welcome to€¦ · acquisition of property, plant and equipment (233,477) (1,013,593) proceeds from...

See accompanying notes to consolidated interim financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2015 and 2016 NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

MARCH 31, 2015, DECEMBER 31, 2015 AND MARCH 31, 2016

(Expressed in thousands of New Taiwan Dollars)

March 31, 2015

December 31, 2015

March 31, 2016

Assets Amounts ％ Amounts ％ Amounts ％

Current assets:

1100 Cash and cash equivalents (note 6(1)) $ 8,292,813 18 10,314,873 22 9,906,580 22

1125 Available-for-sale financial assets－current (note 6(2)) 7,223,108 15 5,123,705 11 4,102,896 9

1170 Accounts receivable, net (note 6(3)) 6,900,009 15 5,972,808 13 6,496,850 14

1180 Accounts receivable－related parties (notes 6(3) and 7) 11,015 - 10,505 - 5,376 -

1200 Other receivables (note 6(3)) 169,932 - 95,980 - 144,629 -

1210 Other receivables－related parties (notes 6(3) and 7) 1,408,215 3 2,025,053 4 1,807,042 4

1310 Inventories (note 6(4)) 3,681,093 8 3,627,055 8 3,455,652 7

1470 Other current assets 261,878 1 328,697 1 251,756 1

Total current assets 27,948,063 60 27,498,676 59 26,170,781 57

Non-current assets:

1550 Investments accounted for using equity method (note 6(5)) 671,921 1 719,723 1 732,836 2

1600 Property, plant and equipment (notes 6(6) and 7) 17,415,719 37 17,622,414 38 17,753,321 39

1780 Intangible assets 11,462 - 9,653 - 9,049 -

1840 Deferred tax assets 844,066 2 805,190 2 805,190 2

1900 Other non-current assets 67,183 - 64,771 - 66,850 -

Total non-current assets 19,010,351 40 19,221,751 41 19,367,246 43

Total assets $ 46,958,414 100 46,720,427 100 45,538,027 100

March 31, 2015

December 31, 2015

March 31, 2016

Liabilities and Equity Amounts % Amounts % Amounts %

Current liabilities：

2100 Short-term loans (note 6(7)) $ 456,878 1 330,662 1 159,380 -

2170 Accounts payable 1,403,289 4 1,819,677 4 1,479,517 3

2180 Accounts payable－related parties (note 7) 425,342 1 347,625 1 354,409 1

2200 Other payables 1,354,263 3 1,605,938 3 1,210,031 3

2220 Other payables－related parties (note 7) 95,247 - 93,217 - 73,451 -

2230 Current income tax liabilities 162,651 - 85,783 - 85,699 -

2300 Other current liabilities 161,071 - 162,876 - 215,730 -

2322 Current portion of long-term liabilities (note 6(8)) 540,101 1 284,366 1 1,058,840 3

Total current liabilities 4,598,842 10 4,730,144 10 4,637,057 10

Non-current liabilities:

2540 Long-term loans (note 6(8)) 1,287,448 3 2,314,637 5 1,588,259 4

2570 Deferred tax liabilities 1,372,774 3 1,348,727 3 1,348,684 3

2640 Net defined benefit liabilities 1,530,182 3 1,577,063 3 1,581,664 3

2645 Guarantee deposits 50,180 - 48,243 - 53,819 -

Total non-current liabilities 4,240,584 9 5,288,670 11 4,572,426 10

Total liabilities 8,839,426 19 10,018,814 21 9,209,483 20

Equity (notes 6(10)(11)):

3100 Common stock 6,461,655 14 6,461,655 14 6,461,655 14

3200 Capital surplus 21,916,582 47 21,916,582 47 21,916,582 48

3310 Legal reserve 4,240,724 9 4,402,201 10 4,402,201 10

3320 Special reserve 672,510 1 672,510 1 672,510 2

3350 Retained earnings 2,512,190 5 1,784,409 4 1,462,758 3

3400 Other equity 2,315,327 5 1,464,256 3 1,412,838 3

Total equity 38,188,988 81 36,701,613 79 36,328,544 80

Total Liabilities and equity $ 46,958,414 100 46,720,427 100 45,538,027 100


Reviewed only, not audited in accordance with generally accepted auditing standards NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2015 AND 2016 (Expressed in thousands of New Taiwan Dollars, except for loss per share)

For the three-month periods ended

March 31,

2015 2016

Amounts ％ Amounts ％

4000 Operating revenues (note 7) 8,035,658 100 7,659,702 100

5000 Operating costs (notes 6(9)(11) and 7) 7,308,568 91 7,383,697 96

Gross profit 727,090 9 276,005 4

Operating expenses (notes 6(9)(11) and 7):

6100 Selling expenses 165,193 2 131,208 2

6200 Administrative expenses 301,695 4 301,294 4

6000 Total operating expenses 466,888 6 432,502 6

6900 Operating income (loss) 260,202 3 (156,497) (2)

Non-operating income and expenses (notes 6(5)(15)(16)):

7010 Other income 31,530 - 33,286 1

7020 Other gains and losses 359,408 5 (209,017) (3)

7050 Finance costs (3,517) - (2,219) -

7060 Recognized share of profit of associates accounted for using equity

method

1,411 - 13,113 -

Total non-operating income and expenses 388,832 5 (164,837) (2)

Income (loss) before income tax 649,034 8 (321,334) (4)

7950 Less: income tax expense (note 6(10)) 85,603 1 317 -

Net income (loss) 563,431 7 (321,651) (4)

8300 Other comprehensive income (loss) (notes 6(10)(11)(16)):

8360 Items that could be reclassified subsequently to profit or loss

8361 Exchange differences arising on translation of foreign operations (170,937) (2) (231,452) (3)

8362 Unrealized gains (losses) on available-for-sale financial assets (801,851) (10) 179,991 2

8399 Less: income tax expense related components of other comprehensive

income

20

-

43

-

Total of items that could be reclassified to profit or loss (972,768) (12) (51,418) (1)

8300 Other comprehensive loss (net after tax) (972,768) (12) (51,418) (1)

Total comprehensive loss (409,337) (5) (373,069) (5)

9750 Basic earnings (loss) per share (expressed in New Taiwan Dollars) (note 6(13)) 0.87 (0.50)

9850 Diluted earnings per share (expressed in New Taiwan Dollars) (note 6(13)) 0.87 -


Reviewed only, not audited in accordance with generally accepted auditing standards

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2015 AND 2016


Retained Earnings Others Equity

Common

stock

Capital

surplus

Legal

reserve

Special

reserve

Unappropriated

retained earnings

(accumulated deficit)

Exchange

differences on

translation of

foreign operations

Unrealized (losses)

gains on

available-for-sale

financial assets

Total Equity

Balance as of January 1, 2015 $ 6,461,655 21,916,582 4,240,724 672,510 1,948,759 740,319 2,547,776 38,528,325

Net income for the three-month period ended March 31, 2015 - - - - 563,431 - - 563,431

Net other comprehensive income for the three-month period ended March 31, 2015 - - - - - (170,917) (801,581) (972,768)

Total comprehensive income for the three-month period ended March 31, 2015 - - - - 563,431 (170,917) (801,581) (409,337)

Balance as of March 31, 2015 $ 6,461,655 21,916,582 4,240,724 672,510 2,512,190 569,402 1,745,925 38,118,988

Balance as of January 1, 2016 $ 6,461,655 21,916,582 4,402,201 672,510 1,784,409 520,982 943,274 36,701,613

Net loss for the three-month period ended March 31, 2016 - - - - (321,651) - - (321,651)

Net other comprehensive loss for the three-month period ended March 31, 2016 - - - - - (231,409) 179,991 (51,418)

Total comprehensive loss for the three-month period ended March 31, 2016 - - - - (321,651) (231,409) 179,991 (373,069)

Balance as of March 31, 2016 $ 6,461,655 21,916,582 4,402,201 672,510 1,462,758 289,573 1,123,265 36,328,544


Reviewed only, not audited in accordance with generally accepted auditing standards

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2015 AND 2016


For the three-month periods ended

March 31, 2015 2016

Cash flows from operating activities:

Net income (loss) before income tax $ 649,034 (321,334)

Adjustments for:

Income and expenses not affecting cash flows

Depreciation expense 674,804 663,148

Amortization expense 603 604

Interest expense 3,517 2,219

Interest income (18,576) (19,038)

Share of profit of associates accounted for using equity method (1,411) (13,113)

(Gain) loss on disposal of property, plant and equipment, net (20,850) 123

Gain on reversal of impairment loss of property, plant and equipment (594) (1,413)

Gain on disposal of investment (323,113) (9,886)

Unrealized foreign currency exchange gain, net 378 267,907

Total income and expenses items 314,758 890,551

Change in operating assets and liabilities:

Change in operating assets, net：

Decrease (increase) in accounts receivable (including related parties) 283,294 (632,878)

Decrease (increase) in other receivables 162,140 (48,028)

(Increase) decrease in inventories (89,678) 172,705

Decrease (increase) in other current assets (99,963) 77,990

Change in operating assets ,net 255,793 (430,211)

Change in operating liabilities, net：

Increase (decrease) in accounts payable (including related parties) 33,438 (309,146)

Decrease in other payables (including related parties) (429,620) (417,217)

Increase in other current liabilities 7,622 52,854

Increase in net defined benefit liabilities 7,527 4,601

Change in operating liabilities, net (381,033) (668,908)

Total change in operating assets and liabilities (125,240) (1,099,119)

Total adjustments 189,518 (208,568)

Cash inflow (outflow) generated from operations 838,552 (529,902)

Interest received 24,834 18,294

Interest paid (3,131) (524)

Income tax paid (6,783) (1,371)

Net cash provided (used) in operating activities 853,472 (513,503)

Cash flows from investing activities:

Proceeds from disposal of available-for-sale financial assets 2,264,685 1,210,686

Acquisition of property, plant and equipment (233,477) (1,013,593)

Proceeds from disposal of property, plant and equipment 26,808 1,573

Decrease (increase) in other non-current assets 5,493 (2,079)

Decrease in other receivables due from related parties 626,165 218,011

Net cash provided by investing activities 2,689,634 414,598

Cash flows from financing activities:

Decrease in short-term loans (59,415) (171,282)

Increase in long-term loans 188,407 395,582

Decrease in long-term loans (271,372) (289,390)

(Increase) decrease in guarantee deposits (3,572) 5,576

Net cash used in financing activities (145,952) (59,514)

Effect of exchange rate changes on cash and cash equivalents (56,644) (249,874)

Increase (decrease) in cash and cash equivalents 3,340,510 (408,293)

Cash and cash equivalents at the beginning of period 4,952,303 10,314,873

Cash and cash equivalents at the end of period $ 8,292,813 9,906,580

1

(Continued)

Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2015 and 2016

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2016

(All amounts are expressed in thousands of New Taiwan Dollars,

except for per share information or unless otherwise specified)

1. Description of business

Nan Ya Printed Circuit Board Corporation (the “Company”) was legally established with the approval

by the Ministry of Economic Affairs on October 28, 1997, with registered address at 3F, No.201-36,

Dunhua N. Rd., Songshan Dist., Taipei City, Taiwan. The Company and its subsidiaries (the “Group”)

main operating activities are primarily in the manufacturing and selling of printed circuit boards.

2. Approval date and procedures of the financial report

The consolidated financial statements as of and for the three-month period ended March 31, 2016 were

authorized for issue by the Board of Directors on May 9, 2016.

3. New standards and interpretations not yet adopted

The IFRSs issued by IASB but not yet endorsed by FSC.

New, revised and amended standards and interpretations for IFRSs issued by the IASB but not yet

endorsed by the FSC are as follows:

New, revised or amended standards and interpretations

Effective date

prescribed by

IASB

IFRS 9 “Financial Instruments” January 1, 2018

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets

Between an Investor and its Associate or Joint Venture”

To be determined

by the IASB

Amendments to IFRS 10, IFRS 12, and IAS 28 “Investment Entities:

Applying the Consolidation Exception”

January 1, 2016

Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint

Operations”

January 1, 2016

IFRS 14 “Regulatory Deferral Account” January 1, 2016

IFRS 15 “Revenue from Contracts with Customers” January 1, 2018

IFRS 16 “Lease” January 1, 2019

Amendment to IFRS 15 “Explanation of IFRS 15” January 1, 2018

Amendment to IAS 1 “Disclosure Initiative” January 1, 2016

Amendment to IAS 7 “Disclosure Initiative” January 1, 2017

Amendment to IAS 12 “Recognition of Deferred Tax Asset arising from

unrealized loss”

January 1, 2017

Amendment to IAS 16 and IAS 38 “Clarification of Acceptable Methods of

Depreciation and Amortization”

January 1, 2016

Amendments to IAS16 and IAS 41 “Bearer Plants” January 1, 2016

Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions” July 1, 2014

2

(Continued)

New, revised or amended standards and interpretations

Effective date

prescribed by

IASB

Amendments to IAS 27 “Equity Method in Separate Financial Statements” January 1, 2016

Amendment to IAS 36 “ Recoverable Amount Disclosures for

Non-financial Assets”

January 1, 2014

Amendment to IAS 39 “ Novation of Derivatives and Continuation of

Hedge Accounting”

January 1, 2014

Annual Improvements Cycle 2010-2012 and 2011-2013 July 1, 2014

Annual Improvements to IFRSs 2012–2014 Cycle January 1, 2016

Amendments to IFRIC Interpretation 21 “Levies” January 1, 2014

The Group is evaluating the impact on its financial position and financial performance of the

initial adoption of above mentioned standards or interpretations. The results thereof will be

disclosed when the Group completes its evaluation.

4. Summary of significant accounting policies

(1) Statement of compliance

The accompanying consolidated financial statements have been prepared in accordance with the

Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter

referred to the Regulations) and guidelines of IAS 34 “Interim Financial Reporting” which are

endorsed by the FSC. These consolidated financial statements do not include all disclosures

required for full annual consolidated financial statements under the Regulations and International

Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and

SIC Interpretations as endorsed by the FSC (hereinafter referred to as IFRS endorsed by the

FSC).

Except as described below, the significant accounting policies adopted in the accompanying

consolidated financial statements are the same as the consolidated financial statements as of and

for the year ended December 31, 2015. Please refer to note 4 of the consolidated financial

statements as of and for the year ended December 31, 2015 for the detail disclosures of

significant accounting policies.

(2) Basis of consolidation

The principle of preparing consolidated financial statements are the same as the consolidated

financial statements as of and for the year ended December 31, 2015. Please refer to note 4(3) of

the consolidated financial statements as of and for the year ended December 31, 2015 for relevant

information.

3

(Continued)

(a) The subsidiaries included in the consolidated financial statements are as follows:

Percentage of ownership (%)

Investor

Name of

subsidiary

Business activity

March 31,

2015

December

31, 2015

March 31,

2016

The Company NPUC Customer sales promotion and

other services

100.00% 100.00% 100.00%

The Company NPHK Selling and investing in

electronic products

100.00% 100.00% 100.00%

NPHK NPKC Producing and selling PCB 100.00% 100.00% 100.00%

(b) Subsidiaries not include in the consolidated financial statements: None.

(3) Income tax

The Group evaluates and discloses interim period income tax expense in accordance with

paragraph B12 of IAS 34 “Interim Financial Reporting”.

Income tax expense is best estimated by multiplying the pretax income for the interim reporting

period by the effective annual tax rate as forecasted by the management, and should be allocated

to current and deferred tax expense based on the proportion of the annual estimated and deferred

tax expense.

Temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and their respective tax bases shall be measured based on the tax rates that

have been enacted or substantively enacted at the time of the asset or liability is recovered or

settled and recognized directly in equity or other comprehensive income as tax expense.

(4) Employee benefits

The pension cost for the interim period is calculated and disclosed on a year-to-date basis by

using the actuarially determined pension cost rate at the end of prior fiscal year, adjusted for

significant market fluctuations since that time and for significant curtailments, settlements, or

other significant one-off events.

5. Critical accounting judgments and key sources of estimates uncertainly

The consolidated financial statements are prepared in conformity with IAS 34 “Interim financial

reporting” as endorsed by the FSC, under which, management make judgments, estimates and

assumptions that affect the application of the accounting policies and the reported amount of assets,

liabilities, income and expenses. Actual results may differ from these estimates.

In these consolidated financial statements, judgments and key sources of estimation uncertainty used

by management in the application of critical accounting policies are expected to be consistent with

those of note 5 of the consolidated financial statements for the year ended December 31, 2015.

4

(Continued)

6. Description of the significant accounts

Except as described below, the description of significant accounts in the accompanying interim

consolidated financial statements is not materially different from the consolidated financial statements

as of and for the year ended December 31, 2015. Please refer to note 6 of the consolidated financial

statements as of and for the year ended December 31, 2015 for the detailed disclosures of these

significant accounts.

(1) Cash and cash equivalents

March 31,

2015

December 31,

2015

March 31,

2016

Cash on hand $ 35 15 18

Cash in bank 997,302 2,240,449 2,794,364

Cash equivalents – time deposits 6,697,958 7,553,480 6,797,248

Cash equivalents – short-term bills 380,903 - 173,390

Cash equivalents –bonds with a put option 216,615 520,929 171,560

$ 8,292,813 10,314,873 9,906,580

(2) Financial assets

Financial assets consist of the following:

March 31,

2015

December 31,

2015

March 31,

2016

Available-for-sale financial assets－current:

Domestic listed stocks $ 4,202,863 3,397,436 3,586,403

Mutual funds 3,020,245 1,726,269 516,493

Total $ 7,223,108 5,123,705 4,102,896

(3) Accounts receivable and other receivables

March 31,

2015

December 31,

2015

March 31,

2016

Accounts receivable – non-related parties $ 6,972,086 6,029,263 6,553,295

Accounts receivable – related parties 11,015 10,505 5,376

Other receivables – non related parties 169,932 95,980 144,629

Other receivables –related parties 1,408,215 2,025,053 1,807,042

Less: allowance for doubtful accounts (72,077) (56,455) (56,445)

$ 8,489,171 8,104,346 8,453,897

5

(Continued)

Overdue but unimpaired aging of accounts receivable and other receivables of the Group were as

followed:

March 31,

2015

December 31,

2015

March 31,

2016

Overdue < 60 days $ 79,698 123,121 223,669

Overdue from 61 days to 90 days 7,473 16,002 2,840

Overdue from 91 days to 120 days 600 3,617 3,972

Overdue from 121 days to 1 year 15,392 16,741 6,562

Overdue > 1 year - 15,880 25,508

$ 103,163 175,361 262,551

Movements of allowance for doubtful accounts of accounts receivable and other receivables for

the three-month periods ended March 31, 2015 and 2016 were as follows:

Individually

assessed

impairment loss

Collectively

assessed

impairment loss

Total

Balance as of January 1, 2015 $ - 72,084 72,084

Effect of exchange rate - (7) (7)

Balance as of March 31, 2015 $ - 72,077 72,077

Individually

assessed

impairment loss

Collectively

assessed

impairment loss

Total

Balance as of January 1, 2016 $ - 56,455 56,455

Effect of exchange rate - (10) (10)

Balance as of March 31, 2016 $ - 56,445 56,445

(4) Inventories

March 31,

2015

December 31,

2015

March 31,

2016

Finished goods $ 1,074,574 1,198,452 1,019,107

Work in progress 1,676,046 1,457,558 1,582,350

Raw materials 681,962 651,299 617,086

Supplies 248,511 319,746 237,109

$ 3,681,093 3,627,055 3,455,652

No inventory devaluation or recovery of impairment was recognized for the three-month periods

ended March 31, 2015 and 2016.

6

(Continued)

(5) Investment accounted for using the equity method

The components of the investments accounted for using equity method were as follows:

March 31,

2015

December 31,

2015

March 31,

2016

Associates $ 671,921 719,723 732,836

Summary of shares of the profit or loss of associates attributable to the Group were as follows:

For the three-month

periods ended March 31,

2015 2016

Share of profit of associates accounted

for using equity method

1,411

13,113

(6) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Group for the three-month

periods ended March 31, 2015 and 2016 were as follows:

Building

Machinery

and

equipment

Vehicles

Miscellaneous

equipment

Under

construction

Total

Cost：

Balance as of January 1, 2015 $ 3,960,944 40,943,133 16,566 4,027,789 1,544,862 50,493,294

Additions - 6,416 - 272 226,789 233,477

Disposals - (558,987) - (30,259) - (589,246) Reclassification - 68,702 - 3,851 (71,923) -

Impact of exchange rate change (24,849) (217,878) (53) (2,256) (21,121) (266,157)

Balance as of March 31 , 2015 $ 3,936,095 40,240,756 16,513 3,999,397 1,678,607 49,871,368

Balance as of January 1, 2016 $ 3,929,020 40,598,464 15,874 4,067,062 2,649,298 51,259,718 Additions - 10,635 2,270 134,525 866,163 1,013,593

Disposals - (297,071) (68) (548) - (297,687) Reclassification - 499,740 - 4,310 (504,050) -

Impact of exchange rate change (33,523) (311,013) (58) (3,129) (51,413) (399,136)

Balance as of March 31 , 2016 $ 3,895,497 40,500,755 18,018 4,202,220 2,959,998 51,576,488

Accumulated depreciation:

Balance as of January 1, 2015 $ 1,665,178 27,602,454 10,694 3,201,183 - 32,479,509

Depreciation for the period 41,429 597,117 250 36,008 - 674,804 Reversal of impairment loss - (594) - - - (594)

Disposals - (556,830) - (26,458) - (583,288)

Impact of exchange rate change (11,176) (101,835) (29) (1,742) - (114,782)

Balance as of March 31 , 2015 $ 1,695,431 27,540,312 10,915 3,208,991 - 32,455,649

Balance as of January 1, 2016 $ 1,814,919 28,517,970 11,118 3,293,297 - 33,637,304

Depreciation for the period 39,908 582,653 211 40,376 - 663,148 Reversal of impairment loss - (1,396) (4) (13) - (1,413)

Disposals - (295,443) (64) (484) - (295,991) Reclassification - 139 - (139) - -

Impact of exchange rate change (16,843) (160,680) (39) (2,319) - (179,881)

Balance as of March 31 , 2016 $ 1,837,984 28,643,243 11,222 3,330,718 - 33,823,167

7

(Continued)

Building

Machinery

and

equipment

Vehicles

Miscellaneous

equipment

Under

construction

Total

Carrying amounts:

Balance as of March 31, 2015 $ 2,240,664 12,700,444 5,598 790,406 1,678,607 17,415,719

Balance as of December 31, 2015 $ 2,114,101 12,080,494 4,756 773,765 2,649,298 17,622,414

Balance as of March 31, 2016 $ 2,057,513 11,857,512 6,796 871,502 2,959,998 17,753,321

Please refer to note 6(15) for further information about the capitalized interest on borrowings for

the purchase of the property, plant and equipment and gain (loss) on disposal of property, plant

and equipment.

(7) Short-term loans

March 31,

2015

December 31,

2015

March 31,

2016

Unsecured bank loans $ 456,878 330,662 159,380

Unused credit facility for short-term loans $ 2,000,000 2,000,000 2,000,000

Range of interest rates 1.25%~1.50% 1.30%~1.39% 4.1325%

Please refer to note 6(15) for information of interest expense. For other relevant information,

please refer to note 6(5) of the consolidated financial statements as of and for the year ended

December 31, 2015.

(8) Long-term loans

Long-term loans consisted of the following: March 31, 2015

Currency Interest rate range Expiration Unused credit Amount

Unsecured long-term bank loans USD 0.81%~0.95% 2016 - $ 540,101

Unsecured long-term bank loans USD 1.36%~2.35% 2018 2,396,850 1,287,448

Less: current portion 540,101 Total $ 1,287,448

December 31, 2015


Unsecured long-term bank loans USD 0.9214%~1.926% 2016 $ - $ 284,366


Less: current portion 284,366

Total $ 2,314,637

March 31, 2016


Unsecured long-term bank loans USD 1.36%~1.7202% 2016 $ - $ 529,420

Unsecured long-term bank loans USD 1.36%~1.7202% 2017 - 1,058,840


Less: current portion 1,058,840 Total $ 1,588,259

8

(Continued)

Issuance and repayments of loans

The issuance of long-term loans was $188,407 and $395,582, the interest rate range were from

1.36%~2.35% and 1.36%~1.7202%, the expiration date is May 6, 2018 and repayments of

$271,372 and $289,390 were made for the three-month periods ended March 31, 2015 and 2016,

respectively.

Please refer to note 6(15) for information on interest expense, and note 6(8) of the consolidated

financial statements as of and for the year ended December 31, 2015 for other relevant

information.

(9) Employee benefits

(a) Defined benefit plan

Subsequent to December 31, 2015, there is apparently no evidence of any material market

volatility, material curtailment, reimbursement and settlement or other material one-time

events. Therefore, pension cost in the consolidated financial statements is measured and

disclosed according to the respective actuarial report for the years ended December 31,

2014 and 2015.

Recognition as expense of pension cost was as follows:

For the three-month periods

ended March 31,

2015 2016

Operating costs $ 14,123 12,343

Selling expenses 418 349

Administrative expenses 1,822 1,627

Total $ 16,363 14,319

(b) Defined contribution plan

The pension costs that were contributed to Bureau of Labor Insurance were as follows:


ended March 31,

2015 2016

Operating costs $ 103,759 115,107

Selling expenses 1,525 1,598

Administrative expenses 8,222 10,035

Total $ 113,506 126,740

9

(Continued)

(10) Income tax

(a) The details of income tax expense were as follows:


ended March 31,

2015 2016

Current income tax expenses

Generated in current period $ 29,143 317

Deferred tax expenses

Origination and reversal of

temporary differences

56,460

-

Income tax expense of continuing

operations

$ 85,603

317

(b) The details of income tax benefit under other comprehensive income were as follows:


ended March 31,

2015 2016

Items that could be reclassified subsequently to

profit or loss:

Exchange differences on translation of foreign

financial statements

$ 20

43

(c) The Company applies to the criterion of Emerging Important Strategical Industries and

Related Technical Services, which was approved by the National Tax Administration. Thus,

the Company is exempt from paying the profit-seeking enterprise income tax on related

income for five consecutive years, commencing from the date of the Company’s choice.

Related tax-exempt information are as follows:

Tax-exempt category Interpretation No. Encouraging items Tax-exempt period

Expansion of capital increase No. 1001784030

on 2012.1.16

IC substrate base

(BGA substrate base)

2013.1.1~2017.12.31

(d) The Company’s income tax returns have been examined by the ROC tax authority through

2013.

(e) The ROC Income Tax Act allows offset of net losses, as assessed by the tax authorities,

against taxable income over a period of ten years for local tax reporting purposes. As of

March 31, 2016, unused loss carry forward available to the Company were as follows:

Year

Unused loss

carry forward

Expiry year

2012 (Declared) $ 1,800,204 2022

2013 (Declared) 1,285,305 2023

Total $ 3,085,509

10

(Continued)

(f) Information related to intergraded income tax were as follows:

March 31,

2015

December 31,

2015

March 31,

2016

Undistributed earnings on and after 1998 $ 2,512,190 1,784,409 1,462,758

Imputation credit account balance $ 517,137 403,488 403,683

2014 (actual) 2015 (estimated)

Tax deduction ratio for earnings distribution to ROC residents 22.77% 27.18%

Under the information for integrated income tax, the above imputation credit account and

creditable ratio were calculated according to the formal interpretation No.10204562810

issued by Taxation Administration, Ministry of Finance, R.O.C. on October 17, 2013.

(11) Equity

Except for those described below, there were no material changes in equity for the three-month

periods ended March 31, 2015 and 2016. Please refer to note 6(11) of the consolidated financial

statements for the year ended December 31, 2015 for other relevant disclosures of equity.

(a) Retained earnings

Earnings appropriation and distribution

According to the Company’s articles of incorporation, the Company’s earnings from the

current year should be used to pay income tax, offset prior-year deficits, set aside 10% of

the remainder as legal reserve, provide a special reserve when necessary, and pay dividends.

After the above-mentioned appropriation, the remainder (the distributable earnings after

dividends), if any, plus the undistributed earnings from previous years should be proposed

by the board of directors and is subject to the shareholders’ approval. The Company

appropriates 0.1% to 1% of the distributable earnings after dividends as employees’ bonus,

and records it as periodic expense in the current year.

The Company distributes dividends in cash or stock. Fifty percent or more of the

distributable earnings after deducting legal reserve and special reserve should be distributed

as dividends, of which cash dividends should be the priority, and the total of earnings and

capital surplus transferred to share capital should be no more than 50% of all dividends for

the year.

According to the amendments of Corporation Law in May 2015, employee bonuses are no

longer subject to earnings appropriation and distribution. The consequential amendments to

the Company’s Articles of Incorporation had been proposed by the Company’s board of

directors on December 23, 2015 and are subject to the resolution of the stockholders

meeting. According to the amended Company’s Articles of Incorporation, the Company’s

annual net profit, after providing for income tax and covering the losses of previous years,

is first set aside for legal reserve at the rate of 10% until the accumulated balance of legal

reserve equals the total issued capital, and any special reserves pursuant to relevant laws

and regulations. The remainder, plus the undistributed earnings of the previous years, are

distributed or left undistributed for business purposes according to the resolution of the

stockholders’ dividend distribution plan, which are initially proposed by the board of

11

(Continued)

directors and adopted by the shareholders in the annual stockholders’ meeting.

For the three-month period ended March 31, 2015 , the estimated employee bonus was

$688 based on the distribution plan according to the Company’s articles of incorporation,

and the amount is reported under the operating cost and expense for the above period. The

difference between the amounts approved in the shareholders’ meeting and those

recognized in the consolidated financial statements, if any, are accounted for as changes in

accounting estimates and recognized as profit or loss in the following year.

The appropriations of earnings and employee bonus amounted to $2,751 in 2014 were

approved in the shareholders meeting on June 17, 2015.

The amounts of appropriation of dividends per share in 2014, approved in the shareholders

meeting on June 17, 2015, were as follows:

2014

Dividends per

share (TWD)

Amount

Dividends distributed to common stock shareholders:

Cash $ 1.30 840,015

The appropriations of earnings were approved in the board of directors’ meeting on March

18, 2016. The earnings distribution are yet to be approved at the shareholders’ meeting.

This information can be reviewed on the Market Observation Post System website after

related meetings are held. The amounts of appropriation of dividends per share were as

follows:

2015

Dividends per

share (TWD)

Amount

Dividends distributed to common stock shareholders:

Cash $ 1.00 646,165

(d) Other equity

Exchange differences

on translation of

financial statements for

foreign operation

Unrealized (loss)

gain on

available-for–sale

financial assets

Total

Balance as of January 1, 2015 $ 740,319 2,547,776 3,288,095

Exchange differences on translation (net of tax) (170,917) - (170,917)

Unrealized loss on available-for-sale financial

assets

-

(801,851)

(801,851)

Balance as of March 31, 2015 $ 569,402 1,745,925 2,315,327

Balance as of January 1, 2016 $ 520,982 943,274 1,464,256

Exchange differences on translation (net of tax) (231,409) - (231,409) Unrealized gain on available-for-sale financial

assets

-

179,991

179,991

Balance as of March 31, 2016 $ 289,573 1,123,265 1,412,838

12

(Continued)

(12) Share-based payment transactions

The Group believes that there was no material change on share-based payment transactions for

the three-month periods ended March 31, 2015 and 2016. Please refer to note 6(12) of the

consolidated financial statements for the year ended December 31, 2015 for related detail

disclosures on share-based payment transactions.

(13) Earnings per share

The basic earnings per share were calculated as follows:


ended March 31,

2015 2016

Basic Earnings Per Share

Net income (loss) attributable to equity

shareholder’s of the Company

$ 563,431

(321,651)

Weighted average number of ordinary

shares outstanding (basic)

646,166

646,166

Basic earnings (loss) per share $ 0.87 (0.50)

Diluted Earnings Per Share

Net income attributable to equity

shareholder’s of the Company

$ 563,431

-


shares outstanding (basic)

646,166

Effect of employee stock bonus 69 -


shares outstanding (diluted)

646,235

-

Diluted earnings per share $ 0.87 -

The exercise price of the options issued by the Company exceeded the average market price of

the shares during the three-month period ended March 31, 2016.

The stock options were not included in the calculation of weighted average number of ordinary

shares because they were anti-dilutive during the three-month periods end March 31, 2015.

(14) Employee compensation

According to the Company’s articles of incorporation, which are subject to the shareholders’

approval, the Company’s annual net profit should be set aside from the allocation 0.05% to 0.5%

as employee compensation based on the Company’s net profit before tax offsetting employee

compensation. When the Company incurs accumulated deficit, the Company should be reserve in

advance with covering the accumulated deficits.

The Company did not recognize its employee compensation for the three-month period ended

March 31, 2016 due to the loss incurred by the Company.

13

(Continued)

For the year ended December 31, 2015, the estimated employee compensation which were based

on the distribution plan according to the Company's articles of incorporation amounted to $1,507.

The amounts were reported under the operating cost and expense for the above periods. The

difference between the amounts approved in the shareholders' meeting and those recognized in

the consolidated financial statements, if any, are accounted for as changes in accounting

estimates and recognized as profit or loss in 2016.

(15) Non-operating income and expenses

(a) Other income

The Group’s other income were as follows:


ended March 31,

2015 2016

Interest income of bank deposits $ 18,576 19,038

Others 12,954 14,248

Total $ 31,530 33,286

(b) Other gains and losses

The Group’s other gains and losses were as follows:


ended March 31,

2015 2016

Foreign exchange net loss $ (43,421) (299,770)

Net gain on disposal of available-

for-sale financial assets

323,113

9,886

Gains (losses) on disposal of property,

plant and equipments

20,850

(123)

Gains on disposal of materials and

spoilages

61,893

82,214

Gains on recovery of impairment loss 594 1,413

Others (3,621) (2,637)

Total $ 359,408 (209,017)

(c) Finance expenses

The details of finance expenses were as follows:


ended March 31,

2015 2016

Interest expense $ 7,609 12,180

Less: capitalized interest (4,092) (9,961) $ 3,517 2,219

Interest capitalization rate 1.3600%~1.5543% 1.4366%~1.6791%

14

(Continued)

(16) Reclassified adjustments of the components of other comprehensive income

The details of the reclassified adjustments of the components of other comprehensive income

were as follows:


ended March 31,

2015 2016

Available-for-sale financial assets:

Net change in fair value during the year $ (478,738) 189,877

Net change in fair value reclassified as

profit or loss

(323,113)

(9,886)

Net change in fair value recognized into

other comprehensive income

$ (801,851)

179,991

(17) Financial instruments

Except for those described below, the Group believes that there was no material change with

regard to the fair value and exposure risks of credit risk, liquidity risk and market risk on

financial instruments. Please refer to note 6(17) of the consolidated financial statements for the

year ended December 31, 2015 for the related detail disclosures on financial instruments.

(a) Liquidity risk

(i) The following are the remaining contractual maturities at the end of the reporting

period of financial liabilities, including estimated interest payments but excluding the

impact of netting agreements:

Carrying

amount

Contractual

cash flow Within 6

months

6-12months

1-2years

2-5years

Over 5 years

March 31, 2015

Non-derivative financial liabilities

Unsecured short-term bank loans $ 456,878 457,002 457,002 - - - -

Unsecured long-term bank loans (including

current portion)

1,827,549

1,885,454

271,852

271,852

268,350

1,073,400

-

Accounts payable (including related parties) 1,828,631 1,828,631 1,828,631 - - - -

Other payables (including related parties) 1,449,510 1,449,510 1,449,510 - - - -

$ 5,562,568 5,620,597 4,006,995 271,852 268,350 1,073,400 -

December 31, 2015




current portion)

2,599,003

2,677,260

284,550

-

957,084

1,435,626

-



$ 6,796,122 6,874,468 4,481,758 - 957,084 1,435,626 -

March 31, 2016




current portion)

2,647,099

2,742,661

548,532

548,532

1,097,064

548,533

-



$ 5,923,887 6,025,494 3,831,365 548,532 1,097,064 548,533 -

It is not expected that the cash flows included in the maturity analysis could occur

significantly earlier, or at significantly different amounts.

15

(Continued)

(b) Currency risk

(i) The Group’s exposure to significant foreign currency risk was as follows:

March 31, 2015

Foreign

Currency

(in thousands)

Exchange

rate

New Taiwan

Dollars

Financial assets:

Monetary items

USD $ 429,210 31.4010 13,477,637

EUR 3 33.9010 94

JPY 1,580 0.2604 411

Financial liabilities

Monetary items

USD 105,466 31.4010 3,311,746

JPY 231,080 0.2604 60,173

RMB 237 5.1124 1,211

December 31, 2015

Foreign

Currency

(in thousands)

Exchange

rate

New Taiwan

Dollars

Financial assets:

Monetary items

USD $ 459,361 33.0660 15,189,223

EUR 7 36.0384 240

JPY 4,730 0.2736 1,294


Monetary items

USD 118,418 33.0660 3,915,624

EUR 35 36.0384 1,258

JPY 185,020 0.2736 50,622

CNY 761 5.0921 3,877

March 31, 2016

Foreign

Currency

(in thousands)

Exchange

rate

New Taiwan

Dollars

Financial assets:

Monetary items

USD $ 471,832 32.2820 15,231,669

EUR 6 36.4318 228

JPY 4,171 0.2859 1,193


Monetary items

USD 108,800 32.2820 3,512,277

EUR 133 36.4318 4,853

JPY 228,139 0.2859 65,225

CNY 784 4.9962 3,918

16

(Continued)

The Group’s exposure to foreign currency risk arises from the foreign currency

exchange fluctuations on cash and cash equivalents, accounts receivable, other

receivables, loans, accounts payable and other payables which are denominated in

different foreign currencies. A 1% appreciation or depreciation of the NTD against

the USD as of March 31, 2015 and 2016 would have decreased or increased the net

income before tax by $101,659 and $117,194 for the three-month periods ended

March 31, 2015 and 2016, respectively. This analysis assumes that all other variables

remain constant and is performed on the same basis.

(ii) Other pricing risks

The effects of the changes of the price equity securities (the analysis assumes that all

other variables remain constant and is performed on the same basis) on the

comprehensive income on the reporting date were as follows:

For the three-month

periods ended March 31,

2015 2016

Price of equity securities on reporting date

Appreciation of 1% $ 42,029 35,864

Depreciation of 1% $ (42,029) (35,864)

(b) Information of fair value

(i) Fair value of financial instruments

The carrying and fair value of the Group’s financial assets and liabilities are as

follows:

Fair Value

Carrying

Value

Level 1

Level 2

Level 3

Total

March 31, 2015

Available-for-sale financial assets

Domestic listed stocks $ 4,202,863 4,202,863 - - 4,202,863

Mutual funds 3,020,245 3,020,245 - - 3,020,245

Total $ 7,223,108 7,223,108 - - 7,223,108

Loans and receivables

Cash and cash equivalents $ 8,292,813 - - - -

Accounts receivable, net (including related

parties)

6,911,024 - - - -

Other receivables (including related parties) 1,578,147 - - - -

Total $ 16,781,984 - - - -

Financial liabilities measured by amortized cost

Short term loans $ 456,878 - - - -

Accounts payable (including related parties) 1,828,631 - - - -

Other payables (including related parties) 1,449,510 - - - -

Long term loans (including current portion) 1,827,549 - - - -

Total $ 5,562,568 - - - -

17

(Continued)

Fair Value

Carrying

Value

Level 1

Level 2

Level 3

Total

December 31, 2015



Mutual funds 1,726,269 1,726,269 - - 1,726,269

Total $ 5,123,705 5,123,705 - - 5,123,705




parties)

5,983,313

-

-

-

-

Other receivables(including related parties) 2,121,033 - - - -

Total $ 18,419,219 - - - -






Total $ 6,796,122 - - - -

Fair Value

Carrying

Value

Level 1

Level 2

Level 3

Total

March 31, 2016



Mutual funds 516,493 516,493 - - 516,493

Total $ 4,102,896 4,102,896 - - 4,102,896




parties)

6,502,226

-

-

-

-

Other receivables(including related parties) 1,951,671 - - - -

Total $ 18,360,477 - - - -






Total $ 5,923,887 - - - -

(ii) Valuation techniques and assumptions unused fair value determination


Fair value measurement is based on the latest quoted price and agreed-upon price if

these prices are available in an active market. When market value is unavailable, the

fair value of financial assets and liabilities are evaluated based on the discounted cash

flow of the financial assets and liabilities.

(iii) Valuation techniques and assumptions used in fair value determination

Non-derivative financial instruments

If a quoted price is available on an active market, the market price should be used as

the fair value; the market price published by the primary stock exchanges as the basis

of fair value evaluation for listed equity instruments.

18

(Continued)

Financial instruments have an active market price when the public offer of financial

instruments, which represents the actual price of the fair market where transactions

often incur, can be frequently and promptly obtained from brokers, underwriters,

industrial unions, institutes of pricing services and authorities. The market is

considered inactive when conditions mentioned above are not met. In general, high or

incremental differences between the buying and selling price or low trading volumes

are indications of inactive markets.

If the financial instruments the Company possesses have an active market price, the

nature of its fair value will be as follows:

Stock of listed companies has standard clauses while financial assets and liabilities

traded in the active markets refer to the market price when deciding their fair value.

Except for those financial instruments with active markets mentioned above, the fair

values of other financial instruments are measured by referring to the price of other

commencing components.

(18) Financial risk management

The Group believes that there were no material changes in financial risk management objective

and policy since December 31, 2015. Please refer to the detail disclosure on financial risk

management in note 6(18) of the consolidated financial statements as of and for the year ended

December 31, 2015.

(19) Capital management

The Group believes that there were no material changes in capital management target, policy and

procedure and in quantitative information adopted for capital management since December 31,

2015. Please refer to note 6(19) of the consolidated financial statements as of and for the year

ended December 31, 2015 for the detail disclosure on capital management.

7. Related-party Transactions

(1) Other related-party transactions

(a) Sales to related parties

Significant sales to related parties were as follows:


ended March 31,

2014 2015

Associates $ 15,031 12,731

19

(Continued)

(b) Accounts receivable- related parties

Accounts receivable to related parties were as follows:

Item listed

Types of

related parties

March 31,

2015

December 31,

2015

March 31,

2016

Accounts receivable

－related parties

Associates

$ 11,015

10,505

5,376

The normal credit term with the related parties above is collection before the 15th of the

month following the sales month and on open account 70 days. Sales price is cost plus

profit as quoted price. There is no collateral received among related parties accounts

receivable and there is no need to estimate bad debt expense.

(c) Purchase from related parties

Purchases from related parties were as follows:


ended March 31,

2015 2016

The parent company $ 303,359 237,272

Associates 498,146 436,180

$ 801,505 673,452

(d) Accounts payable-related parties

Accounts payable from related parties were as follows:

Item listed

Types of

related parties

March 31,

2015

December 31,

2015

March 31,

2016

Accounts payable

－related parties

The parent company

$ 130,654

101,265

90,922

Accounts payable

－related parties

Associates

294,688

246,360

263,487

$ 425,342 347,625 354,409

The purchase price from related parties is not significantly different from that from

non-related general parties. The normal credit term with the related parties above is collected

before the 15th of the month following the purchase month, on open account 90 days, on

open account 60 days and on the day following the day of approving payment.

(e) Property transactions

The Group purchased fixed assets from Nan Ya Electric (Nantong) Co., Ltd. with the

acquisition price of $8,224 for the three-month period ended March 31, 2015. However, the

Group still has unpaid payables accounted under other payables - related parties amounting

to $9,407, $621 and 609 as of March 31 and December 31, 2015, and March 31, 2016,

respectively.

20

(Continued)

(f) Financing to related parties

Financing to relate parties were as follows:

March 31,

2015

December 31,

2015

March 31,

2016

Associates $ 1,408,215 2,025,053 1,807,042

(g) Guarantees

The parent company acted as a joint guarantor and assumed the joint responsibility of the

Group’s participating loan borrowed from Chang Hwa Commercial Bank.

(h) Lease contracts

The Group signed lease contracts with NPC (the parent company) to rent the factory, which

is located at Lujhu Township, Taoyuan County and Shulin Dist., New Taipei City,

employees’ dormitories and the office in Taipei, etc. The operating lease reported as

expense resulting from the above transactions for the three-month periods ended March 31,

2015 and 2016 were $42,648 and $43,526, respectively.

(i) Others

The Group bought utilities from Nan Ya Electronic Materials (Kunshan) Co., Ltd.

amounting to $216,395 and $211,145 for the three-month periods ended March 31, 2015

and 2016, respectively. The Group still has unpaid payables accounted under other

payables - related parties amounting to $85,840, $72,842, and $92,596 for the three-month

periods ended March 31, 2015 and 2016, and for the year ended December 31, 2015,

respectively.

(2) Key Management Personnel Transactions

Key Management Personnel Compensation


ended March 31,

2015 2016

Short-term employee benefits $ 4,213 4,487

8. Pledged properties：None.

9. Significant commitments and contingencies Except for those described in the financial statements and accompanying notes, the commitments and

contingencies of the company as of March 31, 2016 were as follows: (1) The balance of outstanding letters of credit for the importation of raw materials of the Group

amounted to $37,587. (2) The guarantee for customs and guarantee for letters of credit were $64,500 and $20,000,

respectively.

21

(Continued)

10. Significant disaster loss：None.

11. Significant subsequent event：None.

12. Others

(1) The Group’s personnel, depreciation, depletion and amortization expenses, categorized by

function were as follows:

For the three-month period ended

March 31, 2015

For the three-month period ended

March 31, 2016

Classified as

Operating

Costs

Classified as

Operating

Expenses

Total Classified as

Operating

Costs

Classified as

Operating

Expenses

Total

Employee benefits

Salaries 1,627,930 181,284 1,809,214 1,605,715 178,546 1,784,261

Labor and health insurance 139,311 13,820 153,131 132,819 14,333 147,152

Pension expenses 117,882 11,987 129,869 127,450 13,609 141,059

Other personnel expenses 58,747 4,894 63,641 68,357 6,264 74,621

Depreciation expenses 672,915 1,889 674,804 660,667 2,481 663,148

Amortization expenses 603 - 603 604 - 604

(2) The seasonality of operation

The operation of the Group is not influenced by seasonality and periodicity.

22

(Continued)

13. Other disclosure items

(1) Relevant information on material transaction items：

According to Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Group should disclose significant transactions as of

the three-month period ended March 31, 2016 as follows:

(a) Fund financing to other parties：

No. Financing

Company

Counter

-party

Financial

Statement

Account

Related

parties

Maximum

balance

Ending

balance

Actual

amount

used

Interest

rate

Nature

of funds

provided

(Note 1)

Amount

of

business

contact

Reasons for

short-term

fund

circulation

Allowance

for doubtful

accounts

Collateral Financing

Limit

for Each

Borrowing

Company

Financing

Company’s

Financing

Amount

Limit

Item Value

0 The Company NPHK Other receivables-

related parties

Yes 50,000 50,000 - - 2 - Operating

capital

- None - 7,265,709

(Note 2)

14,531,418

(Note 3)

0 The Company HYPC Other receivables-

related parties

Yes 2,000,000 1,700,000 1,000,000 1.474%

~ 1.497%

2 - Operating

capital

- None - 7,265,709

(Note 2)

14,531,418

(Note 3)

0 The Company FPC Other receivables-

related parties

Yes 1,300,000 1,300,000 - - 2 - Operating

capital

- None - 7,265,709

(Note 2)

14,531,418

(Note 3)

1 NPHK NPKC Other receivables-

related parties

Yes 277,624 - - 1.926% 2 - Operating

capital

- None - 3,045,446

(Note 4)

5,075,743

(Note 5)

2 NPKC PFGK Other receivables-

related parties

Yes 1,000,733 807,042 807,042 1.271%

~1.327%

2 - Operating

capital

- None - 4,888,548

(Note 4)

4,888,548

(Note 5)

Note 1: 1. With business contact

2. Necessary for short-term fund circulation

Note 2: The amount of financing to related parties or parties with business contact is subjected to a limit, which is 25% of the net value. To other counterparties, the limit is 20% of the net value. Note 3: The amount of financing to others is subjected to a limit, which is 50% of the net value. To those without business contact but in need of fund, the limit is 40% of the net value.

Note 4 For NPKC and NPHK, the amount of financing to related parties or parties with business contact is subjected to a limit, which is 50% and 60%, respectively, of the net value. To other counterparties, the limit is 40% of the net value.

Note 5 For NPKC and NPHK, the amount of financing to others is subjected to a limit, which is 100% of the net value. To those without business contact but in need of fund, the limit is 40% of the net value.

There is no restriction when financing to foreign firms who directly or indirectly 100% of voting rights.

23

(Continued)

(b) Endorsement and guarantee for others：

No.

Endorsement

/guarantee

Provider

Counter-party/

guarantee receiver Limit of

guarantee/

endorsement

amount for

receiving party

Maximum

balance

Ending

balance

Actual

amount

used

Endorsement

and

guarantee

secured by

assets

Percentage of

accumulated guarantee

amount to net assets

value

from the latest financial

statement

Limit of total

guarantee/

endorsement

amount

Classified as

endorsement and

guarantee

to subsidiary by

parent company

Classified as

endorsement and

guarantee to

parent company by

parent’s subsidiary

Classified as

endorsement

and guarantee to

companies in

Mainland China

Name Relation

0 The Company NPHK 2

(Note 1)

23,613,554

(Note 2)

277,625 - - - - 47,227,107

(Note 2)

Y - -

Note 1：The relation between the endorsement/guarantee provider and the Counter-party/guarantee receiver are as follows:

2. Subsidiary of which the investor holds more than 50% of its outstanding common stock.

Note 2：The total amount of endorsement cannot exceed more than 1.3 times of the Company’s net value, but for single enterprise, the amount of endorsement cannot exceed half of the aforementioned amount.

(c) Information regarding securities held at the end of the March 31, 2016(investees, affiliates and joint ventures were not included)：

Name of company

which holds

securities

Category and name

of securities

Relationship between issuer of security

and

the company which holds securities

Account name

March 31, 2016

Note Shares / Units

(in thousands)

Carrying

value

Percentage of

ownership

Market value or

net asset value

The Company FPC stock The parent is the companies’ legal director. Available-for-sale financial asset－current 7,011 559,449 0.11% 559,449 -

The Company FCFC stock The director is the Company’s chairman 〃 15,432 1,237,634 0.26% 1,237,634 -

The Company IMI stock Investee of the Company under equity

method 〃 61,383 1,789,320 0.94% 1,789,320 -

The Company Mega Diamond Money Market Fund - 〃 41,688 516,493 - 516,493 -

(d) Information regarding accumulated purchase or sale of securities for the period exceeding $300 million or 20% of the Company’s paid-in capital：

Company

name

Type and Issuer of

Marketable

Securities

Account

Name Counterparty

Nature of

the

Relationship

Beginning Balance Acquisition Disposal Ending Balance

Number of

Shares

(in thousands)

Amount Number of

Shares

(in thousands)

Amount Acquisition Amount Carrying

Value

Gain (Loss)

on

Disposal

Number of

Shares

(in thousands)

Amount

The Company Mega Diamond Money

Market Fund

Available-for-sale financial

assets－current

- - 139,475 1,726,269 - - 97,787 1,210,686 1,210,301 385

(Note 1)

41,688 515,968

(Note 2)

Note 1: The disposal gain above did not include realized appraisal profit amounted to $9,501. Note 2: The ending balance above did not include unrealized appraisal profit amounted to $525.

(e) Information regarding acquisition of real estate exceeding $300 million or 20% of the Company’s paid-in capital：None.

24

(Continued)

(f) Information regarding receivables from disposal of real estate exceeding $300 million or 20% of the Company’s paid-in capital：None.

(g) Information regarding purchases and sales from related parties for which the amount exceeded $100 million or 20% of the Company’s paid-in

capital:：

Purchasing

(selling)

company

Related party Nature of

relationship

Transaction details Abnormal transaction Accounts/notes receivable

(payable) Note

Purchase

(sale)

Amount % to total Payment terms Unit price Payment

terms

Ending balance % to total

The Company Parent company Parent company Purchase 225,614 5.05% Before the 15th of the following month - - (83,003) (4.72)% -

The Company NPKC Subsidiary of the Company Purchase 2,496,337 55.84% Before the 15th of the following month - - (980,097) (55.70)% Note

NPKC NEMK Same chairman Purchase 390,361 21.97% On open account 60 days - - (255,697) (24.11)% -

Note: The transactions listed in the left have been written off during the preparation of the consolidated financial statements.

(h) Information regarding receivables from related parties for which the amount exceeded $100 million or 20% of the Company’s paid-in capital：

Accounts receivable

company Counter party Nature of relationship Amount Turnover

Overdue receivables

-related parties Subsequent

Received

Allowance for

doubtful

account Amount Method

The Company HYPC Other related parties Other receivables-related parties：1,000,000 Note - - - -

NPKC The Company (Note 1) Parent company Accounts receivable-related parties：980,097 9.61 - - 761,830 -

NPKC PFGK Other related parties Other receivables-related parties：807,042 Note - - 129,120 -

Note: Receivables from related parties without the calculating of turnover rate.

Note 1: The transactions listed in the left have been written off during the preparation of the consolidated financial statements.

(i) Information regarding trading in derivative financial instruments：None.

(j) Business relationship and significant intercompany transactions were listed as follows：

No. Name Counterparty relation

Transaction details

Account name Amount Transaction terms

Percentage of Consolidated

Total Operating Revenues

or Total Assets

1 NPKC The Company 2 Sales 2,496,337 Before the 15th of the following month 32.59%

1 NPKC The Company 2 Accounts receivables 980,097 Before the 15th of the following month 2.15%

25

(Continued)

Note 1: Numbers are filled in as follows

1. 0 represents parent company 2. Subsidiaries are numbered from 1

Note 2: classifications of relation with counterparty are listed as follows:

1. Parent to subsidiary 2. Subsidiary to parent

3. between subsidiaries

Only data related to sales and accounts receivable of all the intercompany transactions and business contact are disclosed. The related purchase and accounts payable are not stated. Note 3: the transaction amount divided by the consolidated net operating revenue or consolidated total asset.

(2) Relevant information about reinvestment (investees of mainland china are not included)：

Relevant information about reinvestment for the three-month period ended March 31, 2016 is as follows:

Investor Investee Location Main Businesses and Products

Investment Amount Balance as of March 31, 2016 Net Income

(Loss) of the

Investee

Equity in Net

Income

(Net Loss)

Note March 31,

2016

December 31,

2015 Shares

Percentage of

Ownership Carrying value

The Company NPHK HK Business of electronic products 5,020,900 5,020,900 1,223,820,000 100.00% 11,937,630 (155,485) (155,485) Note

The Company NPUC USA Customer sales promotion 3,479 3,479 1,000,000 100.00% 10,475 (309) (309) Note

The Company FPC TAIWAN Production and marketing of PCBs 654,868 654,868 11,958,300 0.13% 732,836 10,446,085 13,113

Note: The transactions listed in the left have been written off during the preparation of the consolidated financial statements.

(3) Investment in Mainland China：

(a) Relevant information about the name of investees and the main business activities were as follows：

Investee

Company

Name

Main Businesses

and Products

Actual amount

of Paid-in

Capital

Method of

Investment

Accumulated

Outflow of

Investment from

Taiwan as of

Jan 1, 2016

Outflow/ Inflow amount

of current period

Accumulated

Outflow of

Investment from

Taiwan as of

March 31, 2016

Current

income of

investees

Direct and

Indirect

Shareholding

Ratio by the

Company

Investment

Gain (Loss)

(Note2)

Carrying

Values as of

March 31,

2016

Accumulated

Inward

Remittance of

Earnings as of

March 31, 2016

Outflow Inflow

NPKC Production and

marketing of PCBs

5,017,721 (Note 1) 5,017,721 - - 5,017,721 (155,704) 100.00% (155,704)

(Note 2)

11,923,682 -

Note 1: NPKC in Mainland China is invested through a company established in a third region.

Note 2: Investment gain or loss is recognized according to the financial statements reviewed by a CPA.

26

(Continued)

(b) Quota for investment in Mainland China：

Accumulated outflow investment

from Taiwan to China

Investment amounts authorized

by the investment commission,

MOEA

Maximum allowable

investment authorized

by the investment

commission, MOEA

5,017,721 5,017,721 21,797,126

(c) Information on significant transactions among investees in Mainland China：

Please refer to “significant information for relevant transaction” and “business contact and significant transactions” for direct or indirect significant

transactions (written off during the preparation of the consolidated financial statements), between the Company and its investees in Mainland China

for the three-month period ended March 31, 2016.

27

14. Segment information

The reconciliation of operating segments of the Group is as follows:

For the three-month period ended March 31, 2015

Domestic

American

Asian

Adjustments

and write off

Total

Revenue:

From external clients $ 7,862,433 - 173,225 - 8,035,658

Intersegments 6,398 9,150 3,253,749 (3,269,297) -

Total revenue $ 7,868,831 9,150 3,426,974 (3,269,297) 8,035,658

Income/Loss of reportable segments $ 619,891 2,802 124,550 (98,209) 649,034

For the three-month period ended March 31, 2016

Domestic

American

Asian

Adjustments

and write off

Total

Revenue:

From external clients $ 6,885,463 - 774,239 - 7,659,702

Intersegments 6,280 6,136 2,496,337 (2,508,753) -

Total revenue $ 6,891,743 6,136 3,270,576 (2,508,753) 7,659,702

Income/Loss of reportable segments $ (321,651) 8 (155,485) 155,794 (321,334)

Domestic

American

Asian

Adjustments

and write off

Total

Assets of reportable segments

March 31, 2015 $ 44,167,487 12,317 16,469,642 (13,691,032) 46,958,414

December 31, 2015 $ 43,054,354 11,037 17,231,704 (13,576,668) 46,720,427

March 31, 2016 $ 42,033,327 10,475 16,605,168 (13,110,943) 45,538,027

Domestic

American

Asian

Adjustments

and write off

Total

Liabilities of reportable segments

March 31, 2015 $ 6,048,499 - 4,131,695 (1,340,768) 8,839,426

December 31, 2015 $ 6,352,741 - 4,785,611 (1,119,538) 10,018,814

March 31, 2016 $ 5,704,783 - 4,545,760 (1,041,060) 9,209,483

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