Money

Market



loss-current

3,013,752 47,043 - 47,043 -

Leading Energy Corp. Common Stock Taiwan Cement Corp. The president is

the Company's

director

Available-for-sale financial

assets-current

432,280 11,801 - 11,801 -

KD Holding Corp. Fund Capital Money Market Fund N/A Financial assets at fair


loss-current

343,472 5,473 - 5,473 -

KD Holding Corp. Fund Nomura Taiwan Money

Market



loss-current

440,732 7,102 - 7,102 -

KD Holding Corp. Fund CTBC Hwa-win Money

Market Fund



loss-current

3,640,476 39,615 - 39,615 -

KD Holding Corp. Common Stock Taiwan Cement Corp. The president is

the Company's

director

Available-for-sale


179,780 4,908 - 4,908 -

KD Holding Corp. Common Stock Gintech Energy Corporation. The Company's

president is the

director

Available-for-sale


462,000 14,807 - 14,807 -

KD Holding Corp. Common Stock TSC Venture Management.

Inc.


measured at cost

- non-current

270,000 - 5.88 - -

KD Holding Corp. Common Stock TeamWIN Opto-Electronics

Co., Ltd.


measured at cost

- non-current

150,000 475 2.46 475 -

Fortune Energy Corp. Fund FSITC Taiwan Money Market N/A Financial assets at fair


loss-current

232,614 3,512 - 3,512 -

~262~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Fortune Energy Corp. Fund Prudential Financial Money

Market

- Financial assets at fair


loss-current

1,089,848 17,012$ - 17,012$ -

Fortune Energy Corp. Fund Taishin 1699 Money Market - Financial assets at fair


loss-current

524,440 7,005 - 7,005 -

CTCI Chemical

Corp.

Fund FSITC Taiwan Money Market - Financial assets at fair


loss-current

530,353 8,007 - 8,007 -

CTCI Chemical

Corp.





loss-current

646,904 8,002 - 8,002 -

CTCI Chemical

Corp.

Fund CTBC Hwa-win Money

Market Fund



loss-current

459,626 5,003 - 5,003 -

CTCI (Thailand) Co., Ltd. Common Stock CHIYODA (Thailand) Co.

Ltd.

- Financial assets

measured at cost

- non-current

3,600 329 9.00 329 -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the book value without deduction of allowance for valuation loss of the marketable securities.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Note 5: The book value of bonds denominated in CNY.

~263~

Proceeds

Shares Amounts Shares Amounts Shares Amounts Book value on disposal Amount Shares Amounts

CTCI Corp. Jih Sun Money

Market Fund

Financial assets at fair


loss-current

- N/A - $ - 81,698,302 $ 1,190,000 81,698,302 $ 1,190,477 $ 1,190,000 $ 477 $ - - $ -

CTCI Corp. Paradigm Pion

Money Market

Fund



loss-current

- N/A - - 87,502,570 995,000 87,502,570 995,368 995,000 368 - - -

CTCI Corp. Allianz Global

Investors

Taiwan

Money Market



loss-current

- N/A 53,455,504 657,406 93,347,970 1,150,000 146,803,474 1,808,227 1,807,406 821 - - -

CTCI Corp. Franklin

Templeton

Sinoam Money

Market Fund



loss-current

- N/A 42,632,155 432,091 78,772,958 800,000 121,405,113 1,233,004 1,232,091 913 - - -

CTCI Corp. Capital Money

Market Fund



loss-current

- N/A - - 37,806,792 600,000 37,806,792 600,118 600,000 118 - - -

KD Holding

Corp.

CTBC Hwa-win

Money Market

Fund



loss-current

- N/A - - 38,389,048 416,900 34,748,572 377,481 377,300 181 - 3,640,476 39,600


Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.

Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity

attributable to owners of the parent in the calculation.



Relationship

with

the investor

（Note 2）

Balance as at January 1, 2015

Table 4

Balance as at December 31,

2015


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


Current changesAddition（Note 3） Disposal（Note 3）

Investor

Marketable

securities

（Note 1）

General

ledger account

Counterparty

（Note 2）

~264~

Purchases

(sales) Amount

Percentage of total

purchases (sales) Credit term Unit price Credit term Balance

Percentage of

total notes/accounts

receivable (payable)

CTCI Corp. CTCI Overseas Co., Ltd. Subsidiary Purchases 850,921$ 2.17% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

319,871)($ ( 3.12%) -


& System Inc.

Subsidiary Purchases 788,023 2.01% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

378,421)( ( 3.69%) -

CTCI Corp. CTCI Machinery Corp. Subsidiary Purchases 773,507 1.97% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

370,237)( ( 3.61%) -

CTCI Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

145,670)( ( 1.42%) -

HD Resources

Management Corp.

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

84,369)( ( 0.82%) -

HD Resources

Management Corp.

Leading Energy Corp. Subsidiary Purchases 287,941 0.73% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

49,997)( ( 0.49%) -

Leading Energy Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

58,531)( ( 0.57%) -

Fortune Energy Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

28,713)( ( 0.28%) -

FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction

Differences in transaction terms

compared to third party

transaction（Note 1） Notes/accounts receivable (payable)


Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more




~265~

Purchases

(sales) Amount

Percentage of total


Percentage of


receivable (payable) FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction




Sino Environmental

Services Corp.

CTCI Chemical

Corp.

Subsidiary Purchases 114,460$ 0.29% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

22,512)($ ( 0.22%)

CTCI Overseas Co., Ltd. CTCI Corp. The Company (Sales) 850,921)( ( 2.02%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

319,871 8.58% -

Advanced Control

& System Inc.

CTCI Corp. The Company (Sales) 788,023)( ( 1.87%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

378,421 10.15% -

CTCI Machinery Corp. CTCI Corp. The Company (Sales) 773,507)( ( 1.84%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

370,237 9.93% -

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

145,670 3.91% -

Leading Energy Corp. HD Resources

Management Corp.

Subsidiary (Sales) 287,941)( ( 0.68%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

49,997 1.34% -

Sino Environmental

Services Corp.

HD Resources

Management Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

84,369 2.26% -

Sino Environmental

Services Corp.

Leading Energy Corp. Subsidiary (Sales) 226,302)( ( 0.54%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

58,531 1.57% -

Sino Environmental

Services Corp.

Fortune Energy Corp. Subsidiary (Sales) 157,987)( ( 0.38%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

28,713 0.77% -

CTCI Chemical

Corp.

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

22,512 0.60%

~266~

Table 6

Amount Action taken

CTCI Corp. CTCI Arabia Ltd. Subsidiary 988,619$ Note 1 -$ - -$ -$

CTCI Corp. CTCI Machinery Corp. Subsidiary 541,396 Note 1 - - - -

Sino Environmental Services Corp. CTCI Corp. The Company 145,670 3.53 14,598 Active Collection 34,477 -

Advanced Control & System Inc. CTCI Corp. The Company 378,421 2.27 - - 2,578 -

CTCI Machinery Corp. CTCI Corp. The Company 370,237 2.52 - - - -

CTCI Overseas Co., Ltd. Shang Ding Engineering &

Construction Co., Ltd.

Subsidiary 230,631 Note 1 - - - -

CTCI Overseas Co., Ltd. CTCI Corp. The Company 319,871 3.67 - - - -

Jing Ding Engineering &


Shanghai XuanLi Trading

Co., Ltd.


Note 1：Other accounts receivable arise from lending capital.

Amount collected

subsequent to the

balance sheet date

Allowance for

doubtful accountsCreditor Counterparty

Relationship

with the counterparty


2015（Note 1） Turnover rate

Overdue receivables


Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more




~267~

General ledger account Amount Transaction terms

Percentage of consolidated total operating

revenues or total assets (Note 3)

1 Advanced Control & System Inc. CTCI Corp. 2 Sales revenue 788,023$ Negotiated by

both parties

1.87%

2 CTCI Machinery Corp. 〃 2 〃 773,507 〃 1.84%

3 CTCI Overseas Co., Ltd. 〃 2 〃 850,921 〃 2.02%

4 Sino Environmental Services Corp. HD Resources Management

Corp.

3 〃 413,198 〃 0.98%

4 〃 Leading Energy Corp. 3 〃 226,302 〃 0.54%

4 〃 Fortune Energy Corp. 3 〃 157,987 〃 0.38%

5 Leading Energy Corp. HD Resources Management

Corp.

3 〃 287,941 〃 0.68%

4 Sino Environmental Services Corp. CTCI Corp. 2 〃 431,272 〃 1.03%

1 Advanced Control & System Inc. 〃 2 Accounts

receivable

378,421 〃 0.92%


4 Sino Environmental Services Corp. 〃 2 〃 145,670 〃 0.35%


0 CTCI Corp. CTCI Arabia Ltd. 1 Other

receivables

988,619 〃 2.40%

0 〃 CTCI Machinery Corp. 1 〃 541,396 〃 1.32%

3 CTCI Overseas Co., Ltd. Shang Ding Engineering

& Construction Co., Ltd.

3 〃 230,631 〃 0.56%

6 Jing Ding Engineering &



Co., Ltd.

3 〃 114,878 〃 0.28%

0 CTCI Corp. CTCI Overseas (BVI) Corp.

and its subsidiaries.

1 Progress billings 3,309,692 〃 8.05%

2 CTCI Machinery Corp. CTCI Corp. 2 〃 2,803,170 〃 6.82%

7 Resources Engineering Service Inc. 〃 2 〃 358,170 〃 0.87%

0 CTCI Corp. CTCI Machinery Corp. 1 〃 109,894 〃 0.27%

0 〃 GRQ Investment Corp. 1 Refundable

deposits

128,300 〃 0.31%

Number

(Note 1) Company name Counterparty

Relationship

(Note 2)

Transaction



Significant inter-company transactions during the reporting years



~268~




Number


Relationship

(Note 2)

Transaction

0 CTCI Corp. CTCI (Thailand) Co., Ltd. 1 Guarantee 3,138,420$ Not applicable Not applicable

0 〃 CCJV P1 E&C SDN. BHD. 1 〃 657,900 〃〃

0 〃 CTCI Overseas Co., Ltd. 1 〃 4,514,222 〃〃

0 〃 Jind Ding Engineering &


1 〃 703,023 〃〃

0 〃 CINDA Engineering &

Construction Private

Limited

1 〃 2,231,320 〃〃

0 〃 Shang Ding Engineering


1 〃 561,708 〃〃

0 〃 CTCI Arabia Ltd. 1 〃 5,416,968 〃〃

0 〃 CTCI Singapore Pte. Ltd. 1 〃 1,743,479 〃〃

0 〃 CTCI Machinery Corp. 1 〃 371,497 〃〃

0 〃 CTCI Malaysia Sdn. Bhd. 1 〃 1,381,590 〃〃

0 〃 CB&I-CTCI B.V. 1 〃 253,771 〃〃

2 CTCI Machinery Corp. E&C Engineering Corp. 3 〃 426,323 〃〃

8 Shang Ding Engineering



Co., Ltd.

3 〃 108,554 〃〃

9 E&C Engineering Corp. Shang Ding Engineering


3 〃 117,765 〃〃

9 〃 CTCI Machinery Corp. 3 〃 1,230,407 〃〃

10 KD Holding Corp. G.D. Development Company 3 〃 629,076 〃〃

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.


Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between

subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction;

for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(1)Parent company to subsidiary.

(2)Subsidiary to parent company.

(3)Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on

accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

~269~

Balance as at

December 31, 2015

Balance as at

December 31, 2014 Number of shares Ownership (%) Book value

CTCI Corp. E&C

Engineering

Corp.

Taiwan Design, management,

and building of nuclear

power, thermal power,

fire pumped storage

power generation and

others related to

engineering.

$ 456,251 $ 456,251 59,098,624 97.09 $ 797,452 $ 135,937 $ 131,978 A subsidiary


Engineering

Service Inc.

Taiwan Mining of geology, sea oil

and gas, marbal and

rare；planning, design,

monitor of civil, traffic

environment and various

mechanical and

electrical equipment.

15,957 15,957 16,765,048 93.14 285,891 627 584 A subsidiary

CTCI Corp. Advanced

Control &

System Inc.

Taiwan Systems planning, design,

integration, and

engineering for various

IT systems etc.

44,409 44,409 11,444,842 48.76 251,792 79,749 38,891 A subsidiary


Corp.

Taiwan General investment. 1,690,000 1,690,000 169,000,000 100.00 2,486,323 110,579 110,076 A subsidiary

CTCI Corp. Innovest

Investment Corp.

Taiwan General investment. 1,140,000 1,100,000 114,000,000 100.00 1,060,390 ( 55,825) ( 71,498) A subsidiary

CTCI Corp. KD Holding Corp. Taiwan General investment. 938,889 938,889 38,457,105 58.46 2,595,013 710,370 416,278 A subsidiary

CTCI Corp. CTCI (Thailand)

Co., Ltd.

Thailand Design and building of

petrochemical plant.

116,894 116,894 1,249,500 49.00 122,884 16,965 8,313 A subsidiary


Corp.

Taiwan Secondary processing

of steel, piping, heat

treatment, manufacture

of pollution control

equipment and non-

destructive testing etc.

293,800 293,800 20,000,000 100.00 438,862 69,347 68,203 A subsidiary

Net profit (loss)

of the investee for the year

ended December 31, 2015

(Note 2(2))

Investment income(loss)

recognised by the Company for

the year ended December 31,

2015（Note 2(3)） FootnoteInvestor

Investee

(Notes 1 and 2) Location Main business activities

Initial investment amount Shares held as at December 31, 2015

Information on investees (not including investees in Mainland China)





~270~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. CTCI Arabia Ltd. Arabia Construction and

maintenance of refinery,

storage tanks and

chemical plant.

$ 23,312 $ 23,312 500 50.00 ($ 679,584) $ 71,562 $ 35,781 A subsidiary

CTCI Corp. Sinogal-Waste

Services Corp.

Macao Management of waste

recycling site and

maintenance of related

mechanical and

equipment etc.

4,958 4,958 - 30.00 34,550 86,392 25,918 A subsidiary

CTCI Corp. CTCI Singapore Pte.

Ltd.

Singapore Investment and planning

of related engineering.

152,254 152,254 5,100,000 100.00 ( 87,179) ( 253,000) ( 253,000) A subsidiary

CTCI Corp. CTCI and Partners

Company Limited

Arabia Construction and


storage tanks and chemical

plant.

15,755 15,755 - 40.00 11,664 ( 5,501) ( 2,200) A subsidiary


(BVI) Corp.

BVI Investment and planning


308,554 308,554 6,740,000 100.00 2,525,557 306,893 306,893 A subsidiary

CTCI Corp. CTCI Engineering

& Construction

Sdn. Bhd.

Malaysia Wholesale and retail of

information software;

computer equipment

installation and

information processing etc.

4,118 4,118 450,000 60.00 48,266 62,782 37,669 A subsidiary

CTCI Corp. CTCI Americas, Inc. USA Business development, and

related engineering and

planning of construction

projects.

3,217 3,217 100,000 100.00 7,597 208 208 A subsidiary

CTCI Corp. CCJV P1

Engineering &

Construction Sdn.

Bhd.

Malaysia Construction planning. 2,259 1,899 247,500 99.00 199,105 176,894 141,515 A subsidiary

~271~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. Pan Asia Corp. Taiwan Input of foreign labor

and technologies,

technical cooperation

with foreign construction

business, and construction

of engineering construction

etc.

$ 71,543 $ 71,543 39,219,509 34.27 $ 558,796 $ 120,783 $ 41,393 An investee under

equity method

$ 10,657,379 $ 1,037,002

GRQ

Investment

Corp.

CTCI Chemical

Corp.

Taiwan Manufacture wholesale,

and retail of industrial

chemicals.

13,522 13,522 480,661 6.77 $ 14,199 72,451 $ 4,905 A subsidiary

GRQ

Investment

Corp.

KD Holding Corp. Taiwan General investment. 11,270 11,270 243,918 0.37 16,439 710,370 2,448 A subsidiary

GRQ

Investment

Corp.

Resources

Engineering

Service Inc.


and gas, marbal and rare,

planning, design, monitor

of civil, traffic


mechanical and electrical

equipment.

23 23 1,000 0.01 17 627 ( 13) A subsidiary

Innovest

Investment

Corp.

CTCI Chemical Corp. Taiwan Manufacture, wholesale,


chemicals.

32,153 32,153 1,657,207 23.34 48,955 72,451 16,913 A subsidiary

Innovest

Investment

Corp.

KD Holding Corp. Taiwan General investment. 1,374 1,374 32,132 0.05 2,166 710,370 325 A subsidiary

Innovest

Investment

Corp.

E&C

Engineering Corp.



power,thermal power, fire

pumped storage power

generation and others

related to engineering.

11 11 1,000 0.002 13 135,937 4 A subsidiary

Innovest

Investment

Corp.

Powertec Energy

Corp.

Taiwan Basically chemical

industry

power generation, rotation

electric, machinery

manufacturing of electric

power and services of

926,700 926,700 308,900,005 18.18 792,196 ( 581,489) ( 105,728) An investee under

equity method

~272~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



Innovest

Investment

Corp.

MIE INDUSTRIAL

SDN. BHD.

Malaysia Equipment & Instrument,

Procurement &

Contruction & Panel

$ 139,885 $ - 9,450,000 21.00 $ 150,277 $ 138,374 $ 18,974 An investee under

equity method

CTCI Machinery

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.

154,744 154,744 6,666,667 10.00 151,501 ( 23,834) ( 858) An investee under

equity method

KD Holding

Corp.

HD Resources

Management

Corp.

Taiwan International trade and

environmental service of

waste disposal,

equipment installation

and mechanical

installation etc.

20,000 20,000 2,000,000 100.00 74,389 26,338 26,338 A subsidiary

KD Holding

Corp.

Leading Energy

Corp.

Taiwan Environmental service of

waste disposal device

installation, steam power

cogeneration etc.

797,485 993,485 66,640,000 98.00 1,504,251 251,011 245,991 A subsidiary

KD Holding

Corp.

Sino

Environmental

Services Corp.

Taiwan Management of waste

recycling site and


mechanical and

equipment etc.

339,921 339,921 14,065,936 93.15 780,216 338,612 315,423 A subsidiary

KD Holding

Corp.

Fortune Energy

Corp.




cogeneration etc.

1,012,483 1,012,483 56,249,000 74.999 1,004,303 178,088 133,564 A subsidiary

KD Holding

Corp.

G.D. Development

Company

Taiwan Energy technology service

and related components

manufacturing.

189,991 95,491 18,999,000 49.997 214,032 23,401 11,699 An investee which

has a 50% interest

in a joint venture

KD Holding

Corp.

Yuan Ding

Resources

Management Corp.

Taiwan Waste service, waste clear

other environmental

service, and environmental

pollution service etc.

27,000 27,000 2,700,000 60.00 23,399 1,029 617 A subsidiary

~273~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



KD Holding

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.

$ 309,489 $ 309,489 13,333,333 20.00 $ 341,371 ($ 23,834) ($ 1,715) An investee under

equity method

Sino

Environmental

Services Corp.

Leading Energy

Corp.




cogeneration etc.

13,600 17,600 1,360,000 2.00 30,699 251,011 5,020 A subsidiary

Sino

Environmental

Services Corp.

CTCI Chemical

Corp.

Taiwan Manufacture, wholesale,


chemicals.

24,581 24,581 1,910,241 26.90 56,430 72,451 19,493 A subsidiary

Sino

Environmental

Services Corp.

Sinogal-Waste

Services Corp.


recycling site and


mechanical and

equipment etc.

4,964 4,964 - 30.00 34,550 86,392 25,918 A subsidiary

Sino

Environmental

Services Corp.

Fortune Energy

Corp.




cogeneration etc.

13 13 1,000 0.001 18 178,088 2 A subsidiary

Sino

Environmental

Services Corp.

G.D. Development

Company



manufacturing.

8 8 1,000 0.01 11 23,401 1 An investee which

has a 50% interest

in a joint venture

HD Resources

Management

Corp.

Sino

Environmental

Services Corp.


recycling site and


mechanical and

equipment etc.

53 53 1,000 0.01 56 338,612 ( 6) A subsidiary

HD Resources

Management

Corp.

Yuan Ding Resources

Management

Corp.


other environmental



18,000 18,000 1,800,000 40.00 15,599 1,029 412 A subsidiary

~274~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Chemical

Corp.

Chung Ding

Chemical Corp.

Samoa Manufacture participation

and sale of chemicals etc.

$ 314 $ 45,084 10,000 100.00 $ 322 $ 26,107 $ 26,107 A subsidiary

CTCI Overseas

(BVI) Corp.

CTCI Overseas

Co., Ltd.

Hong

Kong

Investment and planning


276,815 276,815 6,740,000 100.00 2,412,322 307,287 307,287 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI Arabia Ltd. Arabia Construction and



plant.

22,610 22,610 500 50.00 ( 679,609) 71,562 35,781 A subsidiary

CTCI Overseas

Co., Ltd.


(BVI) Corp.



1,694 1,694 50,000 100.00 112,403 ( 20,215) ( 20,215) A subsidiary

CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Philippines Construction and



plant.

663 663 10,000 40.00 ( 897) ( 2,497) ( 999) A subsidiary

CTCI Overseas

Co., Ltd.

CIMAS

Engineering Corp.

Vietnam Chemical, petrochemical,

feasibility study &

planning, engineering

design, procurement &

fabrication, erection,

construction &

commissioning.

26,330 26,330 - 50.00 62,807 11,547 5,774 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI Engineering &

Construction Sdn.

Bhd.

Malaysia Investment and building of

related engineering.

2,879 2,879 300,000 40.00 32,174 62,782 25,113 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI and Partners

Company Limited


maintenance of

refinery, storage

tanks and chemical

plant.

25,585 25,585 3,000,000 60.00 17,497 ( 5,501) ( 3,301) A subsidiary

CTCI Overseas

Co., Ltd.

CINDA

Engineering &

Construction

Private Limited

India Chemical, petrochemical,

feasibility atudy &




construction &

commissioning.

31,022 31,022 8,000,000 100.00 202,896 90 90 A subsidiary

Universal

Engineering

(BVI) Corp.

Superiority


Thailand Investment and building of


151 151 2,156 49.00 (7,381) 7,889 7,889 A subsidiary

~275~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))





Investee



Superiority

(Thailand) Co.,

Ltd.

CTCI Thailand

Co., Ltd.

Thailand Design and planting of


$ 12,628 $ 12,628 1,300,500 51.00 $ 52,552 $ 16,965 $ 8,652 A subsidiary

Advanced

Control &

System Inc.

Century Ahead Ltd. Samoa Professional investment

company.

25,097 25,097 750,000 100.00 29,551 6,166 6,166 A subsidiary

E&C

Engineering

Corp.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 18,423 72,451 6,695 A subsidiary

Shang Ding

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Corp.

China General trade. 23,748 23,748 - 100.00 33,238 4,836 4,836 A subsidiary

Resources

Engineering

Service Inc.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 18,650 72,451 6,695 A subsidiary

CTCI Singapore

Pte. Ltd.

TECA Engineering

Pte. Ltd.

Singapore Design and planning of

engineeing projects.

5,968 5,968 250,000 25.00 1,841 ( 2,798) ( 699) An investee under

equity method

CTCI Engineering

& Construction

SDN. BHD.

CTCI Malaysia SDN.

BHD.



1,357 1,357 150,000 20.00 14,067 48,638 13,739 A subsidiary

CTCI Malaysia

SDN. BHD.

MIE INDUSTRIAL

SDN. BHD.


Procurement &

Construction, Panel

185,537 - 12,600,000 28.00 220,372 138,374 46,279 An investee under

equity method

資料結束列

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding

company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2015’ should fill orderly in the Company’s (public company’s) information on investees and every

directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column.

(2)The ‘Net profit (loss) of the investee for the year ended December 31, 2015’ column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the year ended December 31, 2015’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary

and recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should

confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations.

~276~

Remitted to

Mainland China

Remitted back

to Taiwan

Jing Ding

Engineering &

Construction Co.,

Ltd.

Design, survey, construction

and inspection of various

engineering and construction

projects, plants, machinery

and equipment, and

environmental protection

projects.

$ 342,115 2 $ 313,998 $ - $ - $ 313,998 $ 113,572 100.00 $ 113,572 $ 1,735,818 $ 3,302 Note 3

Shang Ding

Engineering &

Construction Co.,

Ltd.

Design, survey, construction and

inspection of various engineering

and construction projects.

592,787 2 534,974 - - 534,974 3,212 99.44 3,194 475,141 23,530 "

Zhuhai Chung

Ding Chemical

Corp.

Trading of chemical materials. 46,218 2 46,218 - (43,849) - - - - - 47,941 Note 5、6

Advanced Control

& Information

Technologies

Ltd.

Computer technology services. 24,675 2 24,675 - - 24,675 6,172 48.76 3,009 28,171 - Note 4

GranSino

Environmental

Technology Co.,

Ltd.

Consultation and development of

sanitation technology, maintenance

of environmental pollution disposal

equipment, management of

construction, and retail business,

etc.

22,193 1 10,874 - - 10,874 (8,553) 26.88 (2,299) 6,016 3,377 -

Xiang Ding

Environment

Consultant

(Shanghai) Co.,

Ltd.

Technical development, advisory

and service in environmental field;

environmental pollution control

equipment and related parts

wholesale, import and export, etc.

4,147 1 4,147 - - 4,147 2,155 54.85 1,182 8,078 - -

Investee in

Mainland China

Book value of

investments in

Mainland China

as of December

31, 2015

Accumulated

amount

of investment

income

remitted back to

Taiwan as of

December 31,

2015

Table 9

FootnoteMain business activities Paid-in capital

Investment method

（Note 1）

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of January 1,

2015

Accumulated

amount

of remittance

from Taiwan to

Mainland China

as of December

31, 2015

Ownership

held by

the

Company

(direct or

indirect)

Investment income

(loss) recognised

by the Company

for the year ended

December 31, 2015

（Note 2(2)B）

Net income of

investee as of

December 31,

2015

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the year ended

December 31, 2015



Information on investments in Mainland China



~277~

Company name

Accumulated amount of remittance

from Taiwan to Mainland China

as of December 31, 2015

Investment amount approved

by the Investment

Commission of the Ministry

of Economic Affairs

(MOEA) (Note 6)

Ceiling on investments in

Mainland China imposed

by the Investment

Commission of MOEA

CTCI Corp. $ 888,668 $ 953,715 $ 10,211,669

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1)Directly invest in a company in Mainland China..

(2)Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

(3)Others

Note 2: In the ‘Investment income (loss) recognised by the Company for the year ended December 31, 2015’ column:

(1)It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

B.The financial statements that are audited and attested by parent company's accounting firm in R.O.C.

C.Others ( it is recognised based on the financial statements which is not reviewed by independent accountants of Investee Company as the same period).

Note 3: Invested by CTCI Overseas Co., Ltd.

Note 4: Invested by Century Ahead Ltd.

Note 5: Sold in August, 2015.

Note 6: The accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2015 is US $27,231,000

The investment amount approved by the Investment Commission of the Ministry of Economic Affairs is US $28,561,000.

~278~

279

CTCI CORPORATION

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS


------------------------------------------------------------------------------------------------------------------------------------

For the convenience of readers and for information purpose only, the auditors‘ report and the accompanying

financial statements have been translated into English from the original Chinese version prepared and used in

the Republic of China. In the event of any discrepancy between the English version and the original

Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors‘

report and financial statements shall prevail.

Appendix 2

CTCI CORPORATION BALANCE SHEETS


282

December 31, 2015



Assets Notes AMOUNT % AMOUNT % AMOUNT %

Current assets

1100 Cash and cash equivalents 6(1) $ 1,182,557 3 $ 4,579,282 11 $ 4,685,629 14

1110 Financial assets at fair value


6(2)

154,276 - 1,174,481 3 463,231 2

1125 Available-for-sale financial

assets - current

6(3)

377,033 1 371,518 1 370,594 1

1150 Notes receivable, net 6(5) - - 21 - 3,202,568 10

1160 Notes receivable - related

parties

7

586,246 1 1,411,400 4 - -

1170 Accounts receivable, net 6(5) 3,110,998 8 2,044,749 5 1,130,606 3

1180 Accounts receivable - related

parties

7

30,524 - 21,252 - 285,310 1

1190 Due from customers for

contract work

6(6)

18,543,107 45 13,957,407 34 5,906,355 18

1200 Other receivables 52,707 - 68,057 - 40,900 -

1210 Other receivables - related

parties

7

1,551,595 4 1,605,558 4 2,802,721 8

1220 Current income tax assets - - 113,187 - 120,067 -

1410 Prepayments 6(7) 2,094,025 5 2,601,246 6 2,043,470 6

1470 Other current assets - - - - 672,388 2

11XX Current Assets 27,683,068 67 27,948,158 68 21,723,839 65

Non-current assets

1543 Financial assets measured at

cost - non-current

6(4)

539,980 1 570,556 2 572,877 2

1550 Investments accounted for

under equity method

6(8)

11,424,142 28 11,064,278 27 9,474,692 28

1600 Property, plant and equipment 6(9) 344,367 1 354,847 1 376,216 1

1760 Investment property 6(10) 155,582 1 156,904 - 158,226 1

1780 Intangible assets 112,131 - 108,317 - 99,555 -

1840 Deferred income tax assets 6(25) 437,647 1 456,332 1 469,035 1

1900 Other non-current assets 6(11), 7

and 8 426,352 1 473,348 1 786,878 2

15XX Non-current assets 13,440,201 33 13,184,582 32 11,937,479 35

1XXX Total assets $ 41,123,269 100 $ 41,132,740 100 $ 33,661,318 100

(Continued)

CTCI CORPORATION BALANCE SHEETS


The accompanying notes are an integral part of these financial statements.


283

December 31, 2015



Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowings 6(12) $ 2,126,000 5 $ - - $ - - 2120 Financial liabilities at fair value


6(2)

1,694 - 14,437 - 19,503 - 2150 Notes payable 8,190 - 5,083 - 2,100 - 2170 Accounts payable 6(13) 8,378,251 20 10,356,196 25 9,207,734 28 2180 Accounts payable - related

parties

7

1,858,564 5 1,522,114 4 896,032 3 2190 Due to customers for contract

work

6(6)

5,307,238 13 6,082,764 15 2,674,825 8 2200 Other payables 6(14) 1,425,482 4 1,298,698 3 1,286,278 4 2220 Other payables - related parties 7 57,533 - 18,555 - 87,843 - 2230 Current income tax liabilities 185,969 - 210,156 - - - 2300 Other current liabilities 6(15) 1,144,895 3 1,205,130 3 104,062 - 21XX Current Liabilities 20,493,816 50 20,713,133 50 14,278,377 43 Non-current liabilities 2570 Deferred income tax liabilities 6(25) 289,322 1 245,922 1 246,355 1 2600 Other non-current liabilities 6(8)(16)(1

7) 3,320,683 8 3,254,736 8 3,185,946 9 25XX Non-current liabilities 3,610,005 9 3,500,658 9 3,432,301 10 2XXX Total Liabilities 24,103,821 59 24,213,791 59 17,710,678 53 Equity Share capital 6(19) 3110 Common stock 7,611,076 18 7,575,303 18 7,474,343 22 Capital surplus 6(18)(20) 3200 Capital surplus 3,297,703 8 3,230,033 8 3,070,085 9 Retained earnings 6(21)(25) 3310 Legal reserve 2,852,010 7 2,663,798 7 2,499,625 7 3320 Special reserve 768,286 2 778,162 2 778,162 2 3350 Unappropriated retained

earnings

2,477,692 6 2,432,925 6 1,910,722 6 Other equity interest 3400 Other equity interest 24,516 - 250,563 - 229,538 1 3500 Treasury stocks 6(19) ( 11,835 ) - ( 11,835 ) - ( 11,835 ) - 3XXX Total equity 17,019,448 41 16,918,949 41 15,950,640 47 Significant Contigent Liabilities

and Unrecognised Contract

Commitments

9

Significant Events After the

Balance Sheet Date

11

3X2X Total liabilities and equity $ 41,123,269 100 $ 41,132,740 100 $ 33,661,318 100

CTCI CORPORATION STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE AMOUNTS)



284

For the years ended December 31

2015 2014 (adjusted)

Items Notes AMOUNT % AMOUNT %

4000 Operating revenue 6(22) and 7 $ 42,049,227 100 $ 38,060,203 100 5000 Operating costs 6(23)(24) and 7 ( 39,224,105 ) ( 93 ) ( 35,993,997 ) ( 95 )

5900 Net operating margin 2,825,122 7 2,066,206 5

5920 Realized profit on sales 1,980 - 1,937 -

5950 Gross profit 2,827,102 7 2,068,143 5

Operating expenses 6(23)(24) and 7 6200 General and administrative expenses ( 1,552,885 ) ( 4 ) ( 703,666 ) ( 2 ) 6300 Research and development expenses ( 81,217 ) - ( 81,630 ) -

6000 Total operating expenses ( 1,634,102 ) ( 4 ) ( 785,296 ) ( 2 )

6900 Operating profit 1,193,000 3 1,282,847 3

Non-operating income and expenses 7010 Other income 7 181,612 - 275,691 1

7020 Other gains and losses 6(4) 57,559 - 61,097 - 7050 Finance costs ( 5,016 ) - ( 118 ) - 7070 Share of profit of associates and joint

ventures accounted for under equity

method

6(8)

1,037,002 3 747,892 2

7000 Total non-operating income and

expenses

1,271,157 3 1,084,562 3

7900 Profit before income tax 2,464,157 6 2,367,409 6

7950 Income tax expense 6(25) ( 423,547 ) ( 1 ) ( 275,210 ) -

8200 Profit for the year $ 2,040,610 5 $ 2,092,199 6

Other comprehensive income Components of other comprehensive

income that will not be reclassified to

profit or loss

8311 Other comprehensive income before

tax, actuarial (losses) gains on

defined benefit plans

( $ 137,721 ) - $ 94,315 - 8349 Income tax related to components of

other comprehensive income that will

not be reclassified to profit or loss

18,303 - ( 1,689 ) - Components of other comprehensive

income that will be reclassified to

profit or loss

8361 Cumulative translation differences of

foreign operations

( 135,403 ) ( 1 ) 95,209 - 8362 Unrealized loss on valuation of

available-for-sale financial assets

( 125,306 ) - ( 59,613 ) -

8380 Total share of other comprehensive

income (loss) of associates and joint

ventures accounted for under equity

method

34,662 - ( 14,571 ) -

8300 Other comprehensive (loss) income

for the year

( $ 345,465 ) ( 1 ) $ 113,651 -

8500 Total comprehensive income for the

year

$ 1,695,145 4 $ 2,205,850 6

Basic earnings per share 6(26) $ 2.69 $ 2.79

Diluted earnings per share 6(26) $ 2.68 $ 2.76

CTCI CORPORATION

STATEMENTS OF CHANGES IN EQUITY


Retained Earnings Other equity interest

Notes

Common stock

Capital surplus

Legal reserve

Special reserve

Unappropriated

earnings

Cumulative

translation

differences of foreign

operations

Unrealized gain or loss

on valuation of

available-for-sale

financial assets

Treasury

stocks

Total equity

Note1: The directors' and supervisors' remuneration of $15,000 and the employees' bonus of $88,815 for the year ended December 31, 2013 has been deducted from the statement of comprehensive income.

Note2: The directors' and supervisors' remuneration of $15,000 and the employees' bonus of $51,092 for the year ended December 31, 2014 has been deducted from the statement of comprehensive income.



285

For the year ended December 31, 2014 Balance at January 1, 2014 $ 7,474,343 $ 3,070,085 $ 2,499,625 $ 778,162 $ 2,432,195 $ 7,178 $ 222,360 ( $ 11,835 ) $ 16,472,113 The effects of retrospective application

and restatement

- - - - ( 521,473 ) - - - ( 521,473 ) Restated balance at January 1, 2014 7,474,343 3,070,085 2,499,625 778,162 1,910,722 7,178 222,360 ( 11,835 ) 15,950,640 Appropriation of 2013 earnings (Note 1) 6(21) Legal reserve - - 164,173 - ( 164,173 ) - - - - Cash dividends - - - - ( 1,498,449 ) - - - ( 1,498,449 ) Profit for the year - - - - 2,092,199 - - - 2,092,199 Employee stock options excercised by

subsidiary 6(20)

- 11,961 - - - - - - 11,961 Convertible bonds transferred to common

stock by subsidiary 6(20)

- ( 683 ) - - - - - - ( 683 ) Share-based payment transactions - 15,610 - - - - - - 15,610 Employee stock options exercised 6(18)(19) 100,960 133,060 - - - - - - 234,020 Cumulative translation differences of

foreign operations

- - - - - 95,209 - - 95,209 Unrealized loss on valuation of


- - - - - - ( 74,184 ) - ( 74,184 ) Other comprehensive income for the year - - - - 92,626 - - - 92,626 Balance at December 31, 2014 $ 7,575,303 $ 3,230,033 $ 2,663,798 $ 778,162 $ 2,432,925 $ 102,387 $ 148,176 ( $ 11,835 ) $ 16,918,949 For the year ended December 31, 2015 Balance at January 1, 2015 (adjusted) $ 7,575,303 $ 3,230,033 $ 2,663,798 $ 778,162 $ 2,432,925 $ 102,387 $ 148,176 ( $ 11,835 ) $ 16,918,949 Appropriation of 2014 earnings (Note 2) 6(21) Legal reserve - - 188,212 - ( 188,212 ) - - - - Special reserve - - - ( 9,876 ) 9,876 - - - - Cash dividends - - - - ( 1,698,089 ) - - - ( 1,698,089 ) Profit for the year - - - - 2,040,610 - - - 2,040,610 Employee stock options excercised by

subsidiary 6(20)

- 19,556 - - - - - - 19,556 Convertible bonds transferred to common

stock by subsidiary 6(20)

- ( 819 ) - - - - - - ( 819 ) Share-based payment transactions - 2,950 - - - - - - 2,950 Employee stock options exercised 6(18)(19) 35,773 45,983 - - - - - - 81,756 Cumulative translation differences of

foreign operations

- - - - - ( 135,403 ) - - ( 135,403 ) Unrealized loss on valuation of


- - - - - - ( 90,644 ) - ( 90,644 ) Other comprehensive income for the year - - - - ( 119,418 ) - - - ( 119,418 ) Balance at December 31, 2015 $ 7,611,076 $ 3,297,703 $ 2,852,010 $ 768,286 $ 2,477,692 ( $ 33,016 ) $ 57,532 ( $ 11,835 ) $ 17,019,448

CTCI CORPORATION

STATEMENTS OF CASH FLOWS



Notes 2015 2014

286

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year $ 2,464,157 $ 2,367,409 Adjustments to reconcile profit before income tax to net cash

provided by operating activities

Income and expenses having no effect on cash flows Impairment losses 6(4) 30,576 81,521 Depreciation 6(22) 53,940 56,281 Amortization 6(22) 111,929 105,544 Provision for (reversal of ) allowance for doubtful accounts 787,005 ( 87,570 ) (Gain) loss on valuation of financial assets 6(2) ( 52,928 ) 7,737 Gain on disposal of property, plant and equipment ( 12 ) ( 155 ) Compensation costs for employee stock options 6(23) - 5,266 Gain on disposal of investments - ( 1,156 ) Share of profit of associates and joint ventures accounted for

under equity method 6(8)

( 1,037,002 ) ( 747,892 ) Realized gain from intercompany transactions ( 1,980 ) ( 1,937 ) Dividends income ( 27,139 ) ( 27,185 ) Interest income ( 69,426 ) ( 107,365 ) Interest expense 5,016 - Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit or loss 1,133,907 ( 750,670 ) Notes receivable, net (including related parties) 38,463 1,826,206 Accounts receivable, net (including related parties) ( 1,075,814 ) ( 597,573 ) Other receivables 6,963 ( 18,586 ) Other receivables - related parties 34,249 55,958 Due from customers for contract work ( 4,585,700 ) ( 8,051,052 ) Prepayments 507,221 ( 557,776 ) Other current assets - 672,388 Other non-current assets 10,605 323,416 Net changes in liabilities relating to operating activities Notes payable 3,107 2,983 Accounts payable ( 1,977,945 ) 1,148,462 Accounts payable - related parties 336,450 626,082 Due to customers for contract work ( 775,526 ) 3,407,939 Other payables 125,740 12,420 Other payables - related parties 38,978 ( 69,288 ) Net defined benefit liabilities ( 147,344 ) ( 133,691 ) Other current liabilities ( 60,235 ) 1,101,068 Cash (used in) generated from operations ( 4,122,745 ) 648,784 Interest received 63,754 77,568 Interest paid ( 4,495 ) - Dividends received 699,600 700,205 Income tax paid ( 367,348 ) ( 47,592 ) Net cash (used in) provided by operating activities ( 3,731,234 ) 1,378,965

(Continued)

CTCI CORPORATION

STATEMENTS OF CASH FLOWS



Notes 2015 2014



287

CASH FLOWS FROM INVESTING ACTIVITIES

Decrease in other receivables - related parties $ 19,690 $ 1,141,093

Interest received-related parties 14,083 21,338

Increase in available-for-sale financial assets ( 77,769 ) ( 41,155 )

Decrease in financial assets measured at cost - ( 79,200 )

Increase in long-term investments - subsidiaries 6(8) ( 40,360 ) ( 1,175,699 )

Acquisition of property, plant and equipment 6(9) ( 42,165 ) ( 33,616 )

Proceeds from disposal of property, plant and equipment 39 181

Increase in intangible assets ( 75,529 ) ( 76,881 )

Increase in refundable deposits (shown in other non-current assets) ( 3,823 ) ( 9,176 )

Net cash used in investing activities ( 205,834 ) ( 253,115 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in short-term borrowings 2,126,000 -

Increase in other payables 522 -

Increase in deposits received 30,154 32,232

Cash dividends paid ( 1,698,089 ) ( 1,498,449 )

Proceeds from employee stock options exercised 81,756 234,020

Net cash provided by (used in) financing activities 540,343 ( 1,232,197 )

Decrease in cash and cash equivalents ( 3,396,725 ) ( 106,347 )

Cash and cash equivalents at beginning of year 4,579,282 4,685,629

Cash and cash equivalents at end of year $ 1,182,557 $ 4,579,282

288

CTCI CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANIZATION

CTCI Corporation (the ―Company‖) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China on April 6, 1979 and commenced its

operations on May 1, 1979. The main business activities of the Company are the design, survey,

construction and inspection of various engineering and construction projects, plants, machinery and

equipment and environmental protection projects. The Company‘s shares have been listed and traded

on the Taiwan Stock Exchange since May 1993.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE NON-CONSOLIDATED

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These non-consolidated financial statements were authorized for issuance by the Board of Directors on

March 18, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (―IFRS‖) as endorsed by the Financial Supervisory Commission (―FSC‖)

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3,

2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei

Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9,

‗Financial instruments‘) as endorsed by the FSC and Regulations Governing the Preparation of

Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the

―2013 version of IFRS‖) in preparing the consolidated financial statements. The impact of adopting

the 2013 version of IFRS is listed below:

IAS 19 (revised), ‗Employee benefits‘

The revised standard makes amendments that net interest amount, calculated by applying the

discount rate to the net defined benefit asset or liability, replaces the finance charge and expected

return on plan assets. The revised standard eliminates the accounting policy choice that the actuarial

gains and losses could be recognized based on corridor approach or recognized in profit or loss. The

revised standard requires that the actuarial gains and losses can only be recognized immediately in

other comprehensive income when incurred. Past service cost will be recognized immediately in the

period incurred and will no longer be amortized using straight-line basis over the average period

until the benefits become vested. An entity is required to recognize termination benefits at the

earlier of when the entity can no longer withdraw an offer of those benefits and when it recognizes

any related restructuring costs, rather than when the entity is demonstrably committed to a

termination. Additional disclosures are required for defined benefit plans. Based on the Company‘s

assessment, the impact of the standard is in the following table.

289

Significant effects of applying the 2013 version of IFRS to the non-consolidated financial

statements are summarized in the following table:

Non-consolidated balance sheet 2010 version Effect of 2013 version


January 1, 2014

Investments accounted for under equity method 9,635,377$ 160,685)($ 9,474,692$ (1)

Deferred income tax assets 395,139 73,896 469,035 (1)

Others 23,717,591 - 23,717,591

Total assets 33,748,107$ 86,789)($ 33,661,318$


Others 14,524,732 - 14,524,732



Others 14,039,918 - 14,039,918

Total equity 16,472,113 521,473)( 15,950,640

Total equity and liabilities 33,748,107$ 86,789)($ 33,661,318$

Non-consolidated balance sheet 2010 version Effect of 2013 version


December 31, 2014

Investments accounted for under equity method 11,110,900$ 46,622)($ 11,064,278$ (1)

Deferred income tax assets 421,073 35,259 456,332 (1)

Others 29,612,130 - 29,612,130

Total assets 41,144,103$ 11,363)($ 41,132,740$


Others 20,959,055 - 20,959,055



Others 14,486,024 - 14,486,024

Total equity 17,137,716 218,767)( 16,918,949

Total equity and liabilities 41,144,103$ 11,363)($ 41,132,740$

290

Remark:

(a) The Company is expected to recognize previously unrecognized past service cost and as a

consequence of elimination of the corridor approach to recognize prior unrecognized actuarial

losses by increasing deferred income tax assets by $73,896, and net defined benefit liabilities by

$434,684, and decreasing investments accounted for under equity method by $160,685, and

retained earnings by $521,473 as at January 1, 2014, respectively; investments accounted for

under equity method, non-operating revenue, income tax expense, and retained earnings were

increased by $114,063, $29,687, $36,949 and $92,626 as at December 31, 2014, respectively,

and deferred income tax assets, net defined benefit liabilities, operating costs and operating

expenses were decreased by $38,637, $,227,280, $175,539, and $41,803, respectively.

(b) IAS 1, ‗Presentation of financial statements‘

The amendment requires entities to separate items presented in OCI classified by nature into two

groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently

when specific conditions are met. If the items are presented before tax then the tax related to

each of the two groups of OCI items (those that might be reclassified and those that will not be

reclassified) must be shown separately. Accordingly, the Company will adjust its presentation of

the statement of comprehensive income.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company

None.

Non-consolidated statement of comprehensive income 2010 version Effect of 2013 version



Operating revenue 38,060,203$ -$ 38,060,203$

Operating costs 36,167,599)( 175,539 35,992,060)( (1)

Operating expenses 827,099)( 41,803 785,296)( (1)

Non-operating income and expenses 1,054,875 29,687 1,084,562 (1)

Net income before tax 2,120,380 247,029 2,367,409

Income tax expense 238,261)( 36,949)( 275,210)( (1)

Profit for the period 1,882,119 210,080 2,092,199

Other comprehensive income, net of tax 21,025 92,626 113,651 (1)

Total comprehensive income for the period 1,903,144$ 302,706$ 2,205,850$

Earnings per share:

Basic 2.51$ 0.28$ 2.79$

Diluted 2.48$ 0.28$ 2.76$

291

(3) IFRSs issued by IASB but not yet endorsed by the FSC

The following are the assessment of new standards, interpretations and amendments issued by

IASB but not yet endorsed by the FSC:

The Company is assessing the potential impact of the new standards, interpretations and

amendments above. The impact will be disclosed when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these non-consolidated financial

statements are set out below. These policies have been consistently applied to all the periods presented,

unless otherwise stated.

New Standards, Interpretations and Amendments

Effective date by


Standards Board

IFRS 9, ‗Financial instruments' January 1, 2018

Sale or contribution of assets between an investor and its associate or

joint venture (amendments to IFRS 10 and IAS 28)

To be determined by


Standards Board

Investment entities: applying the consolidation exception (amendments

to IFRS 10, IFRS 12 and IAS 28)

January 1, 2016

Accounting for acquisition of interests in joint operations

(amendments to IFRS 11)

January 1, 2016

IFRS 14, 'Regulatory deferral accounts' January 1, 2016

IFRS 15, ‗Revenue from contracts with customers' January 1, 2018

IFRS 16, 'Leases' January 1, 2019



Recognition of deferred tax assets for unrealised losses (amendments to

IAS 12)

January 1, 2017

Clarification of acceptable methods of depreciation and amortisation

(amendments to IAS 16 and IAS 38)

January 1, 2016

Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016

Defined benefit plans: employee contributions (amendments to IAS

19R)

July 1, 2014

Equity method in separate financial statements (amendments to IAS 27) January 1, 2016

Recoverable amount disclosures for non-financial assets (amendments

to IAS 36)

January 1, 2014

Novation of derivatives and continuation of hedge accounting

(amendments to IAS 39)

January 1, 2014

IFRIC 21, ‗Levies‘ January 1, 2014



Improvements to IFRSs 2012-2014 January 1, 2016

292

(1) Compliance statement

This non-consolidated financial statement of the Company have been prepared in accordance with

the ―Regulations Governing the Preparation of Financial Reports by Securities Issuers‖,

International Financial Reporting Standards, International Accounting Standards, IFRIC

Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the

―IFRSs‖).

(2) Basis of preparation

A. Except for the following items, the non-consolidated financial statements have been prepared

under the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value

through profit or loss.

(b) Available-for-sale financial assets measured at fair value.

(c) Liabilities on cash-settled share-based payment arrangements measured at fair value.

(d) Defined benefit liabilities recognized based on the net amount of pension fund assets less

present value of defined benefit obligation.

B. The preparation of financial statements in conformity with IFRSs requires the use of certain

critical accounting estimates. It also requires management to exercise its judgment in the process

of applying the Company‘s accounting policies. The areas involving a higher degree of

judgment or complexity, or areas where assumptions and estimates are significant to the

non-consolidated financial statements are disclosed in Note 5.

(3) Foreign currency translation

Items included in the financial statements of each of the Company‘s entities are measured using the

currency of the primary economic environment in which the entity operates (the ―functional

currency‖). The non-consolidated financial statements are presented in New Taiwan Dollars, which

is the Company‘s functional.

A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange

rates prevailing at the dates of the transactions or valuation where items are remeasured.

Foreign exchange gains and losses resulting from the settlement of such transactions are

recognized in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are

re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences

arising upon re-translation at the balance sheet date are recognized in profit or loss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

through profit or loss are re-translated at the exchange rates prevailing at the balance sheet

date; their translation differences are recognized in profit or loss. Non-monetary assets and

liabilities denominated in foreign currencies held at fair value through other comprehensive

income are re-translated at the exchange rates prevailing at the balance sheet date; their

translation differences are recognized in other comprehensive income. However,

non-monetary assets and liabilities denominated in foreign currencies that are not measured

at fair value are translated using the historical exchange rates at the dates of the initial

transactions.

293

B. Translation of foreign operations

(a) The operating results and financial position of all the group entities, associates and joint

arrangements that have a functional currency different from the presentation currency are

translated into the presentation currency as follows:

i. Assets and liabilities for each balance sheet presented are translated at the closing

exchange rate at the date of that balance sheet;

ii. Income and expenses for each statement of comprehensive income are translated at

average exchange rates of that period; and

iii. All resulting exchange differences are recognized in other comprehensive income.

(b) When a foreign operation partially disposed of or sold is an associate or joint arrangements,

exchange differences that were recorded in other comprehensive income are proportionately

reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the

Company still retains partial interest in the former foreign associate or joint arrangements

after losing significant influence over the former foreign associate, or losing joint control of

the former joint arrangements, such transactions should be accounted for as disposal of all

interest in these foreign operations.

(4) Classification of current and non-current items

A. As the operating cycle for construction contracts usually exceeds one year, the Company uses

the operating cycle (typically 3～4 years) as its criteria for classifying current and non-current

assets and liabilities related to construction contracts. For other assets and liabilities, the

criterion is one year.

B. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to

be sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realized within twelve months from the balance sheet date;

(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that

are to be exchanged or used to pay off liabilities more than twelve months after the balance

sheet date.

C. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise

they are classified as non-current liabilities:

(a) Liabilities that are expected to be paid off within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be paid off within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date. Terms of a liability that could, at the option of

the counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

(5) Cash and cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits

that meet the definition above and are held for the purpose of meeting short-term cash commitments

in operations are classified as cash equivalents.

294

(6) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets held for trading or

financial assets designated as at fair value through profit or loss on initial recognition.

Financial assets are classified in this category of held for trading if acquired principally for the

purpose of selling in the short-term. Derivatives are also categorized as financial assets held for

trading unless they are designated as hedges. Financial assets that meet one of the following

criteria are designated as at fair value through profit or loss on initial recognition:

(a) Hybrid (combined) contracts; or

(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

(c) They are managed and their performance is evaluated on a fair value basis, in accordance

with a documented risk management or investment strategy.

B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are

recognized and derecognized using trade date accounting.

C. Financial assets at fair value through profit or loss are initially recognized at fair value.

Related transaction costs are expensed in profit or loss. These financial assets are subsequently

remeasured and stated at fair value, and any changes in the fair value of these financial assets

are recognized in profit or loss.


A. Available-for-sale financial assets are non-derivatives that are either designated in this category

or not classified in any of the other categories.

B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and


C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs.

These financial assets are subsequently remeasured and stated at fair value, and any changes in

the fair value of these financial assets are recognized in other comprehensive income.

Investments in equity instruments that do not have a quoted market price in an active market

and whose fair value cannot be reliably measured or derivatives that are linked to and must be

settled by delivery of such unquoted equity instruments are presented in ‗financial assets

measured at cost‘.


Accounts receivable are loans and receivables originated by the entity. They are created by the

entity by selling goods or providing services to customers in the ordinary course of business.

Accounts receivable are initially recognized at fair value and subsequently measured at amortized

cost using the effective interest method, less provision for impairment. However, short-term

accounts receivable without bearing interest are subsequently measured at initial invoice amount as

effect of discounting is immaterial.

(9) Impairment of financial assets

A. The Company assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more events that

occurred after the initial recognition of the asset (a ‗loss event‘) and that loss event (or events)

has an impact on the estimated future cash flows of the financial asset or group of financial

assets that can be reliably estimated.

295

B. The criteria that the Company uses to determine whether there is objective evidence of

impairment loss is as follows:

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

(b) A breach of contract, such as a default or delinquency in interest or principal payments;

(c) The Company, for economic or legal reasons relating to the borrower‘s financial difficulty,

granted the borrower a concession that a lender would not otherwise consider;

(d) It becomes probable that the borrower will enter bankruptcy or other financial

reorganization;

(e) The disappearance of an active market for that financial asset because of financial

difficulties;

(f) Observable data indicating that there is a measurable decrease in the estimated future cash

flows from a group of financial assets since the initial recognition of those assets, although

the decrease cannot yet be identified with the individual financial asset in the group,

including adverse changes in the payment status of borrowers in the group or national or

local economic conditions that correlate with defaults on the assets in the group;

(g) Information about significant changes with an adverse effect that have taken place in the

technology, market, economic or legal environment in which the issuer operates, and

indicates that the cost of the investment in the equity instrument may not be recovered; or

(h) A significant or prolonged decline in the fair value of an investment in an equity

instrument below its cost.

C. When the Company assesses that there has been objective evidence of impairment and an

impairment loss has occurred, accounting for impairment is made as follows according to the

category of financial assets:

(a) Financial assets measured at amortized cost


carrying amount and the present value of estimated future cash flows discounted at the

financial asset‘s original effective interest rate, and is recognized in profit or loss. If, in a

subsequent period, the amount of the impairment loss decreases and the decrease can be

related objectively to an event occurring after the impairment loss was recognized, the

previously recognized impairment loss is reversed through profit or loss to the extent that

the carrying amount of the asset does not exceed its amortized cost that would have been at

the date of reversal had the impairment loss not been recognized previously. Impairment

loss is recognized and reversed by adjusting the carrying amount of the asset directly.

(b) Financial assets measured at cost


carrying amount and the present value of estimated future cash flows discounted at current

market return rate of similar financial asset, and is recognized in profit or loss.

Impairment loss recognized for this category shall not be reversed subsequently.

Impairment loss is recognized by adjusting the carrying amount of the asset through the

use of an impairment allowance account.

(c) Available-for-sale financial assets


acquisition cost (less any principal repayment and amortization) and current fair value, less

any impairment loss on that financial asset previously recognized in profit or loss, and is

296

reclassified from ‗other comprehensive income‘ to ‗profit or loss‘. If, in a subsequent

period, the fair value of an investment in a debt instrument increases, and the increase can

be related objectively to an event occurring after the impairment loss was recognized, then

such impairment loss is reversed through profit or loss. Impairment loss of an investment

in an equity instrument recognized in profit or loss shall not be reversed through profit or

loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the

asset through the use of an impairment allowance account.

(10) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to receive the cash flows

from the financial asset expire.

(11) Construction contracts

A. IAS 11, ‗Construction Contracts‘, defines a construction contract as a contract specifically

negotiated for the construction of an asset. If the outcome of a construction contract can be

estimated reliably and it is probable that this contract would make a profit, contract revenue

should be recognized by reference to the stage of completion of the contract activity, using the

percentage-of-completion method of accounting, over the contract term. Contract costs are

expensed as incurred. The stage of completion of a contract is measured by the proportion of

contract costs incurred for work performed to date to the estimated total costs for the contract.

An expected loss where total contract costs will exceed total contract revenue on a construction

contract should be recognized as an expense as soon as such loss is probable. If the outcome of

a construction contract cannot be estimated reliably, contract revenue should be recognized

only to the extent of contract costs incurred that it is probable will be recoverable.

B. Contract revenue should include the revenue arising from variations from the original contract

work, claims and incentive payments that are agreed by the customer and can be measured

reliably.

C. The excess of the cumulative costs incurred plus recognized profits (less recognized losses)

over the progress billings on each construction contract is presented as an asset within ‗due

from customers for contract work‘. While, the excess of the progress billings over the

cumulative costs incurred plus recognized profits (less recognized losses) on each construction

contract is presented as a liability within ‗due to customers for contract work‘.

(12) Investments accounted for under the equity method / subsidiary and associates

A. Subsidiaries are all entities (including special purpose entities) over which the Company has

the power to govern the financial and operating policies. In general, control is presumed to

exist when the parent owns, directly or indirectly through subsidiaries, more than half of the

voting power of an entity. The Company accounts for investments in subsidiaries under the

equity method in the non-consolidated financial statements.

B. Inter-company transactions, balances and unrealised gains or losses on transactions between

companies and subsidiaries are eliminated. Accounting policies of subsidiaries have been

adjusted where necessary to ensure consistency with the policies adopted by the Company.

C. The Company‘s share of its subsidiary‘ post-acquisition profits or losses is recognized in

profit or loss, and its share of post-acquisition movements in other comprehensive income is

recognized in other comprehensive income. When the Company‘s share of losses in an

associate equals or exceeds its interest in the associate, including any other unsecured

receivables, the Company recognizes losses in ownership interests.

297

D. Associates are all entities over which the Company has significant influence but not control.

In general, it is presumed that the investor has significant influence, if an investor holds,

directly or indirectly 20 percent or more of the voting power of the investee. Investments in

associates are accounted for using the equity method and are initially recognized at cost.

E. The Company‘s share of its associates‘ post-acquisition profits or losses is recognized in

profit or loss, and its share of post-acquisition movements in other comprehensive income is

recognized in other comprehensive income. When the Company‘s share of losses in an

associate equals or exceeds its interest in the associate, including any other unsecured

receivables, the Company does not recognize further losses, unless it has incurred legal or

constructive obligations or made payments on behalf of the associate.

F. When changes in an associate‘s equity that are not recognized in profit or loss or other

comprehensive income of the associate and such changes not affecting the Company‘s

ownership percentage of the associate, the Company recognizes change in ownership

interests in the associate in ‗capital surplus‘ in proportion to its ownership.

G. Unrealized gains on transactions between the Company and its associates are eliminated to

the extent of the Company‘s interest in the associates. Unrealized losses are also eliminated

unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies of associates have been adjusted where necessary to ensure consistency

with the policies adopted by the Company.

H. In the case that an associate issues new shares and the Company does not subscribe or

acquire new shares proportionately, which results in a change in the Company‘s ownership

percentage of the associate but maintains significant influence on the associate, then ‗capital

surplus‘ and ‗investments accounted for under the equity method‘ shall be adjusted for the

increase or decrease of its share of equity interest. If the above condition causes a decrease

in the Company‘s ownership percentage of the associate, in addition to the above adjustment,

the amounts previously recognized in other comprehensive income in relation to the associate

are reclassified to profit or loss proportionately on the same basis as would be required if the

relevant assets or liabilities were disposed of.

I. In accordance with the ―Rules Governing the Preparation of Financial Statements by

Securities Issuers‖, the period‘s income and other comprehensive income in the

non-consolidated financial statements should be the same to the allocation amount of the

period‘s income and comprehensive income attributable to the owners of the parent

company‘s in the consolidated financial statements. The owners‘ equity in the

non-consolidated financial statements should be the same as the owners‘ equity attributable to

the owners of the parent company in the consolidated financial statements.


A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during

the construction period are capitalized.

B. Subsequent costs are included in the asset‘s carrying amount or recognized as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the

item will flow to the Company and the cost of the item can be measured reliably. The

carrying amount of the replaced part is derecognized. All other repairs and maintenance are

charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are

depreciated using the straight-line method to allocate their cost over their estimated useful

lives. 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 must be depreciated separately.

298

D. The assets‘ residual values, useful lives and depreciation methods are reviewed, and adjusted

if appropriate, at each financial year-end. If expectations for the assets‘ residual values and

useful lives differ from previous estimates or the patterns of consumption of the assets‘ future

economic benefits embodied in the assets have changed significantly, any change is

accounted for as a change in estimate under IAS 8, ―Accounting Policies, Changes in

Accounting Estimates and Errors‖, from the date of the change. The estimated useful lives of

property, plant and equipment are as follows:

Buildings 35 ~ 50 years

Machinery 3 ~ 10 years

Transportation equipment 3 ~ 10 years

Office equipment 3 ~ 5 years


An investment property is stated initially at its cost and measured subsequently using the cost

model. Except for land, investment property is depreciated on a straight-line basis over its

estimated useful life of 50 years.

(15) Intangible assets

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful

life of 3 to 5 years.

(16) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where

there is an indication that they are impaired. An impairment loss is recognized for the amount by

which the asset‘s carrying amount exceeds its recoverable amount. The recoverable amount is the

higher of an asset‘s fair value less costs to sell or value in use. When the circumstances or reasons

for recognizing impairment loss for an asset in prior years no longer exist or diminish, the

impairment loss is reversed. The increased carrying amount due to reversal should not be more

than what the depreciated or amortized historical cost would have been if the impairment had not

been recognized.

(17) Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings

are subsequently stated at amortized cost; any difference between the proceeds (net of transaction

costs) and the redemption value is recognized in profit or loss over the period of the borrowings

using the effective interest method.

(18) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in

the ordinary course of business from suppliers. They are recognized initially at fair value and

subsequently measured at amortized cost using the effective interest method. However, short-term

accounts payable without bearing interest are subsequently measured at initial invoice amount as

effect of discounting is immaterial.

(19) Financial liabilities at fair value through profit or loss

A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading

or financial liabilities designated as at fair value through profit or loss on initial recognition.

Financial liabilities are classified in this category of held for trading if acquired principally

for the purpose of repurchasing in the short-term. Derivatives are also categorized as

financial liabilities held for trading unless they are designated as hedges.

299

B. Financial liabilities at fair value through profit or loss are initially recognized at fair value.

Related transaction costs are expensed in profit or loss. These financial liabilities are

subsequently remeasured and stated at fair value, and any changes in the fair value of these

financial liabilities are recognized in profit or loss.

(20) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the

contract is discharged or cancelled or expires.

(21) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when


settle on a net basis or realize the asset and settle the liability simultaneously.

(22) Financial guarantee contracts

A financial guarantee contract is a contract that requires the Company to make specified payments

to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when

due in accordance with the original or modified terms of a debt instrument. A financial guarantee

contract is initially recognized at its fair value adjusted for transaction costs on the trade date.

After initial recognition, the financial guarantee is measured at the higher of the initial fair value

less cumulative amortization and the best estimate of the amount required to settle the present

obligation on each balance sheet date.

(23) Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into

and are subsequently remeasured at their fair value.

(24) Employee benefits

A. Short-term employee benefits

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

expected to be paid in respect of service rendered by employees in a period and should be

recognized as expenses in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expenses when

they are due on an accrual basis. Prepaid contributions are recognized as an asset to the

extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans

i) Net obligation under a defined benefit plan is defined as the present value of an amount

of pension benefits that employees will receive on retirement for their services with the

Company in current period or prior periods. The rate used to discount is determined by

using interest rates of high-quality corporate bonds that are denominated in the

currency in which the benefits will be paid, and that have terms to maturity

approximating the terms of related pension liability; when there is no deep market in

high-quality corporate bonds, the Company uses interest rates of government bonds (at

the balance sheet date) instead.

ii) Remeasurement arising on defined benefit plans are recognized in other comprehensive

income in the period in which they arise and are recorded as retained earnings.

iii) Past service costs are recognized immediately in profit or loss.

300

C. Employees‘ bonus and directors‘ and supervisors‘ remuneration

Employees‘ bonus and directors‘ and supervisors‘ remuneration are recognized as expenses and

liabilities, provided that such recognition is required under legal or constructive obligation and

those amounts can be reliably estimated. Any difference between the resolved amounts and the

subsequently actual distributed amounts is accounted for as changes in estimates.

(25) Employee share-based payment

For the equity-settled share-based payment arrangements, the employee services received are

measured at the fair value of the equity instruments granted at the grant date, and are recognized as

compensation cost over the vesting period, with a corresponding adjustment to equity. The fair

value of the equity instruments granted shall reflect the impact of market vesting conditions and

non-market vesting conditions. Compensation cost is subject to adjustment based on the service

conditions that are expected to be satisfied and the estimates of the number of equity instruments

that are expected to vest under the non-market vesting conditions at each balance sheet date. And

ultimately, the amount of compensation cost recognized is based on the number of equity

instruments that eventually vest.

(26) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit

or loss, except to the extent that it relates to items recognized in other comprehensive income

or items recognized directly in equity, in which cases the tax is recognized in other

comprehensive income or equity.

B. The current income tax charge is calculated on the basis of the tax laws enacted or

substantively enacted at the balance sheet date in the countries where the Company and its

subsidiaries operate and generate taxable income. Management periodically evaluates

positions taken in tax returns with respect to situations in accordance with applicable tax

regulations. It establishes provisions where appropriate based on the amounts expected to be

paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained

earnings and is recorded as income tax expense in the year the stockholders resolve to retain

the earnings.

C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

non-consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that

have been enacted or substantially enacted by the balance sheet date and are expected to

apply when the related deferred tax asset is realized or the deferred income tax liability is

settled.

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable

profit will be available against which the temporary differences can be utilized. At each

balance sheet date, unrecognized and recognized deferred tax assets are reassessed.

E. Current tax assets and liabilities are offset and the net amount reported in the balance sheet

when there is a legally enforceable right to offset the recognized amounts and there is an

intention to settle on a net basis or realize the asset and settle the liability simultaneously.

Deferred tax assets and liabilities are offset on the balance sheet when the entity has the

legally enforceable right to offset current tax assets against current tax liabilities and they are

levied by the same taxation authority on either the same entity or different entities that intend

to settle on a net basis or realize the asset and settle the liability simultaneously.

301

F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting

from research and development expenditures, to the extent that it is possible that future

taxable profit will be available against which the unused tax credits can be utilised.

(27) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

B. Where the Company repurchases the Company‘s equity share capital that has been issued, the

consideration paid, including any directly attributable incremental costs (net of income taxes)

is deducted from equity attributable to the Company‘s equity holders. Where such shares are

subsequently reissued, the difference between their book value and any consideration

received, net of any directly attributable incremental transaction costs and the related income

tax effects, is included in equity attributable to the Company‘s equity holders.

(28) Dividends

Dividends are recorded in the Company‘s financial statements in the period in which they are

approved by the Company‘s shareholders. Cash dividends are recorded as liabilities.

(29) Revenue recognition

The Company provides construction services. Revenue from delivering services is recognized

under the percentage-of-completion method when the outcome of services provided can be

estimated reliably. The stage of completion of a service contract is measured by the proportion of

contract costs incurred for services performed as of the financial reporting date to the estimated

total costs for the service contract. If the outcome of a service contract cannot be estimated reliably,

contract revenue should be recognized only to the extent that contract costs incurred are likely to

be recoverable.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these non-consolidated financial statements requires management to make critical

judgments in applying the Company‘s accounting policies and make critical assumptions and estimates

concerning future events. Assumptions and estimates may differ from the actual results and are

continually evaluated and adjusted based on historical experience and other factors. Such assumptions

and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year; and the related information is addressed below:

Critical accounting estimates and assumptions

A. Realisability of deferred tax assets

Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will

be available against which the deductible temporary differences can be utilized. Assessment of the

realisability of deferred tax assets involves critical accounting judgements and estimates of the

management, including the assumptions of expected future sales revenue growth rate and profit rate,

tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic

environment, industry environment, and laws and regulations might cause material adjustments to

deferred tax assets.

The Company‘s recognized deferred tax assets amounted to $437,647 as of December 31, 2015.

302

B. Calculation of net defined benefit liabilities

When calculating the present value of defined pension obligations, the Company must apply

judgements and estimates to determine the actuarial assumptions on balance sheet date, including

discount rates and future salary growth rate. Any changes in these assumptions could significantly

impact the carrying amount of defined pension obligations.

As of December 31, 2015, the carrying amount of net defined benefit liabilities was $2,362,122.

C. Financial assets—fair value measurement of unlisted stocks without active market

The Company assesses the impairment of an investment of financial instruments as soon as there is

any indication that it might have been impaired and its carrying amount cannot be recoverable. The

Company assesses the recoverable amounts of financial assets without active market based on the

present value of expected cash dividends receivable from the investee and future cash flows from

the disposal of the investee, with present value of similar financial instruments at balance sheet date,

and analyses the reasonableness of related assumptions.

As of December 31, 2015, the Company recognized financial assets measured at cost, net of

impairment loss, amounting to $539,980.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

A. The Company transacts with a variety of financial institutions all with high credit quality to

disperse credit risk, so it expects that the probability of counterparty default is remote.

B. Details of the Company‘s cash and cash equivalents pledged to others as collateral are provided

in Note 8.

(2) Financial assets at fair value through profit or loss – current

A. The Company recognized, net gain (loss) of $52,928 and ($7,737) for the years ended

December 31, 2015 and 2014, respectively.


Cash on hand and petty cash 23,849$ 20,462$ 21,637$

Checking accounts and demand deposits 1,071,107 2,012,618 941,740

Time deposits 87,601 2,546,202 3,722,252

1,182,557$ 4,579,282$ 4,685,629$


Current items:

Financial assets held for trading

Mutual funds 136,455$ 1,118,986$ 431,674$

Non-hedging derivatives 23,349 55,191 31,086

159,804 1,174,177 462,760

Valuation adjustment of financial assets

held for trading5,528)( 304 471

Total 154,276$ 1,174,481$ 463,231$

Finacial liablities held for trading

Non-hedging derivatives $ 1,694 $ 14,437 19,503$

303

B. As of December 31, 2015, December 31, 2014, and January 1, 2014, the trading items and

contract information of derivatives are as follows:

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of

import or export proceeds. However, these forward foreign exchange contracts are not adopting

the hedging accounting because these do not conform to all the conditions.

C. Due to the global financial crisis in year 2008, listed (TSE and OTC) stocks amounting to

$68,651 which were initially classified as ―financial assets at fair value through profit or loss‖

were reclassified to ―available-for-sale financial assets‖ on July 1, 2008, in accordance with

paragraph 50 (c) of IAS 39. The relevant information is set forth below:

(a) The above reclassified assets which have not yet been disposed of were as follows:

Contract Period

Foreign exchange swap contract (6 items) JPY 550,000,000 2015.09.02~2016.06.23


buy (2 items)

USD 35,000,000 2015.11.30~2016.03.02

Forward exchange contract-buy (1 item) CHF 1,000,000 2015.11.30~2016.01.07

Forward exchange contract-buy (3 items) EUR 8,000,000 2015.12.03~2016.01.07

Contract Period


sell (10 items)

USD 50,207,000 2013.07.22~2015.05.26

Foreign exchange swap contract (1 item) AUD 780,000 2014.06.18~2015.04.17


December 31, 2015

Contract Amount

December 31, 2014

Contract Amount

Contract Period

Forward exchange contract-buy (1 item) GBP 1,000,000 2013.09.13~2014.09.17

Forward exchange contract-buy (3 items) JPY 400,000,000 2013.11.21~2014.02.25

Forward exchange contract-sell (2 items) SGD 2,000,000 2013.07.18~2014.01.27

Forward exchange contract-buy (5 items) CHF 9,000,000 2013.07.10~2014.09.15


sell (5 items)

USD 3,775,000 2013.07.22~2015.03.24


buy (1 item)

CHF 1,000,000 2013.10.22~2014.03.03

Foreign exchange swap contract (4 items) USD 29,500,000 2013.09.24~2014.08.12


January 1, 2014

Contract Amount


Book value/Fair value Book value/Fair value Book value/Fair value

Listed (TSE or OTC)

stocks86,070$ 121,467$ 135,046$

304

(b) The changes in fair value of the above listed stocks that were recognized in profit or loss and

other comprehensive income were $0 and ($35,397), respectively, for the year ended

December 31, 2015, and were $0 and ($13,579), respectively, for year ended December 31,

2014. And the accumulated total changes in fair value of the above listed stocks that were

recognized in profit or loss and other comprehensive income before January 1, 2014 were $0

and $66,395, respectively.

(c) If the above listed stocks had not been reclassified to ―available-for-sale financial assets‖ on

July 1, 2008, the gain (loss) from change in fair value of those assets should have been

recognized for the following periods:


The amounts that the Company recognized profit or loss in other comprehensive income due to the

changes in fair value were ($90,644) and ($74,184) for the years ended December 31, 2015 and

2014, respectively.

(4) Financial assets measured at cost

A. According to the Company‘s intention, its investment in stocks should be classified as

available-for-sale financial assets. However, as these investments are not traded in active

markets, the fair value of the investment cannot be measured reliably. The Company classified

those stocks as ‗financial assets measured at cost‘.

B. As the operating results of investee companies accounted for under the cost method had

deteriorated, their net worth has declined significantly. The Company expects that the

probability of a recovery in its net worth is remote. As a result, loss on decline in market value

of $30,576 and $81,521 were recognized for the years ended December 31, 2015 and 2014,

respectively, which shown in non-consolidated statements of comprehensive income are as

follows:

C. As of December 31, 2015, December 31, 2014 and January 1, 2014, no financial assets

measured at cost held by the Company were pledged to others.



Listed (TSE or OTC) stocks 35,397)($ 13,579)($


Current items:


Foreign bonds 120,865 45,325 -

Valuation adjustment 60,740 132,994 174,381

377,033$ 371,518$ 370,594$


Non-current items:

Unlisted stocks 1,025,200$ 1,025,200$ 946,000$

Accumulated impairment 485,220)( 454,644)( 373,123)(

539,980$ 570,556$ 572,877$


Other gains and losses

Impairment loss 30,576$ 81,521$

305

(5) Notes and accounts receivable

(6) Construction in progress

As of December 31, 2015, December 31, 2014, and January 1, 2014, the retentions relating to

construction contracts amounted to $0, $0 and $0, respectively; the advances received before the

related construction work is performed amounted to $0, $398,817 and $0, respectively.

(7) Prepayments

(8) Investments accounted for under the equity method


Notes receivable -$ 21$ 3,250,915$

Accounts receivable 3,111,333 2,044,791 1,183,159

Less: Allowance for bad debts 335)( 42)( 100,900)(

3,110,998$ 2,044,770$ 4,333,174$


Aggregate costs incurred

plus recognised profits

(less recognised losses)

245,744,358$ 211,267,523$ 198,894,104$

Less: progress billings 232,508,489)( 203,392,880)( 195,662,574)(

Net balance sheet position

for construction in progress

13,235,869$ 7,874,643$ 3,231,530$

Presented as:

Due from customers for

contracts work

18,543,107$ 13,957,407$ 5,906,355$

Due to customers for

contracts work 5,307,238)( 6,082,764)( 2,674,825)(

13,235,869$ 7,874,643$ 3,231,530$


Prepayment for materials 1,446,858$ 2,150,524$ 1,292,652$

Prepayment for construction in

progress 69,464 170,864 615,522

Overpaid sales tax 312,829 144,002 60,464

Others 264,874 135,856 74,832

2,094,025$ 2,601,246$ 2,043,470$

2015 2014

At January 1 11,064,278$ 9,474,692$

Addition of investments accounted

for under equity method

40,360 1,175,699

Share of profit or loss of investments


1,037,002 747,892

Earnings distribution of investments


672,461)( 673,019)(

Changes in capital surplus 21,687 21,621

Changes in other equity items 66,724)( 317,393

At December 31 11,424,142$ 11,064,278$

306

A. Subsidiary

(a) The basic information of the subsidiaries that are material to the Company is as follows:

Investments under equity method December 31, 2015 December 31, 2014 January 1, 2014

Subsidiaries

E&C Engineering Corp. 797,452$ 761,356$ 625,626$

Resources Engineering Service Inc. 285,891 293,884 277,616

Advanced Control & System Inc. 251,792 248,803 248,310

GRQ Investments Corp. 2,486,323 2,471,455 2,465,249

Innovest Investment Corp. 1,060,390 1,103,048 132,494

KD Holding Corp. 2,595,013 2,509,932 2,420,767

CTCI(Thailand) Co., Ltd. 122,884 121,518 99,837

CTCI Machinery Corp. 438,862 444,575 262,455

Sinogal-waste Services Co., Ltd. 34,550 29,414 28,740

CTCI Singapore Pte. Ltd. - 172,269 173,101

CTCI and Partners Company Limited 11,664 13,538 14,413

CTCI Overseas (BVI) Co., Ltd. 2,525,557 2,288,814 2,141,154

CTCI Engineering & Construction

Sdn. Bhd. 48,266 15,164 13,383

CTCI Americas, Inc. 7,597 7,096 6,240

CCJV P1 Engineering & Construction

Sdn. Bhd. 199,105 32,862 -

Associates

Pan Asia Corp. 558,796 550,550 565,307

11,424,142$ 11,064,278$ 9,474,692$

Other non-current liabilities

Subsidiaries

CTCI Arabia Ltd. 679,584)($ 689,310)($ 507,187)($

CTCI Singapore Pte. Ltd. 87,179)( - -

766,763)($ 689,310)($ 507,187)($


E&C Engineering Corp. Taiwan 97.09% 97.09% 97.09% Subsidiaries Equity method

GRQ Investments Corp. " 100.00% 100.00% 100.00% " "

Innovest Investment Corp. " 100.00% 100.00% 100.00% " "

KD Holding Corp. " 58.46% 59.32% 60.67% " "

CTCI Machinery Corp. " 100.00% 100.00% 100.00% " "

CTCI Overseas (BVI) Co.,

Ltd. BVI 100.00% 100.00% 100.00%

" "

CTCI Arabia Ltd. Arabia 50.00% 50.00% 50.00% " "

Shareholding ratio

Company name

Principal place

of business

Nature of

relationship

Methods of

measurement

307

(b) The summarized financial information of the subsidiaries that are material to the Company

is as follows:

Balance sheet


Current assets 2,978,289$ 2,595,553$ 2,432,909$



Non-current liabilities 234,467)( 244,916)( 202,536)(

Total net assets 820,214$ 783,036$ 639,397$

Share in associate's net assets 796,346$ 760,250$ 620,791$

Carrying amount of the associate 797,452$ 761,356$ 625,626$

E&C Engineering Corp.


Current assets 157,174$ 174,537$ 198,092$


Current liabilities 178,151)( 176,583)( 172,540)(

Non-current liabilities 2,391,620)( 2,548,729)( 2,705,563)(

Total net assets 2,508,039$ 2,493,151$ 2,479,710$

Share in associate's net assets 2,508,039$ 2,493,151$ 2,479,710$

Carrying amount of the associate 2,486,323$ 2,471,455$ 2,465,249$

GRQ Investments Corp.


Current assets 64,767$ 147,607$ 77,079$

Non-current assets 1,023,096 961,247 61,036

Current liabilities 94)( 94)( 233)(

Non-current liabilities 5,901)( - -

Total net assets 1,081,868$ 1,108,760$ 137,882$

Share in associate's net assets 1,081,868$ 1,108,760$ 137,882$

Carrying amount of the associate 1,060,390$ 1,103,048$ 132,494$

Innovest Investment Corp.

308


Current assets 514,494$ 331,043$ 633,275$


Current liabilities 18,276)( 40,554)( 53,266)(

Non-current liabilities 366)( 1,195)( 3,846)(

Total net assets 4,438,954$ 4,231,476$ 3,992,247$



KD Holding Corp.


Current assets 1,591,301$ 1,733,144$ 1,572,101$




Total net assets 457,777$ 443,162$ 262,569$



CTCI Machinery Corp.


Current assets 26,219$ 25,560$ 24,230$


Current liabilities 128)( 89)( 50)(

Total net assets 2,438,420$ 2,201,677$ 2,054,017$



CTCI Overseas (BVI) Co., Ltd.


Current assets 2,037,003$ 650,224$ 1,853,107$




Total net assets 1,359,169)($ 1,378,619)($ 1,014,374)($

Share in associate's net assets 679,584)($ 689,310)($ 507,187)($

Carrying amount of the associate 679,584)($ 689,310)($ 507,187)($

CTCI Arabia Ltd.

309



Revenue 4,344,867$ 3,784,999$

Profit for the period from

continuing operations 135,937 114,348

Other comprehensive income, net

of tax 13,487)( 35,379


Dividends received from associates 80,672$ 6,892$

E&C Engineering Corp.


Revenue 329,380$ 319,804$




of tax 10,969)( 6,022)(



GRQ Investments Corp.


Revenue 53,008)($ 15,639)($


continuing operations 55,825)( 16,598)(


of tax 11,087)( 1,381)(

Total comprehensive income 66,912)($ 17,979)($

Dividends received from associates -$ 11,166$

Innovest Investment Corp.


Revenue 731,917$ 710,984$




of tax 3,763 25,837



KD Holding Corp.

310

B. Associate

(a) The basic information of the associate that are material to the Company is as follows:

(b) The summarized financial information of the associates that are material to the Company is

as follows:

Balance sheet


Revenue 2,328,074$ 2,083,696$




of tax 9,830 8,737



CTCI Machinery Corp.


Revenue -$ -$


CTCI Overseas (BVI) Co. Ltd.


Revenue 2,548,590$ 970,807$

Total comprehensive income (loss) 71,562$ 291,413)($

CTCI Arabia Ltd.


Pan Asia Corp. Taiwan 34.27% 34.27% 34.27% Associates Equity method

Shareholding ratio

Company name

Principal place

of business

Nature of

relationship

Methods of

measurement


Current assets 3,321,154$ 2,744,321$ 2,786,280$




Total net assets 1,630,569$ 1,604,252$ 1,671,514$



Pan Asia Corp.

311


C. For information on the Company‘s subsidiaries, please refer to Note 4 (3) in the Company‘s

consolidated financial statements for the year ended December 31, 2015.

D. Under the equity method, the Company recognized investment income and other

comprehensive income of $68,661 for the year ended December 31, 2014, from Pan Asia Corp.,

CTCI Engineering & Construction Co., Ltd., CTCI and Partners Company Limited, CCJV P1

Engineering & Construction Sdn. Bhd. and CTCI Overseas (BVI) Corp., and its subsidiaries.

Under the equity method, the Company recognized investment income and other

comprehensive income of $180,597 for the year ended December 31, 2015, from Pan Asia

Corp., CTCI Engineering & Construction Co., Ltd., CTCI and Partners Company Limited,

CCJV P1 Engineering & Construction Sdn. Bhd., MIEI Industrial Sdn. Bhd. that invest by

Innovest Investment Corp. and CTCI Malaysia Sdn. Bhd. and CTCI Overseas (BVI) Corp., and

its subsidiaries.

The amounts are recognized according to the financial statements audited by other independent

accountants.


Revenue 5,395,210$ 5,393,763$




of tax 14,520)( 1,779)(



Pan Asia Corp.

312



Transportation

equipment

Office

equipment Others Total

At January 1, 2015

Cost 127,228$ 124,799$ 347,313$ 48,229$ 54,808$ 139,057$ 841,434$

Accumulated depreciation - 60,897)( 284,847)( 36,703)( 48,911)( 55,229)( 486,587)(

127,228$ 63,902$ 62,466$ 11,526$ 5,897$ 83,828$ 354,847$

2015

Opening net book

amount

127,228$ 63,902$ 62,466$ 11,526$ 5,897$ 83,828$ 354,847$

Additions - - 27,619 8,931 575 5,040 42,165

Disposals - - 27)( - - - 27)(

Depreciation charge - 2,388)( 32,430)( 5,404)( 3,336)( 9,060)( 52,618)(

Closing net book

amount 127,228$ 61,514$ 57,628$ 15,053$ 3,136$ 79,808$ 344,367$


Cost 127,228$ 124,799$ 357,303$ 56,830$ 53,378$ 141,437$ 860,975$


127,228$ 61,514$ 57,628$ 15,053$ 3,136$ 79,808$ 344,367$

313

1. The Company‘s buildings include major building components which are depreciated over 35~50 years.

2. No capitalization of borrowing interests attributable to the property, plant and equipment for the years ended December 31, 2015 and

2014.

3. No property, plant and equipment were pledged to others as collaterals for the years ended December 31, 2015 and 2014.


Transportation

equipment

Office

equipment Others Total

At January 1, 2014

Cost 127,228$ 124,799$ 334,122$ 47,282$ 54,308$ 139,057$ 826,796$


127,228$ 66,290$ 66,903$ 13,930$ 8,742$ 93,123$ 376,216$

2014

Opening net book

amount

127,228$ 66,290$ 66,903$ 13,930$ 8,742$ 93,123$ 376,216$

Additions - - 31,186 1,930 500 - 33,616

Disposals - - 26)( - - - 26)(

Depreciation charge - 2,388)( 35,597)( 4,334)( 3,345)( 9,295)( 54,959)(

Closing net book

amount 127,228$ 63,902$ 62,466$ 11,526$ 5,897$ 83,828$ 354,847$


Cost 127,228$ 124,799$ 347,313$ 48,229$ 54,808$ 139,057$ 841,434$


127,228$ 63,902$ 62,466$ 11,526$ 5,897$ 83,828$ 354,847$

314


A. Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:


At January 1, 2015

Cost 115,692$ 75,983$ 191,675$


115,692$ 41,212$ 156,904$

2015





Cost 115,692$ 75,983$ 191,675$


115,692$ 39,890$ 155,582$


At January 1, 2014

Cost 115,692$ 75,983$ 191,675$


115,692$ 42,534$ 158,226$

2014





Cost 115,692$ 75,983$ 191,675$


115,692$ 41,212$ 156,904$

For the year ended

December 31, 2015

For the year ended

December 31, 2014

Rental revenue from the lease of the

investment property 6,392$ 6,392$

Direct operating expenses arising from the

investment property that generated

rental income in the period 2,131$ 2,131$

Direct operating expenses arising from the

investment property that did not

generate rental income in the period -$ -$

315

B. The fair value of the investment property held by the Company as of December 31, 2015 and

2014 were $708,946 and $783,792, respectively. The above fair values are based on the

valuation of market trading prices of similar property belonging to close proximities.

(11) Other non-current assets

(12) Short-term borrowings


(14) Other payables


Long-term receivables 48,460$ 150,727$ 476,923$

Restricted bank deposits 88,951 59,795 57,015

Refundable deposits 203,283 199,460 190,284

Others 85,658 63,366 62,656

426,352$ 473,348$ 786,878$



Mizuho Bank, Ltd. 299,000$ 0.86% -

The Bank of Tokyo-Mitsubishi UFJ 527,000 0.88% -

Bank SinoPac 300,000 0.87% -

Taipei Fubon Commercial Bank 300,000 0.85% -

HSBC 700,000 0.83%~0.86% -

2,126,000$


Materials payable 4,677,119$ 7,269,937$ 7,204,924$

Sub-contract costs payable 3,701,132 3,086,259 2,002,810

8,378,251$ 10,356,196$ 9,207,734$


Accrued payroll 982,411$ 933,653$ 866,181$

Accrued employee bonuses,

directors' and supervisors'

remuneration 70,111 64,844 103,815

Accrued insurance 50,198 51,055 50,736

Accrued pension 20,418 21,648 21,951

Accrued temporary equipment - - 75,587

Others 302,344 227,498 168,008

1,425,482$ 1,298,698$ 1,286,278$

316

(15) Other current liabilities

As of December 31, 2015, due to the accumulated cost was greater than the accumulated capital

injection, the joint venture was recognized in ―other current liabilities‖.

(16) Other non-current liabilities

(17) Pensions

A. Defined benefit pension plan

(a) The Company has a defined benefit pension plan in accordance with the Labor Standards

Law, covering all regular employees‘ service years prior to the enforcement of the Labor

Pension Act on July 1, 2005 and service years thereafter of employees who chose to

continue to be subject to the pension mechanism under the Law. Under the defined benefit

pension plan, two units are accrued for each year of service for the first 15 years and one

unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits

are based on the number of units accrued and the average monthly salaries and wages of the

last 6 months prior to retirement. The Company contributes monthly an amount equal to 2%

of the employees‘ monthly salaries and wages to the retirement fund deposited with Bank of

Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the

Company would assess the balance in the aforementioned labor pension reserve account by

the end of December 31, every year. If the account balance is insufficient to pay the pension

calculated by the aforementioned method, to the employees expected to be qualified for

retirement next year, the Company will make contributions to cover the deficit by next

March.

(b) The amounts recognized in the balance sheet are as follows:


Joint venture 969,912$ 1,096,463$ -$

Receipt in advance 155,868 107,016 103,457

Others 19,115 1,651 605

1,144,895$ 1,205,130$ 104,062$


Net defined benefit liabilities 2,362,122$ 2,401,801$ 2,545,430$

Deposits received 108,090 77,936 45,704

Investment accounted for

under

766,763 689,310 507,187

equity method (Credit)

Others 83,708 85,689 87,625

3,320,683$ 3,254,736$ 3,185,946$


Present value of defined

benefit obligations

3,583,229$ 3,589,763$ 3,698,515$

Fair value of plan assets 1,221,107)( 1,187,962)( 1,153,085)(

Net defined benefit liability 2,362,122$ 2,401,801$ 2,545,430$

317

(c) Movements in net defined benefit liabilities are as follows:

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company‘s and

domestic subsidiaries‘ defined benefit pension plan in accordance with the Fund‘s annual

investment and utilisation plan and the ―Regulations for Revenues, Expenditures, Safeguard

and Utilisation of the Labor Retirement Fund‖ (Article 6: The scope of utilisation for the

Fund includes deposit in domestic or foreign financial institutions, investment in domestic or

foreign listed, over-the-counter, or private placement equity securities, investment in

domestic or foreign real estate securitization products, etc.). With regard to the utilisation of

the Fund, its minimum earnings in the annual distributions on the final financial statements

shall be no less than the earnings attainable from the amounts accrued from two-year time

deposits with the interest rates offered by local banks. If the earning is less than

aforementioned rates, government shall make payment for the deficit after authorized by the

Regulator. The Company has no right to participate in managing and operating that fund and

Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability





3,683,709 1,210,533)( 2,473,176

Remeasurements:

Change in financial assumptions 54,952 - 54,952

Experience adjustments 61,976 9,263)( 52,713

116,928 9,263)( 107,665


Paid pension 217,408)( 71,418 145,990)(


Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability





3,796,712 1,174,994)( 2,621,718

Remeasurements:

Experience adjustments 4,542)( 5,396)( 9,938)(


Paid pension 202,407)( 66,526 135,881)(


318

hence the Company is unable to disclose the classification of plan asset fair value in

accordance with IAS 19 paragraph 142. The constitution of fair value of plan assets as of

December 31, 2015 and 2014 is given in the Annual Labor Retirement Fund Utilisation

Report announced by the government.

(e) The principal actuarial assumptions used were as follows:

Assumptions regarding future mortality experience are set based on actuarial advice in

accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit

obligation is affected. The analysis was as follows:

The sensitivity analysis above is based on other conditions that are unchanged but only one

assumption is changed. In practice, more than one assumption may change all at once. The

method of analysing sensitivity and the method of calculate net pension liability in the

balance sheet are the same.

(f) Expected contributions to the defined benefit pension plans of the Company for the year

ended December 31, 2016 amounts to $72,405.

B. Defined contribution pension plan

(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined

contribution pension plan (the ―New Plan‖) under the Labor Pension Act (the ―Act‖),

covering all regular employees with R.O.C. nationality. Under the New Plan, the Company

and its domestic subsidiaries contribute monthly an amount based on 6% of the employees‘

monthly salaries and wages to the employees‘ individual pension accounts at the Bureau of

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of

employment.

(b) The pension costs under defined contribution pension plans of the Company for the years

ended December 31, 2015 and 2014 were $115,601 and $112,697, respectively.


Discount rate 1.70% 1.90%

Future salary increases 3.00% 3.00%

Increase 1% Decrease 1% Increase 1% Decrease 1%

December 31, 2015


defined benefit obligation 262,210)($ 295,567$ 251,530$ 229,046)($

December 31, 2014


defined benefit obligation 274,122)($ 310,440$ 266,336$ 241,360)($

Discount rate Future salary increases

319

(18) Share-based payment-employee compensation

A. As of December 31, 2015 and 2014, the Company‘s share-based payment arrangements were as

follows:

B. The above employee stock options are set forth below:

(a) The first plan of employee stock options was already complete.

(b) The second plan of employee stock options was already complete.

As a result of employee stock options exercised based on the exercise price of NT$14.30, the

outstanding capital stock increase amounted to 991,000 shares and capital surplus-common

stock amounted to $4,266 for the year ended December 31, 2014. Each warrant could

subscribe to 1,000 shares of common stock.


Quantity

granted

Contract

period

Vesting

conditions


stock options

2007.09.28 16,000

units



stock options

2008.08.27 21,000

units



stock options

2009.07.08 21,000

units



stock options

2010.06.18 22,000

units


Weighted-average Weighted-average

No. of exercise price No. of exercise price

Stock options units (in dollars) units (in dollars)


beginning of period - - 1,071.00 NT$14.60




Options outstanding


Options exercisable



2015 2014

320

(c) The third plan of employee stock options was already complete.

As a result of employee stock options exercised based on the exercise price of NT$20.60

and NT$21.30, the outstanding capital stock increase amounted to 1,542,250 shares and




(d) Details of the fourth plan of employee stock options outstanding as of December 31, 2015


As a result of employee stock options exercised based on the exercise price of NT$24.56 and

NT$25.60, the outstanding capital stock increase amounted to 2,035,000 shares and









Options waived 161.50)( - 10.75)( -



Options outstanding


Options exercisable



2015 2014






Options waived 18.25)( - 37.00)( -



Options outstanding


Options exercisable



2015 2014

321

C. The weighted-average stock price of stock options at exercise dates for the years ended


D. As of December 31, 2015, December 31, 2014 and January 1, 2014, the range of exercise


NT$14.60～NT$26.00, respectively; the weighted-average remaining contractual period was as

follows:

E. For the stock options granted before January 1, 2008 with compensation cost accounted for


Black-Scholes option-pricing model. The information is as follows:

F. For the stock options granted after January 1, 2008 with compensation cost accounted for using

the fair value method, their fair value on the grant date is estimated using the Black-Scholes

option-pricing model. The information is as follows:



stock options- - -

Second plan of

employee stock- - 0.66 years


stock options- 0.50 years 1.50 years

Fourth plan of

employee stock0.50 years 1.50 years 2.50 years

Type of


Exercise

price

Expected

price

volatility

rate

Expected

vesting

period

Expected

dividend

yield

rate

Risk free

interest

rate

Fair value

per unit

First plan of

employee stock

options

2007.9.28 NT$ 25.3 NT$ 25.3 37.04% 4.5 years 0% 2.57% NT$ 8.77

Type of

arrangement

Grant

date

Stock

price

Exercise

price

Expected

price

volatility

rate

Expected

vesting

period

Expected

dividend

yield

rate

Risk free

interest

rate

Fair value

per unit

Second plan of

employee stock

options

2008.8.27 NT$ 21.9 NT$ 21.9 36.05% 4.5 years 0% 2.41% NT$ 7.37

Third plan of

employee stock

options

2009.7.08 NT$ 28.9 NT$ 28.9 36.45% 4.5 years 0% 0.94% NT$ 9.13

Fourth plan of

employee stock

options

2010.6.18 NT$ 32.8 NT$ 32.8 36.22% 4.5 years 0% 0.93% NT$ 10.30

322

G. Expenses incurred on share-based payment transactions are shown below:

(19) Share capital

A. As of December 31, 2015 and 2014, the Company‘s authorized capital was $9,000,000,

(including 800,000 thousand shares reserved for employee stock options), and the paid-in

capital was $7,611,076 consisting of 761,107,598 shares with a par value of NT$10 per share.

All proceeds from shares issued have been collected.

Movements in the number of the Company‘s ordinary shares outstanding are as follows:

Note: The number of the Company‘s ordinary shares outstanding which was held by its

subsidiaries had not been reduced.

B. Treasury shares

(20) Capital surplus

A. Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of

par value on issuance of common stocks and donations can be used to cover accumulated

deficit or to issue new stocks or cash to shareholders in proportion to their share ownership,

provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and



Equity-settled -$ 5,266$

For the year ended

December 31, 2015 (Note)

For the year ended

December 31, 2014 (Note)

At January 1 757,530,348 747,434,298

Employee stock options

exercised 3,577,250 10,096,050

At December 31 761,107,598 757,530,348

Name of investors Reason for reacquisition Number of shares Book value

Subsidiary-Sino Environmental Services

Corp.

To maintain


1,028 $ 10

Subsidiary-Innovest Investment Corp. " 344,436 3,241


December 31, 2015



Corp.

To maintain


1,028 $ 10



December 31, 2014



Corp.

To maintain


1,028 $ 10



January 1, 2014

323

Exchange Law requires that the amount of capital surplus to be capitalized mentioned above

should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to

cover accumulated deficit unless the legal reserve is insufficient.

B. Change of Capital surplus is as follows:

C. Please refer to Note 6 (18) for the capital reserve – employee stock options.

(21) Retained earnings

A. In accordance with the Company‘s Articles of Incorporation, 10% of the Company‘s annual net

income, after paying all taxes and dues and deducting losses of prior years, if any, should be set

aside as legal reserve, except when the legal reserve is over total assets. Subsequently, when the

reduction in equity is reversed, the Company may return the special reserve to undistributed

earnings in the current year. The remaining balance and the cumulative undistributed earnings

from prior years are called disposable cumulative undistributed earnings. The net income after

legal reserve shall be allocated as follows:

(a) At least 2% of the balance as employees‘ bonus;

(b) 2% of the balance as remuneration to directors and supervisors; and

(c) After paying employees‘ bonus and remuneration to directors and supervisors, the remaining

balance may be distributed as stockholders‘ dividends.




At January 1, 2015 2,737,464$ 5,043$ 184,615$ 296,048$ 3,303$ 3,560$ 3,230,033$

Employee stock options exercised by - - 19,556 - - - 19,556

subsidiary


common stock

- - - - 819)( - 819)(

Employee stock options granted - - - 2,950 - - 2,950

Employee stock options exercised 78,021 - - 32,038)( - - 45,983

Employee stock options revoked - - - 1,296)( - 1,296 -

At December 31, 2015 2,815,485$ 5,043$ 204,171$ 265,664$ 2,484$ 4,856$ 3,297,703$




At January 1, 2014 2,488,469$ 5,043$ 172,654$ 397,019$ 3,986$ 2,914$ 3,070,085$

Employee stock options exercised by - - 11,961 - - - 11,961

subsidiary


common stock

- - - - 683)( - 683)(

Employee stock options granted - - - 15,610 - - 15,610

Employee stock options exercised 248,995 - - 115,935)( - - 133,060

Employee stock options revoked - - - 646)( - 646 -

At December 31, 2014 2,737,464$ 5,043$ 184,615$ 296,048$ 3,303$ 3,560$ 3,230,033$

2015 2014

At January 1 2,432,925$ 1,910,722$

Profit for the period 2,040,610 2,092,199

Set aside as legal reserve 188,212)( 164,173)(

Cash dividends 1,698,089)( 1,498,449)(

Reversal of special reserve 9,876 -

Remeasurement on post employment benefit

obligations, net of tax 119,418)( 92,626

At December 31 2,477,692$ 2,432,925$

324

(d) No less than 50% of the remaining balance and the cumulative undistributed earnings from

prior years may be distributed as stockholders‘ dividends, of which at least 20% shall be in

the form of cash dividends, upon the approval of the stockholders.

B. Legal reserve only can be used to cover the losses and issue new stocks or cash dividends

proportionately according to the stock ratio. The latter should be by an amount under 25% of

legal reserve exceeding issued and outstanding capital.

C. The new Taiwan imputation tax system requires that any undistributed current earnings derived

on or after January 1, 1998 of the Company are subject to an additional 10% corporate income

tax if the earnings are not distributed in the following year.

D. Special reserve

(a) In accordance with the regulations, the Company shall set aside special reserve from the

debit balance on other equity items at the balance sheet date before distributing earnings.

When debit balance on other equity items is reversed subsequently, the reversed amount

could be included in the distributable earnings.

(b) The amounts previously set aside by the Company as special reserve on initial application of

IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6,

2012, shall be reversed proportionately when the relevant assets are used, disposed of or

reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the

assets are investment property of land, and reversed over the use period if the assets are

investment property other than land.

E. The appropriaton of 2014 and 2013 earnings had been resolved at the stockholders‘ meeting on

June 22, 2015 and June 26, 2014, respectively. Details are summarized below:

T

F. The appropriation of 2015 earnings had been proposed at the Board of Directors meeting on

March 18, 2016. Details are summarized below:

The appropriation of 2015 earnings had not been resolved at the stockholders‘ meeting until

March 18, 2016.

Amount

Dividends

per share

(in NT dollars) Amount

Dividends

per share

(in NT dollars)

Legal reserve 188,212$ NT$ - 164,173$ NT$ -

Reversal of 9,876)( - - -

special reserve

Cash dividends 1,698,089 2.24 1,498,449 2.00

Total 1,876,425$ NT$ 2.24 1,662,622$ NT$ 2.00

2014 2013

Dividends

per share

Amounts (in NT dollars)

Legal reserve 204,061$ NT$ -

Reversal of special reserve 166)( -

Cash dividends 1,828,815 2.40

Total 2,032,710$ NT$ 2.40

2015

325

G. On June 22, 2015, the abovementioned 2014 earnings appropriation and capitalization of

capital surplus was approved by the Board of Directors with the issue date on August 3, 2015.

In addition, during the Board of Directors in July 13, 2015, since outstanding stocks will be

influenced by convertible bonds and employees‘ share rights, the stockholders approved the

adjustment of the rate of distributed dividends from NT$2.24 per share to NT$2.2334469 per

share.

H. For information relating to employees‘ remuneration (bonuses) and directors‘ and supervisors‘

remuneration, please refer to Note 6(24).

(22) Operating revenue

(23) Expense by nature

(24) Employee benefit expense



Construction contract revenue 41,534,145$ 37,563,575$


Total 42,049,227$ 38,060,203$



Materials 14,352,688$ 14,339,988$

Subcontract costs 11,359,628 11,044,812

Employee benefit expense 4,780,105 4,328,844

Temporary equipment 693,756 517,438

Rental expenses 599,560 491,961

Insurance expenses 44,678 28,304

Travel expenses 264,015 257,770

Depreciation charges on property,

plant and equipment 53,940 56,281

Amortisation on intangible assets 111,929 105,544

Joint ventures 4,213,376 2,309,904

Others 4,384,532 3,298,447

Total 40,858,207$ 36,779,293$

For operating costs For operating expenses Total

Salaries and wages 3,622,137$ 543,317$ 4,165,454$

Labor and health insurance fees 259,311 36,274 295,585

Pension costs 156,731 30,245 186,976

Other personnel expenses 118,382 13,708 132,090

4,156,561$ 623,544$ 4,780,105$


326

As of December 31, 2015 and 2014, Company had 2,780 and 2,777 employees, respectively.

A. According to the Articles of Incorporation of the Company, when distributing earnings, the

Company shall distribute bonus to the employees and pay remuneration to the directors and

supervisors that should be 1.5% to 5% and not be higher than 1.5%, respectively, of the total

distributed amount.

However, in accordance with the Company Act amended in May 20, 2015, a company shall

distribute employee compensation, based on the profit of the current year distributable, in a

fixed amount or a ratio of profits. If a company has accumulated deficit, earnings should be

channeled to cover losses. A company may, by a resolution adopted by a majority vote at a

meeting of board of directors attended by two-thirds of the total number of directors, have the

profit distributable as employees' compensation distributed in the form of shares or in cash; and

in addition thereto a report of such distribution shall be submitted to the shareholders' meeting.

Qualification requirements of employees, including the employees of subsidiaries of the

company meeting certain specific requirements, entitled to receive aforementioned stock or

cash may be specified in the Articles of Incorporation. The Board of Directors of the Company

has approved the amended Articles of Incorporation of the Company on March 18, 2016.

According to the amended articles, a ratio of profit of the current year distributable, after

covering accumulated losses, shall be distributed as employees' compensation and directors‘

and supervisors‘ remuneration. The ratio shall be 1.5% to 5% for employees‘ compensation and

shall not be higher than 1.5% for directors‘ and supervisors‘ remuneration. The amended

articles will be resolved at the shareholders‘ meeting in 2016.

B. For the years ended December 31, 2015 and 2014, employees‘ bonus was accrued at $55,111

and $51,092, respectively; directors‘ and supervisors‘ remuneration was accrued at $15,000 and

$13,752, respectively. The aforementioned amounts were recognized in salary expenses.

The employees‘ compensation and directors‘ and supervisors‘ remuneration were estimated and

accrued based on an amount 1.5% to 5% and not higher than 1.5% of distributable profit of

current year for the year ended December 31, 2015. The employees‘ compensation and the

directors‘ and supervisors‘ remuneration have not been resolved at the shareholders‘ meeting.

The employees‘ compensation will be distributed in the form of shares or cash.

The expenses recognized for the year of 2014 were accrued based on the net income of 2014

for employees‘ compensation of $51,092 and directors‘ and supervisors‘ remuneration of

$13,752, taking into account other factors such as legal reserve. The employees‘ compensation

and directors‘ and supervisors‘ remuneration resolved at the shareholders‘ meeting were

$51,092 and $15,000, respectively. The difference between employees‘ bonus (directors‘ and

supervisors‘ remuneration) as resolved at the shareholders‘ meeting and the amount recognized

in the 2014 financial statements by $1,248, mainly caused by estimate adjustment, had been

adjusted in the profit or loss of 2015.

For operating costs For operating expenses Total

Salaries and wages 3,224,330$ 525,208$ 3,749,538$

Employee stock options 5,266 - 5,266

Labor and health insurance fees 229,892 37,060 266,952

Pension costs 164,030 24,955 188,985

Other personnel expenses 106,591 11,512 118,103

3,730,109$ 598,735$ 4,328,844$


327

Information about employees‘ compensation and directors‘ and supervisors‘ remuneration of

the Company as resolved at the Board of Directors‘ meeting will be posted in the ―Market

Observation Post System‖ at the website of the Taiwan Stock Exchange.

(25) Income tax

A. Components of income tax expense:

B. Reconciliation of differences between financial income and taxable income:



Current tax :

Current tax on profits for the period 338,818$ 265,444$

Adjustments in respect of prior years 12,739 6,880

Total current tax 351,557 272,324

Deferred tax:

Origination and reversal of temporary

differences 80,388 10,581

Tax credit of investment 8,398)( 7,695)(

Total deferred tax 71,990 2,886




Net income before tax calculated by

the legal tax rate 419,038$ 397,413$

Effects from items disallowed by tax regulation 64,261 60,833)(

Prior year income tax underestimate 12,739 6,880

Tax-exempt income 3,957)( 5,448)(

Reduction of expense for R&D investments 8,398)( 7,695)(

Others 60,136)( 55,107)(


328

C. Amounts of deferred tax assets or liabilities as a result of temporary difference are as follows:

January 1

Recognised in

profit or loss

Recognised in other

comprehensive income December 31


Deferred tax assets:

Unrealized construction

loss 16,350$ 1,946$ -$ 18,296$



(holiday leave) 21,358 364 - 21,722

Unrealized exchange loss 3,728 3,325)( - 403

Unrealized loss on

financial instruments 510 - - 510

Unrealized membership

fees of the golf club 918 - - 918

Unrealized labor pension 373,786 25,025)( 18,303 367,064

Others 22,512 10,948)( - 11,564

Subtotal 456,332$ 36,988)($ 18,303$ 437,647$

Deferred tax liabilities:

Unrealized exchange gain 15,253)($ 7,786$ -$ 7,467)($

Unrealized investment

income from foreign

equity investments 224,098)( 51,186)( - 275,284)(

Others 6,571)( - - 6,571)(

Subtotal 245,922)($ 43,400)($ -$ 289,322)($

Total 210,410$ 80,388)($ 18,303$ 148,325$


329

D. As of December 31, 2015, the Company‘s income tax returns through 2013 have been assessed

and approved by the Tax Authority.

E. The Company obtained income tax exemption as follows:

January 1

Recognised in

profit or loss

Recognised in other

comprehensive income December 31


Deferred tax assets:

Unrealized construction

loss 10,852$ 5,498$ -$ 16,350$



(holiday leave) 21,306 52 - 21,358

Unrealized exchange loss 4,193 465)( - 3,728

Unrealized loss on

financial instruments 510 - - 510

Unrealized membership

fees of the golf club 918 - - 918

Unrealized labor pension 398,173 22,698)( 1,689)( 373,786

Others 15,913 6,599 - 22,512

Subtotal 469,035$ 11,014)($ 1,689)($ 456,332$

Deferred tax liabilities:

Unrealized exchange gain 11,922)($ 3,331)($ -$ 15,253)($

Unrealized investment

income from foreign

equity investments 225,892)( 1,794 - 224,098)(

Others 8,541)( 1,970 - 6,571)(

Subtotal 246,355)($ 433$ -$ 245,922)($

Total 222,680$ 10,581)($ 1,689)($ 210,410$


Applicable laws 2015 2014

The Company Regulations governing the application of the

incentive for a five- year exemption from profit-

seeking enterprise income tax to the investments

made by enterprise in the manufacturing industry

and the technical service industry between July 1,

2008 and December 31, 2009

2011.01.01~

2015.12.31

23,277$ 32,048$

Period of

tax exemption



330

F. Unappropriated retained earnings:

As of December 31, 2015, December 31, 2014 and January 1, 2014, the balance of the

imputation tax credit account was $186,080, $203,969 and $301,536 respectively. The

creditable tax rate was 18.47% for 2014 and is estimated to be 20.88% for 2015.

(26) Earnings per share



and before 1997

47,819$ 47,819$ 47,819$


and after 1998

2,429,873 2,385,106 1,862,903

Weighted-average




Profit attributable to the

ordinary shareholders

of the parent 2,040,610$ 758,195 2.69$


Effects of dilutive potential

ordinary shares



Profit attributable to


of the parent plus

assumed conversion

of all dilutive potential

ordinary shares 2,040,610$ 761,863 2.68$


331

(27) Operating leases

The Company leases land and buildings under operating lease agreements. These leases have

terms expiring between 2007 and 2029. The lease expenses recognized for the years ended

December 31, 2015 and 2014 were $599,560 and $491,961, respectively.

The Company‘s future aggregate minimum lease payments under non-cancellable operating leases

are as follows:

Weighted-average




Profit attributable to the


of the parent 2,092,199$ 750,959 2.79$


Effects of dilutive potential

ordinary shares




shareholders of the parent

plus assumed conversion

of all dilutive potential

ordinary shares 2,092,199$ 757,983 2.76$



Not later than one year 279,302$ 279,302$ 279,302$

Later than one year but not 1,396,510 1,396,510 1,396,510

later than five years

Later than five years 2,031,219 2,310,521 2,589,823

3,707,031$ 3,986,333$ 4,265,635$

332

7. RELATED PARTY TRANSACTIONS

Significant transactions and balances with related parties

(1) Sales of services:

A. The rate on the construction contracts entered into with related parties are set through

negotiation by both parties. The collection terms of 30 days were approximately the same

as those with third parties.

B. Innovest Investment Corporation, the subsidiary, invested in Powertec Energy Corporation

which became an associated enterprise on August, 2014. Due to its contracted engineering

with Powertec Energy Corporation, the Company recognized operating revenue of

$126,566 for the seven-month period ended July 31, 2014. As of December 31, 2015 and

2014, the Company recognized total operating revenue amounting to $9,776,664 and

$9,624,895, respectively, notes receivable amounted to $586,246 and $1,411,400 (less

doubtful accounts amounting to $800,000 and $13,288), respectively, and accounts

receivable amounted to $17,328 and $186, respectively.

(2) Other operating revenue

The rate on the human resource support contracts entered into with related parties are set

through negotiation by both parties. The collection terms of 30 days were approximately the

same as those with third parties.

(3) Purchases of services:

The rate on the construction contracts entered into with related parties are set through

negotiation by both parties. The payment terms of 30 days were approximately the same as

those with third parties.



Associates 151,769$ 70,628$

Subsidiaries 34,701 88,306

Entities with significant influence

over the entity 2,256 1,773

Other related parties - 85)(

188,726$ 160,622$



Subsidiaries 38,777$ 49,357$

Associates 7,577 2,682

46,354$ 52,039$



Subsidiaries 3,179,959$ 2,991,439$

Associates 292,916 664,821

Entities with significant influence

over the entity 1,221 -

3,474,096$ 3,656,260$

333

(4) Other operating costs

The rate on the sub-contracting projects contracts entered into with related parties are set

through negotiation by both parties. The payment terms of 30 days were approximately the

same as those with third parties.


(6) Other receivables-related parties (Reclassified from accounts receivable):

As of December 31, 2015, certain accounts receivable from related parties which are not on

regular collection terms, was reclassified to ―other receivables-related parties‖ whose aging is

from 90 to 360 days.

(7) Other receivables-related parties:

Includes advances to related parties for engineering and business travel, etc.

(8) Loans to related parties (shown in other receivables - related parties):

A. Receivables from related parties

B. Interest income

The loans to subsidiaries are repayable within one year and carry interest at 0.765%~1.00% per

annum for the years ended December 31, 2015 and 2014, respectively.





Subsidiaries 11,842$ 19,990$ 284,622$

Associates 17,989 621 -


influence over the entity 693 641 688

30,524$ 21,252$ 285,310$


Subsidiaries 10,904$ 50,605$ 93,090$


Subsidiaries 12,841$ 7,409$ 20,990$

Associates - 4 8

12,841$ 7,413$ 20,998$


Subsidiaries 1,527,850$ 1,547,540$ 2,688,633$




334

(9) Other non-current assets- related parties (Reclassified from accounts receivable):

As of December 31, 2015, certain accounts receivable from related parties which are not on

regular collection terms, was reclassified to ―other non-current assets‖ whose aging is over 360

days.


(11) Other payables

Includes advances to CTCI‘s customs duty.

(12) Progress billings

(13) Rental income

A. Assets leased to related parties are as follows:

B. Rental income


Subsidiaries 48,089$ 150,076$ 476,213$


Subsidiaries 1,684,036$ 1,332,815$ 879,898$

Associates 174,528 189,299 16,134

1,858,564$ 1,522,114$ 896,032$


Subsidiaries 56,991$ 18,555$ 87,843$


influence over the entity 542 - -

57,533$ 18,555$ 87,843$


Subsidiaries 3,502,293$ 18,433,165$ 11,710,753$

Associates 10,237,446 9,998,703 -


influence over the entity 2,229 1,743 3,303

13,741,968$ 28,433,611$ 11,714,056$

Leased assets Lessee December 31, 2015 December 31, 2014 January 1, 2014

Land and buidings Subsidiaries 155,582$ 156,904$ 158,226$


Lessee Rental amount December 31, 2015 December 31, 2014

Subsidiaries-A $268/month/quarterly collection 3,217$ 3,217$

Subsidiaries-B $265/month/quarterly collection 3,175 3,175

Subsidiaries-C $1,135/month/quarterly collection 13,616 13,616

20,008$ 20,008$

335

(14) Rental expense

(15) Guarantees for related parties

As of December 31, 2015, December 31, 2014, and January 1, 2014 the Company had used

guarantees in the amount of $8,624,818, $7,643,205 and $7,771,979, respectively, for related

parties, and guarantees under various construction contracts amounting to $5,977,873,

$7,134,633 and $6,855,989, respectively.

(16) Key management compensation

8. PLEDGED ASSETS

Lessor Leased assets Rental amount 2015 2014

Entities with significant Land / Buildings 8,372$ 8,372$

influence over the entity

Subsidiaries-D Land / Buildings

$23,772/month/

monthly payment

Refundable deposit

of $128,300

285,257 275,707

Subsidiaries-C Land / Buildings/Cars$46/month/ half

year payment- 296

293,629$ 284,375$

For the years ended December 31

$698/month/

semiannual payment


Subsidiaries 21,092,682$ 22,654,977$ 22,837,069$

2015 2014

Salaries and other short-term 84,894$ 92,214$

employee benefits

Post-employment benefits 500 2,133

Share-based payments - 1,027

Other long-term benefits 196 322

85,590$ 95,696$


Pledged assets December 31, 2015 December 31, 2014 January 1, 2014 Purpose

Other non-current assets

Pledged bank deposits 8,025$ 1,547$ 300$ Guarantee for oil expense, bank

guarantee

Refundable deposits 203,283 199,460 190,284 Guarantee for oil expense, rent,

construction contracts

211,308$ 201,007$ 190,584$

Book value

336

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

In addition to those items which have been disclosed in Note 6(27), 7, the significant contingent

liabilities and unrecognized contract commitments of the Company as of December 31, 2015 were as

follows:

(1) Guarantee

A. The Company had outstanding notes payable for security deposits various construction

projects amounting to $1,593,247.

B. The Company had outstanding notes payable for bank financing amounting to $55,786,127.

(2) The Company had unused and outstanding letters of credit of approximately $1,463,626.

(3) The Company had outstanding commitments for construction subcontracts amounting to

$11,543,464.

(4) The Company had a joint procurement project with Mitsubishi Heavy Industries, Ltd. in 1996. The

construction was completed on February 19, 2000 and accepted by the Environmental Protection

Administration (the ―EPA‖) on May 16, 2000. According to the contract, the Company provided

warranty deposit amounting to $141,690 on the materials of the equipment. As the Kaohsiung

County government, the user of the incineration, had a dispute with the operating manufacturer,

the EPB rejected to repay the deposit. The EPA availed of the warranty deposit on February 4,

2009. As a result, the Company had to remit $73,253 to the procurement department of Bank of

Taiwan Co., Ltd. Consequently, the Company took action to cancel the deposit of $141,690 and

filed a lawsuit requiring EPA to repay the $73,253. The EPA indicated that it had repaid $9,299 to

the Company in 2010. Therefore, the Company reduced the lawsuit claim to $63,954 plus interest

of $117 and damage loss of $2,421. The case was reverted back to the Taiwan High Court after

being handled by the Supreme Court. The Taiwan High Court reverted the case back again to the

Supreme Court. Thus, the case is currently pending with the Supreme Court as of December 31,

2015.

According to the Company‘s lawyer, the outcome of the case is still uncertain and it is difficult to

estimate any potential gain or loss on the case.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Please see Note 6(21)F for detailed information about the appropriation of 2015 earnings that had

been resolved at the Board of Directors‘meeting on March 18, 2016.

12. OTHERS

(1) Capital risk management

The Company‘s objectives when managing capital are to safeguard the Company‘s ability to

continue as a going concern in order to provide returns for shareholders and to maintain an

optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital

structure, the Company may adjust the amount of dividends paid to shareholders, return capital

to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on

the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net

debt is calculated as total borrowings (including ‗current and non-current borrowings‘ as shown

in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as

‗equity‘ as shown in the consolidated balance sheet.

337

The gearing ratios as of December 31, 2015, December 31, 2014 and January 1, 2014 were as

follows:

(2) Financial instruments

A. Fair value information of financial instruments

Except for those listed in the table below, the carrying amounts of the Company‘s financial

instruments not measured at fair value (including cash and cash equivalents, notes

receivable, accounts receivable, other receivables, accounts payable, other payables and

long-term borrowings which was included current portion) approximate their fair values.

The fair value information of financial instruments measured at fair value is provided in

Note 12(3).

B. Financial risk management policies

(a) The Company‘s activities expose it to a variety of financial risks: market risk

(including foreign exchange risk, interest rate risk and price risk), credit risk and

liquidity risk. The Company‘s overall risk management programme focuses on the

unpredictability of financial markets and seeks to minimise potential adverse effects

on the Company‘s financial position and financial performance.

(b) Risk management is carried out by a treasury department (Company treasury) under

policies approved by the Board of Directors. Company treasury identifies, evaluates

and hedges financial risks in close co-operation with the Company‘s operating units.

The Board provides written principles for overall risk management, as well as written

policies covering specific areas and matters, such as foreign exchange risk, interest

rate risk, credit risk, use of derivative financial instruments and non-derivative

financial instruments, and investment of excess liquidity.

C. Significant financial risks and degrees of financial risks

(a) Market risk

Foreign exchange risk

i) The Company operates internationally and is exposed to foreign exchange risk

arising from various currency exposures, primarily with respect to the USD and

EUR. Foreign exchange risk arises from future commercial transactions,

recognized assets and liabilities and net investments in foreign operations.

ii) Management has set up a policy to require group companies to manage their

foreign exchange risk against their functional currency. The group companies are

required to hedge their entire foreign exchange risk exposure with the Company

treasury. To manage their foreign exchange risk arising from future commercial

transactions and recognized assets and liabilities, entities in the Company use

forward foreign exchange contracts, transacted with Company treasury. Foreign

exchange risk arises when future commercial transactions or recognized assets or

liabilities are denominated in a currency that is not the entity‘s functional currency.

iii) The Company has certain investments in foreign operations, whose net assets are

exposed to foreign currency translation risk.


Total borrowings 2,126,000$ -$ -$

Total equity 17,019,448$ 17,137,716$ 16,472,113$

Gearing ratio 12.49% - -

338

iv) The Company‘s businesses involve some non-functional currency operations (the

Company‘s and certain subsidiaries‘ functional currency: NTD; other certain

subsidiaries‘ functional currency: USD, RMB, etc.). The information on assets

and liabilities denominated in foreign currencies whose values would be materially

affected by the exchange rate fluctuations is as follows:

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 41,869$ 32.90 1,377,490$

EUR：NTD 8,144 35.94 292,695

JPY：NTD 111,051 0.27 29,984

THB：NTD 1,996 0.91 1,816

RMB：NTD 15,496 4.99 77,325

SEK：NTD 413 3.90 1,611

AUD：NTD 184 24.00 4,416

SGD：NTD 731 23.26 17,003


Monetary items

USD：NTD 4,008 32.90 131,863

EUR：NTD 3,577 35.94 128,557

JPY：NTD 51,727 0.27 13,966

GBP：NTD 12 48.74 585

THB：NTD 4,193 0.91 3,816

SGD：NTD 12 23.26 279

December 31, 2015

339

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 57,459$ 31.62 1,816,854$

EUR：NTD 8,349 38.55 321,854

JPY：NTD 486,926 0.26 126,601

GBP：NTD 75 49.36 3,702

THB：NTD 4,191 0.97 4,065

RMB：NTD 426,123 5.10 2,173,227

SEK：NTD 898 4.09 3,673

CHF：NTD 113 32.06 3,623

AUD：NTD 7 25.96 182

SGD：NTD 1,580 23.99 37,904

CAD：NTD 20 27.33 547


Monetary items

USD：NTD 2,600 31.62 82,212

EUR：NTD 159 38.55 6,129

JPY：NTD 2,668 0.26 694

THB：NTD 959 0.97 930

December 31, 2014

340

v) The unrealised exchange gain (loss) arising from significant foreign exchange variation

on the monetary items held by the Company for the years ended December 31, 2015

and 2014 amounted to $2,635, and $175,301, respectively.

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 151,835$ 29.85 4,532,275$

EUR：NTD 10,641 41.26 439,048

JPY：NTD 498,193 0.29 144,476

GBP：NTD 64 49.45 3,165

THB：NTD 53,875 0.91 49,242

RMB：NTD 303,874 4.94 1,500,530

SEK：NTD 554 4.66 2,582

CHF：NTD 2,099 33.66 70,652

AUD：NTD 3 26.69 80

SGD：NTD 2,365 23.67 55,980

CAD：NTD 71 28.12 1,997


Monetary items

USD：NTD 7,259 29.85 216,681

EUR：NTD 1,122 41.26 46,294

JPY：NTD 53,940 0.29 15,384

CHF：NTD 47 33.66 1,582

THB：NTD 2,612 0.91 2,387

SGD：NTD 10 23.67 237

SAR：NTD 286 7.96 2,277

January 1, 2014

341

vi) Analysis of foreign currency market risk arising from significant foreign exchange

variation:

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 13,775$ -$

EUR：NTD 1% 2,927 -

JPY：NTD 1% 300 -

THB：NTD 1% 18 -

RMB：NTD 1% 773 -

SEK：NTD 1% 16 -

AUD：NTD 1% 44 -

SGD：NTD 1% 170 -


Monetary items

USD：NTD 1% 1,319 -

EUR：NTD 1% 1,286 -

JPY：NTD 1% 140 -

GBP：NTD 1% 6 -

THB：NTD 1% 38 -

SGD：NTD 1% 3 -

December 31, 2015


342

Price risk

The Company is exposed to equity securities price risk because of investments held by the

Company and classified on the non-consolidated balance sheet either as available-for-sale

or at fair value through profit or loss. The Company is not exposed to commodity price risk.

To manage its price risk arising from investments in equity securities, the Company

diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits

set by the Company.

Interest rate risk

The Company‘s interest rate risk arises from borrowings. Borrowings issued at variable

rates expose the Company to cash flow interest rate risk which is partially offset by cash

and cash equivalents held at variable rates. During the years ended December 31, 2015 and

2014, the Company‘s borrowings at variable rate were denominated in NTD.

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 18,169$ -$

EUR：NTD 1% 3,219 -

JPY：NTD 1% 1,266 -

GBP：NTD 1% 37 -

THB：NTD 1% 41 -

RMB：NTD 1% 21,732 -

SEK：NTD 1% 37 -

CHF：NTD 1% 36 -

AUD：NTD 1% 2 -

SGD：NTD 1% 379 -

CAD：NTD 1% 5 -


Monetary items

USD：NTD 1% 822 -

EUR：NTD 1% 61 -

JPY：NTD 1% 7 -

THB：NTD 1% 9 -

December 31, 2014


343

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Company arising from default by

the clients or counterparties of financial instruments on the contract obligations.

According to the Company‘s credit policy, each local entity in the Company is

responsible for managing and analysing the credit risk for each of their new clients before

standard payment and delivery terms and conditions are offered. Internal risk control

assesses the credit quality of the customers, taking into account their financial position,

past experience and other factors.

ii. The credit quality information of financial assets that are neither past due nor

impaired is as follows:

Group 1：Government or state- owned enterprise.

Group 2：Listed companies.

Group 3：The company does not belong to group 1 or group 2.

iii. The ageing analysis of financial assets that were past due but not impaired is as

follows:

iv. Movements on the Company‘s provision for impairment of accounts receivable are

as follows:

i) As of December 31, 2015 and 2014, the Company‘s accounts receivable that were

impaired amounted to $800,335 and $13,330, respectively.


Notes and accounts receivable 2,274,105$ 119,316$ 714,907$

December 31, 2015


Notes and accounts receivable 361,162$ 137,830$ 436,493$

December 31, 2014


Notes and accounts receivable 85,295$ 99,715$ 1,148,185$

January 1, 2014


Notes and accounts receivable

Up to 30 days 15,884$ 1,987$ 753,540$

31 to 90 days 1,526 - 2,531,749

91 to 180 days 14,060 - -

Over 181 days 587,970 2,539,950 -

619,440$ 2,541,937$ 3,285,289$

344

ii) Movements on the Company‘s provision for impairment of accounts receivable are

as follows:

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Company and

aggregated by Company treasury. Company treasury monitors rolling forecasts of

the Company‘s liquidity requirements to ensure it has sufficient cash to meet

operational needs so that the Company does not breach borrowing limits or

covenants on any of its borrowing facilities. Such forecasting takes into

consideration the Company‘s debt financing plans, covenant compliance,

compliance with internal balance sheet ratio targets.

ii. The table below analyses the Company‘s non-derivative financial liabilities and

net-settled derivative financial liabilities into relevant maturity groupings based on

the remaining period at the balance sheet date to the contractual maturity date for

non-derivative financial liabilities and to the expected maturity date for derivative

financial liabilities. The amounts disclosed in the table are the contractual

undiscounted cash flows.

2015 2014

At January 1 13,330$ 100,900$

Reversal of impairment - 87,570)(

Provision for impairment 787,005 -

At December 31 800,335$ 13,330$



Short-term borrowings 2,126,000$ -$


Accounts payable 10,236,815 -

Other payables 1,483,015 -



Notes payable 5,083$ -$




January 1, 2014 Less than 1 year More than 1 year

Notes payable $ 2,100 $ -




December 31, 2015

Commodity swap contracts $ 1,575 $ 119

Less than 3 months

Between 3 months

and 1 year

345

(d) Cash flow risk from variations of rates

There is no significant cash flow risk from variations of rates since accounts payable are

due less than one year.

(3)Fair value information

A. Details of the fair value of the Company‘s financial assets and financial liabilities not

measured at fair value are provided in Note 12(2)A.

B. The different levels that the inputs to valuation techniques are used to measure fair value of

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active where a

market in which transactions for the asset or liability take place with sufficient

frequency and volume to provide pricing information on an ongoing basis. The fair

value of the Company‘s investment in listed stocks and beneficiary certificates is

included in Level 1.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset

or liability, either directly or indirectly. The fair value of the Company‘s investment in

most derivative instruments is included in Level 2.

Level 3: Inputs for the asset or liability that is not based on observable market data.


December 31, 2014

Forward exchange contracts $ 241 $ -

Commodity swap contracts 7,756 6,440

Less than 3 months

Between 3 months

and 1 year


January 1, 2014

Interest rate swaps (net-settled) $ - $ 11,151

Forward exchange contracts 3,423 115

Commodity swap contracts - 4,814

Less than 3 months

Between 3 months

and 1 year

346

C. The following table presents the Company‘s financial assets and liabilities that are measured at

fair value as of December 31, 2015, December 31, 2014, and January 1, 2014.


Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 130,927$ -$ -$ 130,927$


assets

- 23,349 - 23,349

Available-for-sale

financial assets


Total 507,960$ 23,349$ -$ 531,309$



fair value through

profit or loss


liabilities -$ 1,694$ -$ 1,694$


Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 1,119,290$ -$ -$ 1,119,290$


assets

- 55,191 - 55,191

Available-for-sale

financial assets


Total 1,490,808$ 55,191$ -$ 1,545,999$



fair value through

profit or loss


liabilities -$ 14,437$ -$ 14,437$

347

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

(a) The instruments the Company used market quoted prices as their fair values (that is,

Level 1) are listed below by characteristics:

(b) Except for financial instruments with active markets, the fair value of other financial

instruments is measured by using valuation techniques or by reference to counterparty

quotes. The fair value of financial instruments measured by using valuation techniques

can be referred to current fair value of instruments with similar terms and characteristics

in substance, discounted cash flow method or other valuation methods, including

calculated by applying model using market information available at the consolidated

balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper

interest rates quoted from Reuters).

E. If one or more of the significant inputs is not based on observable market data, the instrument

is included in level 3.

F. Specific valuation techniques used to value financial instruments include:

(a) Quoted market prices or dealer quotes for similar instruments.

(b) The fair value of forward foreign exchange contracts is determined using forward exchange

rates at the balance sheet date, with the resulting value discounted back to present value.

(c) Other techniques, such as discounted cash flow analysis, are used to determine fair value

for the remaining financial instruments.

January 1, 2014 Level 1 Level 2 Level 3 Total

Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 432,145$ -$ -$ 432,145$


assets

- 31,086 - 31,086

Available-for-sale

financial assets


Total 802,739$ 31,086$ -$ 833,825$



fair value through

profit or loss


liabilities -$ 19,503$ -$ 19,503$

Listed shares Open-end fund

Market quoted price Closing price Net asset value

348

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

and joint ventures): Please refer to table 3.

D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or

20% of the Company‘s paid-in capital: Please refer to table 4.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of

paid-in capital or more: Please refer to table 5.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Please refer to table 6.

I. Trading in derivative instruments undertaken during the reporting periods: Please refer to

Notes 6(2) and 12(2).

J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in

Mainland China)：Please refer to table 8.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 9.

B. Significant transactions, either directly or indirectly through a third area, with investee

companies in the Mainland Area: None.

Item Value

0 CTCI Corp. CTCI

(Thailand)

CO., Ltd.

Other

receivables-

related

parties

Yes 315,800$ 213,818$ -$ - 2 -$ For

operational

need

-$ - -$ 3,403,890$ 6,807,779$ -

0 CTCI Corp. CTCI Arabia

Ltd.

Other

receivables-

related

parties

Yes 1,024,075 986,850 986,850 0.82%-0.881% 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. CTCI

Machinery

Corp.

Other

receivables-

related

parties

Yes 1,250,000 700,000 541,000 0.88%-1% 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. E & C

Engineering

Corp.

Other

receivables-

related

parties

Yes 200,000 200,000 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -

0 CTCI Corp. Resources

Engineering

Service Inc.

Other

receivables-

related

parties

Yes 400,000 400,000 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -


Engineering &

Construction

Co., Ltd.

Other

receivables-

related

parties

Yes 98,685 98,685 - - 2 - For

operational

need

- - - 3,403,890 6,807,779 -

1 CTCI Overseas

Co., Ltd.

ShangDing

Engineering &

Construction

Co., Ltd.

Other

receivables-

related

parties

Yes 384,506 384,214 230,265 0.919%-0.983% 2 - For

operational

need

- - - 964,929 964,929 -

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

the year ended

December 31,

2015

（Note 3）

Balance at

December 31,

2015

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

CTCI Corporation

Loans to others

December 31, 2015



~349~

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

the year ended

December 31,

2015

（Note 3）

Balance at

December 31,

2015

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

1 CTCI Overseas

Co., Ltd.

Superiority

(Thailand)

Co., Ltd

Other

receivables-

related

parties

Yes 63,407$ 60,086$ 60,086$ 0.929% 2 -$ For

operational

need

-$ - -$ 964,929$ 964,929$ -

1 CTCI Overseas

Co., Ltd.

CIPEC

Construction

Inc.

Other

receivables-

related

parties

Yes 17,852 17,838 17,838 0.936% 2 - For

operational

need

- - - 964,929 964,929 -

1 CTCI Overseas

Co., Ltd.

CTCI Americas,

Inc.

Other

receivables-

related

parties

Yes 39,474 39,474 - - 2 - For

operational

need

- - - 964,929 964,929 -

2 KD Holding Corp. G.D.

Development

Corporation

Other

receivables-

related

parties

Yes 30,000 30,000 29,000 1.60% 2 - For

operational

need

- - - 443,895 1,775,582 -

3 Jing Ding

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Co.,

Ltd.

Other

receivables-

related

parties

Yes 119,002 114,878 114,878 1.755%-2.1% 2 - For

operational

need

- - - 694,500 694,500 -

~350~

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:



Note 2: Fill in the name of account in which the loans are recognised, such as receivables-related parties, current account with stockholders, prepayments, temporary payments, etc.

Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2015.

Note 4:.The numbers filled in for the nature of loans are as follows:

(1) Business association is labeled as “1”

(2) Short-term financing is labeled as “2”.Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of business transactions occurred between the creditor and borrower in the current year.

Note 6: Fill in purpose of loan when nature of loan belongs to short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc.

Note 7: The calculation and amount on ceiling of loans are as follows:

[The company]

(1) The limit on loans granted to a single party shall not exceed 20% of the Company's net assets value.

(2) The ceiling on total loans shall not exceed 40% of the Company's net assets value.


(1) The limit on loans granted to a single party by domestic subsidiaries and overseas subsidiaries shall not exceed 10% and 40% of the Company's net value, respectively.

(2) The ceiling on total loans shall not exceed 40% of the Company's net assets value.Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Govering Loaning of Funds and Making

of Endorsements/Guarantees by public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they

have not yet been appropriated. However, this balance should excluded the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has

authorised the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2,of the “Regulations Governing Loaning of Funds and Making of Endorsements/

Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be

excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

~351~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

0 CTCI Corp. CTCI (Thailand)

Co., Ltd.

3 51,058,344$ 3,143,897$ 3,138,420$ 1,067,364$ -$ 18.44% 102,116,688$ Y N N -

0 CTCI Corp. CTCI Overseas

Co., Ltd.

3 51,058,344 5,698,729 4,514,222 1,154,307 - 26.52% 102,116,688 Y N N -

0 CTCI Corp. Jing Ding

Engineering &

Construction

Co., Ltd.

3 51,058,344 843,615 703,023 79,766 - 4.13% 102,116,688 Y N Y -

0 CTCI Corp. CINDA Engineering

& Construction

Private Limited.

3 51,058,344 2,290,673 2,231,320 503,800 - 13.11% 102,116,688 Y N N -


Engineering &

Construction

Co., Ltd.

3 51,058,344 577,492 561,708 18,847 - 3.30% 102,116,688 Y N Y -

0 CTCI Corp. CTCI Arabia Ltd. 3 51,058,344 5,503,573 5,416,968 4,172,703 - 31.83% 102,116,688 Y N N -

0 CTCI Corp. CTCI Singapore Pte.

Ltd.

2 51,058,344 1,743,479 1,743,479 868,599 - 10.24% 102,116,688 Y N N -

0 CTCI Corp. CTCI Machinery

Corp.

2 51,058,344 371,497 371,497 292,752 - 2.18% 102,116,688 Y N N -

0 CTCI Corp. CIMAS Engineering

Co., Ltd.

3 51,058,344 409,630 32,895 6 - 0.19% 102,116,688 Y N N -

0 CTCI Corp. CTCI Chemical

Corp.

3 51,058,344 22,128 21,563 1,797 - 0.13% 102,116,688 Y N N -

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）

CTCI Corporation

Provision of endorsements and guarantees to others

December 31, 2015

Table 2

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）



~352~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. E&C Engineering

Corp.

2 51,058,344$ 31,431$ 31,431$ -$ -$ 0.18% 102,116,688$ Y N N -

0 CTCI Corp. Universal

Engineering (BVI)

Corporation

3 51,058,344 32,920 32,895 - - 0.19% 102,116,688 Y N N -

0 CTCI Corp. CTCI Malaysia Sdn.

Bhd.

3 51,058,344 1,607,010 1,381,590 90,491 - 8.12% 102,116,688 Y N N -

0 CTCI Corp. CCJV P1 E&C Sdn.

Bhd.

2 51,058,344 657,900 657,900 120,615 - 3.87% 102,116,688 Y N N -

0 CTCI Corp. CB&I-CTCI B.V. 6 51,058,344 253,771 253,771 253,771 - 1.49% 102,116,688 N N N -

1 Advanced

Control &

System Inc.

Century Ahead

Ltd.

2 516,391 19,752 19,737 - - 3.82% 1,032,782 N N N -

2 E&C

Engineering

Corp.

CTCI Machinery

Corp.

5 2,460,642 1,230,407 1,230,407 1,230,407 - 150.01% 4,921,284 N N N -

2 E&C

Engineering

Corp.

Shanghai XuanLi

Trading Co.,

Ltd.

5 2,460,642 64,168 61,944 61,944 - 7.55% 4,921,284 N N Y -

2 E&C

Engineering

Corp.

ShangDing

Engineering &

Construction

Co., Ltd.

5 2,460,642 130,978 117,765 117,765 - 14.36% 4,921,284 N N Y -

2 E&C

Engineering

Corp.

Resources

Engineering

Service Inc.

5 2,460,642 22,803 - - - 0.00% 4,921,284 N N N -

3 CTCI Machinery

Corp.

E&C Engineering

Corp.

5 1,373,331 426,323 426,323 426,323 - 93.13% 2,746,662 N N N -

4 CTCI Chemical

Corp.

CTCI Corp. 4 629,211 18,817 18,817 18,817 - 8.97% 1,258,422 N Y N -

~353~

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

Outstanding

endorsement/

guarantees

amount at

December 31,

2015

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2015

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

4 CTCI Chemical

Corp.

Resources

Engineering

Service Inc.

5 629,211$ 12,766$ -$ -$ -$ 0.00% 1,258,422$ N N N -

4 CTCI Chemical

Corp.

CTCI Machinery

Corp.

5 629,211 230,473 - - - 0.00% 1,258,422 N N N -

5 ShangDing

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Co.,

Ltd.

2 1,314,047 276,051 108,554 - - 24.78% 2,628,094 N N Y -

6 KD Holding

Corp.

G.D.

Development

Corporation

6 8,877,908 640,017 629,076 395,612 - 14.17% 26,633,724 N N N -

7 Resources

Engineering

Service Inc.

E&C Engineering

Corp.

5 920,926 1,760 1,760 1,760 - 0.57% 1,841,852 N N N -

8 CTCI Overseas

Co., Ltd.

CTCI Americas, Inc. 3 7,236,967 50,941 50,941 50,941 - 2.12% 14,473,934 N N N -

8 CTCI Overseas

Co., Ltd.

CTCI Singapore Pte.

Ltd.

3 7,236,967 37,160 13,836 11,069 - 0.57% 14,473,934 N N N -

~354~

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:



Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

(1)Having business relationship.

(2)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(4)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

(5)Mutual guarantee of the trade as required by the construction contract.

(6)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s

“Procedures for Provision of Endorsements and Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on

total amount of endorsements/guarantees provided in the footnote.

[The company]

(1)The limit on endorsements and guarantees granted to a single party shall not exceed 300% of the Company’s net assets value in last financial statements which was reviewed or audited by accountant.

(2)The ceiling on total endorsements and guarantees shall not exceed 600% of the Company’s net assets value in last financial statements which was reviewed or audited by accountant.


(1)The limit on endorsements and guarantees granted to a single party shall not exceed 100% to 300% of the Company's net assets value in last financial statements which was reviewed or audited by accountant.

(2)The ceiling on total endorsements and guarantees shall not exceed 200% to 600% of the Company's net assets value in last financial statements which was reviewed or audited by accountant.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other events involve

endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

~355~

Type of marketable


Number of shares/

denominations

Book value


CTCI Corp. Fund Fuh Hwa China New

Economy Balance



loss-current

1,000,000 10,000$ - 8,740$ -

CTCI Corp. Fund BlackRock Global Fund - US

Basic Value Fund



loss-current

13,372 31,421 - 30,496 -

CTCI Corp. Fund MIRAE ASSET ASIA

GREAT CONSUMER

EQUITY FUND



loss-current

67,708 31,346 - 28,999 -

CTCI Corp. Fund Aberdeen Global-Japanese

Smaller Companies Fund A2

Base Currency Exposure USD



loss-current

40,236 21,532 - 21,141 -

CTCI Corp. Fund BlackRock Global Fund -

European Value Fund A2

USD Hedged



loss-current

24,876 9,204 - 9,206 -

CTCI Corp. Fund Janus Global Life Sciences A

USD



loss-current

16,680 16,372 - 15,797 -

CTCI Corp. Fund Fidelity America A-USD N/A Financial assets at fair


loss-current

23,403 6,580 - 6,934 -

CTCI Corp. Fund Allianz Global Investors

Target IncA TWD



loss-current

1,000,000 10,000 - 9,614 -

136,455 130,927$

Adjustment 5,528)(

130,927$

Footnote

（Note 4）

CTCI Corporation

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

December 31, 2015

Table 3

Securities held by

(Note 1)


securities issuer

(Note 2)

General

ledger account




~356~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Corp. Bonds GUOSEN SECURITIES

OVERSEAS CO. LTD.



5,000,000 25,220$ - 24,991$ Note 5

CTCI Corp. Bonds BP Capital PLC. N/A Available-for-sale


2,000,000 10,132 - 9,716 Note 5

CTCI Corp. Bonds BOC Aviation PTE. LTD. N/A Available-for-sale


2,000,000 9,973 - 9,804 Note 5

CTCI Corp. Bonds Cayman Ton Yi Industrial N/A Available-for-sale


15,000,000 75,540 - 75,126 Note 5

120,865 119,637$

Adjustment 1,228)(

119,637$

CTCI Corp. Common Stock China Steel Chemical Corp. The Company's

President is the

supervisor

Available-for-sale


1,776,916 100,615$ - 189,242$ -

CTCI Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


1,827,629 82,206 - 58,575 -

CTCI Corp. Common Stock CHIYODA The subsidiary is the

Board of director

Available-for-sale


38,000 12,607 - 9,579 -

195,428 257,396$

Adjustment 61,968

257,396$

CTCI Corp. Common Stock Core Pacific City Co., Ltd. N/A Financial assets

measured at cost

- non-current

36,000,000 360,000$ 2.26 190,000$ -

CTCI Corp. Common Stock Utech Solar Corp. The Company is the

Board of director

Financial assets

measured at cost

- non-current

31,920,000 409,200 14.51 96,980 -

CTCI Corp. Common Stock CDIB & Partners

Investment Holding

Corp.

The Company is the

Board of director

Financial assets

measured at cost

- non-current

27,000,000 250,000 2.48 250,000 -

CTCI Corp. Common Stock Metro-consultant Co.,

Ltd.

The Company is the

Board of director

Financial assets

measured at cost

- non-current

300,000 3,000 6.00 3,000 -

CTCI Corp. Common Stock Heng Keng Corp. N/A Financial assets

measured at cost

- non-current

20,000 3,000 5.12 - -

Less: Accumulated

impairment

485,220)( 539,980$

539,980$

~357~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Sino Environmental

Services Corp.

Fund Mega Diamond Money

Market Fund



loss-current

407,439 5,043$ - 5,043$ -

Sino Environmental

Services Corp.



loss-current

7,047,945 103,052 - 103,052 -

Sino Environmental

Services Corp.



loss-current

1,255,209 20,000 - 20,000 -

Sino Environmental

Services Corp.

Common Stock CTCI Corp. The Company Available-for-sale


1,028 37 - 37 -

Sino Environmental

Services Corp.


the Company's

director

Available-for-sale


438,156 11,962 - 11,962 -

Sino Environmental

Services Corp.


President is

the director

Available-for-sale


575,000 18,428 - 18,428 -

Sino Environmental

Services Corp.

Bonds BP Capital PLC N/A Available-for-sale


6,000,000 29,147 - 29,147 Note 5

Sino Environmental

Services Corp.

Bonds BOC Aviation PTE LTD N/A Available-for-sale


6,000,000 29,414 - 29,414 Note 5

Advanced Control &

System Inc.

Fund FSITC Taiwan Money Market N/A Financial assets at fair


loss-current

2,650,762 40,019 - 40,019 -

Advanced Control &

System Inc.



loss-current

1,192,755 19,005 - 19,005 -

Advanced Control &

System Inc.





loss-current

3,243,957 40,127 - 40,127 -

Advanced Control &

System Inc.


the Company's

director

Available-for-sale


825,980 22,549 - 22,549 -

~358~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Advanced Control &

System Inc.


President is

the director

Available-for-sale


737,000 23,621$ - 23,621$ -

Advanced Control &

System Inc.

Bonds BANK OF CHINA LTD

PARIS



6,000,000 28,864 - 28,864 Note 5

Advanced Control &

System Inc.

Bonds SINOCHEM OFFSHORE

CAPITA



6,000,000 29,346 - 29,346 Note 5

E&C Engineering Corp. Fund Capital Money Market Fund N/A Financial assets at fair


loss-current

9,413,950 150,000 - 150,000 -

Innovest Investment Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


277,000 8,878 - 8,878 -

Innovest Investment Corp. Common Stock CTCI Corp. The Company Available-for-sale


344,436 12,348 0.05 12,348 -

Innovest Investment Corp. Common Stock Global Strategic Investment

Inc.


measured at cost

- non-current

283,500 962 0.65 962 -

GRQ Investment Corp. Common Stock CTCI Corp. The Company Available-for-sale


912,170 32,701 0.12 32,701 -

GRQ Investment Corp. Common Stock Advanced Control &

System Inc.

Subsidiary Available-for-sale


324,417 13,301 1.42 13,301 -

GRQ Investment Corp. Common Stock Gintech Energy Corporation. The Company's

President is

the director

Available-for-sale


759,000 24,326 - 24,326 -

GRQ Investment Corp. Fund JPMorgan Investment Funds -

Global Income Fund



loss-current

2,800 14,574 - 14,574 -

GRQ Investment Corp. Fund Schroder ISF Global Dividend N/A Financial assets at fair


loss-current

46,374 14,461 - 14,461 -

~359~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


GRQ Investment Corp. Fund Fidelity Funds - Global

Financial Services Fund



loss-current

18,265 6,531$ - 6,531$ -

GRQ Investment Corp. Fund Invesco Global Leisure Fund N/A Financial assets at fair


loss-current

5,419 6,531 - 6,531 -

GRQ Investment Corp. Fund BlackRock Global Fund -

World Healthscience Fund



loss-current

5,500 6,385 - 6,385 -

GRQ Investment Corp. Fund Taishin 1699 Money Market N/A Financial assets at fair


loss-current

374,378 5,000 - 5,000 -

HD Resources

Management

Corp.

Fund Mega Diamond Money Market

Fund



loss-current

1,705,065 21,103 - 21,103 -

HD Resources

Management

Corp.



loss-current

685,443 10,022 - 10,022 -

HD Resources

Management

Corp.



loss-current

1,066,928 17,000 - 17,000 -

HD Resources

Management

Corp.


the Company's

director

Available-for-sale


435,310 11,884 - 11,884 -


Service Inc.


president is the

director

Available-for-sale


872,000 27,948 - 27,948 -


Service Inc.

Common Stock Global Strategic Investment

Inc.

N/A Financial assets measured at

cost - non-current

567,000 1,924 1.29 1,924 -

~360~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Leading Energy Corp. Fund Mega Diamond Money

Market Fund



loss-current

1,431,550 17,718$ - 17,718$ -

Leading Energy Corp. Fund Prudential Financial Money

Market



loss-current

3,013,752 47,043 - 47,043 -

Leading Energy Corp. Common Stock Taiwan Cement Corp. The president is

the Company's

director

Available-for-sale financial

assets-current

432,280 11,801 - 11,801 -

KD Holding Corp. Fund Capital Money Market Fund N/A Financial assets at fair


loss-current

343,472 5,473 - 5,473 -

KD Holding Corp. Fund Nomura Taiwan Money

Market



loss-current

440,732 7,102 - 7,102 -

KD Holding Corp. Fund CTBC Hwa-win Money

Market Fund



loss-current

3,640,476 39,615 - 39,615 -

KD Holding Corp. Common Stock Taiwan Cement Corp. The president is

the Company's

director

Available-for-sale


179,780 4,908 - 4,908 -

KD Holding Corp. Common Stock Gintech Energy Corporation. The Company's

president is the

director

Available-for-sale


462,000 14,807 - 14,807 -

KD Holding Corp. Common Stock TSC Venture Management.

Inc.


measured at cost

- non-current

270,000 - 5.88 - -

KD Holding Corp. Common Stock TeamWIN Opto-Electronics

Co., Ltd.


measured at cost

- non-current

150,000 475 2.46 475 -

Fortune Energy Corp. Fund FSITC Taiwan Money Market N/A Financial assets at fair


loss-current

232,614 3,512 - 3,512 -

~361~

Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


Fortune Energy Corp. Fund Prudential Financial Money

Market



loss-current

1,089,848 17,012$ - 17,012$ -

Fortune Energy Corp. Fund Taishin 1699 Money Market - Financial assets at fair


loss-current

524,440 7,005 - 7,005 -

CTCI Chemical

Corp.

Fund FSITC Taiwan Money Market - Financial assets at fair


loss-current

530,353 8,007 - 8,007 -

CTCI Chemical

Corp.





loss-current

646,904 8,002 - 8,002 -

CTCI Chemical

Corp.

Fund CTBC Hwa-win Money

Market Fund



loss-current

459,626 5,003 - 5,003 -

CTCI (Thailand) Co., Ltd. Common Stock CHIYODA (Thailand) Co.

Ltd.

- Financial assets

measured at cost

- non-current

3,600 329 9.00 329 -


Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the book value without deduction of allowance for valuation loss of the marketable securities.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Note 5: The book value of bonds denominated in CNY.

~362~

Proceeds

Shares Amounts Shares Amounts Shares Amounts Book value on disposal Amount Shares Amounts

CTCI Corp. Jih Sun Money

Market Fund



loss-current

- N/A - $ - 81,698,302 $ 1,190,000 81,698,302 $ 1,190,477 $ 1,190,000 $ 477 $ - - $ -

CTCI Corp. Paradigm Pion

Money Market

Fund



loss-current

- N/A - - 87,502,570 995,000 87,502,570 995,368 995,000 368 - - -

CTCI Corp. Allianz Global

Investors

Taiwan

Money Market



loss-current

- N/A 53,455,504 657,406 93,347,970 1,150,000 146,803,474 1,808,227 1,807,406 821 - - -

CTCI Corp. Franklin

Templeton

Sinoam Money

Market Fund



loss-current

- N/A 42,632,155 432,091 78,772,958 800,000 121,405,113 1,233,004 1,232,091 913 - - -

CTCI Corp. Capital Money

Market Fund



loss-current

- N/A - - 37,806,792 600,000 37,806,792 600,118 600,000 118 - - -

KD Holding

Corp.

CTBC Hwa-win

Money Market

Fund



loss-current

- N/A - - 38,389,048 416,900 34,748,572 377,481 377,300 181 - 3,640,476 39,600


Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.

Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity

attributable to owners of the parent in the calculation.


Relationship

with

the investor

（Note 2）

Balance as at January 1, 2015

Table 4


2015

CTCI Corporation

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


Current changesAddition（Note 3） Disposal（Note 3）

Investor

Marketable

securities

（Note 1）

General

ledger account

Counterparty

（Note 2）


~363~

Purchases

(sales) Amount

Percentage of total


Percentage of


receivable (payable)

CTCI Corp. CTCI Overseas Co., Ltd. Subsidiary Purchases 850,921$ 2.17% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

319,871)($ ( 3.12%) -


& System Inc.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

378,421)( ( 3.69%) -

CTCI Corp. CTCI Machinery Corp. Subsidiary Purchases 773,507 1.97% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

370,237)( ( 3.61%) -

CTCI Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

145,670)( ( 1.42%) -

HD Resources

Management Corp.

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

84,369)( ( 0.82%) -

HD Resources

Management Corp.

Leading Energy Corp. Subsidiary Purchases 287,941 0.73% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

49,997)( ( 0.49%) -

Leading Energy Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

58,531)( ( 0.57%) -

Fortune Energy Corp. Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

28,713)( ( 0.28%) -

FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction




CTCI Corporation

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more




~364~

Purchases

(sales) Amount

Percentage of total


Percentage of


receivable (payable) FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction




Sino Environmental

Services Corp.

CTCI Chemical

Corp.

Subsidiary Purchases 114,460$ 0.29% Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

22,512)($ ( 0.22%)

CTCI Overseas Co., Ltd. CTCI Corp. The Company (Sales) 850,921)( ( 2.02%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

319,871 8.58% -

Advanced Control

& System Inc.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

378,421 10.15% -

CTCI Machinery Corp. CTCI Corp. The Company (Sales) 773,507)( ( 1.84%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

370,237 9.93% -

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

145,670 3.91% -

Leading Energy Corp. HD Resources

Management Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

49,997 1.34% -

Sino Environmental

Services Corp.

HD Resources

Management Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

84,369 2.26% -

Sino Environmental

Services Corp.

Leading Energy Corp. Subsidiary (Sales) 226,302)( ( 0.54%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

58,531 1.57% -

Sino Environmental

Services Corp.

Fortune Energy Corp. Subsidiary (Sales) 157,987)( ( 0.38%) Standards

selling price

and collection

terms

Negotiated by

both parties

No significant

difference

28,713 0.77% -

CTCI Chemical

Corp.

Sino Environmental

Services Corp.


selling price

and collection

terms

Negotiated by

both parties

No significant

difference

22,512 0.60%

~365~

Table 6

Amount Action taken

CTCI Corp. CTCI Arabia Ltd. Subsidiary 988,619$ Note 1 -$ - -$ -$

CTCI Corp. CTCI Machinery Corp. Subsidiary 541,396 Note 1 - - - -

Sino Environmental Services Corp. CTCI Corp. The Company 145,670 3.53 14,598 Active Collection 34,477 -

Advanced Control & System Inc. CTCI Corp. The Company 378,421 2.27 - - 2,578 -

CTCI Machinery Corp. CTCI Corp. The Company 370,237 2.52 - - - -

CTCI Overseas Co., Ltd. Shang Ding Engineering &



CTCI Overseas Co., Ltd. CTCI Corp. The Company 319,871 3.67 - - - -

Jing Ding Engineering &



Co., Ltd.


Note 1：Other accounts receivable arise from lending capital.

Amount collected

subsequent to the

balance sheet date

Allowance for

doubtful accountsCreditor Counterparty

Relationship

with the counterparty


2015（Note 1） Turnover rate

Overdue receivables

CTCI Corporation

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more




~366~




1 Advanced Control & System Inc. CTCI Corp. 2 Sales revenue 788,023$ Negotiated by

both parties

1.87%



4 Sino Environmental Services Corp. HD Resources Management

Corp.

3 〃 413,198 〃 0.98%

4 〃 Leading Energy Corp. 3 〃 226,302 〃 0.54%

4 〃 Fortune Energy Corp. 3 〃 157,987 〃 0.38%

5 Leading Energy Corp. HD Resources Management

Corp.

3 〃 287,941 〃 0.68%

4 Sino Environmental Services Corp. CTCI Corp. 2 〃 431,272 〃 1.03%

1 Advanced Control & System Inc. 〃 2 Accounts

receivable

378,421 〃 0.92%


4 Sino Environmental Services Corp. 〃 2 〃 145,670 〃 0.35%


0 CTCI Corp. CTCI Arabia Ltd. 1 Other

receivables

988,619 〃 2.40%

0 〃 CTCI Machinery Corp. 1 〃 541,396 〃 1.32%

3 CTCI Overseas Co., Ltd. Shang Ding Engineering


3 〃 230,631 〃 0.56%

6 Jing Ding Engineering &



Co., Ltd.

3 〃 114,878 〃 0.28%

0 CTCI Corp. CTCI Overseas (BVI) Corp.

and its subsidiaries.

1 Progress billings 3,309,692 〃 8.05%

2 CTCI Machinery Corp. CTCI Corp. 2 〃 2,803,170 〃 6.82%

7 Resources Engineering Service Inc. 〃 2 〃 358,170 〃 0.87%

0 CTCI Corp. CTCI Machinery Corp. 1 〃 109,894 〃 0.27%

0 〃 GRQ Investment Corp. 1 Refundable

deposits

128,300 〃 0.31%

Transaction


CTCI Corporation

Significant inter-company transactions during the reporting years



Number


Relationship

(Note 2)

~367~




Transaction

Number


Relationship

(Note 2)

0 CTCI Corp. CTCI (Thailand) Co., Ltd. 1 Guarantee 3,138,420$ Not applicable Not applicable

0 〃 CCJV P1 E&C SDN. BHD. 1 〃 657,900 〃〃

0 〃 CTCI Overseas Co., Ltd. 1 〃 4,514,222 〃〃

0 〃 Jind Ding Engineering &


1 〃 703,023 〃〃

0 〃 CINDA Engineering &

Construction Private

Limited

1 〃 2,231,320 〃〃

0 〃 Shang Ding Engineering


1 〃 561,708 〃〃

0 〃 CTCI Arabia Ltd. 1 〃 5,416,968 〃〃

0 〃 CTCI Singapore Pte. Ltd. 1 〃 1,743,479 〃〃

0 〃 CTCI Machinery Corp. 1 〃 371,497 〃〃

0 〃 CTCI Malaysia Sdn. Bhd. 1 〃 1,381,590 〃〃

0 〃 CB&I-CTCI B.V. 1 〃 253,771 〃〃

2 CTCI Machinery Corp. E&C Engineering Corp. 3 〃 426,323 〃〃

8 Shang Ding Engineering



Co., Ltd.

3 〃 108,554 〃〃

9 E&C Engineering Corp. Shang Ding Engineering


3 〃 117,765 〃〃

9 〃 CTCI Machinery Corp. 3 〃 1,230,407 〃〃

10 KD Holding Corp. G.D. Development Company 3 〃 629,076 〃〃

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.


Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between

subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction;

for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(1)Parent company to subsidiary.

(2)Subsidiary to parent company.

(3)Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on

accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

~368~

Balance as at

December 31, 2015

Balance as at


CTCI Corp. E&C

Engineering

Corp.



power, thermal power,

fire pumped storage

power generation and

others related to

engineering.

$ 456,251 $ 456,251 59,098,624 97.09 $ 797,452 $ 135,937 $ 131,978 A subsidiary


Engineering

Service Inc.


and gas, marbal and

rare；planning, design,

monitor of civil, traffic


mechanical and

electrical equipment.

15,957 15,957 16,765,048 93.14 285,891 627 584 A subsidiary

CTCI Corp. Advanced

Control &

System Inc.

Taiwan Systems planning, design,

integration, and

engineering for various

IT systems etc.

44,409 44,409 11,444,842 48.76 251,792 79,749 38,891 A subsidiary


Corp.

Taiwan General investment. 1,690,000 1,690,000 169,000,000 100.00 2,486,323 110,579 110,076 A subsidiary

CTCI Corp. Innovest

Investment Corp.

Taiwan General investment. 1,140,000 1,100,000 114,000,000 100.00 1,060,390 ( 55,825) ( 71,498) A subsidiary

CTCI Corp. KD Holding Corp. Taiwan General investment. 938,889 938,889 38,457,105 58.46 2,595,013 710,370 416,278 A subsidiary

CTCI Corp. CTCI (Thailand)

Co., Ltd.

Thailand Design and building of


116,894 116,894 1,249,500 49.00 122,884 16,965 8,313 A subsidiary


Corp.

Taiwan Secondary processing

of steel, piping, heat

treatment, manufacture

of pollution control

equipment and non-

destructive testing etc.

293,800 293,800 20,000,000 100.00 438,862 69,347 68,203 A subsidiary

Information on investees (not including investees in Mainland China)




CTCI Corporation

Net profit (loss)



(Note 2(2))

Investment income (loss)

recognised by the Company

for the year ended

December 31, 2015

(Note 2(3)) FootnoteInvestor

Investee



~369~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



CTCI Corp. CTCI Arabia Ltd. Arabia Construction and


storage tanks and

chemical plant.

$ 23,312 $ 23,312 500 50.00 ($ 679,584) $ 71,562 $ 35,781 A subsidiary

CTCI Corp. Sinogal-Waste

Services Corp.


recycling site and


mechanical and

equipment etc.

4,958 4,958 - 30.00 34,550 86,392 25,918 A subsidiary

CTCI Corp. CTCI Singapore Pte.

Ltd.

Singapore Investment and planning


152,254 152,254 5,100,000 100.00 ( 87,179) ( 253,000) ( 253,000) A subsidiary

CTCI Corp. CTCI and Partners

Company Limited




plant.

15,755 15,755 - 40.00 11,664 ( 5,501) ( 2,200) A subsidiary


(BVI) Corp.



308,554 308,554 6,740,000 100.00 2,525,557 306,893 306,893 A subsidiary

CTCI Corp. CTCI Engineering

& Construction

Sdn. Bhd.

Malaysia Wholesale and retail of

information software;

computer equipment

installation and

information processing etc.

4,118 4,118 450,000 60.00 48,266 62,782 37,669 A subsidiary

CTCI Corp. CTCI Americas, Inc. USA Business development, and

related engineering and

planning of construction

projects.

3,217 3,217 100,000 100.00 7,597 208 208 A subsidiary

CTCI Corp. CCJV P1

Engineering &

Construction Sdn.

Bhd.

Malaysia Construction planning. 2,259 1,899 247,500 99.00 199,105 176,894 141,515 A subsidiary

~370~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



CTCI Corp. Pan Asia Corp. Taiwan Input of foreign labor

and technologies,

technical cooperation

with foreign construction

business, and construction

of engineering construction

etc.

$ 71,543 $ 71,543 39,219,509 34.27 $ 558,796 $ 120,783 $ 41,393 An investee under

equity method

$ 10,657,379 $ 1,037,002

GRQ

Investment

Corp.

CTCI Chemical

Corp.

Taiwan Manufacture wholesale,


chemicals.

13,522 13,522 480,661 6.77 $ 14,199 72,451 $ 4,905 A subsidiary

GRQ

Investment

Corp.

KD Holding Corp. Taiwan General investment. 11,270 11,270 243,918 0.37 16,439 710,370 2,448 A subsidiary

GRQ

Investment

Corp.

Resources

Engineering

Service Inc.


and gas, marbal and rare,

planning, design, monitor

of civil, traffic


mechanical and electrical

equipment.

23 23 1,000 0.01 17 627 ( 13) A subsidiary

Innovest

Investment

Corp.

CTCI Chemical Corp. Taiwan Manufacture, wholesale,


chemicals.

32,153 32,153 1,657,207 23.34 48,955 72,451 16,913 A subsidiary

Innovest

Investment

Corp.

KD Holding Corp. Taiwan General investment. 1,374 1,374 32,132 0.05 2,166 710,370 325 A subsidiary

Innovest

Investment

Corp.

E&C

Engineering Corp.



power,thermal power, fire

pumped storage power

generation and others

related to engineering.

11 11 1,000 0.002 13 135,937 4 A subsidiary

Innovest

Investment

Corp.

Powertec Energy

Corp.

Taiwan Basically chemical

industry

power generation, rotation

electric, machinery

manufacturing of electric

power and services of

926,700 926,700 308,900,005 18.18 792,196 ( 581,489) ( 105,728) An investee under

equity method

~371~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



Innovest

Investment

Corp.

MIE INDUSTRIAL

SDN. BHD.


Procurement &

Contruction & Panel

$ 139,885 $ - 9,450,000 21.00 $ 150,277 $ 138,374 $ 18,974 An investee under

equity method

CTCI Machinery

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.

154,744 154,744 6,666,667 10.00 151,501 ( 23,834) ( 858) An investee under

equity method

KD Holding

Corp.

HD Resources

Management

Corp.

Taiwan International trade and

environmental service of

waste disposal,

equipment installation

and mechanical

installation etc.

20,000 20,000 2,000,000 100.00 74,389 26,338 26,338 A subsidiary

KD Holding

Corp.

Leading Energy

Corp.




cogeneration etc.

797,485 993,485 66,640,000 98.00 1,504,251 251,011 245,991 A subsidiary

KD Holding

Corp.

Sino

Environmental

Services Corp.


recycling site and


mechanical and

equipment etc.

339,921 339,921 14,065,936 93.15 780,216 338,612 315,423 A subsidiary

KD Holding

Corp.

Fortune Energy

Corp.




cogeneration etc.

1,012,483 1,012,483 56,249,000 74.999 1,004,303 178,088 133,564 A subsidiary

KD Holding

Corp.

G.D. Development

Company



manufacturing.

189,991 95,491 18,999,000 49.997 214,032 23,401 11,699 An investee which

has a 50% interest

in a joint venture

KD Holding

Corp.

Yuan Ding

Resources

Management Corp.


other environmental



27,000 27,000 2,700,000 60.00 23,399 1,029 617 A subsidiary

~372~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



KD Holding

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.

$ 309,489 $ 309,489 13,333,333 20.00 $ 341,371 ($ 23,834) ($ 1,715) An investee under

equity method

Sino

Environmental

Services Corp.

Leading Energy

Corp.




cogeneration etc.

13,600 17,600 1,360,000 2.00 30,699 251,011 5,020 A subsidiary

Sino

Environmental

Services Corp.

CTCI Chemical

Corp.



chemicals.

24,581 24,581 1,910,241 26.90 56,430 72,451 19,493 A subsidiary

Sino

Environmental

Services Corp.

Sinogal-Waste

Services Corp.


recycling site and


mechanical and

equipment etc.

4,964 4,964 - 30.00 34,550 86,392 25,918 A subsidiary

Sino

Environmental

Services Corp.

Fortune Energy

Corp.




cogeneration etc.

13 13 1,000 0.001 18 178,088 2 A subsidiary

Sino

Environmental

Services Corp.

G.D. Development

Company



manufacturing.

8 8 1,000 0.01 11 23,401 1 An investee which

has a 50% interest

in a joint venture

HD Resources

Management

Corp.

Sino

Environmental

Services Corp.


recycling site and


mechanical and

equipment etc.

53 53 1,000 0.01 56 338,612 ( 6) A subsidiary

HD Resources

Management

Corp.

Yuan Ding Resources

Management

Corp.


other environmental



18,000 18,000 1,800,000 40.00 15,599 1,029 412 A subsidiary

~373~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



CTCI Chemical

Corp.

Chung Ding

Chemical Corp.

Samoa Manufacture participation

and sale of chemicals etc.

$ 314 $ 45,084 10,000 100.00 $ 322 $ 26,107 $ 26,107 A subsidiary

CTCI Overseas

(BVI) Corp.

CTCI Overseas

Co., Ltd.

Hong

Kong

Investment and planning


276,815 276,815 6,740,000 100.00 2,412,322 307,287 307,287 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI Arabia Ltd. Arabia Construction and



plant.

22,610 22,610 500 50.00 ( 679,609) 71,562 35,781 A subsidiary

CTCI Overseas

Co., Ltd.


(BVI) Corp.



1,694 1,694 50,000 100.00 112,403 ( 20,215) ( 20,215) A subsidiary

CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Philippines Construction and



plant.

663 663 10,000 40.00 ( 897) ( 2,497) ( 999) A subsidiary

CTCI Overseas

Co., Ltd.

CIMAS

Engineering Corp.

Vietnam Chemical, petrochemical,

feasibility study &




construction &

commissioning.

26,330 26,330 - 50.00 62,807 11,547 5,774 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI Engineering &

Construction Sdn.

Bhd.



2,879 2,879 300,000 40.00 32,174 62,782 25,113 A subsidiary

CTCI Overseas

Co., Ltd.

CTCI and Partners

Company Limited


maintenance of

refinery, storage

tanks and chemical

plant.

25,585 25,585 3,000,000 60.00 17,497 ( 5,501) ( 3,301) A subsidiary

CTCI Overseas

Co., Ltd.

CINDA

Engineering &

Construction

Private Limited

India Chemical, petrochemical,

feasibility atudy &




construction &

commissioning.

31,022 31,022 8,000,000 100.00 202,896 90 90 A subsidiary

Universal

Engineering

(BVI) Corp.

Superiority


Thailand Investment and building of


151 151 2,156 49.00 (7,381) 7,889 7,889 A subsidiary

~374~

Balance as at

December 31, 2015

Balance as at


Net profit (loss)



(Note 2(2))



for the year ended

December 31, 2015


Investee



Superiority

(Thailand) Co.,

Ltd.

CTCI Thailand

Co., Ltd.

Thailand Design and planting of


$ 12,628 $ 12,628 1,300,500 51.00 $ 52,552 $ 16,965 $ 8,652 A subsidiary

Advanced

Control &

System Inc.

Century Ahead Ltd. Samoa Professional investment

company.

25,097 25,097 750,000 100.00 29,551 6,166 6,166 A subsidiary

E&C

Engineering

Corp.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 18,423 72,451 6,695 A subsidiary

Shang Ding

Engineering &

Construction

Co., Ltd.

Shanghai XuanLi

Trading Corp.

China General trade. 23,748 23,748 - 100.00 33,238 4,836 4,836 A subsidiary

Resources

Engineering

Service Inc.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 18,650 72,451 6,695 A subsidiary

CTCI Singapore

Pte. Ltd.

TECA Engineering

Pte. Ltd.

Singapore Design and planning of

engineeing projects.

5,968 5,968 250,000 25.00 1,841 ( 2,798) ( 699) An investee under

equity method

CTCI Engineering

& Construction

SDN. BHD.

CTCI Malaysia SDN.

BHD.



1,357 1,357 150,000 20.00 14,067 48,638 13,739 A subsidiary

CTCI Malaysia

SDN. BHD.

MIE INDUSTRIAL

SDN. BHD.


Procurement &

Construction, Panel

185,537 - 12,600,000 28.00 220,372 138,374 46,279 An investee under

equity method

資料結束列

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding

company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2015’ should fill orderly in the Company’s (public company’s) information on investees and every

directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column.

(2)The ‘Net profit (loss) of the investee for the year ended December 31, 2015’ column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the year ended December 31, 2015’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary

and recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should

confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations.

~375~

Remitted to

Mainland China

Remitted back

to Taiwan

Jing Ding

Engineering &

Construction Co.,

Ltd.

Design, survey, construction

and inspection of various

engineering and construction

projects, plants, machinery

and equipment, and

environmental protection

projects.

$ 342,115 2 $ 313,998 $ - $ - $ 313,998 $ 113,572 100.00 $ 113,572 $ 1,735,818 $ 3,302 Note 3

Shang Ding

Engineering &

Construction Co.,

Ltd.

Design, survey, construction and

inspection of various engineering

and construction projects.

592,787 2 534,974 - - 534,974 3,212 99.44 3,194 475,141 23,530 "

Zhuhai Chung

Ding Chemical

Corp.

Trading of chemical materials. 46,218 2 46,218 - (43,849) - - - - - 47,941 Note 5、6

Advanced Control

& Information

Technologies

Ltd.

Computer technology services. 24,675 2 24,675 - - 24,675 6,172 48.76 3,009 28,171 - Note 4

GranSino

Environmental

Technology Co.,

Ltd.

Consultation and development of

sanitation technology, maintenance

of environmental pollution disposal

equipment, management of

construction, and retail business,

etc.

22,193 1 10,874 - - 10,874 (8,553) 26.88 (2,299) 6,016 3,377 -

Xiang Ding

Environment

Consultant

(Shanghai) Co.,

Ltd.

Technical development, advisory

and service in environmental field;

environmental pollution control

equipment and related parts

wholesale, import and export, etc.

4,147 1 4,147 - - 4,147 2,155 54.85 1,182 8,078 - -

CTCI Corporation

Information on investments in Mainland China



Investee in

Mainland China

Book value of

investments in

Mainland China

as of December

31, 2015

Accumulated

amount

of investment

income

remitted back to

Taiwan as of

December 31,

2015

Table 9

FootnoteMain business activities Paid-in capital

Investment method

（Note 1）

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of January 1,

2015

Accumulated

amount

of remittance

from Taiwan to

Mainland China

as of December

31, 2015

Ownership

held by

the

Company

(direct or

indirect)

Investment income

(loss) recognised

by the Company

for the year ended

December 31, 2015

（Note 2(2)B）

Net income of

investee as of

December 31,

2015

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the year ended

December 31, 2015


~376~

Company name

Accumulated amount of remittance

from Taiwan to Mainland China

as of December 31, 2015

Investment amount approved

by the Investment

Commission of the Ministry

of Economic Affairs

(MOEA) (Note 6)

Ceiling on investments in

Mainland China imposed

by the Investment

Commission of MOEA

CTCI Corp. $ 888,668 $ 953,715 $ 10,211,669

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1)Directly invest in a company in Mainland China..

(2)Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

(3)Others

Note 2: In the ‘Investment income (loss) recognised by the Company for the year ended December 31, 2015’ column:

(1)It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

B.The financial statements that are audited and attested by parent company's accounting firm in R.O.C.

C.Others ( it is recognised based on the financial statements which is not reviewed by independent accountants of Investee Company as the same period).

Note 3: Invested by CTCI Overseas Co., Ltd.

Note 4: Invested by Century Ahead Ltd.

Note 5: Sold in August, 2015.

Note 6: The accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2015 is US $27,231,000

The investment amount approved by the Investment Commission of the Ministry of Economic Affairs is US $28,561,000.

~377~

CTCI CORPORATION

DETAILS OF CASH AND CASH EQUIVALENTS

FOR THE YEAR ENDED DECEMBER 31, 2015


Sheet 1

378

Items Summary Amount

Cash on hand and petty cash 23,849$

Bank deposits :

Checking accounts 8,038

Demand deposits

－USD USD $ 24,437 rate32.8950 803,855

－EUR EUR $ 1,033 rate35.9378 37,124

－JPY JPY $ 95,519 rate 0.2731 26,086

－NTD 151,525

－Others 44,479

1,063,069

Time depostis

－NTD 16,297

－CNY CNY $ 14,276 rate 4.9947 71,304

87,601

1,182,557$

CTCI CORPORATION

DETAILS OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OF LOSS–CURRENT



Sheet 2

379

Financial Commodities

Number of

Shares/Units Par value Amount Costs Price Amount Notes

Mutual funds

Fuh Hwa China New Economy Balance 1,000,000 10.00$ 10,000$ 10,000$ 8.74$ 8,740$

BlackRock Global Fund - US Basic Value

Fund 13,372 2,349.75 31,421 31,421 2,280.61 30,496

MIRAE ASSET ASIA GREAT

CONSUMER EQUITY FUND 67,708 462.95 31,346 31,346 428.29 28,999

Aberdeen Global-Japanese Smaller Companies

Fund A2 Base Currency Exposure USD 40,236 535.14 21,532 21,532 525.44 21,141

BlackRock Global Fund - European Value

Fund A2 USD Hedged 24,876 370.00 9,204 9,204 370.07 9,206

Janus Global Life Sciences A USD 16,680 981.54 16,372 16,372 947.05 15,797

Fidelity America A-USD 23,403 281.16 6,580 6,580 296.29 6,934

Allianz Global Investors Target IncA TWD 1,000,000 10.00 10,000 10,000 9.61 9,614

Subtotal 136,455 130,927

Valuation adjustment 5,528)( -

Non-heding derivatives - - - 23,349 23,349

Total 154,276$ 154,276$

Fair value

CTCI CORPORATION

DETAILS OF ACCOUNTS RECEIVABLE



Sheet 3

380

Client Name Amount Notes

Client :

A Company 2,243,390$

B Company 613,746

Others 254,197

Each individual customer balance did not

exceed 5% of the account balance

3,111,333

Less : Allowance for bad debts 335)(

3,110,998$

CTCI COPORATION

DETAILS OF CONSTRUCTION IN PROGRESS

FOT THE YEAR ENDED DECEMBER 31, 2015


Sheet 4

381

Project No.

Balance at

January 1,

2015 Cost

Project

(loss) gain

Completed

and roll-out

Balance at

December 31,

2015

08 1305 25,904,082$ 82,713$ 53,044$ -$ 26,039,839$

09 0001A 23,182,036 34,072 28,246)( - 23,187,862

11 0789A 18,690,757 7,729,303 449,982 - 26,870,042

03 3456 17,719,833 - - - 17,719,833

12 1000A 11,983,737 6,822,763 768,033 - 19,574,533

11 0570A 9,624,895 157,037 5,268)( - 9,776,664

06 1170 5,990,708 4,874 543 - 5,996,125

14 1717A 397,991 4,484,385 664,166 - 5,546,542

04VKX0088A 5,543,797 265 9,846 - 5,553,908

10 0347A 5,165,444 10,894)( 20,188 - 5,174,738

00 2902 4,899,790 37,066 39,696)( - 4,897,160

13 1500A 977,718 3,136,615 435,009 4,549,342

10 0541A 4,276,358 263,571 253,968)( - 4,285,961

09 0171A 4,163,867 6,876)( 12,306 - 4,169,297

12 0888A 3,722,678 169,540 11,581 - 3,903,799

11 0845A 3,614,029 126,765 35,009 - 3,775,803

13 1336C 2,254,134 1,732,112 236,801)( 3,749,445

10 0523B 3,238,518 58,933 29,916 - 3,327,367

97 2262 3,197,249 250 250)( - 3,197,249

08 1309 2,810,601 - 382,651 3,193,252)( -

13 1515A 3,099,603 774,301 77,968 - 3,951,872

06 1165C 3,023,608 3,316 17,308 - 3,044,232

12 0977A 2,949,552 119,654 119,465)( - 2,949,741

02 3288 2,701,927 263,985 15,912)( - 2,950,000

10 0542A 2,935,531 125,221 83,869)( 2,976,883

08 1301 2,689,821 941 429)( 2,690,333)( -

Other 36,509,259 13,114,193 641,476 1,688,807)( 48,576,121

211,267,523$ 39,224,105$ 2,825,122$ 7,572,392)($ 245,744,358$

Current change

CTCI CORPORATION DETAILS OF INVESTMENTACCOUNTED FOR UNDER THE EQUITY METHOD


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Sheet 5

382

Name

Number of

Shares Amounts

Number of

Shares Amounts

Number of

Shares Amounts

Number of

Shares Ownership Amounts Fair value Collateral

E&C Engineering Corp. 59,098,624 761,356$ - 116,768$ - 80,672)($ 59,098,624 97.09 797,452$ 796,346$ N/A

Resources Engineering Service Inc. 16,765,048 293,884 - - - 7,993)( 16,765,048 93.14 285,891 285,891 〃

Advanced Control & System Inc. 11,444,842 248,803 - 31,913 - 28,924)( 11,444,842 48.76 251,792 477,822 〃

GRQ Investment Corp. 169,000,000 2,471,455 - 99,744 - 84,876)( 169,000,000 100.00 2,486,323 2,508,039 〃

Innovest Investment Corp. 110,000,000 1,103,048 4,000,000 - - 42,658)( 114,000,000 100.00 1,060,390 1,081,868 〃

KD Holding Corp. 38,457,105 2,509,932 - 441,074 - 355,993)( 38,457,105 58.46 2,595,013 6,172,365 〃

CTCI (Thailand) Co., Ltd. 1,249,500 121,518 - 8,313 - 6,947)( 1,249,500 49.00 122,884 122,884 〃

CTCI Machinery Corp. 20,000,000 444,575 -

58,848 - 64,561)( 20,000,000 100.00 438,862 457,777 〃

Sinogal-Waste Service Corp. - 29,414 - 25,918 - 20,782)( - 30.00 34,550 34,550 〃

CTCI Singapore Pte. Ltd. 5,100,000 172,269 - - - 259,448)( 5,100,000 100.00 87,179)( 87,179)( 〃

CTCI and Partners Company Limited - 13,538 - 327 - 2,201)( - 40.00 11,664 11,664 〃

CTCI Overseas (BVI) Corp. 6,740,000 2,288,814 - 306,893 - 70,150)( 6,740,000 100.00 2,525,557 2,438,420 〃

CTCI Engineering & Construction

Sdn. Bhd. 450,000 15,164 - 37,669 - 4,567)( 450,000 60.00 48,266 48,266 〃

CTCI Americas, Inc. 100,000 7,096 - 501 - - 100,000 100.00 7,597 7,597 〃

CCJV P1 Engineering &

Construction Sdn.Bhd. 200,000 32,862 47,500 179,727 - 13,484)( 247,500 99.00 199,105 199,105 〃

Pan Asia Corp. 37,530,631 550,550 1,688,878 35,643 - 27,397)( 39,219,509 34.27 558,796 558,796 〃

CTCI Arabia Ltd. 500 689,310)( - 35,781 - 26,055)( 500 50.00 679,584)( 679,584)( 〃

10,374,968$ 1,379,119$ 1,096,708)($ 10,657,379$ 14,434,627$

Balance at January 1, 2015 Additions Reductions Balance at December 31, 2015

CTCI CORPORATION

DETAILS OF ACCOUNTS PAYABLE



Sheet 6

383

Client name Amounts Notes

Client :

Alstom Power Japan K.K. 1,276,141$

FORTUNE ELECTRIC CO., LTD. 448,907

Taicheng Machinery Co.,Ltd 388,506

Chung Hsin Electric & Machinery Mfg. Corp. 355,790

TA YA ELECTRIC WIRE & CABLE CO., LTD. 304,526

HUAH RUNG CO., LTD 241,037

TAIWAN JENFORT ENTERPRISE CO.,LTD. 221,864

Shihlin Electric & Engineering Corporation 191,786

ALSTOM Grid GmbH 178,263

Others 4,771,431

Each individual customer balance

did not exceed 2% of the account

balance

8,378,251$

CTCI CORPORATION

DETAILS OF PARTIAL CONSTRUCTION BILLINGS



Sheet 7

384

Project No.

Balance at

January 1,

2015

Additions

(Reductions)

Completed and

roll-out

Balance at

December 31,

2015

08 1305 25,967,230$ 114,262$ -$ 26,081,492$

09 0001A 23,199,120 - - 23,199,120

03 3456 17,686,052 - - 17,686,052

12 1000A 8,538,876 4,261,795 - 12,800,671

11 0789A 14,941,746 7,166,173 - 22,107,919

11 0570A 9,994,224 231,143 - 10,225,367

06 1170 5,999,725 - - 5,999,725

14 1717A 1,109,667 4,560,069 - 5,669,736

04VKX0088A 5,566,794 - - 5,566,794

10 0347A 5,183,951 - - 5,183,951

00 2902 4,603,823 92,391 - 4,696,214

13 1500A 977,718 3,107,595 - 4,085,313

10 0541A 4,244,795 57,354 - 4,302,149

09 0171A 4,215,732 - - 4,215,732

12 0888A 3,629,548 275,762 - 3,905,310

11 0845A 3,572,731 231,000 - 3,803,731

13 1336C 1,172,560 2,494,318 - 3,666,878

10 0523B 3,109,836 71,385 - 3,181,221

97 2262 3,209,438 - - 3,209,438

08 1309 3,193,252 - 3,193,252)( -

13 1515A 2,675,055 1,483,782 - 4,158,837

06 1165C 2,615,852 - - 2,615,852

12 0977A 2,799,385 153,953 - 2,953,338

02 3288 2,722,273 227,015 - 2,949,288

10 0542A 2,909,136 149,934 - 3,059,070

08 1301 2,690,333 - 2,690,333)( -

Other 36,864,028 12,010,071 1,688,807)( 47,185,292

203,392,880$ 36,688,001$ 7,572,392)($ 232,508,489$

CTCI CORPORATION

DETAILS OF OPERATING REVENUE



Sheet 8

385

Items Summary Amounts Notes

Refining and petrochemical

project 18,894,515$

Basic construction 48,656

Resources environmental 21,264,863

Others 1,841,193

42,049,227$

CTCI CORPORATION

DETAILS OF OPERATING COSTS



Sheet 9

386

Items Summary Amounts

Balance at January 1, 2015 -$

Add : Purchasing 14,374,421

Less : transferred to indirect materials 21,733)(

Balance at December 31, 2015 -

Consumption materials 14,352,688

Consumption indirect materials 21,733

Direct labor 2,968,017

Manufacturing expenses 10,533,155

Subcontract costs 11,337,063

Input costs 39,212,656

Estimated project loss at January 1, 2015 96,174)(

Estimated project loss at December 31, 2015 107,623

Operating costs 39,224,105$

CTCI CORPORATION

DETAILS OF MANUFACTURING EXPENSES



Sheet 10

387

Items Summary Amounts

Indirect labor 810,851$

Temporary equipment 693,756

Rental expenses 560,823

Insurance expenses 302,311

Travelling expenses 230,744

Finance costs 113,391

Various amortizations 111,874

Taxes 16,357

Meals expenses 63,858

Employee benefits 48,929

Depreciation charges on property,

plant and equipment 42,099

Utilities expenses 50,139

Repairs and maintenance expenses 25,548

Fuel consumption 36,220

Postage expenses 30,761

Apportion of office 25,207

Photocopier expenses 22,605

Entertainment expenses 15,623

Apportion expenses of joint venture 4,213,376

Other expenses 3,118,683

10,533,155$

CTCI CORPORATION

DETAILS OF OPERATING EXPENSES



Sheet 11

388

Items

General and

administrative

expenses

Research and

development

expenses Total

Payroll expenses 488,511$ 54,806$ 543,317$

Rental expenses 35,796 2,941 38,737

Office supplies expenses 3,183 6 3,189

Travelling expenses 33,215 56 33,271

Utilities expenses 2,465 222 2,687

Insurance expenses 33,659 4,293 37,952

Entertainment expenses 6,783 33 6,816

Donation expenses 4,352 - 4,352

Depreciation charges on

property, plant and equipment 8,752 1,767 10,519

Employee benefits 3,606 905 4,511

Professional service fees 21,223 - 21,223

Office miscellaneous expenses 3,149 283 3,432

Meals expenses 3,801 1,178 4,979

Bad debt expenses 787,197 - 787,197

Miscellaneous expenses 117,193 14,727 131,920

1,552,885$ 81,217$ 1,634,102$

ctci annual report

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