INVENTEC - Annual Report 2015 | FinancialReports.eu

Annual Report Website: http://mops.twse.com.tw Stock Code: 2356 Company Website: http://www.inventec.com Printing Date: May 11, 2016

Inventec Corporation

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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 version and Chinese version, the Chinese version shall prevail.

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Name,	Title and Contact Information for Company’s Spokesperson	Title and Contact Information for Company’s Spokesperson
Name	: Yu, Chin-Pao Tel.	: 886(2) 2881-0721
Title	: Vice President E-mail	: [email protected]
Name,	Title and Contact Information for Company’s Deputy Spokesperson
Name	: Huang, Kuo-Chun Tel.	: 886(2) 2881-0721
Title	: President E-mail	: [email protected]

2. Address and Telephone Number of Company’s Headquarters, Branches and Plant

Headquarters

Add : No.66, Hougang Street, Shilin District, Taipei City, Taiwan, R.O.C. Tel : 886(2) 2881-0721

Taoyuan Factory

Add : No.255, Renhe Rd, Sec. 2, Daxi District, Taoyuan City, Taiwan, R.O.C. Tel : 886(3) 390-0000

Taipei Research and Development Center

Add : No.166, Chengde Rd, Sec. 4, Shilin District, Taipei City, Taiwan, R.O.C. Tel : 886(2) 2881-0721

Taoyuan Research and Development Center

Add : No.349, Renhe Rd, Sec. 2, Daxi District, Taoyuan City, Taiwan, R.O.C. Tel : 886(3) 390-0000

Taoyuan Science and Technology Park

Add : No.88, Dazhi Rd, Taoyuan District, Taoyuan City, Taiwan, R.O.C. Tel : 886(3) 390-0000

3. Common Share Transfer Agent And Registrar

Name : Registrar & Transfer Agency Department of Taishin International Bank

Add : B1F, No.96, Sec. 1, Jianguo N. Road, Zhongshan District, Taipei City, Taiwan, R.O.C. Website: http: //www.taishinbank.com.tw

Tel. : 886(2) 2504-8125

4. Information of the Certified Public Accountants for the Latest Financial Repot

Name of CPA: Chen, Ying-Ju and Yang, Liu-Fong

CPA Firm: KPMG

Add : 68F, No.7, Sec. 5, Xinyi Road, Taipei City, Taiwan, R.O.C.

Website: http: //www.kpmg.com.tw

Tel : 886(2) 8101-6666

5. Overseas Trade Places for Listed Negotiable Securities

None

6. Corporate Website

http: //www.inventec.com

Letter to Shareholders ................................................................................................................. 1 Ⅰ. Company Introduction .......................................................................................................... 3 1.1 Founding Date ............................................................................................................... 3 1.2 Formation History ......................................................................................................... 3 Ⅱ. Corporate Governance Report ............................................................................................ 11 2.1 Organization Structure ................................................................................................. 11 2.2 Board of Directors, Supervisors and Management Team ............................................ 13 2.3 Implementation of Corporate Governance .................................................................. 31 2.4. Information Regarding the Company’s Audit Fee ...................................................... 80 2.5 Information Regarding the Replacement of CPA ........................................................ 81 2.6 Audit Independence ..................................................................................................... 81 2.7 Changes in Shares Trading and Pledge of Directors, Supervisors, Managers and Major Shareholders: ................................................................................................... 82 2.8 The Relations of the Top Ten Shareholders ................................................................. 84 2.9 Ownership of Shares in Affiliated Enterprises ............................................................ 87 Ⅲ . Capital Overview .............................................................................................................. 88 3.1 Capital and Shares ....................................................................................................... 88 3.2 Issuance of Corporate Bond. ....................................................................................... 94 3.3 Issuance of Preferred Shares ....................................................................................... 94 3.4 Issuance of Global Depository Receipts...................................................................... 94 3.5 Issuance of Employee Stock Option............................................................................ 94 3.6 Issuance of Restricted Employee Shares. .................................................................... 94 3.7 Status of New Shares Issuance in connection with Mergers and Acquisitions. .......... 94 3.8 Financing Plans and Implementation .......................................................................... 94 Ⅳ . Operational Highlights ..................................................................................................... 95 4.1 Business Activities....................................................................................................... 95 4.2 Overview of the Market, Production, and Marketing ................................................ 104 4.3 Human Resources ...................................................................................................... 111 4.4 Information on Environmental Protection Costs ....................................................... 112 4.5 Labor Relations ......................................................................................................... 114

4.6 Important Contracts ................................................................................................... 121 Ⅴ . Financial Information .................................................................................................... 123 5.1 Five-Year Financial Summary ................................................................................... 123 – 5.2 Five-Year Consolidated Financial Analysis Consolidated ..................................... 128 5.3 Supervisors’ Report or Audit Committee’s Review Report in the Most Recent Year ........................................................................................................................... 136 5.4 Consolidated Financial Statements with Subsidiaries Audited by CPA .................... 136 5.5 The Effect on Company or its Affiliates have Experienced Financial Difficulties ... 136 VI. Review of Financial Conditions, Operating Results, and Risk Management ........... 137 6.1 Analysis of Financial Status ...................................................................................... 137 6.2 Analysis of Operation Results ................................................................................... 139 6.3 Cash flow Analysis .................................................................................................... 143 6.4 The Impact of Significant Capital Expenditure in Recent Years on Financial Business .................................................................................................................... 144 6.5 Reinvestment Policy in Recent Years, the Main Reason for Profit Earning or Loss, Improvement Plan, and Analysis on the Investment Plan in the Coming Year ........ 145 6.6 Analysis and Assessment of Risk Items .................................................................... 146 6.7 Other Important Matters ............................................................................................ 157 VII. Special Disclosure ......................................................................................................... 158 7.1 Summary of Affiliated Companies ............................................................................ 158 7.2 Private Placement Securities in the Most Recent Years ............................................ 176 7.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ............................................................................................................. 176 7.4 The Matters Listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act, which might Materially affect Shareholders' Equity or the Price of the Company's Securities ............................................................................ 176 7.5 Other Matters that Require Additional Description................................................... 176 Appendix Ⅰ : Consolidated Financial Statements with Subsidiaries Audited by CPA of 2015 ................................................................................................................. 177

Letter to Shareholders

Thank you for attending Inventec’s annual shareholders’ meeting, the operation performance of 2015 is summarized below: with regard to revenue and profit making, the individual revenue and consolidated revenue of the Company reached approximately NTD289.3 billion and NTD395.4 billion, respectively. The product portfolio is mainly computer products; compared to 2014 (in 2014, individual revenue and consolidated revenue were approximately NTD330.7 billion and NTD435.5 billion, respectively), the individual revenue has decreased by 12.5%, while the consolidated revenue decreased by 9.2%. Regarding product category, due to the continuous downturn of notebook computer market, the popularity degree of the new operation platform was not as expected, the annual revenue decreased by 25.28%; driven by the continuous fermentation of cloud computing market issues, the revenue performance in server products has been relatively stable, with the annual revenue in 2015 increasing by 24.05%. With regard to wireless devices and mobile communication products, thanks to customer product hot sales and the expansion of production capacity, the operation income contributed approximately NTD46.9 billion of revenue, and the annual revenue performance increased by 0.29%. As for solar energy products, the overall revenue contribution of the Group’s solar energy products was approximately NTD12.9 billion, an increase of 14.79% year-on-year.

In regard to profit making, the annual net profit attributable to parent company shareholders reached approximately NTD5.5 billion, with earnings per share of NTD1.55, a reduction of approximately NTD1.5 billion from the previous year, profit making decreased by 21.6%, the main reason is that the notebook computer market is facing slow-moving growth and price competition. Nevertheless, the server and mobile communication product markets are continuing to experience stable growth; furthermore, with regard to reinvestment business, under the supply chain vertical integration and organizational merger, the Company hopes to improve its business turnover and profit making capacity to bring positive benefit to the Group’s performance.

This year’s business plan summary and future development strategies:

Due to the continuous downturn of the global economy in 2016, the shipment volume of traditional notebook computers continues to be impacted by the stagnated growth in the change of ultimate consumer habits; faced with the challenges of the information industry operating environment, Inventec will adhere to innovative thinking, adjust its operating strategy, and actively face future challenges to seek new kinetic energy for operation growth. With regard to personal computer products, Inventec will continuously coordinate with the demand of major international manufacturers and develop light, thin, and portable products to meet market trends and consumer demands; regarding enterprise solutions (including servers, storage, and LAN switches), Inventec will continue to focus on the hardware leading foundation of network integration, storage, computation modules, etc. and adhere to main trends in cloud application, integrate software and hardware development capability, and actively develop customers to continuously expand its

leading position in the server-related product market; furthermore, with regard to wireless devices and smart mobile products, we will gradually improve the proportion of automated processes in order to reduce production costs, as well as coordinate with advanced technological solutions to provide end customers with smart home and wireless intelligent end products; as for the solar energy industry, through vertical integration of Inventec Solar Energy Corporation and Inventec Energy Corporation, we will continue to cut costs in the hopes of gradually improving operation efficiency to expand market competitiveness; in order to capture the opportunity of the handheld wireless devices for industrial usage market, Inventec Corporation and Advantech Co., Ltd. form a strategic alliance to establish a joint venture company, we hope to further provide a complete solution to the customer and become the pioneer of industrial smart mobile devices through combining the advantages of both parties in the aspect of research and development, manufacturing and brand; finally, regarding research and development innovation, in 2015, the product research and development costs of the Group reached NTD8.8 billion; in the future, we will continue to work hard at product innovation, automated processes, etc. in order to maintain core competitiveness.

When pursuing an enterprise’s sustainable operation and creating enterprise value, Inventec also fulfills its corporate citizenship responsibility. Through Inventec Group Charity Foundation, it has gathered the Group’s caring volunteers to actively promote relevant volunteer businesses such as social care, emergency relief, environmental protection, culture promotion, etc. over the long term in order to practice the social service philosophy of Inventec Group, namely environmental protection, culture, poverty relief, and community. In the past year, whether in the Formosa dust explosion incident or Taiwan earthquake, you can always witness the social responsibility spirit of Inventec Group in treating others as ourselves and loving others as ourselves and assisting disaster stricken populations to live through hard times.

Looking toward 2016, Inventec will continue to adhere to the operation philosophy of “Innovation, Quality, Open mind and Execution”, in addition to caring for its existing customers, Inventec will continuously improve its management performance to consolidate its long-term competitive advantage through product diversification, strategic investment, human resource inventory, and organization optimization in order to expand the Group’s operation scale and its growth space in profit making. This is the everlasting commitment of the Inventec management team to its shareholders and investors. Again, thanks to every shareholder for their support of and guidance to Inventec.

Best regards,

Chairman: Lee, Tsu-Chin

President: Huang, Kuo-Chun

Ⅰ . Company Introduction

1.1 Founding Date : June 9, 1975

1.2 Formation History

1975

． Inventec corporation was incorporated with a paid-in capital of NT$1 million.

1987

． Won the "PIP Optimal Growth Partner Award" issued by the world’s largest department store chain, SEARS.
． Ranked No. 18 of the national export excellent manufacturers and won the Import and Export Excellent Manufacturer Award issued by the Minister of the Ministry of Economic Affairs.

1988

． Started implementing upgrades of product structure and set up an overseas production base plan.
． Won the "PIP Optimal Growth Partner Award" issued by SEARS again and won "Best Cooperation Company Award" issued by Royal Dutch Philips Electronics Ltd.
． The Company’s application for being a public company was approved.

1989

． Began to produce notebook laptop computer and word processor products.
． Established Inventec Besta Co., Ltd.

1990

． Established Inventec Electronics (M) SDN. BHD.
． Started production of phone fax machines.

1991

． Won "Best Cooperation Company Award" issued by Zenith.
． Established the joint venture TIM Electronics (Malaysia) Co., Ltd. in Malaysia with Toshiba Co. to produce communication products.
． Won "Excellent Manufacturer Award" issued by Texas Instruments.
． Invested in Inventec Electronics (Shanghai) Co., Ltd. through its investment in Inventec Corporation (Hong Kong) Co., Ltd..

1992

． Granted ISO 9001 Quality Certification by BCIO and the BSI.

1993

． Among word processor products, the plug-in type language learning dictionary CD61 won "Outstanding Boutique Award" in the national product image awards issued by the Ministry of Economic Affairs.
． Won " Best Cooperation Company Award " issued by Texas Instruments again.
． Invested in Inventec Corporation (Hong Kong) Co., Ltd. for further investment in Inventec Electronics (Tianjin) Co., Ltd., Inventec Electronics (Beijing) Co., Ltd., Inventec Electronics (Nanking) Co., Ltd. and Inventec Electronics (Xi’an) Co., Ltd..
． Started production of PDAs.

1994

． Among word processor products, the reading electronic dictionary CD37 won the "Taiwan Boutique Mark". Meanwhile, the plug-in type reading electronic dictionary CD65 and e-books transcription machine won the "National Product Image Award" issued by the Ministry of Economic Affairs.
． Inventec (Shanghai) Electronics Co.Ltd. earned ISO9001 certification.
． Won the "Quality Control Group Award" issued by the Chinese Society for Quality.

1995

． Won the "National Quality Award", which symbolizes the highest honor in national quality operation and management.
． Started production of Pentium series multi-media notebooks.
． Established Donglan Factory in Shanghai.
． Inventec Electronics (Tianjin) Co., Ltd., Inventec Electronics (Beijing) Co., Ltd., Inventec Electronics (Nanking) Co., Ltd., and Inventec Electronics (Xi’an) Co., Ltd. grated ISO 9001 Quality Certification.
． Established Hou Gang Factory to manufacture electronic dictionaries.
． Established Linkou Factory to manufacture and assemble computer peripherals.

1996

． Established Taipei Second Factory to manufacture PDA and graphic calculator.
． Established Jingting Factory in Shanghai.
． Inventec corporation officially listed.
． Achieved ISO 14001 Certification for Environmental Management System by SGS.
． Won " Best Cooperation Company Award " issued by Texas Instruments again.

1997

． Established subsidiaries in the United States, Scotland, and Singapore.
． Ranked No. 3 among enterprise operation performances rated by the China Credit Information Service.

． Ranked first in Taiwan’s enterprise operation performance ranking list rated by
Commonwealth Magazine.
． Established Taipei Third Factory to manufacture notebook.

1998

． Taipei Second Factory and Third Factory earned ISO9002 quality system international certification from the Bureau of Commodity Inspection and Quarantine (BCIQ) and the British Standards Institution (BSI).
． Taipei Second Factory achieved ISO 14001 Certification by SGS.
． Established Taoyuan Factory for R&D and manufacture of high-end desktop and server.

1999

． Taipei Third Factory achieved ISO 14001 Certification by SGS.
． Taipei Third Factory achieved the whole country promotes the labor safe hygiene good prize by Council of Labor Affairs, Executive Yuan.
． Taipei Second Factory achieved TI SEA Awards by Texas Instruments.
． Inventec Besta Co., Ltd changed Chinese company name.
． Established Inventec Micro-Electronics Corp. for calculators.
． Established Inventec Online Corp. for software development.
． Established Inventec Multimedia and Telecom Corp. for multimedia and communications products.

2000

． Established Inventec Appliances Corp for the manufacture and sales of information appliances, WAP phone, science plotter.
． Invested in Inventec (Cayman) Corp. for further investment in Inventec Corporation (Shanghai) Co., Ltd..
． Elected to be the 1999 national good personalities and good deeds group representative of the Republic of China.
． The Company was responsible for manufacturing more than four million Compaq Computer Corporation commercial notebook computers.
． Taipei First factory won the “Industrial Excellence Award” issued by the Ministry of Economic Affairs.

2001

． Invested in Inventec Tomorrow Studio Corporation for editorial tasks of book and electronic publication and sales.
． Won the Gold Award from the National Invention Award Corporate Group, which affirmed the outstanding achievement of the Company with regard to emphasizing intellectual property rights and research and development from product technology to prospective technology.

． Won the 9th Ministry of Economic Affairs Industrial Technology Development Award - Excellence Award, manifesting its emphasis on R&D achievement and remarkable effects with incentive measures.
． Won the “Enterprise Gold Trade Award” issued by the Executive Yuan again.
． The Company was responsible for manufacturing more than five million Compaq Computer Corporation commercial notebook computers.
． The notebook computers manufactured by the Company won the “Best Buy Award” issued by "PC World" from mainland China.

2002

． Inventec Online Corp. and Inventec Appliances Corp. merged to integrate resources. Inventec Appliances Corp. is the surviving company after the merger.
． The Company was responsible for manufacturing more than six million Hewlett-Packard Company commercial notebook computers.

2003

． The Company sold its investment in Inventec Appliance (Shanghai) Co., Ltd. to Inventec Appliances Corp..
． Invested in Inventec (Cayman) Corp. which invested in Inventec (Pudong) Corp. Inventec (Pudong) Corp. engages in parts assembling.

2004

． Invested in Inventec Enterprise System Corp. for computer design, research and manufacture.
． Invested in Inventec (Czech) S.R.O. was engaged in parts assembling.
． Invested in Inventec (Cayman) Corp. which invested in Inventec (Pudong) Technology Corp. and Inventec (Shanghai) Service Co., Ltd. engages in parts assembling.
． The Company reduced shareholding in Inventec Tomorrow Studio Corp. and accounted for under the cost method.
． The Company sold its investment in Inventec Electronics (Nanking) Co., Ltd. to Inventec Appliances Corp..

2005

． Invested in Inventec (Cayman) Corp. for further investment in Inventec Hi-Tech Co., Ltd. whose major line of business is wireless phone production.
． Invested in Inventec Corporation Korea Branch which engages ib developing wireless phone software.
． Inventec Appliances Corp. officially listed.

2006

． Established Hong Kong branch for wireless terminal production business.
． Invested in Inventec Holding (North America) Co., Ltd. for further investment in IEC Technologies. S. de R.L. de C.V. in Mexico, which engages in server products and computer parts assembling.
． Invested in Inventec Corporation (Singapore) Ltd. which finished business and liquidation.

2007

． Due to the business development purpose, purchased a R & D building at Shihlin.
． Invested in Inventec (Cayman) Corp. for further investment in Inventec Huan Hsin (Zhejiang) Technology Co., Ltd..
． Inventec Besta Co., Ltd officially listed.

2008

． Invested in Win Semiconductors Corp..
． Reinvested in Inventec Huan Hsin (Zhejiang) Technology Co., Ltd..
． Exceeded 16 million units shipments of the Pudong Park notebook.
． Annual Sales exceeded 10 billion U.S. dollars.

2009

． Invested in Kohjinsha Co., Ltd..
． Purchased the R&D building at Taoyuan.
． Dr. Eye family (Dr. Eye 8.1 version, mobile dictionary for PPC, translation by USB drive version) won three 2009 17th Taiwan Boutique Award information software awards.
． Won the “Corporate Social Responsibility Award” issued by Global Views Magazine.
． Established Inventec Investment Co., Ltd. for investment business.
． Established Inventec Technology (Singapore) Pte. Ltd in Singapore for server business.
． Established Inventec Tooling and Mold Co., Ltd for mold business.
． Merged 100% owned subsidiary, Inventec Enterprise System Corp..
． Inventec Investment Co., Ltd. invested Huga Optotech Inc..
． Established R&D Centers in Palo Alto and Houston.
． Invested in Inventec (Cayman) Corp. for further investment in Inventec (ChongQing) Corporation.
． Invested in Inventec (Cayman) Corp. for further investment in Inventec (ChongQing) Service Co., Ltd..
． Awarded a “Carbon Reduction Model Enterprise” by the Industrial Development Bureau, Ministry of Economic Affairs.

2010

． Through Inventec (Cayman) Corp., established the joint venture Onkyo-Inventa (Hong Kong) Co., Ltd. in Hong Kong with Onkyo Corporation.
． Through Inventec (Cayman) Corp., established the joint venture TPV-Inventa Holding Ltd. with Admiral Overseas Corporation, and through the joint venture company, invested in TPV-Inventa Technology (Fujian) Ltd., and TPV-Inventa Technology Co., Ltd. in Taipei.
． Reinvested in Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.which became wholly owned subsidiary of Inventec Corporation.
． Reinvested in Inventec Investment Co., Ltd. for further investment in Huga Optotech Inc..
． Kohjinsha Co., Ltd. changed company name to Inventec Development Japan Corporation, moved to a new location, and reduced the capital.
． Invested in Arima Communications Corp..
． Established Inventec Solar Energy Corp..
． Achieved National Invention and Creation Silver Medal Awards.
． Grated ISO 14064-1 Certification.

2011

． Invested in Kinmac Solar Corp..
． Invested in E-TON Solar Tech. Co., Ltd..
． Invested in New E Materials Co., Ltd..
． Inventec Technology (Singapore) Pte.Ltd closed down.
． Inventec Appliances Corp. became wholly owned subsidiary of Inventec Corporation.

2012

． Onkyo-Inventa (Hong Kong) Co., Limited, and Onkyo-Inventa Technologies (Tianjin) Co.,Ltd. closed down.
． In 2011, ranked No. 8 in national corporate patent application volume, No. 6 in invention patent application volume, No. 7 in patent certification acquisition volume, and No. 5 in invention patent certification acquisition volume.
． The Company was awarded“PPS Alignment Supplier of the Year” by HP.
． The Company was awarded“EG Service Supplier of the Year” by HP.
． Won the “Energy Saving and Carbon Reduction Action Mark - Excellence Award”, issued by the Environmental Protection Administration, Executive Yuan.

2013

． In 2012, ranked No. 7 in national corporate patent application volume, No. 6 in invention patent application volume, and No. 7 in invention patent certification acquisition volume.
． Reinvested in E-TON Solar Tech. Co., Ltd..
． Achieved the Best Partner Awards by Toshiba.
． Won 2013 Ministry of Economic Affairs Industrial Innovation Achievement Praise
-product/system/service innovation awards.
． Established the China Region of operation headquarters of enterprises in Mainland China.
． Taoyuan Science and Technology Park won the “Energy Saving and Carbon Reduction Action Mark-Excellence Award”, issued by the Environmental Protection Administration, Executive Yuan.
． Invested in Inventec Energy Corporation.
． Inventec (Cayman) Corp. carried out capital reduction to withdraw paid-in capital due to the close down of Onkyo-Inventa Technologies (Tianjin) Co.,Ltd., a reinvested business in mainland China.
． Invested in Inventec Technology (Chongqing) Corp. Ltd. through its investment in IEC (Cayman) Corporation.
． Set up Inventec Energy Corporation for Hsinchu Plant and expanded the solar photovoltaic module, with an annual production capacity of 150 MW.
． The capital of E-TON Solar Tech. Co., Ltd. increased NT$3,000,000,000 by cash, and the paid-in capital of E-TON Solar Tech. Co., Ltd. was NT$7,794,498,000.

2014

． Named a U.S. "2013 Number of Patent Certification" global top 500 enterprise.
． Acquired "ISO-50001 International Energy Management System" certification for the first time.
． Won Taiwan 2013 patent application and notice of certification as a top ten enterprise.
． Invested in SKSpruce Holding Limited.
． Reinvested in Inventec Solar Energy Corp..
． The Company won the 2014 Commonwealth Magazine World Corporate Citizenship Award.
． The Company won the 23rd ROC Corporate Environmental Protection Award issued by the Environmental Protection Administration, Executive Yuan.
． The Company won the “2014 Taiwan Corporate Sustainability Award - Gold Award” issued by the Taiwan Institute for Sustainable Energy.
． Inventec Appliances Corp. won Taiwan 2013 patent application and notice of certification as a top 100 enterprise.
． Inventec Appliances Corp. subsidiary, Inventec Appliances (Nanjing) Corp.in Nanjing expanded second phase plant and purchased machines and equipment to expand production capacity.

2015

． Established Inventec Manufacturing (India) Private Limited.
． Invested in Inventec Asset-Management (Shanghai) Corporation through its investment in Inventec (Shanghai) Corp..
． Reinvested in Chongqing YuYa Cloud Service Co., Ltd. through Inventec (Chongqing) Corp..
． Participated in TPV-Inventa Holding Ltd. cash capital increase through Inventec (Cayman) Corp..
． 47.68% common stock equity of Inventec Energy Corporation held by the Company was sold to Inventec Solar Energy Corporation.
． Purchased the plant building in Taoyuan Science and Technology Park.
． Won the 2015 Commonwealth Magazine World Corporate Citizenship Award.
． Won the 24th ROC Corporate Environmental Protection Award issued by the Environmental Protection Administration, Executive Yuan.
． Won the “2015 Taiwan Corporate Sustainability Award - Silver Award” issued by the Taiwan Institute for Sustainable Energy.
． Won Taiwan 2015 patent application and notice of certification as a top ten enterprise.

2016

． The Company and Advantech Co., Ltd. jointly established AIMobile Co., Ltd..

`Ⅱ` . Corporate Governance Report

2.1 Organization Structure

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Board of shareholders
Supervisor
Board of Directors
Remuneration Committee
Audit Center Social Responsibility Group
President
Chief Operating Officer
Safety & Health Center
Business Unit Company Unit Factory Business Center
Enterprise Business Group Finance Center China Strategy Center
Pudong Factory
Legal & Intellectual Property
Personal Solution Group Center
Chongqing Factory
Information Technology
Cloud Information Services Center
Mexico Factory
Talent Center
Czech Factory
Environmental Management
Center
India Factory
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Department Functions

Department Functions
Major Department	Major BusinessActivities
Audit Center	Overall planning businesses such as internal control system, internal audits, self-assessment, etc. of the company.
Social Responsibility Group	Plan and execute corporate social responsibility related matters.
Enterprise Business Group	Planning and management of enterprise business computer design, development, manufacturing,production, marketing, after-sales service, etc.
Personal Solution Group	Planning and management of portable computer design, development, manufacturing,production, marketing, after-sales service, etc.
Cloud Information Services	Cloud solution research and development, sales, and service. Exploitation of big data analytical ability and market application promotion. Development and sales of Internet important system services. Data center setting and fully established SaaS and PaaS service promotion. IoT and industry4.0 solution construction and sales services.
Finance Center	Overall planning of the financial, accounting, investment, and stock affairs business of the company.
Legal & Intellectual PropertyCenter	Overall planning of application protection business related to patent rights, trademark rights, copyrights, and trade secrets of the company.
Information Technology Center	Overall planning of the establishment and operation of a network system structure, product life cycle management system, enterprise resource planning system, manufacturing execution system, quality inspection management system, supply chain management system, form management system, etc. of the company. Development and sales of enterprise solutions, enterprise system integration and consulting services, office system import and process automation services, and development and sales ofgreen energysolutions.
Talent Center	Overallplanningof the company’s human resources related business.
Environmental Management Center	Overall planning of the company’s related management business and the integratedplanningand supervision of environment andquality.
Pudong Factory	Responsible for design and development, manufacturing, after-sales services, etc. of portable computers, wireless communication products, and corporate computers.
Chongqing Factory	Responsible for design and development, manufacturing, after-sales services, etc. of portable computers, wireless communication products, and corporate computers.
Mexico Factory	Responsible for production, testing, troubleshooting, after-sales services, etc. of corporate servers and storage systems.
Czech Factory	Responsible for production, testing, troubleshooting, after-sales services, etc. of corporate servers and storage systems.
India Factory	Responsible for production and manufacturing, testing, troubleshooting, after-sales services, etc. of mobile phones, plates, portable computers, wireless communication products, corporate computers, corporate servers, and storage systems.
StrategyCenter	Overallplanningand integration of enterprise operation strategies.

2.2 Board of Directors, Supervisors and Management Team

2.2.1 Board of Directors and Supervisors

2.2.1.1 Introduction of Board of Directors and Supervisors 2016.04.30

Title	Nationality or Registered Address	Name	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience Education	Selected Current Positions	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation- ship
Chairman	R.O.C	Lee, Tsu-Chin	2014.06.12	3	1980.06.08	115,833,835	3.23%	115,833,835	3.23%	`－`	`－`	`－`	`－`	Bachelor of Economics, Tunghai University Chairman, Inventec Corporation	Note 1	None	None	None
Director	R.O.C	Yeh, Kuo-I	2014.06.12	3	1975.06.09	254,361,330	7.09%	254,361,330	7.09%	99,314,117	2.77%	`－`	`－`	University of San Francisco Chairman, Inventec Corporation	Note 2	Supervisor	Wang, Ping-Hui	Within two degrees of kinship
Director	R.O.C	Wen, Shih-Chih	2014.06.12	3	2004.05.27	35,685,590	0.99%	35,685,590	0.99%	37,399	0.00%	`－`	`－`	Xihu Vocational High School of Industry and Commerce Senior Vice President, Inventec Corporation	Note 3	Represent- ative of Supervisor	Yang, Chiung- Nan	Spouse
Director	R.O.C	Chang, Ching-Sung	2014.06.12	3	2014.06.12	788,644	0.02%	788,644	0.02%	6,743,434	0.19%	`－`	`－`	Master of Electric Engineering, National Taiwan University Chairman, Inventec Appliances Corporation	Note 4	None	None	None
Director	R.O.C	Huang, Kuo-Chun	2014.06.12	3	2014.06.12	1,461,985	0.04%	1,461,985	0.04%	9,327	0.00%	`－`	`－`	Bachelor of Electric Engineering, National Cheng-Kung University Qume Electronics, Taiwan	Note 5	None	None	None

Title	Nationality or Registered Address	Name	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience Education	Selected Current Positions	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation- ship
Independent Director	R.O.C	Chang, Chang-Pang	2014.06.12	3	2014.06.12	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Master of Laws, National Cheng-Chi University Chairman, Fuhwa Financial Holding Co., Ltd. Deputy Minister, Ministry of Economic Affairs Deputy Secretary General, Executive Yuan Vice Minister, Ministry of Finance Chairman, Securities and Exchange Commission, Ministry of Finance	Note 6	None	None	None
Independent Director	R.O.C	Chen, Ruey-Long	2014.06.12	3	2014.06.12	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Bachelor of Economics, National Chung-Hsing University Chairman, Institute for Information Industry Minister, Ministry of Economic Affairs	Note 7	None	None	None
Supervisor	R.O.C	Cheng, Hsien-Ho	2014.06.12	3	2002.05.30	1,553,664	0.04%	1,443,664	0.04%	655,923	0.02%	`－`	`－`	Bachelor of Accounting, National Cheng-Chi University Senior Vice President, Inventec Corporation	Note 8	None	None	None
Supervisor	R.O.C	Wang, Ping-Hui	2014.06.12	3	1990.04.07	19,317,657	0.54%	19,317,657	0.54%	18,200,345	0.51%	`－`	`－`	Tatung High School Chairman, Snow Peak Enterprise Co., Ltd.	None	Director	Yeh, Kuo-I	Within two degrees of kinship
Supervisor	R.O.C	Shyh Shiunn Investment Corp.	2014.06.12	3	2011.06.09	139,416,690	3.89%	139,416,690	3.89%	`－`	`－`	`－`	`－`	`－`	None	None	None	None
	R.O.C	Representative, Yang, Chiung-Nan	2014.06.12	3	2014.06.12	37,399	0.00%	37,399	0.00%	35,685,590	0.99%	`－`	`－`	Nan Ying Vocation High School Accountant, Taipei Veterans General Hospital	Supervisor, Tomorrow Technology Corporation	Director	Wen, Shih-Chih	Spouse

Note 1: Chairman of Inventec Investments Co., Ltd. ； Director of Inventec Corporation (Hong Kong) Ltd., Inventec (Cayman) Corp., IEC (Cayman) Corporation, Inventec Holding (North America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration (North America) Corp., Inventec Distribution(North America) Corp., IEC Technologies,S.de R.L.de C.V., Inventec Appliances Corp., and Inventec Group Charity Foundation ； Chief executive officer of Inventec Development Japan Corporation ； President of Cloud Computing Association in Taiwan.
Note 2: Director of Inventec Corporation (Hong Kong) Ltd., W.K Technology Fund Ⅷ Ltd., PK Venture Capital Corp., PK Ⅱ Venture Capital Corp., Kuo Hsieh Investment Co. Ltd., Fu Tai Investment Co. Ltd., WK Technology Fund., WK Technology Fund IV, W.K Technology Fund Ⅴ Ltd., W.K Technology Fund Ⅵ Ltd., and Royal Base Corporation ； Supervisor of W.K Technology Fund Ⅶ Ltd. ； Chairman of Inventec Group Charity Foundation.
Note 3: Director of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., and Inventec Appliances Corp. ； Chairman of Shyh Shiunn Investment Corp.
Note 4: Chairman of Inventec Appliances Corp., Inventec Electronics (Shanghai) Co. Ltd., Inventec Appliances (Pudong) Corp., Inventec (Nanjing) Electronics Co. Ltd., Inventec Appliances (Nanjing) Corp., Inventec Appliances (Nanjing) System Corp., Inventec Appliances (Xi'An) Corporation, Inventec Appliances (Nanchang) Co., Ltd., and Inventec Appliances (Shang Hai) Co., Ltd. ； Director of Inventec Appliances (Cayman) Holding Corp., Inventec Appliances (USA) Distribution Corp., Inventec Appliances USA Inc. and Inventec Group Charity Foundation.
Note 5: Chairman of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd., and TPV-Inventa Technology (Fujian) Ltd. ; President of Inventec Corp. ； Director of Inventec Investments Co., Ltd., Inventec Holding (North America) Corp., Inventec Electronics (USA) Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration (North America) Corp., Inventec Distribution (North America) Corp., and IEC Technologies,S.de R.L.de C.V.
Note 6: Chief Executive Officer of Lien Chan Foundation for Peace and Development ； Independent Director of Formosa Petrochemical Corp., Silitech Technology Corporation, Powerchip Technology Corporation ； Director of Capital Securities Corp., Maxigen Biotech Inc., Global Financial Services, Global Investment Holdings, Zi-Yu Investment Co., Ltd., and Inventec Group Charity Foundation ； Supervisor of Jintex Corporation Ltd.
Note 7: Chairman of Sinocon Industrial Standards Foundation, and Powerchip Technology Corporation ； Independent Director of Formosa Chemicals & Fibre Corporation and China Petrochemical Development Corporation ； Director of Teknowledge Development Corporation, Bank of Panhsin, HannStar Board Corp., Asia Cement Corporation, PowerGate Optical Inc., Gintech Energy Corporation, and Inventec Group Charity Foundation.
Note 8: Supervisor of Inventec Investments Co., Ltd., Inventec Solar Engergy Corporation, E-TON Solar Tech. Co., Ltd., Inventec Energy Corporation, New E Materials Co., Ltd., and Inventec Appliances Corp.

2.2.1.2 The institutional shareholders

	2.2.1.2 The institutional shareholders	2.2.1.2 The institutional shareholders
	04/30/2016
	Name	shareholders
	Shyh Shiunn Investment Corp.	Wen, Shih-Chih (35.45%)`、`Wen, Shih-Yi (32.27%)`、`Huang, Ye-Ming (9.96%)

2.2.1.3 Professional Qualifications and Independence Analysis of the Board

04/30/2016

														04/30/2016
Criteria Name	Met one of the following professional qualification requirements with at least five years work experience			Independence`（`Note1`）`										Number of other public companies in which the individual is concurrently serving as an independent director
	An instructor of 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, or university	A judge,public prosecutor, attorney, CPA, or other professional or technical specialist who has passed a national examination and bee awarded a certificate in a profession necessary for the business of the company	Have work experience in the areas of commerce,law, finance, accounting, or otherwise necessary for the business of the company	`〈`1`〉`	`〈`2`〉`	`〈`3`〉`	`〈`4`〉`	`〈`5`〉`	`〈`6`〉`	`〈`7`〉`	`〈`8`〉`	`〈`9`〉`	`〈`10`〉`
Lee, Tsu-Chin	-	-		-	-	-								-
Yeh, Kuo-I	-	-		-	-	-	-		-					-
Wen, Shih-Chih	-	-		-	-	-		-						-
Chang, Ching-Sung	-	-		-	-									-
Huang, Kuo-Chun	-	-		-	-									-
Chang, Chang-Pang														3
Chen, Ruey-Long	-	-												2
Cheng, Hsien-Ho	-	-			-									-
Wang, Ping-Hui	-	-				-	-							-
Shyh Shiunn Investment Corp. Representative, Yang, Chiung-Nan	-	-					-				-		-	-

Note1: The independece criteria to indicate whether the directors or supervisors had met any of the conditions during the 2 years prior to being elected or during the term of office
（1）Not an employee of the company or its affiliates
（2）A director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which the company holds, directly or indirectly, more than 50 percent of the voting shares.
（3）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 one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
（4）A spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
（5）A director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company or that holds shares ranking in the top five in holdings.
（6）A director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
（7）A professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, provided that this restriction does not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies Whose Stock is Listed on the TWSE or Traded on the TPEx.
（8）Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.
（9）Not been a person of any conditions defined in Article 30 of the Company Act.

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（10）

2.2.2 Introduction of the Management Team 2016.04.30

Title	Nationality	Name	On-board Date	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding By Nominee Arrangement	Shareholding By Nominee Arrangement	Experience Education	Selected Current Positions	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relationship
President	R.O.C	Huang Kuo-Chun	2013.06.13	1,461,985	0.04%	9,327	0.00%	`－`	`－`	B.S. in Electrical Engineering, National Cheng Kung University QUME Electronics, Taiwan	Note 1	None	None	None
Executive Vice President	R.O.C	Wu, Yung-Tsai	2006.03.01	482,731	0.01%	12,864	0.00%	`－`	`－`	M.B.A. in Management, National Taiwan University of Science and Technology Linco Precision	Note 2	None	None	None
Senior Vice President	R.O.C	Chang, Hui	2004.09.01	687,059	0.02%	306,721	0.01%	`－`	`－`	M.B.A. in Global Management, Thunderbird School of Global Management	Note 3	None	None	None
Senior Vice President	R.O.C	Yang, Hsin-Hua	2006.03.01	227,928	0.01%	77,589	0.00%	`－`	`－`	M.S. in Science and Technology, Keio University	Director of E-TON Solar Tech.Co., Ltd, and Inventec Development Japan Corporation	None	None	None
Senior Vice President	R.O.C	Tsai, Chih-An	2009.03.24	746,101	0.02%	13,208	0.00%	`－`	`－`	B.S. in Industrial Engineering and Enterprise Information, Tunghai University Digital Equipment Corporation	Representative of Inventec (Czech) s.r.o	None	None	None
Senior Vice President	R.O.C	Wen, Chi-Wai	2010.01.22	622,556	0.02%	`－`	`－`	`－`	`－`	B.S. in Electrical Engineering, Fu Jen Catholic University Microtek International Inc	None	None	None	None
Senior Vice President	R.O.C	Lin, Chin-Wen	2010.01.22	85,278	0.00%	`－`	`－`	`－`	`－`	Ph.D. in Industrial Engineering, Purdue University The Boeing Company	None	None	None	None

Title	Nationality	Name	On-board Date	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding By Nominee Arrangement	Shareholding By Nominee Arrangement	Experience Education	Selected Current Positions	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relationship
Senior Vice President	R.O.C	Chen, Yea-Ping	2013.07.30	120,000	0.00%	20,000	0.00%	`－`	`－`	Ph. D. in Electrical Engineering, University of Wisconsin-Madison Philips Semiconductors	None	None	None	None
Vice President	R.O.C	Chang, Nai-Wen	2004.12.01	28,857	0.00%	`－`	`－`	`－`	`－`	LL.M. in Law, University of Minnesota VIA Technologies Inc.	None	None	None	None
Vice President	R.O.C	Hong, Kuo-Ching	2006.03.01	382,010	0.01%	14,986	0.00%	`－`	`－`	M.B.A. in Executive Master of Business Administration, National Cheng-Chi University	None	None	None	None
Vice President	R.O.C	Chang Yiu-Lang	2007.05.01	`－`	`－`	`－`	`－`	`－`	`－`	B.B.A. in Business Administration, Senshu University M.B.A. in Business Administration, Taiwan National University Alpha Networks	None	None	None	None
Vice President	R.O.C	Yu, Chin-Pao	2009.01.20	707,576	0.02%	175,105	0.00%	`－`	`－`	B.B.A. in Accounting, National Cheng Kung University M.B.A. in Executive Master of Business Administration, National Cheng-Chi University	Note 4	None	None	None
Vice President	R.O.C	Chien, Kuei-Fen	2010.01.22	25,068	0.00%	`－`	`－`	`－`	`－`	M.B.A., Missouri State University Digital Equipment Corporation	None	None	None	None
Vice President	R.O.C	Lou, Jin-Pang	2010.02.23	44,613	0.00%	573	0.00%	`－`	`－`	B.S. in Electrical Engineering, National Taipei University of Technology Quanta Computer lnc.	None	None	None	None
Vice President	R.O.C	Yi, Fu-Ming	2010.12.28	65,637	0.00%	`－`	`－`	`－`	`－`	B.S. in Electrical Engineering, Tatung University	None	None	None	None

Title	Nationality	Name	On-board Date	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding By Nominee Arrangement	Shareholding By Nominee Arrangement	Experience Education	Selected Current Positions	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
				Shares	%	Shares	%	Shares	%			Title	Name	Relationship
Vice President	R.O.C	Tsai, Yuh-Chen	2010.12.28	`－`	`－`	`－`	`－`	`－`	`－`	M.S. in Engineering and Computer Science, Syracuse University Arima Computer Corp.	None	None	None	None
Vice President	R.O.C	Hsu, Ching-Wu	2012.01.16	88,508	0.00%	`－`	`－`	`－`	`－`	M.B.A in Finance and Business Administration, National Taiwan University of Science and Technology Sanyo Electric Corp., Ltd.	None	None	None	None
Vice President	R.O.C	Ting, Chin-Yun	2012.05.29	96,520	0.00%	`－`	`－`	`－`	`－`	Hofstra University Master of Science First International Computer	None	None	None	None
Vice President	R.O.C	Chou, Shao-Hsin	2013.07.30	592,615	0.02%	`－`	`－`	`－`	`－`	B.S. in Computer Science and Information Engineering, Tamkang University	None	None	None	None
Vice President	R.O.C	Tsung, Yu-Lin	2013.07.30	`－`	`－`	`－`	`－`	`－`	`－`	Ph.D. in Computer Science, National Chiao Tung University Institute for Information Industry Yuan Chi Computer Corp.	Director andPresident of Chongqing Rongjie Cloud Service Co., Ltd.	None	None	None
Senior Director of Talent Center	R.O.C	Yu, Win-Chee	2011.10.01	573,636	0.02%	156,922	0.00%	`－`	`－`	M.S. in Communications Engineering, National Chiao Tung University	None	None	None	None
Director of Finance Center	R.O.C	Liang, Wen-Jan	2008.08.01	`－`	`－`	`－`	`－`	`－`	`－`	B.B.A. in Economics, National Taiwan University OCBC Bank	None	None	None	None
Director of Talent Center	R.O.C	Lin, Shih-Pin	2015.03.30	28,000	0.00%	`－`	`－`	`－`	`－`	M.S. in Manufacturing Engineering, Boston University Radiant Opto-Electronics Corporation	None	None	None	None
Director of Finance Center	R.O.C	Hsiao, I-Ying	2015.04.01	996	0.00%	676	0.00%	`－`	`－`	M.B.A., Baruch College, City University of New York CTBC bank	None	None	None	None

Note 1: Chairman of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd., TPV-Inventa Technology (Fujian) Ltd. ； Director of Inventec Corporation, Inventec Investments Co., Ltd., Inventec Holding (North America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing(North America) Corp., Inventec Configuration(North America) Corp., Inventec Distribution(North America) Corp., IEC Technologies,S.de R.L.de C.V..
Note 2: Chairman of Inventec Technology (Chongqing) Corp., Inventec (Pudong) Corp., Inventec Hi-Tech Corp., Inventec (Pudong) Technology Corp., Inventec (Shanghai) Corp., Inventec (Shanghai) Service Co., Ltd., Inventec (Chongqing) Corp., Inventec (Chongqing) Service Co., Ltd., Inventec (Beijing) Electronics Technology Co., Ltd., Inventec (Tianjin) Electronics Co., Ltd., and Inventec Asset-Management (Shanghai) Corporation ； President of Inventec (Shanghai) Corp., and Inventec (Shanghai) Service Co., Ltd. ; Director of Inventec Huan Hsin (Zhejiang) Technology Co., Ltd., TPV-Inventa Holding Ltd., Inventec Appliances Corp., Inventec Besta Co., Ltd., Inventec Holding (North America) Corp., Inventec Electronics(USA) Corp., Inventec Manufacturing (North America) Corp., Inventec Configuration(North America) Corp., Inventec Distribution (North America) Corp and E28 Limited ; Representative of Inventec Manufacturing (India) Private Limited.
Note 3: Dircetor of TPV-Inventa Holding Ltd., TPV-Inventa Technology Co., Ltd., TPV-Inventa Technology (Fujian) Ltd. ； Representative of Inventec Manufacturing (India) Private Limited.
Note 4: Director and President of Inventec Investments Co., Ltd. ； Director of E-TON Solar Tech. Co., Ltd., Inventec Solar Engergy Corporation, Arima Communications Corp., Global Strategic Investments Fund and TPV- Inventa Holding Ltd. ； Supervisor of TPV- Inventa Technology Ltd., Inventec Besta Co., Ltd., and TPV-Inventa Technology (Fujian) Ltd. ； Chief Executive Officer of Inventec Group Charity Foundation ； Supervisor of Inventec Development Japan Corporation.

2.2.3 Remuneration of Directors, Supervisors, the President, and Vice President

2.2.3.1 Remuneration of Directors Unit: NT$ Thousands

Title	Name			Remuneration	Remuneration	Remuneration	Remuneration			Ratio of total to net income	Ratio of total to net income	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	Relevant remuneration received by directors who are	also employees	also employees	also employees	also employees	Ratio to net i	of total ncome	Compensation paid to directors from an invested company other than the company's subsidiary
		Compensation (A)		Retire- ment Pension (B)		Bonus (C)		Allowance (D)				Salary and allowance (E)		Severance pay (F)		Employees bonus (G)				Exercisable employee stock option (H)		Number of restricted employee shares (I)
		The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The comp-any	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company		financial report	Compani es in the	The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report
																cash	stock	cash	stock
Chairman	Lee, Tsu-Chin	15,480	15,480	284	284	83,519	83,519	1,720	1,950	1.82%	1.82%	17,600	26,140	340	769	7,000	-	7,000	-	-	-	-	-	2.26%	2.43%	-
Director	Yeh, Kuo-I
Director	Wen, Shih-Chih
Director	Chang, Ching-Sung
Director	Huang, Kuo-Chun
Independent Director	Chang, Chang-Pang
Independent Director	Chen, Ruey-Long

Bracket	Name	Name	Name	Name
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The Company	Companies in the financial report	The Company	Companies in the financial report
Below NT$ 2,000,000
NT$2,000,000(Included) ~ $5,000,000(Excluded)	Chang, Chang-Pang, Chen, Ruey-Long	Chang, Chang-Pang, Chen, Ruey-Long	Chang, Chang-Pang, Chen, Ruey-Long	Chang, Chang-Pang, Chen, Ruey-Long
NT$5,000,000(Included) ~ $10,000,000(Excluded)
NT$10,000,000(Included) ~ $15,000,000(Excluded)	Wen, Shih-Chih, Huang, Kuo-Chun	Wen, Shih-Chih, Huang, Kuo-Chun	Wen, Shih-Chih, Huang, Kuo-Chun	Wen, Shih-Chih, Huang, Kuo-Chun
NT$15,000,000(Included) ~ $30,000,000(Excluded)	Lee, Tsu-Chin, Yeh, Kuo-I, Chang, Ching-Sung	Lee, Tsu-Chin, Yeh, Kuo-I, Chang, Ching-Sung	Lee, Tsu-Chin, Yeh, Kuo-I, Chang, Ching-Sung	Lee, Tsu-Chin, Yeh, Kuo-I, Chang, Ching-Sung
NT$30,000,000(Included) ~ $50,000,000(Excluded)
NT$50,000,000(Included) ~ $100,000,000(Excluded)
Over NT$100,000,000
Total	7	7	7	7

2.2.3.2 Remuneration of the Supervisors Unit: NT$ Thousands

Title	Name			Remuneration	Remuneration			Ratio of total to net income	Ratio of total to net income	Compensation paid to directors from an invested company other than the company's subsidiary
		Compensation (A)		Bonus (B)		Allowance (C)
		The Company	Companies in the financial report	The Company	Companies in the financial report	The Company	Companies in the financial report	The Company	Companies in the financial report
Supervisor	Cheng, Hsien-Ho	5,160	5,160	14,739	14,739	780	1,062	0.37%	0.38%	-
Supervisor	Wang, Ping-Hui
Supervisor	Shyh Shiunn Investment Corp. Representative, Yang,Chiung-Nan

Bracket	Name	Name
	Total of(A+B+C)
	The company	Companies in the financial report
Below NT$ 2,000,000
NT$2,000,000(Included)~ $5,000,000(Excluded)	Wang, Ping-Hui, Shyh Shiunn Investment Corp.	Wang, Ping-Hui, Shyh Shiunn Investment Corp.
NT$5,000,000(Included)~ $10,000,000(Excluded)
NT$10,000,000(Included)~ $15,000,000(Excluded)
NT$15,000,000(Included)~ $30,000,000(Excluded)	Cheng, Hsien-Ho	Cheng, Hsien-Ho
NT$30,000,000(Included)~ $50,000,000(Excluded)
NT$50,000,000(Included)~ $100,000,000(Excluded)
Over NT$100,000,000
Total	3	3

2.2.3.3 Remunerations paid to the management team

Unit: NT$ Thousands

Title	Name	Compensation (A)	Compensation (A)	Retirement Pension (B)	Retirement Pension (B)	Bonus (C)	Bonus (C)	Employees bonus (D)	Employees bonus (D)	Employees bonus (D)		Ratio of total to net income	Ratio of total to net income	Exercisable employee stock option	Exercisable employee stock option	Number of restricted employee shares	Number of restricted employee shares	Compensati on paid to directors from an invested company other than the company's subsidiary
		The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report	The company		es in the financial report	Compani	The company	Companies in the financial report	The company	Companies in the financial report	The company	Companies in the financial report
								cash	stock	cash	stock
President	Huang, Kuo-Chun	58,080	62,601	3,485	3,485	101,800	102,219	46,100	-	46,100	-	3.76%	3.85%	-	-	-	-	130
Executive Vice President	Wu, Yung-Tsai
Senior Vice President	Chang, Hui
Senior Vice President	Yang, Hsin-Hua
Senior Vice President	Tsai, Chih-An
Senior Vice President	Wen, Chi-Wai
Senior Vice President	Lin, Chin-Wen
Senior Vice President	Chen, Yea-Ping
Vice President	Chang, Nai-Wen
Vice President	Hong, Kuo-Ching
Vice President	ChangYiu-Lang
Vice President	Yu, Chin-Pao
Vice President	Chien, Kuei-Fen
Vice President	Lou, Jin-Pang
Vice President	Yi, Fu-Ming
Vice President	Tsai, Yuh-Chen
Vice President	Hsu, Ching-Wu
Vice President	Ting, Chin-Yun
Vice President	Chou, Shao-Hsin
Vice President	Tsung, Yu-Lin

Bracket	Name	Name
	The Company	Companies in the financial report
Below NT$ 2,000,000
NT$2,000,000(Included) ~ $5,000,000(Excluded)	Hsu, Ching-Wu, Tsung, Yu-Lin	Hsu, Ching-Wu, Tsung, Yu-Lin
NT$5,000,000(Included) ~ $10,000,000(Excluded)	Lin, Chin-Wen, Chen, Yea-Ping , Hong, Kuo-Ching, Yu, Chin-Pao, Chang, Nai-Wen, Ting, Chin-Yun, Chien, Kuei-Fen, Chang, Yiu-Lang, Tsai, Yuh-Chen, Chou,Shao-Hsin	Lin, Chin-Wen, Chen, Yea-Ping , Hong, Kuo-Ching, Yu, Chin-Pao, Chang, Nai-Wen, Ting, Chin-Yun, Chien, Kuei-Fen, Chang, Yiu-Lang, Tsai, Yuh-Chen, Chou,Shao-Hsin
NT$10,000,000(Included) ~ $15,000,000(Excluded)	Yang, Hsin-Hua, Yi, Fu-Ming, Lou, Jin-Pang	Yang, Hsin-Hua, Yi, Fu-Ming, Lou, Jin-Pang
NT$15,000,000(Included) ~ $30,000,000(Excluded)	Huang, Kuo-Chun, Wu, Yung-Tsai, Chang, Hui, Tsai, Chih-An, Wen, Chi-Wai	Huang, Kuo-Chun, Wu, Yung-Tsai, Chang, Hui, Tsai, Chih-An, Wen, Chi-Wai
NT$30,000,000(Included) ~ $50,000,000(Excluded)
NT$50,000,000(Included) ~ $100,000,000(Excluded)
Over NT$100,000,000
Total	20	20

2.2.3.4 Employee Profit Sharing Granted to Management Team

Unit: NT$ Thousands

Title	Name	Stock	Cash	Total	Ratio of Total Amount to Net Income
President	Huang,Kuo-Chun	-	49,100	49,100	0.88%
Executive Vice President	Wu,Yung-Tsai
Senior Vice President	Chang,Hui
Senior Vice President	Yang,Hsin-Hua
Senior Vice President	Tsai,Chih-An
Senior Vice President	Wen,Chi-Wai
Senior Vice President	Lin,Chin-Wen
Senior Vice President	Chen,Yea-Ping
Vice President	Chang,Nai-Wen
Vice President	Hong,Kuo-Ching
Vice President	Chang,Yiu-Lang
Vice President	Yu,Chin-Pao
Vice President	Chien,Kuei-Fen
Vice President	Lou,Jin-Pang
Vice President	Yi,Fu-Ming
Vice President	Tsai,Yuh-Chen
Vice President	Hsu,Ching-Wu
Vice President	Ting,Chin-Yun
Vice President	Chou,Shao-Hsin
Vice President	Tsung,Yu-Lin
Senior Director of Talent Center	Yu,Win-Chee
Director of Finance Center	Liang,Wen-Jan
Director of Talent Center	Lin,Shih-Pin
Director of Finance Center	Hsiao,I-Ying

2.2.3.5 Compare and state the ratio of total remuneration paid to the Company’s Directors, Supervisors, President and Vice Presidents by

the company and the companies in the consolidated financial statements to net income in the past two years.

Unit: NT$ Thousands

Item	The Company	The Company	Companies in the financial report	Companies in the financial report
	2014	2015	2014	2015
Remuneration of Directors	124,569	101,003	125,243	101,233
Ratio of total to net income	1.76%	1.82%	1.76%	1.82%
Remuneration of the supervisors	24,924	20,679	25,207	20,961
Ratio of total to net income	0.35%	0.37%	0.36%	0.38%
Remuneration of the President and Vice President	244,345	209,465	255,396	214,405
Ratio of total to net income	3.44%	3.76%	3.60%	3.85%
Net income	7,097,815	5,563,633	7,097,815	5,563,633

2.2.3.6 Policy, standards, and combination of remuneration payment to directors, supervisors, President, and Vice President, the remuneration determination procedure, and the relationship between operation performance and future risk
(1). Remuneration payment methods to directors and supervisors of the Company are stipulated below:

On December 29, 2015, the Board of Directors of the Company passed a resolution amending the Articles of Incorporation ; it still needs to be passed as a resolution of the 2016 general meeting before being officially issued. According to the amended Articles of Incorporation of the Company, if the Company has annual profits, no less than 3% of them shall be allocated as employee remuneration, and no more than 3% as director and supervisor remuneration. However, when the Company experiences accumulated losses, it shall reserve the compensation amount in advance. The employee remuneration may be issued in cash or stock; the issuing object may include employees subordinated to the company that conform to certain conditions; and the conditions and methods thereof will be stipulated by the Board of Directors.

The remuneration payment depends on the participation degree and contribution value of each director and supervisor and also refers to normal industry standards; it will be decided by the Board of Directors after being reviewed by the Remuneration

Committee and shall not exceed the upper limit stipulated in the Company’s Articles of Association. Directors of the Company carry out the duties of other company directors or supervisors stated in the consolidated statement on behalf of the Company; supervisors of the Company concurrently assume the duty of other company supervisors stated in the consolidated statement and thus receive a traffic allowance. Apart from that, they do not receive any remuneration from reinvestment business beyond the Company.

(2). The relevant measures related to remuneration payment to the President and Vice President are stipulated below:

The remuneration payment to the President and Vice President is reviewed by the Remuneration Committee and proposed to the Board of Directors for resolution before making a decision. Regarding the performance assessment and remuneration of the manager, apart from referring to normal industry standards and considering the personal time engaged, the responsibility assumed, achievement of personal targets, performance in assuming other duties, and the remuneration paid by the company to employees of the same position, the Remuneration Committee of the Company also takes the achievement of short-term and long-term business targets of the Company, related rationality of company operation performance and future risks, etc. as its basis.

2.3 Implementation of Corporate Governance

2.3.1 Board of Directors

A total of 13 (A) meetings of the Board of Directors were held in 2015, the average attendance rate is 94%. Directors’ attendance status is as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) B/A
Chairman	Lee, Tsu-Chin	13	0	100%
Director	Yeh, Kuo-I	13	0	100%
Director	Wen, Shih-Chih	13	0	100%
Director	Chang, Ching-Sung	13	0	100%
Director	Huang, Kuo-Chun	12	1	92%
Independent Director	Chang, Chang-Pang	12	1	92%
Independent Director	Chen, Ruey-Long	10	3	77%
Other matters that should be recorded: I. For the matters specified in Point 3 of Article 14 of the Securities Exchange Act, and other resolutions of the Board of Directors in which an independent director opposes or reserves opinion and with record or written statement, the date of the Board of Directors, stage, proposal content, opinions of all independent directors, and the Company's handling of independent directors' opinion shall be specified: Not available. II. For the director's avoidance of proposal with a conflict of interest, the name of the director, proposal content, reason for conflict of interest, and participation in voting shall be specified: Not available. III.Objective of strengthening the function of the Board of Directors in the current year and recent years (e.g. set up an Audit Committee, improve information transparency, etc.) and execution assessment: The Company adopted the system for nominating candidates in 2014 to elect the 14th session of directors and supervisors, electing seven directors (including two independent directors) and three supervisors; the term of office is three years (from June 12, 2014 to June 11, 2017) in order to strengthen the independence and diversity of the Board of Directors. If a member of the Board of Directors receives further continuous education duringthe term of office,the Companywill buy

liability insurance for the business scope executed by all directors and supervisors. The Board of Directors is responsible to the Shareholders' Meeting and exercise its function and power according to relevant laws and decrees, the Company’s Articles of Association, and resolutions of Shareholders' Meetings. Members of the Board of Directors adhere to the attitude of loyalty, prudence, and fulfilling manager's responsibility, take company interests as their premise, assess company operation strategies, risk management, annual budget, and business performance, and supervise significant matters, such as major capital expenditure, investment disposal, etc. Board of Directors meetings shall be convened at least once every quarter, and important resolutions shall be published immediately on the company website for inquiry. The operation of the Board of Directors is subject to the "Rules for Board of Directors’ Discussion" and follows the "Corporate Governance Best Practice Principles", "Code of Integrity Operation", "Code of Corporate Social Responsibility", and execution objectives. Through the discussion of corporate governance issues, the Board of Directors communicates with an external certified accountant to regularly review the corporate governance strategy every quarter; the support and persistence of the Board of Directors to the "Inventec Internal Audit Penalty Point Provisions" has become important guidance and the best guarantee for the Company to implement corporate governance and preventive (risk control) internal control system. The Company has established two independent directors, who are concurrent members of the Remuneration Committee, and one of them is the convener of the Remuneration Committee. On December 29, 2015, the Board of Directors passed a resolution to amend the Articles of Association as follows: 1. In 2015, Shareholders' Meeting will amend the Articles of Association so that the number of independent directors shall be at least two and no less than one fifth of the total number of directors. 2. The reelection of the Shareholders' Meeting will be conducted in 2017, and all independent directors (no less than three independent directors) will take posts as members of the Audit Committee. The setup of the Audit Committee further strengthens the operation of the Board of Directors. Independent directors possess professional knowledge, their stock holding and part-time job are restricted, and they shall maintain independence with the scope of business execution and shall not have direct or indirect conflict of interests with the Company. To be more capable of exerting the maximum function and increase the transparency of the Company’s financial statements, it can guarantee shareholders' rights and interests and improve company value to achieve the objective of sustainable operation. In order to improve information transparency, in addition to disclosing significant resolution matters of the Board of Directors on the company website, the Company has also set up the interested party zone to achieve the purpose of full communication with investors and timeliness of public information disclosure through the website and an implemented spokesman system. In the securities and futures market, the Development Foundation's eleventh and twelfth listed company information disclosure evaluation is Class A. In 2016, according to the "Corporate Governance Center" of the Taiwan Stock Exchange Corporation, the second corporate governance evaluation system, the evaluation result lists the Company as a top five percent company.

2.3.2 Audit Committee `：` NA

2.3.3 The Supervisors

A total of 13 (A) meetings of the Board of Directors were held in 2015, the average attendance rate is 100%. Supervisors’ attendance status is as follows :

follows :
Title	Name	Attendance in person (B)	Attendance rate (%) B/A
Supervisor	Cheng, Hsien-Ho	13	100%
Supervisor	Wang, Ping-Hui	13	100%
Supervisor	Shyh Shiunn Investment Corp. Representative, Yang, Chiung-Nan	13	100%
Other matters that should be recorded: I. Supervisor composition and responsibility: (I) The Company designates three supervisors with three-year terms of office; supervisors shall have integrity, dependability, fair judgment, professional knowledge, capability of reading financial statements, etc. (II) Responsibilities of the Company’s supervisors are as follows: 1. Investigate and supervise the business situation and financial condition of the company at all times in order to reduce the financial crisis and operation risk of the Company and maintain the rights and interests of the Company and its shareholders. 2. Be familiar with relevant laws and regulations, understand the rights and obligations and responsibilities of the company directors, as well as the responsibility division and operation content of each department, and attend the Board of Directors meetings to supervise its operation and express opinions in a timely manner in order to master or find out abnormal conditions in advance. 3. Check all kinds of forms, lists, and data documents and issue reports. 4. Other responsibilities granted pursuant to laws and decrees or regulations. (III) Communication circumstances (e.g. communication channels, methods, etc.) between the supervisor and company employees and shareholders:

  1. The Company has set up an employee opinion exchange zone, shareholder and interested party zone, and supervisor intercommunication channel; through employee opinion investigation and the employee complaint system, the possible disadvantages of the Company can be found and resolved in a timely manner through information delivery.

  2. The supervisor shall actively participate in study and continuously attend further education courses in order to strengthen professional quality and understand the trends of the latest laws and decrees; through the construction of internal and external website information of the Company, the supervisor can fully achieve the communication purpose with internal employees and external interested parties.

(IV) Communication circumstance (e.g. communication matters, methods, results, etc. regarding financial and business situations of the Company) between the supervisor and the internal audit supervisor and accountant:
1. Pursuant to Article 15 of the "Guidelines for Public Companies to Establish Internal Control Systems", the internal audit supervisor shall submit the audit report and tracking report to each supervisor for review before the end of the next month after completion of the audit project, and the supervisor shall report the lookup result to the Board of Directors in the current month. Regarding the instruction of the supervisor during review, the Audit Center will carry out subsequent improvement and tracking operations, and after completion of improvement and tracking, it shall be reported to the supervisor and proposed to the Board of Directors.
2. When the supervisor establishes an audit project according to the instruction on important issues of the internal control system of the Company, the Audit Center shall immediately establish an audit project team (or subsidiary supervision) to carry out examination operations. Upon completion of the audit (or subsidiary supervision) project, it shall report the project audit result to the supervisor and propose it to the Board of Directors.
3. The Audit Center will also regularly report audit business to each supervisor.
4. The supervisor shall keep in touch with the accountant at all times and communicate the important financial and business situations of the Company by discussing corporate governance issues every quarter.
II. If the supervisor states an opinion when attending the Board of Directors meeting, the date of the Board of Directors meeting, stage, proposal content, Board of Directors resolution result, and the company's handling of opinions stated by the supervisor shall be specified: Not available.

2.3.4 Corporate Governance Implementation Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

Item			Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
1. If the Company established and disclosed Corporate Governance Principles in accordance with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies?			The Company has formulated the "Inventec Corporation Corporate Governance Best Practice Principles" pursuant to the "Listed Company Corporate Governance Best Practice Principles"; the first amendment was passed by the Board of Directors on January 27, 2015 and was disclosed on the company website and mops.twse.com.tw. In order to establish good corporate governance and risk control, the Company takes creating shareholder value and integrity operations as its objective and formulates relevant corporate governance rules under the premise of complying with the basic requirements of laws and ethical standards. In order to guarantee shareholder equality, the Company has formulated the Code of Integrity Operation, Codes of Ethical Conduct, Global Employee Code of Conduct Management Measures, and Procedures for Handling Material Inside Information in order to regulate information confidentiality and prevent insider trading and conflicts of interest, which will impact the rights and interests of the Company. Furthermore, the Company provides complaint channels and procedures to strengthen the enterprise’s attention to the rights and interests of interested parties. Through the internal and external company website, e-mail, and contract, the Company carries out educational propaganda on corporate governance laws and decrees, so that company directors, supervisors, managers, and employees can fully understand and abide by laws and codes of conduct related to the businesses engaged by them. Listed subsidiaries of the Company Group have not yet formulated such regulations, but they all abide by relevant regulations.	No difference.

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
2. Shareholding Structure & Shareholders’ Rights (1) If the Company established internal procedures to handle shareholder suggestions, proposals, complaints and litigation and execute accordingly? (2) If the Company maintained of a list of major shareholders and a list of ultimate owners of these major shareholders? (3) If risk management mechanism and “firewall” between the Company and its affiliates are in place? (4) If the Company established internal policies that forbid insiders from trading based on non-disclosed information?	   		(1) Pursuant to internal stock affairs operation procedure, the Company assigns stock affairs and relevant responsible units to be responsible for handling shareholder suggestions, doubts, disputes, litigation, etc. and implement them according to procedures; the Company otherwise appoints a professional stock affairs agency as the window for serving shareholders. (2) In case of change of stock rights held by an insider (director, supervisor, manager, and shareholder holding more than 10% of the total stock), the Company will declare such at mops.twse.com.tw on a monthly basis, so that the stock affairs unit can instantly and effectively master major shareholders and the final controller list of the major shareholders. (3) The internal control of the Company covers risk management and operation activity of the operation level and has formulated the "Subsidiary Management Measures" to supervise operation management and financial and business information of the subsidiary in order to implement the risk control mechanism to the subsidiary. The Company has also formulated written specifications for financial business related operations between and among affiliated enterprises; all business contacts shall be handled according to the operation specifications in order to completely eradicate non-routine transactions. (4) The Company has formulated the "Codes of Ethical Conduct" and "Insider Trading Prevention Management Operation Procedure", among others, to prohibit company insiders from utilizing information undisclosed to the market to transact negotiable securities; internal educational training and literature are carried out regularly.	No difference. No difference. No difference. No difference.

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
3.Structure of Board of Directors and its responsibility (1) Does the Board of Directors set and implement a diversification policy? (2) If the Company established any other functional committee in addition to Compensation Committee,Audit Committee as required by law? (3) If the Company established methods andprocedures to assess the	  		(1) Pursuant to Article 20 of the "Inventec Corporation Corporate Governance Best Practice Principles", the Company has formulated diversified policies for members of the Board of Directors and implements them. Basic conditions and value, as well as gender, age, nationality, culture, etc., shall be considered, and they shall possess professional knowledge and skills, especially the knowledge, skills and quality required to perform their duty, including operation judgment, accounting and financial analysis, crisis management, leadership and decision-making ability, and industry knowledge and international market view. The Company designates seven directors (including two independent directors) and three supervisors. (2) All resolutions of the Company shall be passed by the Board of Directors. There are three members of the Remuneration Committee, who will be appointed through resolution of the Board of Directors. The Company appoints two independent directors, who are concurrent members of the Remuneration Committee, and one of them is the convener of the Remuneration Committee. In 2016, the Shareholders' Meeting will amend the Articles of Association so that the number of independent directors shall be at least two and no less than one fifth of the total number of directors; the reelection of the Shareholders' Meeting will be conducted in 2017, and all independent directors (no less than three independent directors) will take posts as members of the Audit Committee. The Company sets up the "Social Responsibility Group", which will be dedicated to promoting corporate social responsibility related affairs. (3) Pursuant to Point 1 of Article 28 of the "Inventec Corporation Corporate Governance Best Practice Principles",the Companyregularlycarries out	No difference. No difference. No difference.

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
performance of the Board and conduct assessment on annual basis? (4) If the Company assess the independence of CPA periodically?			performance assessment every year through the Remuneration Committee in order to improve the function of the Board of Directors. In 2015, the Board of Directors convened a total of 13 meetings, with one at least every month, to decide on proposals and operation policies, in which they continuously supervised the execution effect of the operation team and appointed and dismissed managers, fulfilling the responsibility of the Board of Directors. (4) Every year, the Company lets the Board of Directors decide to appoint an accountant and regularly examines the accountant’s independence and evaluates whether there is circumstance of violating No. 10 of the Code of Ethics bulletin or the occurrence of circumstances stipulated in Article 47 of the Accounting Act. It further confirms that the accountant has no other financial interests and business relationship with the Company other than the costs of certifying and finance and taxation cases, and checks whether the accountant is a director, supervisor, manager, or shareholder of the Company or gets payments from the Company, confirming that the accountant is not an interested party. The appointment of an accountant and fee review can only be conducted after the Company has confirmed its independence through the examination of the accountant independence assessment result..	No difference.
4. If the Company established communication channel with stakeholders and disclosed key corporate social responsibility issues frequently enquired by stakeholders on the designated area of the corporate website?			The Company has established a spokesman system, dedicated to handling relevant matters, and the company website has created an interested party zone to maintain communication channels with interested parties at any time through information delivery by telephone, fax, e-mail, etc., for important corporate social responsibility issues that concern interested parties and their feedback. The Company will also properly handle matters to respect and maintain its due rights and interests.	No difference.

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
5. If the Company engaged professional transfer agent to host annual general shareholders’ meeting?	.		The Company has appointed the stock affairs agency department of "Taishin International Bank Co., Ltd." to be responsible for serving shareholders and handling affairs of the Shareholders' Meetings.	No difference.
6. Information Disclosure (1) If the Company set up a corporate website to disclose information regarding the Company’s finance, business and corporate governance? (2) If the Company adopted any other information disclosure channels (e.g., maintaining an English-language website, appointing designated personnel to handle information collection and disclosure, appointing spokespersons, webcasting investors conference, etc)?	 		(1) Through the company website (http://www.inventec.com), the Company updates and discloses financial business and corporate governance information regularly and for special matters. Furthermore, the Company utilizes Shareholders' Meetings and Investor Conferences to describe the governance situation of the Company to investors. (2) The Company has set up Chinese and English websites and assigned dedicated personnel to be responsible for the collection and disclosure of company information; it has also set up a spokesman and agency spokesman system; when convening an Investor Conference, the Company will also place the process materials on the company website for investor's to look up and input them at mops.twse.com.tw as required.	No difference. No difference.
7. If the Company had other important information to facilitate better understanding of the Company’s corporate governance practices (including but not limited to employee rights,employee wellness,			1. Employee rights and interests: Pursuant to government laws and decrees and personnel management measures of the Company, the Company provides all kinds of basic due labor conditions, including a working hour mechanism and thorough ask for leave system, as well as provides a stable and safe work environment, and in addition to basic welfares, such as labor insurance, health insurance, pension allocation,etc.,employees can also enjoyregular health examinations, group	No difference

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
investor relations, supplier relations, rights of stakeholders, directors’and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?			insurance, and thorough employee retirement measures. 2. Employee care: The Company has established the Occupational Safety and Health Committee pursuant to laws to discuss safety and health related regulations. In order to ensure employee safety and health, the Company has formulated the "Occupational Safety and Health Policy", regularly holds all kinds of keynote lectures and courses, provides physician consultation, opens diversified channel for employee to express opinions and consultation, and creates good participation sense and smooth two-way communication channel. 3. Investor relations: The Company takes guaranteeing shareholders' rights and interests as its main objective, treats all shareholders equally, and instantly announces relevant significant company information, such as finance, business, change of insiders' stock holdings, etc. at "mops.twse.com.tw" pursuant to relevant regulations. 4. Supplier relations: In addition to formulating "Codes of Ethical Conduct" and the "Global Employee Code of Conduct Management Measures", the Company has also formulated "New Manufacturer Assessment Management Measures" to require new manufacturers to have good business reputation and conform to the ethical requirements of the Company. In its "Purchase Contract", it shall explicitly stipulate that suppliers shall abide by a special guarantee clause, and the payment of commission, proportion commission, brokerage fees, tail end fees, or other beneficial behaviors are prohibited. In 2015, the Company continuously held Inventec Group GP and CSR supplier workshops, providing communication channels to suppliers through explanation sessions and questionnaires, hoping to set an example that will lead more supplier partners to jointly improve their environmentalprotection awareness in order to fulfill our corporate social

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			responsibility. 5. Rights of interested parties: Operate pursuant to Articles 51-54 of the "Inventec Corporation Corporate Governance Best Practice Principles" and set up an interested party zone. 6. Execution circumstances of the risk management policy and risk measurement standards: Through an external audit unit and execution of the internal control system, the Company has properly identified, assessed, and reduced all kinds of operation risks. In addition to controlling daily operation procedures, the Company has established a crisis response team in a timely manner to supervise the execution of risk control at any time in order to reduce adverse impacts on the Company. 7. Execution circumstance of customer policy: The Company has formulated an appropriate customer policy and operation target and adjusts its operation strategy in a timely manner to achieve the target. 8. Circumstances of buying liability insurance for directors and supervisors: The Company has bought relevant liability insurance for its directors and supervisors. 9. Situation of director and supervisor's attendance in Board of Directors meetings: Board of Directors meetings are regularly convened, and directors and supervisors actively attend; the Company reports the attendance situation of directors and supervisors online in a timely manner.
8. If the Company implemented a self-evaluation on corporate governance or authorized any other professional organization to conduct			Except for participating in securities and futures market development foundation information disclosure assessment, the Company has not appointed other professional institutions to issue a corporate governance assessment report, but it independently evaluates its compliance with corporategovernance every year and makes	No difference

Item	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
such evaluation (if yes, please state if the Board of Directors provided any comment and what was the evaluation result along with its major deficiencies, suggestions and improvement plan)?			step-by-step improvements. In 2016, according to the "Corporate Governance Center" of the Taiwan Stock Exchange Corporation, the second corporate governance evaluation system, the evaluation result lists the Company as a top five percent company.

9. Continuing Professional Education (CPE) Hours for Directors and Supervisors in 2015

Title	Name	Course	Hours	Institute
Chairman	Lee, Tsu-Chin	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurement practice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Director	Yeh, Kuo-I	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurement practice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association

Title	Name	Course	Hours	Institute
Director	Wen, Shih-Chih	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Director	Chang, Ching-Sung	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Director	Huang, Kuo-Chun	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Independent Director	Chang, Chang-Pang	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association

Title	Name	Course	Hours	Institute
Independent Director	Chen, Ruey-Long	Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		How to properly protect business secrets, prevent fraud, and strengthen corporategovernance	3.0	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Supervisor	Wang, Ping-Hui	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Supervisor	Cheng, Hsien-Ho	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Supervisor	Shyh Shiunn Investment Corp. Representative, Yang, Chiung-Nan	Combination of building and land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance from procurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association

10. Continuing Professional Education (CPE) Hours for Managers in 2015

Title	Name	Course	Hours	Institute
President	Huang, Kuo-Chun	Combination of buildingand land taxation introduction and impact	1.5	Taiwan Corporate Governance Association
		Discuss enterprise risk management and corporate governance fromprocurementpractice	1.5	Taiwan Corporate Governance Association
		The impact of report examination by new accountants on readers of financial statements	1.5	Taiwan Corporate Governance Association
		Introduction of the Cross-Strait Tax Treaty	1.5	Taiwan Corporate Governance Association
Vice President	Yu, Chin-Pao	The impact of a public company's revision of the Guidelines for Public Companies to Establish an Internal Control System on enterprise corporategovernance and the response	3.0	Accounting Research and Development Foundation1
		Enterprise secret leakage case analysis and studies on legal responsibilityof the newlyamended Trade Secret Act	3.0	Accounting Research and Development Foundation1n
		Understand the meaning of trust and legal responsibility of fraud/perfidy from the judicial point of view and relevant case analysis	3.0.	Accounting Research and Development Foundation1
		No. 15 of the International Financial Reporting Standards: customer contract income analysis	3.0	Accounting Research and Development Foundation1
Vice President	Hsu, Ching-Wu	Important accountingsubject auditing practice workshop	6.0	Securities and Futures Institute
		Workshop to discuss fraud risk from circulation control operation	6.0	Securities and Futures Institute
Director of Finance Center	Liang, Wen-Jan	"Advanced India Character Guidance" seminar	3.5	KPMG AccountingFirm
		2015 Corporate Governance Assessment Symposium	3.5	Taiwan Stock Exchange Corporation
Director of Finance Center	Hsiao, I-Ying	2015 global economic outlook and foreign currency market analysis seminar	3.5	Cathay United Bank Co., Ltd.
		"Advanced India Character Guidance" seminar	3.5	KPMG Accounting Firm

11. Certificate of License

11. Certificate of License
Title	Persons
Taiwan CPA	4
CIA	4
Taiwan CIA	5
CCSA	1
Public company accounting supervisor with professional certification	1
Stock Affair Specialist	2
Enterprise Internal Control Basic Ability	5

Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon corporate governance operation.

2.3.5 Status of Compensation Committee

2.3.5.1 Compensation Committee

Title (Note1)	Criteria Name	Met one of the following professional qualification requirements with at least five years work experience	Met one of the following professional qualification requirements with at least five years work experience	Met one of the following professional qualification requirements with at least five years work experience		Independence`（`Note2`）`	Independence`（`Note2`）`	Independence`（`Note2`）`	Independence`（`Note2`）`	Independence`（`Note2`）`	Independence`（`Note2`）`		Number of other public companies in which the individual is concurrently serving as an Compensation Committee member	Note3
		An instructor of 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, or university	A judge,public prosecutor, attorney, CPA, or other professional or technical specialist who has passed a national examination and bee awarded a certificate in a profession necessary for the business of the company	Have work experience in the areas of commerce,law, finance, accounting, or otherwise necessary for the business of the company	`1`	`2`	`3`	`4`	`5`	`6`	`7`	`8`
Independent Director	Chang, Chang-Pang												`3`	`Y`
Independent Director	Chen, Ruey-Long	`-`	`-`										`4`	`Y`
Other	Chuang, Chau-Sui	`-`	`-`										`0`	`-`

Note1 ： Title: Ddirector, Independent Director, and other 。

Note2 ： During the 2 years before being appointed or during the term of office, a remuneration committee member shall have been or be any of the following:

（1） Not an employee of the company or any of its affiliates.
（2） Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which the company holds, directly or indirectly, more than 50 percent 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 any other's name, in an aggregate amount of 1 percent or more of the total number of issued shares of the company or ranking in the top 10 in shareholding.

（4） Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
（5） Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total number of issued shares of the company or ranks in the top 5 in shareholding.
（6） Not a director, supervisor, managerial officer, or shareholder holding 5 percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
（7） Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, or accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof.
（8） Not been a person of any conditions defined in Article 30 of the Company Act.
Note3 ： If title is Director, please describe in accordance with the Article 6 item 5 of “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company whose stock is listed on the Stock Exchange or Traded Over the Counter”.

2.3.5.2 The state of The Compensation Committee's implementation

A. The Compensation Committee comprised of 3 members.
B. Tenure of the second session of Compensation committee is from 24th June, 2014 to 11th June, 2017. A total of 3 (A) meetings of the Compensation Committee were held in 2015, the average attendance rate is 89%, the status of attendance is as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%) B/A	Remarks
Chairman	Chang, Chang-Pang	2	1	67%	Independent Director
Member	Chen, Ruey-Long	3	0	100%	Independent Director
Member	Chuang, Chau-Sui	3	0	100%
Other information to be disclosed: 1. If Board of Directors did not adopt or revise the proposal made by the Compensation Committee, please specify the date, session, agendas and resolutions of the Board of Directors meeting and how the Company handled the proposal made by the Compensation Committee ( If amount of the compensation approved by the Board of Directors is higher than that proposed by the Compensation Committee, please specify the reasons and differences in proposals.): None. 2. If any members of the Compensation Committee were against or reserved their opinions towards the resolutions, please specify the date, session, agendas, opinions of all members and how the opinions were handled: None.

2.3.6 Implementation of Corporate Social Responsibility

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
1. Exercising Corporate Governance (1) If the Company established corporate social responsibility (“CSR”) policy or system and reviewed its implementation and effectiveness? (2) If the Company conducted CSR related trainings? (3) If the Company set up a unit exclusively or concurrently to execute CSR policies and if the Board appointed member(s) of management team to supervise and report its implementation status to the Board? (4) If the Company adopted appropriate remuneration policies, integrated employee performance appraisal with CSR	   		(1) The Company has formulated corporate social responsibility policies pursuant to the "Inventec Corporation Code of Corporate Social Responsibility", believes in "corporate governance" internally, practices "corporate citizenship" externally, and promotes relevant works and activities through the Board of Directors operation, internal control system, and four directions of "environmental protection, culture, poverty relief, and community". Listed subsidiaries of the Company Group have not yet formulated such regulations, but they all abide by relevant regulations. (2) The Company regularly holds educational training on corporate social responsibility, including promoting the inclusion of corporate social responsibility into operation activities and the development direction of the company and approves specific promotion plans for corporate social responsibility. (3) The enterprise level of "corporate social responsibility" of the Company is the Chairman of the Board of Directors, and the "Social Responsibility Group" is established under the Chairman to be dedicated to promoting corporate social responsibility related affairs and regularly report to the Board of Directors. Listed subsidiaries of the Company Group have not established a dedicated (part-time) unit to promote corporate social responsibility, but they ask relevant units to cooperate in the proceedings. (4) The Company has established a Remuneration Committee to assist the Board of Directors in implementing and evaluating the overall remuneration and welfare policy of the company and the remuneration of directors, supervisors, and managers. The Company has formulated a reasonable remunerationpolicyand takes the "Global Employee Code of Conduct Management	No difference No difference No difference No difference

Item policies, and established a clear and effective incentive and discipline system`？`				Non-implement -ation and its reason(s)
	Y	N	Summary
			Measures" as the basis regarding the conduct of all employees; those who violate relevant regulations will be punished according to the relevant rewards and punishment provisions in the "Personnel Management Measures", allowing employees' salary to jointly grow with company operations in order to fulfill our corporate social responsibility.
2.Fostering a Sustainable Environment (1) If the Company endeavored to utilize resources more efficiently and utilized renewable materials which have a lower impact on the environment? (2) If the Company established proper environment management system based on the characteristics of the industrywhere the Company	 		(1) In order to save the resources needed in product production, at the stage of design and development, to maintain product function and quality, the Company has reduced the components and consumable materials needed to be used in product production through the design of common use and reduction of materials and recycling, reusing, etc. Green design is the design for the environment, and its connotation is to integrate the consideration of environment, safety, etc. into the stage of product development and design through a systematic approach, then include it in the product life cycle, import the concept of green design into the manufacturing process, utilize the selection of raw materials and product easy dismantling design, reduce product environmental impact, and maintain product price, efficiency, and quality at the same time. The green design strategies of Inventec are divided into the following eight points: 1. Spare no effort to seek approaches to reduce environmental impact; 2. Lessen the total energy consumption in the product life cycle; 3. Mitigate the burden on the land; 4. Design for clean production and use; 5. Design for durability; 6. Design for best function; 7. Design for reuse, recovery, and recycling; 8. Avoid using raw materials with toxic substances in the product. (2) In recent years, the Company has gradually established a thorough environmental sustainability management system and has passed the external validation and verification conducted by independent third party validation units; the four major environmental sustainability management systems of the Company include ISO 14001 Environmental Management System, IECQ QC 080000 Hazardous Substance Process Management System,ISO 14064 Greenhouse	No difference No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
belongs to? (3) If the Company monitored the impact of climate change on the Company’s business operations, checked greenhouse gas inventory and established corporate strategies on energy conservation and reduction on carbon and greenhouse gas emission?			Gas Management System, and ISO 50001 Energy Management System. They are the communication basis and mechanism of interested parties, such as a complaint and feedback system of product quality, environmental issue, energy, etc. For complaints related to environmental issues, interested parties can complain through the official website of Inventec. (3) In response to the issue of global energy depletion and climate change and to fulfill our responsibility of corporate citizenship, the Company has set medium and long-term reduction goals, namely "Take 2010 as the benchmark, reduce greenhouse gas emissions by 10% by 2020", in the hope of making certain contributions to the green economy and climate change mitigation. The "Inventec Group 2015 Greenhouse Gas Inventory Report" has been disclosed on the company website. The Company has imported a greenhouse gas inventory system since 2008, and so far, it has completed nine years (from 2007 to 2015) of greenhouse gas inventory operations. Meanwhile, in order to optimize inventory operations, in 2011, the Inventec GHG Portal was set up, allowing all inventory operations and the verification of third party certification units to be completed on the platform, thus effectively improving inventory quality and efficiency, and reducing unnecessary manual operation time and manual mistakes in order to achieve the effect of energy saving and carbon reduction. In 2015, the total greenhouse gas emissions of Inventec and Inventec Appliances Corp.’ major plants was 270,564.911 tonnes of carbon dioxide; the main emission originated from purchasing electricity externally, accounting for 93.58% of total emissions, an increase of 8,288.13 tonnes of carbon dioxide compared to the 262,276.781 tonnes of emissions in 2014. The main reason for increase was the expansion of production capacity in Chongqing Plant of Inventec and Nanjing Plant of Inventec Appliances Corp.. Regarding environmental sustainability, the Company strives to break through the current situation and simultaneously reduce long-term operation costs. Since 2012, the Company set up a solar energy power generation cleaning device in Pudong Plant, which started operation in 2013, and the solar energy power generation available is 3.2 million degrees of electricityevery year,accountingfor approximately1.54% of the totalpower consumption in	No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
			nine of Inventec’s major plants. Saving energy and improving equipment energy efficiency have always been the major directions of the Company. Over the years, the Company has been devoted to energy saving, carbon reduction, and green energy environmental protection and has finally achieved the phased goal in green building in March 2016, showing our determination to attach importance to green energy environmental protection and caring for the earth.
3.Preserving Public Welfare (1) If the Company followed relevant labor laws, and internationally recognized human rights principal, and established appropriate management policies and procedures? (2`）`If the Company established grievance channel for employees and handled complaints appropriately?	 		(1) Pursuant to relevant labor laws and regulations and by referring to internationally recognized basic labor human rights principles, the Company has established relevant work specifications and announced them so that the employees can understand in order to ensure the rights and interests of employees. Furthermore, the Company has formulated the "Global Employee Code of Conduct Management Measures" for each plant, which stipulate the basic code of conduct for the labor and capital on the basis of fairness and impartiality. As an employee of the Company, when facing all kinds of work behaviors and ethical and legal problems, we shall aim to create shareholder and employee value and ensuring social responsibility. Therefore, under the precondition of following the basic requirements of laws and ethical standards of each country or district, we shall comply with all kinds of internal control systems of the company. (2) The "Global Employee Code of Conduct Management Measures" and "Employee Complaints and External Reporting Management Specifications" of the Company have been explicitly stipulated to encourage the report of any illegal conducts or behaviors that violate ethical standards, and their punishment measures. Anyone who violates relevant regulation shall be punished pursuant to the relevant reward and punishment provisions in the "Global Employee Code of Conduct Management Measures" and "Personnel Management Measures". Furthermore, each plant has set up an "Employee Complaint System" to guarantee a fair arbitration mechanism when employees suffer from human rights related infringements. In the plants in mainland China,agrassroots employee caregrouphas been especiallyset upto handle	No difference No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
(3) If the Company provided safe and healthy working envirnonment to employees and conducted relevant training on safety and health management to employees periodically? (4) If the Company established a periodical communication mechanism to employees and notified employees of significant changes that may impact the Company’s operation in a proper manner?	 		employee complaints and understand the employee's voice through employee interviews, etc. (3) In order to improve safety, health, and environment management performance, the Company has established a professional and effective safety, health, environment, and energy management system, and plans the safety, health, and environment management plan pursuant to relevant laws every year, including occupational disaster prevention in its implementation. Emergency response drills are carried out for different issues, such as fire, flood, earthquake, etc. Risk management strategies are discussed and formulated, and all kinds of international information are promptly mastered. In the spirit of sustainable improvement of the safety, health, environment, and energy management system, and with systematized practice and performance, the Company adopts continuous cycling mechanisms from planning, execution, and examination to correction, exerts independent protection and control functions, and reduce potential risks to safety, health, environment, and energy in order to reduce operation risks. Regarding health promotion, new employees are required to provide a physical examination report pursuant to law before reporting for duty; for in-service employees, better than what is required by relevant laws and decrees, the Company regularly carries out all employees`’` health examination every year and implements health management operations. It also regularly cooperates with medical and health institutions to hold all kinds of health lectures and consultations. (4) Through all the mechanisms described below, the Company provides channels for significant company information delivery, real-time employee responses, and regular communication. (A) Internal website and announcement delivery: For company operation information, management policies, change of personnel organization, or other relevant significant messages, employees will be notified instantly through internal website or written and electronic announcement. (B)Two-waytalks betweengrassroots employees and senior supervisors:quarterlymeetings	No difference No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
(5) If the Company provided career planning, relevant training and skill development for employees?			and all kinds of symposium held occasionally. (C) Management policy and business process communication: communication meetings for employee representatives from each department will be held regularly every month. (D) Cross-department communication and labor and capital communication: internal portal platform has set up the multi-functional "Employee Opinion Exchange Area". (E) Instant response problem and information consultation: each unit has established a service consultation window and service hot line. (F) Employee welfare policy and welfare promotion: employee welfare committee monthly meetings and special meetings. (G) Grassroots employee care group: handle employee complaints and understand the employee's voice through employee interviews, etc. (5) By taking corporate operation objectives and development strategies as a training blueprint and being oriented according to actual employee demands, the Company has developed an effective career skills development training plan. (A) Talent asset appreciation: Encourage employees to take in-service training in English, Japanese, and patent courses in order to be in line with international norms. (B) Corporate culture communication: After reporting for duty, new employees will receive new employee training to become familiar with internal personnel regulation systems, corporate culture, work environment, etc. All kinds of employee assemblies and communication meetings will be held regularly, in which the senior supervisor will directly deliver company operation philosophy and operation direction and describe the strategic policy of each department. (C) Supervisor cultivation plan: Basic supervisor training, advanced supervisor training, and custom senior management courses will be regularly held in order to improve overall management capability. (D)Professional competencydevelopment: Accordingto all kinds of demands to develop	No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
(6) If the Company established any consumer protection measures with regard to the process of research and development, procurement, production, operations and services and its grievance channels? (7) If the Company followed relevant laws and regulations and international guidelines on marketingand labelingof	 		professional skills and with the Technical Committee, designedly carry out professional skill training courses. (E) Condense team consensus: Carry out all kinds of team building and encouragement courses and strategic operation meetings based on the demand and build high identification for both the team and the company. (6) The Company provides customers with a comprehensive and thorough customer relations management service mechanism, from order receiving to the stage of product development and to the stage of mass production. After product delivery, we track the product condition to the customer end and actively care about all feedback from the customer. Through the customer complaint management system and with a complete customer complaint standard operation procedure, the Company prepares reason analysis, correction and prevention solutions in project review, and confirms effectiveness in order to give feedback on problem solving to customers and understand real customer demands to achieve the highest customer satisfaction. Furthermore, by periodically holding customer business review meetings, the Company can discuss relevant issues, such as technology research and development, product delivery, product quality, after-sales service, quotation cost, energy saving and carbon reduction, green products, corporate social responsibility, etc., in response to the issues that concern customers. In order to solve the problems reflected by customers, the customer service and quality assurance departments have established a 24-hour customer service hot line and customer service website and provide instant services and response mechanisms through a stationed service mechanism at OEM/ODM customer end. (7) In response to environmental protection legal issues of each country throughout the world and provide customers with better environmental protection service, the Company will assist customers in acquiring product green mark certification, including such certification mechanisms as Taiwan Green Mark,China Green Mark(SEPA),China EnergySavingMark	No difference No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
products and services? (8) Prior to engaging commercial dealings, if the Company assessed whether the supplier had track record o negative impact on the environment and society? (9) If the contracts with major suppliers stipulated a clause that allowed the Company to terminate or rescind the contract at any time shall the suppliers violate CSR policies and cause significant impact to the environment and society?	 		(CECP), China Energy Saving Label (CEL), Energy Star, American Green Procurement Assessment Guideline (EPEAT), etc., in order to provide global customers more environmentally friendly products and services. (8) The Company strengthens its cooperation with suppliers through mutual understanding to seek win-win situations. Supplier management carries out various assessments on suppliers according to customer requirements, laws and regulations, and international trends, including propaganda, promotion, and audit of the supplier. Regarding new supplier assessment, through technical skill development and evaluation, subcontractor supply capability evaluation, purchasing operation system audits, supplier corporate responsibility investigation and appraisal, on-site examination, HSF assessment, and signing of environmental protection affidavit, it will guarantee that the requirements and control contents stipulated in relevant international environmental protection laws and regulations and relevant environmental protection specifications of the Company are applicable now and in the future. (9) With regard to the various assessments of suppliers, in addition to the quality, cost, delivery time, technical skill, and service that are assessed in the general industry, with the rise of corporate social responsibility awareness, the Company will also extend the assessment scope to green products and corporate social responsibility, and the assessment scope will correspond to the Company's requirements for supplier, including the establishment of management systems such as ISO 9001, ISO 14001, OHSAS 18001, EICC, etc. Through diversified assessment consideration, the Company ensures that the cooperating supplier can specifically respond to important supply chain issues, such as product environmental protection, manufacturing process environmental protection condition operation requirements, restriction of the use of hazardous substances, prohibiting child labor, guaranteeing employee rights and interests, workplace safety, etc. The Company ensures that the supplier does not violate the aforementioned circumstances through supplier SER auditing. Every year,the Companywillperform an on-site	No difference No difference

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
			audit on existing suppliers with medium and high risks and ask for improvement; furthermore, contract contents explicitly stipulate a legal compliance clause, and in case of violation of relevant important laws and regulations and having an obvious impact on the environment and society, the contract can be terminated or canceled pursuant to such clause.
4. Enhancing Information Disclosure If the Company disclosed CSR report and other relevant information on its corporate website and MOPS?			(1) On the principle of accuracy, openness, and transparency, the Company discloses relevant company information; through its investor service platform, the Company continuously and instantly publishes corporate governance operation performance reports and financial information on the information service disclosure platform and mops.twse.com.tw. All corporate social responsibility related messages are also posted on the company website to be read by the public.	No difference
5.If the Company established any guideline of corporate social responsibility in accordance with “Corporate Social Responsibility Best-Practice Principles for TWSE/GTSM-Listed Companies” and please state the implementation status of the guideline and any reasons for non-implementation: Pursuant to the "Listed Company Corporate Governance Best Practice Principles" and approved by Board of Directors in 2014, the Company has formulated the "Inventec Corporation Corporate Governance Best Practice Principles"; the first amendment was passed by the Board of Directors on January 27, 2015, and its operation has had no difference from the rules.
6.Other material information that helps to understand the operation of corporate social responsibility: (1).Environmental protection: To the Company, "environmental protection" is a part of its "social responsibility" in our top ten beliefs, namely "environmental protection, culture, poverty relief, and community". In order to fulfill our corporate citizenship responsibility and practice the "green energy environmental protection" of our five major policies, the Company has set Inventec's environmental objectives, environmental policies, and environmental projects in order to guide the overall power of our colleagues to move towards a new vision of green sustainability.

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
(2). Community participation: Integrate into community life with practical action and the long-term adoption of community parks and designate dedicated personnel for maintenance and cleaning in order to provide community residents with a comfortable and clean public space. (3). Social contribution: In order to care for society, the Company responds to blood and love donation and is enthusiastic about social responsibility. From 2009 to 2015, the Company has consecutively won the "Excellent Blood Donation Unit Award" issued by the Ministry of the Interior; based on the philosophy of enterprise society, the Company has been devoted to improving its work environment and has been successful in constructing a good workplace, and has successively won the affirmation of both the government and civil public credit institutions. In 2012, it won the "Labor Safety Excellent Unit - Enterprise Award" issued by Taipei City and the "Excellent Breastfeeding Room Award" issued by Taipei City and Taoyuan County government; in 2013, it won the national "Labor Safety and Health Excellent Unit Award", and "Energy Saving and Carbon Reduction Action Mark" issued by the Environmental Protection Administration, Executive Yuan; in 2014, it won the "Healthy Workplace Certification - Health Promotion Mark" issued by the National Health Service, Ministry of Health and Welfare, Executive Yuan, "ROC Enterprise Environmental Protection Award" issued by the Environmental Protection Administration, Executive Yuan, "2014 Taiwan Corporate Sustainability Award - Gold Award", and Commonwealth Magazine’s 2014 "World Corporate Citizenship Award"; in 2015, it won the "Labor Safety Excellent Unit Award" issued by the Ministry of Labor, Executive Yuan, "Certificate of Merit for Hazard-Free Working Hour Record", Commonwealth Magazine’s "World Corporate Citizenship Award", the "National Excellent Occupational Safety and Health Unit Award" issued by the Ministry of Labor, Executive Yuan, the "Enterprise Environmental Protection Award" issued by the Environmental Protection Administration, Executive Yuan, and the "Taiwan Corporate Sustainability Report Award" issued by Taiwan Sustainable Energy Foundation, among others. (4). Social service: From 8:00 am to 9:00 am from Monday to Friday, the Company will arrange an internal security guard to ease vehicle congestion during office hours and safeguard community traffic safety on surrounding roads of the Company. (5). Social benefit: Inventec encourages employees to actively participate in public benefit activities, such as minority group caring, literary and artistic activity, ecological education,etc. In 2010,the Inventec GroupCharityFoundation was established. Over theyears,it has been carryingout heart-warmingactivities before the

Item				Non-implement -ation and its reason(s)
	Y	N	Summary
Spring Festival and donating to dozens of social welfare charity groups, assisting them to input long-term social welfare occupation. It also evaluates the fund-raising projects of social benefit charity institutions from all walks of life and selects projects that conform to the establishing purpose of Inventec Foundation for donation. Since 2012, it has been adopting school children from Huiming Blind School in Taichung City every year, and in the dust explosion that occurred in Formosa Fun Park in June 2015 and earthquake that occurred in Tainan, Kaohsiung in February 2016, it provided donations to respond to the disaster relief work of the government. Furthermore, the social responsibility group of the Company also calls on colleagues to fundraise and regularly donates to social welfare institutions, such as "Hsinchu City Charity Foundation" and "New Life Social Welfare Development Promotion Association", every month. The Talent Center encourages colleagues to participate in World Vision - Hunger Thirty Experience Camp activity and also actively responds to the Ministry of Health and Welfare to propagate the purchase of Mid-Autumn festival gift boxes promoted by disability social welfare institutions in order to support disabled people to acquire the expertise to become independent. With regard to literary and artistic activities, in 2015, the Company donated to the Taipei Philharmonic Foundation in order to hold the Taipei International Choral Festival activity; with regard to ecological conservation, over the years, the Company has cooperated with the Wild Bird Society of Taipei to promote the environmental education course plan of Kwan-tu Nature Park. In addition to subsidizing school children in remote districts for environmental and ecological education courses, it also calls on colleagues to serve as conservation volunteers at the Kwan-tu wetlands. (6). Consumer rights and interests: The Company has provided product liability insurance, and has set up a related product customer service hot line. (7). Human rights: The Company has provided public accidental insurance and employee group insurance. (8). Safety and health: In addition to complying with the Occupational Safety and Health Act and relevant subordinate legislations and carrying out all kinds of matters as required, the Company also effectively promotes the Taiwan Occupational Safety and Health Management System (TOSHMS) and International Occupational Health and Safety Assessment Series (OHSAS 18001), implements all kinds of safety and health business management, and works together with community medical and health resources to arrange employees to participate in the screening of four cancers (breast cancer, cervical cancer, oral cancer, colorectal cancer), bone mineral density test, and physical fitness test, and also holds health lectures, etc. So far, the Company has won several awards, including: "Labor Safety Excellent Unit - Enterprise Award","Labor Safetyand Health Excellent Unit - Five Stars Award","Hazard-Free WorkingHour Record Award","Excellent

Item
	Y	N	Summary
Health Workplace - Health Excellence Award", "Taipei City Excellent Breastfeeding Room Certification", "Taoyuan County Excellent Breastfeeding Room Award", and "Blood Donation Excellent Enterprise Award", etc. Furthermore, the Company actively coordinates with the promotion of all kinds of government policies, facilitates harmonious labor-capital relationships, and fulfills its corporate social responsibility. The corporate social responsibility related information of the Company, such as corporate governance implementation, sustainable environment development, social benefits, etc., are disclosed on the company website and mops.twse.com.tw.
7. Please provide further description for company product or corporate social responsibility report which is certified by relevant organization: In order to improve the transparency, completeness, and reliability of information disclosure, for the "2015 Inventec Corporate Social Responsibility Report", the Company designated a third party unit (SGS) to carry out substantial examination and assurance operations on the contents and data in the report according to GRI G4 version "core option" in order to conform to the GRI G4 core option and AA1000 AS 2008 second type high assurance level. Listed subsidiaries of the Company Group have not yet acquired relevant certification on corporate social responsibility report, but they all abide by relevant regulations and have no significant difference.

Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon Corporate Social Responsibility.

2.3.7 Implementation of Ethical Corporate Management Best Practice Principles

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
1. Ethical Corporate Management Policy (1) If the Company clearly specified ethical corporate management and process in its internal policies and external document? If the Board of Directors and the management team committed to enforce such policies rigorously and thoroughly? (2) If the Company established any measures to prevent unethical conduct and clearly prescribed the specific ethical management practice includingoperational	 		(1) The Company attaches importance to its reputation and takes integrity and sustainable operations as the maximum assets accumulated by company operations. Among them, the "Codes of Ethical Conduct" and "Code of Integrity Operation" are the ethical standards of conduct and specifications for integrity operation philosophy for directors, supervisors, managers, employees, appointees, or those with substantial control capability of the Company in order to prevent the occurrence of conflicts of interest and acts without good faith, as well as let interested parties of the company better understand the above company standards by which they must abide. The official business discussion of the Board of Directors of the Company takes good governance system establishment, supervision function improvement, and management mechanism strengthening as its major purposes. Unless otherwise prescribed by laws and decrees or regulations, the Board of Directors meetings shall be conducted pursuant to the "Rules for Board of Directors’ Discussion" of the Company. Upon convening a Board of Directors meeting, the discussion unit designated by the Board of Directors shall prepare relevant materials for the Board of Directors' examination at any time and notify managers from relevant departments who are not directors to attend according to the contents of the proposals. When necessary, the Company will also invite accountants and other professionals to attend meetings. (2) The Company has formulated schemes for preventing acts without good faith in the "Global Employee Code of Conduct Management Measures" and "Employee Complaints and External Reporting Management Specifications" pursuant to the "Code of Integrity Operations", including operation procedures, behavioral guidelines,violationpunishments,and a complaint system,and implements them.	No difference No difference

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
procedures, guiding principles, penalties and grievance channels? (3) If the Company adopted any preventive measures against business activities specified in the second paragraph of Article 7 of Ethical Corporate Management Best Practice Principles for TWSE/GTSE Listed Companies or in other business activities within the business scope which are possibly at a higher risk of being involved in an unethical conduct?			(3) In order to ensure the implementation of integrity operations, all new employees of the Company must participate in the "Implement Internal Control System" and relevant legal courses training, and an audit supervisor will report the important poor external and internal control cases, deficiency analysis, and self-prevention countermeasures in the Board of Directors meetings. Furthermore, the Company signs improper benefits banned purchase contract with its suppliers, establishes an effective accounting system and internal control system, regularly executes internal auditing and self-assessment operations, and actually checks the company's compliance in order to prevent the occurrence of acts without good faith.	No difference
2. Implementation of Ethical Corporate Management (1) If the Company checked whether the respective counterparty holds any record of unethical misconduct and if the contract terms required the compliance of ethical corporate management policy?			(1) In addition to formulating the "Codes of Ethical Conduct" and "Global Employee Code of Conduct Management Measures", the Company has also formulated "New Manufacturer Assessment Management Measures" that require new manufacturers to have good business reputations and conform to the ethical requirements of the Company. In "Purchase Contracts", it shall explicitly stipulate that the supplier shall abide by the special guarantee clause, in which the payment of commission, proportion commission, brokerage fees, tail end fees, or other beneficial behaviors are prohibited. In case of violation, the Company is entitled to terminate the contract immediately, and the supplier shall unconditionally cooperate to ask such person that received benefits for compensation.	No difference

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
(2) If the Company set up a unit, under the direct supervision of the Board of Directors, to handle the implementation of ethical corporate management and reported to the Board of Directors periodically? (3) If the Company established a policy on prevention of conflict of interests, provided appropriate reporting channel and executed rigorously and thoroughly? (4) If the Company established an effective accounting system and internal control system to implement ethical corporate management, and if internal auditing department or CPA conductedperiodic auditing?	  		(2) On November 10, 2015, the Board of Directors of the Company passed the second amendment of the "Inventec Corporation Code of Integrity Operation", which explicitly stipulates that the Talent Center is responsible for formulating and supervising the execution of integrity operation policies and prevention schemes and regularly report its execution situation to the Board of Directors. (3) The Company has formulated the "Codes of Ethical Conduct", "Global Employee Code of Conduct Management Measures", and "Employee Complaints and External Reporting Management Specifications" to standardize the prevention of the occurrence of conflict of interest circumstances, explicitly stipulating that directors, supervisors, managers, and all employees must not accept any gift or business entertaining and prohibiting transactions or business contact between the company and relatives of colleagues in order to avoid the impact of personal improper interests on company rights and interests. The Company has formulated a conflict of interest prevention policy in the "Code of Integrity Operations" and provides proper channel for directors, supervisors, managers, and other interested parties attending Board of Directors meetings to actively describe whether they have any potential conflict of interest with the company, which they shall evade. (4) The Company has established an effective accounting system and internal control system. (A)Accounting system: In order to implement integrity operations, an effective accounting system has been established. The accounting system of the Company was formulated pursuant to relevant laws and decrees and principles, such as the Securities Exchange Act, Company Act, Business Accounting Act, Securities Issuer Financial Statement Preparation Standards and International Financial	No difference No difference No difference

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			Reporting Standards recognized by the Financial Supervisory Commission, International Accounting Standards, interpretation and interpretation announcements, etc., and was designed in accordance with company regulations, aiming at meeting actual operation requirements. (B) Internal control system: In order to implement integrity operations, an internal control system has been established. The internal control system of the Company is the management process following the "Guidelines for Public Companies to Establish an Internal Control System" and was designed by a manager, approved by the Board of Directors, and implemented by the Board of Directors, managers, and other employees. Its purpose is to facilitate sound company operation in order to reasonably ensure the achievement of the following objectives: (1). Operation effect and efficiency. (2). The report is reliable, timely, and transparent and conforms to relevant regulations. (3) Compliance with relevant laws and decrees and regulations. Components of the Inventec internal control system include: control environment, risk assessment, control operation, information and communication, and supervision operation. The prevention (risk control) internal control system of Inventec includes: preventive (risk control) risk assessment, preventive (risk control) internal control, preventive (risk control) internal audit, and preventive (risk control) self-assessment. (C) "Inventec Internal Audit Penalty Point Provisions": (a) Board of Directors' attention and commitment to the internal control system: The Board of Directors approved the "Inventec Internal Audit Penalty Point Provisions" to become the important driving force of Inventec to continuously implement corporate governance, the internal control system, internal audit, and self-assessment. It is also the best guarantee for the Companyto continuouslyand effectivelyimplement the internal control

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			system. In order to continuously implement corporate governance, the internal control system, and internal audit operations, the Board of Directors has been instructed to formulate the "Inventec Internal Audit Penalty Point Provisions", which was approved in August 2006 for implementation and combines the internal control system of all units, execution effect of self-assessment, and personal annual performance appraisal. "Inventec Internal Audit Penalty Point Provisions" are not only the commitment and oath of the Board of Directors to pay attention to corporate governance and implementation of the internal control system, but also exert a rooting and deepening effect on Inventec's promotion of corporate governance and implementation of the internal control system. (b) Do it right the first time: Carry out preventive (risk control) risk assessment according to the nine major high risk policies (high risk items of Group level, code of ethics, cost, International Financial Reporting Standards (IFRS), asset preservation, legal compliance, business (production) operation, credit investigation, and environmental protection high risk indicator) in order to draft preventive (risk control) management mechanism examination main points, check organizational processes, confirm high risk control points, improve superfluous and repeated processes, and avoid increasing workload and wasting resources without efficiency. We hope to be able to determine potential operation risks as early as possible so that we can take preventive measures, thus achieving the effect of "Prevention is better than cure, do things right the first time". (D) Execution and performance of the preventive (risk control) internal control system: (a)Corporategovernance meeting: The Board of Directors and senior

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			supervisors of the Company attach great importance to corporate governance and internal control system implementation. They not only convene a Board of Directors meeting every month to review such issues as corporate governance, operation, internal control system, etc., but also convene corporate governance meetings every quarter. In addition to routine examination by an accountant, the Board of Directors also appoints an accountant to propose suggestions and descriptions on new laws and decrees regarding the examination part in the corporate governance meeting convened every quarter, and the Board of Directors complies with laws and decrees to adjust the practice and regulation of corporate governance and the internal control system. Meanwhile, the Board of Directors' support and affirmation of the Audit Center also indicates the attention and determination of Inventec’s Board of Directors to implementing corporate governance and its actual performance through putting it into practice. (b) Integrate and establish an all-in-one preventive (risk control) internal control system: Components of Inventec’s internal control system include: control environment, risk assessment, control operation, information and communication, and supervision operations. The prevention (risk control) internal control system of Inventec includes: preventive (risk control) risk assessment, preventive (risk control) internal control, preventive (risk control) internal audit, and preventive (risk control) self-assessment. Considering ethical value, organizational structure, responsibility assignment, human resources policies, performance measurement, and rewards and punishment of the Company, the Company integrates the preventive (risk control) internal control system into ten major internal control operation cycles and management systems,and has established a

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			thorough and effective preventive (risk control) internal control system. The ten major cycles include: (1) Sales and cash receipts, (2) Purchase and payment, (3) Production, (4) Salary, (5) Financing, (6) Real estate, plant, and equipment, (7) Investment, (8) Research and development, (9) Information, and (10) Other. Management systems include international standard systems such as ISO 9001 Quality Management System, IECQ QC 080000 Hazardous Substance Process Management System, ISO 14001 Environmental Management System, ISO14064 Greenhouse Gas Management System, OHSAS18001 Occupational Safety and Health Management System, TOSHMS Taiwan Occupational Safety and Health Management System, and ISO 50001 Energy Management System. Furthermore, for the convenience of colleagues' inquiry and compliance, the Company has established the "Preventive (Risk Control) Internal Control System Procedure Document Inquiry System", with which employees can inquire about internal control procedure documents of the subordinate department on the internal company website at any time. If an employee needs to inquire about cross-plant procedure documents, he/she can also apply to the document control unit. In order to implement internal control rooting work, the Company also arranges for all new employees to participate in the new employee educational training course of "Preventive (Risk Control) Internal Control System Implementation". (c) Establishment of Inventec Group’s electronic preventive (risk control) internal control system: The Company has consolidated all domestic and overseas plants and all subsidiaries and plants to establish all-in-one preventive (risk control) internal control system. The Inventec parent company has issued a total of 355 preventive (risk control) internal control systemprocedure documents;a total of 35 subsidiaries have issued 1,795

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			preventive (risk control) internal control system procedure documents. As of now, a total of 2,150 procedure documents have been formulated. For the convenience of colleagues' inquiry and compliance, the Company has established an internal control system procedure document inquiry system, with which employees can inquire about operation procedure documents of the subordinate department on the internal company website at any time. If an employee needs to inquire about cross-plant procedure documents, he/she can also apply to the document control unit. (d) Promotion of educational training on preventive (risk control) internal control system: In order to implement internal control rooting work, the Company arranges for all new employees to participate in the educational training course of "Internal Control System Implementation"; in 2015, seven new employee educational training sessions were held, and a total of 365 employees participated. (E) Preventive (risk control) internal audit: (a) Internal audit lean progress: Since March 2013, in order to improve internal audit mechanisms, in addition to detection (wrongdoing prevention) audits, the Company also actively promotes preventive (risk control) audits. Mechanism and major tasks of detection (wrongdoing prevention) audit: legal compliance audit, internal control system audit, internal control execution audit, asset preservation audit, integration self-assessment, subsidiary supervision, and wrongdoing prevention innovation audit. The 2016 preventive (risk control) audit is subject to nine major high risk policies: high risk items of Group level, code of ethics, cost, International Financial Reporting Standards (IFRS), asset preservation, legal compliance, business(production)operations,credit investigation,and environmental

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			protection high risk indicator. The Company drafts preventive (risk control) management mechanism examination main points in the hopes of being able to find out potential operation risk as early as possible so that the operation governance team can take preventive measures in advance and continuously improve the contribution and value of internal audits to Inventec companies and Group through this. (b) Preventive (risk control) high risk audit items: Preventive (risk control) audits adopt high risk assessment and control and draft preventive (risk control) high risk audit items according to the modes, such as the essential items required by the competent authority, audit item risk assessment of the nine major high risk policies, accounting risk assessment, subsidiary risk assessment, etc. In March 2013, the audit function was improved from detection wrongdoing prevention function (auditing 401 items) to preventive (risk control) function (revised auditing items to 124 items), focusing on the risk control points of high value and high risk again in February 2014, at which point the auditing items were changed from 124 items down to 81 items. In July 2014, auditing items were further focused to 39 items. In January 2015, in order to strengthen audit effect and efficiency, the Company activated remote audits, and auditing items were revised into 43 items. In view of fierce turbulence of the global economy and finance in 2016, the overall operation of the Company may be affected, so credit investigation has been included into the 2016 high risk audit policy, with auditing items focused to 36 items, in order to create a higher contribution value of internal audits to the enterprise. (c) Preventive (risk control) internal audit plan: In 2015, the internal audit plans include: company part(Shilin Plant,Taoyuan Plant),subsidiary part(EBG

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			group, solar energy group, a total of 23 groups and 11 Inventec Appliances groups). In addition to the "Annual Audit Plan" approved by the Board of Directors, the Audit Center also carries out preventive (risk control) internal audits on each transaction cycle control operation of all plants and subsidiaries. For significant problems and high risk businesses found in routine audits, the Audit Center will ask the Board of Directors to establish an audit project for further investigation to propose an audit report in order to expand the depth of internal audits and improve the larger comprehensive effect and contribution of internal audits. (d) Preventive (risk control) internal audit result: After submitting and approving the internal audit report and tracking report, they shall be delivered to each supervisor for review before the end of the following month after completing audit items. The review and instruction matters delivered by the supervisor in 2015 will be continuously tracked and improved by the Audit Center. The Audit Center will propose internal audit deficiency and improvement suggestions in the 2015 internal audit operation, and all non-conforming matters found have been improved. (F).Preventive (risk control) self-assessment: (a) Establishment of preventive (risk control) self-assessment mode: The Company has established a risk-oriented self-assessment system, improved from the previous detection (wrongdoing prevention) self-assessment system into a preventive (risk control) system and that takes the high risk of Group level, code of ethics, cost, International Financial Reporting Standards (IFRS), asset preservation, legal compliance, and business (production) operation as its risk determination criteria. It thus determines consecutive dutytargets and controlpoints of high and low risk and

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
			systematically implements self-assessment, thus becoming an important driving force for each unit of the company to implement responsibility system self-management. (b) Preventive (risk control) self-assessment training explanation session: In order to implement the self-supervision mechanism of the Company and respond to environmental change in a timely manner, in order to adjust the design and execution of the internal control system, in December every year, the Company arranges to go to each plant and subsidiary to carry out the "Self-assessment Training Explanation Session", ensuring that supervisors above the department level fully understand the purpose and practice of self-assessment and are able to actually execute self-assessment. A total of seven training explanation sessions were held for self-assessment in 2015, and the total number of supervisors and colleagues participating in the self-assessment training explanation sessions was 680 people. (c) Self-assessment results of the Company: In 2015, the Company completed the parent company part by completing self-assessment on 198 units, identifying a total of 1,634 unit operation targets and 1,973 risk items affecting target achievement. Meanwhile, the Company has prepared 3,072 control points to reduce the occurrence of such risks in order to achieve those targets. For the subsidiary part, the self-assessment work on a total of 314 departments from 33 subsidiaries was completed, identifying a total of 4,487 unit operation targets and 5,874 risk items affecting target achievement. Meanwhile, the Company has prepared 9,342 control points to reduce the occurrence of such risks in order to achieve those targets. (G)The Board of Directors issues the "Inventec Internal Control System Statement":

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
(5) If the Company organized training and awareness programs on ethical corporate management to internal and external parties?			The Company implements internal control self-assessment operations once a year, and then the Audit Center will review the self-assessment report of each unit and subsidiary. Together with the internal control deficiency and improvement circumstance of abnormal matters found by the Audit Center, they will be the major basis for the Chairman, President, and Board of Directors to assess the effectiveness of the "Internal Control System" and issue the "Internal Control System Statement". In 2015, the Company has declared said statement according to the rules of the competent authority. (5) The Company will regularly arrange for directors and supervisors to participate in external integrity operation related courses every year. Furthermore, through "Procedures for Handling Material Inside Information" and company website disclosure, internal on-line educational training will be conducted, and the Company will propagate integrity operation related specifications to its suppliers.anagement internal and external parties.	No difference
3.Implementation of whistleblowing system (1) If the Company established a whistleblowing and reward system? Upon receiving a reported case, is there a dedicated personnel handling the reported case? (2) If the Company established standard operational procedures and relevant information confidentiality policyfor	 		(1) System management and special personnel for special responsibilities: In order to solve major violations or misconduct, etc. complained about by employees, the Company has set up external and internal complaint management. When employees suffer from improper, illegal, or unreasonable events, they can submit a complaint according to the complaint system. (2) Pursuant to the "Employee Complaints and External Reporting Management Specification", the Company has established investigation standard operation procedures and a confidentiality mechanism to accept reporting matters and imposes punishment byreferringto trialprinciples.	No difference No difference

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
investigation of reported cases? (3) If the Company established any measures for protecting whistleblowers from inappropriate disciplinary actions?			(3) In the "Employee Complaints and External Reporting Management Specifications", the Company has designated a dedicated complaint accepter and complaint and reporting hotline: Tel.: 2881-0721 ext. 21999 / E-mail: 21999 @inventec.com, and according to the treatment principle, the Company will protect the reporter from discriminations, threats, post transfers, and other unfavorable treatments.	No difference
4. Information Disclosure (1) If the Company disclosed ethical corporate management policy and its status of implementation via corporate website or Market Observation Post System?			(1) The website of the Company discloses such information as integrity operation, social responsibility, corporate culture, and operation policy. Furthermore, a dedicated department has been established to be responsible for collecting and publishing all kinds of information, and the spokesman system has been established and Investor Conference convened pursuant to law, describing the company operation results and business conditions. The meeting video files will be uploaded to the company website and mops.twse.com.tw for review.	No difference
5. If the Company established any guideline of ethical business conduct in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, please state the implementation status of the guideline and any reasons for non-implementation? In 2014, pursuant to the "Listed Company Code of Integrity Operations", the Company formulated the "Inventec Corporation Code of Integrity Operation", which was approved by the Board of Directors and submitted to the supervisor to propose at the Shareholders' Meeting; the first and second amendments were passed by the Board of Directors in 2015, and the operation has no difference from the rules.
6. If any other information that helped to understand the operation of ethical business conduct and its implementation? (1).Suppliers of the Companyneed topass the supplier corporate social responsibilitysurveyappraisal form with the aim that suppliers will fulfill corporate

Items	Implementation Status	Implementation Status	Implementation Status	Non-implementation and its reason(s)
	Y	N	Summary
social responsibility. (2).The director conflict of interest system is stipulated in the "Rules for Board of Directors’ Discussion" of the Company in order to ensure that relevant resolutions have no damage to company rights and interests. (3).Regarding major operation policies, investment cases, asset acquisition and disposal, bank financing, capital loan to other persons, endorsements, etc. of the Company, they shall be evaluated and analyzed by the relevant responsible unit and proposed to the Board of Directors for resolution. (4).Every year, all departments throughout the Company will carry out self-assessment operations, coordinate with the change of organization and environment in a timely manner, and review the appropriateness of the internal control system and whether colleagues are following the relevant regulations for business execution in order to ensure effective implementation of the internal control system of the company.

Note: Unless otherwise described, the listed subsidiaries of the Company Group comply with relevant regulations upon Ethical Corporate Management.

2.3.8 Corporate Governance Guideline and Regulations

Please go to the company website (http://www.inventec.com), and click on investor service/corporate governance for inquiry.

2.3.9 Other Important Information Regarding Corporate Governance

The governance unit of the Company will fully communicate and discuss with a certified accountant every quarter regarding financial statement examination matters and execution circumstances of the internal control system. Pursuant to the "Procedures for Handling Material Inside Information", the Company has established good internal material information handling and disclosing mechanisms to prevent improper information leakage and also implements a spokesman system to ensure the consistency and accuracy of information published externally by the Company. By participating in corporate governance related course training and internal and external company website, e-mail, and contracts, the Company carries out educational promotion on operation procedures and relevant laws and decrees, so that company directors, supervisors, managers, and employees can fully understand and comply with relevant procedures.

2.3.10 Internal Control System

2.3.10.1 Statement of Internal Control System

Inventec Corporation

Statement of Internal Control System Feb. 23, 2016 Based on the findings of self-assessment, the company states the following with regard to its internal control system in 2015:

The company is fully aware that establishing, operating and maintaining an internal control system are the responsibilities of its Board of Directors and management. The aim of the internal control system is to provide reasonable assurance to operating effectiveness and efficiency (including profitability, performance and safeguarding of assets), reliability of financial reporting and compliance of applicable laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the aforementioned three objectives. Moreover, the effectiveness of an internal control system may be subject to changes of environmental or circumstances. Nevertheless, the internal control system of the company contains self-monitoring mechanism and the company takes corrective actions whenever a deficiency is identified.
The company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control System by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each component further contains several items. Please refer to the Regulations for details.
The company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the evaluation mentioned in the preceding paragraph, the company believes that, as of December 31, 2015, its internal control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with the applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
This Statement will be integral part of the company’s Annual Report for the year 2014 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Law.
This Statement has been passed by the Board of Directors in their meeting held on Feb. 23, 2016 with zero of seven attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Inventec Corporation. Chairman ： Lee, Tsu-Chin President ： Huang, Kuo-Chun

2.3.10.2 If the Company is requested by the SEC to retain CPA’s service for examining internal control system, the Independent Auditor’s Report must be disclosed: None

2.3.11 The penalties delivered to the Company and the staffs of the Company, or the penalties delivered by the Company to the staffs for violations of internal control system, the major nonconformity, and the corrective action in the most recent years and up to the date of the annual report : None.

2.3.12 Major Resolutions of Shareholders’ Meeting and Board Meetings

2.3.12.1 Major Resolutions of Shareholders’ Meeting

Date	Major Resolutions	Implementation
2015.06.16	1. Acknowledge the 2014 Business Report and Financial Statements.	Approved and acknowledged as proposed by the Board of Directors by voting
	2. Acknowledge the 2014 Earnings Distribution.	Approved and acknowledged as proposed by the Board of Directors by voting. The cash dividend to shareholders is NT$1.75 per share, and the Ex-dividend record date is 2015/07/22.
	3. Discussion of the Amendments to “Rules of Procedure for Shareholders Meetings ”	Approved and acknowledged as proposed by the Board of Directors by voting

2.3.12.2 Major Resolutions of Board Meetings

Date	Major resolutions
2015.01.27	Approved theproposal of the salaryandyear-end bonus for managers,employees bonuses and compensation of Directors and Supervisors.
	Approved to amend the Corporate Social ResponsibilityBest Practice Principles.
	Approved to amend the Corporate Governance Best Practice Principles.
	Approved the internal control statements issued by the Inventec Corporation (Hong Kong) Ltd., Inventec (Cayman) Corp., and Invnetec Investments Co.,Ltd. of the Company.
	Approved to establish a subsidiaryin India.
2015.02.25	Approved to issue the 2014 Internal Control System Statement.
	Approved to amend the Codes of Ethical Conduct.
	Approved to amend the Rules of Procedure for Shareholders Meetings.
	Approved to amend the Ethical Corporate Management Best Practice Principles.
2015.03.24	Approved the 2014 financial statements,consolidated financial statements and business report.
	Approved the 2015 Shareholders’meetingdate, place,and meetingagenda.
2015.04.21	Approved the 2014 employee bonuses and compensation of Directors and Supervisors.
	Approved the 2014 earnings distribution.
2015.05.11	Approved the 2015Q1 consolidated financial report.
	Approved Inventec(Chongqing)Corp.to invest ChongqingYuYa Cloud Service Co.,Ltd.
2015.06.30	Approved the ex-dividend record date.
2015.07.21	Approved to donate NT$10 million by Inventec Group Charity Foundation to the special account under New Taipei City Government to support medical care for the Powder Explosion injured at the Formosa Fun Coast.
2015.08.11	Approved the 2015Q2 consolidated financial report.
2015.09.08	Approved the agreement between Inventec (Cayman) Corp. and Top Victory Investment Co., Ltd. to terminate the joint venture agreement of TPV-Inventa HoldingLtd. and change the board seats.
	Approved Inventec(Cayman)Corp. to reinvest TPV-Inventa HoldingLtd..
2015.09.30	Approved to increase investment to TPV- Inventa Technology (Fujian) Ltd. via subsidiary TPV- Inventa holding Ltd.by means of Debt for EquitySwap.

Date	Major resolutions
2015.10.20	Approved managerial officers to engage in competitive conduct.
2015.11.10	Approved the 2016 Internal Audit Plan.
	Approved the 2015Q3 consolidated financial report.
	Approved to amend the Ethical Corporate Management Best Practice Principles.
	Approved the selling of 47.68% of the common stock equity of Inventec Energy Corporation held by the Company to Inventec Solar Energy Corporation
2015.12.29	Approved to formulate operationprocedures for the Companyto applyto suspend and resume transactions.
	Approved to amend Internal Control Systems.
	Approval of the Amendments to Articles of Incorporation.
	Approved to hire certifiedpublic accountants
	Approved the 2016 corporate businessplan.
	Approved the remuneration of directors,supervisors,and managers andyear-end bonusplanningscheme of the Company.
	Approved topurchaseplant buildingin Taoyuan Science and TechnologyPark.
	Approved to donate NT$7.5 million to Inventec GroupCharityFoundation.
2016.02.23	Approved to issue the 2015 Internal Control System Statement.
	Approved the renamingand revision of the "Director and Supervisor Election Rules" of the Company.
	Approved to release the newly added non-competition restriction to the current directors Huang, Kuo-Chun, Chang, Chang-Pang, and Chen, Ruey-Long.
	Approved to subsequently confirm that the Company donates NT$10 million to Tainan City government through " Inventec Group Charity Foundation " in response to earthquake disaster bailout.
2016.03.22	Approved the 2015 employee bonuses and compensation of Directors and Supervisors.
	Approved the 2015 financial statements,consolidated financial statements and business report.
	Approved the 2016 Shareholders’meetingdate, place,and meetingagenda.
	The Companyand Advantech Co.,Ltd.jointlyestablished ajoint venture company.
2016.04.26	Approved the 2015 earnings distribution.

2.3.13 Major Issues of Record or Written Statement Made by Any Director Dissenting to Important Resolutions Passed by the Board of Directors in 2015 and to the date of the annual report : None.

2.3.14 Resignation or Dismissal of Personnel Involved in the Company : None .

2.4. Information Regarding the Company’s Audit Fee

2.4.1 Range of accountants’ fee

CPA Firm	CPA Firm	CPA	CPA	CPA	Auditing Period	Auditing Period	Remark
KPMG		Chen, Ying-Ru,	Yang, Leou-Fong,		2015.01.01~2015.12.31		-
							Unit: NT$ Thousands
Amount Bracket		Items		Auditing Fees		Non-Auditing Fees	Total
1	Below 2,000 thousand					
2	2,000 thousand (included) ~ 4,000 thousand(excluded)
3	4,000 thousand (included) ~6,000 thousand(excluded)
4	6,000 thousand (included) ~ 8,000thousand(excluded)
5	8,000 thousand (included) ~ 10,000thousand(excluded)						
6	Over 10,000 thousand (included)

Unit: NT$ Thousands

									Unit: NT$Thousands
CPA Firm	CPA	Auditing Fees		Non-Auditing Fees				Auditing Period	Note
			System Design	Industrial and Commercial Registration	HR	Others	Total
KPMG	Chen, Ying-Ru	8,600	0	0	0	1,165	1,165	2015.01.01~2015.12.31	Non-auditing services include transfer pricing, VAT and tax consultant.
	Yang, Leou-Fong							2015.01.01~2015.12.31

2.4.2 The non-audit fee paid to certified CPA, certified Office of CPA and affiliated companies accounts for over 1/4 to audit fee: None

2.4.3 Alter the CPA Firm and the audit fee in altering year is less than that in the previous year: None

2.4.4 The audit fee is reduced by over 15% compared with the previous year: None

2.5 Information Regarding the Replacement of CPA

Change of CPA in recent two years and thereafter: as of the fourth quarter of 2014, CPAs are changed, from the original Lin, Wan-Wan and Chen, Ying-Ru into Chen, Ying-Ru and Yang, Leou-Fong, such change is the internal rotation of accounting office, hence it is not applicable.

2.6 Audit Independence

If the chairman, president, and financial or accounting manager of the Company who had worked for the independent auditor or the related party in the most recent year, the name, title, and the term with the independent auditor or the related party must be disclosed: None.

2.7 Changes in Shares Trading and Pledge of Directors, Supervisors, Managers and Major Shareholders:

Unit: Thousand shares

				Unit: Thousand shares	Unit: Thousand shares
Title	Name	2015		2016/04/30
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Lee,Tsu-Chin	0	0	0	0
Director	Yeh,Kuo-I	0	0	0	0
Director	Wen,Shih-Chih	0	0	0	0
Director	Chang,Ching-Sung	0	0	0	0
Director	Huang,Kuo-Chun	0	0	0	0
Independent Director	Chang,Chang-Pang	0	0	0	0
Independent Director	Chen,Ruey-Long	0	0	0	0
Supervisor	Cheng,Hsien-Ho	-110	0	0	0
Supervisor	Wang,Ping-Hui	0	0	0	0
Supervisor	Shyh Shiunn Investment Corp.	0	0	0	0
Representative of Shyh Shiunn Investment Corp.	Yang, Chiung-Nan	0	0	0	0
President	Huang,Kuo-Chun	0	0	0	0
Executive Vice President	Wu,Yung-Tsai	-100	0	0	0
Senior Vice President	Chang,Hui	0	0	0	0
Senior Vice President	Yang,Hsin-Hua	0	0	0	0
Senior Vice President	Tsai, Chih-An	0	0	0	0
Senior Vice President	Wen, Chi-Wai	0	0	0	0
Senior Vice President	Lin,Chin-Wen	0	0	0	0
Senior Vice President	Chen, Yea-Ping	0	0	0	0
Vice President	Chang,Nai-Wen	0	0	0	0
Vice President	Hong,Kuo-Ching	-220	0	0	0
Vice President	Chang,Yiu-Lang	0	0	0	0
Vice President	Yu,Chin-Pao	0	0	0	0
Vice President	Chien,Kuei-Fen	-10	0	0	0
VicePresident	Lou,Jin-Pang	0	0	0	0
Vice President	Yi,Fu-Ming	0	0	0	0
Vice President	Tsai,Yuh-Chen	0	0	0	0

Title	Name	2015	2015	2016/04/30	2016/04/30
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Vice President	Hsu,Ching-Wu	0	0	0	0
Vice President	Ting,Chin-Yun	0	0	0	0
Vice President	Chou, Shao-Hsin	0	0	0	0
Vice President	Tsung,Yu-Lin	0	0	0	0
Senior Director of Talent Center	Yu,Win-Chee	0	0	0	0
Director of Finance Center	Liang,Wen-Jan	0	0	0	0
Director of Talent Center	Lin,Shih-Pin	28	0	0	0
Director of Finance Center	Hsaio,I-Ying	0	0	0	0

Note 1: The Company has no shareholder holding more than ten percent of the total stock.

2.7.1 Information of Shares Transferred

						Unit: Share
Name	The reason	Date	Trading counterparties	Relation	Shares	Price
Wu, Yung-Tsai	endowment	2015/06/09	Wu, Ya-Chuan	father-child	100,000	22.00
Cheng, Hsien-Ho	endowment	2015/07/08	Lu, Hui-Chun	daughter-in-law	110,000	19.95
Hong, Kuo-Ching	endowment	2015/07/13	Hung, Yu-Chieh	father-child	100,000	21.15
Hong, Kuo-Ching	endowment	2015/11/27	Lin, Pi-Chin	spouse	120,000	18.25

2.7.2 Information of Equity Pledged : None.

2.8 The Relations of the Top Ten Shareholders

Unit: Share

Name	Shareholding	Shareholding	Spouse and	Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	The R
	Shares	%	Shares	%	Shares	%	Name	Relations
Yeh, Kuo-I	254,361,330	7.09%	99,314,117	2.77%	-	-	Yeh, Li-Quan Yeh, Li-Cheng Kuo Hsieh Investment Co., Ltd. Fu Tai Investment Co., Ltd. Wang,Fu-Tai	Relative within the second degree of kinship Relative within the second degree of kinship Director Director Spouse
Shyh Shiunn Investment Corp.	139,416,690	3.89%	-	-	-	-	Wen, Shih-Chih	Chairman
Shyh Shiunn Investment Corp.: Representative, Wen,Shih-Chih	35,685,590	0.99%	37,399	0.00%	-	-
Lai-Chu Investment Co., Ltd.	136,721,634	3.81%	-	-	-	-	Yang, Yuan-Yuan	Chairman
Lai-Chu Investment Co., Ltd.Representative Yang,Yuan-Yuan	-	-	-	-	-	-	-	-
Kuo Hsieh Investment Co., Ltd.	118,152,558	3.29%	-	-	-	-	Yeh, Li-Quan Yeh, Kuo-I Wang, Fu-Tai Yeh,Li-Cheng	Chairman Director Director Supervisor

Name	Shareholding	Shareholding	Spouse and	Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	The R
	Shares	%	Shares	%	Shares	%	Name	Relations
Kuo Hsieh Investment Co., Ltd.. Representative, Yeh, Li-Quan	63,398,405	1.77%	2,711,196	0.09%	-	-	Yeh, Kuo-I Yeh, Li-Cheng Wang, Fu-Tai Fu Tai Investment Co.,Ltd.	Relative within the second degree of kinship Relative within the second degree of kinship Relative within the second degree of kinship Supervisor
Fu Tai Investment Co., Ltd.	116,781,074	3.26%	-	-	-	-	Yeh, Li-Cheng Yeh, Kuo-I Wang, Fu-Tai Yeh,Li-Quan	Chairman Director Director Supervisor
Fu Tai Investment Co., Ltd. Representative, Yeh, Li-Cheng	67,412,472	1.88%	600,000	0.03%	-	-	Yeh, Kuo-I Yeh, Li-Quan Wang, Fu-Tai Kuo Hsieh Investment Co.,Ltd..	Relative within the second degree of kinship Relative within the second degree of kinship Relative within the second degree of kinship Supervisor
Lee, Tsu-Chin	115,833,835	3.23%	-	-	-	-	-	-
Wang, Fu-Tai	99,314,117	2.77%	254,361,330	7.09%	-	-	Yeh, Li-Quan Yeh, Li-Cheng Kuo Hsieh Investment Co., Ltd.. Fu Tai Investment Co., Ltd. Yeh,Kuo-I	Relative within the second degree of kinship Relative within the second degree of kinship Director Director Spouse

Name	Shareholding	Shareholding	Spouse and	Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	The R
	Shares	%	Shares	%	Shares	%	Name	Relations
Yeh, Li-Cheng	67,412,472	1.88%	600,000	0.03%	-	-	Yeh, Kuo-I Yeh, Li-Quan Wang, Fu-Tai Kuo Hsieh Investment Co.,Ltd..	Relative within the second degree of kinship Relative within the second degree of kinship Relative within the second degree of kinship Supervisor
Yeh, Li-Quan	63,398,405	1.77%	2,711,196	0.09%	-	-	Yeh,Kuo-I Yeh, Li-Cheng Wang, Fu-Tai Fu Tai Investment Co.,Ltd.	Relative within the second degree of kinship Relative within the second degree of kinship Relative within the second degree of kinship Supervisor
Employees Provident Fund Board-Pheim Asset Management SDN BHD as external fund manager-EPF MSCI	62,612,000	1.75%	-	-	-	-	-	-

Note 1: The top ten shareholders shall all be listed; for corporate shareholders, the name and representative of the corporate shareholder shall be listed respectively.

Note 2: The calculation of shareholding ratio means the calculation of shareholding ratio in the name of oneself, spouse, minor children, or other person. Note 3: For the corporate shareholders and natural person shareholders listed above, any relationship between and among them shall be disclosed.

2.9 Ownership of Shares in Affiliated Enterprises

Unit: Thousand shares

					Unit: Thousand shares	Unit: Thousand shares
Long-Term Investment	Ownership by Inventec		Direct/Indirect Ownership by Directors and Management		Total
	Shares	%	Shares	%	Shares	%
Inventec Appliances Corporation	536,857	100.00%	-	-	536,857	100.00%
Inventec Besta Co., Ltd	33,436	37.53%	1,104	1.24%	34,540	38.77%
Inventec Investment Corporation	108,800	100.00%	-	-	108,800	100.00%
Inventec Solar Energy Corporation	108,150	33.45%	63,568	19.66%	171,718	53.11%
E-Ton Solar Tech. Co., Ltd.	231,521	29.70%	48,633	6.24%	280,154	35.94%
Inventec Energy Corporation.	127	0.10%	62,454	49.26%	62,581	49.36%

Note: It is the investment of company by adopting the Equity Method.

Ⅲ . Capital Overview 3.1 Capital and Shares

3.1.1 Capital and Shares 04/30/2016

Month/ Year	Par Value (NTD)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
		Shares (1,000)	Amount (NT$1,000)	Shares (1,000)	Amount (NT$1,000)	Sources of Capital (NT$10,000)	Capital Increased by Assets Other than Cash	Other
1988.11	10	22,060	220,600	22,060	220,600	Capital increase NT 3,000 by Cash	`－`	November 1, 1988 (77), No. 09283
1989.08	10	66,999	660,000	33,200	332,000	Capital increase NT 4,080.80 by Cash Capital increase NT 7,059.20 by Earnings	`－`	August 21, 1989 (78), No. 01724
1990.05	10	100,000	1,000,000	76,360	763,600	Capital increase NT 3,320 by Capital Surplus Capital increase NT 39,840 by Earnings	`－`	May 30, 1990 (79), No. 28599
1991.07	10	100,000	1,000,000	83,996	839,960	Capital increase NT 7,636 by Capital Surplus	`－`	July 18, 1991 (80), No. 01592
1992.06	10	100,795	1,007,952	100,795	1,007,952	Capital increase NT 16,799.20 byEarnings	`－`	June 17, 1992 (81), No. 01286
1993.07	10	120,954	1,209,542	120,954	1,209,542	Capital increase NT 20,159 by Earnings	`－`	July 20, 1993 (82), No. 30624
1994.06	10	145,145	1,451,451	145,145	1,451,451	Capital increase NT 24,191 by Earnings	`－`	June 20, 1994 (83), No. 28255
1995.06	10	174,174	1,741,741	174,174	1,741,741	Capital increase NT 29,029 by Earnings	`－`	June 21, 1995 (84), No. 36512
1996.06	10	226,426	2,264,263	226,426	2,264,263	Capital increase NT 52,252 by Earnings	`－`	June 21, 1995 (84), No. 38703
1997.05	10	600,000	6,000,000	508,560	5,085,604	Capital increase NT 282,134 by Earnings	`－`	May 06, 1997 (86), No. 36918
1998.05	10	1,000,000	10,000,000	835,407	8,354,069	Capital increase NT9,663 by Eapital Surplus Capital increase NT 317,184 by Earnings	`－`	May 12, 1998 (87), No. 41354
1998.05	10	1,000,000	10,000,000	855,407	8,554,069	Capital increase NT 20,000 by Cash	`－`	May 20, 1998 (87), No. 41353
1999.05	10	1,250,000	12,500,000	1,140,000	11,400,000	Capital increase NT 284,593 by Earnings	`－`	May 17, 1999 (88), No. 46068
2000.05	10	1,500,000	15,000,000	1,375,860	13,758,600	Capital increase NT 22,800 by Capital Surplus Capital increase NT 213,060 by Earnings	`－`	May 22, 2000 (89), No. 43743
2001.05	10	2,000,000	20,000,000	1,660,700	16,607,000	Capital increase NT 27,517.2 by Capital Surplus Capital increase NT 257,322.8 byEarnings	`－`	May 18, 2001 (90), No. 130976
2002.06	10	2,000,000	20,000,000	1,835,000	18,350,000	Capital increase NT 24,910.5 by Capital Surplus Capital increase NT 149,389.5 by Earnings	`－`	June 14, 2002 (91), No. 132472

Month/ Year	Par Value (NTD)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark
		Shares (1,000)	Amount (NT$1,000)	Shares (1,000)	Amount (NT$1,000)	Sources of Capital (NT$10,000)	Capital Increased by Assets Other than Cash	Other
2003.06	10	2,500,000	25,000,000	2,026,000	20,260,000	Capital increase NT 191,000 by Earnings	`－`	June 18, 2003 (92), No. 0920127026
2004.06	10	2,500,000	25,000,000	2,137,000	21,370,000	Capital increase NT 111,000 by Earnings	`－`	June 08, 2004 (93), No. 0930125427
2005.06	10	2,500,000	25,000,000	2,205,700	22,057,000	Capital increase NT 68,700 by Earnings	`－`	June 24, 2005 (94), No.0940125418
2006.06	10	2,500,000	25,000,000	2,301,000	23,010,000	Capital increase NT 95,300 by Earnings	`－`	June 27, 2006 (95), No. 0950126555
2007.06	10	2,500,000	25,000,000	2,427,800	24,278,000	Capital increase NT 126,800 by Earnings	`－`	June 25, 2007 (96), No. 0960031988
2008.06	10	3,000,000	30,000,000	2,561,000	25,610,000	Capital increase NT 133,200 by Earnings	`－`	June 24, 2008 (97), No. 0970031477
2009.06	10	3,000,000	30,000,000	2,821,426	28,214,260	Capital increase NT 260,426 by Earnings	`－`	June 25, 2009 (98), No. 0980031805
2010.06	10	3,000,000	30,000,000	2,962,497	29,624,973	Capital increase NT 141,071 by Earnings	`－`	June 25, 2010 (99), No. 0990032858
2011.08	10	3,500,000	35,000,000	3,468,922	34,689,218	Capital increase NT 506,425 by Merging	`－`	August 19, 2011 (100), No. 1000037640
								September 01, 2011 (100),No. 1000041230
2011.10	10	3,500,000	35,000,000	3,466,159	34,661,595	Cancellation of Treasury Stocks NT2,762	`－`	`－`
2012.06	10	3,650,000	36,500,000	3,587,475	35,874,751	Capital increase NT 121,316 by Earnings	`－`	June 27, 2012 (101), No.1010028496

Unit : Share ; 04/30/2016

	Unit	Unit	Unit	: Share ; 04/30/2016
Shares category	Authorized Capital			Remarks
	Issued shares(Listed)	Non-issued	Total
Registered Common Shares	3,587,475,066	62,524,934	3,650,000,000

Information for Shelf Registration : None

3.1.2 Composition of Shareholders

04/30/2016

						04/30/2016
Item	Government Agencies	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	9	69	130	111,741	798	112,747
Shareholding (shares)	42,503,370	57,759,793	637,272,909	1,660,429,513	1,189,509,481	3,587,475,066
Percentage	1.19%	1.61%	17.76%	46.28%	33.16%	100.00%

3.1.3 Shareholding Distribution Status

04/30/2016

			04/30/2016
Class of Shareholding (Unit : Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1~ 999	36,460	11,122,222	0.31%
1,000~ 5,000	48,530	115,247,256	3.21%
5,001~ 10,000	14,278	104,518,766	2.91%
10,001~ 15,000	4,781	58,806,961	1.64%
15,001~ 20,000	2,493	45,222,104	1.26%
20,001~ 30,000	2,296	57,715,606	1.61%
30,001~ 40,000	1,012	35,801,448	1.00%
40,001~ 50,000	601	27,712,355	0.77%
50,001~ 100,000	1,091	76,413,327	2.13%
100,001~ 200,000	490	67,621,912	1.89%
200,001~ 400,000	256	73,255,379	2.04%
400,001~ 600,000	111	55,045,736	1.54%
600,001~ 800,000	55	38,675,640	1.08%
800,001~1,000,000	47	42,401,462	1.18%
1,000,001~999,999,999	246	2,777,914,892	77.43%
Total	112,747	3,587,475,066	100.00%

Preferred share: The Company did not issue any preferred share.

3.1.4 List of Major Shareholder

04/30/2016

	04/30/2016	04/30/2016
Shareholder's Name	Shareholding
	Shares	Percentage
Yeh, Kuo-I	254,361,330	7.09%
Shyh Shiunn Investment Corp.	139,416,690	3.89%
Lai-Chu InvestmentCo., Ltd	136,721,634	3.81%
Kuo Hsieh Investment Co., Ltd	118,152,558	3.29%
Fu Tai Investment Co., Ltd	116,781,074	3.26%
Lee, Tsu-Chin	115,833,835	3.23%
Wang, Fu-Tai	99,314,117	2.77%
Yeh, Li-Cheng	67,412,472	1.88%
Yeh, Li-Quan	63,398,405	1.77%
Employees Provident Fund Board- Pheim Asset Management SDN BHD as external fund manager-EPF MSCI	62,612,000	1.75%

3.1.5 Market Price Per Share, Net Value, Earnings & Dividends For Latest Two Years

Unit：NT$ ； Thousand shares

	Year	Year	2014	2015	01/01/2016
Item					~03/31/2016
Market Price per Share	Highest Market Price		32.35	24.70	26.10
	Lowest Market Price		18.55	13.30	20.15
	Average Market Price		25.49	20.12	23.22
Net Worth Per Share	Before Distribution		16.05	15.74	15.99
	After Distribution		14.30	`－`	`－`
Earnings Per Share	Weighted Average Share Numbers		3,587,475	3,587,475	3,587,475
	Earnings Per Share		1.98	1.55	0.34
Dividends Per Share	Cash Dividends		1.75	`－`	`－`
	Stock Dividend	Dividends from Retained Earnings	`－`	`－`	`－`
		Dividends from Capital Surplus	`－`	`－`	`－`
	Accumulated Undistributed Dividends		`－`	`－`	`－`
Return on Investment	Price / Earnings Ratio		12.87	12.98	`－`
	Price / Dividend Ratio		14.57	`－`	`－`
	Cash Dividend Yield Rate		0.07	`－`	`－`

Note: Price / Earnings Ratio = Average Market Price / Earnings Per Share

Price / Dividend Ratio = Average Market Price / Cash Dividends Per Share

Cash Dividend Yield Rate = Cash Dividends Per Share / Average Market Price

3.1.6 Corporate dividend policy and implementation condition

1. Corporate dividend policy

The Board of Directors of the Company passed a revision of the Articles of Incorporation on December 29, 2015. Pursuant to the provisions of the revised Articles of Incorporation, if there is a surplus in the general annual report of the Company, it shall first be used to pay taxes and offset accumulated losses, and then 10% will be withdrawn as a statutory surplus reserve, except when the statutory surplus reserve has accumulatively reached the total paid-up capital of the Company. Furthermore, the special surplus reserve shall be set or returned according to the operation demand of the company and pursuant to relevant laws and decrees. If there is still surplus and accumulated undistributed surplus, a proper amount shall be reserved according to operation demand, and a dividend of no less than 10% of the surplus in the current year shall be paid. The Board of Directors shall prepare a surplus distribution proposal and submit it to the Shareholders' Meeting for acknowledgment. The dividend policy of the Company considers the future fund demand and long-term financial planning of the Company, as well as shareholders' demand on cash inflow. If there is a surplus in the annual report, the cash dividend distributed every year shall not be less than

10% of the total cash and stock dividend distributed in the current year.

2. Dividend distribution situation

The dividend distribution situations of the Company for past five years are summarized in the following table; the surplus distribution in 2015 is still pending acknowledgment by the 2016 general meeting.

general meeting.
Year	2011	2012	2013	2014	2015
Cash Dividend	0.30	0.80	1.60	1.75	1.40
Stock Dividend	0.35	-	-	-	-

3.1.7 The impact of stock grants proposed by the Shareholders' Meeting at this time on company business performance and earnings per share

This (2016) Shareholders' Meeting has not proposed any stock grants.

3.1.8 Remuneration of employees, directors, and supervisors

Percentage or scope of remuneration of employees, directors, and supervisors as stated in the Articles of Association

On December 29, 2015, the Board of Directors of the Company passed a resolution amending the Articles of Incorporation; it still needs to be passed as a resolution of the 2016 general meeting before being officially issued. According to the amended Articles of Incorporation of the Company, if the Company experiences overall annual profit, no less than 3% shall be allocated as employee remuneration and no more than 3% as director and supervisor remuneration. However, when the Company has accumulated losses, it shall reserve the compensation amount in advance. Employee remuneration may be issued in cash or stock, the issuing object may include employees subordinated to the company and conforming to certain conditions, and the conditions and methods thereof will be stipulated by the Board of Directors.

Estimation base of employee, director and supervisor remuneration in this estimation, the number of shares calculation base for employee remuneration in stock distribution, and accounting treatment when the actual distribution amount differs from the estimated amount.
(1) Estimation base of employee, director and supervisor remuneration in this estimation: Pursuant to the amended Articles of Association of the Company, if the Company experiences overall annual profit, no less than 3% shall be allocated as employee remuneration and no more than 3% as director and supervisor remuneration. However, when the Company has accumulated losses, it shall reserve the compensation amount in advance.
(2) The number of shares calculation base for employee remuneration in stock distribution: In this period, no employee remuneration is in stock distribution.
(3) When the actual distribution amount differs from the estimated amount, the balance thereof will be listed as cost adjustments in the actual distribution year.

Situation of the Board of Directors' passing remuneration distribution
(1) The amount of employee, director, and supervisor remuneration in cash or stock distribution. If it differs from the estimated amount in the recognized expense year, the balance, reason, and handling situation shall be disclosed: the Board of Directors passed a resolution, determining that the remuneration of employees in 2015 is NTD336,884,470, and the remuneration of directors and supervisors in 2015 is NTD 98,257,971, which are the same as the recognized expense amount in 2015.
(2) The proportion of employee remuneration amount in stock distribution in the net profit after tax in individual financial statements of this period and the total employee remuneration: None
For the actual distribution situation of employee, director, and supervisor remuneration last year (including distributed shares, amount, and stock price), if it differs from the recognized employee, director, and supervisor remuneration, the balance, reason, and handling situation shall be specified.

In 2015, the relevant information on the employee, director, and supervisor remuneration distributed by the Company from the distributable surplus in 2014 is summarized below:

Employee bonus distribution: NTD447,162,335; director and supervisor remuneration distribution: NTD127,760,667, and the total distribution amount is greater than NTD574,923,002. It is the same as the recognized cost amount in 2014.

The distribution situation passed by the Shareholders' Meeting is the same as the proposed situation passed by the Board of Directors.

3.1.9 Company’s situation regarding buying back Company shares : None.

. 3.2 Issuance of Corporate Bond : None

3.3 Issuance of Preferred Shares : None.

3.4 Issuance of Global Depository Receipts : None.

3.5 Issuance of Employee Stock Option : None.

3.6 Issuance of Restricted Employee Shares : None.

3.7 Status of New Shares Issuance in connection with Mergers and Acquisitions : None.

3.8 Financing Plans and Implementation

3.8.1 Plans `：` None. 3.8.2 Implementation `：` None.

Ⅳ . Operational Highlights

4.1 Business Activities

4.1.1. Business scope

Major business contents

The major business items of the Group include the manufacturing and sale of computer software and hardware products, and solar batteries, as well as the assembly and sale of communication and digital assistant products, etc.

Proportion of consolidated business

Year Item	2014	2015
IT Product	97.42%	96.74%
Solar Product	2.58%	3.26%
Total	100.00%	100.00%

Commodity items and new commodities planned to be developed
A. Computer hardware products: portable notebooks, corporate computers (including servers, data centers, storage equipment, work stations), etc.
B. Computer software products: including server management software ESMS, application software, learning tool software, computer peripheral extended products, etc.
C. Cloud application platforms.
D. Consumer electronics products and handheld devices.
E. Solar batteries and module products.

4.1.2 Industry overview

1. The current situation and development of the industry

(1) Notebook computers

In the first half of 2015, some emerging market countries were affected by exchange depreciation, causing the demand for notebook computers to decline and most brand manufacturers to experience a general increase in inventory. In the second half, in order to avoid inventory risk, distributors only actively purchased after the launch of Windows 10 computers, resulting in the sales growth to be obviously higher in the third quarter than the second quarter. Furthermore, in recent years, with the diversification of mobile device products, the degree of dependency on notebook computers has reduced, so the overall sales volume is still lower than that in 2014. According to the statistics of

TrendForce, a global market research institution, the shipment volume of notebook computers in 2015 was approximately 164 million computers, a decline of 6.3% from the previous year.

Looking forward to the development of global notebook computers in 2016, the consumer market is gradually shrinking. Although the demand for tablet PCs within the same competitive market has been saturated, is the demand for network computers is still affected by other mobile devices (such as smart phones, etc.). However, several brand companies in mainland China are expected to launch notebook computers in the first half of the year, the launch of the new products is expected to attract consumers and activate the market. Although the gross profit margin of notebook computers declines annually due to low-priced competition, the stimulation effect of low-price commodities on market demand is no longer significant. Therefore, in order to increase sales profit, the branded companies must increase the shipment proportion of high-end machines. Taiwan is a technological leader with regard to the design and manufacturing of high-end machines. Anticipating the importance of improving high-end machines, Taiwan’s industry will also move towards high-quality development. In consideration of various trends, the market survey research institution TrendForce estimates that the shipment volume of notebook computers in 2016 will decline slightly by 3.2% to 159 million computers.

(2) Servers

In recent years, with the rapid development of cloud and mobile applications, the market scale of servers has been growing continuously. Since mainland China telecommunication dealers and Internet service providers have massive data processing and storage demand and the shipment volume of server brand manufacturers in mainland China are continuously growing, they are expected to catch up with the leading manufacturers in Europe and the United States in the coming years. However, each brand manufacturer in Europe and the United States continues to be devoted to the development of new products. In addition to maintaining the self-manufacturing of high-end and large-scale server products, brand manufacturers have outsourced medium and low-end products and relevant components thereof to OEM for manufacturing. With an increase in challenging brand manufacturers from mainland China, in addition to maintaining inherent corporate hardware business, brand manufacturers in the United States are also actively developing cloud computing solutions. According to the statistics of Gartner, an international research and consultant institution, the shipment volume of global servers in 2015 increased by 9.9%, and the revenue grew by 10.1%. Looking to 2016, Gartner is optimistic about the continuous and moderate growth of the overall server market. Continuously driven by the demand for cloud application and data center computing, the Institute for Information Industry also estimates that the market scale will reach 10.74 million servers, growth of 6.8% compared with 2015. Furthermore, since many large scale data center markets adopt Whitebox server to construct their information center, the demand of ODM Direct is growing drastically, compressing the market of brand manufacturers, and the sales ratio and market share of ODM Direct is expected to increase continuously.

(3) Cloud computing
Recently, mobile communication devices have been becoming more popular by the year, and the information application market, such as wearable devices, Internet of Things, etc., has also been developing rapidly. In response to the demand of storing massive digital data, all manufacturers worldwide have successively joined the cloud computing field, which has driven all kinds of innovative services. Cloud computing has reshaped the supply chain of the information communication industry and has triggered a new wave of industry competition. With a continuous increase of output value in the entire cloud industry, companies that offer cloud services also continue to increase. In addition to large-scale Internet and virtual community dealers, many medium and small-scale companies are providing all kinds of cloud services with development potential. Each industry utilizes cloud computing and big data analysis to predict consumer behavior and then formulate management decision and make its information department operate in a more flexible manner in order to narrow the management span, increase production efficiency, reduce costs, and improve the overall operation performance. With the increase of cloud computing efficiency and cost reduction, data collection has become more effective, and big data analysis more important. According to the global cloud market analysis report issued by Synergy Research, a market research institution, global enterprises' expenditure amount in the field of cloud computing in 2015 exceeds 60 billion US dollars, and the expenditure in private cloud and mixed cloud services is continuously growing at the rate of 45% every year. Furthermore, according to the estimation of the market research institution IDC, the expenditure of global public cloud services in 2015 was approximately 70 billion US dollars. By 2019, it is expected to reach 14.1 billion US dollars, with a compound annual growth rate of 19.4%. Most software suppliers are expected to transfer to SaaS and PaaS models.
(4) Smart phone/wireless communication devices According to statistics from the Institute for Information Industry, in 2015, the shipment volume of global smart phones was approximately 1.531 billion phones, growth of 7.2% compared with 2014; the single digit growth rate indicates that it has entered market maturity. Since the market growth has slowed down, the sales volume of smart phones is expected to reach 1.7 billion phones in 2020, with a compound annual growth rate of 4.0%. When comparing the market trend of each region, in mature markets with high penetration rates, such as North America and Western Europe, the sales volume in 2016 will be close to that of 2015. Although the expected growth rate is lower than that of emerging markets with low penetration rates, such as Africa, India, etc., they are still the major sales areas for high-end mobile phones with high yield. On the other hand, the Institute for Information Industry estimates that India will drive the huge domestic market with economic development and will become the second largest smart phone market in the world by 2019. The popularizing rate of mobile phones will also increase drastically in Africa due to the general increase of personal income, and the market growth rate there should not be underestimated.

With the development of the Internet of Things, related application services have gradually matured, wearable devices will attract various dealers to actively invest in

developing relevant products due to such factors as technology improvement, increase of consumer acceptance, etc. Many traditional industry dealers are carrying out research and development to add the smart technology design into such products as watches and sports products. According to the research report of Gartner, an international research and consultant institution, in 2015, the shipment volume of global wearable devices was approximately 232 million items. With the stimulation of such factors as the joining of new manufacturers and the increase of consumer cognition degree, the shipment volume of global wearable devices is expected to increase to 275 million items in 2016, with an annual growth rate reaching 18.4%, and the revenue of wearable devices can reach 28.7 billion US dollars, of which 11.5 billion US dollars come from smart watches.

(5) Solar energy

Since 2011, the setup cost, module sales price, and module production cost in the solar photovoltaic industry have declined drastically, causing global solar battery manufacturers to gradually consolidate or quit the industry. Since green energy is currently a major trend of global energy development, with the rapid decline of solar energy setup costs and the active development of China, the U.S., Japan, and countries in emerging districts, the global solar photovoltaic demand still sees high growth. In the first half of 2015, the situation in which supply exceeded demand due to the excessive overall production capacity expansion in the past few years was still present, but in the second half of 2015, due to China's increase of installation targets and the increase of market demand in Europe and the United States, the market supply and demand tend to balance, and the price of solar batteries has gradually rebounded. According to the research data of Energy Trend, a research institution, in 2015, the scale of global solar photovoltaic demand was 53GW, an increase of 20% compared with 2014, the scale of global solar photovoltaic demand is expected to reach approximately 59GW in 2016, further growth of 11% compared with 2015. Looking toward 2016, the global solar energy industry will positively and continuously develop, and the solar photovoltaic products and their shipment volume in Taiwan are expected to grow alongside them, but we still need to evaluate the subsidy policy of the government and the impact on the market caused by dramatic production expansion by manufacturers from mainland China.

2. Relevance of upstream, midstream, and downstream of the information hardware industry

Upstream component Midstream semi-finished Downstream product manufacturing industry products processing industry distribution industry (1) CPU (2) ODD (3) HDD (4) LCD panel Module (5) Battery (6) Memory and Distributor

(7) Network device

(8) Keyboard Assembly

(9) Mainboard

(10) Adaptor

(11) Other components

3. All kinds of product development trends and competition situations

(1) Notebook computers

Due to fierce market competition, branded manufacturers continue to launch all kinds of products. In the future, the major advancing direction of notebook computers still mainly relies on their being lightweight, portable, and convenient. The mainstream notebook computer also actively integrates notebook computers with touch screens and narrow borders in order to improve portable convenience. Furthermore, many brand manufacturers focus on the production of gaming notebooks, including entry-level and medium and high-end specification products, especially under the development trend of Augmented Reality (AR) and Virtual Reality (VR), which will improve consumer's efficiency requirement on notebook computers. Because of the continuous decline in the price of notebook computer panels, the prices of mainstream 14-inch and 15.6-inch HD (1,366×768) screens have been close to cost, so manufacturers have started promoting FHD (1,920×1080) panels to maintain profits. Through the aforementioned improvement of notebook computer efficiency and performance, the industry hopes to stimulate consumer's purchase intention in order to increase the sales volume of notebook computers in 2016. Furthermore, after the Chromebook entered the education market with a low price, the entry-level notebook has also reduced its sales price under mutual competition between and among major American manufacturers. With successful expansion in the education application market, major American search engine manufacturers have also actively cooperated with local European brand manufacturers to develop and expand the consumer market; major American computer operation system manufacturers contend against them by reducing licensing fees. Among competition with major brands, the product line of low-price notebook computers is expected to expand.

(2) Server and cloud computing

The reformation of software technology drives the virtualization of the data center, and the software-defined data center (SDDC) has also been upgraded along with the new generation of server specifications. The expansion of DDR4 memory support increases the memory resources in the server, and the popularization of solid state disk resolves the bottleneck of data I/O access, increasing the computing capacity of mainstream servers. The cross-platform cooperation between manufacturers has gradually become universal, and the server will develop built-in application programs to cross the platforms of different cloud services. In recent years, cloud computing has been promoting computing resources to gather at the server end. In addition to driving the output value of server and data centers, it will also stimulate computing, storage, and network requirements, including the IC application of memory and storage equipment, among others. Among green and environmental protection trends, server products with high efficiency will generate a lot of heat energy in the course of computing; the uninterrupted operation of server rooms also need thorough cooling systems to reduce the heat. Therefore, most server products are being developed towards the direction of reducing processor energy dissipation and reducing the power consumption of cooling systems.

With the rise of the Whitebox server in recent years, relevant dealers have been actively developing new markets and customers by providing solutions with more value-added services through end product production bases, including overall server tied products of storage, software, and service, and assisting local data center hardware equipment or integration schemes. Future market trends will connect cloud computing with Internet of Things technology for huge business opportunities. Using the reaction speed of the cloud system and system upgrades, in addition to reducing costs, it can also create more value-added cloud services and develop a cloud industry-supported service industry.

(3) Smart phones/wireless communication devices
Since smart phones entered into price competition with low product differentiation, each manufacturer continues to focus on improving hardware specifications and higher cost performance. Regarding high-end machines, the launch of the high-end smart phone with 64 bits and 8 core architecture processors has rapidly penetrated into the high-end machines of each big brand. Furthermore, random access memory is expected to increase to 4GB, and battery life will also continuously improve, while the fingerprint identification function will become a universal allocation function as consumers increasingly emphasize privacy security. According to the estimation of the Institute for Information Industry, in 2016, the sales volume of smart phones in mature markets such as North America, Western Europe, etc. will maintain at 180 million items and 160 million items, respectively. Although the growth range is not high, they are still the major sales locations for high-end machines with high profits; therefore each manufacturer continues to attach importance to such places.

Recently, with regard to wearable device products, in addition to the continuous development of watches, bracelets, glasses, head-mounted cameras, etc., relevant product applications have gradually expanded into many other devices, such as those related to

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sports and medical treatment. The major purpose is to collect all-around relevant personal physiological information and carry out analysis using a device that is closer to the human body. Traditional dealers and new entrepreneurs are actively entering the smart wear market one after another, creating fierce competition. In order to meet various consumer demands, product design development is also quite diversified, prompting the emergence of the competition status of small quantity product diversification. Therefore, for future development, dealers must possess sales capability, such as good product design, production support and marketing, etc. to obtain the advantage in such a market.

(4) Solar energy

Types of solar batteries are diversified, and different materials have different characteristics in their reaction to the solar spectrum. Except for crystalline silicon, thin-film materials, and III-V and II-VI compound semiconductor materials, organic composite materials have low costs and are easily produced, and even specific nano materials have solar energy power generation characteristics. Currently, commercialized solar batteries include crystalline silicon type, thin-film type and III-V (GaAs) solar batteries, but the crystalline silicon solar battery is the mainstream in market application. Of those, three varieties are most common, namely single crystalline silicon, polycrystalline silicon, and amorphous silicon. Although the energy conversion efficiency of thin-film type solar batteries is lower than that of a crystalline silicon solar battery, they do not require crystalline silicon wafers and can grow onto base materials with different shapes and of different materials, and it has the characteristics of low cost and a large applicable area; therefore, it still has the opportunity to drastically reduce the cost of production equipment, which is originally relatively high. Currently, with the development of centralized solar photovoltaic systems gradually maturing, the development of a decentralized solar photovoltaic system will become the key point in the next wave of promotion. Since the decentralized solar power generation cycle is consistent with the household power consumption cycle, as solar energy power generation costs continue to decline, the decentralized solar energy system will become one of the solutions for replacing traditional household energy.

The research and development priority of each major manufacturer is continuously aimed at products with high quality and high efficiency, including adjusting the manufacturing process to ensure the total number of single crystalline and polycrystalline solar batteries conforms to the PID-free requirement (exempt from efficiency attenuation triggered by electric potential difference). Passivated Emitter and Rear Cell (PERC) processing technology and material selection can effectively increase the battery's photovoltaic conversion efficiency. The development of new type solar battery technology can increase conversion efficiency, improve light attenuation, and reduce the efficiency temperature coefficient.

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4.1.3 Overview of technology and research and development

Table of R&D Expenditure Investment by the Group in the Past Two Years

Year	2014	2015
R&D Expenses (Unit: NT$ Thousand)	8,511,964	8,816,932
R&D Expenses to Revenue (%)	1.95	2.23
Growth Rate (%)	4.35	3.58

"Innovation" is the basic spirit of the Group foundation’s operation philosophy; it is the best medium for shaping our enterprise's differentiation value, as well as our commitment to our customers and partners. Therefore, we pay special attention to innovation research and development and patents for invention in order to improve the international competitiveness and influence of our Group. Over the years, the Group has invested considerable amounts of expenditure into product research and development, with the R&D expenditure of the Group in the past two years reaching NTD8.51 billion and NTD8.82 billion, respectively. In the future, we will continue to invest large amounts of funds. We will be dedicated to the improvement and expansion of original product line function, understanding the demand of end consumers through product innovation, and participation in the research and development design of major international manufacturers in order to strengthen the market concept of original product design. We will further master, collect, and analyze the after-sales demands of consumers through a global logistics service structure. Moreover, we will actively cooperate with major component manufacturers, fully master the core design capability, and establish cross-domain technology application platforms by integrating software and hardware with integrative functions. Furthermore, we will integrate wireless communication technology and establish new platforms for communication products to expand the product lineup.

The Group attaches great importance to cultivating innovation research and development talents and motivates employees through financial reward and management mechanism; innovation and patent protection have been fully integrated into the corporate organizational culture. We have also established the innovation incubation fund; in addition to investing in the innovation team externally, we also pay attention to encourage internal innovation inside the Group, accelerating the cultivation of innovative entrepreneurial energy. Since the Group has been continuously dedicated to independent innovation, as of the end of December 2015, more than 14,000 patent certificates worldwide had been accumulatively acquired, and more than 6,000 patents are under application. In Taiwan and China, the total number of invention and patent certificates and the number of applications have officially ranked in the top ten for more than eight consecutive years. In the future, we will continue to adhere to the spirit of innovation and be dedicated to the research and development of core technology to improve industrial competitiveness.

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4.1.4 Long-term and short-term business development plans

Short-term business development plans
(1) Stick to knitting and strive for innovation improvement, satisfying customer and market demands in the quickest and most direct way.
(2) Start from the operation philosophy of “Innovation, Quality, Open Mind, and Execution” to integrate operation technology and management tools to improve operation performance.
(3) Research and develop demand-oriented products and expand the depth and width of product research and development level to achieve the target of multiple earning growth.
(4) Actively carry out global arrangement, properly utilize each local resource advantage, and construct an optimized global supply chain and operation network.
Long-term business development plans
(1) Combine software, hardware, and relevant applications to create relative advantage to maintain an international foothold. Unlike the traditional manufacturing concept of focusing on hardware only, emphasize the utilization of soft skills such as information, simulation, research and development, system integration, services, etc. and create product features and differentiation to improve added value.
(2) Focus on research and development and core capability management and develop towards the direction of "Creating high value". Seek cooperative international opportunities worldwide and cultivate technical talents with global competitiveness to accelerate the improvement of our technical level and implement innovative concepts.
(3) Continuously promote the five major development areas of "Rapid Innovation", "Sustainable Energy", "Cloud Solutions", "Mobile Lifestyle", and "Emerging Markets". Utilize vertical labor division, improve efficiency, provide customers with timely and complete services, carry out supply chain integrating management, and construct the production organization of an economic scale in order to strengthen long-term competitive advantages.
(4) Continue diversified cultivation, based on a solid foundation of professional notebook computer OEM, enter the fields of cloud computing, mobile computing, wireless communication, network applications, smart family, application software, green energy environmental protection, etc., expand corporate operation scale, and overall arrange Internet of Things technology to become the top Internet enterprise.

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4.2 Overview of the market, production, and marketing

4.2.1 Market analysis

Sales territory of major products

Major product department	Name	Major sales territory
Computer product	Notebook computers, servers, and other electronic information products	North America, Europe, Asia

Market share, supply and demand situation, and growth in the future market

(1) Notebook computers

The rise of the notebook computer OEM supply chain in mainland China has caused the order quantity to decline in some Taiwan OEM dealers. According to the statistics of the Institute for Information Industry, in 2015, the global market share of Taiwan’s notebook computers dropped by 1.1%; however, Taiwan notebook computer OEM manufacturers possess global logistics capability, rapid response, and economic scale, so major brand manufacturers from the U.S., Japan, and Taiwan continue to appoint Taiwan OEM dealers for design and manufacturing, and Taiwan’s global market share is approximately 83.8%, maintaining a leading position.

The development of Taiwan’s notebook computer industry is closely connected to global industry development and is deeply influenced by customers' outsourcing strategy. Looking toward 2016, as each major brand starts to attach importance to product line and emphasizes high efficiency and specification improvements, the design and manufacturing technology of Taiwan will continue to lead worldwide and have a definite advantage regarding medium and high-end notebook computer OEM. The Group still maintains the concept of continuous innovation, with competitive advantages such as excellent global logistics service capability, the most flexible order receiving production mode, and a localized and customized production mode. Therefore, it has become the leading manufacturer in global notebook computer manufacturing. Growth space for commercial notebook computers is still expected in the future; hence the Group will continue to focus on the development of commercial notebook computers while developing thinner and differentiated products.

(2) Servers

According to statistics from the Institute for Information Industry, in 2015, the shipment volume of Taiwan’s server related products accounted for 81.5% of the global market. Most American and Japanese brand dealers make orders to Taiwanese OEM plants since they have no assembly plants; on the other hand, most Chinese brand dealers own their own assembly plants and generally purchase main boards from Taiwan OEM plants for independent assembly. With the rapid development of cloud computing and mobile devices, the network has been able to be constructed onto a universal type x86 server platform, and the server market has been growing rapidly in

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the past three years. Together with the expansion of public cloud services and fierce bidding degrees, the rise of large data center demands is also driving the demand of the White box server, which will help Taiwan’s server dealers to obtain more orders. Looking toward 2016, since the proportion of self-manufacturing of mainland China manufacturers is increasing and major American brands have slightly scattered orders, which is estimated to slightly reduce the global shipment share of Taiwan. The Group has been thoroughly cultivating the server industry and continuously improving its competitive advantage. Meanwhile, in response to the increase of computing demands, the growth momentum of server demands is still good; therefore, our continuous assessment goes beyond the strongholds in the existing North American and European regions, and we will actively expand markets in emerging regions, amplifying server end product assembly plants and continuously developing all kinds of server businesses.

(3) Cloud computing

In recent years, the Group has been actively developing cloud services in the hopes of creating a flexible cloud knowledge application environment by combining the SaaS service provided by partners in order to provide customer solutions for software, hardware, and service. To meet customer demands, customers can choose a cloud service platform or enterprise cloud all-in-one scheme and switch between these two schemes at different stages according to their business growth and demand. Starting from 2015, with innovation incubation projects and mini venture investments, we have been emphasizing three major aspects, namely Internet of Things, big data, and the cloud, in order to facilitate business development. Meanwhile, we exploit global supply chain systems, in addition to the existing cloud equipment production base on the US-Mexico border and in the Czech Republic. In the future, we will also consider establishing research and development and production bases in other areas to improve company competitiveness. Furthermore, considering the "IOE removing" business opportunity in the China cloud market, the Group has taken the leader as hardware manufacturer, leading Taiwan network service providers and software integration dealers to go to mainland China to seek cloud business opportunities together. In 2017, the Group is expected to set five data centers in North China, East China, South China, and Taiwan, focusing on the mixed cloud market of small and medium-sized enterprises in both Taiwan and mainland China.

(4) Smart phones/wireless communication devices

Since most Chinese consumers have already switched from using feature phones to using smart phones, the growth range of the global smart phone shipment volume will gradually slow down. The research institution Institute for Information Industry expects India to become the second largest market in the world in the future. Each dealer has been actively arranging production plants in regions with a lower penetration rate such, as India and Africa, or cooperating with local manufacturers in order to exploit their consumer markets. Furthermore, according to the data of the market research institution TrendForce, in 2015, the total shipment of China brands was close to the total shipment of top two mobile phone brands globally; in the future,

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the sales market of international big plants will be compressed due to the rise of Chinese brands. The Group is dedicated to continuously strengthening design, testing, and manufacturing capability through customer value innovation and actively integrating the design OEM process; with the gradual maturity of company research and development strength, test technology, and product design capability, we can take our place in the field of smart phone manufacturing.

Since 2013, wearable devices have been developed into all kinds of styles and are considered the main development commodities after computers and smart phones. Each major brand plant has been devoted to designing wearable devices independent of smart phones, as well as actively combining data collected from wearable devices and providing users with information and suggestions to improve their added value. With such advantages as existing smart phone designs and manufacturing, the Group expects to first invest in research and development of wearable devices. Currently, such application commodities as wearable devices and smart family also have market competitiveness and are expected to bring more business opportunities to the Group in the future.

(5) Solar energy

Reviewing the global solar energy industry in 2015, after the anti-dumping investigation in Taiwan initiated by the U.S. Department of Commerce in 2014, the average sales price of solar batteries declined to its lowest point in the middle of 2015 from a market price of more than 0.40 US dollars per watt in the beginning of 2014, the lowest in the history of solar energy. However, throughout the entire year of 2015, due to the strong domestic demand in mainland China and emerging markets such as India and countries in Central and South America being devoted to developing solar energy industries, this drove the recovery of prosperity, and the great decline in quantity and price in the first half of the year turned into price stabilization and gradual rise in the second half of the year.

Looking toward 2016, in the first half of the year, such wave of upsurge will continue, but in the second half of the year, we still need to observe the impact of newly increased production capacity on the supply and demand balance. According to the estimation of the Institute for Information Industry, in 2016, mainland China will still be the largest market for solar energy, with installation quantity accounting for 28.2% globally, followed by the U.S., expected to account for 16.7%, and then Japan and Europe, accounting for approximately 15.9% and 14.5%, respectively. The solar energy demand in emerging markets is also increasing rapidly, with the solar energy demand growing continuously in such regions as Southeast Asia, Africa, Central and South America, Middle-South Asia, etc. However, the policy variability in such markets is great and relatively unstable, so subsequent developments still need to be observed. The Group has been actively optimizing product innovation and manufacturing processes in order to develop high quality and high efficiency products through professionalism and differentiation.

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Competition niche, favorable and unfavorable factors in development prospects, and solutions
(1) Favorable factors
- A. Product advantages continue to improve and drive the growth of market demand Since the functions of notebook computers are continuously improving, and the weight and modeling are becoming thinner and thinner, as well as the collocation of touch control and continuous development of all kinds of digital mobile video multimedia technologies, it has made the product line more extensive through innovation to meet the demands of each consumer group.
- B. Cloud computing is the mainstream in future development
  - The cloud computing industry and big data are both growing rapidly. In the future, the cloud application business opportunities are infinite. The Group has been the industry leader in the aspect of server OEM; through existing hardware technology and application software development, we can take our place in the cloud computing industry.
- C. Construct an all-around system product line
  - Based on the good foundation of an existing all-around product line, in addition to continuing to consolidate the notebook computer and server product fields, the Group is also gradually expanding to relevant fields such as peripheral software products, electronic information products, etc. with higher added value. Furthermore, in the solar energy photovoltaic industry, through vertical integration and Group resources sharing, the Group can take its place in the field of solar battery and module products.
- D. Establishment of a global logistics supply chain system
  - In addition to strengthening the status of global manufacturing, research and development, and the logistics center, the Group is also actively utilizing production advantages and research and development factors in the Greater China economic circle in order to construct a real time co-working platform with high efficiency and a market feedback mechanism, and together with the setup of a research and development innovation center, we will enhance technology and product design innovation capability.
(2) Unfavorable factors
- A. Since manufacturers in our country cannot sufficiently supply some important key components, and we still rely on supply from overseas manufacturers, controlling both material sources and price is not easy; for example, a significant natural disaster can easily cause a supply chain disruption crisis.
  - Solution: The Company has long-term cooperative and strategic ally relationships with major suppliers and has established multiple supply sources for important components to ensure sufficient component supply; we also seek all kinds of approaches to integrate the supply chain and reduce the impact.
- B. The prices of important components have dropped rapidly, causing low price computers to quickly extend, and supply manufacturers and brand manufacturers are

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dominating the formulation of industry standards and mastering the distribution channels, thus compressing the profits of downstream manufacturers.

Solution: In addition to being dedicated to the development of high added value products and all-around products, we also actively improve operation efficiency in such aspects as production, marketing, logistics, etc. to reduce operation costs and improve overall operation efficiency through constructing Enterprise Resource Planning (ERP), Supply Chain Management (SCM), and six sigma improvement strategy.

C. Industrial technology is rapidly changing and constantly updating the environment of shortening product life cycle and meager profits, causing fierce industry competition. Solution: The Group will formulate a relevant operation risk management mechanism to consider various operation strategies as relevant solutions; in addition to coordinating with customers for the research and development of relevant demanded commodities, we are also dedicated to patent and intellectual property innovation in order to strengthen Group resource integration and expand emerging business investments and arrangements to respond to changes in the market.
D. Our business is mainly export sales, so the change of exchange rate will significantly impact company revenue and profit-making.
Solution: Most of the important components of the Company are purchased and imported overseas and priced with foreign currency, and the sales are mostly priced with foreign currency, which can naturally offset the impact of change of exchange rate on revenue and cost. Furthermore, taking currency hedging measures can help us reasonably avoid exchange rate risk.

4.2.2 Important uses and production processes of major products

1. Important uses of major product

Product name	Product type	Important use
Computer products	Notebook computers, servers, and other electronic information products	Notebook computers are used for the storage, computing, and analysis of digital and character data, data transfer and receiving, etc. Through a server host machine, several computers can execute the function of computing, transfer, and data storage at the same time.

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2.Production process

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

Automatic assembly Semi-finished product assembly
SMT op eration Automatic assembly LCM semi-finished product assem Semi-finished product assembly bly
SMT operation LCM semi-finished product assembly
Test
SA operation
SA operation
test
Welding repair and troubleshooting Process inspection
Welding repair and troubleshooting
Test Process inspection
Test
Finished product assembly
Finished product
Packing Finished product
assembly Finished product assembly Image DLImage DL
shipmentFinished product
Packing
Finished product assembly shipment
Outfit assembly Process inspectionProcess inspection Outgoing quality control
Outgoing quality
Outfit assembly control
Visual inspection
Finished
Test on appearanceVisual inspection
product
Test on appearance Finished product
storage
storage
----- End of picture text -----

4.2.3 Major raw materials' supply condition

The major raw materials of the Group include central processing units, liquid crystal displays, hard disks, etc. For the stability with regard to the quality of raw materials suppliers, both delivery accuracy and quality specifications are factors in choosing suppliers. The Group maintains a good cooperative relationship with its suppliers while adopting a decentralized procurement process. We not only aim to strengthen the collection and analysis of market conditions, but also strive for timely material supply to ensure reasonable costs and sufficient material supply.

Key Material Suppliers

Item	CPU	PANEL	HDD
Suppliers	INTEL	AUO	SEAGATE
	AMD	LG	HGST
	MARVELL	INX	TOSHIBA

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4.2.4 Major Accounts in the Past Two Years

A. Major Suppliers

Unit: NT$ Thousand

		2014				2015			As of end of Q1, 2016	As of end of Q1, 2016	As of end of Q1, 2016
Item	Company	Amount	Percentage of total Net Purchases	Relationship with the issuer	Company	Amount	Percentage of total Net Purchases	Relationship with the issuer	Company	Amount	Percentage of total Net Purchases	Relationship with the issuer
1	A	161,206,331	44	Nil	A	165,344,764	50	Nil	A	39,992,440	46	Nil
2	B	50,202,590	14	Nil	B	8,366,803	3	Nil	B	383,747	0	Nil
3	Others	150,976,983	42	-	Others	154,311,850	47	-	Others	46,778,658	54	-
	Total Net Purchases	362,385,904	100	-	Total Net Purchases	328,023,417	100	-	Total Net Purchases	87,154,845	100	-
B. Major Clients
		2014				2015			As of end of Q1, 2016
Item	Company	Amount	Percentage of total Net Sales	Relationship with the issuer	Company	Amount	Percentage of total Net Sales	Relationship with the issuer	Company	Amount	Percentage of total Net Sales	Relationship with the issuer
1	C	223,243,940	51	Nil	C	239,147,943	61	Nil	C	57,504,245	60	Nil
2	D	73,012,045	17	Nil	D	12,969,145	3	Nil	D	667,545	1	Nil
3	Others	139,343,983	32	-	Others	143,353,133	36	-	Others	37,191,801	39	-
	Total Net Sales	435,599,968	100	-	Total Net Sales	395,470,221	100	-	Total Net Sales	95,363,591	100	-

4.2.5 Production Value in the Most Recent Years

Unit: 1,000 pcs, NT$ Thousand

Quantity & Value Major Product		2014	2014		2015	2015
	Capacity	Quantity	Value	Capacity	Quantity	Value
IT Product	414,445	314,888	353,989,199	522,641	350,125	311,481,323
Solar Product	211,432	196,959	12,201,048	282,540	268,699	12,832,227
Total	625,877	511,847	366,190,247	805,181	618,824	324,313,550

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4.2.6 Sales Value in the Most Recent Years

Unit: 1,000 pcs, NT$ Thousand

					Unit: 1,000pcs, NT$ Thousand	Unit: 1,000pcs, NT$ Thousand	Unit: 1,000pcs, NT$ Thousand	Unit: 1,000pcs, NT$ Thousand
Quantity & Value Major Product	2014				2015
	Domestic		Export		Domestic		Export
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
IT Product	17	25,064,790	311,860	399,294,489	13	21,986,826	354,234	360,580,881
Solar Product	8,046	2,514,229	165,333	8,725,474	16,849	1,673,578	250,292	11,228,698
Others	-	-	-	986	-	-	-	238
Total	8,063	27,579,019	477,193	408,020,949	16,862	23,660,404	604,526	371,809,817

4.3 Human Resources

4.3 Human	Resources
	Year	2014	2015	Up to Mar. 31, 2016
Employee Number	Direct Labor	36,128	35,702	34,107
	Indirect Labor	12,928	13,416	13,041
	Total	49,056	49,118	47,148
Average Age		25.93	27.25	27.56
Average Seniority		2.47	2.61	2.84
Education Distribution %	PhD Degree	0.10%	0.12%	0.12%
	Master Degree	3.06%	3.79%	3.83%
	College	24.72%	26.50%	26.96%
	High School (and below)	70.67%	69.59%	69.09%

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4.4 Information on Environmental Protection Costs

4.4.1 The total amount of loss (including compensation) and punishment suffered from polluting the environment

In recent years and as of the date of publication, the Company has not suffered loss or punishment due to polluting the environment.

4.4.2 Future solutions (including improvement measures) and possible expenditures

In view of global green movements and the new wave of Internet technology innovation, Inventec actively promotes the "Green energy environmental protection" strategy, mastering the low carbon trend and developing towards a green economy. In addition to formulating the social responsibility policy of "environmental protection, culture, poverty relief, and community" as the foundation for promotion, Inventec has also set "Green product", "Green production", and "Green life" as environment and quality objectives in order to meet the expectations of each interested party. Inventec has been continuously adhering to the environment and quality policies and sustainable projects formulated, as well as implementing a series of plans. In 2015, the cost of relevant environmental protection expenditures of Inventec was approximately NTD118.5 million, which mainly included waste disposal, maintenance of pollution control equipment, environment detection, ecological afforestation, green management system validation, product environmental protection mark certification, environmental education, energy saving and carbon reduction projects, environmental preservation activities, occupational health, and green supply chain management, among others.

In order to comply with corporate sustainable development and social responsibility, Inventec is constantly optimizing the existing comprehensive green management system. It takes the circulation of PDCA (Plan, Do, Check, Action) in the ISO 9001 quality management system as the basis to gradually optimize all kinds of green management systems, such as ISO14001 environmental management system, IECQ QC 080000 hazardous substance process management system, ISO 14064-1 greenhouse gas management system, ISO 50001 energy management system, TOSHMS, OHSAS 18001, and other safety, health, environment, and energy management systems.

In response to the demands of the government, customers, and international investment institutions on low carbon economies, Inventec has actively arranged the green energy industry and continuously pursues the reduction of the impact of products on the environment through green research and development, implementing green plants, enhancing energy saving and water saving, reducing production energy consumption, disclosing environmental information, etc. Regarding environmental sustainability, Inventec strives to break through the current situation while reducing long-term operation cost. Since 2012, Inventec has set up a solar energy power generation cleaning device in its Pudong Plant, which began operation in 2013. The solar energy power generation made available is 3.2 million degrees of electricity every year, which accounted for approximately 1.54% of the total power consumption in nine of Inventec’s major plants.

Saving energy and improving equipment energy efficiency have always been major directions

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of Inventec. Over the years, Inventec has been devoted to energy saving and carbon reduction and green energy environmental protection and finally achieved the phased goal in green building in March 2016, showing our determination to attach importance to green energy environmental protection and caring for the earth.

In response to the issue of global energy depletion and climate change and to fulfill our responsibility as corporate citizens, Inventec has set medium and long-term reduction goals, namely "Take 2010 as the benchmark, reduce greenhouse gas emissions by 10% by 2020", in the hope of making certain contributions to the green economy and mitigating climate change. The "Inventec Group 2015 Greenhouse Gas Inventory Report" has been disclosed on the company website. Inventec has imported a greenhouse gas inventory system since 2008, and so far, it has completed nine years (from 2007 to 2015) of greenhouse gas inventory operations. Meanwhile, in order to optimize inventory operation, in 2011, Inventec’s GHG Portal was set up, which allows all inventory operations and the verification of third party certification units to be completed in the platform, effectively improving inventory quality and efficiency, and reducing unnecessary manual operation time and manual mistakes in order to achieve the effect of energy saving and carbon reduction. In 2015, the total greenhouse gas emissions of Inventec and Inventec Appliances Corp.’ major plants was 270,564.911 tonnes of carbon dioxide; the main emission originated from purchasing electricity externally, accounting for 93.58% of total emissions, an increase of 8,288.13 tonnes of carbon dioxide compared to the 262,276.781 tonnes of emissions in 2014. The main reason for increase was the expansion of production capacity in Chongqing Plant of Inventec and Nanjing Plant of Inventec Appliances Corp..

In order to spread Inventec's green enterprise influence, Inventec actively promotes the green supply chain and holds Taiwan and mainland China supplier environmental protection conferences through all kinds of assistance and integration with suppliers in order to propagate the requirements related to conflict minerals, carbon marks, biodiversity etc. to its cooperating supply partners, with the hope of making certain contributions to mitigate global warming.

Inventec has been devoted to environmental and ecological protection for a long time. In response to the implementation of the "Environmental Education Act", in addition to amending the company "Code of Corporate Social Responsibility", constructing an environmental education workplace, and implementing educational training on environmental management, Inventec also adopts community parks, holds community environmental protection lectures, and participates in the preservation of the important national wetland "Kwan-tu Nature Park". Since 2012, Inventec and Inventec Group Charity Foundation has adopted the important national wetland "Kwan-tu Nature Park" with the five-year plan of "Love ‧ Happiness - Let us care for the ecological environment on earth together". Through the company environmental protection volunteers' participation in wetland maintenance, we hope to enable more citizens and children to understand the function and importance of wetlands and properly care for such precious land in order to maintain biodiversity. With regard to ecological education, in order to let children from the community’s disadvantaged families learn about wetlands, Inventec has continuously cooperated with Kwan-tu Nature Park to hold the "Aquatic Family Nature Exploration Experience Course" to promote ecological conservation, which allows children with a lack of resources to cultivate proper

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concepts and actions to protect Taiwan’s wetlands. In 2015, a total of eight courses were held, benefitting 240 school children.

4.5 Labor Relations

Attaching importance to and maintaining harmonious labor-capital relationships has always been one of the important foundations of the company’s operation and management; measures that promote labor-capital relationships are summarized below:

4.5.1 Welfare measure and retirement system

Provide a stable working environment with development space, make talents stable, and continue to create value! Based on government laws and decrees, the Company provides all kinds of proper basic labor conditions to employees, including two-day weekends, a flexible working hours mechanism, and a thorough ask for leave system. We also periodically hold soft incentive lectures so that employees can obtain a balance between life and work. With regard to safety and health and job security, in addition to basic welfares, such as labor insurance, health insurance, pension allocation etc., every employee enjoys regular health examinations and is insured with complete group insurance. Pursuant to the standards of the "Labor Pension Act", we have also formulated thorough employee retirement programs and actually implement them pursuant to the relevant laws and decrees. The old system part: we regularly allocate reserves for labor retirement and deposit them into a special account in the Bank of Taiwan, and the Labor Pension Supervision Committee is responsible for managing and utilizing the reserve for retirement; the new system part: for employees choosing the new system, every month, the Company will allocate 6% of pension to the employee's personal special account in the Bureau of Labor Insurance, Council of Labor Affairs, liberating employees from any worry at work. Furthermore, we have created performance-oriented promotion, dividends, and all kinds of reward mechanisms to achieve the objective of retaining talents and profit-sharing.

4.5.2 Work environment and employee personal safety protection measures

Within the Company, the Industrial Safety and Health Office is responsible for planning all kinds of safety, health, and environment management matters and supervising relevant departments in implementing and executing all kinds of safety, health, and environment affairs. Furthermore, the Company has created an Occupational Safety and Health Committee pursuant to law, which works on such matters as safety and health related regulations, an occupational safety and health management system, an educational training implementation plan, preventing hazardous equipment or raw materials, operating environmental monitoring and improvements, occupational health management, health promotion, health protection, etc., which will be planned, promoted and propagated by a dedicated work, safety, and health unit in each department for implementing and executing relevant matters. Furthermore, in order to ensure employee safety and health, we have formulated the "Occupational Safety and Health Policy" to focus on occupational safety and health related matters, actively carry out occupational safety and health education, prevent the occurrence of occupational disasters, promote a healthy workplace, facilitate employee health, and establish good communication

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and consulting channel to effectively carry out continuous improvement in order to reduce the risk of all kinds of hazards and let all employees work peacefully in a safe professional environment.

Regarding safety, health, and environmental management, the Company has acquired all kinds of certifications in safety, health, and environment energy systems, including "TOSHMS Taiwan Occupational Safety and Health Management System", "OHSAS-18001 International Occupational Health and Safety Assessment Series", "ISO-14001 Environmental Management System", and "ISO-50001 Energy Management System" certification. Furthermore, the Company has also won all kinds of awards issued by the government, including: the "Health Excellence Award" for a Taipei City excellent healthy workplace, "Health LOHAS Award" and "Health Sustainability Award" for a national excellent healthy workplace, "No Smoking Workplace Model", "Excellent Independent Management Unit", "Blood Donation Excellence Unit", "General Industry Excellent Independent Management Unit", "Excellent Breastfeeding Room Certification", "Healthy Workplace Independent Certification - Health Promotion Mark", "Labor Safety Award", "Carbon Reduction Model Award", "Corporate Social Responsibility Award", "Energy Saving and Carbon Reduction Action Badge", "Environmental Sustainability Award", "Excellent Unit in Labor Safety and Health Promotion", "Excellent Unit in Hazard-Free Working Hour Implementation", "Excellent Employee Welfare Business Unit", "Labor Safety and Health - Five Star Award", etc. In 2014, we won Taipei City’s "Labor Safety Excellent Unit - Enterprise Award", the national "Labor Safety and Health Excellent Unit Award", the Ministry of the Interior’s "Blood Donation Excellent Enterprise Award", the National Health Service, Executive Yuan’s "Healthy Workplace Certification - Health Promotion Badge", "ROC Enterprise Environmental Protection Award", and "2014 Taiwan Enterprise Sustainability Award - Gold Award". In 2015, we won the Ministry of Labor, Executive Yuan’s "Labor Safety Excellent Unit Award", "Certificate of Merit for Hazard-Free Working Hour Record", Commonwealth Magazine’s "World Corporate Citizenship Award", the Ministry of Labor, Executive Yuan’s "National Excellent Occupational Safety and Health Unit Award", the Environmental Protection Administration, Executive Yuan’s "Enterprise Environmental Protection Award", and Taiwan Sustainable Energy Foundation’s "Taiwan Corporate Sustainability Report Award". Meanwhile, we have also actively coordinated with all kinds of government policies to promote and participate in relevant activities in order to further facilitate good and harmonious labor-capital relationships, fulfill our corporate social responsibility, and move towards the objective of corporate sustainable development.

Occupational safety and health policy: The Company has formulated its Occupational Safety and Health Policy according to the requirements of the Taiwan Occupational Safety and Health Management System (TOSHMS) and International Occupational Health and Safety Assessment Series (OHSAS 18001), taking them as the highest criteria for guaranteeing employees’ work safety.
Occupational safety and health management unit and personnel allocation: In order to comply with laws and regulations to carry out risk assessment and continuous improvements, the Industrial Safety and Health Office, as a whole, plans to handle and execute all kinds of safety, health, and environment management related affairs. All members possess safety, health, and environment professional certificates.

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Setting of Occupational Safety and Health Committee and conference convening: The Company will regularly convene the Occupational Safety and Health Committee conference; it is currently convened once every quarter, so four times a year.
Safety, health and environment management plan and occupational disaster prevention: Safety, health, and environment management plans are formulated pursuant to law and include occupational disaster prevention. Items that are planned to be formulated include: working environment or operation hazard identification, assessment and control, hazardous chemicals classification and marking, general education and management, purchase management, contractor management, safety and health operational standard formulation, occupational disaster, near miss and investigation, handling and statistical analysis on events affecting physical and psychological health, safety, health, and environment management records, performance assessment measures, etc.
Health management plan and physical health examinations: Before reporting to the Company, new employees shall provide a physical examination report pursuant to law; moreover, better than what is required by regulations, in-service personnel will regularly receive health examinations every year.
Automatic safety and health inspection: Pursuant to the Occupational Safety and Health Act, the Company will automatically include each machine and piece of equipment that should be inspected in the occupational safety and health management plan and formulate automatic inspection management measures for management.
Operating environment monitoring and occupational disease prevention measures: Based on the operating environment hazard property of the Company, as well as monitoring purpose and relevant guidance announced by the central governing authority, the Company has formulated an operating environment monitoring plan that includes a sampling strategy and regularly carrying out operating environment monitoring accordingly. Meanwhile, we also conduct results comparisons according to test results; if the test data is relatively higher than the previous test data, we will immediately carry out a risk identification investigation in order to reduce site hazards and achieve the objective of preventing occupational disease and reducing site risk.
Strengthen contracting management: The Company has formulated contractor safety operation management measures and requires the engineering unit to carry out contractor safety and health educational training before starting engineering construction. Relevant units will convene contractor safety and health management conferences to carry out hazard notification and ask suppliers to sign the "Contracting Unit/Contractor Safety and Health Meeting Minutes", "Contractor Safety and Health Management Commitment", and "Contractor In-plant Work Application" of the Company. Upon engineering construction, the contractor shall follow all kinds of operation management measures of the Company, and the occupational safety and health unit will execute contractor safety appraisal and abnormal deficiency analysis, as well as execute prevention education according to the appraisal and analysis results in order to ensure reduction of risks that might be caused by contracting construction.
Hazard risk assessment identification: Pursuant to the Taiwan Occupational Safety and Health Management System "TOSHMS" and International Occupational Health and

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Safety Assessment Series "OHSAS 18001", the Company has formulated safety and health hazard risk identification and assessment management measures, regularly execute comprehensive hazard identification and risk assessment operations according to all kinds of potential factors that may cause personnel injury or accident, and further formulate occupational safety and health targets, objects, and management plans as the basis for planning the safety and health management system.

Occupational safety and health management plan: According to the results of the occupational safety and health hazard identification and risk assessment, the Company will give priority to certain high risk activities as improvement targets and regularly trace the improvement effect by carrying out the management plan.
Safety and health educational training promotion: The Company will carry out safety, health, and environment management and educational training for new employees; educational training on safety, health, and environment risk identification, management plan, laboratory education, laws and regulations, special operations, system documents, internal audits, etc. will be otherwise given to key safety, health, and environment members and relevant personnel in order to reduce the occurrence of occupational disasters and ensure workplace safety.
The Company will regularly carry out fire lecturing and fire drills, emergency evacuation drills, and fire tour inspections, regularly check all kinds of safety facilities, and conduct task grouping and fire equipment drills to implement disaster prevention and relief work.
Product development and design shall emphasize environmental issues and are aimed at the advantages of low energy consumption, low pollution, recoverable, and recyclable. Furthermore, energy saving and carbon reduction matters will be carried out to reduce waste generation and the impact on the environment in order to achieve the objectives of zero public hazard, diligent waste reduction, green products, and ecological preservation, thus fulfilling our corporate responsibility and promoting sustainable environmental protection.
The Company respects the life of laborers and emphasizes the health of colleagues by effectively carrying out occupational health promotion activities and implementing health management; furthermore, the Company is devoted to zero disaster related prevention work to maintain zero disasters and care for its employee in order to improve its healthy corporate image and move towards a healthy and sustainable workplace.

4.5.3 Further education and training for employees

The Company adheres to a "talent-oriented" cultivation philosophy, provides outstanding internal and external teachers and diversified cultivation channels to company talents, and is devoted to balancing the emphasis on educational training and learning development in order to continuously promote the Company’s corporate culture and continuously improve its competitive advantage. In 2015, the expenditures related to employee training were NT$10,775,149, and the total training hours were 56,756 hours.

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"Talent cultivation" is the foundation for Inventec's sustainable operation, and the Company continuously creates a friendly environment for employee's learning and growth. The educational training system of the Company is divided into five major types of courses centered on core value courses and delivers the corporate culture and value theory of Inventec. Taking level type course and function type course as the two major axis, the Company teaches employees in accordance with their aptitude, specifically plans personal development plan for employee's career development, and assists colleagues to strengthen the capabilities required at work. The language school provides further language education opportunities to the employees to improve their personal competitive advantage; digital courses provide a diversified learning environment, which allows colleagues to learn anytime, anywhere. Course descriptions are summarized below:

(1) Core value course: Inventec pursues the maximization of shareholders' equity while implementing corporate responsibility to make a certain contribution to society. All the Company’s colleagues, from top to bottom and from inside out, have been shaped with "Inventec" DNA through official conferences and activities, allowing employees to acknowledge the operation philosophy of the company and become "Inventec Staff". Contents include such courses and activities as monthly meetings, assistant level meetings, management forums, strategic meetings, soft/incentive lectures, team building exercises, etc.
(2) Level type course: Management courses are planned according to the demand of colleagues at different levels; through meetings and daily communication, it improves the colleagues' management capability and establishes a common communication language and management beliefs to improve organizational performance. Contents include: Inventec EMBA advanced class, senior supervisor training, advanced supervisor training, basic supervisor training, professional training, new employee training, production personnel training, etc.
(3) Function type course: These provide all kinds of professional knowledge and technical bases, as well as advanced courses and lectures, to satisfy the functions of employees needed in different specialties. Contents include innovation, product technology, research and development production technology, patent and intellectual property, industry intelligence, environmental safety and health, etc.
(4) Language school: In response to international development and the competition of the Group, Inventec has been devoted to cultivating technology talents with multi-language capabilities. English and Japanese seminars are held every quarter, thus providing colleagues a learning environment for continuous language learning in the company, and foreign language skills classes are also set up to immediately satisfy colleagues' business demands. Meanwhile, internal English and Japanese tests will be held every quarter to encourage colleagues to pass the test to acquire substantial affirmation and allowance.
(5) Digital course: These provide colleagues an e-Learning on-line learning service, constructs the Inventec networking academy, and is open as an important media for employees' independent learning in order to facilitate the improvement and innovation of technical capability, as well as further promote organizational learning and improve

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work value and organizational competitiveness. Its contents cover all kinds of language, management, and professional courses, thus allowing employees to learn independently without time and place limitations.

4.5.4 Employee code of conduct

The Company has formulated "Global Employee Code of Conduct Management Measures" in each plant, which stipulate the basic code of conduct for labor and capital on the basis of fairness and impartiality. As an Inventec employee, when facing all kinds of work behaviors and ethical and legal problems, we shall aim to create shareholder and employee value and ensure social responsibility; therefore, under the precondition of following the basic requirements of laws and ethical standards of each country or district, we shall abide by all kinds of internal control systems of the company. Upon reporting for duty, every colleague must sign and abide by it, and it shall be placed on the internal portal website, so that all colleagues can read it at any time, and regularly carry out signing and promotion work; the code of conduct is hereby summarized below:

(1) Safeguard a healthy work environment without sexual discrimination.
(2) All company-related confidential information must be kept confidential.
(3) Employees must protect the personal information of other persons circulated internally or acquired upon business execution.
(4) Employees must protect intellectual property rights.
(5) Employees must abide by copyright regulations.
(6) Employees must not be involved in corruption or bribery of any kind.
(7) Employees must not participate in insider trading and avoid conflicts of interest.

In case of violation of the relevant requirements above, relevant punishment will be imposed without exception.

In order to provide all employees with a healthy, safe, and highly efficient working environment, the "Global Employee Code of Conduct Management Measures" also stipulates that no employee or applicant shall be discriminated against or deprived of talent development opportunities due to gender, age, race, color, nationality, religion, disability, or other factors irrelevant to the legal interests of Inventec. Furthermore, each plant has set up an "Employee Complaint System" to guarantee a fair arbitration mechanism when employees suffer from human rights related infringements. In the plants in mainland China, a grassroots employee caring group has been especially set up to handle employee complaints and understand the employee's voice through employee interviews, etc.

4.5.5 Labor and capital communication mechanism

Through all the communication mechanisms listed below, the Company provides employees with real-time responses and regular communication channels in order to facilitate a harmonious working atmosphere and create a win-win situation for both the labor and capital.

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(1) Two-way talks between grassroots employees and senior supervisor: quarterly meetings and all kinds of symposiums occasionally held.
(2) Management policy and business process communication: communication meetings for employee representatives from each department will be regularly held every month.
(3) Cross-department communication and labor and capital communication: an internal portal platform sets the multi-functional "Employee Opinion Exchange Area".
(4) Instant response problem and information consultation: each unit has established a service consultation window and service hot line.
(5) Employee welfare policy and welfare promotion: employee welfare committee monthly meetings and temporary meetings.
(6) Grassroots employees care group: handle employee complaints and understand the employees' voice through employee interviews, etc.

4.5.6 In recent years and as of the date of the annual report publication, losses suffered from labor dispute and disclosure of the estimated amount that are occurring currently and likely to occur in the future and the resolution

In recent years and as of the date of the annual report publication, the Company has not suffered any loss from labor disputes; it is estimated that, under the circumstances that the Company continuously and actively promotes and implements all kinds of employee welfare measures, there shall be no losses suffered from labor disputes in the future.

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4.6 Important Contracts

Contract Nature	Counterparty	Contract Term	Major Contents	Restrictions
Sales Agreement	HP Inc.	Three years from 1998/6/1; automatically renewable for one year terms	Acceptance of order and production of HP branded notebook products	The duty of confidentiality
Quality Agreement		Same as above	Production of notebook products compliant with HP quality requirements based on Sales Agreement.	The duty of confidentiality
Service and Support Agreement		Same as above	Provision of necessary components, after sales services and related technical support for HP branded notebook products made based on Sales Agreement	The duty of confidentiality
Sales Contract	Hewlett Packard Enterprise Company	Four years from 2000/12/1; automatically renewable for one year terms	Acceptance of order and production of HP branded server products	The duty of confidentiality
Quality Agreement		Same as above	Production of server products compliant with HP quality requirements based on Sales Agreement.	The duty of confidentiality
Service and Support Agreement		Same as above	Provision of necessary components, after sales services and related technical support for HP branded server products made based on Sales Agreement	The duty of confidentiality
Sales Contract	Toshiba Corporation	One year from 2002/1/1 and automatically renewable for one year terms; effective on 2004/6/1 and automatically renewable for one year terms	Acceptance of order and production of Toshiba branded notebook products	The duty of confidentiality
Service Contract		Same as above	Provision of necessary components, after sales services and related technical support for Toshiba branded notebook products made based on Sales Agreement	The duty of confidentiality
Sales Contract	Dell Prpducts L.P.	Three years from 2008/4/21; automatically renewable for one year terms	Acceptance of order and production of Dell branded notebook and server products	The duty of confidentiality

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Contract Nature	Counterparty	Contract Term	Major Contents	Restrictions
Sales Contract	Fujitsu Limited	Five years from 2007/4/1; automatically renewable for one year terms	Acceptance of order and production of Fujitsu branded computer system products	The duty of confidentiality
Quality Contract		Effective from 2007/4/1 until terminated by mutual agreement of the parties	Production of products compliant with Fujitsu quality requirements based on the contract	The duty of confidentiality
Syndicated Loans Contract	Syndicated Loans banks	Three Years from 2015/10/22	The Participantbanks agree to provide agreed credit line to Inventec Corporation during the contract term	None

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Ⅴ . Financial Information

5.1 Five-Year Financial Summary

5.1.1 Five-Year Financial Summary - Consolidated Balance Sheet – IFRS

						Unit: NT$ Thousands 01/01/2016 ~3/31/2016 2015 133,577,659 120,941,355 34,660,330 40,052,559 872,905 866,723 6,635,579 5,893,670 175,746,473 167,754,307 98,771,869 95,909,222 `－` `－` 14,075,755 8,083,002 112,847,624 103,992,224 `－` `－` 56,480,704 57,371,906 35,874,751 35,874,751 2,912,784 2,912,784 14,883,819 16,115,147 `－` `－` 2,809,350 2,469,224 `－` `－` 6,418,145 6,390,177 62,898,849 63,762,083 `－` `－`	Unit: NT$ Thousands 01/01/2016 ~3/31/2016 2015 133,577,659 120,941,355 34,660,330 40,052,559 872,905 866,723 6,635,579 5,893,670 175,746,473 167,754,307 98,771,869 95,909,222 `－` `－` 14,075,755 8,083,002 112,847,624 103,992,224 `－` `－` 56,480,704 57,371,906 35,874,751 35,874,751 2,912,784 2,912,784 14,883,819 16,115,147 `－` `－` 2,809,350 2,469,224 `－` `－` 6,418,145 6,390,177 62,898,849 63,762,083 `－` `－`
Year Item			Five-Year Financial Summary				01/01/2016 ~3/31/2016
		2011	2012	2013	2014	2015
Current Assets		121,900,414	130,970,654	168,811,543	151,098,840	133,577,659	120,941,355
Property, Plant and Equipment		38,207,206	35,238,180	34,032,310	35,073,036	34,660,330	40,052,559
Intangible Assets		1,158,928	982,226	887,259	901,392	872,905	866,723
Other Assets		12,737,205	12,029,148	10,440,024	8,628,461	6,635,579	5,893,670
Total Assets		174,003,753	179,220,208	214,171,136	195,701,729	175,746,473	167,754,307
Current Liabilities	Before Distribution	107,014,115	109,720,439	135,212,247	126,668,060	98,771,869	95,909,222
	After Distribution	108,053,963	112,590,419	140,952,207	132,946,141	`－`	`－`
Non-Current Liabilities		11,148,146	13,967,429	17,146,701	4,610,879	14,075,755	8,083,002
Total Liabilities	Before Distribution	118,162,261	123,687,868	152,358,948	131,278,939	112,847,624	103,992,224
	After Distribution	119,202,109	126,557,848	158,098,908	137,557,020	`－`	`－`
Total Equity Attributable to Owners of Parent		48,369,571	49,757,813	54,837,123	57,578,038	56,480,704	57,371,906
Share Capital		34,661,595	35,874,751	35,874,751	35,874,751	35,874,751	35,874,751
Capital Surplus		2,899,296	2,927,057	2,895,677	2,920,718	2,912,784	2,912,784
Retained Earnings	Before Distribution	9,333,792	10,246,474	14,425,431	15,773,335	14,883,819	16,115,147
	After Distribution	7,080,788	7,376,494	8,685,471	9,495,254	`－`	`－`
Other Equity Interest		1,474,888	709,531	1,641,264	3,009,234	2,809,350	2,469,224
Treasury Stock		`－`	`－`	`－`	`－`	`－`	`－`
Non-Controlling Interests		7,471,921	5,774,527	6,975,065	6,844,752	6,418,145	6,390,177
Total Equity	Before Distribution	55,841,492	55,532,340	61,812,188	64,422,790	62,898,849	63,762,083
	After Distribution	54,801,644	52,662,360	56,072,228	58,144,709	`－`	`－`

Note 1: Above financial information has been audited (review) by CPA.

Note 2: The company also compiles individual statements. The brief individual balance sheet of the recent five years is as follows.

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Five-Year Financial Summary - Individual Balance Sheet– IFRS

Unit: NT$ Thousands

Year Item	Year Item		Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary
		2011	2012	2013	2014	2015
Current Assets		76,834,419	98,042,298	156,799,371	109,949,533	91,631,494
Property, Plant and Equipment		6,423,112	6,232,467	6,030,123	5,820,213	5,739,243
Intangible Assets		56,338	62,352	75,128	86,258	56,851
Other Assets		33,291,531	30,517,611	34,040,342	37,385,215	38,286,030
Total Assets		116,605,400	134,854,728	196,944,964	153,241,219	135,713,618
Current Liabilities	Before Distribution	57,673,474	72,329,394	126,500,178	93,810,253	68,203,221
	After Distribution	58,713,322	75,199,374	132,240,138	100,088,334	`－`
Non-current liabilities		10,562,355	12,767,521	15,607,663	1,852,928	11,029,693
Total Liabilities	Before Distribution	68,235,829	85,096,915	142,107,841	95,663,181	79,232,914
	After Distribution	69,275,677	87,966,895	147,847,801	101,941,262	`－`
Total Equity Attributable to Owners of Parent		48,369,571	49,757,813	54,837,123	57,578,038	56,480,704
Share Capital		34,661,595	35,874,751	35,874,751	35,874,751	35,874,751
Capital Surplus		2,899,296	2,927,057	2,895,677	2,920,718	2,912,784
Retained Earnings	Before Distribution	9,333,792	10,246,474	14,425,431	15,773,335	14,883,819
	After Distribution	7,080,788	7,376,494	8,685,471	9,495,254	`－`
Other Equity Interest		1,474,888	709,531	1,641,264	3,009,234	2,809,350
Treasury Stock		`－`	`－`	`－`	`－`	`－`
Non-Controlling Interests		`－`	`－`	`－`	`－`	`－`
Total Equity	Before Distribution	48,369,571	49,757,813	54,837,123	57,578,038	56,480,704
	After Distribution	47,329,723	46,887,833	49,097,163	51,299,957	`－`

Note 1: Above financial information has been audited (review) by CPA.

124

5.1.2 Five Year Financial Summary-Consolidated Statement of Comprehensive Income-IFRS

Unit: NT$ Thousands

Year Item		Five-Year Financial Summary (Note2)	Five-Year Financial Summary (Note2)	Five-Year Financial Summary (Note2)	Five-Year Financial Summary (Note2)	01/01/2016~ 03/31/2016
	2011	2012	2013	2014	2015
Sales Revenues		410,937,895	461,091,703	435,599,968	395,470,221	95,363,591
Gross Profit from Operation		19,147,808	22,808,470	23,348,338	21,705,408	5,645,077
OperatingExpenses		3,606,340	7,511,866	7,109,079	5,407,268	1,865,142
Non-Operating Income and Expenses		-86,092	1,412,460	2,571,619	1,776,602	19,194
Profit before Income Tax		3,520,248	8,924,326	9,680,698	7,183,870	1,884,336
Profit for the Period		1,769,853	6,209,438	6,665,561	4,975,735	1,365,468
Loss from Discontinued Operations		`－`	`－`	`－`	`－`	`－`
Profit(Loss)for the Period		1,769,853	6,209,438	6,665,561	4,975,735	1,365,468
Other Comprehensive Income (Loss) for the Period, Net of Tax		-851,066	925,163	1,359,826	-245,620	-341,736
Total Comprehensive Income for the Period		918,787	7,134,601	8,025,387	4,730,115	1,023,732
Profit Attributable to Owners of Parent		3,253,368	7,074,172	7,097,815	5,563,633	1,231,328
Profit Attributable to Non-ControllingInterests		-1,483,515	-864,734	-432,254	-587,898	134,140
Comprehensive Income Attributable to Owners of Parent		2,400,327	8,011,952	8,455,834	5,315,880	891,202
Comprehensive Income Attributable to Non-ControllingInterests		-1,481,540	-877,351	-430,447	-585,765	132,530
Basic Earnings Per Share		0.91	1.97	1.98	1.55	0.34

Note 1: Above financial information has been audited (review) by CPA.

Note 2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.

Note 3: The company also compiles individual statements. The brief individual comprehensive income sheet of the recent five years is as follows.

125

Unit: NT$ Thousands

Year Item		Five-Year	Financial Summary`（`Note2`）`	Financial Summary`（`Note2`）`
	2011	2012	2013	2014	2015
Sales Revenues		320,807,295	369,228,630	330,784,531	289,354,169
Gross Profit from Operation		13,396,524	15,126,403	13,346,958	12,049,443
Operating Expenses		5,790,761	6,666,457	4,471,632	3,801,715
Non-Operating Income and Expenses		-1,733,261	1,894,985	4,293,281	2,781,569
Profit before Income Tax		4,057,500	8,561,442	8,764,913	6,583,284
Profit for the Period		3,253,368	7,074,172	7,097,815	5,563,633
Loss from Discontinued Operations		`－`	`－`	`－`	`－`
Profit (Loss) for the Period		3,253,368	7,074,172	7,097,815	5,563,633
Other Comprehensive Income (Loss) for the Period, Net of Tax		-853,041	937,780	1,358,019	-247,753
Total Comprehensive Income for the Period		2,400,327	8,011,952	8,455,834	5,315,880
Profit Attributable to Owners of Parent		3,253,368	7,074,172	7,097,815	5,563,633
Profit Attributable to Non-Controlling Interests		`－`	`－`	`－`	`－`
Comprehensive Income Attributable to Owners of Parent		2,400,327	8,011,952	8,455,834	5,315,880
Comprehensive Income Attributable to Non-Controlling Interests		`－`	`－`	`－`	`－`
Basic Earnings Per Share		0.91	1.97	1.98	1.55

Note 1: Above financial information has been audited (review) by CPA.

Note 2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.

126

Five-Year Financial Summary - Individual Statement of Comprehensive Income –– TW GAAP

Unit: NT$ Thousands

Year Item	Year Item		Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary
		2008	2009	2010	2011	2012
Sales revenues		350,652,991	398,133,990	349,334,999	338,417,358	320,465,451
Grossprofit from operation		12,656,398	13,992,034	14,810,141	13,738,319	14,011,124
Operatingexpenses		3,757,354	5,342,751	4,245,561	4,454,217	5,785,216
Non-operatingincome		2,443,090	591,618	1,491,969	526,124	314,736
Non-operatingexpenses		-683,167	-686,878	-1,749,887	-2,002,651	-2,083,067
Income from operations of continued segments - before tax		5,517,277	5,247,491	3,987,643	2,977,690	4,016,885
Income from operations of continued segments - after tax		5,335,433	4,612,739	3,482,413	2,425,354	3,214,562
Income from discontinued departments		`－`	`－`	`－`	`－`	`－`
Extraordinary gain or loss		`－`	`－`	`－`	`－`	`－`
Cumulative effect of accounting principle changes		`－`	`－`	`－`	`－`	`－`
Net income(loss)		5,335,433	4,612,739	3,482,413	2,425,354	3,214,562
Basic earnings per share ($) (Note 2)	Before adjustment	2.08	1.64	1.18	0.79	0.90
	After adjustment	1.89	1.56	1.18	0.76	`－`

Note 1: Above financial information has been audited by CPA.

Note 2: Earning per share is calculated according to the adjusted weighted number of shares. For capitalization with retained earnings or additional paid-in capital, it will be adjusted by the capital increase ratio. The issuance time of the shares will not be taken into consideration.

5.1.3 CPAs and Their Opinions for Most Recent 5-Year

Year	CPA Firm	CPA’S Name	Auditing Opinion	Remarks
2011	KPMG	Lin, Wan-Wan & Chen, Ying-Ju	Modified Unqualified
2012	KPMG	Lin, Wan-Wan & Chen, Ying-Ju	Modified Unqualified
2013	KPMG	Lin, Wan-Wan & Chen, Ying-Ju	Modified Unqualified
2014	KPMG	Chen, Ying-Ju & Yang, Liu-Fong	Modified Unqualified	Internal Adjustment in the AccountingFirm
2015	KPMG	Chen, Ying-Ju & Yang, Liu-Fong	Unqualified

127

5.2 Five-Year Consolidated Financial Analysis – IFRS

Item	Year	Year	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	01/01/2016~ 03/31/2016
			2011	2012	2013	2014	2015
Capital structure (%)	Debt ratio			69.01	71.14	67.08	64.21	61.99
	Ratio of long-term capital to property, plant and equipment			197.23	232.01	196.83	222.08	179.38
Solvency ( % )	Current ratio			119.37	124.85	119.29	135.24	126.10
	Quick ratio			86.86	95.08	92.95	104.37	88.91
	Times interest earned (Times)			4.00	14.48	8.74	8.86	30.84
Operating ability	Accounts receivable turnover (Times)			6.91	7.38	6.45	6.12	6.51
	Average collection period			53	49	57	60	56
	Inventory turnover (Times)			11.11	11.34	11.10	11.74	10.74
	Accounts payable turnover (Times)			5.53	5.17	4.90	5.64	5.97
	Average days in sales			32.86	32.19	32.88	31.09	34.00
	Property, plant, and equipment turnover (Times)			11.66	13.55	12.42	11.41	9.52
	Total assets turnover (Times)			2.29	2.15	2.23	2.25	2.27
Profitability	Return on total assets (%)			1.55	3.44	3.76	3.09	0.83
	Return on stockholders' equity (%)			3.18	10.58	10.56	7.82	2.16
	To pay-in Capital (%)	Operating income		10.05	20.94	19.82	15.07	5.20
		PBT		9.81	24.88	26.98	20.02	5.25
	Net profit margin (%)			0.43	1.35	1.53	1.26	1.43
	Basic earnings per share ($)			0.91	1.97	1.98	1.55	0.34
Cash flow	Cash flow ratio (%)			18.49	15.61	0.64	17.23	0.90
	Cash flow adequacy ratio (%)			Note4	Note4	Note4	Note4	Note4
	Cash reinvestment ratio (%)			0.20	0.16	-0.05	0.09	0.01
Leverage	Operating leverage			3.93	4.74	5.14	3.89	3.41
	Financial leverage			1.48	1.10	1.21	1.20	1.04

128

Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Return on stockholders' equity : The decrease in this period is mainly due to the change of product portfolio generated from market factors, which resulted in a decrease in revenue; furthermore, the depreciation of the RMB has caused the reduction of profit and loss from foreign currency exchange, thus resulting in the reduction of overall profit and loss after tax when compared with last period.
Operating income to pay-in capital ratio : The decrease in this period is mainly due to the change of product portfolio generated from market factors, which resulted in revenue reduction and a decrease in operating income.
PBT to pay-in capital ratio : The decrease in this period is mainly due to the reduction of revenue and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss before tax..
Basic earnings per share : The decrease in this period is mainly due to the reduction of revenue and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss before tax.
Cash flow ratio : The increase in this period is mainly due to the increase of cash flow in operating activities.
Cash reinvestment ratio : The increase in this period is mainly due to the increase of cash flow in operating activities.
Operating leverage : The decrease in this period is mainly due to the reduction of fixed operating expenses.

Note1: Above financial information has been audited (review) by CPA.

Note2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.

Note3: The Company compiles individual statements, analysis of financial ratio shall be disclosed.

Note4: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.

Note5: Net cash flow of operating activities is not included.

Note 6: Equations:

(1). Capital Structure:

Debt ratio ＝ Total liability ／ Total assets

Ratio of long-term capital to property, plant and equipment ＝（ Net shareholders’ equity ＋ Non-current liability ）／ Net property, plant and equipment

(2). Solvency:

Current ratio ＝ Current assets ／ Current liability

－－ Quick ratio ＝（ Current assets Inventory Prepaid expense ）／ Current liability

Times interest earned ＝ Net income before tax and interest expense ／ Interest expense of the year

129

(3). Operating ability:

Account receivable turnover ＝ Net sales ／ Average accounts receivable (including accounts receivable and notes receivable derived from business operation)

Days sales in accounts receivable ＝ 365 ／ Account receivable turnover

＝ Inventory turnover Cost of goods sold ／ Average inventory amount

＝ Account payable turnover Cost of goods sold ／ Average accounts payable (including accounts payable and notes payable derived from business operation)

Average days in sales ＝ 365 ／ Inventory turnover

Ratio of property, plant and equipment ＝ Net sales ／ Average of net property, plant and equipment

Total assets turnover ＝ Net sales ／ Average total assets

(4). Profitability:

Return on assets ＝〔 Net income (loss) ＋ Interest expense× （１－ Tax rate ）〕／ Average total assets

＝ Return on shareholders’ equity Net income (loss) ／ Net average shareholders’ equity

＝ Operating income (pre-tax income) to Paid-in Capital Ratio Operating income (pre-tax Income) ／ Paid-in Capital

Profit ratio ＝ Net income (loss) ／ Net sales

－ Basic earnings per share ＝（ Profit attributable to owners of parent Preferred stock dividend) ）／ Weighted average stock shares issued

(5). Cash flow:

Cash flow ratio ＝ Net cash flow from operating activity ／ Current liability

＝ Cash flow adequacy ratio Net cash flow from operating activity in the past 5 years ／ In the past 5 years (Capital expenditure ＋ Inventory interest ＋ Cash dividend)

Cash reinvestment ratio ＝ (Net cash flow from operating activity － Cash dividend) ／ (property, plant and equipment ＋ Long- term investment ＋ Other assets ＋ Working capital)

(6). Leverage:

＝－ Degree of operating leverage (Net operating income Variable operating cost and expense) ／ Operating income

＝－ Degree of financial leverage Operating income ／ (Operating income Interest expense)

130

Five-Year Individual Financial Analysis– IFRS

Item	Year	Year		Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)	Five-Year Financial Analysis(Note2)
			2011	2012	2013	2014	2015
Capital structure (%)	Debt ratio			63.10	72.16	62.43	58.38
	Ratio of long-term capital to property, plant and equipment			1,003.22	1,168.21	1,021.11	1,176.29
Solvency ( % )	Current ratio			135.55	123.27	117.20	134.35
	Quick ratio			133.77	123.38	116.22	133.02
	Times interest earned (Times)			16.85	40.21	32.93	36.91
Operating ability	Accounts receivable turnover (Times)			6.91	7.61	6.14	5.56
	Average collection period			53	48	59	66
	Inventory turnover (Times)			228.12	355.62	362.84	307.45
	Accounts payable turnover (Times)			5.58	4.09	3.72	5.00
	Average days in sales			1.60	1.03	1.01	1.19
	Property, plant, and equipment turnover (Times)			51.47	61.23	56.83	50.42
	Total assets turnover (Times)			2.38	1.87	2.16	2.13
Profitability	Return on total assets (%)			2.75	4.37	4.18	3.96
	Return on stockholders' equity (%)			6.63	13.53	12.63	9.76
	To pay-in Capital (%)	Operating income		16.14	18.58	12.46	10.60
		PBT		11.31	23.86	24.43	18.35
	Net profit margin (%)			1.01	1.92	2.15	1.92
	Basic earnings per share ($)			0.91	1.97	1.98	1.55
Cash flow	Cash flow ratio (%)			11.90	Note3	8.67	23.40
	Cash flow adequacy ratio (%)			Note4	Note4	Note4	Note4
	Cash reinvestment ratio (%)			0.12	Note3	0.04	0.14
Leverage	Operating leverage			2.41	4.37	6.02	4.01
	Financial leverage			1.05	1.03	1.07	1.05

131

Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Accounts payable turnover : The decrease in this period is mainly due to the reduction of payment for materials payable by interested parties, thus increasing the turnover rate of accounts payable.
Return on stockholders' equity : The decrease in this period is mainly due to the reduction of revenue and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss after tax.
PBT to pay-in capital ratio : The decrease in this period is mainly due to the reduction of revenue and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss after tax.
Basic earnings per share : The decrease in this period is mainly due to the reduction of revenue and profit and loss from foreign currency exchange, thus resulting in the reduction of profit and loss after tax.
Cash flow ratio : The increase in this period is mainly due to the increase of cash flow in operating activities.
Cash reinvestment ratio : The increase in this period is mainly due to the increase of cash flow in operating activities.
Operating leverage : The decrease in this period is mainly due to the reduction of fixed operating expenses.

Note 1: Above financial information has been audited (review) by CPA.

Note 2: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.
Note 3: Net cash flow of operating activities are not included.
Note 4: If the adoption of IFRS for the financial information is less than five years, the ROC GAAP financial information shall be disclosed.

132

Five-Year Consolidated Financial Analysis– TW GAAP

Five-Year Consolidated Financial Analysis– TW GAAP	Five-Year Consolidated Financial Analysis– TW GAAP	Five-Year Consolidated Financial Analysis– TW GAAP
Year Item				Five-Year Financial Analysis
			2008	2009	2010	2011	2012
Capital structure (%)	Debt ratio		63.59	67.09	60.85	58.33	62.94
	Ratio of long-term capital to property, plant and equipment		979.99	818.51	789.51	1,115.63	1,221.60
Solvency ( % )	Current ratio		142.81	133.51	135.45	134.04	136.37
	Quick ratio		141.07	131.82	132.83	131.26	134.58
	Times interest earned (Times)		19.99	50.00	28.71	16.16	16.70
Operating ability	Accounts receivable turnover (Times)		6.40	6.34	6.15	6.83	6.91
	Average collection period		57	58	59	53	53
	Inventory turnover (Times)		385.21	427.11	291.92	229.60	227.42
	Accounts payable turnover (Times)		7.11	7.03	6.65	7.41	5.57
	Average days in sales		0.95	0.85	1.25	1.59	1.60
	Property, plant, and equipment turnover (Times)		74.00	67.63	59.32	65.72	64.41
	Total assets turnover (Times)		3.31	3.24	3.37	2.91	2.38
Profitabi- -lity	Return on total assets (%)		5.79	4.11	3.18	2.35	2.73
	Return on stockholders' equity (%)		14.21	11.67	8.59	5.45	6.54
	To pay-in Capital (%)	Operating income	14.67	18.94	14.33	12.85	16.13
		PBT	21.54	18.60	13.46	8.59	11.20
	Net profit margin (%)		1.52	1.16	1.00	0.72	1.00
	Basic earnings per share ($)		1.89	1.56	1.18	0.76	0.90
Cash flow	Cash flow ratio (%)		Note3	Note3	17.90	14.96	11.90
	Cash flow adequacy ratio (%)		54.71	49.82	80.29	77.93	94.84
	Cash reinvestment ratio (%)		Note3	Note3	0.15	0.09	0.12
Leverage	Operating leverage		3.00	2.66	2.85	2.67	2.36
	Financial leverage		1.09	1.02	1.04	1.05	1.05

133

Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Accounts payable turnover: In this period, due to the improvement of gross profit and the decrease of sales costs, the turnover rate of accounts payable has decreased.
Operating income to pay-in capital ratio: In this period, due to the increase of gross profit margins and reduction of operating costs, the proportion of operating income in paid-up capital has increased.
Pre-tax income to issued capital ratio: The increase of proportion of net profit before tax in paid-up capital is mainly due to certain increases in operating income.
Net profit margin: The increase of the net profit ratio is mainly due to the increase of operating income in this period.
Cash flow ratio:This decrease is mainly due to the increase of current liabilities - accounts payable in this year.
Cash flow adequacy ratio:In the past three years, the operating cash flow has been increasing when compared with the previous year, thus increasing the cash flow adequacy ratio.
Cash reinvestment ratio: The increase of the cash reinvestment ratio compared to last year is mainly due to the long-term investment amount in this year decreasing when compared with last year.
Note 1: Earning per Share is calculated according to the adjusted weighted number of shares. For capitalization with retained earnings or additional paid-in capital, it will be adjusted by the capital increase ratio. The issuance time of the shares will not be taken into consideration.

Note 2: Above financial information has been audited by CPA.

Note 3: Net cash flow of operating activities are not included.

Note 4: The calculation of inventory turnover is mainly based on the inventory in Taiwan.

Note 5: Equations:

1 、 Capital Structure:

Debt ratio ＝ Total liability ／ Total asset

Ratio of long-term capital to fixed assets ＝（ Net shareholders’ equit ＋ Long-term liability ）／ Net fixed assets

2 `、` Solvency:

Current ratio ＝ Current assets ／ Current liability

－－ Quick ratio ＝（ Current assets Inventory Prepaid expense ）／ Current liability

Times interest earned ＝ Net income before tax and interest expense ／ Interest expense of the year

3 `、` Operating ability:

Account receivable turnover ＝ Net sales ／ Average accounts receivable (including accounts receivable and notes receivable derived from business operation)

Days sales in accounts receivable ＝ 365 ／ Account receivable turnover

＝ Inventory turnover Cost of goods sold ／ Average inventory amount

134

＝ Account payable turnover Cost of goods sold ／ Average accounts payable (including accounts payable and notes payable derived from business operation)

Average days in sales ＝ 365 ／ Inventory turnover

Fixed assets turnover ＝ Net sales ／ Net fixed assets

Total assets turnover ＝ Net sales ／ Total assets

4 `、` Profitability:

Return on assets ＝〔 Net income (loss) ＋ Interest expense× （１－ Tax rate ）〕／ Average total assets ＝ Return on shareholders’ equity Net income (loss) ／ Net average shareholders’ equity

Operating income (pre-tax Income) to Paid-in Capital Ratio ＝ Operating income (pre-tax Income) ／ Paid-in Capital Profit ratio ＝ Net income (loss) ／ Net sales

－ Basic earnings per share ＝﹙ Net income Preferred stock dividend ﹚／ Weighted average stock shares issued

5 `、` Cash flow:

Cash flow ratio ＝ Bet cash flow from operating activity ／ Current liability

＝ Cash flow adequacy ratio Net cash flow from operating activity in the past 5 years ／ In the past 5 years （ Capital expenditure ＋ Inventory interest ＋ Cash dividend ）

－ Cash reinvestment ratio ＝（ Net cash flow from operating activity Cash dividend ）／（ Fixed assets ＋ Long-term investment ＋ Other assets ＋ Working capital ）

6 `、` Leverage:

＝－ Degree of operating leverage (Net operating income Variable operating cost and expense) ／＝－ Operating income Degree of financial leverage Operating income ／ (Operating income Interest expense)

135

5.3 Supervisors’ Report or Audit Committee’s Review Report in the Most Recent Year

Supervisors' Review Report

Date: Apr. 28, 2016

The Board of Directors has prepared and submitted to us the Company’s 2015 financial statements which have been audited and certified by Chen Ying Ju and Yang Liu Fong of KPMG Certified Public Accountants, along with Company's business report and earnings distribution proposals. We, the Supervisors, have duly examined the same as correct and accurate. We hereby report to the 2016 Annual General Shareholders Meeting in accordance with Article 219 of the Company Act for your review.

Inventec Corporation

Supervisor : Wang, Ping-Hui

Supervisor : Cheng, Hsien-Ho

Supervisor : Shyh Shiunn Investment Corp.

(Representative :Yang, Chiung-Nan)

5.4 Consolidated Financial Statements with Subsidiaries Audited by CPA

Please refer to Appendix Ⅰ , page 178.

5.5 The Effect on Company or its Affiliates have Experienced Financial Difficulties: None

136

VI. Review of Financial Conditions, Operating Results, and Risk Management

6.1 Analysis of Financial Status

6.1.1. Consolidated

Unit: NT$Thousand

6.1.1. Consolidated			Unit: NT$Thousand	Unit: NT$Thousand
Year Item	2015	2014	Difference
			Amount	%
Current assets	133,577,659	151,098,840	-17,521,181	-11.60%
Property, plant and equipment	34,660,330	35,073,036	-412,706	-1.18%
Intangible assets	872,905	901,392	-28,487	-3.16%
Other assets	6,635,579	8,628,461	-1,992,882	-23.10%
Total assets	175,746,473	195,701,729	-19,955,256	-10.20%
Current liabilities	98,771,869	126,668,060	-27,896,191	-22.02%
Non-current liabilities	14,075,755	4,610,879	9,464,876	205.27%
Total liabilities	112,847,624	131,278,939	-18,431,315	-14.04%
Share capital	35,874,751	35,874,751	-	0.00%
Capital surplus	2,912,784	2,920,718	-7,934	-0.27%
Retained earnings	14,883,819	15,773,335	-889,516	-5.64%
Total equity attributable to owners of parent	56,480,704	57,578,038	-1,097,334	-1.91%

Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Other assets: caused by the reduction of advance payments and long-term prepaid rents.
Current liabilities: the decrease in this period is mainly due to the newly added syndicated loan case, which is used for enriching working capital and repaying due bank borrowings.
Non-current liabilities: mainly caused by the newly added syndicated loan case being classified as long-term borrowing.

137

6.1.2. Individual

Unit: NT$Thousand

6.1.2. Individual			Unit: NT$Thousand	Unit: NT$Thousand
Year Item	2015	2014	Difference
			Amount	%
Current assets	91,631,494	109,949,533	-18,318,039	-16.66%
Property, plant and quipment	5,739,243	5,820,213	-80,970	-1.39%
Intangible assets	56,851	86,258	-29,407	-34.09%
Other assets	38,286,030	37,385,215	900,815	2.41%
Total assets	135,713,618	153,241,219	-17,527,601	-11.44%
Current liabilities	68,203,221	93,810,253	-25,607,032	-27.30%
Non-current liabilities	11,029,693	1,852,928	9,176,765	495.26%
Total liabilities	79,232,914	95,663,181	-16,430,267	-17.18%
Share capital	35,874,751	35,874,751	0	0.00%
Capital surplus	2,912,784	2,920,718	-7,934	-0.27%
Retained earnings	14,883,819	15,773,335	-889,516	-5.64%
Total equity	56,480,704	57,578,038	-1,097,334	-1.91%

Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Intangible assets: caused by disposing part of the intangible assets in the current period.
Current liabilities: the decrease in this period is mainly due to the newly added syndicated loan case, which is used for enriching working capital and repaying due bank borrowings.
Non-current liabilities: mainly caused by the newly added syndicated loan case being classified as long-term borrowing.

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6.2 Analysis of Operation Results

6.2.1 Consolidated

6.2.1 Consolidated
			Unit:	NT$Thousand
Year Item	2015	2014	Amount changed	Change percentage (%)
	Amount	Amount
Gross Sales Revenue	395,470,221	435,599,968	-40,129,747	-9.21%
Less`：`Sales Discounts and Allowances	-	-	-	-
Net Sales Revenue	395,470,221	435,599,968	-40,129,747	-9.21%
OperatingCosts	-373,764,813	-412,251,630	38,486,817	-9.34%
Gross Profit from Operation	21,705,408	23,348,338	-1,642,930	-7.04%
OperatingExpense	-16,298,140	-16,239,259	-58,881	0.36%
OperatingProfit	5,407,268	7,109,079	-1,701,811	-23.94%
Non-operatingIncome and Expense	1,776,602	2,571,619	-795,017	-30.92%
Income from Operations of continued segments - before tax	7,183,870	9,680,698	-2,496,828	-25.79%
Less: Income Tax(Expense)	-2,208,135	-3,015,137	807,002	-26.77%
Profit attributable to owners ofparent	5,563,633	7,097,815	-1,534,182	-21.61%
Profit attributable to non-controlling interests	-587,898	-432,254	-155,644	36.01%
Income from Operations of continued segments - after tax	4,975,735	6,665,561	-1,689,826	-25.35%

Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Operating Profit: market factors affecting the change of product portfolio have caused revenue reduction, thus also reducing the operating profit.
Non-operating Income and Expense: the reduction in the current period is mainly caused by losses from RMB depreciation in foreign currency exchange..
Income from Operations of continued segments-before tax: mainly caused by revenue reduction and a decline in non-operating income and expenses.
Income Tax Expense: it is mainly due to the decrease of net profit, which causes the reduction of income tax expenses; furthermore, the Company has also strengthened tax planning to reduce the effective tax rate.
Profit attributable to owners of parent: caused by revenue reduction and a decline in non-operating income and expenses.
Profit attributable to non-controlling interests: mainly caused by the reduction of the net profit of invested companies.
Income from Operations of continued segments-after tax: caused by revenue reduction and a decline in non-operating income and expenses.

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Individual

Individual
			Unit: NT$Thousand
Year Item	2015	2014	Amount changed	Change percentage (%)
	Amount	Amount
Gross Sales Revenue	289,354,169	330,784,531	-41,430,362	-12.52%
Less`：`Sales Discounts and Allowances	-	-	-	-
Net Sales Revenue	289,354,169	330,784,531	-41,430,362	-12.52%
OperatingCosts	-277,304,726	-317,437,573	40,132,847	-12.64%
Gross Profit from operation	12,049,443	13,346,958	-1,297,515	-9.72%
Less`：`Unrealized Profit(Loss) from Sales	-15,615	-12,315	-3,300	26.80%
Plus`：`Realized Profit(Loss) from Sales	12,315	16,869	-4,554	-27.00%
Realized Gross Profit from operation	12,046,143	13,351,512	-1,305,369	-9.78%
OperatingExpense	-8,244,428	-8,879,880	635,452	-7.16%
OperatingProfit	3,801,715	4,471,632	-669,917	-14.98%
Non-operatingIncome and Expense	2,781,569	4,293,281	-1,511,712	-35.21%
Income from operations of continued segments - before tax	6,583,284	8,764,913	-2,181,629	-24.89%
Less: Income Tax Expense	-1,019,651	-1,667,098	647,447	-38.84%
Income from operations of continued segments - after tax	5,563,633	7,097,815	-1,534,182	-21.61%

Analysis of financial ratio changed in the last two years. (If the difference does not exceed 20%, the analysis is not required.)

Unrealized Profit (Loss) from Sales: mainly caused by customers’ delay in picking up goods at the end of the year.
Realized Profit (Loss) from Sales: the inventory from previous delivery to affiliated companies has been sold to customers in the current period.
Non-operating Income and Expense: the decrease in this period is mainly due to the decrease of income from investments recognized by the Equity Method.
Income from Operations of continued segments-before tax: mainly caused by revenue reduction and a decline in non-operating income and expenses.
Income Tax Expense: it is mainly due to the decrease of net profit, which causes the reduction of income tax expenses; furthermore, the Company has also strengthened tax planning to reduce the effective tax rate.
Income from operations of continued segments-after tax: mainly caused by revenue reduction and a decline in non-operating income and expenses.

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6.2.2 Expected sales volume and its basis

In 2015, the decline in emerging market demand and environmental turbulence in Europe impacted the consuming intentions of the general public, in addition to Win10 not driving the market demand to change machines, the global personal computer market experienced a recession. Furthermore, the tablet PC market was affected by continuously larger mobile phone sizes, which have replaced the status of small tablets, and no innovative product attracted consumers; therefore, tablet PCs experienced their first negative growth since their launch. In 2015, the shipment volume of global notebook computers was approximately 164.4 million computers, with an annual decline rate of almost 6.3%. In 2016, in general, the decline rate of notebook computers will slow compared to 2015. In 2016, with the launch of the new platform Intel Skylake, and driven by brand dealers actively importing minimized E-sports products to satisfy the niche market demand, the decline rate is expected to lessen. With the gradual growth slowdown of personal computer products, the Company has been recently devoted to seeking product innovation, such as the Internet of Things (IoT), virtual reality related applications, etc. with the hope of deploying the production capacity of declining demand and bringing continuous growth momentum to personal computer products.

Regarding global servers, the expansion of public clouds and the rise of private clouds both drive the growth of server demand. In 2015, the overall server market emerged as a rising trend. Looking toward the future, the boom of the Internet of Things in recent years has driven the server demand. Through the computing demand of the data center and the emerging market demand, the market scale will continue to grow. The Institute for Information Industry MIC estimates that the global server market in 2016 will grow by 6.8% when compared with 2015.

Affected by manufacturers in China, the solar energy industry continued to have a supply that exceeded demand in the first half of 2015. However, with the elimination of uncertain factors of the U.S. double negative survey, China approved a policy to raise installation targets and achieve the objective of carbon, fog, and haze reduction, and, together with India, established solar energy power generation on a large scale to improve basic electric power construction. The solar energy industry is again rising from the bottom. As of the end of 2015, more than 180 countries worldwide have jointly signed the Paris Climate Agreement, ensuring the long-term development foundation of alternative energy sources, such as solar energy, etc. Looking toward 2016 for the solar energy industry, due to the hot market demand in China, India, the U.S., and the Southeast Asian market, global solar energy installations will continue to increase, and Taiwan’s solar battery industry is expected to continuously grow. Despite the active expansion of manufacturers increasing uncertain factors in the market in 2016, with the rise of emerging market demand and continuous development of environmental protection issues, the solar energy industry of the Company is expected to create large-scale economic effects in the long run through the integration of industry chain resources. It is expected that it will be good for mastering the layout of the future solar energy market.

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With regard to the handheld mobile device industry, in 2015, due to product homogeneity and gradual market saturation, the growth rate slowed. Looking toward the future, the smart phone will enter into its mature period, and smart phone manufacturers from mainland China will battle for the market with high cost performance methods, resulting in the rapid market saturation of mainland China and the continuous decline of sales prices. The market growth of smart phones will be inferior to the explosive growth seen in previous years. However, with the upgrading of mobile and wearable device products, together with the demand of 4G and 5G networks, Internet of Things, etc., driven by Internet communication products in cloud service demand, the handheld mobile device industry can still be expected to grow in the future. Furthermore, the penetration rate of smart phones is still low in developing countries, and their demand to change to smart phones will become one of the industry’s driving forces.

6.2.3 Possible impact on the future financial business of the Company and response plan

Looking toward 2016 and beyond, in addition to focusing on its original operation strategies, the Company will continuously carry out vertical integration and strategic alliance to initiate new opportunities. In order for the operation growth to face the rise of capital demand, the Company’s professional team will give comprehensive consideration to financial resource allocation, cost of capital, etc. through rigorous internal and external financial risk management mechanisms in order to achieve the most thorough financial planning and ensure smooth operations. Therefore, we currently have no doubt regarding significant impacts on future financial business.

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6.3 Cash flow analysis –Consolidated

Unit: NTD thousand

				Unit: NTD thousand	Unit: NTD thousand
Beginning cash balance A	Annual net cash flow from operating activities B	Annual cash outflow C	Cash surplus (insufficient) amount A+B-C	Remedial measures for cash shortfall
				Investment plan	Financial management plan
37,123,631	12,982,548	13,542,941	36,563,238	`－`	`－`
1. Analysis on change of cash flow this year: Operating activity: In 2015, since the Group continuously adjusted product proportion, improved cost structure, and was devoted to stabilizing gross profit ratio, along with proper capital movement employed by the Company’s team, the operating cash flow is definitely proper this year, and the overall cash flow is sufficient for the operation expenditures of the Group. 2. Remedial measures for expected cash shortfall and liquidity analysis: Comprehensively influenced by all kinds of cash flow activities, there should be no circumstance causing insufficient cash this year. 3. Cash liquidity analysis in the coming year: Beginning cash balance (A): NTD 37,123,631 thousand Expected annual net cash flow from operating activity (B): NTD 12,982,548 thousand Expected annual cash outflow (C): NTD 13,542,941 thousand Expected cash surplus (insufficient) amount (A+B-C): NTD 36,563,238 thousand In 2016, despite the growth rate in the notebook computer business slowing, driven by the growth in the server, solar energy, and handheld device businesses, and with the Company’s professional team continuously adjusting product proportion and stabilizing gross profit ratio, the cash flow in operating activities is expected to be sufficient. In addition to the expenditures from operating activities due to investment activities, such as asset procurement, replacing old equipment with new, etc. and issuing cash dividends, regarding financing activities, the Company may also utilize loans from financial institutions and properly manage them for employment, and the cash liquidity will be suitable.

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6.4 The impact of Significant Capital Expenditure in Recent Years on Financial Business

6.4.1 Employment of significant capital expenditure and capital source:

Unit: NTD thousand

				Unit: NTD thousand	Unit: NTD thousand	Unit: NTD thousand	Unit: NTD thousand
Planned project	Actual or expected capital source	Actual or expected completion date	Total capital needed	Circumstance of actual or expected capital employment
				2015	2016	2017	2018
Purchase more plant space and equipment	Own capital	Current year	19,762,999	3,762,999	8,000,000	4,000,000	4,000,000

Note: The actual and expected capital employment in significant capital expenditure is consolidated data.

6.4.2 The impact of significant capital expenditure on financial business

Purchase more plant space: In response to the future product business expansion demands of business units, each unit of the Group in Taiwan will conduct integration planning, reduce management cost, and improve the Group’s overall research and development capability of innovative products.

Purchase and update machines and R&D equipment: New product research and development lineup are increased in order to accelerate product development schedules and improve production efficiency.

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6.5 Reinvestment Policy in Recent Years, the Main Reason for Profit Earning or Loss, Improvement Plan, and Analysis on the Investment Plan in the Coming Year

Inventec Corporation was established over 40 years ago. Starting in the field of notebook computers and servers at an early stage, Inventec gradually crossed fields to enter enterprise network solutions, and even solar energy and smart end devices at later stages, actively transforming Inventec into an Internet company. In recent years, the Group has done well in reinvestments and has respectively achieved certain increases. Inventec Appliances Corp. has started to focus on developing wireless smart end products and has taken planning the best solutions for customers as its orientation. It is currently involved in the hottest Internet theme and is dedicated to putting smart end devices into smart living. The delivery in 2016 is expected to yield unusually brilliant results due to the customers’ order expansions. Inventec Besta Co., Ltd. is the leading brand in computer dictionary and translation software in the overseas Chinese area; as it continuously moves towards all-around learning and video entertainment platform, it will take initiating cloud related products as its objective. TPV-Inventa Technology Co., Ltd. engages in the research and development and production of All-in-one PC and AIO and will aim to enrich its product line to improve future revenue. E-TON Solar Tech. Co., Ltd, Inventec Solar Energy Corporation, and Inventec Energy Corporation are mainly dedicated to the research and development, production, and sales of solar batteries, photovoltaic module manufacturing, and photovoltaic system integration. The resource integration strategy between Inventec Solar Energy Corporation and Inventec Energy Corporation in 2015 can ensure the production mode of a coordinated process in order to effectively reduce cost. In February 2016, the European Union published the anti-circumvention results, which affirmed that 21 Taiwan manufacturers, including three solar energy subsidiaries of the Group, were real manufacturers, and anti-circumvention tax could be exempted, thus stabilizing the sales situation in the European market. Despite the U.S. Department of Commerce’s affirmation that our country practices dumping behavior and has then levied anti-dumping tax on us, with the continuous expansion of market demand and development of environmental protection issues, the solar energy company of the Group will accelerate the adjustment of its overseas layout, utilization of product portfolios, development of high performance products, and automation of manufacturing processes, it is expected to reverse from loss to profit earnings. In general, although the growth of notebook computers still tends to be conservative, with gradual recovery the in the server, smart end, and solar energy markets, the performance in 2016 is expected to be acceptable.

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6.6 Analysis and assessment of risk items

6.6.1 The impact of interest rate, change in exchange rate, inflation on loss and profit of the Company, and future resolutions:

Impact on loss and profit of the Company:

Impact on loss and profit	of the Company:
2015	Net amount ofinterest income(expenditure)	Net amount of exchange(loss) profit
Unit: NTD thousand	1,198,055	(669,167)

Future resolutions:
A. Interest rate: The uncertainty of the global economy has made the interest rates in European and American countries attract more attention. However, the U.S. economic recovery, the slowdown of China’s economic growth rate, oil price fluctuations, and the demand in the energy and mining industry and raw materials can affect consumer’s confidence, as well as the authority on whether or not to raise interest rates. Since most of the industry investment momentum in Taiwan is still insufficient, the inflation is not obvious, and the commodity price is also moderate; only consumption still suffers from the dual impact by structural factors and short-term prosperity; therefore, it is expected that, the central bank will still comply in 2016 with international trends and adopt loose monetary policies to reduce the impact brought by the sharp fluctuation on the domestic economy. Regarding the impact of interest rate change risk on capital operation, the Company will continue to carry out the best employment on capital portfolio under the premise of considering liquidity, safety, etc.
B. Exchange rate: For many years, the monetary policy in European and American countries has always affected the performance of all other countries around the world, and the long-term recession in the Eurozone and England’s desire to quit the European Union has impacted the Eurozone’s recovery. Fortunately, since the market inflation is still moderate, and the financial condition and overseas economic risk is high, despite continuous rumors about raising interest rates, the market still expects that the U.S. will postpone raising interest rates within a short time; therefore, the exchange rate in each country throughout the world can be maintained relatively stable. Among higher uncertainty factors in international major currency, the central bank is still expected to adopt moderate exchange rate policies in response in 2016. Major customers of the Company are big international manufacturers, and they have the same transaction currency in goods purchase and sales; therefore, the mutual offset of credit and debt can achieve a natural hedging effect. Furthermore, the Company will make up the shortcomings of natural hedging through foreign currency

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hedging operations in order to reduce the impact of exchange rate change risk on profit and loss on exchange.

C. Inflation: Inflation is closely linked to monetary policy, but compared with dual-rate, inflation has no directly significant impact on the profit and loss of the Company. The different economic performance of each country causes divergence of opinions on monetary policy. For example, the Eurozone implements negative interest rate, but due to the limited effect, the expansion of quantitative easing seems to be unavoidable; as far as the U.S. is concerned, since the economic data tends to be positive and the employment market is getting stronger, the rumor of raising interest rates begins again. However, in general, the adjustment of U.S. monetary policy is still a major risk source affecting global economic growth and financial stability. It is expected that when the central bank adopts a moderate monetary policy in 2016, it shall also simultaneously consider the consequence of real interest rates on the domestic economy in order to maintain it at a relatively stable status. In the future, the Company will continue to actively carry out cost and operating expenditure control, process improvement, and asset activating in order to mitigate the impact of inflation on its operation.

6.6.2 Engage in high risk and high leverage investments, lend funds to other parties, endorsement and derivatives transaction policy, main reasons for profit or loss, and future resolutions:

Based on a steady operation philosophy, the Company mainly focuses on the operation of its original product field. Regarding investments, in addition to relevant investments in the original industry, upstream and downstream of the product field, vertical cooperation, etc., the Company does not engage in any high risk or high leverage investments. Regarding lending funds to other parties, endorsements, and derivatives related transactions, such is actually handled according to the execution policy stipulated in Procedures for Acquisition and Disposal of Assets, Procedures for Lending Funds to Other Parties, and Procedures for Endorsements and Guarantees of the Company. In the future, the Company will still rigorously execute such matters according to the handling procedures of relevant regulations in order to guarantee the maximum rights and interests of the Company and its shareholders.

6.6.3 Future research and development plan and research and development expenditures expected to be invested

Five major policies:
A. Rapid Innovation: “Innovation” has been the basic spirit of our operation philosophy since the foundation of the Company in 1975; it is also the best media shaping enterprise differentiated value, even for our commitment to customers and partners. In addition to

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internal and external research and development, innovation cultivation, and accumulation of competitive energy, the activation of intellectual property assets can also effectively improve the international competitiveness and influence of the Company. As of December 2015, the Company has acquired more than 14,000 patent certificates worldwide and more than 6,000 patents are currently under application. In addition to focusing on notebook computers and servers, the Company has also achieved breakthroughs in the fields of consumer electronics, mobile communication, wearable devices, wireless integration plans, and application software. Recently, it has also actively transformed into an Internet enterprise to initiate more abundant smart living tools.

B. Sustainable Energy: The increasing deterioration of climate warming and environment has facilitated the rise of environmental protection awareness and further drives the rise of global green consumerism. In order to respond to customers’ demands for green products, enterprises around the world have started focusing on green production and integrating ubiquitous environmental protection elements into green life in order to reduce environmental impact and fulfill social responsibility. In addition to satisfying customer demands and strengthening core competitiveness in product research and development, the Group also spares no effort in fulfilling its social environment responsibility. The Group completely implements green supply chain management by formulating environmental objectives, environmental policies, and environmental projects, as well as exerting green value-added benefits. Furthermore, regarding solar energy products, the Group will strive to improve relevant manufacturing processes and energy consumption in order to promote the use of alternative energy and contribute to society.
C. Cloud Solutions: As times change, cloud related products are expected to drive the overall demand among considerations of resource benefits, price performance, and operational assistance. As a cloud supplier, the Company will be dedicated to developing cloud computing SaaS, PaaS, and IaaS and integrate them in the direction of a software, hardware, and service three-in-one, taking overall solutions as a basis for creating more unique market value.
D. Mobile Lifestyle: The coming of the Internet era not only makes high information and communication technology more advanced, but also drives the reformation of smart end products and their relevant extended devices. The Company mainly focuses on developing wireless smart end products and provides diversified smart handheld devices and network application products by linking cloud technology and services. In the future, the Company will continuously adhere to such principles as innovation, good quality, excellent talent, design, manufacturing, marketing, after-sales service, etc., with the aim of becoming a benchmark in the global wireless communication industry. Since the smart phone market is currently facing an awkward situation of growth slowdown and price cutting competition, increasing profits is more difficult, and how to achieve further

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transformation of products will become an important key for success in the future.

E. Emerging Markets: The notebook computer and server industry is subject to the impact of a high saturation degree in mature European and American markets, and the law of survival competition forces the territory to migrate to emerging markets with stronger growth momentum in Latin America, Asia, etc. Furthermore, regarding the solar energy industry, despite the final judgment on the U.S.’s new anti-dumping and countervailing policy, or the European Union’s lifting its ban on Taiwan manufacturers that directly or indirectly affect Taiwan manufacturers, the strategy of the Company will be to move towards adhering to product efficiency improvement and overseas layout in order to reduce the impact. Regarding smart phones, despite brand manufacturers from mainland China rising rapidly around the world, with increasing saturation in the China market, “black mainland” has aroused the investment fever of East Asia manufacturers, and India and Africa will be the emerging industry cluster after the “made in China” age. The low penetration rate of mobile phones in India and Africa makes for high consumption growth. Through the improvement of brand recognition degree, high customization, and after-sales service, it is expected to break through the current growth plateau period of smart phones.

2. Future research and development plan:

A. Notebook computers: After the performance and specification development of notebook computers have satisfied the demand of most consumers, the specification competition of the consumption style machine gradually transfers from computing performance to display screen. Since the specifications of consumption style machines are diversified and of small quantity, OEM no longer seeks economic scale but is oriented toward profit making. In response to the change of OEM mode, consumer behavior, and operation system, the future notebook of the Company will integrate cloud service applications and move towards the direction of light, thin, long service, touch control, portable, low price, cross industry, mashup, etc. In general, the consumption style machine still has relative pressure, but the Company will focus on quality differentiation instead of pursuing quantity increase in order to improve profit making.
B. Servers: The age of big data is driving the rise of cloud computing. Due to the change of operation and consumption mode triggered by it, servers must be equipped with stronger computing capabilities in order to effectively resolve the huge cloud data loading capacity and effectively provide information to users for decision making. In order to expand the market share and avoid a price war, the product research and development strategy of the Company will strive for product differentiation and focus on products with high performance computing, coordinated with the integration of all-around software and hardware systems in order to provide customers with a complete solution. In 2016, in consideration of dealers’ price-oriented and performance-oriented philosophies, as well as the expanding demand, the revenue and shipment volume in the server business is expected

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to have good performance.

C. Cloud service: In recent years, with the coming of the Internet era appreciated and promoted by China and each European and American country, the government of our country is also aiming to build Taiwan as the Asian center of the Internet of Things. In order to carry the cloud service needed in the Internet of Things, in addition to strategic system integration, the Company also coordinates with overall resolution and localized services to accompany customer growth in order to achieve the perfection of a software, hardware, and service three-in-one. Furthermore, the Company still takes building a cross-strait cloud operation center as its objective, and in 2015, we completed the establishment of a southwest (offshore) cloud operation center, which will expand to East China, North China, South China, and all of the Greater China area in 2016 and 2017. In 2016, the Company expects to increase order receiving, which is good for revenue.
D. Solar energy: Since the solar energy market is becoming more and more mature, the traditional price war is no longer the major battlefield; instead, higher quality and a more stable power source will be the key factor for victory in the future, including module efficiency, a stable system, and monitoring. The Company mainly focuses on the design and manufacturing of the key supply chain for solar batteries (including single crystalline silicon and polycrystalline silicon) and solar energy modules. Through the automation import of all kinds of machines and the breakthrough in process conversion rate and optimization of personnel quality, both the conversion efficiency and yield rate of solar wafers have increased to some extent. Regarding solar modules, they continue to provide wafers and power converters with high efficiency, stable system operation, and customized beautiful installation in order to satisfy the end demands of customers.
E. Smart phones: In recent years, with a strong domestic demand, China brand manufacturers have globally risen against the trend. With the gradual saturation of the mainland China market, the exploitation of the overseas market is imperative. The future market mainly originates from old customers’ demand to change phones, and fingerprint recognition, uniform standard new specifications, customer loyalty establishment, and the active development of products with high performance cost ratio, etc. will become the future development trend.
Research and development expenditure expected to be invested:

The future development plan of the Company will continue to move in five major directions, namely independent innovation, green energy environmental protection, cloud service, wireless broadband, and emerging market by mastering market fluctuation and understanding customer demands. In response to new market environments, manufacturing process improvement, and technology development, the Group is expected to input more than NTD 9.1 billion in research

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and development this year and will control the product development and market sales schedule within six months.

The research and development plans in recent years, current progress of unfinished research and development plans, research and development expenses that need to be invested, expected time of completing mass production, and major factors influencing the success of research and development in the future:

Recent annual plans	Current progress	R&D expenses to be invested	Time of completing mass production (Note)	Major factors influencing the success of research and development in the future
Notebook computer	Under development	NTD 1.9 billion	2017	Provision of long-term accumulated software and hardware technology and customized overall solutions
Server and cloud computing	Under development	NTD 4.5 billion	2017	Provision of long-term accumulated software and hardware technology and customized overall solutions
Solar energy	Under development	NTD 200 million	2017	Group resource integration and combination of automation import, manufacturing process conversion rate improvement, and optimization of personnel quality
Smart phone and wireless communica tion devices	Under development	NTD 2.3 billion	2017	Continuous innovation, good quality, excellent talent, design, manufacturing, marketing, and after-sales service capability

Note: This refers to the mass production time currently expected; the actual situation is still subject to market and customer demands.

6.6.4 Important policies at home and abroad, the impact of law changes on the Company’s financial business, and resolutions:

The relevant units of the Company have always strictly followed important policies at home and abroad, as well as law changes, and pay close attention to any changes at all times. They also actively coordinate and adjust company financial business activities in response to such changed matters. With regard to the promotion of corporate governance by competent authorities, successive issuing and amendment of the Company Act, Securities Exchange Act, and handling criterion for all kinds of businesses, the reformation of the tax regulations environment, etc., the Company actively coordinates to handle such matters as required.

Since 2013, listed companies have comprehensively applied IFRs, the Taiwan-IFRSs translated

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and issued by the Domestic Accounting Research and Development Foundation are the basis for preparing the enterprise financial report. In the face of the change of accounting principles, the Company has actively carried out training on financial and accounting personnel with relevant knowledge, smoothly matching up with the accounting system. Furthermore, the Company simultaneously maintains close communication with information personnel and coordinates with the response method of the information system according to the change to the accounting system in order to reduce the impact brought by the change of accounting principles in the future.

6.6.5 The impact of technology change and industry change on company financial business and resolutions:

In light of the huge changes to network in modern times led by global Internet companies, the rapid development of information and communication technology has also been driven. With the increasing maturity of the notebook computer market, and the server market facing the impact of cloud computing, the electronic industry will certainly face more challenges. In response to technology and industry transformation and high speed competition, as well as the achievement of the corporate mission of “Best system, software, and service company”, the Company strives to follow five major policies, namely “Rapid Innovation, Sustainable Energy, Cloud Solutions, Mobile Lifestyle, and Emerging Markets”, in order to create new prospects. In the short term, the Company will accelerate asset activation; through the initiation of venture capital investments and the integration of software and hardware, we will improve the level of research and development and make the new investments increase Internet thinking. In the long term, in addition to product diversity, the Company will optimize Group resources through cross-industry alliance and supply chain integration. Furthermore, throughout research and development, design, production, distribution and service, the Company will provide customers with all-around solutions to improve profit making and further maintain corporate sustainable development. Mobile technologies such as joint Internet, wireless communication transmission, etc. shorten the space barrier, allowing for the smooth sharing of internal and external environmental resources of the company organization. Importing an enterprise resource integration system and financial consolidation system will improve the overall operation and handling efficiency of financial affairs. With regard to the solar photovoltaic industry, despite being boycotted by the U.S.’s anti-dumping and countervailing policy, the market of the Company has a decentralized arrangement, and customers themselves also carry out strategic arrangements, so that we can minimize the impact. Furthermore, the Company will accelerate the change and breakthrough of the Group this year by implementing five changes, which include: 1. Handover inheritance, promoting younger supervisors; 2. Select person based on talent, with men and women being equal; 3. Management must be innovative, and supervisors must be responsible; 4. Business losing money must be stopped; and 5. Professional leadership is required for future investments. Moreover, the so-called five breakthroughs refer to: 1. Manufacturing servitization, enterprise socialization; 2. Active investment merger, transforming

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into an Internet company, 3. Tangible assets activation, input start-up company; 4. Intangible assets reevaluation, consolidate core war; and 5. Extensively recruit international talents and seek strategic global alliances. Through comprehensive change and breakthrough, the Company is expected to be able to break through the awkward operation situations of a bad political and economic environment and courageously move forward. Through active and effective financial and information technology application, the Company will assist in integrating upstream of vision and strategy, medium of process and indicator, and down to management information, action plans, etc. in order to take it as the best management tool in response to the change of technology and industry.

6.6.6 The impact of corporate image change on corporate crisis management and resolutions:

2015 is a milestone year as Inventec Corporation celebrates its 40[th] anniversary. For a long time, the Company has adhered to the operation philosophy of“Innovation, Quality, Open Mind, and Execution”. From professional OEM at the early stage to current high technology product fields, such as cloud computing, green energy, Internet, etc., Inventec has expanded its operation scale and developed a long-term competition advantage through product diversification, strategic alliance, and supply chain resource integration. The so-called “Top ten beliefs” take “talent-oriented” as its first priority and “social responsibility” as its ultimate commitment. The combination of operation philosophy and top ten beliefs constitutes the core value system of Inventec and has formed the corporate culture of Inventec in its pursuit of sustainable development. The baptism and shaping of corporate culture has also facilitated the understanding and recognition of all colleagues in the company. Within a rigorous business environment, it can improve work intention and attitude and then strengthen the company competition system to create the maximum value of corporate culture.

In the spirit of “Talent-oriented, increase gross profit, and invest in the future”, in addition to the originally established enterprise and brand image of innovation and high quality, as a member of the global Internet industry, Inventec should also face such issues as climate change, energy depletion, ecological conservation, protecting the underprivileged, public spirit, etc. with an active attitude in order to promote social enterprise with core values. In the future, in addition to providing support to non-profit institutions or non-governmental organizations, Inventec will jointly discuss how to strengthen the function of social enterprises, thus effectively improving the social responsibility of Internet enterprises.

The Company adheres to a consistent operation philosophy and corporate culture. Through internal management mechanisms and external auditing execution, the Company vigorously examines and approves the setting and execution of objectives and strategies, actually mastering the overall organizational risk. As of the publication date of this annual report, the Company has no impact on enterprise crisis management caused by a change of corporate image.

153

6.6.7 Expected benefits of mergers, possible risks, and resolutions:

Since 2015 and as of the publication date of this annual report, the Company has no circumstances related to conducting a merger.

6.6.8 Expected benefits of plant expansion, possible risks, and resolutions:

Based on customer demands, production capacity planning, and market layout, the Company actively integrates group resources and exploits territory externally, in the hope of achieving the objective of production optimization and cost control through scale economic benefits. However, success or failure, both are due to the same reason: simultaneously considering the idling capacity and capital risk hidden behind active plant expansion; this is indeed an important issue. Therefore, the Company will continuously and prudently evaluate the demand for plant expansion and the corresponding future economic benefits and accelerate current assets activation to reduce the exposure risk accompanied by plant expansion. At the beginning of 2016, the Company newly purchased a plant building in Guishan, Taoyuan, which is to be mainly used for server research and development and operation. The new plant is expected to improve overall production efficiency and make management simpler and more centralized.

6.6.9 Risks faced in centralized goods purchase and sales and resolutions:

2015 is a year of global mergers and acquisitions. Many large-scale brand manufacturers are spreading consolidation news one after another, which indirectly impacts the OEM plant under the Group. Regardless of internal acquisition, internal separation, external panel discussion, or hostile takeover, we can clearly see that the global market layout has started to change, and the original supply mode of OEM will cause market loss due to the operating decision of major customers. However, instead of making excuses, in addition to pursuing further improvement of quality and quantity and cost control, OEM dealers should go deep into establishing diversified customer relationships in order to avoid the awkward situation brought by excessive concentration of sales. The purchases and sales of the Company are mostly from and to suppliers or international brand manufacturers with considerable scale in the industry. In addition to seeking alternative materials and properly managing inventory levels to reduce the risk of material shortage by actively dispersing supplier sources, the Company also continuously and actively opens channels and exploits overseas markets; by reducing sales risk through product quality optimization, it is expected to harvest potential global markets and grow against trends.

154

6.6.10 The impact of massive transfer or change of stock equity between and among directors, supervisors, or major shareholders holding more than ten percent of the total share of the company and resolutions: not available.

6.6.11 The impact of change of operation rights of the company, risks, and resolutions: not available.

6.6.12 Litigation or non-litigation cases:

Significant litigation, non-litigation or administrative litigation cases of the Company and affiliated companies in the past two years, such cases that have been sentenced or are currently pending, and the results thereof that have a significant impact on shareholders’ equity or securities price:
A. Litigation case:
- a. American merchant Convergence Technologies USA, LLC applied to the U.S. District Court of the Northern District of California in November 2011 to add the Company as a defendant; claims included that the Company and seven other joint defendants infringed on one of its patent rights in the U.S., but Convergence did not specifically indicate the amount it was requesting. After receiving the notice in January 2012, the Company specially appointed American lawyers to handle it, and the court judged on motion to stay on April 6, 2012, after the end of the Convergence patent reexamination procedure conducted by the U.S. Patent and Trademark Office Patent Trial and Appeal Board. On February 10, 2015, the final decision of the committee was that the scope of the patent in the reexamination part is invalid. On May 18, 2015, the litigation parties reached a consensus to withdraw the lawsuit.
- b. The relationship between E-TON Solar Tech. Co., Ltd and Ji-Ee Industry Co., Ltd. changed due to a dispute regarding the old land and building in the plant. Ji-Ee Industry Co., Ltd. intended not to continue to lease to E-TON Solar Tech. Co., Ltd on the ground that the leasehold relationship expired on December 31, 2013; therefore, E-TON Solar Tech. Co., Ltd initiated litigation to the court, claiming a temporary state injunction. The case was tried by Taiwan Tainan District Court, and the civil ruling thereof was that, after E-TON Solar Tech. Co., Ltd had provided a guarantee of NTD 120 million to Ji-Ee Industry Co., Ltd., before conforming to the litigation of a temporary state injunction case between two parties, regarding the sidewalk and lane on land No. 73, 74, Kegong Section, Annan District, Tainan City, and the gate set at land No. 74 of the same section owned by Ji-Ee Industry Co., Ltd., Ji-Ee Industry Co., Ltd. was prohibited to change the current situation, set a barrier, or conduct other similar behaviors that would obstruct the

155

access of E-TON Solar Tech. Co., Ltd, and shall allow the building at Building No. 16-10, Kegong Section, Annan District, Tainan City owned by E-TON Solar Tech. Co., Ltd to continue to occupy and use the land with the aforementioned land numbers, namely allow E-TON Solar Tech. Co., Ltd to continue to use the building with Building No. 16-1 and 16-7 at Kegong Section, Annan District, Tainan City, and shall not change the current condition of such buildings.

E-TON Solar Tech. Co., Ltd applied for compulsory execution after providing the guarantee according to the aforementioned civil ruling; in accordance with the execution order of Nan-Yuan-Kun-2014-Si-Zhi-Quan-Jian-Zi No. 82, Ji-Ee Industry Co., Ltd. shall perform the contents of temporary state injunction mentioned above.

On July 15, 2014, according to the order of 2014 Si-Sheng-Zi No. 160 issued by Taiwan Tainan District Court, litigation may be initiated with the competent court for civil ruling if it intends to ask for preservation enforcement. On July 15, 2014, E-TON Solar Tech. Co., Ltd initiated a civil litigation with Taiwan Tainan District Court for conforming to the leasehold relationship, and it was accepted by Taiwan Tainan District Court with case number of 2014 Chong-Su-Zi No. 196 and is currently being heard.

Furthermore, Ji-Ee Industry Co., Ltd. claimed to the court for payment order on the ground that the liquidated damages incurred in January 2014, a total of NTD 8.537 million, that should be paid by E-TON Solar Tech. Co., Ltd was still in arrears, and Taiwan Tainan District Court issued the 2014 Si-Cu-Zi No. 6096 Payment Order; E-TON Solar Tech. Co., Ltd shall pay Ji-Ee Industry Co., Ltd. NTD 8.537 million, as well as the interest calculated based on a five percent annual interest rate from the next day after serving such payment order until the repayment date. The case entered into civil procedures due to the objection raised by E-TON Solar Tech. Co., Ltd, and Ji-Ee Industry Co., Ltd. added a standby request for unjust enrichment equivalent to the rent from January to March 2014. According to the 2014 Chong-Su-Zi No. 73 Judgment issued by Taiwan Tainan District Court, E-TON Solar Tech. Co., Ltd shall pay Ji-Ee Industry Co., Ltd. NTD 6,098,000, and the interest calculated based on a five percent annual interest rate from May 22, 2014 until the repayment date (namely the previous request for liquidated damages was rejected, and the request for standby unjust enrichment was approved). E-TON Solar Tech. Co., Ltd filed an appeal to the Tainan Branch of Taiwan High Court on December 5, 2014, and it was accepted by such court with case number 2015 Chong-Shang-Zi No. 5, which is currently being heard.

B. Non-litigation cases: not available in the past two years.
C. Administrative litigation cases: not available in the past two years.

156

As of the publication date of annual report, whether the directors, supervisors, President, and shareholders with shareholding ratio over ten percent of the Company are involved in any significant litigation, non-litigation or administrative litigation cases, such cases have been sentenced or are currently pending, and the results thereof have a significant impact on shareholders' equity or securities price: there is no such circumstance.

6.6.14 Other important risks and response measures: None.

6.7 Other Important Matters: None

157

VII. Special Disclosure

7.1 Summary of Affiliated Companies

7.1.1 The chart of Inventec Corporation

==> picture [765 x 406] intentionally omitted <==

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

Inventec
Corporation
Inventec
Holding (North (Czech), s.r.o. Inventec (Cayman) IEC (Cayman) Inventec (Hong Kong) Corporation Inventec Manufacturing (India) Private Inventec E-TON Tech. Solar Investments Invnetec Inventec Energy Solar Appliances Inventec Development Inventec Japan Inventec Besta
America) Corporation Corp. Co., Ltd . Corp. Co., Ltd.
100% Ltd. Limited Co., Ltd Corporation Corporation
Corp. 100% 100% 100% 99.99% 29.70% 100% 33.45% 100% 100% 37.53%
100%
4.95 % 4.64 % 9.55 %
0.01 %
0.1 %
1.59 %
0.79 %
Refer to the
Inventec Refer to the Inventec Refer to the Refer to the
chart of Inventec
Inventec (Chongqing) Technology Inventec chart of Electronics (Tianjin) chart of E-TON Energy Inventec chart of
Holding Corporation
(North Corp. (Cayman) Co., Ltd. Solar Tech 48.47% Appliances
America) 100% Corp. 100% Co., Ltd. Corp
Note1 ：
Investments in subsidiaries
Inventec Investments accounted for under the equity method
(Beijing) Investments between subsidiaries
Electronics
Technology
Co., Ltd
100% Note 2 ： As of 12/31/2015
----- End of picture text -----

158

The chart of Inventec Holding (North America) Corp.

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

Inventec
Corporation
Inventec Holding
(North America)
Corp.
100%
Inventec Inventec
Inventec Electronics Manufacturing Configuration
(USA) Corp. (North America) (North America)
100% Corp. Corp.
100% 100%
----- End of picture text -----

==> picture [296 x 125] intentionally omitted <==

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

Inventec Distribution IEC
(North America) Technologies, S. de
Corp. R.L. de C.V.
100% 99%
1%
----- End of picture text -----

159

The chart of Inventec (Cayman) Corp.

Inventec Corporation Inventec (Cayman) Corp. 100% Inventec Inventec Inventec Inventec Inventec Inventec Inventec Inventec TPV-Inventa Huan Hsin (Shanghai) (Pudong) (Pudong) (Shanghai) Hi-Tech (Chongqing) (Chongqing) Holding Corp. Corp. Technology Corp. Service Co., Ltd. Corp. (Zhejiang) Corp. Service Co., Ltd. Ltd. 100% 100% 100% 100% 100% Technology Co., Ltd. 100% 100% 90% 100% Inventec AssetChongqing TPV-Inventa TPV-Inventa Management Rongjie Cloud Technology Co., Technology (Shanghai) Service Co., Ltd. Ltd. (Fujian) Ltd. Corporation 100% 100% 100% 78% Chongqing TaiYu Cloud Service Co., Ltd. 100% Chongqing YuYa Cloud Service Co., Ltd. 100%

160

The chart of E-TON Solar Tech. Co., Ltd.

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

Inventec
Corporation
E-TON Solar Tech.
Co., Ltd.
29.70%
Gloria Solar
International
Holding, Inc.
50.76%
Adema Techologies,
Gloria Solar Co., Ltd
Inc.
100%
100%
----- End of picture text -----

161

The Chart of Inventec Apliances Corp.

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

Inventec
Corporation
Inventec
Appliances Corp.
100%
Inventec
Appliances
(Cayman)
Holding Corp.
100%
----- End of picture text -----

Inventec Inventec Inventec Inventec Appliances Appliances Electronics Appliances (USA) Corporation USA (Shanghai) Co., Distribution Corp. Inc. Ltd. (Pudong) Corp. 100% 100% 100% 100%

Inventec Inventec Inventec Inventec Inventec (Nanjing) Appliances Appliances Appliances ElectronicsCo. Appliances (Nanjing) System (XI'AN) (Nanchang) Ltd. (Nanjing) Corp. 100% Corp. Corporation Corporation 100% 100% 100% 100%

==> picture [75 x 55] intentionally omitted <==

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

Inventec
Appliances
(Shang Hai) Co.,
Ltd.
100%
----- End of picture text -----

162

7.1.2 Inventec Corporation Subsidiaries

Unit: NT$ Thousands As of 12/31/2015

Company	Date of Incorpo- -ration	Place of Registration	Capital Stock	Business Activities
Inventec Corporation (Hong Kong) Ltd.	1990.08	Level 28,Three Pacific Place 1, Queen`s Road East, Hong Kong	8,705	Investing in Mainland China and import and export business
Inventec (Tianjin) Electronics Co., Ltd.	1993.11	23F, Wanzhao Smart Valley Building, No. 218 Hongqi Road, Nankai District, Tianjin, China	164,100	Research, manufacture, sale and warranty services of electronic computers and related.
Inventec (Beijing) Electronics Technology Co., Ltd.	1994.07	A-206, No.1 Building (Information Center), Zhongguancun Software Park, No.8 Dongbeiwang West Road, Haidian District, Beijing, China.	47,589	Manufacture, and warranty services of computers and related; as well as business information consultation.
Inventec (Cayman) Corp.	2000.06	Floor 4,Willow House,Cricket Square, P.O.Box 2804, Grand Cayman KY1-1112, Cayman Islands	9,812,963	Holding Company
Inventec(Shanghai)Corp	2000.10	No.1295, Yi Shan Road Shanghai, China	968,190	Sale of servers, notebooks and related.
Inventec Asset-Management (Shanghai) Corporation	2014.06	The first floor 08 business of No.7 building , No.1528 Gumei road, , Xuhui district, Shanghai ,China	647,975	Equipment leasing, storage, technological development and sale of computer
Inventec(Pudong)Corp.	2003.01	No.699 Puxing Road, Minhang District,Shanghai, China	1,641,000	Computer products assembly operations and sale of computer
Inventec (Pudong) Technology Corp.	2004.04	No.789 Puxing Road, Minhang District, Shanghai, China	1,641,000	Manufacture and sale of Servers and related
Inventec (Shanghai) Service Co., Ltd	2004.03	2F Building, No.1295, Yi Shan Road Shanghai, China	95,178	Research, and sale of softwareproducts
InventecHi-TechCorp.	2004.09	No.789 Puxing Road, Minhang District, Shanghai, China	1,641,000	Computer products assembly operations and sale
Inventec Huan Hsin (Zhejiang)Technology Co., Ltd.	2007.03	No. 8, XinDa Road, Huimin Avenue ,Jiashan County, Zhejiang Province, China	941,934	Complete of the electronic computer and product and sale of external equipment
Inventec(Chongqing)Corp.	2010.05	No.66, Xiqu Sceond Road, Shapingba District, ChongQing, China	1,641,000	Assembly and sale of computerproducts
Chongqing Rongjie Cloud Service Co., Ltd.	2015.03	No.1, 8F, B Building, No.24 Honghu West Road, Yubei District, Chongqing, China	101,084	Computer software system integration service
Chongqing TaiYu Cloud Service Co., Ltd.	2015.03	No.2, 8F, B Building, No.24 Honghu West Road, Yubei District, Chongqing, China	101,084	Computer software system integration service
Chongqing YuYa Cloud Service Co., Ltd.	2015.03	No.3, 8F, B Building, No.24 Honghu West Road, Yubei District, Chongqing, China	101,084	Computer software system integration service
Inventec(Chongqing) ServiceCo., Ltd.	2010.05	3F Building No.98, Xiqu Sceond Road, Shapingba District, ChongQing, China	32,820	Assembly and sale of computer products

163

Company	Date of Incorpo- -ration	Place of Registration	Capital Stock	Business Activities
TPV-Inventa Holding Ltd.	2010.05	54F, Hopewell Centre, 183 Queen’s Road East, HongKong	1,834,968	Holding Company
TPV-Inventa Technology Co., Ltd.	2011.05	7F, No.166 Chengde Rd Sec 4, Shilin District, Taipei City, Taiwan, R.O.C	152,500	Assembly and sale of AIO PC
TPV-Inventa Technology (Fujian) Ltd.	2010.06	Rongqiao Economic and Technological Development Zone, FuqingCity, Fujian Province, China.	1,476,900	Assembly and sale of AIO PC
IEC (Cayman) Corporation	2013.11	Floor 4,Willow House,Cricket Square, P.O.Box 2804, Grand Cayman KY1-1112, Cayman Islands	739,500	Holding Company
Inventec Technology (Chongqing) Corp.	2013.12	No.1-6, Building 9t, GuiFuJiaYuan, No.18, GuiFu No.2 branch, ShuangLongHu Sub-district, Yubei District, Chongqing, China	820,500	Computer software design and computer system integration service.
Inventec Holding (North America) Corp.	1997.09	11450 Compaq Center Dr. West Suite 200, Houston, TX 77070	159,003	Holding company in America
Inventec Electronics (USA) Corp.	1997.02	11450 Compaq Center Dr. West Suite 200	16,410	Computer product assembles and warranty services
Inventec Manufacturing (North America)Corp.	1997.09	11450 Compaq Center Dr. West Suite 200	65,640	Technical and Marketing support service
Inventec Distribution (North America) Corp.	1998.08	11450 Compaq Center Dr. West Suite 200	16,410	Sale of computer products
Inventec Configuration (North America)Corp.	1998.08	11450 Compaq Center Dr. West Suite 200	65,640	Assembly of computer products
IEC Technologies, S. de R.L. de C.V.	2006.09	Blvd.Independencia #10150,Centro Industrial del Norte #1, CD Juarez, Chihuahua, Mexico 32575	65,640	Assembly of servers and related.
Inventec (Czech), s.r.o.	2004.02	Modrice, Central Trade Park Evropska 863 664 42 Modrice, Czech Republic	85,921	Computer products assembly operations
Inventec Development Japan Corporation	2004.12	7F, No.1 Shinbashi-Ekimae BL.,2-20-15 Shinbashi, Minakotu-ku, Tokyo, Japan	32,048	Developing, designing and selling computer peripherals
Inventec Manufacturing (India) Private Limited	2015.04	Survey No.381, Padur Road, Kuthambakkam Village, Poonamallee Taluk. Chennai, Tamil Nadu, India, Pin:602107	281,720	Computer product assembles and warranty services
Invnetec Investments Co., Ltd.	2009.08	3F-1, No.166, Sec. 4, Chengde Rd., Shilin Dist., Taipei City, Taiwan	1,088,000	Investment activities
Inventec Solar Energy Corporation	2010.10	No.349, Sec 2, Renhe Rd., Daxi Township, Taoyuan City, Taiwan.	3,233,548	Developing, production and selling of solar cells.
Inventec Energy Corporation	2004.01	No.2, Gongye 3rd Rd., Hukou Township, Hsinchu County, Taiwan	1,267,801	Manufacturing and selling of photovoltaic systems integration
E-TON Solar Tech. Co., Ltd.	2001.12	NO.498,Sec.2, Bentian St., Tainan, Taiwan	7,794,498	Manufacturing and selling of solar cells
Gloria Solar International Holding, Inc.	2007.12	The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052 Grand Cayman, KY1-1208 Cayman Islands	1,166,345	Investment activities

164

Company	Date of Incorpo- -ration	Place of Registration	Capital Stock	Business Activities
Adema Techologies, Inc.	2000.11	4701 Patrick Henry Dr. Bldg 16, Ste 3H Santa Clara, CA 95051	0	Design and consulting service of photovoltaic systems
Gloria Solar Co., Ltd	2006.08	No.110, Ln. 320, Sec. 4, Anzhong Rd., Annan Dist., Tainan City, Taiwan	639,081	Manufacture and sale of photovoltaic modules
Inventec Appliances Corp.	2000.05	No.37, Wugong 5th Road, Wugu Industrial Park, Wugu District, New Taipei City, Taiwan	5,368,573	Wireless terminal products
Inventec Appliances (Cayman) Holding Corp.	2000.06	The Grand Pavilion Commercial Center, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands.	6,543,828	Holding Company
Inventec Appliances (USA)Distribution Corp.	2000.07	555 Republic Drive, Suite 200, Plano, Texas 75074 , USA	131	Sale of MP3 Play, and consumer electronics etc.
Inventec Appliances Corporation USA Inc.	2006.04	2880 Lakeside Drive, Suite 247, Santa Clara, California 95054	33	Sales activities
InventecElectronics (Shanghai) Co., Ltd.	1991.07	No.7, Gui Qing Rd., Shanghai, China.	1,693,512	Manufacture and sale of Consumer electronics and ITproducts.
Inventec Appliances (Shang Hai) Co., Ltd.	2015.04	Room B506, Building 3, No.7 Guiqing Road, Xuhui District, Shanghai, China.	1,264	Development and consultation on software and hardware; as well as selling of electronic products
InventecAppliances (Pudong) Corp.	2004.03	No.789, Puxing Rd., Minhang District, Shanghai, China.	2,527,140	Research, design and manufacture of consumer electronics, and MP3 Player
Inventec(Nanjing) ElectronicsCo. Ltd.	1993.10	No.100 Xian He Street, Nanjing, China	164,100	Real Estate Rental and Leasing
InventecAppliances (Nanjing)Corp.	2004.02	No.133, Jiang-Jun Road ,Jiangning Economic and Technological Development Zone, Nanjing, China.	1,903,560	Research, design and manufacture of telecommunication
InventecAppliances (Nanjing)System Corp.	2006.07	No.133 ,Jiang-Jun Road ,Jiangning Economic and Technological Development Zone, Nanjing, China.	328,200	Research, design and manufacture of telecommunication
InventecAppliances (XI’AN)Corporation	2007.12	No.50 Jin-Ye 1st Road High-tech Industrial Development Zone, Xi' an China	131,280	Research, design and sale of electronic and software products
InventecAppliances(Na nchang)Corporation	2008.12	C401-417,No. 698 Jingdong Boulevard, High-Tech Zone of Nanchang,Jiangxi,China.	68,922	Research, design and sale of electronic and software products

7.1.3 Shareholders in Common of Inventec Corporation and Its Subsidiaries with Deemed Control and Subordination: None.

165

7.1.4 Industrial Classification in Inventec Corporation Subsidiaries

Industrial Classification	Company	Relationships to Related Party
Holding company	Inventec Corporation (HongKong) Ltd.	Direct investment in Inventec (Beijing) Electronics Technology Co., Ltd. and Inventec (Tianjin) Electronics Co., Ltd.
Electric Product Manufacturing	Inventec (Tianjin) Electronics Co., Ltd.	Research, manufacture, sale and warranty services of electronic computers and related.
Electric Product Manufacturing	Inventec (Beijing) Electronics TechnologyCo., Ltd.	Manufacture, and warranty services of computers and related; as well as business information consultation.
Holding company	Inventec (Cayman) Corp.	Direct investment in Inventec (Shanghai) Corp. etc.
Electric Product Manufacturing	Inventec(Shanghai)Corp.	Sale of servers, notebooks and related.
Electric Product Manufacturing	Inventec Asset-Management (Shanghai) Corporation	Equipment leasing, storage, technological development and sale of computer
Electric Product Manufacturing	Inventec(Pudong)Corp.	Computer products assembly operations and sale of computer
Electric Product Manufacturing	Inventec (Pudong) TechnologyCorp	Manufacture and sale of servers and related
Electric Product Manufacturing	Inventec (Shanghai) Service Co., Ltd	Research and sale of sofewareproducts
Electric Product Manufacturing	InventecHi-TechCorp.	Computerproducts assemblyoperations and sale
Electric Product Manufacturing	Inventec Huan Hsin (Zhejiang) TechnologyCo., Ltd.	Computer products assembly operations and sale
Electric Product Manufacturing	Inventec(Chongqing)Corp.	Computerproducts assemblyoperations and sale
Electric Product Manufacturing	ChongqingRongjie Cloud Service Co.	Computer software system integration service
Electric Product Manufacturing	ChongqingTaiYu Cloud Service Co.	Computer software system integration service
Electric Product Manufacturing	ChongqingYuYa Cloud Service Co.	Computer software system integration service
Electric Product Manufacturing	Inventec (Chongqing) Service Co., Ltd.	Assembly and sale of computer products
Holding company	TPV-Inventa Holding Ltd.	Direct investment in TPV-Inventa Technology Co., Ltd. etc.
Electric Product Manufacturing	TPV-Inventa TechnologyCo., Ltd.	Assemblyand sale of AIO PC
Electric Product Manufacturing	TPV-Inventa Technology(Fujian) Ltd.	Assemblyand sale of AIO PC
Holding company	IEC (Cayman) Corporation	Direct investment in Inventec Technology (Chongqing) Corp.
Electric Product Manufacturing	Inventec Technology (Chongqing) Corp.	Computer software design and computer system integration service.
Holding company	InventecHolding (NorthAmerica) Corp.	Direct investment in Inventec Electronics (USA) Corp. etc.
Electric Producs Manufacturing	Inventec Electronics (USA) Corp.	Computer product assembles and warranty services
Electric Product Manufacturing	Inventec Manufacturing (North America) Corp.	Technical and Marketing support service
Electric Product Manufacturing	Inventec Distribution (North America) Corp.	Computer product assembles and sales
Electric Products Manufacturing	Inventec Configuration (North America) Corp.	Computer product assembles
Electric Products Manufacturing	IEC Technologies, S. de R.L. de C.V.	Assemblyof servers and related..
Electric Products Manufacturing	Inventec (Czech), s.r.o.	Computer product assembles and warranty services

166

Industrial Classification	Company	Relationships to Related Party
Electric Product Manufacturing	Inventec Development Japan Corporation	Developing, designing and selling computer peripherals
Electric Product Manufacturing	Inventec Manufacturing (India) Private Limited	Computer product assembles and warranty services
Investment	Invnetec Investments Co., Ltd.	Investment activities
Energy Technical Services	Inventec Solar Energy Corporation	Developing, production and selling of solar cells.
EnergyTechnical Services	Inventec EnergyCorporation	Manufacturingofphotovoltaic systems integration
Energy Technical Services	E-TON Solar Tech. Co., Ltd.	Manufacturing and selling of solar cells
Investment	Gloria Solar International Holding, Inc.	Investment in Adema Technologies, Inc. etc.
EnergyTechnical Services	Adema Technologies, Inc.	Design and consultingservice ofphotovoltaic systems
EnergyTechnical Services	Gloria Solar Co., Ltd	Manufacture and sale ofphotovoltaic modules
Electric Product Manufacturing	Inventec Appliances Corp.	Communication and digital accessory product assembles and sales
Holding company	Inventec Appliances (Cayman) HoldingCorp.	Investment in InventecElectronics(Shanghai)Co., Ltd. etc.
Electric Product Manufacturing	Inventec Appliances (USA) Distribution Corp.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances Corporation USA Inc.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Electronics (Shanghai) Co., Ltd.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (Shang Hai) Co., Ltd.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (Pudong) Corp.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec (Nanjing) Electronics Co. Ltd.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (Nanjing) Corp.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (Nanjing) System Corp.	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (XI’AN) Corporation	Communication and digital accessory product assembles and sales
Electric Product Manufacturing	Inventec Appliances (Nanchang) Corporation	Communication and digital accessory product assembles and sales

167

7.1.5 Rosters of Directors, Supervisors, and Presidents of Inventec Corporation’s Subsidiaries

Unit: Shares ； % As of 12/31/2015

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

Inventec		Representative of Inventec Corporation`：`
Corporation	Director	Yeh, Kuo-I	2,500,000	100%
(Hong Kong) Ltd.	Director	Lee, Tsu-Chin
		Representative of Inventec Corporation (Hong Kong) Ltd.`：`
	Chairman	Lee, Tsu-Chin
Inventec (Tianjin)
	Director	Wen, Shih-Chih
Electronics Co.,			N/A	100%
	Director	Huang, Kuo-Chun
Ltd.
	Supervisor	Chen, Pei-chia

	*General manager	Chen, Chih-Feng
		Representative of Inventec Corporation (HongKong) Ltd.`：`
Inventec (Beijing)
	Chairman	Lee, Tsu-Chin
Electronics
	Director	Wen, Shih-Chih	N/A	100%
Technology Co.,
	Director	Huang, Kuo-Chun
Ltd.
	*General manager	Chiu, Chuan-Cheng

Inventec		Representative of Inventec Corporation`：`
			301,768,161	100%
(Cayman) Corp.	Director	Lee, Tsu-Chin

		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Wu,Yung-Tsai
Inventec	Director	Chien, Chin-Yen
			N/A	100%
(Shanghai) Corp.	Director	Chang, Chung-Ming

	Supervisor	Chen,Pei-Chia
	*General manager	Wu,Yung-Tsai
		Representative of Inventec (Shanghai) Corp.`：`
	Chairman	Wu,Yung-Tsai
Inventec
	Director	Chien, Chin-Yen		78%
Appliances (Shang			N/A
	Supervisor	Chen,Pei-Chia
Hai) Co., Ltd.
	Director	Shanghai Caohejing Hi-Tech Park Development Corp.		22%

	*General manager	Chien, Chin-Yen
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Wu,Yung-Tsai
Inventec (Pudong)	Director	Chien, Chin-Yen
			N/A	100%
Corp.	Director	Chang, Chung-Ming

	Supervisor	Chen,Pei-Chia
	*General manager	Hsun, Chin-Ta
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Wu,Yung-Tsai
Inventec (Pudong)	Director	Chien, Chin-Yen
			N/A	100%
Technology Corp.	Director	Chang, Chung-Ming

	Supervisor	Chen,Pei-Chia
	*General manager	Hu,Chih-Kuan
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Wu,Yung-Tsai
Inventec
	Director	Chien, Chin-Yen
(Shanghai) Service			N/A	100%
	Director	Chang, Chung-Ming
Co., Ltd
	Supervisor	Chen,Pei-Chia

	*General manager	Wu,Yung-Tsai

168

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Wu, Yung-Tsai
Inventec Hi-Tech	Director	Chien, Chin-Yen
			N/A	100%
Corp.	Director	Chang, Chung-Ming

	Supervisor	Chen, Pei-Chia
	*General manager	Hu,Chih-Kuan
		Representative of Inventec (Cayman) Corp.`：`
Inventec Huan	Chairman	Huang, Kuo-Chun
Hsin (Zhejiang)	Director	Wen, Shih-Chih
			N/A	100%
Technology Co.,	Director	Wu, Yung-Tsai

Ltd.	Supervisor	Chen, Pei-Chia
	*General manager	Chien, Chin-Yen
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Huang, Kuo-Chun
Inventec	Director	Wu, Yung-Tsai
			N/A	100%
(Chongqing) Corp.	Director	Chien, Chin-Yen

	Supervisor	Chen, Pei-Chia
	*General manager	Chien, Chin-Yen
		Representative of Inventec (Chongqing) Corp.`：`
Chongqing
	Chairman	Yang, Jen-Chieh
Rongjie Cloud			N/A	100%
	Supervisor	Chen, Pei-Chia
Service Co.
	*General manager	Tsung, Yu-Lin

		Representative of Chongqing Rongjie Cloud Service Co.`：`
Chongqing TaiYu	Chairman	Kung, Ching-Cheng
			N/A	100%
Cloud Service Co.	Supervisor	Ma, Pin-Pin

	*General manager	Chin, Ching
		Representative of Chongqing TaiYu Cloud Service Co`：`
Chongqing YuYa	Chairman	Kung, Ching-Cheng
			N/A	100%
Cloud Service Co.	Supervisor	Ma, Pin-Pin

	*General manager	Chin, Ching
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Huang, Kuo-Chun
Inventec
	Director	Wu,Yung-Tsai
(Chongqing)			N/A	100%
	Director	Chien,Chin-Yen
Service Co., Ltd.
	Supervisor	Chen,Pei-Chia

	*General manager	Chien,Chin-Yen
		Representative of Inventec (Cayman) Corp.`：`
	Chairman	Huang, Kuo-Chun
	Director	Wu,Yung-Tsai
TPV-Inventa
	Director	Chang, Hui	302,421,330	90%
Holding Ltd.
	Director	Chen, Wan-Chien

	Director	Yu, Chin-Pao
	*General manager	Chen, Wan-Chien
	Chairman	Representative TPV-Inventa Holding Ltd.`：`
	Director	Huang, Kuo-Chun
TPV-Inventa
	Dit	Ch Hi
Technology Co.,	recor	ang, u	15,250,000	100%

Ltd.	Director	Chen, Wan-Chien
	Supervisor	Yu, Chin-Pao

	*General manager	Chen, Wan-Chien

169

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

	Chairman	Representative TPV-Inventa Holding Ltd.`：`
	Director	Huang, Kuo-Chun
TPV-Inventa
	Dit	Ch Hi
Technology	recor	ang, u	N/A	100%

(Fujian) Ltd.	Director	Chen, Wan-Chien
	Supervisor	Yu, Chin-Pao

	*General manager	Chen, Wan-Chien
		Representative of Inventec Corporation`：`
IEC (Cayman)
			25,000,000	100%
Corporation	Director	Lee, Tsu-Chin

		Representative of IEC (Cayman) Corp.`：`
	Chairman	Wu, Yung-Tsai
Inventec
	Director	Chien, Chin-Yen
Technology			N/A	100%
	Director	Chang, Chung-Ming
(Chongqing) Corp.
	Supervisor	Chen, Pei-Chia

	*General manager	Chien, Chin-Yen
Inventec Holding (North America) Corp.	Director Director Director	Representative of Inventec Corporation`：` Lee, Tsu-Chin Huang, Kuo-Chun Wu, Yung-Tsai	5,000,000	100%
Inventec Electronics (USA) Corp.	Director Director Director *General manager	Representative of Inventec Holding (North America) Corp.`：` Lee, Tsu-Chin Huang, Kuo-Chun Wu, Yung-Tsai Lin, Chin-Wen	500,000	100%
Inventec Manufacturing (North America) Corp.	Director Director Director *General manager	Representative of Inventec Holding (North America) Corp.`：` Lee, Tsu-Chin Huang, Kuo-Chun Wu, Yung-Tsai Lin, Chin-Wen	2,000,000	100%
Inventec Distribution (North America) Corp.	Director Director Director *General manager	Representative of Inventec Holding (North America) Corp.`：` Lee, Tsu-Chin Huang, Kuo-Chun Wu, Yung-Tsai Lin, Chin-Wen	500,000	100%
Inventec Configuration (North America) Corp.	Director Director Director *General manager	Representative of Inventec Holding (North America) Corp.`：` Lee, Tsu-Chin Huang, Kuo-Chun Wu, Yung-Tsai Lin, Chin-Wen	2,000,000	100%
IEC Technologies, S. de R.L. de C.V.	Director Director	Representative of Inventec Holding (North America) Corp.`：` Lee, Tsu-Chin Huang, Kuo-Chun	2	100%
Inventec (Czech), s.r.o.	Representative Representative Representative	Representative of Inventec Corporation`：` Tsai, Chih-An John William Busby Tseng, Kuang-Chao	68,000,000	100%

170

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

Inventec Development Japan Corporation	Representative Representative Director Supervisor	Representative of Inventec Corporation`：` Lee, Tsu-Chin Ryu Kazuyoshi Yuan, Chen-Fa Yu, Chin-Pao	45,100	100%
Inventec Manufacturing (India) Private Limited	Representative Representative Representative *General manager	Representative of Inventec Corporation`：` Wu, Yung-Tsai Chang, Hui N. Ramalingam Hsu, Yu-Kuang	55,994,400 NA	99.99% NA
Invnetec Investments Co., Ltd.	Chairman Director Director Supervisor *General manager	Representative of Inventec Corporation`：` Lee, Tsu-Chin Huang, Kuo-Chun Yu, Chin-Pao Cheng, Hsien-Ho Yu, Chin-Pao	108,800,000	100%
Inventec Solar Energy Corporation	Director Chairman Director Director Director Supervisor Supervisor General manager	Inventec Corporation Cho, Tom-Hwar Representative of Invnetec Investments Co., Ltd.`：` Yu, Chin-Pao Fu-Tai investment Corporation Hsieh, Jui-Hai Cheng, Hsien-Ho Chen, Chin-Tsai Hsieh, Jui-Hai	108,150,000 2,120,000 15,000,000 16,422,320 7,291,760 530,000 10,000 7,291,760	33.45% 0.66% 4.64% 5.08% 2.26% 0.16% 0.00% 2.26%
Inventec Energy Corporation	Chairman Director Director Director Supervisor Supervisor General manager	Chen, Chin-Tsai Huang, Ping-Lin E-TON Solar Tech. Co., Ltd. WIN Semiconductors Corp. Cheng, Hsien-Ho Chuang, Shuo-Hung Hsieh, Jui-Hai	18,878 226,538 1,000,000 43,770,481 0 481,392 0	0.01% 0.18% 0.79% 34.52% 0.00% 0.38% 0.00%
E-TON Solar Tech. Co., Ltd.	Chairman Director Director Director Independent Director Independent Director Independent Director Supervisor Supervisor General manager	Representative of Inventec Corporation`：` Hsu, Shen-Chun Yu, Chin-Pao Yang, Hsin-Hua Representative of Fu-Tai investment Corporation`：` Wen, Ching-Chang Lai, Ming-Chang Tsai, Yang-Tsung Wu, Ying-Chih Yeh, Li-Cheng Cheng, Hsien-Ho Wen, Ching-Chang	231,520,528 42,500,000 0 0 0 25,100,000 0 420,000	29.70% 5.45% 0.00% 0.00% 0.00% 3.22% 0.00% 0.05%
Gloria Solar International Holding, Inc.	Chairman Director Director Director Director	Representative of E-TON Solar Tech. Co., Ltd.`：` Hsu, Shen-Chun Wen, Ching-Chang Chen, Chao-Chuan Lee, Chung-I Su, Yao-Chuan	59,200,000	50.76%

171

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

Adema Technologies, Inc.	Chairman Director Director	Representative of Gloria Solar International Holding, Inc.`：` Hsu, Shen-Chun Chen, Chao-Chuan Lee, Chung-I	1,100,000	100%
Gloria Solar Co., Ltd	Chairman Director Director Supervisor *General manager	Representative of Gloria Solar International Holding, Inc.`：` Hsu, Shen-Chun Wen, Ching-Chang Lee, Chung-I Chen, Chao-Chuan Hsu, Shen-Chun	63,908,120	100%
Inventec Appliances Corp.	Chairman Director Director Director Director Supervisor *General manager	Representative of Inventec Corporation`：` Chang, Ching-Sung Lee, Tsu-Chin Wen, Shih-Chih Wu, Yung-Tsai Lee, Chia-En Cheng, Hsien-Ho Ho, Tai-Shui	536,857,254	100%
Inventec Appliances (Cayman) Holding Corp.	Director	Representative of Inventec Appliances Corporation`：` Chang, Ching-Sung	199,385,369	100%
Inventec Appliances (USA) Distribution Corp.	Director *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang,Ching-Sung Wang, Po-Hung	400,000	100%
Inventec Appliances Corporation USA Inc.	Director *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang,Ching-Sung Wang,Po-Hung	10,000	100%
Inventec Electronics (Shanghai) Co., Ltd.	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Tsai, Shih-Kuang Ho, Tai-Shui Tseng, Ching-An Tsai, Shih-Kuang	N/A	100%
Inventec Appliances (Shang Hai) Co., Ltd.	Chairman Supervisor *General manager	Representative of Inventec Electronics (Shanghai) Co., Ltd.`：` Chang, Ching-Sung Tseng, Ching-An Tsai, Shih-Kuang	N/A	100%
Inventec Appliances (Pudong) Corp.	Chairman Director Director Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang,Ching-Sung Lin,Wen-Yao Chen, Kun-Hui Ho, Tai-Shui Chang, Hsueh-Ling Tseng, Ching-An Chen, Kun-Hui	N/A	100%

172

			Shareholding	Shareholding
Company	Title	Name		Investment
			Shares
				Holding (%)

Inventec (Nanjing) Electronics Co. Ltd.	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Kao, Chao-Yang Chen, Lieh-Hung Shen, Cheng-Hung Kao, Chao-Yang	N/A	100%
Inventec Appliances (Nanjing) Corp.	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Chang, Hsueh-Ling Kao, Chao-Yang Chang, Shu-Ching Kao, Chao-Yang	N/A	100%
Inventec Appliances (Nanjing) System Corp.	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Yang, Ming-Hsien Kao, Chao-Yang Chang, Shu-Ching Kao, Chao-Yang	N/A	100%
Inventec Appliances (XI’AN) Corporation	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Chang, Hsueh-Ling Pien, Yung-Tsai Shen, Cheng-Hung Pien, Yung-Tsai	N/A	100%
Inventec Appliances (Nanchang) Corporation	Chairman Director Director Supervisor *General manager	Representative of Inventec Appliances (Cayman) Holding Corp.`：` Chang, Ching-Sung Chen, Kun-Hui Chang, Ju-Nan Shen, Cheng-Hung Chang, Ju-Nan	N/A	100%

Note: General managers marked with * are assigned and are not individual shareholders.

173

7.1.6 Operational Highlights of Inventec company Subsidiaries

Unit: NT$ Thousands (Except EPS) ； As of 12/31/2015

Company	Capital	Total Assets	Total Liabilities	Total Stockholders' Equity	Sales Revenue	Operating Income	Income after Tax	EPS after Tax
Inventec Corporation (Hong Kong) Ltd.	8,705	56,860,724	56,361,564	499,160	203,336,695	6,701	174,530	－
Inventec (Tianjin) Electronics Co., Ltd.	164,100	456,783	67,977	388,806	143,938	(30,243)	127,075	－
Inventec (Beijing) Electronics Technology Co., Ltd.	47,589	94,846	9,842	85,004	37,942	1,287	2,535	－
Inventec (Cayman) Corp.	9,812,963	13,983,905	0	13,983,905	0	65,775	(50,164)	－
Inventec (Shanghai) Corp.	968,190	4,072,801	3,303,646	769,155	10,198,666	(14,026)	(12,715)	－
Inventec Appliances (ShangHai) Co., Ltd.	647,975	738,247	4,448	733,799	0	(19,617)	(21,170)	－
Inventec (Pudong) Corp.	1,641,000	15,524,058	13,744,824	1,779,234	23,966,662	(539,407)	(678,243)	－
Inventec (Pudong) TechnologyCorp.	1,641,000	22,349,522	17,137,689	5,211,833	51,416,223	367,265	(46,584)	－
Inventec (Shanghai) Service Co., Ltd	95,178	49,832	8,605	41,226	32,520	4,552	5,769	－
Inventec Hi-Tech Corp.	1,641,000	12,918,077	11,153,380	1,764,697	18,390,901	15,257	(42,450)	－
Inventec Huan Hsin (Zhejiang) Technology Co., Ltd.	941,934	956,504	684,549	271,955	755,423	(400,884)	(440,918)	－
Inventec (Chongqing) Corp.	1,641,000	28,745,534	24,115,890	4,629,644	152,416,967	749,671	1,213,502	－
Chongqing Rongjie Cloud Service Co.	101,084	101,033	2	101,031	0	(1)	(54)	－
Chongqing TaiYu Cloud Service Co.	101,084	101,032	2	101,030	0	(1)	(55)	－
Chongqing YuYa Cloud Service Co.	101,084	101,064	34	101,031	0	(173)	(54)	－
Inventec (Chongqing) Service Co., Ltd.	32,820	105,491	69,444	36,047	94	(132)	516	－
TPV-Inventa HoldingLtd.	1,834,968	15,363	171,198	(155,835)	1,693,130	4,192	(150,699)	－
TPV-Inventa Technology Co., Ltd.	152,500	12,683,281	12,834,993	(151,712)	23,070,957	(303,997)	(130,984)	(8.59)
TPV-Inventa Technology (Fujian) Ltd.	1,476,900	308,812	274,361	34,451	259,280	(14,558)	(12,110)	－
IEC (Cayman) Corporation	739,500	784,561	0	784,561	0	0	12,346	－
Inventec Technology (Chongqing) Corp.	820,500	784,666	105	784,561	0	0	12,346	－
Inventec Holding (North America) Corp.	159,003	1,248,653	87,136	1,161,516	0	0	53,512	－
Inventec Electronics (USA) Corp.	16,410	246,050	313	245,737	58,173	2,770	1,840	－
Inventec Manufacturing (North America) Corp.	65,640	233,970	8,353	225,617	291,170	13,865	8,413	－
Inventec Distribution (North America) Corp.	16,410	13,557,169	13,149,118	408,051	61,934,526	21,023	12,046	－

174

Company	Capital	Total Assets	Total Liabilities	Total Stockholders' Equity	Sales Revenue	Operating Income	Income after Tax	EPS after Tax
Inventec Configuration (North America) Corp.	65,640	195,228	10	195,218	50,567	2,408	2,870	－
IEC Technologies, S. de R.L. de C.V.	65,640	180,701	51,721	128,980	513,148	20,504	28,321	－
Inventec (Czech), s.r.o.	85,921	8,542,242	8,400,650	141,592	35,515,180	190,452	10,811	－
Inventec Development Japan Corporation	32,048	127,394	2,982	124,412	20,856	(3,458)	(3,679)	－
Inventec Manufacturing (India) Private Limited	281,720	313,020	81,609	231,412	8	(50,482)	(44,216)	－
Inventec Investments Co., Ltd.	1,088,000	559,717	152	559,565	0	(238)	(94,407)	(0.87)
Inventec Solar Energy Corporation	3,233,548	5,993,418	2,908,875	3,084,543	7,831,894	245,755	208,502	0.64
Inventec EnergyCorporation	1,267,801	1,003,797	158,624	845,173	949,814	(125,191)	(258,847)	(2.04)
E-TON Solar Tech. Co., Ltd.	7,794,498	7,652,542	854,444	6,798,098	4,527,777	(787,120)	(808,218)	(1.04)
Gloria Solar International Holding	1,166,345	162,312	547,916	(385,604)	0	(5,348)	(46,239)	－
Adema Technologies	0	388	17,897	(17,509)	0	(2,669)	(2,266)	－
Gloria Solar Co.	639,081	172,664	530,740	(358,076)	0	(2,157)	(43,111)	(0.67)
Inventec Appliances Corp.	5,368,573	26,337,666	11,926,311	14,411,355	40,948,618	1,190,554	1,693,572	3.15
Inventec Appliances (Cayman) HoldingCorp.	6,543,828	12,819,625	0	12,819,625	0	0	884,840	－
Inventec Appliances (USA) Distribution Corp.	131	555,165	455,828	99,337	1,940,979	1,243	1,262	－
Inventec Appliances Corporation USA Inc.	33	11,402	1,094	10,308	29,459	1,667	999	－
Inventec Electronics (Shanghai) Co., Ltd.	1,693,512	2,134,316	171,565	1,962,751	90,540	(77,156)	119,001	－
Inventec Appliances (ShangHai) Co., Ltd.	1,264	44	0	44	0	(1,228)	(1,228)	－
Inventec Appliances (Pudong) Corp.	2,527,140	16,591,258	10,519,199	6,072,059	38,408,670	560,049	556,258	－
Inventec (Nanjing) Electronics Co. Ltd.	164,100	328,707	5,004	323,703	0	(4,264)	13,476	－
Inventec Appliances (Nanjing) Corp.	1,903,560	6,877,520	3,293,550	3,583,970	5,838,020	204,409	203,025	－
Inventec Appliances (Nanjing) System Corp.	328,200	591,930	29,449	562,481	30,546	(1,421)	27,126	－
Inventec Appliances (XI’AN)Corporation	131,280	194,539	176,930	17,609	0	(17,448)	4,810	－
Inventec Appliances (Nanchang) Corporation	68,922	158,217	11,377	146,840	75,386	242	3,981	－

175

7.1.7 Consolidated Financial Statements of Affiliates

Representation Letter

The entities that are required to be included in the combined financial statements of Inventec Corporation as of and for the year ended December 31, 2015 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated and Spearate Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Inventec Corporation and its Subsidiaries do not prepare a separate set of combined financial statements.

Company Name : Inventec Company. Chairman : Lee, Tsu-Chin Date: March 22, 2016

7.2 Private Placement Securities in the Most Recent Years: None

7.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: None

7.4 The Matters Listed in Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act, which might Materially affect Shareholders' Equity or the Price of the Company's Securities: None

7.5 Other Matters that Require Additional Description: None

176

Appendix `Ⅰ` : Consolidated Financial Statements with Subsidiaries Audited by CPA of 2015

177

Representation Letter

Company Name : Inventec Company. Chairman : Lee, Tsu-Chin Date: March 22, 2016

178

Independent Auditors’ Report

The Board of Directors of Inventec Corporation：

We have audited the accompanying consolidated balance sheets of Inventec Corporation and its subsidiaries (the "Group") as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended. These financial statements are the responsibility of the Group's management. Our responsibility is to express an audit report based on our audits. We did not audit the financial statements of certain consolidated subsidiaries with the total assets of $72,686,249 thousand, representing 37% of the consolidated total assets as of December 31, 2014; and the net sales of $82,918,862 thousand, representing 19% of the consolidated net sales for the years ended December 31, 2014. Also, we did not audit the long-term investments of other companies which amounted to $(542,888) thousand, representing (0.28)% of the consolidated total assets as of December 31, 2014; and the related investment income of $44,090 thousand, representing 0.45% of the consolidated net income before tax for the years ended December 31, 2014. The financial statements of these subsidiaries and investees accounted for under the equity method were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts for these companies, were based solely on the reports of other auditors.

We conducted our audits in accordance with the "Regulation Governing Auditing and Certification of Financial Statements by Certified Public Accountants" and the auditing standards generally accepted in the Republic of China. Those regulations and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit 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 and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors, the accompanying consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Consolidated Company 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Note to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with the International Financial Reporting Standards approved by the Financial Supervisory Commissions in the Republic of China and not those of any other jurisdictions. The standards, procedures, and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

The independent auditors' report and the accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language auditors’ report and financial statements, the Chinese version shall prevail.

179

We have also audited the non-consolidated financial statements of the Company as of and for the years ended December 31, 2015 and 2014, and have issued an unqualified audit report and a modified unqualified audit report thereon.

KPMG

CPA： Ying Ru, Chen

Leou Fong, Yang Taipei, Taiwan, R.O.C. March 22, 2016

Note to Readers

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

2015.12.31	2015.12.31	2014.12.31 Amount % 15,859,736 8 41,666 - 24,263 - 67,231,370 35 6,712,732 3 2,115,698 1 12,165,426 6 15,232,531 8 4,571,486 2 2,713,152 1
133,577,659 76
331,492 - 502,173 - 532,888 - 34,660,330 20 548,071 - 872,905 1 4,720,955 3
	98,771,869 56	126,668,060 64
	11,293,260 6 1,030,424 1 1,752,071 1	1,005,492 1 1,014,760 1 2,590,627 1
	14,075,755 8	4,610,879 3
	112,847,624 64	131,278,939 67
42,168,814 24	35,874,751 20 2,912,784 2 14,883,819 8 2,809,350 2	35,874,751 18 2,920,718 1 15,773,335 8 3,009,234 2
	56,480,704 32 6,418,145 4	57,578,038 29 6,844,752 4
	62,898,849 36	64,422,790 33
$ 175,746,473 100	$ 175,746,473 100	195,701,729 100

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

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Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

2015	% 100 95	2014	% 100 95
Amount $ 395,470,221 373,764,813		Amount 435,599,968 412,251,630
21,705,408	5	23,348,338	5
2,688,381 4,792,827 8,816,932	1 1 2	2,926,456 4,800,839 8,511,964	- 1 2
16,298,140	4	16,239,259	3
5,407,268	1	7,109,079	2
2,112,228 676,152 (914,173) (97,605)	1 - - -	2,864,110 1,015,376 (1,251,417) (56,450)	- - - -
1,776,602	1	2,571,619	-
7,183,870 2,208,135	2 1	9,680,698 3,015,137	2 -
4,975,735	1	6,665,561	2
(58,068) 69 9,781	- - -	(6,610) (4,265) 1,194	- - -
(48,218)	-	(9,681)	-
(640,299) 48,545 12,423 381,929	- - - -	1,472,514 32 6,101 (109,140)	- - - -
(197,402)	-	1,369,507	-
(245,620)	-	1,359,826	-
$ 4,730,115	1	8,025,387	2
$ 5,563,633 (587,898)	1 -	7,097,815 (432,254)	2 -
$ 4,975,735	1	6,665,561	2
$ 5,315,880 (585,765)	1 -	8,455,834 (430,447)	2 -
$ 4,730,115	1	8,025,387	2
$	1.55		1.98
$	1.54		1.96

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

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Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

		Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent		Non-Controlling Interests	Total Equity 61,812,188 6,665,561 1,359,826
Capital Stock	Capital Surplus	Retained	Earnings	Other Equity Interest		Total Equity Attributable to Owners of Parent
				Exchange Differences on Translation of Foreign Financial Statements	Unrealized Gains (Losses) on Available-for-Sale Financial Assets
Share Capital		Legal Reserve	Unappropriated Retained Earnings
$ 35,874,751 - -	2,895,677 - -	6,936,854 - -	7,488,577 7,097,815 (9,951)	1,495,109 - 1,373,853	146,155 - (5,883)	54,837,123 7,097,815 1,358,019	6,975,065 (432,254) 1,807
-	-	-	7,087,864	1,373,853	(5,883)	8,455,834	(430,447)	8,025,387
- - - -	- - - 25,041	707,417 - - -	(707,417) (5,739,960) - -	- - - -	- - - -	- (5,739,960) - 25,041	- - 294,973 5,161	- (5,739,960) 294,973 30,202
35,874,751 - -	2,920,718 - -	7,644,271 - -	8,129,064 5,563,633 (47,869)	2,868,962 - (264,790)	140,272 - 64,906	57,578,038 5,563,633 (247,753)	6,844,752 (587,898) 2,133	64,422,790 4,975,735 (245,620)
-	-	-	5,515,764	(264,790)	64,906	5,315,880	(585,765)	4,730,115
- - - -	- - - (7,934)	709,781 - - -	(709,781) (6,278,081) - (127,199)	- - - -	- - - -	- (6,278,081) - (135,133)	- - 16,943 142,215	- (6,278,081) 16,943 7,082
$ 35,874,751	2,912,784	8,354,052	6,529,767	2,604,172	205,178	56,480,704	6,418,145	62,898,849

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

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Consolidated Statements of Cash Flows

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities： Profit before income tax Adjustments to reconcile profit before income tax to net cash provided by operating activities： Depreciation expenses Amortization expenses Provisions for bad debt expenses Interest expenses Interest income Share-based payments Share of losses of associates and joint ventures accounted for using equity method (Gains) losses on disposal of property, plant, equipment and inventory property Gain on disposal of investments Impairment losses on financial assets Impairment losses on non-financial assets Others Total adjustments to reconcile profit Changes in operating assets and liabilities： Changes in operating assets： Decrease (increase) in financial assets held for trading Decrease in accounts receivable Decrease (increase) in other receivables Decrease in inventories Decrease (increase) in other current assets Total changes in operating assets Changes in operating liabilities： Increase (decrease) in financial liabilities held for trading Decrease in notes payable Decrease in accounts payable Increase in other payables Increase in other current liabilities Decrease in net defined benefit liabilities-non-current Increase in deferred income Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interests received Interests paid Income taxes paid Net cash flows from operating activities	2015 $ 7,183,870 3,976,246 964,995 25,179 914,173 (2,112,228) 8,533 97,605 (136,531) (331,861) - 140,379 (772)	2014 9,680,698 3,813,990 1,222,212 15,856 1,251,417 (2,864,110) 9,575 56,450 162,409 (383,461) 109,590 1,454,743 (38,264) 4,810,407 (227,010) 6,006,396 (27,568) 8,914,388 (1,646,819) 13,019,387 (64,739) (26,239) (31,253,048) 2,366,838 1,638,197 (30,129) 581,934 (26,787,186) (13,767,799) (8,957,392) 723,306 2,942,046 (944,491) (1,904,967) 815,894
	3,545,718
	215,185 11,810,327 2,596,999 2,892,534 1,610,970
	19,126,015
	48,343 (12,131) (20,374,773) 3,370,735 4,276,868 (41,869) 355,366
	(12,377,461)
	6,748,554
	10,294,272
	17,478,142 2,269,550 (864,916) (1,861,137)
	17,021,639

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

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Consolidated Statements of Cash Flows (CONT'D)

For the Years Ended December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities： Acquisition of available-for-sale financial assets Proceeds from disposal of available-for-sale financial assets Proceeds from capital reduction of available-for-sale financial assets Proceeds from repayments of bond investment without active market Acquisition of financial assets at cost Proceeds from disposal of financial assets at cost Proceeds from capital reduction of financial assets at cost Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Net cash inflows from business combination (Increase) decrease in other non-current assets Net cash flows from (used in) investing activities Cash flows from financing activities： Decrease in short-term borrowings (Repayments) proceeds from long-term debt Increase in other non-current liabilities Cash dividends paid Change in non-controlling interests Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2015 (23,452,524) 28,952,230 35,371 - (55,595) - 88,354 (367,399) - (3,762,999) 250,519 (239,988) 1,305,370 (145,720)	2014 (33,777,739) 29,491,624 6,650 208,740 (144,403) 1,268 - (939) 67,329 (4,781,393) 93,680 (378,368) - 438,857 (8,774,694) (9,035,069) 1,982,345 19,090 (5,739,960) 19,175 (12,754,419) 1,512,290 (19,200,929) 56,932,670 37,731,741
	2,607,619
	(8,351,998) (4,659,943) 13,762 (6,278,081) 249,395
	(19,026,865)
	(1,210,503) (608,110) 37,731,741
	$ 37,123,631

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

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Notes to the Consolidated Financial Statements

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

(1) Overview

Inventec Co., Ltd. (the “Company”) was organized in 1975. The Company engages primarily in the developing, manufacturing, processing and trading of computers and related products. The Company’s registered office address is located at No. 66 Hou-gang Street, Shin-Lin District, Taipei, Taiwan, R.O.C. The shares of the Company became officially listed and traded on the Taiwan Stock Exchange in November 1996.

The consolidated financial statements of the Company as of and for the year ended December 31, 2015 comprised the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group primarily is involed in the developing, computer hardware and software products, manufacturing, processing and trading of computers and related products, and sale of wired and wireless communication and digital accessory products. Please refer to Note 4(c) for details.

(2) Financial Statements Authorization Date and Authorization Process

The consolidated financial statements were authorized for issuance by the Board of Directors on March 22, 2016.

(3) New Standards and Interpretations not yet Adopted

(a) Impact of the 2013 version of the International Financial Reporting Standard (“IFRS”) endorsed by the Financial Supervisory Commissions R.O.C. (“FSC”).

The Group has adopted the 2013 version of the IFRS endorsed by the FSC (excluding IFRS 9 Financial instruments) in preparing consolidated financial statements starting in 2015.

The related new standards, interpretations and amendments issued by the International Accounting Standards Board (“IASB”) were as follows:

New Standards and amendments
Amended IFRS 1_“Limited Exemption from Comparative IFRS 7_
Disclosures for First-time Adopters”
Amended IFRS 1_“Severe Hyperinflation and Removal of Fixed_
Dates for First-time Adopters”
Amended IFRS 1_“Government Loans”
Amended IFRS 7“Disclosure_－Transfers of Financial Assets”
Amended IFRS 7_“Disclosure_－Offsetting Financial Assets and
Financial Liabilities”
IFRS10 “Consolidated Financial Statements”

Effective date
per IASB

July 1, 2010
July 1, 2011
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
(Investment Entities
amendments to be
adopted on January
1, 2014.)

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

New Standards and amendments
IFRS 11 “Joint arrangements”
IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 13 “Fair Value Measurement”
Amended IAS 1_“Presentation of Items of Other Comprehensive_
Income”
Amended IAS 12_“Deferred Tax: Recovery of Underlying Assets”
Amended IAS 19“Employee Benefits”
Amended IAS 27“Separate Financial Statements”
Amended IAS 32“Offsetting Financial Assets and Financial_
Liabilities”
IFRIC20－“Stripping Costs in the Production Phase of a Surface
Mine”

Effective date
per IASB

January 1, 2013
January 1, 2013
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013

The Group had assessed that the 2013 version of the IFRS may not have any significant impact on the consolidated financial statements except for the following:

A. IAS 1 Presentation of Financial Statements

The other comprehensive income section is required to present line items which are classified by their nature, and are grouped between those items that will or will not be reclassified to profit or loss in subsequent periods. Allocation of income tax to two groups of items of other comprehensive is also required. The Group is expecting to change the presentation of comprehensive income statements in accordance with the standard. The Group has changed the presentation of comprehensive income statement along with its comparison periods in accordance with the standard.

B. IFRS 12 Disclosure of Interests in Other Entities

The Group will disclose any additional information about its subsidiaries accordingly by the standard; please refer to Note 6(e).

C. IFRS 13 Fair value measurement

The standard revised the definition of the fair value, provides a framework for measuring fair value, and requires the disclosures on fair value measurement. Under this standard, Group has increased its disclosures on the measurement of fair value (Please refer to note 6(w)) and postponed the adoption of the standard regarding fair value measurement during the transition period of IFRS 13.

Comparative information need not be disclosed for periods before initial application.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(b) Impact of IFRSs issued by IASB but not yet endorsed by the FSC

The 2013 version of the IFRS issued by the IASB but not yet endorsed by the FSC were as follows：

New Standards, Interpretations and Amendments
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 acquisitions of interests in joint operations
(amendments to IFRS 11)
IFRS 14 ‘Regulatory deferral accounts’
IFRS 15 ‘Revenue from contracts with customers’
IFRS16 ‘Lease’
Disclosure initiative (amendments to IAS 1)
Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealized losses
(amendments to IAS 12)
Clarification of Acceptable Methods of Depreciation and
Amortization (amendments to IAS 16 and 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Services related contributions from employees or third parties
(amendments to IAS 19)
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)
The Annual Improvements: 2010-2012 and 2011-2013 Cycles
The Annual Improvements to IFRS: 2012-2014 Cycles
IFRIC 21, ‘Levies’

IASB Effective
Date

January 1, 2018
Not yet endosed by
IASB
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
July 1, 2014
January 1, 2016
January 1, 2014

As the standards and amendments above have not been endorsed by the FSC, the Group is in the process of assessing the impact on the financial position and results of operations. Related impact will be disclosed following the completion of its assessments.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(4) Significant Accounting Policies

The consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and the Chinese language, the Chinese version shall prevail.

The significant accounting policies presented in the consolidated financial statements are summarized as follows:

The significant accounting policies have been applied consistently to all periods presented in these consolidated financial statements, except when otherwise indicated.

(a) Statement of compliance

These consolidated annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to the Regulations) and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by FSC (hereinafter referred to as the IFRSs endorsed by FSC).

(b) Basis of preparation
1.Basis of measurement

The consolidated financial statements have been prepared on historical cost basis except for the following material items in the statement of financial position:

1) Financial instruments measured at fair value through profit or loss are measured at fair value;
2) Available-for-sale financial assets are measured at fair value;
3) Liabilities for cash-settled share-based payment arrangements are measured at fair value;and
4) The net defined benefit liability (or asset) is recognized as the fair value of plan assets, net of aggregation of the present value of the defined benefit obligation, with a limit based on a defined benefit asset as disclosed in Note 4(s).
2.Functional and presentation currency

The functional currency of each entity of the Group is determined based on the primary economic environment in which the entity operates. The Group consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Basis of consolidation
1.Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Income (losses) applicable to non controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any differences between the Group’s share of net assets before and after the change, and any considerations received or paid, are adjusted to or against the Group reserves.

2.List of subsidiaries in the consolidated financial statements

Principal
Investor
Name of Subsidiary
activity

Shareholding Ratio
2015.12.31
2014.12.31
Note

The Company
Inventec Corporation (Hong Kong) Ltd.
Investing in Mainland
China and import and
export business
100.00%
100.00%
〞
Inventec Holding (North America) Corp.
Investment of holding
company in America
100.00%
100.00%
〞
Inventec (Cayman) Corp.
Holding Company
100.00%
100.00%
〞
IEC (Cayman) Corporation
Holding Company
100.00%
100.00%
〞
Inventec (Czech), s.r.o.
Computer products
assembly operations
100.00%
100.00%
〞
Inventec Development Japan Corporation
Developing,
designing
and selling
computer peripherals
100.00%
100.00%
〞
Inventec Investments Co., Ltd.
Investment company
100.00%
100.00%
The Company、
Inventec Investments
Co., Ltd.、Inventec
Appliances Corp. and
Inventec Energy
Corporation
Inventec Solar Energy Corporation
Developing,
production and selling
of multi-crystalline
solar cells
49.23%
49.23%
The Company and
Inventec Investments
Co., Ltd.
E-TON Solar Tech. Co., Ltd
Manufacturing and
selling of solar cells
34.65%
34.65%
The Company,
Inventec Solar Energy
Corporation and
E-TON Solar Tech.
Co., Ltd
Inventec Energy Corporation
Manufacturing and
selling of
photovoltaic systems
integration
49.36%
49.36%
The Company
Inventec Appliances Corp.
Wireless terminal
products
100.00%
100.00%
The Company and
Inventec Investments
Co., Ltd.
Inventec Manufacturing (India) Private
Limited
Computer product
assembles and
warranty services
100.00%
-
%
Inventec Corporation
(Hong Kong) Ltd.
Inventec (Tianjin) Electronics Co., Ltd.
Electronic product
software and
hardware
development
manufacturing
100.00%
100.00%
〞
Inventec (Beijing) Electronics Technology
Co., Ltd.
〞
100.00%
100.00%

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Principal
Investor
Name of Subsidiary
activity

Shareholding Ratio
2015.12.31
2014.12.31
Note

Inventec (Cayman)
Corp.
Inventec (Shanghai) Corp.
Electronic
product
software and
hardware
development
manufacturing
100.00%
100.00%
〞
Inventec (Pudong) Corp.
〞
100.00%
100.00%
〞
Inventec (Pudong) Technology Corp.
〞
100.00%
100.00%
〞
Inventec (Shanghai) Service Co., Ltd.
〞
100.00%
100.00%
〞
Inventec Hi-Tech Corp.
〞
100.00%
100.00%
〞
Inventec Huan Hsin (Zhejiang) Technology
Co., Ltd.
Complete of the
electronic computer
and product and sale
of external equipment
100.00%
100.00%
〞
Inventec (Chongqing) Corp.
Assembly and sale of
computer products
100.00%
100.00%
〞
Inventec (Chongqing) Service Co., Ltd
〞
100.00%
100.00%
〞
TPV-Inventa Holding Ltd.
Holding Company
90.00%
-
% The board of Directors decided to terminate the
joint venture agreement with TPV Technology
Limited. The Company obtained all of the numbers
of the board of directors of TPV-Inventa Holding
Ltd. and obtain the controlling power in 2015.
Inventec (Shanghai)
Corp.
Inventec Asset-Management (Shanghai)
Corporation
Equipment leasing,
Storage, technological
development and sale
of computer
78.00%
-
%
Inventec (Chongqing)
Corp.
Chongqing Rongjie Cloud Service Co., Ltd. Software production
100.00%
-
%
Chongqing Rongjie
Cloud Service Co.,
Ltd.
Chongqing TaiYu Cloud Service Co., Ltd.
〞
100.00%
-
%
Chongqing TaiYu
Cloud Service Co.,
Ltd.
Chongqing YuYa Cloud Service Co., Ltd.
〞
100.00%
-
%
TPV-Inventa Holding
Ltd.
TPV-Inventa Technology Co., Ltd.
AIO PC
100.00%
-
%
〞
TPV-Inventa Technology (Fujian) Ltd.
〞
100.00%
-
%
IEC (Cayman)
Corporation
Inventec Technology (Chongqing) Corp.
Computer software
design and computer
system integration
service
100.00%
100.00%
Inventec Holding
(North America)
Corp.
Inventec Electronics (USA) Corporation
Computer product
assembles and
warranty services
100.00%
100.00%
〞
Inventec Manufacturing (North America)
Corporation
〞
100.00%
100.00%
〞
Inventec Configuration (North America)
Corporation
〞
100.00%
100.00%
〞
Inventec Distribution (North America)
Corporation
〞
100.00%
100.00%
〞
IEC Technologies, S. de R.L. de C.V.
〞
100.00%
100.00%
E-TON Solar Tech.
Co., Ltd
Gloria Solar International Holding, Inc.
Investment company
50.76%
50.76%
Gloria Solar
International Holding,
Inc.
Adema Technologies, Inc.
Design and consulting
service of
photovoltaic systems
100.00%
100.00%
〞
Gloria Solar Co., Ltd.
Manufacture and sale
of photovoltaic
modules
100.00%
100.00%

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

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Principal Shareholding Ratio
Investor Name of Subsidiary activity 2015.12.31 2014.12.31 Note
Inventec Appliances Inventec Appliances (Cayman) Holding Corp. Holding Company 100.00% 100.00%
Corp.
Inventec Appliances Inventec Appliances (USA) Distribution Marketing promotion 100.00% 100.00%
(Cayman) Holding Corp.
Corp.
〞 Inventec Appliances Corporation USA, Inc. Customer information 100.00% 100.00%
service
Inventec Appliances Inventec Electronics (Shanghai) Co.Ltd. Telecommunication 100.00% 100.00%
(Cayman) Holding research
Corp.
〞 Inventec Appliances (Pudong) Corp. Electronic 100.00% 100.00%
communication and
products
manufacturing
〞 Inventec Appliances (Nanjing) Corp. 〞 100.00% 100.00%
〞 Inventec (Nanjing) Electronics Co. Ltd. house leasing 100.00% 100.00%
〞 Inventec Appliances (Nanjing) System Corp. Electronic 100.00% 100.00%
communication and
products
manufacturing
〞 Inventec Appliances (XI'AN) Corporation Telecommunication 100.00% 100.00%
research and service
〞 Inventec Appliances (Nanchang) Corporation 〞 100.00% 100.00%
Inventec Electronics Inventec Appliances (Shang Hai) Co., Ltd. Development and 100.00% - %
(Shanghai) Co.Ltd. consultation on
software and
hardware; as well as
selling of electronic
products
----- End of picture text -----

3.Subsidiaries excluded from the consolidated financial statements: None.
(d) Foreign Currency
1.Foreign currency transaction

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period adjusted for the effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period.

Non monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation.

Foreign currency differences arising on retranslation are recognized in profit or loss, except for those differences relating to available-for-sale equity investment which are recognized in other comprehensive income.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2.Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the reporting currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated at average exchange rate. Translation differences are recognized in other comprehensive income, and presented in the foreign currency translation reserve in equity.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group dispose of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group dispose of only part of investment in an associate or joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising form such items are considered to form parts of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

(e) Classification of current and non-curent assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

1.It expects to realize the asset or intends to sell or consume it, in its normal operating cycle;
2.It holds the asset primarily for the purpose of trading;
3.It expectes to realize the asset within twelve months after the reporting period; or
4.The asset is cash and its cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

1.It expects to settle the liability in its normal operating cycle;
2.It holds the liability primarily for the purpose of trading;
3.The liability is due to be settled within twelve months after the reporting period; or
4.It does not have any unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(f) Cash and cash equivalents

Cash comprise cash balances and call deposits. Cash equivalents with maturities of twelve months or less from the acquisition date are subject to an insingnificant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments.

Time deposits which are held for the purpose of meeting short-term cash commitments, rather than for investment or other purposes, are reported as cash equivalents.

(g) Financial instruments

Financial assets and financial liabilities are initially recognized when the Group become a party to the contractual provisions of the instruments.

1.Financial assets

Financial assets are classified into the following categories: financial assets at fair value through profit or lss, loans and receivables, and available-for-sale financial assets.

1) Financial assets are at fair value through profit or loss

A financial asset is classified in this category if they are classified as held-for-trading or is designated as such on initial recognition.

Financial assets are classified as held-for-trading if they are acquired principally for the purpose of selling in the short term. The Group designate financial assets, other than ones classified as held-for-trading, as at fair value through profit or loss at initial recognition under one of the following situations:

A.Designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise.
B.Performance of the financial asset is evaluated on a fair value basis.
C.A hybrid instrument contains one or more embedded derivatives.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend and interest income, are recognized in profit or loss, under non-operating income and expense. A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade date accounting.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured, are measured at amortised cost, and are included in financial assets measured at cost.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2) Available-for sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other categories of financial assets. Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction cost. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, interest income calculated using the effective interest method, dividend income, and foreign currency differences on available-for -sale debt instruments, are recognized in other comprehensive income and presented in the fair value reserve in equity. When an investment is derecognized, the gain or loss accumulated in equity is reclassified to profit or loss, under non-operating income and expense. A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade date accounting.

Dividend income is recognized in profit or loss on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date. Such dividend income is included in other income of non-operating income and expenses.

Interest income from investment in bond security is recognized in profit or loss, under other income of non-operating income and expenses.

3) Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise trade receivables, other receivables, and investment in debt security with no active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses other than insignificant interest on short-term receivables. A regular way purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade date accounting.

Interest income is recognized in profit or loss, under non-operating income and expense.

4) Impairment of financial assets

Except for financial assets at fair value through profit or loss, other financial assets are assessed for impairment at each reporting date. A financial asset is impaired if, and only if, there is objective evidence of impairment 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 assets that can be estimated reliably.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is accounted for as objective evidence of impairment.

All individually significant receivables are assessed for specific impairment. Receivables that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics. In assessing collective impairment, the Group use historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or lesser than those suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate.

An impairment loss in respect of a financial asset measured at cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss is not reversible in subsequent periods.

An impairment loss in respect of a financial asset is deducted from the carrying amount, except for trade receivables, for which an impairment loss is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. Any subsequent recovery of receivable written off is recorded in the allowance account. Changes in the amount of the allowance accounts are recognized in profit or loss.

Impairment losses on available-for-sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss.

If, in a subsequent period, the amount of impairment loss of financial assets measured at amortized cost decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the decrease in impairment loss is reversed through profit or loss to the extent that the carrying value of the asset does not exceed its amortized cost before impairment was recognized at the reversal date.

Impairment losses recognized on available-for-sale equity security are not reversed through profit or loss. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income, and accumulated in other equity. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Provision for doubtful accounts is recorded as general and administrative expenses. The impairment loss on financial assets other than accounts receivable is recorded as other gains and losses under non-operating income and expenses.

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the asset are terminated, or when the Group transfer substantially all the risks and rewards of ownership of financial assets.

On derecognition of a financial asset in its entity, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in other equity – unrealized gains or losses from available for sale financial assets are recognized in profit or loss, under non-operating income and expenses.

2.Financial liabilities and equity instruments
1) Financial liabilities at fair value through profit or loss

A financial liability is classified in this category if it is classified as held-for-trading or is designated as such on initial recognition.

A financial liability is classified as held-for-trading if it is acquired principally for the purpose of selling in the short term. The Group designates financial liabilities, other than the ones classified as held-for-trading, as at fair value through profit or loss at initial recognition under one of the following situations:

A.Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on a different basis;
B.Performance of the financial liabilities is evaluated on a fair value basis;
C.A hybrid instrument contains one or more embedded derivatives.

Attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, which take into account any interest expense, are recognized in profit or loss, under non-operating income and expenses.

The Group provides and designates financial guarantee contracts and loan commitments as at fair value through profit or loss. Any gains and losses are recognized in profit or loss, under non-operating income and expenses.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2) Other financial liabilities

Financial liabilities not classified as held-for-trading, or designated as at fair value through profit or loss, which comprise of loans and borrowings, and trade and other payables, are measured at fair value plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in profit or loss, under non-operating income and expenses.

3) Derecognition of financial liabilities

A financial liability is derecognized when its contractual obligation has been discharged or cancelled, or expires. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and under non-operating income and expenses.

4) Offsetting of financial assets and liabilities

The Group presents financial assets and liabilities on a net basis when the Group has the legally enforceable rights to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

3.Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate fluctuation exposures. Derivatives are recognized initially at fair value and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss, under “non-operating income and expenses”. When the fair value of derivative instrument is positive, it is classified as a financial asset; otherwise, it is classified as a financial liability.

For derivatives that are linked to investments in equity instruments that do not have a quoted market price in an active market and must be settled by delivery of such unquoted equity instruments, such derivating that are classified as financial assets are measured at amortized cost, and are included in financial assets measured at cost, and are included in financial liabilities measured at cost.

Embedded derivatives are separated from the host contract and are accounted for separately when the economic characteristics and risk of the host contract and the embedded derivatives are not closely related, and the host contract is measured as at fair value through profit or loss.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or jointly control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. The Group recognizes any changes, proportionately with shareholding ratio under additional-paid-in capital, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual controlling power.

Unrealized profits resulting from the transactions between the Group and an associate are eliminated to the extent of the Group’s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired.

When the Group’s share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent the Group has an obligation or has made payments on behalf of the investee.

The Group shall discontinue the use of equity method from the date when its investment ceases to be an associate or a joint venture. The Group shall measure the retained interest at fair value. The difference between the fair value of retained interest and proceeds from disposals, and the carrying amount of the investment at the date the equity method that was discontinued is recognized in profit or loss. The Group shall account for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss on the disposal of the related assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued. If an entity's ownership interest in an associate or a joint venture is reduced, while the entity continues to apply the equity method, the entity shall reclassify the proportion of the gain or loss, that had previously been recognized in other comprehensive income relating to that reduction in ownership interest, to profit or loss.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group shall continue to apply the equity method without remeasuring the retained interest.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Group’s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under additional paid-in capital. If the additional paid-in capital resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Group’s ownership interest is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

The Group ceases to have a significant influence over an associate and shall account for the investment in accordance with IAS 9 and IAS 39 from that date, provided the associate does not become a subsidiary or a joint venture as defined in IAS 31. On the loss of significant influence, the investor shall measure at fair value any investment the investor retains in the former associate. The investor shall recognize in profit or loss any difference between:

1.The fair value of any retained investment and any proceeds from disposing of the part interest in the associate; and
2.The carrying amount of the investment at the date when significant influence is lost.
( j) Joint Arrangements

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (ie joint venturers) have rights to the net assets of the arrangement. A joint venturer shall recognize its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless, the entity is exempted from applying the equity method as specified in that Standard.

When assessing the classification of a joint arrangement, the Group shall consider the structure and legal form of the arrangement, the terms in the contractual arrangement and other facts and circumstances. The Group had previously reviewed the contractual structure of the joint arrangement, and has now decided to reclassify the investments in 「Jointly Controlled Entities」 to 「Joint Venturers」. Although the investments have been reclassified, they are still recorded under the equity method. Thus, there is no effect in the recognized assets, liabilities and other comprehensive income.

A joint arrangement is an arrangement of which two or more parties have joint control. The IFRS classifies joint arrangements into two types-joint operations and joint ventures, and have the following characteristics: (a)The participants are bound by a contractual arrangement; (b) The contractual arrangement gives two or more of those parties joint control of the arrangement. IFRS 11 “Joint Arrangements” defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (ie activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(k) Investment property

Investment property is a property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment losses. Depreciation method, useful lives, and hesidual values shall be treated in accordance with IAS 16.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of raw materials and direct labor, and any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalized borrowing costs.

Any gain or loss on disposal of an investment property (caculated as the difference between the net proceeds from disposal and its carrying amount) is recognized in profit or loss. When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.

When the use of an investment property changes such that it is reclassified as property, plant and equipment, its book value at the date of reclassification becomes its cost for subsequent accounting.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

Buildings 10 ~ 25years

(l) Property, plant, and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method of a significant part of an item of property, plant and equipment are the same as the useful life and depreciation method of another significant part of that same item.

The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit or loss, under other gains and losses.

Subsequent expenditure is capitalized only when it is probable that future economic benefits associated with the expenditure will flow to the Group. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance is expensed as incurred.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The depreciable amount of an asset is determined after deducting its residual amount, and it shall be allocated on a systematic basis over its useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss.

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

plant and equipment are as follows:
Buildings	10 ~ 50years
Machinery	2 ~ 11years
Transportation equipment	3 ~ 6years
Furniture and office facilities	2 ~ 18years
Power equipment	2 ~ 16years
Renovation and leasehold improvements	2 ~ 20years
Miscellaneous equipment	2 ~ 25years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate.

(m) Leases
1.Lessor

Lease income from an operating lease is recognized in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. Incentives granted to the lessee to enter into the operating lease are spread over the lease term on a straight-line basis so that the lease income received is reduced accordingly.

Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

2.Lessee

Other leases are operating leases and are not recognized in the Group’s statement of financial position.

Payments made under operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(n) Intangible assets
1.Goodwill
1) Recognition

Goodwill arising from the acquisition of subsidiaries is recognized as intangible assets. For the measurement of initial recognition of goodwill, please refer to Note 4(v).

2) Measurement

Goodwill is measured at its cost less impairment losses. Investments in associates are accounted for using the equity method. The carrying amount of the investment in associates includes goodwill, in which the kind of investment of impairment losses are recognized as a part of the carrying amount of the investment, not associated to goodwill and any other assets.

2.Research and development

During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred.

Expenditures arising from the development phase shall be recognized as an intangible asset if all the conditions described below can be demonstrated; otherwise, they will be recognized in profit or loss as incurred.

1) The technical feasibility of completing the intangible asset so that it will be available for use or sale.
2) Its intention to complete the intangible asset and use or sell it.
3) Its ability to use or sell the intangible asset.
4) How the intangible asset will generate probable future economic benefits.
5) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
6) Its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Capitalized development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.

Other intangible assets that are acquired by the Group are measured at cost less accumulated amortisation and any accumulated impairment losses.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as incurred.

Depreciable amount of intangible asset is calculated based on the cost of an asset less its residual values.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and intangible assets with all indefinite useful life, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

periods are as follows:
Patents	1 ~ 5years
Trademark rights	1 ~ 10years
Computer software cost	1 ~ 6years

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any change shall be accounted for as changes in accounting estimates.

(o) Impairment-Non-derivative-financial assets

The Group assesses the following assets for impairment and estimates the recoverable amounts for any impaired assets at the end of each reporting period:

‧Inventories
‧Deferred tax assets
‧Assets arising from employee benefit

If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for an individual asset, then the Group will have to determine the recoverable amount for the asset's cash-generating unit (CGU).

Notwithstanding whether indicators exist, recoverability of goodwill and intangible assets with indefinite useful lives or those not yet in use are required to be tested at least annually. Impairment loss is recognized if the recoverable amount is less than the carrying amount.

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value less costs to sell or its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss.

For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirer's cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or group of units.

If the carring amount of the cash-generating units exceeds the recoverable amount of the unit, the enity shall recognize the impairment loss, and the impairment loss shall be allocated to reduce the carrying amount of each asset in the unit.

Reversal of an impairment loss for goodwill is prohibited.

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The Group assess at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset.

An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount, as a reversal of a previously recognized impairment loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(p) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

1.Warranties

A provision for warranties is recognized when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

2.Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognizes any impairment loss on the assets associated with that contract.

(q) Treasury stock

Repurchased shares are recognized under treasury shares (a contra-equity account) based on their repurchase price (including all directly accountable costs), net of tax. Gains on disposal of treasury shares should be recognized under Capital Reserve – Treasury Shares Transactions; Losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted average of different types of repurchase.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

During the cancellation of treasury shares, Capital Reserve – Share Premiums and Share Capital should be debited proportionately. Gains on cancellation of treasury shares should be recognized under existing capital reserves arising from similar types of treasury shares; Losses on cancellation of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings.

(r) Revenue recognition policies for the various businesses activities
1.Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement.

2.Service

Revenue from services rendered including consulting and management is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

3.Commissions

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognized is the net amount of commission made by the Group.

4.Transfer of goods and or services

When goods or services are exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not regarded as a transaction which generates revenue. This is often the case with commodities like oil or milk where suppliers exchange or swap inventories in various locations to fulfill demand on a timely basis in a particular location. When goods are sold or services are rendered in exchange for dissimilar goods or services, the exchange is regarded as a transaction which generates revenue. The revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred. When the fair value of the goods or services received cannot be measured reliably, the revenue is measured at the fair value of the goods or services given up, adjusted by the amount of any cash or cash equivalents transferred.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(s) Employee benefits
1.Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

2.Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized immediately in profit or loss.

Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group reclassified the amounts recognized in other comprehensive income to retained earnings.

The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets, and any change in the present value of the defined benefit obligation.

3.Terminated benefits

Termination benefits are recognized as an expense when the Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. The Group is required to recognize the termination benefits at the earlier of when the Group can no longer withdraw the offer of those benefits and when it recognizes any related restructuring costs. If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4.Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(t) Share-based payment

The grant-date fair value of share-based payment awards granted to employee is recognized as employee salary expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

The Company shall reserve a certain portion of the shares of its capital increase, which is issued on the grant-date, to its employees. The subscription price and the number of shares should be confirmed at the grant-date.

(u) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or these recognised directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, they also include tax adjustments related to prior years.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes recognised except for the following:

1.Assets and liabilities that are initially recognised but are not related to the business combination and have no effect on net income or taxable gains (losses) during the transaction.
2.Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.
3.Initial recognition of goodwill.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to be applied to the period when the asset is realised or the liability is settled based on the tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

1.The entity has the legal right to settle tax assets and liabilities on a net basis; and
2.the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
1) levied by the same taxing authority; or
2) levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

A deferred tax asset should be recognised for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences, to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and adjusted based on the probability that the future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

(v) Business combination

For those business acquisitions occurring goodwill is measured as the aggregation of the consideration transferred (which generally is measured at fair value at the acquisition date) and the amount of any non-controlling interest in the acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Group shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed, and recognize a gain on the bargain purchase thereafter.

All the transaction costs incurred for the business combination are recognized immediately as the Group’s expenses when incurred, except for the issuance of debt or equity instruments.

The Group shall measure any non-controlling equity interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, if the shareholder of non-controning equity interest has the right to claim ownership of the acquiree's net assets when the acquiree is liquidated.

Other non-controlling interest is evaluated by its fair valne or by other basis permitted by IFRSs endorsed by F.S.C..

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

In a business combination achieved in stages, the Group shall re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss. In prior reporting periods, the Group may have recognized the changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be recognized on the same basis as would be required if the Group had disposed directly of the previously held equity interest. If the disposal of the equity interest required a reclassification to profit or loss, such an amount shall be reclassified to profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition date, or recognize additional assets or liabilities to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date.

(w) Earnings per share

The Group disclose the Company’s basic and diluted earnings per share attributable to ordinary equity holders of the Company. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, such as employee bonus and employee compensation.

(x) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information.

(5) Significant Accounting Judgments, Estimation, Assumptions, and Sources of Estimation Uncertainty

The preparation of the consolidated anuual financial statements in conformity with IFRSs endorsed by the FSC requires management to make judgements, estimations and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The management continuously reviews the estimates and basic assumptions. Changes in accounting estimates are recognized in the period of change.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The group does not have any accounting policies which involve significant judgment which have significant influence to the consolidated annual financial statements.

Information on assumptions and estimation uncertainties that do not have a significant risk of resulting in a material adjustment within the next year.

(6) Explanation to Significant Accounts

(a) Cash and cash equivalents

Cash Demand deposits and checking accounts Time deposits Cash and cash equivalents in consolidated statement of cash flows	2015.12.31 $ 9,397 18,126,234 18,988,000	2014.12.31 7,054 12,711,623 25,013,064 37,731,741
	$ 37,123,631

Refer to Note 6(w) for the sensitivity analysis and interest rate risk of the financial assets and liabilities of the Group.

(b) Financial assets and liabilities at fair value through profit or loss、available-for-sale financial assets and financial assets carried at cost
1.Details of financial assets are as follows：

Financial assets： Financial assets at fair value through profit or loss Held for trading Available-for-sale financial assets Financial assets carried at cost Total Current Non-current Total Financial liabilities： Financial liabilities at fair value through profit or loss Held for trading Current Non-current Total	2015.12.31 $ 221,615 3,622,176 502,173
	$ 4,345,964
	$ 3,512,299 833,665
	$ 4,345,964

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

All of the abovementioned investments in common stock and preferred stock which do not have quoted market prices in an active market and whose fair value cannot be reliably measured were reflected as non-current financial assets carried at cost on initial recognition and subsequently at cost less accumulated impairment losses. There were objective evidences indicating that some financial assets were impaired, and the Group recognized impairment loss for the asset whose carrying value is higher than the recoverable amount. The Group recognized an impairment loss of $109,590 in 2014.

As of December 31, 2015 and 2014, the aforesaid financial assets were not pledged as collateral.

2.Sensitivity analysis：

If the equity price changes, the sensitivity analysis shall be based on the same variables except for the price index for both year, the impact to other comprehensive income will be as follows:

Equity price at reporting day	For the years ended December 31, 2015 2014 After-tax other comprehensive income After-tax profit (loss) After-tax other comprehensive income After-tax profit (loss) $ 22,570 1,436 26,601 4,267 $ (22,570) (1,436) (26,601) (4,267)	For the years ended December 31, 2015 2014 After-tax other comprehensive income After-tax profit (loss) After-tax other comprehensive income After-tax profit (loss) $ 22,570 1,436 26,601 4,267 $ (22,570) (1,436) (26,601) (4,267)	For the years ended December 31, 2015 2014 After-tax other comprehensive income After-tax profit (loss) After-tax other comprehensive income After-tax profit (loss) $ 22,570 1,436 26,601 4,267 $ (22,570) (1,436) (26,601) (4,267)
	2015 After-tax other comprehensive income After-tax profit (loss) $ 22,570 1,436
	After-tax other comprehensive income $ 22,570		After-tax other comprehensive income 26,601
Increase3% Decrease3%
	$ (22,570)	(1,436)	(26,601)

3.Foreign equity investments

Significant foreign equity investments at the end of the each period were as follows:

CNY CNY		2015.12.31	TWD 2,715,761 TWD 7,972,361
	Foreign Currency $ 537,774	Exchange Rate CNY／TWD＝5.05 2014.12.31
	Foreign Currency $ 1,542,043	Exchange Rate CNY／TWD＝5.17

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4.Derivative financail instruments not used for hedging:

The Group uses derivative financial instruments to hedge certain foreign exchange and interest risk arising from its operating, financing and investing activities. The following are the transactions that do not qualify for hedge accounting which are presented as held-for-trading financial assets and liabilities as of December 31, 2015 and 2014:

1) Financial assets:

Forward Foreign exchange Swap Foreign exchange Swap Forward Foreign exchange Swap		2015.12.31	Contract Period 2016.04.11-2016.04.22 2016.01.13-2016.03.31 2016.03.14 Contract Period 2015.07.01-2015.12.14 2015.01.14-2015.03.23
	Contract Amount	Currency
	USD 81,531 USD:CNY USD 217,000 USD:TWD USD 4,452 USD:JPY 2014.12.31
	Contract Amount	Currency
	USD 669,023 USD:CNY USD 112,000 USD:TWD

2) Financial liabilities:

Contract Amount Forward USD 80,914 Contract Amount Forward USD 159,293 Forward JPY 18,000 Foreign exchange Swap USD 12,000 Foreign exchange Swap USD 5,047 Accounts receivable and other receivables Accounts receivable due from related parties Accounts receivable due from non-related parties Other receivables due from related parties Other receivables due from non-related parties Less: Allowance for impairment Allowance for sales returns and discounts			2015.12.31
	Contract Amount		Currency
	USD 80,914		USD:CNY 2014.12.31
	Contract Amount		Currency
			USD:CNY JPY:TWD USD:TWD USD:JPY 2015.12.31
			$ 61,368,205

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Not past due Past due up to 180 days Past due over 180 days	2015.12.31 Total amount Impairment $ 57,223,377 41,996 4,435,743 8,164 157,000 98,561	2015.12.31 Total amount Impairment $ 57,223,377 41,996 4,435,743 8,164 157,000 98,561	2014.12.31 Total amount Impairment 63,484,455 12,754 5,770,684 6,016 214,944 143,607	2014.12.31 Total amount Impairment 63,484,455 12,754 5,770,684 6,016 214,944 143,607
	Total amount $ 57,223,377 4,435,743 157,000		Total amount 63,484,455 5,770,684 214,944
	$ 61,816,120	148,721	69,470,083	162,377

As of March 10, 2016, the amount that received by the Group is $58,448,688.

The movement in the allowance for impairment with respect to accounts receivable and other receivables during the period were as follow:

Balance on January 1, 2015 Impairment loss Written off unrecoverable amount Foreign exchange gain (loss) and other Balance on December 31, 2015 Balance on January 1, 2014 (Reversal of) impairment loss Written off unrecoverable amount Foreign exchange gain (loss) Balance on December 31, 2014	Individually assessed impairment $ 12,020 2,824 (21,989) 47,845 $ 40,700 $ 618,125 20,604 (589,250) (37,459) $ 12,020	Collectively assessed impairment 150,357 22,355 (24,625) (40,066)	Total 162,377 25,179 (46,614) 7,779
		108,021	148,721
		154,785 (4,748) - 320	772,910 15,856 (589,250) (37,139)
		150,357	162,377

The allowance for impairment account is used to record bad debt expenses. If the Group believes that it may not be able to collect the receivables. The accumulated impairment was used to offset the receivables when it is certain they are unrecoverable, after related legal actions were taken by the Group.

As of December 31, 2015 and 2014, none of the receivables above are pledged as collateral for loans and borrowings.

As of December 31, 2015 and 2014, the Group sold its accounts receivable without recourse as follows:

(Unit: Foreign currency/TWD in Thousands)

			201	5.12.31			Derecognition Amount (Note 1)
Purchaser	Assignment Facility	Factoring Line	Advanced Amount	Range of Interest Rate 0.97%~1.28%	Collateral	Significant Transferring Terms
Non-related parties	$ 2,235,586	USD 80,000	USD 40,940		None	The accounts receivable factoring is without recourse but the seller still bears the risks except for eligible obligor’s insolvency.	1,343,636

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

			201	4.12.31			Derecognition Amount
Purchaser	Assignment Facility	Factoring Line	Advanced Amount	Range of Interest Rate	Collateral	Significant Transferring Terms
Non-related parties	$ 1,574,184	Note	USD 49,753	0.6985%	None	The accounts receivable factoring is without recourse but the seller still bears the risks except for eligible obligor’s insolvency.	1,574,184

Note1: The Group entered into an accounts receivable factoring agreement with a financial institution. According to the agreement, the Group can only collect the amounts transferred which are not yet drawn in advance, after the collection of transferee from the third party. Therefore, the Group continues to recognized the full carrying value of its accounts receivable. As of December 31, 2015, accounts receivable which were not derecognized amounted to $891,950.
Note2: The Company and its client signed a factoring agreement with purchaser. The purchaser has the right to make factoring transactions with the company based on the amount allocated by the client under factoring agreement.
(d) Inventories

Raw materials and consumables Work in process Finished goods Materials and supplies in transit	2015.12.31 $ 17,011,371 6,563,538 5,302,552 82,443	2014.12.31 19,133,857 6,861,460 5,385,817 391,717
	$ 28,959,904	31,772,851

For the years ended December 31, 2015 and 2014, the reversal of write-down of inventories amounted to $20,280 and $183,713, respectively; expenses of idle capacity amounted to $277,474 and $262,986, respectively.

As of December 31, 2015 and 2014, the aforesaid inventories were not pledged as collateral.

(e) Investments accounted for under the equity method

The investment under equity method is as follows:

Associate Joint venture	2015.12.31 $ 532,888 -	2014.12.31 613,137 (556,600)
	$ 532,888	56,537

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

1.Associate

The Group’s financial information for investments in individually insignificant associates accounted for using equity method at the reporting date was as follows. These financial information are included in the consolidated financial statements.

Individually insignificant associates The Group’s share of profit (loss) of the associates Losses for the year Other comprehensive income Total comprehensive income	2015.12.31 $ 532,888
	2015 $ (87,548) 12,170
	$ (75,378)

2.Joint venture

The Group’s financial information for investments in individually insignificant joint venture accounted for using equity method at the reporting date was as follows. These financial information are included in the consolidated financial statements.

Individually insignificant joint venture The Group’s share of profit (loss) of the joint venture Losses for the year Other comprehensive income Total comprehensive income	2015.12.31 $ -	2014.12.31
	2015 $ (10,057) (24,079)
		40,315 (31,969) 8,346
	$ (34,136)

The Group jointly invested in TPV-Inventa Holding Ltd., and owns 49% of TPV-Inventa Holding Ltd.’s shares. On September 8, 2015, the board of Directors decided to terminate the joint venture agreement with TPV Technology Limited. The Company obtained all of the numbers of the board of directors of TPV-Inventa Holding Ltd. and obtain the controlling power.

The Group used the equity method to account for jointly controlled entity, of which the total equity was negative; therefore, the Group recognized the credit balance of investments as other non-current liabilities. Please refer to Note 13(a) for information of guarantee and endorsement.

As of December 31, 2015 and 2014, the Group’s investments under equity method has not been pledged as collaterals or restricted in any way.

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(f) Business combination

In September, 2015, the board of Directors decided to terminate the joint venture agreement with TPV Technology Limited. The Company obtained all of the numbers of the board of directors of TPV-Iventa Holding Ltd. and gain control over it. The Group adjusted its structure through this acquisition and included the acquired subsidiary in its consolidated financial statements.

1.The fair value of identifiable assets acquired and liabilities assumed at the date of acquistion were as follow:

as follow:
Cash	$	1,335,051
Available-for-sale financial assets		62,516
Accounts receivable and other receivables		5,549,532
Inventories		387,278
Other current assets		161,509
Property, plant, and equipment		91,297
Intangible assets		5,783
Other non-current assets		78,457
Long-term and short term borrowings		(1,236,750)
Notes payable and accounts payable		(4,873,475)
Other payables		(1,661,560)
Other current liabilities		(348,544)
	$	(448,906)
At acquisition date, the gross amount of accounts receivable was $5,559,101, with the amount of
$9,569 expected to be unrecoverable.
Differences between equity price and carrying amount of the acquiree
Transfer price	$	(219,964)
Non-controlling interest (calculated proportionately based on the		(228,942)
acquiree's identifiable net assets)
Less: Fair value of identifiable net assets		(448,906)
	$	-

At acquisition date, the gross amount of accounts receivable was $5,559,101, with the amount of $9,569 expected to be unrecoverable.

2.Differences between equity price and carrying amount of the acquiree

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(g) Changes in a parent's ownership interest in a subsidiary
1.Acquisition extra shares of subsidiaries without changes in controlling power

On September, 2015, in pursuant to the resolutions of the Board of Directors, the Group acquired 270,137 thousand shares of TPV-Inventa Holding Ltd. and paid the amount of USD12,967 thousand, which resulted in an increase in the equity interest of TPV-Inventa Holding Ltd. from 49% to 90%.

The aforesaid transaction did not affect the controlling power of the Group over TPV-Inventa Holding Ltd. Therefore, the transaction was accounted for as equity transaction, which resulted in a capital surplus in debit of 288,198 thousands.

2.Re-organization of Group structure

The Company adjusted its Group structure by transfering its 47.68% shares of ownership in Inventec Energy Corporation to Inventec Solar Energy Corporation, with a transfer price amounting to $483,634 thousands.

The effect of change in ownership attributable to the owners of the parent was as follows:

Carrying amount of subsidiary of disposal Transfer price (net of securities transaction tax) Capital surplus-difference between consideration and carrying amount of subsidiaries disposed	2015 $ 478,985 (482,184)
	$ (3,199)

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2015 and 2014 were as follows:

Land $ 3,737,914 1,978 - - -	Building and construction 20,572,908 51,934 (160,724) 820,682 (374,511)	Machinery and equipment 29,989,482 776,740 (703,627) 1,466,903 (384,136)	Transportation equipment 120,196 12,098 (10,609) 1,200 (1,668)	Office equipment 6,570,562 440,069 (386,302) 95,116 (97,349)	Other facilities 10,411,437 420,459 (170,062) 1,082,580 (167,867)	Leasehold improvements 1,382,009 60,054 (39,581) 31,499 (868)	Others	Total 74,824,489 4,108,315 (1,470,905) 571,066 (1,047,209)
							2,039,981 2,344,983 - (2,926,914) (20,810)
$ 3,739,892	20,910,289	31,145,362	121,217	6,622,096	11,576,547	1,433,113	1,437,240	76,985,756
$ 3,737,914 - - - -	19,672,134 14,334 (5,664) 10,149 881,955	26,063,989 2,440,872 (1,476,190) 2,056,702 904,109	118,580 21,775 (24,552) 353 4,040	6,348,973 395,303 (611,072) 201,772 235,586	10,999,716 42,272 (40,286) (1,064,967) 474,702	1,354,970 106,958 (81,973) - 2,054	641,799 1,730,321 (6,056) (364,035) 37,952	68,938,075 4,751,835 (2,245,793) 839,974 2,540,398 74,824,489
$ 3,737,914	20,572,908	29,989,482	120,196	6,570,562	10,411,437	1,382,009	2,039,981

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Land $ - - - - - -	Building and construction 4,621,884 501,146 - (44,537) - (84,168)	Machinery and equipment 21,621,821 2,302,871 88,483 (764,008) (13,816) (272,780)	Transportation equipment 76,563 12,511 - (9,878) 1,068 (1,033)	Office equipment 5,215,824 449,908 (11,357) (354,219) 47,655 (70,300)	Other facilities 7,618,338 549,121 5,983 (159,522) 356,915 (114,233)	Leasehold improvements 597,023 132,601 57,270 (39,222) 7,964 (450)	Others - - - - - -	Total 39,751,453 3,948,158 140,379 (1,371,386) 399,786 (542,964)
$ -	4,994,325	22,962,571	79,231	5,277,511	8,256,602	755,186	-	42,325,426
$ - - - - - -	2,945,241 505,798 988,314 (4,144) - 186,675	18,711,875 2,131,114 107,596 (1,312,105) 1,354,121 629,220	85,553 11,639 - (23,248) - 2,619	4,909,147 458,545 12 (476,143) 153,795 170,468	7,696,055 558,412 246,097 (38,890) (1,184,897) 341,561	557,894 119,726 - (81,778) - 1,181	- - - - - -	34,905,765 3,785,234 1,342,019 (1,936,308) 323,019 1,331,724
$ -	4,621,884	21,621,821	76,563	5,215,824	7,618,338	597,023	-	39,751,453
$ 3,739,892	15,915,964	8,182,791	41,986	1,344,585	3,319,945	677,927	1,437,240	34,660,330
$ 3,737,914	16,726,893	7,352,114	33,027	1,439,826	3,303,661	797,076	641,799	34,032,310
$ 3,737,914	15,951,024	8,367,661	43,633	1,354,738	2,793,099	784,986	2,039,981	35,073,036

The Group performed an impairment test and adopted the value in use as its recoverable amount, and recognized the impairment losses based on the differences between the book values and the recoverable amounts of the property, plant and equipment. For the years ended December 31, 2015 and 2014, the impairment losses were $140,379 and $1,342,019, respectively.

As of December 31, 2015 and 2014, the details of property are subject to a registered debenture to secure bank loans (see Note 8).

(i) Investment property

Land $ 9,492 (9,846) 354	Building and construction 1,057,916 (67,866) 2,440	Total 1,067,408 (77,712) 2,794
$ -	992,490	992,490
$ 8,955 537	1,054,215 3,701	1,063,170 4,238
$ 9,492	1,057,916	1,067,408

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Land $ - - - -	Building and construction 477,328 28,088 (63,272) 2,275	Building and construction 477,328 28,088 (63,272) 2,275	Total 477,328 28,088 (63,272) 2,275
$ -	444,419		444,419
$ - - -	445,145 28,756 3,427		445,145 28,756 3,427
$ -	477,328		477,328
$ -	548,071		548,071
$ 8,955	609,070		618,025
$ 9,492	580,588		590,080
		$ 579,882
		$ 664,451
		$ 643,869

Based on the purposes of earning rental income or for capital appreciaiton income or both, the Group reclassified land and buildings to investment property.

The fair value of investment property as disclosed in the financial statements is based on the valuation of the independent valuator. The inputs of levels of fair value hierarchy in determing the fair value is classified to Level 3. It is measure at cost, and value of an objects is estimated by the cost of re-acquisition or reconstruction deducting the accumulated depreciaion and other deductibles, with a consideration of current situation, economy, and function of the object.

The Group assessed the recoverable amount for investment property and recognized the accumulative impairment loss of $305,169 and $346,196 as of December 31, 2015 and 2014, respectively.

Please refer to Note 8 for the information of the Group’s investment property pledging for bank mortgage as of December 31, 2015 and 2014.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(j) Intangible assets

The costs of intangible assets, amortization, and impairment loss of the Group for the years ended December 31, 2015 and 2014 were as follows:

Cost: Balance at January 1, 2015 Additions Other Disposals Effect of movements in exchange rate Balance at December 31, 2015 Balance at January 1, 2014 Additions Other Disposals Effect of movements in exchange rate Balance at December 31, 2014 Amortization and impairment losses: Balance at January 1, 2015 Amortization for the period Other Disposals Effect of movements in exchange rate Balance at December 31, 2015 Balance at January 1, 2014 Amortization for the period Other Disposals Effect of movements in exchange rate Balance at December 31, 2014		Goodwill $ 1,083,429 - - - - $ 1,083,429 $ 1,167,745 - (84,316) - - $ 1,083,429 $ 275,009 - - - - $ 275,009 $ 359,325 - (84,316) - - $ 275,009	Patent and trademark right	Patent and trademark right		Total 2,068,581 239,989 33,295 (286,338) 1,086 2,056,613 2,003,566 378,368 (80,175) (233,431) 253 2,068,581 1,167,189 274,266 27,646 (286,330) 937 1,183,708 1,116,307 368,421 (84,316) (233,431) 208 1,167,189
			124,713 848,471
			124,621 711,200 - 378,368 - 4,141 - (233,431) - 253
			124,621 860,531
			124,518 767,662 60 274,206 - 27,646 - (286,330) - 937
			124,578 784,121
			124,488 632,494 30 368,391 - - - (233,431) - 208
			124,518	767,662

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Goodwill $ 808,420	Patent and trademark right	Software cost 64,350	Total 872,905
	135
$ 808,420	133	78,706	887,259
$ 808,420	103	92,869	901,392

The amortization of intangible assets and impairment losses are respectively included in the statement of comprehensive income:

Operating costs Operating expenses Total	For the years ended December 31, 2015 2014 $ 153,916 217,975 120,350 150,446	For the years ended December 31, 2015 2014 $ 153,916 217,975 120,350 150,446
	2015 $ 153,916 120,350
	$ 274,266	368,421

As of December 31, 2015 and 2014, the aforesaid Intangible assets were not pledged as collateral.

(k) Other current assets-others and other non-current assets

The other current assets-others and other non-current assets of the Group were as follows:

Refundable deposits Prepayments to suppliers Long-term prepaid rents Prepayments for building Others	2015.12.31 $ 217,998 1,406,945 1,418,422 606,000 3,685,210	2014.12.31 215,228 2,364,980 2,268,767 - 5,048,221 9,897,196
	$ 7,334,575

As of December 31, 2015 and 2014, the details of other non-current assets-others were pledged as collateral, please refer to Note 8.

The Group entered into land and building purchase agreement. According to the agreement, the total amount of $6,060,000 should be paid with a prepayment amount of $606,000. The related legal transferring process was completed in February 2016.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(l) Long-term and short-term borrowings

The significant terms and conditions of long-term and short-term borrowings were as follows:

Secured bank loans Unsecured bank loans Total Current Non-current Total Unused credit line Secured bank loans Unsecured bank loans Total Current Non-current Total Unused credit line	2015.12.31	Amount
	Interest Rate Currency Period
	1.64%-2.50% TWD 2016-2017 0.74%-3.19% TWD 2016 USD 2016-2018 2014.12.31	$ 596,570 1,379,942 17,327,573
		$ 19,304,085
		$ 8,010,825 11,293,260
		$ 19,304,085
		$ 88,795,529
		Amount
	Interest Rate Currency Period
	1.66%-2.51% TWD 2015-2018 USD 2015 0.85%-6.00% TWD 2015 USD 2015-2017 CNY 2015	$ 1,034,312 1,265,600 1,010,653 27,530,695 1,256,499
		$ 32,097,759
		$ 31,092,267 1,005,492
		$ 32,097,759
		$ 71,687,165

1.Collateral of bank loans

Please refer to Note 8 for details of the related assets pledged as collateral. In order to assist the Company to access credit line from banks, some shareholders and board of directors pledged their assets as collaterals, please refer to Note 7 for details.

2.Contract of bank loans

According to the Company’s credit loan facility agreements with the banks, during the loan repayment periods, the Company must comply with certain financial covenants based on its audited annual consolidated financial statements and non-consolidated financial statements (December 31) and reviewed semi-annual consolidated financial statement (June 30). The Company is in compliance with these financial covenants.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

According to the credit loan facility agreement with the banks, Inventec Solar Energy Corporation must comply with certain financial covenants based on its audited annual financial statements. If the covenants are breached, the credit line and relevant conditions must be reviewed.

Inventec Solar Energy Corporation was not violate with the above financial covenants.

According to the credit loan facility agreement with the banks of Inventec Appliances Corporantion's subsidiaries, the subsidiaries of Inventec Appliances Corporation must comply with certain financial covenants based on its audited annual financial statements. If the covenants are breached, the interest rates of the loans will increase by 15%.

Inventec Appliances Corporation was not violate with the above financial covenants.

Base on the above financial covenants, Inventec Appliances Corporation's subsidiaries must comply with certain financial covenants based on its audited annual financial statments. If the following covenants are breached, the interest rates of the loans will increase by 15%.

Inventec Appliances Corporation's subsidiaries was not violate with the above financial conenants.

(m) Operating Leases

1.Leases entered into as lessee

Non-cancellable operating lease payable were as follows:

Within 1 year Period after 1 to 5 years Period after 5 years	2015.12.31 $ 193,065 465,234 169,467	2014.12.31 102,276 383,800 201,394 687,470
	$ 827,766

The Group lease a number of office, warehouse, factory facilities and staff dormitories under operating leases. The leases typically run for a period of 1 to 20 years, with an option to renew the lease after that date. The Group lease the land which is located on Ke Gong Section, Annan Dist., Tainan City, the first two years of the leasing period is rent free; in the third and forth year the rent accounts for 60% of the agreed rent in the contract; the fifth and sixth year the rent accounts for 80% of the agreed rent in the contract, and the full amount of the agreed rent is applied for the rest of the period.

For the years ended December 31, 2015 and 2014, expenses recognized in profit or loss in respect of operating leases were $226,271 and $132,263.

224

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The warehouse and factory leases were entered into many years ago as combined leases of land and buildings. The Group determined that the land and building elements of the warehouse and factory leases are operating leases. The rent paid to the landlord is increased to market rent at regular intervals, and the Group does not participate in the residual value of the land and buildings. As a result, it was determined that substantially all the risks and rewards of the land and buildings are with the landlord.

2.Leases- Lessor

The future minimum lease payments under non-cancellable leases are as follows:

Within 1 year Period after 1 to 5 years Period after 5 years	2015.12.31 $ 186,208 195,860 56,934 $ 439,002	2014.12.31 198,217 334,791 177,310
		710,318

The rental revenues incurred by leasing plants were $217,450 and $241,353 for the years ended December 31, 2015 and 2014, respectively.

(n) Employee benefits

1.Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

follows:
Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	2015.12.31 $ 1,746,837 (721,427)	2014.12.31 1,844,731 (835,395) 1,009,336
	$ 1,025,410

The Group makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued two-year time deposits with interest rates offered by local banks.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The Group’s pension reserve account in Bank of Taiwan amounted to $721,351 at the end of December 31, 2015. For information on the utilization of the labor pension fund assets including the assets allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Group were as follows:

Defined benefit obligation at January 1 Current service costs and interest Remeasurement on the net defined benefit liability －Experience adjustments arising on the actuarial gain or loss －Actuarial loss (gain) arising from changes in financial assumptions Benefits paid by the plan assets Defined benefit obligation at December 31	For the years ended December 31, 2015 2014 $ 1,844,731 1,864,142 44,152 48,728 6,339 11,557 59,477 (238) (207,862) (79,458) $ 1,746,837 1,844,731
	2015 $ 1,844,731 44,152 6,339 59,477 (207,862)
	$ 1,746,837

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group were as follows:

Fair value of plan assets at January 1 Interest income Remeasurement on the net defined benefit liability －Return on plan assets (excluding current interest) Contributions made Benefits paid by the plan assets Other Fair value of plan assets at December 31	For the years ended December 31, 2015 2014 $ 835,395 813,921 13,764 14,239 7,748 4,708 72,382 82,987 (207,862) (79,458) - (1,002) $ 721,427 835,395
	2015 $ 835,395 13,764 7,748 72,382 (207,862) -
	$ 721,427

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service costs Net interest of net liabilities for defined benefit obligations Operating cost Selling expenses Administration expenses Research and development expenses	For the years ended December 31, 2015 2014 $ 12,899 16,101 17,489 18,388 $ 30,388 34,489 $ 2,374 3,269 3,378 3,499 9,329 10,916 15,307 16,805 $ 30,388 34,489
	2015 $ 12,899 17,489
	$ 30,388
	$ 2,374 3,378 9,329 15,307
	$ 30,388

5) Remeasurement on the net defined benefit liability recognized in other comprehensive income

The Group’s remeasurement on the net defined benefit liability recognized in other comprehensive income were as follows:

comprehensive income were as follows:
Cumulative amount at January 1 Recognised during the period Cumulative amount at December 31	For the years ended December 31, 2015 2014 $ (90,758) (84,148) (58,068) (6,610) $ (148,826) (90,758)
	2015 $ (90,758) (58,068)
	$ (148,826)

6) Actuarial assumptions

The following are the Group’s principal actuarial assumptions:

Present Value of defined benefit obligations:

Discount rate Future salary increases rate	For the years ended December 31,	For the years ended December 31,
	2015	2014
	1.00%~1.70% 1.00%~2.50%	1.50%~2.30% 1.00%~2.50%

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The expected allocation payment made by the Group to the defined benefit plans for the one year period after the reporting date was $300,190.

The weighted-average duration of the defined benefit obligation is 6~21.3 years.

7) Sensitivty analysis

When calculating the present value of the defined benefit obligations, the Group uses judgments and estimations to determine the actuarial assumptions, including discount rate and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

benefit obligation shall be as follows:
Discount rate Future salary increasing rate	Influences of defined benefit obligations
	Increased 0.25% (20,869) 714	Decreased 0.25%
		21,340 (585)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2015 and 2014.

2.Defined contribution plans

In accordance with the provisions of the Labor Pension Act, the Group contribute an amount equal to 6% of the employee’s monthly wages to the Labor Pension personal account with the Bureau of the Labor Insurance.

The pension costs incurred from the contributions to the to the Bureau of the Labour Insurance amounted to $228,685 and $223,411 for the years ended December 31, 2015 and 2014, respectively.

The pension expenses contributed by the foreign entities following the local regulations amounted to $1,738,012 and $1,148,009 for the years ended December 31, 2015 and 2014, respectively.

228

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INVENTEC CORPORATION AND ITS SUBSIDIARIES Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(o) Income taxes

1.The components of income tax expense (gain) in the years 2015 and 2014 were as follows:

		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2015		2014
Current tax expense
Current period	$	2,085,895		2,328,427
Adjustment for prior periods			73,775	(292,043)
		2,159,670		2,036,384
Deferred tax expense
Origination and reversal of temporary			41,302	998,056
differences
Recognition of previously unrecognised tax			(4,064)	(11,229)
losses, tax credits and temporary
differences
Tax incentives		-		(10,000)
Other			11,227	1,926
			48,465	978,753
Income tax expense from continuing operations	$	2,208,135		3,015,137
The amount of income tax recognized in other comprehensive income for 2015 and 2014 was as
follows:
		For the years ended December 31,
		2015		2014
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement from defined benefit plans	$		9,781	1,194
Items that may be reclassified subsequently to
profit or loss:
Unrealized gains (losses) on
available-for-sale financial assets	$	381,929		(109,140)

The amount of income tax recognized in other comprehensive income for 2015 and 2014 was as follows:

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

Income before tax
Income tax using the Company’s domestic tax rate
Permanent differences
Tax credits
Recognition of previously unrecognized tax losses
Current-year losses for which no deferred tax asset
was recognized
Change in unrecognized temporary differences
Under (over) provision in prior periods
Under (over) provision of tempopary differences
10% surtax on undistributed earnings
Other
Income tax expense

For the years ended December 31,
2015
2014
$
7,183,870
9,680,698

1,983,188
2,751,273
(367,566)
(312,304)
(171,444)
(245,561)
(4,064)
(11,229)
641,881
64,378
(41,142)
971,266
73,775
(292,043)
31,361
29,539
10,000
62,738
52,146
(2,920)

$
2,208,135
3,015,137

2.Deferred Tax Assets and Liabilities
1) Unrecognized Deferred Tax Assets

Deferred tax assets that have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences The carryforward of unused tax losses	2015.12.31 $ 2,537,916 2,797,376	2014.12.31 2,799,412 2,052,891 4,852,303
	$ 5,335,292

The carryforward of unused tax credits were determined in accordance with the rules established by each taxation authorities, and can be applied to offset against profit and income tax in the future respectively. The deferred tax assets have not been recognized in respect of the aforementioned items because they are not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

The Subidiaries located in China, where the income tax rate is 25%, in accordance with the rules for the implementation of the Income Tax Law of the People's Republic of China for enterprises with Foreign Investment and Foreign Enterrises, was entitled to the preferential treatment for advanced technology industries with respect to reduction of or exemption from income tax.

Under such tax law, commencing with the first profit-making year is exempted from income tax in the first and second profitable year and is entitled to a 50% reduction from the third to fifth year.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The Group invested in the companies which were incorporated in the Cayman Islands. The earnings of these entities are not taxable by the local government in their respective jurisdictions. Other foreign subsidiaries are taxed in accordance with the Income Tax Law of their respective jurisdiction.

As of December 31, 2015 and 2014, the Group estimated that the part of the temporary differences do not have more than 50% possiblity to realize in the visible future, so they were not recognized as deferred tax assets.

The profits attributable to the expansion and construction projects of Photovoltaic (“PV”) cells were exempted from income tax for a five-year period. Additionally, according to the Statue for Upgrading Industries “Regulations for Encouraging Manufacturing Enterprises and Technical Service Enterprises in the Newly Emerging, Important and Strategic Industries”, the Company was granted certain investment tax credits. These credits may be applied over a period of five years and may be deducted in any year.

Each company is taxed in accordance with the income tax law of their respective jurisdiction. Unused operating loss carry-forwards can be applied to offset against profit in the future after being examined by the Tax Authority. As of December 31, 2015, the company that have loss carry forwards which can be used to offset profit were as follow. Among the taxable losses, $70,292 were recognized as deferred tax assets.

As of December 31, 2015, the Group did not recognized its prior years' loss carry-forwards as deferred tax assets, whose expiring years were as follows:

The carryforward of unused losses	Unused balance $ 14,223,097	Expring year
		2016~2025

Due to the unstable economic environment recovery, the realizability of tax assets of the tax losses, which amounted to $14,223,097, is doubtful. Therefore, the Group has recognized the partial tax losses as deferred tax assets. If the sales grow continuously, the Group would recognize the aforementioned tax losses in the future and generate the additional tax benefits.

2) Recognized Deferred Tax Assets and Liabilities

The movements in deferred tax assets and liabilities for the years ended December 31, 2015 and 2014 were as follows:

and 2014 were as follows:
Deferred Tax Liabilities: Balance at January 1, 2015 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2015	Gain (loss) on investment	Other	Total 1,792,550 97,031 (381,929)
	$ 1,223,737 183,357 -	568,813 (86,326) (381,929)
	$ 1,407,094	100,558	1,507,652

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Deferred Tax Liabilities: Balance at January 1, 2014 Recognized in profit or loss Recognized in equity Balance at December 31, 2014 Warranty expense Deferred Tax Assets: Balance at January 1 2015 $ 452,699 Recognized in profit or loss 61,343 Recognized in other comprehensive income - Other - Effect of movements in exchange rate - Balance at December 31, 2015 $ 514,042 Balance at January 1, 2014 $ 352,101 Recognized in profit or loss 100,598 Recognized in other comprehensive income - Effect of movements in exchange rate - Balance at December 31, 2014 $ 452,699	Loss of market decline on financial assets 54,517 14,567 - - -	Gain (loss) on investment Other $ 759,511 319,036 464,226 140,637 - 109,140 $ 1,223,737 568,813 Defined Benefit Plans Investment tax credits Others 140,269 10,000 828,633 (6,437) (10,000) (10,907) 9,781 - - - - 133,870 - - (2,950)	Gain (loss) on investment Other $ 759,511 319,036 464,226 140,637 - 109,140 $ 1,223,737 568,813 Defined Benefit Plans Investment tax credits Others 140,269 10,000 828,633 (6,437) (10,000) (10,907) 9,781 - - - - 133,870 - - (2,950)	Other
				319,036 140,637 109,140
				568,813
			Investment tax credits 10,000 (10,000) - - -	Others
$ 452,699 61,343 - - -		140,269 (6,437) 9,781 - -		828,633 (10,907) - 133,870 (2,950)
$ 514,042	69,084	143,613	-	948,646
$ 352,101 100,598 - -	324,983 (270,466) - -	144,520 (5,445) 1,194 -	- 10,000 - -	1,018,176 (208,577) - 19,034
$ 452,699	54,517	140,269	10,000	828,633

3.The Company’s income tax returns through 2013 have been examined and approved by the Tax Authority.

The income tax return in 2012 is still in the process of examination.

4.Information related to the unappropriated earnings and tax deduction ratio is summarized below:

Accumulated in 1997 and prior years Accumulated in 1998 and thereafter Stockholders’ imputation tax credit account Tax deduction ratio for earnings distributable	2015.12.31	2014.12.31 108,940 8,020,124
	$ - 6,529,767
	$ 6,529,767	8,129,064
	$ 888,376	681,214
	2015(Estimated) 23.13%	2014(Actual) 19.45%

Tax deduction ratio for earnings distributable to R.O.C. residents

The aforesaid information of tax deduction ratio for earnings distributable to R.O.C. residents was prepared in accordance with Decree NO.10204562810 issued by Taxation Administration, Ministry of Finance, R.O.C. on October 17, 2013.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

5.Business income tax administrative remedies

The Group's income tax return for the year 2013 and 2012 had been examined by the tax authorities, and the Group paid additional $93,653 and $39,551 for tax, respectively. The Group disagreed with the examination results and requested for a re-examination.

(p) Capital and reserves

As of December 31, 2015 and 2014, the authorized capital of the Company both consisted of 3,650,000 thousand shares and both issued worth $36,500,000, with par value of $10 per share, and its outstanding capital both consisted of 3,587,475 thousand shares of stock. All issued shares were paid up upon issuance.

1.Capital surplus

The components of the capital surplus were as follows:

Share capital Other	2015.12.31 $ 2,891,959 20,825	2014.12.31 2,891,959 28,759 2,920,718
	$ 2,912,784

In accordance with the ROC company Act, realized capital reserves can only be reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the securities offering and Issuance Guidelines, the amount of capital reserve to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

2.Retained earnings

The Company’s articles of incorporation require that after-tax earnings shall first be offset against any deficit, and 10% of the rest be set aside as legal reserve. The appropriation for legal reserve is discontinued when the balance of the legal reserve equals the total authorized capital. Special reserve may be appropriated for operations or to meet regulations. Of the remainder, a minimum of 3% will be distributed as employee bonus and a maximum of 3% will be allotted for directors’ and supervisors’ remuneration. The remaining earnings, if any, may be appropriated according to the proposal presented to the annual stockholders’ meeting by the board of directors. If the employee bonus is distributed in the form of stock, the employees qualifying for such distribution may include the employees of subsidiaries of the Company who meet certain specific requirements. Such qualified employees and the distribution ratio shall be decided by the board of directors. In consideration of the Company’s long-term operating plan, funding needs, and satisfying shareholder demand for cash flow, the Company distributes cash dividends of at least 10% of the aggregate of cash dividends and stock dividends if the distributions include cash dividend. According to The Company Act which was amended on May 2015, the employee benefits and the rewards of the directors and supervisors should no longer be subject to earnings distribution. The Company will amend its articles of association before the deadline set by the authorities.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

1) Legal reserve

In accordance with the ROC Company Act, 10 percent of net income should be set aside as legal reserve, until it is equal to share capital. If the Company experienced profit for the year, the meeting of shareholders shall decide on the distribution of the statutory earnings reserve either by new shares or by cash, of up to 25 percent of the actual share capital.

2) Special reserve

In accordance with Permit No.1010012865 as issued by the Financial Supervisory Commission on 6 April 2012, a special reserve equal to the contra account of other shareholders' equity is appropriated from the current and prior period earnings. When the debit balance of any of the contra accounts in the shareholders' equity is reveresd, the related special reserve can be reversed. The subsequent reversals of the contra accounts in shareholders' equity shall qualify for additional distributions.

3) Earnings Distribution

For the years ended December 31, 2014, the Company accrued employee bonuses of $447,162, and directors’ and supervisors’ remuneration of $127,761. These amounts were estimated from the Company’s net profit for 2014, to the earnings allocation method, priority and factor for employee benefits and the board of director's remuneration as stated under the Articles of Association. These benefits are charged to operating costs or expenses for the years ended December 31, 2014.

There were no difference between the actual distribution for employee bonus and directors' and superrisors' remuneration for the years 2014 and the amount estimated in the financial statements. Related information can be accessed from the Market Observation Post System on the web site.

During the meeting of shareholders on June 16, 2015 and June 12, 2014, the shareholders approved to distribute the 2014 and 2013 earnings, respectively, as follows:

Dividends disrtibuted to common shareholders Cash	2014	2014		2013 Dividend per share($) Amount 1.60 5,739,960
	Dividend per share($)	Amount		Dividend per share($)
	$ 1.75	6,278,081		1.60

The information on prior year's distribution of the Company's earnings were announced through the Market Observation Post System on the internet.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

3.Other equity (net of taxes) and non-controlling interests

Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on available-for-sale financial assets	Non-controlling interests
		6,844,752 2,482 - - - (429,089)
$ 2,604,172 205,178		6,418,145
1,495,109 146,155 1,363,861 - 9,992 - - (1,992) - (3,891) - - $ 2,868,962 140,272
	140,272	6,844,752

(q) Share-Based payments

1.E-ton Solar Tech Co. Ltd. and its subsidiaries

As of December 31, 2015, share-based payments of E-ton Solar Tech Co., Ltd. and its subsidiaries were as follows:

Grant date Number of shares granted Contractual life Grant target Vesting period	E-Ton Solar Tech. Co., Ltd. Employee Stock Option Plan Second plan in 2010 Employee Stock Option Plan First plan in 2010 August 1, 2011 September 3, 2010 1,567 thousand units 3,433 thousand units 6years 6years Employees of E-Ton Solar Tech. Co., Ltd. Employees of E-Ton Solar Tech. Co., Ltd. Subsequent 2~4 years service Subsequent 2~4 years service	E-Ton Solar Tech. Co., Ltd. Employee Stock Option Plan Second plan in 2010 Employee Stock Option Plan First plan in 2010 August 1, 2011 September 3, 2010 1,567 thousand units 3,433 thousand units 6years 6years Employees of E-Ton Solar Tech. Co., Ltd. Employees of E-Ton Solar Tech. Co., Ltd. Subsequent 2~4 years service Subsequent 2~4 years service
	Employee Stock Option Plan Second plan in 2010 August 1, 2011 1,567 thousand units 6years Employees of E-Ton Solar Tech. Co., Ltd. Subsequent 2~4 years service
		September 3, 2010 3,433 thousand units 6years Employees of E-Ton Solar Tech. Co., Ltd. Subsequent 2~4 years service

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

1) Determining the fair value of equity instruments granted

E-Ton Solar Tech. Co., Ltd. and its subsidiaries adopted the Black-Scholes Model to calculate the fair value of the stock option at grant date, and the assumptions adopted in this valuation model were as follows:

Fair value at grant date Share price at grant date Exercise price Expected volatility(%) Expected life of the option (year) Expected dividend yield rate Risk-free interest rate (%)	E-TonSolar Tech.Co., Ltd. Employee Stock Option Plan Secondplan in 2010 Employee Stock Option Plan Firstplan in 2010 $ 9.60 $ 13.22 26.10 35.55 26.10 35.55 44% 45% 6 6 - % - % 1.20% 1.00%

E-ton Solar Tech Co. Ltd. and its subsidiaries use the historical volatility as base to estimate the expected volatility; the duration of stock options is in accordance with the regulations. The expected dividends were set at 0, and the risk free rate was set considering the rate of the short-term government bonds. The definition of fair value did not cover the service fee of the trade or the non-market achievement conditions.

2) Employee stock options

Information on aforesaid employee stock options was as follows:

(Unit:Thousands)

E-Ton Solar Tech. Co., Ltd. For the years ended December 31, 2015 For the years ended December 31, 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-ave rage Exercise Price Numbers of Options $ 20.72 1,847 20.73 2,024 - - - - 20.47 (292) 20.79 (177) - - - - - - - - $ 20.77 1,555 20.72 1,847 $ 20.77 1,555 20.82 1,690	E-Ton Solar Tech. Co., Ltd. For the years ended December 31, 2015 For the years ended December 31, 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-ave rage Exercise Price Numbers of Options $ 20.72 1,847 20.73 2,024 - - - - 20.47 (292) 20.79 (177) - - - - - - - - $ 20.77 1,555 20.72 1,847 $ 20.77 1,555 20.82 1,690	E-Ton Solar Tech. Co., Ltd. For the years ended December 31, 2015 For the years ended December 31, 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-ave rage Exercise Price Numbers of Options $ 20.72 1,847 20.73 2,024 - - - - 20.47 (292) 20.79 (177) - - - - - - - - $ 20.77 1,555 20.72 1,847 $ 20.77 1,555 20.82 1,690	E-Ton Solar Tech. Co., Ltd. For the years ended December 31, 2015 For the years ended December 31, 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-ave rage Exercise Price Numbers of Options $ 20.72 1,847 20.73 2,024 - - - - 20.47 (292) 20.79 (177) - - - - - - - - $ 20.77 1,555 20.72 1,847 $ 20.77 1,555 20.82 1,690
For the years ended December 31, 2015
Weighted-aver age Exercise Price $ 20.72 - 20.47 - - $ 20.77 $ 20.77	Numbers of Options	Weighted-ave rage Exercise Price 20.73 - 20.79 - - 20.72 20.82
	1,555		1,847
	1,555		1,690

As of December 31, 2015 and 2014, the exercise prices of outstanding options were both $21.50 for the first grant, and both $19.70 for the second grant. The weighted-average remaining life of outstanding options of E-TON company were 1.04 years and 2.06 years.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

3) Expenses and liabilities resulted from share-based payments

The E-TON company and its subsidiaries incurred expenses and liabilities from share-based payments transactions for the years ended December 31, 2015 and 2014 as follows:

Expenses arising from granting of employee share options	For the years ended December 31,	For the years ended December 31,
	2015 $ (13)	2014
		53

2.Inventec Solar Energy Corporation

As of December 31, 2015, the share-based payment of Inventec Solar Energy Corporation were as follows:

as follows:
Grant date Number of shares granted Contractual life Grant target Vesting period	Equity transaction
	Capital increase by cash for the employees to have the share options in 2014 April 28, 2014 2,000,000 shares - Employees of Inventec Solar Energy Corporation -	Employee Stock Option in 2011
		August 1, 2011 20,000,000 shares 5years Employees of Inventec Solar Energy Corporation Subsequent 1 year service

1) Determining the fair value of equity instruments granted

Inventec Solar Energy Corporation adopted the Black-Scholes Option Valuation Model to estimate the fair value of its employee stock options on the date of grant. The assumptions used in this valuation model were as follows:

Fair value at grant date Share price at grant date Exercise price Expected volatility(%) Expected life of the option (year) Expected dividend yield rate Risk-free interest rate (%)	For theyears ended December 31,	For theyears ended December 31,
	2014	2011
	Capital increase by cash for the employees to have the share options	Employee Stock Option
	$ 1.48 $ 2.68 13.19 7.76 12.00 10.00 40.96% 53.38% 0.13 4.00 - % - % 0.47% 1.07%

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Inventec Solar Energy Corporation use the historical volatility as base to estimate the expected volatility; the duration of stock options is in accordance with the regulations. The expected dividends were set at 0, and the risk free rate was set considering the rate of the short-term government bonds. The definition of fair value did not cover the service fee of the trade or the non-market achievement conditions.

2) Employee stock options

Information on aforesaid employee stock options was as follows:

(Unit:Thousands)

Balance, beginning of January 1 Options granted Options forfeited Options exercised Options expired Balance, end of December 31 Options exercisable, end of December 31	For the years ended December 31, 2015 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-aver age Exercise Price Numbers of Options $ 10.00 6,051 10.00 11,121 - - - - 10.00 (195) 10.00 (116) 10.00 - 10.00 (3,355) 10.00 (5,856) 10.00 (1,599) 10.00 - 10.00 6,051 - - - -	For the years ended December 31, 2015 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-aver age Exercise Price Numbers of Options $ 10.00 6,051 10.00 11,121 - - - - 10.00 (195) 10.00 (116) 10.00 - 10.00 (3,355) 10.00 (5,856) 10.00 (1,599) 10.00 - 10.00 6,051 - - - -	For the years ended December 31, 2015 2014 Weighted-aver age Exercise Price Numbers of Options Weighted-aver age Exercise Price Numbers of Options $ 10.00 6,051 10.00 11,121 - - - - 10.00 (195) 10.00 (116) 10.00 - 10.00 (3,355) 10.00 (5,856) 10.00 (1,599) 10.00 - 10.00 6,051 - - - -
	2015
	Weighted-aver age Exercise Price
	$ 10.00 - 10.00 10.00 10.00 10.00 -
			6,051
			-

As of December 31, 2015 and 2014, the exercise prices of outstanding options were both $10.00. The weighted-average remaining life of outstanding options of Inventec Solar Energy Corporation were 0.58 years and 1.58 years, respectively.

3) Expenses and liabilities resulted from share-based payments

The Inventec Solar Energy company incurred its expenses and liabilities from the share-based payments transactions for the years ended December 31, 2015 and 2014 as follows:

Expenses arising from granting of employee share options Expenses arising from capital increase by cash for the employees to have the share options Total	For the years ended December 31, 2015 2014 $ 8,546 6,062 - 2,960	For the years ended December 31, 2015 2014 $ 8,546 6,062 - 2,960
	2015 $ 8,546 -
	$ 8,546	9,022

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INVENTEC CORPORATION AND ITS SUBSIDIARIES Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(r) Earnings per share

The following are the calculation of basic earnings per share and diluted earnings per share:

Basic earnings per share: Profit attributable to ordinary shareholders Weighted average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars) Diluted earnings per share: Profit attributable to ordinary shareholders of the Company (adjusted for the effects of all dilutive potential ordinary shares) Weighted average number of ordinary shares (thousand shares) Effect of dilutive potential common shares (thousand shares) profit sharing to employees Weighted average number of ordinary shares (adjusted for the effects of all dilutive potential ordinary shares) Diluted earnings per share (NT dollars)	For the years ended December 31,	For the years ended December 31,
	2015 $ 5,563,633 3,587,475 $ 1.55 $ 5,563,633 3,587,475 26,479 3,613,954 $ 1.54	2014 7,097,815
		3,587,475
		1.98
		7,097,815
		3,587,475 28,479
		3,615,954 1.96

(s) Revenue

The details of revenue for the years ended December 31, 2015 and 2014 were as follows:

Sale of goods Rendering of services	For the years ended December 31, 2015 2014 $ 394,511,666 434,971,494 958,555 628,474 $ 395,470,221 435,599,968
	2015
	$ 394,511,666 958,555
	$ 395,470,221

(t) Rewards of employees, directors and supervisors

The Company's articles of incorporation which were authorized by the Board of Directors, but has not yet been determined by the stockholders, require that earnings shall first be offset against any deficit. A minimum of 3% will be distributed as employee compensation and a maximum of 3% will be allocated as directors' and supervisors' compensation.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

If the employee compensation are distributed in the form of stock or cash, the employees qualifying for such distribution shall include the employees of the subsidiaries of the Company who meet certain specific requirements. Such qualified employees and the distribution ratio shall be decided by the board of divectors.

The rewards of employees amounted to $336,884 thousand, and rewards of directors and supervisors amounted to $98,258 thousand for the years ended December 31, 2015. These amounts are calculated using the Company's profit before tax for each period described above, and are determined using the earnings allocation method which stated under the Company's article. These bonus are expensed under operating cost or expenses in 2015. Related information can be accessed from the Market Observation Post System on the web site. The difference between the actual amounts of employee compensation and estimation of employee compensation, if any, will be treated as changes in accounting estimates and adjusted in profit or loss in 2016.

(u) Non-operating income and expenses
1.Other income

The details of other income for the years ended December 31, 2015 and 2014 were as follows:

Interest income	For the years ended December 31, 2015 2014 $ 2,112,228 2,864,110
	2015 $ 2,112,228

2.Other income and losses

The details of other income and losses for the years ended December 31, 2015 and 2014 were as follows:

Rent income
Foreign exchange gains (losses)
Gains (losses) on disposal of investments and
financial liabilities
Net gains (losses) on financial assets
(liabilities) measured at fair value through profit
or loss
Held-for-trading
Impairment losses on financial assets at cost
Impairment loss on non-financial assets
Gains (losses) on disposal of property, plant,
equipment, investment properties and other
assets
Other

For the years ended December 31,
2015
2014
$ 241,477
256,872
(669,167)
870,133
331,861
383,461

31,250
613,138
-
(109,590)
(140,379)
(1,454,743)
136,531
(162,409)
744,579
618,514
$
676,152
1,015,376

2015
$ 241,477
(669,167)
331,861

31,250
-
(140,379)
136,531
744,579

$
676,152

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

3.Finance costs

The details of finance expenses for the years ended December 31, 2015 and 2014 were as follows:

follows:
Interest expenses Bank borrowings Others	For the years ended December 31, 2015 2014 $ 910,050 1,247,235 4,123 4,182 $ 914,173 1,251,417
	2015 $ 910,050 4,123
	$ 914,173

(v) Reclassification adjustments of components of other comprehensive income

For the years ended December 31, 2015 and 2014, the reclassification adjustments of components of other comprehensive income amounted for $330,867 and $313,660, respectively.

(w) Financial instruments

1.Credit risks

1) Credit risks exposure

The carrying amounts of financial assets represented the maximum credit risk exposure of the Group.

For contingencies resulting from guarantees and endorsements provided by the Company, please refer to Note (13).

2) Condition of credit risk concentration

Implicit credit risk of the Group is inherent in its cash and accounts receivable. The cash is deposited in different financial institutions. The Company manages the credit risk exposure with each of these financial institutions and believes that cash do not have a significant credit risk concentration.

The major customers of the Group are centralized in the high-tech computer industry. To minimize credit risk, the Company periodically evaluates the Company’s financial positions and the possibility of collecting trade receivables.

Besides, the Consolidated Company monitors and reviews the recoverable amount of the trade receivables to ensure the uncollectible amount are recognized approprately as impairment loss.

As of December 31, 2015 and 2014, 60% and 56%, respectively, of accounts receivable were two major customers. Thus, credit risk is significantly centralized.

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2.Liquidity risks

The following are the contractual maturities of financial liabilities of the Group, including estimation of interest, but excluding the impact of netting arrangements:

Carrying amount	Contractual cash flows	Less than 6 months	6 to 12 months	1 to 2years	2 to 5years	More than 5years - - - - - - -
$ 596,570 18,707,515 12,132 58,609,552 11,911,563 88,985 -	606,702 19,161,601 12,132 58,609,552 11,911,563 (2,577,197) 2,488,212	211,592 7,709,257 12,132 58,609,552 11,911,563 (2,577,197) 2,488,212	193,600 83,753 - - - - -	201,510 1,083,862 - - - - -	- 10,284,729 - - - - -
$ 89,926,317	90,212,565	78,365,111	277,353	1,285,372	10,284,729	-
$ 2,299,912 29,797,847 24,263 73,944,102 7,898,426 17,095 - 24,571 -	2,299,912 29,797,847 24,263 73,944,102 7,898,426 (533,454) 516,359 (5,207,675) 5,183,104	1,322,620 11,541,152 24,263 73,944,102 7,898,426 (533,454) 516,359 (5,207,675) 5,183,104	240,740 17,987,755 - - - - - - -	468,080 - - - - - - - -	268,472 268,940 - - - - - - -	- - - - - - - - -
$ 114,006,216	113,922,884	94,688,897	18,228,495	468,080	537,412	-

The Group are not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

3.Currency risks
1) Exposure to currency risks

The Group's exposures to significant currency risk were those from its foreign currency denominated financial assets and liabilities as follows:

Financial assets Monetary items USD JPY EUR Non-monetary items USD EUR Financial Liabilities Monetary items USD JPY EUR Financial assets Monetary items USD JPY EUR Non-monetary items USD		2015.12.31	TWD 39,388,49 9,626,73 6,548,64 1,12 88,85 1,787,76 6,51 43,332,83 32,844,68 153,10 1,94 207,57 TWD 58,071,80 21,153,33 6,363,18 74,41 26,37 2,968,73
	Foreign currency (Inthousand) $ 1,200,137 293,319 199,532 4,179 2,484 54,981 182 1,320,318 1,000,752 4,665 7,200 5,803	Exchange rate USD：TWD 32.82 USD：CNY 6.49 USD：CUZ 24.83 JPY：TWD 0.27 EUR：TWD 35.77 USD：TWD29.50~33.02 EUR：TWD 35.77 USD：TWD 32.82 USD：CNY 6.49 USD：CUZ 24.83 JPY：TWD 0.27 EUR：TWD 35.77 2014.12.31
	Foreign currency (Inthousand) $ 1,835,392 668,563 201,112 286,227 688 90,920	Exchange rate USD：TWD 31.64 USD：CNY 6.12 USD：CUZ 22.83 JPY：TWD 0.26 EUR：TWD 38.34 USD：TWD29.25~33.59

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Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Foreign currency (Inthousand) Financial Liabilities Monetary items USD 1,946,793 1,577,310 4,549 JPY 11,062 EUR 4,682 Non-monetary items USD 17,592		2014.12.31	TWD 61,596,531 49,906,088 143,930 2,876 179,508 556,600
		Exchange rate USD：TWD 31.64 USD：CNY 6.12 USD：CUZ 22.83 JPY：TWD 0.26 EUR：TWD 38.34 USD：TWD 31.64

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable and other payables that are denominated in foreign currency. A 0.5% depreciation or appreciation of the functional currency against all the non-functional currency as of December 31, 2015 and 2014 would have increased or decreased the net profit after tax by $81,468 and $106,664, respectively. The analysis is performed on the same basis for both periods.

3) Gains or losses on foreign exchange

As Group deals with diverse foreign currencies, therefore, the gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2015 and 2014, the foreign exchange gain (loss), including realized and unrealized, amounted to $(669,167) and $870,133, respectively.

4.Interest rate analysis

The Group’s financial assets and financial liabilities with interest rate exposure risk were noted in the liquidity risk section.

The following sensitivity analysis in interest rates is based on the risk exposure to interest rates on the reporting date. For variable rate instruments, the sensitivity analysis assumes the variable rate liabilities are outstanding for the whole year on the reporting date.

If the interest rate increases or decreases by 0.5%, the Group’s profit will decrease or increase by $7,057 and $63,323 for the years ended December 31, 2015 and 2014, respectively, assuming all other variable factors remain constant. This is mainly due to the Group's variable rate in borrowings and time deposits.

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

5.Fair value of financial instruments
1) Fair value hierarchy

The Group uses the observable market data to evaluate its assets and liabilities. The different inputs of levels of fair value hierarchy in determing the fair value are as follows:

‧Level 1: quoted prices (unadjusted) in active markets for identified assets or liabilities.
‧Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
‧Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

		2015.12.31	2015.12.31	Total 163,956 57,659
Book Value $ 163,956 57,659		Fair Value
	Level 1 - 57,659	Level 2 163,956 -	Level 3 - -
221,615	57,659	163,956	-	221,615
574,923 331,492 2,715,761	574,923 - -	- 298,136 -	- 33,356 2,715,761	574,923 331,492 2,715,761
3,622,176	574,923	298,136	2,749,117	3,622,176
$ 3,843,791	632,582	462,092	2,749,117	3,843,791
$ -	-	88,985	-	88,985

245

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

		2014.12.31	2014.12.31	Total 298,746 142,226
Book Value $ 298,746 142,226		Fair Value
	Level 1 - 142,226	Level 2 298,746 -	Level 3 - -
440,972	142,226	298,746	-	440,972
429,200 457,501 7,972,361	429,200 - -	- 420,178 -	- 37,323 7,972,361	429,200 457,501 7,972,361
8,859,062	429,200	420,178	8,009,684	8,859,062
$ 9,300,034	571,426	718,924	8,009,684	9,300,034
$ 41,666	-	41,666	-	41,666

2) Valuation techniques and assumption for financial instruments measured at fair value:

The fair value of financial assets and liabilities were decided in accordance with the solutions as follows:

(2.1)Non-derivative financial instruments
A.The stocks of listed companies are financial assets with standard terms which are traded in the active markets. Their fair values are based on the quoted market prices.
B.The fair value of private equity is based on standard terms and quoted market prices.
C.The fair value of unquoted instruments were estimated using either the discounted cash flow model in which future cash flow were estimated and discounted or the fair value of the recognized assets and liabilities of the consolidated subsidiaries on the measurement day.
(2.2)Derivative financial instruments

Foreign exchange swap and forward exchange were usually evaluated in the latest forward rate.

3) Transfers between level 1 and level 2

There were no transfers between level 1 and level 2 of the fair value in the year of 2015 and 2014.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4) The following table shows the movements in fair value measurements under level 3 of the fair value hierarchy:

Balance as of January 1, 2015
Total gains and losses recognized in
Profit or loss
Other comprehensive income
Purchase
Disposals
Effect of movements in exchange rate
Proceeds from capital reduction
Balance as of December 31, 2015
Balance as of January 1, 2014
Total gains and losses recognized in
Profit or loss
Other comprehensive income
Purchase
Disposals
Proceeds from capital liquidation
Balance as of December 31, 2014

Available-for-sale
financial assets
$ 8,009,684
330,867
(4,108)
23,452,524
(28,621,363)
(412,087)
(6,400)
$
2,749,117
$ 3,016,571
313,660
(5,819)
34,177,265
(29,485,343)
(6,650)
$
8,009,684

For the years ended December 31, 2015 and 2014, total gains and losses included in “other gains and losses” and “unrealised gains and losses from available-for-sale financial assets were as follows:

Total gains and losses recognized in : In other comprehensive income (recognized as “unrealised gains and losses from available-for-sale financial assets ”)	For the years ended December 31, 2015 2014 $ (4,108) (5,819)
	2015 $ (4,108)

5) The quantified information for significant unobservable inputs (Level 3) used in fair value measurement

The Company uses level 3 inputs to measure fair values of available-for-sale financial assets.

247

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INVENTEC CORPORATION AND ITS SUBSIDIARIES Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Quantified information of significant unobservable inputs was as follows:

Item Available-for-sale financial assets-financial instruments without an active market Available-for-sale financial assets -equity investments without an active market	Valuation Technique Discounted Cash Flow Method Net Asset Value Method	Significant Non-observable Input ‧Discount Rate ‧Net Asset Value	The Relationship between Significant Non-observable Input and Fair Value
			‧The higher the discount rate, the lower the fair value. ‧Not applicable

6) Sensitivity analysis for fair values of financial instruments using Level 3 Inputs

The measurement would differ if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters are changed, the impact on net income or loss and other comprehensive income or loss will be as follows:

Input	Variation	Impact of Fair Value Change on Other Comprehensive income or loss Favorable Change Unfavorable Change $ 1,334 (1,334)
		Favorable Change
Discount Rate	0.5%	$ 1,334

The favorable change and unfavorable change refer to the fluctuation of fair value. The fair value is calculated based on the different levels of unobservable inputs. The table above shows the impact on single input. Therefore, the relations and variations between inputs are not considered.

6.Offsetting financial assets and financial liabilities

The Group has financial instruments transactions applicable to the International Financial Reporting Standards Sections 42 NO. 32 approved by the FSC which required for offsetting. Financial assets and liabilities relating those transactions are recognized in the net amount of the balance sheets.

The Group also performs transactions not applicable to the International Financial Reporting Standards Sections 42 NO. 32, but the Group has an exercisable master netting arrangement or similar agreement in place with its counterparties, and both parties reach a consensus regarding net settlement. The aforesaid exercisable master netting arrangement or similar agreement can be net settled after offsetting the financial assets and financial liabilities. Otherwise, the transaction can be settled at the total amount. In the event of default involving one of the parties, the other party can have the transaction net settled.

248

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

The following tables present the aforesaid offsetting financial assets and financial liabilities.

2015.12.31 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not off set in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 191,361,207 190,923,408 437,799 - - 437,799 113,321 - 113,321 - - 113,321 $ 191,474,528 190,23,408 551,120 - - 551,120	2015.12.31 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not off set in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 191,361,207 190,923,408 437,799 - - 437,799 113,321 - 113,321 - - 113,321 $ 191,474,528 190,23,408 551,120 - - 551,120	2015.12.31 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not off set in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 191,361,207 190,923,408 437,799 - - 437,799 113,321 - 113,321 - - 113,321 $ 191,474,528 190,23,408 551,120 - - 551,120	2015.12.31 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not off set in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 191,361,207 190,923,408 437,799 - - 437,799 113,321 - 113,321 - - 113,321 $ 191,474,528 190,23,408 551,120 - - 551,120	2015.12.31 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not off set in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 191,361,207 190,923,408 437,799 - - 437,799 113,321 - 113,321 - - 113,321 $ 191,474,528 190,23,408 551,120 - - 551,120
Gross amounts of recognized financial assets (a)	Gross amounts of financial liabilities offset in the balance sheet (b) 190,923,408 -	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)	Amounts not off set in the balance sheet (d)
			Financial instruments (Note)	Cash collateral received
$ 191,361,207 113,321		437,799 113,321	- -	- -
$ 191,474,528	190,23,408	551,120	-	-
		2015.12.31
Financial	liabilities that are
Gross amounts of recognized financial liabilities (a)	Gross amounts of financial assets offset in the balance sheet (b) -	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)	Amounts not off set in the balance sheet (d)
			Financial instruments (Note)	Cash collateral received
$ 88,985		88,985	-	-
		2014.12.31
Gross amounts of recognized financial assets (a)	Gross amounts of financial liabilities offset in the balance sheet (b) 162,194,618 -	Net amount of financial assets presented in the balance sheet (c)=(a)-(b)	Amounts not off set in the balance sheet (d)
			Financial instruments (Note)	Cash collateral received
$ 162,719,102 259,344		524,484 259,344	- 5,099	- -
$ 162,978,446	162,194,618	783,828	5,099	-

249

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2014.12.31 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset Net amount of financial liabilities presented in Amounts not off set in the balance sheet (d) financial liabilities (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 36,397 - 36,397 - - 36,397	2014.12.31 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset Net amount of financial liabilities presented in Amounts not off set in the balance sheet (d) financial liabilities (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 36,397 - 36,397 - - 36,397	2014.12.31 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset Net amount of financial liabilities presented in Amounts not off set in the balance sheet (d) financial liabilities (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 36,397 - 36,397 - - 36,397	2014.12.31 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset Net amount of financial liabilities presented in Amounts not off set in the balance sheet (d) financial liabilities (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 36,397 - 36,397 - - 36,397	2014.12.31 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset Net amount of financial liabilities presented in Amounts not off set in the balance sheet (d) financial liabilities (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments (Note) Cash collateral received Net amount (e)=(c)-(d) $ 36,397 - 36,397 - - 36,397
Gross amounts of recognized financial liabilities (a)	Gross amounts of financial assets offset in the balance sheet (b)	Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b)	Amounts not off set in the balance sheet (d)
			Financial instruments (Note)	Cash collateral received
$ 36,397	-	36,397	-	-

Note: Master netting arrangements and non-cash financial collaterals are included.

(x) Financial risk management
1.Overview

The Group have exposures to the following risks from its financial instruments:

1) credit risk
2) liquidity risk

3) market risk

The following likewise discusses the Group’s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying consolidated financial statements.

2.Risk management framework

The group are exposed to credit risk, market risk, operating risk and liquidity risk due to its operating activities. To lower the latent unfavorable effects of changing market to the Group's financial performance, the Group have made efforts in identifying and evaluating the risks and avoiding the uncertainty of the market through derivative financial instruments.

The board of directors has the overall responsibility for the establishment and oversight of the Group’s risk management framework. The fincancial units follows the risk managment policies, and report the operating status to the board of dirctors regularly. The internal auditors perform regular reviews by taking risk management control procedures and report to the board of directors.

3.Credit risk

Please refer to Note 6(w) for the analysis of credit risk of cash, cash equivalent and accounts receivable. Please refer to Note 13(a) for the endorsement and guarantee provided to the subsidiaries and affiliates as of December 31, 2015 and 2014.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4.Liquidity risk

Liquidity risk is a risk that the Group is unable to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as much as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group use actual cost to estimate the cost of its products and services to better assist the Group's monitoring on the cash flow and optimizing the return on investment. As of December 31, 2015, the capital and working funds of the Group are sufficient to meet its entire contractual obligation; therefore, the management is not expecting any significant issue on liquidity risk. As of December 31, 2015 and 2014, the Group's unused credit line were amounted to $88,795,529 and $71,687,165, respectively.

5.Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rate, and equity prices which will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Group.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollars (TWD), US Dollars (USD), Czech Koruna (CZK), Japanese Yen (JPY) and China Yuan (CNY). The currencies used in these transactions are denominated in TWD, USD, JPY and CNY.

The Group often uses the principle of natural hedging as its basis, and proceed supplemented by derivative instruments for hedging exchange rate risk.

The interest is denominated in the same currency as borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

251

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Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2) Interest rate risk

The Group's interest rate risk arises from long-term borrowings bearing floating interest rates. The fluctuation of the the market interest rate changes the floating interest rates of the long-term borrowings, and thus affect the future cash flow. In order to decrease the effect of the market interest rate fluctuation on to the future cash flow, the Group periodically evaluates bank and currency borrowing rate to hedge the cash flow risk caused by the market interest rate fluctuation.

(y) Capital Management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, additional paid-in capital, retained earnings and non-controlling interests of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The group's objective for managing capitals is to maintain investor, creditor and market confidence, and to sustain future development of the business by making debts and equities the most suitable capital structure and optmizing the best of it based on industrial scales, future growth development, and capital expenditures needed for plants and equipments. Thus, the Group calculates the operating funds based on the life cycle of the products, plans for the development in the long run, and then decides the most suitable captial structure considering the business cycle.

The Group ensures the financial resources and the operating plan are sufficient to support the future needs of operating funds, capital expenditures, debt refunding and dividend distribution.

The Group’s debt to equity ratio at the reporting date was as follows:

Total Liabilities Less: cash and cash equivalents Net debt Total Equity Total Capital Debt to equity ratio	2015.12.31 $ 112,847,624 (37,123,631)	2015.12.31 $ 112,847,624 (37,123,631)	2014.12.31 131,278,939 (37,731,741) 93,547,198 64,422,790 157,969,988 59.22%
	75,723,993 62,898,849
	$ 138,622,842
		54.63%

According to the Company's management, there were no changes in the Group's approach to capital management at of December 31, 2015.

(7) Related Party Transactions

(a) The Company and the ultimate controlling party

The Company is the ultimate controlling party of the Group.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(b) Significant transactions with related parties
1.Sale revenue

The amounts of significant sales transactions and outstanding balances between the Group and related parties were as follows:

related parties were as follows:
Associates	For the years ended December 31, 2015 2014 $ 15,503,838 30,160,467
	2015 $ 15,503,838

For related parties, the price and terms were determined in accordance with mutual agreements with its collection terms of OA30~90 days for sales. Receivables from related parties were not secured with collaterals, and did not require provisions for bad debt expenses.

2.Purchase

The amounts of significant purchase transactions between the Group and related parties were as follows:

Associates	For the years ended December 31, 2015 2014 $ 1,822,700 4,640,199
	2015 $ 1,822,700

There is no other vendor as comparison for the above purchases, and the purchase prices are 。 based on the settling price agreed by both sides. The payment term is 30~75 days

3.Account receivables from related parties

The amounts of account receivables between the Group and related parties were as follows:

Financial Statement Account	Related Party Categories	2015.12.31 $ 20,254 522	2014.12.31 8,967,761 29,900
Account receivables Other receivables	Associates Associates
		$ 20,776	8,997,661

4.Account payables from Related Parties

The amounts of Account payables between the Group and related parties were as follows:

FinancialStatement Account	Related Party Categories	2015.12.31 $ 27,239 12,132 3,732 5,045	2014.12.31 6,712,732 24,263 - 899
Accounts payable Notes payable Other accounts payable Other accounts payable (excluding borrowings)	Associates Other related parties Associates Other related parties
		$ 48,148	6,737,894

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

5.Property transactions

The amounts of acquisition of property, plant and equipment between the Group and related parties were as follows:

1) Acquisition of property, plant and equipment

For the year ended December 31, 2015 the Group purchused property, plant and equipment from associates and paid the amounted $7,629.

2) On September 8, 2015 and September 30, 2015, in pursuant to the resolution of the board of Directors, the Group paid the amount of $367,399 to TPV-Inventa Holding Ltd..
3) In 1999, the Group sold property, deferred assets, assets stated under expense, and trademarks to associates resulting in a gain on property disposal of $51,712 and other revenue of $40,453. As of December 31, 2015 and 2014, the unrealized other revenues are both $1,211.
6.Borrowings of Related Parties

The amount of the Group financed from related parties was as follows:

For the years ended December 31, 2015	Ending Balance $ 328	Interest rate	Ending interests payable -	Interest expense 114
Related parties For the years ended December 31, 2014		2.20%~3.14% 2.20%~3.14%
	$ 4,746		26	36
Related parties

7.Guarantees and endorsements

As of December 31, 2014, guarantee and endorsements of bank loans provided by the Group for related parties amounted for $1,240,288, the amount of $860,597 were exercised.

8.Others

1) As of December 31, 2015 and 2014, in order to assist the affiliate to access credit line from banks, related parties pledge a time deposit amounted to $131,500 and $126,700 certificate as collateral. As of December 31, 2015, the accrued expenses resulting from time deposit, which was pledged as collateral, amounted to $5,045.
2) General and adminstrative expense and SAP expense collected amount from related parties were as follow:

were as follow:
Associates	For the years ended December 31, 2015 2014 $ 12,008 19,681
	2015 $ 12,008

3) Donation for other related parties for the years ended December 31, 2015 and 2014 were $17,800 and $11,500, respectively.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

4) Administrative expenses paid to associates were as follows:

Associates

For the years ended December 31, 2015 $ 14,843

Key management personnel compensation includes:

Short-term employee benefits Post-employment benefit Share-based payments Terminated benefits	For the years ended December 31, 2015 2014 $ 642,557 628,286 7,887 7,318 - 888 564 - $ 651,008 636,492
	2015
	$ 642,557 7,887 - 564
	$ 651,008

Please refer to Note 6(q) for further explanations related to share-based payment transactions.

(8) Pledged Assets

The carrying values of pledged assets were as follows:

Pledged assets	Object		2015.12.31	2014.12.31
Refundable deposits	Customs duty guarantee and rental	$	217,998	215,228
(Other non-current assets)	deposit
Restricted cash in banks	Short-term borrowings,		5,760	1,000,720
(Other current assets and	construction contract guarantee,
Other non-current assets)	long-term borrowings and
	Secured deposits for executing
	technology agreements with
	goverment
Other non-current assets	Guaranty for material purchase		17,723	24,632
	contracts
Land, buildings, structures,	Long-term borrowings, and		1,597,510	1,621,365
machinery and equipment, net	short-term borrowings
(Property, plant and equipment,
Investment property and Other
non-current assets)
Total		$	1,838,991	2,861,945

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INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

(9) Significant Commitments and Contingencies

(a) Major Commitments:
1.Unused standby letters of credit were as follows:

EUR USD JPY TWD	2015.12.31 $ 2,888 8,105 25,210 -	2014.12.31 3,511 6,971 48,710 322,839

2.Promissory notes issued for bank credit, forward contracts, and Secured deposits for executing technology agreements with the goverment and property deposits are as follows:

TWD USD	2015.12.31 $ 21,758,059 1,319,000	2014.12.31 21,415,172 1,239,900

3.As of December 31, 2015, the executed agreement for acquisition of plants amounted to $6,060,000, in which, $5,454,000 has not yet been paid.
(b) Contingencies
1.Inventec Energy Corporation sold photovoltaic modules to TOPCO Scientific Co., Ltd.. Upon the installation of the said products by TOPCO Scientific Co., Ltd., it was discovered that there were some flaws on the products. Therefore, TOPCO Scientific Co., Ltd. hired another company to repair or replace the damaged products. On August 10, 2010, TOPCO Scientific Co., Ltd. filed a lawsuit in the Taipei District Court against Inventec Energy Corporation, asking Inventec Energy Corporation to pay the amount of USD1,799 thousand as compensation for the maintenance and the replacement of the products sold by Inventec Energy Corporation to TOPCO Scientific Co., Ltd.. However, on July 3, 2013, Taipei District Court ruled in favor of Inventec Energy Corporation and dismissed the case.

On July 26, 2013, TOPCO Scientific Co., Ltd. appealed against Inventec Energy Corporation demanding for the damage costs of NT$3,486 and US$961 thousand.

On August 31, 2015, Inventec Energy Corporation received the investigation result from Taiwan High Court, which includes a fine of USD 83 thousand.

Inventec Energy Corporation is to pay 8% of the expenses for filing the lawsuit, except for those already confirmed.

Inventec Energy Corporation and TOPCO scientific Co., Ltd. both appealed to Taiwan Supreme Court before September 29, 2015. The case is still in investigation.

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INVENTEC CORPORATION AND ITS SUBSIDIARIES Notes to the Consolidated Financial Statements (CONT'D) December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

2.The relationship between E-Ton Company and JI-EE Industry Co., Ltd. has deteriorated due to a dispute over the lands and buildings which JI-EE Industry Co., Ltd. leased to E-Ton Company. JI-EE Industry Co., Ltd. claimed that the lease is due on December 31, 2013 and decided to discontinue to rent the aforesaid lands and buildings to E-Ton Company. Therefore, E-Ton Company filed a temporary injunction to the Tainan District Court concerning this matter.

Tainan District Court requests that E-ton Company should provide a guarantee deposit of 1.2 billion New Taiwan Dollars for the temporary injunction mentioned above. In return, JI-EE Industry Co., Ltd. should leave the driveways and doors of the building (which is located on No. 73 and 74 Ke Gong Section, Annan Dist., Tainan City) in its current condition until this case is resolved. Furthermore, JI-EE Industry Co., Ltd. should allow E-ton Company to continue using the other buildings located on No.16-1, 16-7, and 16-10 Ke Gong Section, Annan Dist., Tainan City.

In accordance with the enforcement order No.82 (103), JI-EE Industry Co., Ltd. has to follow the aforementioned injunction. E-Ton Company has received the civil ruling No. 160 (103) from the Tainan District Court and submitted the indictment to the Tainan District Court on July 15, 2014. The case is filed as No. 196 (103) and is still in progress.

In accordance with the payment order No.6096 from Tainan District Court, JI-EE Industry Co., Ltd. advocated that E-Ton Company should pay a penalty of $8,537, plus, interest payables accrued with an annual interest rate of 5% from the issuance date of the payment order to the payment date.

E-Ton Company disagreed with the demand of JI-EE Industry Co., Ltd. and filed an appeal to the Tainan District Court against JI-EE Industry Co., Ltd.. JI-EE Industry Co., Ltd. filed an appeal against E-Ton Company asking for compensation for the damage. In 2014, according to case No. 73 of Zhong-Su-Zi, Tainan District Court granted the demand of JI-EE Industry Co., Ltd., which resulted to the penalty of 6,098, plus, interest payables accrued with an annual interest rate of 5% from the issuance date on May 22, 2014. Therefore, E-Ton Company filed an appeal to the Taiwan High Court against JI-EE Industry Co., Ltd. on December 5, 2014. Currently, the case is filed as No. 5 (104) and is still in progress.

257

(English Translation of Financial Report Originally Issued in Chinese)

INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

3.As of December 31, 2015, the long-term supply agreement of the Group entered with various vendors were summarized as follows:

Supplier	Term of	Prepayment US$ 149,000 4,105 16,280 - 22,825	Unused Down	Note M. Setek is required to supply E-TON SOLAR TECH.CO., LTD (E-TON) with “Monocrystalline Silicon Wafer" and polysilicon at the contract price. Pursuant to the agreement, E-TON has to prepay a certain amount as down payment. E-TON entered into a Memorandum of Understanding (“MOU”) with M. Setek on August 17, 2011. According to the MOU, E-TON and M. Setek agreed to subsequently reframe another purchase contract to replace the original one. The expiry date of the renewed agreement will be extended to December 31, 2020. In addition, M. Setek is required to repay US$3,000 thousand in settlements by December 31, 2011. E-TON had received US$2,000 thousand as of the date the report was issued, because the settlement is not reached , remainder US$1,000 thousand is reclassified account to other receivables. According to the MOU, if E-TON didn't reached the agreement of the plan of supply, prepayment of carryforward and principle with M.Setek, the original contracts will be excuted. E-TON and M. Setek have signed a new MOU in March 2013, the remainding prepayments can be deferred for future purchases. E company is required to supply E-TON with“Monocrystalline Silicon Wafer” at the contract price. Pursuant to the agreement, E-TON has to prepay a certain amount as down payment. As of December 31, 2015 the two parties are still in the negotiation. N company is required to supply E-TON with“Monocrystalline Silicon Wafer” at the contract price. Pursuant to the agreement, E-TON has to prepay a certain amount as down payment. E-TON entered an agreement to purchase “Monocrystalline Silicon Wafer” at the negotiated price. E-TON has to provide 45 metric tons of polysilicon as collateral which will be returned by supplier when the agreement is expired. In 2011, E-TON did not purchase the required quantities of products in compliance with the contract due to fluctuation in market conditions.Therefore, E-TON entered into a agreement with J Company on November 23, 2011 and agreed to extend the expiry date of the original agreement to the first quarter in 2013. As of December 31, 2015, the two parties are still in the negotiation. W company is required to supply ADEMA with polysilicon at the contract price. Pursuant to the agreement, ADEMA has to prepay a certain amount as down payment.
	Contract		Payment
M.Setek E Company N Company J Company W Company	2006.4- 2016.12 2009.1- 2014.12 2009.1- 2015.12 2011.1- 2012.12 2011.01-2016.12		US$ 50,048 2,644 4,620 - 5,704

258

(English Translation of Financial Report Originally Issued in Chinese)

INVENTEC CORPORATION AND ITS SUBSIDIARIES

Notes to the Consolidated Financial Statements (CONT'D)

December 31, 2015 and 2014

(Amounts Expressed in Thousands of New Taiwan Dollars Unless Stated Otherwise)

Supplier	Term of	Prepayment 7,499	Unused Down	Note
	Contract		Payment
GCL	2011.02-2015.12		312	GCL is required to supply Inventec Solar Engergy Corporation with “Monocrystalline Silicon Wafer” at the contract price. Pursuant to the agreement, Inventec Solar Engergy Corporation has to prepay a certain amount as down payment. Although the agreement had reached its expiry date, the supplier continued to agree with Inventec Solar Energy Corporation for the usage of its “Monocrystalline Silicon Wafer” until February 2016.
		US$ 199,709	US$ 63,328

Considering the significant price fluctuation in the solar market as compared to the date of the supply contract, the purchase price per unit and deductible amount from the down payment were adjusted to a negotiated price to reflect the change in spot price for the individual transaction. Besides, the Group has accrued the impairment loss based on the estimation of solar market fluctuation.

(10) Losses Due to Major Disasters : None.

(11) Subsequent Events : None.

(12) Other

(a) The employee benefits, depreciation, depletion and amortization expenses categorized by function were as follows:

By function By item	For the years ended December 31, 2015	For the years ended December 31, 2015	For the years ended December 31, 2015	For the years ended December 31, 2014	For the years ended December 31, 2014	For the years ended December 31, 2014
	Operating costs	Operating expense	Total	Operating costs	Operating expense	Total
Employee benefits Salary Labor and health insurance Pension Others Depreciation Amortization	10,918,860 944,605 1,423,399 940,698 3,020,004 534,071	8,361,983 722,532 573,686 229,101 956,242 430,924	19,280,843 1,667,137 1,997,085 1,169,799 3,976,246 964,995	11,392,985 795,852 950,271 948,254 2,653,925 537,965	8,249,554 582,379 455,638 174,817 1,160,065 684,247	19,642,539 1,378,231 1,405,909 1,123,071 3,813,990 1,222,212

259

Inventec Corporation Chairman : Lee, Tsu-Chin

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AI assistant

INVENTEC — Annual Report 2015

52026_rns_2016-06-23_445cbaae-9af4-4a45-8e2c-0dabf146914a.pdf

Inventec Corporation

2015 Annual Report

Notice to readers

2. Address and Telephone Number of Company’s Headquarters, Branches and Plant

3. Common Share Transfer Agent And Registrar

4. Information of the Certified Public Accountants for the Latest Financial Repot

5. Overseas Trade Places for Listed Negotiable Securities

6. Corporate Website

Contents

Letter to Shareholders

Ⅰ . Company Introduction

1.1 Founding Date : June 9, 1975

1.2 Formation History

1975

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1994

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1996

1997

1998

1999

2000

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2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Ⅱ . Corporate Governance Report

2.1 Organization Structure

2.2 Board of Directors, Supervisors and Management Team

2.2.1 Board of Directors and Supervisors

2.2.1.1 Introduction of Board of Directors and Supervisors 2016.04.30

2.2.1.3 Professional Qualifications and Independence Analysis of the Board

2.2.2 Introduction of the Management Team 2016.04.30

2.2.3 Remuneration of Directors, Supervisors, the President, and Vice President

2.2.3.1 Remuneration of Directors Unit: NT$ Thousands

2.2.3.3 Remunerations paid to the management team

2.2.3.4 Employee Profit Sharing Granted to Management Team

2.2.3.5 Compare and state the ratio of total remuneration paid to the Company’s Directors, Supervisors, President and Vice Presidents by

2.3 Implementation of Corporate Governance

2.3.1 Board of Directors

2.3.2 Audit Committee ： NA

2.3.3 The Supervisors

2.3.4 Corporate Governance Implementation Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

9. Continuing Professional Education (CPE) Hours for Directors and Supervisors in 2015

10. Continuing Professional Education (CPE) Hours for Managers in 2015

11. Certificate of License

2.3.5 Status of Compensation Committee

2.3.5.2 The state of The Compensation Committee's implementation

2.3.6 Implementation of Corporate Social Responsibility

2.3.7 Implementation of Ethical Corporate Management Best Practice Principles

2.3.8 Corporate Governance Guideline and Regulations

2.3.9 Other Important Information Regarding Corporate Governance

2.3.10 Internal Control System

2.3.10.1 Statement of Internal Control System

Inventec Corporation

2.3.11 The penalties delivered to the Company and the staffs of the Company, or the penalties delivered by the Company to the staffs for violations of internal control system, the major nonconformity, and the corrective action in the most recent years and up to the date of the annual report : None.

2.3.12 Major Resolutions of Shareholders’ Meeting and Board Meetings

2.3.12.1 Major Resolutions of Shareholders’ Meeting

2.3.12.2 Major Resolutions of Board Meetings

INVENTEC Annual Report 2015

`Ⅱ` . Corporate Governance Report

2.3.2 Audit Committee `：` NA

3.8.1 Plans `：` None. 3.8.2 Implementation `：` None.