Altek - Annual Report 2015 | FinancialReports.eu

Stock Code: 3059

Altek Corporation

2015 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw

2015 Annual Report is available at: http://www.altek.com.tw Printed on May 5, 2016.

Spokesperson

Name: Steven Su Title: Director Tel: 886-3-578-4567 E-mail: [email protected]

Headquarters, Branches and Plant

Headquarters Address: No.12, Li-Hsin Rd., Hsinchu, Taiwan, R.O.C. Tel: 886-3-578-4567

Deputy Spokesperson

Name: Eva Liang Title: Manager Tel: 886-3-578-4567 E-mail: [email protected]

Plant

Address: No.7, Yan-Fa first Rd., Hsinchu, Taiwan, R.O.C. Tel: 886-3-578-4567

Stock Transfer Agent

Sino Pac Securities Corporation, Stock Transfer Agent Dept. Tel: 886-2-2381-6288 Website: http://www.sinotrade.com.tw

Auditors

PricewaterhouseCoopers Accounting Firm Auditors: Mrs. Yu-Kuan Lin and Mr. Dian-Yi Li Address: 5F, No.2, Gong-Ye E. 3rd Rd., Hsinchu, Taiwan, R.O.C. Tel.: 886-3-578-0205 Website: http://www.pwc.com.tw

Overseas Securities Exchange: N.A.

Corporate Website

http://www. altek.com.tw

I. Letter to Shareholders ............................................................................................ 1 II. Company Profile 2.1 Date of Incorporation.............................................................................................. 2 2.2 Company History ……… ...................................................................................... 2 III. Corporate Governance Report 3.1 Organization............................................................................................................ 3 3.2 Directors, Supervisors and Management Team…………………………………4 3.3 Implementation of Corporate Governance ........................................................... 18 3.4 Information Regarding the Company’s Audit Fee and Independence.................. 24 3.5Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders…………………………………………………………………….25 3.6 Relationship among the Top Ten Shareholders………..……....………...………25 3.7Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders………………………………………………………………..25 3.8 Relationship among the Top Ten Shareholders……..……....…………...………25 3.9 Ownership of Shares in Affiliated Enterprises………………………………...…27 IV. Capital Overview 4.1 Capital and Shares………………………………………………………….……28 4.2 Bonds…………….………………………………………………………….……32 4.3 Preferred Stock..………....….…………………………………………….……32 4.4 Global Depository Receipts……………………………………………………32 4.5 Status of New Shares Issuance in Connection with Mergers and Acquisitions….33 4.6 Issuance of New Restricted Employee Shares……………..……………...……..35

V. Operational Highlights 5.1 Business Activities……………………………………………………………….37 5.2 Market and Sales Overview…………………………………….………..………38 5.3 Human Resources……….……………………………………………………….39 5.4 Environmental Protection Expenditure………….……………………………….40 5.5 Labor Relations…………………………………………………………………40 5.6 Important Contracts………………………………………………………………41 VI. Financial Information 6.1 Five-Year Financial Summary………………………………………….………..42 6.2 Five-Year Financial Analysis…………………………………………….………47 6.3 Supervisors’ or Audit Committee’s Report in the Most Recent Year……………49 6.4 Financial Statements for the Years Ended December 31, 2015 and 2014, and Independent Auditors’ Report………………………………..………………….50 6.5 Consolidated Financial Statements for the Years Ended December 31, 2015 and 2014, and Independent Auditors’ Report………………………………….……113 VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status…………………………………………………….114 7.2 Analysis of Operation Results……………………………………………..……115 7.3 Analysis of Cash Flow………………………………………..………………116 7.4 Major Capital Expenditure Items………………………………………………116 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year……….………………...116 7.6 Analysis of Risk Management…………………………………………….……117 VIII. Special Disclosure 8.1 Summary of Affiliated Companies……………………………………..….…122 8.2 Private Placement Securities in the Most Recent Years………………………122 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year……………………………………………………………………..122

I. Letter to Shareholders

First of all, I would like to thank all shareholders and employees’ continuing support throughout the year, Altek Corp. has been active to transform itself into digital image solutions supplier. In 2015, Altek has provided image signal processor solution, dual- camera module solution and the license of image processing technologies and these have made Altek become part of the supply chain of international smart phone companies as the benefits of transformation which are gradually emerging. However, dual-camera module business does not prosper as expected due to the development of dual-camera smart phones has not yet become the mainstream of the market and also the market for wearable-camera product has speedy changes, therefore the consolidated revenues of 2015 is about NTD 12,490 million dollars, which decreases 19% than 2014. The good news is that compare to the consolidated gross margin of 10% of 2014, it has reached 13% in 2015. Net income after tax is NTD 276,643 thousand dollars. The earning per share-after tax is NTD 1.02.

The digital image applications have been widely used nowadays, and Altek is experienced to provide the customers all kinds of digital image solutions, including image signal processor, camera module, the license of digital image technologies, and the wearable camera products. Since it has gradually become a trend for the smart phone to install dual camera design, it’s generally estimated the first tier smart phone makers will promote their main brand of smart phones accompanying the dual-camera function at the second quarter of this year. Also, as related applications have become more completed, it is expected that the smart phones with dual-cameras will become more commonly used. As for the wearable camera product, the market share is expected to grow if there are no big changes in the market. Moreover, in order to enhance the safety of car driving and make a smarter automobile, the application of autotronic imaging solutions has gradually become a must to the industry and is expected to prosper in the future. Altek will take advantages of its experiences on the image technologies and invest more resources and effort to develop products that meet the market demand.

As for this year, due to the speedy changes of new technologies, new materials and new skills, Altek and all of the employees will constantly strengthen our systems, process and production management as well as to develop the core technologies of digital images to enhance the added-value of the products and enhance the market share and influence in the digital image area. The management team and all the employees of Altek will constantly work hard, follow the principle of “innovation, quality, cost, flexibility, efficiency” to pursue the biggest benefits of the shareholders.

Sincerely yours,

Chairman & CEO Ru Win, Hsia

II.Company Profile

2.1 Date of Incorporation : December 24, 1996.

2.2 Company History

Year	Milestones
1996	The company was founded as “Asia Imagination corporation” to engage in digital camera design, production and sales.
1997	Corporation renamed as “Altek Corporation” and established its first corporate headquarter located in 3F, No. 10 Li-Hsin Road, Science-Based Industrial Park,Hsinchu City,Taiwan.
1998	Introduced Taiwan’s first 1.0 millionpixels autofocus digital still camera.
2002	Shares listed on the Taiwan Stock Exchange.
2003	Issued US$60,000 thousand dollars Convertible Bonds and listed on LuxembourgStock Exchange.
2004	China manufacturingsite and employee dormitorywere inaugurated.
2006	Published domestic convertible bonds of NT$ 1,500,000 thousand dollars and listed on Taiwan Stock Exchange.
2007	MonthlyDSC shipment achieved two million units.
2008	Introduced the world's first GPS digital camera.
2010	First Smartphone/camera received CommunicAsia’s award of Ten Best Products. Established new headquarter at 12 Li-Hsin Road, Science-Based Industrial Park,Hsinchu City,Taiwan.
2011	First shipment of medicalproduct –glucometer device.
2013	Enterprise Transformation to image solution provider. Product Received Golden Pin Design Award.
2014	First shipment of dual camera solution and ISP (Image Signal Processor) for smartphones. Launched altek Hello KittyCubic(smart mini wireless camera)
2015	More customers launched more models with Altek imaging solutions. Launches altek Cubic Live camera(smart mini wireless camera).

III. Corporate Governance Report

3.1 Organization

3.1.1 Organizational Chart

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3.1.2 Major Corporate Functions

Department	Functions
Audit Office	To identify deficiencies in the internal control system, assess the effectiveness and efficiency of operations, and provide appropriate improvement suggestions to ensure the effectiveness of the internal control system as well as forcontinuousimprovement.
CEO Office	Strategic planning, business planning authorization and supervision
Wearable Camera System BU	Responsible for business of image system and wearable products
Medical BU	Responsible for business of medical products.
Mobile Image Devices BU	Responsible for business of mobile image devices and solution.
Supply Chain Management Division	Responsible for supply chain management.
Finance Division	Responsible for the summarization and supply of accounting information, management and operation of finance and investment, annual budgeting, credit control, and stocks services.
Human Resource Division	Responsible for the planning and execution of human resource management.

Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Relation	Spouse	None	None	None	None	None	None	None	None	Spouse	None
	Name	Amy Chien	None	None	None	None	None	None	None	None	Ru Win Hsia	None
	Title	Supervisor	None	None	None	None	None	None	None	None	Chairman	None
Other Position		Note 1	Note 2	Note 2	Note 3	Note 4	Note 5	Note 6	Note 7	Note 8	Note 9	Note 10
Experience �Education�		Note 1	Note 2		Note 3	Note 4	Note 5	Note 6	Note 7	Note 8	Note 9	Note 10
Shareholding by Nominee Arrangement	�	0.00	0.00	0.00	0.00	0.00	0.00	-	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	-	0	0	0	0
Spouse & Minor Shareholding	�	0.34	0.00	0.00	0.00	0.00	0.00	-	0.00	0.00	0.30	0.00
	Shares	943,051	0	0	0	0	0	-	0	0	827,713	7,000
Current Shareholding	�	0.28	0.00	0.19	0.05	0.00	0.20	-	0.00	0.00	0.32	0.13
	Shares	757,934	0	520,790	140,000	0	552,438	-	0	0	873,272	350,142
Shareholding when Elected	�	0.45	0.10	0.13	0.05	0.00	0.24	0.01	0.00	0.00	0.14	0.00
	Shares	1,782,764	410,000	520,790	200,000	0	952,055	48,329	0	0	547,532	1,203
Date First Elected		1996. 12.20	2014. 06.19	2016. 03.19	2014. 06.19	2014. 06.19	2014. 06.19	2002. 05.27	2002. 05.27	2000. 06.01	2014. 06.19	2014. 06.19
Term (Years)		3	3	3	3	3	3	3	3	3	3	3
Date Elected		2014. 06.19	2014. 06.19	2016. 03.19	2014. 06.19	2014. 06.19	2014. 06.19	2014. 06.19	2014. 06.19	2014. 06.19	2014. 06.19	2014. 06.19
Name		Ru Win Hsia	Steve Shyr	David Lin	Simon Law	Stan Hung	Jason Lin	James Huang	Jaime Tang	Tim Liou	Amy Chien	Alex Liou
Nationality/ Country of Origin		R.O.C	R.O.C.	R.O.C.	Macau	R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.
Title		Chairman	Director	Director	Director	Director	Director	Independent Director	Independent Director	Supervisor	Supervisor	Supervisor

April 19, 2016	Major Shareholders	Ying Da Lian Co., Ltd. and other shareholders(100%)	l shareholders April 19, 2016	l shareholders April 19, 2016	Major Shareholders	Mr. Chang Tung Yi and other shareholders(100%)
	Name of Institutional Shareholders	Yitsang International Limited Company			Name of Institutional Shareholders	Ying Da Lian Co., Ltd.

17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0	17 Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. Criteria Name Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria(Note) Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 Ru Win Hsia � � � � � � � � 0 Steve Shyr � � � � � � � � 0 David Lin � � � � � � � � 0 Simon Law � � � � � � � � � � 0 Stan Hung � � � � � � � � � � 0 Jason Lin � � � � � � � � � 0 James Huang � � � � � � � � � � � 0 Jaime Tang � � � � � � � � � � � 0 Tim Liou � � � � � � � � � � � 0 Amy Chien � � � � � � � � � 0 Alex Liou � � � � � � � � � � � 0
Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director		0	0	0	0	0	0	0	0	0	0	0
Independence Criteria(Note)	10	�				�	�	�	�	�	�	�
	9	�	�	�	�	�	�	�	�	�	�	�
	8	�	�	�	�	�	�	�	�	�		�
	7	�	�	�	�	�	�	�	�	�	�	�
	6	�	�	�	�		�	�	�	�	�	�
	5	�	�	�	�	�	�	�	�	�	�	�
	4		�	�	�	�	�	�	�	�		�
	3	�	�	�	�	�	�	�	�	�	�	�
	2				�	�		�	�	�	�	�
	1				�	�		�	�	�	�	�
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	�	�	�	�	�	�	�	�	�	�	�
	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University
	Criteria Name	Ru Win Hsia	Steve Shyr	David Lin	Simon Law	Stan Hung	Jason Lin	James Huang	Jaime Tang	Tim Liou	Amy Chien	Alex Liou

Managers who are Spouses or Within Two Degrees of Kinship	Relation	None	None	None	None	None	None	None	None	None	None
	Name	None	None	None	None	None	None	None	None	None	None
	Title	None	None	None	None	None	None	None	None	None	None
Other Position		Note 1	Note 2	Note 3	Note 4	Note 5	Note 6	Note 7	Note 8	Note 9	Note 10
Experience �Education�		Note 1	Note 2	Note 3	Note 4	Note 5	Note 6	Note 7	Note 8	Note 9	Note 10
Shareholding by Nominee Arrangement	�	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	0	0	0	0	0	0	0	0	0	0
Spouse & Minor Shareholding	�	0.34	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
	Shares	943,051	0	0	0	0	0	0	707	0	0
Shareholding	�	0.28	0.20	0.00	0.19	0.00	0.09	0.14	0.00	0.05	0.00
	Shares	757,934	552,438	0	520,790	0	234,747	394,100	1,747	143,017	0
Date Effective		1996.12.28	2004.11.19	2002.10.02	2014.11.10	2014.11.10	2010.04.13	2006.08.23	2014.11.10	2014.11.10	2014.11.10
Name		Ru Win Hsia	Jason Lin	Steve Shyr	David Lin	Doug Franz	Rick Han	Jack Lee	Vincent Kao	Morgan Chiu	Kenny Li
Nationality/ Country of Origin		R.O.C.	R.O.C.	R.O.C.	R.O.C.	U.S.A.	R.O.C.	R.O.C.	R.O.C.	R.O.C.	R.O.C.
Title		CEO	SVP	SVP	SVP	SVP	VP	VP	VP	VP	VP

Ratio of Total Remuneration	(A+B+C+D) to Net Income (%)	Companies in the consolidated financial statements		1.61	1.61	1.61	1.61
		The company		1.61
Remuneration	Allowances (D)	Companies in the consolidated financial statements		235
		The company		235
	Bonus to Directors (C)	Companies in the consolidated financial statements		4,157
		The company		4,157
	Severance Pay (B)	Companies in the consolidated financial statements					0
		The company					0
	Base Compensation (A)	All companies in the consolidated financial statements					0
		The company					0
	Name		Ru Win Hsia	Steve Shyr (note 1)	David Lin (note1)	Simon Law	Stan Hung	Jason Lin	James Huang (note 2)	Jaime Tang
	Title		Chairman	Director	Director	Director	Director	Director	Independent Director	Independent Director

Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Companies in the consolidated financial statements	Companies in the consolidated financial statements		10.19	10.19	10.19	10.19	10.19
		The company			3.94
Relevant Remuneration Received by Directors Who are Also Employees	New Restricted Employee Shares (I)	Companies in the consolidated financial	statements		780
		The company			780
	Exercisable Employee Stock Options (H)	Companies in the consolidated financial	statements		1,860
		The company			1,860
	Profit Sharing- Employee Bonus (G)	Companies in the consolidated financial statements	Stock		0
			Cash		1,200
		The company	Stock		0
			Cash		1,200
	Severance Pay (F)	Companies in the consolidated financial statements			216
		The company			108
	Salary, Bonuses, and Allowances (E)	Companies in the consolidated financial statements			22,080
		The company			5,086
	Name			Ru Win Hsia	Steve Shyr (note 1)	David Lin (note1)	Simon Law	Stan Hung	Jason Lin	James Huang	Jaime Tang
	Title			Chairman	Director	Director	Director	Director	Director	Independent Director	Independent Director

Total of (A+B+C+D+E+F+G)	Companies in the consolidated financial statements	Note 3	�	Note 5	�	9
	The company	Note 2	Note 4	�	�	9
Total of (A+B+C+D)	Companies in the consolidated financial statements	Note 1	�	�	�	9
	The company	Note 1	�	�	�	9
	Range of Remuneration	Under NT$ 2,000,000	NT$2,000,001 ~ NT$5,000,000	NT$5,000,001 ~ NT$10,000,000	Over NT$10,000,000	Total

Unit: NT$ thousands; Dec. 31, 2015	Remuneration Ratio of Total Remuneration	Title Name (A+B+C) to Net Income (%) Base Compensation (A) Bonus to Supervisors (B) Allowances (C) Companies in the Companies in the Companies in the Companies in the	The company consolidated The company consolidated The company consolidated The company consolidated	financial statements financial statements financial statements financial statements	Supervisor Tim Liou 0 0 620 620 45 45 0.24% 0.24%	Supervisor Amy Chien 0 0 620 620 45 45 0.24% 0.24%	Supervisor Alex Liou 0 0 620 620 15 15 0.23% 0.23%		Name of Supervisors	Range of Remuneration Total of (A+B+C)	The company Companies in the consolidated financial statements	Under NT$ 2,000,000 Note 1 Note 1	NT$2,000,001 ~ NT$5,000,000 � �	NT$5,000,001 ~ NT$10,000,000 � �	Over NT$10,000,000 � �	Total 3 3	Note 1�Tim Liou�Amy Chien�Alex Liou

New Restricted Employee Shares	Companies in the consolidated financial statements	Companies in the consolidated financial statements	1,130	1,130	1,130	1,130	1,130	1,130	1,130
	The company		1,130
Exercisable Employee Stock Options	Companies in the consolidated financial statements		3,044
	The company		3,044
Ratio of total compensation (A+B+C+D) to net income (%)	Companies in the consolidated financial statements		20.37
	The	company	11.62
Profit Sharing- Employee Bonus (D) (Note 1)	Companies in the consolidated financial statements	Stock	0
		Cash	3,000
	The company	Stock	0
		Cash	3,000
Bonuses and Allowances (C)	Companies in the consolidated financial statements		17,957
	The company		5,869
Severance Pay (B)	Companies in the consolidated financial statements		864
	The company		635
Salary(A)	Companies in the consolidated financial statements		33,919
	The company		22,291
	Name		Ru Win Hsia	Jason Lin	Steve Shyr	David Lin	Doug Franz	Rick Han	Jack Lee	Vincent Kao	Morgan Chiu	Kenny Li
	Title		CEO	SVP	SVP	SVP	SVP	VP	VP	VP	VP	VP

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� � 10
Note 4 Note 5
financial statements
Companies in the consolidated
Name of President and Vice President
� 10
Note 1 Note 2 Note 3
The company
Range of Remuneration
Jason Lin, David Lin Ru Win Hsia , Steve Shyr, Rick Han, Jack Lee, Vincent Kao, Morgan Chiu, Kenny Li Doug Franz Rick Han, Jack Lee, Vincent Kao, Morgan Chiu, Kenny Li Ru Win Hsia , Jason Lin, Steve Shyr, David Lin, Doug Franz
� � � � �
Under NT$ 2,000,000 NT$2,000,001 ~ NT$5,000,000 NT$5,000,001 ~ NT$10,000,000 Over NT$10,000,001 ~ NT$15,000,000 Total Note 1 Note 2 Note 3 Note 4 Note 5
----- End of picture text -----

Ratio of Total Amount to Net Income (%)	1.10%	1.10%	1.10%	1.10%	1.10%	1.10%	1.10%	1.10%	1.10%	1.10%
Total	3,000
Employee Bonus - in Cash	3,000
Employee Bonus - in Stock (Fair Market Value)	0
Name	Ru Win Hsia	Jason Lin	Steve Shyr	David Lin	Doug Fraz	Rick Han	Jack Lee	Vincent Kao	Morgan Chiu	Kenny Li
Title	CEO	SVP	SVP	SVP	SVP	VP	VP	VP	VP	VP
	Executive Officers

3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents
A. The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income.

	2014	2014	2015(Note 1)	2015(Note 1)
	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements
directors, supervisors, presidents and vice presidents	11.2%	14.5%	13.94%	22.06%

Note 1: Earnings distribution of Year 2015 is subject to approval of Shareholders Meeting to be held on June 17, 2016.

B. The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with business performance.

Compensation policy for Directors and Supervisors

(1) In Article 26 of the Articles of Incorporation, if the Company has earnings after the annual final accounts, after paying profit-seeking income tax as well as making up losses of the previous years, the Company shall first set aside ten percent (10%) of said earnings as legal reserve. Thereafter, the Company shall set aside or reverse a special reserve in accordance with the Securities and Exchange Act. 2% of balance of the earnings shall be distributed as compensation to the Directors and Supervisors.
(2)Subject to Article 240 of the Company Act, the compensation shall be distributed by cash.

Remuneration policy for Directors and Supervisors

The remuneration is paid for the services Directors and Supervisors provided to the Company subject to Article 21 of the Articles of Incorporation. The remuneration is measured based on the personal achievements, contribution and participation made to the business operation with reference to the normal standard of the industry.

Allowance policy for Directors and Supervisors

The Company may pay the allowance with reference to the normal standard of the industry and subject to the attendance rate.

Payment policy for President and Vice president

(1)Subject to Article 14-6 of the Securities and Exchange Act, the Company has set up the Remuneration Committee in 2011 to evaluate the individual performance and enact the policies, standards and portfolios for the payments.
(2)The payment portfolios include salary, bonus and compensation. The payment will be distributed according to the individual experience, contribution and performance as well as the liability burdened with reference to the normal standard of the industry.

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

A total of 6 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) ��/��
Chairman	Ru Win Hsia	6	0	100%
Director	SteveShyr	6	0	100%
Director	Simon Law	6	0	100%
Director	Stan Hung	4	2	67%
Director	Jason Lin	4	2	67%
Independent Director	James Huang (note1)	3	1	75%
Independent Director	Jaime Tang	3	1	50%
Note: resigned on August 14, 2015. Other mentionable items: 1. If there are circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors’ meetings objected to by independent directors or subject to qualified opinion and recorded or declared in writing, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: None 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: None 3. Measures taken to strengthen the functionality of the board: The Board of Directors has established a Remuneration Committee to assist the board in carrying out its various duties.

3.3.2 Audit Committee: N.A.

3.3.3 Attendance of Supervisors at Board Meetings

A total of 6 (A) meetings of the Board of Directors were held in the previous period. The attendance of supervisors was as follows:

Title	Name	Attendance in Person (B)	Attendance Rate (%) ��/��
Supervisor	Tim Liou	6	100%
Supervisor	AmyChien	3	50%
Supervisor	Alex Liou	5	83%
Other mentionable items: 1. Composition and responsibilities of supervisors: (1) Communications between supervisors and the Company's employees and shareholders (e.g. communication channels and methods, etc.): The supervisors may directly communicate with employees and shareholders if needed. (2) Communications between supervisors and the Company's chief internal auditor and CPA (e.g. items, methods and results of the audits of corporate finance or operations, etc.): A. Communications with the chief internal auditor: The company chief internal auditor shall summit the audit reports to supervisors every month. The supervisors have no opposite opinions or comments on the reports. B. The chief internal auditor shall attend the board meeting to brief the audit findings. The supervisors have no opposite opinions or comments on the reports. C. Communications with the CPA: Supervisors have face to face communication with CPA periodically. 2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of the meetings, sessions, contents of motion, resolutions of the directors’ meetings and the company’s response to the supervisor’s opinion should be specified: None

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee

A. Professional Qualifications and Independence Analysis of Remuneration Committee Members

==> picture [434 x 353] intentionally omitted <==

----- Start of picture text -----

Meets One of the Following Professional
Independence Criteria
Qualification Requirements, Together with
(Note)
at Least Five Years’ Work Experience
An instructor A judge, Has work
Criteria or higher public experience
position in a prosecutor, in the areas
department of attorney, of
commerce, Certified commerce, Number of
law, finance, Public law, finance, Other Public
accounting, or Accountant, or or Companies in
other academic other accounting, Which the
department professional or or otherwise Individual is
Title related to the technical necessary Concurrently
business needs specialist who for the 1 2 3 4 5 6 7 8 Serving as an
of the has passed a business of Remuneration
Company in a national the Committee
public or examination Company Member
private junior and been
college, awarded a
Name college or certificate in a
university profession
necessary for
the business of
the Company
Convener Jaime Tang � �� 0
Committee Sophia � �� 2
Member Chen
Committee James
� �� 0
Member Huang
----- End of picture text -----

Note: Please tick the corresponding boxes that apply to a member during the two years prior to being

elected or during the term(s) of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs.
Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or

more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.

Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.
Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
Not a person of any conditions defined in Article 30 of the Company Law.

B. Attendance of Members at Remuneration Committee Meetings

There are 3 members in the Remuneration Committee with term from June 19[th,] 2014 to June[18th, ] 2016. A total of 2 (A) Remuneration Committee meetings were held in the previous period. The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) ��/��
Convener	Jaime Tang	2	0	100%
Committee Member	Sophia Chen	2	0	100%
Committee Member	James Huang	1	0	50%
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

3.3.5 Corporate Governance Guidelines and Regulations

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

3.3.6 Other Important Information Regarding Corporate Governance

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

3.3.7 Internal Control Systems

Please refer to page 35 of the Chinese annual report.

3.3.8 Major Resolutions of Shareholders’ Meeting and Board Meetings

Implementation of resolutions of 2015 annual shareholders’ meeting

Item	Major resolutions	Implementation
1	Approval of the 2014 business report and financial statements.	Performed in accordance with relevant laws and regulations.
2	Approval of the distribution of surplus earnings and capital reserve by cash.	Done by October 2nd, 2015 (Cash dividend per share NTD 0.50182152, capital surplus per share NTD 0.50182152, the total amount of distribution per share NTD 1.00364304.
3	Approval of amendment to the Company’s “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees”	The Company will perform in accordance with the revised regulations.
4	Approval of the issuance of 4,000,000 Restricted Employee Shares	1. Approved by the Financial Supervisory Commission letter dated June 22th, 2015. 2. The total amount of issuance shares will be fully subscribed before June 17, 2016.
5	Approval of spin-off the Company’s medical electronic division.	1. The target date for the spin-off approved by shareholders’ meeting is September 30th, 2015. 2. The target date is adjusted to January 4th, 2016 by the Board meetings. 3. This has been executed and approved by Hsinchu Science Park Bureau, Ministry of Science and Technology.

Implementation of resolutions of 2015 Board meeting before the publication date of the annual report

Date	Major resolutions	Implementation
March 10, 2015	1. Approval of the 2014 business report and financial statements and 2015 operation plan. 2. Approval of assembly of the 2015 annual shareholders’ meeting.	1. Item1 has been approved by the 2015 shareholders’ meeting. 2. The 2015 shareholder’s meeting has been held on June 2nd, 2015.
April 20, 2015	1. Approval of 2013 earnings distribution. 2. Approval of 2013 cash distribution of capital surplus generated from cash injection. 3. Approval of the issuance of Restricted Employee Shares. 4. Approval of spin-off the Company’s medical electronic division to wholly-owned affiliate-- Altek Biotechnology Corporation. 5. Approval of changing the CPA for financial statement auditing.	1. Item1 to Item4 has been approved by the 2015 shareholders’ meeting. 2. Item 5 is subject to the firm’s internal rotation.
September 8, 2015	1. Approval of Share Buyback Program for transferring to the employees. 2. Approval of the cash injection of the Companys’ affiliate-- Altek Semiconductor (Cayman) Co., Ltd. (hereinafter “Altek-semi Cayman”) and the subscription of share to Altek-Semi’s employees.	1. Item1 has been executed on November 8th, 2015 and reported to the competent authority. 2. Altek-semi Cayman has done the cash injection and the subscription of share to Altek-Semi’s employees.
November 13, 2015	1. Approval of establishment of” Procedures for halt and resumption applications” of the Company. 2. Approval of the evaluation of financial statements solely by the Company.	1. The Company will perform in accordance with the regulations. 2. Item2 has been reported to the competent authority.
March 18, 2016	1. Approval of amendment to the Company’s Articles of Incorporation. 2. Approval of independence evaluation of the Company’s CPA. 3. Approval of the 2015 business report and financial statements as well as the 2016 operation plan. 4. Approval of the distribution of 2015 surplus earnings proposal. 5. Approval of the distribution of cash distribution of capital surplus generated from cash injection. 6. Approve of election to Fill the Vacancy of 7th Independent Director. 7. Approval of the amendment to the Company’s “Procedures for Acquisition or Disposal of Assets” 8. Approval of issuance of new common shares in private placement and/or issuance of domestic or overseas convertible bonds in private placement. 9. Approval of the cash injection of Altek Semiconductor (Cayman) Co., Ltd., one of Altek’s subsidiaries.	1. Item3 to Item is subject to approval by the shareholders held on June 17th, 2016. 2. The Company will perform in accordance with relevant laws and regulations.

	10. Approval of convening 2016 annual shareholders’ meeting.
May 5, 2016	1. Approval of the amendment of “ Regulations of Board of Director’s Meeting Proceedings” 2. Approval of the candidate(s) for election to fill the vacancy of 7th Independent Director. 3. Approval of the adjustment of the investment structure of the Company’s subsidiary-Altek Biotechnology Corporation as well as to approve the cash injection..etc.	1. Item2 to Item 3 has been approved by the shareholders during the annual shareholders’ meeting dated June 17th, 2016. 2. The Company will perform in accordance with the revised regulations.

3.3.9 Major Issues of Record or Written Statements Made by Any Director or

Supervisor Dissenting to Important Resolutions Passed by the Board of

Directors: None.

3.3.10 Resignation or Dismissal of the Company’s Key Individuals, Including the

Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D: None.

3.4 Information Regarding the Company’s Audit Fee and Independence

3.4.1 Audit Fee

Unit: NT$ thousands

Accounting Firm	Name of CPA	Audit Fee	Non-auditFee	Non-auditFee	Non-auditFee	Non-auditFee	Non-auditFee	Period Covered by CPA’s Audit
			System of Design	Company Registration	Human Resource	Others (Note)	Subtotal
Pricewater- houseCoopers	Yun-Kuan Lin	4,600	0	35	0	3,032	3,067	2015.01.01~ 2015.12.31
	Dian-Yi, Lin

Note�Consulting fees.

3.5 Replacement of CPA: Not applicable.

3.6 Audit Independence

The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates during 2015.

3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

				Unit: Shares	Unit: Shares
Title	Name	2015		2016.1.1~2016.4.19
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman & CEO	Ru Win Hsia	0	0	0	0
Director & SVP (Note1)	Yitsang International Ltd. Co.	0	0	0	0
	Representative: SteveShyr	(120,000)	0	0	0
	Representative: David Lin	0	0	0	0
Director	YitsangInternational Ltd. Co.	0	0	0	0
	Representative: SimonLaw	0	0	0	0
Director	Stan Hung	0	0	0	0
Director & SVP	Jason Lin	(80,000)	0	0	0
Independent Director	James Huang	0	0	0	0
Independent Director	Jaime Tang	0	0	0	0
Supervisor	Tin Liou	0	0	0	0
Supervisor	Amy Chien	0	0	0	0
Supervisor	Alex Liou	0	0	0	0
Senior Vice President	David Lin	0	0	0	0
Senior Vice President	Doug Franz	0	0	0	0
Vice President	Rick Han	(179,000)	0	0	0
Vice President	Jack Lee	0	0	0	0
Vice President	Vincent Kao	(53,000)	0	0	0
Vice President	Morgan Chiua	0	0	0	0
Vice President	Kenny Li	0	0	0	0

Note 1: Yitsang International Ltd. Co. reappointed David Lin as Director.

3.7.1 Shares Trading with Related Parties: None

3.7.2 Shares Pledge with Related Parties: None

3.8 Relationship among the Top Ten Shareholders

April 19, 2016

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within TwoDegrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within TwoDegrees
	Shares	%	Shares	%	Shares	%	Name	Relationship
Hsiang-Wei Investment Corp.	15,052,090	5.50	0	0.00	0	0.00	N/A	N/A
Yitsang International LimitedCompany	13,946,100	5.09	0	0.00	0	0.00	N/A	N/A
Tung-Hsin Investment Corp.	13,866,000	5.06	0	0.00	0	0.00	N/A	N/A
PamirsCapital(H.K.)	6,540,700	2.39	0	0.00	0	0.00	N/A	N/A
Ashmore SICAV Emerging Market Global Small-Cap EquityFund	6,132,500	2.24	0	0.00	0	0.00	N/A	N/A
KGI	3,836,758	1.40	0	0.00	0	0.00	N/A	N/A
Altek Employees’ RSA Trust Account	3,630,000	1.33	0	0.00	0	0.00	N/A	N/A
Credit Suisse� Renaissance	3,343,200	1.22	0	0.00	0	0.00	N/A	N/A
Unique Technology Co.,Ltd.	3,097,304	1.13	0	0.00	0	0.00	N/A	N/A
Vanguard Total International Stock Index Fund a series of Vanguard Star Funds	2,489,353	0.91	0	0.00	0	0.00	N/A	N/A

3.9 Ownership of Shares in Affiliated Enterprises

Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016	Unit: shares/ %; April 19, 2016
Affiliated Enterprises	Ownership by the Company		Direct or Indirect Ownership by Directors, Supervisors,Managers		Total Ownership
	Shares	%	Shares	%	Shares	%
Altek International Investment Co., Ltd.	92,726,249	100.00	0	0.00	92,726,249	100.00
Altek Lab Inc.	0	0.00	Note 1	100.00	Note 1	100.00
Altek Imaging Technology (Cayman) Co., Ltd.	0	0.00	15,092,410	100.00	15,092,410	100.00
Altek (Kunshan) Precision Co., Ltd.	N/A	0.00	N/A	100.00	N/A	100.00
Leading Tech. Co., Ltd.	0	0.00	45,000,000	100.00	45,000,000	100.00
Altek (Kunshan) Co., Ltd.	N/A	0.00	N/A	100.00	N/A	100.00
Toptek Investment Cayman Co., Ltd.	0	0.00	1,400,000	100.00	1,400,000	100.00
Toptek Electronics (Kunshan) Co., Ltd.	N/A	0.00	N/A	100.00	N/A	100.00
Altek Trading (Cayman) Co., Ltd.	0	0.00	8,500,000	100.00	8,500,000	100.00
Altek Trading(Shanghai) Co., Ltd	N/A	0.00	N/A	100.00	N/A	100.00
Altek Semiconductor (Cayman) Co., Ltd.	0	0.00	20,000,000	71.43	20,000,000	71.43
Altek Semiconductor Corp.	0	0.00	20,000,000	100.00	20,000,000	100.00
Altek Optical (Cayman) Co., Ltd.	0	0.00	8,864,432	100.00	8,864,432	100.00
Altek Optical Technology (Cayman) Co., Ltd.	0	0.00	15,000,000	100.00	15,000,000	100.00
Altek (Kunshan) Optical Co., Ltd.	N/A	0.00	N/A	100.00	N/A	100.00
Altek Japan Corporation	1,000	100.00	0	0.00	1,000	100.00
Altek Investment Co., Ltd.	5,000,000	100.00	0	0.00	5,000,000	100.00
Altek Autotronics Corp.	21,735,600	90.57	2,224,800	9.27	23,960,400	99.84
Altek Biotechnology Corp.	40,100,000	100.00	0	0	40,100,000	100.00

Note 1�9,311,875 common shares and 2,000,000 preferred stocks.

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Issued Shares

Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
		Shares	Amount (NT$ thousands)	Shares	Amount (NT$ thousands)	Sources of Capital	Capital Increased by Assets Other than Cash	Other
2014.02	10	500,000,000	5,000,000	385,265,321	3,852,653	Cancellation of Treasurystock	No	-
2014.08	10	500,000,000	5,000,000	394,158,321	3,941,583	Execution of ESOP	No	-
2014.10	10	500,000,000	5,000,000	275,910,825	2,759,108	Cash Capital Reduction	No	-
2014.10	10	500,000,000	5,000,000	270,135,825	2,701,358	Cancellation of Treasurystock	No	-
2015.05	10	500,000,000	5,000,000	270,253,825	2,702,538	Execution of ESOP	No	-
2015.12	10	500,000,000	5,000,000	272,693,825	2,726,938	Issuance of RSA	No	-
2016.03	10	500,000,000	5,000,000	273,883,825	2,738,838	Issuance of RSA	No	-

B. Type of Stock

			Unit: shares;April 19,2016	Unit: shares;April 19,2016
Share Type		Authorized Capital		Remarks
	Issued Shares	Un-issued Shares	Total Shares
Common shares	273,883,825	226,116,175	500,000,000

C. Information for Shelf Registration: N.A.

4.1.2 Status of Shareholders

4.1.2 Status of	Shareholders	Shareholders	Shareholders	Shareholders	Shareholders	Shareholders
	April 19,2016
Item	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	1	6	80	37,427	152	37,666
Shareholding (shares)	34	3,512,700	58,966,132	161,872,791	49,532,168	273,883,825
Percentage	0.00	1.28	21.53	59.10	18.09	100.00

4.1.3 Shareholding Distribution Status

A. Common Shares

A. Common Shares
			April 19,2016
Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1~999	17,586	4,510,748	1.65
1,000~5,000	14,312	32,607,790	11.91
5,001 ~ 10,000	3,000	22,957,902	8.38
10,001 ~ 15,000	915	11,588,195	4.23
15,001 ~ 20,000	519	9,475,498	3.46
20,001 ~30,000	475	11,812,658	4.31
30,001 ~50,000	368	14,728,363	5.38
50,001~100,000	271	19,261,161	7.03
100,001 ~ 200,000	123	17,721,038	6.47
200,001 ~ 400,000	45	12,693,767	4.63
400,001 ~600,000	15	7,832,374	2.86
600,001 ~800,000	7	4,855,821	1.77
800,001 ~ 1,000,000	4	3,656,272	1.33
1,000,001orabove	26	100,182,238	36.58
Total	37,666	273,883,825	100.00

B. Preferred Shares: N.A.

4.1.4 List of Major Shareholders

	April 19,2016	April 19,2016
Shareholder's Name	Shareholding
	Shares	Percentage
Hsiang-Wei Investment Corp.	15,052,090	5.50
YitsangInternational Limited Company	13,946,100	5.09
Tung-Hsin Investment Corp.	13,866,000	5.06
Pamirs Capital(H.K.)	6,540,700	2.39
Ashmore SICAV Emerging Market Global Small-Cap Equity Fund	6,132,500	2.24
KGI	3,836,758	1.40
Altek Employees’ RSA Trust Account	3,630,000	1.33
Credit Suisse�Renaissance	3,343,200	1.22
Unique TechnologyCo.,Ltd.	3,097,304	1.13
Vanguard Total International Stock Index Fund a series ofVanguard Star Funds	2,489,353	0.91

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

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share	4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share	4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share	4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share	4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share	4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share
Unit: NT$
Year Item			2014	2015	2016 (as of Mar. 31)
Market Price per Share	Highest Market Price		40.90	40.60	31.10
	Lowest Market Price		21.00	17.75	21.85
	Average Market Price		30.07	30.88	27.14
Net Worth per Share	Before Distribution		35.81	34.93	34.16
	After Distribution		34.81	Note 1	�
Earnings per Share	Weighted Average Shares (thousand shares)		345,978	269,237	265,840
	Earnings Per Share		0.80	1.02	(0.18)
Dividends per Share	Cash Dividends		1.0036	Note 1	�
	Stock Dividends	�	�	�	�
		�	�	�	�
	Accumulated Undistributed Dividends		�	�	�
Return on Investment	Price/Earnings Ratio(Note 2)		37.5875	30.2745	�
	Price/Dividend Ratio(Note 3)		29.9621	Note 1	�
	Cash Dividend Yield Rate		3.3375	Note 1	�

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

Under the Company Law as amended in May 2015, profit sharing bonus to employees has been detached from distribution of company’s earnings. In addition, the newly amended Company Law also requires companies to stipulate in their Articles of Incorporation a fixed amount or ratio of annual profits as profit sharing bonus to employees. The Company expects to amend its Articles of Incorporation, which is to be approved at the Annual Shareholders’ Meeting on June 17, 2016. Based on the proposed amendment, the Company shall have ten percent (10%) to twenty percent (20%) of profit of the current year distributable as employees' compensation and not more than two (2%) of profit of the current year distributable as directors’ remuneration. However, the company's accumulated losses shall have been covered. The Company may have the profit distributable as employees' compensation in the form of shares or in cash. The employees to distribute the compensation include the staffs in the affiliate companies which the Company owns more than fifty percent (50%) of the shares.

Profit of the current year mentioned in the first paragraph shall be profit before tax and employees’ compensation and directors’ remuneration. The Company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation and directors’ remuneration; and in addition thereto a report of such distribution shall be submitted to the shareholders' meeting.

The amount of dividend distributed shall consider the surplus earnings of the year, the accumulated surplus earnings of the previous years and the capital structure as well as the future operation demand. Generally speaking, the dividend distributed will not be less than ten percent (10%) of the profit after deduction of tax of the year if there are no special concerns. The policy of dividend distribution will take funding demand and dilution of surplus earnings per share into account, and both the stock dividend as well as the cash dividend will be distributed together. The ratio of cash dividend distributed will not be lower than twenty percent (20%) of the total dividend distributed of the year. However, the actual amount of distribution will be determined by shareholders in the shareholders’’ meeting.

B. Proposed Distribution of Dividend

	Date for Board of Directors to approve Distribution of Dividend	Shareholders Meeting	Shareholders Meeting	Shareholders Meeting
		Cash Dividend	Capital Surplus (in cash)	Share Dividend
2015	2016.03.18	NTD 134,139,926 (NTD0.5per share)	134,139,926 (NTD0.5per share)	0

Note: The ratio of distribution per share is calculated based on the outstanding stock on March 10[th] , 2016. It is 268,279,852 shares in total, and the 4,413,973 treasury stock has already been deducted. The distribution will be implemented subject to relevant rules after the resolution of the annual shareholders’ meeting on June 17[th] , 2016.

4.1.7 Employee Bonus and Directors' and Supervisors' Remuneration

A. Information Relating to Employee Bonus and Directors’ and Supervisors’ Remuneration in the Articles of Incorporation

The Article of Incorporation prescribes the following for the employee bonus and compensation for directors and supervisors:

10 %~20% as a bonus for employees;
Not exceeding 2 % as compensation for directors and supervisors;
B. The Estimated Basis for Calculating the Employee Bonus and Directors’ and Supervisors’ Remuneration: None.

C. Profit Distribution for Employee Bonus and Directors’ and Supervisors’ Remuneration for 2015 Approved in Board of Directors Meeting

The proposal of surplus earnings distribution has been approved by the board of directors on March 18[th] , 2016, and the compensation for the employees is NTD 45,124,312 dollars and the compensation for the directors and supervisors is NTD 6,016,574 dollars. It’s proposed to distribute the compensation by cash after the approval of the annual shareholders’ meeting. The proposed amount of the compensation for the employees, directors and supervisors is the same as the estimated amount of recognition fees of the year

D. Information of 2014 Earnings Set Aside for Employee Bonus and Directors’ and Supervisors’ Remuneration: None.

4.1.8 Buyback of Treasury Stock

4.1.8 Buyback of Treasury Stock
	April 19,2016
Batch Order	The 8thBatch
Purpose of buy-back	transfer to employees
Timeframe of buy-back	2015.9.9~2015.11.8
Price range	NTD 20�30
Class, quantity of shares bought back	3,433,000 shares
Value of shares bought-back (in NT$ thousands)	NTD 96,138,495
Shares sold/transferred	0
Accumulated number of company shares held	3,433,000 shares
Percentage of total company shares held (%)	1.25%

4.2 Bonds: N.A.

4.3 Preferred Stock :N.A.

4.4 Global Depository Receipts

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options

Type of Stock Option	2ndTranche	2ndTranche	2ndTranche	3rdTranche	3rdTranche
Approvaldate	2008.04.28			2011.06.08
Issue date	2008.06.13	2008.10.31	2009.03.23	2011.10.28	2012.03.21
Units issued (thousand shares)	8,000	1,000	3,000	3,000	3,000
Shares of stock options to be issued as a percentage of outstanding shares (note 1)	2.06%	0.26%	0.77%	0.77%	0.76%
Duration	2008.06.13~ 2017.12.31	2008.10.31~ 2017.12.31	2009.03.23~ 2017.12.31	2011.10.28~ 2020.12.31	2012.03.21~ 2020.12.31
Conversion measures	Issuingnew shares
Conditional conversion periods and percentages	2 years after 3 years after 4 years after	issued: could exercise 40% of total outstanding shares� issued: could exercise 70% of total outstanding shares� issued: could exercise 100% of total outstanding shares�
Converted shares (thousand shares)	5,933	684	2,272	280	1,054
Exercised amount (NTD thousand dollars)	139,099	15,288	43,360	6,748	26,441
Number of shares yet to be converted (thousand shares)	1,400	30	0	2,320	1,405
Adjusted exercise price for those who have yet to exercise their rights (NTD)	32.00	26.80	25.30	33.20	33.00
Unexercised shares as a percentage of total issued shares(note 2)	0.51%	0.01%	0.00%	0.85%	0.51%

Note 1: calculate according to issued shares on date of issuing the ESOP.

Note 2: calculate according to issued share on April 19, 2016 (273,883,825shares).

Unexercised	Converted Shares as a Percentage of Shares Issued	1.08	1.08	1.08	1.08	1.08	1.08	1.08	1.08	1.08	1.08	0.25
	Amount (NT$ thousands)	96,924										22,275
	Strike Price (NT$)	32.00~33.2										33.0
	No. of Shares Converted	2,964										675
Exercised	Converted Shares as a Percentage of Shares Issued	0.29										0.47
	Amount (NT$ thousands)	19,170										30,511
	Strike Price (NT$)	21.2~29.5										21.2~26.9
	No. of Shares Converted	785										1,277
Stock Options as a Percentage of Shares Issued		1.37										0.71
No. of Stock Options		3,749										1,952
Name		Ru Win Hsia	Jason Lin	Steve Shyr	David Lin	Doug Franz	Rick Han	Jack Lee	Vincent Kao	Morgan Chiu	Kenny Li	Other 10 employees
Title		CEO	SVP	SVP	SVP	SVP	VP	VP	VP	VP	VP

April 19, 2016

4.6 Issuance of New Restricted Employee Shares

	April 19, 2016	April 19, 2016
Type of New Restricted Employee Shares	The first Tranche of 2015
Date of Effective Registration	2015.06.22
Issue date	2015.12.08	2016.03.21
Number of New Restricted Employee Shares Issued(thousand shares)	2,440	1,190
Issued Price (NT$)	0	0
New Restricted Employee Shares as a Percentage of Shares Issued	0.89%	0.43%
Vesting Conditions of New Restricted Employee Shares	This is based on the index of the personal performance review. If the employees are still on duty and the personal performance of the year are at least B plus or more than B plus as well as the employee has followed the relevant working rules of the Company, the ratio for the employees to acquire New Restricted Employee Shares is as follows� one year after issuance: 0% of acquired shares; two years after issuance: 50% of acquired shares; threeyears after issuance: 100%of acquired shares
Restricted Rights of New Restricted Employee Shares	If the employees have acquired New Restricted Employee
	Shares before the fulfillment of the conditions, New Restricted
	Employee Shares are not able to sell, pledge, transfer, offer as a
	gift, set the mortgage or dispose in some other ways.
	The attendance of shareholders’ meeting, voting rights and some other rights of shareholders will be managed by the trust custodian institution.
Custody Status of New Restricted Employee Shares	Trust custodian institution will take care of the shares before the fulfillment of duration mentioned above.
Measures to be Taken When Vesting Conditions are not Met	Except the trust custodian limitation mentioned above, the rights of the New Restricted Employee Shares are all the same as the issued common shares of the Company.
Number of New Restricted Employee Shares that have been Redeemed or Bought Back(thousand shares)	0	0
Number of Released New Restricted Employee Shares (thousand shares)	0	0
Number of Unreleased New Restricted Shares(thousand shares)	2,440	1,190
Ratio of Unreleased New Restricted Shares to Total Issued Shares (%)	0.89%	0.43%
Impact on possible dilution of shareholdings	If New Restricted Employee Shares has been fully issued, it’s estimated to enhance 0.89% of the capital stock base on the current outstanding stock. Since the conditions are fulfilled separately, the effect of dilution is verylimited.	If New Restricted Employee Shares has been fully issued, it’s estimated to enhance 0.43% of the capital stock base on the current outstanding stock. Since the conditions are fulfilled separately, the effect of dilution is verylimited.

Note: Calculated according to issued share on April 19, 2016 (273,883,825 shares).

Unreleased	Unreleased Restricted Shares as a Percentage of Shares Issued				0.41%				0.23%
	Amount (NT$ thousands)				0				0
	Strike Price (NT$)				0				0
	No. of Shares				1,130				640
Released	Released Restricted Shares as a Percentage of Shares Issued				0				0
	Amount (NT$ thousands)				0				0
	Issued Price (NT$)				0				0
	No. of Shares				0				0
New Restricted Shares as a Percentage of Shares Issued					0.41%				0.23%
No. of New Restricted Shares					1,130				640
Name		Ru Win Hsia	Jason Lin	David Lin	Rick Han	Vincent Kao	Morgan Chiu	Kenny Li	Other 10 employee
Title		CEO	SVP	SVP	VP	VP	VP	VP

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Main areas of business operations

Research, development, manufacturing and sale of digital imaging-related applications, as well as business associated with the import and export business of the Company.

B. Revenue distribution

B. Revenue distribution
	Unit�NT$ thousands TotalSalesin Year 2015 (%) ofSales 12,492,029 100.00%
Major Divisions	TotalSalesin Year 2015	(%) ofSales
Digital imaging-related applications	12,492,029	100.00%

C. New products development

(1)Dual camera module (fusion, zooming..)

(2)ISP (real time depth, real time zoom, real time fusion..)

(3)Diabetes care products(glucose meter, insulin delivery system..)

(4)ADAS (advanced driving assistance system)

(5)Other image products (wearable camera, sports cam, VR..)

5.1.2 Industry Overview

Please refer to page 49 of the Chinese annual report.

5.1.3 Research and Development

Please refer to page 52 of the Chinese annual report.

A. Research and Development Expenses

Year	2015	2016(As of March 31)
Total Expenses(NT$ thousands)	1,046,831	250,246
% to revenues	8%	10%

B. Ongoing Research and Development Projects and Expenses

Unit: NTD thousand dollars

Ongoing Projects	Completed %	Expense to beinvested	Mass produc -tiondate	Key Success Factors
Smartphone image solution	30%	400,000� 600,000	2016 Q3	To deliver based on customers product launchdate
DSC and sports cam	40%	100,000~ 200,000	2016 Q3	To deliver based on customers product launchdate
Advanced Driving Assistance System	60%	20,000� 40,000	2016 Q4	Customer verification, cost structure
Insulin Delivery System	60%	120,000� 200,000	2016 Q4	Software, Mechanism, WIFI

5.1.4 Long-term and Short-term Development

Please refer to page 53 of the Chinese annual report.

5.2 Market and Sales Overview

Please refer to page 53 of the Chinese annual report.

5.2.1 Market Analysis

A. Sales (Service) Region

Area	2014	2014	2015	2015
	Sales	Non-current Assets	Sales	Non-current Assets
Asia	9,850,869	3,455,509	9,235,699	3,085,704
Europe	1,377,807	�	1,191,005	�
America	2,525	�	29,719	�
Taiwan	4,199,880	2,251,630	2,035,606	2,219,152
Total	15,431,081	5,707,139	12,492,029	5,304,856

5.2.2 Major Suppliers and Clients

Please refer to page 58 of the Chinese annual report.

A. Major Suppliers in the Last Two Calendar Years

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Item	2014				2015				2016 (As of March31)
	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
	Note

Note: Such information is business secret of suppliers and the Company. To protect shareholder’s benefits, it’s not able to disclose herein.

B. Major Clients in the Last Two Calendar Years

Unit: NT$ thousands

Item		2014				2015			2016 (As of March31)	2016 (As of March31)	2016 (As of March31)	2016 (As of March31)
	Company Name	Amount	%	Relation with Issuer	Company Name	Amount	%	Relation with Issuer	Company Name	Amount	%	Relation with Issuer
	Note	15,431,081	100.00		Note	12,492,029	100.00		Note	2,424,840	100.00

Note: Such information is business secret of clients and the Company. To protect shareholder’s benefits, it’s not able to disclose herein.

5.2.3 Production in the Last Two Years

Output Major Products	2014	2014	2014	2015	2015	2015
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Digital imaging-related applications	Note			Note

Note: Such information is the Company’s business secret. To protect shareholder’s benefits, it’s not able to disclose.

5.2.4 Shipments and Sales in the Last Two Years

Year Shipments & Sales( NT$ thousands) Major Products	2014	2014	2014	2014	2015	2015	2015	2015
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Digital imaging-related applications	Note 2	4,199,880	Note 2	11,231,201	Note 2	2,035,606	Note 2	10,456,423

Note 1: Consolidated sales with IFRS.

Note 2: Such information is the Company’s business secret. To protect shareholder’s benefits, it’s not able to disclose herein.

5.3 Human Resources

	Year	2014	2015	Mar. 31, 2016
Number of Employees	Direct and Indirect	493	397	254
	Management	16	15	8
	Total	509	412	262
Average Age		38.98	40.18	41.00
Average Years of Service		5.09	6.50	7.30
Education	Ph.D.	2.36	1.46	0.75
	Masters	49.71	47.82	42.32
	Bachelor’s Degree	44.20	46.36	48.31
	Senior High School	2.55	3.16	6.74
	Below Senior High School	1.18	1.20	1.88

5.4 Environmental Protection Expenditure

5.4.1 Total Losses and Penalties

The loss or penalty caused by environmental pollution during the latest year and up to the printing date of this annual report: None

5.4.2 Countermeasures

The Company is a high-tech company located in Hsinchu Science-base Park, consuming very limited pollution. The Company strictly obeys environmental protection regulations. No environmental protection and safety penalty occurred from the Company and its subsidiaries.

5.5 Labor Relations

5.5.1 Learning & Development

A. Training Plan

The Company arranges annual training plans to address the professional needs of its employees, the professional skills training targets of management and the overall strategic objectives of the organization. Training for individuals, jobs and the organization strikes an optimal balance that gives every employee a tailored training schedule that is solid, well-rounded and targeted on enhancing and expanding skill sets. The Company also offers a broad array of practical courses to meet the educational, technical training and professional needs of employees throughout the company.

Managers arrange a professional training schedule for all new employees. In addition, managers assess the information, technical skills and systems knowledge each new employee should know and, based on such, arrange for individualized training.
All employees receive a monthly bulletin on training opportunities. Work load and schedule permitting, all employees are encouraged to take courses of personal and professional interest, be they training in professional skills, legal affairs, MIS, photography or other competencies. Audio-visual and other tools are used extensively to maximize training and learning efficacies and ensure Altek has ample professional and managerial talent at all levels.
Reflecting technology and development priorities, Altek frequently sponsors employees to join professional training and study programs run by outside organizations in order to expand knowledge and expertise and fully leverage the

professional potentials of employees.

B. Training Course

The Company provides training courses to its employees in the following categories:

Management Development
Professional Training
Quality Training
Employee Safety and Health Training
Generic Training
New Employee Orientation

Please refer to page 60 of the Chinese annual report and company website http://www.altek.com.tw for more information.

5.6 Important Contracts

Agreement	Counterparty	Period	Major Contents	Restrictions
ODM	note	note	To design and manufacture medicalproducts.	Non-disclosure
ODM	note	note	To design and manufacture DSC	Non-disclosure
ODM	note	note	To design and manufacture smartphone imaging products.	Non-disclosure

Note: Such information is business secret. To protect shareholder’s benefit, it’s unable to disclose herein.

VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed Balance Sheet

A. Consolidated Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial Summary for				2016/3/31
		2012	2013	2014	2015
Current assets		10,012,033	9,078,856	9,643,055	9,649,516	9,170,081
Property, Plant and Equipment		5,297,892	5,656,784	5,603,692	5,211,143	5,082,867
Intangible assets		73,079	110,413	103,447	93,713	90,215
Other assets		1,034,715	872,407	502,017	445,806	450,781
Total assets		16,417,719	15,718,460	15,852,211	15,400,17	14,793,944
Current liabilities	Before distribution	5,311,445	4,923,728	5,447,625	5,124,537	4,717,628
	After distribution	5,684,446	4,923,728	5,717,879	�	�
Non-current liabilities		953,879	894,824	724,458	646,789	623,024
Total liabilities	Before distribution	6,265,324	5,818,552	6,172,083	5,771,326	5,340,652
	After distribution	6,638,325	5,818,552	6,442,337	�	�
Share capital		3,961,013	3,902,653	2,701,358	2,726,938	2,738,838
Capital surplus	Before distribution	2,377,444	2,028,690	2,063,551	1,975,772	1,996,879
	After distribution	2,041,743	2,028,690	1,928,424	�	�
Retained earnings	Before distribution	4,912,768	4,374,704	4,426,902	4,536,749	4,489,167
	After distribution	4,875,468	4,374,704	4,291,775	�	�
Other equity interest		(340,799)	27,904	481,868	414,647	261,623
Treasury stock		(768,094)	(440,573)	�	(129,393)	(129,393)
Equity attributable to owners of the parent	Before distribution	10,142,332	9,893,378	9,673,679	9,524,713	9,357,114
	After distribution	9,769,331	9,893,378	9,403,425	�	�
Non-controlling interest		10,063	6,530	6,449	104,139	96,178
Total equity	Before distribution	10,152,395	9,899,908	9,680,128	9,628,852	9,453,292
	After distribution	9,779,394	9,899,908	9,409,874	�	�

B. Consolidated Condensed balance sheet – Based on ROC GAAP

Unit: NT$ thousands

		Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial Summary for
		2011	2012
Current assets		12,832,329	10,289,931
Funds & Long-term investments		653,285	587,372
Fixed assets		3,814,306	3,826,492
Intangible assets		107,279	111,536
Other assets		1,591,349	1,558,127
Total assets		18,998,548	16,373,458
Current liabilities	Before distribution	7,313,878	5,453,899
	After distribution	7,878,687	5,826,900
Long-term liabilities		�	�
Other liabilities		863,271	749,962
Total liabilities	Before distribution	8,177,149	6,203,861
	After distribution	8,741,958	6,576,862
Capital stock		3,955,214	3,961,013
Capital surplus	Before distribution	2,367,802	2,387,988
	After distribution	2,367,802	2,052,287
Retained earnings	Before distribution	5,069,098	4,775,439
	After distribution	4,504,289	4,738,139
Unrealized gain or loss on financial instruments		�	�
Cumulative translation adjustments		143,987	(196,812)
Net loss unrecognized as	pension cost	�	�
Treasury stock		(714,702)	(768,094)
Non-controlling interest		�	10,063
Total equity	Before distribution	10,821,399	10,169,597
	After distribution	10,256,590	9,796,596

6.1.2 Condensed Statement of Comprehe9nsive Income/Condensed Statement of

Income

A. Consolidated Condensed Statement of Comprehensive Income – Based on

IFRS

IFRS
Year Item	Financial Summary for				2016/3/31
	2012	2013	2014	2015
Operating revenue	24,575,459	19,165,825	15,431,081	12,492,029	2,424,840
Gross profit from operations	1,766,651	1,158,836	1,560,966	1,568,786	251,383
Net operating income(loss)	183,551	(63,840)	301,251	226,351	(77,285)
Non-operating income and expense	145,809	(303,661)	9,631	56,160	17,948
Income (loss) before tax	329,360	(367,501)	310,882	282,511	(59,337)
Income (loss) for continued operations	280,103	(330,515)	276,175	274,380	(54,208)
Income (loss) from discontinued operations	�	�	�	�	�
Net Income(loss)	280,103	(330,515)	276,175	274,380	(54,208)
Other comprehensive income (income after tax)	(343,283)	368,703	458,362	(11,764)	(127,506)
Total comprehensive income	(63,180)	38,188	734,537	262,616	(181,714)
Net income attributable to owners of theparent	280,103	(332,012)	275,335	273,643	(47,582)
Net income attributable to non-controllinginterest	�	1,497	840	737	(6,626)
Comprehensive income attributable to owners of theparent	(63,180)	36,691	733,697	265,898	(174,633)
Comprehensive income attributable to non-controllinginterest	�	1,497	840	(3,282)	(7,081)
Earnings(loss) per share	0.75	(0.88)	0.80	1.02	(0.18)

B. Consolidated Condensed Statement of Income – Based on ROC GAAP

Unit: NT$ thousands

Year Item	Financial Summary for	Financial Summary for
	2011	2012
Operating revenue	27,861,489	24,575,459
Gross profit	2,250,677	1,766,651
Income from operations	(139,482)	183,551
Non-operating income	270,198	183,463
Non-operating expenses	(7,581)	(37,654)
Income from operations of continued segments - before tax	123,135	329,360
Income from operations of continued segments - after tax	191,843	280,103
Income from discontinued operations	�	�
Extraordinary gain or loss	�	�
Cumulative effect of accounting principle changes	�	�
Net income	191,843	280,103
Comprehensive income attributable to Shareholders of theparent	191,843	280,103
Comprehensive income attributable to non-controllinginterest	�	�
Earnings per share	0.51	0.75

6.1.3 Auditors’ Opinions from 2011 to 2015

Year	Accounting Firm	CPA	Audit Opinion
2011	PricewaterhouseCoopers	Zeng, Guo-Hua Wang, Wei-Chen	unqualified opinion
2012	PricewaterhouseCoopers	Zeng, Guo-Hua Wang, Wei-Chen	unqualified opinion
2013	PricewaterhouseCoopers	Zeng, Guo-Hua Wang, Wei-Chen	unqualified opinion
2014	PricewaterhouseCoopers	Lin, Yu-Kuan Wun, Fang-Yu	unqualified opinion
2015	PricewaterhouseCoopers	Lin, Yu-Kuan Li, Dian-Yi	unqualified opinion

6.2 Five-Year Financial Analysis

A. Consolidated Financial Analysis – Based on IFRS

Item	Year	Year		Financial Analysis for	Financial Analysis for		2016/ 3/31
			2012	2013	2014	2015
Financial structure (%)	Debt Ratio		38.16	37.02	38.94	37.48	36.10
	Ratio of long-term capital to property, plant and equipment		209.64	190.83	185.67	197.19	198.24
Solvency (%)	Current ratio		188.50	184.39	177.01	188.30	194.38
	Quick ratio		151.89	153.51	151.85	165.33	164.79
	Interest earned ratio(times)		187.92	�	19.00	14.88	�
Operating performance	Accounts receivable turnover (times)		7.07	5.80	5.60	5.30	4.84
	Average collectionperiod		51.62	62.93	65.17	68.86	75.41
	Inventoryturnover(times)		10.62	10.55	9.98	8.36	6.20
	Accounts payable turnover (times)		5.46	6.37	5.10	4.08	4.14
	Average days in sales		34.36	34.59	36.57	43.66	58.87
	Property, plant and equipment turnover(times)		4.64	3.50	2.74	2.31	0.47
	Total assets turnover(times)		1.38	1.19	0.98	0.80	0.16
Profitability	Return on total assets(%)		1.59	(2.00)	1.84	1.86	(0.32)
	Return on stockholders' equity (%)		2.67	(3.30)	2.82	2.84	(0.57)
	Pre-tax income to paid-in capital (%)		8.32	(9.42)	11.51	10.36	(2.17)
	Profit ratio(%)		1.14	(1.72)	1.79	2.20	(2.24)
	Earnings per share (NT$)	before adj.	0.75	(0.88)	0.80	1.02	(0.18)
		after adj.	0.75	(0.88)	0.80	�	�
Cash flow	Cash flow ratio	(%)	�	�	21.2	6.16	�
	Cash flow adequacy ratio (%)		108.16	95.69	42.36	62.43	0.74
	Cash reinvestment ratio (%)		�	�	9.33	0.36	�
Leverage	Operating leverage		16.72	�	8.39	10.88	�
	Financial leverage		1.01	0.85	1.06	1.10	0.92

B. Consolidated Financial Analysis – Based on ROC GAAP

Item	Year	Year	Financial Analysis for	Financial Analysis for
			2011	2012
Financial structure (%)	Debt Ratio		43.04	37.89
	Ratio of long-term capital to fixed assets		204.29	191.96
Solvency (%)	Current ratio		175.45	188.67
	Quick ratio		139.95	147.34
	Interest earned ratio (times)		123.64	187.92
Operating performance	Accounts receivable turnover (times)		6.21	6.48
	Average collection period		58.78	56.34
	Inventory turnover (times)		10.38	10.62
	Accounts payable turnover (times)		4.98	5.46
	Average days in sales		35.17	34.36
	Fixed assets turnover (times)		5.73	4.64
	Total assets turnover (times)		1.44	1.39
Profitability	Return on total assets (%)		1.00	1.59
	Return on stockholders' equity (%)		1.77	2.67
	Ratio to issued capital (%)	Operating income	(3.53)	4.63
		Pre-tax income	3.11	8.32
	Profit ratio (%)		0.69	1.14
	Earnings per share (NT$)	before adjustment	0.51	0.75
		after adjustment	0.51	0.75
Cash flow	Cash flow ratio (%)		25.56	�
	Cash flow adequacy ratio (%)		95.30	103.11
	Cash reinvestment ratio (%)		8.45	�
Leverage	Operating leverage		�	16.72
	Financial leverage		0.99	1.01

6.3 Supervisors’ /Audit Committee’s Report for the Most Recent Year

Supervisors’ Audit Report

To�The 2016 General Meeting of Shareholders

The undersigned has duly audited the Operating Report, Financial Statements certified by CPA Mrs. Yu Kuan Lin and Mr. Dian Yi Li of Pricewaterhouse Coopers Firm (pwc) together with the Schedule of Surplus Earnings Distribution prepared by the Board of Directors for the year of 2015 and found the same to be true and correct. Therefore, in accordance with Article 219 of the Company Law of the Republic of China, the undersigned takes pleasure in submitting this report for your perusal and acceptance.

Altek Corporation Supervisors:

Tim Liou

Amy Chien

Alex Liou

March 18, 2016

6.4 Consolidated Financial Statements for the Years Ended December 31, 2015

and 2014, and Independent Auditors’ Report

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR15000184 (In Thousands of New Taiwan Dollars)

To Altek Corporation

We have audited the accompanying consolidated balance sheets of Altek Corporation and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements referred to above present fairly, in all material respects, the financial position of Altek Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

~1~

We have also audited the parent company only financial statements of Altek Corporation as of the years ended December 31, 2015 and 2014. In our report dated March 18, 2016, we expressed an unqualified opinion on these financial statements.

PricewaterhouseCoopers, Taiwan Hsinchu, Taiwan Republic of China

March 18, 2016

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.

~2~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

Assets	December31,2015 AMOUNT % � �� �� �� � �� � �� �� �� � �� � �� � �� � �� � �� �� �� � �� � �� �� �� � �� � �� � �� �� � �� ��	December31,2014	December31,2014
	AMOUNT � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� � ��	AMOUNT � �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� �� � ��	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Current income tax assets Inventories, net Prepayments Other current assets Current Assets Non-current assets Financial assets at cost - non current Investments accounted for using equity method Property, plant and equipment, net Intangible assets Deferred income tax assets Other non-current assets Non-current assets Total assets			�� � � �� � � � � �
			��
			� � �� � � �
			��
			��

(Continued)

~3~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

Liabilities andEquity	December31,2015 December31,2014 Notes AMOUNT % AMOUNT % 6(10) � �� �� �� � 12(2) �� �� �� �� 12(2) �� � �� � �� � �� � 6(13) �� � �� � �� � �� � �� �� �� �� 6(13) �� � �� � 6(23) �� � �� � 6(11) �� � �� � �� � �� � �� �� �� �� 6(14) �� �� �� �� 6(15) �� �� �� �� 6(16) �� � �� � �� � �� � �� �� �� �� 6(17) �� � �� � 6(14) � �� �� � � �� �� �� �� �� � �� � �� �� �� �� 9 11 � �� �� �� ��	December31,2014	December31,2014
			%
Current liabilities Short-term borrowings Accounts payable Other payables Current income tax liabilities Provisions for liabilities - current Other current liabilities Current Liabilities Non-current liabilities Provisions for liabilities - noncurrent Deferred income tax liabilities Other non-current liabilities Non-current liabilities Total Liabilities Equity attributable to owners of parent Share capital Common stock Capital surplus Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Other equity interest Other equity interest Treasury stocks Equity attributable to owners of the parent Non-controlling interest Total equity Significant contingent liabilities and unrecognised contract commitments Significant subsequent event after the balance sheet date Total liabilities and equity			� �� � � � �
			��
			� � �
			�
			��
			�� �� � � �� � �
			��
			�
			��
			��

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

~4~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars,except earning per share amounts)

Items

Year ended December 31
2015
2014
Notes
AMOUNT
%
AMOUNT
%
�
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6(21)(22)
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6(23)
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Sales revenue
Operating costs

Net operating margin
Operating expenses

Selling expenses
General & administrative expenses
Research and development expenses
Total operating expenses
Operating profit
Non-operating income and expenses
Other income

Other gains and losses

Finance costs

Share of loss of associates and joint
ventures accounted for under equity
method

Total non-operating income and
expenses
Profit before income tax
Income tax expense

Profit for the year

(Continued)

~5~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars,except earning per share amounts)

					Year	ended	December 31	December 31
					2015			2014
Items		Notes			AMOUNT	%		AMOUNT	%
Other comprehensive income Components of other comprehensive
income that will not be reclassified to
profit or loss Actuarial gain on defined benefit plan 6(11) �� �� � �								��	�
Income tax related to components of	6(23)
other comprehensive income that will
not be reclassified to profit or loss					��	�	� ��		�
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 Currency translation differences of
foreign operations			�		��	�	��		�
Share of other comprehensive loss of
associates and joint ventures
accounted for under equity method			�		��	�	��		�
Income tax relating to the components	6(23)
of other comprehensive income					��	�	� ��		��
Components of other
comprehensive income that will
be reclassified to profit or loss			�		��	�	��		�
Total other comprehensive (loss)
income for the year			��		��	�	�	��	�
Total comprehensive income for the
year				�	��	�	�	��	�
Profit, attributable to: Owners of the parent � �� � �								��	�
Non-controlling interest					��	�	��		�
Profit for the year				�	��	�	�	��	�
Comprehensive income attributable
to: Owners of the parent � �� � �								��	�
Non-controlling interest			�		��	�	��		�
Total comprehensive income for
the year				�	��	�	�	��	�
Basic earnings per share 6(24) Total basic earnings per share � �� �									��
Diluted earnings per share 6(24) Total diluted earnings per share � �� �									��

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

~6~

										Total equity			� ��			�		��	�		� ��	� ��	��		��	� ��		� ��		� ��			�			� ��		��		�	� ��		�				�	��		� ��	��		� ��
									Non-controlling	interest			� ��			�		�	�		� ��	�	��		�	� ��		� ��		� ��			�			�		�		�	�		��				� ��	��		� ��	��		� ��
										Total			��			�		��	�		�	��	��		��	�		��		��			�			��		��		�	��		��				��	��		��	�		��
													�									�						�		�						�					�		�							�			�
										Treasury stocks			�� ��			�		�	��		�	��	�		�	�		� �		� �			�			�		�		�	� ��		�				�	�		�	�		�� ��
ALTEK CORPORATION AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained Earnings Other equity interest	Currency	translation	differences of	Unappropriated foreign Other equity -	Legal reserve Special reserve retained earnings operations others			� �� � �� � �� � �� � �			� � �� �� � �		� � � � �	� � � �� � �		� � � � �	� � � �� � �	� � �� � �		� � �� �� �	� � � � �		� �� � �� � �� � �� � �		� �� � �� � �� � �� � �			�� � � �� � �			� � � �� � �		� � � � ��		� � � � � ��	� � � � �		� � � �� � �				� � � � �	� � �� � �		� � � �� � �� �	� � � � �		� �� � �� � �� � �� �� ��	The accompanying notes are an integral part of these consolidated financial statements.	~7~
										Capital surplus			��			�		��	� ��		�	� ��	�		�	�		��		��			�			� ��		��		��	�		�				��	�		�	�		��
										Common stock			� ��			�		��	� ��		�	� ��	�		�	�		� ��		� ��			�			�		��		��	�		�				�	�		�	�		� ��
										Notes	For the year ended December	31, 2014	Balance at January 1, 2014	Appropriation of 2013 6(16)	losses	Special reserve	Share-based payment 6(12)(14)(15	transactions )	Disposal of treasury shares 6(14)(15)	Distribution of subsidiary	cash dividends	Cash capital reduction 6(14)(15)	Profit for the year 6(16)	Other comprehensive 6(17)	income for the year	Non-controlling interest 6(25)	Balance at December 31,	2014 For the year ended December 57	31, 2015	Balance at January 1, 2015	Appropriation of 2014 6(16)	earnings	Legal reserve	Cash dividends and capital	surplus used to issue	cash to shareholders	Share-based payment 6(12)(14)(15	transactions )(17)	Issuance of restricted shares 6(12)(14)(15	to employees )(17)	Purchase of treasury shares 6(14)	Changes in ownership	interests in subsidiaries	Difference between 6(15)(25)	consideration and	carrying amount of	subsidiaries acquired	Profit for the year 6(16)	Other comprehensive 6(17)	income for the year	Non-controlling interest 6(25)	Balance at December 31,	2015

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Years ended December 31

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense
Amortisation expense
Provision for doubtful accounts
Net (gains) loss on financial assets at fair value through
profit or loss
Impairment loss on investments accounted for using
equity method
Impairment of financial assets
Gain on disposal of financial assets at amortised cost
Interest expense
Interest income
Cash dividends income
Share-based payment compensation cost
Share of loss of associates and joint ventures accounted
for under equity method
Gain on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Other payables
Provisions for liabilities
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Cash dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

Notes
2015
2014
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6(7)(21)
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6(8)(21)
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6(4)
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6(2)(19)
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6(6)(19)
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6(5)(19)
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6(5)(19)
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6(20)
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6(18)
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6(12)
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(Continued)

~8~ 58

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

Years ended December 31

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at cost
Proceeds from liquidation of financial assets measured at
cost
Proceed from capital reduction of financial assets at cost
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in intangible assets
Decrease (increase) in refundable deposits
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Decrease in guarantee deposits
Employee stock options exercised
Proceeds to acquire treasury stock
Payments of cash dividends
Payments for cash capital reduction
Changes in non-controlling interest
Net cash flows used in financing activities
Effect of exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2015
2014
��
��
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6(27)
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6(27)
�
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6(10)
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6(14)
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6(1)
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6(1)
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��

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

~9~ 59

ALTEK CORPORATIONAND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of new Taiwan dollars, unless stated otherwise)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, and related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the Tai-Tz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on March 18, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued by FSC on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taipei Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and Regulations Governing the Preparation of Financial Reports by Securities Issuers effective January 1, 2015 (collectively referred herein as the “2013 version of IFRS”) in preparing the consolidated financial statements. The impact of adopting the 2013 version of IFRS is listed below:

~10~

A. IAS 19 , ‘Employee benefits’
The revised standard makes amendments that net interest amount, calculated by applying the discount rate to the net defined benefit asset or liability, replaces the finance charge and expected return on plan assets. The revised standard eliminates the accounting policy choice that the actuarial gains and losses could be recognised based on corridor approach or recognised in profit or loss. The revised standard requires that the actuarial gains and losses can only be recognised immediately in other comprehensive income when incurred. Past service cost will be recognised immediately in the period incurred and will no longer be amortised using straight-line basis over the average period until the benefits become vested. An entity is required to recognise termination benefits at the earlier of when the entity can no longer withdraw an offer of those benefits and when it recognises any related restructuring costs, rather than when the entity is demonstrably committed to a termination.
B. IAS 1, ‘Presentation of financial statements’
The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassified to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.
C. IFRS 13, ‘Fair value measurement’

The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. Also, the standard requires disclosures about fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group will disclose additional information about fair value measurements accordingly.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

None.

~11~

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC:

version of IFRS as endorsed by the FSC:

New Standards,InterpretationsandAmendments

Effective Date by
International Accounting
StandardsBoard

IFRS 9, ‘Financial instruments'
Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)
Investment entities: applying the consolidation exception (amendments
to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)
IFRS 14, 'Regulatory deferral accounts'
IFRS 15, ‘Revenue from contracts with customers'
IFRS 16, 'Leases'
Disclosure initiative (amendments to IAS 1)
Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealised losses (amendment to
IAS 12)
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Defined benefit plans: employee contributions
(amendments to IAS 19R)
Equity method in separate financial statements (amendments to IAS 27)
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’
Improvements to IFRSs 2010-2012
Improvements to IFRSs 2011-2013
Improvements to IFRSs 2012-2014

January 1, 2018
To be determined by
International Accouting
Standards Board
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2018
January 1, 2019
January 1, 2016
January 1, 2017
January 1, 2017
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
July 1, 2014
July 1, 2014
January 1, 2016

The Group is assessing the potential impact of the new standards, interpretations and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

~12~

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).
(2) Basis of preparation
A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls and 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 unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

~13~

c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised 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 recognised 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.

(Blank below)

~14~

Ownership (%)	Name of Investor Name of Subsidiaries Main Business Activities December 31, 2015 December 31, 2014 Note	Altek Corporation Altek International Investment Co., Ltd. Investments and general business operations 100% 100%	" Altek Japan Corporation Sales and design of optical instruments 100% 100%	" Altek Investment Co., Ltd. Investments 100% 100%	" Altek Autotronics Corporation Research design, manufacture and sales of car electronic components 99.59% 98.02% Note 1	" Altek Biotechnology Corporation Research and development, manufacture and sales of biotechnology 100% 100%	Altek International Altek Lab Inc. Design service 100% 100%	Investment Co., Ltd.	" Altek Optical (Cayman) Co., Ltd. Investments and general business operations 100% 100%	" Altek Semiconductor (Cayman) Co., Ltd. Investments and general business operations 71.43% 100% Note 2	Note 3 Altek (Kunshan) Co., Ltd. Manufacture and sales of digital still camera and its accessories 100% 100%	Note 3 Altek EMS (Kunshan) Co., Ltd. Manufacture and sales of related engineering services 100% 100%	Note 3 Altek Imaging Technology (Shanghai) Limited Manufacture and sales of optical components - 100% Note 4	Note 3 Altek Precision (Kunshan) Co., Ltd. Manufacture and sales of digital camera parts 100% 100%	Note 3 Altek Trading (Shanghai) Limited Wholesale, import and export of related electronic and their 100% 100%	associated accessories	Altek Semiconductor Altek Semiconductor Corporation Research design and sales of ASIC 100% 100%	(Cayman) Co., Ltd.	Altek Trading (Shanghai) Beijing Altek Image Communication Technology Co., Sales of electronic and their related accessories - 100% Note 4	Limited Ltd.	Note 3 Altek Optical Technology (Kunshan) Co., Ltd. Manufacture and sales of related electronic services and its 100% 100%	accessories and optical components	Note 1: Ownership increased due to subsidiary’s continued repurchase of shares of Altek Autotronics Corporation.	Note 2: The Group did not participate in the subsidiary’s capital increase, thus, the share ownership was decreased.	Note 3: Altek International Investment Co., Ltd.’s wholly- owned subsidiaries - Leading Tech. Co., Ltd.�Toptek Investment Cayman Co., Ltd.�Altek Imaging Technology (Cayman) Co., Ltd.�Altek Trading (Cayman)	Co., Ltd.�Altek Optical Technology (Cayman) Co., Ltd. which Altek International Investment Co., Ltd. invests other subsidiaries through.	Note 4: Altek Imaging Technology (Shanghai) Limited and Beijing Altek Image Communication Technology Co., Ltd. have completed the liquidation in the fourth quarter of 2015.

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: None.
(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

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 recognised in profit or loss in the period in which they arise.
b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised 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 recognised in profit or loss as part of the fair value gain 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 recognised 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 other 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 operating results 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

~16~

iii. All resulting exchange differences are recognised in other comprehensive income.

b) On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings for long-term investment purpose and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income.
c) When a foreign operation is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale.
d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(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 realised, 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 realised 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.

(6) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following

~17~

criteria are designated as at fair value through profit or loss on initial recognition:

a) Hybrid contracts; or
b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
B. On a regular way purchase or sale basis, financial assets held for trading are recognised and derecognised using trade date accounting.
C. Financial assets at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.

(7) Accounts receivable

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(8) 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 Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
e) The disappearance of an active market for that financial asset because of financial difficulties;
f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or

~18~

local economic conditions that correlate with defaults on the assets in the group;

g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
a) Financial assets measured at amortised 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 recognised 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 recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.
b) Financial assets measured 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 return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(9) Derecognition of financial assets

The Group derecognises 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 Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

(10) Lease receivables/ leases (lessor)

An operating lease is a lease other than a finance lease. Lease income from an operating lease (net

~19~

of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(11) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress 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 realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(12) Investments accounted for under the equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost. The Group’s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts

~20~

previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

(13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised 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 derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives.
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 patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

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The estimated useful lives of property, plant and equipment are as follows:

Buildings	3 years ~ 40 years
Machinery	3 years ~ 10 years
Test equipment	3 years ~ 6 years
Other equipment	1 years ~ 11 years

(14) Intangible assets

Intangible assets consist of software costs and are amortized on a straight-line basis over its estimated useful life of 1 to 5 years.

(15) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. 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 amortised historical cost would have been if the impairment had not been recognised.

(16) Borrowings

A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(17) 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 recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(18) Provisions for other liabilities

Provisions (including warranties) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably

~22~

estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(19) Employee benefits
A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans 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 high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
- ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
C. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognized relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12

~23~

months after balance sheet date shall be discounted to their present value.

D. Employees’ remuneration (bonus) and directors’ and supervisors’ remuneration Employees’ remuneration (bonus) and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. The Company calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.
(20) Employee share based payment
A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.
B. Restricted stocks:
- (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period.
- (b) For restricted stocks where those stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Group recognized the fair value of the dividends received by the employees who are expected to resign during the vesting period as compensation cost at the date of dividends declared.
- (c) For restricted stocks where employees do not need to pay to acquire those stocks, if the Group will pay the employees who resign during the vesting period to repurchase the stocks, the Group estimates such payment that will be made and recognizes such amounts as compensation cost and liability at the grant date in accordance with the terms of restricted stocks.

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(21) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognised, 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 (and laws) 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 realised or the deferred income tax liability is settled.
D. Deferred income tax assets are recognised 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, unrecognised and recognised deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise 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 realise the asset and settle the liability simultaneously.

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F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

(22) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(23) 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.

(24) Revenue recognition

The Group manufactures and sells digital image technology application products. Revenue is measured at the fair value of the consideration received or receivable taking into account of 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 should be recognised 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 G roup retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

(25) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

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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:

Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of obsolete inventories on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories 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.

As of December 31, 2015, the carrying amount of inventories was $1,061,419.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Checking accounts and demand deposits Time deposits Total	December31,2015 1,139 $ 282,049 5,458,785 5,741,973 $	December31,2014
		1,194 $ 126,864 5,313,792
		5,441,850 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss
Items Current items: Financial assets held for trading Valuation adjustment Total	December31,2015 425,032 $ 2,499 427,531 $	December31,2014
		361,658 $ 497
		362,155 $

The Group recognized net loss of $11,190 and $4,638 for the years ended December 31, 2015 and 2014, respectively.

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(3) Accounts receivable

Accounts receivable Less: allowance for bad debts (	December31,2015 2,252,282 $ 534) ( 2,251,748 $	December31,2014 2,367,831 $ 37) 2,367,794 $

A.The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s Credit Quality Control Policy:

Group 1 Group 2	December31,2015 2,156,195 $ 91,433 2,247,628 $	December31,2014
		2,357,895 $ 8,784
		2,366,679 $

Note:

Group 1: Including domestic and foreign listed companies and their affiliated companies. Group 2: Others.

B.The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Up to 30 days 31 to 90 days 91 to 180 days	December31,2015 565 $ 3,312 243 4,120 $	December31,2014
		1,077 $ 38 -
		1,115 $

The above ageing analysis was based on past due date.

C.Movements on the Group’s provision for impairment of accounts receivable are as follows:

Individualprovision At January 1 37 $ Provision for impairment 502 Effects of foreign exchange 5) ( At December 31 534 $ Individualprovision At January 1 652,675 $ Provision for impairment 37 Write-off of uncollectible receivable (Note) 652,675) ( At December 31 37 $		2015	Total 37 $ 502 5) ( 534 $ Total 652,675 $ 37 652,675) ( 37 $
		Group provision - $ - - - $ 2014
		Group provision - $ - - - $

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Note: The impaired financial assets refer to receivables from Kodak US which has filed for bankruptcy protection. The full amount of the unrecovered receivables was recorded as impaired. The possibility of recovery of receivables was assessed to be low during the second quarter of 2014, thus, the receivables were eliminated.

D.The Group does not hold any collateral as security.

(4) Inventories

Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total			December31,2015	Bookvalue 461,225 $ 119,509 480,685 1,061,419 $
		Cost 586,514 $ 145,078 591,776 1,323,368 $	Allowance for valuation loss 125,289) ($ 25,569) ( 111,091) ( 261,949) ($ December 31,2014
		Cost 497,182 $ 236,833 555,805 1,289,820 $	Allowance for valuation loss 70,708) ($ 23,157) ( 19,594) ( 113,459) ($	Book value 426,474 $ 213,676 536,211 1,176,361 $

The cost of inventories recognised as expense for the years ended December 31, 2015 and 2014 was $10,923,243 and $13,870,115, respectively, including the amount of $103,880 and ($204), respectively, that the Group wrote down from cost to net realizable value accounted for as ‘cost of goods sold’ or that the Group reversed from a previous inventory write-down and accounted for as reduction of ‘cost of goods sold’.

(5) Financial assets measured at cost

Items Non-current items: Unlisted stocks Less: Accumulated impairment ( Total	December 31,2015 156,591 $ 12,596) ( 143,995 $	December 31,2014 241,402 $ 90,033) 151,369 $

A. As the Group’s investment in unlisted stocks are not traded in an active market, and no sufficient industry information of companies similar to these stocks financial information can be obtained, the fair value of the investment in unlisted stocks cannot be measured reliably. The Group classified those stocks as ‘financial assets measured at cost’.

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B. Financial assets measured at cost – Pac-line Opportunity Fund has completed the liquidation on December 23, 2015. The Company recognised disposal of financial assets at Pac-line Opportunity Fund’s carrying amount of $21,647. The actual amount recovered was $32,480 and gain on disposal of investments of $10,833 was recognised.
C. The Group assessed and recognized impairment loss of $880 for the year ended December 31, 2014.
D. As of December 31, 2015 and 2014, no financial assets measured at cost held by the Group were pledged to others.

(6) Investments accounted for under the equity method

JinJing Optical Technology Co., Ltd. Phoenix Optical (Shanghai) Co., Ltd. Less: accumulated impairment loss	December 31,2015 44,028 $ 151,420 195,448 57,242) ( 138,206 $	December 31,2014 61,214 $ 155,107 216,321 36,801) ( 179,520 $

The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

As of December 31, 2015 and 2014, the carrying amount of the Group’s individually immaterial associates amounted to $138,206 and $179,520, respectively.

		December 31,2015		December 31,2014
Loss for the period from continuing operations	($	79,237)	($	373,515)
Other comprehensive income-net of tax	(	12,930)		-
Total comprehensive loss	($	92,167)	($	373,515)

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			Total		7,666,579 $		2,062,887)	5,603,692 $		5,603,692 $	105,791	-	-	426,624)	71,716)	5,211,143 $		7,585,266 $		2,374,123)	5,211,143 $
							(							(	(					(
			Others		711,759 $		467,168) (	244,591 $		244,591 $	87,873	-	-	136,413) (	4,243) (	191,808 $		740,695 $		548,887) (	191,808 $
Construction	in progress and	prepayment for	equipment		2,695 $		-	2,695 $		2,695 $	12,974	-	240) (	-	86) (	15,343 $		15,343 $		-	15,343 $
		Test	equipment		221,421 $		178,466) (	42,955 $		42,955 $	3,512	-	-	21,861) (	618) (	23,988 $		201,217 $		177,229) (	23,988 $
			Machinery		1,914,467 $		920,394) (	994,073 $		994,073 $	1,334	-	240	172,772) (	18,428) (	804,447 $		1,868,136 $		1,063,689) (	804,447 $
			Buildings		3,774,021 $		496,859) (	3,277,162 $		3,277,162 $	98	-	-	95,578) (	48,341) (	3,133,341 $		3,717,659 $		584,318) (	3,133,341 $
			Land	At January 1, 2015	Cost 1,042,216 $	Accumulated depreciation	and impairment -	1,042,216 $	2015	Opening net book amount 1,042,216 $	Additions -	Disposals -	Reclassifications -	Depreciation charge -	Net exchange differences -	Closing net book amount 1,042,216 $	At December 31, 2015	Cost 1,042,216 $	Accumulated depreciation	and impairment -	1,042,216 $

Construction	in progress and	Test prepayment for	Land Buildings Machinery equipment equipment Others Total	At January 1, 2014	Cost 1,042,216 $ 3,637,511 $ 2,297,655 $ 211,774 $ 24,235 $ 567,879 $ 7,781,270 $	Accumulated depreciation	and impairment - 384,930) ( 1,223,233) ( 144,247) ( - 372,076) ( 2,124,486) (	1,042,216 $ 3,252,581 $ 1,074,422 $ 67,527 $ 24,235 $ 195,803 $ 5,656,784 $	2014	Opening net book amount 1,042,216 $ 3,252,581 $ 1,074,422 $ 67,527 $ 24,235 $ 195,803 $ 5,656,784 $	Additions - - 15,584 2,267 3,512) ( 124,528 138,867	Disposals - - 53 27 - 179) ( 99) (	Reclassifications - - 3,680 - 18,225) ( 13,590 955) (	Depreciation charge - 93,880) ( 155,413) ( 29,009) ( - 98,946) ( 377,248) (	Net exchange differences - 118,461 55,747 2,143 197 9,795 186,343	Closing net book amount 1,042,216 $ 3,277,162 $ 994,073 $ 42,955 $ 2,695 $ 244,591 $ 5,603,692 $	At December 31, 2014	Cost 1,042,216 $ 3,774,021 $ 1,914,467 $ 221,421 $ 2,695 $ 711,759 $ 7,666,579 $	Accumulated depreciation	and impairment - 496,859) ( 920,394) ( 178,466) ( - 467,168) ( 2,062,887) (	1,042,216 $ 3,277,162 $ 994,073 $ 42,955 $ 2,695 $ 244,591 $ 5,603,692 $

(8) Intangible assets

(8)Intangible assets
			2015				2014
At January 1
Cost		$		138,662	$		141,213
Accumulated amortisation and impairment	(			35,215)	(		30,800)
		$		103,447	$		110,413
Year ended December 31
Opening net book amount		$		103,447	$		110,413
Additions				2,676			6,085
Amortisation charge	(			14,497)	(		18,489)
Net exchange differences				2,087			5,438
Closing net book amount		$		93,713	$		103,447
At December 31
Cost		$		130,369	$		138,662
Accumulated amortisation and impairment	(			36,656)	(		35,215)
		$		93,713	$		103,447
A. Details of amortisation on intangible assets are as			follows:
		Year ended		December	Year		ended December
			31,2015				31,2014
Operating costs		$		7,685	$		7,459
Operating expense				6,812			11,030
		$		14,497	$		18,489
B.The Group has no intangible assets pledged to others.
(9)Long-term prepaid rents ( shown as‘Other non-current assets’)
			December	31,2015		December 31,2014
Land-use right		$		39,003	$		40,957
The Group recognized amortisation expenses for		the years ended December					31, 2015 and 2014
amounting to $1,032 and $999, respectively.
(10)Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Unsecured borrowings Type of borrowings Bank borrowings Unsecured borrowings	December 31,2015 1,730,000 $ December 31,2014 1,410,000 $	Interest rate range 1.14%~1.3% Interest rate range 1.21%~1.36%	Collateral
			None Collateral
			None

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(11) Pensions

A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

(b) The amounts recognised in the balance sheet are as follows:

		December31,2015	December	31,2014
Present value of defined benefit	($	68,753)	($	62,721)
obligations
Fair value of plan assets		48,985		47,686
Net defined benefit liability	($	19,768)	($	15,035)

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 demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	62,721) ($ 52) ( 1,255) ( 64,028) ( - - 2,284) ( 2,441) ( 4,725) ( - 68,753) ($		47,686 $ - 954 48,640 333 - - - 333 12 48,985 $	15,035) ($ 52) ( 301) ( 15,388) ( 333 - 2,284) ( 2,441) ( 4,392) ( 12 19,768) ($

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Year ended December 31, 2014 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 demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefitliability
	58,795) ($ 47) ( 1,176) ( 60,018) ( - - - 2,703) ( 2,703) ( - 62,721) ($		46,571 $ - 931 47,502 172 - - - 172 12 47,686 $	12,224) ($ 47) ( 245) ( 12,516) ( 172 - - 2,703) ( 2,531) ( 12 15,035) ($

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earning is less than aforementioned rates, government shall make payment for the deficit after authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The constitution of fair value of plan assets as of December 31, 2015 and 2014 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases		Year ended December 31,2015	Year ended December 31,2014
		1.70% 3.00%	2.00% 3.00%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31, 2015 Effect on present value of defined benefit obligations		Discount rate	Discount rate		Future salaryincreases
	(	Increase1% 7,216) $	Decrease1% 8,447 $		Increase1% Decrease1% 7,504 $ 6,593) ($

The sensitivity analysis above is based on other conditions that are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculate net pension liability in the balance sheet are the same.

The method and assumptions of analysing sensitivity are the same with the previous for the period.

(f) Expected contributions to the defined benefit pension plans of the Group for the year ended December 31, 2016 amount to $12.
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. For the years ended December 31, 2015 and 2014, the Group had recognized pension costs of $35,926 and $35,580, respectively, under the above pension scheme.
b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $49,915 and $46,637 for the years ended December 31, 2015 and 2014, respectively.

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(12) Share-based payment

A.As of December 31, 2015 and 2014, the Company’s share-based payment arrangements were as follows:

Type of arrangement	Grantdate	Quantity granted	Contract period	Vesting conditions
Employee stock options " " " " First time issuance of restricted shares to employees	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012 November 13, 2015	8,000 1,000 3,000 3,000 3,000 2,440	9.6 years 9.2 years 8.8 years 9.2 years 8.9 yesrs 3 years	Note 1 Note 1 Note 1 Note 1 Note 1 Note 2�Note 3

Note 1: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.

Note 2: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 2 years and 3 years and who achieved the performance requirement. The vested ratio is 50% and 50%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.
Note 3: The stocks and dividends distributed to employees during the vesting period shall be given by the Company at no consideration. Employees are not required to return the stocks and dividends if they resign during the vesting period.

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B.Details of the share-based payment arrangements are as follows:

a) For the year ended December 31,2015 and 2014 the share options and the weighted number of average exercise price of compensation plan empolyee stock options of the information revealed:

Options outstanding at beginning of the year Options forfeited Options exercised Options outstanding at end of the year Options exercisable at end of the year Approved and not yet issued options at the end of the year	For the year ended December 31,2015	For the year ended December 31,2015	For the year ended December 31,2014	For the year ended December 31,2014
	No. of options	Weighted-average exercise price (in dollars)(Note)	No. of options	Weighted-average exercise price (in dollars)(Note)
	6,561 1,288) ( 118) ( 5,155 4,417 -	33.60 $ - 34.50 32.80 32.70	15,708 254) ( 8,893) ( 6,561 3,201 -	22.60 $ - 22.19 33.60 32.60

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.
b) The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2015 and 2014 amounted to $37.48 (in dollars) and 30.39 (in dollars). No stock options were excercised during the six-month periods ended December 31, 2015 and 2014.
c) The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

Issue date approved Expiry date June 13, 2008 December 31, 2017 October 31, 2008 December 31, 2017 March 23, 2009 December 31, 2017 October 28, 2011 December 31, 2020 March 21, 2012 December 31, 2020	December31,2015	December31,2015	December31,2014
	No. of shares (in thousands) 1,400 30 - 2,320 1,405	Exercise price (Note)(in dollars) $ 32.00 26.80 - 33.20 33.00	No. of shares Exercise price (in thousands) (Note)(in dollars) 1,555 $ 33.40 256 28.00 366 26.40 2,320 34.70 2,064 34.50

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

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d) The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price (in dollars)	Exercise price (Note 1) (in dollars)	Expected price volatility	Expected option life	Expected dividends	Risk- free interest rate	Fair value per unit (in dollars)
Employee stock options " " " "	June 13, 2008 October 31, 2008 March 23, 2009 October 28, 2011 March 21, 2012	$ 45.50 32.60 30.90 30.65 27.85	$ 33.40 28.00 26.40 34.70 34.50	24.45% 22.11% 22.63% 30.27% 33.54%	6 years 6 years 6 years 5 years 4.9 years	1.5% 1.5% 1.5% 1.4% 1.4%	2.40% 1.88% 0.96% 1.18% 1.08%	10.56 6.54 5.73 7.42 7.35

Note 1: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.
Note 2: The grant date is close to the exercise date. Fair value per unit is estimated based on its intrinsic value.

C.The information of restricted shares to employees is as follows:

.The information of restricted shares to employees is as follows:
Outstanding opening balance Shares granted Shares retired Outstanding ending balance	Year ended December 31, 2015 (sharein thousands)
	- 2,440 -
	2,440

D.Expenses incurred on share-based payment transactions are shown below:

(13)	Provisions Equity-settled At January 1, 2015 Additional provisions Exchange differences At December 31, 2015 Current Non-current	For the year ended December31,2015 5,113 $ December 31,2015 36,998 $ 98,880 $	For the year ended December31,2014
			6,957 $
			Warranty 184,608 $ 48,626) ( 104) ( 135,878 $ December 31,2014
			64,373 $
			120,235 $

~39~

The Group gives warranties on digital image technology application products sold. Provision for warranty is estimated based on historical warranty data of digital image technology application products.

(14) Share capital

A.As of December 31, 2015, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,726,938 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

(Expressed in thousands of shares)

At January 1 Employee stock options exercised Issuance of restricted stocks Cash capital reduction Purchase of treasury shares ( At December 31	2015 2014 270,136 377,015 118 8,893 2,440 - - 115,772) ( 4,414) - 268,280 270,136

B. Treasury shares
a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

Sharesheld by	Reason for reacquisition		December 31, 2015 (in thousands of shares)	December 31, 2015 (in thousands of shares)
			Number ofshares 981 3,433 4,414	Bookvalue 33,255 $ 96,138 129,393 $
Altek Corporation Altek Corporation	Repurchase shares under the R.O.C Company Law section 187 and the Enterprises Mergers and Acquisitions Act section 12 To be reissued to employees

December 31, 2014�None.

b) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.
c) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should not be pledged

~40~

as collateral and is not entitled to dividends before it is reissued.

d) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.
e) The cancellation of treasury shares was approved by the Board of Directors’ resolution dated November 4, 2013, amounting to $166,250 consisting of 5,000 thousand shares. The capital reduction date was on February 11, 2014, and the registration for cancellation of treasury shares had been completed.
f) The cancellation of treasury shares was approved by the Board of Directors’ resolution on September 22, 2014, amounting to $192,026 consisting of 5,775 thousand shares. The capital reduction date was on October 7, 2014, and the registration for cancellation of treasury shares had been completed.
C. On June 19, 2014, the stockholders have resolved to reduce capital by $1,182,475, by eliminating 118,247,496 shares (including elimination of 2,475,000 treasury shares as a result of the cash capital reduction) and 300 shares out of every thousand shares. The capital reduction ratio was approximately 30% and $3 (in dollars) refund for each share. After the capital reduction, the amount of the Company's issued shares was 275,910,825 shares with a par value of $10 (in dollars), and the paid-in capital was $2,759,108. The capital reduction date was set on September 4, 2014, and the registration for the capital reduction had been completed. The amount of share capital that was refunded amounted to $1,157,725. On September 22, 2014, the Board of Directors has resolved the distribution date of return of share capital as October 24, 2014.
D. For the year ended December 31, 2015 and 2014, the Company issued 118 and 8,893 thousand shares respectively for employee stock options exercised and the registration for issuance had been completed.
E. Under the Enterprise Merger and Acquisition Act, in consideration of business strategies and division of services to increase competitiveness and operational performance, the Company decided to spin-off its medical electronics segment amounting to $400,000 to swap for common shares of Altek Biotechnology Corporation at $10 per share and obtained 40 million shares. The split was resolved by the shareholders on June 2, 2015. On September 8, 2015, the Board of Directors has proposed to set the spin-off date as January 4, 2016.
F. The Board of Directors meeting on April 20, 2015 and the stockholder's meeting on June 2,2015 adopted a resolution to issue employee restricted ordinary shares 4,000 thousands shares. Notification to the competent authority take effect once or issued within one year from the date of arrival. The shares are subscribed at no cost to employees (Accounting policies see Note

~41~

4(19)). The employee restricted ordinary shares issued are subject to certain transfer restrictions before their vesting conditions are met. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.

(15) Capital surplus

Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1, 2015 Employee stock options expenses Employee stock options exercised Issuance of restricted shares to employees Cash dividends from capital Acquisition of ownership interests in subsidiaries At December 31, 2015 At January 1, 2014 Employee stock options expenses Employee stock options exercised Cancellation of treasury shares (Including elimination of treasury shares caused by the cash capital reduction) At December 31, 2014	Share premium	Employee stock options	Difference between proceeds from disposal of subsidiary and book value	Restricted shares to employees	Total
	2,012,075 $ - 3,758 - 135,127) ( - 1,880,706 $ Share premium 1,903,779 $ - 188,687 80,391) ( 2,012,075 $	50,518 $ 2,842 867) ( - - - 52,493 $ Employee stock options 123,953 $ 6,957 80,245) ( 147) ( 50,518 $	958 $ - - - - 623 1,581 $ Difference between proceeds from disposal of subsidiary and book value 958 $ - - - 958 $	- $ - - 40,992 - - 40,992 $ Restricted shares to employees - $ - - - - $	2,063,551 $ 2,842 2,891 40,992 135,127) ( 623 1,975,772 $ Total
					2,028,690 $ 6,957 108,442 80,538) ( 2,063,551 $

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(16) Retained earnings

A. According to the Company’s Articles of Incorporation, the annual 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. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Law, and remaining amount shall be distributed in the following order:
(a) allocating 10% to 20% as employees’ bonus;
(b) allocating 2% as directors’ and supervisors’ remuneration;
(c) dividends
Distributing the remaining amount as common stockholders’ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders’ meeting.
B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders’ meeting.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
D. a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

~43~

E. The appropriation of 2014 earnings had been resolved at the stockholders’ meeting on June 2, 2015. The appropriation of 2013 losses had been resolved at the stockholders’ meeting on June 19, 2014. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Amount (in NT dollars) 27,533 $ - - - 135,127 0.5 162,660 $ 2014		2013	2013
	Amount 27,533 $ - 135,127 162,660 $	Amount - $ 196,811) ( - 196,811) ($		Dividends per share (in NT dollars) - - -

The appropriation of 2014 earnings was the same as that approved by the Board of Directors on April 20, 2015. The deficit compensation for 2013 was the same at that approved by the Board of Directors on March 21, 2014. The additional paid-in capital was returned to stockholders as resolved at the stockholders’ meeting on June 2, 2015. Furthermore, on June 2, 2015, the shareholders resolved to return capital surplus of $135,127 (approximately $0.5 per share) to shareholders on the nature of capital contribution.

F. The appropriation of 2015 earnings had been resolved at the Board of Directors meeting on March 18, 2016. Details are summarized below:

March 18, 2016. Details are summarized below:
Legal reserve Cash dividends			2015
		Amount 27,364 $ 134,140 161,504 $	Dividends per share (inNTdollars) - 0.5

Furthermore, on March 18, 2016, the Board of Directors has proposed to return the capital surplus as the nature of capital contribution amounting to $134,140 (about 0.5 dollars per share) to shareholders. Abovementioned appropriation of 2015 earnings and cash distribution with capital surplus is yet to be resolved by the shareholders.

G.The information relating to employees’remuneration (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(22).

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(17) Other equity items

Foreign currency
translation adjustment
At January 1, 2015
481,868
$ Currency translation differences:
Group
2,633
Associates
6,733)
(
Issuance of restricted shares
to employees
-

Share-based payment transactions
-
At December 31, 2015
477,768
$
Foreign currency
translation adjustment
At January 1, 2014
27,904
$ Currency translation differences:
Group
442,443
Associates
11,521
At December 31, 2014
481,868
$

Unearned
compensation
Total
-
$ 481,868
$ -
2,633
-
6,733)
(
65,392)
(
65,392)
(
2,271
2,271
63,121)
($ 414,647
$ Unearned
compensation
Total
-
$ 27,904
$ -
442,443
-
11,521
-
$ 481,868
$

(18) Other income

Other income
Rental revenue Dividend income Interest income: Interest income from bank deposits Others Other income - others (Note) Total	For the year ended December31,2015 $ 5,822 267 50,233 66 33,804 $ 90,192	For the year ended December31,2014
		$ 15,678 572 68,350 79 94,695
		$179,374

Note: The Company was allotted shares and warrants of Kodak US, due to the property distribution plan of Kodak US. The Company recognized this transaction as other income for the years ended December 31, 2015 and 2014.

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(19) Other gains and losses

(20) (21) (22)	Finance costs Expenses by nature Employee benefit expenses For the year ended For the year ended December 31,2015 December 31,2014 Net losses on financial assets at fair value through profit or loss 11,190) ($ 4,638) ($ Net currency exchange gains (losses) 21,297 2,510) ( Gain on disposal of property, plant and equipment 1,974 19,349 Gain on disposal of financial assets at amortised cost 10,833 - Impairment loss 20,442) ( 14,094) ( Other expenses 870) ( 1,641) ( Total 1,602 $ 3,534) ($ For the year ended For the year ended December 31,2015 December 31,204 Interest expense: Bank borrowings 20,459 $ 17,276 $ For the year ended For the year ended December31,2015 December31,2014 Employee benefit expenses 1,634,084 $ 1,695,060 $ Depreciation charges on property, plant and equipment 426,624 377,248 Amortisation charges on intangible assets 14,497 18,489 Total 2,075,205 $ 2,090,797 $ For the year ended For the year ended December 31,2015 December 31,2014 Wages and salaries 1,404,206 $ 1,458,888 $ Employee stock options 5,113 6,957 Labor and health insurance fees 80,852 80,704 Pension costs 86,194 82,854 Other personnel expenses 57,719 65,657 Total 1,634,084 $ 1,695,060 $	Finance costs Expenses by nature Employee benefit expenses For the year ended For the year ended December 31,2015 December 31,2014 Net losses on financial assets at fair value through profit or loss 11,190) ($ 4,638) ($ Net currency exchange gains (losses) 21,297 2,510) ( Gain on disposal of property, plant and equipment 1,974 19,349 Gain on disposal of financial assets at amortised cost 10,833 - Impairment loss 20,442) ( 14,094) ( Other expenses 870) ( 1,641) ( Total 1,602 $ 3,534) ($ For the year ended For the year ended December 31,2015 December 31,204 Interest expense: Bank borrowings 20,459 $ 17,276 $ For the year ended For the year ended December31,2015 December31,2014 Employee benefit expenses 1,634,084 $ 1,695,060 $ Depreciation charges on property, plant and equipment 426,624 377,248 Amortisation charges on intangible assets 14,497 18,489 Total 2,075,205 $ 2,090,797 $ For the year ended For the year ended December 31,2015 December 31,2014 Wages and salaries 1,404,206 $ 1,458,888 $ Employee stock options 5,113 6,957 Labor and health insurance fees 80,852 80,704 Pension costs 86,194 82,854 Other personnel expenses 57,719 65,657 Total 1,634,084 $ 1,695,060 $	Finance costs Expenses by nature Employee benefit expenses For the year ended For the year ended December 31,2015 December 31,2014 Net losses on financial assets at fair value through profit or loss 11,190) ($ 4,638) ($ Net currency exchange gains (losses) 21,297 2,510) ( Gain on disposal of property, plant and equipment 1,974 19,349 Gain on disposal of financial assets at amortised cost 10,833 - Impairment loss 20,442) ( 14,094) ( Other expenses 870) ( 1,641) ( Total 1,602 $ 3,534) ($ For the year ended For the year ended December 31,2015 December 31,204 Interest expense: Bank borrowings 20,459 $ 17,276 $ For the year ended For the year ended December31,2015 December31,2014 Employee benefit expenses 1,634,084 $ 1,695,060 $ Depreciation charges on property, plant and equipment 426,624 377,248 Amortisation charges on intangible assets 14,497 18,489 Total 2,075,205 $ 2,090,797 $ For the year ended For the year ended December 31,2015 December 31,2014 Wages and salaries 1,404,206 $ 1,458,888 $ Employee stock options 5,113 6,957 Labor and health insurance fees 80,852 80,704 Pension costs 86,194 82,854 Other personnel expenses 57,719 65,657 Total 1,634,084 $ 1,695,060 $

			1,695,060 $ 377,248 18,489
			2,090,797 $
			For the year ended December 31,2014
			1,458,888 $ 6,957 80,704 82,854 65,657
			1,695,060 $

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A.According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees and pay remuneration to the directors and supervisors that account for 10%~20% and 2%, respectively, of the total distributed amount. However, in accordance with the Company Act amended on May 20, 2015, a company shall distribute employee remuneration, based on the current year's profit condition, in a fixed amount or a proportion of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. Aforementioned employee remuneration could be paid by cash or stocks. Specifics of the compensation are to be determined in a board meeting that registers two-thirds of directors in attendance, and the resolution must receive support from half of participating members. The resolution should be reported to the shareholders' meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. The board of directors of the Company has approved the amended Articles of Incorporation of the Company on March 18, 2016. According to the amended articles, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees’ compensation and directors and supervisors remuneration. The ratio shall not be lower than 10%~20% for employees’ compensation and shall not be higher than 2% for directors and supervisors remuneration. The amended articles will be resolved in the shareholders’ meeting in 2016.
B.For the years ended December 31, 2015 and 2014, employees’ remuneration (bonus) was accrued at $45,124 and $37,170, respectively; while directors’ and supervisors’ remuneration was accrued at $6,017 and $4,956, respectively. The aforementioned amounts were recognized in salary expenses. The expenses recognised for the year 2015 were accrued based on the earnings of current year; the expenses recognised for the year 2014 were accrued based on the net income for 2014 and the percentage specified in the Articles of Incorporation of the Company, taking into account other factors such as legal reserve.
C.The 2013 employees’ cash bonus and directors’ and supervisors’ remuneration as appropriated during the stockholders’ meeting on June 2, 2015 were $37,170 and $4,956, respectively. Employees’ bonus and directors’ and supervisor’ remuneration for 2014 as resolved by the stockholders were in agreement with those amounts recognised in the 2014 financial statements.
Information about the appropriation of employees’ 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.

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(23) Income tax

A.Income tax expense

a) Components of income tax expense:

a) Components of income tax expense:
			For the year ended		For the year ended
			December31,2015		December31,2014
Current tax:
Current tax on profits for the period		$	55,823	$	78,891
Adjustments in respect of prior years	(		7,338)	(	1,278)
Total current tax			48,485		77,613
Deferred tax:
Origination and reversal of
temporary differences	(		40,354)	(	43,338)
Effect of exchange rate changes
arising from temporary differences			-		432
Total deferred tax	(		40,354)	(	42,906)
Income tax expense		$	8,131	$	34,707
b) The income tax charged to equity during			the period is as follows:
			For the year ended		For the year ended
			December31,2015		December31,2014
Remeasurement of defined benefit
obligations	($		747)	$	393
Translation differences of foreign
operations	(		839)		92,980
	($		1,586)	$	93,373
B. Reconciliation between income tax expense and accounting profit:
			For the year ended		For the year ended
			December31,2015		December31,2014
Tax calculated based on profit before
tax and statutory tax rate		$	74,552	$	65,844
Expense disallowed by tax regulation	(		2,447)	(	5,776)
Estimated 10% corporate income tax
on unappropriated earnings			15,451		796
Changes in reassessment of deferred
tax assets	(		54,841)	(	25,311)
Effect of exchange rate changes arising
from temporary differences			-		432
Effect from tax credit of investment	(		17,246)		-
Adjustment of income tax expense in
prior years	(		7,338)	(	1,278)
Income tax expense		$	8,131	$	34,707

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C. Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carryforward and investment tax credit are as follows:

			For	For	the	yearendedDecember31,	yearendedDecember31,	yearendedDecember31,	yearendedDecember31,	yearendedDecember31,	2015	2015
								Recognised
									in other
				Recognised in			comprehensive
		January1		profitor loss					income		December31
Temporary differences:
-Deferred tax assets:
Cost of after-sales service and other
estimated expenses		$	67,911	($		6,216)		$	747		$	62,442
Net operating loss carryforward			17,007	(		17,007)			-			-
Tax credit of investment			-			9,392			-			9,392
Subtotal		$	84,918	($		13,831)		$	747		$	71,834
-Deferred tax liabilities:
Gain on foreign investment under the
equity method	($		454,966)		$	54,971		$	-	($		399,995)
Currency translation differences	(		128,186)			-			839	(		127,347)
Others	(		13)	(		786)			-	(		799)
Subtotal	($		583,165)		$	54,185		$	839	($		528,141)
Total	($		498,247)		$	40,354		$	1,586	($		456,307)
			For		the	yearendedDecember31,					2014
								Recognised
									in other
				Recognised in			comprehensive
		January1		profitor loss					income		December31
Temporary differences:
-Deferred tax assets:
Cost of after-sales service and other
estimated expenses		$	242,924	($		174,620)	($		393)		$	67,911
Net operating loss carryforward			55,709	(		38,702)			-			17,007
Subtotal		$	298,633	($		213,322)	($		393)		$	84,918
-Deferred tax liabilities:
Gain on foreign investment under the
equity method	($		711,639)		$	256,673		$	-	($		454,966)
Currency translation differences	(		35,206)			-	(		92,980)	(		128,186)
Others			-	(		13)			-	(		13)
Subtotal	($		746,845)		$	256,660	($		92,980)	($		583,165)
Total	($		448,212)		$	43,338	($		93,373)	($		498,247)

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D. According to the Act for Industrial Innovation and Statute for Upgrading Industries (before its abolishment), details of the amount the Group is entitled as investment tax credit and unrecognised deferred tax assets amount are as follows:

Qualifyingitems		December 31,2015
	Unused tax credits	Unrecognised deferred tax assets	Investment usable until
Research and development	9,392 $	- $	2017

E. Expiration dates of unused net operating loss carryforward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2015: None.

December 31, 2014

		December 31,2014
Year incurred 2012 2013 2014	Amount filed / assessed 19,048 $ 42,253 39,765 101,066 $	Unused amount 18,024 $ 42,253 39,765 100,042 $	Unrecognised deferred tax assets - $ - -	Usable untilyear
				2022 2023 2024

F. The amounts of deductible temporary difference that are not recognized as deferred tax assets� None.
G. As of December 31, 2015, the Company’s income tax returns through 2013 have been assessed and approved by the Tax Authority.
H. Unappropriated retained earnings:

appropriated retained earnings:
Earnings generated in and after 1998	December31,2015 3,047,283 $	December31,2014
		2,964,969 $

I. As of December 31, 2015 and 2014, the balance of the imputation tax credit account was $258,938 and $245,051, respectively. The creditable tax rate is estimated 8.50% for the year ended December 31, 2015 and was 9.24% for the year ended December 31, 2014.

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(24) Earnings (losses) per share

Earnings (losses) per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Restricted shares to employees Assumed conversion of all dilutive potential ordinary shares Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of 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 of the parent plus assumed conversion of all dilutive potential ordinary shares	For theyear ended December 31,2015
	Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (share in thousands) (in dollars) 273,643 $ 269,237 1.02 $ 273,643 $ 7 3 - 795 273,643 $ 270,042 1.01 $ For theyear ended December 31,2014		Earnings per share (in dollars)
			1.02 $
			1.01 $
	Amount after tax 275,335 $ 275,335 $ - 275,335 $	Weighted average number of ordinary shares outstanding (share in thousands) 345,978 53 1,033 347,064	Earnings per share (in dollars)
			0.80 $
			0.79 $

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(25) Transactions with non-controlling interest

A. Acquisition of additional equity interest in a subsidiary

For the years ended December 31, 2015 and 2014, the Group acquired an additional 1.57% and 0.06%, respectively, of shares of its subsidiary—Altek Autotronics Corporation for a total cash consideration of $5,097 and 208, respectively. This transaction resulted in a decrease in the non-controlling interest by $5,720 and $208 and an increase in the equity attributable to owners of the parent by $623 and $0, respectively. The effect of changes in ownership interests in Altek Autotronics Corporation on the equity attributable to owners of the parent for the years ended December 31, 2015 and 2014 is shown below:

Carrying amount of non-controlling interest acquired Consideration paid to non- controlling interest Capital surplus -difference between proceeds on acquisition of or disposal of equity interest in a subsidiary and its carrying amount		2015		2014
	(	5,720 $ 5,097) 623 $		208 $ 208) ( - $

B. The Group did not acquire share increase raised by a subsidiary proportionally to its interest to the second-tier subsidiary.

Grandson Altek Semiconductor (Cayman) Co., Ltd., a second-tier subsidiary of the Group, increased capital by issuing new shares on December 30, 2015. The Group did not acquire shares proportionally to its interest. As a result, the Group decreased its share interest to 28.57%. The transaction increased non-controlling interest by $89,367 and decreased the equity attributable to owners of parent by $11,261. The effect of changes in interests in Altek Semiconductor (Cayman) Co., Ltd. on the equity attributable to owners of the parent for the year ended December 31, 2015 is shown below:

year ended December 31, 2015 is shown below:
Cash Decrease in the carrying amount of non-controlling interst Exchange differences on translation of foreign financial statements Retained earnings -recognition of changes in ownership interest in subsidiaries	2015
	81,668 $ 102,673) ( 4,019) ( 25,024) ($

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(26) Operating leases

The Group acquired a Taipei building for operating use. However, this building is still under a certain unexpired lease agreement. Contingent rents of $11,471 and $26,978 were recognized for these leases in profit or loss for the years ended December 31, 2015 and 2014, respectively. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

December 31, 2015: None

December 31, 2014 Not more than 1 year $ 12,045

The Group leases office buildings for operational needs under non-cancellable operating lease agreements. These lease terms are between 2015 and 2027. Most of the lease agreements are renewable at the market price at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

Not more than 1 year More than 1 year but not more than 5 years Over 5 years	December31,2015 16,963 $ 22,285 25,874 65,122 $	December31,2014
		20,573 $ 27,083 29,570
		77,226 $

(27) Non-cash transactions

Investing activities with partial cash payments

Acquisitions of property, plant, and equipment Add:property and equipment and construction billings payable at beginning of year Less: property and equipment and construction billings payable at end of year Cash paid		For the year ended December31,2015		For the year ended December31,2014
	(	105,791 $ 8,332 61,027) 53,096 $	(	138,867 $ 8,848 8,332)
				139,383 $

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Acquisitions of intangible assets Add: Intangible billings payable at beginning of year Less: intangible billings payable at end of year Cash paid		For the year ended December31,2015		For the year ended December31,2014
		2,676 $ 6,163 - 8,839 $	(	6,085 $ 6,738 6,163) 6,660 $

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties:

No significant related party transactions.

(2) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total		For the year ended December31,2015		For the year ended December31,2014
		60,609 $ 864 - 61,473 $		22,278 $ 504 1,446 24,228 $

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

Contingencies

a) The GUC (General Unsecured Creditor Trustee) of Eastman Kodak Company (hereunder ‘Kodak’) filed a lawsuit against the Company in the United States Bankruptcy Court for the Southern District of New York, asserting certain payments in 49.2 million transactions prior to Kodak’s bankruptcy were out of ordinary course of business. The Company vigorously disputed GUC’s claim, and insists that the transactions had always been made in the ordinary course of business with Kodak. According to the press release, GUC has sued over 700 of Kodak’s suppliers, trying to require marginal settlement fees from the suppliers, as it is a regular ploy of US bankruptcy lawyers in bankruptcy cases. For the protection of shareholders’ interests, the Company did not accept GUC’s settlement proposal. The GUC’s assertion has now been heard by the court, and this incident did not have a significantly impact on the Company’s business and financial performance.
b) On December 22, 2015, the Company filed a civil complaint against the hTC Corporation at the Taiwan Taipei District Court, alleging hTC Corporation’s default in the agreed upon Manufacturing

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and Supply Agreement and claiming damage of USD 11,126 thousand against hTC Corporation. As of March 18, 2016, the case is still under trial.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

On March 18, 2016, the Board of Directors of the Company has resolved to issue employee restricted shares of 1,560,000 shares for no consideration with a par value of NT$10 per share, amounting to NT$15,600,000.

12. OTHERS

(1) Capital risk 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 and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

A. Fair value information of financial instruments

The carrying amounts of financial instruments (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits (shown as non-current assets), short-term borrowings, notes payable, accounts payable, other payables, and guarantee deposits received (shown as non-current liabilities)) are approximate to their fair value. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

B.Financial risk management policies
a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.
b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units, as well as provides written principles for overall risk management and 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.

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C.Significant financial risks and degrees of financial risks
a) Market risk

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. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
ii.Management has set up a policy to require that group companies hedge their entire foreign exchange risk exposure with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.
iii.The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through transactions denominated in the relevant foreign currencies.
iv.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, 2015

Foreign Currency Amount (In thousands)	Exchange Rate	Book Value (NTD)	SensitivityAnalysis	SensitivityAnalysis	SensitivityAnalysis
			Extent of Variation	Effect on Profit or (Loss)	Effect on Other Comprehensive Income(Loss)
USD 100,781 USD 80,924 USD 4,210 USD 92,778 USD 67,843	32.825 6.4936 32.825 32.825 6.4936	3,308,136 $ 2,656,330 138,206 $ 3,045,438 $ 2,226,946	1% 1% 1% 1% 1%	33,081 $ 26,563 - $ 30,454) ($ 22,269) (	- $ - 1,382 $ - $ -

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December 31, 2014

Foreign Currency Amount Exchange (In thousands) Rate USD 116,490 31.650 USD 108,490 6.1190 USD 5,672 31.650 USD 119,272 31.650 USD 96,893 6.1190	Foreign Currency Amount Exchange (In thousands) Rate USD 116,490 31.650 USD 108,490 6.1190 USD 5,672 31.650 USD 119,272 31.650 USD 96,893 6.1190	Book Value (NTD)	SensitivityAnalysis	SensitivityAnalysis	SensitivityAnalysis
			Extent of Variation	Effect on Profit or (Loss)	Effect on Other Comprehensive Income(Loss)
USD 116,490 USD 108,490 USD 5,672 USD 119,272 USD 96,893	31.650 6.1190 31.650 31.650 6.1190	3,686,909 $ 3,433,709 179,520 $ 3,774,959 $ 3,066,663	1% 1% 1% 1% 1%	36,869 $ 34,337 - $ 37,750) ($ 30,667) (	- $ - 1,795 $ - $ -

v.Total exchange gain (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, 2015 and 2014 amounted to $21,297 and ($2,510), respectively.

Interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

The Group raised short-term borrowings at fixed rates during the year ended December 31, 2015, and thus had no significant cash flow interest rate risk.

Price risk

The Group is exposed to price risk because of investments held by the Group. The Group sets limits to control the transaction volume and stop-loss amount to reduce it’s market risk.

b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and 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 risk limits are set based on internal or external

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ratings, the utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

ii No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties for the years ended December 31, 2015 and 2014.
iii.The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.
iv.The credit quality information of financial assets that are neither past due nor impaired or past due and not impaired is provided in the statement in Note 6(4).
c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, and compliance with internal balance sheet ratio targets.
ii. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
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 for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
December 31, 2015 Short-term borrowings Accounts payable Other payables	Lessthan 1year	Over 1year
	1,730,000 $ 2,422,069 510,923	- $ - -

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Non-derivative financial liabilities:

Non-derivative financial liabilities:
December 31, 2014 Short-term borrowings Accounts payable Other payables Guarantee deposits received	Lessthan 1year	Over 1year
	1,410,000 $ 2,933,033 530,190 6,023	- $ - - -

(3) Fair value estimation

A.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 beneficiary certificates, on-the-run derivative instruments with quoted market prices is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.
B. 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, 2015 and 2014 is as follows:

December 31, 2015 Assets Recurring fair value measurements Financial assets at fair value though profit or loss Beneficiary certificate	Level 1 427,531 $	Level 2 - $	Level3 - $	Total
				427,531 $

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December 31, 2014 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Beneficiary certificate	Level 1 362,155 $	Level 2 - $	Level 3 - $	Total
				362,155 $

C. 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:

Open-end fund Market quoted price Net asset value

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) : Please refer to table 1.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$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 paid-in capital or more: Please refer to table 2.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.
I. Trading in derivative financial instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China ): Please refer to table 5.

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(3) Information on investments in Mainland China

A. The related information of investments in Mainland China: Please refer to table 6.
B. Significant transactions, either directly or indirectly throught a third area, with investee companies in the Mainland Area:
For the significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please refer to table 2 and table 4.

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The chief operating decision-maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

The chief operating decision-maker assesses the segment performance through the consolidated financial statements which are prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC.

(3) Information about segment profit or loss, assets and liabilities

The Group has a single reportable segment. The revenue from external customers, the related gain
or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.
(4) Reconciliation for segment income (loss), assets and liabilities�None.

(5) Information on product and service

Revenues from external customers are derived from the sale of digital image technology application and related export and import trade.

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(6) Geographical information

Geographical information for the years ended December 31, 2015 and 2014 is as follows:

For the years ended December 31,

Revenue Non-current assets 9,235,699 $ 3,085,704 $ 1,191,005 - 29,719 - 2,035,606 2,219,152 12,492,029 $ 5,304,856 $ 2015	2014	2014
Revenue 9,235,699 $ 1,191,005 29,719 2,035,606 12,492,029 $	Revenue 9,850,869 $ 1,377,807 2,525 4,199,880 15,431,081 $	Non-current assets
		3,455,509 $ - - 2,251,630
		5,707,139 $

(7) For the years ended December 31, 2015 and 2014, $4,876,853 and $8,769,693 out of the Group's total revenue was from sales of digital image technology application and others to certain customers, respectively.

(Blank below)

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6.5 Financial Statements for the Years Ended December 31, 2015 and 2014, and

Independent Auditors’ Report

Please refer to page 132~182 of the Chinese annual report.

113

VII. Review of Financial Conditions, Financial Performance, and Risk

Management

7.1 Analysis of Financial Status - IFRS & Consolidated base

Unit: NT$ thousands

Year Item	2014/12/31	2015/12/31	Difference	Difference
			Amount	%
Current Assets	9,643,055	9,649,516	6,461	0.07
Property, Plant and Equipment	5,603,692	5,211,143	(392,549)	(7.01)
Intangible Assets	103,447	93,713	(9,734)	(9.41)
Other Assets	502,017	445,806	(56,211)	(11.20)
Total Assets	15,852,211	15,400,178	(452,033)	(2.85)
Current Liabilities	5,447,625	5,124,537	(323,088)	(5.93)
Non-current liabilities	724,458	646,789	(77,669)	(10.72)
Total Liabilities	6,172,083	5,771,326	(400,757)	(6.49)
Share capital	2,701,358	2,726,938	25,580	0.95
Capital surplus	2,063,551	1,975,772	(87,779)	(4.25)
Retained Earnings	4,426,902	4,536,749	109,847	2.48
Other equity interest	481,868	414,647	(67,221)	(13.95)
Treasury Stocks	-	(129,393)	(129,393)	-
Non-controlling interest	6,449	104,139	97,690	1,514.81
Total Equity	9,680,128	9,628,852	(51,276)	(0.53)

Effect of changes on the company’s financial condition: The Company’s financial condition has not changed significantly.
Future response actions: Not applicable

114

7.2 Analysis of Financial Performance –IFRS & Consolidated base

Unit: NT$ thousands

Year Item	2014	2015	Difference	Difference
			Amount	%
Operating revenue	15,431,081	12,492,029	(2,939,052)	(19.05)
Cost of Sales	13,870,115	10,923,243	(2,946,872)	(21.25)
Gross profit from operations	1,560,966	1,568,786	7,820	0.50
Operating Expenses	1,259,715	1,342,435	82,720	6.57
Net operating income(loss)	301,251	226,351	(74,900)	(24.86)
Non-operating income and expense	9,631	56,160	46,529	483.12
Income before Tax	310,882	282,511	(28,371)	(9.13)
Tax benefit (Expense)	34,707	8,131	(26,576)	(76.57)
Income before Tax	276,175	274,380	(1,795)	(0.65)

Effect of changes on the company’s future business: The Company’s business scope has not changed significantly.
Future response actions: Not applicable.

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7.3 Analysis of Cash Flow

1.Cash Flow Analysis for the Current Year IFRS & Consolidated base

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands
Cash and Cash Equivalents, Beginning of Year (1)	Net Cash Flow from Operating Activities (2)	Cash Outflow (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Leverage of Cash Deficit
				Investment Plans	FinancingPlans
5,441,850	315,923	(15,800)	5,741,973	�	�

2.Remedy for Cash Deficit and Liquidity Analysis: Not applicable.
3.Cash Flow Analysis for the Coming Year: Not applicable.

7.4 Major Capital Expenditure Items and impact to finance and business: None.

7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year:

Please see page 186 of Chinese annual report.

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7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

(1) Interest rate

The short-term investments of the Company are mainly Money Market Fund. Interest expenses of Year 2015 increased NTD 3,183 thousand dollars compared to Year 2014, with interest rate between 1.14% and 1.3%. Going forward, the Company will continue to carefully monitor interest rate movements, adopt proper hedging strategies, and make use of capital markets financing instruments to ensure that our financing costs are at a comparatively low level

NTD thousand dollars

Item	2014	2014	2014	2015	2015	2015
	Amount	% to revenue	% to operating income	Amount	% to revenue	% to operating income
interest expenses	17,276	0.11	5.56	20,459	0.16	7.24
income/loss from foreign exchange transactions	(2,510)	(0.02)	0.81	21,297	0.17	7.54

Note: consolidated amount in IFRS.

(2) Foreign exchange rates

Foreign exchange gain of Year 2015 increased NTD 23,807 thousand dollars compared to Year 2014. The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD. Management has set up a policy to require that group companies hedge their entire foreign exchange risk exposure with group treasury. As such, no significant market risk is anticipated. The Company has a clear operating strategy and risk control procedure to respond to changes in the spot exchange rate, stays in close contact with financial institutions, and adjusts its foreign exchange strategy to minimize the risk of exchange rate accordingly.

(3) Inflation

The impact of inflation does not currently have a significant impact on the Company’s profits and business operations.

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7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

The Company did not engage in any high-risk or high-leveraged investments. The transactions and procedures related to lending and endorsement are based on the Company’s “Procedures for Lending” and “Procedures for Endorsement Guarantee”. Furthermore, derivative transactions follow the “Procedures for Acquisition and Disposal of Assets”.

7.6.3 Future Research & Development Projects and Corresponding Budget Please refer to page 52.

The Company consistently pays close attention to any changes in local and foreign policies and makes appropriate amendments to our systems when necessary. During 2015 and as of the date of publication of this annual report, changes in related laws have not had a significant impact on our operations.

7.6.4 Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales

The digital image applications have been widely used nowadays including mobile devices, medical devices and autotronic devices while the correction of DSC market. The Company attaches great importance to improvements in technology and carefully monitors market trends and assesses the impact they may have on the company’s operations. The Company will constantly develop the core technologies of digital images to enhance the added-value of the products and enhance the market share and influence in the digital image area.

7.6.5 The Impact of Changes in Corporate Image on Corporate Risk

Management, and the Company’s Response Measures

Since its inception, the Company has consistently maintained an ethical business philosophy and fulfilled its social responsibilities. Aside from working to strengthen internal management and conforming to all relevant corporate governance requirements, the Company has also organized numerous public welfare activities including establishing Altek Charity Fund to fulfill the social responsibilities.

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7.6.6 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans

The Company has no ongoing merger and acquisition activities. In considering future M&A activities, the Company will evaluate their efficiency, risks, vertical integration and other factors in accordance with its internal control system.

7.6.7 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans

The Company has no ongoing factory expansion activities. Any expansion of the Company’s facilities will be subject to careful evaluation by a special task force in accordance with the Company’s internal control system.

7.6.8 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration

The Company has consistently focused on identifying alternative sources for purchasing, and has worked to diversify its customer base in order to reduce the concentration of sales.

7.6.9 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%.

The shareholdings of the Company’s directors and supervisors have been stable during the last few years, and there have been no major transfers or swaps of shares.

7.6.10 Effects of, Risks Relating to and Response to the Changes in Management

Rights

The structure of our principal shareholders is solid. A strong professional management team is in place to maximize both shareholders and the Company’s best interest. Accordingly, we believe that the risk of changing in management rights that would cause damage to the Company is mitigated. Our policy is to maintain a steady ownership and management structure. As of the date of this Annual Report, such risks were not identified by the Company.

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7.6.11 Litigation or Non-litigation Matters

A. The GUC (General Unsecured Creditor Trustee) of Eastman Kodak Company (hereunder ‘Kodak’) filed a lawsuit against the Company in the United States Bankruptcy Court for the Southern District of New York, asserting certain payments in 49.2 million transactions prior to Kodak’s bankruptcy were out of ordinary course of business. The Company vigorously disputed GUC’s claim, and insists that the transactions had always been made in the ordinary course of business with Kodak. According to the press release, GUC has sued over 700 of Kodak’s suppliers, trying to require marginal settlement fees from the suppliers, as it is a regular ploy of US bankruptcy lawyers in bankruptcy cases. For the protection of shareholders’ interests, the Company did not accept GUC’s settlement proposal. The GUC’s assertion has now been heard by the court, and this incident did not have a significantly impact on the Company’s business and financial performance.
B. On December 22, 2015, the Company filed a civil complaint against the HTC Corporation at the Taiwan Taipei District Court, alleging HTC Corporation’s default in the agreed upon Manufacturing and Supply Agreement and claiming for USD 11,126 thousand against HTC Corporation. As of March 18, 2016, the case is still under trial.

7.6.12 Other Major Risks:

(1) Market risk

A. Foreign exchange risk

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, recognised assets and liabilities and net investments in foreign operations.

Management has set up a policy to require that group companies hedge their entire foreign exchange risk exposure with group treasury. As such, no significant market risk is anticipated.

B. Interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future. The Company raised short-term borrowings at fixed rates during the year ended December 31, 2015, and thus had no significant cash flow interest rate risk

120

C. Price Risk

The Company is exposed to price risk because of investments held by the Company. The Company sets limits to control the transaction volume and stop-loss amount to reduce its market risk.

(2) Credit risk

According to the Company’s credit policy, each local entity in 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 risk limits are set based on internal or external ratings, the utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions.

No credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties for the years ended December 31, 2015 and 2014.

As a result, no material losses resulting from counter-party defaults are anticipated.

(3) Liquidity risk

Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts. As such, no significant demand for additional cash is anticipated.

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VIII. Special Disclosure

8.1 Summary of Affiliated Companies

Please refer to page 191 of the Chinese annual report.

8.2 Private Placement Securities in the Most Recent Years: None.

8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most

Recent Years: None

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AI assistant

Altek — Annual Report 2015

52290_rns_2016-08-03_00987d65-dbf1-496d-af87-40eb5d0893d5.pdf

Altek Corporation

Notice to readers

Spokesperson

Headquarters, Branches and Plant

Deputy Spokesperson

Plant

Stock Transfer Agent

Auditors

Overseas Securities Exchange: N.A.

Corporate Website

Contents

I. Letter to Shareholders

II.Company Profile

2.1 Date of Incorporation : December 24, 1996.

2.2 Company History

III. Corporate Governance Report

3.1 Organization

3.1.1 Organizational Chart

3.1.2 Major Corporate Functions

Compensation policy for Directors and Supervisors

Remuneration policy for Directors and Supervisors

Allowance policy for Directors and Supervisors

Payment policy for President and Vice president

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

3.3.2 Audit Committee: N.A.

3.3.3 Attendance of Supervisors at Board Meetings

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee

A. Professional Qualifications and Independence Analysis of Remuneration Committee Members

B. Attendance of Members at Remuneration Committee Meetings

3.3.5 Corporate Governance Guidelines and Regulations

3.3.6 Other Important Information Regarding Corporate Governance

3.3.7 Internal Control Systems

3.3.8 Major Resolutions of Shareholders’ Meeting and Board Meetings

Implementation of resolutions of 2015 annual shareholders’ meeting

Implementation of resolutions of 2015 Board meeting before the publication date of the annual report

3.3.9 Major Issues of Record or Written Statements Made by Any Director or

Supervisor Dissenting to Important Resolutions Passed by the Board of

3.3.10 Resignation or Dismissal of the Company’s Key Individuals, Including the

3.4 Information Regarding the Company’s Audit Fee and Independence

3.4.1 Audit Fee

3.5 Replacement of CPA: Not applicable.

3.6 Audit Independence

3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

3.7.1 Shares Trading with Related Parties: None

3.7.2 Shares Pledge with Related Parties: None

3.8 Relationship among the Top Ten Shareholders

3.9 Ownership of Shares in Affiliated Enterprises

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Issued Shares

B. Type of Stock

C. Information for Shelf Registration: N.A.

4.1.2 Status of Shareholders

4.1.3 Shareholding Distribution Status

A. Common Shares

B. Preferred Shares: N.A.

4.1.4 List of Major Shareholders

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

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

B. Proposed Distribution of Dividend

4.1.7 Employee Bonus and Directors' and Supervisors' Remuneration

4.1.8 Buyback of Treasury Stock

4.2 Bonds: N.A.

4.3 Preferred Stock :N.A.

4.4 Global Depository Receipts

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options

4.6 Issuance of New Restricted Employee Shares

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

B. Revenue distribution

5.1.2 Industry Overview

5.1.3 Research and Development

Altek Annual Report 2015