Annual Report

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TSE Code 9907

TON YI INDUSTRIAL CORP.

2016 Annual Report

Ton Yi Industrial Corp. Website: http://www.tonyi.com.tw Market Observation Post System (MOPS) Website of Taiwan Stock Exchange Corporation: http://mops.twse.com.tw

Date of Publication: April 30, 2017

Ton Yi Industrial Corp. I.

Names, titles, contact phone numbers and e-mail addresses of the spokesman, and acting Spokesmen: Name

Title

Email Address

Chang, Yu-Hsin

Vice President

(06) 253-1131 ext. 490

cho@tonyi.com.tw

Hsu, Chin-Cheng

Vice President

(06) 253-1131 ext. 600

[email protected] com.tw

Wang, Shih-Ying

Manager

(06)253-1131 ext. 200

wangsir@tonyi.com.tw

Spokesman Acting Spokesmen

Telephone

II. Addresses and phone numbers of the head office and the plant: Name Head Office Plant

Address No. 837, Zhongzheng N. Rd., Niaosong Village, Yongkang District, Tainan City

III. Common Share Transfer Agent and Registrar Name

:Share Transfer Department, President Securities

Corp. Address: Base 1F, No.8, Dongxing Rd., Songshan Dist., Taipei City Website: http://www.pscnet.com.tw Tel

: (02) 2746-3797

IV. Auditors Auditors: Tzu-Yu Lin, Ming-Hsien Lee Company: PricewaterhouseCoopers Taiwan Address: 12F, No. 395, Linsen Rd., Sec. 1, Tainan City Website: http://www.pwc.tw Tel

: (06)234-3111

V. Name of stock exchange for securities transaction abroad and method to inquire into overseas securities: Nil VI. Website of the Company: http://www.tonyi.com.tw

Telephone (06) 253-1131

Table

of Contents

Item One. A Letter To Shareholders I. Operation Highlight In 2016 II. Summary of the Business Plan for 2017 III. The effect of the corporate development strategy of the Company, external competitive environment, legal environment, and macroeconomic environment uture Development Strategies Of The Company, The Potential Impact From External Competitive Environments, Legal Environments And Overall Operating Environments Two. Company Profile I. Date of Incorporation II. Milestones III. Mergers and Acquisitions, Direct Investment and Affiliates, and Corporate Reorganization in the most recent year to the date this report was printed acts Relation To Merger And Acquisition, Outward Investment Into Affiliated Enterprises And Reorganization In The Latest Year And As Of The Date The Annual Report Is Printed IV. Transfer or swap of shares in large quantity by Directors, Supervisors, or dominant shareholders holding more than 10% of shares, or, the change in the management, mode of business, or significant change in the content of operation and any others that may significantly affect the shareholders’ equity of the Company and the impact on the Company Three. Corporate Governance Report I. Corporate Organization II. Profiles of the Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and the heads of the functional departments and branches nformation Relating to Directors, supervisors and Managers’ III. Remuneration to the Directors, President and Vice Presidents in the most recent year IV. Corporate Governance V. Information on Accountant Fees VI. Information on replacement of CPA VII. The Chairman, President, the manager in finance or accounting has been working with the commissioned CPA firm or its affiliates VIII. Changes in the transfer of shareholding or pledge of shares under lien by the Directors, Supervisors, Managers, and shareholders holding 10% or more of Company shares in the most recent year to the date this report was printed IX. Top 10 shareholders by quantity of shareholding and are related parties or spouses to one another, or kindred within the 2nd tier under the Civil Code nformation Of Key Shareholders Holding Over 10% Of The Aggregate Total, Being Related Parties, Relatives Within The Second Degree Of Kinship Among Themselves

Item X. The quantity of shareholding of particular investee by the Company, the Directors, Supervisors, and Managers of the Company, or specific enterprise directly or indirectly controlled by the Company, and the overall proportion of shareholding Four. Status of Capital I. Capital stock And Shares (I)Source of capital (II)Composition of shareholders (III)Distribution of shares (IV)List of Dominant shareholders (V)Information on the stock market price, net value, earnings, stock dividend per share and related matters (VI)Dividend policy of the Company and pursuit of policy (VII)The influence of stock dividend proposed in the upcoming General Meeting of shareholders on the operation performance and earnings per share of the Company (VIII)Remuneration to the employees and Directors (IX)Repurchase of the Company shares II. Corporate bond III. Preferred Shares IV. Overseas Depository Receipts V. Employee Stock Options VI. RSA VII. Merger And Acquisition or acceptance of new shares from assignment VIII. Attainment of the capital utilization plan FIVE. Operation Highlights I. Contents of Business (I)Scope of business (II)Industry Outlook (III)Technology and R&D (IV)Business Development Plan in the Long and Short Run II. Market Sale and Production (I) Market Analysis (II) Primary use and production process of its premium products mportant applications and production processes of the main products (III) Supply of key materials (IV) The names of the customers that accounted for more than 10% of the total purchase (sale) of the total purchase (sale) in any of the last 2 years, and the amount and proportion of purchase (sale)he names of key suppliers/customers with purchase/sale amount accounting for over 10% of the aggregate in any single year over the past two years and their respective purchase/sale amount and percentage (V) Production volume and value in the last 2 years (VI) Sale volume and value in the last 2 years III. Information on employees in the last 2 years to the date this report was printedmployee databases over the past two years and up to the date of

Item the present Annual Report IV. Information on environmental protection expenditure V. Labor Management relation VI. Major Agreements SIX. Financial Position I. Condensed balance sheet, comprehensive income statement, names of CPAs and audit opinions covering the period of the past 5 years II. Financial Analysis covering the last 5 years III. Review Report of Auditing Committee on the Financial Statements of the Latest Year IV. Audited and certified consolidated financial statements of the most recent year V. Audited and certified separate financial statements of the most recent year VI. Insolvency of the Company and its affiliates in the most recent year to the date this report was printed Seven. Review and Analysis of Financial Position and Performance and Risks I. Analysis of financial position II. Financial Performance Analysis III. Cash flow analysis IV. Significant capital expenditures in the most recent year and the influence on the operation and financial position V. The primary cause of profit or loss for direct investment policy of the most recent year, the remedy and the investment plan for the year ahead VI. Risks and Assessment of Risks VII. Other materiality Eight. Special remarks I. Relevant information of affiliated enterprises II. Private placement of securities in the current year and as of the date of printing of the annual report III. Holding or disposal of the Company’s stocks by subsidiaries in the current year and as of the date of printing of the Annual Report IV. Other supplementation as necessary V. Occurrence of any event under Article 36, Paragraph 3, Subparagraph 2 of the Securities And Exchange Act which results in significant impacts upon the shareholders’ equity or securities price Appendix Audited and certified consolidated financial statements of the most recent year Appendix Audited and certified separate financial statements of the most recent year

One. Letter to Shareholders Ladies and gentlemen:

Following the recovery of global steel prices, the selling price of tin plates has also risen to the point where the Company was able to make a reasonable margin; meanwhile, sales volume of coldrolled steel, TMBP and tin plates had also increased by 6% in 2016 over the previous year. Improvement of both price and volume are reflected favorably in figures such as gross profits and operating profits and although the PET plant in China experienced a decline in sales volume, it still managed to maintain profits at a level comparable to the previous year. Despite increased price and volume, the full-year average selling price of tin plates was still 8% lower than the previous year. This, combined with the loss of revenues from the PET segment, produced consolidated revenues of NT$32.749 billion in 2016, down 9.5% from the previous year. Stand-alone revenues in 2016 amounted to NT$15.914 billion, representing a 7% decrease, but net income had increased by 81% to NT$1.069 billion. The loss of revenue was met by a significant increase in profits mainly due to the recovery of tin plate prices. The global economy had changed much in the previous year. While the entire world was anticipating a rate hike in the United States, currencies of other countries had weakened, especially the RMB, which caused certain impact on the Company's operations. The sudden collapse of the RMB one year before last eroded much of the Company's profits that year, but with the implementation of hedging measures, the Company managed to avoid loss of operating profits from the continuous weakening of the RMB last year. Nevertheless, the weaker currency did result in some losses on translation of net asset value, given the extensive investments the Company has in China. The Company operates and invests in many parts of the world, therefore it pays constant attention to the exchange rate changes. The Company values its duties not only to consumers, but to its employees and the environment as well. The Company prides itself in

producing safe, healthy and appealing tin cans for various food

and beverages. It adds value to the food supply chain by making consumers feel safe about the products that they purchase, and contributes to the society by refining its production procedures in ways that minimize impact

on the environment. Through after-sales service and research, we continue to refine

the quality of products and services offered and take step towards sustainability. To ensure food safety, the Company has constructed a national-grade laboratory and passed international certifications including JIS G3303, ISO9001, ISO14001, OHSAS 18001 & TOSHMS. In 2014, the Company adopted ISO 22000, CNS12681 and CNS labeling to assure customers of the safety of the things that we make. In 2017, we shall build on top of our existing advantage in tinplates, tin cans and PET bottles, and develop more advanced technology in the production of beverage containers. Our solid presence in China will enable us to capture the enormous potentials of the local beverage market and prepare us for

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expansions into the world market. For the coming future, Ton Yi Industrial will continue to devote attention towards corporate social responsibilities in areas such as technology improvements, talent training, environmental protection, food safety and corporate governance, and thereby creating a threewin among the employees, shareholders, and the society/environment.

Chairman: Chih-Hsien Lo

Manager : Feng-Fu Chen

2

Head of Accounting : Yi-Hsin Liu

1. 2016 business results Unit: NTD thousands (Consolidated financial statements)

2016

2015

Growth rate

Operating revenues

32,748,645

36,178,627

-9.5%

Gross profit

4,339,248

3,573,436

21.4%

Operating net profit

1,880,360

1,090,416

72.4%

Pre-tax profit

1,430,161

702,747

103.5%

Net income attributable to: Parent company shareholders

1,069,141

590,018

81.2%

Basic earnings per share ($)

0.68

0.37

83.8%

Explanation: 1. In 2016, sales volume of cold-rolled steel, TMBP and tinplates had increased by about 6% compared to the previous year, while selling price also recovered to contribute significant growth in terms of gross profit and operating profit. Although the PET plant in China experienced a decline in sales volume, it still managed to maintain profit at a level comparable to the previous year. Despite increased price and volume, the full-year average selling price of tinplates was still 8% lower than the previous year. This, combined with the loss of revenues from the PET segment, produced consolidated revenues that were 9.5% lesser compared to the previous year. 2. The loss of revenue was met by a significant increase in profit mainly due to the recovery of tinplate prices.

2. Summary of 2017 business plan Item

Production volume

Sales volume

Remarks Amount used for tinplate production 260,000 tons Amount used for can production 12,850 tons

TMBP (tons)

798,000

538,000

Tinplate (tons)

272,955

260,105

Can (thousands)

128,086

128,086

-

312,020

312,020

-

723,733

723,270

-

119,548

119,548

-

Overseas plant - tinplates (tons) Overseas plant - can production (thousands) Overseas plant - PET bottle (thousand cartons)

3

Overseas plant - Tetra Pak (thousand cartons) Overseas plant - PET cap (millions)

14,738

14,738

503

503

-

Operating strategy: To create value in food and beverage products, and satisfy consumers' demand for safety by utilizing nearly more than half a century of supply chain experience in the food and beverage industry. Production and sales policy: Develop strong supply chain system with branded manufacturers; monitor market changes and expand market presence for revenue generation.

3. The company's future strategies; impacts of the competitive environment, regulatory environment, and the overall business environment The Company adopts an operating strategy that incorporates 1 core value (quality management) and 4 distinctive advantages (group advantage, competitive advantage, capital advantage, and industry advantage). It aims to become the nation's largest and Asia's most important manufacturer of food-grade tinplates. The Company will continue its existing business strategy and work alongside the parent company - Uni-President Enterprises to expand production and sale of PET beverage, PET caps and related packaging materials in China. In the future, the Company will venture into the production and filling of canned beverage to further diversify its product line. In addition to leveraging on the four main advantages, the Company will also respond to external competition by developing distinctive, diverse product lines and customer groups that separate itself from competition. Also, by enforcing discipline and refining management practices within the organization, the Company will become more capable of responding to external competition. In light of rapid changes in the regulatory and economic environment, the Company will be introducing a broader range of internal and external training to help employees comprehend new laws in a timely manner. By engaging employees in constant learning and discussion, we hope to inspire appropriate responses to the environmental changes around us. The global economy has been presented with numerous challenges such as global warming, extreme weathers, political instability and war. Meanwhile, China's economy has grown to a scale capable of influencing world's decisions. It is in circumstances like these that inspire us to look for opportunities in every potential crisis, which is why we have been paying closer attention to climate change and raw material price, and actively maintain profitability by diversifying market exposure and looking for ways to reduce impact on production, cost and selling price. In light of these challenges, the Company will be focusing on the production of high-end TMBP and adopting strategies that not only

4

add value to its products, but maximize its existing advantages to secure and expand business performance. Additional investments will be made to expand the Company's production of PET-bottled and canned beverages in China, and introduce broader product and service categories to establish the Company's stature as an all-round producer of food and beverage packaging materials for long-term profitability. Given the prevailing trends of the tinplate, packaging material, and beverage-filling industry and the growing beverage market in China, the Company has actively been working with Uni-President Enterprises for the construction of streamlined production sites that handle everything from the manufacturing of PET caps and bottles to the bottling process, which enable us to offer customers a more complete range of products and services. This collaborative relationship has enabled Ton Yi Industrial to expand from metallic packaging to the production of PET bottles and beverages, and transform into an all-round producer of packaging materials dedicated to providing consumers with the utmost assurance on food safety.

5

Two. Company Profile I. Date of Establishment: April 14 1969 II. Milestones: Founding Phase: 1969~1973 The Company was founded by Mr. Chin-yen Kao and Uni-President Enterprise Corp. in a General Meeting in Tainan in 1969 with the appointment of Mr. Huan-yi Hung as the Chairman and Mao-lin Hsu as the President and stated capital of NT$16 million. The Company is titled as “Ton Yi Agricultural Industrial Corporation” with principal engagement in “Ton Yi chickens” and “Ton Yi ducks” processing. Transformation Phase: 1974~1983 Amidst the economic takeoff in Taiwan, the Company also set up the iron printing mill, canning plant and angled can plant and rechristened as “Ton Yi Industrial Corp.”Mr. Chin-yen Kao was elected the Chairman by the Board of Directors. The Company also acquired “Ton Yi Industrial Co., Ltd.”, a woven PP bags manufactory, to broaden the business horizon of the Company into the packaging material industry. Growing Phase: 1984~1993 The stable economic growth of Taiwan contributed to the gradual commercialization of the society with proper international interactions. The Company introduced the technological-knowhow from Japan to set up the tinplate plant, and was successfully listed in the Taiwan Stock Exchange Corporation (TWSE) for trading its stocks on January 29 1991. Expansion Phase: 1994~2003 Ton Yi is committed to global development with roots in Taiwan, and has set up a plant in Taiwan for the manufacturing of tin mill black plates (TMBP) with successful integration of the upstream, midstream and downstream industries in tin plate manufacturing. Furthermore, the Company has also set up a can manufacturing plant in Vietnam and “Jiangsu Ton Yi Tinplate Co., Ltd.” and “Fujian Ton Yi Tinplate Co., Ltd.” in Mainland China. Commercial running was kickoff in this phase. Globalization Phase: 2004~2010 In the wake of the rapid economic growth in Mainland China, the Company expanded its production lines in Guangzhou, Wuxi, and Zhangzhou for the manufacturing of canning and tinplate production in stable paces and buttressed its leading position of tinplate industry in Asia. Diversification Phase: 2011 and beyond In responding to the growing market of beverages in China, the Company teamed up with Uni-President Enterprise Corp to set up 8 bases for the vertical production of PET bottled beverages and packaging. These plants are located at “Zhangzhou of Fujian”, “Taizhou of Jiangsu”, “Xindu at Chengdu of Sichuan”, “Huizhou of Guangdong”, “Kunshan of Jiangsu”, “Beijing”, “Zhangjiang of Guangdong”, “Wenjiang at Chengdu of Sichuan”. Since then, the Company has established its foothold in PET bottle packaging and beverages operation and transform into a comprehensive packaging materials giant. Mr. Chin-yen Kao resigned from office as the Chairman on December 18, 2013. The Board has elected Mr. Chih-hsien Lo as the new Chairman.

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III. (I)

Mergers and Acquisitions, Direct Investment and Affiliates, and Corporate Reorganization in the most recent year to the date this report was printed: Corporate mergers and acquisitions, and reorganization in the most recent period to the date this report was printed: None.

(II) Direct Investment: The Company took advantage of the growth in the beverages market of China by teaming up with the business group in the expansion of its production capacity in China for PET bottle packaging materials and filling. The Company has invested to establish the “Zhangzhou Ton Yi Packaging Co., Ltd.”, “Taizhou Ton Yi Industrial Co., Ltd.”, “Kunshan Ton Yi Industrial Co., Ltd.”, “Beijing Ton Yi Beverages Co., Ltd.”, “Chengdu Ton Yi Industrial Co., Ltd.”, “Huizhou Ton Yi Industrial Co., Ltd., “Sichuan Ton Yi Industrial Co., Ltd.”, and “Zhanjiang Ton Yi Industrial Co., Ltd.”. All these plants are in commercial running.

I.

Transfer or swap of shares in large quantity by Directors, Supervisors, or dominant shareholders holding more than 10% of shares, or, the change in the management, mode of business, or significant change in the content of operation and any others that may significantly affect the shareholders’ equity of the Company and the impact on the Company: None.

7

Three. Corporate Governance Report I.

Corporate Organization

(I) Organizational Structure Purchasing Dept.

Shareholder’s Meeting

General Affairs Dept. Auditing Committee Board of Directors Remuneration Committee Ethical Corporate Management Task Force

Information Technology Dept. Human Resources Dept. Planning Dept. Financial Planning Dept.

Auditing Office

Accounting Dept.

BOD Secretariat

Finance Dept. Business Group

Chairman Of Board

TMBP Business Dept. Tinplats Busines Dept. Canning Business Dept.

General Manager

Production Managment Office Technical Group

GM Office

TMBP General Plant Tinplates General Plant Canning General Dept. Engineering Dept. QA R&D Dept. General Engineer Office Health & Safety Management Office Overseas Business Dept. PET Business Dept.

8

(II) Responsibilities of main departments Main Divisions Internal Audit Office

Responsibilities (1)

Auditing of corporate governance practice and internal control system

(2) Board Secretariat Office

Responsible for organizing meeting-related affairs for the board of directors and functional committees, and preparing files and minutes (1)

Integrity Promotion Task Force

Execution of company policies, instructions and rules

Establishes and implements programs that prevent dishonest conducts

(2)

Establishes integrity assurance and fraud prevention measures in accordance with laws

President's Office Human Resource Department

Carries out secretarial duties for the President (1)

Planning and execution of human resource policies

(2)

Establishment of human resource system, and planning and execution of training events

(1) IT Department

(2) (3) (1)

Planning Department

Procurement Department

(2) (3)

Responsible for the planning and execution of local/foreign investment, merger, acquisition, and joint venture projects Matters relating to advertising and promotion Matters relating to investor relations

(1)

Matters relating to procurement within the Company

(2)

Matters relating to imported and exported goods

(1)

Matters relating to raw material collection, transportation, and

General Affairs Department Financial Planning

product shipment (2)

Preparation of raw material processing reports

(3)

Matters relating to shareholder service

(1)

(1) Supervision of financial and accounting practice on invested

(1) (2)

businesses Research, design and improvement of accounting system Bookkeeping, tax filing, cost calculation, and analysis for the Company's transactions

(1)

Matters relating to funding and banking relations

(2)

Cash disbursement and management of negotiable instruments

Department Accounting Department

Treasury Department

Development and maintenance of the Company's management information system Develops specifications and standards, and installs and maintains applications, software, and hardware Security management for all information technology used by the Company

9

Main Divisions

Responsibilities (1) (2)

Health and Safety Office

Overseas Business Department

(3) (4)

Implements tasks relating to OHSAS 18001 - Occupational Health and Safety Management System Plans and implements safety and health management programs and actions Plans and executes safety and health training (4) Plans and executes health protection and health management actions

Responsible for establishing overseas factories and managing production of tinplates and cans Responsible for establishing overseas factories and managing

PET Business Department

production of PET packaging materials and the beverage filling business.

Technical Divisions TMBP Main Plant Tinplate Main Plant

Manufactures TMBP and cold rolled steel plate (roll) Manufactures tinplates and chromeplates (1)

Tin Can Main Plant

Produces printable metal and coating materials for tin can manufacturing

(2)

Produces containers for food, beverage, edible oil, and chemicals

(1)

Responsible for civil engineering, construction and maintenance works

Engineering Department

(2)

Responsible for pluming, electrical, and air conditioner maintenance works

(3)

Responsible for administration tasks concerning environmental protection

Quality Assurance R&D

(1)

Creates and executes research and development projects

(2)

New product development, quality improvement, and customer

Department

Master Engineer's Office

complaint handling (3)

Market sampling and specifications analysis

(1)

Matters relating to after-sale of the Company's products

(2)

Handling and response to customers' complaints about quality

Business Groups TMBP Division Tinplate Division

Sale of TMBP and cold rolled steel plate (roll) Sale of tinplates and chromeplates

10

Main Divisions

Responsibilities (1)

Tin Can Division

manufacturing (2) (1)

Production and Sales

Sells printable metal and coating materials for tin can

(2)

Management Office (3)

Sells containers for food, beverage, edible oil, and chemicals Collectively manages raw material and product requests of various factories, and allocates resources, schedules production, and manages inventory Responsible for communicating and coordinating between business departments and main plants on production and salesrelated issues Responsible for improving customers' satisfaction towards the Company's efficiency and promptness of delivery, thereby making products competitive

11

Major shareholders of corporate shareholders December 31, 2016 Name of corporate shareholder

Uni-President Enterprises Corporation

Kao Chyuan Investment Co., Ltd.

Major shareholders of corporate shareholders Kao Chyuan Investment Co., Ltd. .79% HSBC Taiwan in its Capacity as Master Custodian for Investment Account of BNP Paribas Singapore 3.20% JP Morgan Chase Bank in its Capacity as Master Custodian for Investment Account of Saudi Arabian Monetary Agency 3.05% Citibank (Taiwan) in its capacity as Master Custodian for Investment Account of GIC Pte Ltd. (Singapore) 2.24% JP Morgan Chase Bank in its Capacity as Master Custodian of T. Rowe Price Institutional Emerging Markets Equity Fund 1.43% Standard Chartered Bank in its capacity as Master Custodian for Vanguard Emerging Stock Market Index Fund 1.32% Po-Ming Hou 2.60%, Po-Yu Hou 2.27%, Xiu-Ling Kao 1.64%, Hsiu-Ren Liu 1.55% Xiu-Ling Kao 61.60%, Chih-Hsien Lo 20.12%, Lai-Huan Kao 13.40%, Han-Ti Kao 1.63%, Zi-Yi Kao 1.20%, Hsi-Ai Lo 1.08%, Chin-Yen Kao 0.97%

Key shareholders of major corporate shareholders December 31, 2016 Name of corporate entity Kao Chyuan Investment Co., Ltd.

Corporate entity's major shareholders Xiu-Ling Kao 61.60%, Chih-Hsien Lo 20.12%, Lai-Huan Kao 13.40%, Han-Ti Kao 1.63%, Zi-Yi Kao 1.20%, Hsi-Ai Lo 1.08%, Chin-Yen Kao 0.97%

HSBC Taiwan in its Capacity as Master Custodian for Investment Account of BNP Paribas Singapore JP Morgan Chase Bank in its Capacity as Master Custodian for Investment Account of Saudi Arabian Monetary Agency Citibank (Taiwan) in its capacity as Master Custodian for Investment No disclosure is required as the investment was held by a foreign Account of GIC Pte Ltd. (Singapore) individual. JP Morgan Chase Bank in its Capacity as Master Custodian of T. Rowe Price Institutional Emerging Markets Equity Fund Standard Chartered Bank in its capacity as Master Custodian for Vanguard Emerging Stock Market Index Fund

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Directors' background (2) April 30, 2017

Compliance of independence (Note)

Having more than 5 years work experience and the following qualifications Lecturer (or above) of commerce, law, Qualification finance, accounting, or any subject relevant to the Name company’s operations in a public or private tertiary institution Chih-Hsien Lo (Representative of Uni-President Enterprises) Jau-Kai Huang (Representative of Uni-President Enterprises) Jui-Sheng Wang (Representative of Uni-President Enterprises) Chih-Chung Chen (Representative of Uni-President Enterprises)

Certified judge, attorney, lawyer, accountant, or holder of professional qualification relevant to the company’s operations

Number

Commercial, of legal, financial, positions accounting or as other work independ experiences ent relevant to 1 2 3 4 5 6 7 8 9 10 director business in other operations as public required to compani perform the es assigned duties

-

-

V

-

- V -

- V V - V -

-

-

-

V

-

- V V -

- V V V -

-

-

-

V

-

- V V -

- V V V -

-

-

-

V

-

- V V -

- V V V -

-

Shing-Chi Liang

-

-

V

-

- V V V V V V V V

-

Kuo-Keng Chen

-

-

V

V V V V V V V V V V

-

Xiu-Ling Kao (Representative of Kao Chyuan Investment)

-

-

V

V - V - V V V - V -

-

Ming-Long Wang

V

V

V

V V V V V V V V V V

3

Chin-Cheng Chien

V

V

V

V V V V V V V V V V

1

Bin-Eng Wu

V

V

V

V V V V V V V V V V

-

Note: A "V" is placed in the box if the director or supervisor met the following conditions during active duty and two years prior to the date elected. (1)

Not employed by the Company or by any of its affiliated companies.

(2)

Not a director of any of the company's related companies (this restriction does not apply to independent director positions in the company, its parent company or subsidiary, which have been appointed in accordance with local laws or laws of the registered country).

(3)

Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.

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(4)

Not a spouse, relative of second degree, or direct kin of third degree or closer to persons described in the three preceding criteria.

(5)

Not a director, supervisor, or employee of any company that has 5% or higher ownership interest in the Company; nor a director, supervisor, or employee of any of the top-5 corporate shareholders.

(6)

Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any companies or institutions that have financial or business relationship with the Company.

(7)

Not a professional who provides commercial, legal, financial, accounting, or consulting services to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliated companies. However, this excludes members of the Remuneration Committee who have been appointed to exercise duties in accordance with Article 7 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded over the Counter.

(8)

Not a spouse or relative of second degree or closer to any other directors.

(9)

Does not meet any of the conditions stated in Article 30 of The Company Act.

(10)

Not elected as a government or corporate representative according to Article 27 of the Company Act.

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(2) Background information of the President, Vice Presidents, Assistant Vice Presidents, and heads of departments and branch offices April 30, 2017 Unit: shares; % Spouse or relatives of second Shares held by spouse and

Current shareholding

Shares held by proxy

Main career

Concurrent

degree or closer acting as

Date elected/

(academic)

positions in

managers

appointed

achievements

other

(Note 1)

companies

underage children Nationality

Title

Name

Gender

Shares held

Shareholding

Shares held

percentage

Shareholding

Shares held

percentage

Shareholding Title

Name

Relationship

percentage

President

The Republic of China

Feng-Fu Chen

Males

2016.6.23

240,167

0.0152

-

-

-

-

National Cheng Kung University

-

-

-

-

Vice President

The Republic of China

Chin-Cheng Hsu

Males

2013.9.1

41,081

0.0030

-

-

-

-

National Taiwan University

-

-

-

-

Vice President

The Republic of China

Yu-Hsin Chang

Males

2013.9.1

1,140

-

-

-

-

-

Ibaraki University (Japan)

-

-

-

-

Head of Finance

The Republic of China

Wen-Lin Chuang

Males

2016.8.5

-

-

-

-

-

-

Feng Chia University

-

-

-

-

Head of Accounting

The Republic of China

Yi-Hsing Liu

Males

2016.8.5

-

-

-

-

-

-

Sun Yat-Sen University

-

-

-

-

Note 1: Key managers previously employed by the auditing accounting firm or any of its affiliated company: None.

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3. Remuneration paid to directors, the President, and Vice Presidents in the last year (1) Remuneration to directors (including independent directors) (aggregate disclosure of directors' names and range of remuneration) December 31, 2016 Unit: NTD thousands Director’s remuneration

Compensation as company employee

The sum of A, B,

The sum of A, B, C,

C, and D as a Compensation

Director remuneration

Fees for services

percentage of net

(C)

rendered (D)

income

Pension (B) (A)

D, E, F, and G as a Salaries, bonuses, special allowances etc

Employee remuneration

percentage of net

(G)

income

Pension (F)

Compensation

(E)

from

Title

Name

All companies All

All

All

All

All

All

companies

companies

companies

companies

companies

companies

included in the

All

included

financial statements

The Company

statements

statements

financial statements

included in the financial statements

included in the financial statements

included in the financial

The Company

financial

in the

The Company

financial

included

The Company

in the

The Company

included

The Company

the

The Company

The Company

included in

statements

in the

Amount Amount Amount

Amount

financial paid in

paid in

paid in

paid in

cash

shares

cash

shares

The Company

All companies

statements

companies included

investments other than subsidiaries

in the financial statements

Chairman

Chih-Hsien Lo (Representative of UniPresident Enterprises)

Director

Chin-Yen Kao (Note 1) (Representative of UniPresident Enterprises) Chang-Sheng Lin (Note 1) (Representative of UniPresident Enterprises) Lung-Yi Lin (Note 1) (Representative of UniPresident Enterprises) Jau-Kai Huang (Note 1) (Representative of UniPresident Enterprises)

-

-

1,750

1,750

11,987

11,987

5,560

5,560

1.80%

1.80%

21,242

21,242

-

-

487

-

487

-

3.84%

3.84%

-

-

-

360

360

-

-

1,830

1,830

0.20%

0.20%

-

-

-

-

-

-

-

-

0.20%

0.20%

-

Jui-Sheng Wang (Note 1) (Representative of UniPresident Enterprises) Chih-Chung Chen (Note 1) (Representative of UniPresident Enterprises) Xiu-Ling Kao (Representative of Kao Chyuan Investment)

Kuo-Keng Chen

Shing-Chi Liang (Note 3) Ming-Long Wang Director

Independent

Chin-Cheng Chien

Bin-Eng Wu

Note 1: Corporate entity Uni-President Enterprises had four director representatives: Chih-Hsien Lo, Chin-Yen Kao (departed on 2016.4.1), Chang-Sheng Lin (service ended on 2016.6.23), Lung-Yi Lin (service ended on 2016.6.23), Jau-Kai Huang (onboard since 2016.4.6), Jui-Sheng Wang (onboard since 2016.6.23), and Chih-Chung Chen (onboard since 2016.6.23). Note 2: Corporate entity Kao Chyuan Investment had 1 director representative (Xiu-Ling Kao). Note 3: Mr. Shing-Chi Liang, one of the Company's directors, was assigned a vehicle; the amount of rent paid to President Tokyo Corporation averaged NT$21,000 per month.

16

Remuneration bracket table December 31, 2016 Name of director

Range of remuneration paid to the Company’s directors

Below NT$ 2,000,000

Sum of the first 7 items (A+B+C+D+E+F+G) All companies included in the financial The Company statements

Sum of first 4 items (A+B+C+D) All companies included in the financial The Company statements Chih-Hsien Lo, Chin-Yen Kao, Chang-Sheng Lin, Lung-Yi Lin, JauKai Huang, JuiSheng Wang, ChihSame as Chung Chen, described on Shing-Chi Liang, the left Kuo-Keng Chen, Ming-Long Wang, Chin-Cheng Chien, Bin-Eng Wu, XiuLing Kao, Kao Chyuan Investment (Note 2)

Chih-Hsien Lo, Chang-Sheng Lin, Lung-Yi Lin, JauKai Huang Jui-Sheng Wang, Kuo-Keng Chen Ming-Long Wang, Chin-Cheng Chien

Same as described on the left

Bin-Eng Wu, XiuLing Kao Kao Chyuan Investment (Note 2)

NT$2,000,000 (inclusive) ~ NT$5,000,000 (non-inclusive)

-

-

Chin-Yen Kao

Same as described on the left

NT$5,000,000 (inclusive) ~ NT$10,000,000 (non-inclusive)

-

-

Chih-Chung Chen

Same as described on the left

Uni-President Enterprises, ShingChi Liang

Same as described on the left

Same as NT$10,000,000 (inclusive) ~ NT$15,000,000 Uni-President described on Enterprises (Note 1) (non-inclusive) the left NT$15,000,000 (inclusive) ~ NT$30,000,000 (non-inclusive)

-

-

-

-

NT$30,000,000 (inclusive) ~ NT$50,000,000 (non-inclusive)

-

-

-

-

NT$50,000,000 (inclusive) ~ NT$100,000,000 (non-inclusive)

-

-

-

-

NT$100,000,000 and above

-

-

-

-

15

15

15

15

Total

Note 1: Corporate entity Uni-President Enterprises had four director representatives: Chih-Hsien Lo, Chin-Yen Kao (departed on 2016.4.1), Chang-Sheng Lin (service ended on 2016.6.23), Lung-Yi Lin (service ended on 2016.6.23), Jau-Kai Huang (onboard since 2016.4.6), Jui-Sheng Wang (onboard since 2016.6.23), and ChihChung Chen (onboard since 2016.6.23).

17

Note 2: Corporate entity Kao Chyuan Investment had 1 director representative (Xiu-Ling Kao). Note 3: Mr. Shing-Chi Liang, one of the Company's directors, was assigned a vehicle; the amount of rent paid to President Tokyo Corporation averaged NT$21,000 per month.

18

(2) Remuneration to the President and Vice Presidents December 31, 2016 Unit: NTD thousands Salary (A)

Title

Name

President

Feng-Fu Chen - Note 1

Vice President

Chin-Cheng Hsu - Note 2

Pension (B)

Employee remuneration (D)

and D as a percentage of net

income (%) All companies All All All All included in the companies companies companies The Company companies financial The included The included The included The included statements Company in the Company in the Company in the Company in the Amount Amount Amount Amount financial financial financial financial paid in paid in paid in paid in statements statements statements statements cash shares cash shares

5,195

5,195

-

-

9,457

9,457

458

-

458

-

1.41%

1.41%

Compensation from investments other than subsidiaries

The sum of A, B, C Bonus and special allowances (C)

-

Yu-Hsin Chang - Note 3

Note 1: Mr. Feng-Fu Chen, the Company's President, came onboard since 2016.6.23 and was assigned a vehicle; the amount of rent paid to President Tokyo Corporation averaged NT$46,000 per month. Note 2: Vice President Chin-Cheng Hsu was assigned a vehicle; book value as at 2016.12.31 was NT$472,000. Note 3: Vice President Yu-Hsin Chang was assigned a vehicle; book value as at 2016.12.31 was NT$458,000.

Remuneration bracket table Range of remuneration to the President and Vice Presidents

Name of President and Vice Presidents The Company

All companies included in the financial statements

-

-

Chin-Cheng Hsu, Yu-Hsin Chang

Same as described on the left

Below NT$ 2,000,000 NT$2,000,000 (inclusive) ~ NT$5,000,000 (non-inclusive) NT$5,000,000 (inclusive) ~ NT$10,000,000 (non-inclusive)

Feng-Fu Chen

NT$10,000,000 (inclusive) ~ NT$15,000,000

Same as described on the left

-

-

-

-

-

-

-

-

NT$100,000,000 and above

-

-

Total

3

3

(non-inclusive) NT$15,000,000 (inclusive) ~ NT$30,000,000 (non-inclusive) NT$30,000,000 (inclusive) ~ NT$50,000,000 (non-inclusive) NT$50,000,000 (inclusive) ~ NT$100,000,000 (non-inclusive)

19

(3) Managers receiving employee remuneration and details of remuneration received: December 31, 2016 Unit: NTD thousands Title

Name

President Managers

Chin-Cheng Hsu

Vice President

Yu-Hsin Chang

Head of Accounting

Total

Total as a percentage of net income (%)

661

0.06%

Feng-Fu Chen

Vice President

Head of Finance

Amount Amount paid in paid in cash shares

-

661

Wen-Lin Chuang Yi-Hsing Liu

(4) Amount of remuneration paid in the last 2 years by the Company and all companies included in the consolidated financial statements to the Company's directors, supervisors, President, and Vice Presidents, and their respective proportions to standalone and consolidated net income, as well as the policies, standards, and packages by which they were paid, the procedures through which remunerations were determined, and their association with business performance and future risks. (1)Remuneration paid by the Company and all companies included in the consolidated financial statements to the Company's directors, supervisors, President and Vice Presidents in the last two years, and percentage relative to consolidated or standalone net income: Title Director President/Vice President

2015 6.31% 2.33%

2016 4.04% 1.41%

(2)The Company has assembled a Remuneration Committee as required by law. This committee is responsible for the establishment and regular review of the Company's compensation policies, systems, standards, structures, packages, the procedures through with decisions are made, and association between performance and future risks: Directors: Remuneration is determined according to the Company's Articles of Incorporation and based on directors' participation and contribution to company operations, and in reference to industry peers. President/Vice Presidents: Remuneration is determined according to the Company's Articles of Incorporation and salary policies, and in reference to industry peers.

20

4. Corporate governance (1) Functionality of board of directors

Functionality of board of directors A total of Title

Chairman

Director

Independent Director

6

meetings were held in 2016; below are directors' attendance records: Actual attendance

Proxy attendance

Percentage of actual attendance (%)

6

-

100%

-

1

-

Departed on 2016.4.1

2

-

100%

Service ended on 2016.6.22

-

2

-

Service ended on 2016.6.22

5

-

100%

Onboard since 2016.4.6

4

-

100%

Onboard since 2016.6.23

4

-

100%

Onboard since 2016.6.23

4

2

67%

Shing-Chi Liang

6

-

100%

Kuo-Keng Chen

6

-

100%

Ming-Long Wang

6

-

100%

Chin-Cheng Chien

6

-

100%

Bing-En Wu

6

-

100%

Name Chih-Hsien Lo (Representative of Uni-President Enterprises) Chin-Yen Kao (Representative of Uni-President Enterprises) Chang-Sheng Lin (Representative of Uni-President Enterprises) Lung-Yi Lin (Representative of Uni-President Enterprises) Jau-Kai Huang (Representative of Uni-President Enterprises) Jui-Sheng Wang (Representative of Uni-President Enterprises) Chih-Chung Chen (Representative of Uni-President Enterprises) Xiu-Ling Kao (Representative of Kao Chyuan Investment)

Remarks

Other remarks: 一、 For board of directors meetings that meet any of the following descriptions, state the date, session, the discussed agenda, independent directors' opinions and how the company has responded to such

21

opinions: (一) Conditions described in Article 14-3 of the Securities and Exchange Act: Note 1. (二) Any other documented objections or qualified opinions raised by independent director against board resolution in relation to matters other than those described above: None. 二、 Disclosure regarding avoidance of interest-conflicting agendas, including the names of directors concerned, the agendas, the nature of conflicting interests, and the voting process: None. 三、 Enhancements to the functionality of board of directors in the current and most recent year, and the progress of such enhancements: None.

22

Note 1: Independent directors' opinions or resolutions on major agendas Board meeting

Agenda and subsequent actions

The 15th board 17th meeting 2016.3.24

1. Proposal for 2015 remuneration to the Company's employees and directors. 2. Proposal for 2015 compensation to the Company's directors and independent directors. 3. Review for auditor's independence - 2016. 4. Re-election of directors (including independent directors). 5. Discussion for "Acceptance of Nomination from Shareholders with More than 1% Ownership Interest for the 16th Directors (Including Independent Directors) Election" Independent directors' opinions: None.

Conditions described in Article 14-3 of the Securities and Exchange Act V

Objections or qualified opinions from independent directors

V

None

V

None

V

None

None

Company's response to independent directors' opinions: N/A Resolution: passed by all attending directors. The 15th board 18th meeting 2016.5.10

1. Nomination of candidates for the 16th board of directors (including independent directors). Independent directors' opinions: None. Company's response to independent directors' opinions: N/A Resolution: passed by all attending directors.

The 16th board 1st meeting 2016.6.23

The 16th board 2nd meeting 2016.8.5

1. Assembly of the 2nd Audit Committee, and appointment of 3 independent directors as Audit Committee members. 2. Appointment of 3 independent directors as the Company's 3rd Remuneration Committee members. Independent directors' opinions: None. Company's response to independent directors' opinions: N/A Resolution: passed by all attending directors. 1. Renewal of insurance coverage for the Company's directors and key employees. 2. 2016 audit remuneration for the appointed auditor. 3. Continuance of Mr. Hsiang-Chu Liang's appointment as Stationed Director. 4. Amendments to the Company's "Asset Acquisition and

23

Disposal Procedures." 5. Amendments to the Company's "Endorsement, Guarantee and Third Party Loan Approval Policy." Independent directors' opinions: None. Company's response to independent directors' opinions: N/A Resolution: passed by all attending directors. The 16th board 5th meeting 2017.3.28

1. Proposal for 2016 remuneration to the Company's employees and directors. 2. Amendments to the Company's "Asset Acquisition and Disposal Procedures." (This agenda will be submitted for resolution during annual general meeting.) 3. Amendments to the Company's "Endorsement, Guarantee and Third Party Loan Approval Policy." Independent directors' opinions: None. Company's response to independent directors' opinions: N/A Resolution: passed by all attending directors.

24

V

None

(2)Functionality of the Audit Committee:

Functionality of the Audit Committee A total of 6 Audit Committee meetings were held in 2016; independent directors' attendance records are summarized below: Title

Name

Actual attendance

Actual attendance rate

Remarks

(%)

Independent Director

Ming-Long Wang

6

100%

Chin-Cheng Chien

6

100%

Bin-Eng Wu

6

100%

Other remarks: 1. For Audit Committee meetings that meet any of the following descriptions, state the date and session of board of directors meeting held, the discussed agenda, the Audit Committee's resolution, and how the company has responded to Audit Committee's opinions. (1)

Conditions described in Article 14-5 of the Securities and Exchange Act: Note 1.

(2) Other than those described above, any resolutions unapproved by the Audit Committee but 2. 3.

passed by more than two-thirds of directors: None. Avoidance of conflicting-interest agendas by independent directors: None. Communication between independent directors and internal/external auditors: External auditors brief independent directors on findings discovered from financial statement audits/reviews during quarterly Audit Committee meetings.

25

Note 1: Audit Committee's opinions or resolutions on major agendas Board meeting The 15th board 17th meeting 2016.3.24

Agenda and subsequent actions

1. Passed the 2015 business report, standalone financial statements, and consolidated financial statements.

Conditions described in Article 14-5 of the Securities and Exchange Act (Article 14-3 does not apply)

V

Audit Committee's opinions: None. Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

The 15th board 18th meeting 2016.5.10

1. The Company's 2016 first quarter consolidated financial statements.

V

Audit Committee's opinions: None. Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

The 16th board 2nd meeting 2016.8.5

1. Passed the Company's 2016 second quarter consolidated financial statements. Audit Committee's opinions: None.

V

Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

The 16th board 3rd meeting 2016.11.8

1. Passed the Company's 2016 third quarter consolidated financial statements. Audit Committee's opinions: None.

V

Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

The 16th board 4th meeting 2016.12.20

V

1. Passed the 2017 audit plan. 2. Passed the 2017 business plan. Audit Committee's opinions: None. Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

The 16th board 5th meeting 2017.3.28

1. Passed the 2016 business report, standalone financial statements, and consolidated financial statements. Audit Committee's opinions: None. Company's response to Audit Committee's opinions: None Resolution: passed by all attending members of the Audit Committee.

26

V

(3) Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies Actual governance

Assessment criteria

1. Has the company established and disclosed its corporate governance principles based on "Corporate Governance BestPractice Principles for TWSE/TPEX Listed Companies"?

2. Shareholding structure and shareholders' interests (1) Has the company implemented a set of internal procedures to handle shareholders' suggestions, queries, disputes and litigations?

Yes No





(2) Is the company constantly informed of the identities of its major shareholders and the ultimate controller?



(3) Has the company established and implemented risk management practices and firewalls for companies it is affiliated with?



(4) Has the company established internal policies that prevent insiders from trading securities against non-public information? 3. Assembly and obligations of the board of directors (1) Has the board devised and implemented policies to ensure diversity of its members?





Summary

The Company established its "Corporate Governance Principles" on November 10, 2014 after being notified by Taiwan Stock Exchange Corporation about regulatory amendments. Following board of directors' approvals dated March 25, 2015 and December 10, 2016, the amended Articles were fully disclosed on the Company's website and Market Observation Post System.

(1) The Company has assigned dedicated personnel to properly address shareholders' recommendations, queries and opinions. The Company engages legal consultants whenever a query involves legal issue. Internal procedures are still being created. (2) The Company identifies its major shareholders and ultimate controller based on the shareholder registry provided by the share administration agent. Changes in insider shareholding are reported on a regular basis. (3) The Company has implemented internal control policies, firewalls, and supervisory guidelines for subsidiaries to ensure effective control of corporate risks.

Deviation and causes of deviation from Corporate Governance BestPractice Principles for TWSE/TPEX Listed Companies

None.

None.

(4) Article 10 of the Company's "Corporate Governance Principles" prohibits insiders from trading securities against non-public information for the purpose of protecting shareholders' interests.

(1) Article 20 of the Company's "Corporate (1) Complies with Governance Principles" outlines the required "Corporate capabilities and diversity guidelines for the Governance board of directors. Best-Practice Principles for TWSE/TPEX

27

Actual governance

Assessment criteria

Yes No

Summary

Deviation and causes of deviation from Corporate Governance BestPractice Principles for TWSE/TPEX Listed Companies

Listed Companies" √ (2) The Company has not established any (2) Does not functional committee other than the comply with Remuneration Committee. "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies"

(2) Apart from the Remuneration Committee and Audit Committee, has the company assembled other functional committees at its own discretion?

√ (3) Currently under evaluation.

(3) Has the company established a set of policies and assessment tools to evaluate the board's performance? Is performance evaluated regularly at least on an annual basis?

(4) Are external auditors' independence assessed on a regular basis?



(4) Financial statement auditors' independence is evaluated once a year by the Audit Committee; the most recent evaluation was reported and passed during the board meeting dated March 24, 2016 (Note 1).

4. Where the company is a TWSE/TPEX listed company, has the company designated a department or personnel that specializes (or is involved) in corporate governance affairs (including but not limited to providing directors/supervisors with the information needed to perform their duties, convention of board meetings and shareholder meetings, company registration and changes, preparation of board meeting and shareholder meeting minutes



The Company's Board Secretariat Office, Planning Department and Share Administration Section are responsible for corporate governance-related affairs such as: providing directors and supervisors with information needed to perform their duties, organizing board meetings and shareholder meetings, making company registrations and amendments, and preparing board/shareholder meeting minutes. An Integrity Promotion Task Force was assembled on March 28, 2017 to further enforce corporate governance affairs.

28

(3) Does not comply with "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies" (4) Complies with "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies"

None.

Actual governance

Assessment criteria

Yes No

Summary

Deviation and causes of deviation from Corporate Governance BestPractice Principles for TWSE/TPEX Listed Companies

etc.)? 5. Has the company provided proper communication channels and created dedicated sections on its website to address corporate social responsibility issues that are of significant concern to stakeholders (including but not limited to shareholders, employees, customers and suppliers)?



6. Does the company engage a share administration agency to handle shareholder meeting affairs?



7. Information disclosure (1) Has the company established a website that discloses financial, business, and corporate governance-related information? (2) Has the company adopted other means to disclose information (e.g. English website, assignment of specific personnel to collect and disclose corporate information, implementation of a spokesperson system, broadcasting of investor conferences via the company website)? 8. Does the company have other information that enables a better understanding of the company's corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders' interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements, implementation







The Company uses numerous channels to communicate with stakeholders, including: investor, customer, supplier and employee web pages and corresponding service units. It also provides whistleblowing channels that people may use to report dishonest conducts. A stakeholder section has been created on the Company's website to properly respond to key corporate social responsibility issues that are of concern to stakeholders.

None.

The Company commissions the Shareholder Service Department of President Securities Corp. to handle matters relating to shareholder meetings.

None.

(1) The Company has established its own website and made disclosures over the Internet as required by law. (2) The Company adopts a spokesperson system and assigns dedicated personnel to gather information and upload disclosures. An English website is also available with important information synchronized with the Chinese version.

1. Employees' rights: (1) Every employee is covered by life insurance and accident insurance. (2) Employee health checkups are organized on a regular basis. (3) The Company provides employees with a broad range of subsidies from wedding, child birth, and funeral to education, and distributes festive bonus and gifts on special occasions. 2. Supplier relations, stakeholders' rights and customer policy: The Company purchases raw materials from

29

None.

None.

Actual governance

Assessment criteria

of customer policy, and insuring against liabilities of company directors and supervisors)?

9. Please explain the improvements made, based on the latest Corporate Governance Evaluation results published by TWSE Corporate Governance Center, and propose enhancement measures for any issues that are yet to be rectified.

Yes No

Summary

local suppliers where possible, which creates employment opportunities while helping local companies improve competitiveness. 3. Directors' education: All directors had completed the required training hours in 2016. (Note 2) 4. The Company purchases liability insurance to insure itself against liabilities of its directors and supervisors. √ The Company was ranked among the top 20% in the 2016 evaluation. Below are the improvements prioritized for 2017: 1. The board of directors will evaluate financial statement auditors' independence at least once a year and disclose results in annual reports; 2. The Company will complete payment of dividends within 30 days after the ex-dividend date; 3. The Company will disclose in its annual report progress concerning the execution of annual general meeting resolutions; 4. The Company will disclose in the annual report details concerning independent directors' opinions toward major board resolutions, and how independent directors' opinions are addressed by the Company; and 5. The Company will disclose in the annual report details concerning Audit Committee's opinions toward major agendas and how Audit Committee's opinions are addressed by the Company. In the future, the Company will ensure the effectiveness of its corporate governance practices on all levels of operation, and make more transparent disclosure of information in shareholders' best interest

30

Deviation and causes of deviation from Corporate Governance BestPractice Principles for TWSE/TPEX Listed Companies

None.

Note 1: Assessment criteria for auditors' independence Item No.

01

02

03

Assessment criteria Do auditors disassociate themselves from involvement in any service that present a direct or indirect conflict against their own interests, to the extent capable of compromising their objectivity or independence? Do auditors maintain independence, both in formality and in reality, when auditing, reviewing and confirming financial statements, conducting special inspections, and issuing the final opinions? Besides the audit service team, do other licensed CPAs, owners, related enterprises and allied partners of the accounting firm maintain independence to the Company?

Assessmen t result

Complian ce of independe nce

Yes

Yes

Yes

Yes

Yes

Yes

04

Do auditors perform their services in an honest, diligent and professional manner?

Yes

Yes

05

Are auditors able to remain objective when performing service, and avoid professional judgments from being compromised by bias, conflict of interest or interests at stake?

Yes

Yes

06

Auditors are able to maintain integrity and objectivity without lack or loss of independence.

Yes

Yes

31

Note 2 Directors' Education

Directors' Education - 2016 Education progress Course date Director

1

2

ChihHsien Lo Xiu-Ling Kao

20160422

4

20160422

Taiwan Corporate Governance Association

Taiwan Corporate Governance Association

20161028 Taiwan Institute of Directors Business Council for Sustainable Development

Jui-Sheng 20161028 Taiwan Institute of Directors Wang

Jau-Kai Huang

20161103

Accounting Research and Development Foundation

20160422

Taiwan Corporate Governance Association

20161028 Taiwan Institute of Directors 20160831

5

Course name

20161028 Taiwan Institute of Directors

20161013

3

Organizer

ChihChung Chen

Business Council for Sustainable Development

Taiwan Corporate Governance 20160930 Association

20161028 Taiwan Institute of Directors

6

KuoKeng Chen

7

ShingChi Liang

8

9

10

MingLong Wang

ChinCheng Chien

Bin-Eng Wu

20161103

Accounting Research and Development Foundation

20160331 Securities & Futures Institute

How Businesses Should Respond to White Collar Crimes Planning for Global Presence and Cross-border Operations How Businesses Should Respond to White Collar Crimes Planning for Global Presence and Cross-border Operations Post-Paris Agreement Low-carbon Development Association Planning for Global Presence and Cross-border Operations Notes on Internal Control and Internal Audit When Preparing Consolidated Statements and Legal Risks of "Misstatement" How Businesses Should Respond to White Collar Crimes Planning for Global Presence and Cross-border Operations Post-Paris Agreement Low-carbon Development Association Fiduciary Duty - Directors' and Supervisors' Fiduciary Duties and Practices Fiduciary Duty - Implications of Directors' and Supervisors' Obligations Planning for Global Presence and Cross-border Operations Notes on Internal Control and Internal Audit When Preparing Consolidated Statements and Legal Risks of "Misstatement" 2016 Corporate Governance Forum - Insider Trading and Corporate Social Responsibilities Conference

Hours

3 3 3 3 3 3 6 3 3 3 3 3 3 6 3

20161020

Financial Supervisory Commission

20160504

Taiwan Academy of Banking and Corporate Governance Forum - Adapting to the Finance Tax Reform

3

20161109 Securities & Futures Institute

Risk Control and Directors' and Supervisors' Legal Responsibilities in Misstated Reports - A Case Study

3

20160831 Securities & Futures Institute

Rules and Case Studies on Competition for Corporate Management

3

The 11th Taipei Corporate Governance Forum

20161109 Securities & Futures Institute

20160126 Securities & Futures Institute 20160325

Taiwan Corporate Governance Association

32

Risk Control and Directors' and Supervisors' Legal Responsibilities in Misstated Reports - A Case Study 2016 Corporate Governance Forum - Insider Trading and Corporate Social Responsibilities Conference Fiduciary Duty - Implications of Directors' and Supervisors' Obligations

3

3 3 3

(4) Composition, responsibilities, and functionality of the Remuneration Committee: (1) Remuneration Committee members Having more than 5 years work experience

Compliance of independence (Note 1)

and the following qualifications Lecturer (or

Identity

above) of Qualification commerce, law, finance,

Name

Certified judge,

Commercial,

attorney, lawyer,

legal, financial,

accountant, or

accounting or

holder of

other work

accounting, or any professional

experiences

subjects relevant

qualification

required to

to the Company's

relevant to the

perform the

operations in a

company's

assigned duties

public or private

operations

1

2

3

4

5

6

7

8

Number of positions as Remuneration Committee member in other public companies

Remarks

tertiary institution Ming-Long Wang

V

V

V

V

V

V

V

V

V

V

V

2

-

Independent Chin-Cheng Director Chien

V

V

V

V

V

V

V

V

V

V

V

3

-

Bin-Eng Wu

V

V

V

V

V

V

V

V

V

V

V

-

-

Note 1: Members who meet the following conditions at any time during active duty and two years prior to the date of appointment will have a "V" placed in the corresponding boxes. (1) Not employed by the Company or by any of its affiliated companies. (2) Not a director or supervisor of the Company or any of its affiliated companies. This restriction does not apply to independent director positions in the company, its parent company or subsidiary, which have been appointed in accordance with local laws or laws of the registered country. (3) Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company. (4) Not a spouse, a relative of second degree or closer, or a direct kin of third degree or closer to anyone listed in the three preceding criteria. (5) Not a director, supervisor, or employee of any company that has 5% or higher ownership interest in the Company; nor a director, supervisor, or employee of any of the top-5 corporate shareholders. (6) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any companies or institutions that have financial or business relationship with the Company. (7) Not a professional who provides commercial, legal, financial, accounting, or consulting services to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliated companies. (8) Does not meet any of the conditions stated in Article 30 of The Company Act.

33

(2) Functionality of the Remuneration Committee 1. The Company's Remuneration Committee consists of 3 members. 2. Duration of service: The first Remuneration Committee served from June 20, 2013 to June 19, 2016; a re-election was held on June 23, 2016 and all three committee members remained. The second Remuneration Committee serves from June 23, 2016 to June 22, 2019. A total of 2 Remuneration Committee meetings were held in 2016; details of members' attendance are as follows: Title

Independent Director

Name

Actual attendance

Proxy attendance

Percentage of actual attendance (%)

Ming-Long Wang

2

-

100%

Chin-Cheng Chien

2

-

100%

Bin-Eng Wu

2

-

100%

Remarks

Other remarks: 1. In the event where the Remuneration Committee's proposal is rejected or amended in a board of directors meeting, please describe the date and session of the meeting, details of the agenda, the board's resolution, and how the company had handled the Remuneration Committee's proposals (describe the differences and reasons, if any, should the board of directors approve a solution that was more favorable than the one proposed by the Remuneration Committee): None. 2. Should any member object or express qualified opinions to the resolution made by the Remuneration Committee, whether on-record or in writing, please describe the date and session of the meeting, details of the agenda, the entire members' opinions, and how their opinions were addressed: None.

34

(5) Fulfillment of social responsibilities: Actual governance Assessment criteria Yes No

1. Sound corporate governance (1) Does the company have a corporate social responsibility policy or system in place? Is progress reviewed on a regular basis?

(2) Does the company organize social responsibility training on a regular basis? (3) Does the company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior management and reports its progress to the board of directors? (4) Has the company implemented a reasonable remuneration system that associates employees' performance appraisals with CSR? Is the remuneration system supported by an effective reward/discipline system?









Summary

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies

(1). The "Corporate Social Responsibility Code (1). No deviations of Conduct" was first established on March were found. 30, 2010 to outline detailed CSR practices and principles. The code of conduct was later revised on April 23, 2013 to accommodate the introduction of independent directors and Audit Committee. (2). In addition to participating in courses held (2). No deviations by professional institutions on an were found. unscheduled basis, internal courses are also being organized on a group level. (3). The "Corporate Social Responsibility Task (3). No deviations Force" was assembled in April 2014 were found. specifically to execute and review the Company's CSR policy and system.

(4). Employees' compensation is determined in (4). No deviations a rational manner in reference to the local were found. salary market and price index. Employees' performance is reviewed on a regular basis, whereas bonuses and salary adjustments are made annually based on performance of the Company and individual employees. By adopting a defined and effective performance appraisal system that reflects employees' performance, the Company hopes to recruit and retain the industry's top talents and inspire them to accomplishing the Company's goal towards sustainability.

35

Actual governance Assessment criteria Yes No

Fostering a sustainable environment (1) Is the company committed to achieving efficient use of resources, and using renewable materials that produce less impact on the environment?

Summary

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies

2.



(2) Has the company developed an appropriate environmental management system, given its distinctive characteristics?



(3) Is the company aware of how climate changes affect its business activities? Are there any actions taken to measure and reduce greenhouse gas emission and energy use?



(1). The Company has long been dedicated to (1). No deviations environmental protection and making more were found. effective use of resources. This was the reason why its environmental policy was created with a focus on "Green Operations" that aims to minimize the environmental impact of its business activities. Please refer to the corporate social responsibility section on the Company's website, or Chapter 3 of the 2015 CSR report. (2). The Company passed ISO14001 certification (2). No deviations and has developed and implemented were found. environmental management practices based on the standard. Please refer to the corporate social responsibility section on the Company's website, or Chapter 3 of the 2015 CSR report. (3). The Company proposes plans and tracks (3). No deviations results on a yearly basis, and engages were found. outside experts to validate GHG emission and carbon reduction. In 2015, the Company was validated of having reduced power usage by 790,000 kWh and reduced GHG emission by 410,000 kg. For more details, please refer to the CSR section on the Company's website or Chapter 3 of the 2015 CSR report.

36

Actual governance Assessment criteria Yes No

3. Enforcement of social justice (1) Has the company developed its policies and procedures in accordance with laws and International Bill of Human Rights?

(2) Does the company have means through which employees may raise complaints? Are employee being handled complaints properly?

(3) Does the company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues?







Summary

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies

(1) The Company ensures full compliance with (1). No deviation was laws and has implemented work rules to found. guide employer's and employees' actions, without discriminating by gender or nationality. Please refer to the corporate social responsibility section on the Company's website, or Chapter 4 of the 2015 CSR report. (2) The Company offers a broad variety of (2). No deviation was grievance channels to facilitate found. communication with employees. Furthermore, an Appraisal Appeal Committee and a Sexual Harassment Complaint Committee have been assembled to handle employees' complaints in the utmost fairness, while counselors have been made available to provide a form of stress relief to employees. (3) The Company places great emphasis on (3). No deviations employees' health and safety training. A were found. multitude of training courses are being organized to raise employees' health and safety awareness toward their profession. Please refer to the corporate social responsibility section on the Company's website, or Chapter 4 of the 2015 CSR report.

37

Actual governance Assessment criteria Yes No

(4) Does the company have means to communicate with employees on a regular basis, and inform them of operational changes that may be of significant impact?



(5) Has the company implemented an effective training program that helps employees develop skills over their career?



(6) Has the company implemented consumer protection and grievance policies with regards to its research, development, procurement, production, operating and service activities?



(7) Has the company complied with laws and international standards with regards to the marketing and labeling of products and services? (8) Does the company evaluate suppliers' environmental and social conducts before commencing business relationships? (9) Is the company entitled to terminate supply agreement at any time with a major supplier, if the supplier is found to have violated its corporate social responsibilities and caused significant impacts against the environment or society?







Summary

(4) The Company publishes business-related information on its website on a monthly basis. Performance briefings are hosted weekly, monthly and during year-end conference by the senior management to give employees a timely update on the Company's operations. (5) The Company adopts a comprehensive training program that covers a broad spectrum of education from pre-job training, managerial training, special skills training, to common knowledge. This program provides employees the means to learn and develop skills throughout their career. (6) The Company has a crisis management organization that encompasses several subdivisions to oversee operations such as: production, products, and businesses. Each sub-division is guided by standard operating procedures and reporting systems to ensure protection of customers'/consumers' interest and communication of complaints. (7) The Company places great emphasis on product and service quality and compliance. It has been certified for multiple local and foreign standards such as: CNS, JIS, ISO, OHSAS & TOSHMS. (8)~(9) The Company is an active promoter of "corporate social responsibilities." Not only does it impose stringent requirements upon itself, it expects all suppliers to make the same commitments. Apart from communicating its ideas, the Company also requires suppliers to issue corporate social responsibility commitments, and performs supplier audits on a yearly basis. The Company may terminate its contract with any supplier who violates the requirements. Please refer to the corporate social responsibility section on the Company's website, or Chapter 2 of the 2015 CSR report.

38

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies (4) No deviations were found.

(5) No deviations were found.

(6) No deviations were found.

(7) No deviations were found.

(8) ~ (9) No deviations were found.

Actual governance Assessment criteria Yes No

4. Enhanced information disclosure (1) Has the company disclosed relevant and reliable CSR information on its website and at the Market Observation Post System?

5.

Summary

Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies



(1) The Company makes regular and (1) No deviations unscheduled disclosures of material were found. information concerning business performance, corporate governance, corporate social responsibilities, and business integrity on website and Market Observation Post System as required by Taiwan Stock Exchange Corporation. If the company has established CSR principles in accordance with "Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies," please describe its current practices and any deviations from the Best Practice Principles: No deviations were found, as described above.

6. Other information useful to the understanding of corporate social responsibilities: Details about CSR practices can be found on the Company's website. 7. Describe the criteria undertaken by any institution to certify the company's CSR report: The Company voluntarily prepared its 2013 CSR report in 2014 and published it on website. CSR reports for years 2014 and 2015 were prepared using the GRI G4.0 framework; both of which have been assured by the financial statement auditor.

39

(6) Integrity policies and practices: Actual governance Assessment criteria

1. Establishment of integrity policies and solutions (1) Has the company stated in its Memorandum or external correspondence about the polices and practices it has to maintain business integrity? Are the board of directors and the management committed in fulfilling this commitment? (2) Does the company have any measures against dishonest conducts? Are these measures supported by proper procedures, behavioral guidelines, disciplinary actions and complaint systems?

Yes



Summary

(1). The Company has followed group policies and demanded full cooperation from its employees. Visit the corporate website for more details.

(2). The board of directors passed "Integrity Procedures and Behavior Guidelines" on May 6, 2015 that outlines the disciplinary and grievance system for employees' violations. An "Integrity Promotion Task Force" was also assembled to implement various plans the Company has in place. (3). The Company is bound to comply with group policies, the Company Act, the Securities and Exchange Act, the Business Entity Accounting Act, the Political Donations Act, the AntiCorruption Act, the Government Procurement Act, the Act on Recusal of Public Servants Due to Conflicts of Interest, and any laws deemed relevant to TWSE/TPEX listed companies and the Company's commercial activities. The Company has internal rules that specifically prohibit: inappropriate donation and sponsorship in the name of charity; offering and acceptance of inappropriate gift, treatment, and illicit benefit; offering of political donation; and offering and acceptance of bribe.

(3) Has the company taken steps to prevent occurrences listed in Paragraph 2, Article 7 of "Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies" or business conducts that are prone to integrity risks?

2. Enforcing ethical management (1) Does the company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners?

No



(1). For the purpose of establishing counterparty's integrity, the Company makes inquiries on the website of the Ministry of Economic Affairs before engaging trade partner in any actual transaction. Trade partners are also

40

Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies

(1). No deviations were found.

(2). No deviations were found.

(3). No deviations were found.

(1). No deviations were found.

(2) Does the company have a unit that specializes (or is involved) in business integrity? Does this unit report its progress to the board of directors on a regular basis?

(3) Does the company have any policy that prevents conflict of interest, and channels that facilitate the report of conflicting interests?

(4) Has the company implemented effective accounting and internal control systems for the purpose of maintaining business integrity? Are these systems reviewed by internal or external auditors on a regular basis?







informed and instructed to comply with the Company's transparency policy, while penalty clauses have been outlined in every contract to entitle the Company the right to terminate contract and claim compensation for all losses suffered as a result of trade counterparty's default or inappropriate actions. (2). The Company already had an internal unit dedicated to promoting business integrity, and to further support the government's policies, An "Integrity Promotion Task Force" was assembled during the board meeting dated May 6, 2015. The task force is entrusted with the responsibility of promoting business integrity, and reports its progress directly to the board of directors on a regular basis.。 (3). The Company has outlined in its Corporate Governance Principles the circumstances in which stakeholders are bound to avoid conflict of interest, and that any transactions or contracts made by the Company and affiliated enterprises with shareholders must be founded on fair grounds. This principle also applies to the controlling shareholder and directors in regards to matters that concern their own interests. Offering and acceptance of private benefits are strictly prohibited. (4). The Company has developed effective accounting system and internal control system to prevent the use of foreign or secret accounts outside the Company's books. Both systems are reviewed regularly to ensure that they remain effective. Internal auditors are being assigned to audit employees' compliance with the above systems. A total of 128 audits were completed in 2016; the outcome of which has been compiled into an audit report and submitted to the board of directors.

41

(2) No deviations were found.

(3). No deviations were found.

(4). No deviations were found.

Actual governance Assessment criteria

Deviation and causes of deviation from Ethical Corporate Management

Yes No

Summary

Best Practice Principles for TWSE/TPEX Listed Companies

(5) Does the company organize internal or external training on a regular basis to maintain business integrity?

3. Whistleblowing system (1) Does the Company provide incentives and means for employees to report misconducts? Does the Company assign dedicated personnel to investigate the reported misconducts?

(2) Has the Company implemented any standard procedures or confidentiality measures for handling reported misconducts?

(3 4. (1)

5.

6.



(5). The Company participates in integrity training programs organized by group, external institutions and the authority as a means to enforce business integrity. In 2016, employees made a total of 135 enrollments and completed 275 hours of integrity training in total

(5). No deviations were found.



(1). The Company provides legitimate and convenient ways for employees to report misconduct, and assigns dedicated personnel to handle the reported misconducts. Employees are rewarded on a case-by-case basis for misconducts that are verified to be true.

(1). No deviations were found.



(2). The Company has established a system that facilitates the reporting and discipline of conducts that violate the integrity policy. Any personnel who commit violation will have their names, titles, misconducts, date of violation, and disciplinary actions disclosed immediately on the Company's intranet. (3). The Company ensures the confidentiality of informant's identity and the details reported.

(2). No deviations were found.

(3). No deviations were found.

Has the Company provided proper √ whistleblower protection? Enhanced information disclosure Has the company disclosed its √ Progress of the Company's integrity practices (1). No deviations integrity principles and progress have been disclosed on website, annual were found. onto its website and MOPS? reports, and prospectus. If the company has established business integrity policies in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies," please describe its current practices and any deviations from the Best Practice Principles: No deviations were found. Other information relevant to understanding the Company's business integrity (e.g. reviews over business integrity principles) The Company follows group policy and requires all suppliers to sign a commitment that signifies their dedication to supporting the Company's integrity principles and transparency policy.

(7) If the company has established corporate governance principles or other relevant guidelines, references to such principles must be disclosed: See the Company's website. (8) Other information material to the understanding of corporate governance: See the Company's website.

42

(9) Internal control 1. Declaration of Internal Control System

Ton Yi Industrial Corp. Declaration of Internal Control System Date: March 28, 2017 The following declaration had been made based on the 2016 self-assessment of the Company’s internal control system: 1.

The Company acknowledges and understands that the establishment, implementation and maintenance of the internal control system are the responsibility of the board and managers, and that such a system has been implemented within the Company. The purpose of this system is to provide reasonable assurance in terms of business performance, efficiency (including profitability, performance, asset security etc), reliable, timely and transparent financial reporting, and regulatory compliance.

2.

There are inherent limitations to even the most well-designed internal control system. As such, an effective internal control system can only reasonably assure achievement of the three goals mentioned above. Furthermore, changes in the environment and circumstances may all affect the effectiveness of the internal control system. However, the internal control system of the Company features a self-monitoring mechanism that rectifies any deficiencies immediately upon discovery.

3.

The Company evaluates the design and execution of its internal control system based on the criteria specified in "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as "The Governing Principles") to determine whether the existing system continues to be effective. Criteria introduced by "The Governing Principles" consisted of five major elements, each representing a different stage of internal control: 1. Control environment; 2. Risk evaluation and response; 3. Procedural control; 4. Information and communication; and 5. Supervision. Each element further encompasses several sub-elements. Please refer to "The Governing Principles" for more details.

4.

The Company has adopted the abovementioned criteria to validate the effectiveness of its internal control system design and execution.

5.

Based on the assessments described above, the Company considers the design and execution of its internal control system to be effective as at December 31, 2016. This system (including the supervision and management of subsidiaries) has provided assurance with regards to the Company's business results, target accomplishments, reliability, timeliness and transparency of reported financial information, and its compliance with relevant laws.

6.

This declaration constitutes part of the Company's annual report and prospectus, and shall be disclosed to the public. Any illegal misrepresentation or concealment in the public statement above are subject to the legal consequences described in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

7.

This declaration was passed unanimously by all 10 Directors present at the board meeting dated March 28, 2017. Ton Yi Industrial Corp. Chairman: Chih-Hsien Lo President: Feng-Fu Chen

43

Signature Signature

2. If the internal control system was reviewed by an external CPA, the result of such review must be disclosed: None. (10)

Penalties imposed against the company for regulatory violation, or penalties against employees for violation of internal control policy in the most recent year up till the publication date of this annual report; describe areas of weakness and any corrective actions taken: None.

(11)

Major resolutions passed in shareholder meetings and board of directors meetings held in the last year up till the publication date of this annual report: Major resolutions of the 2016 annual general meeting: The Company held 1 annual general meeting between 2016 and the publication date of this annual report. The annual general meeting was held on June 23, 2016; the following is a summary of resolutions passed during the meeting: (1) Acknowledgment of the Company's 2015 business report and financial statements. (2) Acknowledgment of the Company's 2015 earnings appropriation: Earnings totaling NT$529,942,006 were distributable from 2015; a cash dividend of NT$0.32 per share was proposed. (3) Passed the proposal to remove restrictions imposed against the Company's directors for involving in competing businesses. (4) Passed the Company's "Director Election Procedures."

1.

2. Execution of resolutions made in the 2016 annual general meeting: (1). Acknowledgment of the Company's 2015 business report and financial statements: All relevant books and documents have been presented to the authority and announced to the public as required by the Company Act and related laws. (2). Acknowledgment of the Company's 2015 earnings appropriation: Cash dividends of NT$0.32 per share were paid on August 26, 2016. (3). Passed the removal of restrictions on directors' competing business involvement: Effective after shareholder meeting resolution. (4) Elected 10 directors (including 3 independent directors) for the 16th board: 10 directors (including 3 independent directors) were elected for the 16th board during shareholder meeting. 3. Significant board of directors resolutions made in 2016, up to the publication date of this annual report: The Company held 7 boards of directors meetings from 2016 to the publication date of this annual report. Below is a list of significant resolutions made during the meetings: 17th meeting of the 15th board (2016.03.24) (1). Passed 2015 remuneration to the Company's employees and directors. (2). Passed 2015 compensation to the Company's directors and independent directors.

44

(3). Passed 2015 compensation to the Company's managers. (4). Passed the Company's 2015 business report, standalone financial statements, and consolidated financial statements. (5). Passed the Company’s 2015 earnings appropriation. (6). Passed the Company's 2015 "Declaration of Internal Control System." (7). Passed the review for auditor's independence - 2016. (8). Passed the renewal of "TMBP Technical Assistance Agreement" with JFE Steel Corporation (Japan). (9). Passed the renewal of credit limits with banks. (10). Passed the issuance of comfort letters to support credit applications of the Company's subsidiaries. (11). Set the date, time, venue and agendas for the Company's 2016 annual general meeting. (12). Passed details concerning "Acceptance of Shareholders' Proposal." (13). Passed the re-election of directors (including independent directors). (14). Passed "Acceptance of Nomination from Shareholders with More than 1% Ownership Interest for the 16th Directors (Including Independent Directors) Election" 18th meeting of the 15th board (2016.05.10) (1). Passed the Company's 2016 first quarter consolidated financial statements. (2). Passed the renewal of credit limits with banks. (3). Passed the issuance of comfort letters to support credit applications of the Company's subsidiaries. (4). Passed the review of candidates nominated for the 16th board of directors (including independent directors). 1st meeting of the 16th board (2016.06.23) (1). Mr. Chih-Hsien Lo was elected unanimously by the board of directors to serve as the Company's 16th Chairman. (2). Appointed Mr. Feng-Fu Chen as the new President. (3). Passed the assembly of the 2nd Audit Committee, and appointment of 3 independent directors as Audit Committee members. (4). Passed the appointment of 3 independent directors as the Company's 3rd Remuneration Committee members. (5). Set the ex-dividend date for the 2015 earnings appropriation. 2nd meeting of the 16th board (2016.08.05) (1). Passed the Company's 2016 second quarter consolidated financial statements. (2). Passed the renewal of insurance coverage for the Company's directors and key employees. (3). Passed 2016 audit remuneration for the appointed auditor. (4). Passed the decision to continue Mr. Hsiang-Chu Liang's appointment as Stationed Director.

45

(5). Passed the change of position title and compensation structure for the senior management. (6). Passed the proposal to change the Company's organization. (7). Passed the proposal to amend levels of approval authority. (8). Passed changes to personnel deployment. (9). Passed the renewal of credit limits with banks. (10). Passed the issuance of comfort letters to support credit applications of the Company's subsidiaries. (11). Passed the decision to apply for additional credit limits from banks. (12). Passed the decision to provide guarantee for credit applications of the Company's subsidiaries. (13). Passed amendments to the company's "Asset Acquisition and Disposal Procedures." (14). Passed amendments to the Company's "Endorsement, Guarantee and Third Party Loan Approval Policy." (15). Passed amendments to the Company's "Trade Suspension and Resumption Application Procedures." (16). Passed the proposal to renew "Collective Bargaining Agreement" with Workers Union of Ton Yi Industrial Corp. 3rd meeting of the 16th board (2016.11.08) (1). Passed the Company's 2016 third quarter consolidated financial statements. (2). Passed the renewal of credit limits with banks. (3). Passed the issuance of comfort letters to support credit applications of the Company's subsidiaries. (4). Passed the establishment of the Company's "Compliance System." (5). Passed amendments to the Company's "Trade Suspension and Resumption Application Procedures." (6). Passed amendments to the Company's "Seal Management Policy." (7). Passed the decision to change the keeper of the Company's seal (common seal). 4th meeting of the 16th board (2016.12.20) (1). Passed the 2017 audit plan. (2). Passed the 2017 business plan. (3). Passed the renewal of Management Consultancy Contract with Uni-President Enterprises. (4). Passed the decision to provide guarantee for credit applications of the Company's subsidiaries. (5). Passed the renewal of credit limits with banks. (6). Passed the issuance of comfort letters to support credit applications of the Company's subsidiaries. (7). Passed amendments to the Company's "Corporate Governance Principles."

46

5th meeting of the 16th board (2017.3.28) (1). Passed 2016 remuneration to the Company's employees and directors. (2). Passed the 2016 business report, standalone financial statements, and consolidated financial statements. (3). Passed the 2016 earnings appropriation. (4). Passed the 2016 Declaration of Internal Control System. (5). Passed amendments to the Company's "Articles of Incorporation." (This agenda will be submitted for resolution during annual general meeting.) (6). Passed amendments to the Company's "Shareholders Conference Rules." (This agenda will be submitted for resolution during annual general meeting.) (7). Passed amendments to the company's "Asset Acquisition and Disposal Procedures." (This agenda will be submitted for resolution during annual general meeting.) (8). Set details and agendas for the 2017 annual general meeting. (9). Passed details concerning Acceptance of Shareholders' Proposal. (10). Passed the decision to invest an additional USD 76,903,000 into "Cayman Ton Yi Industrial Holdings Limited." (11). Passed amendments to the Company's "Endorsement, Guarantee and Third Party Loan Approval Policy." (12). Passed amendments to the Company's "Seal Management Policy." (12)

Documented opinions or declarations made by directors or supervisors against board resolutions in the most recent year, up till the publication date of this annual report: None.

(13)

Resignation or dismissal of the Chairman, President, head of accounting, head of finance, chief internal auditor, or head of R&D in the most recent year up till the publication date of this annual report: None.

47

5. Disclosure of auditors' remuneration (1) Audit remuneration brackets table Name of accounting firm

Name of auditor

PwC Taiwan

Phoebe Lin

Audit period

Lewis Lee

Remarks

2016 Unit: NTD thousands

Fee category Amount range

Audit remuneration

Non-audit remuneration

Total

-

-

-

V

V

-

-

-

V

-

-

-

-

-

-

-

-

-

Below NT$2,000,000 NT$2,000,000 (inclusive) ~ NT$4,000,000 NT$4,000,000 (inclusive) ~ NT$6,000,000 NT$6,000,000 (inclusive) ~ NT$8,000,000 NT$8,000,000 (inclusive) ~ NT$10,000,000 $10,000,000 and above

(2) Disclosure of audit remuneration, non-audit remuneration and details of non-audit services, if the sum of non-audit remuneration paid to the auditor, accounting firm and affiliated companies amount to more than one-quarter of total audit remuneration: The Company's non-audit remuneration represented 88% of audit remuneration. Unit: NTD thousands Non-audit remuneration Name of accounting

Audit

CPA

Name of auditor firm

Remarks remuneration

License

Audit period

Human Others

Policy design registration

Subtotal

resource

Financial statement translation - 1,000, CSR consultation and assurance report - 590, Transfer Phoebe Lin PwC Taiwan

2,981

-

-

-

Lewis Lee

2,630

2016.01.01~

pricing report - 500,

2016.12.31

Business income tax

2,630 certification - 320, Financial consultation 200, Review of annual report - 20

(3) Any replacement of accounting firm that resulted in the reduction of audit remuneration paid, as compared to the previous year: None. (4) Any reduction in audit remuneration by more than 15% compared to the previous year: Audit remuneration in the current year was NT$639,000 (18%) lesser than the previous year; this difference was mainly attributed to the fact that the amount of audit remuneration in 2015 included an underestimated amount carried from 2014.

48

6. Change of auditor: None. 7. The company's Chairman, President, or any managers involved in financial or accounting affairs being employed by the accounting firm or any of its affiliated company in the last year: None 8. Details of shares transferred or pledged by directors, supervisors, managers and shareholders with more than 10% ownership interest in the last year, up till the publication date of this annual report: (1) Change of shareholding of directors, supervisors, managers and major shareholders: 2016 Title

Director

Name

Kao Chyuan Investment Co., Ltd.

Year-to-date April 30, 2017

Increase (decrease) in shares held

Increase (decrease) in shares pledged

Increase (decrease) in shares held

Increase (decrease) in shares pledged

580,000

-

100,000

-

-

-

-

-

Representative: Xiu-Ling Kao

(2) Information on share transfer: Not applicable as no share was transferred to related parties. (3) Pledge of shareholding: Not applicable.

49

9. Relationships characterized as spouse or second degree relatives or closer among top-ten shareholders: Unit: shares; % April 30, 2017 Shares held by spouse and underage

others

(Note 1)

Name

Shareholding Shares held

Uni-President Enterprises Corporation

Shares held in the names of

children

Shares held in own name

percentage

Shareholding Shares held

45.55

719,357,425

1,908,820

0.12

Representative: Chih-Hsien Lo

second degree or closer among the top-10 shareholders. (Note 2)

Shareholding Shares held

percentage

Relationship characterized as spouse or relative of

Remarks

Name Relationship

percentage

Kao Chyuan Investment Co., Ltd. -

-

Spouse

-

Representative: Xiu-Ling Kao

Toyota Tsusho Corporation

88,549,987

5.61

-

-

-

-

-

-

-

Mao Da Investment Co., Ltd.

44,982,000

2.85

-

-

-

-

-

-

-

JFE Steel Corporation

27,081,764

1.71

-

-

-

-

-

-

-

26,445,229

1.67

-

-

-

-

Note 3

-

Spouse

-

Uni-President Enterprises Kai Yu Investment Co., Ltd. Representative: Chih-Hsien Lo

Corporation Representative: Chih-Hsien Lo Uni-President Enterprises

Kao Chyuan Investment Co., Ltd.

1.62

25,520,700

2,125,614

0.13

Representative: Xiu-Ling Kao

-

-

Corporation Representative: Chih-Hsien Lo

Nan Shan Life Insurance Company Ltd.

24,418,000

1.55

-

-

-

-

-

Public Service Pension Fund Supervisory Board

14,634,000

0.93

-

-

-

-

-

-

-

China Life Insurance Company

13,706,000

0.87

-

-

-

-

-

-

-

Tao-En Cheng

13,301,000

0.84

-

-

-

-

-

-

-

-

Note 1: The percentages of shares held under own name, spouse's name, underage children's names, or in the names of others are calculated separately. Note 2: Relations among the abovementioned shareholders (including corporate and natural-person shareholders) have been disclosed in accordance with the relationships defined in Regulations Governing the Preparation of Financial Reports by Securities Issuers. Note 3: Kai Yu Investment is an invested business of Uni-President Enterprises.

10. Investments jointly held by the company, the company's directors, supervisors, managers, and enterprises directly or indirectly controlled by the company; disclose shareholding in aggregate of the above parties: April 30, 2017 Unit: shares; % Held by directors, supervisors, managers, and Held by the Company

Aggregate investment directly/indirectly controlled entities

Investees (Note 1) Shareholding Shares held

percentage

50

Shareholding

Shareholding Shares held

Shares held percentage

percentage

Tovecan Corporation Ltd.

Cayman Ton Yi Industrial Holdings Limited

-

51.00

-

-

-

51.00

25,309,700

100.00

-

-

25,309,700

100.00

Note: The above investments have been accounted using the equity method.

51

Four. Status of Capital I.

Capital stock and shares (I)

Sources of capital 1. Sources of capital Unit: share/NTD Remarks

Quantity of shares

Amount

Quantity of shares

Amount



1,784,700,918

17,847,009,180

1,579,145,342

15,791,453,420

Sources Investment by property other of than cash capital -



Others

April 2017

Paid-in capital

Offering price

Year/month

Stated capital



April 30 2016 Type of share

Stated capital Unissued shares

Outstanding shares

Remarks

Total

The stock is listed for Common trading in the exchange 1,579,145,342(share) 205,555,576(share) 1,784,700,918(share) share without restriction for trading. 2. Information on the overall declaration system: Not applicable (II)

Composition of shareholders



1

131

57,278



6,885

934,247,832

432,486,325

212,404,300

1,579,145,342





59.162

27.388

13.45

100

Composition of Financial shareholders Government Other institutions institutions Quantity Number Quantity of shareholding Proportion of shareholding

April 30 2017

Foreign institutions and foreign nationals 187

52

Natural persons

Total 57,597

(III) Distribution of shares 1. Common share Level of shareholding by quantity 1 to0,000,999

Number of shareholders

Total quantity of shareholding

April 30 2017 Percentage of shareholding %

23,367

4,172,086

0.264

1,000 to

5,000

21,846

49,784,286

3.153

5,001 to

10,000

5,731

43,866,953

2.778

10,001 to

15,000

1,997

24,471,474

1.550

15,001 to

20,000

1,291

23,769,162

1.505

20,001 to

30,000

1,164

29,440,500

1.864

30,001 to

40,000

550

19,375,079

1.227

40,001 to

50,000

381

17,787,149

1.126

50,001 to 100,000

651

46,805,222

2.964

100,001 to 200,000

319

44,435,210

2.814

200,001 to 400,000

155

43,100,242

2.729

400,001 to 600,000

48

23,443,551

1.485

600,001 to 800,000

26

18,158,787

1.150

800,001 to 1,000,000

9

8,180,342

0.518

More than 1,000,001

62

1,182,355,299

74.873

Total

57,597

1,579,145,342

100.000

2. Preferred share: Not applicable.

53

(IV) List of Dominant Shareholders: April 30 2017 Dominant shareholders

Quantity of shareholding

Percentage of shareholding (%)

Uni-President Enterprise; Representative: Chih-hsien Lo

719,357,425

45.55

Toyota Tsusho Corporation

88,549,987

5.61

Masterford Investment Limited

44,982,000

2.85

JFE Steel Corporation

27,081,764

1.71

Kaiyu Investment Co., Ltd.

26,445,229

1.67

Kao Chuan Investment Co., Ltd.

25,520,700

1.62

Nan Shan Life Insurance Co., Ltd.

24,418,000

1.55

Civil Servants Pension Fund Management Committee

14,634,000

0.93

China Life Insurance Company, Ltd

13,706,000

0.87

Tao-en Cheng

13,301,000

0.84

Shareholding

54

(V) Information on the stock market price, net value, earnings, stock dividend per share and related matters Currency unit: NTD in thousands Year 2017 to April 30 2015 2016 (Note 4) Title 24.85 24.85 16.35 Market High price per Low 13.15 13.15 13.85 share Average 18.51 18.51 15.13 Net Cum-dividend 11.87 11.87 (Note 4) value per Ex-dividend (Note 5) (Note 5) (Note 5) share Weighted average 1,579,145 1,579,145 1,579,145 Earnings outstanding shares per share (thousand shares) EPS (after taxation)

0.37

0.68

(Note 4)

Cash dividend

0.32

0.38



Dividend Stock per share dividend

ROI Note 1: Note 2: Note 3: Note 4: Note 5:







- - - Cumulative unpaid - - dividend PE ratio (Note 1) 50 21 (Note 4) 38 PP ratio (Note 2) 58 - Cash dividend yield (Note 1.73% 2.62% - 3) Price/ Earnings ratio = Average closing price per share of the year /earnings per share. Price/Profit ratio = Average closing price per share of the year/cash dividend per share Cash Dividend Yield= Cash dividend per share/Average closing price per share of the year. As of the date this report was printed, information on audited financial statements covering Q1 2017 was still unavailable. 2017 General Meeting of shareholders is not yet convened.

55

(VI) Dividend policy of the Company and pursuit of policy 1. The Company is at a stage of stable growth but in an unpredictable industry environment. The Board will consider the capital expenditure and cash flow in the future with a proper balance between earnings and necessary capital spending in planning for the amount of distribution or retaining of earnings or the payment of dividend in cash or in stock for the shareholders. The Company will allocate its earnings, if applicable, for the payment of applicable corporate income tax and covering loss carried forward. If there is still a balance, the Company shall appropriate 10% as legal reserve and special reserve as required by law. The remainder will be the distributable earnings for the year and will add to the undistributed earnings carried forward from previous year as distributable earnings. The Board will propose a plan for the distribution of earnings with reference to a number of factors including the needs for business operation or direct investment in the future. Dividends for the shareholders may be accumulated to 50% to 100% of the distributable earnings of which stock dividends and cash dividends will account for 50% of the amount respectively. Such ratio shall be subject to adjustment where necessary and will be presented before the General Meeting of shareholders for final approval. 2. The payout of dividend by the Company shall be based on the dividend policy as stated in the Articles of Incorporation of the Company. The proposal for the distribution of earnings in 2016 has been passed by the Board in a session dated March 28 2017 whereby cash dividend will be NT$0.38/share pending on the final approval of the upcoming General Meeting of Shareholders.

(VII) The influence of stock dividend proposed in the upcoming General Meeting of shareholders on the operation performance and earnings per share of the Company: Not applicable. (VIII) Remuneration to the employees and Directors’ 1. The percentage or range of remuneration to the employees and Directors as stated in the Articles of Incorporation of the Company According to the Articles of the Incorporation, our company depends on those early years degree profit condition after deducting the accumulation deficiency like still enough sum, should appropriate employee's remuneration is no lower than 2%, board director's remuneration is no higher than 2% 2. The accounting of the difference between the estimates of remuneration to the employees the Directors, the basis for the calculation of outstanding shares for dividend payment and the actual amount paid out. (1) The basis for the estimation of employee remuneration: The Company shall multiply the percentage of the distributable earnings after taxation of the year by the percentage of no less than 2% as stated in the Articles of Incorporation for the estimation of employee remuneration. (2) The basis for the estimation of remuneration to the Directors: The Company shall multiply the percentage of the distributable earnings after taxation of the year by the percentage no more than 2% as stated in the Articles of Incorporation for the estimation of remuneration to the Directors. (3) This period allots the number of employee's remuneration calculation foundation by stock:

56

Our company is adopted the cash method to issue by March 28, Year 106 of the Republic of China board of directors resolution. (4) The accounting of the difference between the actual amount and estimation of payment: The difference will be taken as changes in accounting estimate and recognized as income for current period.

3. Information on the proposal of the Board for the release of employee remuneration: (1) The amount of employee bonus in cash and in stock and remuneration to shareholders. a. Employee remuneration in cash: NT$58,081,464. b. Employee remuneration in stock: None. c. Remuneration to the Directors: NT$11,986,574. d. The proposal of the Board for employee remuneration is NT$7,257,964 less than the estimated amount mainly because of the accounting estimation difference, and will be recognized as income for current period pending on the final approval of the Board. (2) The proposed amount of employee bonus in stock and the ratio to the sum of the corporate earnings of the separate and consolidated financial statements and total employee remuneration: None. (3) Earnings per share in consideration of the distribution of remuneration to the employee and Directors: NT$0.68/share. 4. The actual payment of employee bonus and remuneration to the Directors in the previous year: (1) Actual payment of employee bonus from the corporate earnings of 2015: NT$ 33,344,422, which is NT$655,578 less than the recognized amount in the financial statement mainly because of the difference from estimation, and has been adjusted and recognized as income in 2016. (2) Actual remuneration to the Directors from the corporate earnings of 2015: NT$ 10,640,030, and there is no difference. (IX) Repurchase of Company shares: None.

II. III. IV. V. VI. VII. VIII.

Corporate bond: None. Preferred shares: None. Overseas Depository Receipts: None. Employee Stock Option: None. RSA: None. Mergers and Acquisitions or acceptance of new shares from assignment: None. Attainment of the capital utilization plan: None.

57

FIVE. Operation Highlights I.

Content of Business: (I)

Scope of Business: 1. Content and proportion of the principal business of the Company: Unit:NTD in millions Year Consolidated revenue in 2016 Consolidated revenue in 2015 Product Amount Percentage Amount Percentage Tinplate packaging products

19,469.13

59.45%

20,325.34

56.18%

Plastic packaged beverage products

13,279.51

40.55%

15,853.29

43.82%

Total

32,748.64

100.00%

36,178.63

100.00%

2. Running items of the Company: (1) Tinplate packaging products: TMBP, high-end ultra thin cold rolls, color printed tinplates, tin containers (for containing food, beverages, juices, milk powder, vegetable oil, resin, paints and others, in cylinder shape and 5 gallon empty cylinders). (2) Plastic packaged beverage products: PET caps, perform, ejection, filling PET bottled beverages and TP beverages. (3) New products for development under planning: process improvement research and development in deep stamping cold rolls products. (II) Industry Outlook: (1) Tinplate packaging products: Tinplate is a thin sheet of iron plated with tin and the proper name is tin-plated steel sheet. The upstream industry is hot roll steel from which TMBP, tinplate, and empty cylinders will be made. In Asia, most of the materials for hot rolls are from giant steel firms such as NSSC, JFE of Japan, Posco of Korea, and CSC. For this reason, the Company has cultivated positive supply chain relation with the major steel mills in Asia. Tinplate features a number of advantages and properties, and allow, for good physical and chemical protection for the content being packed by tinplates. As such, tinplate can be extensively used in industrial production, such as the packaging of food and beverages to the container of grease and oil, chemicals and other miscellaneous items. In addition, tinplate is highly manageable in industrial production, and has been applied to the areas of electronic parts, cable, battery cell, stationary, and metal pieces lately. The rapid economic growth in Asia and the annual increase in average incomes drove up the demand for tinplate packaging materials. The growth in demand in China and India is particularly promising. (2) Plastic packaged beverage products:PET caps, perform, ejection, filling PET bottled beverages and TP beverages are the premium items. Modernization and urbanization helped to pull up the demand for beverages. PET bottled and TP beverages emerged as a daily necessity. Today, Ton Yi Industrial Corp. has transcended its operation from tinplate packaging materials (for canned foods) to plastic packaged (PET bottles and caps), TP and beverage filling. The operation of beverage filling made the Company plays the role as kitchen that prepares food and beverages for big food and beverages firms. The Company provide sterile PET filling production line to keep safety for food. Food safety always comes first. The vertical operation from packaging containers making to the preparation of food and beverages, and sterile filling of food and beverages into commercial products of beverages. The Company also provides logistics and storage services and delivery the merchandises to the shops. The Company has modern sterile and clean production environment and vast space for logistics support, and can definitely satisfy the harsh 58

requirement of the food and beverages firms in food safety.

(III)

Technology and R&D: The Company makes ceaseless effort in exercising strict internal control through its quality management, standardization, and automation to upgrade quality and technical level, and has been accredited with JIS by the Ministry of Industry and Trade of Japan at the end of 1992. This is the first steel company of the world outside Japan being accredited with JIS in tinplate. There are several JIS audits conducted from 2004 onwards and the Company passed all the audits. Indeed, this is the demonstration of the spirit of the Company in going for the best and proper pursuit of quality management. In addition, the Company has also been accredited with the ISO 14001 standard from 1997 onward and since 2004. From 2005 onward, the Company has also been accredited with the ISO 9001 standard in quality system management. These indicated the determination of the Company in quality and environmental management for mutual reinforcement of the two efforts. Further, the Company also developed the SPCL, an environmental friendly tinplate product. The Company also aligned with new technology in the development of steel plates for computer components and deep stamping products. The Company has established a designated quality research and development body for administering research and development, quality management, and technical service centers, and regularly sends related personnel to receive professional training at home and aboard. These personnel also collect information on technological development in Taiwan and other countries and the development of application in market as the theoretical foundation for production process and practice in process improvement so as to upgrade quality and develop new products. Substantive Goal: 1. Keep abreast of the change in the trend of plate thinness. 2. PL-TCM acceleration. 3. BAF time compression. Substantive result: 1. Continue to upgrade the mechanical stability of TMBP and improvement of yield rate. 2. Continue the refinement of production efficiency of T-3 CAL materials. 3. The continued improvement of the evenness of thin layer of tinplate. 4. The technology of the use of low tin layer in the production of tinplate. 5. Develop the production process of SPCL tinplate. 6. Develop the application technology to metal composite cans. 7. Study on the applicability of ultra low tin content tinplate and empty cylinders. 8. Develop the process technology for ultra thin steel plates. 9. Research and develop steel plate for computer components. Ton Yi Industrial Corp. supplies the food and beverages factories and container factories in Taiwan, Mainland China, and other parts of the world with tinplates. From 2012 onward, the Company started to include plastic packing materials PET and beverage filling to its product line that extended to the research and development of food and beverages. The Company highly values food safety from the origin and research and develop the improvement of sterile production process so as to play a vital role as a commissioned plant and provide the consumers the best of protection.

(IV)

Business Development Plan in the Long and Short Run: 1. Business development plan in the short run: Integration of the production bases in Taiwan, Mainland China, and Vietnam to perform the best in division of labor in production and sale. 2. Business development plan in the long run: In light of the possible international development of the ASEAN 10+3, ECFA and FTA, the Company seeks to integrate its production bases in Taiwan, Mainland China, and Vietnam to diversify risk and optimize interest by engaging in supply chain system cooperation with the upstream materials suppliers and close relation with the product customers.

59

II. Market Sale and Production (I) Market Analysis 1. Premium items Unit:NTD in millions Year Product

Consolidated revenue in 2016

Distribution by marketing region

Amount

Percentage

Mainland China

Outside China

Tinplate packaging products

19,469.13

59.45%

Approx.42%

Approx.58%

Plastic packaged beverage products

13,279.51

40.55%

100%

0%

Total

32,748.64

100.00%

Approx.65%

Approx.35%

2. Analysis of the TMBP market Ton Yi Industrial Corp. is the only tinplate manufacturer in Taiwan and the first manufacturer of its kind in combining acid-wash line and continuous roller machine in its production line. The quality of its products has been accredited with JIS standard by MITI of Japan in tinplate quality, and also ISO 9001 quality management system and ISO 14001 in international environmental management. They are the advantages of the Company in business development that makes the Company recognized by the international community. In addition to the supply of materials for tinplates, the TMBP plant of the Company also develops ultra thin steel plate, and high-end steel plate for computer components. The total production capacity of the TMBP plant of the Company is approximately 1 million tons per year for products of different specifications of which approximately 700,000 tons TMBP are for internal consumption (300,000 tons for Taiwan and 400,000 tons for Mainland China). The remaining 300,000 tons of cold rolled coils are for selling. 3. Analysis of the tinplate market Tinplate is made from iron sheet plated with tin and is mainly for beverage cans, food cans, and industrial use containers. The Company supplies tinplate to meet the demand of the market in Taiwan and also to different regions of the world. The material for tinplate is the TMBP produced by the Company, which can help to hold down the cost and enhance economic efficiency and bolster competitiveness. The production facilities of the Company in Taiwan accounted for approximately 44% of the production while the facilities in Mainland China accounted for the remaining 56% of the production. There are signs of international economic recovery that allows for a positive environment for the Company as the quality of tinplate products has already been extensively acclaimed by the world. It is expected that the Company can mitigate the pressure from other competitors in the future with its performance. 4. Analysis of the canning market The empty cans produced by the Company are sterile under high temperature and anticorrosion, which is suitable for filling with beverages of higher salinity such as tomato juice, star fruit juice, plum juice, and processed food. In addition, the opaque and airtight nature of the material is also suitable for containing milk powder, biscuits, paints, and aerosol substances. The Company has gained approximately 10% of the share in the beverage can market and approximately 25% of the angle-can market of Taiwan. In addition to the facility in Taiwan, the Company has also established four canning plants in Mainland China and one in Vietnam, respectively. In the future, there will be room for further growth in line with the economic growth in China and Asia.

60

5. Analysis of the plastic packaged beverages market The demand for PET bottled and TP beverages is on the rise in line with the modernization and urbanization in Mainland China. As such, the market for PET bottled and TP beverages production to customer orders thrived. As always, the Company plays a vital role in providing packaging containers for food and beverages in the industry and is familiar with the market. The Company will move further into the business of beverage filling and is confident to prosper together with the beverage giants. 6. Competitive edge, favorable and unfavorable factors for development in the future, and the response to the situation: (1) Favorable factors A. Technology Advantage: The Company is the leader in the industry and is one among the few manufacturers that possessed TMBP production technology. In addition, the Company runs vertical operations from TMBP at the upstream, tin plating at the midstream, and canning and printing at the downstream with proper technology for the rolling of ultra thin cold rolled coils. B. Group Advantage: The Company is a member of the Uni-President Group, and has worked in cooperation with the Group in business expansion in Mainland China for years. The sale volume of tinplates manufactured from the plants in Jiangsu and Fujian accounted for approximately 15% of the high-end tinplate market in Mainland China, which gives the advantages of sale, production capacity, and channeling. C. Competitive Advantage: The Company is the number one tinplate manufacturer in Taiwan and a major firm of its kind in Asia, and is the only manufacturer of TMBP in Taiwan. D. Capital Advantage: The Company has the biggest TMBP plant in Taiwan with annual production capacity of 1 million tons. This is a high entrance barrier for competitors. E. Industry Advantage: The sustained economic growth in the newly emerged economies of Asia gives rise to the sustained growth of domestic demand for daily necessities with Mainland China in particular. As such, the supply-demand balance of tinplate remains stable and less likely to be affected by the economic cycle. (2) Unfavorable factors A. The access to raw materials for hot rolled steel is conditioned by the furnace industry at upstream. B. The price of steel is at the mercy of the oligopoly of iron ore and coke suppliers that remains high. As such, the cost of easy-open can is higher than the other packaging materials. (3) Responses: A Make positive effort to cultivate friendly supply chain relation with iron and steel giants in Asia for stable sources of supply. B. Develop market segmentation with tinplate industry peers in Mainland China so as to engage in fair competitive and maintain reasonable price. C. To develop long-term cooperative relation with downstream customers so as to enhance profitability of the canning factory. D. Make the product advantage of the ultra thin cold rolled coils to its entirety so as to develop customer groups of distinctive products and differentiate with the competitors in market. E. In the wake of the prosperous development of the consumer market in Mainland China, the Company supports the marketing of the food and beverages of its parent company, UniPresident Enterprise, to invest for the establishment of the production bases for different packaging materials for food and beverages. The diversification of product lines enables the Company to advance further in corporate development.

(III)

Supply of key materials: The Company has long-term suppliers in Taiwan and other countries for the supply of 61

materials for tinplate and PET products and has stable sources of supply. The Company is selfsufficient in the supply of TMBP, the key materials for tinplates and cans.

The names of the customers that accounted for more than 10% of the total purchase (sale) of the total purchase (sale) in any of the last 2 years, and the amount and proportion of purchase (sale): 1. List of major suppliers (IV)

Unit: NTD in millions; %

Amount

Ratio to net purchase in current year to the end of the previous quarter (%)

China Steel Corporation

1,913.86

34.44%

Toyota Tsusho Corporation

689.56

12.41%

Others

2,954.21

53.15%

Net purchase

5,557.63

100%

Relation to the issuer

Name

20,089.19

Relation to the issuer

12,166.03

Net purchase

100%

1,953.79

Others

60.56%

5,969.37

Toyota Tsusho Corporation

9.73%

Amount

China Steel Corporation

29.71%

Name

Ratio to net annual purchase (%)

Relation to the issuer

22,778.63

100%

14,023.47

Net purchase

61.56%

2,728.89

Others

11.98%

6,026.27

Toyota Tsusho Corporation

26.46%

Amount

China Steel Corporation

Ratio to net annual purchase (%)

Name Item

62

| |

|

| |

|

| 2

|

|

| | | 1

2017 to March 31 2016 2015

2. List of major customers:

Unit: NTD in millions; %

Amount

Ratio to net annual sale (%)

Relation to the issuer

Name

Amount

Ratio to net annual sale (%)

Relation to the issuer

Name

Amount

Ratio to net sale in current year to the end of the previous quarter (%)

Guangzhou President Enterprises Co., Ltd.

3,702.89

10.24%

Investee of the parent company

Guangzhou President Enterprises Co., Ltd.

3,042.33

9.29%

Investee of the parent company

Guangzhou President Enterprises Co., Ltd.

835.91

10.88%

Investee of the parent company

Others

32,475.74

89.76%

Others

29,706.31

90.71%

Others

6,847.68

89.12%

|

Net sale

36,178.63

100%

|

Net sale

32,748.64

100%

|

Net sale

7,683.59

100%

63

Relation to the issuer

Name

|

|

Item

| 1

2017 to March 31 2016 2015

(V) Production volume and value in the last 2 years Currency unit: NTD in millions year Production Volume/value

2015 Production capacity

Premium items (or by segment)

2016

Production volume

Production value

Production capacity

Production volume

Production value

1,000,000

209,615

3,368.55

1,000,000

222,224

3,316.86

Steel plate (ton)

700,000

562,813

13,591.77

700,000

584,622

12,460.49

Can (thousand pcs)

950,000

678,124

1,741.72

950,000

518,480

1,353.94

296,448

167,649

13,055.73

292,983

140,673

10,625.26

807

343

714.04

956

335

647.91

TMBP (ton)

Overseas facility-PET bottles/TP (thousand cartons) Overseas facility –PET bottle cap (million pcs)



Total





32,471.80



28,404.46

(VI) Sale volume and value in the last 2 years Curreency unit: NTD in millions year

2015

Production Volume/Value

2016

Domestic Premium items (or by segment)

Export sale

Domestic

Export sale

Volume

Value

Volume

Value

Volume

Value

Volume

Value

TMBP (ton)

80,763

1,247.52

139,973

2,443.18

92,986

1,416.04

145,318

2,477.32

Steel plate (ton)

78,506

2,073.78

470,105 12,586.31

74,973

1,784.46

498,974 12,068.75

Can (thousand pcs)

71,771

575.47

610,361

62,368

533.29

546,223





167,583 14,704.90





140,957 12,123.93





941.63





Others







216.04







100.20

Total



3,896.77



32,281.86



3,733.79



29,014.85

Overseas facility-PET bottles/TP (thousand cartons) Overseas facility –PET bottle cap (million pcs)

328

64

1,389.79

323

1,184.33

1,060.32

III. Information on employees in the last 2 years to the date this report was printed Year

2015

Clerical staff Number of employees

Operators Total

172

172

1,009

1,030

1,029

1,182

1,202

1,201

(Note 2)

(Note 3)

(Note 4)

42

43

43

17.02

17.77

17.99

PhD





-

Master’s

2.45%

2.16%

2.08%

Bachelor’s

56.09%

56.90%

56.20%

28.17%

27.12%

27.14%

13.29%

13.82%

14.58%

Average years of service

distribution

2017 to April 30

173

Average age

Education

2016

Senior High School Under Senior High School

Note 1: The above employee information is for Ton Yi Industrial Corp. As of the date this report was printed, the number of employees for the tinplate plant and the PET plants for the overseas subsidiaries was 869 and 2,157 persons, respectively. Note 2: It is the number of employees as of December 31 2015. Note 3: It is the number of employees as of December 31 2016. Note 4: It is the number of employees as of April 30 2017.

65

IV. Contribution to environmental protection The Company adopts an environmental policy that focuses on "Green Operations." It aims to minimize energy, waste and impact to the environment in all of its activities from business development to daily operations. The Company constantly adopts scientific and technological improvements to refine its production procedures and avoid activities that have adverse impacts on the environment. It complies with regulatory requirements and dedicates itself to making ongoing improvements. By adopting environmental sustainability action plans, the Company actively manages the waste it produces and promotes the use of renewable energy to create a better environment. The Company's environmental protection spendings amounted to NT$71,996,000 in 2016. (I) Losses (including damage compensations) and fines incurred due to pollution of environment in the year of report up till the publication date of this annual report: Year-to-date 2016 April 30, 2017 Pollution (category and None None severity) Compensated party or None None penalty issuer Amount of compensation or Zero Zero penalty Other losses

Zero

66

Zero

(II) Future responsive strategies (including improvement measures) and possible expenses (including possible losses due to absence of responsive strategy, estimated amount of penalties and compensations etc): The Company did not receive any fines for violation of environmental protection laws. However, it continues to invest into new equipment for better resource utilization and energy/carbon reduction, and thereby contribute to the environmental friendliness of its operations. 1. Proposed improvement measures (1) Improvement plans: Solution Upgrades or optimization Use of high efficiency motor

Power-saving benefits (kWh) 535,933 Saves diesel consumption by 2,400 liters 462,452

Use of energy-saving lighting Improved management or optimization of equipment Total

Emission reduction benefits (ton CO2e/ton) 289,621 244,175

12,600

6,653

951,795

502,548

1,962,780 Saves gasoline consumption by 2,400 liters

1,042,997

(2) Effects after improvement: In response to the rising awareness towards environmental issues such as climate change and greenhouse gas inventory around the world, the Company has taken steps to pass certification for ● Effect on net ISO14001 Environmental Management System and income conduct regular greenhouse gas inventory and validation in accordance with ISO 14064. Both standards are in conformity with ongoing trends and shall prove favorable to business development in the future. ● Effect on competitive

Not applicable.

advantage 2. Future responsive strategies: (1) Reasons for not adopting improvement measures: Not applicable. (2) Pollution: Not applicable. (3) Possible losses and compensation: Not applicable. 3. Compliance with RU RoHS directives: Not applicable.

V. Labor-management relations (I) Availability and execution of employee welfare, education, and training and retirement policies; elaborate on the agreements between employers and employees, and protection of

67

employees' rights: 1. Employee welfare, education and training (1) Robust system: The Company has fair and open rules in place to regulate employment issues such as salary, promotion, welfare, reward, discipline, leave of absence, labor/health insurance coverage, pension fund contribution etc. (2) The Company offers a comprehensive range of benefits from dormitory, affordable dining options, entertainment facilities, regular concessions, to wedding/funeral/childbirth/education subsidies to make employees comfortable working in a factory. (3) Employees are offered pre-job training, on-job training, career planning and external training, where they have the opportunity to develop professional skills and obtain new information and knowledge. (4) Employees may express opinions through a multitude of communication channels. The Company has a union that gathers employees' feedbacks and ensures opinions are exchanged properly between employees and the employer. 2. Pension system The Company has established a "Pension Policy" in accordance with law to govern all matters concerning employees' pension. It makes monthly contributions to the pension account held with Bank of Taiwan or to employees' personal accounts held with the Bureau of Labor Insurance, which employees may withdraw upon retirement. Overseas subsidiaries also comply with local regulations when developing pension systems. (II) Losses as a result of employment disputes in the last year up till the publication date of this annual report:

Employment disputes Amount of losses incurred Estimated possible losses in the future Responsive measures

Year-to-date April 30, 2017 None Zero

None Zero

Zero

Zero

N/A

N/A

68

2016

VI. Major contracts: Contract nature Long-term borrowings

Parties involved KGI Bank

Contract start/end date 2016.11.01~ 2019.11.14

Long-term A syndicate of 14 banks, 2015.06.10~ borrowings namely: Bank of Taiwan, 2020.11.25 Mega Bank, Far Eastern International Bank, Industrial Bank of Taiwan, Bangkok Bank, Chang Hwa Bank, Hua Nan Bank, First Commercial Bank, Land Bank of Taiwan, Chinatrust Bank, E.Sun Bank, Taishin Bank, Yuanta Bank, and Taiwan Cooperative Bank Long-term The Bank of Tokyo- 2017.03.28~ 2020.04.24 borrowings Mitsubishi UFJ

Long-term borrowings

Chinatrust Bank

2016.04.25~ 2020.03.20

69

Main contents

Restrictive clauses

Medium-term 1. Consolidated liabilities ratio credit limit of (consolidated total liabilities NT$800 less cash and cash equivalents, million divided by consolidated tangible net worth) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion. Syndicated 1. Consolidated liabilities ratio credit limit of (consolidated total liabilities NT$1.1 less cash and cash equivalents, billion divided by consolidated tangible net worth) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion

Medium-term 1. Consolidated liabilities ratio credit limit of (consolidated total liabilities NT$600 less cash and cash equivalents, million divided by consolidated tangible net worth) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion. Medium-term 1. Consolidated liabilities ratio credit limit of (consolidated total liabilities US$10 less cash and cash equivalents, million divided by consolidated tangible net worth) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15

Contract nature

Parties involved

Contract start/end date

Main contents

Restrictive clauses billion.

Long-term borrowings

Sumitomo Mitsui 2016.04.29~ 2019.10.24 Banking Corporation

Long-term A syndicate of 10 banks, borrowings namely: Taipei Fubon Bank, Chang Hwa Bank, Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank, Export-Import Bank of the R.O.C., E.Sun Bank, Bangkok Bank, Yuanta Bank, Hua Nan Bank, and Land Bank of Taiwan

Medium-term 1. Consolidated liabilities ratio credit limit of must not exceed 180% on a halfUS$8.5 yearly basis. million 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion. 2016.04.25~ Medium-term 1. Consolidated liabilities ratio 2018.06.24 credit limit of (consolidated total liabilities US$20 divided by consolidated net million tangible assets) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200% 3. Consolidated net tangible asset must not fall below NT$15 billion. 2014.10.08~2019. Syndicated 1. Consolidated liabilities ratio 12.18 loan limit of (consolidated total liabilities US$75 divided by consolidated net million tangible assets) must not exceed 180% on a half-yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion.

Long-term borrowings

Overseas Chinese Banking Corporation (Singapore)

Short-term borrowing

2015.12.09~ 2018.11.23

ANZ Bank

70

Credit limit of 1. Consolidated liabilities ratio US$20 (consolidated total liabilities million less cash and cash equivalents, divided by consolidated net tangible assets) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion.

Contract nature

Parties involved

Contract start/end date

Main contents

Restrictive clauses

Long-term borrowings

DBS Bank

2015.11.13~ 2018.11.13

Credit limit of 1. Consolidated liabilities ratio RMB 140 (consolidated total liabilities million divided by consolidated net tangible assets) must not exceed 180% on a yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion.

Long-term borrowings

DBS Bank

2015.11.13~ 2018.11.13

Long-term borrowings

BNP Paribas Bank

2016.09.23~ 2019.09.23

Long-term borrowings

BNP Paribas Bank

2016.08.25~ 2019.08.25

Medium-term 1. Consolidated liabilities ratio credit limit of (consolidated total liabilities RMB 34.5 divided by consolidated net million tangible assets) must not exceed 180% on a half-yearly basis. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion. Credit limit of 1. Tangible net worth of RMB 67 Zhangzhou Ton Yi Industrial million must not fall below RMB 195,000,000. 2. Total liability to equity ratio of Zhangzhou Ton Yi Industrial must not exceed 160%. Credit limit of 1. Tangible net worth of Taizhou RMB 19 Ton Yi Industrial must not fall million below RMB 270 million. 2. Total liability to equity ratio of Taizhou Ton Yi Industrial must not exceed 60%.

Long-term borrowings

Mizuho Bank, Ltd.

2016.06.24~ 2019.06.24

71

Credit limit of 1. Consolidated liabilities ratio RMB 38.61 (consolidated total liabilities million divided by consolidated net tangible assets) must not exceed 180%. 2. Consolidated interest coverage ratio must not fall below 200%. 3. Consolidated net tangible asset must not fall below NT$15 billion

Contract nature

Parties involved

Contract start/end date

Main contents

Restrictive clauses

Long-term borrowings

United Overseas Bank

2015.11.06~ 2018.11.06

Credit limit of 1. The total amount borrowed must RMB 10 not exceed 225% of net tangible million asset at all times.

Long-term borrowings

United Overseas Bank

2016.04.28~ 2018.10.28

Credit limit of 1. The total amount borrowed must RMB 50 not exceed 225% of net tangible million asset at all times.

Long-term borrowings

Bangkok Bank

2016.07.28~ 2019.07.26

Credit limit of 1. Debt to equity ratio must not RMB 85 exceed 250%. million

72

(5) Summary balance sheet (standalone) - IFRS-compliant Unit: NTD thousands Year

Financial information for the latest 5 years (Note 1)

Item 2012 Current assets Property, plant and equipment (note 2) Intangible assets Other assets (Note 2) Total assets Before dividend Current Liabilities After dividend Non-current liabilities Before Liabilities dividend After dividend Equity attributable to parent company shareholders Share capital Capital reserves Before Retained dividend After earnings dividend Other equity items Non-controlling equity Before Total dividend equity After dividend

2013

2014

2015

2016

4,046,698)

4,143,819

4,238,152

3,033,378

3,596,936

15,780,928)

14,715,947

13,794,579

12,864,316

11,927,726

141,276) 7,354,093) 27,322,995)

105,957 8,447,321 27,413,044

70,638 11,089,639 29,193,008

35,319 10,809,578 26,742,591

10,096,811 25,621,473

2,719,942)

2,398,314

2,987,505

2,752,707

2,535,851

2,956,814)

3,424,758

3,698,120

3,258,034

Note 3

6,805,836)

5,566,113

6,771,011

5,242,314

4,905,388

9,525,778)

7,964,427

9,758,516

7,995,021

7,441,239

9,762,650)

8,990,871

10,469,131

8,500,348

Note 3

17,797,217)

19,448,617

19,434,492

18,747,570

18,180,234

15,791,453) 228,178)

15,791,453 228,178

15,791,453 228,178

15,791,453 228,178

15,791,453 228,178

2,186,313)

3,202,974

2,941,638

2,796,095

3,235,748

1,949,441)

2,176,530

2,231,023

2,290,768

Note 3

(408,727)

226,012

473,223

(68,156)

(1,075,145)

-)

-

-

-

-

17,797,217)

19,448,617

19,434,492

18,747,570

18,180,234

17,560,345)

18,422,173

18,723,877

18,242,243

Note 3

Note 1: The Company adopted IFRS since 2012. Financial information for 2012 can be found in "(6) Summary balance sheets (standalone) - based on R.O.C. accounting standards." All yearly financial information presented above has been audited. Note 2: No asset revaluation was perform in any year. Note 3: Appropriation of 2016 earnings had yet to be resolved in a shareholder meeting.

73

(6) Summary balance sheet (standalone) - based on R.O.C. accounting standards Unit: NTD thousands Year

Financial information for the latest 5 years (Note 1)

Item 2012 Current assets Funds and investments Fixed assets (Note 2) Intangible assets Other assets Total assets Before dividend Current liabilities After dividend Long-term liabilities Other liabilities Before dividend Liabilities After dividend Share capital Capital reserves Before dividend Retained After earnings dividend Unrealized gain/loss on financial instrument Cumulative translation adjustments Net losses not recognized as pension costs Unrealized revaluation increments Before Total dividend shareholders' After equity dividend

2013

2014

2015

2016

4,071,154) 7,279,830) 15,763,927) 141,276) 26,680) 27,282,867)

-

-

-

-

2,753,803)

-

-

-

-

2,990,675)

-

-

-

-

6,041,685) 241,735)

-

-

-

-

9,037,223)

-

-

-

-

9,274,095)

-

-

-

-

15,791,453) 315,726)

-

-

-

-

1,479,186)

-

-

-

-

1,242,314)

-

-

-

-

(244,189)

-

-

-

-

796,510)

-

-

-

-

(203,472)

-

-

-

-

310,430)

-

-

-

-

18,245,644)

-

-

-

-

18,008,772)

-

-

-

-

Note 1: The Company adopted IFRS since 2012. Financial information from 2013 to 2016 can be found in "(5) Summary balance sheet (standalone) - IFRS-compliant." All yearly financial information presented above has been audited. Note 2: No asset revaluation was perform in any year.

74

(7) Summary statement of comprehensive income (standalone) - IFRS-compliant Unit: NTD thousands Year

Financial information for the latest 5 years (Note 1)

Item 2012 Operating revenues

2013

2014

2015

2016

22,407,070)

21,629,949

21,042,118

17,152,577

15,914,109

1,583,127)

2,440,300

2,080,827

1,662,473

2,038,401

Operating profit Non-operating revenues and expenses

393,099)

1,113,080

777,220

565,339

890,072

(47,876)

331,515

152,491

132,697

337,053

Pre-tax profit

345,223)

1,444,595

929,711

698,036

1,227,125

Net income from continuing operations

259,646)

1,256,122

775,960

590,018

1,069,141

-)

-

-

-

-

259,646)

1,256,122

775,960

590,018

1,069,141

(273,034)

632,150

236,359

(566,325)

(1,131,150)

(13,388)

1,888,272

1,012,319

23,693

(62,009)

259,646)

1,256,122

775,960

590,018

1,069,141

-)

-

-

-

-

(13,388)

1,888,272

1,012,319

23,693

(62,009)

-)

-

-

-

-

Gross profit

Loss from discontinued operations Other comprehensive income (loss) (net, after tax) Total comprehensive income (loss) for the current period Net income attributable to: Parent company shareholders Net income attributable to: Non-controlling equity Comprehensive income attributable to parent company shareholders Comprehensive income attributable to noncontrolling shareholders Earnings per share

0.16

0.80

0.49

0.37

0.68

Note 1: The Company adopted IFRS since 2012. Financial information for 2012 can be found in "(8) Summary income statements (standalone) - based on R.O.C. accounting standards." All yearly financial information presented above has been audited.

75

(8) Summary income statement (standalone) - based on R.O.C. accounting standards Unit: NTD thousands Year

Financial information for the latest 5 years (Note 1)

Item 2012 Operating revenues Gross profit Operating profit Non-operating income and gains Non-operating expenses and losses Pre-tax profit (loss) from continuing operations Net profit (loss) from continuing operations Net profit (loss) from discontinued operations Extraordinary gains and losses Cumulative effects of changes in accounting policies Net income Earnings per share

2013

2014

2015

2016

22,407,070

-

-

-

-

1,559,779

-

-

-

-

369,751

-

-

-

-

83,646

-

-

-

-

130,234

-

-

-

-

323,163

-

-

-

-

271,872

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

271,872

-

-

-

-

-

-

-

-

0.17

Note 1: The Company adopted IFRS since 2012. Financial information from 2013 to 2016 can be found in "(7) Summary statement of comprehensive income (standalone) - IFRS-compliant." All yearly financial information presented above has been audited.

(9) Name of auditor and audit opinions Year

Name of accounting firm and auditor

Audit opinion

2012

KPMG Oliver Chang Vincent Hsu

Unqualified opinion

2013

PwC Taiwan Phoebe Lin Lewis Lee

Unqualified opinion

2014

PwC Taiwan Phoebe Lin Lewis Lee

Unqualified opinion

2015

PwC Taiwan Phoebe Lin Lewis Lee

Unqualified opinion

2016

PwC Taiwan Phoebe Lin Lewis Lee

Unqualified opinion

76

2. Financial analysis for the last 5 years (1) Consolidated financial analysis - IFRS Year Item

Financial analysis for the last 5 years (Note 1) 2012

2013

2014

2015

2016

2017 up till March 31 (Note 1) 51.76

Debt to assets ratio 51.81 55.66 59.05 55.27 51.99 Long-term capital to property, plants and 120.78 108.54 105.90 103.23 113.17 111.79 equipment Current ratio 155.18 105.82 98.17 85.81 119.96 111.15 Solvency Quick ratio 78.46 44.75 44.48 38.79 60.56 52.78 % Interest coverage ratio 2.08 4.54 2.69 2.07 3.59 3.29 Accounts receivable 8.36 8.72 8.90 9.80 9.58 8.70 turnover (times) Average cash collection 44 42 41 37 38 42 days Inventory turnover (times) 4.88 5.93 6.46 7.09 7.46 6.90 Operating Accounts payable turnover 38.88 24.19 28.27 34.55 25.02 22.09 efficiency (times) Average inventory turnover 75 62 57 51 49 53 days Property, plant and 1.08 1.13 1.08 1.06 1.06 1.09 equipment turnover (times) Total asset turnover (times) 0.72 0.78 0.75 0.77 0.78 0.78 Return on assets (%) 1.37 3.87 2.46 2.19 3.63 0.75 Return on equity (%) 1.31 6.65 3.70 2.44 5.50 1.06 Profitability Pre-tax profit to paid-up 2.68 10.27 6.26 4.45 9.06 1.68 capital (%) Net profit margin (%) 0.90 3.95 2.09 1.36 3.27 2.62 Earnings per share (NT$) 0.16 0.80 0.49 0.37 0.68 0.13 Cash flow ratio (%) 31.04 27.08 17.09 53.82 64.88 0.44 Cash flow adequacy ratio Cash 92.08 75.02 50.72 75.21 88.28 95.21 flow (%) Cash reinvestment ratio (%) 2.30 4.43 1.72 7.43 6.13 0.06 3.79 2.34 3.14 4.01 2.69 2.83 Degree of Operating leverage leverage Financial leverage 2.11 1.35 1.66 2.51 1.42 1.40 Reasons for changes in financial ratios in the last 2 years: 1. Solvency ratio improved from the previous year mainly due to loan repayment, reduction of benchmark interest rate in China, and overall increase in pre-tax profit. 2. Payables turnover decreased from the previous year mainly due to: recovery of steel prices, which the Company responded by making additional purchases of raw material in year-end; and lesser sale of beverage in low season that the Company responded by reducing purchases. Overall, purchases increased slightly while cost of sales reduced, which resulted in a lower payables turnover. 3. All profitability indicators improved as compared to the previous year mainly due to a recovery in global steel price, China's successful efforts in removing excess capacity, fall of raw material cost in excess of the fall of unit selling price, and overall increase in sales volume that overcompensated the fall in unit selling price. 4. Cash flow ratio improved from the previous period mainly due to loan repayments that reduced current liabilities. 5. All degrees of leverage have decreased from the previous year mainly due to loan repayment, reduction of benchmark interest rate in China, and overall improvement in the Company's operations that resulted in higher profits. Note 1: The Company adopted IFRS since 2012. Consolidated financial analysis for 2012 can be found in Financial Structure (%)

77

"(3) Consolidated financial analysis - based on R.O.C. accounting standards." Year-to-date financial information up till March 31, 2017 was not reviewed by auditors; information of other years shown above had been audited.

78

(1) Standalone financial analysis - IFRS Financial analysis for the last 5 years (Note 1)

Year Item

2012 34.86

2013 29.05

2014 33.43

2015 29.90

2016 29.04

Debt to assets ratio Long-term capital to property, 155.90 169.98 189.97 186.48 193.55 plants and equipment Current ratio 148.78 172.78 141.86 110.20 141.84 Solvency Quick ratio 48.27 62.57 57.15 47.16 55.20 % Interest coverage ratio 3.93 12.29 8.79 7.02 14.73 Accounts receivable turnover 20.35 17.23 14.20 12.18 12.60 (times) Average cash collection days 18 21 26 30 29 Inventory turnover (times) 6.98 7.45 7.77 7.59 7.32 Accounts payable turnover 77.68 43.66 62.26 83.23 41.5 Operating (times) efficiency Average inventory turnover 52 49 47 48 50 days Property, plant and equipment 1.38 1.42 1.48 1.29 1.28 turnover (times) Total asset turnover (times) 0.83 0.79 0.74 0.61 0.61 Return on assets (%) 1.32 4.97 3.09 2.45 4.36 Return on equity (%) 1.42 6.75 3.99 3.09 5.79 Profitability Pre-tax profit to paid-up capital 2.19 9.15 5.89 4.42 7.77 (%) Net profit margin (%) 1.16 5.81 3.69 3.44 6.72 Earnings per share (NT$) 0.16 0.80 0.49 0.37 0.68 Cash flow ratio (%) 71.35 99.88 38.25 95.68 58.37 Cash Cash flow adequacy ratio (%) 133.82 190.90 150.23 207.74 226.30 flow Cash reinvestment ratio (%) 2.36 4.61 0.24 4.02 2.04 3.75 2.08 2.46 2.82 2.34 Degree of Operating leverage leverage Financial leverage 1.42 1.13 1.18 1.26 1.11 Reasons for changes in financial ratios in the last 2 years: 1. Current ratio increased from the previous year mainly due to recovery of international steel price, purchase of additional raw materials at year-end, and reversal of loss on inventory devaluation. 2. Interest coverage ratio increased from the previous year mainly due to loan repayment, recovery of the steel market, and overall improvement in the Company's operations that resulted in higher profits. 3. Accounts payable turnover decreased compared to the previous year mainly because of ongoing recovery in the steel market, which the Company responded by making additional purchases at a favorable price towards year-end. These purchases resulted in higher amount of payables. 4. All profitability indicators improved as compared to the previous year mainly due to a recovery in global steel price, China's successful efforts in removing excess capacity, and overall increase in sales volume that overcompensated the fall in unit selling price. 5. Cash flow ratio reduced from the previous year mainly due to a significant decrease in net cash flow from operating activities. Although profits improved in the current year, the Company encountered higher cash outflows as a result of increased inventory balance, recovery of inventory devaluation loss, and increased receivables. 6. Cash reinvestment ratio reduced from the previous year mainly as a result of: lesser cash flow from operating activities described above, increase in year-end inventory, and continual loan repayment. Financial Structure (%)

79

Note 1: The Company adopted IFRS since 2012. Standalone financial analysis for 2011 can be found in "(4) Standalone financial analysis - based on R.O.C. accounting standards." All yearly financial information presented above has been audited. Note 2: Below are the formulas used in various financial analyses:

1. Financial structure (1) Debt to asset ratio = total liabilities/ total assets. (2) Long-term capital to property, plants and equipment = (total equity + non-current liabilities) / net property, plant and equipment. 2. Solvency (1) Current ratio = current assets / current liabilities. (2) Quick ratio = (current assets - inventory - prepayments) / current liabilities. (3) Interest coverage ratio = net profit before interest and tax / interest expenses for the current period. 3. Operating efficiency (1) Receivables turnover (including accounts receivable and notes receivable from business activities) = net sales / average receivables balance (including accounts receivable and notes receivable from business activities). (2) Average cash collection days = 365 / receivables turnover. (3) Inventory turnover = cost of sales/average inventory balance. (4) Payables turnover (including accounts payable and notes payable for business activities) = cost of sales / average payables balance (including accounts payable and notes payable for business activities). (5) Average inventory turnover days = 365 / inventory turnover. (6) Property, plant and equipment turnover = net sales / average net property, plant and equipment balance. (7) Total asset turnover = net sales/average total assets. 4. Profitability (1) Return on assets = (net income + interest expenses x (1- tax rate)) / average asset balance. (2) Return on equity = net income / average shareholders' equity. (3) Net profit margin = net income / net sales. (4) Earnings per share = (net income attributable to parent company shareholders - preferred share dividends) / weighted average outstanding shares. 5. Cash flow (1) Cash flow ratio = net cash flow from operating activities / current liabilities. (2) Cash flow adequacy ratio = net cash flow from operating activities for the previous 5 years / (capital expenditure + increase in inventory + cash dividends) for the previous 5 years. (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant and equipment + long-term investments + other non-current assets + working capital). 6. Degree of leverage: (1) Degree of operating leverage = (net operating revenues - variable operating costs and expenses) / operating profit. (2) Degree of financial leverage = operating profit / (operating profit - interest expense).

80

(3) Financial analysis - consolidated - based on R.O.C. accounting standards Year Analysis Financial structure (%)

Debt to assets ratio Long-term capital to fixed assets ratio Current ratio (%)

Financial analysis for the last 5 years (Note 1) 2012 2013 2014 2015 2016 50.51 119.63

-

-

-

-

156.42

-

-

-

-

77.04

-

-

-

-

2.02

-

-

-

-

8.36

-

-

-

-

44

-

-

-

-

4.89

-

-

-

-

38.92

-

-

-

-

75

-

-

-

-

Fixed asset turnover (times)

1.08

-

-

-

-

Total asset turnover (times)

0.73

-

-

-

-

Return on assets (%) Return on shareholders’ equity (%) As a Operating percentage profit Profitability of paid-up capital Pre-tax profit (%)

1.41

-

-

-

-

1.34

-

-

-

-

3.88

-

-

-

-

2.54

-

-

-

-

Net profit margin (%)

0.95

-

-

-

-

Earnings per share (NT$)

0.17

-

-

-

-

29.13

-

-

-

-

91.35

-

-

-

-

2.06

-

-

-

-

Operating leverage

3.93

-

-

-

-

Financial leverage

2.20

-

-

-

-

Solvency

Quick ratio (%) Interest coverage ratio (times) Accounts receivable turnover (times) Average cash collection days Inventory turnover (times)

Operating efficiency

Accounts payable turnover (times) Average inventory turnover days

Cash flow ratio (%) Cash flow

Degree of leverage

Cash flow adequacy ratio (%) Cash reinvestment ratio (%)

Note 1: The Company adopted IFRS since 2012. Consolidated financial analysis from 2013 to 2016 can be found in "(1) Consolidated financial analysis - IFRS-compliant." All yearly financial information presented above has been audited.

81

(4) Financial analysis - standalone - based on R.O.C. accounting standards Year Analysis Financial structure (%)

Solvency

Debt to assets ratio Long-term capital to fixed assets ratio Current ratio (%)

154.07

-

-

-

-

147.84

-

-

-

-

47.68

-

-

-

-

3.80

-

-

-

-

20.51

-

-

-

-

18

-

-

-

-

7.05

-

-

-

-

77.76

-

-

-

-

52

-

-

-

-

Fixed asset turnover (times)

1.42

-

-

-

-

Total asset turnover (times)

0.82

-

-

-

-

1.36

-

-

-

-

1.45

-

-

-

-

2.34

-

-

-

-

2.05

-

-

-

-

1.21

-

-

-

-

0.17

-

-

-

-

70.64

-

-

-

-

99.57

-

-

-

-

2.38

-

-

-

-

Operating leverage

8.99

-

-

-

-

Financial leverage

1.45

-

-

-

-

Quick ratio (%) Interest coverage ratio (times) Accounts receivable turnover (times) Average cash collection days Inventory turnover (times)

Operating efficiency

Accounts payable turnover (times) Average inventory turnover days

Return on assets (%) Return on shareholders’ equity (%) As a Operating percentage profit Profitability of paid-up Pre-tax capital profit (%) Net profit margin (%) Earnings per share (NT$) Cash flow ratio (%) Cash flow

Degree of leverage

Financial analysis for the last 5 years (Note 1) 2012 2013 2014 2015 2016 33.12 -

Cash flow adequacy ratio (%) Cash reinvestment ratio (%)

Note 1: The Company adopted IFRS since 2012. Consolidated financial analysis from 2013 to 2016 can be found in "(2) Standalone financial analysis - IFRS-compliant." All yearly financial information presented above has been audited.

82

1. Financial structure (1) Debt to asset ratio = total liabilities/ total assets. (2) Long-term capital to fixed assets ratio = (net shareholders' equity + long-term liabilities) / net fixed assets. 2. Solvency (1) Current ratio = current assets / current liabilities. (2) Quick ratio = (current assets - inventory - prepayments) / current liabilities. (3) Interest coverage ratio = net profit before interest and tax / interest expenses for the current period. 3. Operating efficiency (1) Receivables turnover (including accounts receivable and notes receivable from business activities) = net sales / average receivables balance (including accounts receivable and notes receivable from business activities). (2) Average cash collection days = 365 / receivables turnover. (3) Inventory turnover = cost of sales/average inventory balance. (4) Payables turnover (including accounts payable and notes payable for business activities) = cost of sales / average payables balance (including accounts payable and notes payable for business activities). (5) Average inventory turnover days = 365 / inventory turnover. (6) Fixed asset turnover = net sales / average net fixed assets. (7) Total asset turnover = net sales/average total assets. 4. Profitability (1) Return on assets = (net income + interest expenses x (1- tax rate)) / average asset balance. (2) Return on shareholders' equity = net income/ average shareholders' equity. (3) Net profit margin = net income / net sales. (4) Earnings per share = (net income - preferred share dividends) / weighted average outstanding shares. 5. Cash flow (1) Cash flow ratio = net cash flow from operating activities / current liabilities. (2) Cash flow adequacy ratio = net cash flow from operating activities for the previous 5 years / (capital expenditure + increase in inventory + cash dividends) for the previous 5 years. (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross fixed assets + long-term investments + other assets + working capital). 6. Degree of leverage: (1) Degree of operating leverage = (net operating revenues - variable operating costs and expenses) / operating profit. (2) Degree of financial leverage = operating profit / (operating profit - interest expense)

83

3. Audit Committee's report on the review of the latest financial report

Ton Yi Industrial Corp. Audit Committeeal Corp.0; We have reviewed the Company's 2016 business report, financial statements, and earnings appropriation prepared by the board of directors. The standalone and consolidated financial statements were audited by CPA Phoebe Lin and CPA Lewis Lee of PricewaterhouseCoopers Taiwan. These financial statements were submitted for review by us, the Audit Committee, along with the Company's business report and earnings appropriation proposal. We found the abovementioned reports to be free of misstatement, and hereby issue this review report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

For 2017 Annual General Meeting Ton Yi Industrial Corp.

Audit Committee: Convener: Member: Member:

March 28, 2017

84

4. The latest audited consolidated financial statements: Please see page 110. 5. The latest audited standalone financial statements: Please see page 206. 6. Financial distress encountered by the company and affiliated enterprises in the last year, up till the publication date of this annual report: None.

85

Seven. Review and analysis of financial position and business performance, and risk management issues 1. Analysis of financial position (1) Analysis of consolidated financial position Year Item Current assets

2016

2015

Unit: NTD thousands Variation Amount increase Variation (%) (decrease)

8,626,122

9,075,144

(449,022)

(4.95)

28,914,965

32,623,697

(3,708,732)

(11.37)

399,648

453,510

(53,862)

(11.88)

Other assets

1,972,079

2,101,011

(128,932)

(6.14)

Total assets

39,912,814

44,253,362

(4,340,548)

(9.81)

7,191,123

10,576,087

(3,384,964)

(32.01)

Non-current liabilities

13,559,175

13,881,347

(322,172)

(2.32)

Total liabilities

20,750,298

24,457,434

(3,707,136)

(15.16)

Share capital

15,791,453

15,791,453

-

-

228,178

228,178

-

-

Retained earnings

3,235,748

2,796,095

439,653

15.72

Other equity items

(1,075,145)

(68,156)

(1,006,989)

(1,477.48)

982,282

1,048,358

(66,076)

(6.30)

19,162,516

19,795,928

(633,412)

(3.20)

Property, plant and equipment Intangible assets

Current liabilities

Capital reserves

Non-controlling equity Total equity

Explanation to significant variations (20% or above): 1. Current liabilities decreased by NT$3,384,964,000 mainly due to continual repayment of outstanding loans. 2. Other equity items decreased by NT$1,006,989,000 mainly due to weakening of RMB against the USD, which reduced cumulative translation adjustments from foreign operations by NT$998,735,000, and unrealized gains from available-for-sale financial assets by NT$8,254,000.

86

(2) Analysis of standalone financial position Unit: NTD thousands Variation Amount increase Variation (%) (decrease)

Year Item Current assets

2016

2015

3,596,936

3,033,378

563,558

18.58

11,927,726

12,864,316

(936,590)

(7.28)

-

35,319

(35,319)

(100.00)

Other assets

10,096,811

10,809,578

(712,767)

(6.59)

Total assets

25,621,473

26,742,591

(1,121,118)

(4.19)

Current liabilities

2,535,851

2,752,707

(216,856)

(7.88)

Non-current liabilities

4,905,388

5,242,314

(336,926)

(6.43)

Total liabilities

7,441,239

7,995,021

(553,782)

(6.93)

15,791,453

15,791,453

-

-

228,178

228,178

-

-

Retained earnings

3,235,748

2,796,095

439,653

15.72

Other equity items

(1,075,145)

(68,156)

(1,006,989)

(1,477.48)

-

-

-

-

18,180,234

18,747,570

(567,336)

(3.03)

Property, plant and equipment Intangible assets

Share capital Capital reserves

Non-controlling equity Total equity

Explanation to significant variations (amounting to NT$20 million or above): 1. Intangible assets decreased by NT$35,319,000 compared to the above; this was due to amortization of royalties on technology transfer that was fully completed in the last year. 2. Other equity items decreased by NT$1,006,989,000 mainly due to weakening of RMB against the USD, which reduced cumulative translation adjustments from foreign operations by NT$998,735,000, and unrealized gains from available-for-sale financial assets by NT$8,254,000.

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2. Analysis of financial performance (1) Significant change in operating revenues, operating profit and pre-tax income in the last 2 years and the underlying causes (consolidated and standalone): 1. Analysis of consolidated financial performance Year 2016

Item Operating revenues

2015

Unit: NTD thousands Variation Amount increase Variation (%) (decrease)

32,748,645

36,178,627)

(3,429,982)

(9.48)

(28,409,397)

(32,605,191)

(4,195,794)

(12.87)

4,339,248

3,573,436)

765,812

21.43

(2,458,888)

(2,483,020)

(24,132)

(0.97)

Operating profit

1,880,360

1,090,416)

789,944

72.44

Non-operating income and losses

(450,199)

(387,669)

(62,530)

(16.13)

Pre-tax profit

1,430,161

702,747)

727,414

103.51

Income tax expense

(359,531)

(210,790)

148,741

70.56

Net income

1,070,630

491,957)

578,673

117.63

(1,198,715)

(590,802)

(607,913)

(102.90)

(128,085)

(98,845)

(29,240)

(29.58)

1,069,141

590,018)

479,123

81.20

(62,009)

23,693)

(85,702)

(361.72)

Operating costs Gross profit Operating expenses

Other current comprehensive income (net, after tax) Total comprehensive income (loss) for the current period Net income attributable to: Parent company shareholders Comprehensive income attributable to: Parent company shareholders

Explanation to significant variations: 1. Operating revenues: Current operating revenues decreased by NT$3,429,982,000 mainly due to a fall in the annual average unit selling price of tinplates, and lower sales volume from the PET factory. 2. Gross profit: Current gross profit increased significantly by NT$765,812,000 mainly due to a larger fall in cost as compared to the fall in unit selling price. Sale of PET beverage and packaging materials had decreased, thus contributed a reduction to gross profit. However, overall gross profit from sales still increased as compared to the previous year. 3. Operating profit: Gross profit from sales had increased while operating expenses remained comparable to the previous year, thus resulting in an increase of operating profits. 88

4. Net income: Apart from those discussed above, non-operating revenues and losses decreased by NT$62,530,000 compared to the previous year mainly because: (1) No gain from disposal of non-current assets pending sale had occurred in the current period; (2) Lesser losses on exchange despite volatile exchange rate movements, as subsidiaries' borrowings were converted into the functional currency; and (3) Ongoing repayment of borrowings that reduced financial expenses. Overall, the Company delivered higher net income compared to the previous period. 5. Comprehensive income attributable to parent company shareholders: Comprehensive income attributable to parent company shareholders decreased by NT$85,702,000 despite the higher net income described above. This was largely due to the ongoing weakening of RMB against USD, which reduced cumulative translation adjustments from foreign operations.

89

2. Analysis of standalone financial performance Year 2016

Item

2015

Unit: NTD thousands Variation Amount increase Variation (%) (decrease)

15,914,109

17,152,577)

(1,238,468)

(7.22)

(13,778,246)

(15,572,801)

(1,794,555)

(11.52)

2,038,401

1,662,473)

375,928

22.61

(1,148,329)

(1,097,134)

51,195

4.67

Operating profit

890,072

565,339)

324,733

57.44

Non-operating income and losses

337,053

132,697)

204,356

154.00

Pre-tax profit

1,227,125

698,036)

529,089

75.80

Income tax expense

(157,984)

(108,018)

49,966

46.26

Net income

1,069,141

590,018)

479,123

81.20

(1,131,150)

(566,325)

(564,825)

(99.74)

(62,009)

23,693)

(85,702)

(361.72)

Operating revenues Operating costs Gross profit Operating expenses

Other current comprehensive income (net, after tax) Total comprehensive income (loss) for the current period

Explanation to significant variations: 1. Operating revenues and gross profit: Current operating revenues decreased by NT$1,238,468,000 mainly due to recovery of the international steel market. Although the average selling price was still lower than the previous year, the fall in unit selling price was lesser than the fall in cost, and thus contributed to higher gross profit from sales as compared to the previous year. 2. Operating profit: Current operating profit increased by NT$324,733,000 mainly due to increased gross profit from sales. 3. Net income: Current net income increased by NT$479,123,000 mainly due to an increase in operating profits mentioned above and additional gains recognized from investments. 4. Total comprehensive income - current: Comprehensive income attributable to parent company shareholders decreased by NT$85,702,000 despite the higher net income described above. This was largely due to the ongoing weakening of RMB against USD, which reduced cumulative translation adjustments from foreign operations.

(2) Expected sales, the basis of estimation, likely impacts on the Company's future financial position, and responsive plans: The Company estimates its production and sales for the coming year based on the prevailing condition of the international steel market, the beverage market in China, and prospects of the future economy. Judging by its competitiveness in the tinplates industry and association with Uni-President Group, the Company 90

possesses adequate financial as well as business capacity to respond to changes in the steel industry and changes in the PET beverage market. For details about sales volume of the following year, please refer to - "Summary of 2017 business plan."

91

3. Cash flow analysis (1) Cash flow analysis for the last 2 years Cash flow analysis - consolidated Year Item

2016

2015

Variation (%)

Cash flow ratio

64.88%

53.82%

20.55%

Cash flow adequacy ratio

88.28%

75.21%

17.38%

6.13%

7.43%

(17.50)%

Cash reinvestment ratio Explanation to major variations:

1. Cash flow ratio improved from the previous period mainly due to loan repayments that reduced current liabilities. 2. Cash flow adequacy ratio increased due to continual net cash inflow and absence of significant capital expenditure. 3. Cash reinvestment ratio decreased from the previous year mainly due to: lower cash inflow from operating activities, continual repayment of outstanding loans, and higher working capital balance.

(2) Liquidity analysis for the next year Liquidity analysis for the next year - consolidated Unit: NTD thousands Net cash flow from Opening cash Annual cash operating activities balance outflow for the year

745,621

3,865,720

Cash surplus (deficit)

3,703,149

908,192

Financing of cash deficits Investment

Financing

plans

plans

N/A

N/A

1. The price of tinplates is expected to stabilize in 2017, while profits from PET beverage and packaging materials are expected to grow consistently. Given the absence of new investments, the Company will allocate its cash surplus to repay loans and distribute as cash dividends. 2. Responsive measures and liquidity analysis for cash flow deficits: Not applicable.

4. Major capital expenditures in the last year and impact on business performance: Not applicable. 5. Causes of profit or loss incurred on investments in the last year, and any improvements or investments planned for the next year: (1) Causes of profit or loss incurred on investments in the last year, and any improvements or investments planned for the next year: 92

The Company has established 8 factories in China to capitalize on the growth of the local beverage market. These factories are being used as production sites for PET beverage, packaging material, and beverage filling for the group. These factories began operation between 2012 and 2015, and although some were unable to profit due to market conditions, they still contribute an adequate level of profit each year. (2) Investment plans for the coming year: The Company does not have any significant capital spending or investment planned for 2017; however, to accommodate the growth of the beverage market in China, the Company will continue supporting the group's business plans in China by by expanding the capacity of its PET beverage filling and packaging operations, and venture into the filling of canned beverages.

6. Evaluation of risk factors (1) Impact of interest rate, exchange rate, and inflation on the company’s earnings, and responsive measures: Item 2016 (NTD thousands) Interest expense 551,487 Loss on currency (10,373) exchange - net

The Company reviews its borrowing interest rates with banks on a regular basis. In addition to managing cash inflow from operating activities for bank loan repayment, the Company maintains close communication with banks in order to borrow at preferred rates. More than half of the Company's raw materials are imported from overseas, while most of its products are exported. As a result, the majority of debt entitlements and debt obligations are denominated in foreign currency, and are able to offset each other to create a natural hedge against exchange rate movements. The residual exposure to foreign currency is hedged using financial derivatives. Many countries around the world have implemented incentives to stimulate economy, and expansionary monetary policies, in particular, are especially effective in helping businesses obtain capital at lower cost. The U.S. economy performed relatively well in 2016 and up till the publication date of this annual report. Strong economic performance combined with FED's rate hike should cause the NTD to weaken against the USD over the medium and long term. Nevertheless, short-term currency movements will continue to be affected by political instabilities and trade competition between countries. Governments around the world have resolved to expansionary monetary policy as a means to stimulate economy. This decision will inevitably lead to a competition for the weakest currency and affect competitiveness of the Company's products. The Company will continue paying attention to changes in the market, and maintain sound interaction with suppliers and customers while at the same time enhance product quality and added value. In terms of pricing, appropriate adjustments will be made to keep inventory under control. The Company will also monitor changes in the economic environment and market conditions closely to avoid adverse impacts. 93

(2) Policies on high-risk and highly leveraged investments, loans to third parties, endorsements / guarantees, and trading of derivatives; describe the main causes of any profit or loss incurred and future responsive measures: The Company is not involved in any high-risk or highly leveraged investment. All loans, endorsements and guarantees to third parties and derivative transactions are conducted according to rules of the securities and futures bureau, and governed by internal policies such as "Asset Acquisition and Disposal Procedures," "Third-party Lending Procedures," "Endorsement and Guarantee Policy," and "Derivative Trading Procedures." Internal units and personnel have been assigned specifically to evaluate and manage risks associated with the above activities. In addition, the Company's internal audit department conducts risk management and assessment works according to "Regulations Governing Establishment of Internal Control Systems by Public Companies." The Company holds derivatives to hedge against exchange rate risks that arise as a result of business, financial and investment activities. These derivatives were accounted as "held for trading" because they did not meet the requirements for hedge accounting. (3) Future research and development plans and projected expenses: The Company is a provider of general packaging materials, and has recently ventured into the beverage filling business. To ensure stringent control over product quality and safety, the Company has constructed a national-grade laboratory and invested resources into the development of coating materials that are harmless to the environment and human body, and design of lightweight containers for lesser environmental impact. The Company expects to invest approximately NT$62 million into R&D in 2017. (4) Financial impacts and responsive measures in the event of changes in local and foreign regulations: The Company pays constant attention to new government policies and laws that are likely to affect its operations. Following the implementation of "Personal Information Protection Act," the Company established its own "Personal Information Security System" and "Personal Information Security Management Center" in 2012, and later created an "Information Security Team," an "Internal Audit and Evaluation Team," a "Policy Execution Team," and an "Operations Team" under the Center to enforce information security throughout the Company. (5) Financial impacts and responsive measures in the event of technological or industrial changes: The Company devotes great attention to how technology affects its operations. In addition to establishing security measures and enhancing protection for confidential and personal information, the Company also adopts the use of technologies such as video conferencing, IP phone, and encrypted private network as a means to reduce cost and raise competitiveness. (6) Crisis management, impacts, and responsive measures in the event of a change in corporate image: The Company developed "Crisis Management Guidelines" in January 2014 to guide its 94

response to various crises. Should any crisis occur, an accountable unit will be available to activate the necessary responsive measures. Furthermore, a "Reporting Center" has been created to oversee major crises. (7) Expected benefits, risks and responsive measures in relation to mergers and acquisitions: After many years of hard work, the Company has grown to become a provider of general packaging materials, and a significant part in the group's plan for the Greater China Region. In the future, the Company aims to secure the group's leading position in the current industry. The Company has accumulated many years of experience in business investment and management, and demonstrated the ability to effectively integrate products, markets, customers and technologies, and control financial risks. (8) Expected benefits, risks and responsive measures associated with plant expansions: All of the Company's plant expansion projects undergo complete, careful and expert evaluation that takes full account of investment yields and possible risks. (9) Risks and responsive measures associated with concentrated sales or purchases: 1. Purchases: The Company purchases steel materials mainly from leading suppliers in Asia that offer transparent pricing and open information. Other secondary materials and parts are purchased according to the Company's procurement and payment procedures. The Company completes all its purchases after proper comparison and negotiation; there was no significant concentration to any particular supplier. 2. Sales: The Company sells products mainly to related companies as a result of its vertical integration. These products are further distributed in China through Cayman Ton Yi Industrial Holdings Limited, so practically speaking, the Company has a wide customer base and its business activities are not concentrated to any single customer, and therefore is not exposed to any significant concentration of credit risk. Furthermore, the Company monitors the credibility of its customers very strictly, and has not encountered any major credit loss. The Company sells goods on credit only to reputable customers; smaller customers may be required to make advance payment or provide collateral or guarantee for their purchase. (10) Impacts, risks and responsive measures following a major transfer of shareholding by directors, supervisors, or shareholders with more than 10% ownership interest: Currently, all changes in shareholding are the result of investment decisions of individual shareholders, and have not impacted the Company in any way. There had been no significant transfer of shareholding in 2016, or up till the publication date of this annual report. (11) Impacts, risks and responsive measures associated with a change of management: The Company has a stable shareholder structure and is run by a team of professional managers. A change in management would not undermine the Company's performance. There had been no 95

significant transfer of shareholding in 2016, or up till the publication date of this annual report. (12) Litigations or non-contentious cases that may have significant impact on shareholders' equity or security price: None. (13) Other material risks and responsive measures: None.

7. Other important disclosures: None.

96

Eight. Special Remarks: I. Relevant information of affiliated enterprises (I) Consolidated business reports of affiliated enterprises 1. Organization chart of affiliated enterprises 100%

Ton Yi Industrial Corp.

51%

Cayman Jiangsu Ton Yi Holdings Ltd.

Tovecan Corporation Ltd.

82.86% 100%

Cayman Fujian Ton Yi Holdings Ltd. 86.80%

100%

Cayman Ton Yi Industrial Holdings Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

100%

Chengdu Ton Yi Industrial Packing Co., Ltd.

100%

Wuxi Ton Yi Industrial Packing Co., Ltd.

100%

Changsha Ton Yi Industrial Packing Co., Ltd.

100%

Cayman Ton Yi Holdings Ltd.

100%

Cayman Ton Yi (China) Holdings Ltd.

100%

Ton Yi (China) Investment Co., Ltd.

100% 100%

100%

100%

100%

100%

100% 100%

97

Zhangzhou Ton Yi Industrial Co., Ltd. Taizhou Ton Yi Industrial Co., Ltd. Chengdu Ton Yi Industrial Co., Ltd. Huizhou Ton Yi Industrial Co., Ltd. Kunshan Ton Yi Industrial Co., Ltd. Beijing Ton Yi Industrial Co., Ltd. Sichuan Ton Yi Industrial Co., Ltd. Zhanjiang Ton Yi Industrial Co., Ltd.

2. Basic information about affiliated enterprises Year of 2016 Names of enterprises

Ton Yi Industrial Corp.

Tovecan Corporation Ltd.

Cayman Ton Yi Industrial Corp.

Expressed in thousand dollars Date of incorporation

Address

No. 837, Zhongzheng N. Rd., Niaosong 1969.04.14 Village, Yongkang District, Tainan City, Taiwan Lot A60/I-A61/II, No.7 Street, Vinh Loc Industrial Park, Binh Hung Hoa B Ward, 1993.01.28 Binh Tan District, Hochiminh City, Vietnam Floor 4, Willow House, Cricket Square, 1997.01.31 P.O. Box 2804, Grand Cayman KY1-1112, Cayman Islands.

Paid-in capital

Marketing and production items Tin plates Tin mill black plates NT$15,791,453 (TMBP) Coated Steel Tin cans, etc. US$4,576

US$253,097

Manufacturing of Tin cans Investment, International trade

Cayman Jiangsu Ton Yi Holdings Ltd.

1998.10.29

Ditto

US$50

Investment in general attribute

Cayman Fujian Ton Yi Holdings Ltd.

1998.10.29

Ditto

US$87

Investment in general attribute

Cayman Ton Yi Holdings Ltd.

2012.07.03

Ditto

US$230,000

Investment in general attribute

Cayman Ton Yi (China) Holdings Ltd.

2012.07.04

Ditto

US$230,000

Investment in general attribute

US$230,000

Investment in general attribute

No.301 QingYang South Rd., Kunshan Ton Yi (China) Investment 2014.09.15 Economic & Technical Development Zone, Co., Ltd. Jiangsu, China East Section South 2nd Rd., Xindu Chengdu Ton Yi Industrial 1994.02.06 Industrial Zone of Chengdu Satellite-town, Packing Co., Ltd. Sichuan, China

Manufacturing of Tin US$7,500 cans

Wuxi Ton Yi Industrial Packing Co., Ltd.

1994.02.24

No. 3, Taishan Road, New District, Wuxi, Jiangsu, China

US$9,720

Jiangsu Ton Yi Tinplate Co., Ltd.

1994.07.28

No. 1, Taishan Road, New District, Wuxi, Jiangsu, China

US$40,000

Manufacturing and sales of Tin plates

US$86,500

Manufacturing and sales of Tin Plates

Nanbei No.2 Road Jiaomei Industry 1995.03.31 General Developing District, Longhai,, Fujian, China Changsha Ton Yi Industrial No. 188, Chigang Rd., Hunan Wangcheng Co., Ltd 2012.11.12 Economic Development Zone, Changsha, Hunan, China Zhangzhou Ton Yi Fengshan Industrial Park, Zhangzhou 2011.04.28 Industrial Co., Ltd. Taiwanese Investment Zone, Fujian , China No.301 Zhenxing Road, Gaogang Science Taizhou Ton Yi Industrial 2012.03.07 and Technology Innovation Park, Gaogang Co., Ltd. District, Taizhou City, Jiangsu, China No.129 Huixiang RD. Pickles Chengdu Ton Yi Industrial 2012.07.04 (Food) Industrial Park, Xinfan Town, Co., Ltd. Xindu District, Chengdu City , China Banqiao Industrial Park, Taimei Town, Huizhou Ton Yi Industrial 2012.10.12 Boluo County, Huizhou City, Guangdong, Co., Ltd. China No.301 QingYang South Rd., Kunshan Kunshan Ton Yi Industrial 2013.04.25 Economic & Technical Development Zone, Co., Ltd. Jiangsu, China Building C, Dazhong Fule Village Beijing Ton Yi Industrial 2013.05.08 Industrial Zone, Huairou District, Beijing Co., Ltd. City, China Fujian Ton Yi Industrial Co., Ltd.

98

Manufacturing of Tin cans

Manufacturing of Tin US$7,000 cans US$30,000

Manufacturing of PET packages

US$30,000

Manufacturing of PET packages

US$30,000

Manufacturing of PET packages

US$30,000

Manufacturing of PET packages

US$30,000

Manufacturing of PET packages

US$30,000

Manufacturing of PET packages

Year of 2016 Names of enterprises

Sichuan Ton Yi Industrial Co., Ltd. Zhanjiang Ton Yi Industrial Co., Ltd.

Expressed in thousand dollars Date of incorporation

Address

NO.18 North section RongTai Avenue Cross-strait science and Technology 2014.10.21 Industrial Park. wenjiang district , Chengdu city, Sichuan, China No 1, Henger Rd., Lingbei Industrial 2014.10.28 Bases, Suixi County, Zhanjiang , Guangdong, China

99

Paid-in capital

Marketing and production items

US$30,000

Manufacturing of PET packages

US$20,000

Manufacturing of PET packages

3. Information of the Directors, Supervisors and Presidents of affiliated enterprises December 31, 2016 Expressed in thousand U. S. Dollars, number of shares, % Company names

Position titles Chairman

Director

Names or statutory representative Chih-Hsien Lo (Statutory Representative of Uni-President Enterprises Corp. )

719,357,425(shares)

45.55%

Jau-Kai Huang, Jui-Sheng Wang, ChihChung Chen (Statutory Representative of Uni-President Enterprises Corp. )

719,357,425(shares)

45.55%

Shing-Chi Liang

5,920,028(shares)

0.38%

Kuo-Keng Chen

7,859,222(shares)

0.50%

24,840,700(shares)

1.57%

Ton Yi Industrial Corp. Xiu-Ling Kao ( Statutory representative of Kao Chyuan Investment Co., Ltd.) Ming-Long Wang Independent Chin-Chen Chien director Bing-Eng Wu President

Feng-Fu Chen

Chairman

Tovecan Corporation Ltd. Director

-

-

-

-

-

240,167(shares)

0.01%

Shing-Chi Liang (Statutory representative of Ton Yi Industrial Corp. )

US$2,334

51.00%

Ming-Sung Wu (Statutory representative of Ton Yi Industrial Corp. )

US$2,334

51.00%

Saito Naoji (Statutory representative of Toyota Tsusho Corporation)

US$1,206

26.36%

Nguyen Van Lai (Statutory representative of Vietnam National Vegetable , Fruit And Agricultural Product Corporation Limited)

US$1,036

22.64%

Nguyen Van Lai

Chairman

Shing-Chi Liang (Statutory representative of Ton Yi Industrial Corp. )

25,309,700(shares)

100.00%

Chih-Chung Chen, Feng-Fu Chen (Statutory representative of Ton Yi Industrial Corp. )

25,309,700(shares)

100.00%

Director

Shing-Chi Liang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

50,000(shares)

100.00%

Chairman

Chih-Chung Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

50,000(shares)

100.00%

Director

Shing-Chi Liang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

87,270(shares)

100.00%

Chairman

Chih-Chung Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

87,270(shares)

100.00%

Director Chairman

Feng-Fu Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

230,000,000(shares)

100.00%

Cayman Jiangsu Ton Yi Holdings Ltd.

Cayman Fujian Ton Yi Holdings Ltd.

Cayman Ton Yi

-

President

Cayman Ton Yi Industrial Holdings Ltd.

Number of shares held Number of shares held Shareholding ratio

-

100

-

Company names

Position titles

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

230,000,000(shares)

100.00%

Chairman

Feng-Fu Chen (Statutory Representative of Cayman Ton Yi Holdings Ltd. )

230,000,000(shares)

100.00%

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Cayman Ton Yi Holdings Ltd. )

230,000,000(shares)

100.00%

Director

Feng-Fu Chen (Statutory Representative of Cayman Ton Yi (China) Industrial Holdings Ltd. )

US$230,000

100.00%

Chairman

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Cayman Ton Yi (China) Holdings Ltd. )

US$230,000

100.00%

Director Supervisor

Yu-Hsin Chang (Statutory Representative of Cayman Ton Yi (China) Holdings Ltd. )

US$230,000

100.00%

Shing-Chi Liang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

US$7,500

100.00%

Chairman

US$7,500

100.00%

Director

Chih-Chung Chen, Lin Ming-Hua, Yu-Hsin Chang, Feng-Fu Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

President

Lin Ming-Hua Shing-Chi Liang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

US$9,720

100.00%

Chairman

US$9,720

100.00%

Director

Chih-Chung Chen, Chih-Kang Hsu, YuHsin Chang, Feng-Fu Chen (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

President

Chih-Kang Hsu

Chairman

Shing-Chi Liang (Statutory Representative of Cayman Jiangsu Ton Yi Holdings Ltd. )

US$33,143

82.858%

Ming-Sung Wu, Chin-Cheng Hsu, KengHua Lin (Statutory Representative of Cayman Jiangsu Ton Yi Holdings Ltd.)

US$33,143

82.858%

Akama Hiroshi (Statutory representative of JFE Steel Corporation Japan)

US$2,286

5.714%

Supervisor

Feng-Fu, Chen (Statutory Representative of Cayman Jiangsu Ton Yi Holdings Ltd. )

US$33,143

82.858%

President

Keng-Hua Lin

Chairman

Shing-Chi Liang (Statutory Representative of Cayman Fujian Ton Yi Holdings Ltd. )

US$75,086

86.8044%

Chin-Cheng Hsu, Feng-Jen Huang (Statutory Representative of Cayman Fujian Ton Yi Holdings Ltd. )

US$75,086

86.8044%

US$6,621

7.6544%

Cayman Ton Yi (China)

Ton Yi (China) Investment Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packaging Co., Ltd.

Jiangsu Ton Yi Tinplate Director Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Number of shares held Number of shares held Shareholding ratio

Director

Holdings Ltd.

Holdings Ltd.

Names or statutory representative

Director

-

-

-

Saito Naoji (Statutory representative of Toyota Tsusho Corporation Japan)

101

-

-

-

Company names

Changsha Ton Yi

Position titles

Feng-Fu Chen (Statutory Representative of Cayman Fujian Ton Yi Holdings Ltd. )

President

Feng-Jen Huang Shing-Chi Liang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

US$7,000

100.00%

Chairman

Feng-Fu Chen, Ming-Sung Wu (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

US$7,000

100.00%

Director

Feng-Jen Huang (Statutory Representative of Cayman Ton Yi Industrial Holdings Ltd. )

US$7,000

100.00%

Supervisor President

Chih-Kang Hsu

Chairman

Feng-Fu Chen (Statutory representative of Wuxi Ton Yi Industrial Packing Co., Ltd.)

RMB30,000

100.00%

Chin-Cheng Hsu (Statutory representative of Wuxi Ton Yi Industrial Packing Co., Ltd.)

RMB30,000

100.00%

Supervisor President

Ming-Hua Lin

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd.)

US$30,000

100.00%

Director Supervisor

Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

President

Feng-Fu Chen

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd.)

US$30,000

100.00%

Director Supervisor

Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

President

Feng-Fu Chen

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd.)

US$30,000

100.00%

Director Supervisor

Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

President

Feng-Fu Chen

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Chin-Cheng Hsu, Chao-Pin Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Director

Chengdu Tongxin Industrial Packing Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Taizhou Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Number of shares held Number of shares held Shareholding ratio

Supervisor

Industrial Packing Co., Ltd.

Names or statutory representative

US$75,086 -

-

-

-

-

-

102

86.8044% -

-

-

-

-

-

Company names

Kunshan Ton Yi

Position titles

Industrial Co., Ltd.

Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

President

Feng-Fu Chen

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Chao-Pin Chen, Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

Director Supervisor

Feng-Jen Huang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

President

Feng-Fu Chen

Chairman

Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

Director Supervisor President Chairman

Sichuan Ton Yi

Director

Industrial Corp. Supervisor President Chairman Zhanjiang Ton Yi

Number of shares held Number of shares held Shareholding ratio

Supervisor

Industrial Co., Ltd.

Beijing Ton Yi

Names or statutory representative

Director

Industrial Co., Ltd. Supervisor President

US$30,000 -

-

100.00% -

-

US$30,000

100.00%

Chao-Pin Chen, Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. ) Feng-Jen Huang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. )

US$30,000

100.00%

US$30,000

100.00%

Feng-Fu Chen Feng-Fu Chen (Statutory Representative of Ton Yi (China) Investment Co., Ltd. ) Chao-Pin Chen, Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. ) Chin-Cheng Hsu (Representative of Ton Yi (China) Investment Co., Ltd. )

-

Feng-Fu Chen Feng-Fu Chen(Representative of Ton Yi (China) Investment Co., Ltd. ) Chao-Pin Chen, Yu-Hsin Chang (Statutory Representative of Ton Yi (China) Investment Co., Ltd. ) Chin-Cheng Hsu (Statutory Representative of Ton Yi (China) Investment Co., Ltd. ) Feng-Fu Chen

US$30,000

100.00%

US$30,000

100.00%

US$30,000

100.00%

-

-

US$20,000

100.00%

US$20,000

100.00%

US$20,000

100.00%

-

103

-

-

4.

An overview of business operation of affiliated enterprises December 31, 2016 Expressed in thousand NTD Dollars

Names of enterprises

Capital

Aggregate total Total liabilities of assets

Net worth

Operating revenues

Operating interests

EPS (NT$)

890,072

1,069,141

0.68

15,791,453

25,621,473

147,576

187,114

22,608

164,506

202,115

1,279

808

8,162,378

15,311,382

5,987,773

9,323,609

4,739,197

(15,796)

363,633

1,613

1,937,587

0

1,937,587

0

0

7,144

1,290,000

2,871,448

670,671

2,200,777

3,015,548

61,326

8,622

2,814

3,462,423

0

3,462,423

0

0

(2,531)

2,789,625

5,725,363

1,751,160

3,974,203

4,744,831

91,241

(2,916)

Chengdu Ton Yi Industrial Packing Co., Ltd.

241,875

592,649

76,186

516,463

368,079

(29,093)

(17,309)

Wuxi Ton Yi Industrial Packing Co., Ltd

313,470

809,651

181,130

628,521

1,288,415

65,046

49,383

Changsha Ton Yi Industrial Packing Co., Ltd

225,750

266,705

54,059

212,646

90,826

(2,131)

(3,263)

Cayman Ton Yi Holdings Ltd.

7,417,500

7,981,131

0

7,981,131

0

0

441,485

Cayman Ton Yi (China ) Holdings Ltd.

7,417,500

7,981,131

0

7,981,131

0

0

441,485

Ton Yi (China) Investment Co., Ltd.

7,417,500

8,125,406

144,247

7,981,159

65,255

5,394

441,485

Zhangzhou Ton Yi Industrial Packing Co., Ltd

967,500

2,840,092

1,506,555

1,333,537

2,279,476

277,765

161,039

Taizhou Ton Yi Industrial Packing Co., Ltd

967,500

2,074,436

458,566

1,615,870

2,327,499

273,772

207,483

Chengdu Ton Yi Industrial Packing Co., Ltd

967,500

1,924,639

1,164,778

759,861

829,759

41,451

(17,538)

Huizhou Ton Yi Industrial Packing Co., Ltd

967,500

1,845,964

1,020,767

825,197

1,089,095

47,718

1,617

Kunshan Ton Yi Industrial Packing Co., Ltd

967,500

1,564,637

429,496

1,135,141

2,421,073

117,625

82,785

Beijing Ton Yi Industrial Packing Co., Ltd

967,500

1,509,566

743,614

765,952

2,017,880

(7,395)

(13,561)

Sichuan Ton Yi Industrial Packing Co., Ltd

967,500

1,841,167

1,002,606

838,561

1,487,444

8,673

(28,148)

Zhanjiang Ton Yi Industrial Packing Co., Ltd

645,000

1,285,452

593,848

691,604

1,161,543

71,092

35,728

Ton Yi Industrial Corp. Tovecan Corporation Ltd. Cayman Ton Yi Industrial Holdings Ltd. Cayman Jiangsu Ton Yi Ltd.

Holdings

Jiangsu Ton Yi Tinplate Co., Ltd. Cayman Fujian Ton Yi Holdings Ltd. Fujian Ton Yi Tinplate Co., Ltd.

7,441,239 18,180,234 15,914,109

Profit and/or loss this term

104

(II) Affiliation Report Ton Yi Industrial Corp. Declaration of Affiliation Report

The Company's 2016 Affiliation Report (for the period January 1 to December 31, 2016) has been prepared in accordance with "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises." There was no material discrepancy between information disclosed in the above report and notes to financial statements for the corresponding period.

Company name: Ton Yi Industrial Corp. Chairman: Chih-Hsien Lo

105

Ton Yi Industrial Corp. Auditor's review of the Affiliation Report Zi-Hui-Zong-16008304

To stakeholders of Ton Yi Industrial Corp.:

The 2016 Affiliation Report of Ton Yi Industrial Corp. dated March 28, 2017, was claimed to have been prepared in accordance with "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" with no material discrepancy between information disclosed in the above report and notes to financial statements for the corresponding period. We, the auditors, have compared the Company's Affiliation Report against footnote disclosures presented in the 2016 financial statements based on "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises," and found no material contradiction to the above claims.

PwC Taiwan

Phoebe Lin CPA Lewis Lee

(Formerly known as) Securities and Futures Commission, The Ministry of Finance Approval reference : (82)Tai-Tsai-Cheng (VI) No. 44927 (78)Tai-Tsai-Cheng (I) No. 30934 March 28, 2017

106

Ton Yi Industrial Corp. (I) Relationship between the subordinate company and the controlling company The Company is a subordinate company of Uni-President Enterprises Corp. The relevant information is enumerated below: Expressed in number of shares and % Shareholding and pledge facts of the controlling Name of the controlling company

Uni-President Enterprises Corporation

company Causes of control Number of shares held Shareholding ratio The controlling company directly or indirectly controls the Company’s personnel matters, financial matters or business operation.

Uni-President Enterprises Corp. 719,357,425 shares

Kai Yu Investment Co., Ltd.(Note) 26,445,229 shares

45.55%

1.67%

Facts of the personnel assigned by the controlling company to serve as the directors and supervisors, managerial officers

Number of Position titles shares pledged





Name

Chairman

Chih-Hsien Lo

Director

Jui-Sheng Wang

Director

Chih-Chung Chen

Director

Jau-Kai Huang





(Note) Shareholding ratio of Uni-President Enterprises Corporation: 100.00%.

Chairman: Chih-Hsien Lo

Manager : Feng-Fu Chen

107

Accounting Manager: Liu Yi-Hsin

Ton Yi Industrial Corp.

(II) Transaction between the subordinate company and the controlling company: The Company’s transaction with the controlling company, i.e., Uni-President Enterprises Corp., in 2016 is enumerated below` 1. Transaction in purchases, sales: Expressed in Thousand NT Dollars;% Overdue receivables

Accounts, notes receivable (payable)

Credit duration

Unit price (NT$)

Credit duration

Balance

Ratio to aggregate total of input, output accounts and notes

Amount

Method of management

Amount of allowance for bad debt

Pursuant to terms and conditions set forth under the contracts

By wire transfer (T/T), on a monthly basis in every 30 days

Pursuant to terms and conditions set forth under the

By wire transfer (T/T), on a monthly basis in every 30 days, payable 50 days after shipment or 30 days after arrival of the shipments

Without a significant gap

$ 348



$─



$─



























Remarks

Unit price (NT$)

37%

Cause leading to the gap

Gross sales profit

Purchases



─ 383)

─ ($

Ratio to the aggregate total input(output) Amount

(Sales)

108

Accounting Manager: Yi-Hsin Liu

Manager : Feng-Fu Chen

Chairman: Chih-Hsien Luo

Ordinary terms of transaction

Terms of transaction with controlling company

Transaction with controlling company

Input (output) transaction

2. Transaction in properties: Nil . 3. Capital financing: Nil . 4. Leasehold of assets: Nil . 5. Other significant transactions: Nil . (III) Endorsements/guarantees between subordinate company and controlling company: Nil

II. Private placement of securities in the current year and as of the date of printing of the annual report: Nil. III. Holding or disposal of the Company’s stocks by subsidiaries in the current year and as of the date of printing of the Annual Report: Nil. IV. Other supplementation as necessary: Nil. V. Occurrence of any event under Article 36, Paragraph 3, Subparagraph 2 of the Securities And Exchange Act which results in significant impacts upon the shareholders’ equity or securities price: Nil.

109

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2016 AND 2015

-----------------------------------------------------------------------------------------------------------------------------------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.

110

REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Ton Yi Industrial Corp.

Opinion We have audited the accompanying consolidated balance sheets of Ton Yi Industrial Corp. and its subsidiaries (the “Group”) as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”.

Basis for opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ton Yi Industrial Corp. consolidated financial statements of 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

111

Existence of sales revenues Description Please refer to Note 4(30) for the accounting policy on revenue recognition. The Group’s sale revenues from Tin Plate products for the year ended December 31, 2016 was NT$19,469,132 thousand. The primary business of Ton Yi Industrial Corp. and its subsidiaries is Tin Plate products. The Group has a large volume of transactions from sales of numerous kinds of products to a wide range of customers in many different countries such as Taiwan, Asia, Europe, America,etc. For the customers and dealers who are from remote districts, the substantive of sales revenue need times to be comfirmed. This matter also exists in the subsidiaries of Ton Yi Industrial Corp. Thus, the existence of sales revenue has been identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above key audit matter included the following: 1. Inspecting whether approved additions to the merchandise master file data had been correctly entered in the merchandise master file which include basic information of customers, such as name of representative, location of company, amount of capital and scope of business for evaluating the creditworthiness of buyers. 2.

Understanding, evaluating and validatinf management’s controls in respect of the Company’s sales transactions from customer order’s approval, goods delivery, sales recording, reconciliation of cash receipts and customer’s records to subsequent settlement of trade receivables. In addition, testing the internal control environment of the Company’s effectiveness of revenue recognition.

3.

Performing substantive test on selected sales transactions including confirming orders, shipping documents, invoices and cash receipts to verify the exustence of sale revenues.

Inventory evaluation Description Please refer to Note 4(9) for accounting policy on inventory valution, Notes 5(2)A for the accounting estimates and assumption uncertainty in relation to inventory valution. For the year ended December 31, 2016, Tin Plate products inventory and allowance to reduce inventory to market are NT$3,022,593 thousand and NT$40,503 thousand. The Group’s raw materials are often subject to fluctuation in the international steel prices. However, as the Tin Plate products are for necessities, such price changes may not be immediately reflected in reflect material costs immediately. In addition, the competition landscape within the steel industry in China will

112

contitue to affect the price of raw materials that would impact the estimation of net realizable value of inventory. Thus, the inventory evaluation has been identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above key audit matter included the following: 1. Evaluating the adequacy of allowance for inventory and the consistency of provision policy. 2.

Assessing the reasonableness of the esitmation of net realizable value of Tin plate products and discussing with management and examining related documents to confirm the adequacy of allowance for price decline.

Other matter – Parent company only financial reports We have audited and expressed an unmodified opinion on the parent company only financial statements of Ton Yi Industrial Corp. as of and for the years ended December 31, 2016 and 2015.

Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”, and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

113

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities withinthe Group’s to express an opinion on the consolidated financial statements.

114

We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Lin, Tzu-Shu Independent Accountants Lee, Ming-Hsien PricewaterhouseCoopers, Taiwan Republic of China March 28, 2017 ------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

115

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Assets

December 31, 2016 AMOUNT

Notes

December 31, 2015 AMOUNT

Current assets 1100

Cash and cash equivalents

6(1)

1150

Notes receivable, net

6(2)(3)

1170

Accounts receivable, net

6(3)(28)

1180

Accounts receivable - related

7

$

745,621

$

704,759

690,719

923,390

1,873,439

1,447,523

parties

886,754

886,015

1200

Other receivables

118,097

85,058

1220

Current income tax assets

6(26)

40,205

55,355

130X

Inventories

5(2) and 6(4)

3,520,787

3,800,625

1410

Prepayments

6(8)(28)

729,133

1,165,797

1476

Other current financial assets

7

21,367

6,622

8,626,122

9,075,144

122,642

130,896

501,050

501,050

28,914,965

32,623,697

11XX

Total current assets Non-current assets

1523

Available-for-sale financial assets 6(6) - non-current

1543

Financial assets carried at cost -

6(7)

non-current 1600

Property, plant and equipment -

6(8)(28)

net 1760

Investment property - net

6(9)

137,670

158,012

1780

Intangible assets

6(10)

399,648

453,510

1840

Deferred income tax assets

6(26)

572,239

590,677

1915

Prepayments for business

6(8)(28) 3,696

43,769

89,800

90,730

503,015

525,685

41,967

60,192

31,286,692

35,178,218

facilities 1920

Guarantee deposits paid

7

1985

Long-term prepaid rents

6(11)(28)

1990

Other non-current assets

15XX 1XXX

Total non-current assets Total assets

$

(Continued)

116

39,912,814

$

44,253,362

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Liabilities and Equity

December 31, 2016 AMOUNT

Notes

December 31, 2015 AMOUNT

Current liabilities 2100

Short-term borrowings

2110

Short-term notes and bills payable 6(13)

2150

Notes payable

2170

Accounts payable

$

6(12) and 9

2180

Accounts payable - related parties 7

2200

Other payables

6(28)

2220

Other payables - related parties

7

2230

Current income tax liabilities

6(26)

2305

Other current financial liabilities

2310 2320

Advance receipts Long-term liabilities, current

2530 2540 2550

Total current liabilities Non-current liabilities Corporate bonds payable Long-term borrowings Provisions for liabilities - non-

6(14) 6(15) and 9 6(16)(23)

current 2570 2630

Deferred income tax liabilities Long-term deferred revenue

2640

Accrued pension liabilities - non- 5(2) and 6(17)

6(26) 6(28)

current 2645

$

2,898,530

349,838

-

13,325

24,074

1,071,402

960,547

92,276

108,918

1,331,162

1,429,725

104,386

73,766

88,944

53,369

20,929

21,631

237,597

57,972

6(15) and 9

portion 21XX

2,575,599

Guarantee deposits received

1,305,665

4,947,555

7,191,123

10,576,087

658,144

711,756

11,982,355

12,347,156

75,389

74,001

375,518 -

324,455 47,917

459,460 8,309

365,767 10,295

25XX

Total non-current liabilities

13,559,175

13,881,347

2XXX

Total liabilities

20,750,298

24,457,434

15,791,453 228,178

15,791,453 228,178

1,439,699

1,379,732

826,453 969,596

826,453 589,910

Equity attributable to owners of parent Share capital 3110 3200

Share capital - common stock Capital surplus Retained earnings

3310

Legal reserve

3320

Special reserve

3350 3400 31XX

6(18) 6(19) 6(20)(26)

Unappropriated retained earnings (

Other equity interest

1,075,145) (

Equity attributable to owners

3XXX

Non-controlling interest

4(3)

Total equity Contingent liabilities and

18,747,570

18,180,234

of the parent 36XX

68,156)

982,282

1,048,358

19,162,516

19,795,928

9

commitments 3X2X

Total liabilities and equity

$

39,912,814

$

The accompanying notes are an integral part of these consolidated financial statements.

117

44,253,362

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars, except for earning per share) Year ended December 31

4000 5000 5950 6100 6200 6000 6900 7010 7020 7050 7000 7900 7950 8200

8311 8349

8361 8362 8399

8300 8500 8610 8620

8710 8720

Items Sales revenue Operating costs

2016 AMOUNT

Notes 7 $ 6(4)(10)(11)(17)(24)( 25), 7 and 9 (

Net operating margin Operating profit

2015 AMOUNT 32,748,645

$

36,178,627

28,409,397) ( 4,339,248

32,605,191) 3,573,436

1,247,586) ( 1,211,302) ( 2,458,888) ( 1,880,360

1,257,061) 1,225,959) 2,483,020) 1,090,416

119,196 17,908) 551,487) (

181,701 85,818 655,188)

$

450,199) ( 1,430,161 359,531) ( 1,070,630 $

387,669) 702,747 210,790) 491,957

($

149,591) ($

30,055)

6(3)(9)(10)(11)(17)(2 4)(25), 7 and 9

Selling expenses General and administrative expenses Total operating expenses Operating profit Non-operating income and expenses Other income Other gains and losses Finance costs Total non-operating income and expenses Profit before income tax Income tax expense Profit for the year Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss Remeasurements of defined benefit plans Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss Exchange translation differences arising on translation of foreign operations Unrealized loss on valuation of available-for-sale financial assets Income tax relating to the components of other comprehensive income Other comprehensive loss for the year

( ( (

6(3)(9)(21) 6(5)(22) and 12 6(8)(16)(23)

( ( (

6(26)

(

6(17) 6(26) 25,430

5,109

(

1,066,188) (

519,213)

(

8,254) (

47,444)

(

112)

6(6) 6(26)

Total comprehensive loss for the year Profit (loss) attributable to: Owners of the parent Non-controlling interest Comprehensive loss attributable to: Owners of the parent Non-controlling interest

9750

Basic earnings per share from continuing operations

6(27)

9850

Diluted earnings per share from continuing operations

6(27)

801

($

1,198,715) ($

590,802)

($

128,085) ($

98,845)

$ $

1,069,141 $ 1,489 ( 1,070,630 $

590,018 98,061) 491,957

($ ( ($

62,009) $ 66,076) ( 128,085) ($

23,693 122,538) 98,845)

$

0.68

$

0.37

$

0.67

$

0.37

The accompanying notes are an integral part of these consolidated financial statements.

118

$ 58,271

$ 15,791,453

Balance at December 31, 2015

$ 58,271

-

-

-

$ 15,791,453

Cash dividends

Profit for the year

Other comprehensive loss for the year

Balance at December 31, 2016

-

-

Legal reserve

Distribution of 2015 net income:

Balance at January 1, 2016

2016

6(20)

-

-

Other comprehensive loss for the year

$ 58,271

-

$ 15,791,453

-

Cash dividends

-

-

$ 58,271

-

$ 15,791,453

-

6(20)

Notes

Share capital common stock

169,088

-

-

-

-

169,088

169,088

-

-

-

-

169,088

$

$

$

$

819

-

-

-

-

819

819

-

-

-

-

819

$ 1,439,699

-

-

-

59,967

$ 1,379,732

$ 1,379,732

-

-

-

76,511

$ 1,303,221

$ 826,453

-

-

-

-

$ 826,453

$ 826,453

-

-

-

-

$ 826,453

Special reserve

(

(

(

$

$

$

(

(

(

$

$

$

$

969,596

($

124,161 ) (

1,069,141

505,327 )

59,967 )

589,910

589,910

24,946 ) (

590,018

710,615 )

76,511 )

811,964

The accompanying notes are an integral part of these consolidated financial statements.

$

$

$

$

Donated assets received Legal reserve

($

($

($

818,870 ) ($

998,735 ) (

-

-

-

179,865

179,865

493,935 ) (

-

-

-

673,800

(

(

256,275 )

8,254 ) (

-

-

-

248,021 )

248,021 )

47,444 ) (

-

-

-

200,577 )

Other Equity Interest Exchange difference Unrealized gain arising on or loss on translation of available-forUnappropriated foreign sale financial retained earnings operations assets

Equity attributable to owners of the parent Retained Earnings

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)

Capital Reserves Capital surplus, additional Treasury paid-in stock capital transactions

Profit for the year

Legal reserve

Distribution of 2014 net income(Note):

Balance at January 1, 2015

2015

119

(

$ 18,180,234

1,131,150 ) (

1,069,141

505,327 )

-

$ 18,747,570

$ 18,747,570

566,325 ) (

590,018

710,615 ) (

-

$ 19,434,492

Total

$

(

982,282

67,565 ) (

1,489

-

-

$ 1,048,358

$ 1,048,358

24,477 ) (

98,061 )

$ 19,162,516

1,198,715 )

1,070,630

505,327 )

-

$ 19,795,928

$ 19,795,928

590,802 )

491,957

714,274 )

-

$ 20,609,047

Total equity

3,659 ) (

-

$ 1,174,555

Noncontrolling interest

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars) Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Provision for doubtful accounts Reversal of allowance for doubtful accounts (Reversal) provision for inventory market price decline Gain on disposal of non-current assets held for sale Property, plant and equipment transferred to expenses Depreciation on property, plant and equipment (Gain) loss on disposal of property, plant and equipment Gain on disposal of investment property Amortization Amortization of long-term prepaid rent Dividend income Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Changes in operating liabilities Notes payable Accounts payable Accounts payable - related parties Other payables Other payables - related parties Advance receipts Long-term deferred revenue Accrued pension liabilities - non-current Cash inflow generated from operations Dividends received Interest received Income tax refund Interest paid Income tax paid Net cash flows from operating activities

$ 6(3) 6(3) 6(4) 6(5)(22) 6(8) 6(8)(9) 6(22) 6(22) 6(10)(24) 6(11) 6(21) 6(21) 6(23)

(Continued)

120

2016

(

( ( ( (

( ( (

( ( ( ( (

( (

2015

1,430,161

$

702,747

7,500 - ( 212,169 ) - ( 9,000 2,754,741

10,366 ) 169,676 452,780 ) 356 2,843,877

18,975 ) 5,993 ) 45,374 13,422 5,152 ) ( 13,341 ) ( 551,487

30,623 45,702 12,963 3,458 ) 25,432 ) 655,188

233,309 429,847 ) 739 ) ( 33,039 ) 495,546 436,664

331,892 606,141 196,323 ) 58,153 1,084,919 620,468

10,749 ) 110,855 16,642 ) 44,733 ) 30,620 179,625 2,897 ) 55,898 ) 5,448,130 5,152 13,341 20,352 561,341 ) 260,255 ) 4,665,379

( ( ( (

( (

4,503 358,932 63,643 ) 30,886 ) 22,653 4,953 931 ) 54,323 ) 6,715,604 3,458 25,432 4,438 622,493 ) 434,783 ) 5,691,656

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars) Notes CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of disposal groups held for sale (Increase) decrease in other current assets - other financial assets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of investment property Proceeds from disposal of investment property Acquisition of intangible assets Increase in prepayments for equipment Interest paid for prepayments for equipment Decrease (increase) in guarantee deposits paid Increase in long-term prepaid rent Decrease in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Increase (decrease) in notes and bills payable (Decrease) increase in other current liabilities - other financial liabilities Proceeds from issuance of corporate bonds Increase in long-term borrowings Decrease in long-term borrowings (Decrease) increase in guarantee deposits received Cash dividends paid Payment of cash dividends to non-controlling interests Net cash flows used in financing activities Effect of foreign exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

2016

$

6(28)

6(28)

( (

6(9)

(

6(10)

( ( (

6(8)(23)

$

(

(

322,931 ) ( 350,000 (

1,204,026 ) 100,000 )

(

702 ) 28,348,218 31,909,682 ) ( 1,986 ) 505,327 ) ( - (

5,194 717,242 42,117,420 45,747,361 ) 115 710,615 ) 3,659 )

(

4,042,410 ) (

4,925,690 )

(

180,431 )

6(14) ( ( (

$

40,862 704,759 745,621

( ( ( ( ( ( (

38,987 ( $

The accompanying notes are an integral part of these consolidated financial statements. 121

387,937

47,357 1,803,425 ) 12,576 758 ) 346 ) 243,327 ) 773 ) 37,200 ) 50,436 ) 16,298 1,672,097 )

(

6(1) 6(1)

14,745 ) 358,417 ) 95,053 992 ) 10,178 2,404 ) 124,434 ) 869 ) 930 24,201 ) 18,225 401,676 )

(

6(20)

2015

867,144 ) 1,571,903 704,759

TON YI INDUSTRIAL CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) 1. HISTORY AND ORGANIZATION (1) Ton Yi Industrial Corp. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on April 14, 1969. The Company is primarily engaged in the manufacture, processing and sales of various cans of steel and tin plate. (2) The common shares of the Company have been listed on the Taiwan Stock Exchange since January 1991. (3) Uni-President Enterprises Corp. holds 45.55% equity interest in the Company and is the ultimate parent company. 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 28, 2017. 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”) None. (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company New standards, interpretations and amendments as endorsed by FSC effective from 2017 are as follows:

New Standards, Interpretations and Amendments Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Defined benefit plans: employee contributions (amendments to IAS 19R) Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013

122

Effective date by International Accounting Standards Board January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 July 1, 2014

Effective date by International Accounting Standards Board January 1, 2016

New Standards, Interpretations and Amendments 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) IFRS 14, ‘Regulatory deferral accounts’ January 1, 2016 Disclosure initiative (amendments to IAS 1) January 1, 2016 Clarification of acceptable methods of depreciation and amortisation January 1, 2016 (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016 Equity method in separate financial statements (amendments to IAS 27) January 1, 2016 Improvements to IFRSs 2012-2014 January 1, 2016

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating results based on the Group’s assessment. Amendments to IAS 36, ‘Recoverable amount disclosures for non-financial assets’ The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or indefinite lived intangible assets but there has been no impairment. When a material impairment loss has been recognised or reversed for an individual asset, including goodwill, or a CGU, it is required to disclose the recoverable amount of the asset or CGU. If the recoverable amount is fair value less costs of disposal, it is required to disclose the level of the fair value hierarchy, the valuation techniques used and key assumptions. (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 2017 version of IFRSs as endorsed by the FSC: Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Disclosure initiative (amendments to IAS 7) January 1, 2017 Recognition of deferred tax assets for unrealised losses (amendments to January 1, 2017 IAS 12) January 1, 2017 Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Transfers of investment property (amendments to IAS 40) January 1, 2018 Classification and measurement of share-based payment transactions January 1, 2018 (amendments to IFRS 2) January 1, 2018 Applying IFRS 9, ‘Financial instruments’ with IFRS 4‘Insurance contracts’ (amendments to IFRS 4) IFRS 9, ‘Financial instruments’ January 1, 2018 IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

123

Effective date by International Accounting Standards Board January 1, 2018

New Standards, Interpretations and Amendments Clarifications to IFRS 15, ‘Revenue from contracts with customers’ (amendments to IFRS 15) IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018 Annual improvements to IFRSs 2014-2016 cycle - Amendments to January 1, 2018 IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ January 1, 2018 Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’ IFRS 16, ‘Leases’ January 1, 2019 Sale or contribution of assets between an investor and its associate or To be determined by joint venture (amendments to IFRS 10 and IAS 28) International Accounting Standards Board Except for the followings, the above standards and interpretations have no significant impact to the Company’s financial condition and operating result based on the Company’s assessment. A. Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ These amendments clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value, and they clarify several of the general principles underlying the accounting for deferred tax assets. The amendments clarify that a deductible temporary difference exists whenever an asset is measured at fair value and that fair value is below the asset’s tax base. When an entity assesses whether taxable profits will be available against which it can utilise a deductible temporary difference, it considers a deductible temporary difference in combination with all of its other deductible temporary differences unless there are tax law restrictions, and the tax deduction resulting from temporary differences is excluded from estimated future taxable profits. B. IFRS 9, ‘Financial instruments’ (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading. (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month

124

expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component. C. IFRS 15, ‘Revenue from contracts with customers’ IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer Step 2: Identify separate performance obligations in the contract(s) Step 3: Determine the transaction price Step 4: Allocate the transaction price Step 5: Recognise revenue when the performance obligation is satisfied Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. D. Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from Contracts with Customers‘ The amendments clarify how to identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and determine whether the revenue from granting a licence should be recognised at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard. E. IFRS 16, ‘Leases’ IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for 125

lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. 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”, and the 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, these 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) 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 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. Critical accounting judgements, estimates and key sources of assumption uncertainty. (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

126

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 noncontrolling interests having a deficit balance. (d) Transactions with non-controlling interest that do not result in loss of control are accounted for as equity transaction- that is, as transactions with the owners in their capacity as owners. The difference between non-controlling interest adjustments and consideration paid or received is recorded 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. B. Subsidiaries included in the consolidated financial statements: Percentage owned by the Company (%) Name of investors

Name of subsidiaries

Business activities

December 31, 2016

December 31, 2015

Note

100.00



TON YI INDUSTRIAL CORP.

Cayman Ton Yi Industrial Holdings Ltd.

General trading and investments

100.00

TON YI INDUSTRIAL CORP.

Tovecan Corp.

Manufacturing of cans

51.00

51.00



Cayman Ton Yi Industrial Cayman Ton Yi Holdings Holdings Ltd. Ltd.

General investment

100.00

100.00



Cayman Ton Yi Industrial Cayman Fujian Ton Yi Holdings Ltd. Industrial Holding Ltd.

General investment

100.00

100.00



Cayman Ton Yi Industrial Cayman Jiangsu Ton Yi Holdings Ltd. Industrial Holding Ltd.

General investment

100.00

100.00



Cayman Ton Yi Industrial Wuxi Ton Yi Industrial Holdings Ltd. Packing Co., Ltd.

Manufacturing of cans

100.00

100.00



Cayman Ton Yi Industrial Chengdu Ton Yi Industrial Holdings Ltd. Packing Co., Ltd.

Manufacturing of cans

100.00

100.00



Cayman Ton Yi Industrial Changsha Ton Yi Industrial Sales of cans Holdings Ltd. Co., Ltd.

100.00

100.00



Cayman Ton Yi Holdings Cayman Ton Yi (China) Ltd. Holdings Ltd.

100.00

100.00



General investment

127

Percentage owned by the Company (%) Name of investors

Name of subsidiaries

Business activities

December 31, 2016

December 31, 2015

Note

Cayman Fujian Ton Yi Industrial Holding Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Manufacturing of tinplate

86.80

86.80



Cayman Jiangsu Ton Yi Holdings Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Manufacturing of tinplate

82.86

82.86



Wuxi Ton Yi Industrial Packing Co., Ltd.

Chengdu Tongxin Industrial Manufacturing of cans Packing Co., Ltd.



100.00

(Note)

Cayman Ton Yi (China) Holdings Ltd.

Ton Yi (China) Investment Co., Ltd.

General investment

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Taizhou Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Zhangzhou Ton Yi Industrial Manufacturing of PET packages Co., Ltd.

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd

Manufacturing of PET packages

100.00

100.00



Ton Yi (China) Investment Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Manufacturing of PET packages

100.00

100.00



(Note) In October 2016, the subsidiary was completed its liquidation. C. Subsidiaries not included in the consolidated financial statements: None. D. Adjustments for subsidiaries with different balance sheet dates: None. E. Significant restrictions: None. F. Subsidiaries that have non-controlling interests that are material to the Group: As of December 31, 2016 and 2015, the non-controlling interest amounted to $982,282

and

$1,048,358, representing 2.46% and 2.37% of the consolidated total assets, respectively. None of the non-controlling interest is material to the Group. (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 presentation currency. 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

128

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 retranslated 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, nonmonetary 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. (d) All foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within other gains and losses. B. Translation of foreign operations (a) The financial performance and financial position of all the group entities 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 the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation. (5) Classification of current and non-current items A. 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;

129

(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. B. 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 A. 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. B. 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; (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 policy 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 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.

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(8) Loans and receivables 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, for short-term accounts receivable which are not interest bearing, as the effect of discounting is insignificant, they are measured subsequently at the original invoice amount. (9) Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. 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 to completion and applicable variable selling expenses. When the cost of inventory is lower than net realizable value, a write down is provided and recognized in operating costs. If the circumstances that caused the write-down cease to exist, such that all or part of the write down is no longer needed, it should be reversed to that extent and recognized as deduction of operating costs. (10) Disposal groups held for sale Disposal groups are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. (11) 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. For regular way purchase or sale, available-for-sale financial assets are recognized and derecognized using trade date accounting. 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 carried at cost’.

131

(12) 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 an 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 disappearance of an active market for that financial asset because of financial difficulties; (d)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; (e) 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 equity investment may not be recovered; (f) 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 treatment for impairment is as follows: (a) Available-for-sale financial assets The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) 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 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.

132

(b) Financial assets carried at cost The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market rate of return 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) 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 through the use of an impairment allowance account. (13) Derecognition of financial assets The Group derecognizes a financial asset when one of the following conditions is met: A. The contractual rights to receive cash flows from the financial asset expire. B. The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset. C. The contractual rights to receive cash flows from the financial asset have been transferred, and the Group has not retained control of the financial asset. (14) 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.

133

C. Property, plant and equipment apply the cost model. Except for land, other property, plant and equipment are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately. D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the consumption patterns 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: Asset Name

Useful Lives 2 2 3 2 2

Buildings Machinery and equipment Transportation equipment Office equipment Other equipment

~ ~ ~ ~ ~

55 30 20 10 40

years years years years years

(15) Lease (Lessor) Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term. (16) Lease (Lessee) Payments made under an operating lease (net of any incentives received from the lessor) are recognized in profit or loss on a straight-line basis over the lease term. (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 20 years. (18) Intangible assets A. Goodwill Goodwill arises in a business combination accounted for by applying the acquisition method. B. Royalties Royalties are stated at cost and amortized on a straight-line basis over its estimated useful life of 10 years. C. Computer software Computer software is stated at cost and amortized on a straight-line basis over its estimated useful life of 10 years.

134

(19) Impairment of non-financial assets A. 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 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. Except for goodwill, 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. B. The recoverable amounts of goodwill shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years. C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. (20) 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. (21) Notes and accounts payable 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, for short-term accounts payable which are not interest bearing, as the effect of discounting is insignificant, they are measured subsequently at the original invoice amount. (22) Financial liabilities instruments Ordinary corporate bonds issued by the Group are initially recognized at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) 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 amortized in profit or loss as an adjustment to the ‘finance costs’ over the period of bond circulation using the effective interest method.

135

(23) Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability specified in the contract is discharged, cancelled or expired. (24) Offsetting financial instruments Financial assets and liabilities are offset and reported at net amount on 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) Provision Provision (decommissioning liabilities) is recognized when the Group has a present legal or constructive obligation as a result of past events; 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. Provision is 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. (26) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid 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 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 liability recognised in the balance sheet in respect of the defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations. ii Remeasurements arising on defined benefit plan are recognised in other

136

comprehensive

income in the period in which they arise and are recorded as retained earnings 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. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution. (27) Income tax A. The tax expense comprises current and deferred tax. Income 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 case 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. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the shareholders resolve to retain the earnings. C. Deferred income 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 financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed. E. Current income tax assets and liabilities are offset and the net amount is reported on the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the

137

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. (28) 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 its outstanding shares, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders. When 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. (29) 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; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares and share premium on the effective date of new shares issuance. (30) Revenue recognition The Group manufactures and sells tinplate, empty can and PET package, etc. Revenue is measured at the fair value of the consideration received or receivable taking into account the value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement nor effective control over the goods sold, and the customer has accepted the goods according to the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied. (31) Government grants Government grants are recognized 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 recognized in profit or loss on a systematic basis over the periods in which the Group recognizes expenses for the related costs for which the grants are intended to compensate. (32) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing

138

performance of the operating segments. 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: (1) Critical judgements in applying the Group’s accounting policies None. (2) Critical accounting estimates and assumptions A. Evaluation of inventories (a) As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Because of the change in market demand and the sales strategy, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on the balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. (b) As of December 31, 2016, the carrying amount of inventories was $3,520,787. B. Calculation of net defined benefit liabilities - non-current (a) When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on the balance sheet date, including discount rates and future salary growth rate. Any change in these assumptions could significantly impact the carrying amount of defined pension obligations. (b) As of December 31, 2016, the carrying amount of net defined benefit liabilities - non-current was $459,460.

139

6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents

Cash: Cash on hand and petty cash Checking accounts and demand deposits

December 31, 2016

December 31, 2015

$

$

Cash equivalents: Time deposits $

780 600,204

842 482,388

600,984

483,230

144,637 745,621

221,529 704,759

$

A. The Group transacts with a variety of financial institutions all with high credit rankings to diversify credit risk, so it expects that the probability of counterparty default is remote. B. The Group did not pledge cash equivalents to others as of December 31, 2016 and 2015. (2) Notes receivable, net December 31, 2016 $

Notes receivable Less: Allowance for doubtful accounts

( $

December 31, 2015

691,704 $ 985) ( 690,719 $

925,013 1,623) 923,390

A. The Group has no significant past due but not impaired notes receivable. B. Movements of financial assets that were impaired are shown in Note 6(3). C. The Group’s notes receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. D. The Group did not pledge notes receivable as collateral as of December 31, 2016 and 2015. (3) Accounts receivable, net December 31, 2016 December 31, 2015 $ 1,935,093 $ 1,511,072 ( 61,654) ( 63,549)

Accounts receivable Less: Allowance for doubtful accounts

$

1,873,439

$

1,447,523

A. Aging analysis of the Group’s accounts receivable, including those with related party that are past due but not impaired is as follows: December 31, 2016 $ 31,195

Within 90 days

December 31, 2015 $ 36,932

The above ageing analysis was based on past due date. B. Movements of financial assets that were impaired including notes receivable and accounts receivable are as follows:

140

At January 1 Provision for impairment Reversal of impairment Write-offs during the year Effect of foreign exchange rate changes At December 31

Years ended December 31, 2016 2015 Group provision Group provision $ 65,172 $ 76,852 7,500 - ( 10,366) ( 5,826) ( 4,207) ( 1,314) $ 62,639 $ 65,172

C. The Group’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. D. The Group did not pledge accounts receivable, including those with related party, as collateral as of December 31, 2016 and 2015. E. The Group did not hold any accounts receivable, including those with related party as collateral as of December 31, 2016 and 2015. (4) Inventories December 31, 2016

Raw materials Raw materials in transit Supplies Supplies in transit Work in process Finished goods

$

Allowance for price Cost decline of inventories Carrying amount 1,736,451 ($ 18,961) $ 1,717,490

$

31,057 422,802 27,927 641,932 701,121 3,561,290

( ( ( ($

118) 6,050) 15,374) 40,503) $

31,057 422,684 27,927 635,882 685,747 3,520,787

December 31, 2015

Raw materials Raw materials in transit Supplies Supplies in transit Work in process Finished goods

$

Allowance for price Cost decline of inventories Carrying amount 1,734,346 ($ 99,591) $ 1,634,755

$

2,647 499,329 19,012 648,671 1,152,831 4,056,836

141

( ( ( ($

- $ 4,359) 58,078) 94,183) 256,211) $

2,647 494,970 19,012 590,593 1,058,648 3,800,625

The cost of inventories recognized as expense for the year:

Cost of goods sold Loss on disposal of inventory (Reversal gain) loss on decline in market value (Note) Revenue from sale of scraps Indemnities Total cost of sales

$ ( ( ( $

Years ended December 31, 2016 2015 28,880,660 $ 32,709,972 4,260 866 212,169) 169,676 257,770) ( 5,584) ( 28,409,397 $

263,704) 11,619) 32,605,191

(Note) For the year 2016, the Group reversed a previous inventory write-down which was accounted for as a reduction of cost of goods sold as a result of the increase in selling prices of inventories. (5) Disposal group classified as held for sale The assets and liabilities related to Chengdu Ton Yi Industrial Packing Co., Ltd. have been reclassified as disposal group held for sale following the approval of the Group’s Board of Directors on October 6, 2013 to sell Chengdu Ton Yi Industrial Packing Co., Ltd. The disposal group held for sale is the tinplate segment in Mainland China. The transaction was expected to be completed in June 2014, however, as of June 30, 2014, the equity transfer was in the process of administrative application. On June 30, 2014, a supplemental agreement was signed by both the buyer and seller which provides that there will be no restriction in the original agreement for not completing the equity transfer as of June 30, 2014, as the equity transfer was in the process of administrative application before June 30, 2014. If the administrative acceptance could not be obtained, the equity transfer agreements and supplemental agreement will automatically be terminated. Due to the local land policy restrictions, the administrative acceptance could not be obtained and thus the above equity transfer agreements and supplemental agreement were automatically terminated in December 2014. On December 3, 2014, the Group signed an indemnity agreement for land expropriation and plant demolition and relocation with the People’s Government of Xindu District of Chengdu, whereby the Group will demolish all buildings and complete transfer of land within 120 days after the effective date of the agreement. The assets and liabilities not relating to the indemnity agreement was transferred out from the disposal group held for sale for the termination of share capital transfer agreement and supplemental agreement and award of indemnity agreement. The above disposal group held for sale had been disposed in February 2015, and gain on disposal of held-for-sale non-current assets (shown as other gains and losses) of $452,780 was recognized.

142

(6) Available-for-sale financial assets - non-current December 31, 2016 December 31, 2015 $ 378,917 $ 378,917 ( 256,275) ( 248,021)

Listed stocks Adjustments for change in fair value of available-for-sale financial assets

$

122,642

$

130,896

A. The Group recognized fair value change in other comprehensive income of ($8,254) and ($47,444) for the years ended December 31, 2016 and 2015, respectively, and no amount was reclassified from equity to profit or loss for both years. B. The Group did not pledge available-for-sale financial assets as collateral as of December 31, 2016 and 2015. (7) Financial assets carried at cost - non-current December 31, 2016 $ 501,050

Unlisted stocks

December 31, 2015 $ 501,050

A. The Group classified some of its equity investments as available-for-sale financial assets, based on its intention. However, as these stocks are not traded in an active market, and there is no sufficient information of similar companies in the same industry, fair value of the investments cannot be measured reliably. Accordingly, the Group classified these stocks as financial assets carried at cost. B. The Group had invested in Emivest Aerospace Corporation. The carrying amount was $- and was liquidated for the year ended December 31, 2016 C. The Group did not pledge financial assets measured at cost - non-current as collateral as of December 31, 2016 and 2015.

143

144

$ 48,406,571

$

$

$ 10,405,190

$ 47,196,254

$

$

4,709,212) ( 27,061,610) ( - ( 615,892 $ 5,695,978 $ 20,134,644 $

615,892

$ 5,695,978

907,277) (

31,910) ( 18,651

$

$

$

42,358

244,684) (

287,042

42,358

2,557) (

$

$

$

28,333) ( 13,871

21,697) (

-

10,184

70,890

70,890

240,364) (

311,254

87,791

119,934) (

$

$

$

$ 2,234,340

3,404,574)

$ 5,638,914

$ 2,234,340

100,908) (

$

$

$

96,951) ( 59,406

503,998)

and equipment

in progress

Construction

103,962

- (

103,962

103,962

2,705) (

Total

$ 28,914,965

35,540,014)

$ 64,454,979

$ 28,914,965

1,312,812)

281,046) 204,968

2,747,697)

156,376

271,479

$ 32,623,697

$ 32,623,697

33,758,705)

$ 66,382,402

10,691) ( -

- (

43,525)

71,149

89,734

89,734

- (

89,734

to be inspected

39,209 (

62,513

$ 2,775,069

7,094) (

207,725

3,050,511) $ 2,775,069

1,054) ( 933

87,791

Others $ 5,825,580

38,407) (

1,613

7,711

124,089

124,089

90,061) (

214,150

Office equipment

(Note) Including transfer of $165,376 from Prepayments for equipment; transfer of $9,000 into expenses.

Accumulated depreciation

Cost

At December 31, 2016

615,892

$

$

1,877,600) (

159,079

119,922

$ 20,134,644

112,107) ( 112,107

- ( -

Disposal - Cost Disposal - Accumulated depreciation Net exchange differences

$

305,995) (

- (

Depreciation charge

Closing net book amount as at December 31

-

-

Transfers - Cost (Note)

- ( 292,271) (

-

$ 22,653,779

$ 22,653,779

-

$ 6,294,244

$

Vehicles

4,624,977) ( 25,752,792) (

$ 10,919,221

Machinery

$ 6,294,244

615,892

- (

615,892

Buildings

615,892

$

$

$

Land

2016 Opening net book amount as at January 1 Additions - Cost

Accumulated depreciation

Cost

At January 1, 2016

(8) Property, plant and equipment

145

$

$ 10,919,221

$ 6,294,244 $ 48,406,571

$ 22,653,779 $

$

4,624,977) ( 25,752,792) ( - ( 615,892 $ 6,294,244 $ 22,653,779 $

615,892

615,892

231,263) (

62,305

93,968) (

1,929,718) (

2,465,576

$

$

$

$

$

$

240,364) ( 70,890 $

311,254

70,890

1,075) (

8,281

11,642) (

24,914) (

1,189

9,002

90,049

90,049

$

$

$ 5,825,580

$

$

90,061) ( 3,050,511) 124,089 $ 2,775,069 $

214,150

$ 2,775,069

36,225) (

13,760

21,716)

514,701)

$ 66,382,402

$ 32,623,697

400,255)

- ( 33,758,705) 89,734 $ 32,623,697

89,734

89,734

44,572) (

85,546

128,745)

2,836,611)

195,223

364,344

$ 35,344,195

- ( -

31,215,331) $ 35,344,195

- (

2,944,614)

136,689

$ 2,942,231

$ 2,942,231

Total $ 66,559,526 - (

$ 2,942,231

to be inspected

626,684 (

77,834

$ 2,629,433

1,955) ( 124,089

2,566,128) $ 2,629,433

1,419) ( 1,200

Others $ 5,195,561

37,503) (

36,690

9,484

117,592

117,592

54,526) (

172,118

Office equipment

225,143) (

315,192

Vehicles

(Note) Including transfer of $201,238 from Prepayments for equipment; transfer of $5,659 into Prepayment; transfer of $356 into expenses.

Accumulated depreciation

Cost

At December 31, 2015

$

-

Closing net book amount as at December 31

-

-

Disposal - Cost Disposal - Accumulated depreciation Net exchange differences - ( 85,165) (

- (

- (

Depreciation charge

$

9,698

-

Transfers - Cost (Note)

84,501

$ 22,296,346

$ 22,296,346

329,775) (

46,834

-

$ 6,652,652 $ 6,652,652

615,892

$ 46,344,149

Machinery

4,321,731) ( 24,047,803) (

$ 10,974,383

- (

615,892

615,892

$

$

$

Buildings

2015 Opening net book amount as at January 1 Additions - Cost

Cost Accumulated depreciation

At January 1, 2015

Land

and equipment

in progress

Construction

A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows: Years ended December 31, 2016 2015 869 $ 773 1.30% 1.30%~3.01%

$

Amount capitalized Interest rate range

B. The Group did not pledge property, plant and equipment as collateral as of December 31, 2016 and 2015. (9) Investment property Land At January 1, 2016 Cost Accumulated depreciation Accumulated impairment 2016 Opening net book amount as at January 1 Additions - Cost Depreciation

$

41,638

$

Total

160,516

$

202,154

$

- ( 31,539) 10,099 $

12,603) ( - ( 147,913 $

12,603) 31,539) 158,012

$

10,099

147,913

158,012

(

$

-

( Disposal - Cost Disposal - Accumulated depreciation Net currency exchange difference Closing net book amount as of $ December 31 At December 31, 2016 Cost Accumulated depreciation Accumulated impairment

Buildings

992

10,561

10,105) (

- (

$

$

26,892 $ - ( ( 20,978) $ 5,914 $

146

992 7,044) 14,746) 10,561

7,044) ( - (

- ( 14,746)

5,914

$

10,105)

131,756

$

137,670

150,216 18,460) ( 131,756

$

177,108 18,460)

( 20,978) $ 137,670

Land At January 1, 2015 Cost Accumulated depreciation Accumulated impairment

$ ( $

2015 $ Opening net book amount as at January 1 Additions - Cost Depreciation Net currency exchange difference Closing net book amount as of $ December 31 At December 31, 2015 Cost Accumulated deprecration Accumulated impairment

Buildings

Total

41,638 $ - ( 31,539) 10,099 $

162,861 5,497) 157,364

$ ( ( $

204,499 5,497) 31,539) 167,463

10,099

157,364

$

167,463

$

- ( - ( 10,099

758 7,266) ( 2,943) (

$

147,913

$

41,638 $ - ( ( 31,539) $ 10,099 $ A. Rental income from the lease of the investment property and

758 7,266) 2,943)

$

158,012

160,516 $ 202,154 12,603) ( 12,603) - ( 31,539) 147,913 $ 158,012 direct operating expenses arising

from the investment property are shown below: Years ended December 31, 2016 $ $

Rental income of investment property Direct operating expenses from the investment property that generated income in the period

2015 24,360 11,855

$ $

27,506 12,461

B. The fair values of the investment property held by the Group as of December 31, 2016 and 2015 were $192,967 and $296,075, respectively. Land is valued according to Current Land Value announced by the Department of Land Administration. Buildings are valued based on discounted recoverable amounts of future rent income. C. The Group purchased an agricultural purpose land in the amount of $23,108 but registered it in the name of a natural person. Before changing the land registration, the land will then be mortgaged to the Group. The decision on the purpose of the land has not yet been decided; thus, this was recognized as Investment property. D. As of December 31, 2016 and 2015, no investment property held by the Group was pledged to others.

147

(10) Intangible assets Goodwill At January 1, 2016 Cost Accumulated amortization Net exchange differences

Computer Software

Royalties

$ 342,773

$

- ( ( 187) $ 342,586 $

387,569

$ 100,236

352,250) ( 35,319 $

Total $ 830,578

27,413) ( 379,663) 2,782 2,595 75,605 $ 453,510

2016 At January 1 Additions - separately acquired Amortization charge Transfer - Cost Transfer - Accumulated amortization Net exchange differences At December 31 At December 31, 2016 Cost Accumulated amortization Net exchange differences

$ 342,586 -

$

- ( - ( (

35,319 -

$

35,319) ( 387,569) 387,569

6,001) $ 336,585 $

- ( - $

$ 342,773

-

$

( 6,188) $ 336,585 $

148

75,605 2,404

10,055) (

45,374)

- ( -

387,569) 387,569

4,891) ( 10,892) 63,063 $ 399,648

$ 102,640

- ( - ( - $

$ 453,510 2,404

$ 445,413

37,468) ( 37,468) 2,109) ( 8,297) 63,063 $ 399,648

Goodwill At January 1, 2015 Cost Accumulated amortization Net exchange differences

Computer Software

Royalties

$ 342,773 $ - ( ( 12,450) $ 330,323 $

387,569 $ 316,931) ( 70,638 $

Total

99,890 17,030) 4,365 87,225

$ 830,232 ( 333,961) ( 8,085) $ 488,186

87,225 346

$ 488,186 346

2015 At January 1 Additions - separately acquired Amortization charge Net exchange differences At December 31 At December 31, 2015 Cost Accumulated amortization Net exchange differences

$ 330,323 -

$

- ( 12,263 $ 342,586 $

$ 342,773

$

- ( ( 187) $ 342,586 $

70,638 -

$

35,319) ( - ( 35,319 $

387,569

10,383) ( 45,702) 1,583) 10,680 75,605 $ 453,510

$ 100,236

352,250) ( 35,319 $

$ 830,578

27,413) ( 379,663) 2,782 2,595 75,605 $ 453,510

A. No borrowing costs were capitalized as part of intangible assets as of December 31, 2016 and 2015. B. Details of amortisation on intangible assets are as follows: Years ended December 31, 2016 Operating costs Selling expenses Administrative expenses

2015

$

37,066

$

687 7,621 45,374

$

37,142

$

716 7,844 45,702

C. The Group applied value in use method when calculating recoverable amount of goodwill and determined the recoverable amount to be greater than the carrying amount; thus, no impairment was identified. Goodwill distributed to cash generating unit according to operating segment is shown below: December 31, 2016 $ 336,585

Tinplate factory located in China

149

December 31, 2015 $ 342,586

(11) Long-term prepaid rent December 31, 2016 $ 503,015

Land use right

December 31, 2015 $ 525,685

The Group entered into a land lease agreement with Taiwan Sugar Corporation and local authority of People's Republic of China for use of property located in Yong-Kang District, Tainan and various properties in China. Lease periods are from 48 to 50 years. The Group recognized $13,422 and $12,963 of rental expense (under operating cost and operating expense) for the years ended December 31, 2016 and 2015, respectively. (12) Short-term borrowings Nature

December 31, 2016 Interest rate range $ 2,575,599 0.71%~4.35% Unsecured bank borrowings Nature December 31, 2015 Interest rate range $ 2,898,530 0.90%~4.60% Unsecured bank borrowings

Collateral None Collateral None

(13) Short-term commercial paper Commercial paper payable Less: unamortized discount

December 31, 2016 Interest rate range 350,000 $ 0.94% ( 162) $ 349,838

Collateral None

A. There was no short-term commercial paper as of December 31, 2015. B. The above commercial papers were issued and secured by International Bills Finance Co., Ltd and China Bills Finance Co., Ltd. for short-term financing. (14) Bonds payable

Unsecured corporate bonds

December 31, 2016 $ 658,144

December 31, 2015 $ 711,756

Pledged or collateral None

The subsidiary – Cayman Ton Yi Industrial Holdings Ltd. issued the first unsecured ordinary bonds of RMB 142 million in February 2015. The terms are as follows: (1) Total issuance: RMB 142 million ($717,242) (2) Issuance price: fully issued at par value of RMB 1 million per bond (3) Coupon rate: fixed rate at 4.20% per annum (4) Interest payment method: starting from the issuance date, interest is accrued at the coupon rate and paid annually (5) Repayment of principal: payable in full 3 years after the issuance date (6) Issuance deadline: 3 years (February 3, 2015 to February 3, 2018) (7) Depository bank: CTBC Bank Co., Ltd.

150

(15) Long-term borrowings Range of Range of Nature maturity dates interest rates Collateral None Unsecured bank 2017.03.10~ 1.04%~4.75% borrowings 2020.11.25 Less: current portion of long-term borrowings

December 31, 2016 $ 13,288,020 ( $

Range of Range of Nature maturity dates interest rates Collateral None Unsecured bank 2016.01.30~ 1.12%~4.75% borrowings 2020.11.25 Less: unamortised discount

(

Less: current portion of long-term borrowings

(

1,305,665) 11,982,355

December 31, 2015 $ 17,295,543

$

832) 17,294,711 4,947,555) 12,347,156

For information on the terms and conditions of all the loan contracts the Group entered into with financial institutions, please refer to Note 9(4), “Significant contingent liabilities and unrecognized contract commitments”. (16) Provision - non-current Years ended December 31, 2016

Decommissioning liabilities At January 1 Unwinding of discount At December 31

$ $

2015 74,001 1,388 75,389

$ $

72,639 1,362 74,001

According to the policy published, applicable agreement or the law and regulation, the Group has obligations to restore certain property, plant and equipment located in Yong-Kang District, Tainan City in the future. A provision is recognized for the present value of costs to be incurred for dismantling, removing the asset and restoring the site. It is expected that the provision will be settled within 50 years from the beginning of contract. (17) Pensions A. (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

151

retirement. The Company contributes monthly an amount equal to 14% 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 December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by next March. (b) The amounts recognised in the balance sheet are as follows: December 31, 2016 Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability - non-current

($ ($

December 31, 2015

1,425,701) ($ 966,241 459,460) ($

1,281,847) 916,080 365,767)

(c) Movements in net defined benefit liabilities - non-current are as follows:

Year ended December 31, 2016 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

Present value of defined benefit obligations ($ ( ( (

( ( (

($

152

1,281,847) $ 18,535) 23,948) 1,324,330)

Fair value of plan assets 916,080 17,787 933,867

Net defined benefit liability ($ ( ( (

365,767) 18,535) 6,161) 390,463)

- (

11,129) (

11,129)

101,210) 37,252) 138,462) ( -

- ( - ( 11,129) ( 80,594

101,210) 37,252) 149,591) 80,594

37,091 ( 1,425,701) $

37,091) 966,241 ($

459,460)

Year ended December 31, 2015 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

Present value of Fair value of defined benefit plan assets obligations ($ 1,242,619) $ 852,584 ( 18,618) ( 24,744) 17,677 ( 1,285,981) 870,261 -

( ( (

($

Net defined benefit liability ($ 390,035) ( 18,618) ( 7,067) ( 415,720)

4,842

4,842

22,895) 12,002) 34,897) -

- ( - ( 4,842 ( 80,008

22,895) 12,002) 30,055) 80,008

39,031 ( 1,281,847) $

39,031) 916,080 ($

365,767)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s 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 earnings is less than aforementioned rates, government shall make payment for the deficit after being 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 composition of fair value of plan assets as of December 31, 2016 and 2015 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

153

(e) The principal actuarial assumptions used were as follows: Years ended December 31, 2016 1.375% 3.00%

Discount rate Future salary increases

2015 1.875% 3.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows: Discount rate December 31, 2016 Effect on present value of defined benefit obligation December 31, 2015 Effect on present value of defined benefit obligation

Future salary increases

Increase 0.25%

Decrease 0.25%

Increase 0.25%

Decrease 0.25%

($ 51,737)

$ 54,118

$ 52,386

($ 50,377)

($ 46,508)

$ 51,310

$ 49,971

($ 45,495)

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2017 are $74,340. (g) As of December 31, 2016, the weighted average duration of that retirement plan is 16 years. The analysis of timing of the future pension payment was as follows: $

Within 1 year 2-5 years Over 6 years

$

12,872 71,651 220,366 304,889

B.(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.

154

(b) The Group’s subsidiaries have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations. (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2016 and 2015 were $183,851 and $179,439, respectively. (18) Share capital - Common stock A. Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands of shares): Years ended December 31, 2016 2015 1,579,145 1,579,145

Beginning and ending balance

B. As of December 31, 2016, the Company’s authorized capital was $17,847,009, and the paid-in capital was $15,791,453, consisting of 1,579,145 thousand shares of ordinary stock, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. (19) Capital surplus Pursuant to the R.O.C. Company Act, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to offset 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 capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit after the legal reserve is used. (20) Retained earnings A. The legal reserve shall be exclusively used to offset accumulated deficit, to issue new stocks or distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Company’s paid-in capital. B. Since the Company operates in a volatile business environment and is in stable growth stage, the appropriation of earnings should consider fund requirements and capital budgets to decide how much earnings will be kept or distributed and how much cash dividends will be distributed. According to the Company's Articles of Incorporation, 10% of the annual net income, after offsetting any loss of prior years and paying all taxes and dues, shall be set aside as legal reserve. The remaining net income and the unappropriated retained earnings from prior years can be distributed in accordance with a resolution approved by the Board ofADirectors and then approved at the shareholders' meeting. Of the amount to be distributed by the Company,

155

shareholders’ dividends shall comprise 50% to 100% of the unappropriated retained earnings, distributed half as cash dividend and half as stock dividend. However, the rate could be adjusted if it was necessary and shall be resolved by the shareholders. The Company’s original Articles of Incorporation had been amended as resolved by the shareholders on June 23, 2016. According to the amended articles, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside legal reserve and special reserve shall be set aside or reversed in accordance with related regulations. The remaining amount plus the accumulated unappropriated earnings from prior years is this accumulated distributable earnings. Of the amount to be distributed by the Company, shareholders’ dividends shall comprise 50% to 100% of the accumulated distributable earnings and cash dividends shall not be lower than 30% of the total dividends distributed. The appropriation of earnings shall be proposed by the Board of Directors and resolved by the shareholders. C. (a) In accordance with the regulations, the Company shall set aside special reserve arising from the debit balances in other equity items at the balance sheet date before distributing earnings. When debit balances in other equity items are reversed subsequently, an equal amount could then be used for distribution. (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, those other than land, are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are land. D. The Company recognized dividends distributed to owners amounting to $505,327 and $710,615 ($0.32 and $0.45 (in dollars) per share as cash dividends, respectively) for the years ended December 31, 2016 and 2015, respectively. On March 28, 2017, total dividends for 2016 of $600,075, constituting $0.38 (in dollars) per share as cash dividends, was proposed by the Board of Directors. (21) Other income Years ended December 31, 2016 Dividend income Interest income Rental income Other income

156

2015

$

5,152

$

13,341 30,020 70,683 119,196

$

3,458

$

25,432 33,619 119,192 181,701

(22) Other gains and losses

Gain (loss) on financial assets at fair value $ through profit or loss Gain on disposal of non-current assets held for sale Net gain(loss) on disposal of property, plant and equipment Net gain on disposal of investment property Net currency exchange loss ( ( Miscellaneous expenses ($

Years ended December 31, 2016 2015 210 ($ -

528)

452,780

18,975 (

30,623)

5,993 10,373) ( 32,713) ( 17,908) $

288,090) 47,721) 85,818

(23) Finance costs Years ended December 31, 2016 2015 Interest expense: Bank borrowings Corporate bond Provisions – unwinding of discount Less: capitalization of qualifying assets

$

( $

157

522,029 $ 28,939 1,388 552,356 869) ( 551,487 $

626,827 27,772 1,362 655,961 773) 655,188

158

Wages and salaries Labor and health insurance expense Pension costs Other personnel expenses

(25) Employee benefits expense

Employee benefits expense Depreciation Amortization

(24) Expenses by nature

$

$

38,297 42,547 46,262 595,806

168,896 205,124 173,778 $ 2,380,480

130,599 162,577 127,516 $ 1,784,674

165,077 208,547 200,549 $ 2,421,489

127,220 163,269 131,019 $ 1,738,979

37,857 45,278 69,530 682,510

Year ended December 31, 2015 Operating cost Operating expense Total $ 1,363,982 $ 468,700 $ 1,832,682

$

2,836,611 45,702 $ 5,262,793

Year ended December 31, 2016 Operating cost Operating expense Total $ 1,317,471 $ 529,845 $ 1,847,316

$

173,199 8,560 777,565

2,663,412 37,142 $ 4,485,228

2,747,697 45,374 $ 5,214,560

2,599,477 37,066 $ 4,375,522

148,220 8,308 839,038

Year ended December 31, 2015 Operating cost Operating expense Total $ 1,784,674 $ 595,806 $ 2,380,480

Year ended December 31, 2016 Operating cost Operating expense Total $ 1,738,979 $ 682,510 $ 2,421,489

A. According to the Articles of Incorporation of the Company, 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 not be lower than 2% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration. B. For the years ended December 31, 2016 and 2015, employees’ compensation was accrued at $58,081 and $34,000, respectively, while directors’ and supervisors’ remuneration was accrued at $19,245 and $10,640, respectively. The aforementioned amounts were recognized in salary expenses. The expenses recognized were accrued based on the profit of current period distributable and the percentage specified in the Articles of Incorporation of the Company for the years ended December 31, 2016 and 2015. The employees’ compensation and directors’ remuneration resolved by the Board of Directors were $58,081 and $11,987, respectively, for the year ended December 31, 2016, and the employees’ compensation will be distributed in the form of cash. The difference of ($656) between employees’ compensation and directors’ remuneration of $33,344 and $10,640 as resolved by the Board of Directors and the amount recognized in the 2015 financial statements had been adjusted in the 2016 statement of comprehensive income. Information about the appropriation of employees’ compensation (bonus) and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

159

(26) Income tax A. Income tax (a) Components of income tax expense: Years ended December 31, 2016 2015 Current income tax: Income tax incurred in current year Additional 10% income tax imposed on unappropriated earnings Under provision in prior years Deferred income tax: Origination and reversal of temporary differences Income tax expense

$

$

251,058 86

$

363,091 -

13,568 264,712

24,193 387,284

94,819 ( 359,531 $

176,494) 210,790

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

Remeasurement of defined benefit obligations Currency translation differences

($ ($

Years ended December 31, 2016 2015 25,430) ($ 5,109) 801) 112 ( 25,318) ($ 5,910)

B. Reconciliation between income tax expense and accounting profit Years ended December 31, 2016 2015 Income tax expense at the statutory tax rate Effect of amount not allowed to recognise under regulations Tax effect of tax exempt income Effect from net operating loss carryforward Impact of change in tax rate Additional 10% income tax imposed on unappropriated earnings Under provision of prior year’s income tax Land value increment tax Income tax expense

160

$ (

(

$

488,955 $ 149,259) (

213,062 45,915)

777 6,674 1,473) 86

2,678 16,772 -

13,568 203 359,531

$

24,193 210,790

C. Amounts of deferred tax assets or liabilities recognized as a result of temporary differences are as follows: Year ended December 31, 2016 Recognised in other Recognised comprehensive January 1 in profit or loss income December 31 Deferred income tax assets Temporary differences: Unrealized sales returns and allowance Unrealized profit from sales Loss on doubtful debts Loss on inventories from market value decline

-

$

$

7,606 14,800 ( 49,280 (

Depreciation charge Unused compensated absences Maintenance fees for machinery Unrealised provision Unrealised deferred revenue Pensions Unrealized losses Remeasurement of defined benefit plan Currency translation difference Loss carryforward

1,670

$

$

1,670

16,568 2,522) 40,862)

-

24,174 12,278 8,418

93,163 6,080

9,477 553

-

102,640 6,633

10,086 (

4,050)

-

6,036

9,953 12,012 ( 32,382 ( 406 29,798

323 12,012) 9,502) 2,849 -

25,430

10,276 22,880 3,255 55,228

109

- (

325,002 ( 590,677 ($

6,251) 43,759) $

($ ( ( (

6,898) ($ 119,947) ( 197,039) 571) ( -

70) $ 50,082) 908) - (

($ $

324,455) ($ 266,222 ($

51,060) ($ 94,819) $

$

-

109) 25,321

-

$

318,751 572,239

Deferred income tax liabilities Temporary differences: Foreign investment income Depreciation charge Land value incremental tax Unrealized exchange gain Currency translation differences

161

3)

($ ( ( ( (

6,968) 170,029) 197,039) 1,479) 3)

3) ($ 25,318 $

375,518) 196,721

Year ended December 31, 2015 Recognised in other Recognised comprehensive January 1 in profit or loss income December 31 Deferred income tax assets Temporary differences: Unrealized profit from sales Loss on doubtful debts

$

Loss on inventories from market value decline Depreciation charge Unrealized gain on disposal of plant, property and equipment Unused compensated absences Maintenance fees for machinery Unrealised provision

21,664 ($ 17,809 ( 18,743

14,058) $ 3,009) 30,537

-

78,851 30 (

14,312 30)

-

93,163 -

Pensions Unrealized losses Remeasurement of defined benefit plan Currency translation difference Loss carryforward

$

7,606 14,800 49,280

5,805

275

-

6,080

-

10,086

-

10,086

5,109

9,953 12,012 32,382 406 29,798

9,634 12,212 ( 41,617 ( 24,689

Unrealised deferred revenue

$

319 200) 9,235) 406 -

-

-

109

109

125,108

199,894

-

325,002

356,162

$

229,297

$

5,218

$

590,677

Deferred income tax liabilities

Temporary differences: Foreign investment income Depreciation charge Land value incremental tax Unrealized exchange gain Currency translation differences

($ ( ( ( (

7,054) $ 63,228) ( 197,039) 4,331) 692)

156 $ 56,719) 3,760 -

692

($ ( ( (

6,898) 119,947) 197,039) 571) -

($

272,344) ($

52,803) $

692

($

324,455)

5,910

$

266,222

$

83,818

162

$

176,494

$

D. Expiration dates of unused taxable loss and amounts of unrecognised deferred tax assets are as follows: December 31, 2016

Year incurred 2013~2016

Amount filed $ 1,381,150

Unused amount $ 1,370,471

Unrecognised deferred income tax asset Year of expiry $ 2018~2021

December 31, 2015

Year incurred 2013~2015

Amount filed $ 1,369,803

Unused amount $ 1,369,803

Unrecognised deferred income tax asset Year of expiry $ 2018~2020

E. The Group does not recognise temporary differences arising from gains on investment in overseas subsidiaries. As of December 31, 2016 and 2015, unrecognised deferred tax liabilities were $1,459,821 and $2,095,472, respectively. F. The Company’s income tax returns through 2013 have been assessed and approved by the Tax Authority. As of March 28, 2017, there was no administrative lawsuit. G. Unappropriated retained earnings: December 31, 2016 December 31, 2015 $ 969,596 $ 589,910 Earnings generated in and after 1998 H. As of December 31, 2016 and 2015, the balance of the imputation tax credit account was $62,823 and $70,734, respectively. As dividends were approved at the shareholders’ meeting on June 23, 2016 and June 30, 2015 with the dividend distribution date set on July 27, 2016 and July 25, 2015, respectively, by the Board of Directors, the creditable tax rates for the unappropriated retained earnings of 2015 and 2014 is 19.17% and 17.96%, respectively, and the creditable tax for 2016 is expected to be 15.42%. The creditable tax rate will be based on the actual imputation tax credit account on the distribution date for the earnings of 2016; thus, the credit account may be subject to appropriate adjustments according to tax regulations.

163

(27) Earnings per share Year ended December 31, 2016 Weighted average number of ordinary Earnings shares outstanding per share Amount after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares

$

$

1,069,141

1,579,145

1,069,141

1,579,145

1,069,141

4,785 1,583,930

$

0.68

$

0.67

Year ended December 31, 2015 Weighted average number of ordinary Earnings shares outstanding per share Amount after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares

$

$

164

590,018

1,579,145

590,018

1,579,145

590,018

3,418 1,582,563

$

0.37

$

0.37

(28) Supplemental cash flow information A. Operating and investing activities with partial cash payments: (a) Cash received from disposal groups held for sale: Year ended December 31, 2015 $ ( $

Disposal groups held-for-sale Less: Opening balance of advance receipts Cash received from disposal groups held-for-sale

492,728 104,791) 387,937

As of December 31, 2016, the Group did not have any cash received from disposal groups held for sale. (b) Cash paid for acquisition of property, plant and equipment:

Purchase of property, plant and $ equipment and investment property Add: Opening balance of other payables Opening balance of other payables - related parties ( Less: Ending balance of other payables $ Cash paid for acquisition of property, plant and equipment and investment property

Years ended December 31, 2016 2015 271,479 $ 364,344 152,730

360,188

-

1,231,623

65,792) ( 358,417

152,730) $

1,803,425

B. Operating and investing activities with no cash flow effect: (a) Accounts receivable: Years ended December 31, 2016 Write-off of allowance for doubtful accounts (b) Property, plant and equipment:

$

2015 5,826

$

-

Years ended December 31, 2016 Reclassification of prepayments

$

165

2015 -

$

5,659

(c) Prepayment for equipment, net: Years ended December 31, 2016 2015 Reclassification of property, plant and equipment (d) Long-term prepaid rent:

$

165,376

$

201,238

Years ended December 31, 2016 Reclassification of prepayment

$

2015 -

$

2,505

(e) Long-term deferred revenue: Years ended December 31, 2016 Reclassification of other payables

$

2015 45,020

$

-

7. RELATED PARTY TRANSACTIONS (1) Significant transactions and balances with related parties A. Sales Years ended December 31, 2016 2015 Sales of goods Parent company to entities with joint control or significant influence

$

13,618,590

$

16,212,398

The Group’s collection terms and methods for related party are wire transfer within 28~60 days of monthly statements, wire transfer within 22 days of statements settled twice a month and wire transfer within 20~45 days after receiving the receipt. The collection terms are similar to that of a third party. The Group only sells to the subsidiaries; thus there is no comparable price for sales made at arm’s length. B. Purchases of goods Years ended December 31, 2016 2015 Purchases of goods Parent company to entities with joint control or significant influence

$

988,880

$

2,070,688

Purchase price from related party is similar to that of a third party. Except for some transactions in letters of credit, the payment terms are similar to those of third parties, which are payments within 28~45 days of monthly statement, 10~30 days of invoice receipt, wire transfer within 7~ 45 days after receiving the receipt and 15 days upon receipt of goods.

166

C. Rental expense (recorded under Operating cost and Operating expense) Years ended December 31,

Determination Payment Parent company to entities with joint control or significant influence

Leased subject of rent Plant and office Negotiation

method (Note)

$

2016 273,373

$

2015 310,464

(Note) Prepayment for three months. D. Outstanding balance of receivables from related parties December 31, 2016 Receivables from related party: Parent company to entities with joint control or significant influence

$

December 31, 2015

886,754

$

886,015

Receivables from related parties arise primarily from sales of goods. These receivables have not been pledged and do not incur interest. E. Refundable deposit (including other current financial assets) December 31, 2016 $ 78,012

Parent company to entities with joint control or significant influence G. Outstanding balance of payables to related parties

December 31, 2016 Payables to related party: Parent company to entities with joint control or significant influence

$

December 31, 2015 $ 82,608

December 31, 2015

196,662

$

182,684

Payables to related party arise from purchases of goods, property transactions and collections and payments on behalf of others. These payables do not incur interest. (2) Key management compensation Years ended December 31, 2016 Salaries and other short-term employee benefits Retirement benefits

2015

$

64,708

$

2,110 66,818

8. PLEDGED ASSETS None.

167

$

60,725

$

60,725

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS A. As of December 31, 2016 and 2015, the balances for contracts that the Group entered into but not yet due are $79,697 and $212,523, respectively. B. As of December 31, 2016 and 2015, the unused letters of credit amounted to $925,524 and $476,328, respectively. C. The details of endorsements and guarantees provided are described in Note 13(1)B. D. (a) The Company has entered into a lending agreement with KGI Bank in 2016. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and the consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assesment. Under the terms of the loan agreement, if any of the financial covenants were not met, the Company has to improve the conditions within four months after the release of financial reports. Should the Company fail to meet the above covenants, the bank has the right to demand the Company to pay off the loan balance immediately. (b) The Company has signed a syndicated loan agreement with Taiwan Bank and other banks in 2015. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Under the terms of the loan agreement, if any of the financial covenants were not met, the Company has to improve the conditions within three months after the release of financial reports. Should the Company meet the required financial covenants by then, it will not be considered as a violation of the agreement. There will be an additional 0.1% interest imposed on the annual floating rate from the day after the release of the financial report which violates the financial covenants above to the day before the Company meets the required financial covenants. Otherwise, the banks have the right to demand the Company to pay off the loan balance immediately. (c) The Company has entered into a lending agreement with Bank of Tokyo-Mitsubishi UFJ in 2015. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the Company has to maintain a consolidated debt-to-equity ratio of less than 180%, interest coverage ratio at over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assesment. Should the Company fail to meet the above covenants, the bank has the right to demand the Company to pay off the loan balance immediately. (d) Cayman Ton Yi Industrial Holdings Ltd. (the ‘Cayman Ton Yi’), a subsidiary of the Group, has signed a loan agreement with Sumitomo Mitsui Banking Corporation in 2016. The Company has

168

to maintain the following financial ratios and terms: maintain consolidated debt-to-equity ratio at or below 180%, interest coverage ratio at 200% or above, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Should the Company fail to meet the above covenants, the bank will re-examine the facilities of Cayman Ton Yi. (e) Cayman Ton Yi, a subsidiary of the Group, has signed a loan agreement with OCBC Bank in 2016. The Company has to maintain the following financial ratios and terms: maintain consolidated debt-to-equity ratio at or below 180%, interest coverage ratio at 200% or above, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Should the Company fail to meet the above covenants, the bank will re-examine the facilities of Cayman Ton Yi. (f) Cayman Ton Yi, a subsidiary of the Group, has signed a syndicated loan agreement with Taipei Fubon Commercial Bank in 2014. The Company has to maintain a consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the semi-annual assessment. Should the Company fail to meet the above covenants, the banks have the right to demand Cayman Ton Yi to pay off the loan balance immediately. (g) Fujian Ton Yi Tinplate Co., Ltd. (Fujian Ton Yi) and Jiangsu Ton Yi Tinplate Co., Ltd. (the ‘Jiangsu Ton Yi’), subsidiaries of the Group, has signed a loan agreement with DBS Bank Paribas in 2015. The Company has to maintain a consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Should the Company fail to meet the above covenants, the banks have the right to demand Fujian Ton Yi and Jiangsu Ton Yi to pay off the loan balance immediately. (h) Jiangsu Ton Yi, a subsidiary of the Group, has signed a loan agreement with Australia and New Zealand Bank in 2015. The Company has to maintain a consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Should the Company fail to meet the above covenants, the banks have the right to demand Jiangsu Ton Yi to pay off the loan balance immediately. (i) Taizhou Ton Yi Industrial Co., Ltd. (the ‘Taizhou Ton Yi’), a subsidiary of the Group, has signed a loan agreement with BNP Paribas in 2016. In accordance with the agreement, Taizhou Ton Yi has to maintain the following financial ratios and terms: the tangible shareholders’ equity of not less than CNY$270,000,000 at the annual assessment, and the total debt-to-total equity ratio of less than 60%. Should Taizhou Ton Yi fail to meet the above covenants, the banks have the right to demand Taizhou Ton Yi to pay off the loan balance immediately.

169

(j) Zhangzhou Ton Yi Industrial Co., Ltd. (the ‘Zhangzhou Ton Yi’), a subsidiary of the Group, has signed a loan agreement with BNP Paribas in 2016. In accordance with the agreement, Zhangzhou Ton Yi has to maintain the following financial ratios and terms: the tangible shareholders’ equity of not less than CNY$195,000,000 at the annual assessment, and the total debt-to-total equity ratio of less than 160%. Should Zhangzhou Ton Yi fail to meet the above covenants, the banks have the right to demand Zhangzhou Ton Yi to pay off the loan balance immediately. (k) Huizhou Ton Yi Industrial Co., Ltd. (the ‘Huizhou Ton Yi’), a subsidiary of the Group, has signed a loan agreement with Mizoho Bank in 2016. The Company has to maintain a consolidated debtto-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Should the Company fail to meet the above covenants, the banks have the right to demand Huizhou Ton Yi to pay off the loan balance immediately. (l) Chengdu Ton Yi Industrial Co., Ltd. (the ‘Chengdu Ton Yi’), a subsidiary of the Group, has signed a loan agreement with Bangkok Bank in 2016. In accordance with the agreement, Chengdu Ton Yi has to maintain the following financial ratios and terms: the debt-to-equity ratio of less than 250%. Should Chengdu Ton Yi to meet the above covenants, the banks have the right to demand Chengdu Ton Yi to pay off the loan balance immediately. (m) Chengdu Ton Yi, a subsidiary of the Group, has signed a loan agreement with United Overseas Bank in 2015. In accordance with the agreement, Chengdu Ton Yi has to maintain the following financial ratios and terms: the ratio of the total borrowings to net tangible assets shall not exceed 225% at all times. Should Chengdu Ton Yi fail to meet the above covenants, the banks have the right to demand Chengdu Ton Yi to pay off the loan balance immediately. As of December 31, 2016 and 2015, the Group’s financial ratios have not violated the above covenants. E. The Group leases various land, offices, warehouses and equipment under operating lease agreements. For the years ended December 31, 2016 and 2015, rental expense recorded under Operating cost and Operating expense amounted to $345,137 and $348,334, respectively. The future aggregate minimum lease payments under operating leases are as follows:

Within 1 year Between 1 and 5 years Over 5 years

December 31, 2016 $ 344,250 194,935 631,720 $ 1,170,905

10. SIGNIFICANT DISASTER LOSS None.

170

December 31, 2015 $ 345,240 255,513 328,286 $ 929,039

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE None. 12. OTHERS (1) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders, maintain an optimal capital structure to both reduce the cost of capital and to meet the monetary needs of improving productivity. 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. (2) Financial instruments A. Fair value information of financial instruments The financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable (including related party), other receivables, other current financial assets, refundable deposits, short-term borrowings, short-term commercial paper, notes payable, accounts payable (including related party), other payables (including related party), other current financial liabilities, bonds payable, long-term borrowings (including current portion) and guarantee deposit received, are based on their book value as book value approximates fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(3) Fair value estimation. B. Financial risk management policies (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, risk price and interest rate 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. The Group uses derivative financial instruments to hedge specific risks. For more information about financial instruments, please refer to Note 13(1)I, Trading in derivative financial instruments undertaken during the reporting periods. (b) Risk management is carried out by a central treasury department (Group Finance Department) under policies approved by the board of directors. Group Finance Department identifies, evaluates and hedges financial risks in close cooperation 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.

171

C. Significant financial risks and degrees of financial risks (1) Market risk (a) Foreign exchange risk (i) The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and China Yuan (the ‘CNY’). Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. (ii) The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Group’s foreign operations are considered strategic investments; thus, no hedging for the purpose is conducted. (iii) The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other subsidiaries’ functional currency: USD ,CNY and VND. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows: December 31, 2016 Foreign Currency Amount (foreign currency: functional currency)

(in thousands)

Exchange Rate

Book Value

Financial assets Monetary items $

8,857

32.25

1,326

6.95

285,638 42,764

CNY :USD

142,000

0.143988

659,395

USD : NTD

6,983

32.25

225,202

USD : NTD USD : CNY

$

Financial liabilities Monetary items

172

December 31, 2015 Foreign Currency Amount (foreign currency: functional currency)

(in thousands)

Exchange Rate

Book Value

Financial assets Monetary items $

5,427

32.825

1,394

6.57

45,758

944

35.88

33,871

CNY : USD

142,000

0.152171

709,290

USD : CNY

16,548

6.57

543,188

USD : NTD USD : CNY EUR : NTD

$

178,141

Financial liabilities Monetary items

(iv) As of December 31, 2016 and 2015, if the exchange rate of the Group’s functional currency to USD had appreciated/depreciated by 1%, with all other factors remaining constant, the post-tax profit for the years ended December 31, 2016 and 2015 would have increased/decreased by $857 and $2,650, respectively. If the exchange rate of the Group’s functional currency to CNY had appreciated/depreciated by 1%, with all other factors remaining constant, the post-tax profit for the years ended December 31, 2016 and 2015 would have increased/decreased by $5,473 and $5,887, respectively. (v) The total exchange loss, including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2016 and 2015 amounted to $10,373 and $288,090, respectively. (b) Price risk (i) The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as available-for-sale. To manage its price risk arising from investments in equity securities, the Group has carefully determined its investing portfolio and has set various stop-loss points to ensure that it is not exposed to significant risks. Accordingly, no material market risk is expected. (ii) The Group’s investments in equity securities comprise domestic as well as foreign listed and unlisted stocks. The prices of equity securities would fluctuate due to the uncertainty of the future value of investee companies. During the years ended December 31, 2016 and 2015, if the prices of these equity securities had increased/decreased by 1% with all other variables held constant, other comprehensive income for the years ended December 31, 2016 and 2015 would have increased/decreased by $1,226 and $1,309 as a result of valuation gains/losses on equity securities classified as available-for-sale, respectively.

173

(c) Interest rate risk (i) The Group’s interest rate risk arises from short-term and long-term 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 rate. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. For the years ended December 31, 2016 and 2015, the Group’s borrowings at variable rate were denominated in NTD, USD, EUR, JPY, and CNY. (ii) During the years ended December 31, 2016 and 2015, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2016 and 2015 would have decreased / increased by $4,573 and $5,433, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings. (2) Credit risk (i) Credit risk refers to the risk that the clients or counterparties of financial instruments will cause a financial loss for the Group by failing to discharge a contractual obligation. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing 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. Individual credit limit is set by management through evaluating internal and external credit ratings. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with good ratings are accepted. The Group transacts with several banks to mitigate risk. (ii) No credit limits were breached for the year of 2016 and 2015, and management does not expect any significant losses from non-performance by these counterparties. (iii) The Group provides endorsements and guarantees based on the Group’s policies and procedures on endorsements and guarantees. The Group only provides endorsement or guarantee for subsidiaries that the Group directly holds more than 50% ownership, or for entities that the Group holds more than 50% ownership, either directly or indirectly, as well as the power to govern the policies. No collateral is requested for the endorsements and guarantees as the Group can control the credit risk of the subsidiary. The maximum credit risk is the guaranteed amount. (iv) For the credit ratings of the Group’s financial assets, please refer to Note 6, Financial assets.

174

(3) Liquidity risk (i) Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group Finance Department. Group Finance Department monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. (ii) Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group Finance Department. Group Finance Department invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above mentioned forecasts.

175

(iii) The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. December 31, 2016 Non-derivative financial liabilities: Short-term borrowings

Less than 1 year

Between 1 and 2 years

$

$

Short-term notes and bills payable Notes payable Accounts payable (including related party) Other payables (including related party) Other financial liabilities - current Corporate bonds payable Long-term borrowings Guarantee deposits received

2,588,613

Corporate bonds payable Long-term borrowings Guarantee deposits received

$

$

-

More than 5 years

$

-

350,000

-

-

-

13,325

-

-

-

1,163,687

-

-

-

1,435,548

-

-

-

20,929

-

-

-

27,642

660,601

-

-

1,659,788

6,122,468

6,240,834

-

-

7,891

418

-

Between 1 and 2 years

December 31, 2015 Less than 1 year Non-derivative financial liabilities: Short-term borrowings Notes payable Accounts payable (including related party) Other payables (including related party) Other financial liabilities - current

-

Between 2 and 5 years

2,921,264 24,074 1,069,465

$

Between 2 and 5 years

-

$

More than 5 years

-

$

-

1,503,491

-

-

-

21,631

-

-

-

29,894

29,894

714,579

-

5,358,053

7,694,796

5,047,611

-

-

8,847

-

1,448

(iv) The Group does not expect the maturity date to end early nor the actual cash flow to be materially different.

176

(3) Fair value information A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value is provided in Note 12(2) A “Fair value information of financial instruments”. Details of the fair value of the Group’s investment property measured at cost is provided in Note 6(9) “Net investment property”. 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 Group’s investment in listed stocks 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 foreign exchange contracts is included in Level 2. Level 3: Unobservable inputs for the asset or liability. C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2016 and 2015 is as follows: December 31, 2016 Level 1 Assets: Recurring fair value measurements Available-for-sale financial assets $ 122,642 Equity securities December 31, 2015 Level 1 Assets: Recurring fair value measurements Available-for-sale financial assets $ 130,896 Equity securities

Level 2

$

Level 3

-

$

Level 2

$

Total

-

$ 122,642

Level 3

-

$

Total

-

$ 130,896

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: Market quoted price

Listed shares Closing price

177

(b) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. E. For the years ended December 31, 2016 and 2015, there was no transfer between Level 1 and Level 2. F. For the years ended December 31, 2016 and 2015, there was no transfer from Level 3. 13. SUPPLEMENTARY DISCLOSURES (According to the current regulatory requirements, the Group is only required to disclose the information for the year ended December 31, 2016. The financial information of investees was audited by the independent accountants and disclosed individually. Elimination and adjustments for consolidation were not considered.) (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, and associates): 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: None. 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 paidin capital or more: Please refer to table 4. H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 5. I. Trading in derivative financial instruments undertaken during the reporting periods: a. As of December 31, 2016, the Company has not traded any derivative financial instrument. For the year ended December 31, 2016, the net loss recognized for trading derivative instruments amounted to $210. b. The subsidiaries have not traded derivative financial instruments. J. Significant inter-company transactions during the reporting periods: Please refer to table 6. (2) Information on investees Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7. (3) Information on investments in Mainland China A. Basic information: Please refer to table 8.

178

B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 9.

179

180

Segment revenue Segment income Segment assets

Revenue from internal customers

Revenue from external customers

$ $ $

$ 5,136,721 15,914,109 1,227,125 25,621,473

Taiwan 10,777,388 $ $ $

966,198 7,760,326 23,599 8,723,501 $ $ $

13,279,513 598,114 14,069,572

PET Package Tinplate Manufacturing Manufacturing (in Mainland China) (in Mainland China) $ 6,794,128 $ 13,279,513

Year ended December 31, 2016

$ $ $

$

4,791,013 6,688,629 409,517 17,167,496

Others 1,897,616

(3) Information about segment profit or loss, assets The segment information provided to the chief operating decision-maker for the reportable segments was as follows:

$ $ $

$

10,893,932 43,642,577 2,258,355 65,582,042

Total 32,748,645

The chief operating decision-maker evaluates the performance of operating segments based on pre-tax income excluding non-recurring income.

(2) Measurement of segment information

order to make strategic decisions. The basis of identification and measurement of segment information had no significant changes in this period.

The management of the Group has identified the operating segments based on information provided to the Group’s chief operating decision maker in

(1) General information

14. SEGMENT INFORMATION

181

Taiwan 11,163,925 5,988,653 17,152,578 $ 698,036 ($ 26,742,591 $

$

$ $ $

Revenue from external customers Revenue from internal customers

Segment revenue Segment income Segment assets

980,250 8,049,914 $ 844,666) $ 9,849,470 $

15,853,286 598,501 16,683,880

PET Package Tinplate Manufacturing Manufacturing (in Mainland China) (in Mainland China) $ 7,069,664 $ 15,853,286

Year ended December 31, 2015

$ $ $

$ 5,775,199 7,866,951 674,702 18,388,153

Others 2,091,752

$ $ $

$

12,744,102 48,922,729 1,126,573 71,664,094

Total 36,178,627

(4) Reconciliation for segment income (loss) A.Sales between segments were carried out at arm’s length. Basis of measurement remained consistent with revenue in the statements of comprehensive income and revenue from external parties reported to the chief operating decision-maker. A reconciliation of reportable segment profit or loss to the profit before tax and discontinued operation for the years ended December 31, 2016 and 2015 is shown below:

Reportable segments profit and loss $ Other segments profit and loss Elimination of intersegment transactions ( $ Income before income tax

Years ended December 31, 2016 2015 1,848,838 $ 451,871 409,517 674,702 828,194) ( 423,826) 1,430,161 $ 702,747

B. The amount of total assets provided to the chief operating decision-maker adopts the same basis of measurement as assets in the Group's financial statements. The reconciliations between reportable segments' assets and total assets are as follows: December 31, 2016 December 31, 2015 Assets of reportable segments $ 48,414,546 $ 53,275,941 Assets of other operating segments 17,167,496 18,388,153 ( 25,669,228) ( 27,410,732) Elimination of intersegment transactions $ 39,912,814 $ 44,253,362 Total assets (5) Information on products and services The information on products are as follows:

$

Revenue from tinplate products Revenue from PET packages

$

Years ended December 31, 2016 2015 19,469,132 $ 20,325,341 13,279,513 15,853,286 32,748,645 $ 36,178,627

(6) Information on geographic area As of and for the years ended December 31, 2016 and 2015, the information on geographic area is as follows: 2016

Taiwan Mainland China Others

2015

Revenue $ 3,742,306

Non-current assets $ 12,007,062

Revenue $ 3,896,772

Non-current assets $ 12,965,898

21,401,483 7,604,856 $ 32,748,645

17,942,805 51,094 $ 30,000,961

24,595,878 7,685,977 $ 36,178,627

20,840,560 58,407 $ 33,864,865

182

(7) Major customer information In 2016 and 2015, no customers constituted more than 10% of the Group’s total revenue.

183

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Changsha Ton Yi Industrial Co., Ltd.

2

2

2

2

2

3

4

Chengdu Ton Yi Industrial Packing Co., Ltd.

2

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

account

Zhangzhou Ton Yi Other receivables Industrial Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Borrower

General ledger

Huizhou Ton Yi Other Industrial Co., receivables Ltd. Chengdu Tongxin Zhangzhou Ton Yi Other Industrial Industrial Co., receivables Packing Ltd. Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Creditor

1

NO.

Table 1

184

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related Balance at

$

27,862

18,575

23,218

46,436

116,091

46,436

46,436

278,618

464,363

$

-

18,575

-

-

-

46,436

46,436

185,745

-

December 31, 2016 December 31, 2016

Maximum outstanding balance during the year ended $

4.00

4.00

4.00

4.00

4.00

4.00

4.00

4.00

4.50

Interest rate

Table 1 page 1

-

18,575

-

-

-

46,436

46,436

185,745

-

drawn down

Actual amount

Year ended December 31, 2016

Loans to others

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions with the loan

Ton Yi Industrial Corp. and Subsidiaries

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful



















Item

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

-

212,646

516,463

103,293

103,293

516,463

516,463

516,463

9,323,609

a single party

Limit on loans granted to

$

-

212,646

516,463

206,585

206,585

516,463

516,463

516,463

9,323,609

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Expressed in thousands of NTD

185

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

5

5

5

5

5

5

5

6

7

7

Other receivables

Other receivables

account

Huizhou Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Zhangzhou Ton Yi Other Industrial Co., receivables Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Ton Yi (China) Investment Co., Ltd.

5

Borrower

Chengdu Tongxin Beijing Ton Yi Industrial Industrial Co., Packing Ltd. Co., Ltd.

Creditor

4

NO.

General ledger

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related

92,873

-

92,873

92,873

139,309

139,309

139,309

139,309

139,309

139,309

139,309

139,309

92,873

92,873

139,309

139,309

139,309

139,309

139,309

139,309

139,309

139,309

-

$

$

27,862

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

4.00

3.00

3.00





4.00

4.00

4.00

4.00

4.00

4.00

4.00

Interest rate

Table 1 page 2

-

-

-

-

-

-

13,931

65,011

-

14,163

51,080

-

drawn down

Actual amount

2

2

2

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions loan with the

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful

























Item

-

-

-

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

-

1,333,537

1,333,537

1,615,870

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

a single party

Limit on loans granted to $

-

1,333,537

1,333,537

1,615,870

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

186

Sichuan Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

12

12

Chengdu Ton Yi Industrial Co., Ltd.

11

Sichuan Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

10

12

Beijing Ton Yi Industrial Co., Ltd.

9

Sichuan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

8

12

Kunshan Ton Yi Industrial Co., Ltd.

8

Sichuan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

8

12

Kunshan Ton Yi Industrial Co., Ltd.

Creditor

8

NO.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Borrower

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

account

General ledger

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related

46,436

-

23,218

92,873

92,873

92,873

92,873

92,873

92,873

92,873

92,873

-

92,873

139,309

325,054

92,873

92,873

92,873

92,873

139,309

92,873

566,523

218,251

$

$

278,618

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

4.00

4.00

4.00

4.00

3.00

3.00



3.00

4.00

3.00

4.00

4.00

Interest rate

Table 1 page 3

-

46,436

92,873

92,873

58,028

-

-

-

-

-

139,309

139,309

drawn down

Actual amount

2

2

2

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions loan with the

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful

























Item

-

-

-

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

838,561

838,561

838,561

838,561

838,561

759,861

825,197

765,952

1,135,141

1,135,141

1,135,141

1,135,141

a single party

Limit on loans granted to $

838,561

838,561

838,561

838,561

838,561

759,861

825,197

765,952

1,135,141

1,135,141

1,135,141

1,135,141

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Zhanjiang Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd. Zhanjiang Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

13

13

13

13

Sichuan Ton Yi Industrial Co., Ltd.

Creditor

12

NO.

Chengdu Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd. Beijing Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Borrower

(1) For trading partner.

Other receivables

Other receivables

Other receivables

Other receivables

Y

Y

Y

Y

Y

party

Is a related

232,181

139,309

185,745

92,873

-

69,654

92,873

92,873

-

$

$

116,091

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

-

69,654

92,873

75,117

-

drawn down

Actual amount

4.00

4.00

4.00

3.00

4.00

Interest rate

2

2

2

2

2

(Note 1) $

Operational use

Operational use

-

-

Operational use

Operational use

Operational use

financing

Reason for short-term

-

-

-

borrower

Amount of Nature of transactions loan with the $



-

-

-

-

-

$ -

Value $

691,604

691,604

691,604

691,604

838,561

a single party

Limit on loans granted to $

691,604

691,604

691,604

691,604

838,561

loans granted

Ceiling on total

Table 1 page 4

(Note 3) Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2016 as follows: USD:NTD 1:32.25 and CNY:NTD 1:4.643629.

the subsidiary is 100% of the Company’s net assets.

(2) Short-term financing: The maximum amount for short-term financing is 20% of the Company’s net assets; If the Company loans to foreign subsidiaries, which the Company holds 100% ownership directly or indirectly, the maximum amount for









Item

Collateral

-

-

-

-

accounts

Allowance for doubtful

(1) Trading partner: The maximum amount for individual trading partner shall not exceed the higher of total purchase or sale transactions during the reporting period or the most recent year.

(Note 2) The maximum loan amount is 40% of its net assets.

(2) For short-term financing.

account

General ledger

Other receivables

(Note 1) Nature of loans to others is filled as follows:

187

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

0

0

0

Zhangzhou Ton Yi Industrial Co., Ltd. Chengdu Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Company name

2

2

2

$

12,726,164

12,726,164

12,726,164

12,726,164

$

single party

(Note 1)

2

December 31,

provided for a

endorser/ guarantor

Ton Yi Industrial Corp. and Subsidiaries

$

-

-

-

-

December 31, 2016

amount at

endorsement/ guarantee

Outstanding

$

$

collateral

-

-

-

-

$

12,726,164

12,726,164

12,726,164

12,726,164

provided

guarantees

total amount of endorsements/

Ceiling on

Table 2 page 1

(Note 3) Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2016 as follows: USD:NTD 1:32.25 and CNY:NTD 1:4.643629.

(Note 2) The total endorsement and guarantee provided shall not exceed 70% of the Company’s net assets; the amount provided for each counterparty shall not exceed 70% of the Company's net assets.

-

-

-

-

company

secured with of the endorser/guarantor

(2) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

-

-

-

-

Actual amount drawn down

Ratio of accumulated

endorsements/ endorsement/guarantee guarantees amount to net asset value

Amount of

Year ended December 31, 2016

Provision of endorsements and guarantees to others

(1) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

417,732

295,120

940,000

1,180,000

2016

amount as of

endorsements/ guarantees

with the

endorsement/ guarantee

Limit on

Maximum outstanding

Relationship

Party being endorsed/guaranteed

(Note 1) The following code represents the relationship with the Company:

Ton Yi Industrial Corp.

Endorser/ guarantor

0

Number

Table 2

188

parent

company to

Y

Y

Y

Y

N

N

N

N

company

guarantees by subsidiary to

guarantees by parent subsidiary

Provision of endorsements/

Provision of endorsements/

Y

Y

Y

Y

China

Mainland

guarantees to the party in

endorsements/

Provision of

Note 2

Note 2

Note 2

Note 2

Footnote

Expressed in thousands of NTD

Same director

Grand Bills Finance Co.



Relationship with the securities issuer

Same Chairman

2.Financial assets carried at cost - non-current

1.Available-for-sale financial assets - non-current

Ton Yi Industrial Corp. and Subsidiaries

44,100 108

2 2

Table 3 page 1

250

Number of shares (in thousands)

1

General ledger account (Note)

December 31, 2016

$

1,050

500,000

122,642

Book value

0.02

3.33

0.04

Ownership (%)

As of December 31, 2016

Holding of marketable securities at the end of the period (not including Subsidiaries, associates and joint ventures)

President International Development Corp.

JFE Holdings Inc.

Stocks:

Marketable securities

(Note) The code number explanation is as follows:

Ton-Yi Industrial Corp.

Securities held by

Table 3

189

$

-

-

122,642

Fair value







Footnote

Expressed in thousands of NTD

Counterparty

Cayman Ton Yi Industrial Holdings Ltd.

Tovecan Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Purchaser/seller

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Table 4

Relationship with the

The Company

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Ton Yi Industrial Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd. Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

TTET Union Corp.

Ton Yi Industrial Corp.

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Jiangsu Ton Yi Tinplate Co., Ltd.

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

An investee company accounted for under the equity method

counterparty

Ton Yi Industrial Corp. and Subsidiaries

(Sales)

(Sales)

Purchases

(Sales)

(Sales)

(Sales)

(Sales)

(Sales)

(sales)

Purchases

280,366)

(

2,907,023)

1,823,760)

(

(

4,649,906

109,022)

271,239)

(

(

106,554)

4,649,906)

Amount

(

($

Table 4 page 1

(38)

(61)

99

(2)

(1)

(2)

(1)

(29)

(sales)

Percentage of total purchases

Transaction

Credit term

50 days after shipping

50 days after shipping

50 days after shipping

Monthly-closing basis on 30th next month, T/T

50 days after shipping

50 days after shipping

30 days after arrival at port

50 days after shipping

Year ended December 31, 2016

$

Unit price

-

-

-

-

-

-

-

-

















Credit term

transactions

Description and reasons for difference in transaction terms compared to third party

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

Ton Yi Industrial Corp.

190

(

$

10,230

380,674

390,298)

28,828

81,161

186,748

24,768

390,298

Balance

3

97

(100)

2

6

14

2

30

receivable (payable)

Percentage of total notes/accounts

Notes/accounts receivable (payable)

















Footnote

Expressed in thousands of NTD

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Counterparty

Ton Yi Industrial Corp. Jiangsu Ton Yi Tinplate Co., Ltd.

Purchaser/seller

Tovecan Corp.

Ton Yi Industrial Corp.

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Ton Yi Industrial Corp.

Cayman Ton Yi Industrial Holdings Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

191

An investee company accounted for under the equity method

The Company

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

The Company

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

The Company

Relationship with the counterparty

Purchases

Purchases

(Sales)

(Sales)

Purchases

Purchases

Purchases

Purchases

Purchases

Purchases

Purchases (sales)

5

80

109,022

1,823,760

Table 4 page 2

(4)

192,302)

(

(5)

245,967)

82

83

245,967

2,907,023

23

192,302

8

63

519,413

271,239

87

106,554

Amount

(

$

Credit term

50 days after shipping

50 days after shipping

67 days after invoice date, T/T

67 days after invoice date, T/T

50 days after shipping

50 days after shipping

67 days after invoice date, T/T

67 days after invoice date, T/T

30 days after arrival at port 67 days after invoice date, T/T

$

Unit price

-

-

-

-

-

-

-

-

-

-





















Credit term ($

(

(

(

(

(

(

(

10,230)

81,161)

21,977

59,494

380,674)

186,748)

59,494)

21,977)

93,487)

24,768)

Balance

(8)

(63)

2

5

(62)

(30)

(87)

(15)

(65)

(100)

Percentage of total notes/accounts receivable (payable)

Percentage of

Notes/accounts receivable (payable)

total purchases (sales)

Transaction

Description and reasons for difference in transaction terms compared to third party transactions





















Footnote

Taizhou President Enterprises Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Guangzhou President Enterprises Co., Ltd.

Uni-President Trading (Kunshan) Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Beijing President Enterprises Drinks & Food Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Counterparty

Wuxi Ton Yi Industrial Packing Co., Ltd.

Purchaser/seller

Jiangsu Ton Yi Tinplate Co., Ltd.

192

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Relationship with the counterparty

Purchases

(Sales)

Purchases

(Sales)

(Sales)

Purchases

(Sales)

(Sales)

Purchases (sales)

(

(

(

(

($

13

159,161

Table 4 page 3

(98)

13

202,532

1,974,943)

(95)

2,306,277)

(81)

11

140,218

1,844,957)

(78)

(17)

1,804,515)

519,413)

Amount

Credit term

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

67 days after invoice date, T/T

$

Unit price

-

-

-

-

-

-

-

-

















Credit term $

(

(

(

7,285)

128,552

13,464)

128,836

103,637

9,489)

182,969

93,487

Balance

(8)

98

(19)

92

82

(9)

85

14

Percentage of total notes/accounts receivable (payable)

Percentage of

Notes/accounts receivable (payable)

total purchases (sales)

Transaction

Description and reasons for difference in transaction terms compared to third party transactions

















Footnote

Chengdu President Enterprises Food Co., Ltd.

Chengdu President Enterprises Food Co., Ltd.

Zhanjiang President Enterprises Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Counterparty

Guangzhou President Enterprises Co., Ltd.

Purchaser/seller

Huizhou Ton Yi Industrial Co., Ltd.

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

counterparty

Relationship with the

(Sales)

(Sales)

(Sales)

(Sales)

Purchases (sales)

536,145)

1,373,515)

1,138,900)

(

(

1,088,247)

Amount

(

($

(98)

(92)

(65)

(100)

(sales)

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

$

-

-

-

-









Credit term $

37,050

148,341

12,499

38,529

Balance

100

95

37

99

receivable (payable)

Table 4 page 4

CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 2) Foreign currencies were translated into New Taiwan Dollars using the following exchange rates: Ending balances of receivables and payables were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25,

Unit price

Percentage of total notes/accounts

Notes/accounts receivable (payable)

Percentage of Credit term

Description and reasons for difference in transaction terms compared to third party transactions

total purchases

Transaction

(Note 1) The above terms are in accordance with the Company's policy on credit management, please refer to Note 7 Related Party Transactions for details.

193









Footnote

Fujian Ton Yi Tinplate Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Taizhou President Enterprises Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Ton Yi Industrial Corp. and Subsidiaries

-

14.36

186,302

182,969

Other receivables

7.26

148,341

Chengdu President Enterprises Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

$

Amount

-

-

-

-

-

-

-

-

-

-

-























Action taken

Overdue receivables $

148,341

128,552

128,836

Table 5 page 1

-

-

95,746

182,969

-

380,674

186,748

390,298

Amount collected subsequent to the balance sheet date

$

-

-

-

-

-

-

-

-

-

-

-

Allowance for doubtful accounts

Expressed in thousands of NTD

(Note) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable and subsequent collections were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25, CNY:NTD 1:4.643629).

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

Accounts receivable

24.07

128,552 Accounts receivable

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

Beijing President Enterprises Drinks & Food Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

-

139,513

Other receivables

18.81

-

139,513

Other receivables

128,836

13.08

103,637

Accounts receivable

Accounts receivable

Accounts receivable

Accounts receivable

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

Kunshan Ton Yi Industrial Co., Ltd. Chengdu Ton Yi Industrial Co., Ltd.

7.64

380,674

Accounts receivable

Turnover rate

2.78

Amount

186,748

$

9.11

Accounts receivable

390,298

Items

Balance as at December 31, 2016

Kunshan Ton Yi Industrial Co., Ltd. Uni-President Trading (Kunshan) Co., Ltd. An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

Relationship with the counterparty

Year ended December 31, 2016

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

Kunshan Ton Yi Industrial Co., Ltd. Beijing Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Guangzhou President Enterprises Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Ton Yi Industrial Corp.

Counterparty

Cayman Ton Yi Industrial Holdings Ltd.

Creditor

Ton Yi Industrial Corp.

Table 5

194

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

2

3

4

Ton Yi Industrial Corp.

Company name

1

0

Number (Note 2)

Table 6

195

Ton Yi Industrial Corp. and Subsidiaries

Sales Accounts receivable Sales

Sales Accounts receivable Sales

1 1 1

1 1 1

Tovecan Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Sales Other receivables Sales Sales Sales

3 3 3 3 3

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Table 6 page 1

Accounts receivable

3

Jiangsu Ton Yi Tinplate Co., Ltd.

Sales

3

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

General ledger account

Relationship (Note 3)

Counterparty

Year ended December 31, 2016

Significant inter-company transactions during the reporting period

$

67 days after invoice date

192,302

67 days after invoice date

67 days after invoice date

245,967

519,413



50 days after shipping



186,302

1,823,760

380,674

50 days after shipping

50 days after shipping

109,022 2,907,023



50 days after shipping

30 days after arrival at port



50 days after shipping

Transaction terms

186,748

271,239

106,554

390,298

4,649,906

Amount

Transaction

2%

1%

1%

-

6%

1%

9%

-

-

1%

-

1%

14%

Percentage of consolidated total operating revenues or total assets (Note 4)

Expressed in thousands of NTD

5

Number (Note 2)

Kunshan Ton Yi Industrial Co., Ltd.

Company name

General ledger account Other receivables Other receivables

Relationship (Note 3) 3 3

Beijing Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Counterparty $ 139,513

139,513

Amount





Transaction terms

Transaction

Table 6 page 2

CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 5) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25,

and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

(Note 4) 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

(3)Subsidiary to subsidiary.

(2)Subsidiary to parent company.

(1)Parent company to subsidiary.

(Note 3) Relationship between transaction company and counterparty is classified into the following three categories:

(2)The subsidiaries are numbered in order starting from ‘1’.

(1)Parent company is ‘0’.

(Note 2) The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

-

-

Percentage of consolidated total operating revenues or total assets (Note 4)

(Note 1) Only transactions amounting to more than $100 million are disclosed. Transactions between parent company and subsidiaries were disclosed on the previous sections, no duplicated information is disclosed in this section.

196

Cayman Ton Yi Holdings Ltd.

Cayman Fujian Ton Yi Industrial Holdings Ltd.

Cayman Jiangsu Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman

Cayman

Cayman

Cayman

Vietnam

Cayman

Location

General investment

General investment

General investment

General investment

Manufacturing of cans

$

1,157,865

1,157,865

7,417,500

2,066,002

2,066,002

7,417,500

7,417,500

7,417,500

7,863,787

43,740

$

43,740

7,863,787

31, 2015

31, 2016

activities General trading and investment

Balance as at December

Balance as at December

Main business

Initial investment amount

230,000,000

5,000

8,727

230,000,000

-

25,309,700

100.00

100.00

100.00

100.00

51.00

100.00

$

7,981,131

2,066,477

3,532,987

7,981,131

54,569

9,210,736

Book value

Shares held as at December31, 2016

Number of shares Ownership (%)

Year ended December 31, 2016

Information on investees

Ton Yi Industrial Corp. and Subsidiaries

(

$

441,485

7,144

2,531)

441,485

808

363,633

ended December 31, 2016

investee for the year

Net profit (loss) of the

Table 7 page 1

Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543).

$

-

-

-

-

412

363,633

the year ended December 31, 2016

the Company for

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary

Subsidiary

Footnote

Expressed in thousands of NTD

Investment income (loss) recognised by

(Note 2) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25);

(Note 1) Not required to disclose income (loss) recognised by the Company.

Cayman Ton Yi Holdings Ltd.

Cayman Ton Yi (China) Holdings Ltd.

Tovecan Corp.

Ton Yi Industrial Corp.

Investee

Cayman Ton Yi Industrial Holdings Ltd.

Investor

Ton Yi Industrial Corp.

Table 7

197

Note 1 Note 1 Note 2 Note 3 Note 4 Note 5

225,750

2,789,625

1,290,000

7,417,500

967,500

Changsha Ton Yi Industrial Sales of cans Co., Ltd.

Manufacturing of tinplate

Jiangsu Ton Yi Tinplate Co., Ltd.

Ton Yi (China) Investment General investment Co., Ltd.

Manufacturing of tinplate

Fujian Ton Yi Tinplate Co., Ltd.

Manufacturing of cans

241,875

Wuxi Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Manufacturing of cans Packing Co., Ltd.

Investment method Note 1

Main business activities

Paid-in capital 313,470 $

Investee in Mainland China

Table 8

Note 5 Note 5 Note 5 Note 5 Note 5 Note 5 Note 5

967,500

967,500

967,500

967,500

967,500

967,500

645,000

Manufacturing of PET packages

Manufacturing of PET packages

Manufacturing of PET packages

Manufacturing of PET packages

Beijing Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Manufacturing of PET packages Co., Ltd.

Manufacturing of PET packages

Zhangzhou Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Manufacturing of PET packages Co., Ltd.

Manufacturing of PET packages

Taizhou Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

198

Ton Yi Industrial Corp. and Subsidiaries

-

-

370,875

193,500

-

-

967,500

967,500

967,500

894,937

1,720,441

-

241,875

Table 8 page 1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

370,875

193,500

-

-

967,500

967,500

967,500

894,937

1,720,441

-

241,875

Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan Accumulated for the year amount of remittance Accumulated amount ended December 31, 2016 from Taiwan to of remittance from Mainland China as Taiwan to Mainland Remitted to China as of January Mainland Remitted back of December 31, 1, 2016 China to Taiwan 2016 $ 225,750 $ - $ - $ 225,750

Year ended December 31, 2016

Information on investments in Mainland China

(

(

(

(

(

(

35,728

28,148)

17,538)

1,617

13,561)

82,785

161,039

207,483

441,485

8,622

2,916)

3,263)

17,309)

Net income of investee for the year ended December 31, 2016 $ 49,383

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

82.86

86.80

100.00

100.00

Ownership held by the Company (direct or indirect) 100.00

(

(

(

(

(

(

35,728

28,148)

17,538)

1,617

13,561)

82,785

161,039

207,483

441,485

7,144

2,531)

3,263)

17,309)

691,604

838,561

759,861

825,197

765,952

1,135,141

1,333,537

1,615,870

7,981,131

1,937,587

3,462,423

212,645

516,461

Investment income (loss) Book value of recognised by investments in Mainland the Company for China as of the year ended December 31, December 31, 2016 2016 $ 52,266 $ 605,841

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Accumulated amount of investment income remitted back to Taiwan as of December 31, 2016

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Footnote Note 6

Expressed in thousands of NTD

Company name

$

6,549,878

Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2016

$ 11,906,932

$ 11,497,510

Investment Ceiling on amount approved investments in by the Investment Mainland China Commission of imposed by the the Ministry of Investment Economic Affairs Commission of (MOEA) MOEA (Note 7)

Table 8 page 2

(Note 8) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25, CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 7) The ceiling amount is 60% of consolidated net assets.

(Note 6) The financial statements were audited by the independent accountants of parent company in Taiwan.

(Note 5) Through investing in an existing company in the Mainland China (Ton Yi (China) Investment Co., Ltd.) , which then invested in the investee in Mainland China.

(Note 4) Through investing in an existing company in the third area (Cayman Ton Yi (China) Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 3) Through investing in an existing company in the third area (Cayman Jiangsu Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 2) Through investing in an existing company in the third area (Cayman Fujian Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 1) Through investing in an existing company in the third area (Cayman Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

Ton Yi Industrial Corp.

199

Investee in Mainland China

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Table 9

200

$

12

1,932,782

%

20

3,178,262

Amount

Sale (purchase)

Ton Yi Industrial Corp. and Subsidiaries

$

Amount

-

-

-

%

Property transaction

$ 91,391

567,422

Balance at December 31, 2016

8

47

%

Accounts receivable (payable)

-

-

Table 9 page 1

$

Balance at December 31, 2016





Purpose

Provision of endorsements/guarantees or collaterals

Year ended December 31, 2016

$ -

-

Maximum balance during the nyear ended December 31, 2016 $

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

-

-

Balance at December 31, 2016

Financing





Interest rate

$

-

-





Interest during the year ended December 31, 2016 Others

Expressed in thousands of NTD

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2016 AND 2015

-----------------------------------------------------------------------------------------------------------------------------------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.

201

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE To the Board of Directors and Shareholders of Ton Yi Industrial Corp.

Opinion We have audited the accompanying parent company only balance sheets of Ton Yi Industrial Corp. as of December 31, 2016 and 2015, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies. In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of Ton Yi Industrial Corp. as of December 31, 2016 and 2015, and its parent company only financial performance and parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”.

Basis for opinion We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the parent company only Financial Statements section of our report. We are independent of Ton Yi Industrial Corp. in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ton Yi Industrial Corp. parent company only financial statements of 2016. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

202

Existence of sales revenues Description Please refer to Note 4(27) for the accounting policy on revenue recognition.The Company’s sales revenues for the year ended December 31,2016 was NT$15,914,109 thousand. The primary business of Ton Yi Industrial Corp. is selling Tin Plate products.The Company has a large volume of transactions from sales of numerous kinds of products to a wide range of customers in many different countries such as Taiwan, Asia, Europe, America,etc. For the customers and dealers who are from remote districts, the substantive of sales revenue need times to be comfirmed. This matter also exists in the subsidiaries of Ton Yi Industrial Corp. (investments accounted for under equity method). Thus, the existence of sales revenue has been identified as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above key audit matter included the following: 1.

Inspecting whether approved additions to the merchandise master file data had been correctly entered in the merchandise master file which include basic information of customers, such as name of representative, location of company, amount of capital and scope of business for evaluating the creditworthiness of buyers.

2.

Understanding, evaluating and validatinf management’s controls in respect of the Company’s sales transactions from customer order’s approval, goods delivery, sales recording, reconciliation of cash receipts and customer’s records to subsequent settlement of trade receivables. In addition, testing the internal control environment of the Company’s effectiveness of revenue recognition. Performing substantive test on selected sales transactions including confirming orders, shipping documents, invoices and cash receipts to verify the exustence of sale revenues.

3.

203

Inventory evaluation Description Please refer to Notes 4(7) for accounting policyon inventory valution, Notes 5(2)A for accounting estimates and assumption uncertainty in relation to inventory valution and Notess 6(4) for details of inventories. For the year ended December 31, 2016, inventory and allowance to reduce inventory to market amounted to NT$2,035,218 thousand and NT$8,000 thousand. The Company’s raw materials are often subject to fluctuation in the international steel prices. However,as the Tin Plate products are for necessities,such price changes may not be immediately reflected in reflect material costs immediately. In addition, the competition landscape within the steel industry in China will contitue to affect the price of raw materials that would impact the estimation of net realizable value of inventory.This matter also applies the subsidiaries of Ton Yi Industrial Corp. (investments accounted for under equity method). Thus, we consider the evaluation of inventory as a key audit matter. How our audit addressed the matter Our key audit procedures performed in respect of the above key audit matter included the following: 1. Evaluating the adequacy of allowance for inventory and the consistency of provision policy. 2.

Assessing the reasonableness of the esitmation of net realizable value of Tin plate products and discussing with management and examining related documents to confirm the adequacy of allowance for price decline.

Responsibilities of management and those charged with governance for the parent company only financial statements Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers”, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

204

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements. As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1.

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

205

4.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5.

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities withinthe Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

6.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

206

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Lin, Tzu-Shu Independent Accountants Lee, Ming-Hsien PricewaterhouseCoopers, Taiwan Republic of China March 28, 2017 ------------------------------------------------------------------------------------------------------------------------------------------------The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

207

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Assets

December 31, 2016 AMOUNT

Notes

December 31, 2015 AMOUNT

Current assets 1100

Cash and cash equivalents

6(1)

1150

Notes receivable, net

6(2)(3)

1170

Accounts receivable, net

6(3)

1180

Accounts receivable - related

6(3) and 7

$

parties 1200

Other receivables

1210

Other receivables - related parties 7

130X

Inventory

5(2) and 6(4)

1410

Prepayments

6(27)

11XX

Total current assets

9,114

$

4,801

97,510

160,650

481,737

352,615

714,160

709,492

97,350

63,097

-

7,627

2,027,218

1,571,397

169,847

163,699

3,596,936

3,033,378

122,642

130,896

501,050

501,050

9,265,305

9,997,345

11,927,726

12,864,316

5,914

10,099

Non-current assets 1523

Available-for-sale financial assets 6(5) - non-current

1543

Financial assets carried at cost -

6(6)

non-current 1550

Investments accounted for under

6(7) and 7

equity method 1600

Property, plant and equipment

6(8)(27)

1760

Investment property - net

6(9)

1780

Intangible assets

6(10)

-

35,319

1840

Deferred income tax assets

6(25)

122,221

112,618

1915

Prepayments for business

6(8)(27) 60

2,915

6,257

1,406

65,177

43,842

8,185

9,407

22,024,537

23,709,213

facilities 1920

Guarantee deposits paid

1985

Long-term prepaid rents

1990

Other non-current assets

15XX 1XXX

6(11)(27)

Total non-current assets Total assets

$

(Continued)

208

25,621,473

$

26,742,591

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Liabilities and Equity

December 31, 2016 AMOUNT

Notes

December 31, 2015 AMOUNT

Current liabilities 2100

Short-term borrowings

2110

Short-term notes and bills payable 6(13)

2150

Notes payable

2170

Accounts payable

2200

Other payables

2230

Current income tax liabilities

2310

Advance receipts

2320

Long-term liabilities, current

$

6(12)

$

18,405

349,838

-

13,325

24,074

405,078

221,537

6(27)

615,068

593,578

6(25)

86,683

45,657

42,059

49,456

-

1,800,000

2,535,851

2,752,707

4,159,550

4,592,538

75,389

74,001

205,489

204,508

459,460

365,767

5,500

5,500

6(14) and 9

portion 21XX

1,023,800

Total current liabilities Non-current liabilities

2540

Long-term borrowings

6(14) and 9

2550

Provisions for liabilities - non-

6(15)(22)

current 2570

Deferred income tax liabilities

6(25)

2640

Accrued pension liabilities - non- 5(2) and 6(16) current

2645

Guarantee deposits received

25XX

Total non-current liabilities

4,905,388

5,242,314

2XXX

Total liabilities

7,441,239

7,995,021

Equity Share capital 3110

Share capital - common stock

6(17)

15,791,453

15,791,453

3200

Capital surplus

6(18)

228,178

228,178

1,439,699

1,379,732

6(19)(25)

Retained earnings 3310

Legal reserve

3320

Special reserve

826,453

826,453

3350

Unappropriated retained earnings

969,596

589,910

3400 3XXX

(

Other equity interest

1,075,145) (

68,156)

18,180,234

Total equity Contingent liabilities and

18,747,570

7 and 9

commitments 3X2X

Total liabilities and equity

$

25,621,473

The accompanying notes are an integral part of these financial statements.

209

$

26,742,591

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars, except for earning per share) Year ended December 31

4000 5000 5900 5910 5920 5950

6100 6200 6000 6900 7010 7020 7050 7070

7000 7900 7950 8200

8311 8349

8361

8362 8399

8300 8500

9750 9850

Items Sales revenue Operating costs

2016 AMOUNT

Notes 7 $ 6(4)(10)(11)(16)(23)( 24), 7 and 9 (

Net operating margin Unrealized profit from sales Realized profit from sales Net operating margin Operating expenses

6(7) and 7 6(7)

2015 AMOUNT 15,914,109

(

$

17,152,577

13,778,246) ( 2,135,863 142,201) ( 44,739 2,038,401

15,572,801) 1,579,776 44,739) 127,436 1,662,473

735,863) ( 412,466) ( 1,148,329) ( 890,072

739,211) 357,923) 1,097,134) 565,339

39,929 21,498 88,419) (

41,796 24,457 115,395)

6(3)(16)(23)(24), 7 and 9

Selling expenses General & administrative expenses Total operating expenses Operating profit Non-operating income and expenses Other income Other gains and losses Finance costs Share of profit of associates and joint ventures accounted for using equity method, net Total non-operating income and expenses Profit before income tax Income tax expense Profit for the year Other comprehensive income Components of other comprehensive income (loss) that will not be reclassified to profit or loss Remeasurements of defined benefit plans Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss Exchange translation differences arising on translation of foreign operations Unrealized loss on valuation of available-for-sale financial assets Income tax relating to the components of other comprehensive income Other comprehensive loss for the year Total comprehensive (loss) income for the year

( ( (

6(20) and 7 6(21), 7 and 12 6(8)(15)(22) 6(7)

(

364,045

6(25)

181,839

$

337,053 1,227,125 157,984) ( $ 1,069,141

132,697 698,036 108,018) 590,018

($

149,591) ($

30,055)

(

6(16) 6(25)

25,430

5,109

6(7) (

998,623) (

494,736)

(

8,254) (

47,444)

(

112)

6(5) 6(25)

Basic earnings per share from continuing operations

6(26)

Diluted earnings per share from continuing operations

6(26)

801

($

1,131,150) ($

566,325)

($

62,009)

$

23,693

$

0.68

$

0.37

$

0.67

$

0.37

The accompanying notes are an integral part of these financial statements.

210

58,271

$ 15,791,453

Other comprehensive loss for the year $

-

-

Profit for the year

$

$

$

$

169,088

-

-

-

-

169,088

169,088

-

-

-

-

169,088

Treasury stock transactions

$

$

$

$

819

-

-

-

-

819

819

-

-

-

-

819

$

1,439,699

-

-

-

59,967

$ 1,379,732

$ 1,379,732

-

-

-

76,511

$ 1,303,221

Donated assets received Legal reserve

The accompanying notes are an integral part of these financial statements.

(Note) The employees' bonuses and directors' remuneration were $58,920 and $43,984 in 2014 and 2015, respectively, which had been deducted from net income for the year.

Balance at December 31, 2016

-

-

Cash dividends

6(19)

-

-

Legal reserve

Distribution of 2015 net income (Note):

Balance at January 1, 2016

2016 58,271

58,271

$ 15,791,453

$

-

-

Other comprehensive loss for the year

$ 15,791,453

-

-

Profit for the year

Balance at December 31, 2015

-

-

58,271

Cash dividends

$

$

-

$ 15,791,453

-

6(19)

Notes

Share capitalncommon stock

Capital surplus, additional paid-in capital

Capital Reserves

Retained Earnings

$

$

$

$

826,453

-

-

-

-

826,453

826,453

-

-

-

-

826,453

Special reserve

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars)

Legal reserve

Distribution of 2014 net income (Note):

Balance at January 1, 2015

2015

211 (

(

(

(

(

(

$

$

$

$

969,596

$

($

$

$

124,161 ) (

1,069,141

505,327 )

59,967 )

589,910

589,910

24,946 ) (

590,018

710,615 )

76,511 )

811,964

Unappropriated retained earnings

($

($

($

818,870 )

($

998,735 ) (

-

-

-

179,865

179,865

493,935 ) (

-

-

-

673,800

(

(

(

1,131,150 )

1,069,141

505,327 )

-

$ 18,747,570

$ 18,747,570

566,325 )

590,018

710,615 )

-

$ 19,434,492

256,275 ) $ 18,180,234

8,254 )

-

-

-

248,021 )

248,021 )

47,444 ) (

-

-

-

200,577 )

Other Equity Interest Exchange difference Unrealized gain arisimg on or loss on translation of available-forforeign sale financial operations assets Total equity

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Provision for doubtful accounts (Reversal of allowance) provision for inventory market price decline Share of profit of associates and joint ventures accounted for under equity method Unrealized profit from sales Realized profit from sales Depreciation on property, plant and equipment Loss on disposal of property, plant and equipment Gain on disposal of investment property Amortization Amortization of long-term prepaid rent Dividend income Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Other receivables - related parties Inventories Prepayments Changes in operating liabilities Notes payable Accounts payable Other payables Advance receipts Accrued pension liabilities - non-current Cash inflow generated from operations Cash dividends received from investments accounted for under equity method Dividends received Interest received Interest paid Income tax paid Net cash flows from operating activities

$

2015

1,227,125

$

383

6(3) 6(4) (

149,000 )

(

364,045 ) 142,201 44,739 ) 1,017,305 51 5,993 ) 35,319 2,866 5,152 ) 138 ) 88,419

698,036

347 139,000

6(7) 6(7) 6(7) 6(8)(23) 6(21) 6(21) 6(10)(23) 6(11) 6(20) 6(20) 6(22)

(

(

( (

( ( ( ( ( (

( (

( (

( (

181,839 ) 44,739 127,436 ) 1,052,307 25,031 35,319 2,505 3,458 ) 90 ) 115,395

63,778 ( 130,143 ) 4,668 ) 34,253 ) 7,627 ( 306,821 ) 6,148 )

15,397 ) 14,618 360,865 51,131 7,627 ) 647,978 11,172

10,749 ) 183,541 20,792 ( 7,397 ) 55,898 ) ( 1,664,263

4,503 112,492 76,137 ) 8,910 54,323 ) 2,858,041

5,152 138 89,151 ) ( 100,262 ) ( 1,480,140

3,808 3,458 90 114,931 ) 116,775 ) 2,633,691

6(7)

(Continued)

212

2016

( (

TON YI INDUSTRIAL CORP. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015 (Expressed in thousands of New Taiwan dollars) Notes

2016

2015

CASH FLOWS FROM INVESTING ACTIVITIES 6(27)

Acquisition of property, plant and equipment

($

Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment property Increase in prepayments for equipment 6(8)(22)

Interest paid for prepayments for equipment

16,871 ) ($

30,814 )

587

38

10,178

-

(

57,270 ) (

118,916 )

(

869 ) (

473 )

(Increase) decrease in guarantee deposits paid

(

4,851 )

4,776

Increase in long-term prepaid rent

(

24,201 )

-

1,222

Decrease (increase) in other non-current assets (

Net cash flows used in investing activities

(

1,968 )

92,075 ) (

147,357 )

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings

1,005,395

(

179,482 )

Increase (decrease) in notes and bills payable

350,000

(

100,000 )

8,543,966

Increase in long-term borrowings Decrease in long-term borrowings Cash dividends paid

6(19)

Net cash flows used in financing activities

(

10,777,786 ) (

21,401,964 )

(

505,327 ) (

710,615 )

(

1,383,752 ) (

2,491,526 )

4,313

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year

6(1)

Cash and cash equivalents at end of year

6(1)

(

5,192 )

4,801 $

9,114

The accompanying notes are an integral part of these financial statements. 213

19,900,535

9,993 $

4,801

TON YI INDUSTRIAL CORP. NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (Expressed in thousands of New Taiwan dollars, expect as otherwise indicated) 1. HISTORY AND ORGANIZATION (1) Ton Yi Industrial Corp. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on April 14, 1969. The Company is primarily engaged in the manufacture, processing and sales of various cans of steel and tin plate. (2) The common shares of the Company have been listed on the Taiwan Stock Exchange since January 1991. (3) Uni-President Enterprises Corp. holds 45.55% equity interest in the Company and is the ultimate parent company. 2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These parent company only financial statements were authorized for issuance by the Board of Directors on March 28, 2017. 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”) None. (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company New standards, interpretations and amendments as endorsed by FSC effective from 2017 are as follows:

New Standards, Interpretations and Amendments Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Defined benefit plans: employee contributions (amendments to IAS 19R) Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013

214

Effective date by International Accounting Standards Board January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 July 1, 2014

Effective date by International Accounting Standards Board January 1, 2016

New Standards, Interpretations and Amendments 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) IFRS 14, ‘Regulatory deferral accounts’ January 1, 2016 Disclosure initiative (amendments to IAS 1) January 1, 2016 Clarification of acceptable methods of depreciation and amortisation January 1, 2016 (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016 Equity method in separate financial statements (amendments to IAS 27) January 1, 2016 Improvements to IFRSs 2012-2014 January 1, 2016 The above standards and interpretations have no significant impact to the Company’s financial condition and operating results based on the Company’s assessment. (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 2017 version of IFRSs as endorsed by the FSC:

New Standards, Interpretations and Amendments Disclosure initiative (amendments to IAS 7) Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Transfers of investment property (amendments to IAS 40) Classification and measurement of share-based payment transactions (amendments to IFRS 2) Applying IFRS 9, ‘Financial instruments’ with IFRS 4 ‘Insurance contracts’ (amendments to IFRS 4) IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Clarifications to IFRS 15, ‘Revenue from contracts with customers’ (amendments to IFRS 15) IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’

215

Effective date by International Accounting Standards Board January 1, 2017 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018

January 1, 2018

New Standards, Interpretations and Amendments IFRS 16, ‘Leases’ Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)

Effective date by International Accounting Standards Board January 1, 2019 To be determined by International Accounting Standards Board

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and operating results based on the Company’s assessment. A. Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ These amendments clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value, and they clarify several of the general principles underlying the accounting for deferred tax assets. The amendments clarify that a deductible temporary difference exists whenever an asset is measured at fair value and that fair value is below the asset’s tax base. When an entity assesses whether taxable profits will be available against which it can utilise a deductible temporary difference, it considers a deductible temporary difference in combination with all of its other deductible temporary differences unless there are tax law restrictions, and the tax deduction resulting from temporary differences is excluded from estimated future taxable profits. B. IFRS 9, ‘Financial instruments’ (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading. (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing

216

component. C. IFRS 15, ‘Revenue from contracts with customers’ IFRS 15, Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer Step 2: Identify separate performance obligations in the contract(s) Step 3: Determine the transaction price Step 4: Allocate the transaction price Step 5: Recognise revenue when the performance obligation is satisfied Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. D. Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from Contracts with Customers‘ The amendments clarify how to identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and determine whether the revenue from granting a licence should be recognised at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard. E. IFRS 16, ‘Leases’ IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

217

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1) Compliance statement These parent company only financial statements are prepared by the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”. (2) Basis of preparation A. Except for the following items, the parent company only 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) 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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “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 parent company only financial statements are disclosed in Note 5. Critical accounting judgements, estimates and key sources of assumption uncertainty. (3) Foreign currency translation Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan Dollars, which is the Company’s functional and presentation currency. 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 retranslated 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.

218

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 retranslated 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. D. All foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within other gains and losses. (4) Classification of current and non-current items A. 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. B. 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) 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:

219

(a) Hybrid (combined) contracts; (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 policy 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 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. (6) Loans and receivables 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, for short-term accounts receivable which are not interest bearing, as the effect of discounting is insignificant, they are measured subsequently at the original invoice amount. (7) Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. 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 to completion and applicable variable selling expenses. When the cost of inventory is lower than net realizable value, a write down is provided and recognized in operating costs. If the circumstances that caused the write-down cease to exist, such that all or part of the write down is no longer needed, it should be reversed to that extent and recognized as deduction of operating costs. (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. For regular way purchase or sale, available-for-sale financial assets are recognized and derecognized using trade date accounting. 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

220

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 carried at cost’. (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. B. The criteria that the Company uses to determine whether there is objective evidence of an 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 disappearance of an active market for that financial asset because of financial difficulties; (d)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; (e) 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 equity investment may not be recovered; (f) 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 treatment for impairment is as follows: (a) Available-for-sale financial assets The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) 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 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

221

account. (b) Financial assets carried at cost The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market rate of return 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) 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 through the use of an impairment allowance account. (10) Derecognition of financial assets The Company derecognizes a financial asset when one of the following conditions is met: A. The contractual rights to receive cash flows from the financial asset expire. B. The contractual rights to receive cash flows from the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset. C. The contractual rights to receive cash flows from the financial asset have been transferred, and the Company has not retained control of the financial asset. (11) Investments accounted for using equity method / Subsidiaries A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. B. Unrealised profit (loss) from the transactions between the Company and subsidiaries has been offset. The accounting policies of the subsidiaries have been adjusted to ensure consistency with the policies of the Company. C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit

222

or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership. D. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements. (12) 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 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. Property, plant and equipment apply the cost model. Except for land, other property, plant and equipment are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately. D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the consumption patterns 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: Asset Name

Useful Lives 2 2 2 2 2

Buildings Machinery and equipment Transportation equipment Office equipment Other equipment

223

~ ~ ~ ~ ~

55 30 20 8 40

years years years years years

(13) Lease (Lessor) Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term. (14) Lease (Lessee) Payments made under an operating lease (net of any incentives received from the lessor) are recognized in profit or loss on a straight-line basis over the lease term. (15) Investment property An investment property is stated initially at its cost and measured subsequently using the cost model. (16) Intangible assets The intangible assets are royalties for technology transfer which are recorded at cost and amortised using the straight-line method over its useful life of 10 years. (17) 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. Except for goodwill, 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. (18) 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. (19) Notes and accounts payable 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, for short-term accounts payable which are not interest bearing, as the effect of discounting is insignificant, they are measured subsequently at the original invoice amount. (20) Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability specified in the contract is discharged, cancelled or expired. (21) Offsetting financial instruments Financial assets and liabilities are offset and reported at net amount on the balance sheet when there

224

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. (22) Provision Provision (decommissioning liabilities) is recognized when the Company has a present legal or constructive obligation as a result of past events; 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. Provision is 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. (23) Employee benefits A. Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and should be recognized as expenses in that period when the employees render service. B. Pensions (a) Defined contribution plan For defined contribution plan, the contributions are recognized as pension expenses 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 plan 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 liability recognised in the balance sheet in respect of the defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations. ii. Remeasurements arising on defined benefit plan are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings. C. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive

225

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. If employee compensation is distributed by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution. (24) Income tax A. The tax expense comprises current and deferred tax. Income 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 case the tax is recognized in other comprehensive income or equity. B. The Company’s current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the shareholders resolve to retain the earnings. C. Deferred income 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 financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed. E. Current income tax assets and liabilities are offset and the net amount is reported on the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

226

(25) 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 its outstanding shares, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders. When 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. (26) 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; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares and share premium on the effective date of new shares issuance. (27) Revenue recognition The Company manufactures and sells tinplate and empty can, etc. Revenue is measured at the fair value of the consideration received or receivable taking into account the value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities. Revenue arising from the sales of goods is recognized when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement nor effective control over the goods sold, and the customer has accepted the goods according to the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied. 5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these parent company only financial statements requires management to make critical judgements 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 : (1) Critical judgements in applying the Company’s accounting policies None.

227

(2) Critical accounting estimates and assumptions A. Evaluation of inventories (a) As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Because of the change in market demand and the sales strategy, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on the balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. (b) As of December 31, 2016, the carrying amount of inventories was $2,027,218. B. Calculation of net defined benefit liabilities - non-current (a) When calculating the present value of defined pension obligations, the Company must apply judgements and estimates to determine the actuarial assumptions on the balance sheet date, including discount rates and future salary growth rate. Any change in these assumptions could significantly impact the carrying amount of defined pension obligations. (b) As of December 31, 2016, the carrying amount of net defined benefit liabilities - non-current was $459,460. 6. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents Cash: Cash on hand and petty cash Checking accounts and demand deposits

December 31, 2016

December 31, 2015

$

$

$

36 9,078 9,114

$

176 4,625 4,801

A. The Company transacts with a variety of financial institutions all with high credit rankings to diversify credit risk, so it expects that the probability of counterparty default is remote. B. The Company has no cash pledged to others as of December 31, 2016 and 2015. (2) Notes receivable, net December 31, 2016 $

Notes receivable Less: Allowance for doubtful accounts

( $

December 31, 2015

98,495 $ 985) (

162,273 1,623)

97,510

160,650

$

A. The Company has no significant past due but not impaired notes receivable. B. Movements of financial assets that were impaired are shown in Note 6(3). C. The Company’s notes receivable that were neither past due nor impaired were fully performing

228

in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. D. The Company did not pledge notes receivable as collateral as of December 31, 2016 and 2015. (3) Accounts receivable, net December 31, 2016 $

Accounts receivable Less: Allowance for doubtful accounts

( $

December 31, 2015

486,336 $ 4,599) ( 481,737 $

356,193 3,578) 352,615

A. Aging analysis of the Company’s accounts receivable, including those with related party, that are past due but not impaired is as follows: December 31, 2016 $ 10,438

Within 90 days

December 31, 2015 $ 9,068

The above ageing analysis was based on past due date. B. Movements of financial assets that were impaired including notes receivable and accounts receivable are as follows: Years ended December 31, 2016 2015 Group provision $ 5,201 383 $ 5,584

At January 1 Provision for impairment At December 31

Group provision $ 4,854 347 $ 5,201

C. The Company’s accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on counterparties’ industrial characteristics, scale of business and profitability. D. The Company did not pledge accounts receivable, including related parties, as collateral as of December 31, 2016 and 2015. E. The Company did not hold collateral on accounts receivable, including those with related party, as of December 31, 2016 and 2015.

229

(4) Inventories

Raw materials Raw materials in transit Supplies Supplies in transit Work in process Finished goods

$

$

December 31, 2016 Allowance for price decline of inventories Carrying amount ($ 2,374) $ 1,071,926 31,057 1) 117,212 ( 27,927 2,781) 393,543 ( ( 2,844) 385,553 ($ 8,000) $ 2,027,218

Cost 1,074,300 31,057 117,213 27,927 396,324 388,397 2,035,218

December 31, 2015

Raw materials Raw materials in transit Supplies Supplies in transit Work in process Finished goods

$

Allowance for price Cost decline of inventories Carrying amount 727,928 ($ 77,475) $ 650,453

$

2,647 118,282 19,012 376,691 483,837 1,728,397

594) 52,584) 26,347) 157,000) $

( ( ( ($

2,647 117,688 19,012 324,107 457,490 1,571,397

The cost of inventories recognized as expense for the year: Years ended December 31, Cost of goods sold (Reversal gain) loss on decline in market value (Note) Revenue from sale of scraps Indemnities Total operating costs

$

2016 14,152,807

$

(

149,000)

( (

219,977) ( 5,584) ( 13,778,246 $

$

2015 15,670,714 139,000 225,294) 11,619) 15,572,801

(Note) For the year 2016, the Company reversed a previous inventory write-down which was accounted for as a reduction of cost of goods sold as a result of the increase in selling prices of inventories.

230

(5) Available-for-sale financial assets - non-current December 31, 2016 Listed stocks Adjustments for change in fair value of available-for-sale financial assets

$ ( $

December 31, 2015

378,917

$

378,917

256,275) (

248,021)

122,642

130,896

$

A. The Company recognized fair value change in other comprehensive income of ($8,254) and ($47,444) for the years ended December 31, 2016 and 2015, respectively, and the amount of $- was reclassified from equity to profit or loss for the year. B. The Company did not pledge available-for-sale financial assets-non-current as collateral as of December 31, 2016 and 2015. (6) Financial assets carried at cost - non-current Unlisted stocks

December 31, 2016 $ 501,050

December 31, 2015 $ 501,050

A. The Company classified some of its equity investments as available-for-sale financial assets based on its intention. However, as these stocks are not traded in an active market, and there is no sufficient information of similar companies in the same industry, fair value of the investments cannot be measured reliably. Accordingly, the Company classified these stocks as financial assets carried at cost. B. The Company had an investment in Emivest Aerospace Corporation. The carrying amount $- and was liquidated for the year ended December 31, 2016.

was

C. The Company did not pledge financial assets measured at cost - non-current as collateral as of December 31, 2016 and 2015.

231

(7) Investments accounted for using equity method Years ended December 31, $ At January 1 Share of profit or loss of investments accounted for using the equity method Cash dividends from investments accounted for under equity method Unrealised gain from sale ( Realized gain from sale Realised gain on disposal of property, plant and equipment ( Changes in other equity items-financial statements translation differences of foreign operations $ At December 31

2016 9,997,345 364,045

181,839

- (

3,808)

142,201) ( 44,739 -

44,739) 127,436 175

998,623) (

494,736)

9,265,305

December 31, 2016 $ 9,210,736 54,569 $ 9,265,305

Cayman Ton Yi Industrial Holdings Ltd. Tovecan Corp.

$

2015 10,231,178

$

9,997,345

December 31, 2015 $ 9,943,210 54,135 $ 9,997,345

Information on the Company’s subsidiaries is provided in Note 4(3) Basis of consolidation in the Company’s 2016 consolidated financial statements.

232

233

$ 27,627,858

Machinery

Cost Accumulated depreciation

At December 31, 2016

Disposal - Accumulated depreciation At December 31

$

$

615,892

11,098 8,327,256

$ 27,657,135

$

$ 1,882,216

$

8,327,256

3,174,821) ( 19,329,879) (

$ 5,057,037

112,107 $ 1,882,216

- (

615,892

615,892

11,111) (

112,107) (

- (

Disposal - Cost

7,345 33,043

9,070,200

9,070,200

783,319) (

-

-

$

$

124,174) (

$ 2,006,390

$ 2,006,390

$

$

$

$

$

$

22,115

195,643) (

217,758

584 22,115

1,200) (

11,611) (

8,710 -

25,632

25,632

$

$

$

$

$

$

18

5,157) (

5,175

88 18

88) (

7) (

-

25

25

5,238) (

5,263

Office equipment

184,616) (

210,248

Vehicles

3,162,754) ( 18,557,658) (

$ 5,169,144

615,892

615,892

- (

615,892

Buildings

- (

$

$

$

$

Land

Transfer from prepayments for equipment Depreciation charge

Additions - Cost

At January 1

2016

Cost Accumulated depreciation

At January 1, 2016

(8) Property, plant and equipment

$ 1,000,999

2,086,799)

$ 3,087,798

12,246 $ 1,000,999

12,255)

98,194)

4,304 -

$ 1,094,898

$ 1,094,898

2,000,851)

$ 3,095,749

Others

$

$

$

$

$

$

79,230

$ 12,864,316

23,911,117)

$ 36,775,433

Total

$ 11,927,726

24,792,299)

$ 36,720,025

136,123 $ 11,927,726

136,761)

1,017,305)

20,359 60,994

$ 12,864,316

- (

79,230

79,230

- (

- (

27,951

51,279

51,279

- (

51,279

to be inspected

and equipment

in progress

Construction

234

Cost Accumulated depreciation

At December 31, 2015

Disposal - Accumulated depreciation At December 31

$

$

615,892

- ( 58,940 9,070,200

$ 27,627,858

$

$ 2,006,390

$

9,070,200

$

$

$

25,632

184,616) (

210,248

319 25,632

$

$

$

319) (

$

$

84,173) (

2,440 -

35,065

35,065

$

11,873) (

$

$

173,062) (

208,127

25

5,238) (

5,263

8 25

8) (

8) (

-

33

33

5,238) (

5,271

Office equipment

800,973) (

13,775 59,325

9,823,306

9,823,306

$

Vehicles

3,162,754) ( 18,557,658) (

$ 5,169,144

$ 2,006,390

- (

615,892

615,892

-

$

$

141,674) (

-

-

$ 2,148,064

$ 2,148,064

Disposal - Cost

$ 27,638,931

Machinery

3,021,080) ( 17,815,625) (

$ 5,169,144

615,892

615,892

- (

615,892

- (

$

$

$

$

Buildings

Transfer from prepayments equipment Depreciation charge

Additions - Cost

At January 1

2015

Cost Accumulated depreciation

At January 1, 2015

Land

$ 1,094,898

2,000,851)

$ 3,095,749

3,200 $ 1,094,898

3,211)

97,779)

14,599 22,122

$ 1,155,967

$ 1,155,967

1,906,272)

$ 3,062,239

Others

$

$

$

$

$

$

51,279

22,921,277)

$ 12,864,316

23,911,117)

$ 36,775,433

62,467 $ 12,864,316

87,711)

1,052,307)

30,814 116,474

$ 13,794,579

$ 13,794,579

- (

51,279

51,279

- (

- (

35,027

16,252

16,252

Total $ 36,715,856 - (

16,252

to be inspected

and equipment

in progress

Construction

A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

Amount capitalized Interest rate

Years ended December 31, 2016 2015 869 $ 1.30% 1.30%

$

473

B. The Company did not pledge property, plant and equipment as collateral as of December 31, 2016 and 2015. (9) Investment property Years ended December 31, 2016

Land At January 1 Cost Accumulated impairment

$ $

Opening net book amount Disposal - Cost Disposal - Accumulated depreciation Closing net book value At December 31 Cost Accumulated impairment

41,638 $ ( 31,539) ( 10,099 $

$

10,099

( $

$ $

2015 41,638 31,539) 10,099

$

10,099

14,746) 10,561 5,914 $

10,099

26,892 $ ( 20,978) ( 5,914 $

41,638 31,539) 10,099

A. The fair values of the investment property held by the Company as of December 31, 2016 and 2015 were $8,114 and $13,093, respectively. Land is valued according to Current Land Value announced by the Department of Land Administration. B. The Company purchased an agricultural purpose land in the amount of $23,108 but was registered in the name of a natural person. Before changing the land registration, the land will be mortgaged to the Company. The decision on the purpose of the land has not yet been decided; thus, this was recognized as Investment property. C. As of December 31, 2016 and 2015, no investment property held by the Company was pledged to others.

235

(10) Intangible assets Years ended December 31, 2016 2015

Royalties At January 1 Cost Accumulated amortization

Net value at January 1 Amortization Transfer - Cost Transfer - Accumulated amortization Net value at December 31 At December 31 Cost Accumulated amortization

$

387,569

( 352,250) ( $ 35,319 $ ( ( $

35,319

$

387,569

$

316,931) 70,638

$

70,638

35,319) ( 387,569) 387,569 - $

$

-

$

$

- ( - $

35,319) 35,319

387,569 352,250) 35,319

A. No borrowing costs were capitalized as part of intangible assets as of December 31, 2016 and 2015. B. Details of amortisation on intangible assets are as follows:

Operating costs

$

Years ended December 31, 2016 2015 35,319 $ 35,319

(11) Long-term prepaid rent Land use right

December 31, 2016 $ 65,177

December 31, 2015 $ 43,842

The Company entered into a land lease agreement with Taiwan Sugar Corporation for use of property located in Yong-Kang District, Tainan and the lease period is 50 years. The Company recognized $2,866 and $2,505 of rental expense (under operating cost) for the years ended December 31, 2016 and 2015, respectively. (12) Short-term borrowings Nature

December 31, 2016 $ 1,023,800 Unsecured bank borrowings Nature December 31, 2015 $ 18,405 Unsecured bank borrowings

236

Interest rate 0.71%~0.98%

Collateral None

Interest rate 0.90%

Collateral None

(13) Short-term commercial paper Commercial paper payable Less: unamortized discount

December 31, 2016 350,000 $ ( 162) $ 349,838

Interest rate 0.94%

Collateral None

A. There was no short-term commercial paper as of December 31, 2015. B. The above commercial paper was issued and secured by International Bills Finance CO., Ltd and China Bills Finance Co., Ltd. for short-term financing. (14) Long-term borrowings Nature Unsecured bank borrowings

Range of Range of maturity dates interest rates Collateral None 2018.04.22~ 1.04%~1.79% 2020.11.25

December 31, 2016 $

Range of Range of Nature maturity dates interest rates Collateral None Unsecured bank 2016.06.28~ 1.12%~1.79% borrowings 2020.11.25 Less: unamortised discount

(

Less: current portion of long-term borrowings

(

4,159,550

December 31, 2015 $ 6,393,370

$

832) 6,392,538 1,800,000) 4,592,538

For information on the terms and conditions of all the loan contracts the Company entered into with financial institutions, please refer to Note 9(4), “Significant contingent liabilities and unrecognized contract commitments”. (15) Provision - non-current Years ended December 31, 2016

Decommissioning liabilities At January 1 Unwinding of discount At December 31

$ $

2015 74,001 1,388 75,389

$ $

72,639 1,362 74,001

According to the policy published, applicable agreement or the law and regulation, the Company has obligations to restore certain property, plant and equipment located in Yong-Kang District, Tainan City in the future. A provision is recognized for the present value of costs to be incurred for dismantling, removing the asset and restoring the site. It is expected that the provision will be settled within 50 years from the beginning of contract.

237

(16) Pensions A.(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 14% 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 December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by next March. (b) The amounts recognised in the balance sheet are as follows: December 31, 2016 Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability - non-current

238

($ ($

December 31, 2015

1,425,701) ($ 966,241 459,460) ($

1,281,847) 916,080 365,767)

(c) Movements in net defined benefit liabilities - non-current are as follows:

Year ended December 31, 2016 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

Year ended December 31, 2015 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31

Present value of defined benefit obligations ($ ( ( (

( ( (

($

1,281,847) $ 18,535) 23,948) 1,324,330)

Net defined benefit liability

916,080 17,787 933,867

($ ( ( (

365,767) 18,535) 6,161) 390,463)

- (

11,129) (

11,129)

101,210) 37,252) 138,462) ( -

- ( - ( 11,129) ( 80,594

101,210) 37,252) 149,591) 80,594

37,091 ( 1,425,701) $

37,091) 966,241 ($

459,460)

Present value of defined benefit obligations ($ ( ( (

Fair value of plan assets

1,242,619) $ 18,618) 24,744) 1,285,981) -

Fair value of plan assets

Net defined benefit liability

852,584 17,677 870,261

($ ( ( (

4,842

390,035) 18,618) 7,067) 415,720) 4,842

(

22,895)

- (

22,895)

( (

12,002) 34,897) -

- ( 4,842 ( 80,008

12,002) 30,055) 80,008

39,031 ( 1,281,847) $

39,031) 916,080 ($

365,767)

($

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s 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

239

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 earnings is less than aforementioned rates, government shall make payment for the deficit after being 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 composition of fair value of plan assets as of December 31, 2016 and 2015 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government. (e) The principal actuarial assumptions used were as follows: Years ended December 31, 2016 1.375% 3.00%

Discount rate Future salary increases

2015 1.875% 3.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows: Discount rate December 31, 2016 Effect on present value of defined benefit obligation December 31, 2015 Effect on present value of defined benefit obligation

Future salary increases

Increase 0.25%

Decrease 0.25%

Increase 0.25%

Decrease 0.25%

($ 51,737)

$ 54,118

$ 52,386

($ 50,377)

($ 46,508)

$ 51,310

$ 49,971

($ 45,495)

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2017 are $74,340.

240

(g) As of December 31, 2016, the weighted average duration of that retirement plan is 16 years. The analysis of timing of the future pension payment was as follows: $

Within 1 year 2-5 years Over 6 years

$

12,872 71,651 220,366 304,889

B.(a) Effective July 1, 2005, the Company has 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 contributes 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 the defined contribution pension plan of the Company for the years ended December 31, 2016 and 2015 were $23,024 and $22,488, respectively. (17) Share capital - Common stock A. Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands of shares): Years ended December 31, 2016 2015 1,579,145 1,579,145

Beginning and ending balance

B. As of December 31, 2016, the Company’s authorized capital was $17,847,009, and the paid-in capital was $15,791,453, consisting of 1,579,145 thousand shares of ordinary stock, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. (18) Capital surplus Pursuant to the Company Act, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to offset 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 Securities and 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 reserve should not be used to cover accumulated deficit after the legal reserve is used. (19) Retained earnings A. The legal reserve shall be exclusively used to offset accumulated deficit, to issue new stocks or distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Company’s paid-in capital.

241

B. Since the Company operates in a volatile business environment and is in stable growth stage, the appropriation of earnings should consider fund requirements and capital budgets to decide how much earnings will be kept or distributed and how much cash dividends will be distributed. According to the Company's Articles of Incorporation, 10% of the annual net income, after offsetting any loss of prior years and paying all taxes and dues, shall be set aside as legal reserve. The remaining net income and the unappropriated retained earnings from prior years can be distributed in accordance with a resolution approved by the Board of Directors and then approved at the shareholders' meeting. Of the amount to be distributed by the Company, shareholders’ dividends shall comprise 50% to 100% of the unappropriated retained earnings, distributed half as cash dividend and half as stock dividend. However, the rate could be adjusted if it was necessary and shall be resolved by the shareholders. The Company’s original Articles of Incorporation had been amended as resolved by the shareholders on June 23, 2016. According to the amended articles, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve and special reserve shall be set aside or reversed in accordance with related regulations. The remaining amount plus the accumulated unappropriated earnings from prior years is this accumulated distributable earnings. Of the amount to be distributed by the Company, shareholders’ dividends shall comprise 50% to 100% of the accumulated distributable earnings and cash dividends shall not be lower than 30% of the total dividends distributed. The appropriation of earnings shall be proposed by the Board of Directors and resolved by the shareholders. C. (a) In accordance with the regulations, the Company shall set aside special reserve arising from the debit balances in other equity items at the balance sheet date before distributing earnings. When debit balances in other equity items are reversed subsequently, an equal amount could then be used for distribution. (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, those other than land, are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are land. D. The Company recognized dividends distributed to owners amounting to $505,327 and $710,615 ($0.32 and $0.45 (in dollars) per share as cash dividends, respectively) for the years ended December 31, 2016 and 2015, respectively. On March 28, 2017, total dividends for 2016 of $600,075, constituting $0.38 (in dollars) per share as cash dividends, was proposed by the Board of Directors.

242

(20) Other income Years ended December 31, 2016 $

Dividend income Interest income Rental income Other income

2015 5,152 138 5,348 29,291 39,929

$

$

3,458 90 5,280 32,968 41,796

$

(21) Other gains and losses Years ended December 31, 2016 $

Gain on financial assets at fair value through profit or loss Net gain on disposal of investment property Net currency exchange gain Net loss on disposal of property, plant and equipment Miscellaneous expenses

( ( $

2015 210 ($

528)

5,993 15,401 51) (

50,091 25,031)

55) ( 21,498 $

75) 24,457

(22) Finance costs Years ended December 31, 2016 2015 Interest expense: Bank borrowings Provisions – unwinding of discount Less: capitalization of qualifying assets

$

( $

243

87,900 $ 1,388 89,288 869) ( 88,419 $

114,506 1,362 115,868 473) 115,395

244

Wages and salaries Labor and health insurance expense Pension costs Other personnel expenses

(24) Employee benefits expense

Employee benefits expense Depreciation Amortization

(23) Expenses by nature

$

53,353 35,282 35,143 660,036 $

18,589 12,438 37,247 365,082

71,942 47,720 72,390 $ 1,025,118

Year ended December 31, 2016 Operating cost Operating expense Total $ 536,258 $ 296,808 $ 833,066

$

1,052,307 35,319 $ 2,033,736

Total 946,110

$

53,503 35,532 32,526 643,616

$

19,680 12,641 19,433 302,494

$

73,183 48,173 51,959 946,110

Year ended December 31, 2015 Operating cost Operating expense Total $ 522,055 $ 250,740 $ 772,795

$

11,578 314,072

1,040,729 35,319 $ 1,719,664

1,017,305 35,319 $ 2,077,742

1,006,326 35,319 $ 1,701,681

10,979 376,061

Operating cost Operating expense $ 643,616 $ 302,494 $

Year ended December 31, 2015

Operating cost Operating expense Total $ 660,036 $ 365,082 $ 1,025,118

Year ended December 31, 2016

A. As of December 31, 2016 and 2015, the Company had approximately 1,212 and 1,182 employees, respectively. B. According to the Articles of Incorporation of the Company, 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 not be lower than 2% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration. C. For the years ended December 31, 2016 and 2015, employees’ compensation was accrued at $58,081 and $34,000, respectively, while directors’ and supervisors’ remuneration was accrued at $19,245 and $10,640, respectively. The aforementioned amounts were recognized in salary expenses. The expenses recognized were accrued based on the profit of current period distributable and the percentage specified in the Articles of Incorporation of the Company for the years ended December 31, 2016 and 2015. The employees’ compensation and directors’ remuneration resolved by the Board of Directors were $58,081 and $11,987, respectively, for the year ended December 31, 2016, and the employees’ compensation will be distributed in the form of cash. The difference of ($656) between employees’ compensation and directors’ remuneration of $33,344 and $10,640 as resolved by the Board of Directors and the amount recognized in the 2015 financial statements had been adjusted in the 2016 statement of comprehensive income. Information about the appropriation of employees’ compensation (bonus) and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange. (25) Income tax A. Income tax (a) Components of income tax expense Years ended December 31, 2016 2015 Current income tax: Income tax incurred in current year Additional 10% income tax imposed on unappropriated earnings Under provision in prior years Deferred income tax: Origination and reversal of temporary differences Income tax expense

245

$

$

136,384 86

$

102,400 -

4,818 141,288

10,435 112,835

16,696 ( 157,984 $

4,817) 108,018

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows: Years ended December 31, 2016 2015 ($ 25,430) ($ 5,109) Remeasurement of defined benefit obligations 112 ( 801) Currency translation differences ($ 25,318) ($ 5,910) B. Reconciliation between income tax expense and accounting profit Years ended December 31, 2016 2015 Income tax expense at the statutory tax rate Effect of amount not allowed to recognise under regulations Tax effect of tax exempt income Additional 10% income tax imposed on unappropriated earnings Under provision of prior year’s income tax Land value increment tax Income tax expense

246

$ (

$

208,611 $ 56,511) (

118,666 21,083)

777 86

-

4,818 203 157,984

10,435 108,018

$

C. Amounts of deferred tax assets or liabilities recognized as a result of temporary differences are as follows: Year ended December 31, 2016 Recognised in other Recognised comprehensive January 1 in profit or loss income December 31 Deferred income tax assets Temporary differences: Unrealized sales allowance and returns Unrealized profit from sales Loss on inventories from market value decline Unused compensated absences

-

$

$

7,606 26,690 ( 6,080 9,953 32,382 ( 29,798

Unrealized provision Pensions Remeasurement of defined benefit plan

109

Currency translation difference

1,670

$

16,568 25,330) 553 323 9,502) - (

$

112,618 ($

15,718) $

($ ( (

6,898) ($ 197,039) 571) ( -

70) $ 908) - (

($ ($

204,508) ($ 91,890) ($

978) ($ 16,696) $

-

$

1,670

-

24,174 1,360

-

6,633

25,430

10,276 22,880 55,228

109) 25,321

$

122,221

($ ( ( (

6,968) 197,039) 1,479) 3)

3) ($ 25,318 ($

205,489) 83,268)

Deferred income tax liabilities Temporary differences: Foreign investment income Land value incremental tax Unrealized exchange gain Currency translation differences

247

3)

Year ended December 31, 2015

Recognised January 1 in profit or loss

Recognised in other comprehensive income December 31

Deferred income tax assets Temporary differences:

$

Unrealized profit from sales Loss on inventories from market value decline

21,664 ($ 3,060

Unrealized provision Pensions Remeasurement of defined benefit plan Currency translation difference

$

-

$

7,606 26,690

30 (

30)

-

-

5,805 9,634 41,617 ( 24,689

275 319 9,235) -

5,109

6,080 9,953 32,382 29,798

109 5,218

109 112,618

Unrealized gain on disposal of plant, property and equipment Unused compensated absences

14,058) $ 23,630

106,499

$

901

$

$

Deferred income tax liabilities Temporary differences: Foreign investment income Land value incremental tax Unrealized exchange gain Currency translation differences

($ ( ( ( ($ ($

7,054) 197,039)

$

156 -

4,331) 692)

3,760 -

209,116) $ 102,617) $

3,916 4,817

$

- ($ - ( - ( 692

$ $

692 ($ 5,910 ($

6,898) 197,039) 571) 204,508) 91,890)

D. The Company did not recognise temporary differences arising from gain on investment in overseas subsidiaries. As of December 31, 2016 and 2015, unrecognised deferred tax liabilities were $1,459,821 and $2,095,472, respectively. E. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority. As of March 28, 2017, there was no administrative lawsuit. F. Unappropriated retained earnings: December 31, 2016 $ 969,596

Earnings generated in and after 1998

December 31, 2015 $ 589,910

G. As of December 31, 2016 and 2015, the balance of the imputation tax credit account was $62,823 and $70,734, respectively. As dividends were approved at the shareholders’ meeting on June 23,

248

2016 and June 30, 2015 with the dividend distribution date set on July 27, 2016 and July 25, 2015, respectively, by the Board of Directors, the creditable tax rates for the unappropriated retained earnings of 2015 and 2014 is 19.17% and 17.96%, respectively and the creditable tax rate for 2016 is expected to be 15.42%. The creditable tax rate will be based on the actual imputation tax credit account on the distribution date for the earnings of 2016; thus, the credit account may be subject to appropriate adjustments according to tax regulations. (26) Earnings per share Year ended December 31, 2016 Weighted average number of ordinary Earnings shares outstanding per share Amount after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders $ Diluted earnings per share Profit attributable to ordinary shareholders Assumed conversion of all dilutive potential ordinary shares Employees' compensation $ Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares

1,069,141

1,579,145

1,069,141

1,579,145

1,069,141

4,785 1,583,930

$

0.68

$

0.67

Year ended December 31, 2015 Weighted average number of ordinary Earnings shares outstanding per share Amount after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders $ Diluted earnings per share Profit attributable to ordinary shareholders Assumed conversion of all dilutive potential ordinary shares Employees' compensation $ Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares

249

590,018

1,579,145

590,018

1,579,145

590,018

3,418 1,582,563

$

0.37

$

0.37

(27) Supplemental cash flow information A. Investing activities with partial cash payments Cash paid for acquisition of property, plant and equipment: Years ended December 31, 2016 2015 Acquisition of property, $ 20,359 $ 30,814 plant and equipment ( 3,488) Less: Ending balance of other payables Cash paid for acquisition of property, $ 16,871 $ 30,814 plant and equipment B. Operating and investing activities with no cash flow effect:

(a) Long-term prepaid rents transferred

(b) Prepayment for equipment

$

Years ended December 31, 2016 2015 - $ 2,505

$

Years ended December 31, 2016 2015 60,994 $ 116,474

7. RELATED PARTY TRANSACTIONS (1) Significant transactions and balances with related parties A. Sales Years ended December 31, 2016 2015 Sales of goods Subsidiaries Parent company to entities with joint control or significant influence

$

5,136,721

$

296,776 5,433,497

$

5,988,653

$

299,150 6,287,803

(a) The Company’s collection terms and methods for related party are wire transfer within 30 days of monthly statements, within 50 days after packing or within 30 days after arrival at port. The collection terms are similar to that of a third party. The Company only sells to the subsidiaries; thus there is no comparable price for sales made at arm’s length. (b) The unrealised gain arising from goods sold to subsidiaries of $142,201 and $44,739 was recorded as a reduction to ‘investments accounted for using equity method’ for the years ended December 31, 2016 and 2015, respectively.

250

B. Purchases of goods Years ended December 31, 2016 2015 Purchases of goods $ 39,068 $ 43,758 Parent company to entities with joint control or significant influence Purchase price from related party is similar to that of a third party. The payment terms are similar to those of third parties, which are 30 days of invoice receipt. C. Property transactions The Company has sold machinery and equipment to subsidiaries in 2005 and recognised realised gain on disposal of property, plant and equipment (recorded as ‘other gains and losses’) of $- and $175 for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, the both unrealised gain on disposal of property, plant and equipment were $-, respectively. D. Outstanding balance of receivables from related parties December 31, 2016 Accounts receivable: Subsidiaries Parent company to entities with joint control or significant influence

$

Other receivables: Subsidiaries $

682,977

December 31, 2015 $

680,471

31,183

29,021

714,160

709,492

714,160

7,627 717,119

$

Receivables from related parties arise primarily from sales of goods and income from endorsements and guarantees. These receivables have not been pledged and do not incur interest. E. Endorsements and guarantees Endorsements and guarantees provided to related parties: Subsidiary

Nature Endorsements and guarantees

December 31, 2016 $

-

December 31, 2015 $ 2,997,472

(a) As of December 31, 2016 and 2015, the actual amount drawn from the endorsements and guarantees provided to related parties was $- and $2,942,809, respectively. (b) For the years ended December 31, 2016 and 2015, the Company provided endorsements and guarantees to subsidiaries and recognised income from endorsements and guarantees (shown as ‘other income’) of $5,293 and $9,036, respectively.

251

(2) Key management compensation

Salaries and other short-term employee benefits Retirement benefits

$ $

Years ended December 31, 2016 2015 56,419 $ 50,986 2,110 58,529 $ 50,986

8. PLEDGED ASSETS None. 9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS A. As of December 31, 2016 and 2015, the balances for contracts that the Company entered into but not yet due are $74,242 and $108,412, respectively. B. As of December 31, 2016 and 2015, the unused letters of credit amounted to $925,524 and $475,873, respectively. C. The details of endorsements and guarantees provided are described in Note 7(1) E. D. (a) The Company has entered into a lending agreement with KGI Bank in 2016. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and the consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assesment. Under the terms of the loan agreement, if any of the financial covenants were not met, the Company has to improve the conditions within four months after the release of financial reports. Should the Company fail to meet the above covenants, the bank has the right to demand the Company to pay off the loan balance immediately. (b) The Company has signed a syndicated loan agreement with Taiwan Bank and other banks in 2015. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the consolidated debt-to-equity ratio of less than 180%, interest coverage ratio of over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assessment. Under the terms of the loan agreement, if any of the financial covenants were not met, the Company has to improve the conditions within three months after the release of financial reports. Should the Company meet the required financial covenants by then, it will not be considered as a violation of the agreement. There will be an additional 0.1% interest imposed on the annual floating rate from the day after the release of the financial report which violates the financial covenants above to the day before the Company meets the required financial covenants. Otherwise, the banks have the right to demand the Company to pay off the loan balance immediately.

252

(c) The Company has entered into a lending agreement with Bank of Tokyo-Mitsubishi UFJ in 2015. In accordance with the agreement, the Company has to maintain the following financial ratios and terms: the Company has to maintain a consolidated debt-to-equity ratio of less than 180%, interest coverage ratio at over 200%, and consolidated tangible shareholders’ equity of not less than $15,000,000 at the annual assesment. Should the Company fail to meet the above covenants, the bank has the right to demand the Company to pay off the loan balance immediately. As of December 31, 2016 and 2015, the Company’s financial ratios have not violated the above covenants. E. The Company leases various land years lease agreements. For the years ended December 31, 2016 and 2015, rental expense recorded under Operating cost and Operating expense amounted to $31,802, and $13,332, respectively. The future aggregate minimum lease payments under operating leases are as follows: December 31, 2016 $ 41,138 164,553 605,715 $ 811,406

Within 1 year Between 1 and 5 years Over 5 years

December 31, 2015 $ 13,293 53,174 301,467 $ 367,934

10. SIGNIFICANT DISASTER LOSS None. 11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE None. 12. OTHERS (1) Capital 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, maintain an optimal capital structure to both reduce the cost of capital and to meet the monetary needs of improving productivity. 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. (2) Financial instruments A. Fair value information of financial instruments The financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable (including related party), other receivables (including related party), refundable deposits, short-term borrowings, short-term commercial paper, notes payable, accounts payable, other payables, long-term borrowings (including current portion) and guarantee deposit received), are based on their book value as book value approximates fair value.

253

The fair value information of financial instruments measured at fair value is provided in Note 12(3) Fair value estimation. B. Financial risk management policies (a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, risk price and interest rate 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. The Company uses derivative financial instruments to hedge specific risks. For more information about financial instruments, please refer to Note 13(1)I, Trading in derivative financial instruments undertaken during the reporting periods. (b) Risk management is carried out by a central treasury department (Company Finance Department) under policies approved by the board of directors. Company Finance Department identifies, evaluates and hedges financial risks in close cooperation 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, and 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 (1) Market risk (a) 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. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. (ii) The Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Company’s foreign operations are considered strategic investments; thus, no hedging for the purpose is conducted. (iii) The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

254

December 31, 2016

(foreign currency: functional currency) Financial assets

Foreign Currency Amount (in thousands) Exchange Rate

Book Value

Monetary items $

USD : NTD

30,068

32.25

289,104 59,235,755

32.25 0.001416

$

969,693

Investments accounted for using equity method USD : NTD VND :NTD

9,323,604 83,898

December 31, 2015 Foreign Currency Amount (foreign currency: functional currency)

(in thousands)

Exchange Rate

Book Value

Financial assets Monetary items $

USD : NTD EUR : NTD

26,818 944

32.825 35.88

303,405 58,949,998

32.825 0.001405

$

880,301 33,871

Investments accounted for using equity method USD : NTD VND :NTD

9,959,269 82,825

(iv) As of December 31, 2016 and 2015, if the NTD:USD exchange rate had appreciated/depreciated by 1%, with all other factors remaining constant, the Company’s post-tax profit for the years ended December 31, 2016 and 2015 would have increased/decreased by $8,048 and $7,306, respectively. (v) The total exchange gain, including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2016 and 2015 amounted to $15,401 and $50,091, respectively. (b) Price risk (i) The Company is exposed to equity securities price risk because of investments held by the Company and classified on the individual balance sheet as available-for-sale. To manage its price risk arising from investments in equity securities, the Company has carefully determined its investing portfolio and has set various stop-loss points to ensure that it is not exposed to significant risks. Accordingly, no material market risk is expected. (ii) The Company’s investments in equity securities comprise domestic as well as foreign listed and unlisted stocks. The prices of equity securities would fluctuate due to the uncertainty of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, other

255

comprehensive income for the years ended December 31, 2016 and 2015 would have increased/decreased by $1,226 and $1,309 as a result of valuation gains/losses on equity securities classified as available-for-sale, respectively. (c) Interest rate risk (i) The Company’s interest rate risk arises from short-term and long-term 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 rate. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. For the years ended December 31, 2016 and 2015, the Company’s borrowings at variable rate were denominated in NTD, USD and JPY. (ii) During the years ended December 31, 2016 and 20145, if interest rates on borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2016 and 2015 would have increased /decreased by $730 and $950, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings. (2) Credit risk (i)

Credit risk refers to the risk that the clients or counterparties of financial instruments will cause a financial loss for the Company by failing to discharge a contractual obligation. According to the Company’s credit policy, the Company is responsible for managing and analyzing 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. Individual credit limit is set by management through evaluating internal and external credit ratings. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with good ratings are accepted. The Company transacts with several banks to mitigate risk.

(ii)

No credit limits were breached for the year of 2016 and 2015, and management does not expect any significant losses from non-performance by these counterparties.

(iii)

The Company provides endorsements and guarantees based on the Company’s policies and procedures on endorsements and guarantees. The Company only provides endorsement or guarantee for subsidiaries that the Company directly holds more than 50% ownership, or for entities that the Company holds more than 50% ownership, either directly or indirectly, as well as the power to govern the policies. No collateral is requested for the endorsements and guarantees as the Company can control the credit risk of the subsidiary. The maximum credit risk is the guaranteed amount.

256

(iv) For the credit ratings of the Company’s financial assets, please refer to Note 6, Financial assets. (3) Liquidity risk (i)

Finance Department monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.

(ii) Surplus cash held by the Company over and above the balance required for working capital management are transferred to the Finance Department. Finance Department invests surplus cash in interest bearing current accounts and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. (iii) The table below analyses the Company’s non-derivative financial liabilities and relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2016 Short-term borrowings

Between

Between

More than

Less than 1 year

1 and 2 years

2 and 5 years

5 years

$

$

$

1,025,994

-

-

$

-

350,000

-

-

-

13,325

-

-

-

Accounts payable

405,078

-

-

-

Other payables

615,068

-

-

-

57,104 -

2,367,802 5,500

1,856,552 -

-

Less than 1 year

Between 1 and 2 years

Between 2 and 5 years

More than 5 years

$

$

Short-term notes and bills payable Notes payable

Long-term borrowings Guarantee deposits received December 31, 2015 Short-term borrowings

18,419

-

$

-

$

-

20,047

-

-

-

Accounts payable

221,537

-

-

-

Other payables

593,578

-

-

-

1,895,197 -

2,954,818 5,500

1,741,623 -

-

Notes payable

Long-term borrowings Guarantee deposits received

(iv) The Company does not expect the maturity date to end early nor the actual cash flow to be materially different.

257

(3) Fair value information A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value is provided in Note 12(2) A “Fair value information of financial instruments”. Details of the fair value of the Company’s investment property measured at cost is provided in Note 6(9), “Investment property”. 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 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 foreign exchange contracts is included in Level 2. Level 3: Unobservable inputs for the asset or liability. C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2016 and 2015 is as follows: December 31, 2016 Level 1 Assets: Recurring fair value measurements Available-for-sale financial assets $ 122,642 Equity securities December 31, 2015

Level 2

$

Level 1

Assets: Recurring fair value measurements Available-for-sale financial assets $ 130,896 Equity securities

Level 3

-

$

Level 2

$

Total

Level 3

-

$

$ 122,642 Total

-

$ 130,896

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: Market quoted price

Listed shares Closing price

258

(b) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate. E. For the years ended December 31, 2016 and 2015, there was no transfer between Level 1 and Level 2. F. For the years ended December 31, 2016 and 2015, there was no transfer from Level 3. 13. SUPPLEMENTARY DISCLOSURES (According to the current regulatory requirements, the Company is only required to disclose the information for the year ended December 31, 2016. The financial information of investees was audited by the independent accountants and disclosed individually. Elimination and adjustments for consolidation were not considered.) (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, and associates): 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: None. 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 paidin capital or more: Please refer to table 4. H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 5. I. Trading in derivative financial instruments undertaken during the reporting periods: a. As of December 31, 2016, the Company has not traded any derivative financial instrument. For the year ended December 31, 2016, the net loss recognized for trading derivative instruments amounted to $210. b. The subsidiaries have not traded derivative financial instruments. J. Significant inter-company transactions during the reporting periods: Please refer to table 6. (2) Information on investees Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

259

(3) Information on investments in Mainland China A. Basic information: Please refer to table 8. B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 9. 14. SEGMENT INFORMATION None.

260

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Changsha Ton Yi Industrial Co., Ltd.

2

2

2

2

2

3

4

Chengdu Ton Yi Industrial Packing Co., Ltd.

2

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

account

Zhangzhou Ton Yi Other receivables Industrial Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Borrower

General ledger

Other Huizhou Ton Yi receivables Industrial Co., Ltd. Chengdu Tongxin Zhangzhou Ton Yi Other Industrial Industrial Co., receivables Packing Ltd. Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Creditor

1

NO.

Table 1

261

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related Balance at

$

27,862

18,575

23,218

46,436

116,091

46,436

46,436

278,618

464,363

$

-

18,575

-

-

-

46,436

46,436

185,745

-

December 31, 2016 December 31, 2016

Maximum outstanding balance during the year ended $

4.00

4.00

4.00

4.00

4.00

4.00

4.00

4.00

4.50

Interest rate

Table 1 page 1

-

18,575

-

-

-

46,436

46,436

185,745

-

drawn down

Actual amount

Year ended December 31, 2016

Loans to others

Ton Yi Industrial Corp.

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions loan with the

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful



















Item

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

-

212,646

516,463

103,293

103,293

516,463

516,463

516,463

9,323,609

a single party

Limit on loans granted to

$

-

212,646

516,463

206,585

206,585

516,463

516,463

516,463

9,323,609

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Expressed in thousands of NTD

262

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

5

5

5

5

5

5

5

6

7

7

Other receivables

Other receivables

account

Huizhou Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Zhangzhou Ton Yi Other Industrial Co., receivables Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Ton Yi (China) Investment Co., Ltd.

5

Borrower

Chengdu Tongxin Beijing Ton Yi Industrial Industrial Co., Packing Ltd. Co., Ltd.

Creditor

4

NO.

General ledger

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related

92,873

-

92,873

92,873

139,309

139,309

139,309

139,309

139,309

139,309

139,309

139,309

92,873

92,873

139,309

139,309

139,309

139,309

139,309

139,309

139,309

139,309

-

$

$

27,862

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

4.00

3.00

3.00





4.00

4.00

4.00

4.00

4.00

4.00

4.00

Interest rate

Table 1 page 2

-

-

-

-

-

-

13,931

65,011

-

14,163

51,080

-

drawn down

Actual amount

2

2

2

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions loan with the

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful

























Item

-

-

-

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

-

1,333,537

1,333,537

1,615,870

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

a single party

Limit on loans granted to $

-

1,333,537

1,333,537

1,615,870

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

7,981,159

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

263

Sichuan Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

12

12

Chengdu Ton Yi Industrial Co., Ltd.

11

Sichuan Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

10

12

Beijing Ton Yi Industrial Co., Ltd.

9

Sichuan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

8

12

Kunshan Ton Yi Industrial Co., Ltd.

8

Sichuan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

8

12

Kunshan Ton Yi Industrial Co., Ltd.

Creditor

8

NO.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Borrower

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

Other receivables

account

General ledger

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

party

Is a related

46,436

-

23,218

92,873

92,873

92,873

92,873

92,873

92,873

92,873

92,873

-

92,873

139,309

325,054

92,873

92,873

92,873

92,873

139,309

92,873

566,523

218,251

$

$

278,618

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

4.00

4.00

4.00

4.00

3.00

3.00



3.00

4.00

3.00

4.00

4.00

Interest rate

Table 1 page 3

-

46,436

92,873

92,873

58,028

-

-

-

-

-

139,309

139,309

drawn down

Actual amount

2

2

2

2

2

2

2

2

2

2

2

2

(Note 1) $

-

-

-

-

-

-

-

-

-

-

-

-

borrower

Amount of Nature of transactions loan with the

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

Operational use

financing

Reason for short-term $

-

-

-

-

-

-

-

-

-

-

-

-

accounts

Allowance for doubtful

























Item

-

-

-

-

-

-

-

-

-

-

-

$ -

Value

Collateral $

838,561

838,561

838,561

838,561

838,561

759,861

825,197

765,952

1,135,141

1,135,141

1,135,141

1,135,141

a single party

Limit on loans granted to $

838,561

838,561

838,561

838,561

838,561

759,861

825,197

765,952

1,135,141

1,135,141

1,135,141

1,135,141

loans granted

Ceiling on total

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Zhanjiang Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd. Zhanjiang Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

13

13

13

13

Sichuan Ton Yi Industrial Co., Ltd.

Creditor

12

NO.

Chengdu Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd. Beijing Ton Yi Industrial Co., Ltd.

Ton Yi (China) Investment Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Borrower

(1) For trading partner.

Other receivables

Other receivables

Other receivables

Other receivables

Y

Y

Y

Y

Y

party

Is a related

232,181

139,309

185,745

92,873

-

69,654

92,873

92,873

-

$

$

116,091

December 31, 2016

Balance at

December 31, 2016

Maximum outstanding balance during the year ended $

-

69,654

92,873

75,117

-

drawn down

Actual amount

4.00

4.00

4.00

3.00

4.00

Interest rate

2

2

2

2

2

(Note 1) $

Operational use

Operational use

-

-

Operational use

Operational use

Operational use

financing

Reason for short-term

-

-

-

borrower

Amount of Nature of transactions loan with the $



-

-

-

-

-

$ -

Value $

691,604

691,604

691,604

691,604

838,561

a single party

Limit on loans granted to $

691,604

691,604

691,604

691,604

838,561

loans granted

Ceiling on total

Table 1 page 4

(Note 3) Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2016 as follows: USD:NTD 1:32.25 and CNY:NTD 1:4.643629.

the subsidiary is 100% of the Company’s net assets.

(2) Short-term financing: The maximum amount for short-term financing is 20% of the Company’s net assets; If the Company loans to foreign subsidiaries, which the Company holds 100% ownership directly or indirectly, the maximum amount for









Item

Collateral

-

-

-

-

accounts

Allowance for doubtful

(1) Trading partner: The maximum amount for individual trading partner shall not exceed the higher of total purchase or sale transactions during the reporting period or the most recent year.

(Note 2) The maximum loan amount is 40% of its net assets.

(2) For short-term financing.

account

General ledger

Other receivables

(Note 1) Nature of loans to others is filled as follows:

264

Note 2

Note 2

Note 2

Note 2

Note 2

Footnote

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

0

0

0

Zhangzhou Ton Yi Industrial Co., Ltd. Chengdu Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Company name

provided for a

single party

guarantor

(Note 1)

2

2

2

12,726,164

12,726,164

12,726,164

12,726,164

guarantees

endorser/

$

endorsements/

with the

2

Limit on

Relationship

Party being endorsed/guaranteed

$

2016

417,732

295,120

940,000

1,180,000

$

-

-

-

-

December 31, 2016

amount at Actual amount $

collateral

-

-

-

-

-

-

-

-

company $

12,726,164

12,726,164

12,726,164

12,726,164

provided

guarantees

endorsements/

Table 2 page 1

(Note 3) Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2016 as follows: USD:NTD 1:32.25 and CNY:NTD 1:4.643629.

(Note 2) The total endorsement and guarantee provided shall not exceed 70% of the Company’s net assets; the amount provided for each counterparty shall not exceed 70% of the Company's net assets.

(2) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

-

-

-

-

drawn down $

amount to net asset value

secured with of the endorser/guarantor

guarantees

total amount of

Y

Y

Y

Y

subsidiary

parent company to

guarantees by

guarantee

endorsement/guarantee

endorsement/

guarantee amount as of December 31,

endorsements/

Provision of Ceiling on

endorsements/

Ratio of accumulated

Outstanding

endorsement/ Amount of

Year ended December 31, 2016

outstanding

Maximum

Ton Yi Industrial Corp. Provision of endorsements and guarantees to others

(1) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(Note 1) The following code represents the relationship with the Company:

Ton Yi Industrial Corp.

guarantor

Endorser/

0

Number

Table 2

265

N

N

N

N

company

subsidiary to parent

guarantees by

endorsements/

Provision of

Y

Y

Y

Y

China

the party in Mainland

guarantees to

endorsements/

Provision of

Note 2

Note 2

Note 2

Note 2

Footnote

Expressed in thousands of NTD

Same director

Grand Bills Finance Co.



Relationship with the securities issuer

Same Chairman

2.Financial assets carried at cost - non-current

1.Available-for-sale financial assets - non-current

Ton Yi Industrial Corp.

44,100 108

2 2

Table 3 page 1

250

Number of shares (in thousands)

1

General ledger account (Note)

December 31, 2016

$

1,050

500,000

122,642

Book value

0.02

3.33

0.04

Ownership (%)

As of December 31, 2016

Holding of marketable securities at the end of the period (not including Subsidiaries, associates and joint ventures)

President International Development Corp.

JFE Holdings Inc.

Stocks:

Marketable securities

(Note) The code number explanation is as follows:

Ton-Yi Industrial Corp.

Securities held by

Table 3

266

$

-

-

122,642

Fair value







Footnote

Expressed in thousands of NTD

Counterparty

Cayman Ton Yi Industrial Holdings Ltd.

Tovecan Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Purchaser/seller

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Ton Yi Industrial Corp.

Table 4

Relationship with the

The Company

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Ton Yi Industrial Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd. Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

TTET Union Corp.

Ton Yi Industrial Corp.

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Jiangsu Ton Yi Tinplate Co., Ltd.

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

An investee company accounted for under the equity method

counterparty

Ton Yi Industrial Corp.

(Sales)

(Sales)

Purchases

(Sales)

(Sales)

(Sales)

(Sales)

(Sales)

(sales)

Purchases

280,366)

(

2,907,023)

1,823,760)

(

(

4,649,906

109,022)

271,239)

(

(

106,554)

4,649,906)

Amount

(

($

Table 4 page 1

(38)

(61)

99

(2)

(1)

(2)

(1)

(29)

(sales)

Percentage of total purchases

Transaction

Credit term

50 days after shipping

50 days after shipping

50 days after shipping

Monthly-closing basis on 30th next month, T/T

50 days after shipping

50 days after shipping

30 days after arrival at port

50 days after shipping

Year ended December 31, 2016

$

Unit price

-

-

-

-

-

-

-

-

















Credit term

transactions

Description and reasons for difference in transaction terms compared to third party

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

Ton Yi Industrial Corp.

267

(

$

10,230

380,674

390,298)

28,828

81,161

186,748

24,768

390,298

Balance

3

97

(100)

2

6

14

2

30

receivable (payable)

Percentage of total notes/accounts

Notes/accounts receivable (payable)

















Footnote

Expressed in thousands of NTD

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Counterparty

Ton Yi Industrial Corp. Jiangsu Ton Yi Tinplate Co., Ltd.

Purchaser/seller

Tovecan Corp.

Ton Yi Industrial Corp.

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Ton Yi Industrial Corp.

Cayman Ton Yi Industrial Holdings Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

268

An investee company accounted for under the equity method

The Company

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

The Company

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company of Cayman Jiangsu Ton Yi Industrial Holdings Ltd. accounted for under the equity method

The Company

Relationship with the counterparty

Purchases

Purchases

(Sales)

(Sales)

Purchases

Purchases

Purchases

Purchases

Purchases

Purchases

Purchases (sales)

5

80

109,022

1,823,760

Table 4 page 2

(4)

192,302)

(

(5)

245,967)

82

83

245,967

2,907,023

23

192,302

8

63

519,413

271,239

87

106,554

Amount

(

$

Credit term

50 days after shipping

50 days after shipping

67 days after invoice date, T/T

67 days after invoice date, T/T

50 days after shipping

50 days after shipping

67 days after invoice date, T/T

67 days after invoice date, T/T

30 days after arrival at port 67 days after invoice date, T/T

$

Unit price

-

-

-

-

-

-

-

-

-

-





















Credit term ($

(

(

(

(

(

(

(

10,230)

81,161)

21,977

59,494

380,674)

186,748)

59,494)

21,977)

93,487)

24,768)

Balance

(8)

(63)

2

5

(62)

(30)

(87)

(15)

(65)

(100)

Percentage of total notes/accounts receivable (payable)

Percentage of

Notes/accounts receivable (payable)

total purchases (sales)

Transaction

Description and reasons for difference in transaction terms compared to third party transactions





















Footnote

Taizhou President Enterprises Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Guangzhou President Enterprises Co., Ltd.

Uni-President Trading (Kunshan) Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Beijing President Enterprises Drinks & Food Co., Ltd.

Shanghai E & P Trading Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

Counterparty

Wuxi Ton Yi Industrial Packing Co., Ltd.

Purchaser/seller

Jiangsu Ton Yi Tinplate Co., Ltd.

269

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Cayman Ton Yi Industrial Holdings Ltd. accounted for under the equity method

Relationship with the counterparty

Purchases

(Sales)

Purchases

(Sales)

(Sales)

Purchases

(Sales)

(Sales)

Purchases (sales)

(

(

(

(

($

13

159,161

Table 4 page 3

(98)

13

202,532

1,974,943)

(95)

2,306,277)

(81)

11

140,218

1,844,957)

(78)

(17)

1,804,515)

519,413)

Amount

Credit term

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

15 days after invoice date, T/T

Within 22 days of statements settled twice a month, T/T

67 days after invoice date, T/T

$

Unit price

-

-

-

-

-

-

-

-

















Credit term $

(

(

(

7,285)

128,552

13,464)

128,836

103,637

9,489)

182,969

93,487

Balance

(8)

98

(19)

92

82

(9)

85

14

Percentage of total notes/accounts receivable (payable)

Percentage of

Notes/accounts receivable (payable)

total purchases (sales)

Transaction

Description and reasons for difference in transaction terms compared to third party transactions

















Footnote

Chengdu President Enterprises Food Co., Ltd.

Chengdu President Enterprises Food Co., Ltd.

Zhanjiang President Enterprises Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

Counterparty

Guangzhou President Enterprises Co., Ltd.

Purchaser/seller

Huizhou Ton Yi Industrial Co., Ltd.

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

counterparty

Relationship with the

(Sales)

(Sales)

(Sales)

(Sales)

Purchases (sales)

536,145)

1,373,515)

1,138,900)

(

(

1,088,247)

Amount

(

($

(98)

(92)

(65)

(100)

(sales)

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

Within 22 days of statements settled twice a month, T/T

$

-

-

-

-









Credit term $

37,050

148,341

12,499

38,529

Balance

100

95

37

99

receivable (payable)

Table 4 page 4

CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 2) Foreign currencies were translated into New Taiwan Dollars using the following exchange rates: Ending balances of receivables and payables were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25,

Unit price

Percentage of total notes/accounts

Notes/accounts receivable (payable)

Percentage of Credit term

Description and reasons for difference in transaction terms compared to third party transactions

total purchases

Transaction

(Note 1) The above terms are in accordance with the Company's policy on credit management, please refer to Note 7 Related Party Transactions for details.

270









Footnote

Fujian Ton Yi Tinplate Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Taizhou President Enterprises Co., Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Taizhou Ton Yi Industrial Co,. Ltd.

Ton Yi Industrial Corp.

-

14.36

186,302

182,969

Other receivables

7.26

148,341

Chengdu President Enterprises Co., Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

$

Amount

-

-

-

-

-

-

-

-

-

-

-























Action taken

Overdue receivables $

148,341

128,552

128,836

Table 5 page 1

-

-

95,746

182,969

-

380,674

186,748

390,298

Amount collected subsequent to the balance sheet date

$

-

-

-

-

-

-

-

-

-

-

-

Allowance for doubtful accounts

Expressed in thousands of NTD

(Note) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable and subsequent collections were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25, CNY:NTD 1:4.643629).

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

Accounts receivable

24.07

128,552 Accounts receivable

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

Beijing President Enterprises Drinks & Food Co., Ltd.

Beijing Ton Yi Industrial Co., Ltd.

-

139,513

Other receivables

18.81

-

139,513

Other receivables

128,836

13.08

103,637

Accounts receivable

Accounts receivable

Accounts receivable

Accounts receivable

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

Kunshan Ton Yi Industrial Co., Ltd. Chengdu Ton Yi Industrial Co., Ltd.

7.64

380,674

Accounts receivable

Turnover rate

2.78

Amount

186,748

$

9.11

Accounts receivable

390,298

Items

Balance as at December 31, 2016

Kunshan Ton Yi Industrial Co., Ltd. Uni-President Trading (Kunshan) Co., Ltd. An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of parent company (Uni-President Enterprises Corp.) has joint control or significant influence

An investee company of Ton Yi (China) Investment Co., Ltd. accounted for under the equity method

An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method An investee company of Cayman Fujian Ton Yi Industrial Holdings Ltd. accounted for under the equity method

An investee company accounted for under the equity method

Relationship with the counterparty

Year ended December 31, 2016

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

Kunshan Ton Yi Industrial Co., Ltd. Beijing Ton Yi Industrial Co., Ltd.

Zhangzhou Ton Yi Industrial Co., Ltd.

Guangzhou President Enterprises Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Ton Yi Industrial Corp.

Counterparty

Cayman Ton Yi Industrial Holdings Ltd.

Creditor

Ton Yi Industrial Corp.

Table 5

271

Ton Yi Industrial Corp.

Cayman Ton Yi Industrial Holdings Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

1

2

3

4

Company name

0

Number (Note 2)

Table 6

272

Ton Yi Industrial Corp.

Accounts receivable Sales Sales Accounts receivable Sales Sales Accounts receivable Sales Other receivables Sales Sales Sales

1 1 1 1 1 3 3 3 3 3 3 3

Tovecan Corp.

Fujian Ton Yi Tinplate Co., Ltd.

Chengdu Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Wuxi Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Jiangsu Ton Yi Tinplate Co., Ltd.

Table 6 page 1

Sales

1

Cayman Ton Yi Industrial Holdings Ltd.

General ledger account

Relationship (Note 3)

Counterparty

Year ended December 31, 2016

Significant inter-company transactions during the reporting period

$

50 days after shipping

2,907,023

67 days after invoice date

192,302

67 days after invoice date

67 days after invoice date

245,967

519,413



50 days after shipping 186,302

1,823,760



50 days after shipping

109,022

380,674



2%

1%

1%

-

6%

1%

9%

-

-

1%

-

30 days after arrival at port 50 days after shipping

1%

14%

Percentage of consolidated total operating revenues or total assets (Note 4)



50 days after shipping

Transaction terms

186,748

271,239

106,554

390,298

4,649,906

Amount

Transaction

Expressed in thousands of NTD

5

Number (Note 2)

Kunshan Ton Yi Industrial Co., Ltd.

Company name

General ledger account Other receivables Other receivables

Relationship (Note 3) 3 3

Beijing Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Co., Ltd.

Counterparty $ 139,513

139,513

Amount





Transaction terms

Transaction

Table 6 page 2

CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 5) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25,

and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

(Note 4) 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

(3)Subsidiary to subsidiary.

(2)Subsidiary to parent company.

(1)Parent company to subsidiary.

(Note 3) Relationship between transaction company and counterparty is classified into the following three categories:

(2)The subsidiaries are numbered in order starting from ‘1’.

(1)Parent company is ‘0’.

(Note 2) The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

-

-

Percentage of consolidated total operating revenues or total assets (Note 4)

(Note 1) Only transactions amounting to more than $100 million are disclosed. Transactions between parent company and subsidiaries were disclosed on the previous sections, no duplicated information is disclosed in this section.

273

Cayman Ton Yi Holdings Ltd.

Cayman Fujian Ton Yi Industrial Holdings Ltd.

Cayman Jiangsu Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman Ton Yi Industrial Holdings Ltd.

Cayman

Cayman

Cayman

Cayman

Vietnam

Cayman

Location

General investment

General investment

General investment

General investment

Manufacturing of cans

General trading and investment

activities

Main business

Ton Yi Industrial Corp.

2,066,002

1,157,865

2,066,002

1,157,865

7,417,500

7,417,500

7,417,500

7,417,500

43,740

43,740

7,863,787

$

7,863,787

$

Balance as at December 31, 2015

as at December 31, 2016

Balance

Initial investment amount

ended December 31, 2016

230,000,000

5,000

8,727

230,000,000

-

25,309,700

100.00

100.00

100.00

100.00

51.00

100.00

$

7,981,131

2,066,477

3,532,987

441,485

7,144

2,531)

441,485

7,981,131

363,633

2016

808

(

$

investee for the year ended December 31,

Net profit (loss) of the

54,569

9,210,736

Book value

Shares held as at December 31, 2016

Number of shares Ownership (%)

Information on investees Year

Table 7 page 1

Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543).

$

-

-

-

-

412

363,633

December 31, 2016

the Company for the year ended

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary (Note 1)

Subsidiary

Subsidiary

Footnote

Expressed in thousands of NTD

Investment income (loss) recognised by

(Note 2) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25);

(Note 1) Not required to disclose income (loss) recognised by the Company.

Cayman Ton Yi Holdings Ltd.

Cayman Ton Yi (China) Holdings Ltd.

Tovecan Corp.

Ton Yi Industrial Corp.

Investee

Cayman Ton Yi Industrial Holdings Ltd.

Investor

Ton Yi Industrial Corp.

Table 7

274

Note 1 Note 1 Note 2 Note 3 Note 4 Note 5

225,750

2,789,625

1,290,000

7,417,500

967,500

Changsha Ton Yi Industrial Sales of cans Co., Ltd.

Manufacturing of tinplate

Jiangsu Ton Yi Tinplate Co., Ltd.

Ton Yi (China) Investment General investment Co., Ltd.

Manufacturing of tinplate

Fujian Ton Yi Tinplate Co., Ltd.

Manufacturing of cans

241,875

Wuxi Ton Yi Industrial Packing Co., Ltd.

Chengdu Ton Yi Industrial Manufacturing of cans Packing Co., Ltd.

Investment method Note 1

Main business activities

Paid-in capital 313,470 $

Investee in Mainland China

Table 8

Note 5 Note 5 Note 5 Note 5 Note 5 Note 5 Note 5

967,500

967,500

967,500

967,500

967,500

967,500

645,000

Manufacturing of PET packages

Manufacturing of PET packages

Manufacturing of PET packages

Manufacturing of PET packages

Beijing Ton Yi Industrial Co., Ltd.

Huizhou Ton Yi Industrial Co., Ltd.

Chengdu Ton Yi Industrial Manufacturing of PET packages Co., Ltd.

Manufacturing of PET packages

Zhangzhou Ton Yi Industrial Co., Ltd.

Kunshan Ton Yi Industrial Manufacturing of PET packages Co., Ltd.

Manufacturing of PET packages

Taizhou Ton Yi Industrial Co,. Ltd.

Sichuan Ton Yi Industrial Co., Ltd.

Zhanjiang Ton Yi Industrial Co., Ltd.

275

Ton Yi Industrial Corp.

-

-

370,875

193,500

-

-

967,500

967,500

967,500

894,937

1,720,441

-

241,875

Table 8 page 1

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

370,875

193,500

-

-

967,500

967,500

967,500

894,937

1,720,441

-

241,875

Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan Accumulated for the year amount of remittance Accumulated amount ended December 31, 2016 from Taiwan to of remittance from Mainland China as Taiwan to Mainland Remitted to China as of January Mainland Remitted back of December 31, 1, 2016 China to Taiwan 2016 $ 225,750 $ - $ - $ 225,750

Year ended December 31, 2016

Information on investments in Mainland China

(

(

(

(

(

(

35,728

28,148)

17,538)

1,617

13,561)

82,785

161,039

207,483

441,485

8,622

2,916)

3,263)

17,309)

Net income of investee for the year December 31, 2016 $ 49,383

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

100.00

82.86

86.80

100.00

100.00

Ownership held by the Company (direct or indirect) 100.00

(

(

(

(

(

(

35,728

28,148)

17,538)

1,617

13,561)

82,785

161,039

207,483

441,485

7,144

2,531)

3,263)

17,309)

691,604

838,561

759,861

825,197

765,952

1,135,141

1,333,537

1,615,870

7,981,131

1,937,587

3,462,423

212,645

516,461

Investment income (loss) Book value of recognised by investments in Mainland the Company for China as of the year ended December 31, December 31, 2016 2016 $ 52,266 $ 605,841

$

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Accumulated amount of investment income remitted back to Taiwan as of December 31, 2016

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Note 6

Footnote Note 6

Expressed in thousands of NTD

Company name

$

6,549,878

Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2016

$ 11,906,932

$ 11,497,510

Investment Ceiling on amount approved investments in by the Investment Mainland China Commission of imposed by the the Ministry of Investment Economic Affairs Commission of (MOEA) MOEA (Note 7)

Table 8 page 2

(Note 8) Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable were translated using the exchange rate as at December 31, 2016 (USD:NTD 1:32.25, CNY:NTD 1:4.643629); Amounts of transactions were translated using the weighted-average exchange rate for the year ended December 31, 2016 (USD:NTD 1:32.238543, CNY:NTD 1:4.850003).

(Note 7) The ceiling amount is 60% of consolidated net assets.

(Note 6) The financial statements were audited by the independent accountants of parent company in Taiwan.

(Note 5) Through investing in an existing company in the Mainland China (Ton Yi (China) Investment Co., Ltd.) , which then invested in the investee in Mainland China.

(Note 4) Through investing in an existing company in the third area (Cayman Ton Yi (China) Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 3) Through investing in an existing company in the third area (Cayman Jiangsu Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 2) Through investing in an existing company in the third area (Cayman Fujian Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

(Note 1) Through investing in an existing company in the third area (Cayman Ton Yi Industrial Holdings Ltd.), which then invested in the investee in Mainland China.

Ton Yi Industrial Corp.

276

Investee in Mainland China

Jiangsu Ton Yi Tinplate Co., Ltd.

Fujian Ton Yi Tinplate Co., Ltd.

Table 9

277

$

12

1,932,782

%

20

3,178,262

Amount

Sale (purchase)

Ton Yi Industrial Corp.

$

Amount

-

-

-

%

Property transaction

$ 91,391

567,422

Balance at December 31, 2016

8

47

%

Accounts receivable (payable)

-

-

Table 9 page 1

$

Balance at December 31, 2016





Purpose

Provision of endorsements/guarantees or collaterals

Year ended December 31, 2016

$ -

-

Maximum balance during the year ended December 31, 2016 $

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

Balance at December 31, 2016

-

-

Financing





Interest rate

$

-

-

Interest during the year ended December 31, 2016





Others

Expressed in thousands of NTD

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Annual Report

TSE Code 9907 TON YI INDUSTRIAL CORP. 2016 Annual Report Ton Yi Industrial Corp. Website: http://www.tonyi.com.tw Market Observation Post System (M...

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