INX - Annual Report 2014 | FinancialReports.eu

Stock Code: 3481

Innolux Corporation 2014 Annual Report

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw 2014 annual report is available at: http://www.innolux.com Printed on April 30, 2015

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.

A. Spokesperson & Deputy Spokesperson information.

Spokesperson Deputy Spokesperson Name: Jyh Chau Wang Name: Chien-Lang Lo Title: President Title: General Director Tel: 886-37-586000 Tel: 886-37-586000 E-mail: [email protected] E-mail: [email protected]

B Headquarters, Branches and Plant.

Headquarters: No.160, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000 Branch: 9 Ditanggang, Building B, 21 Zidong Road, Fenghuali, Xinshi District, Tainan City Tel: 886-6- 5889998

Plant

Fab T1: No.160, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000 Fab T2: No.168, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000 Fab T3: No. 12, Kejung Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586393 Fab Pingzhen: No. 458, Pingjen Sect., Jung Shing Road, Zhenxing Village, Pingjen City, Taoyuan County Tel: 886-37- 586000 STSP Touch Fab 1: No.12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051880 STSP Touch Fab 2: No.3, Sect. 1, Huansi Road, Sinshih District, Tainan City, Southern Taiwan Science Tel: 886-6-505 1880 Park Fab A: No.1, Ciye Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051881 Fab B: No.2, Sect. 2, Huansi Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051889 Fab C: No.12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Tel: 886-6-5051880 Fab D: No.3, Sect. 1, Huansi Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051888 Fab F: No.11, Luke 10th Road, Kaohsiung City, Southern Taiwan Science Park Tel: 886-7-6278888 Touch Module Fab : No. 12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Science Tel: 886-6-5051888 Park

C. Stock Transfer Agent

Grand Fortune Securities Co., Ltd. Address: 3[rd] Floor, 51 Mingsheng E. Rd, Sec. 1, Taipei, Taiwan Tel: 886-2-25621658 Website: http://www.gfortune.com.tw

D. Auditors

PricewaterhouseCoopers Auditors: Han-Chi Wu, Sheng-Chung Hsu Address: 27[th] Floor, 333 Keelung Rd, Sec. 1, Taipei, Taiwan Tel.: 886-2-27296666 Website: http://www.pwcglobal.com.tw

E. Overseas Securities Exchange

Luxembourg Stock Exchange Disclosed information can be found at http://www.bourse.lu

F Corporate Website: http://www.innolux.com

Innolux Corporation Chairman: Hsing-Chien Tuan

I.	Letter to Shareholders..............................................................................................................1	Letter to Shareholders..............................................................................................................1
II.	Company Profile.......................................................................................................................4
	2.1	Date of Incorporation ........................................................................................................4
	2.2	Company History ..............................................................................................................4
III.	Corporate Governance Report................................................................................................9
	3.1	Organization......................................................................................................................9
	3.2	Directors, Supervisors and Management Team............................................................... 11
	3.3	Remuneration of Directors, Supervisors, President, and Vice President ........................21
	3.4	Implementation of Corporate Governance......................................................................28
	3.5	Information Regarding Innolux’s Independent Auditors ................................................54
	3.6	Replacement of independent auditors:............................................................................55
	3.7	The Company’s chairman, general manager, or any managerial officer in charge of
		finance or accounting matters has in the most recent year held a position at the
		accounting firm of its CPA or at an affiliated enterprise.................................................55
	3.8	Changes in Shareholding of Directors, Supervisors, Managers and Major
		Shareholders....................................................................................................................56
	3.9	Information Disclosing the Relationship between any of the Company’s Top Ten
		Shareholders....................................................................................................................57
	3.10	The number of shares held by the Company, the Company’s directors and
		supervisors, managerial officers and enterprises under control, either directly or
		indirectly, with consolidated calculation of the comprehensive shareholding ratio. ......58
IV.	Capital Overview....................................................................................................................59
	4.1	Capital and Shares...........................................................................................................59
	4.2	Issuance of Corporate Bonds ..........................................................................................65
	4.3	Preferred Shares: None. ..................................................................................................65
	4.4	Issuance of Global Depositary Shares.............................................................................66
	4.5	Employee Stock Options.................................................................................................67
	4.6	Status of Employee Restricted Stock ..............................................................................69
	4.7	Status of New Share Issuance in Connection with Mergers and Acquisitions................71
	4.8	Financing Plans and Implementation..............................................................................71
V.	Operational Highlights...........................................................................................................72
	5.1	Business Activities ..........................................................................................................72
	5.2	Market and Sales Overview ............................................................................................81
	5.3	Human Resources............................................................................................................88
	5.4	Environmental expenditures Information .......................................................................89
	5.5	Labor Relations ...............................................................................................................89
	5.6	Important Contracts.........................................................................................................94
VI.	Financial Information ............................................................................................................96
	6.1	Five-Year Financial Summary.........................................................................................96
	6.2	Five-Year Financial Analysis ........................................................................................104
	6.3	Supervisors’ Report in the Most Recent Year ............................................................... 113
	6.4	Financial Statements for the Years Ended December 31, 2014 and 2013, and
		Independent Auditors’ Report ....................................................................................... 116
	6.5	Consolidated Financial Statements for the Years Ended December 31, 2014 and
		2013, and Independent Auditors’ Report....................................................................... 116

	6.6	Disclosure of the Impact on Company’s Financial Status Due to Financial
		Difficulties..................................................................................................................... 116
VII.	Review of Financial Conditions, Operating Results, and Risk Management................. 117
	7.1	Analysis of Financial Status.......................................................................................... 117
	7.2	Analysis of Operating Results....................................................................................... 118
	7.3	Analysis of Cash Flow .................................................................................................. 119
	7.4	Major Capital Expenditure Items..................................................................................120
	7.5	Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement
		Plans and the Investment Plans for the Coming Year ...................................................120
	7.6	Analysis of Risk Management ......................................................................................121
	7.7	Other Important Matters................................................................................................125
VIII.	Special Disclosure .................................................................................................................126
	8.1	Summary of Affiliated Companies................................................................................126
	8.2	Private Placement Securities in the Most Recent Years: None. ....................................136
	8.3	The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent
		Years..............................................................................................................................136
	8.4	Special Notes.................................................................................................................136

IX. Materially might affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, such situations shall be listed one by one............136

I. Letter to Shareholders

1.1 2014 Operating Report

It is an improvement and achievement year in 2014, we achieved record-breaking gross profit margin, operating income ratio and net margin since the merger. Inventory turnover days and net debt ratio also hit a new low. Especially net debt ratio down to 27.2% in the end of 2014 compared to 153.2% debt negotiation in Q1 2012, improved significantly and better than the same industry. All the way along, our management team worked tirelessly and employees go all out in the work.

We keep working on financial constitution improvement in 2014 and integrate manpower, production capacity and technique effectively. Through the success both in development of new products and the strategy on products differentiation, we have established our competitiveness among the global panel market. In 2014 our total consolidated revenue was $428.7 billion which increased 1.40% by compared with 2013 revenue of NT$422.7 billion. The increase mainly due MP business growth, Full High Definition (FHD) product development and introduce Touch On Display (TOD) product successfully to Europe and America clients. The gross profit of year 2014 is NT$ 50.3 billion and the gross profit margin of year 2014 is 11.7%, which is massively improved compared with the 8.9% gross profit margin of year 2013. The net operating income of year 2014 is NT$ 28.1 billion and the net operating income ratio of year is 6.6%. Both are keeping improved comparing to the NT$ 15.3 billion operating income or 3.6% operating income ratio for the year 2013. The annual profit after tax is NT$ 21.7 billion for year 2014, the annual earnings per share is NT$ 2.31. Above all, the operating performance of the Company in the year of 2014 has surpassed the same line of work in Taiwan, which demonstrated our resolutions to operate the Company and the results of turning the tide.

As for the research development and market segmentation, we deem the continuous development of the technology as the long term competitive advantage in our business operation. We are highly recognized by the market with outstanding growth for our products in the aspect of ultra-high resolution, ultra-thin, wide viewing angle, narrow frame, low power consumption, wide color gamut, and LED backlight. Moreover, with the innovative thought brought by the Company, we have introduced the whole new LCD TV panels in size 39 inches, 50 inches, 58 inches, 65inches, and panels in 4K2K ultra high resolution. Such products are highly preferred by the consumers. We therefore successfully set the products and specifications of the market, created market segmentation, surpassed and came out first in the same line of work.

As we move forward, we will continue to endeavor, to concentrate and to innovate for the best interest of our shareholders.

(I) Result of Business Plan

In 2014 our consolidated revenue was NT$ 428,661,898 thousand, which increased 1.4%, which is NT$5,931,398 thousand by compared with 2013 yearly revenue of NT$ 422,730,500 thousand.

In 2014 Net income was NT$21,676,759 thousand and earnings per share were NT$2.31.

(II) Budget Implementation

No financial forecast disclosed for 2014, therefore not applicable to disclose budget implementation.

(III) Financial Analysis from 2013 to 2014

		2013	2014
Capital Structure Analysis	Debt to Asset Ratio(%)	67.71	52.50
	Long-term Capital to Fixed Asset Ratio(%)	75.91	121.31
Liquidity Analysis	Current Ratio(%)	57.12	95.10
	Quick Ratio(%)	39.92	77.41
	Times Interest Earned(Times	2.12	7.28
Profitability Analysis	Return on Total Assets(%)	1.72	4.98
	Return on Equity Attributable to Shareholders of the Parent(%)	2.79	10.23
	Operating Income to Paid-in Capital Ratio(%)	16.85	28.30
	Pre-tax Income to Paid-in Capital Ratio(%)	6.20	22.64
	Net Margin(%)	1.21	5.06
	Earnings Per Share(NT$)	0.57	2.31

(IV) Research and development

We keep helping client to intensify product competiveness, fit market demand and be friendly to the environment as our main objective of display technique development. About the development, mainly include environment protection material, electronics saving and low power consumption, high pixel, high chroma, thin, narrow frame, high dynamic display, touch, wide viewing angle and all-around system services integration, we all obtained remarkable achievement. Also, the development achievement of each techniques, fully apply to TV, desktop monitor, notebook, tablets, cell phone, medical application and industrial display products. Moreover, the integrated development on the touch components and panels of more advanced techniques and portable and wearable products application are the key points of our future product design and development.

1.2 Summary of 2015 Business Plan

(I) Enhancement of quality and improvement of technique

Strength quality
The key point of improvement is to improve the yield rate of middle and small products and set the target for yield rate.
Process/ Product technique improvement
Shorten the Cycle time to mass production.
Improve IPS production capacity and improve TOD technique.
Increase the proportion of high resolution (FHD/HD) product.

(II) Continuous growth on middle and small size products

Speed up the process from new product development to mass production
Continuous improve market share

(III) Tablet Integration

Through bundle Sensor Glass and TFT business, to intensify the Touch total solution, and to cooperate with clients of terminal brand.

(IV) Automation upgrade

Keep constructing automatic production line and improving the competitive advantage.
While upgrading the equipment (from manual to automatic), reduced the Assembly Times of the Company.

(V) Sourcing initiative and control and manage expense

In year 2015, the entire staff will also to fully devote themselves to work. Please continue to give us your support and encouragement. Lastly, I wish everyone a good health and the best of luck. Thank you. Lastly, I wish everyone a good health and the best of luck. Thank you.

Chairman: Hsing-Chien Tuan Manager: Hsing-Chien Tuan Chief Accountant: Chin-Yuan Chang

II. Company Profile

II. Company Profile	II. Company Profile
2.1 Date of Incorporation: January 14 2003 2.2 Company History

January 2003	Inception and registration of the Company
March 2003	Invested in a subsidiary, Innolux Holding Ltd.
May 2003	Ground breaking ceremony for the TFT and Color Filter Plant In Jhunan
August 2003	The TFT and Color Filter Plant In Jhunan commenced construction
March 2004	Entered into a 7-year NT$20 billion syndicated loan contract with a syndicate including Bank of Communications
June 2004	Machinery installation started in the TFT factory and Color Filter Plant In Jhunan
September 2004	Birth of the first TFT-LCD panel
October 2004	Invested in Innocom Technology (Shenzhen) Ltd. in China
January 2005	Public issuance of the Company’s shares approved by the Financial Supervisory Commission
February 2005	Invested in Innolux Corporation Ltd. in the U.S.
March 2005	Obtained ISO 9001 certification Granted the “2005 Outstanding Award in Makingthe Science Park Green by Planting Trees” by the Science Park Administration
July 2005	Registered as an emerging stock on the GreTai Securities Market Obtained ISO 14001 and OHSAS 18001 certifications
August 2005	Ranked 51st nationwide in actual import/export performance in 2004 Granted the Excellent Award in Import/Export Performance by the Ministry of Economic Affairs and Bureau of Foreign Trade
November 2005	Recognized as an outstanding waste disposal model factory by the Environmental Protection Administration, Executive Yuan
December 2005	Recognized as an Occupational Safety and Health Administration Voluntary Protection Unit by the Council of Labor Affairs, Executive Yuan
October 2006	Shares became listed on the Taiwan Stock Exchange on 24 October
November 2006	The Board passed the resolution of merging with Jemitek Electronics Corp. on 21 November
March 2007	Completed merger with Jemitek Electronics Corp.
June 2007	Invested in InnoJoy Investment Corporation
August 2007	Invested in InnoFun Investment Corporation
November 2007	Global Deposit Receipts became listed on the London Stock Exchange on 7 November
June 2008	Topping out ceremony for the sixth generation factory of the Company
July 2008	Granted the “Outstanding Award in Making Green by Planting Trees” by the Science Park Administration Recognized as one of the TOP 10 Leading Companies among the “Taiwan Technology Top 100” Ranked sixth among Deloitte Technology FAST50 Taiwan in terms of profit growth
September 2008	Entered into a 5-year NT$24 billion and US$200 million syndicated loan contract with a syndicate of 20 banks including Mega International Commercial Bank Selected as one of the 12 units in the national industrial group by the Water Assessment Programme organized by the Ministry of Economic Affairs
October 2008	Received the Bronze Award of the National QCC Competition from the Corporate Synergy Development Center of the Industrial Development Bureau, Ministry of Economic Affairs Granted the 2008 Excellence Award in Recycling and Reducing Waste Production by the Environmental Protection Administration, Executive Yuan

November 2008	Recognized as a nationwide friendly workplace in 2008 by the Council of Labor Affairs, Executive Yuan
December 2008	Granted the 2008 Outstanding Water Conservation Award by the Water Resources Agency, Ministry of Economic Affairs Honored with the "2008 Taiwan CSR Awards-Silver Award" by the Taiwan Institute for Sustainable Energy
February 2009	Innolux Display’s Fab T1 passed and obtained the Taiwan Occupational Safety and Health Management System (TOSHMS) certification
April 2009	Innolux Display’s Fab T1 was granted the excellent award in achieving zero work accident hours by the Council of Labor Affairs
May 2009	Innolux Display’s Fab T2 obtained ISO 9001/ISO 14001/OHSAS 18001/QC 080000 4-in-1 management system certification
June 2009	Granted the 2008 excellent personnel award by the National Labor Safety and Health Partnership of the Council of Labor Affairs
September 2009	Issued the 2008 Sustainability Report of Innolux Display Innolux Display’s Fab T0, T1, and T2 obtained the TS 16949 quality system certification
October 2009	Innolux Display announced a merger with TPO Displays Corp. Honored with the “Energy Conservation Outstanding Innovation Award” by the Bureau of Energy, Ministry of Economic Affairs
November 2009	Innolux Display announced a merger with Chi Mei Optoelectronics Corporation Entered into an NT$48 billion syndicated credit facility with a syndicate of 19 banks including Mega International Commercial Bank Received two Bronze Awards of the National QCC Competition from the Corporate Synergy Development Center of the Industrial Development Bureau, Ministry of Economic Affairs Granted the excellent award in low carbon production and waste reduction by the Industrial Development Bureau, Ministry of Economic Affairs
December 2009	Innolux Display was honored with the "2009 Taiwan CSR Awards-Bronze Award" for its 2008 Sustainability Report by the Taiwan Institute for Sustainable Energy. Received the outstanding award in the “2009 Outstanding Energy Saving Companies Selection” from the Science Park Administration Recognized as the Best Managed Company in Taiwan by Asiamoney Granted the excellence award in environmental protection by the Science Park Administration
January 2010	Obtained “Labeling of Energy Saving Action” from the Environmental Protection Administration
February 2010	Granted the excellent award for outstanding achievement on training and management for occupational health by the Council of Labor Affairs, Executive Yuan
March 2010	Completed the merger with Chi Mei Optoelectronics and TPO Displays Innolux Display renamed as Chimei Innolux Granted the outstanding performance award in occupational safety and health on the occasion of the 2009 Nationwide Occupational Safety and Health Week, held by the Council of Labor Affairs, Executive Yuan
May 2010	Winner of Taiwan's Environmental Protection Administration's 2009 Enterprise Green Procurement Performance Award. Recognized as an outstanding unit in achieving zero work accident hours by the Council of Labor Affairs, Executive Yuan
June 2010	18.5-inch LCD panel is awarded 2009 FPD green quality certification. 42-inch 120Hz+ MEMC is awarded the best integrated LCD panel at the Taiwan Gold Panel Awards 2010 with the 13 th Annual Outstanding Optoelectronics Product Awards.
September 2010	Awarded the Outstanding Energy Conservation Award by the Department of Energy, Ministry of Economic Affairs
October 2010	Passed DNV third-party independent verification for its 18.5-inch LCD flat panel monitor

	(M185B1-L02), making CMI the first panel maker to receive a supply chain “water footprint” verification statement Granted “the Excellent Environmental Protection Award” by the Science Park Administration
November 2010	Granted the 2010 excellence award in recycling and reducing waste production by the Environmental Protection Administration Completed the merger with Chi Mei Energy
December 2010	Granted “the 2010 Outstanding Energy Saving Award” by the Science Park Administration Granted “the Excellent Award in Low-Carbon Management” by the Science Park Administration Granted “the 2010 Outstanding Award in Making Green by Planting Trees” by the Science Park Administration
January 2011	Became the first manufacturer to obtain “water footprint” verification for its product supply-chain with regard to its desktop LCD monitors and LCD TVs.
March 2011	2.65-inch and 5.3-inch Memory-In-Display (Midis) technology, which was a new energy-saving panel technology, obtained the Best Paper Award of the 17th IDW (International Display Workshops), Japan.
April 2011	Honored with the 2011 Taiwan Excellence Gold Awards for its ultra-thin 13.3-inch HD notebook display module.
May 2011	Kobe site was awarded the Best Safety & Hygiene Company by the Safety Management Committee of Kobe, Japan.
June 2011	Won the Outstanding Photonics Product Award 2011 for its 21.5-inch PCT (Projected Capacitive Touch) display module by the Photonics Industry & Technology Development Association (PIDA). Honored with the “2011 Contribution to Job Creation” award by the Ministry of Economic Affairs and Council of Labor Affairs, Executive Yuan
August 2011	Ranked third among the “2010 Outstanding Export Growth Companies” by the Bureau of Foreign Trade, Ministry of Economic Affairs
September 2011	Granted the 2010 Enterprise Green Procurement Performance Award by the Environmental Protection Administration, Executive Yuan
October 2011	STSP Branch was honored with the “Jin-Jhan Award” by the Council of Labor Affairs, Executive Yuan. Honored with “National Industrial Safety and Health Award” by the Council of Labor Affairs, Executive Yuan
April 2012	Entered into the Joint Debt Restructuring Agreement with the syndicate
June 2012	Won the Outstanding Photonics Product Award 2012 for its 50-inch 3D Direct-Type LED panel by the PIDA.
August 2012	Honored with the “Taiwan Excellence Silver Award” for its 23.6-inch USB super energy-saving LCD screen
September 2012	Recognized as an outstanding unit for hiring disabled persons by surpassing the target Granted the 2011 Enterprise Green Procurement Performance Award by the Environmental Protection Administration, Executive Yuan and the only panel factory granted the award for four consecutive years and fulfilling its responsibility of a sustainable environmental protection enterprise Chi Mei Optoelectronics UK Limited revoked
December 2012	Changed its name to “群創光電股份有限公司” with the English name of “Innolux Corporation”
January 2013	Global depository receipts listed and traded on the Luxembourg Stock Exchange on 23 January Merger of the subsidiaries InnoJoy Investment Corporation and InnoFun Investment Corporation, in which InnoJoy Investment Corporation was the surviving company Eastern Vision Co., Ltd. Liquidated
March 2013	Trading Limited liquidated Dragon Flame Industrial Ltd. liquidated

April 2013	Nanhai Plant took the lead in obtaining the first MFCA material flow cost accounting certification in the world The Company’s 65-inch 4K2K TV module was awarded the 21st “Taiwan Excellence Gold Award” The Company’s 4.3-inch active organic light emitting display (TRUEOLED) was awarded the 21st “Taiwan Excellence Silver Award” The Company's 50-inch ultra-high resolution (4K2K) thin narrow frame LCD TV module was awarded the 21st "Taiwan Excellence Award" The Company’s 30-inch six million pixel medical monitor was awarded the 21st "Taiwan Excellence Award" The Company’s 5-inch Full HD LCD panel module was awarded the 21st "Taiwan Excellence Award" The Company’s 3.4-inch active organic light emitting display was awarded the 21st "Taiwan Excellence Award"
June 2013	The Company's 65-inch ultra-high resolution thin narrow frame LCD TV module was recognized by the 16th “Annual Outstanding Optoelectronics Products Awards” Granted the first “National Environmental Education Award – Excellence Award for Private Enterprises Group” by the Environmental Protection Administration Innocom Technology (Jiashan) Co., Ltd. liquidated
September 2013	Ningbo Chi Mei Electronics Ltd. renamed as Ningbo Innolux Optoelectronics Ltd. Nanhai Chi Mei Optoelectronics Ltd. renamed as Ningbo Innolux Technology Ltd. Ningbo Chi Hsin Electrics Ltd. renamed as Ningbo Innolux Display Ltd. Ningbo Chi Mei Logistics Corp renamed as Ningbo Innolux Logistics Ltd.
October 2013	The Company’s “Intelligent Automation” team was granted the “Annual Innovative Pilot Award” of the Industry Innovation Award for theone-stop touch innovative operating model by the Ministry of Economic Affairs Foshan Chi Mei Logistics Co., Ltd. renamed as Foshan Innolux Logistics Co., Ltd. TPO Displays (Nanjing) Ltd. renamed as Nanjing Innolux Optoelectronics Ltd.
November 2013	Awarded the 2013 Green Building Gold Mark by the Ministry of Economic Affairs Awarded the “Premium” honor of the 2013 Taiwan CSR Awards Full Lucky Investment Limited liquidated
December 2013	Selected as an outstanding water saving unit for 2013 by the Water Resources Agency of the Ministry of Economic Affairs Dongguan Chi Hsin Electrics Ltd. revoked TPO Displays (Shanghai) Ltd. renamed as Shanghai Innolux Optoelectronics Ltd. Global Deposit Receipts listed on the London Stock Exchange delisted
January 2014	Plant T1 and Plant B, D, TOC, F (Tainan) awarded Health Promotion Label of Healthy Workplace Certification Chi Mei Optoelecttonics (Singapore) Pte. Ltd. revoked Innocom Technology (Xiamen) Co., Ltd. revoked Merger of Nanhai Chi Mei Electronics Ltd. and Nanhai Chi Mei Optoelectronics Ltd., in which Nanhai Chi Mei Electronics Ltd. was the surviving company
February 2014	Foshan site awarded as an Advanced Corporation in Promotion of Environmental Protection in Si-shan town Ningbo site awarded as an Advanced Corporation in Safe Production and Workplace in Ningbo City 2013
March 2014	Honored with the Healthy Corporation Award for the 2014 Southern Science Park Ecological and Humanistic Marathon
April 2014	Nanhai Chi Mei Electronics Ltd. renamed as Foshan Innolux Optoelectronics Ltd. The Company’s 65-inch ultra-high-analytic 3D TV panel Awarded a certificate of recognition for offering disability employment opportunities to realize corporate social responsibilities bythe Southern Taiwan Science Park Administration,Ministryof

	Science and Technology Won the“Taiwan Excellence Silver Award”
September 2014	Chi Mei Optoelectronics USA, Inc. renamed as Innolux Optoelectronics USA, Inc. TPO Displays USA Inc. renamed as Innolux Technology USA Inc.
October 2014	TPO Displays Japan K.K. renamed as Innolux Technology Japan Co.,Ltd.
November 2014	Chi Mei Optoelectronics Europe B.V. renamed as Innolux Optoelectronics Europe B.V. TPO Displays (Shinepal) Ltd. renamed as Nanjing Innolux Technology Ltd. Chi Mei Optoelectronics Japan Co., Ltd. renamed as Innolux Optoelectronics Japan Co.,Ltd. TPO Displays Hong Kong Ltd renamed as Innolux Hong Kong Ltd.
December 2014	Health Management Award and Nutrition Health Award by the Health Promotion Administration Granted 2014 Taiwan Sustainable Development Awards by National Council for Sustainable Development TPO Displays Hong Kong Holding Ltd. renamed as Innolux Optoelectronics Hong Kong Holding Ltd. TPO Hong Kong Holding Ltd. renamed as Innolux Hong Kong Holding Ltd. TPO Displays Europe B.V. renamed as Innolux Technology Europe B.V.
February 2015	Signed an agreement for a syndicated credit line of NT$68.5B with Bank of Taiwan and 15 other banks
March 2015	The company terminated the debt restructuring negotiation and canceled the debt negotiations
April 2015	The Company’s 100% high color saturation 4K2K TV module was awarded the 21st “Taiwan Excellence Gold Award” Awarded a certificate of recognition for social responsibilities by the Global Views

III. Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

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3.1.2 Major Corporate Functions

Divisions	Main duties
President’s Office	Manage the businesses of the Company according to the resolutions passed by the shareholders’ meetings and the Board and the orders of the Board
Auditor's Office	Responsible for assessing the soundness of the internal control system and all the standards, checking whether the internal control system is operating effectively on a continual basis, measuring the operating results of the departments and providing improvement recommendations for efficient operation
Global Sales Business Center	Set up business and support units for different types of customers to provide a one-stop solution for all customers’ needs
Product Technology Center	Integrate the research and development of technologies and products, and assess and introduce new technologies and newproducts
Production Technology Center	Responsible for process technology, automation technology and initial equipment and materialpurchase,etc.
LCD Panel Manufacturing Center	Responsible for the production of large-size LCD panel products.

Module Manufacturing Center	Responsible for the production of LCD module products
Touch Panel Business Unit	Responsible for the sales and marketing, technology development and production of touchpanelproducts.
Mobile Device Business Unit	Responsible for the sales, marketing, and product development of LCD wireless communication and audio-visual systems as well asproduction ofpanelproduction
Sales & Marketing	Responsible for market development, promotion,and customer service
TechnologyDevelopment	Develop,improve,verify,and test new technologies and newprocesses
Product Development	Development and improvement of new products; design, development, verification, and testingofproducts
Manufacturing	Production, packaging,and repair ofproducts
Environmental & Safety Division	Responsible for handling company-wide issues including environmental protection, occupational safety, damage prevention, and risk control of the factories, staff health management and workplace improvement, and greenhouse gas reduction; implementing and managingthe environmental safetyand healthpolicies of the Company.
Quality Management Center	Responsible for the quality management of the Company; providing the best and the most efficient quality management services (including quality control, product quality guarantee, quality system, and documentary management); and promoting the concept of totalqualitycontrol
Finance & Accounting Center	Coordinate the capital operating system of the Company, provide financial and accounting information, manage investment plans and risk aversion, and manage overall financial,investment,accounting,and tax matters.
Legal and Intellectual Property Center	Responsible for drafting and reviewing contracts; providing business-related legal consultation services; and coordinating local and international intellectual property matters of the Company
Strategic Procurement Center	Responsible for the overall procurement strategy of the Company, strategic planning of important parts and components, material preparation for the introduction of products and standardized cost management
Business Management Center	Responsible for the operation and management, industrial engineering and information system of the Company; profits and losses of cost accounting, business strategy consultation, work-flow efficiency improvement, capacity expansion planning, production efficiency enhancement, hardware and software infrastructure, and information system construction
Human Resources Management Center	Responsible for overall human resources policy, promotion of talent selection, education, deployment and retention, employee communications, general administration and corporate social responsibilities,etc.

3.2 Directors, Supervisors and Management Team

3.2.1 Directors and Supervisors

																April 10,2015	April 10,2015	April 10,2015
Title	Citizenship	Name Note 1	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Chairman & Chief Executive Officer	Taiwan	Hsing-Chien Tuan	Jun 19, 2013	3	Nov 21, 2002	17,166,567	0.19	17,611,561	0.18	－	－	－	－	Chairman of the Board and CEO, Chimei Innolux Corporation Ph. D, Electronic Engineering, Stanford University (U.S.A.) General Manager, AU Optronics Corp. General Manager, Unipac Optoelectronics Corp.	Note 2	－	－	－
Institutional Director	Taiwan	Hyield Venture Capital Co., Ltd	Jun 19, 2013	3	Nov 21, 2002	163,989,223	1.8	176,311,219	1.77	－	－	－	－	－	－	－	－	－
Representative	Taiwan	Hong-Jen Chuang	Jun 19, 2013	3	Jun 29, 2012	N.A.	－	－	－	－	－	－	－	Master of Accounting, Soochow University Chairman of Innolux Corporation	Note 3	－	－	－
Institutional Director	Taiwan	Jialian Investment Co., Ltd.	Jun 19, 2013	3	Jun 29, 2012	9,926,773	0.11	10,672,661	0.11	－	－	－	－	－	－	－	－	－
Representative	Taiwan	Jyh-Chau Wang	Jun 19, 2013	3	Jun 29, 2012	N.A.	－	673,067	0.01	607	－	－	－	M.S., Materials Engineering, National Tsing-Hua University Vice President, Chi Lin Technology Co., Ltd. Deputy Plant Director, Unipac Optoelectronics Corp. Associate Research Fellow, Material Research Laboratories, Industrial Technology Research Institute	Note 4	－	－	－
Independent Director	Hong Kong	Stanley Yuk Lun Yim	Jun 19, 2013	3	Jun 19, 2013	－	－	－	－	－	－	－	－	High school graduate	Note 5	－	－	－

Title	Citizenship	Name Note 1	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)	Other Position	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
Independent Director	Taiwan	Chi-Chia Hsieh	Jun 19, 2013	3	Jun 19, 2013	－	－	－	－	－	－	－	－	Ph. D of Mechanical Engineering, Santa Clara University, USA	Note 6	－	－	－
Supervisor	Taiwan	Ren-Guang Lin	Jun 19, 2013	3	Jun 29, 2012	－	－	－	－	－	－	－	－	Bachelor of Laws, Soochow University, Master of international banking law, Boston University, USA Master of Law, Duke University,USA Ph. D of Law, Duke University,USA	Professor at National Taiwan University School of Law Director of Securities and Futures Investors Protection Center	－	－	－
Supervisor	Taiwan	Yi-Fang Chen	Jun 19, 2013	3	Jun 29, 2012	－	－	－	－	－	－	－	－	M.S., Accounting, Soochow University Lecturer, Accounting Soochow University Former PwC Partner	Note 7	－	－	－
Supervisor	Taiwan	I-Chen Investment Ltd.	Jun 19, 2013	3	May 19, 2004	25,611,545	0.28	27,535,972	0.28	－	－	－	－	－	－	－	－	－
Representative	Taiwan	Te-Tsai Huang	Jun 19, 2013	－	Jul 1, 2010	N.A.	－	212,619	－	－	－	－	－	Graduated from National Chiao Tung University Manager, Philips Taiwan Ltd. CFO, Vanguard International Semiconductor Corporation CFO, Foxconn Precision Components Co., Ltd.	Note 8	－	－	－

Note 1: Existing Directors and Supervisor as of the date of the annual report.

Note 2: Concurrently as chairman of the board: Innolux Holding Ltd., Rockets Holding Ltd., Stanford Developments Ltd., Nets Trading Ltd., Mega Chance Investments Ltd., Main Dynasty Investment Ltd., Best China Investments Ltd., Asiaward Investment Ltd., Lakers Trading Ltd., Magic Sun Ltd., Sun Dynasty Development Ltd.
Note3: Concurrently as chairman of the board: AOT, FuChu Technology, General Interface Solution (GIS) Holding Limited, Rchiuan Investment, HungWei Investment, LianJiu Investment, HungHan Investment, YungLi Investment and YiGuei Investment

Concurrently as director: UER Technology Corporation (Statutory representative)

Note4: Concurrently as chairman of the board: Landmark International Ltd., Gold Union Investments Ltd., Keyway Investment Management Ltd., Toppoly Optoelectronics (B.V.I.) Ltd., Innolux Hong Kong Holding Ltd., Innolux Optoelectronics Hong Kong Holding Ltd., Innolux Hong Kong Limited, Bright Information Holding Ltd., Toppoly

Optoelectronics (Cayman) Ltd., Leadtek Global Group Ltd., Innolux Technology Germany GmbH, Innolux Technology Europe B.V., Innolux Technology USA Inc., Yuan Chi Investment Co., Ltd.(Statutory representative)

Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co.,Ltd., InnoJoy Investment Corporation(Statutory representative), FI Medical Device Manufacturing Co., (Statutory representative)

Note5: A founder and Executive Director of S.A.S. Dragon Holding Limited, a member of Justices of Peace in the Government of the Hong Kong Special Administrative Region, the deputy chairman of Hong Kong Electronic Industry Association, a permanant member of Hong Kong Trade Services Council, a member of Hong Kong Professionals and Senior Executive Assoication; the chairman of District Fight Crime Committee,
Tsuen Wan District Office; a counselor for Coucil of Yan Chai Hospital, a committee member of Political Consultative Conference Shanghai Committee; and a honoary member of Junior Police Call Committee, Tsuen Wan District.
Note 6: Concurrently as chairman of the board: Microelectironics Technology Inc., IQE Taiwan Corporation, Jupiter Network Corp., Jupiter Technology (Wuxi) Co., Ltd. Concurrently as independent director: AcBel Polytech Inc.

Concurrently as director: Taiwan Cement Corporation (Statutory representative), E-ONE MOLI ENERGY CORP. (Statutory representative), Advanced Wireless

Semiconductor Company, Bright Led Electronics Corp., Kobrite Taiwan Corporation (Statutory representative), Bright Crystal Company Limited (Statutory representative), Advanced Crystal Application Technology, Inc. (Statutory representative), KoBrite Corp., Sasson Capital (Statutory representative) The convener of the 11th supvervision meeting for the Allied Association for Science Park Industries
Note7: A lead accountant of YiFang CPA firm, and a Supervisor of YKK Taiwan Co. and NatureWise Biotech & Medicals Corp.
Note8: Concurrently as chairman of the board: Hyield Venture Capital Co., Ltd. (Statutory representative)
Concurrently as director Director position in HungChi International Investment (Statutory representative), Pao Shin International Investment Co., Ltd. (Statutory representative), HungChiau International Investment, FuRuei International Investment; and Fuxuntong Trading, ShenZhen.
Concurrently as supervisor: Hold a concurrent Supervisor position in: HungJing International Investment (Statutory representative), LiYi International Investment (Statutory representative), HungYuan International Investment (Statutory representative), Advanced Optoelectronic Technology (Statutory representative), and Pan-International.

Major shareholders of the institutional shareholders

s of the institutional shareholders	s of the institutional shareholders
April 10,2015
Name of institutional shareholders	Major shareholders of the institutional shareholders
Hyield Venture Capital Co., Ltd.	Hon Hai Precision Components Co., Ltd. (97.95%), Chiu-Lien Huang (0.20%), Hsiang-Fu Yu (0.20%), Terry Tai-Ming Gou (1.23%), Pao Shin International Investment Co.,Ltd.(0.41%)
Jialian Investment Co.,Ltd.	Super Venture Investments Limited, Samoa（100%）
I-Chen Investment Ltd.	Company Objective Developments Limited, Samoa (100%)

Major shareholders of the major shareholders that are juridical persons

April 10, 2015

	April 10,2015
Name of juridical persons	Major shareholders of the juridical persons
HON HAI PRECISION IND. CO., LTD. (Note)	Terry Tai-Ming Gou (12.28%), JPMorgan hosting Saudi-Arabia Central Bank investment account (2.11%), Citi Managed Government of Singapore Investment accounts (1.94%), Citigroup hosting Hon Hai Precision Ind. Co. Ltd. Depositary Receipts account (1.81%), Standard Chartered hosting Vatican Gardner emerging market equity index fund account (1.56%), JP Morgan Chase Bank hosted Abu Dhabi Investment Authority invested more than accounts (1.29%), JP Morgan Chase Bank hosted Norges Bank Investment account (1.17%), JPMorgan Managed STICHTING Depositary APG investment account (1.14%), Standard Chartered Hosting Fidelity light called Trust: Fidelity Low of shares of the Fund (1.07%), Cathay Life Insurance Co., Ltd.(1.00%)
Pao Shin International Investment Co., Ltd.	Hon Hai Precision Industry Co., Ltd. (100%)
Super Venture Investments Limited, Samoa（100%）	Diamond Luck Enterprises Ltd（100%）
Company Objective Developments Limited, Samoa (100%)	Perfect Impulse Investments Limited（100%）

Note: The information is derived from the close of registrar information of the company dated 27 April 2015.

Professional qualifications and independence analysis of directors and supervisors

Professional qualifications	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors	and independence analysis of directors and supervisors
														April 10,2015
Criteria Name	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years of Work Experience			Independence Criteria (Note)										Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Hsing-Chien Tuan	－	－	V	－	－	V	V	V	V	V	V	V	V	－
Hyield Venture Capital Co., Ltd Hong-Jen Chuang	－	－	V	－	－	V	V	V	V	V	V	V	－	－
Jialian Investment Co., Ltd. Jyh-Chau Wang	－	－	V	－	－	V	V	V	V	V	V	V	－	－
Stanley Yuk Lun Yim	－	－	V	V	V	V	V	V	V	V	V	V	V	－
Chi-Chia Hsieh	－	－	V	V	V	V	V	V	V	V	V	V	V	1
Ren-Guang Lin	V	V	V	V	V	V	V	V	V	V	V	V	V	－
Yi-Fang Chen	V	V	V	V	V	V	V	V	V	V	V	V	V	－
I-Chen Investment Ltd. Te-Tsai Huang	－	－	V	V	－	V	V	V	V	V	V	V	V	－

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.
Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
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 someone else's name(s), in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the

preceding three subparagraphs.

Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company.
Not a professional individual 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.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a governmental, juridical person, or its representative as defined in Article 27 of the Company Law.

3.2.2 Management Team

												April 30,2015	April 30,2015	April 30,2015
Title	Citizenship	Name Note 1	Effective Date	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	％	Shares	％	Shares	％			Title	Name	Relation
Chairman & Chief Executive Officer	Taiwan	Hsing-Chien Tuan	92/1/14	17,611,561	0.18	－	－	－	－	Chairman of the Board and CEO, Chimei Innolux Corporation Ph. D, Electronic Engineering, Stanford University (U.S.A.) General Manager, AU Optronics Corp. General Manager, Unipac Optoelectronics Corp.	Note 2	－	－	－
President	Taiwan	Jyh-Chau Wang	Mar 18, 2010	673,067	0.01	607	－	－	－	M.S., Materials Engineering, National Tsing-Hua University Vice President, Chi Lin Technology Co., Ltd. Deputy Plant Director, Unipac Optoelectronics Corp. Associate Research Fellow, Material Research Laboratories, Industrial TechnologyResearch Institute	Note 3	－	－	－
Vice President	Taiwan	Wen-Jyh Sah	Mar 18, 2010	1,255,963	0.01	9,543	－	－	－	Ph. D, Electrical Engineering, National Taiwan University Senior Consultant, Chi Lin Technology Co., Ltd.	－	－	－	－
Vice President	Taiwan	Chin-Lung Ting	Mar 18, 2010	964,063	0.01	－	－	－	－	M.S., Graduate Institute of Electronics Engineering, National Taiwan University Manager,Unipac Optoelectronics Corp.	Note 4	－	－	－
Vice President	Taiwan	Yao-Tong Chen	Mar 18, 2010	1,744,644	0.02	16,422	－	－	－	Master of EMBA, Sun Yat-sen University Manager,Hitachi Electronics Co.,Ltd.	－	－	－	－
Vice President	Taiwan	Chih-Hung Hsiao (Note5)	92/1/14	3,930,480	0.04	－	－	－	－	B.S., Industrial Engineering, Tunghai University Plant Director, AU Optronics Corp. Deputy Plant Director, Unipac Optoelectronics Corp. Supervisor, Center for Measurement Standards (CMS), Industrial Technology Research Institute	Note 5	－	－	－
Assistant Vice President	Taiwan	Chen-Hua Luo	Feb 6, 2006	1,081,843	0.01	－	－	－	－	M.S., Computer Science, University of California (U.S.A.) Associate Vice President of Marketing & Sales Department, BENQ RD Engineer, Siemens Telecommunication Systems Ltd. Assistant RD Engineer,Apple Computer	Note 6	－	－	－

Title	Citizenship	Name Note 1	Effective Date	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	％	Shares	％	Shares	％			Title	Name	Relation
Assistant Vice President	Taiwan	Hung-Wen Yang	Jun 1, 2007	660,769	0.01	59,002	－	－	－	M.S., Chemical Engineering, National Cheng Kung University Plant Director, Sintek Photronic Corp Deputy Plant Director, AU Optronics Corp. Manager,Unipac Optoelectronics Corp.	－	－	－	－
Assistant Vice President	Taiwan	Chu-Hsiang Yang	Mar 18, 2010	1,064,585	0.01	7,953	－	－	－	M.S., Chemical Engineering, National Central University Deputy Section Manager, Chunghwa Picture Tubes, Ltd.	Director of Chi Lin Optoelectronics Director of FI Medical Device ManufacturingCo.	－	－	－
Assistant Vice President	Taiwan	Kuo-Hsiung Kuo	Mar 18, 2010	594,100	0.01	295,540	－	－	－	B.S., Mechanical Engineering, Waseda University, Japan	Note 7	－	－	－
Assistant Vice President	Taiwan	Ke-Yi Kao	Mar 18, 2010	496,488	－	－	－	－	－	M.S., Chemical Engineering, University of Florida (U.S.A.) Assistant Manager, Unipac Optoelectronics Corp.	Director of Chi Mei El Corporation	－	－	－
Assistant Vice President	Taiwan	Chung-Kuang Wei	Mar 18, 2010	606,395	0.01	－	－	－	－	Ph. D, Institute of Photonics, National Chiao Tung University Electronics Research Laboratories, Industrial TechnologyResearch Institute	－	－	－	－
Assistant Vice President	Taiwan	Tai-Chi Pan	Mar 18, 2010	1,066,880	0.01	58,680	－	－	－	Graduated in Electrical Engineering of National Cheng Kung University Assistant Manager, Unipac Optoelectronics Corp.	－	－	－	－
Assistant Vice President	Taiwan	Chih-Ming Chen	Mar 18, 2010	521,193	0.01	863	－	－	－	Graduated from Metallurgy and Materials Science Research Institute of National Cheng Kung University Engineer, Shyen Sheng Fuat Steel & Iron Works Co., Ltd Senior Engineer, Unipac Optoelectronics Corp.	Chairman of the Board of Chi Mei El Corporation	－	－	－
Assistant Vice President	Taiwan	Jia-Pang Pang	Nov 8, 2010	2,325,089	0.02	－	－	－	－	Ph. D, Electronics Engineering, University of Tokyo, Japan Deputy Director of TFT Manufacturing Plant, AU Optronics Corp.	－	－	－	－
Assistant Vice President	Taiwan	Nai-Jian Zheng	Sept 23, 2013	305,837	－	－	－	－	－	Master of Industrial Engineering and Management, Southwest Louisiana University General Manager of Nine Dragons Paper (Holdings)Limited	Note 8	－	－	－

Title	Citizenship	Name Note 1	Effective Date	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	％	Shares	％	Shares	％			Title	Name	Relation
										General Manager of TPO Displays (Nanjing) Ltd. General Manager of Flash Electronics Inc. (Shanghai) OperatingOfficer of Solectron Co.
Assistant Vice President	Taiwan	Zheng-Xia Kuo	Sept 23, 2013	389,802	－	22,000	－	－	－	Bachelor of Industrial Engineering and Management, National Chiao Tung University Person-in-charge of BU, GIO Optoelectronics Corp. Manager of Chi Mei Lighting Technology Corporation Engineer of Chunghwa Picture Tubes, Ltd. Engineer of Behavior Tech Computer Corp.	Director of Ampower Holding Ltd.	－	－	－
Assistant Vice President	Taiwan	Tian-Ren Lin	Sept 23, 2013	1,065,554	0.01	311,081	－	－	－	Master of Electrical Engineering, National Taiwan University Advisor to General Manager's Office, Unity Opto Technology Co., Ltd. Director of Head Office of Product Development, Chi Mei Lighting Technology Corporation	－	－	－	－
Assistant Vice President	Taiwan	Yu Shui Kuo	Dec 1, 2014	80,000	－	－	－	－	－	Master of Mechanical Engineering, Yuan Ze University Associate President of Entire Technology Co. Ltd. Manager of AU Optronics Corp. Associate Manager of Prodisc	－	－	－	－
Finance Supervisor	Taiwan	Chien-Lang Lo	May 7, 2014	177,431	－	198	－	－	－	Master of Business Administration, Baruch College, College of the City of New York Assitant manager of Sumitomo Mitsui Banking Corporation. Deputymanager of HSBC	Note 9	－	－	－
Account Supervisor	Taiwan	Chin-Yuan Chang	Jan 9, 2009	408,192	－	－	－	－	－	Master of Business Administration, National Chengchi University Vice President of Finance, Xiamen Overseas Chinese Electronic Co., Ltd. CFO, Information Product Business Group, BENQ	Note 10	－	－	－

Note 1: Existing Managers as of the date of the annual report.

Note 2: Concurrently as chairman of the board: Innolux Holding Ltd., Rockets Holding Ltd., Stanford Developments Ltd., Nets Trading Ltd., Mega Chance Investments Ltd., Main Dynasty Investment Ltd., Best China Investments Ltd., Asiaward Investment Ltd., Lakers Trading Ltd., Magic Sun Ltd., Sun Dynasty Development Ltd.

Note3: Concurrently as chairman of the board: Landmark International Ltd., Gold Union Investments Ltd., Keyway Investment Management Ltd., Toppoly Optoelectronics (B.V.I.) Ltd., Innolux Hong Kong Holding Ltd., Innolux Optoelectronics Hong Kong Holding Ltd., Innolux Hong Kong Limited, Bright Information Holding Ltd., Toppoly Optoelectronics (Cayman) Ltd., Leadtek Global Group Ltd., Innolux Technology Germany GmbH, Innolux Technology Europe B.V., Innolux Technology USA Inc., Yuan Chi Investment Co., Ltd. (Statutory representative)
Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co., Ltd., InnoJoy Investment Corporation (Statutory representative), FI Medical Device Manufacturing Co. (Statutory representative)
Note 4: Concurrently as chairman of the board: GIO Optoelectronics Corp. Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., TOA Optronics Corporation (Statutory representative)
Note 5: Promoted to deputy Vice President on 9 May 2013
Concurrently as chairman of the board: Suns Holding Ltd., Warriors Technology Investments Ltd., InnoJoy Investment Corporation (Statutory representative) Concurrently as director: Yuan Chi Investment Co., Ltd. (Statutory representative)
Note 6: Concurrently as chairman of the board: Innolux Corporation (U.S.), Foshan Innolux Optoelectronics Ltd, Foshan Innolux Logistics Co., Ltd.
Note 7: Concurrently as chairman of the board: Ningbo Innolux Logistics Co., Ltd., Ningbo Innolux Technology Ltd., Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd.

Concurrently as director: Chi Mei Frozen Food Co., Ltd.

Note8: Concurrently as chairman of the board: Nanjing Innolux Optoelectronics Ltd., Kunpal Optoelectronics Ltd., VAP Optoelectronics (Nanjing) Corp., Shanghai Innolux Optoelectronics Ltd.
Note 9: Concurrently as director: Ningbo Innolux Logistics Co., Ltd., Ningbo Innolux Technology Ltd., Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd., InnoJoy Investment Corporation, Yuan Chi Investment Co., Ltd.
Note 10: Concurrently as director: Innolux Optoelectronics Europe B.V., Chi Mei Optoelectronics Germany GmbH
Concurrently as director: Innocom Technology (Shenzhen) Co., Ltd., Nanjing Innolux Optoelectronics Ltd., Kunpal Optoelectronics Ltd., Nanjing Innolux Technology Ltd., VAP Optoelectronics (Nanjing) Corp., Shanghai Innolux Optoelectronics Ltd.
Concurrently as supervisor: Ningbo Innolux Logistics Co., Ltd., , Ningbo Innolux Technology Ltd., , Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd., Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co., Ltd., Foshan Innolux Optoelectronics Ltd., Foshan Innolux Logistics Co., Ltd., Chi Mei El Corporation, InnoJoy Investment Corporation

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

Unit: NT$; Shares: thousands

Title	Name	Director Remuneration	Director Remuneration	Director Remuneration	Director Remuneration	Director Remuneration	Director Remuneration	Director Remuneration	Director Remuneration	Ratio of total remuneration (A+B+C+D) to net income (%)	Ratio of total remuneration (A+B+C+D) to net income (%)	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Remuneration received as an employee	Ratio of total compensation (A+B+C+D+E +F+G) to net income (%)	Ratio of total compensation (A+B+C+D+E +F+G) to net income (%)	Any remuneration received from Recipients other than subsidiaries
		Compensation (A) (Note 1)		Pensions (B)		Profit distribution as remuneration (C) (Note 2)		Service execution fees (D) (Note 3)				Salary, Bonuses, and Allowances (E) (Note 4)		Pensions (F) (Note 5)		Profit distribution as employees’ bonuses (G) (Note 2)				Number of shares subscribed under employee stock options (Note 6)		Number of new shares obtained with restrictive rights of employees (Note 7)
		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company		All companies in the financial report		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report
																Cash	Stock	Cash	Stock
Chairman & Chief Executive Officer	Hsing-Chien Tuan	8,045	8,045	－	－	4,636	4,636	330	330	0.06	0.06	25,137	25,137	－	－	29,868	－	29,868	－	1,200	1,200	800	800	0.31	0.31	－
Institutional director	Hyield Venture Capital Co., Ltd
Representative	Hong-Jen Chuang
Institutional director	Jialian Investment Co.,Ltd.
Representative	Jyh-Chau Wang
Independent Director	Stanley Yuk Lun Yim
Independent Director	Chi-Chia Hsieh

Note 1: Refers to directors’ remuneration paid in 2014.

Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 3: Refers to the relevant service execution fees of directors in 2014.

Note 4: Refers to the salaries, bonuses and special disbursement, etc. received as employees by directors in 2014. Note 5: Refers to the amounts transferred to government authorities in 2014.

Note 6: Number of shares subscribed under employee stock options excludes the exercised portion.

Note 7: Number of shares subscribed under restrictive rights of employees excludes the exercised portion.

Range of remuneration table

	Range of remuneration table	Range of remuneration table	Range of remuneration table	Range of remuneration table
Range of remuneration paid to each director of the Company	Name of Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The company	All companies in the financial report	The company	All companies in the financial report
Under NT$ 2,000,000	Hyield Venture Capital Co., Ltd Hong-Jen Chuang Jialian Investment Co., Ltd. Jyh-Chau Wang Stanley Yuk Lun Yim Chi-Chia Hsieh	Hyield Venture Capital Co., Ltd Hong-Jen Chuang Jialian Investment Co., Ltd. Jyh-Chau Wang Stanley Yuk Lun Yim Chi-Chia Hsieh	Hyield Venture Capital Co., Ltd Hong-Jen Chuang Jialian Investment Co., Ltd. Jyh-Chau Wang Stanley Yuk Lun Yim Chi-Chia Hsieh	Hyield Venture Capital Co., Ltd Hong-Jen Chuang Jialian Investment Co., Ltd. Jyh-Chau Wang Stanley Yuk Lun Yim Chi-Chia Hsieh
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000	Hsing-Chien Tuan	Hsing-Chien Tuan
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000			Jyh-Chau Wang	Jyh-Chau Wang
NT$30,000,000 ~ NT$50,000,000			Hsing-Chien Tuan	Hsing-Chien Tuan
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total	7	7	7	7

3.3.2 Remuneration of Supervisors

Unit: NT$; Share: thousands

Title	Name			Supervisors’ Remuneration	Supervisors’ Remuneration			Ratio of total remuneration (A+B+C) to net income (%)	Ratio of total remuneration (A+B+C) to net income (%)	Any remuneration received from Recipients other than subsidiaries
		Base Compensation (A) (Note 1)		Bonus to Supervisors( B) (Note 2)		Allowances (C) (Note 3)
		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report
Supervisor	Ren-GuangLin	3,122	3,122	2,318	2,318	180	180	0.03%	0.03%	－
Supervisor	Yi-FangChen
Supervisor	I-Chen Investment Ltd. Te-Tsai Huang

Note 1: Refers to the remuneration paid to supervisors in 2014. Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 3: Refers to the relevant service execution fees of supervisors in 2014.

Range of remuneration table

	Range of remuneration table	Range of remuneration table
Range of remuneration paid to each supervisor of the Company	Name of Supervisors
	Total of(A+B+C)
	The company	All companies in the financial report D
Under NT$ 2,000,000	Chen Investment Ltd. Te-Tsai Huang, Ren-Guang Lin, Yi-FangChen	Chen Investment Ltd. Te-Tsai Huang, Ren-Guang Lin,Yi-FangChen
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000
NT$30,000,000 ~ NT$50,000,000
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total	4	4

3.3.3 Compensation of President and Vice President

Unit: NT$ thousands

Title	Name	Salary (A) (Note 1)	Salary (A) (Note 1)	Pensions (B) (Note 2)	Pensions (B) (Note 2)	Bonuses and special disbursement, etc. (C) (Note 3)	Bonuses and special disbursement, etc. (C) (Note 3)	Amount of profit distribution as employees’ bonuses (D) (Note 4)	Amount of profit distribution as employees’ bonuses (D) (Note 4)	Amount of profit distribution as employees’ bonuses (D) (Note 4)	Amount of profit distribution as employees’ bonuses (D) (Note 4)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Number of employee stock options obtained (Note 5)	Number of employee stock options obtained (Note 5)	Number of new shares obtained with restrictive rights of employees(Note 6)	Number of new shares obtained with restrictive rights of employees(Note 6)	Any remuneration received from Recipients other than subsidiaries
		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The company		All companies in the financial report		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report
								Cash	Stock	Cash	Stock
Chief Executive Officer	Hsing-Chien Tuan	24,121	24,121	216	216	30,227	30,227	44,631	－	44,631	－	0.46	0.46	2,475	2,475	1,468	1,468	－
President	Jyh-Chau Wang
Vice President	Wen-Jyh Sah
Vice President	Yao-Tong Chen
Vice President	Chin-Lung Ting
Vice President	Chih-Hung Hsiao

Note 1: Refers to remuneration paid in 2014.

Note 2: Refers to amounts transferred to government authorities in 2014.

Note 3: Refers to the bonuses , special disbursement and 491 tousand for a car and oil costs for CEO & President. Note 4: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 5: Number of shares subscribed under employee stock options excludes the exercised portion.

Note 6: Number of shares subscribed under restrictive rights of employees excludes the exercised portion.

Range of remuneration table

Range of remuneration paid to each president and vice president	Name of President and Vice President	Name of President and Vice President
	The company	All companies in the financial report
Under NT$2,000,000
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000	Yao-TongChen	Yao-TongChen
NT$10,000,000 ~ NT$15,000,000	Wen-Jyh Sah,Chih-HungHsiao,Chin-LungTing	Wen-Jyh Sah,Chih-HungHsiao,Chin-LungTing
NT$15,000,000 ~ NT$30,000,000	Jyh-Chau Wang	Jyh-Chau Wang
NT$30,000,000 ~ NT$50,000,000	Hsing-Chien Tuan	Hsing-Chien Tuan
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total	6	6

3.3.4 Names of managerial officers who received employees’ bonuses in the preceding year and the distribution

				Unit: NT$thousands as	Unit: NT$thousands as	of April 30,2015
	Title	Name (Note 1)	Amount of stock bonus	Amount of cash bonus (Note 2)	Total	Ratio of Total Amount to Net Income(%)
Managerial officers	Chief Executive Officer	Hsing-Chien Tuan	-	103,225	103,225	0.48%
	President	Jyh-Chau Wang
	Vice President	Wen-Jyh Sah
	Vice President	Chin-LungTing
	Vice President	Yao-TongChen
	Vice President	Chih-HungHsiao
	Associate Vice President	Chen-Hua Luo
	Associate Vice President	Hung-Wen Yang
	Associate Vice President	Ke-Yi Kao
	Associate Vice President	Chih-MingChen
	Associate Vice President	Chu-HsiangYang
	Associate Vice President	Tai-Chi Pan
	Associate Vice President	Kuo-HsiungKuo
	Associate Vice President	Chung-KuangWei
	Associate Vice President	Jia-PangPang
	Associate Vice President	Nai-Jian Zheng
	Associate Vice President	Zheng-Xia Kuo
	Associate Vice President	Tian-Ren Lin
	Associate Vice President	Yu Shui Kuo
	Manager	Chien-LangLo
	Manager	Chin-Yuan Chang

Note 1: Refers to current managerial officers as of the printing date of the annual report. Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date.

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

A. The ratio of total remuneration paid by the company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, supervisors, presidents, and vice presidents of the Company to the net income.

Ratio of total remuneration paid to directors, supervisors, presidents, and vice presidents to net income

	Ratio of total remuneration paid to directors, supervisors, presidents, and vice presidents to net income	Ratio of total remuneration paid to directors, supervisors, presidents, and vice presidents to net income	Ratio of total remuneration paid to directors, supervisors, presidents, and vice presidents to net income	Ratio of total remuneration paid to directors, supervisors, presidents, and vice presidents to net income
		2013	2014 (Note)
	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements
Directors	0.42	0.42	0.31	0.31
Supervisors	0.06	0.06	0.03	0.03
Presidents & Vice Presidents	0.64	0.64	0.46	0.46

Note 1: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date.

The remuneration payment policy of the Company is determined in accordance with the actual profit of the Company for the year and the ratio as required under the Articles of Association of the Company for distribution as remuneration to directors and supervisors and as bonuses to employees. For payments made to presidents and vice presidents, different levels of remuneration are set after considering their job positions, responsibilities undertaken, job achievements and contributions made to company operations, and with reference to industry standards, the remuneration payment policy is considered to be reasonable.

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

Remunerations of directors and supervisors of the Company are determined in accordance with the Articles of Association of the Company, their participation and value of contributions made to the operation of the Company and with reference to industry standards. For years when the Company has a final net profit, after offsetting losses and making transfers to legal reserves or special reserves, distribution of special stock dividends and employees’ bonuses, the Board will recommend a profit distribution proposal, including remuneration for directors and supervisors, at its own discretion after considering the industry environment and capital requirements of the Company and distribution payments will be made after approval by the shareholders.

Remuneration of presidents and vice presidents includes salaries, bonuses, special disbursements, employee bonus, employee stock options, and new shares with restrictive rights of employees, etc. which are determined after considering the nature of work, responsibilities, job positions, and duties undertaken and with reference to industry standards of similar job positions. The amount of employees’ bonuses, after the relevant resolution has been passed by shareholders, will be reviewed by the remuneration committee according to the bonus distribution mechanism for employees of the Company on individual basis, and a proposal will be made to the Board for a decision and will be implemented upon passing the Board resolution.

3.4 Implementation of Corporate Governance 3.4.1 Board of Directors

A total of 7 meetings of the board of directors were held in the previous period. Director and supervisor attendance was as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%) [B/A]	Remarks
Chairman	Hsing-Chien Tuan	7	0	100%	-
Director	Hyield Venture Capital Co., Ltd Hong-Jen Chuang	7	0	100%	-
Director	Jialian Investment Co., Ltd. Jyh-Chau Wang	7	0	100%	-
Independent Director	Stanley Yuk Lun Yim	7	0	100%	-
Independent Director	Chi-Chia Hsieh	5	2	71.40%	-
Other mentionable items: 1. If the circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors’ meetings objected to by Independent Directors or subject to qualified opinion and recorded or declared in writing exist, the dates of meetings, sessions, contents of motions, all independent opinions, and the Company’s response to the independent directors’ opinions should be specified: None 2. If the Directors avoid motions in a conflict of interest, the Directors’ names, contents of motions, causes for avoidance,and votingshould be specified: Name Contents of motions Causes for avoidance Voting Hsing-Chien Tuan Jyh-Chau Wang The Compensation Committee is proposing manager bonus for the year of 2013. The board member Hsing-Chien Tuan and board member and manager Jyh-Chau Wang have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the regulations specified in Article 178 of the CompanyAct. Did not for the disucssion Hsing-Chien Tuan Jyh-Chau Wang The Compensation Committee is proposing manager bonus for the year of 2014 and amendment the rule of Reward System of executives. The board member Hsing-Chien Tuan and board member and manager Jyh-Chau Wang have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the regulations specified in Article 178 of the Company Act. Did not for the disucssion 3. Measures taken to strengthen the functionality of the Board: (1) The Compnay has set up a Compensation Committee on August 25, 2011 for assisting the Board to conduct regular compensation review and set up compenstation standard for the Directors and managers. The Committee is also in charged of making regular review of performance of the Director and managers, and the related remuneration policy, system, standard, and structure. Please see page 36 for the detail of the Committee’s operation. (2) The Company has re-elected its Board Director on 19 June, 2013. The new Board is made of five board member, including two independent directs and three supervisors fors strengthening the Board function and Corporate Governance.

3.4.2 Audit Committee

A. Audit Committee: N.A.

3.4.3 Attendance of Supervisors for Board Meetings

A total of 7 meetings of the board of directors were held in the previous period. Supervisor attendance was as follows:

Title	Name	Attendance in Person(B)	Attendance rate (%) [B/A]	Remarks
Supervisor	Ren-GuangLin	5	71.40%	-
Supervisor	Yi-FangChen	7	100%	-
Supervisor	I-Chen Investment Ltd. Te-Tsai Huang	6	85.70%	-
Other mentionable items: 1. Composition and responsibilities of supervisors: (1) Communications between supervisors and the Company's employees and shareholders (e.g. the communication channels and methods, etc.): Our Supervisor could communicate with employees and shareholders at any time if necessary. (2) Communications between supervisors and the Company's Chief Internal Auditor and CPA (e.g. the items, methods, and results of the audits of corporate finance or operations, etc.): A. Communications with the Chief Internal Auditor: The Company holds a Board Meeting each quarter and keeps the meeting minutes. The Directors, President, and the company's management are then notified of important discussions and resolutions. All Supervisors had attended on each occasion, and the Chief Internal Auditor was also present at the meetings to report on the audit operations and major internal auditing matters, including execution, reporting, and monitoring of Supervisors’ instructions. In addition, Supervisors obtained audit reports on a monthly basis, which were submitted by the Chief Internal Auditor. B. Communications with the CPA: The Company holds a Board Meeting each quarter and keeps the meeting minutes. All Supervisors had attended on each occasion, and the CFO, Chief Internal Auditor, and CPAs were also present at the meetings to discuss the related subjects, including execution, reporting, and monitoring of the Supervisors’ instructions. 2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of meetings, sessions, contents of motions, resolutions of the directors’ meetings, and the Company’s response to the supervisor’s opinion should be specified: None

3.4.4 Taiwan Corporate Governance Implementation as Required by the Taiwan Financial Supervisory Commission

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
I. Has the Company enacted and disclosed Corporate Governance Best-Practice Principles in accordance with “Corporate Governance Best-Practice Principles of Companies Listed on the Taiwan Stock Exchange or Over-the-Counter Securities Exchange”?		No	The Company has not yet enacted “Corporate Governance Best-Practice Principles” for the time being. In accordance with the philosophy of “Corporate Governance Best-Practice Principles of Companies Listed on the Taiwan Stock Exchange or Over-the-Counter Securities Exchange”, nevertheless, the Company has, case-by-case one after another, updated (enacted) “Procedure Rules for Shareholders’ Meeting”, “Regulations Governing Transactions with the Enterprises within the Conglomerate and Related Parties”, “Procedure Rules for Board of Directors Meeting ”, “Operating Procedures for Management over Major Internal Information”, “Guidelines for Employee Behaviors”, “Policies of Responsibility Toward the Society”, “Code of Ethical Conduct for Directors and Managerial Officers” and such rules and regulations to put into implementation thoroughly the spirit of corporate governance. For hands-on performance by the Company in corporate governance, please refer to the present Annual Report “Performance of Corporate Governance”, page 9 topage 58 for details.	No significant difference compared to corporate governance practice principles
II. Equity structure and shareholder rights (I) How the Company handles shareholder suggestions of shareholders and disputes. (II) Company’s control of the list of its major shareholders and final decision-makers (III) How the Company establishes its risk management mechanism and firewalls involving related enterprises. (IV) Has the Company enacted the internal regulations to ban the personnel inside the Company from buying, selling negotiable securities by taking advantage of the information which has not yet been made public in the market?	Yes Yes Yes Yes		(I) The Company has enacted “Operating Procedures for Management over Major Internal Information” and has, besides, set up spokesman and acting spokesman to take charge of proposals or disputes from shareholders. (II) The Company is in a position to dominate the name lists of the key shareholders and the terminal controllers of the key shareholders and has duly input such information to public into the Market Observation Post System (MOPS) promulgated by the Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan (III) The Company has duly enacted the “Regulations Governing Transaction with Related Parties”, “Regulations Governing Supervision over Subsidiaries” and has, besides, set up relevant departments with sound mechanisms to evaluate and monitor potential risks with affiliated enterprises. (IV) The Company has duly ancted the “Operating Procedures for Management over Major Internal Information” and further in accordance with the Company’s internal control system, enacted “Operating Procedures to Prevent Inside Trading and for Management over Major Information” to ben inside personnel from buying, selling negotiable securities by taking advantage of the information which has not yet been made public in the market.	No significant difference compared to corporate governance practice principles

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
III. Organization and responsibilities of the Board of Directors (I) Has the board of directors worked out diversified, comprehensive and multifaceted policies aiming at its members and put into implementation thoroughly? (II) Other than the Remuneration Committee and Audit Committee, has the Company taken the initiative to set up a variety of other function committee? (III) Has the Company set up regulations and methods to evaluate the performance by the board of directors and conduct evaluation of performance on an annual basis? (IV) Regular assessment on independence of CPAs	Yes Yes Yes	No	(I) The board of directors is composed of 5 members with a professional background and who are technically experienced, two independent directors, and 3 supervisors. They are well-balance and also have multiple part related expertise to raise stockholders’ interest. The Company’s independent directors and supervisors are well known for their hands-on experiences accumulated in the profssion and individual expertises to firmly safeguard the interests of all the Company’s shareholders. Meanwhile, the board of directors has taken into independent and objective account the key issues which would affect the successful development by the Company. (II) Exactly as resolved in the board of directors on August 25, 2011, the Company already set up the Remuneration Committee where the Company’s independent directors and experts hired from outside the Company serve as the Committee members. For more details regarding the business performance of the Company’s Remuneration Committee, please refer to page 36 of this Annual Report. The Company, nevertheless, has not yet set up committee of other functions to date. (III) The Company has not yet conducted self-evaluation of the Company’s board of directors, functional committees and individual directors. We have only conducted evaluation through colleagues, retained outside professional institutions to evaluiate performance or conducted evaluation of performance in other means, nevertheless. .. (IV) The Company’s board of directors evaluates the Certified Public Accountant’s independence on a regular basis, say, on an annual basis, and retains creditworthy Certified Public Accountant(s) to certify financial statements. The Certified Public Accountant(s) so retained has (have) been free of any interested party involvement and has(have)independent as the strict requirements.	No significant difference compared to corporate governance practice principles
IV. Has the Company set up sound channels to communicate interested parties, or set up special zone for interested parties through the Company’s website to appropriately respond to interested parties regarding the key responsibility toward the society issues?	Yes		Innolux offers a variety of features including investor services, supplier area, sales services, product inquiries, media communications, anti-corruption reporting and so forth in order to communicate and respond to shareholders‘ needs and expectations by strengthening communications with stakeholders and thereby meeting their expectations.	No significant difference compared to corporate governance practice principles

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
V. Did the company engage a professional agency to handle shareholder services for Innolux?	Yes		Innolux has appointed a professional agency to handle shareholder related services for the company.	No significant difference compared to corporate governancepracticeprinciples
VI. Disclosure of information (I) Establishment of a Website where information on financial operations and corporate governance is disclosed. (II) Use of other methods for information disclosure (such as setting an English website, appointing personnel in charge of collecting and disclosing information, implementing a spokesman system and publication of shareholder meeting records on the Company’s website).	Yes Yes		(I) Through the company’s website (http:// www.innolux.com ) with Chinese and English versions, we provide financial, business, and corporate governance information and keep updating. (II) The company’s Business information department, Stock department, and the related department responsible for collecting and disclosing the related information also set up positions for its spokesperson in accordance with the regulations and the company provides live shareholder meetings on the official website.	No significant difference compared to corporate governance practice principles
VII. Other important information for better understanding the Company’s corporate governance operation (including but not limited to the interests and rights of employees, care for employees, relations with investors, relations with suppliers, relations with materially related parties, further study of directors and supervisors, execution of risk management policy and risk measuring standards, execution of customer policies and liability insurance for the Company’s directors and supervisors)	Yes		(I) Employee's Rights: Please refer to page 84 “5. The industrial relations of an overview of business” of the annual report (II) Employee Care The company values employees’ mental and physical balance and provides hardware which can release stresses, such as “Le Qun Guan” and “Huo Li Guan”. Innolux also holds different kinds of activities to provide physical and mental relaxation for our employees. We encourage our employees to join clubs (44 clubs in Taiwan factories and 28 in China in 2014) to create an active and positive working environment by supporting those clubs with resources. Innolux cares for our employees from healthcare to daily lives. We not only introduce all-you-can eat organic fruits and vegetables and weekly non-meat-day to the group meals, we also conduct an expanded diet plan. We had been awarded as “Health Management Award” and “nutritious Health Award” from Bureau of Health Promotion in 2014. We care about the health of mothers in the workplace and provide a friendly working environment such as lactation room，mothers’ classroom, new parent lessons, special parking spaces, and support for lactation during work, maternity leave, birth benefits, and parental subsidies. We also established mothers’ healthcare protection measures and rules.

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
			(III) Maintaining good relations and interactions with investors, suppliers, and interested parties. According to different interested groups, Innolux has established multiple and unobstructed communication channels, such as investors’ service on company’s webpage, suppliers zone, business service and product consulting, media communications, so that we can keep communicating and getting feedback from those interests groups’ needs and expectations. 1. Investors: the company treats our shareholders with the principle of fairness and openness. We call the stockholders meetings according to the Company Act and other related laws every year, encourage stockholders to actively participate in the stockholders meeting with proposals and questions, and set up the role of speakers or deputy speakers to deal with the suggestions from stockholders properly. We appoint special personnel to collect Innolux’s information and to revise it, and apply the information published on the TSEC Market Observation Post System according to the related regulations. 2. Customers: we have salespeople and customer service units to reply to customers’ demands effectively, establish a CRM system, monitor the progress of handling issues, field audits and questionnaire feedback, and customers’ satisfaction survey. 3. Employees: we set up a direct employee line, mobilization meeting, Innolux mailbox, interactive factory meeting (Labor-Management Meeting, the Employee Welfare Committee, management interview, Industrial Safety), employee questionnaires (group meals, activities, training), and opinion collection mail box. 4. Suppliers: setting up an interactive platform for supplier purchasing and procurement management, and a buyer and procurement management department to host ad hoc meetings with other departments and suppliers 5. Communities: Having departments or individuals to be responsible for the communications with community residents, visit the district officers and residents from time to time, caring, and being kind to the neighbors 6. Governments: actively participate the regulation public hearing and seminar that host by the governing departments, maintain good interactions with the governments, and follow the government’s environmental protecting actions. 7. Non-governmental organizations: participating the professional seminars host by NGOs, listening to the suggestions from outsiders, keep tracking with the industrial changes, become the reference of CSR policy planning, organizing projects that supportingweakness andpromotingenvironmentalprotection.

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
			(IV) Directors and Supervisors Profession Enhancement Status Innolux’s shareholders and monitors have both professional background and practical experience. The company arranges further studies for shareholders and monitors every year. For the latest further study updates please refer to page 37 of this annual report. (V) Risk Management Running a company may face risks like economic recession, regulation changes, markets with grueling competition, damage to the company’s reputation, and business suspension. Innolux has established a risk management system to regularly monitor the related financial risks, regulation risks, climate change risks, water resource risks, supplier chain risks, information safety risks, and the environment, safety, and health risks. We implements Business Imp act Analysis (BIA) and risk Assessment (RA) concepts from 2012. We analyze major business activities and organization management, and carry out BIA and Business Continuity planning. The factories in Taiwan and mainland China have reduced the risks of business suspension and improved the survival capability to face hazard incidents by implementing business continuity plans, including the subjects of earthquake, fire, information interrupts, and infectious disease in 2014. (VI) The implementation of customer policy 1. The customer satisfaction service The company upholds the principle of “the highest quality” to carry out social responsibility and business continuity, practice the quality policy, and views customer service as the core value of this company. We continuously implement improvement plans for our internal process, such as the quality concepts of product design, manufacturing, information systems, and logistic cooperation, to provide the most competitive service in order to reach the highest customer satisfaction. Therefore, we can pursue the final win-win-win goal for customers, Innolux, and suppliers. 2. Customer satisfaction The company values the customer’s needs. We collect the KPI of services, and we monitor, analyze, and improve the feedback from customers. We also keep interacting with customers pro-actively.

Item			Operation	Difference from corporate governance practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
			(VII) The company implements and maintains D&O insurance for its Directors, Supervisors, and key officers by the company Innolux maintains D&O insurance for its Directors,Supervisors,and keyofficers
VIII. Are there corporate governance evaluation reports done by the Company itself or outsourced to professional agencies? If yes, please state the evaluation result, major shortcomings or recommendations, and improvement:	Yes		The company’s corporate governance evaluation reports already review the implementation status item by item aiming to ensure the stockholder’s equity, the board’s function, supervisor’s function, information transparency, internal control systems, operating strategy, and interested parties and company social responsibility. About corporate governance evaluation reports done by the Company itself, please refer to Company’s website.	No significant difference compared to corporate governance practice principles

3.4.5 Composition, Responsibilities and Operations of the Compensation Committee

A. The Compensation Committee Members’ Professional Qualifications and Independent Analysis

Criteria Name (Note 1)	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years of Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years of Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years of Work Experience	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Independence Criteria(Note 2)	Number of Other Public Companies in Which the Individual is Concurrently Serving for Compensation Committee(Note3)
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8
Independent Director Chi-Chia Hsieh	－	－	v	V	V	V	V	V	V	V	V	V
External Expert Chi-Lin Wei	－	－	v	V	V	V	V	V	V	V	V	V
External Expert Guan-Jun Wang	v	－	－	V	V	V	V	V	V	V	V	－

Note 1: Director; Independent Director or others.

Note 2: If Compensation Committee Members, during the two years before being elected or during the term of office, meet any of the following situations, please tick the appropriate corresponding boxes:
Not an employee of the company or any of its affiliates;
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;
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 someone else’s name(s), in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking as one of its top ten shareholders;
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any of the above persons in the preceding three subparagraphs;
Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the

company or ranking as one of its top five shareholders;

Not 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;
Not a professional individual 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;
Has not been a person under any conditions defined in Article 30 of the Company Law.
Note 3: If the identity of the member is a board member, please state if that meets Article 6 Section 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.

B. Compensation Committee Meeting Status

Mr. Chi-Chia Hsieh, Chairman of the Compensation Committee, convened 3 regular meetings in 2014. The Committee members’ attendance status is as follows:

is as follows:
Title	Name	Attendance in Person (B)	By Proxy	Attendance rate (%) [B/A]	Remarks
Chair	Chi-Chia Hsieh	3	－	100	-
Member	Chi-Lin Wei	3	－	100	-
Member	Guan-Jun Wang	3	－	100	-

Annotation:

There was no recommendation of the Compensation Committee which was not adopted or was modified by the Board of Directors in 2014.
There were no written or otherwise recorded resolutions on which a member of the Compensation Committee had a dissenting opinion or qualified opinion.

3.4.6 Social Contributions

3.4.6 Social Contributions
Item	Operation			Difference from company social responsibility practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
I. Implementation of Corporate Governance (I) Corporate social responsibility policy and performance evaluation (II) Has the company been routinely organizing CSR trainings? (III) Has the company established a designated unit in charge of promoting CSR that consists of members of senior management authorized by the board and report to the board regarding its operation? (IV) Has the company established reasonable salary and renumeration policies that incorporate employee performance evaluation and CSR policies to create an definitive and effective system of merits/demerits?	Yes Yes Yes Yes		(I) Innolux has established relevant CSR policies that have not only been authorized by the highest management and announcement internally at the company. In addition, relevant policies and guidelines have also been made available on the company’s website as a declaration of Innolux’s committment and obligation to fulfilling its corporate social responsibilities. (II) In the orientation training for new employees, Innolux Code of Conduct training has been incorporated as a component. In addition, the company has also incorporated concepts of CSR by emphasizing values such as labor rights in the trainings for assembly line foreman and supervisors. (III) Innolux has established a designated unit responsible for the promotion and planning of CSR in addition to the formulation of approaches and objectives for sustainable development. Innolux also convenes CSR committee meetings on a quarterly basis, although the company has not yet to report and CSR issue to Board of Director meeting directly but the President serving as the management representative. The meeting is attended by senior supervisors from various business divisions, HR, EHS department, green product management department and so forth to discuss the performance of CSR promotion and rate of object accomplishsment in an effort to fulfill the company’s corproate social responsibilities. (IV) Innolux takes the issue of employee benefit and welfare very seriously and has taken steps to ensure that factors such as gender would result in different wage/benefit for employees. By taking various factors (such as employees‘ academic backgrounds, professional experience and surveys of reasonable market salaries) into consideration, Innolux is able to offer competitive salaries. Through „Preliminary Goal Setting“ „Performance management and development“ was implemented with	Compared to the CSR guidelines and practices adopted by other OTC/listed companies, Innolux’s CSR policies have no distinctive differences.

Item	Operation	Operation	Operation	Difference from company social responsibility practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
			the pilot incorporation of „Daily Management Record“ in 2014 to accomplish the objective of „Identifying and Developing Talents“. Employees found violating the „Employee Code of Conduct“ would receive appropriate disciplinary action in accordance with the „Employee Reward/Punishment Procedure“ depending on the severity of their offenses.
II. Sustainable Environment Development (I) Commitment to improving resource utilization and the use of renewable materials (II) Environmental management system designed for industry characteristics. (III) Company strategy for climate change, energy conservation, and greenhouse gas reduction to reflect the affects on operating activities.	Yes Yes Yes		(I) Through improvement in relevant technologies, Innolux has not only reduced its discharge of contaminants from the source but also reduced the quantity of pollutants in its waste water discharge to increase its recycling rate. Innolux has continued to improve upon its recycling rate in 2014. (II) The company has been actively promoting relevant EHS management systems such as the ISO 14001, TOSHMS, OHSAS18001 and so forth in order to Facilitate a positive cycle of gradual improvement for green sustainability and safety culture. (III) Starting from 2005, Innolux has completed its GHG inventory and 3rd party audit as prescribed by ISO 14064-1. Innolux has not only managed its GHG emission information through a GHG Information Platform but also actively participated in the international Carbon Disclosure Project (CDP). Innolux scored 96 points for disclosure in 2014 (a 7-point improvement compared to 2013) and was the top-ranking company in the panel industry. On top of that, Innolux was also selected as Asian Region’s (excluding Japan) top 10% company for carbon disclosure in the Carbon Disclosure Leadership Index (CDLI).	Compared to the CSR guidelines and practices adopted by other OTC/listed companies, Innolux’s CSR policies have no distinctive differences.
III. Maintaining social services (I) Has the company established relevant management policies and procedures for social services in accordance with pertinent regulations and international conventions on human rights?	Yes		(I) Innolux makes an effort to adhere to pertinent regulations prescribed in the Labor Standards Act. In addition, specific regulations on labor rights have also been established in accordance with the Electronic Industry Code of Conduct in the company’s CSR Management Handbook, which states that employees shall be free from harrassments or discriminations for reasons including (but not limited to) race, skin color,age, gender,sexual orientation,	Compared to the CSR guidelines and practices adopted by other OTC/listed companies, Innolux’s CSR policies have no distinctive differences.

Item	Operation	Operation	Operation	Difference from company social responsibility practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
(II) Has the company established systems/channels for employee complaints and handle the complaints in an appropriate manner? (III) Does the company offer a safe and healthy working environment for its employees and conduct safety and health education for employees on a regular basis? (IV) Has the company established a system for routine communication with its employees and to inform employees regarding significant changes to the company’s operation in a reasonable manner? (V) Has the company established effective career competence development/training plan for its employees?	Yes Yes Yes Yes		disability, martial status and so forth in their employment and benefits. In addition, Innolux also implements methods such as legal verification and internal audits to ensure compliance with pertinent labor rights requirements. (II) Innolux has established a number of channels for employees filing complaints, including „Communication Hotline“, „Employee Communication Email“ and „Suggestion Box“ that have been setup at various facilities for employees to voice their opinions/thoughts with/without stating their names. (III) The company has also established its EHS Division to take charge of operations including loss and risk aversion and EHS management. The Facility EHS Committee is responsible for reporting to the highest ranking supervisor, relevant competent units and labor representatives on a quarterly basis. The disabling frequency rate (F.R) has lowered from 0.52 in 2010 to 0.20 in 2014 (equivalent to a margin of 61.5%). The disabling severity rate (S.R) has also fallen from 11.59 in 2010 to 4.30 in 2014 (a margin of 62.9%). (IV) By establishing comprehensive channels of communication and convening labor-management meetings and employee welfare commitee meetings on a quarterly basis, representatives of management (consisting of senior-ranking supervisors) and labor representatives (elected by employees) are able to engage in direct, bi-lateral communications. With regards to the notice of labor contract termination, relevant notification procedures are fully compliant with pertinent regulations. (V) Guided by the philosophy that „talents are the foundation of the company’s development“, Innolux has established the „Employee Career Development Roadmap“ so that all Innolux employees are adeuqately informed regarding the prospects of their career development. In addition, it would also enable supervisors to manage their subordinates efficiently and cultivate Innolux’s DNA of „self-monitoring and self-management“ among all employees. At the same time,the companyalso offers a

Item	Operation	Operation	Operation	Difference from company social responsibility practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
(VI) Has the company established relevant policies and complaint procedures for operations such as R&D, purchasing, production, operation and services to safeguard consumers‘ rights? (VII) Has the company adhered to pertinent regulations and international standards for the marketing and labeling of its products and services? (VIII) Does the company evaluate suppliers‘ past records of environmental/social impacts before forming partnerships with them? (IX) Does the company’s contract with its key suppliers include specific clauses that entail immediate termination or rescission of the contract should the supplier be found to violate the company’s CSR policies or cause significant impact on the environment/society?	Yes Yes Yes Yes		list of qualifications that correspond to specific positions, legal certificates and other diplomas in order to boost employees‘ vocational tenacity, competence and competitiveness. (VI) Innolux has established operating principles that are customer-oriented and through means of telephone calls, email exchanges and face-to-face meetings, we are able to have solid grasp of customers‘ needs so as to formulate improvement strategies to respond to customers in a timely manner. (VII) Product safety has always been the most important consideration for consumers. And as such, safe product design and a series of safety specification accreditations have been incorporated at the early stage of proeduct design to ensure the safety of consumers. Innolux has taken the initiative to apply for international standard accreditation labels for its LCD panels in order to help consumers identify safe products at a glance. (VIII) With regards to new suppliers, Innolux will refer to relevant guidelines on social/economic/environmental and supply chain assessment along with adequate risk evaluation to screen candidates before choosing official suppliers. Suppliers with actual/potential flaws in operation that have failed to show effective improvement despite notification and guidance from Innolux would be included in the list of forbidden/restricted suppliers. (IX) Innolux reserves the right to halt payment/immediately terminate or rescind any contract of transaction/order and revoke the undersigned vendor or its affiliated businesses‘ qualification as an authorized supplier. Innolux would also be entitled to file for compensation for any losses incurred on the company’s part.
IV. Enhanced information disclosure (I) Has the company disclosed relevant and reliable information relating to corporate social responsibilities on its website and/or MOPS?	Yes		Innolux has established a „Corporate Social Responsibilities“ section on its official website Website: (http://www.innolux.com/Pages/TW/CSR/Repor t_Download_TW.html)	Compared to the CSR guidelines and practices adopted by other OTC/listed companies, Innolux’s CSR policies have no distinctive differences.

Item	Operation	Operation	Operation
	Yes	No	Reasons
V. If the company has established its CSR guideline in accordance with the „Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies“, please describe the differences in the actual operation and principles established: The Company has not yet enacted “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies” for the time being,but has established „Innolux Corporate Code of Conduct“ as a working guideline that prescribes the philosophies and behaviors that are expected of all Innolux employees. The code of conduct serves as a reminder that in the face of different challenges from compeititons, no one shall engage in amoral or illegal business activities for the sake of company profit or growth and that everyone at Innolux must adopt higher standards of self-expectation in order to create greater values to contribute to the society. Using tools such as PC startup screen, posters and relevant promotional platforms, Innolux has disseminated the contents of the code of conduct and incorporated CSR and employee code of conduct courses in the new employee orientations.
VI. Other important information that help to shed light on the company’s status of CSR fulfillment: Innolux publishes its CSR Report annually. The report features relevant chapters and contents on Innolux’s CSR commitment, corproate governance and development, initiatives such as „To Earth, with L.O.V.E“ and „To People, with S.M.I.L.E“ to offer comprehensive disclosure of relevant strategies, directions, measures and performance indicators for issues that were of concern to shareholders. As for Innolux’s CSR performance, in addition to the publication of the report, relevant information is also made available on the company’s website at (http://www.innolux.com/Pages/TW/CSR/Report_Download_TW.html).
VII. A clear statement shall be made if the products or corporate social responsibility report of the Company pass the inspection of the relevant certification agencies: Innolux’s CSR Report for 2014 has been verified by 3rd party institute SGS Taiwan for full compliance with the AA1000AS (AccountAbility 1000 Assurance Standard) in Category II high assurance level and GRI G4’s requirement for comprehensive disclosure.

3.4.7 Taiwan Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial Supervisory Commission

Item	Operation	Operation	Operation	Difference from corporate integrity practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
I. Set up operational integrity policy and programs (I) The company clarifies the integrity operation policy in its regulations and external documents and the commitment of the board of directors and managers to active implementation. (II) Has the company established solutions for the prevention of dishonest behaviors and specify relevant operating procedures, guidelines, disciplinary actions for violations and system of complaint and carried out relevant operations accordingly? (III) Has the company taken preventive measures for operations specified in item 2, Article 7 of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and other business activities of higher risks of dishonest behaviors?	Yes Yes Yes		(I) Integrity and honesty are the groundwork of Innolux’s management and operation. The company has clearly laid out the management’s philosophy of honest management in the „CSR Management Handbook“ and „Code of Moral Conduct“. These documentations strictly require all employees to adhere to the company’s policies on honesty. Additionally, Innolux’s honest management policy and implementations by the board and management are duly disclosed in both the annual report and CSR report. (II) With regards to the prevention of dishonest behavior, Innolux has established clearly defined regulations for appropriate behaviors in the „Code of Moral Conduct“, which states that any act of violation shall be subjected to corresponding punitive actions in accordance with pertinent regulations and work regulations. In addition, Innolux has also established relevant systems for loding complaints as a means for offending employees to seek aid. (III) Should any Innolux employee be found to take part in any act of dishonesty, the offending employee shall receive corresponding disciplinary actions. Should said employee be found to be involved in incidents of corruption, receiving bribery/commission, theft, misappropriate/embezzle company property to result in loss of property/significant damage to the company’s reputation would face dismissal. Should any supplier be found to violate the commitment to honesty and integrity (including the offering/acceptance of bribery, offering illegal political contributions and so forth), Innolux would revoke the supplier’s status as a qualified supplier and cease all collaboration with said supplier.	Conformity with the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies

Item	Operation	Operation	Operation	Difference from corporate integrity practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
II. Putoperation integrity into practice (I) Does the company evaluate past records of businesses that deal with the company and incorporate terms of honest behavior in relevant contracts? (II) Has the company established a designated unit or personnel in charge of promoting corporate ethical management and reporting the status of implementation to the board on a routine basis? (III) Has the company established relevant policies to prevent conflicts of interests and offered suitable channels of communication? Has the company conducted relevant operations according to said policies? (IV) Has the company established effective systems of accounting and internal control in an effort to achieve honest management? Has the company designated internal audit unit or appointed qualified accountants to carry out routine audits? (V) Does the company conduct internal/external training on honest management routinely?	Yes Yes Yes Yes Yes		(I) The company request for global suppliers has a cooperation relationship to follow the Supplier CSR Code of Conduct Operating Standards and sign the Supplier's Undertaking About the Code of Conduct Integrity, the company request suppliers to guarantee that they will refrain from bribes or offering to bribe Innolux's employees. Suppliers shall also not offer bribes or benefits to political parties or candidates. (II) The company has not yet established a designated unit or personnel in charge of promoting corporate ethical management for the time being. In accordance with the philosophy of “Corporate Integrity Practice Principles of Companies Listed on the Taiwan Stock Exchange or Over-the-Counter Securities Exchange”, nevertheless, The company has established an Audit Office, which is directly subordinate to the board. The Audit Office performs an audit business report on a quarterly basis. (III) The company clearly makes rules about preventing conflicts of interest in the Code of Conduct. If there is any violation, the company also provides a proper way to report, including a Mailbox for Anti-Corruption Reporting ([email protected]) and staff complaint mailboxes. (IV) Based on the annual audit plan approved by the Board of Directors, perform the internal audit's fieldwork auditing or review depending on the risk. Report of the audit results on a regular basis to ensure that the board and managers are aware of the level of goal achievement in the fields of operational results and efficiency, financial reports are reliable, and the company complies with the relevant decrees. (V) We have made all of our various policies available through easy access on our intranet and require all employees to be trained on corporate social responsibility, also promoted via internal computer boot screens, newsletters, and posters to enhance the staff’s understandingof these	Conformity with the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies

Item	Operation	Operation	Operation	Difference from corporate integrity practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
			policies. We also require our stakeholders, such as our suppliers and vendors, to accept and abide by the integrity policy
III. Implementation Status of the Company establishes the channels for reporting any ethical irregularities (I) Has the company established a concrete whistleblowing and reward system? Has the company established a convenient reporting channel for whistleblowers and assigned appropriate personnel to handle the personnel being reported? (II) Has the company established standard operating procedures for whistleblowing and relevent confidentiality system? (III) Has the company adopted any measures to safeguard employees from being subjected to inappropriate treatment due to accusations of misconduct?	Yes Yes Yes		(I) Innolux has implemented a Mailbox for Anti-Corruption Reporting and staff complaint mailboxes to encourage employees and related people to report evidence. For anti-integrity and anti-corruption incidents, investigators will conduct confidential factual investigations. The investigation reports are submitted to the Integrity Commission for resolution and penalties are imposed internally or the incident is prosecuted. (II) Innolux Corporation ratified the “Operating Standards for the Investigation and Management of Corruption Cases” as the investigation standard for incidents and related confidentiality systems. (III) The company designed a confidentiality system to protect the informants and listed it in the Code of Conduct; the company will protect employees from any revenge due to reporting an incident.	Conformity with the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies
IV. Enhanced information disclosure (I) The company discloses the code of operational integrity and implements the results in its website and the Taiwan Stock Exchange's Market Observation Post System.	Yes		The company discloses the Code of Conduct on the Company’s official website (http://www.innolux.com )and Taiwan Stock Exchange's Market Observation Post System. It also discloses related information about operational integrity and implements results in the official website and corporate social responsibilityreport.	Conformity with the Integrity Operation Practice Principles for TWSE/GTSM-Listed Companies
V. If the company makes its own integrity operation according to the Integrity Operation Best Practice Principles for TWSE/GTSM-Listed Companies, please state the differences. The Company has not yet enacted “Corporate Integrity Practice Principles for TWSE/GTSM” for the time being, guided by the spirit of Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, Innolux has been updating relevant regulations such as the „CSR Management Handbook“ and „Code of Moral Conduct“ and takenpractical approaches to champion the spirit of honest management.
VI. Other important information for better understanding of the integrity operation (such as the company’s review and revise the regulations on integrity operation). In order to ensure full compliance to the company’s policies for honest management, all newcomers are required to sign a „Honesty, Integrity & IP Protection Agreement“ and suppliers over the world that collaborate with Innolux to sign the„Vendor Commitment“ in the hopes of helpingall employees and collaborating partners of

Item	Operation	Operation	Operation	Difference from corporate integrity practice principles for TWSE/GTSM-Listed companies and reasons
	Yes	No	Reasons
Innolux to understand and respect the company’s moral standards. In addition, the company has also been disseminating relevant concepts via workstation startup screens along with routine publication of legal-affairs & IP newsletters containing relevant legal issues so that „Honesty and Integrity“ would become the core of Innolux’s fundamental corporate culture. In addition, Innolux conducts business ethics regulation risk assessment on a yearly basis to monitor the company’s management of business ethics through internal control whilst verifying and updating pertinent regulations on business ethics.

3.4.8 Corporate Governance Guidelines and Regulations

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

3.4.9 Other Important Information Regarding Corporate Governance

Standard operating procedures for the handling of vital internal information: Innolux has established its „Vital Internal Information Handling Procedure“ that clearly regulates the handling of important internal information and system of disclosure as a working reference for board members, supervisors, managers and employees to follow. Relevant procedures have been submitted to the board for approal and internal announcements have been made in the company along with relevant trainings for all employees.
Status of Directors and Supervisors' participation in corporate governance related courses and trainings as of the deadline of annual report publication; April 30, 2015

Title	Name	Date	Sponsoring Organization	Course	Training hours
Chairman	Hsing-Chien Tuan	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Director	Hyield venture Capital Co., Ltd. Hong-Jen Chuang	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Director	Jialian Investment Co., Ltd. Jyh-Chau Wang	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Independent Director	Chi-Chia Hsieh	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Independent Director	Stanley Yuk Lun Yim	May 05, 2014	Securities & Futures Institute	Parent company business structure and division of power related to directors and supervisors	3
		May 06, 2014	Securities & Futures Institute	Case of public company insider manipulate market	3
		June 24, 2014	Securities & Futures Institute	The function of the Board of Directors and the competence of the Committee belongs	3
		Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Supervisor	Ren-Guang Lin	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Supervisor	Yi-Fang Chen	Sept 03, 2014	Securities & Futures Institute	Legal liability and risk control of Finance Report for directors and supervisors	3
		Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Supervisor	I-Chen investment Ltd. Te-Tsai Huang	Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3

Status of managers‘ participation in corporate governance related courses and trainings as of the deadline of annual report publication;

		April 30,2015	April 30,2015	April 30,2015	April 30,2015
Title	Name	Date	Sponsoring Organization	Course	Training hours
Chairman	Hsing-Chien Tuan	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
President	Jyh-Chau Wang	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Sept 26, 2014	Securities & Futures Institute	Business Operation and Related Tax discussion	3
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Vice President	Wen-Jyh Sah	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
Vice President	Chin-Lung Ting	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Vice President	Yao-Tong Chen	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Vice President	Chih-Hung Hsiao	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3
Manager	Chien-Lang Lo	Apr 10, 2014	Innolux Corporation	Positive Discipline Training	1
		June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3

Title	Name	Date	Sponsoring Organization	Course	Training hours
Manager	Chin-Yuan Chang	June 11, 2014	Innolux Corporation	Obligation and Responsibility of board member and supervisor under SecurityExchange Act	1.5
		Aug 12, 2014	Innolux Corporation	Compliance with Anti-Trust Law	0.42
		Mar 20, 2015	Taiwan Corporate Governance Association	Audit Committee Practice Discussion	3

Certification Details of Employees Whose Jobs are Related to the Release of the Company’s Financial Information

Information
Certification	Number of Employees
	Finance&Accounting	Internal Audit
Certified Public Accountants (CPA)	1	-
Certified Internal Auditor (CIA)	-	2
Chartered Financial Analyst (CFA)	1	-
Financial Risk Manager (FRM)	1	-
Senior Securities Specialist	6	-
Securities Specialist	6	-
Internal controller test of Securities & Futures Institute	1	-

3.4.10 Internal Control System

1. Statement of internal control system

Innolux Corporation Statement of Internal Controls

Date: Feb 10, 2015

According to the examination on internal control systems done by the Company itself in 2014, we hereby state as follows:

I. The Company’s board of directors and management team understand their responsibilities of developing, implementing and maintaining the Company’s internal control system, and such a system has been established. The purpose of establishing the internal control system is to reasonably assure the following objectives: (a) The effectiveness and efficiency of business operation (including earnings, operation performance, and the safeguard of company assets); (b) The reliability of the financial and related reports; and (c) The compliance of the relevant laws/regulations and company policies;
II. Due to the innate limitations in designing a faultless internal control system, this system can only assure that the reasonableness of the above three objectives has been fairly achieved. In addition, the effectiveness of the internal control system may change over time due to the change of the business environment or situation. Since the Company’s internal control system has included a self-examination capability, the Company will make immediate corrections when errors are detected.
III. The evaluation of effectiveness of the internal control system design and implementation is made in accordance with the “Guidelines for the Establishment of Internal Control Systems by Public Companies” (the Guidelines). The Guidelines are made to examine the following five factors during the management and control process: (1) control environment, (2) risk assessment and response, (3) control activities, (4) information and communication, and (5) supervision. Each factor also includes several items. Details of each factor can be found in the Guidelines.
IV. The Company has examined the effectiveness of each respected area in the internal control system based on the Guidelines.
V. The examination results indicated that the Company’s internal control system (including subsidiary governance) dated December 31, 2013 had effectively assured that the following objectives had been reasonably achieved during the assessing period: (a) The degree of effectiveness and efficiency of business operation; (b) The reliability of the financial and related reports; (c) The compliance of the relevant laws/regulations and company policies
VI. This Statement is a significant part of the Company’s annual report and prospectus available to the general public. If it contains false information or omits any material content, the Company is in violation of Article 20, Article 32, Article 171, and Article 174 set forth in the Taiwan’s Securities and Exchange Act.
VII. The Company hereby declares that this statement had been approved by the Board of Directors on Feb 10, 2015. Among the 5 attending Directors, no one raised any objection to the contents of this statement.

Innolux Corporation Chairman: Hsing-Chien Tuan General Manager: Hsing-Chien Tuan

Hire an accountant to audit the Company’s internal control system and disclose the audit report made by accountants: None.

3.4.11 Lawful punishment inflicted on the Company, and/or disciplinary action taken by the Company against its employees for violating internal regulations in the latest year and up to the printing date of this Annual Report); important errors committed; and correction and improvement procedures: None.

3.4.12 Major Resolutions of Shareholders’ Meeting and Board Meetings

Important resolutions and implementation made by the Shareholders’ Meeting and Board of Directors by the end of 2014
(1) Adoption of revisions to the 2012 Deficit Compensation Statement Status of execution: Resolution carried
(2) Adoption of the 2013 Business Report and Financial Statements Status of execution: Resolution carried
(3) Adoption of the Proposal for Distribution of 2013 Profits Status of execution: Resolution carried
(4) Carried the resolution to distribute new stocks and overseas depository receipt or private placement of securities dependning on the market status through domestic cash capital increase.
- Status of execution: Resolution carried and the Board has been authorized to conduct fund raising; According to the letter No.1030042223 on Oct. 31, 2014 from FSC,the company is permitted to raising funds by issuing new shares through public offering or issuing new shares to sponsor overseas GRD offering set at NT $ 9,360,000 thousand, approximately equivalent to U.S. $ 312,625 thousand. The Company has made the bank group agreed to extension for cash replenishment, due to the shareholders equity position, the company is permitted to abolish raising funds by GDR offering and consent by FSC.
(5) Carried the resolution to make cash remittance for capital surplus Status of execution: Resolution carried and remittance completed.
(6) Resolution to revise Innolux’s charter carried.
- Status of execution: Resolution carried and implemented in accordance with the revised procedure
(7) Resolution to revise Innolux’s „Operating Procedures of Acquisition or Disposal of Assets“
- Status of execution: Resolution carried and implemented in accordance with the revised procedure

Important resolutions by the Board for 2014 prior to the deadline of annual report publication

publication
Item	Major resolutions
February 17, 2014	Innolux’s Individual Financial Statement and Consolidated Financial Statement for 2013 Proposal to increase cash capital for the distribution of new stocks Proposal for Innolux’s Internal Control Declaration for 2013
March 24, 2014	Innolux’s Operating Plans for 2014 Innolux’s Budget for 2014 Prepare and compile Innolux’s Account of Business for 2013 Revision of Innolux’s Deficit Compensation Statement for 2012 Draft of Innolux’s Dividend Remittance for 2013 Proposal for Capital Surplas Cash Remittance Proposal to revise Innolux’s „Operating Procedures of Acquisition or Disposal of Assets“ Proposal to convene Innolux’s 2014 Annual Meeting of Shareholders Proposal to enter into short-mid term credit line contract with banks Proposal to enter into foreign exchange and derivative product credit contract with banks Proposal to write off Innolux’s new restricted employee shares distributed for 2013 Q4 and 2014 Q1 Proposal to acquire machinery for operational use from stakeholder Contrel Technology Co,. Ltd. Internal rotation of accountants at the accountingfirm
May 6,2014	Status of private placement capital increase for 2013 New proposals at the 2014 Annual Meeting of Shareholders Proposal to change the company’s financial supervisor Proposal to enter into short-mid term credit line contract with financial institution Proposal to enter into foreign exchange and derivative product credit contract with banks Proposal to adjust stock prices for Innolux employee stock options Proposal to submit an application for a 3-month extension for cash capital increase fundraising to the FSC Proposal to acquire machinery for operational use from stakeholder Contrel TechnologyCo,. Ltd.
June 20,2014	Proposals to adjust cash capital for the distribution of common stock Innolux’s cash capital increase employee stock option and the quantity of stocks purchased bymanagers
July 28,2014	Write off of Innolux’s new restricted employee shares purchased/distributed for 2014 Q2 Proposal to change the custodian bank for overseas depository receipt Proposal to enter into contract for guaranteed distribution commercial paper credit with bills finance company The Company’s Remuneration Committee already duly proposed the allocation of remuneration to directors and supervisors and other remuneration for 2013. The Compensation Committee is proposing manager bonus for the year of 2013.
September 26,2014	The proposal for the Company in capital increase through cash injection to issue common shares and to issue overseas deposit receipt certificates (DRC). The Company conducted capital increase through cash injection to issue common shares and to issue global depositary receipts (GDR), adjustment of employee stock option certificates. Proposal for the Company’s “Full-award remuneration system for managerial officers” and proposal for full-award remuneration for managerial officers 2013.

Item	Major resolutions
October 30,2014	Proposal to revoke the Company’s repurchase/redemption of restriction upon employees’ right for new shares in Quarter III, 2014. Proposal of the Company’s Audit Plan 2015 and amendment of the internal control system. Proposal for execution of short-term credit line agreement(s) with financial institution(s).
February 10,2015	The Company’s individual financial statements and consolidated financial statements, 2014. Proposal to execute agreement with Bank of Taiwan and ohter financial institution(s) for NT$6.85 billion syndicated loans. Revocation of the Company’s capital increase through cash injection to issue common shares and issue global depositary receipts (GDR). Proposal for syndicated loans for the capital expenditures for the Company in 2015 In line with the Company’s investment deployments in Taiwan and the Company’s need for land for Tainan Plant regions, it is proposed that the Company should obtain assets required for business operation through auction by court. Proposal to revoke the Company’s restriction upon employees’ right for new shares issued in Quarter IV, 2014. Proposal for execution of short-term loan agreements with financial institutions. Declaration of the Company’s internal control system 2014. Amendment of the Company’s “Full Incentive System along with Appendix for Managerial Officers” and submittal of the “Full Incentives for Managerial Officers2014”.
March 20,2015	The Company’s Business Plan 2015. Amendment of the Company’s “Procedure Rules for Shareholders’Meeting”. Amendment of the Company’s “Regulations Governing Election of Directors and Supervisors”. Proposal to convene the Company’s regular shareholders meeting 2014. Proposal for execution of short-term loan agreementswith financial institutions.
April 28,2015	Prepare and compile Innolux’s Account of Business for 2014 Draft of Innolux’s Dividend Remittance for 2014 Proposal to process domestic capital increase by cash to issue common shares, to issue new shares as a result of cash capital increase for sponsoring issuance of GDR Amendment to Articles of Incorporation of the Company New proposals at the 2015Annual Meeting of Shareholders Proposal to supplemental public issuance of Private Equity Proposal to revoke the Company’s repurchase/redemption of restriction upon employees’ right for new shares inQuarter I,2015

3.4.13 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors

None

3.4.14 Resignation or Dismissal of Personnel Involved in Preparation of Financial Reports


TITLE	NAME	DATE OF APPOINTED	DATE OF TERMINATION	REASONS FOR RESIGNATION OR DISMISSAL
Finance General Director	Jimmy Chiu	January, 09, 2009	05, 06, 2014	Plan of Personal Career.

3.5 Information Regarding Innolux’s Independent Auditors

AccountingFirm	Name of CPA	Name of CPA	Audit Period	Note
Pricewaterhousecoopers	Wu,Han-Chi	Sheng-ChungHsu	Jan 1,2014 - Dec 31,2014

Unit: NT$ thousands

Items Amount Range	Items Amount Range	Audit Fee	Non-Audit Fee	Total
1	Below 2 million		V	V
2	2 million to 4 million
3	4 million to 6 million
4	6 million to 8 million
5	8 million to 10 million
6	Above 10 million	V		V

3.5.1 Non-audit fee paid to auditors, the audit firm and its affiliates accounted for more than one-fourth of total audits Fees should disclosure the audit fee and non-audit fee amount and non-audit service content

Audit Fee: NT$ Thousands

Accounting Firm	Name of CPA	Audit Fee	Non-Audit Fee	Non-Audit Fee	Non-Audit Fee	Non-Audit Fee	Non-Audit Fee	Audit Period	Note
			System Design	Company Registration	Human resource	Others	Subtotal
Pricewaterho usecoopers	Han-Chi Wu Sheng-ChungHsu	12,000		200			200	Jan 1, 2014 Dec 31,2014

3.5.2 Replaced the audit firm and the audit fee paid to the new audit firm was less than the payment of the previous year: No.

3.5.3 Audit fee reduced more than 15% year over year, required to disclose the reduced amount, proportion, and reason: Audit fee in 2014 reduced NT$8,110 Thousands due to GDR audit fee payment of NT$8,110 Thousands in 2013

3.6 Replacement of independent auditors:

3.6.1 About predecessor CPA

3.6.1 About predecessor CPA
Date of change	March 24,2014
Reason for Replacement	Due to accounting firm’s job rotation in accordance to relevant regulations, the CPA Hsiao Chun-Yuan & Wu Han-Chi replaced to Wu,Han-Chi & Hsu,Sheng-ChungsinceQ1 2014.
Descriptions whether the Company terminated or the CPA did not accept the appointment	Parties Status		CPA		The company
	Termination of appointment		－		－
	No longer accepted (continued)appointment		－		－
Other than unqualified issues in the audit reports within last twoyears	None
Differences with the Company	Yes	－		Accounting principles or practices
		－		Disclosure of Financial Statements
		－		Audit scope or steps
		－		Others
	None	V
	Descriptions
Other Revealed Matters (Required to be disclosed by Accounting Standards Article 20 section 2 first paragraph item 4)	None

3.6.2 About the Successor CPA:

3.6.2 About the Successor CPA:
AccountingFirm	Pricewaterhousecoopers
Name of CPA	Wu,Han-Chi & Hsu,Sheng-Chung
Date of appointment	March 24,2014
Consulting results regarding accounting methods or accounting principles to specific transactions or opinions on the financial statements before appointment	None
Successor CPA written disagreements to former CPA	None

3.6.3 Reply of the Previous Accountant: N/A

3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: None

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

3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.

3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.	3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders.
Unit: Per share
Title	Name (Note 1)	2013		2014		As of Apr. 30,2015
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman & CEO	Hsing-Chien Tuan	(750,000)	(5,000,000)	1,414,994	－	90,000	(4,000,000)
Institutional Director	Hyield Venture Capital Co., Ltd	－	－	12,321,996	－	－	－
Representative	Hong-Jen Chuang	－	－	－	－	－	－
Institutional Director	Jialian investment Co.,Ltd	－	－	745,888	－	－	－
Representative	Jyh-Chau Wang	(9,000)	－	121,179	－	167,000	－
Independent Director	StanleyYuk Lun Yim	－	－	－	－	－	－
Independent Director	Chi-Chia Hsieh	－	－	－	－	－	－
Supervisor	Ren-GuangLin	－	－	－	－	－	－
Supervisor	Yi-FangChen	－	－	－	－	－	－
Supervisor	I-Chen investment Ltd.	－	－	1,924,427	－	－	－
Representative	Te-Tsai Huang	(54,000)	－	14,859	－	－	－
Vice President	Wen-Jyh Sah	210,000	－	352,000	－	18,000	－
Vice President	Chin-LungTing	(145,000)	－	165,068	－	(378,000)	－
Vice President	Yao-TongChen	420,000	－	(255,196)	－	80,000	－
Vice President	Chih-HungHsiao	120,000	－	872,544	－	(70,000)	－
Associate Vice President	Chen-Hua Luo	(473,000)	－	443,690	－	140,000	－
Associate Vice President	Hung-Wen Yang	(509,000)	－	23,846	－	160,000	－
Associate Vice President	Ke-Yi Kao	－	－	198,554	－	111,000	－
Associate Vice President	Chih-Ming Chen	233,000	－	(45,807)	－	67,000	－
Associate Vice President	Chu-Hsiang Yang	249,000	－	406,537	－	113,000	－
Associate Vice President	Tai-Chi Pan	170,000	－	412,423	－	70,000	－
Associate Vice President	Kuo-Hsiung Kuo	－	－	188,005	－	120,000	－
Associate Vice President	Chung-Kuang Wei	(53,000)	－	(64,508)	－	93,000	－
Associate Vice President	Jia-Pang Pang	－	－	308,980	－	120,000	－
Associate Vice President	Yu Shui Kuo (Note 2)	－	－	－	－	80,000	－
Associate Vice President	Nai-Jian Zheng(Note3)	－	－	988,837	－	92,000	－
Associate Vice President	Zheng-Xia Kuo(Note3)	－	－	229,802	－	34,000	－
Associate Vice President	Tian-Ren Lin(Note3)	－	－	526,353	－	64,000	－
Manager	Chien-LangLo(Note4)	－	－	－	－	1,000	－
Manager	Chin-Yuan Chang	280,000	－	32,339	－	42,000	－

Note 1: Refers to current managerial officers as of the printing date of the annual report Note 2: Appointed to office on December 1, 2014 thus the change in equity in 2013 was not calculated. Note 3: Appointed to office on September 23, 2013 thus the change in equity in 2013 was not calculated. Note 4: Appointed to office on May 7, 2014 thus the change in equity in 2014 was not calculated. Note 5: The increase(decrease) of the shares held includes the inward or outward transfer of the trusted shareholding..

3.8.2 Shares Trading with Related Parties

None

3.8.3 Shares Pledge with Related Parties

None

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

Shareholders
Name	Shareholding		Spouse & Minor		Shareholding by Nominee Arrangement		The relationship between any of the Company’s Top Ten Share holders		Remarks %
	Shares	%	Shares	%	Shares	%	Name	Relation
CHIMEI CORPORATION	570,929,561	5.74%	－	－	－	－	N.A.	N.A.
Representative: Hsu Chun-hua	－	－	－	－	－	－	N.A.	N.A.
Terry Gou	243,964,977	2.45%	－	－	－	－	HON HAI PRECISION IND. CO.,LTD.	Chairman
Hyield Venture Capital Co., Ltd	176,311,219	1.77%	－	－	－	－	HON HAI PRECISION IND. CO., LTD	Subsidiary of HON HAI PRECISION IND. CO.,LTD..
Representative: Te-Tsai Huang	212,619	－	－	－	－	－	N.A.	N.A.
Standard Chartered Bank hosting Sanskrit Vanguard Emerging Markets Equity Index Fund account	169,754,726	1.71%	－	－	－	－	N.A.	N.A.
Cathay Life Insurance Co.,Ltd.	163,964,330	1.65%	－	－	－	－	N.A.	N.A.
Representative: Tsai Hong-Tu	－	－	－	－	－	－	N.A.	N.A.
JP Morgan Hosting ABP pension fund account	163,355,929	1.64%	－	－	－	－	N.A.	N.A.
Standard Chartered Bank hosting Credit Suisse Securities Europe investment accounts	156,321,881	1.57%					N.A.	N.A.
HON HAI PRECISION IND. CO., LTD.	147,965,363	1.49%	－	－	－	－	TerryGou	Chairman
							Hyield Venture Capital Co., Ltd	Subsidiary of HON HAI PRECISION IND. CO.,LTD.
Representative: Terry Gou	243,964,977	2.45%	－	－	－	－	HON HAI PRECISION IND. CO.,LTD.	Chairman
Compal Electronics, Inc.	134,877,335	1.36%	－	－	－	－	N.A.	N.A.
Representative: Hsu,Sheng-Hsiung	2,517,754	－	－	－	－	－	N.A.	N.A.
Specially designated (earmarked) account of Citibank (Taiwan) for the delegated custody of Newly Emerging Market Evaluation Fund	134,699,544	1.35﹪	－	－	－	－	N.A.	N.A.

3.10 The number of shares held by the Company, the Company’s directors and supervisors, managerial officers and enterprises under control, either directly or indirectly, with consolidated calculation of the comprehensive shareholding ratio. As of 12/31/2014

Long-term Investment	Ownership by INX	Ownership by INX	Ownership by Directors, Managers, and Directly/Indirectly Owned Subsidiaries	Ownership by Directors, Managers, and Directly/Indirectly Owned Subsidiaries	Total Ownership	Total Ownership
	Shares	%	Shares	%	Shares	%
Asiaward Investment Ltd.	-	-	77,830,001	100%	77,830,001	100%
Best China Investments Ltd.	-	-	10,000,001	100%	10,000,001	100%
Bright Information HoldingLtd.	4,910,000	100%	-	-	4,910,000	100%
Chi Mei Optoelectronics GermanyGmbH	-	-	250	100%	250	100%
Gold Union Investments Limited	31,783,000	100%	-	-	31,783,000	100%
Golden Achiever International Limited	39,250	100%	-	-	39,250	100%
InnoLux Corporation	-	-	2,000	100%	2,000	100%
Innolux HoldingLtd.	246,768,185	100%	-	-	246,768,185	100%
Innolux HongKongHoldingLimited	1,158,844,000	100%	-	-	1,158,844,000	100%
Innolux HongKongLimited	-	-	35,000,000	100%	35,000,000	100%
Innolux Optoelectronics Europe B.V.	180	100%	-	-	180	100.%
Innolux Optoelectronics Hong Kong HoldingLtd.	-	-	162,897,802	100%	162,897,802	100%
Innolux Optoelectronics Japan Co.,Ltd.	80	100%	-	-	80	100%
Innolux Optoelectronics USA,Inc.	-	-	1,000	100%	1,000	100%
Innolux TechnologyEurope B.V.	-	-	375,810	100%	375,810	100%
Innolux TechnologyGermanyGmbH	-	-	100,000	100%	100,000	100%
Innolux TechnologyJapan Co.,Ltd.	-	-	201	100%	201	100%
Innolux TechnologyUSA Inc.	-	-	1,000	100%	1,000	100%
KeywayInvestment Management Limited	5,656,410	100%	-	-	5,656,410	100%
Lakers TradingLtd.	-	-	1	100%	1	100%
Landmark International Ltd.	693,100,000	100%	-	-	693,100,000	100%
Leadtek Global GroupLimited	50,000,000	100%	-	-	50,000,000	100%
Magic Sun Ltd.	-	-	38,000,001	100%	38,000,001	100%
Main DynastyInvestment Ltd.	-	-	139,623,801	100%	139,623,801	100%
Mega Chance Investments Ltd.	-	-	18,000,000	100%	18,000,000	100%
Nets TradingLtd.			900,001	100%	900,001	100%
Rockets HoldingLtd.	-	-	226,504,550	100%	226,504,550	100%
Stanford Developments Ltd.	-	-	164,000,000	100%	164,000,000	100%
Sun DynastyDevelopment Ltd.	-	-	295,969,001	100%	295,969,001	100%
Suns HoldingLtd.	-	-	18,177,052	100%	18,177,052	100%
ToppolyOptoelectronics(B.V.I.)Ltd.	144,447,000	100%	-	-	144,447,000	100%
ToppolyOptoelectronics(Cayman)Ltd.	-	-	144,417,000	100%	144,417,000	100%
Warriors TechnologyInvestments Ltd.	-	-	18,177,052	100%	18,177,052	100%
Shanghai Innolux Optoelectronics Ltd.	-	-	-	100%	-	100%
Yuan Chi investment co.,Ltd	-	100%	-	-	-	100%
Foshan Innolux Optoelectronics Ltd.	-	-	-	100%	-	100%
Foshan Innolux Logistics Ltd.	-	-	-	100%	-	100%
Chi Mei EL Corp.	155,500,000	97.19%	-	-	155,500,000	97.19%
VAP Optoelectromics(NanJing)Corp.	-	-	-	100%	-	100%
Kunpal Optoelectronics Ltd.	-	-	-	100%	-	100%
NanjingInnolux TechnologyLtd.	-	-	-	100%	-	100%
NanjingInnolux Optoelectronics Ltd.	-	-	-	100%	-	100%
InnoJoyInvestment Corp.	167,405,392	100%	-	-	167,405,392	100%
Innocom Technology (Chengdu)Co.,LTD	-	-	-	100%	-	100%
Innocom Technology (Shenzhen)Co.,LTD	-	-	-	100%	-	100%
Ningbo Innolux TechnologyCo.,LTD	-	-	-	100%	-	100%
Ningbo Innolux Optoelectronics Co.,LTD	-	-	-	100%	-	100%
Ningbo Innolux DisplayLTD	-	-	-	100%	-	100%
Ningbo Innolux Logistics LTD	-	-	-	100%	-	100%

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Type of Stock

Share Type	Authorized Capital	Authorized Capital	Authorized Capital	Authorized Capital	Authorized Capital
	Outstanding			Un-issued Shares	Total
	Issued Shares	Unlisted	Total Shares
Common Shares	9,383,294,416	570,929,561	9,954,223,977	545,776,023	10,500,000,000

B. Issued Shares

Unit: Shares Thousand; NT Thousand

						Unit: Shares Thousand;NT Thousand	Unit: Shares Thousand;NT Thousand	Unit: Shares Thousand;NT Thousand
Month/ Year	Par Value	Authorized Capital		Paid-in Capital		Remark
		Shares	Amount	Shares	Amount	Sources of Capital	Capital Increased by Assets Other than Cash	Other
2003.01	-	120,000	1,200,000	35,000	350,000	Created at inception	None	2003.01.14 Yuan-Shang-Zih No. 0920001669
2003.05	10	120,000	1,200,000	100,000	1,000,000	65 million shares from cash capital increase	None	2003.05.30 Yuan-Shang-Zih No. 0920013164
2003.10	10	1,000,000	10,000,000	300,000	3,000,000	200 million shares from cash capital increase	None	2003.11.07 Yuan-Shang-Zih No. 0920030835
2004.04	10	1,000,000	10,000,000	900,000	9,000,000	600 million shares from cash capital increase	None	2004.05.24 Yuan-Shang-Zih No. 0930013914
2004.09	12	2,500,000	25,000,000	1,500,000	15,000,000	600 million shares from cash capital increase	None	2004.10.26 Yuan-Shang-Zih No. 9300030355
2005.06	14	2,500,000	25,000,000	2,100,000	21,000,000	600 million shares from cash capital increase	None	2005.07.22 Yuan-Shang-Zih No. 0940019992
2006.01	-	2,500,000	25,000,000	2,106,624	21,066,240	6.624 million new shares issued upon the exercise of employee stock options	None	2006.02.13 Yuan-Shang-Zih No. 0950002674
2006.04	-	2,500,000	25,000,000	2,111,856	21,118,560	5.232 million new shares issued upon the exercise of employee stock options	None	2006.05.09 Yuan-Shang-Zih No. 0950011150
2006.09	-	2,500,000	25,000,000	2,112,129	21,121,290	273 thousand new shares issued upon the exercise of employee stock options	None	2006.10.16 Yuan-Shang-Zih No. 0950026853
2006.10	41	3,300,000	33,000,000	2,312,129	23,121,290	200 million shares from cash capital increase	None	2006.12.04 Yuan-Shang-Zih No. 0950032417
2007.01	-	3,300,000	33,000,000	2,326,056	23,260,560	13.927 million new shares issued upon the exercise of employee stock options	None	2007.02.09 Yuan-Shang-Zih No. 0960003715
2007.03	-	3,300,000	33,000,000	2,331,706	23,317,062	5.650 million shares from capital increase in connection with merger	None	2007.05.30 Yuan-Shang-Zih No. 0960014540
2007.04	-	3,300,000	33,000,000	2,331,761	23,317,612	55 thousand new shares issued upon the exercise of employee stock options	None	2007.05.31 Yuan-Shang-Zih No. 0960014605
2007.08	-	3,300,000	33,000,000	2,340,765	23,407,652	9.004 million new shares issued upon the exercise of employee stock options	None	2007.08.30 Yuan-Shang-Zih No. 0960023196
2007.09	-	3,300,000	33,000,000	2,442,155	24,421,550	101.390 million shares from capital increase through capitalization of retained earnings	None	2007.09.19 Yuan-Shang-Zih No. 0960025459
2007.10	-	3,300,000	33,000,000	2,442,372	24,423,720	217 thousand new shares issued upon the exercise of employee stock options	None	2007.10.29 Yuan-Shang-Zih No. 0960029080

Month/ Year	Par Value	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Shares	Amount	Shares	Amount	Sources of Capital	Capital Increased by Assets Other than Cash	Other
2007.11	146	3,300,000	33,000,000	2,742,372	27,423,720	300 million shares from cash capital increase to participate in the issuance of overseas depositaryreceipts	None	2007.12.10 Yuan-Shang-Zih No. 0960033616
2008.02	-	3,300,000	33,000,000	2,751,026	27,510,260	8.654 million new shares issued upon the exercise of employee stock options	None	2008.02.12 Yuan-Shang-Zih No. 0970003364
2008.05	-	3,300,000	33,000,000	2,757,583	27,575,830	6.557 million new shares issued upon the exercise of employee stock options	None	2008.05.14 Yuan-Shang-Zih No. 0970012623
2008.08	-	3,300,000	33,000,000	2,770,270	27,702,700	12.687 million new shares issued upon the exercise of employee stock options	None	2008.08.21 Yuan-Shang-Zih No. 0970023231
2008.09	-	4,500,000	45,000,000	3,112,297	31,122,970	342.027 million shares from capital increase through capitalization of retained earnings	None	2008.09.09 Yuan-Shang-Zih No. 0970025445
2008.11	-	4,500,000	45,000,000	3,113,147	31,131,470	850 thousand new shares issued upon the exercise of employee stock options	None	2008.11.18 Yuan-Shang-Zih No. 0970032346
2009.03	-	4,500,000	45,000,000	3,123,695	32,236,950	10.548 million new shares issued upon the exercise of employee stock options	None	2009.03.02 Yuan-Shang-Zih No. 0980005613
2009.05	-	4,500,000	45,000,000	3,128,546	31,285,460	4.851 million new shares issued upon the exercise of employee stock options	None	2009.05.18 Yuan-Shang-Zih No. 0980013470
2009.07	-	4,500,000	45,000,000	3,138,537	31,385,370	9.991 million new shares issued upon the exercise of employee stock options	None	2009.07.23 Yuan-Shang-Zih No. 0980020313
2009.09	-	4,500,000	45,000,000	3,243,122	32,431,222	104.585 million shares from capital increase through capitalization of retained earnings	None	2009.09.07 Yuan-Shang-Zih No. 0980024824
2009.11	-	4,500,000	45,000,000	3,244,596	32,445,960	1.474 million new shares issued upon the exercise of employee stock options	None	2009.11.19 Yuan-Shang-Zih No. 0980032198
2010.02	-	4,500,000	45,000,000	3,254,841	32,548,410	10.245 million new shares issued upon the exercise of employee stock options	None	2010.02.12 Yuan-Shang-Zih No. 0990004357
2010.03	-	10,500,000	105,000,000	8,032,930	80,329,300	4,778,089,000 common stocks from capital increase in connection with merger; private placement of 731.707 million preferred shares	None	2010.03.30 Yuan-Shang-Zih No. 0990008717
2010.04	-	10,500,000	105,000,000	8,040,837	80,408,370	7.907 million new shares issued upon the exercise of employee stock options	None	2010.04.29 Yuan-Shang-Zih No. 0990011506
2010.08	-	10,500,000	105,000,000	8,043,497	80,434,970	2.660 million new shares issued upon the exercise of employee stock options	None	2010.08.26 Yuan-Shang-Zih No. 0990025097
2010.11	-	10,500,000	105,000,000	7,311,789	73,117,890	Reduced capital by 731.707 million shares through private placement ofpreferred shares	None	2010.11.11 Yuan-Shang-Zih No. 0990033742
2011. 01	-	10,500,000	105,000,000	7,311,809	73,118,090	20 thousand new shares issued upon the exercise of employee stock options	None	2011.01.03 Yuan-Shang-Zih No. 1000000178
2011. 03	-	10,500,000	105,000,000	7,312,674	73,126,740	865 thousand new shares issued upon the exercise of employee stock options	None	2011.03.25 Yuan-Shang-Zih No. 1000007874
2011.05	-	10,500,000	105,000,000	7,312,804	73,128,040	130 thousand new shares issued upon the exercise of employee stock options	None	2011.05.04 Yuan-Shang-Zih No. 1000012352
2011.07	-	10,500,000	105,000,000	7,312,904	73,129,040	100 thousand new shares issued upon the exercise of employee stock options	None	2011.07.26 Yuan-Shang-Zih No. 1000021596
2011.11	-	10,500,000	105,000,000	7,312,970	73,129,708	66 thousand new shares issued upon the exercise of employee stock options	None	2011.11.28 Yuan-Shang-Zih No. 1000035175
2012.10	9	10,500,000	105,000,000	7,912,970	79,129,700	600 million shares from cash capital increase	None	2012.10.15 Yuan-Shang-Zih No. 1010031831
2013.02	12.98	10,500,000	105,000,000	9,037,970	90,379,700	1.125 billion shares from cash capital increase toparticipate in	None	2013.02.18 Yuan-Shang-Zih No.

Month/ Year	Par Value	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Shares	Amount	Shares	Amount	Sources of Capital	Capital Increased by Assets Other than Cash	Other
						the issuance of overseas depositaryreceipts		1020005087
2013.02	5/-	10,500,000	105,000,000	9,100,272	91,002,720	Issuance of 31,151,000 new shares with restricted employee rights at positive consideration Issuance of 31,151,000 new shares with restricted employee rights at nil consideration	None	2013.02.21 Yuan-Shang-Zih No. 1020005099
2013.04	5/-	10,500,000	105,000,000	9,101,960	91,019,600	Issuance of 844,000 new shares with restricted employee rights at positive consideration Issuance of 844,000 new shares with restricted employee rights at nil consideration	None	2013.04.16 Yuan-Shang-Zih No. 1020010954
2013.08		10,500,000	105,000,000	9,101,670	91,016,700	Capital reduced by 290,000 new shares with restricted employee rights	None	2013.08.23 Yuan-Shang-Zih No. 1020025484
2013.11	-	10,500,000	105,000,000	9,100,892	91,008,920	Capital reduced by 778,000 new shares with restricted employee rights	None	2013.11.27 Yuan-Shang-Zih No. 1020036156
2013.12	5/-	10,500,000	105,000,000	9,109,428	91,094,280	Issuance of 4,268,000 new shares with restricted employee rights at positive consideration Issuance of 4,268,000 new shares with restricted employee rights at nil consideration	None	2013.12.27 Yuan-Shang-Zih No. 1020040096
2014.04	-	10,500,000	105,000,000	9,106,457	91,064,570	Capital reduced by 2,970,000 new shares with restricted employee rights	None	2014.04.10 Zhu-Shang-Zih No.1030009955
2014.09	10	10,500,000	105,000,000	9,956,457	99,564,570	850 million shares from cash capital increase	None	2014.09.05 Zhu-Shang-Zih No.1030026932
2014.09	-	10,500,000	105,000,000	9,955,407	99,554,070	Capital reduced by 1,049,000 new shares with restricted employee rights	None	2014.09.05 Zhu-Shang-Zih No.1030026932
2014.11	-	10,500,000	105,000,000	9,954,536	99,545,360	Capital reduced by 871,000 new shares with restricted employee rights	None	2014.11.19 Zhu-Shang-Zih No.1030033761
2015.03	-	10,500,000	105,000,000	9,954,224	99,542,240	Capital reduced by 312,000 new shares with restricted employee rights	None	2015.03.17 Zhu-Shang-Zih No.1040007082

C. Information for Shelf Registration: None

4.1.2 Status of Shareholders

As of 04/10/2015

Item	Government Agencies	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	8	125	537	337,133	1,133	338,936
Shareholding (shares)	106,789,730	486,026,176	2,194,194,944	3,141,208,497	4,026,004,630	9,954,223,977
Percentage	1.07%	4.88%	22.04%	31.56%	40.45%	100.00%

4.1.3 Shareholding Distribution Status

A. Common Shares (The par value for each share is NT$10)

	As of 04/10/2015	As of 04/10/2015	As of 04/10/2015
Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1 ~999	100,833	31,680,118	0.32%
1,000 ~ 5,000	151,270	349,169,889	3.51%
5,001 ~ 10,000	39,345	295,254,533	2.97%
10,001 ~ 15,000	15,020	182,053,494	1.83%
15,001 ~ 20,000	8,367	151,316,029	1.52%
20,001 ~30,000	8,358	207,403,628	2.08%
30,001 ~ 50,000	6,497	255,284,687	2.57%
50,001 ~ 100,000	4,876	343,701,888	3.45%
100,001 ~ 200,000	2,147	298,190,808	3.00%
200,001 ~ 400,000	961	264,460,383	2.66%
400,001 ~ 600,000	338	166,362,563	1.67%
600,001 ~ 800,000	198	138,802,969	1.39%
800,001 ~ 1,000,000	101	90,859,163	0.91%
1,000,001 or over	625	7179,683,825	72.12%
Total	338,936	9954,223,977	100.00%

4.1.4 List of Major Shareholders

4.1.4 List of Major Shareholders
	As of 04/10/2015
Shareholder's Name	Shareholding
	Shares	Percentage
CHIMEI CORPORATION	570,929,561	5.74%
TerryGuo	243,964,977	2.45%
Hyield Venture Capital Co.,Ltd	176,311,219	1.77%
Standard Chartered Bank hosting Sanskrit Vanguard Emerging Markets Equity Index Fund account	169,754,726	1.71%
CathayLife Insurance Co.,Ltd.	163,964,330	1.65%
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Stitching Depositary APG Emerging Markets EquityPool	163,355,929	1.64%
Standard Chartered Bank hosting Credit Suisse Securities Europe investment accounts	156,321,881	1.57%
HON HAI PRECISION IND. CO.,LTD.	147,965,363	1.49%
Compal Electronics,Inc.	134,877,335	1.36%
Specially designated (earmarked) account of Citibank (Taiwan) for the delegated custody of NewlyEmergingMarket Evaluation Fund.	134,699,544	1.35%

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

Unit: NT$ Thousand share

Item	Year	Year	2013	2014	As of 03/31/2015
Market Price per Share	Highest Market Price		20.95	15.95	17.60
	Lowest Market Price		9.75	10.05	15.00
	Average Market Price		14.91	12.77	16.02
Net Worth per Share	Before Distribution		21.19	22.87	23.61
Earnings per Share	Weighted Average Shares (thousand shares)		8,967,080	9,377,302	9,916,297
	Diluted Earnings Per Share	Adjusted Diluted Earnings Per Share	0.57	2.31	0.87
Dividends per Share(Note2)	Cash Dividends		0.15	0.7(Note)	N.A.
	Stock Dividends	Dividends from Retained Earnings	－	－	－
		Dividends from Capital Surplus	－	－	－
	Accumulated Undistributed Dividends		None	None	None
Return on Investment	Price/Earnings Ratio		N.A.	N.A.	N.A.
	Price/Dividend Ratio		N.A.	N.A.	N.A.
	Cash Dividend Yield Rate		N.A.	N.A.	N.A.

Note: 2014 Distribution of Dividends already gets approval from the Board of Directors, subject to shareholders’ approval in Annual General Shareholders’ Meeting.

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

When allocating the net profits for each fiscal year, the following order shall be followed:

(1) To cover losses
(2) To transfer 10% to the legal reserve account
(3) To transfer the others to the special reserve account or reverse special reserve account pursuant to the regulation
(4) To pay dividends on preferred shares
(5) To pay not less than 5% of the net income as employees’ bonuses. The Company’s employees should meet certain criteria to be entitled to the bonuses. The Board is authorized to determine the relevant criteria
(6) To distribute the remaining pursuant to the profit distribution proposal of the Board in accordance with the second dividend policy listed above, of which 0.1% shall be paid as remuneration to directors and supervisors and the remaining as dividends to shareholders.

The Company is growing stably in a fast-growing and capital-intensive emerging industry. The Board shall prepare a dividend distribution proposal that caters to the future long-term financial planning of the Company, the investment environment and industrial competition, by taking into account the future capital expenditure and capital requirements of the Company, subject to the approval of the shareholders’ meeting. Nevertheless, the amount of dividend distributed to the shareholders shall not exceed two-thirds of the total amount of dividend during the year.

B. Proposed Distribution of Dividend

The Board adopted a proposal in Apr 28, 2015 for profit distribution as follows: Cash Dividends to Common Shareholders from retained earnings: NT$ 0.7(Per share). The proposal is subject to shareholders’ approval at the 2015 Annual Shareholders’ Meeting.

4.1.7 Effect of 2014 Share Dividends to Operating Performance and EPS Not applicable.

No financial forecast disclosed for 2015, therefore not applicable.

4.1.8 Employee Bonus and Directors' and Supervisors' Remuneration

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

The annual budgeted net income of the Company shall be distributed in the following order:

(1) To cover losses
(2) To transfer 10% to the legal reserve account
(3) To transfer the others to the special reserve account or reverse special reserve account pursuant to the regulation
(4) To pay dividends on preferred shares
(5) To pay not less than 5% of the net income as employees’ bonuses. The Company’s employees should meet certain criteria to be entitled to the bonuses. The Board is authorized to determine the relevant criteria
(6) To distribute the remaining pursuant to the profit distribution proposal of the Board in accordance with the second dividend policy listed above, of which 0.1% shall be paid as remuneration to directors and supervisors and the remaining as dividends to shareholders.
B. Estimate Foundation of Employee Bonus and Directors’ and Supervisors’ Remuneration

The Company’s bonus to employees and remuneration to directors and supervisors shall be

estimated and entered in accordance with the requirements set forth under Letter (Year 2007)-Chi-Mi-Zi 052 of Certified Public Accountant Research & Development Foundation and shall be recognized as the operating costs or operating expenses as the actual attributes of the bonus to employees and remuneration to directors and supervisors may justify. The gap between the decision resolved in the shareholders’ meeting and the amount estimated in the financial statements shall be recognized as the expense of the current year.

C. Profit Distribution of 2015 Approved in Board of Directors Meeting for Employee Bonus and Directors’ and Supervisors’ Remuneration
(1) Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: (NT$)
- Employee Bonus – in Cash $1,436,186,891 Directors' and Supervisors' Remuneration $6,954,142
(2) Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings:

Not applicable as the Company did not allocate stock bonus to employees in that year.

(3) Recounted EPS after Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: (NT$ thousands)

Not applicable. Since 2008, employee profit share and remuneration to Directors and Supervisors required expensing.

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

Remuneration:
Distribution of 2014 Earnings (NT$)
Stock Dividends	$0
Cash Dividends	$0.15
Directors' and Supervisors' Remuneration	$90,587
Employee Bonus	$343,921,549

Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. (NT$ Thousand)

4.1.9 Buyback of Common Stock: None

4.2 Issuance of Corporate Bonds

4.2.1 Corporate Bonds: None.

4.2.2 Convertible Bonds: None.
4.2.3 Exchangeable Bonds: None.
4.2.4 Shelf Registration: None.

4.2.5 Bond with Warrants: None. 4.2.6 Private placement of Corporate Bonds: None.

4.3 Preferred Shares: None.

4.4 Issuance of Global Depositary Shares

4.4 Issuance of Global Depositary Shares	4.4 Issuance of Global Depositary Shares	4.4 Issuance of Global Depositary Shares
Issuing Date Item			01/23/2013
IssuingDate			01/23/2013
Issuance & Listing			LuxembourgStock Exchange
Total Amount(US$)			453,701,250
OfferingPrice Per GDS(US$)			4.481
Units Issued			101,250,000
UnderlyingSecurities			Common Shares
Common Shares Represented			1,012,500,000
Rights & Obligations of GDS Holders			Same as those of Common Share Holders
Trustee			Not Applicable
DepositaryBank			Citibank,N.A. – New York
Custodian Bank			Citibank,N.A. – Taipei Branch
ADSs Outstanding(units)			69,181
Apportionment of Expenses for Issuance & Maintenance			Borne by INX
Terms and Conditions in the Deposit Agreement & CustodyAgreement			See Deposit Agreement and Custody Agreement for Details
Closing Price Per GDS(US$)	2014	High	5.20
		Low	3.35
		Average	4.18
	Jan 1, 2015 - April 30,2015	High	5.68
		Low	4.78
		Average	5.06

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options

4.5.1 Issuance of Employee Stock Options
		Unit: NT$:per share 2010 Jun9,2010 May19,2011 50,000,000 0.50% 5 Years New Common Share 2nd Year: 30% 3rd Year: 60% 4th Year: 100% －－ 50,000,000 22.85 0.50% Dilution to Shareholders’ Equity is limited
Type of Stock Option	2009	2010
Regulatoryapproval date	Aug4,2009	Jun9,2010
Issue date	May13,2010	May19,2011
Units issued	20,000,000	50,000,000
Option shares to be issued as a percentage of outstandingshares	0.20%	0.50%
Duration	5 Years	5 Years
Conversion measures	New Common Share	New Common Share
Conditional conversion periods and percentages	2nd Year: 30% 3rd Year: 60% 4th Year: 100%	2nd Year: 30% 3rd Year: 60% 4th Year: 100%
Converted shares	－	－
Exercised amount	－	－
Number of sharesyet to be converted	20,000,000	50,000,000
Adjusted exercise price for those who have yet to exercise their rights	32.59	22.85
Unexercised shares as a percentage of total issued shares	0.20%	0.50%
Impact on possible dilution of shareholdings	Dilution to Shareholders’ Equity is limited	Dilution to Shareholders’ Equity is limited

Note: The aggregate total of issued and outstanding shares represents the aggregate total of issued and outstanding shares having been reported to and registered in the Ministry of Economic Affairs as of the Annual Report date.

4.5.2 List of Executives and the Top 10 Employees Receiving Employee Stock Options

				Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand	Apr 30,2015;Unit: Thousand
Title	Name	No. of Option Shares	Option Shares as a Percentage of Shares lssued	Exercised				Unexercised
				No. of Shares Converted	Strike Price (NT$)	Amount (NT$ thousand)	Converted Shares as a Percentage of Shares lssued	No. of Shares Converted	Strike Price (NT$)	Amount (NT$ thousand)	Converted Shares as a Percentage of Shares lssued
Chairman	Hsing-Chie n Tuan	5,485	0.06%	－	－	－	－	5,485	22.85 ~32.59	141,744	0.06%
President	Jyh-Chau Wang
Vice President	Wen-Jyh Sah
Vice President	Chin-Lung Ting
Vice President	Yao-Tong Chen
Vice President	Chih-Hung Hsiao
Associate Vice President	Chen-Hua Luo
Associate Vice President	Hung-Wen Yang
Associate Vice President	Ke-Yi Kao
Associate Vice President	Chih-Ming Chen
Associate Vice President	Chu-Hsian gYang
Associate Vice President	Tai-Chi Pan
Associate Vice President	Kuo-Hsiun gKuo
Associate Vice President	Chung-Kua ngWei
Associate Vice President	Jia-Pang Pang
Associate Vice President	Nai-Jian Zheng
Associate Vice President	Zheng-Xia Kuo
Associate Vice President	Tian-Ren Lin
Associate Vice President	Yu Shui Kuo
Managerial Officer	Chien-Lang Lo
Managerial Officer	Chin-Yuan Chang
Employees	Jian-Ting Lai	1,750	0.02%	－	－	－	－	1,750	22.85 ~32.59	46,319	0.02%
Employees	Qiu-Lian Yang
Employees	Zheng-Xu Zhou
Employees	Kun-Feng Huang
Employees	Zong-Ren Kuo
Employees	Hao-Kun Liu
Employees	Shu-Fu Hsu
Employees	Yang-Feng Lin
Employees	Fu-Shou Wu
Employees	Min-Zheng Wang

Note 1: Refers to the current management officers and employees up to the date of the Annual Report Note 2: The total number of issued shares represents the number of issued shares registered with the Ministry of Economic Affairs as of the date of the printing of the Annual Report.

4.6 Status of Employee Restricted Stock

4.6.1 Status of Employee Restricted Stock

30 April 2014

			30 April 2014
Class of new restricted shares	First time New restricted shares	Second time New restricted shares	Third time New restricted shares
Effective date of registration	Dec 13,2012
Issue date	Jan 30,2013	Mar 29,2013	Dec 12,2013
Number of new restricted shares issued	62,302,000（Note1）	1,688,000（Note 2）	8,536,000（Note 3）
Issueprice	0.00/5.00
Number of new restricted shares issued as a percentage of the total number of issued shares(Note 4)	0.63%	0.02%	0.09%
Vesting conditions for new restricted shares	Employees shall be in active service during each of the following vesting periods since the capital increase base date with the attainment of the annual individual performance appraisal result of Grade B or G or above over the years. Besides, they shall have fully complied with the service code and have not violated the Company’s service agreement and integrity and intellectual property agreement, work rules, stipulations in contracts with the Company or the regulations of the Company. The percentages of shares in which the vesting conditions are fulfilled are set out below. Upon expiration of one year: 20% of the number of shares subscribed Upon expiration of two years: 40% of the number of shares subscribed Upon expiration of threeyears: 40% of the number of shares subscribed
Restrictions of new restricted shares	(1) shall not be sold, pledged, transferred, given to others as gifts, attached or otherwise dealt with. (2) no voting rights at general meetings. (3) not entitled to participating in the placement (subscription) of shares, dividend distribution for the original shareholders. (4) From the book closure day for the placement of shares at nil consideration, the book closure day for cash dividends, the book closure day for share subscription in connection with a cash capital increase, the book closure period for general meetings as stipulated in Paragraph 3 under Section 165 of the Company Law, or other statutory book closure periods based on the occurrence of facts to the entitlement distribution date, shares without restrictions of employees who fulfill the vesting conditions in this duration are still not entitled to any voting rights, surplus distribution rights, share placement(subscription)rights,and/or dividend distribution rights.
Custodyof new restricted shares	Custodyof shares in trust
If the vesting conditions are not fulfilled after employees are placed with or subscribe for new shares	Being placed with new shares: Shares will be reacquired by the Company at nil consideration for cancellation. Subscribing for new shares: All shares will be repurchased by the Company at the closing price or the original subscription price, whichever is lower, on the expirydates of the respectiveperiods for cancellation.
Number of new restricted shares reacquired or repurchased	6,017,600	318,000	426,000
Number of shares without restrictions	33,828,800	817,200	1,616,800
Number of shares with restrictions	22,455,600	552,800	6,493,200
Number of shares with restrictions as a percentage of the total number of issued shares(%)	0.23%	0.01%	0.07%
Impact on interests of shareholders	The impact is limited as the dilution ratio is low	The impact is limited as the dilution ratio is low	The impact is limited as the dilution ratio is low

Note1: Allotment of 31,151,000 shares at nil consideration; subscription of 31,151,000 shares at a consideration. Note2: Allotment of 844,000 shares at nil consideration; subscription of 844,000 shares at a consideration. Note3: Allotment of 4,268,000 shares at nil consideration; subscription of 4,268,000 shares at a consideration. Note4: The total number of issued shares represents the number of issued shares registered with the Ministry of Economic Affairs as of the date of the printing of the Annual Report.

4.6.2 Employee Restricted Stock Granted to Management Team and to Top 10 Employees

30 April 2015: Unit: in dollars, in thousand units

Title	Name	Number of new restricted shares acquired	Number of new restricted shares acquired as a percentage of the total number of issued shares (Note 2)	Without restrictions	Without restrictions	Without restrictions	Without restrictions	With restrictions	With restrictions	With restrictions	With restrictions
				Number of shares without restrictions	Issue price	Issue amount (in thousand dollars) issued shares	umer o sares without restrictions as a percentage of the total number of	Nb f h Number of shares with restrictions	Issue price	Subscription amount (in thousand dollars) issued shares	umer o sares with restrictions as a percentage of the total number of
Chairman	Hsing-Chien Tuan	7,930	0.08%	4,686	0/5	11,715	0.05%	3,244	0/5	8,110	0.03%
President	Jyh-Chau Wang
Vice President	Wen-Jyh Sah
Vice President	Chin-Lung Ting
Vice President	Yao-Tong Chen
Vice President	Chih-Hung Hsiao
Associate Vice President	Chen-Hua Luo
Associate Vice President	Hung-Wen Yang
Associate Vice President	Ke-Yi Kao
Associate Vice President	Chih-Ming Chen
Associate Vice President	Chu-Hsiang Yang
Associate Vice President	Tai-Chi Pan
Associate Vice President	Kuo-Hsiung Kuo
Associate Vice President	Chung-Kuan gWei
Associate Vice President	Jia-Pang Pang
Associate Vice President	Nai-Jian Zheng
Associate Vice President	Zheng-Xia Kuo
Associate Vice President	Tian-Ren Lin
Associate Vice President	Yu Shui Kuo
Managerial Officer	Chien-Lang Lo
Managerial Officer	Chin-Yuan Chang
Employees	Mao-Sheng Hong	2,710	0.03%	1,506	0/5	3,765	0.02%	1,204	0/5	3,010	0.01%
Employees	Yong-Yu Cai
Employees	Chao-Jun Zhong
Employees	Zheng-Xu Zhou
Employees	Jun-Yi Yu
Employees	Dong-Rong Wang
Employees	GengRon Xu
Employees	Zan-Ren Chen
Employees	Min-Zheng Wang
Employees	Kun-Feng Huang

4.7 Status of New Share Issuance in Connection with Mergers and Acquisitions: None.
4.8 Financing Plans and Implementation: Not applicable.

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

1. Major business operation Scope of business

The combined operating revenue of the Company is derived from TFT-LCD Flat Panel Displays and its main commodities include large-sized and small-to-medium-sized TFT-LCD related products. Large-sized products are generally applied to Liquid Crystal Displays, Billboards, Desktop Monitors, and notebooks. Small-to-medium-sized products are used to manufacture tablet computers, portable audio players, GPS for automobiles, aviation, and mobile phones, while various types of touch-control panels could be selected. Besides, for the purpose of special usage, the Company also provides products used for medical, industrial, and educational purposes. Given that the business of the Company covers the entire world and the size mix of panels is complete, the Company is a comprehensive LCD provider.

2. Combined Weighing of Different Business Operations in the Year of 2013

Unit: NT$ thousand

Major Divisions	Total Sales in 2014	(%)of total sales
TFT-LCD	428,661,898	100%
Total	428,661,898	100%

3. Current commodities (services) items

The Company’s main products are TFT-LCD panels and touch-control modules. The products lines cover small, medium, and large sized panels mainly for a wide range of applications, such as LCD televisions, desktop monitors, notebook computers, mobile phones, portable audio players, automobile accessories, medical, industrial, aeronautic, and educational products.

4. Planned Development of New Commodities (Services)

The Company is planning to develop new commodities with its main focus on Flat display-related products, while continuing to delve into key products such as Mobile Phone Panels, medium-sized Display Panels, Electronic Book Panels, Notebook Computer Panels, Desktop Monitor Panels, and large-sized LCD Television Panels. Meanwhile, the Company will continue expanding the product scale and product application and development of capacitor-based touch-control panels. The Company will also keep investing into the field of non-consumption applications, and launch new products fit for industrial specification panels, medical, and public display panels.

5.1.2 Industry Overview

1. Current situation and development of industry

Owing to excellent product properties and improving costs and image quality, TFT-LCD has become the mainstream of various kinds of flat displays in recent years. The application coverage of TFT-LCD is extensive, of which, large-sized products are being applied to the manufacturing of LCD Televisions, Desktop Monitors and Notebook Computers while small-to-medium-sized products are being applied to Flat Panel Computers, portable audio players, and GPS for automobiles and mobile phones. Large-sized TFT-LCD products will move towards the goals of energy-saving, better images, and narrower frames, thereby offering an incentive to consumers to upgrade the existing product lines. As the applications of smart

phones become more and more popular and the touch-control technology is gradually mature, small-to-medium sized products will become the fastest growing category with the most diverse products in recent years.

The Company adopts the forward–backward integration manufacturing model in response to the development of TFT-LCD Industry, and comprehensively arranges the early phrase glass of every product generation and the later phrase of all-sized modules and integrates IDM product lines, including 3.5 generation, 4.5 generation, 5 generation, 5.5 generation, 6 generation, 7.5 generation and 8.5 generation TFT-LCD plants, 2.5 generation, 4.5 generation, and 5 generation touch-control sensor plants and production lines and later phrase module plants for IDM products such as later phrase product lines, Light Guide Plate/Backlight modules, PCB manufacture, assembly and pressing type paints. The production capacity and scale of every production line are comprehensive and flexible, matching a-Si, p-Si, LTPS, OLED processing and VA, AAS, TN Fringe field Switching and therefore all-sized products can be produced effectively.

2. Association of upstream, mid-stream, and downstream industries

The Company is an IDM product manufacturer which covers the upstream TFT-LCD Panel production and the downstream System Assembly, the association diagram of upstream, mid-stream and downstream industries which the Company belongs to are shown below:

==> picture [419 x 323] intentionally omitted <==

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

Glass Panel Reticle ITO Conduct
LCD
Polarized Driving IC PCB Backit Modules
Colour Filter
LCD Panel
LCM Modules
LCD Monitor LCD TVs NB Mobile, PDA Others
Consumers
Up stream
stream Middle
INX Electronics
Downstream
----- End of picture text -----

(1) Development trend of products

TFT-LCD has a low energy consumption rate, small size, low weight, and low radiation features. Japan, Korea, and Taiwan have actively invested in the production technology for many years, and the technology is getting mature. Now it is widely applied to flat panel displays; especially for notebooks and desktop displays, most of them using TFT-LCD. In the home appliance market, flat screen TVs are the mainstream. The future

developing trend of these products are listed below:

(i) Mobile Computers (Notebooks & Tablets)

Due to fair prices and computational efficiency increasing substantially, rapid growth in sales of mobile computers has already become the biggest sales scale under the personal computer category. As the market expands, manufacturers keep releasing differentiation product lines aiming to stimulate different user demands. The design direction focuses on mobility, word processing, and audio performance to meet the needs of every type of customer for market segmentation. LCD panels also have differences in size and resolution. The smallest size is the Tablet; the main market is customers who focus more on personalization and entertainment. Emphasizing small size, light and easily carried features, less emphasis on word typing, omitting a physical keyboard and changing to a more intuitive touch input. In the past, the main LCD screen was 7 to 10 inches. Now it has gradually increased in its size development trend, such as the new iPad which is expected to have a 12.9-inch screen and more focus on entertainment needs. Therefore everything is moving toward a panel with a wide viewing angle.

Since 2014 high end tablets not only have improved computational efficiency and completeness of software function, in the same time there has been more focus on the customer’s visual sensibility about high screen resolution. The demand of high end tablets has increased significantly due to FHD and more high resolution products continuing to be released.

For many computer users, a keyboard is still the main input device, and notebooks coming with a physical keyboard still have a considerable market. Facing the rise of tablets, personal computer manufacturers have also started to import new design concepts in notebooks, such as transformer books that can switch between two different modes of tablet and notebook at any time, are gradually becoming the mainstream design of 10-inch to 13-inch notebooks. Ultra-thin, wide viewing angle, high colour, and touch function are also becoming important factors. As for those customers with high document requirements and lower mobile requirements, the bigger screen goes with FHD resolution to provide better webpage browsing and visual entertainment experience. 13-inch to 16-inch products are mainstream applications. As for those who emphasize video and audio effects or use the product to replace desktop products, they go with bigger, low energy consumption, and wide color gamut panels to present better color expression.

About the size of the panels, due to the development of next generation production lines and wide screens generally supported by operating systems, 16:9 products are already becoming the mainstream of the market. In addition, to fit the trend of thin and light, panels using thinner glass and thinner organization design are essential factors for products.

(ii) LCD Monitor

LCD monitors mainly go with desktops; two mainstream markets are office use and personal video and audio entertainment use. For office use LCD monitors, generally sales are for computers hosted by brand manufacturers and product structure is relatively simple and of moderate cost to fit the budget of enterprise and government organizations. For personal video and audio entertainment product, due to more focus

on video and audio purposes, recently the proportion of the product equipped with wide viewing angle technology has gradually increased. We expecting the proportion is going to increase continually in 2015. Meanwhile due to customers increasing demand for high quality products, we are expecting 4K2K high resolution products to be released on the market, having a wide viewing angle and narrow frames will become the mainstream of the high end market gradually.

In addition, there is increasing customer demands for touch operation. When the software platforms of new versions of Windows gradually spread and become mature, we anticipate the product proportion of our touch function is going to gradually increase.

About size, due to an increase in the manufacturing efficiency and efficiency of product design structure, the price of TFT-LCD products is dropping and accelerating market demand for a transfer to the bigger size. For office use types, a gradual transfer from 18.5-inch and 19-inch to 20-inch and 21.5-inch; the average size is bigger for personal video and audio entertainment products, 23.6-inch and 27-inch units will gradually increase their proportion soon.

Except for standard LCD monitors, the market will release All-In-One (AIO) which is an integrated design of the desktop host and monitor. Because of advantages in functionality saving space , the product is winning customers. As the Windows 8 operating system penetration rate increases, it accompanies the All-in-One product with touch function adding greater entertainment function. It also shows a new appearance for the market of LCD monitors.

(iii) LCD TV

Since 2005, Taiwan, Japan and Korea, started to mass produce generation six (G6). The production of TFT-LCD panels above 32-inches increased significantly and LCD TVs have taken up living rooms rapidly. In recent years, LCD TVs fast popularization due to each manufacturer developing G7 and G8 capacity, goes with the improvement of each phase of production technology. It not only has become customers’ first choice when buying a new TV, but also has stimulated the traditional TV refresh cycle.

Meanwhile, when a product becomes popular, mass production of large scale and technical improvements provide effective cost reduction of bigger size panels. Each manufacturer introduces large sizes such as 40-inches to 65-inches successively and they are accepted by a great number of customers, even for 75-inch and 85-inch super size products, the market is warming up. Innolux is the pioneer of providing differentiated large size models (especially 50-inch and 58-inch), dedicated to effectively improving the technology of each product to significantly increase the panel’s added value, gain customers’ brand recognition, and market segmentation, and increase the market share of large sizes.

In 2011, with 3D film and 3D TV channel development, the company released a highly competitive panel with a 3D display function as the pioneer of the panel industry to accelerate 3D applications into the family. Meanwhile, mobile display devices gradually move toward high resolution to satisfy customers' demand for high definition TV. We released 4K2K ultra high resolution products in succession since the second half of 2012 and became the pioneer manufacturer of the first of mass production and the highest market share. The company keeps developing 4K2K, Low

Power-consumption & Wide Color Gamut, and over 130% sRGB color range, including 85-inch, 75-inch, 65-inch, 58-inch and 50-inch panels. The 65-inch wide color Gamut (over 130% sRGB color range) and 4K2K LCD TV panel were granted the 2014 Taiwan Flat Panel product technical award. The Innolux 4K2K large size series panel solves dynamic image roughness and increases vividness. The quality of the TV is delicate and the color has higher fidelity, smoother dynamic image, and is mentally in the scene. Moreover, with the standard of 4K high resolution transport protocol agreement completed in the end of 2013, we are expecting the 4K2K product trend will extend into 2015 and future development. Each manufacturer will release 4K2K photographic equipment and go with 4K2K film releases and programs . 4K2K will become the necessary specifications of large TVs.

On the design of panel appearance, the company provides ultra-narrow frames (6mm and 7.5mm) and 50-inch ultra-thin design (thickness <10mm), integrate paint design on appearance to make client rapid input and mass production. End customers not only enjoy the real 4K image, also provide the real high quality of excellent vision and sensual experience. Innolux provide client and customer comprehensive and high competitive TV panel by innovation continually, and continue to lead the market trend and become lead firm of the industry.

(iv) Medium and small size panel

Before 2008, no matter technology or shipment, panel manufacturer of Japan always the leader of medium and small size panel industry; after 2009, Taiwan manufacturer shipment started to exceed Japan and Korea, became the leader of medium and small size panel industry instead. As the competition is more and more intense, panel manufacturer of medium and small size started to produce by higher generation factory. From 2011, even some panel manufacturer started to mass produce mobile phone panel by G6 factory. However, industry competition of medium and small panel not only at price competition, but also at market demands of higher resolution and higher definition panel. It drives medium and small panel manufacturer to be more enhancement in technical part. Since 2013, not only wide viewing angle technology is sharp competitive edge for manufacturers, each manufacturer release high resolution product continually. By a-si realize high cost-effective in over 5-inch screen of FHD resolution and by LTPS provide WQHD resolution in over 5.5-inch screen. In view of the 202015, keep improving resolution in 4-inch to 6-inch screen and compete in lighter, thinner, narrow frames and lower energy consumption products. Manufacturers have R&D input in abnormality cutting wearable device and flexible panel for next generation technology, hoping besides the price competition can developing some more niche products to widen difference with competitors by technology and keeping sustainable operation in the industry.

(2) Market competition situation

In competition of the industry, in order of countries input in TFT-LCD, countries are South Korea, Taiwan, China and Japan. Korea has large-scale investment in two big corporate groups Samsung and LG. Due to domestic support on their own brand, they lead in production volume and production value recent years. Taiwan’s manufacturers based on complete supply chain integration and high production efficiency, the market share is hot pursuit subsequently after Korea manufacturer. The main manufacturers are Innolux and AU Optronics, etc. Japan manufacturers’ market share decrease gradually due to production cost and decreased in new factory investment plan, transfer to high end mobile display and ultra-big TV market. When we look at China, due to huge domestic demand, it

attracts government’s support and factory’s input. Recently BOE and ChinaStar step into generation eight production, but due to the production line’s limitation, they cannot provide whole size product.

5.1.3 Research and Development

Technical Level and Research Development

We keep helping clients to intensify product competitiveness, fit market demand, and be friendly to the environment as our main objective of display technique development. About the development, it mainly includes environment protection materials, electronic saving and low power consumption, high pixel, high chroma, thin, narrow frame, high dynamic displays, touch, wide viewing angle, and all-around system services integration. We already have obtained remarkable achievements. These results of technical development are applying to TV, desktop monitor, Notebook, Tablet, Cell Phone, Medical, Industrial Display. Moreover, the integrated development on the touch components and panels of more advanced techniques and portable and wearable product applications are the key points of our future product design and development.

Facts of research & development:

With incessant efforts, the Company has insistently invested significant human resources, resources and funds in research & development to continually upgrade the quality of products, technology & know-how of new manufacturing process and application for new products. The Company would like to depict performance in research & development through three aspects below:

(1) In the aspect of upgrade of product quality: Including the technology & know-how for broad visual angle, high solution, low energy consumption, thin thickness, high hue, dyamic image, high dynamic range, narrow frames, new touch panel and the like.
(2) New material technical process:
Including IGZO, In-Cell Touch Technique, Copper Manufacture Procedure, COA(Color Filter on Array), Photo-Alignment, Horizontal Electronic Field High Transparency and High Contract Positive Magnetic Susceptibility, Reducing Mask and Automotive wide temperature range display material technique.
(3) In the aspect of new product application:
The up-to-date technology & know-how developed by the Company have been put into volume production one after another and applied onto a good number of products, including notably general cell phones, cameras, MPD, electronic paper, tablets, notebooks, desk monitors, AIO, television, medical treatment services, vehicular carriage, aerospace and touch panel and the like, in the dimensions ranging from 1.36” to 85” TFT-LCD products. In the days and years ahead, we shall continually invest in the research & development oriented human resources and fund to develop more and more TFT-LCD display and monitor products of added dimensions, application ranges, thinner, more environmental protection friendly and high efficiency to live up to the future trends in application and satisfy customers in varied ranges.

The consolidated research & development costs invested in the latest year as of the Annual Report date.

ort date.	ort date.	ort date.
Unit: NT$thousand
Item	2014	As of 3/31/2015
R & D expense	12,177,083	3,970,262
Net Revenue	428,661,898	100,157,867
Percentage of revenue(%)	2.80%	4.00%

Successful development technical or product
The company’s develop technical and products for each direction are listed below.
(1) TV:
- A. The first company of the world develop 40-inch/50-inch/58-inch the best cutting efficiency size in G5.5/G6/G7.5 generation factory, we creating market differentiation and improve add-value of product.
- B. Introduce 4Kx2K ultra high definition and high resolution TV display, the product line is complete, product size from 40-inch to 85-inch, providing higher quality TV image and better product competitiveness, lead 4K TV industry going to fast development and trend.
- C. Introduce new size 40-inch/75-inch/85-inch TV display, overall arrangement in big size application, creating more differentiation product than competitors.
- D. Develop high chroma technique, increasing to over 130% sRGB colour range and without increase energy consumption, not only increase the performance of display, but also make customers feeling more about the value-added of big size TV product.
- E. Develop new MEMC improvement technique, apparent improving dynamic quality and integrate IC, increase dynamic picture quality and integrated technique.
- F. Develop and mass produce a series of over 50-inch thin TV model (<10mm), providing artistic and fashion appearance model to clients.
- G. Develop 0.5mm thin glass and apply to TV display, reduce glass usage and cost. Whole series big size TV import and mass production successfully.
- H. Whole series big size TV import and mass production successfully.
- I. Develop Inno Module model, combine narrow frames and front and back appearance, provide clients high competitive module and reduce assembled time and cost.
- J. Cooperate with brand to develop big size (65-inch and 75-inch) Curve model, mass production successfully and assist client to introduce the product to the market for customers.

(2) Monitors:

A. Release whole series wide viewing angle VA desktop monitor panel and with high brightness, high contrast, high saturation, not only increase product quality and value, but also provide client the best choice of high end monitor LCD panel.
B. Develop several model of globally new Inno-touch monitor and AIO personal computer, by integrate touch as multi-function use can reduce module thickness to become light, increase touch functional can close to end customers’ need.
C. Release 28-inch and 32-inch 4K2K monitor panel, panel monitor can have higher resolution visual enjoyment, not only increase product value, but also provide client the best choice of high end monitor LCD panel.
D. Develop monitor panel of frameless and wide viewing angle and integrate InnoTouch, not only provide thinner and better appearance design to clients, but also have touch function and provide full service.

(3) Notebook:
A. Release whole series light-weight notebook panel, the thickness of whole series of notebook (11.6-inch/12.5-inch/13.3-inch/14-inch/15.6-inch) is only 2.6mm, show light feature and solve the heavy problem of notebook.
B. Interface technical of Notebook panel is totally from LVDS to eDP. It can connect to high resolution trend, also can save space to help thinner design of the system and lower the energy consumption.
C. Release whole series FHD AAS wide viewing angle notebook panel and goes with Low Power-consumption & Wide Color Gamut to increase color range but not increase energy consumption to increase visual performance.
D. Develop TOD technical on notebook panel, through touch integration, notebook not only can be thinner but also can reduce produce process of the module and simplify the complexity of new product.
(4) Small/Medium:
A. Develop oxide TFT technical, using the technique goes with wide viewing angle technique, reduce power consumption and increase optical performance, further can improve optical specification and realize high quality panel product.
B. Develop high resolution panel and smart phone panel, resolution can reach above 500ppi, at the same time have high quality, low energy consumption features to delicate the image but not cost too much energy. The product successfully equipped with better viewing quality and lasting for long time to use in portable product.
C. Develop display with Low Power-consumption & Wide Color Gamut, increasing color gamut but not increase energy consumption in smart phone panel and tablet, can reach 130% sRGB color gamut and increase competitiveness of the product.
D. Develop LTPS AAS panel of frames narrow than 0.6mm and high resolution, reduce the size of the panel module to fit the narrow frames demand from smart phone and tablet user, increase the design freedom of portable device display appearance.
(5) Touch Panel:

The company already develops several touch technique solutions (including InnoTouch, TOD, TID, Hybrid, Total Solution):

A.New type Inno-touch technique is integrated touch panel and induction glass technology. The advantage is able to simplified production process and provides economic touch panel option. The technology can goes with multiple size panels; meets the new development trend of affordable electronic product toward to touch function.
B. Touch On Display (TOD): Through TOD technique can make portable device have light performance effectively, also with well optical performance and increase portable electronics competitiveness. Not only medium and small size smart phone and tablet apply and mass production, but also apply to bigger size notebook products.
C. Touch In Display (TID) & Hybrid : Not only have TOD technical advantage, the company develop TID Hybrid technical to make it even more lighter, and high touch sensibility technique apply to portable product can improve the users’ experience about portable electronic product.
D. Provide more completeness Touch Total Solution: Through highly vertical integration of streamlined production, we may provide client complete and all-round touch integration service. Not only shorten the process and time of production and delivery, but also help client to enter the market, make better arrangement and configuration at capacity and resource of panel and touch. Equip with integrated InnoTouch, TOD, TID Hybrid product and process technical to serve customers.

(6) Special Application

Release 21.3-inch to 30-inch (AAS; 5/6/10/14 MegaPixel) medical LCD display, with high resolution, high brightness, high contrast, adopt 10 bits drive new technology and high efficiency LED BL, to make the image more delicate and medical personnel can make more precise judgment. Big size public display 75-inch/ 85-inch present natural high color gamut and give consideration to both indoor and outdoor environment. Also first release horizon LCD display (32:9) presents multiple sizes can fit for multiple environments.

5.1.4 Long- and Short-Term Business Development Plans

In the short-run, we shall devote ourselves profoundly toward televisions, notebooks, tablet computers, cell phones, monitors oriented to vehicles, medical treatment services and industries. Continually we shall help customers pep up competitive edge through our pround monitor technology & know-how, live up to the market and environment-friendly demands. About the development, it mainly includes environment protection materials, electronic saving and low power consumption, high pixel, high chroma, thin, narrow frame, high dynamic displays, touch, wide viewing angle, and all-around system services integration. We already have obtained remarkable achievements. Meanwhile, we shall spare no effort to profoundly team up with customers in strategic alliance to solidify our firm foundation in the panel supply chains and create the happy win-win aspects through the teamwork.

Long-term development: Other than the efforts to do research & development for up-to-date monitors, strengthen manufacturing process to optimize the productivity. For the emerging of new model monitor know-how, we shall invest appropriate resources, cultivate autonomous development capability, like the embedded touch know-how, super narrow frames, super thin design, super high solution, curved plate design and niche oriented application products and the like. Through such efforts, we hope to set up the optimal strategic deployment in the brand new monitor application regions. Meanwhile, we shall further stress value chian integration and development of products high added values, to make our products more competitive in both pricing and specifications to provide customers with added solutions and services and to provide terminal end consumers with added excitements in visual enjoyment.

5.2 Market and Sales Overview

5.2.1 Market Analysis

1. Main products selling area

	Unit；NT$thousand；%	Unit；NT$thousand；%	Unit；NT$thousand；%
	Area	Amount ofSales	%
	Domestic sales	91,333,989	21.31%
Foreign sales	Americas	11,727,851	2.74%
	Europe	31,048,822	7.24%
	Asia	248,515,267	57.97%
	Other Area	46,035,969	10.74%
	Total amount of F/S	337,327,909	78.69%
	Total	428,661,898	100.00%

2. Market Share

According to the statistic of HIS/DisplaySearch research report, until Q3 2014, the market of the company’s big size panel shipment is 19.5%, which is the second-largest supplier of the world LCD panel industry. Based on application product, global market share of LCD display panel is 23.1%, maintains world’s second ranking performance; global market share of LCD TV panel is 19.8%, world’s third ranking performance, but the market share grows 3.5% compared to 2013; global market share of notebook (including tablet) is 18.4% which is the world’s third ranking, the rank improved compared to 2013. Overall, under the tough economic environment and strong market competition, the company still maintains nice performance in the market of big size product application. The market share of medium and small panel is 10% until Q3 2014, which is the second largest shipment of medium and small size panel manufacturer.

3. The supply and demand situation and growth of the future market

Due to the outstanding product feature and the continuous improvement of cost and quality, TFT-LCD already become the mainstream of flat display and the sales will keep growth as the improvement of application level and penetration. According to the estimation of IHS/DisplaySearch, the global shipment of big size (over 9-inch) TFT-LCD panel will be 534 million chips.

If analyzing market size of several main application level, about LCD TV part, as new size development and new technical input and plus new capacity growth stable, expecting global shipment of LCD TV will be 238 million in 2015 and even will be 242 million shipment in 2016. About LCD monitor, the shipment forecast is 148 million and will slightly decline to 145 million, but as the demand increased of big size and high resolution product, the penetration rate of high value product will increase gradually. About mobile PC (including notebook and tablet), due to tablet trend, shipment grow fast in 2013, notebook have slightly growth in 2014, but growth momentum of tablet slowing down, the shipment slightly declined in 2014. However, overall forecast of mobile PC market will growth again in 2015, will be reach to 438 million, even reach to 455 million in 2016.

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Unit: million
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LCD TV
LCD
Laptop (including
tablet)
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Data Source: DisplaySearch

According to the estimation from IHS/DisplaySearch, global shipment of medium and small size panel will be 220 million in 2014, increased 13.8 % compared with 2013. The shipment will be 238 million in 2015 and annual growth rate is 8.4%. Cell phone shipment grows from 165 million in 2011 to 182 million in 2014; it will grow to 197 million in 2015 and annual growth rate will reach 8.5 %, according to the forecast. As middle-end smart phone rapid growth in emerging countries market, it will keep driving the demand of cell phone’s panel; the overall cell phone panel shipment is going to grow continually until 2020 and will be the main growth power of middle and small size panel.

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

1,600 8%
1,400 6.3% 6.8% 1,391 7%
1,187
1,200 6%
945 1,199 5.1% 5%
1,000 Smartphone
782 4%
800 697 964 666 Functionphone
570 3%
600 464 1.9% Mobile Phone YoY
2%
400 1%
200 -0.5% 0%
0 -1%
2011 2012 2013(E) 2014(F) 2015(F)
----- End of picture text -----

Data Source: DisplaySearch

Amidst the unpredictable macroeconomy, competition amidst the industries, expansion and competition by newly joining competitors amidst products and technology & know-how that have been developed and changed in each and every passing day, the TFT-LCD products would be subject to high level circulation uncertainty. In the face of the mounting cutthroat competition, we shall launch overall upgrade of all substances to deal with all sorts of challenges.

We shall boost marketing by means of improved operating efficiency, refined management, product development, customer services, technical research & development and such efforts. In turn, we will be able to intensify gross profit in sales, cost control to further intensify competitive edge.
Continued investment in research & development to suffice technical talents, improve product design and application of materials. We shall proceed with research & development of advanced and improved manufacturing process and new generation monitor technology & know-how so as to create added lead in know-how of products and production costs.
With wholehearted efforts, we shall deploy integrated product lines for new products. The products manufactured by our Company cover televisions, computers, mobile devices, vehicles- and medical treatment oriented products. We provide varied modes to sell panels, whole machines, touch integration and the like. Through such efforts, we virtually bring

down the potential risks of fluctuation with single products.

We intensify integration of supply chains to stay in close teamwork with suppliers to deepen deployment of strategic customers, strengthen responsiveness toward supply and demand fluctuation and, meanwhile, boost approval-level from customers.
Niches in competition.
(1) Business model:

Since we launched the three-in-one merger, we have continually demonstrated the integrated concerted performance (synergy). Through the business policies with “leadership with know-how and quality, boosting of production efficiency and quality”, we have enhanced the operating efficiency by leaps and bounds and gradually open the new aspects amidst the cutthroat competition.

(2) Vertical and horizontal integration:

In an attempt to strengthen integration of our products, boost cost competitiveness, demonstrate maximum possible benefit in supply chain management, other than production of TFT-LCD panel modules, we dominate a significant ratio of design and manufacture of parts & components, including LED panels, color filter, light guide plate, Backlight Module, PCBA and such structure pieces which could be manufactured inside our home factory or overseas subsidiaries. Thanks to such high leve vertical integration, we have taken advantage in lowering costs, prompt response to assure top level quality.

(3) Portfolios of our products:

The principal products of the Company include notably the TFT-LCD panel modules primarily including: Large size like LED TV, desktop monitor and laptop plate; mid-small size like mobile phone, tablet PC, automotive display. Various products with advanced wide viewing angle and high resolution manufacturing techology. We satisfied every level of your needs.

(4) Our advantages in costs:
Through the hands-on experiences accumulated by TFT-LCD manufacturers at home and abroad, we could conserve quite a few time which is normally indispensable to try & err. In procurement of machinery & equipment, the hands-on experiences accumulated by the suppliers in installation could help us conserve partially the costs. Further coupled with the aforementioned advantages in the unique operation mode and vertical integration, we well outperform horizontal trades in terms of costs required for production.
(5) Concerted performance (synergy) in marketing: We are dominant of sound marketing channels to get connected with world class customers. Toward those world-class giant customers, we are capable of rendering prompt design, integrated products with global services through which our customers enjoy the excitements of one-stop shopping.

In looking back over 2014, our production lines for all sorts of panels, large, medium and small sized ones, were complete and comprehensive and were in an excellent position to enable customers to enjoy the excitements of one-stop shopping. In extensive aspects notably the productivity scale, product design capability, quality rate, supply, managerial plans as well as financial stability, we have accomplished further upgrade.

Besides, the Company has continually without interruption teamed up with customers in the product designs and supply chain management profoundly to continually boost

customer approval-level and, in turn, expanded our shares in the panel markets. In 2014, we saw continued shipment growth, apparently that our efforts in performance have yielded fruit step-by-step. We anticipate that in the days and years ahead, we are in a position to further optimize product, upgrade quality and assure further upgraded approval-level from customers.

Customization Capability:

We can provide customized products through good vertical integration and cost advantage.

Advantage and disadvantage of long term development and reaction strategy
(1) Advantage:
- A. Keep developing new product applications
  - With rapid development of wireless communication and cloud technologies, TV, PC, pad and cellphone are gradually integrated their contents. The development of “one cloud with multiple screens” is the major strategy of all companies. Because the service of cloud information is surrounding people’s life, the flat-panel monitor, as the intermediary of information, has become more important. The more delicate the information content is, the demand of size, resolution, visual angel, and light specification design of consumers rise. It also raises the unit price of TFT-LCD products, and brings new applications and demand increases. The main stream products of all major TV industry brands is ”smart TV”, which is also the sign of the rapid involvement of cloud applications in TV area. 4K 2K ultra HD TV, which were put into market in the second half of 2012 and provided higher level of joy for watching TV, has grown very fast and is expected to become the major spec of middle or high end product from 2015.

Regarding to the LCD monitors, because the market is more matured, the major product requirement is energy saving and HD quality to encourage the customers to upgrade the current product lines. Regarding to notebooks, the new market drives come from the new operating system and calculating platform. The company had started to provide pads products and had good development since pads had grown very fast from 2011. This is good for the production of middle size panels. Regarding to the medium and small size panels, the common use of smart phones and gradually matured touch panel technologies allows smart phones to become general consumer products. The delivery of production is growing rapidly while 2014 might deliver more than 1.2 billion and 2015 1.38 to be expected. Because the panel size of smart phone increases from the size of functional phones, panel’s unit price rises while the requirements of wide visual angle, high resolution, and color presentation upgrades. Thus, cellphone panels’ revenue rises rapidly, too.

B. Stable customer base

Our major customers are global consumer electronics companies, which have important stands in TV, PC and mobile communication industry globally. Moreover, because the trends on integration of consumer electronics and personal computers are obvious, the market will still be dominated by the international big companies, and develops with the direction of “the big ones get bigger”. Therefore, in the company’s perspective, we not only can grow our revenue rapidly, the market share of us is also expected to keep increasing with our major customer basis.

Under the synthesized effects of the three factors: rise of production line completion,

stronger customer base, keep developing new customers in newly developed market on the current customer basis, the company’s revenue is expected to grow stably and rapidly, and the global market share will grows gradually as well.

C. Globalized strategy
Innolux has been recognized as the best LCD panel supplier in all aspects, and had been setting up global strategy aggressively. Now we have production base of ，
post-production LCD panel module and monitor in Shenzhen Ningbo, Foshan, Nanjing in China, and we also have delivery hubs in major cities in Asia, Europe, and America, so that we can achieve “deliver just in time” object and strengthen the long term cooperative relationship with customers.
D. Vertical integration in depth

Innolux has been working in TFT-LCD industry for a long time, and we have the professional knowledge and managing capability in LCD panel, module, mechanism, and optical components’ R&D, production, and selling. We are more cost-effective and have better capability to service the customers timely than unitary TFT-LCD factory.

(2) Disadvantage and Reaction Strategy
A. The balance of supply and demand is hard to keep due to the intense competition in this industry.
- LCD panel industry’s economy cycle is more obvious than other industry and the balance of supply and demand is more difficult to maintain because the high capital intensity and long establishment time. Other competitors in Taiwan, Japan and Korea are planning to build up next generation panel factories and the rising production capability in China since 2012 also brought competition to the industry. Innolux has 3.5th generation, 4th generation, 4.5th generation, 5th generation, 6th generation, 7.5th generation and 8.5th generation production lines, which can produce all sizes of LCD panels and touch panels. The production capability is the 3rd largest panel manufacturer. We try to produce the best combination of products and adjust the production allocation according to market supply-demand condition, so that we can optimize the use our production capacity.
B. The complicated technology and patent portfolio
- The design and production of TFT-LCD requires highly professional technology. All companies that in this industry are aggressively making their portfolio in technology and patent applications. To avoid the violation of patent rights in the production process, Innolux has been developing our own patents and technology since the beginning of this company. We recruited domestic and international talents to join the research team, and evaluate the feasibility of getting the usage rights of some key technology from foreign companies at the same time. Regarding to intellectual poverty, we not only aggressively conduct R&D and the patent applications, we also keep strong legal support team to protect our intellectual poverty.
C. The global economy influences demand and supply
- The global economy has become less stable due to the sub-prime mortgage crisis and the European debt crisis. Although it is recovering gradually, it’s hard to say that the global economy had recovered to the positive growth completely. The demand can be influenced dramatically once regional or global economy fluctuate, and moreover, influence the demands of LCD monitor products. We provide products that are

competitive for its cost and specifications by constantly optimizing our products and technology. We also help our supply chain partners to develop business to diminish the operation disadvantages of fluctuation of external demands.

5.2.2 The Production Procedures of Main Products

Important function of main products
(1) TFT-LCD
- TFT-LCD products are display application for digital information delivery, its wide application including information display equipment for business and industry, computer, telecom related and consumer electronics display equipment, etc. As the development of integrated digital age 3C market, the main area of TFT-LCD product are:
- Information Technology, IT: such as Desktop monitor and Notebooks, etc.
- LCD TV
- Communications and Consumer Electronics: Mobile phone, digital camera, digital video, digital photo frame, automotive display, portable DVD player, portable game console, tablet and other high mobility and portable electronic products application.
- Special application: medical display, Avionics display, automotive display and other touch panel application.
(2) Touch Panel business
- Small size (below 7 inch) products mainly apply to smart phone, multimedia player, GPS and digital camera, etc.
- Medium size (7 inch to 19 inch) products mainly apply to tablet, eBook, Ultrabook, notebook, etc.
- Large size (above 20 inch) products mainly apply to All-in-one computer (AIO), Public Information Display, etc.
Production process of main products
(1) Three Steps in the TFT-LCD Production Process:
- In the Array or TFT Process mentioned in the preceding paragraph, injection and → →
- washing for glass baseplates gate metallic layer sputtered coating gatemetallic layer lithography→Semiconductor layer continued filming→Semiconductor → →
- lithography source/drain film-forming source/ drain medal sputtered → →
- coating source/drain lithography Protection film manufacturing process→Protection film lithography→Transparent conducting layer sputtered coating transparent conducting layer lithography→thin film transistor electrical analysis→thin film transistor completion.
- Cell or LCD Process: The Cell process fits the Array substrate to a color-filter substrate; liquid crystal is then inserted between the two substrate layers.
- Module Assembly or LCM Process: taking the panel from the Cell process and bonding the assembling backlights, IC and frame and other components to make the Open cell, module and system and other types based on clients’ demand.
(2) Touch Panel business
- Sensor Process: Use Semiconductor Litho process to put sensor on the glass.
- Lamination & FPC Bonding Process:
- Touch panel modules and LCD/LCM assembling process (TP & LCD/LCM Direct Bonding & Advanced Direct Bonding): A.TP & LCM: taking LCM as the baseplates to be attached to the touch panel modules for overall combination. B.TP & LCD: 以 LCD(Open-Cell) as the baseplates to be attached to the touch panel modules for overall combination before being assembled with Back Light modules(BLM).

5.2.3 Supply Status of Main Materials

Major Raw Materials	Source of Supply	Supply Situation
Driver IC	Supplier U	Good
Glass	Supplier P,SupplierQ,Supplier S	Good
Polarizer	Supplier R,Supplier T,Supplier V	Good

5.2.4 Major Suppliers and Clients

A. Major Clients Information for the Last Two Calendar Years

Unit：NT Thousand$

Item	2013	2013	2013	2013	2014	2014	2014	2014
	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
1	Customer A	－	－	－	－	－	－	－
2	Others	422,730,500	100.00		Others	428,661,898	100.00
	Net Total Supplies	422,730,500	100.00		Net Total Supplies	428,661,898	100.00

B. Major Suppliers Information for the Last Two Calendar Years

Unit：NT Thousand$

Item	2013	2013	2013	2013	2014	2014	2014	2014
	Company Name	Amount	Percent	Relation with Issuer	Company Name	Amount	Percent	Relation with Issuer
1	Others	279,778,851	100.00	-	Others	248,184,050	100.00	-
	Net Sales	279,778,851	100.00		Net Sales	248,184,050	100.00

5.2.5 Production over the Last Two Years

Unit: NT Thousand$

Year Output Major Products (or bydepartments)		2013			2014
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
TFT-LCD	602,919	552,668	390,036,096	605,200	574,940	371,700,000
Total	602,919	552,668	390,036,096	605,200	574,940	371,700,000

5.2.6 Shipments and Sales over the Last Two Years

Unit：NT Thousand$

Year Shipments & Sales Major Products (or bydepartments)	2013	2013	2013	2013	2014	2014	2014	2014
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
TFT-LCD	56,087	91,333,989	405,536	337,327,909	54,028	71,710,073	510,097	351,019,347
Others	-	-	-	-	-	216	-	864
Total	56,087	91,333,989	405,536	337,327,909	54,028	71,710,289	510,097	351,020,211

5.3 Human Resources

	Year	2013	2014	As of 4/30/2015
Number of Employees	Manager	2,951	2,974	2,965
	IDL	16,195	17,306	17,374
	DL	74,694	79,952	69,488
	Total	93,840	91,232	89,827
Average Age		26.53	27.50	27.78
Average Years of Service		2.53	2.79	2.84
Education	Ph. D.	0.09%	0.11%	0.10%
	Masters	5.62%	6.28%	6.10%
	Bachelor’s Degree	68.18%	73.14%	69.69%
	Senior High School	18.15%	15.99%	16.84%
	Below Senior High School	7.96%	4.48%	7.27%
	Total	100%	100%	100%

5.4 Environmental expenditures Information

Innolux has disclosed the reactions and the total lost (including compensations) and the possible expenses (including the costs of reactions haven’t been taken, estimated amounts of punishments and compensations. We also explain the reason if there is any cost we couldn’t estimate.) Of environmental pollutions.

Jan 9, 2014, Taiwan T3 factory of Innolux Japan had been reported for a violation of environmental protection incidents and the compensations was NTD 60,000. This reported incident happened because the inventory we reported on the online reporting system didn’t match the factory actual inventory.
Corrective action: Innolux has completed the improvement of out online digital system, which will implement systematic error preventing and correcting functions by audition remarks.
Dec 12, 2014, the Taiwan c3 factory of Innolux Japan had an environmental pollution incident. This incident happened because we reported as “0” ton inventory of D-1504, C-0202, and C-0110 on the system, which didn’t match the actual disposal inventory, and violated the Waste Disposal Act’s rule.

Corrective actions:

(1) Create the checklist of materials of waste disposal plan and the waste.
(2) Conduct inspection and estimation operation for all waste (including liquid waste) in factories in the end of every month, so that we will be able to report the temporary inventory in the end of every month.
(3) Confirm the balance and contents of material use and the reported waste every month.
(4) Control the time limitation of disposal reporting of polluted business regularly. (need to apply for expansion of temporary inventory if the disposal hasn’t been removed within a year)
(5) We plan to complete the consensus and corrective actions in all factories before Jan 31, 2015 (able to track back to Jan 2014 system reporting) to avoid the compensations from happening again with the same reason in other factory.
5 Dec 2013, Innolux in Nang Jing had a fire in the dormitory. According to the investigation, the reason of this fire was due to the left tinder ignites the surrounding combustibles. The range of the fire covered 5 square meters and burned one closet. The Nanjing City Jiangning District Gong An Xiao Fang Da Dui had issued ticket and 10,000rmb compensations in 2014/1/15 due to the violation of the rule of “Nana Jing City Xiao Fang Act”.
Corrective Action: Conduct safety inspection at the public areas like dormitory and restaurant, remove, and improve the hidden dangers.

5.5 Labor Relations

5.5.1 List any employee benefit plans, continuing education, training, retirement systems, and - the status of their implementation, and the status of labor management agreements and measures for preserving employees' rights and interests.

Employee welfare and the situation of implementation
(1) Besides the basic monthly salary, we also provide Luna Festival, dragon boat festival and New Year bonus, and proper performance bonus according to the company operation revenue.
(2) Our Employees have the labor insurance, citizen health insurance, and group insurance from the very first day of employment.
(3) We integrate and continuously improve the system, process and plan of talents

development, and we earned the golden prize of TTQS’ evaluation in 2011.

(4) We promote the quality training and activities to maintain our competitiveness with high quality, and we had earned several related awards too.
(5) Strengthening the concepts of sustainable management: we hire mentally or physically ill employees insist in environmental protection, and being responsible to social welfare.
(6) We provide internal and external trainings, such as professional studies, headquarter training, oversea training to develop employees’ professional knowledge and skills.
(7) We provide internal and external trainings, such as professional studies, headquarter training, oversea training to develop employees’ professional knowledge and skills. (8) With the concepts of energy, comfortable life, and happiness, we build the employee’s center, which provide the leisure and exercise functions to release employees’ mental and physical stress.
(9) We have employees’ restaurants in all factories, and provide meal substitutes according to the company rules.
(10) We set up the employee welfare committee to be responsible to welfare planning and execution. Including: club activities, art and culture season, company trip, exercise season, family day, special discounts, and substitutes of festivals, wedding or other special events, and emergencies.
(11) We provide health promotion and mental consulting plan to take care of employees’ mental and physical health.
Retirement structure and the situation of implement
(1) Retirement structure and the situation of implement.
(2) We hire actuary to evaluate our employees’ retirement preparation fund and issue the evaluation report according to the ROC’s financial principles.
(3) We transfer 2%~15% monthly salary to retirement preparation every month.
(4) We will conduct the new retirement structure according to the laws from Jul 1, 2005.

3. Labor and management settlement

The rights and obligations of our labor and management follow the rules of our company operation. The relations between labor and management are good without and dispute settlements.

In order to maintain mutual communications and interactions, we have communicating meetings such as management interviews and mobilization meetings, issuing INX digital news, establishing employee communication mailbox to listen and solve employees’ opinions and thoughts.

Working environment and individual safety protection
(1) Safety and Health organization and operation

The company has an environmental safety office to be in charge of all safety and health risks in company operation management, and to integrate the safety and health departments in all factories. The environmental safety office reports to the factory manager, related departments and the soviet in “factory fields’ safety and environmental protection committee” every season. There are 208 worker representatives of Taiwan factory fields in 2014, which is 45% of the committee; there are 96 worker representatives of Mainland factory fields in 2014, which is 43% of the committee. These worker representatives in behave of all employees to discuss the safety and health issues such as legality, internal and external communications, safety and health issues, objects and KPI, and the latest outer environmental trends.

Analysis and Statistics of Occupational Hazards

Innolux's objective in disaster management is to progressively reduce the Disabling Frequency Rate (FR) and the Disabling Severity Rate (SR) to zero. Through the incident management system the company analyzes the statistics and causes of incidents including traffic accidents and near miss. With reports and surveys generated, the system would announce improvements in hazard prevention, as well as accident reviews and improvements. It also ensures parallel deployment across plants to prevent re-occurrence of incidents. Over 2014 the Disabling Frequency Rate (FR) increased by 16% compared with 2013, while the Disabling Severity Rate (SR) increased by 43% compared to 2013.

Business Continuity Management

Innolux has been providing ESH management and training to vendors. A structure is in place for hazard identification, risk assessment and emergency response for high-risk operations. Monthly meetings are conducted with contractors for two-way communication and coordination. In 2014, the incident rate for vendors was 0 per 1000 persons.

ESH Training

'Employees are the most valuable asset. Training is an investment that never depreciates.' ESH training is the basis for the promotion and practical implementation of our ESH management. We make long-term investments in human and material resources according to the hazard profile of each plant.

We plan, design and deliver training to the staff regarding ESH knowledge and skills, such as handling chemicals, dangerous machinery and equipment, injury prevention, machinery safety, fire safety management, and plant safety management. We also monitor and control the training quality and effectiveness. In 2014, 1,609 ESH training sessions were held, for a total of 277,858 participants. On average, employees joined over 3 training sessions per person per year.

(2) Safety Culture and Risk Management

Outstanding integrating working system

Regarding to environmental safety and health management, we develop several digital working systems and integrate into ESH Information Portal (ESHIP). Managing level can see the condition and efficiency of the operation of factories and his/her departments’ environmental safety and health management immediately; meanwhile, colleagues can learn and interact with other factories through the platform.

Self-audit on Injury Prevention and Risk Management

Early waring system

The system divided into 5 levels, base on plant equipment, facilities, inside & outside trend, irresistible natural disasters and man-made disasters to pre-defense and notify manager immediately.

Prevention of manmade disasters

Due to musculoskeletal disorders percentage increase this few years, prevention of company as below:

A. Identification and analysis of the risk of job-specific processes of a systematic, resource and continuous improvement mode execution.

B. Occupational Safety and Health Act will trigger repetitive operations, such as pre-musculoskeletal diseases Anti concept implanted "hazard identification and risk assessment norms" to implement career

In order to effectively prevent and control concepts, health management must be through hazard awareness, assessment and control improvement.

(3) Recruitment and Staffing

Innolux’s goal is to employ qualified personnel to create the best possible performance. Our company cares about diversity and equal opportunity. We do not allow employment discrimination based on race, color, age, gender, sexual orientation, ethnicity, disability, pregnancy, religion, political affiliation, union membership, and marital status or otherwise. In our day-to-day operations, this means that we monitor and manage our human resources consciously. We analyze and improve turnover patterns. We build a labor force with a balanced structure, which was also integrated into our recruiting policy.

To build up its vertically integrated operations, Innolux opened up 5,000 vacancies in 2014.

(4) Zero Distance Communication

Zero Distance Communication

Innolux emphasizes harmonious labor relations. To this end, we convene quarterly meetings with the labor-capital committee and the Employee Welfare Committee. High-level managers from the capital side and grassroots level representatives from the labor side engage in two-way face-to-face communications, to exchange views in an open atmosphere. We also have built a full range of communication channels, which employees can use under their names or anonymously. The Employee Care Hotline, the Employee Care Mailbox, and the opinion box help employees to find quick solutions to their problems.

Workplace Free from Sexual Harassment

To protect employees from sexual harassment, Innolux adopted the 'Sexual Harassment Prevention, Complaint and Management Procedures for Taiwan site' to effectively prevent and deal with sexual harassment. Investigation of sexual harassment is conducted in a non-public fashion to protect the privacy of the parties involved. Everyday protection from sexual harassment is promoted through the start-up screens of computers to build a friendly workplace and eliminate sexual harassment. In 2014 13 sexual harassment cases were reported, handled, and solved.

EAPs Employee Assistance Programs

Employees are company's most important asset. Innolux understands how difficulties may affect an individual’s work and life. Therefore, Innolux takes a systematic and embedded approach to offer appropriate professional resources, such as employee communications, psychological counseling, and healthcare, in an effort to reduce the impact that problems may have on our employees' work and lives. We hope to enable our employees to work with a fit body and a healthy mind and improve productivity.

Integrated Employee Care Channels

Innolux takes employee feedback seriously. We offer various feedback channels to employees, to effectively prevent and solve employee issues. From 2013 onward, we put more focus on integrating our employee care channels across Taiwan and China. Thus, we unified the representative code of Employee care hotline and the Employee Care Mailbox at different sites. The same was advertised via internal announcements and the start-up screens on computers. We expect this integrated approach will pay off

through more efficient handling of cases.

5.5.2 List any loss sustained as a result of labor disputes in the most recent fiscal year, and during the current fiscal year up to the date of printing of the annual report, disclose an estimate of losses incurred to date or likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot be reasonably estimated, make a statement to that effect. NT$2,530 Thousand.

5.6 Important Contracts

Agreement	Counterparty	Period	Major Contents	Restrictions
Lease Agreement of the Land	Science-based Industrial Park Administration	Feb 2001- Dec 2020	Lease of land for Chunan Base of Hsinchu Science Park in MiaoliCounty	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land	Science-based Industrial Park Administration	May 28, 2003 - Dec 31,2022	Leasehold of land	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land	Science-based Industrial Park Administration	Feb 2004 - Dec 2023	Lease of land for Chunan Base of Hsinchu Science Park in Miaoli County (Plant No. II)	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land	Science-based Industrial Park Administration	Apr 6, 2004 – Dec 31,2023	Leasehold of land	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land	Science-based Industrial Park Administration	Dec 1, 2007 – Dec 31,2026	T2 Leasehold of land oriented for factory	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land	South Taiwan Science-based Industrial Park Administration	Mar 9, 2015 - Mar 8, 2035	Leasehold of land	Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement	Chung Lin Construction Co., Ltd.	2001.02Till expiry of warranty period	FAB I Project of Civil Engineering Construction	Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement	Hu Tzu Construction Co., Ltd.	2005.07 Till expiry of warranty period	FAB II Newly constructed project	Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement	Cheng Teh Fireproof Industrial Co., Ltd.	2005.09Till expiry of warranty period	New construction of Plant No. II, award of the fire prevention project contract	Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement	Chan Mao Optical Co., Ltd.	Jul 4, 2013 – Jul 3, 2016	Leasehold of land for construction purposes	Pursuant to the terms and conditions set forth under the Agreement
Long Term Loan	CTBC Bank and the bank syndicate	Jul 8, 2004 – Jul 8, 2015	Financing for fund for setup (establishment) of next generation (Generation V up) fund financing for TFT-LCD.	Pursuant to the terms and conditions set forth under the Agreement
Financing Contract	Mega Bank and the bank syndicate	Feb 2005 – Mar 2015	FAB I Loan for machine and equipment procurement	Pursuant to the terms and conditions set forth under the Agreement
Long Term Loan	Bank of Taiwan and bank groups	Mar 19, 2006 - Nov 15, 2016	Financing Loan for next generation (Above 7.5 generation) of TFT-LCD procurement	Pursuant to the terms and conditions set forth under the Agreement
Long Term Loan	Bank of Taiwan and bank groups	Feb 8, 2007 – Aug 8, 2016	Financing Loan for next generation (6 generation) of TFT-LCDprocurement	Pursuant to the terms and conditions set forth under the Agreement
Financing Contract	CTBC Bank and the bank syndicate	Aug 2008 – Aug 2016	Loan for factory and machine and equipment procurement	Pursuant to the terms and conditions set forth under the Agreement
Joint Credit	Mega Bank and Taiwan Cooperative Bank and other	Sept 25, 2008 – Nov	Invest to build generation 6 TFT LCD factoryand the	Pursuant to the terms and conditions set forth under

Agreement	Counterparty	Period	Major Contents	Restrictions
	20 bank	20, 2016	fund for machine and equipment and the related attached equipment procurement, NT$ 24 billion and US$ 200 million.	the Agreement
Long Term Loan	Bank of Taiwan and bank groups	Sept 9, 2009 – Sept 9, 2016	In an attempt to reimburse the syndicated loan credit loans due in 2009 and June 2010.	Pursuant to the terms and conditions set forth under the Agreement
Joint Credit	Mega Bank and Taiwan Cooperative Bank and other 19 bank	Nov 17, 2009 – Nov 14, 2016	To be used to suffice the Company’s general mid-term working capital and to expand the existent productivity and equipment & facilities, in the amount of NT$48 billion.	Pursuant to the terms and conditions set forth under the Agreement
Joint agreement of settlement contract	Bank Syndicate	Apr 5, 2012 – Dec 31, 2016	Negotiate with syndicate to extend the participating loan and medium-short term loan amount	Pursuant to the terms and conditions set forth under the Agreement
Long Term Loan	Bank of Taiwan and bank groups	Mar 12, 2015 - Mar 12, 2018	1. To be used by the Loanee to reimburse, under the syndicated accord, the mid-term and long-term syndicated loans, for all fund required for the outstanding balance of principal as mentioned above. 2. In the amount of NT$68.5 billion	Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing	Multinational Enterprise C.	June 28, 2010 - Dec 31,2019	IPS Relevant technology & know-how	Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing	Foreign Company B	Sept 30, 2010 – Sept 30,2017	LCDRelevant patents	Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing	Foreign Company D	Jul 2, 2012 – Jul 7, 2022	Display of the relevant cross-patent licensing within the regions.	Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing	Foreign Company E	Jul 1, 2013 – Jul 1, 2023	LCD Relevant technology & know-how	Pursuant to the terms and conditions set forth under the Agreement
Patent authorization	Foreign Company F	Jan 1, 2013 – Dec 31, 2019	LCD Relevant technology & know-how	Pursuant to the terms and conditions set forth under the Agreement
Patent authorization	Foreign Company A	Jun 17, 2013 – Jun 17,2016	3D Relevant technology & know-how	Pursuant to the terms and conditions set forth under the Agreement
Patent authorization	Foreign Company G	Sept 5, 2013 – Sept 5,2018	LCD Relevant technology & know-how	Pursuant to the terms and conditions set forth under the Agreement
Patent authorization	Multinational Enterprise H	Oct 31, 2013 - Oct 31, 2017	LCD related technical	Pursuant to the terms and conditions set forth under the Agreement

VI. Financial Information

6.1.1 Five-Year Financial Summary

1. Condensed Balance Sheet-IFRS-Consolidate

Unit: NT Thousand

Year Item	Year Item		Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Financial data of ending date in March 31, 2015
		2010	2011	2012	2013	2014
Current assets		－	－	173,139,399	171,701,969	189,380,812	145,539,799
Fixed assets		－	－	332,525,859	273,505,759	233,609,843	222,590,627
Intangible assets		－	－	22,909,059	21,214,994	20,219,137	19,968,114
Other assets		－	－	42,888,840	41,778,163	39,306,763	36,368,319
Total assets		－	－	571,463,157	508,200,885	482,516,555	424,466,859
Current liabilities	Before distribution	－	－	237,566,939	300,586,751	199,135,498	125,777,294
	After distribution	－	－	237,566,939	301,944,190	Note 3	－
Non current liabilities		－	－	162,539,193	13,036,280	54,209,621	62,267,502
Total liabilities	Before distribution	－	－	400,106,132	313,623,031	253,345,119	188,044,796
	After distribution	－	－	400,106,132	314,980,470	Note 3	－
Equity attributable to owners of the parent				169,823,860	193,043,229	227,690,063	234,969,894
Capital stock		－	－	169,823,860	193,043,229	227,690,063	99,542,240
Capital surplus		－	－	119,677,980	96,058,741	99,584,369	99,602,249
Retained earnings	Before distribution	－	－	(24,979,239)	7,421,697	26,632,674	35,283,281
	After distribution	－	－	(24,979,239)	7,331,202	Note 3	－
Other equityinterest		－	－	(4,004,589)	(1,531,497)	1,927,656	542,124
Treasurystock		－	－	－	－	－	－
Non controllinginterest		－	－	1,533,165	1,534,625	1,481,373	1,452,169
Total shareholders’ equity	Before distribution	－	－	171,357,025	194,577,854	229,171,436	236,422,063
	After distribution	－	－	171,357,025	193,220,415	Note 3	－

Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited.

Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

2. Condensed Statement of Income-IFRS-Consolidate

Unit: NT Thousand

Year Item		Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Financial data of ending date in March 31,2015
	2010	2011	2012	2013	2014
Operatingrevenue	－	－	483,609,931	422,730,500	428,661,898	100,157,867
Gross profit (loss) from operations	－	－	4,499,935	37,759,115	50,385,001	17,744,057
Net operatingincome(loss)	－	－	(19,749,654)	15,349,268	28,173,396	11,216,791
Non-operating income and expenses	－	－	(11,064,521)	(9,705,915)	(5,639,056)	(1,156,562)
Profit(loss)before tax	－	－	(30,814,175)	5,643,353	22,534,340	10,060,229
Profit (loss) from continuing operations	－	－	(30,167,283)	5,095,019	21,676,908	8,649,289
Profit (loss) from discontinued operations	－	－	－	－	－	－
Profit(loss)	－	－	(30,167,283)	5,095,019	21,676,908	8,649,289
Other comprehensive income,net	－	－	(1,975,663)	2,859,517	3,159,493	(1,445,244)
Comprehensive income	－	－	(32,142,946)	7,954,536	24,836,401	7,204,045
Profit (loss), attributable to owners ofparent	－	－	(29,899,236)	5,102,568	21,676,759	8,650,607
Profit (loss), attributable to non-controllinginterests	－	－	(268,047)	(7,549)	149	(1,318)
Comprehensive income, attributable to owners ofparent	－	－	(31,688,130)	7,953,076	24,844,853	7,233,249
Comprehensive income, attributable to non-controllinginterests	－	－	(454,816)	1,460	(8,452)	(29,204)
Earningsper share	－	－	(4.00)	0.57	2.31	0.87

Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited.

Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

3. Condensed Balance Sheet-IFRS-Alone

Unit: NT Thousand

				Unit: NT Thousand	Unit: NT Thousand	Unit: NT Thousand
Year Item				Five-Year Financial Summary(Note1)
		2010	2011	2012	2013	2014
Current assets		－	－	147,154,273	138,274,531	162,875,147
Fixed assets		－	－	287,051,335	233,557,614	192,599,182
Intangible assets		－	－	22,796,701	21,114,443	20,127,184
Other assets		－	－	100,240,714	100,611,858	106,252,898
Total assets		－	－	557,243,023	493,558,446	481,854,411
Current liabilities	Before distribution	－	－	238,165,426	287,413,773	205,189,126
	After distribution	－	－	238,165,426	288,771,212	Note 3
Non current liabilities		－	－	149,253,737	13,101,444	48,975,222
Total liabilities	Before distribution	－	－	387,419,163	300,515,217	254,164,348
	After distribution	－	－	387,419,163	301,872,656	Note 3
Equity attributable to owners of the parent		－	－	169,823,860	193,043,229	227,690,063
Capital stock		－	－	79,129,708	91,094,288	99,545,364
Capital surplus		－	－	119,677,980	96,058,741	99,584,369
Retained earnings	Before distribution	－	－	(24,979,239)	7,421,697	26,632,674
	After distribution	－	－	(24,979,239)	7,331,202	Note 3
Other equityinterest		－	－	(4,004,589)	(1,531,497)	1,927,656
Treasurystock		－	－	－	－	－
Non controllinginterest		－	－	－	－	－
Total shareholders’ equity	Before distribution	－	－	169,823,860	193,043,229	227,690,063
	After distribution	－	－	169,823,860	191,685,790	Note 3

Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited.

Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

4. Condensed Statement of Income-IFRS-Alone

Unit: NT Thousand

		Unit: NT Thousand	Unit: NT Thousand	Unit: NT Thousand	Unit: NT Thousand
Year Item		Five-Year Financial Summary (Note1)
	2010	2011	2012	2013	2014
Operatingrevenue	－	－	471,524,374	419,738,269	426,005,033
Grossprofit(loss)from operations	－	－	(7,116,158)	27,531,818	36,395,248
Net operatingincome(loss)	－	－	(24,249,282)	11,300,119	20,439,440
Non-operatingincome and expenses	－	－	(7,431,680)	(6,864,968)	1,238,394
Profit(loss)before tax	－	－	(31,680,962)	4,435,151	21,677,834
Profit(loss)from continuingoperations	－	－	(29,899,236)	5,102,568	21,676,759
Profit(loss)from discontinued operations	－	－	－	－	－
Profit(loss)	－	－	(29,899,236)	5,102,568	21,676,759
Other comprehensive income,net	－	－	(1,788,894)	2,850,508	3,168,094
Comprehensive income	－	－	(31,688,130)	7,953,076	24,844,853
Profit (loss), attributable to owners of parent	－	－	(29,899,236)	5,102,568	21,676,759
Profit (loss), attributable to non-controlling interests	－	－	－	－	－
Comprehensive income, attributable to owners ofparent	－	－	(31,688,130)	7,953,076	24,844,853
Comprehensive income, attributable to non-controllinginterests	－	－	－	－	－
Earningsper share	－	－	(4.00)	0.57	2.31

Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited.

Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

6.1.2 Five-Year Financial Summary

1. Condensed Balance Sheet-GAAP-Consolidate

Unit: NT Thousand

Year Item	Year Item	Five-Year Financial Summary(Note)	Five-Year Financial Summary(Note)	Five-Year Financial Summary(Note)	Five-Year Financial Summary(Note)
		2010	2011	2012	2013	2014
Current assets		198,958,776	212,582,766	174,628,466	－	－
Funds & Long-term investments		13,419,057	22,059,603	23,623,033	－	－
Fixed assets		458,792,555	403,808,043	328,297,554	－	－
Intangible assets		18,891,676	18,517,906	18,065,083	－	－
Other assets		21,333,617	26,696,758	26,244,104	－	－
Total assets		711,395,681	683,665,076	570,858,240	－	－
Current liabilities	Before distribution	252,445,755	419,171,745	237,029,639	－	－
	After distribution	252,445,755	419,171,745	237,029,639	－	－
Long-term liabilities		184,536,481	55,703,297	152,491,697	－	－
Other liabilities		11,495,895	10,122,091	8,894,958	－	－
Total liabilities	Before distribution	448,478,131	484,997,133	398,416,294	－	－
	After distribution	448,478,131	484,997,133	398,416,294	－	－
Capital stock		73,126,748	73,129,708	79,129,708	－	－
Capital surplus		191,189,596	191,835,695	119,594,471	－	－
Retained earnings	Before distribution	(5,215,061)	(69,654,839)	(26,984,855)	－	－
	After distribution	(5,215,061)	(69,654,839)	(26,984,855)	－	－
Unrealized gain or loss on financial instruments		1,700,560	(2,107,490)	(985,693)	－	－
Cumulative translation adjustments		(2,031,508)	2,977,862	155,150	－	－
Net loss unrecognized as pension cost		－	－	－	－	－
Treasurystock		(15,589)	－	－	－	－
Minorityinterest		4,162,804	2,487,007	1,533,165	－	－
Total shareholders’ equity	Before distribution	262,917,550	198,667,943	172,441,946	－	－
	After distribution	262,917,550	198,667,943	172,441,946	－	－

Note: Numbers are audited.

100

2. Condensed Statement of Income-GAAP-Consolidate

Unit: NT Thousand

Year Item	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)
	2010	2011	2012	2013	2014
OperatingRevenue	493,084,954	510,081,200	483,609,931	－	－
Gross profit (loss) from operations	21,621,735	(35,208,648)	4,737,345	－	－
Net operatingincome(loss)	(4,596,422)	(62,700,308)	(19,344,622)	－	－
Non-operating revenue and gain	5,863,594	8,311,203	6,999,454	－	－
Non-operating expense and loss	(14,679,737)	(15,341,165)	(17,725,537)	－	－
Profit (loss) from continuing operations Before tax	(13,412,565)	(69,730,270)	(30,070,705)	－	－
Profit (loss) from continuing operations	(12,214,041)	(64,760,598)	(29,473,396)	－	－
Profit (loss) from discontinued operations	－	－	－	－	－
Extraordinary gain or loss	－	－	－	－	－
Cumulative effect of accounting principle changes	－	－	－	－	－
Net income	(14,214,041)	(64,760,598)	(29,473,396)	－	－
Earningsper share	(2.29)	(8.81)	(3.91)	－	－

Note 1: Numbers are audited.

101

3. Condensed Balance Sheet-GAAP-Alone

Unit: NT Thousand

Year Item	Year Item	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)
		2010	2011	2012	2013	2014
Current assets		172,390,026	155,428,602	148,614,892	－	－
Funds & Long-term investments		67,862,519	82,495,850	82,455,767	－	－
Fixed assets		396,860,728	342,612,740	284,338,966	－	－
Intangible assets		17,647,004	18,515,631	18,064,885	－	－
Other assets		17,176,888	22,596,907	23,121,395	－	－
Total assets		671,937,165	621,649,730	556,595,905	－	－
Current liabilities	Before distribution	221,257,372	380,305,366	237,628,126	－	－
	After distribution	221,257,372	380,305,366	237,628,126	－	－
Long-term liabilities		179,284,091	33,946,997	139,310,440	－	－
Other liabilities		12,640,956	11,216,431	8,748,558	－	－
Total liabilities	Before distribution	413,182,419	425,468,794	385,687,124	－	－
	After distribution	413,182,419	425,468,794	385,687,124	－	－
Capital stock		73,126,748	73,129,708	79,129,708	－	－
Capital surplus		191,189,596	191,835,695	119,594,471	－	－
Retained earnings	Before distribution	(5,215,061)	(69,654,839)	(26,984,855)	－	－
	After distribution	(5,215,061)	(69,654,839)	(26,984,855)	－	－
Unrealized gain or loss on financial instruments		1,700,560	(2,107,490)	(985,693)	－	－
Cumulative translation adjustments		(2,031,508)	2,977,862	155,150	－	－
Net loss unrecognized as pension cost		－	－	－	－	－
Treasurystock		(15,589)	－	－	－	－
Total shareholders’ equity	Before distribution	258,754,746	196,180,936	170,908,781	－	－
	After distribution	258,754,746	196,180,936	170,908,781	－	－

Note 1: Numbers are audited.

102

4. Condensed Statement of Income-GAAP-Alone

Unit: NT Thousand

Year Item	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)
	2010	2011	2012	2013	2014
OperatingRevenue	473,695,780	485,403,114	471,524,374	－	－
Gross profit (loss) from operations	8,338,094	(43,979,512)	(6,872,735)	－	－
Net operatingincome(loss)	(10,492,493)	(63,395,419)	(23,838,237)	－	－
Non-operating revenue and gain	9,709,522	7,966,978	7,345,941	－	－
Non-operating expense and loss	(14,112,329)	(14,733,347)	(14,445,196)	－	－
Profit (loss) from continuing operations Before tax	(14,895,300)	(70,161,788)	(30,937,492)	－	－
Profit (loss) from continuing operations	－	－	－	－	－
Profit (loss) from discontinued operations	－	－	－	－	－
Extraordinary gain or loss	－	－	－	－	－
Cumulative effect of accounting principle changes	－	－	－	－	－
Net income	(14,835,437)	(64,439,778)	(29,205,349)	－	－
Earningsper share	(2.29)	(8.81)	(3.91)	－	－

Note 1: Numbers are audited.

6.1.3 Auditors’ Opinions from 2010 to 2014

Year	CPA Firm	CPA's Name	AuditingOpinion
2010	PricewaterhouseCoopers	Hsiao Chun-Yuan & Hsu Yung-Chien	Unqualified-modified wording
2011	PricewaterhouseCoopers	Hsiao Chun-Yuan & Hsu Yung-Chien	Unqualified-modified wording
2012	PricewaterhouseCoopers	Hsiao Chun-Yuan & Hsu Yung-Chien	Unqualified-modified wording
2013	PricewaterhouseCoopers	Hsiao Chun-Yuan & Wu Han-Chi	Unqualified-modified wording
2014	PricewaterhouseCoopers	Wu Han-Chi & ShengChung-Hsu	Unqualified-modified wording

6.1.4 If there was change/replacement of the CPA within the most recent 5 fiscal years, explanation made by the company ’ s previous and current CPA over the causes for such change/replacement shall be set forth.

Year	Former CPA's Name	Current CPA's Name	Reason
2010	Hsiao Chun-Yuan & ZengHui-Jin	Hsiao Chun-Yuan & Hsu Yung-Chien	Unqualified-modified wording
2011	None
2012	None
2013	Hsiao Chun-Yuan & Hsu Yung-Chien	Hsiao Chun-Yuan & Wu Han-Chi	Unqualified-modified wording
2014	Hsiao Chun-Yuan & Wu Han-Chi	Wu Han-Chi & ShengChung-Hsu	Unqualified-modified wording

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6.2 Five-Year Financial Analysis

1. Financial Analysis-IFRS-Consolidate

Year (Note 1) Item(Note 2)	Year (Note 1) Item(Note 2)	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Ending date in March 31,2015
		2010	2011	2012	2013	2014
Financial structure (%)	Ratio of liabilities to assets	－	－	70.01	61.71	52.50	44.30
	Ratio of long-term capital to fixed assets	－	－	100.41	75.91	121.31	134.19
Solvency (%)	Current ratio	－	－	72.88	57.12	95.10	115.71
	Quick ratio	－	－	54.77	39.92	77.41	88.34
	Times interest earned ratio	－	－	(3.09)	2.12	7.28	17.45
Operating ability	Accounts receivable turnover(turns)	－	－	6.11	5.56	5.88	5.64
	Average collectionperiod	－	－	60	66	62	65
	Inventoryturnover(turns)	－	－	8.51	7.67	8.41	9.15
	Accounts payable turnover(turns)	－	－	4.47	4.54	4.90	4.43
	Average days in sales	－	－	43	48	43	40
	Fixed assets turnover (turns)	－	－	1.31	1.40	1.69	1.76
	Total assets turnover (turns)	－	－	0.77	0.78	0.87	0.88
Profitability	Return on total assets(%)	－	－	(3.77)	1.72	4.98	2.02
	Return on stockholders' equity (%)	－	－	(16.18)	2.79	10.23	3.72
	Ratio to issued capital(%)	－	－	(38.94)	6.20	22.64	10.11
	Profit ratio(%)	－	－	(6.18)	1.21	5.06	8.64
	Earningsper share($)	－	－	(4.00)	0.57	2.31	0.87
Cash flow	Cash flow ratio(%)	－	－	21.16	25.25	52.33	20.05
	Cash flow adequacy ratio (%)	－	－	64.93	84.75	129.39	226.84
	Cash reinvestment ratio (%)	－	－	7.83	12.91	14.58	3.40
Leverage	Operatingleverage	－	－	－	4.77	3.02	2.24
	Financial leverage	－	－	－	1.49	1.15	1.06
Analysis of	financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis
is not required.)
1. The ratio of long-term funds to real estate, plant buildings, current ratio and quick ratio increased over 2013, dueprimarilyto the fact that in 2013, the Companydid not live upto the commitment for capital

104

increase in cash in schedule under the “Agreement for Syndicated Loan & Reimbursement”. As a result, on December 31, 2013, the balance of the syndicated loan was converted from long-term loan to “long-term liabilities due within one year or within one business cycle”. The Company, nevertheless, was aproved by the creditor financial institution that the capital increase through cash injection previously scheduled as of December 31, 2013 be extended as of December 31, 2014.
1. Interest coverage folds: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control costs and upgrade the operating efficiency. As a result, the profits earned in 2014 significantly increased over 2013’s while the interest expenses significantly dropped.
1. Turnover rate of real estate, plant biuldings and equipment & facilities: In 2014, the net sales increased over 2013’s. Meanwhile, service life of real estate, plant biuldings and equipment & facilities was due in some cases. As a result, the net value in 2014 decreased from 2013’s.
1. Various ratios of profitability rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s.
1. Various ratios of cash flow rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. As a result, the net cash inflow in operating activities incrased.
1. Business operation leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014.
1. Financial leverage: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control cost and boost operating efficiency, the operating profit in 2014 significantly increased over 2013’s. Besides, as the interest expenses significantly dropped, the financial leverage dropped in 2014.

Note 1: We adopted International Financial Reporting Standards ( IFRS). For period less than five(5) years, we worked Table 4 below, adopted the Financial Reporting Standards of the Republic of China. Note 2: Numbers are audited. Note 3: Financial Ratio Formula

Financial Structure analysis
(1) Debt ratio= Total Liabilities / Total Assets
(2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net
Liquidity analysis
(1) Current ratio = Current assets / Current liability
(2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability
(3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
Operating performance analysis
(1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables
(2) Days to collect accounts receivable = 365 / Average collection turnover
(3) Average inventory turnover = Cost of goods sold / Average inventories
(4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables
(5) Average days to sell inventory = 365 / Average inventory turnover
(6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net
(7) Total assets turnover = Sales / Average total assets
Return on investment analysis
(1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets
(2) Rate of return on equity = Profit / Average total Equity
(3) Profit to sales = Profit / Sales
(4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares
Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability
(2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend)
(3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital)
Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expenses)

105

2. Financial Analysis-IFRS-Alone

Item(Note 2)	Year (Note 1)	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years
		2010	2011	2012	2013	2014
Financial structure (%)	Ratio of liabilities to assets	－	－	69.52	60.89	52.75
	Ratio of long-term capital to fixed assets	－	－	111.16	88.26	143.65
Solvency (%)	Current ratio	－	－	61.79	48.11	79.38
	Quick ratio	－	－	46.82	34.07	65.50
	Times interest earned ratio	－	－	(5.27)	2.03	8.23
Operating ability	Accounts receivable turnover (turns)	－	－	6.16	5.66	6.03
	Average collectionperiod	－	－	59	64	61
	Inventoryturnover(turns)	－	－	9.99	9.62	10.78
	Accounts payable turnover (turns)	－	－	3.13	3.11	3.39
	Average days in sales	－	－	37	38	34
	Fixed assets turnover(turns)	－	－	1.49	1.61	2.00
	Total assets turnover(turns)	－	－	0.80	0.80	0.87
Profitability	Return on total assets(%)	－	－	(4.36)	1.65	4.95
	Return on stockholders' equity (%)	－	－	(16.35)	2.81	10.30
	Ratio to issued capital(%)	－	－	(40.04)	4.87	21.78
	Profit ratio(%)	－	－	(6.34)	1.22	5.09
	Earningsper share($)	－	－	(4.00)	0.57	2.31
Cash flow	Cash flow ratio(%)	－	－	17.11	17.30	44.53
	Cash flow adequacyratio(%)	－	－	81.66	96.55	153.66
	Cash reinvestment ratio(%)	－	－	7.06	9.34	14.02
Leverage	Operatingleverage	－	－	－	5.81	3.63
	Financial leverage	－	－	－	1.62	1.17

106

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

The ratio of long-term funds to real estate, plant buildings, current ratio and quick ratio increased over 2013, due primarily to the fact that in 2013, the Company did not live up to the commitment for capital increase in cash in schedule under the “Agreement for Syndicated Loan & Reimbursement”. As a result, on December 31, 2013, the balance of the syndicated loan was converted from long-term loan to “long-term liabilities due within one year or within one business cycle”. The Company, nevertheless, was aproved by the creditor financial institution that the capital increase through cash injection previously scheduled as of December 31, 2013 be extended as of December 31, 2014.
Interest coverage folds: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control costs and upgrade the operating efficiency. As a result, the profits earned in 2014 significantly increased over 2013’s while the interest expenses significantly dropped.
Turnover rate of real estate, plant buildings and equipment & facilities: Due primarily to the facts that in 2014, the net sales increased over 2013 and that the service life spans of rate of real estate, plant buildings and equipment & facilities were due in 2014, the net values decreased from 2013.
Various ratios of profitability rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s.
Various ratios of cash flow rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. As a result, the net cash inflow in operating activities incrased.
Business operation leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014.
Financial leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014.

Note 1: We adopted International Financial Reporting Standards ( IFRS). For period less than five(5) years, we worked Table 3 below, adopted the Financial Reporting Standards of the Republic of China. Note 2: Numbers are audited. Note 3: Financial Ratio Formula

Financial Structure analysis
(1) Debt ratio= Total Liabilities / Total Assets
(2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net
Liquidity analysis
(1) Current ratio = Current assets / Current liability
(2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability
(3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
Operating performance analysis
(1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables
(2) Days to collect accounts receivable = 365 / Average collection turnover
(3) Average inventory turnover = Cost of goods sold / Average inventories
(4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables
(5) Average days to sell inventory = 365 / Average inventory turnover
(6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net
(7) Total assets turnover = Sales / Average total assets
Return on investment analysis
(1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets
(2) Rate of return on equity = Profit / Average total Equity
(3) Profit to sales = Profit / Sales
(4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares
Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability
(2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend)
(3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital)

107

Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expenses)

108

3. Financial Analysis-GAAP-Consolidate

Item(Note 2)	Year (Note 1)	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years
		2010	2011	2012	2013	2014
Financial structure (%)	Ratio of liabilities to assets	63.04	70.94	69.79	－	－
	Ratio of long-term capital to fixed assets	100.03	65.50	101.68	－	－
Solvency (%)	Current ratio	78.81	50.71	73.67	－	－
	Quick ratio	52.72	36.10	54.89	－	－
	Times interest earned ratio	(1.87)	(10.85)	(2.91)	－	－
Operating ability	Accounts receivable turnover (turns)	7.28	6.11	7.28	－	－
	Average collectionperiod	50	60	50	－	－
	Inventoryturnover(turns)	7.87	8.50	7.87	－	－
	Accounts payable turnover (turns)	4.76	4.46	4.76	－	－
	Average days in sales	46	43	46	－	－
	Fixed assets turnover(turns)	1.18	1.32	1.18	－	－
	Total assets turnover(turns)	0.73	0.77	0.73	－	－
Profitability	Return on total assets(%)	(2.46)	(8.54)	(3.64)	－	－
	Return on stockholders' equity (%)	(8.30)	(27.92)	(15.74)	－	－
	Ratio to issued capital(%)	(6.29)	(85.74)	(24.45)	－	－
	Ratio to Profit before tax	(18.34)	(95.35)	(38.00)	－	－
	Profit ratio(%)	(3.01)	(12.63)	(6.04)	－	－
	Earningsper share($)	(2.29)	(8.81)	(3.91)	－	－
Cash flow	Cash flow ratio(%)	30.94	6.71	18.36	－	－
	Cash flow adequacyratio(%)	57.62	56.37	62.57	－	－
	Cash reinvestment ratio(%)	13.22	5.75	6.89	－	－
Leverage	Operatingleverage	－	－	－	－	－
	Financial leverage	－	－	－	－	－
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.):N.A.

Note 1: Numbers are audited.

Note 2: Calculation formula of financial ratio

Financial Structure analysis
(1) Debt ratio= Total Liabilities / Total Assets
(2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net
Liquidity analysis
(1) Current ratio = Current assets / Current liability
(2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability
(3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
Operating performance analysis
(1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables
(2) Days to collect accounts receivable = 365 / Average collection turnover
(3) Average inventory turnover = Cost of goods sold / Average inventories
(4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables
(5) Average days to sell inventory = 365 / Average inventory turnover
(6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net
(7) Total assets turnover = Sales / Average total assets
Return on investment analysis

109

(1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets
(2) Rate of return on equity = Profit / Average total Equity
(3) Profit to sales = Profit / Sales
(4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares
Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability
(2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend)
(3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital)
Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expenses)

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4. Financial Analysis-GAAP-Alone

Item(Note 2)	Year (Note 1)	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years
		2011	2012	2013	2014	2015
Financial structure (%)	Ratio of liabilities to assets	68.44	69.29	－	－	－
	Ratio of long-term capital to fixed assets	67.17	109.10	－	－	－
Solvency (%)	Current ratio	40.87	62.54	－	－	－
	Quick ratio	27.31	46.93	－	－	－
	Times interest earned ratio	(14.02)	(4.93)	－	－	－
Operating ability	Accounts receivable turnover (turns)	7.13	6.16	－	－	－
	Average collectionperiod	51	59	－	－	－
	Inventoryturnover(turns)	8.81	9.99	－	－	－
	Accounts payable turnover (turns)	3.75	3.13	－	－	－
	Average days in sales	41	37	－	－	－
	Fixed assets turnover(turns)	1.31	1.50	－	－	－
	Total assets turnover(turns)	0.75	0.80	－	－	－
Profitability	Return on total assets(%)	(9.36)	(4.22)	－	－	－
	Return on stockholders' equity (%)	(28.33)	(15.91)	－	－	－
	Ratio to issued capital(%)	(86.69)	(30.13)	－	－	－
	Ratio to Profit before tax	(95.94)	(39.10)	－	－	－
	Profit ratio(%)	(13.28)	(6.19)	－	－	－
	Earningsper share($)	(8.81)	(3.91)	－	－	－
Cash flow	Cash flow ratio(%)	16.16	14.96	－	－	－
	Cash flow adequacyratio(%)	73.1	79.33	－	－	－
	Cash reinvestment ratio(%)	15.98	6.65	－	－	－
Leverage	Operatingleverage	－	－	－	－	－
	Financial leverage	－	－	－	－	－
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.):N.A.

Note 1: Financial data by IFRS less than 5 years, preparing the following table 3 by ROC GAAP Note 2: Numbers are audited.

Note 3: Financial Ratio Formula

Financial Structure analysis
(1) Debt ratio= Total Liabilities / Total Assets
(2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net
Liquidity analysis
(1) Current ratio = Current assets / Current liability
(2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability
(3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
Operating performance analysis
(1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables
(2) Days to collect accounts receivable = 365 / Average collection turnover
(3) Average inventory turnover = Cost of goods sold / Average inventories
(4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables
(5) Average days to sell inventory = 365 / Average inventory turnover
(6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net
(7) Total assets turnover = Sales / Average total assets

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Return on investment analysis
(1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets
(2) Rate of return on equity = Profit / Average total Equity
(3) Profit to sales = Profit / Sales
(4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares
Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability
(2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend)
(3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital)
Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expenses)

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6.3 Supervisors’ Report in the Most Recent Year

Innolux Corporation

Supervisors’ Audit Report

The Board of Directors has duly submitted the 2014 operating report, financial statements, and table of profit distribution. The financial statements has been duly reviewed and approved by CPA Mr. Hsiao Chun-Yuan and CPA Mr. Wu Han-Chi of PwC Taiwan with the issuance of Independent Auditor’s Report.

I, as the supervisor of the Company, have completed the audit and review, and had found nothing inconsistent with any of the above. Therefore, I issue this audit report for acknowledgment in accordance with Article 219 of the Company Act. For your approval.

General Shareholders Meeting of the Company in 2015

Supervisor: Lin, Ren-Guang

Date: April 28, 2015

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Innolux Corporation

Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2015

Supervisor: Chen, Yi-Fang

Date: April 28, 2015

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Innolux Corporation

Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2015

Supervisor:

I-Chen Investment Ltd. Representative: Te-Tsai Huang

Date: April 28, 2015

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6.4 Consolidated Financial Statements for the Years Ended December 31, 2014 and 2013, and Independent Auditors’ Report

Please refer to page 137 of the annual report.

6.5 Financial Statements for the Years Ended December 31, 2014 and 2013, and Independent Auditors’ Report

Please refer to page 235 of the annual report.

6.6 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties: Not applicable.

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

7.1 Analysis of Financial Status

Unit: NT Thousand

			Difference
	2013	2014
Item			Amount	%
Current Assets	171,701,969	189,380,812	17,678,843	10.30
Fixed Assets	273,505,759	233,609,843	(39,895,916)	(14.59)
Intangible assets	21,214,994	20,219,137	(995,857)	(4.69)
Other Assets	41,778,163	39,306,763	(2,471,400)	(5.92)
Total Assets	508,200,885	482,516,555	(25,684,330)	(5.32)
Current Liabilities(1)	300,586,751	199,135,498	(101,451,253)	(33.75)
Long-term Liabilities(1)	13,036,280	54,209,621	41,173,341	315.84
Total Liabilities	313,623,031	253,345,119	(60,277,912)	(19.22)
Capital stock	91,094,288	99,545,364	8,451,076	9.28
Capital surplus(2)	96,058,741	99,584,369	3,525,628	3.67
Retained Earnings(3)	7,421,697	26,632,674	19,210,977	258.85
Other equity	(1,531,497)	1,927,656	3,459,153	(225.87)
Non controllingequity	1,534,625	1,481,373	(53,252)	(3.47)
Total Stockholders' Equity	194,577,854	229,171,436	34,593,582	17.78

Analysis of changes in financial ratios:

Due primarily to the facts that as of December 31, 2013, the Company did not conform with the commitment in capital increase through cash injection within the time schedule as set forth under “Agreement for Reimbursement under Syndicated Accord”, the banks in the syndicated loan were entitled to take such acts including (but not limited to) that all principal, interest, expense and other sums payable under the Agreement having been disbursed but not yet reimbursed should become due on the very day ahead of expiry. The long-term loans were converted into “Long-term liabilities due within one year or one business cycle”.
Mainly attributed to massive increase in profit.
Due primarily to the facts that in the wake of the change in exchange rate, the margin of exchange in conversion in financial statements in the operating institutions in the long-term investment was recognized.

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7.2 Analysis of Operating Results

Unit: NT Thousand

			Unit: NT Thousand	Unit: NT Thousand
Year Item	2013	2014	Difference
			Amount	%
OperatingRevenue	422,730,500	428,661,898	5,931,398	1.40
OperatingCosts	384,971,385	378,276,897	(6,694,488)	(1.74)
Gross Profit(1)	37,759,115	50,385,001	12,625,886	33.44
OperatingExpenses	22,409,847	22,211,605	(198,242)	(0.88)
OperatingIncome(2)	15,349,268	28,173,396	12,824,128	83.55
Non-operatingIncome and Expenses	(9,705,915)	(5,639,056)	4,066,859	(41.9)
Income Before Tax(2)	5,643,353	22,534,340	16,890,987	299.31
Tax Benefit(Expense) (3)	548,334	857,432	309,098	56.37
Other comprehensive income	2,859,517	3,159,493	299,976	10.49
Total comprehensive income(4)	7,954,536	24,836,401	16,881,865	212.23
Analysis of changes in financial ratios: 1. Innolux focus on cost control and decrease in depreciation lead to increase in margin. 2. Operating income and Net income (loss) before tax mainly attributed to increase in operating margin 3. Mainly due to increase in profit of 2014 compared to last year 4. Mainlydue to increase in Operatingmargin and other comprehensive income

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7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Year

Unit: NT Thousand

		Unit: NT Thousand
Year Items	2014	Analysis
Net cash provided by operatingactivities	104,212,037	Net cash provided mainly due to depreciation and reasonable control for operatingcycle.
Net cash used in investing activities	(13,183,151)	Mainly due to additions to property, plant and equipment.
Net cash used in financing activities	(64,946,530)	Mainly due to issuance of common stock for cash and bank loan repayment.

7.3.2 Cash Flow Analysis for the Coming Year

Cash and cash equivalents at beginning of year (1)	Estimated Net cash provided by operating activities for whole year (2)	Estimated Net decrease in cash and cash equivalent for wholeyear(3)	Estimated Surplus (Shortage) of Cash (1)+(2)+(3)	Remedy Actions for Estimated Cash Shortfall	Remedy Actions for Estimated Cash Shortfall
				Investment Plan	Financing Plan
71 Billion	80.2 Billion	3 Billion	－	－	－
2015 Analysis of changes in cash flow Operating Activities: Net Cash inflow due to expected the average selling price for panels will return to the stable and lower production cost continually Investing Activities: Net cash outflow due to overcome difficulties continually and capital expenditure for new techniques Financing Activities: Net cash outflow mainly due to bank loan repayment RemedyActions for Cash Shortfall: None

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7.4 Major Capital Expenditure Items

Capital Expenditures in 2014 focus on high-precision, high aperture ratio, yield quality improvement, car panel, module manufacturing automation and train cum Green environmental protection, Total amount approximately 17.8 billion

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

In terms of outward investment, the Company focused on the up- and down-streams of TFT-LCD industries to assure effective vertical itnegration as the final objectives. Given the worsening fluctuation of panel industry and the mature development of the industrial chains, the Company held a policy of being increasingly conservative. Other than the effortswe try to refrain from investing toward the businesses irrelevant to the Company’s principal business, the Company disposed non-core investment and investment insignificant in strategies.

In the consolidated financial report of the Company in 2014, the investment gain recognized in equity method came to NT$65.814 million, thanks primarily to the upturn of the overall economy where the business performance of the invested businesses turned better. Some outward investments appeared at a loss. Overall, the performance with the Company’s outward reinvestments have been well up to our expectation and have been continually integrated with our business development.

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7.6 Analysis of Risk Management

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

Interest rate

The American economy rallied at a slow pace. The Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan anticipated the economic growth rate (yoy) by 2015 would hit 3.5%, 0.07% outgrew the annual rate of 2014 at 3.43%. Given the factors of economic growth and commodity prices, the Central Bank would maintain an easy interest rate policy in 2015. The M2 currency growth targets were set at 2.5%~6.5%. To prevent an increase in the Company’s loan costs as a result of an adjustment of currency policy and rise in interest rate in the market, the Company would undertake interest swap transactions in due time over the current loans in floating interest rates so as to evade the risks of the change in cash flow possibly incurred by fluctuation of interest rate.

Foreign exchange rates
a. To prevent a potential disadvantage to the foreign currencies in input, ouput, investment and financing activities to the Company’s assets, liabilities values, operating results due to fluctuation in exchange rates, the Company, in due time, would undertake forward foreign exchange to evade potential risks in fluctuation in exchange rates.
b. The Company adopted Natural Hedge in principle to evade exchange rate risks by taking the revenues from sales in foreign currencies to pay off required foreign currencies. We, therefore, only undertook the hedge transaction aiming at the positions of net assets or liabilities in foreign currencies.
c. In the Company, over 90% of the operating revenues came from U. S. Dollars and other foreign currencies. For capital expenditures and manufacturing costs, the primary demand for foreign currencies came from U. S. Dollars and Japanese yen. Any unfavorable significant change in exchange rate would lead to a passive impact upon the financial profit and/or loss. In calculation with the Company’s output and marketing as well as cost structure in 2014, where the New Taiwan Dollars is appreciated by 1% over U. S. Dollars, the Company’s gross profit would drop 0.4%~0.55%.
Inflation

As officially promulgated by the Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan, in 2014, the average consumer price index (CPI) rose by 0.79% annually, not yet significantly affected by the tremendous oil price drop in 2014. The commodity prices might look stable in years ahead. The high-speed inflation and deflation would interfere with the efficiency in the markets, discourage investment, consumption, savings and such behaviors. To prevent potential impact on the negative aspect from high speed inflation which would, in turn, dampen investment, consumption and savings, the communications has tried by all means of lower various costs to enhance competitive edge and would be closely watchful the change in the supply and demand in the market, to flexbly adjust product portfolio to closely live up to actual demand in the market.

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

The Company had not engaged in highly risky and high financial leverage investment.

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Exactly as required by the Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan and the laws and ordinances concerned, we have set up wholesome financial and operating grounds in the managerial regulations and operating procedures, including “Procedures to Engage in Transaction and Disposal of Derivatives”, “Procedures for Loaning of Funds to Others” and “Operating Procedures of Endorsements/Guarantees”.

In an attempt to control potential risks in finance, we hold a very wholesome and conservative principle in derivative financial instruments to primarily evade the potential risks of the exchange rates in the substantial positions incurred by input, output and financing activities. In the days and years ahead, we shall stick to such same principle to coordinate with the trends of exchange rates and interest rates as well as the Company’s business operation, we shall adjust the financial risk management in real time in accordance with laws and ordinances concerned, internal managerial rule and operating procedures.

7.6.3 Future Research & Development Projects and Corresponding Budget

In terms of the technical development in the future, the Company will continually aim at the development in the monitor application regions. Primarily, we would aim at broad vision TFT LCD monitor technology & know-how to upgrade the contrast and dues in TFT LCD; upgrade of the high penetrating TFT LCD know-how in the optical utilization rate; ultra dimension TFT LCD monitoring technology & know-how; high solution, high brightness, narrow frame TFT LCD moules; in high solution, high brightness, high temperature, low energy consumption. TFT LCD bare-eye monitor know-how upgrade into stereo display effect, rightness monitor technology & know-how, built-in touch panel technology & know-how (TOD, TID, Hybrid) , attachment process technology & know-how. In 2014, the Company woul invest research & development funds in amount equivalent the preceding year’s. In the future, we shall continually invest in technical research & development and boost competitive edge.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate

Finance and Sales

As of the Annual Report’s publication date, there has been no adversely impact on financial or business due to any policy and law changed. All the Company’s teammates would be closely watchful of potential changes in major policies and laws and ordinances concerned at home and abroad and set up legal personnel to help such issues. Through such efforts, we shall be able to take right countermeasures in real-time to minimize the potential impact upon the Company’s financial standing which might be incurred by major policies at home and abroad and change in laws.

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to

Corporate Finance and Sales

1. Technology Change

The TFT-LCD industry is challenged by the constantly upgraded know-how and new products while the mainstream products are being replaced by new generation at a quickening pace. Should we fail to deal with the impact incurred by the change in science and technology, that would be an impact upon the business and financial standing on the seamy sides. Since the Company first came into being, we have spared no effort to accumulate the technical capability of TFT-LCD displays to deal with the impact incurred by the change in science and technology. Other than investment in high level research & development toward high display quality, high solution, broad vision angles, high open rates, quick response, thin and light designs, narrow frames, ultra energy conservaton and

122

such technology & know-how, we have, as wll, tried to develop low temperature LTPS and organic lighting display OLED and such technology & know-how to assure firm competitive edge and effective growth in the Company’s business and financial standing.

2. Industry Change

TFT-LCD features high economic cycle and drastic fluctuation. Any sort of economic trend drop might lead to a shock to the Company’s business operation on the seamy side. Here at the Company, all our teammates would be closely watchful of fluctuation that might hit the Company ito passive aspect and work out sound countermeasures beforehand. In terms of financial operation, we adopt sound and stable financial operation to deal with potential fluctuation in the businesses.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the

Company’s Response Measures

Faithful law compliance, focus on shareholders’ equity represent the very bounden duties to the Company’s management. In case of a contingence, the Company’s ranking department head would serve as the emergency convener to immediately set up the Crisis Task Force ti defuse the crisis forthwith. As of the Annual Report’s publication date, there has been no event that adversely impact in Innolux’s corporate image and impact on corporate risk management.

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition

Plans

At the moment, the Company has no plan to launch a merger with another enterprise. Toward potential strategic investment or vertical integration, and the cost benefit and the potential risk so arising, the Company’s management would conduct appropriate evaluation and evasion as appropriate.

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

We all have those related technical groups to perform the professional feasibility assessment for expansion and build out of new generation factory

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

There is no risk associated with excessive customer concentration, due to the plenty production line and the main customers are international brand manufacturers. Innolux’s usually have two or more suppliers for main material. Therefore there is no risk associated with excessive concentration of purchasing. We will keep developing new products and new customers in the future and seeking for the better quality and the lower cost of purchase sources to reduce the risk of excessive customer concentration or excessive purchasing concentration.

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

As of the date of this Annual Report, there were no such risks for Innolux.

7.6.11 Effects of, Risks Relating to and Response to Changes in Control over the Company

As of the date of this Annual Report, there were no such risks for Innolux.

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- 7.6.12 Litigation or Non litigation Matters

The lawsuits, non-contentious cases, administrative litigation that are decided by the court or still in proceeding in recent years until this report was issued.
(1) Former Chi Mei Optoelectronics Corporation, CMO Japan Co. Ltd. CMO UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics U.S.A. Inc. were inquired by the Department of Justice of U.S.A. in December 2006 regarding to their being suspected of involving violating Anti-trust Laws. Some state governments in the U.S.A, European Union, Brazil, and Korean governments also conducted investigations. Some of the retailers and consumers in the U.S. and Canada had brought individual or collective Civil Procedure lawsuits toward panel manufacturers. Former Chi Mei Optoelectronics Corporation and Chi Mei Optoelectronics U.S.A. Inc. were listed as defendant in some of the cases. The debriefing of major investigations related to anti-trust laws are as following:
- A. The company had reached agreement with the U.S.A. Department of Justice to pay 220 million USD sentence with five years installment plan. Until the end of February 2015, the company finished the payment 220 million USD. From 2012 to presents, the company has reached settlement agreements with individual plaintiffs in the U.S.A, and recognizes the related losses. From 2011 November to presents, the company has reached settlement agreements with 13 state governments, and the company had agreed to settle the civil procedure lawsuits by paying the sentences according to civil codes.
- B. The company received European Commission’s notice in December 2010 to inquire the company paying 300 million Euro sentences to the appointed account within 3 months from the date the notice was received. The company had appealed to EU Court of Justice in February 2011, and deposit 300 million Euro to the account appointed by European Commission in March 14th in the same year. The principal and interest shall be return to the company according the final judgment of this case. EU Court of Justice decided to accepted parts of the appeal and decreased the sentence to 288 million Euro in February 2014. The company decided to make appeal to parts of the judgment within legal time limit.
- C. Except the final judgment remaining unpredictable, the company has recognized the losses according to the facts and evaluation regarding to anti-trust investigation related items revealed in previous paragraphs. The losses are listed in“Provisions Liabilities-Current”,“other accrued expenses payable” and “other financial non-current liabilities”.
(2) Eidos Display, LLC and Eidos III, LLC (below as Eidos) had brought a suit to Eastern District Court of Texas in April 25, 2011, to accuse certain products of ，
Innolux and its US branch’s infringes its patent rights. The summary judgment which decided the invalidation of Eidos’ patent rights, of this case had been issued by the administrative judge in December 2013 and the judge of this case had confirmed the summary judgment in January 2014. Eidos had appealed to the United States courts of appeals in February 2014. The United States courts of appeals made decision to rejected and remanded to the district court in March 2015. The company has a form to United States courts of appeals and raise defences actively. The final judgment depends on the suit proceedings and can’t be certain; therefore, this case doesn’t influence Innolux’s business and finance in short order.
Board members, monitors, CEO, responsible person in fact, shareholders and their companies holding more than 10% shares that involved in lawsuits, non-contentious cases, administrative litigation that were decided by the court or still in proceeding in recent years until this report was issued and might cause major influence on Innolux

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stockholder's equity and securities price: None.

7.6.13 Other Major Risks:None.

7.7 Other Important Matters: None.

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VIII. Special Disclosure

8.1 Summary of Affiliated Companies

==> picture [45 x 30] intentionally omitted <==

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

QunKang
Technology
(Chengdu) Co.
Ltd.
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----- Start of picture text -----

QunKang
Technology
(Shenzhen) Co.
Ltd.
Qun Yi Yuan Chi
Investment Investment
Company Company
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==> picture [147 x 31] intentionally omitted <==

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

Qun Zhi Qun You Qun Zhi
Optronics Corp. Optronics Corp. Optronics Corp.
(Nanjing) (Nanjing) (Shanhai)
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----- Start of picture text -----

Innolux Corp. Ltd
Innolux Corporation (Tree Valley
Park)
Innolux Corp. Ltd
(Tree Valley
Park)
Qun Zhi Qun Zhi Chyun Huei Chyun Huei Kuen Bao
Qun You Optronics Co., Optronics Co., Logistics Logistics Qun Huei Photoelectric Tai Kang
Optronics Co., Ltd (Ningbo) Ltd (Foshan) Company. Company. Optronics Co., Material Co., Ltd Technology Co.,
Ltd (Ningbo) (Foshan) (Ningbo) Ltd (Ningbo) (Nanjing) Ltd (Nanjing)
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8.1.2 Innolux Subsidiaries

8.1.2 Innolux Subsidiaries	8.1.2 Innolux Subsidiaries	8.1.2 Innolux Subsidiaries	8.1.2 Innolux Subsidiaries	8.1.2 Innolux Subsidiaries
December 31,2014
Company	Date of Incorporation	Address	Capital Stock	Business Activities
Asiaward Investment Ltd.	Jan 9, 2008	Room 1701, 111 Leighton Road, CausewayBay,HongKong	HK$77,830,001	Controlling Company
Best China Investments Ltd.	Jan 3, 2007	Offshore Chambers, P.O. Box,217,Apia,Samoa	US$10,000,000	Controlling Company
Bright Information Holding Ltd.	Nov 26, 2008	Rm 1501 15/F, Millennium City 5, 418 Kwun Tong Road, Kwun Tong,Kowloon,HK.	USD 4,910,000	Controlling Company
Chi Mei Optoelectronics Germany GmbH	Mar 02, 2006	Hanns-Martin Schleyer Strasse 9b-9c,47877 Willich-Munchheide	EUR 25,000	Operating electronics parts and LCD display import and export sale and after service
Gold Union Investments Limited	Oct 05, 2006	Offshore Chambers, P.O. Box 217,Apia,Samoa	USD31,783,000	Controlling Company
Golden Achiever International Limited	Sept 30, 2005	Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands	USD 39,250	Controlling Company
InnoLux Corporation	Nov 22, 2004	2525 Brockton Drive, Suite 300, Austin,TX 78758	USD 200,000	Sales company
Innolux Holding Ltd.	Feb 28, 2002	Offshore Chambers, P.O. Box,217,Apia,Samoa.	USD 246,768,185	Controlling Company
Innolux Hong Kong Holding Limited	Dec 14, 2005	Rm 1501 15/F, Millennium City 5, 418 Kwun Tong Road, Kwun Tong,Kowloon,HK.	HKD 1,158,844,000	Controlling Company
Innolux Hong Kong Limited	Feb 15, 2006	Rm 1501 15/F, Millennium City 5, 418 Kwun Tong Road, Kwun Tong,Kowloon,HK.	HKD 35,000,000	Entrepot trade company
Innolux Optoelectronics Europe B.V.	Nov 29, 2004	Jupiterstraat 106, 2132 HE Hoofddorp,The Netherlands	EUR 18,000	Operating electronics parts and LCD display import and export sale
Innolux Optoelectronics Hong KongHoldingLtd.	Nov 16, 2001	Rm 1501 15/F, Millennium City 5, 418 Kwun Tong Road, Kwun Tong,Kowloon,HK.	HKD 162,897,802	Controlling Company
Innolux Optoelectronics Japan Co., Ltd.	Aug 20, 1991	8F, kowa kawasaki-nishiguchi Bldg., 66-2 horikawa-cho, Saiwai-ku, Kawasaki-City, Kanagawa 212-0013,Japan	JPY 314,258,270	Operating TFT-LCD development, manufacture and sales
Innolux Optoelectronics USA, INC.	May 9, 2002	101 Metro Drive Suite 510,San Jose,CA95110, U.S.A	US$6,000,000	Operating electronics parts and computer display sale
Innolux Technology Europe B.V.	Mar 8, 2006	Stationstraat 39G, 6411NK, Heerlen, The Netherlands	EUR 37,581,000	Controlling Company of Researching, developing and Testing
Innolux Technology Germany GmbH	Feb 17, 2006	Kaiserswerther Strasse 115,D-40880 Ratingen, Germany	EUR 100,000	Testing & Maintenance Company
Innolux Technology Japan Co., Ltd.	Mar 1, 2005	1-1-1, Ibukidaihigashimachi, Nishi-ku, Kobe-city, 651-2242, Japan	JPY 146,570,164	Distributor
Innolux Technology USA Inc.	Apr 12, 2006	2300 North Barrington Road, Suite 400, Hoffman Estates, IL 60169,USA	USD 1,000	Distributor
KeywayInvestment	Mar 30,2005	Portcullis TrustNet Chambers,	USD 5,656,410	Controlling

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Company	Date of Incorporation	Address	Capital Stock	Business Activities
Management Limited		P.O Box 1225,Apia,Samoa		Company
Lakers Trading Ltd.	Jun 4, 2004	Offshore Chambers, P.O. Box,217,Apia,Samoa	USD 1	Entrepot trade company
Landmark International Ltd.	Apr 24, 2003	Offshore Chambers, P.O.Box 217,Apia,Samoa	USD 693,100,000	Controlling Company
Leadtek Global Group Limited	Mar 30, 2005	P.O. Box 3444,Road Town,Tortola,BVI	USD 50,000,000	Entrepot trade company
Magic Sun Ltd.	Nov 10, 2009	Offshore Chambers, P.O. Box,217,Apia,Samoa	US$38,000,000	Controlling Company
Main Dynasty Investment Ltd.	Dec 06, 2007	Room 1701, 111 Leighton Road, CausewayBay,HongKong	HKD 139,623,801	Controlling Company
Mega Chance Investments Ltd.	Jan 3, 2007	Offshore Chambers, P.O. Box 217,Apia,Samoa	USD 18,000,000	Controlling Company
Nets Trading Ltd.	May 2, 2008	Offshore Chambers, P.O. Box 217,Apia,Samoa	USD900,001	General Investment Industry
Rockets Holding Ltd.	Dec 18, 2002	Offshore Chambers, P.O. Box,217,Apia,Samoa	USD 226,504,550	Controlling Company
Stanford Developments Ltd.	Aug 12, 1999	Offshore Chambers, P.O. Box,217,Apia,Samoa	USD 164,000,000	Controlling Company
Sun Dynasty Development Ltd.	Nov 6, 2009	Room 1701, 111 Leighton Road, CausewayBay,HongKong	HKD 295,969,001	Controlling Company
Suns Holding Ltd.	Dec 18, 2006	Offshore Chambers, P.O. Box,217,Apia,Samoa	US$18,177,052	Controlling Company
Toppoly Optoelectronics (B.V.I.) Ltd.	Jul 17, 2001	CITCO Building, P.O. Box 662, Road Town, Tortola , British Virgin Islands.	USD 144,447,000	Controlling Company
Toppoly Optoelectronics (Cayman) Ltd.	Jul 17, 2001	89 Nexus Way, Camana Bay, P. O. Box 31106, Georgetown Grand Cayman KY1-1205, Cayman Islands	USD 144,417,000	Controlling Company
Warriors Technology Investments Ltd.	Jan 3, 2007	Offshore Chambers, P.O. Box,217,Apia,Samoa	US$18,177,052	Investment activities
Shanghai Innolux Optoelectronics Ltd.	Jan 9, 2006	No. 272-2, Ba Sheng Road, New Customs, Wai Gao Qiao Free Trade Zone, 200131 Pudong, Shanghai, China	USD 21,000,000	Manufacturing & selling LCD back end module related technologies and products.
Yuan Chi investment co., Ltd	Jul 6, 2005	No.8, Zhongxin Rd., Xinshi Dist., Tainan City 74148, Taiwan (R.O.C.)	NTD 2,100,000,000	Investment activities
Foshan Innolux Optoelectronics Ltd.	Apr 21, 2006	Xingye North Rd., Foshan Science & Technology Industry Garden, Foshan, Guangdong, 528325, China	USD 383,000,000	Manufacturing & selling LCD back end module related technologies and products.
Foshan Innolux Logistics Ltd.	Jul 17, 2008	North Factory, Xingye Rd., Nanhai Economic Zone, Foshan, Guangdong,528325,China	USD 1,500,000	Storage services
Chi Mei EL Corp.	Oct 4, 2004	Area A-F03-01, No.1, Qiye Rd., Xinshi Dist., Tainan City, 74148, Taiwan (R.O.C.)	NTD 1,600,000,000	Researching, developing, designing, manufacturing and selling OLED related technologies andproducts.
VAP Optoelectromics (NanJing) Corp.	Mar 29, 2007	No. 8, Jiu Zu Road, Jiangning Economic and Technical Development Zone, Nanjing, China	USD 6,600,000	Manufacturing & selling LCD back end module related technologies and products.

128

Company	Date of Incorporation	Address	Capital Stock	Business Activities
Kunpal Optoelectronics Ltd.	Jan 9, 2009	No. 93, Fu Cheng West Road, Jiangning Economic and Technical Development Zone, Nanjing,China	USD 4,000,000	Thinner glass process service
Nanjing Innolux Technology Ltd.	Oct 24, 2007	No. 93, Fu Cheng West Road, Jiangning Economic and Technical Development Zone, Nanjing,China	USD 2,100,000	Business of display and related product.
Nanjing Innolux Optoelectronics Ltd.	May 23, 2001	No. 93, Fu Cheng West Road, Jiangning Economic and Technical Development Zone, Nanjing, China	USD 142,000,000	Manufacturing & selling LCD back end module related technologies and products.
InnoJoy Investment Corp.	Jun 26, 2007	No.8, Zhongxin Rd., Xinshi Dist., Tainan City 74148, Taiwan (R.O.C.)	NTD1,674,053,920	Investment activities
Innocom Technology (Chengdu) Co., LTD	98.11.07	No.168, HeZuo Rd., West Park of ChengDu Hi-Tech Industrial Development Zone	USD 38,000,000	Manufacturing & selling LCD back end module related technologies and products.
Innocom Technology (Shenzhen) Co., LTD	Jun 24, 2004	1F, Zone 4, Foxconn Technology Industrial Park E, Bao'an District, Shenzhen City, Guangdong Province, China	USD 164,000,000	Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Technology Co., LTD	Jun 7, 2005	No.8, Cao E River Rd., Ningbo Bonded Zone	USD 130,000,000	Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Optoelectronics Co., LTD	Dec 14, 2004	No.16, YangZi River North Rd., Ningbo Export Processing Zone, 315800, China	USD 310,000,000	Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Display LTD	Dec 05, 2006	No.8, Cao E River Rd., Ningbo Bonded Zone	USD 30,000,000	Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Logistics LTD	Dec 05, 2006	No.8, Alishan Road, Ningbo Export ProcessingZone,China	USD 4,000,000	Storage services

8.1.3 Shareholders in Common of TSMC and Its Subsidiaries with Deemed Control and Subordination: None.

8.1.4 Business Scope of INX and Its Subsidiaries:

The company and its subsidiary operating business include the development, manufacture, after service and sale of TFT-LCD.

By the layout of globalization, combine the distribution of Taiwan and China production base; provide downstream manufacturer or panel module manufacturer to have high flexibility supply capacity.

There are a small number of affiliated companies are setting investment business as operating scope, to strength vertical integration and strategy investment and coordinate the company’s future operation.

129

As of 12/31/2014

8.1.5 Rosters of Directors, Supervisors, and Presidents of TSMC’s Subsidiaries:

			As of 12/31/2014	As of 12/31/2014
Company	Title	Name	Shareholding
			Shares	% (Investment Holding)
Asiaward Investment Ltd.	Chairman	Hsing-Chien Tuan	-	-
Best China Investments Ltd.	Chairman	Hsing-Chien Tuan	-	-
Bright Information Holding Ltd.	Chairman	Jyh Chau,Wang	-	-
	Director	Chao-Hsien Liu	-	-
	Director	Jun-Yi Yu	-	-
Chi Mei Optoelectronics Germany GmbH	Chairman	Chin-Yuan Chang	-	-
Gold Union Investments Limited	Chairman	Jyh Chau,Wang	-	-
Golden Achiever International Limited	Chairman	Chao-Hsien Liu	-	-
InnoLux Corporation	Chairman	Chen-Hua Luo	-	-
Innolux HoldingLtd.	Chairman	Hsing-Chien Tuan	-	-
Innolux Hong Kong Holding Limited	Chairman	Jyh Chau,Wang	-	-
	Director	Chao-Hsien Liu	-	-
	Director	Jun-Yi Yu	-	-
Innolux Hong Kong Limited	Chairman	Jyh Chau,Wang	-	-
	Director	Tzu-En Hung	-	-
	Director	Nai-Hsun Kuo	-	-
Innolux Optoelectronics Europe B.V.	Chairman	Chin-Yuan Chang	-	-
Innolux Optoelectronics Hong Kong Holding Ltd.	Chairman	Jyh Chau,Wang	-	-
	Director	Shu-Mei He	-	-
	Director	Jun-Yi Yu	-	-
Innolux Optoelectronics Japan Co., Ltd.	Chairman	Suzuki Mikio	-	-
	Director	Jyh Chau,Wang	-	-
	Director	Ching-LungTing	-	-
	Supervisor	Kida Masukichi	-	-
	Supervisor	Hui-Chuan Chien	-	-
	Supervisor	Chin-Yuan Chang	-	-
Innolux Optoelectronics USA, INC.	Chairman	Junichi Ishi	-	-
	Director	Suzuki Mikio	-	-
	Director	Sato Takahiro	-	-
Innolux Technology Europe B.V.	Chairman	Jyh Chau,Wang	-	-
	Director	van Riel, Lucien Franciscus Henricus	-	-
Innolux Technology Germany GmbH	Chairman	Jyh Chau,Wang	-	-
	Director	van Riel, Lucien Franciscus Henricus	-	-
	Director	Akkie Petrus Lambert Kersten	-	-
Innolux Technology Japan Co., Ltd.	Chairman	Taruda Kiyoshi	-	-
	Director	Jyh Chau,Wang	-	-
	Director	Hui-Chuan Chien	-	-
	Supervisor	Chin-Yuan Chang
Innolux Technology USA Inc.	Chairman	Jyh Chau,Wang	-	-
	Director	Brant White	-	-
Keyway Investment Management Limited	Chairman	Jyh Chau, Wang	-	-
Lakers TradingLtd.	Chairman	Hsing-Chien Tuan	-	-
Landmark International Ltd.	Chairman	Jyh Chau,Wang	-	-
Leadtek Global GroupLimited	Chairman	Jyh Chau,Wang	-	-
Magic Sun Ltd.	Chairman	Hsing-Chien Tuan	-	-
Main DynastyInvestment Ltd.	Chairman	Hsing-Chien Tuan	-	-
Mega Chance Investments Ltd.	Chairman	Hsing-Chien Tuan	-	-

130

Company	Title	Name	Shareholding	Shareholding
			Shares	% (Investment Holding)
Nets TradingLtd.	Chairman	Hsing-Chien Tuan	-	-
Rockets HoldingLtd.	Chairman	Hsing-Chien Tuan	-	-
Stanford Developments Ltd.	Chairman	Hsing-Chien Tuan	-	-
Sun DynastyDevelopment Ltd.	Chairman	Hsing-Chien Tuan	-	-
Suns HoldingLtd.	Chairman	Chih-HungHsiao	-	-
Toppoly Optoelectronics (B.V.I.) Ltd.	Chairman	Jyh Chau, Wang	-	-
Toppoly Optoelectronics (Cayman)Ltd.	Chairman	Jyh Chau, Wang	-	-
Warriors Technology Investments Ltd.	Chairman	Chih-Hung Hsiao	-	-
Shanghai Innolux Optoelectronics Ltd	Chairman	TPO Displays Hong Kong Holding Ltd. Representative - Nai-Jian Zheng	-	100%
	Director	TPO Displays Hong Kong Holding Ltd. Representative - Chin-Yuan Chang	-	100%
	Director	TPO Displays Hong Kong Holding Ltd. Representative - Jun-Yi Yu	-	100%
Yuan Chi investment co., Ltd	Chairman	Innolux Corporation Representative - Jyh-Chau Wang	-	100%
	Director	Innolux Corporation Representative – Chien-LangLo	-	100%
	Director	Innolux Corporation Representative - Chih-Hung Hsiao	-	100%
Foshan Innolux Optoelectronics Ltd.	Chairman	Landmark International Ltd. Representative - Chen-Hua Luo	-	100%
	Director	Landmark International Ltd. Representative - Ching-Hui Lin	-	100%
	Director	Landmark International Ltd. Representative - Jun-Yi Yu	-	100%
	Supervisor	Landmark International Ltd. Representative - Chin-Yuan Chang	-	100%
Foshan Innolux Logistics Ltd.	Chairman	Keyway Investment Management Ltd. Representative - Chen-Hua Luo	-	100%
	Director	Keyway Investment Management Ltd. Representative - Jung-Hsien Chien	-	100%
	Director	Keyway Investment Management Ltd. Representative - Kuei Wang	-	100%
	Supervisor	Keyway Investment Management Ltd. Representative - Chin-Yuan Chang	-	100%
Chi Mei EL Corp.	Chairman	Innolux Corporation Representative - Chih-Ming Chen	155,500,000	97.19%
	Director	Innolux Corporation Representative - Jun-Yi Yu	155,500,000	97.19%
	~~Dit~~	~~Il Cti~~	~~155500000~~	~~9719%~~
	~~recor~~ ~~nnoux orporaon~~		~~,,~~ ~~.~~

131

Company	Title	Name	Shareholding	Shareholding
			Shares	% (Investment Holding)
		Representative - Ke-Yi Kao
	Supervisor	Innolux Corporation Representative - Chin-Yuan Chang	155,500,000	97.19%
VAP Optoelectromics (NanJing) Corp.	Chairman	Golden Achiever International Ltd. Representative - Nai-Jian Zheng	-	100%
	Director	Golden Achiever International Ltd. Representative - Chin-Yuan Chang	-	100%
	Director	Golden Achiever International Ltd. Representative - Nai-Hsun Kuo	-	100%
	Supervisor	Golden Achiever International Ltd. Representative - Kun Ma	-	100%
Kunpal Optoelectronics Ltd.	Chairman	Bright Information Holding Ltd. Representative - Nai-Jian Zheng	-	100%
	Director	Bright Information Holding Ltd. Representative - Jun-Yi Yu	-	100%
	Director	Bright Information Holding Ltd. Representative - Chin-Yuan Chang	-	100%
	Supervisor	Bright Information Holding Ltd. Representative - Kun Ma	-	100%
Nanjing Innolux Technology Ltd.	Chairman	Toppoly Optoelectronics (Cayman) Ltd. Representative - Nai-Jian Zheng	-	100%
	Director	Toppoly Optoelectronics (Cayman) Ltd. Representative - Chin-Yuan Chang	-	100%
	Director	Toppoly Optoelectronics (Cayman) Ltd. Representative- Chih-ChiangLu	-	100%
	Supervisor	Toppoly Optoelectronics (Cayman) Ltd. Representative - Kun Ma	-	100%
Nanjing Innolux Optoelectronics Ltd.	Chairman	Toppoly Optoelectronics (Cayman) Ltd. Representative - Nai-Jian Zheng	-	100%
	Director	Toppoly Optoelectronics (Cayman) Ltd. Representative - Chin-Yuan Chang	-	100%
	Director	Toppoly Optoelectronics (Cayman) Ltd. Representative - Jun-Yi Yu	-	100%
	Supervisor	Toppoly Optoelectronics (Cayman) Ltd. Representative - Kun Ma	-	100%
InnoJoy Investment Corp.	Chairman	Innolux Corporation Representative - Chih-Hung Hsiao	167,405,392	100%
	Director	Innolux Corporation Representative - Jyh Chau,Wang	167,405,392	100%

132

Company	Title	Name	Shareholding	Shareholding
			Shares	% (Investment Holding)
	Director	Innolux Corporation Representative – Chien-LangLo	167,405,392	100%
	Supervisor	Innolux Corporation Representative - Chin-Yuan Chang	167,405,392	100%
Innocom Technology (Chengdu) Co., LTD	Chairman	Sun Dynasty Development Limited. Representative - Jun-Yi Yu	-	100%
	Director	Sun Dynasty Development Limited. Representative - Jui-Pin Lu	-	100%
	Director	Sun Dynasty Development Limited. Representative - Tzu-En Hung	-	100%
Innocom Technology (Shenzhen) Co., LTD	Chairman	Stanford Developments Ltd. Representative - Tun-Fu Huang	-	100%
	Director	Stanford Developments Ltd. Representative - Jun-Yi Yu	-	100%
	Director	Stanford Developments Ltd. Representative - Chin-Yuan Chang	-	100%
Ningbo Innolux Technology Co., LTD	Chairman	Landmark International Ltd. Representative - Kuo-Hsiung Kuo	-	100%
	Director	Landmark International Ltd. Representative – Chien-LangLo	-	100%
	Director	Landmark International Ltd. Representative- Cheng-Chung Chiang	-	100%
	Supervisor	Landmark International Ltd. Representative - Chin-Yuan Chang	-	100%
Ningbo Innolux Optoelectronics Co., LTD	Chairman	Landmark International Ltd. Representative - Kuo-Hsiung Kuo	-	100%
	Director	Landmark International Ltd. Representative – Chien-LangLo	-	100%
	Director	Landmark International Ltd. Representative - Cheng-Chung Chiang	-	100%
	Supervisor	Landmark International Ltd. Representative - Chin-Yuan Chang	-	100%
Ningbo Innolux Display LTD	Chairman	Gold Union Investments Ltd. Representative - Kuo-Hsiung Kuo	-	100%
	Director	Gold Union Investments Ltd. Representative – Chien-LangLo	-	100%
	Director	Gold Union Investments Ltd. Representative - Cheng-Chung Chiang	-	100%
	Supervisor	Gold Union Investments Ltd. Representative - Chin-Yuan Chang	-	100%
Ningbo Innolux Logistics LTD	Chairman	Keyway Investment ~~Mt Ltd~~	-	100%
	~~anagemen .~~ Representative - Kuo-Hsiung

133

Title	Name	Shareholding	Shareholding
		Shares	% (Investment Holding)
	Kuo
Director	Keyway Investment Management Ltd. Representative – Chien-LangLo	-	100%
Director	Keyway Investment Management Ltd. Representative - Cheng-Chung Chiang	-	100%
Supervisor	Keyway Investment Management Ltd. Representative - Chin-Yuan Chang	-	100%

134

8.1.6 Operational Highlights of INX Subsidiaries

	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -	Unit: NT$thousands,12/31/2014 Capital Stock Assets Liabilities Net Worth Net Revenue Income (Loss) from Operation Net Income (Loss) Basic Earnings (Loss) Per Share 317,546 255,806 - 255,806 - - 36,380 - 316,500 255,806 - 255,806 - - 36,380 - 155,402 106,137 408 105,729 - (525) 423 - 692 154,600 7,115 147,485 71,204 2,789 7,361 - 962 28,840 1,903 26,937 61,223 4,329 3,753 - 189,900 424,492 165,723 258,769 902,759 15,269 23,063 - 83,153 1,761,838 337,278 1,424,560 2,223,865 47,682 68,864 - 1,005,932 260,761 - 260,761 - - 111,306 - 1,242 (43,353) - (43,353) - - (573) - 6,330 126,290 214,508 (88,218) - (1,598) (1,722) - 7,810,213 16,818,434 - 16,818,434 - - 324,999 - 179,025 239,763 - 239,763 - - 5,890 - - 57,981,140 57,740,012 241,128 142,333,982 846,049 - - 21,936,615 42,428,340 - 42,428,340 - - 4,430,141 1,582,500 57,157,313 57,279,027 (121,714) 109,357 109,357 (96,260) - 1,202,700 1,018,638 - 1,018,638 - - 3,328 - 569,665 421,267 - 421,267 - - 1,221 - 569,700 421,268 - 421,268 - - 1,221 - 28,485 30,441 - 30,441 - - - - 7,168,869 15,261,116 - 15,261,116 - - 71,583 - 5,190,600 13,534,886 41 13,534,845 - - 36,362 - 1,207,554 1,018,638 - 1,018,638 - - 3,328 - 575,304 1,404,398 - 1,404,398 - - 255,129 - 4,571,748 6,181,533 - 6,181,533 - - 740,811 - 4,570,798 6,181,164 - 6,181,164 - - 740,811 - 1,445,741 2,510,337 100,158 2,410,179 699,473 42,679 35,651 3,847 92,017 28,866 63,151 32,996 1,745 41 - 664,623 780,296 2 780,294 - (207) 233,398 - 142,800 10,456,844 12,552,790 (2,095,946) 57,330,046 120,387 320,095 - 38,782 1,696,926 56,806 1,640,120 361,091 17,197 (128,257) - 32 623,602 297,285 326,317 1,364,389 49,315 31,730 -
Company	Capital Stock	Assets	Liabilities	Net Worth	Net Revenue	Income (Loss) from Operation	Net Income (Loss)	Basic Earnings (Loss) Per Share
Asiaward Investment Ltd.	317,546	255,806	-	255,806	-	-	36,380	-
Best China Investments Ltd.	316,500	255,806	-	255,806	-	-	36,380	-
Bright Information HoldingLtd.	155,402	106,137	408	105,729	-	(525)	423	-
Chi Mei Optoelectronics GermanyGmbH	692	154,600	7,115	147,485	71,204	2,789	7,361	-
Gold Union Investments Limited	962	28,840	1,903	26,937	61,223	4,329	3,753	-
Golden Achiever International Limited	189,900	424,492	165,723	258,769	902,759	15,269	23,063	-
InnoLux Corporation	83,153	1,761,838	337,278	1,424,560	2,223,865	47,682	68,864	-
Innolux HoldingLtd.	1,005,932	260,761	-	260,761	-	-	111,306	-
Innolux Hong Kong HoldingLimited	1,242	(43,353)	-	(43,353)	-	-	(573)	-
Innolux Hong Kong Limited	6,330	126,290	214,508	(88,218)	-	(1,598)	(1,722)	-
Innolux Optoelectronics Europe B.V.	7,810,213	16,818,434	-	16,818,434	-	-	324,999	-
Innolux Optoelectronics HongKongHoldingLtd.	179,025	239,763	-	239,763	-	-	5,890	-
Innolux Optoelectronics Japan Co.,Ltd.	-	57,981,140	57,740,012	241,128	142,333,982	846,049	-	-
Innolux Optoelectronics USA,Inc.	21,936,615	42,428,340	-	42,428,340	-	-	4,430,141
Innolux Technology Europe B.V.	1,582,500	57,157,313	57,279,027	(121,714)	109,357	109,357	(96,260)	-
Innolux Technology GermanyGmbH	1,202,700	1,018,638	-	1,018,638	-	-	3,328	-
Innolux Technology Japan Co.,Ltd.	569,665	421,267	-	421,267	-	-	1,221	-
Innolux Technology USA Inc.	569,700	421,268	-	421,268	-	-	1,221	-
Keyway Investment Management Limited	28,485	30,441	-	30,441	-	-	-	-
Lakers TradingLtd.	7,168,869	15,261,116	-	15,261,116	-	-	71,583	-
Landmark International Ltd.	5,190,600	13,534,886	41	13,534,845	-	-	36,362	-
Leadtek Global Group Limited	1,207,554	1,018,638	-	1,018,638	-	-	3,328	-
Magic Sun Ltd.	575,304	1,404,398	-	1,404,398	-	-	255,129	-
Main Dynasty Investment Ltd.	4,571,748	6,181,533	-	6,181,533	-	-	740,811	-
Mega Chance Investments Ltd.	4,570,798	6,181,164	-	6,181,164	-	-	740,811	-
Nets TradingLtd.	1,445,741	2,510,337	100,158	2,410,179	699,473	42,679	35,651
Rockets HoldingLtd.	3,847	92,017	28,866	63,151	32,996	1,745	41	-
Stanford Developments Ltd.	664,623	780,296	2	780,294	-	(207)	233,398	-
Sun Dynasty Development Ltd.	142,800	10,456,844	12,552,790	(2,095,946)	57,330,046	120,387	320,095	-
Suns HoldingLtd.	38,782	1,696,926	56,806	1,640,120	361,091	17,197	(128,257)	-
Toppoly Optoelectronics (B.V.I.)Ltd.	32	623,602	297,285	326,317	1,364,389	49,315	31,730	-

135

Company	Capital Stock	Assets	Liabilities	Net Worth	Net Revenue	Income (Loss) from Operation	Net Income (Loss)	Basic Earnings (Loss) Per Share
Toppoly Optoelectronics (Cayman)Ltd.	4,728,084	2,367,447	150	2,367,297	-	(256)	493,840	-
Warriors Technology Investments Ltd.	575,304	1,404,397	-	1,404,397	-	(48)	255,127	-
Shanghai Innolux Optoelectronics Ltd.	2,100,000	1,233,647	4,400	1,229,247	-	(289)	31,904	-
Yuan Chi investment co., Ltd	47,475	81,577	14,934	66,643	107,930	(584)	161	-
Foshan Innolux Optoelectronics Ltd.	12,121,950	61,485,547	42,767,929	18,717,618	114,099,814	2,331,328	1,866,041	-
Foshan Innolux Logistics Ltd.	1,600,000	143,551	88,729	54,822	-	(11,387)	(5,702)	-
Chi Mei EL Corp.	208,890	72,047	115,803	(43,756)	-	(324)	(574)	-
VAP Optoelectromics (NanJing)Corp.	126,600	94,846	15,413	79,433	105,743	1,565	942	-
Kunpal Optoelectronics Ltd.	66,465	609,473	2,420	607,053	-	(1,620)	11,797	-
Nanjing Innolux TechnologyLtd.	4,494,300	17,814,440	12,239,408	5,575,032	46,480,006	907,803	729,013	-
Nanjing Innolux Optoelectronics Ltd.	664,650	6,107,615	5,327,200	780,415	17,939,224	286,824	233,398	-
InnoJoyInvestment Corp.	1,674,054	1,670,913	830	1,670,083	-	(299)	(162,272)	-
Innocom Technology (Chengdu)Co.,LTD	1,202,700	1,020,309	1,515	1,018,794	-	-	3,328	-
Innocom Technology (Shenzhen)Co.,LTD	5,190,600	15,514,116	1,977,216	13,536,900	2,624,944	334,552	36,362	-
Ningbo Innolux TechnologyCo.,LTD	949,500	4,578,221	4,317,436	260,785	4,745,511	52,128	34,860	-
Ningbo Innolux Optoelectronics Co.,LTD	4,114,500	16,627,556	13,408,962	3,218,594	33,635,480	528,642	491,039	-
Ningbo Innolux Display LTD	9,811,500	50,735,291	30,130,493	20,604,798	92,087,411	2,029,637	2,070,696	-
Ningbo Innolux Logistics LTD	126,600	174,276	5,939	168,337	45,021	4,475	5,729	-

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

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

8.4 Special Notes: None.

136

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Innolux Corporation:

We have audited the accompanying consolidated balance sheets of Innolux Corporation and its subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under equity method for the year ended December 31, 2013. Those statements reflect NT$5,130,451,000, constituting 1% of the consolidated total assets as of December 31, 2013, and total operating revenues was NT$0 for the year then ended. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other independent accountants provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other independent accountants, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Innolux Corporation and subsidiaries as of December 31, 2014 and 2013, and their financial performance and cash flows for the years then ended in conformity with the “Regulations Governing the Preparations of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

137

Innolux Corporation and its subsidiaries’ current liabilities have exceeded its current assets by NT$9,754,686,000 as of December 31, 2014. As set forth in Note 12(4), management has designed a turnaround plan to improve the Company’s operating efficiency.

We have also audited the separate financial statements of Innolux Corporation as of and for the years ended December 31, 2014 and 2013, and have expressed an unqualified opinion on such financial statements.

PricewaterhouseCoopers, Taiwan

February 10, 2015

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

138

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 2014 6(1) $ 70,989,741 6(2) 52,453 6(3) 220,000 6(5) 70,976,005 7 6,112,400 7 2,849,589 6(6) 33,787,842 1,441,603 8 2,284,870 666,309 189,380,812 6(2) 605,155 6(3) 5,137,117 6(7) 2,364,225 6(8), 7 and 8 233,609,843 6(9) 693,677 6(10) 20,219,137 6(25) 17,778,516 8 11,160,082 1,567,991 293,135,743 $ 482,516,555 (Continued)	2013
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Accounts receivable, net Accounts receivable, net - related parties Other receivables Inventory Prepayments Other financial assets - current Other current assets Total current assets Non-current assets Financial assets at fair value through profit or loss - non-current Available-for-sale financial assets - non-current Investments accounted for under equity method Property, plant and equipment Investment property, net Intangible assets Deferred income tax assets Other financial assets - non-current Other non-current assets Total non-current assets Total assets		$ 44,137,818 227,703 - 66,358,291 2,049,985 4,255,683 50,524,156 1,194,871 2,544,567 408,895
		171,701,969
		712,603 3,952,530 4,919,134 273,505,759 706,850 21,214,994 18,123,869 12,327,722 1,035,455
		336,498,916
		$ 508,200,885

139

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(11) 6(2) 6(4) 7 7 6(15) 6(12) 6(4) 6(12) 6(25) 9 6(16) 6(17) 6(18) 6(19) 9 6(12)(16) and 11	2014 2013 $ 22,526,999 $ 31,179,767 605,016 689,097 1,351 - 74,954,439 65,435,586 5,252,946 8,756,243 23,912,180 20,715,595 582,258 454,482 3,133,489 1,949,029 66,162,663 169,097,708 2,004,157 2,309,244 199,135,498 300,586,751 - 21,918 42,293,423 - 477,580 909,708 11,438,618 12,104,654 54,209,621 13,036,280 253,345,119 313,623,031 99,545,364 91,094,288 99,584,369 96,058,741 509,272 2,328,981 1,144,229 - 24,979,173 5,092,716 1,927,656 ( 1,531,497) 227,690,063 193,043,229 1,481,373 1,534,625 229,171,436 194,577,854 $ 482,516,555 $ 508,200,885
Current liabilities Short-term borrowings Financial liabilities at fair value through profit or loss - current Derivative financial liabilities for hedging - current Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions - current Long-term liabilities, current portion Other current liabilities Total current liabilities Non-current liabilities Derivative financial liabilities for hedging - non-current Long-term borrowings Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to owners of the parent Share capital - common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Other equity interest Equity attributable to owners of the parent Non-controlling interest Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date Total liabilities and equity

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 10, 2015.

140

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

Items

Notes
2014
2013
7
$ 428,661,898
$ 422,730,500
6(6)(23)(24) and 7 (
378,276,897)(
384,971,385)
50,385,001
37,759,115
6(23)(24)
(
3,224,079) (
2,974,223)
(
6,810,443) (
7,169,974)
(
12,177,083)(
12,265,650)
(
22,211,605)(
22,409,847)
28,173,396
15,349,268
6(20)
2,734,952
2,627,868
6(21)
(
5,130,475) (
7,166,774)
6(22)
(
3,309,347) (
5,103,230)
65,814 (
63,779)
(
5,639,056)(
9,705,915)
22,534,340
5,643,353
6(25)
(
857,432)(
548,334)
$ 21,676,908
$ 5,095,019
$ 3,078,767
$ 2,712,774
6(3)
284,946
16,772
6(4)
(
278,458)
79,477
6(13)
(
55,790) (
11,870)

81,659
36,122
6(25)
48,369
26,242
$ 3,159,493
$ 2,859,517
$ 24,836,401
$ 7,954,536
$ 21,676,759
$ 5,102,568
149 (
7,549)
$ 21,676,908
$ 5,095,019
$ 24,844,853
$ 7,953,076
(
8,452)
1,460
$ 24,836,401
$ 7,954,536
6(26)
$ 2.31
$ 0.57
$ 2.28
$ 0.57

Sales revenue
Operating costs
Net operating margin
Operating expenses
Selling expenses
General and administrative expenses
Research and development expenses
Total operating expenses
Operating profit
Non-operating income and expenses
Other income
Other gains and losses
Finance costs
Share of profit/(loss) of associates and
joint ventures accounted for under equity
method
Total non-operating income and
expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income (net)
Financial statements translation
differences of foreign operations
Unrealized gain on valuation of
available-for-sale financial assets
Cash flow hedges
Actuarial loss on defined benefit plan
Share of other comprehensive income of
associates and joint ventures accounted for
under equity method
Income tax relating to the components of
other comprehensive income
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
Profit attributable to:
Owners of the parent
Non-controlling interest
Total
Other comprehensive income attributable
to:
Owners of the parent
Non-controlling interest
Total
Earnings per share (in dollars)
Basic earnings per share
Diluted earnings per share

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 10, 2015.

141

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

			Equity attributable to own	Equity attributable to own	ers ofthe parent
Common stock	Capital surplus $ 119,677,980 ( 27,308,220 ) 3,269,051 187,212 10,680 189,976 32,062 - - $ 96,058,741 $ 96,058,741 2,125,000 - - - ( 1,266,944 ) 2,328,981 48,924 47,174 289,523 ( 47,030 ) - - - $ 99,584,369		Retained Earnings			Other equity	interest
		Legal reserve $ 2,328,981 - - - - - - - - $2,328,981 $ 2,328,981 - 509,272 - - - ( 2,328,981 ) - - - - - - - $ 509,272	Special reserve	Unappropriated earnings	Financial statements translation differences of foreign operations	Unrealized gain (loss) on available-for- sale financial assets	Changes in gain (loss) on cash flow hedge	Employee unearned compensatio n
$ 79,129,708 - 11,250,000 725,260 ( 10,680 ) - - - - $ 91,094,288 $ 91,094,288 8,500,000 - - - - - ( 48,924 ) - - - - - - $ 99,545,364			$ - - - - - - - - - $ - $ - - - 1,144,229 - - - - - - - - - - $1,144,229	($ 27,308,220 ) 27,308,220 - - - - - 5,102,568 ( 9,852 ) $ 5,092,716 $ 5,092,716 - ( 509,272 ) ( 1,144,229 ) ( 90,495 ) - - - - - - - 21,676,759 ( 46,306 ) $24,979,173	($ 2,818,705 ) ($ 1,609,513 ) - - - - - - - - - - - - - - 2,740,631 65,168 ($ 78,074 ) ($1,544,345 ) ($ 78,074 ) ($ 1,544,345 ) - - - - - - - - - - - - - - - - - - - - - - - - 3,161,022 284,498 $3,082,948 ($1,259,847 )		$ 423,629 - - - - - - - 54,561
							$478,190

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 10, 2015.

142

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the year
Adjustments to reconcile net income to net cash provided by
operating activities
Income and expenses having no effect on cash flows
Depreciation and amortization
Compensation related to share-based payment
Provision for doubtful accounts
Share of profit (loss) of associates and joint ventures
accounted for under equity method
Gain from disposal of investments
Loss on disposal of property, plant and equipment
Impairment loss
Interest expense
Interest income
Dividend income
Unrealized foreign exchange loss (gain)
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets /liabilities at fair value through profit
or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Derivative financial liabilities for hedging
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash generated from operations
Cash paid for income tax
Net cash provided by operating activities

Notes
2014
2013
$ 22,534,340
$ 5,643,353
6(23)
60,899,556
77,851,438
6(24)
578,227
556,874
6(5)
820
453
(
65,814 )
63,779
6(21)
(
794,041 ) (
1,977,799 )
6(21)
179,758
138,658
6(21)
351,066
921,828
6(22)
3,586,581
5,051,960
6(20)
(
328,633 ) (
293,741 )
(
39,958 ) (
58,897 )
1,417,004
(
310,450 )

198,617
(
1,275,676 )
(
4,618,534 )
8,336,807
(
4,062,415 )
6,500,243
(
1,047,816 )
734,595
16,736,314
(
8,456,587 )
(
246,732 ) (
226,676 )
(
257,414 ) (
123,046 )
(
299,025 ) (
399,357 )
9,518,853
(
16,066,134 )
(
3,503,297 ) (
4,958,074 )
4,070,494
749,050
1,184,460
814,253
(
290,486 )
513,119
(
721,826)
3,133,498
104,980,099
76,863,471
(
768,062) (
974,312)
104,212,037
75,889,159

(Continued)

143

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(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 disposal of financial assets carried at cost -
non-current
Proceeds from disposal of non-current assets held for sale
Acquisition of investment accounted for under equity
method
Proceeds from disposal of investment accounted for under
equity method
Proceeds from capital reduction of investments accounted
for under equity method
Decrease in other financial assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Interest received
Dividends received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Decrease in short-term notes and bills payable
Payment of long-term borrowings
Payment of bonds payable
Decrease in accrued lease payments
Stock issued for cash
Cash dividends paid
Cash paid from capital surplus
Proceeds from issuance of restricted stock to employees
Repurchase from issuance of restricted stock to employees
Changes in non-controlling interests
Interest paid
Net cash used in financing activities
Effect of changes in foreign currency exchange
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2014
2013
($ 240,167 ) ($ 916,909 )

802,524
3,963,684
-
192,758
-
279,312
(
73,500 )
-
1,685,201
136,185
59,451
-
464,337
941,407
6(27)
(
20,526,552 ) (
18,370,343 )
6(27)
4,253,209
1,174,898
(
18,140 ) (
157,781 )
(
22,070 )
29,586
368,335
364,391
64,221
201,765
(
13,183,151) (
12,161,047)
(
8,881,219 ) (
14,499,547 )
-
(
699,430 )
(
61,671,395 ) (
51,589,030 )
-
(
2,000,000 )
-
(
980,000 )
6(16)
10,625,000
14,519,051
6(18)
(
90,495 )
-
(
1,266,944 )
-
6(14)
-
181,315
(
7,754 ) (
8,260 )
(
44,800 )
-
(
3,608,923) (
5,586,134)
(
64,946,530) (
60,662,035)
769,567
173,764
26,851,923
3,239,841
44,137,818
40,897,977
$ 70,989,741
$ 44,137,818

The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 10, 2015.

144

INNOLUX CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(All amounts expressed in thousands of New Taiwan dollars)

1. HISTORY AND ORGANIZATION

(1)Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity.
(2)The Company and its subsidiaries (the “Group”) are engaged in the research, development, design, manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.

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

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on February 10, 2015.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) None.

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

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

145

New Standards,Interpretations andAmendments
Severe hyperinflation and removal of fixed dates
for first-time adopters (amendment to IFRS 1)
Government loans (amendment to IFRS 1)
Disclosures－Transfers of financial assets
(amendment to IFRS 7)
Disclosures－Offsetting financial assets and financial
liabilities (amendment to IFRS 7)
IFRS 10, ‘Consolidated financial statements’
IFRS 11, ‘Joint arrangements’
IFRS 12, ‘Disclosure of interests in other entities’
IFRS 13, ‘Fair value measurement’
Presentation of items of other comprehensive income
(amendment to IAS 1)
Deferred tax: recovery of underlying assets
(amendment to IAS 12)
IAS 19 (revised), ‘Employee benefits’
IAS 27 (revised), ‘Separate financial statements’
Investments in associates and joint ventures
(amendment to IAS 28)
Offsetting financial assets and financial liabilities
(amendment to IAS 32)
IFRIC 20, ‘Stripping costs in the production phase
of a surface mine’
Improvements to IFRSs 2010
Improvements to IFRSs 2009－2011

Effective Date by
International Accounting
StandardsBoard

July 1, 2011
January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
(Investment entities: January 1, 2014)
January 1, 2013
January 1, 2013
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
January 1, 2011
January 1, 2013

Based on the Group’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the consolidated financial statements of the Group, except the following: A.IAS 19, ‘Employee benefits’

Under the revised standard, net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. Additional disclosures are also required.

B.IAS 1, ‘Presentation of financial statements’

The amendment requires entities to separate items presented in other comprehensive income (OCI) classified by nature into two groups on the basis of whether they may be reclassified to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.

146

C.IFRS 12, ‘Disclosure of interests in other entities’

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

D.IFRS 13, ‘Fair value measurement’

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

Based on the Group’s assessment, the adoption of the 2013 version of IFRSs has no significant impact on the consolidated financial statements of the Group.

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

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

version of IFRS as endorsed by the FSC:

New Standards,Interpretations and Amendments

Effective Date by
International Accounting
Standards Board

IFRS 9, ‘Financial instruments’
Sale or contribution of assets between an investor and its associate
or joint venture (amendments to IFRS 10 and IAS 28)
Investment entities: applying the consolidation exception
(amendments to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)
IFRS 14, ‘Regulatory deferral accounts’
IFRS 15, ‘Revenue from contracts with customers’
Disclosure initiative (amendments to IAS 1)
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Defined benefit plans: employee contributions
(amendments to IAS 19)
Equity method in separate financial statements
(amendments to IAS 27)
Recoverable amount disclosures for non-financial assets
(amendments to IAS 36)

January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014

147

New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014	January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 January 1, 2016

The Group is assessing the impact of the new standards and interpretations above and the impact will be disclosed when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(4) Compliance statement

These consolidated financial statements are the consolidated financial statements prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(5) Basis of preparation

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

(6) Basis of consolidation

A.Basis for preparation of consolidated financial statements
(a)All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are

148

all entities over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

(b)Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c)Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
(d)Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
(e)When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities		2014 2013 100 57 100 100 100 100 100 100 100 100 100 100 December 31, Ownership (%)	2014 2013 100 57 100 100 100 100 100 100 100 100 100 100 December 31, Ownership (%)	Description
				2014
Innolux Corporation	Bright Information Holding Ltd. Gold Union Investments Ltd. Golden Achiever International Ltd. Innolux Holding Ltd. Keyway Investment Management Limited Landmark International Ltd.	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings		100 100 100 100 100 100	57 100 100 100 100 100	( a ) - - - - -

149

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,
			2014	2013
Innolux Corporation Bright Information Holding Ltd. Gold Union Investments Ltd. Golden Achiever International Ltd. Innolux Holding Ltd. Landmark International Ltd. Keyway Investment Management Limited	Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. (Former TPO Hong Kong Holding Ltd.) Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Chi Mei Optoelectronics (Singapore) Pte Ltd. Innolux Optoelectronics Europe B.V. (Former Chi Mei Optoelectronics Europe B.V.) Innolux Optoelectronics Japan Co., Ltd. (Former Chi Mei Optoelectronics Japan Co., Ltd.) Chi Mei El Corporation Kunpal Optoelectronics Ltd. Ningbo Innolux Display Ltd. VAP Optoelectronics (Nanjing) Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation Ningbo Innolux Logistics Ltd. Foshan Innolux Logistics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd.	Investment holdings Investment holdings Order swapping company Investment company Investment company Distribution company Investment and distribution company Investment and distribution company Production and distribution company Processing company Processing company Processing company Investment holdings Investment holdings Order swapping company Distribution company Warehousing company Warehousing company Processing company Processing company	100 100 100 100 100 - 100 100 97 100 100 100 100 100 100 100 100 100 100 100	100 100 100 100 100 100 100 100 97 100 100 100 100 100 100 100 100 100 100 100	- - - - - ( c ) - - - - - - - - - - - - - -

150

Name of Investor	Name ofSubsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2014	2013
Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Innolux Optoelectronics Europe B.V. Innolux Optoelectronics Japan Co., Ltd. Rockets Holding Ltd. Suns Holding Ltd.	Foshan Innolux Optoelectronics Ltd. (Former Nanhai Chi Mei Electronics Ltd.) Nanhai Chi Mei Optoelectronics Ltd. Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Ltd. (Former TPO Displays Hong Kong Holding Ltd.) Innolux Hong Kong Ltd. (Former TPO Displays Hong Kong Ltd.) Innolux Technology Europe B.V. (Former TPO Displays Europe B.V.) Innolux Technology Japan Co., Ltd. (Former TPO Displays Japan K.K.) Innolux Technology USA Inc. (Former TPO Displays USA Inc.) Chi Mei Optoelectronics Germany GmbH Innolux Optoelectronics USA, Inc. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd. Sonics Trading Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd.	Processing company Processing company Investment holdings Investment holdings Order swapping company Investment and R&D company Distribution company Distribution company After sales service company Distribution company Investment holdings Investment holdings Investment holdings Investment holdings Order swapping company Investment company Investment company	100 - 100 100 100 100 100 100 100 100 100 100 100 100 - 100 100	100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100	( b ) ( b ) - - - - - - - - - - - - ( c ) - -

151

Name of Investor	Name ofSubsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2014	2013
Innolux Optoelectronics Hong Kong Holding Ltd. Innolux Technology Europe B.V. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd. Asiaward Investment Ltd. Sun Dynasty Development Ltd. Toppoly Optoelectronics (Cayman) Ltd.	Nanjing Innolux Technology Ltd. (Former TPO Displays (Shinepal) Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innolux Technology Germany GmbH (Former TPO Displays Germany GmbH) Asiaward Investment Ltd. Main Dynasty Investment Ltd. Sun Dynasty Development Ltd. Innocom Technology (Shenzhen) Ltd. Innocom Technology (Xiamen) Ltd. Innocom Technology (Chengdu) Co., Ltd.	Distribution company Processing company Processing company Testing and maintenance company Investment holdings Investment holdings Investment holdings Processing company Processing company Processing company	100 100 100 100 100 100 100 100 - 100	100 100 100 100 100 100 100 100 100 100	- - - - - - - - ( c ) -

(a)In July, 2014, the Company obtained the remaining 43% interest of its subsidiary, Bright Information Holding Ltd., and the transaction was accounted as equity transaction.

(b)In June, 2013, the Board of Directors of the Company adopted a resolution for the merger of two wholly-owned subsidiaries, Foshan Innolux Optoelectronics Ltd. and Nanhai Chi Mei Optoelectronics Ltd., with Foshan Innolux Optoelectronics Ltd. as the surviving company. Effective date of this merger was January 1, 2014, and it was accounted for as a reorganization.

(c)Chi Mei Optoelectronics (Singapore) Pte Ltd., Sonics Trading Ltd., and Innocom Technology (Xiamen) Ltd. ceased operations and were all liquidated in the first quarter of 2014.

C.Subsidiaries not included in the consolidated financial statements: None.

D.Adjustments for subsidiaries with different balance sheet dates: None.

E.The restrictions on fund remittance from subsidiaries to the parent company: None.

(7) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional

152

currency”). The consolidated financial statements are presented in NTD, which is the Company’s functional and the Group’s presentation currency.

A.Foreign currency transactions and balances

(a)Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges.
(b)Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c)Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d)All foreign exchange gains and losses are presented in the statement of comprehensive income under “other gains and losses”.
B.Translation of foreign operations
(a)The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i.Assets and liabilities for each balance sheet presented are translated at the exchange rate prevailing at the dates of that balance sheet;
- ii.Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period;

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

(b)When a foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c)When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred

153

to the non-controlling interest in this foreign operation. In addition, if the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(8) Classification of current and non-current items

A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a)Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
- (b)Assets held mainly for trading purposes;
- (c)Assets that are expected to be realized within twelve months from the balance sheet date;
- (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to
  - be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a)Liabilities that are expected to be paid off within the normal operating cycle;
- (b)Liabilities arising mainly from trading activities;
- (c)Liabilities that are to be paid off within twelve months from the balance sheet date;
- (d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(9) Cash equivalents
Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. Time deposits and bonds sold under repurchase agreements that meet the above criteria and held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

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

A.Financial assets at fair value through profit or loss are financial assets held for trading or designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of sale in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a)Hybrid (combined) contracts; or
(b)They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c)They are managed and their performance is evaluated on a fair value basis, in accordance with

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a documented risk management or investment strategy.

B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.

(11) Available-for-sale financial assets

A.Available-for-sale financial assets are non-derivatives that are designated in this category. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
B.Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.
(12) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable which are non-interest bearing are subsequently measured at initial invoice amount as the effect of discounting is insignificant.

(13) Impairment of financial assets

A.The Group assesses at each balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of an individual financial asset or group of financial assets that can be reliably estimated.
B.The objective evidence that the Group uses to determine whether there is an impairment loss is as follows:
(a)Significant financial difficulty of the issuer or debtor;
(b)A breach of contract, such as a default or delinquency in interest or principal payments;
(c)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
(d)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C.When the Group assesses that there has been objective evidence of impairment and an

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impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

(a)Financial assets measured at amortized cost
The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.
(b)Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from “other comprehensive income” to “profit or loss”. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(14) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average cost method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

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

A.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
B.The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or

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loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

C.When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes all the change in equity in “capital surplus” in proportion to its ownership.
D.Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E.In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then “capital surplus” and “investments accounted for under the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F.Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.
G.When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of.
H.When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are reclassified to profit or loss. If it retains significant influence over this associate, then the amounts previously recognized as capital surplus in relation to the associate are reclassified to profit or loss proportionately.
(16) Property, plant and equipment
A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B.Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,

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as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss when incurred.

C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately.
D.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings 3~50 years Machinery and equipment 2~9 years Others 2~6 years

(17) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25~50 years.

(18) Intangible assets

A.Goodwill arises in a business combination accounted for by applying the acquisition method.
B.Intangible assets, mainly patents, royalties and other intangible assets, are amortized on a ～
straight-line basis over their estimated useful lives of 2 10 years.

(19) Impairment of non-financial assets

A.The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the asset’s carrying amount greater than its amortized cost where no impairment loss was recognized.
B.The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall

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not be reversed in the following years.

C.For impairment testing purpose, goodwill is allocated to cash generating units. This allocation is based on operating segments. Goodwill is allocated to a cash generating unit or a group of cash generating units that expects to benefit from business combination that will produce goodwill.
(20) Financial liabilities at fair value through profit or loss
A.Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B.Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
(21) Derivative financial instruments and hedging activities
A.Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss.
B.The Group designates certain derivatives as either:
- (a)Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge).
- (b)Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).
C.The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
D.The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.
E.Fair value hedge
- (a)Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging foreign currency on long-term borrowings. The gain or loss relating to the effective portion of currency swaps hedging long-term borrowings denominated in

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foreign currency is recognized in the statement of comprehensive income within “finance costs”. The gain or loss relating to the ineffective portion is recognized in the statement of comprehensive income within “other gains and losses”. Changes in the fair value of the hedge long-term borrowings denominated in foreign currency attributable to interest rate risk are recognized in the statement of comprehensive income within “finance costs”.

  - (b)If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity.

F.Cash flow hedge
- (a)The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of comprehensive income within “other gains and losses”.
- (b)Amounts accumulated in other comprehensive income are reclassified into profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement of comprehensive income within “finance costs”.
- (c)When a hedging instrument expires, or is sold, cancelled or executed, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is transferred to profit or loss in the periods when the hedged forecast cash flow affects profit or loss.
(22) Employee benefits
A.Short-term employee benefits
- Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and should be recognized as expenses in that period when the employees render service.
B.Pensions
- (a)Defined contribution plans

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

(b)Defined benefit plans
i.The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit obligation is calculated annually by independent actuaries using the

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projected unit credit method. The rate used to discount is determined by using interest rates of government bond (at the balance sheet date).

     - ii.Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise.

     - iii.Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period.

C.Employees’ bonus and directors’ and supervisors’ remuneration
- Employees’ bonus and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should be recognized based on the accounting for changes in estimates. The Group calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.
(23) Employee share based payment
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B.Restricted stocks to employees:
- (a)Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period.
- (b)For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Group and the Group must refund their payments on the stocks. The Group recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”.
C.The grant date for the shares reserved for employee preemption in cash capital increase is the date on which the Company informs employees of the grant and both the Company and employees agree to the number of shares granted and the price for subscription.

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(24) Income tax

A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E.A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(25) Revenue recognition

The Group manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities.

(26) Business combinations

A.The Group uses the acquisition method to account for business combinations. The Group chooses to measure the non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets on an acquisition-by-acquisition basis.
B.If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the acquisition-date fair value of any previous equity interest in the acquiree is higher than the fair value of the Group’s share of the identifiable net assets acquired,

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the difference is recorded as goodwill; if less than the fair value of the Group’s share of the identifiable net assets acquired, the difference is recognized directly in profit or loss.

(27) Operating segments

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

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

(28) Critical judgments in applying the Group’s accounting policies

－
Financial assets impairment of equity investments

The Group follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgment. In making this judgment, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the accumulated fair value adjustments recognized in other comprehensive income on the impaired “available-for-sale financial assets” is transferred to profit or loss.

(29) Critical accounting estimates and assumptions

The Group makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

A.Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Group’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(10) for the information on goodwill impairment.

B.Reliability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized.

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Assessment of the reliability of deferred income tax assets involves critical accounting judgments and estimates of the management, including the assumptions of expected future sales, revenue growth rate, profit rate, tax holiday, available tax credits, and tax planning, etc. Any change in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets.

C.Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value.

D.Financial assets - fair value measurement of unlisted stocks without active market

The fair value of unlisted stocks held by the Group that are not traded in an active market is determined considering those companies’ recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgments and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(30) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS )Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Cash equivalents - Repurchase Bonds	December31,2014 2,572 $ 45,954,667 20,806,255 66,763,494 4,226,247 70,989,741 $	December31,2013
		2,809 $ 32,827,254 11,028,129
		43,858,192 279,626
		44,137,818 $

A.The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

B.The above time deposits and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote.

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(31) Financial assets and liabilities at fair value through profit or loss

Assets Current items Financial assets held for trading Forward foreign exchange contracts Non-current items: Financial assets held for trading Stock-Advanced Optoelectronic Technology Inc. Valuation adjustment Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts	December31,2014 52,453 $ 77,019 $ 528,136 605,155 $ December31,2014 605,016 $	December31,2013
		227,703 $
		78,337 $ 634,266
		712,603 $
		December31,2013
		689,097 $

A.The Group recognized net loss of $976,857 and $1,060,390 on financial assets held for trading for the years ended December 31, 2014 and 2013, respectively.

B.The non-hedging derivative financial assets and liabilities transaction information are as follows:

Derivative financial assets and liabilities Current items Forward foreign USD (sell) 425,000 $ exchange contracts JPY (buy) 48,580,180 Forward foreign EUR (sell) 38,000 exchange contracts USD (buy) 47,574 (Notional Principal) (in thousands) December 31, Contract Amount	December 31,	Contract Period Contract Period 2014/10~2015/3 USD (sell) 467,000 $ 2013/10~2014/3 2014/10~2015/3 JPY (buy) 47,065,250 2013/10~2014/3 2014/10~2015/2 EUR (sell) 188,000 2013/10~2014/3 2014/10~2015/2 USD (buy) 256,665 2013/10~2014/3 TWD (sell) 26,762,745 2013/12~2014/3 USD (buy) 904,000 2013/12~2014/3 2014 (in thousands) December 31,2013 Contract Amount (Notional Principal)

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds and foreign currency. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

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(32) Available-for-sale financial assets

)Available-for-sale financial assets
Items Current items Bond investments Non-current items Listed stocks and bond investments Emerging and unlisted stocks	December31,2014 220,000 $ 3,582,677 $ 1,554,440 5,137,117 $	December31,2013
		- $
		1,896,076 $ 2,056,454 3,952,530 $

A.The Group recognized gain in other comprehensive income for the fair value change for the years ended December 31, 2014 and 2013 in the amount of $536,429 and $1,875,599, respectively.
B.As approved by the Board of Directors in June 2013, the Group sold the shares and depositary receipts of Himax Technologies, Inc. and recognized gain on disposal of investments of $1,880,884 (shown as “other gains and losses”).
C.The counterparties of the Group’s debt instrument investments have good credit quality, all with credit rating of twA+ above. The maximum exposure to credit risk at balance sheet date is the carrying amount of available-for-sale financial asstes - debt instruments.

(33) Hedging derivative financial liabilities

)Hedging derivative financial liabilities
Items Current item Interest rate swap - cash flow hedges Non-current item Interest rate swap - cash flow hedges	December31,2014 1,351 $ - $	December31,2013
		- $
		21,918 $

Cash flow hedges

Cash flow hedges
Hedged Items Long-term borrowings	Designated a	December 31, December 31, 2014 2013 1,351) ($ 21,918) ($ Fair Value s HedgingInstruments	Period of Anticipated Cash Flow	Period of Gain (Loss) Expected to be Recognised in Profit or Loss
	Derivative Instruments Designated as Hedges Interest rate swap
		December 31, 2014 1,351) ($
			2008~2015	2008~2015

(a)The Company was exposed to significant risk of future cash flow changes on principal payments associated with the Company’s floating interest rate bearing borrowings, both current and long-term portion. Therefore, the Company entered into interest rate swap contracts for exchanging floating interest rate for fixed interest rate (TWD90/180CP (Page51328) to hedge such exposures.
(b)Information about gain or loss arising from cash flow hedges recognized in profit or loss and other comprehensive income:

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Items Amount of gain or loss adjusted in other comprehensive income Amount of gain or loss transferred from other comprehensive income to profit or loss	2014 2013 1,224 $ 3,210 $ 227,234 82,687) ( Years endedDecember31,

(c)The gain/(loss) relating to the ineffective portion of cash flow hedges recognized in profit or loss amounted to $289 for the year ended December 31, 2013.

(34) Accounts and notes receivable

)Accounts and notes receivable
		December31,2014			December31,2013
Notes receivable	$		21,447	$		24,516
Accounts receivable			71,922,008			68,063,587
			71,943,455			68,088,103
Less: allowance for sales returns and discounts	(		827,583)	(		1,590,591)
allowance for bad debts	(		139,867)	(		139,221)
	$		70,976,005	$		66,358,291

A.The Group’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability.
B.The aging analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

impaired is as follows:
Up to 60 days 61 to 180 days Over 180 days	December31,2014 611,670 $ 64,488 73,023 749,181 $	December31,2013
		3,259,953 $ 594,665 157,567 4,012,185 $

C.Movement analysis of accounts receivable and notes receivable that were impaired is as follows:

(a)As of December 31, 2014 and 2013, the Group’s accounts receivable that were impaired were $139,867 and $139,221, respectively.
(b)Movement on allowance for bad debts for impairment loss based on individual provision is as follows:

2014 At January 1 139,221 $ Allowance for bad debts - provision 820 Allowance for bad debts - reclassified - Allowance for bad debts - write - offs 211) ( Net exchange difference 37 ( At December 31 139,867 $	2013 117,322 $ 453 21,447 - 1) 139,221 $

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D.The maximum exposure to credit risk was the carrying amount of each class of accounts receivable.

(35) Inventories

receivable. )Inventories
Raw materials and supplies Work in process Finished goods	December31,2014 3,851,583 $ 17,996,857 11,939,402 33,787,842 $	December31,2013
		3,970,268 $ 29,182,602 17,371,286 50,524,156 $

Expenses and losses incurred on inventories for the years ended December 31, 2014 and 2013 are as follows:

ollows:
		Years ended	December31,
		2014		2013
Cost of inventories sold	$	378,358,466	$	384,541,919
Reversal of allowance for scrap, obsolescence
and price decline	(	473,142)	(	1,397,747)
Disposal loss and others		391,573		1,827,213
	$	378,276,897	$	384,971,385

The Group had disposed its expired and slow-moving inventories. Thus, the risk of reduction in the inventory’s market price had been decreased and the net realizable value of inventories had been recovered.

(36) Investments accounted for under the equity method

recovered. )Investments accounted for under the equity method
Ampower Holding Ltd. GIO Optoelectronics Corporation TOA Optronics Corporation Chi Mei Materials Technology Contrel Technology Co., Ltd. Others	December31,2014 1,477,199 $ 450,726 364,907 - - 71,393 2,364,225 $	December31,2013
		1,526,449 $ 476,176 410,671 1,883,267 473,259 149,312 4,919,134 $

A.The financial information of the Group’s associates is summarized below:

December 31, 2014 December 31, 2013	Assets 5,190,457 $ 24,441,179	Liabilities 1,417,506 $ 7,330,642	Revenue Profit/(Loss) 2,211,238 $ 581,093) ($ 21,222,917 2,223,356

B.The fair value of the Group’s associates which have quoted market price is as follows:

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Chi Mei Materials Technology Contrel Technology Co., Ltd.

Stock price per share (in dollars) December 31, 2013 $ 36.45 16.95

C.During 2014, the Company sold its interests in Chi Mei Materials Technology and Contrel Technology Co., Ltd. Since the Company lost control, the investment was reclassified as “available-for-sale financial assets - non-current”.
D.The Group recognized impairment loss on associates for the year ended December 31, 2013 in the amount of $245,253.

(37) Property, plant and equipment

2014

									2014
											Transfer, net
												exchange
												differences
		At January1				Additions			Disposals			and others	At December 31
Cost:
Land		$	3,852,792		$	-		$	-		$	-	$	3,852,792
Buildings			184,139,364			8,652	(		341,088)			1,545,170		185,352,098
Machinery and equipment			433,442,047			393,335	(		19,161,213)			17,904,638		432,578,807
Others			29,178,672			210,165	(		4,149,307)			4,789,534		30,029,064
			650,612,875			612,152	(		23,651,608)			24,239,342		651,812,761
Accumulated depreciation
and impairment:
Buildings	(		68,425,305)	(		15,250,980)			327,125	(		154,535)	(	83,503,695)
Machinery and equipment	(		291,198,835)	(		40,505,195)			18,063,267	(		11,624,229)	(	325,264,992)
Others	(		20,748,143)	(		3,617,759)			4,042,819	(		1,800,945)	(	22,124,028)
	(		380,372,283)	(		59,373,934)			22,433,211	(		13,579,709)	(	430,892,715)
Unfinished construction
and equipment under
acceptance			3,265,167			19,220,115	(		814,963)	(		8,980,522)		12,689,797
		$	273,505,759										$	233,609,843

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2013

								2013
									Transfer, net
										exchange
										differences
		At January1				Additions		Disposals		and others	At December 31
Cost:
Land		$		3,852,792	$	-	$	-	$	-	$	3,852,792
Buildings			179,137,767			96,030	(	326,605)		5,232,172		184,139,364
Machinery and equipment			405,398,313			808,409	(	9,815,779)		37,051,104		433,442,047
Others				26,297,094		305,186	(	3,255,595)		5,831,987		29,178,672
			614,685,966			1,209,625	(	13,397,979)		48,115,263		650,612,875
Accumulated depreciation
and impairment:
Buildings	(			51,417,547)	(	16,270,281)		300,169	(	1,037,646)	(	68,425,305)
Machinery and equipment	(		238,302,893)		(	55,655,014)		6,605,916	(	3,846,844)	(	291,198,835)
Others	(			18,162,188)	(	3,611,175)		2,832,151	(	1,806,931)	(	20,748,143)
	(		307,882,628)		(	75,536,470)		9,738,236	(	6,691,421)	(	380,372,283)
Unfinished construction
and equipment under
acceptance				25,722,521		16,893,203		-	(	39,350,557)		3,265,167
	$		332,525,859								$	273,505,759

a.The Group evaluated the recoverable amount for assets with impairment indicators; the impairment loss for the years ended December 31, 2014 and 2013 was $351,066 and $676,575, respectively, shown under “other gains and losses”.

b.Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

(38) Investment property

provided in Note 8. Investment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings (		2014	At December 31 188,247 $ 568,440 756,687 $ 63,010) ( 693,677 $		2013	At December 31 188,247 $ 568,440 756,687 $ 49,837) 706,850 $
	At January1 188,247 $ 568,440 756,687 $ 49,837) 706,850 $	Additions - $ - - $ 13,173) ( (		At January1 188,247 $ 568,440 756,687 $ 36,664) ( 720,023 $	Additions - $ - - $ 13,173) (

The fair value of the investment property held by the Group as at December 31, 2014 and 2013 was $1,110,523 and $721,774, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information.

(39) Intangible assets

A.Intangible assets are goodwill, payments for TFT-LCD related technology, and royalty.

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2014

	2014
Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others	At January1 Additions Disposals 8,807,308 $ - $ 673,622) ($ 17,096,628 - - 3,497,213 18,140 8,911) ( 29,401,149 18,140 682,533) ( 5,215,970) ( 1,193,337) ( 673,622 2,970,185) ( 319,112) ( 7,012 8,186,155) ( 1,512,449) ( 680,634 21,214,994 $ 2013	Transfer, net exchange differences and others At December 31 3,349 $ 8,137,035 $ - 17,096,628 486,719 3,993,161 490,068 29,226,824 - 5,735,685) ( 10,283 3,272,002) ( 10,283 9,007,687) ( 20,219,137 $
	At January1 Additions Disposals 8,805,803 $ 1,700 $ 195) ($ 17,096,628 - - 3,437,199 156,081 144,553) ( 29,339,630 157,781 144,748) ( 3,709,759) ( 1,507,211) ( 195 2,720,812) ( 333,127) ( 142,720 ( 6,430,571) ( 1,840,338) ( 142,915 ( 22,909,059 $	Transfer, net exchange differences and others At December 31 - $ 8,807,308 $ - 17,096,628 48,486 3,497,213 48,486 29,401,149 805 5,215,970) ( 58,966) 2,970,185) ( 58,161) 8,186,155) ( 21,214,994 $

B.Details of amortisation on intangible assets are as follows:

Operating costs Operating expenses	Years endedDecember31,	Years endedDecember31,
	2014 960,230 $ 552,219 1,512,449 $	2013
		1,068,073 $ 772,265
		1,840,338 $

C.The Company performed impairment analysis for recoverable amount of the goodwill at each reporting date and used the value in use as the basis for calculation of the recoverable amount. The value in use was calculated based on the estimated present value of future cash flows for five years, which was discounted at the discount rate of 4.89% and 4.22% for the years ended December 31, 2014 and 2013, respectively, to reflect the specific risks of the related cash generating units. The future cash flows were estimated based on the future revenue, gross profit, and other operating costs each year. Based on the evaluation above, the Company did not recognize impairment loss on goodwill for the years ended December 31, 2014 and 2013.

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(40) Short-term borrowings

(40)	Short-term borrowings
	Type ofborrowings	December31,		2014	December31,	2013	Collateral
	Bank loans
	Credit loans	$	22,526,999		31,179,767 $		None
	Range of interest rates	1.2046%~3.9235%			1.7461%～3.8919%
(41)	Long-term borrowings
	Type of loans	Period		December31,2014		December31,2013
	Syndicated bank loans	2005/03~2016/11		$	108,368,190	$	152,654,461
	Guaranteed commercial papers	2012/11~2015/07			129,148		258,354
	Credit loans	2009/09~2014/06			-		16,372,450
					108,497,338		169,285,265
	Less:
	Administrative expenses
	charged by syndicated
	banks			(	41,252)	(	187,557)
	Current portion			(	66,162,663)	(	169,097,708)
				$	42,293,423	$	-
	Range of interest rates			1.2474%~2.4737%		0.995%~2.795%

A.Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.
B.The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, which were based on the Company’s annual consolidated financial statements audited by independent auditors. The Company’s financial ratios on the consolidated financial statements for the year ended December 31, 2014 and 2013 are in accordance with the covenants on the syndicated loan agreement.
C.In December 2011, the Company applied for the assistance of Ministry of Economic Affairs to negotiate the debt with the syndicated banks, in accordance with the “Procedures for the Assistance of Ministry of Economic Affairs in the Negotiation of Enterprise and Financial Institution relating to the Debt Issue”. On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with all financial institution creditors based on the framework of the resolutions during the creditors and debtors negotiation meeting. The major terms of the agreement were as follows:
(a)Medium and long-term syndicated loans
- The medium and long-term syndicated loans due between 2012 to 2014 will be extended for 2-3 years. Principal is repayable every year based on a certain percentage; interest is charged at the original interest rate or at the original interest rate plus premium rate.
(b)Short and medium-term non-syndicated loans

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The outstanding balances or the original amounts of each loan are renewed based on the original terms and all extended to December 31, 2013. Before maturity, the Company may apply for the extension of such loans for another year for each application, with a maximum of two applications with each bank. Interest is charged at the original interest rate plus premium rate and extension fee is charged at a certain percentage.

(c)Credit lines of derivative financial instruments

At least two-thirds of the original credit lines of derivative financial instruments are renewed based on the original terms and all extended to December 31, 2013. Before maturity, the Company may apply for the extension of such credit lines for another one year for each application, with a maximum of two applications with each bank. Extension fee is charged at a certain percentage.

(d)Other matters
- a) All financial institution creditors agreed to waive the 2011 and 2012 covenants, the interest penalty, and default penalty arising from the violation of covenants.
- b) All financial institution creditors agreed to waive the agreement that the Company shall early repay whole or part of the loans as prescribed by the original agreements before the extension agreements were approved by all financial institution creditors.
(e)The Company’s significant commitments
- The Company is committed to increase capital in certain amounts of cash within 3 years starting from 2012, to focus on its main business activities, and not to make investments out of its main business lines, except for equipment improvements or equipment additions for its main business. Further, the Company shall not apply for bankruptcy or reorganisation during the period of negotiation for the extension of the due date on the Company’s debt.
D.Because the Company failed to meet the requirements specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2013, the syndicated banks may take measures, in accordance with the agreement, including, but not limited to the outstanding principal, interest, expenses and other payables be due immediately. Therefore, the Company reclassified syndicated loans and other long-term borrowings as of December 31, 2013 amounting to $169,097,708 (including administrative expenses charged by syndicated banks) to “long-term liabilities - current portion”. However, the deadline was extended to the end of 2014 through the concession of financial institution creditors on January 27, 2014.
E.Though the Company failed to meet the requirement specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2014, the deadline was extended to the end of 2015 through the concession of financial institution creditors.
F.In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has

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approved the proposal of syndicated credit line of NT$68.5 billion with financial institutions.

(42) Pensions
A.Defined benefit pension plan
- (a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforecment of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, employees are entitled to two base points for every year of service for the first 15 years and one base point for each additional year thereafter, up to a maximum of 45 base points. The pension payment to employees was computed based on years of service and average salaries or wages of the last six months prior to approved retirement. The Company contributed monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

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

	December31,2014	December31,2014		December31,2013
Present value of funded obligations	$	1,605,920	$	1,504,354
Fair value of plan assets	(	1,488,938)	(	1,454,627)
Net liability in the balance sheet (shown as
“Other non-current liabilities”)	$	116,982	$	49,727
)Changes in present value of funded obligations were as follows:
		2014		2013
Present value of funded obligations
At January 1	$	1,504,354	$	1,464,983
Current service cost		10,470		9,148
Interest expense		30,087		21,975
Actuarial gain and loss		61,009		8,248
At December 31	$	1,605,920	$	1,504,354
)Changes in fair value of plan assets were as follows:
		2014		2013
Fair value of plan assets
At January 1	$	1,454,627	$	1,398,638
Expected return on plan assets		29,092		20,980
Actuarial gain and loss		5,219	(	3,622)
Employer contributions		-		38,631
At December 31	$	1,488,938	$	1,454,627

(c)Changes in present value of funded obligations were as follows:

(d)Changes in fair value of plan assets were as follows:

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(e)Expenses recognised in statements of comprehensive income were as follows:

Current service cost Interest cost Expected return on plan assets ( Current pension costs	2014 2013 10,470 $ 9,148 $ 30,087 21,975 29,092) 20,980) ( 11,465 $ 10,143 $ Years ended December31,
	2014 10,470 $ 30,087 29,092) ( 11,465 $

Details of cost and expenses recognised in statements of comprehensive income were as follows:

follows:
Cost of sales Selling expenses General and administrative expenses Research and development expenses	Years ended December31,
	2014 7,991 $ 184 848 2,442 11,465 $	2013
		6,593 $ 329 1,058 2,163
		10,143 $

(f)Amounts recognised under other comprehensive income were as follows:

Recognition for current period Accumulated amount	Years ended December31,	Years ended December31,
	2014 55,790 $ 68,243 $	2013
		11,870 $
		12,453 $

(g)The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The composition of fair value of plan assets as of December 31, 2014 and 2013 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings

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attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

For the years ended December 31, 2014 and 2013, the actual return on plan assets was $34,311 and $17,358, respectively.

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

$34,311 and $17,358, respectively. )The principal actuarial assumptions used were as	follows:	follows:
Discount rate Future salary increases Expected return on plan assets	Years ended December31,
	2014 2.25% 3.00% 2.25%	2013
		2.00%
		3.00%
		2.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Morality Table.

(i)Historical information of experience adjustments was as follows:

Present value of defined benefit obligation Fair value of plan assets ( Deficit in the plan Experience adjustments on plan liabilities Experience adjustments on plan assets	2014 2013 1,605,920 $ 1,504,354 $ 1,488,938) 1,454,627) ( 116,982 $ 49,727 $ 60,201 $ 320,046 $ 5,219 $ 3,622) ($ Years ended December31,
	2014 1,605,920 $ 1,488,938) ( 116,982 $ 60,201 $ 5,219 $ (

(j)The Group suspended its contributions to the pension reserve as agreed by the Science Park Administration in June 2013.

B.Defined contribution pension plan

(a)Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b)The subsidiaries in Mainland China have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentages of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.
(c)The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2014 and 2013 were $1,999,252 and $1,758,981, respectively.

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(43) Share-based payment

A.As of December 31, 2014, the Company’s share-based payment transactions were set forth below (excluding employee stock options assumed because of the merger stated in Note B):

Type of arrangement Employee stock options Employee stock options Employee stock options Reservation for new share subscription by employees Restricted stocks to employees- shares subscribed with consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration -shares without consideration Reservation for new share subscription by employees	Quantity granted Contract period Grant date (in thousand units) (inyears) Vestingconditions 2007.12.20 25,000 6 Note (b),(c) 2010.05.13 20,000 5 Note (a) 2011.05.19 50,000 5 Note (a) 2013.01.17 36,122 - Vested immediately 2013.01.30 31,151 3 Note (d),(e) 2013.01.30 31,151 3 Note (d),(e) 2013.03.29 844 3 Note (d),(e) 2013.03.29 844 3 Note (d),(e) 2013.12.12 4,628 3 Note (d),(e) 2013.12.12 4,628 3 Note (d),(e) 2014.07.09 85,000 - Vested immediately	Vestingconditions

(a)The employees may exercise the stock options by stage based on 30%, 30% and 40% of total options granted on completion of the specified year(s) of service (one to four years) from the grant date.
(b)The employees may exercise the stock options by stage based on 40%, 30% and 30% of total options granted on completion of the specified year(s) of service (three to five years) from the grant date.
(c)The employee stock options had already expired.
(d)The employees may exercise the stock options by stage based on 20%, 40% and 40% of total options granted on completion of the specified year(s) of service (one to three years) from the grant date.
(e)The restricted stocks issued by the Company cannot be transferred. Voting right and dividend right are restricted on these stocks before vested.

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(f)The fair value of stock options granted from 2010 to first quarter of 2014 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Reservation for new share subscription by employees 2014.07.09 14.90 12.50 Restricted stocks to employees - shares subscribed with consideration 2013.12.12 10.65 - - shares issued with no consideration 2013.12.12 10.65 5.00 - shares subscribed with consideration 2013.03.29 18.40 - - shares issued with no consideration 2013.03.29 18.40 5.00 - shares subscribed with consideration 2013.01.30 15.35 - - shares issued with no consideration 2013.01.30 15.35 5.00 Reservation for new share subscription by employees 2013.01.17 14.15 12.98 Employee stock options 2011.05.19 26.70 26.70 Employee stock options 2010.05.13 39.85 39.85	Expected volatility (%) 36.01 - - - - - - 48.20 35.67 51.57	Expected duration (month) 0.84 - - - - - - 0.36 48.60 48.60	Expected Free Fair value dividend interest per unit yield(%) rate(%) (in dollars) - 0.42 2.42 - - 10.65 - - 5.65 - - 18.40 - - 13.40 - - 15.35 - - 10.35 - 0.65 1.17 - 1.00 7.31 ~8.32 - 0.80 15.12 ~16.98

B.Employee stock options acquired because of merger

(a)Details:

Type of arrangement Grant date Employee stock options 2009.09.30 Employee stock options 2007.07.02 Employee stock options 2007.12.27	24,819 5 years 21 (Note i) 6 years 2 (Note i) 6 years Quantity granted (in thousand units) Contractperiod	Vestingconditions Note ii, iv Note iii, iv Note iii, iv

i. Each unit of stock options can subscribe for 1,000 shares of common stock.
ii. The employees may exercise the stock options by stage based on 50% and 50% of total options granted on completion of the specified years of service (two to three years) from the grant date.
iii. The employees may exercise the stock options by stage based on 25%, 25%, 25% and 25% of total options granted on completion of the specified years of service (two to five years) from the grant date.

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iv. The employee stock options had already expired.
v. The units of employee stock options above were adjusted by share conversion rate.
(b)The fair value of employee stock options was estimated using the Hull & White (2002) Enhanced FASB 123 of the aforementioned binomial model. The information was as follows:

Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Employee stock options 2009.09.30 51.60 39.20 Employee stock options 2007.07.02 51.60 67.53 Employee stock options 2007.12.27 51.60 80.63	Expected volatility (%) 45.10 45.10 45.10	Expected duration (month) 36.78 24.78 48.54	Expected Free dividend interest yield(%) rate(%) 0.61 0.82 0.61 0.82 0.61 0.82	Fair value per unit (in dollars)
				3.57~4.14 4.23~4.41 3.65~3.82

C.The details of the employee stock option plan for the years ended December 31, 2014 and 2013 were as follows:

options .The details of the employee stock option plan for the years ended December 31, were as follows:	ock option plan for the years ended December 31,	2014 and 2013
Weighted average Range of Quantity exercise exercise (in thousand price price StockOptions units) (in dollars) (in dollars) Outstanding options at the beginning of the year 94,819 $ 28.71 Options exercised - - Options expired ( 24,819) 32.10 Outstanding options at the end of the year 70,000 25.63 $ 32.59 0.38 years 22.85 1.39 yeas Exercisable options at the end of the year 50,000 26.75 period Year ended December31,2014 Weighted average remaining vesting	Year ended December31,2014
		Weighted average stock price of stock options at exercise date(in dollars)
		$ 12.68

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Year ended December 31, 2013

						Weighted
		Weighted			Weighted	average
		average	Range of		average	stock price of
	Quantity	exercise	exercise		remaining	stock options
	(in thousand	price		price	vesting	at exercise
StockOptions	units)	(in dollars)	(in dollars)		period	date(in dollars)
Outstanding options at the	119,842	$ 41.79
beginning of the year
Options exercised	-	-				$ 14.98
Options expired	(25,023)	57.05
Outstanding options at the
end of the year	94,819	28.71	$	34.46	1.38 years
				23.82	2.39 years
				33.93	0.75 years
Exercisable options at the
end of the year	51,819	31.13

D.For the years ended December 31, 2014 and 2013, the expenses incurred from share-based payment arrangements were $578,227 and $556,874, respectively.

(44) Provisions-current

At January 1, 2014 Addition Used during the year ( At December 31, 2014	Warranty 140,809 $ 2,723,491 2,117,279) ( 747,021 $	Litigationand others 1,808,220 $ 2,451,275 1,873,027) ( 2,386,468 $	Total 1,949,029 $ 5,174,766 3,990,306) 3,133,489 $

A.Warranty

The Group provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products.

B.Litigation and others

Litigation and other provision for the Group are related to patents of TFT-LCD panel products

and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

(45) Share capital

A.As of December 31, 2014, the Company’s authorized and outstanding capital were $120,000,000 (including $500,000 reserved for employee stock options) and $99,545,364, respectively, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. Movements in the number of the Company’s ordinary shares outstanding are as follows:

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At January 1 Employee stock options exercised Issuance of restricted shares to employees Cancellation of restricted stock to employees ( At December 31	2014 Number of ordinary shares (in thousands) 9,109,429 850,000 - 4,893) ( 9,954,536	2013 Number of ordinary shares (in thousands) 7,912,971 1,125,000 72,526 1,068) 9,109,429

B.The Company’s Board of Directors resolved to increase capital through cash on December 17, 2013 by issuing common shares of no more than 2 billion shares, in exchange for cash domestically or by using cash from capital increase to issue common shares in exchange for the issuance of foreign depository receipts. On June 19, 2014, the shareholders approved the capital increase. On June 20, 2014, the Board of Directors approved the domestic capital increase of 10,625,000 shares. The issue price was determined to be $12.5 in July 2014, and the capital increase was effective on August 12, 2014.
C. The Board of Directors of the Company resolved to increase capital for cash by issuing global depositary receipts (the “GDR”). The amount of $9,360,000 is tentatively scheduled for release, (approximately equivalent to US$312,625 thousand). As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval on January 30, 2015.
D.As authorized by the shareholders during their meeting in June 2012, the Board of Directors of the Company resolved to increase capital for cash by issuing the GDR on July 18, 2012, and had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, including 112,500 thousand shares regarded as employee stock options, and 101,250,000 units of GDRs which represent 1,012,500 thousand shares of common stock, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange. Per unit was issued at a premium of US$4.481, which was equivalent to $12.98 per share and raised a total of $14,519,051, net of issuance cost. As of December 31, 2014, there were 69 thousand units outstanding, representing 692 thousand shares of common stocks.
E.As authorized by the shareholders at the shareholders’ meeting in June, 2012, the Board of Directors of the Company adopted a resolution on January 30, 2013, March 29, 2013 and November 12, 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). The effective dates of the issuance were on January 30, 2013, March 29, 2013 and December 12, 2013. Until the vesting conditions are met by employees, those shares are restricted to transfer voting rights, dividend and other rights. As of December 31, 2014, the Company bought back 4,893 shares of unvested restricted stocks to employees,

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and decreased capital in accordance with related regulation.

F.The stockholders at the stockholders’ meeting on January 6, 2010 approved the merger of the Company with another company by issuing new shares, with the Company as the surviving company. The Company issued 4,046,382 thousand new shares according to the merger contract. The new shares included the common stock issued by the acquired companies in May and December 2006 through private placement. The issuance of 570,929 thousand shares was determined based on the exchange ratio in the merger contract. The rights and obligations of the private common shares were the same as other issued common shares, except for the transfer restriction under R.O.C. Securities and Exchange Act and the listing restriction that no public listing will be allowed within three years since the day of issuance and only if the Company completes the application to publicly issue the shares. The aforementioned private common shares have not been publicly issued as of December 31, 2014.
G.In accordance with the Board of Directors’ resolution in August 2007, the Company decided to issue 300 million shares of common stock for cash, including 149,967,500 units of GDRs which represent 299,935 thousand shares of common stock with a unit of GDR representing 2 shares of common stock. Per unit was issued at premium of US$9.02 (in dollars). In accordance with the Board of Directors’ resolution in March 2013, the Company terminated the above mentioned GDR, and the effective date of termination was in May 2013. The depository trust company completed the cancellation and distributed proceeds in November 2013.
(46) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

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2014

								2014
			Share of profit
				(loss) of
			associates
			accounted		for					Restricted
			under equity					Employee		stock to
	Sharepremium			method			stock option			employees				Total
At January 1	$	94,106,611	$	56,303			$	1,697,935		$	197,892		$	96,058,741
Capital issued for cash		2,125,000			-			-			-			2,125,000
Cash paid from Capital surplus	(	1,266,944)			-			-			-	(		1,266,944)
Capital surplus offset against
accumulated deficit		2,328,981			-			-			-			2,328,981
Cancellation of restricted stock to
employees		-			-			-			48,924			48,924
Vested restricted stock to employees		65,665			-			-	(		65,665)			-
Changes in restricted stock to
employees		-			-			-			47,174			47,174
Compensation related to share-based
payment		205,700			-			83,823			-			289,523
Expiration of employee stock options		407,899			-	(		407,899)			-			-
Changes in net equity of long-term
equity investments		-	(	47,030)				-			-	(		47,030)
At December 31	$	97,972,912	$	9,273			$	1,373,859		$	228,325		$	99,584,369

Share of profit (loss) of associates accounted for under equity Employee Sharepremium method stock option At January 1 118,065,992 $ 24,241 $ 1,587,747 $ Capital surplus offset against accumulated deficit 27,308,220) ( - - Global depositary receipt issued for cash 3,269,051 - - Issuance of restricted stock to employees - - - Cancellation of restricted stock to employees - - - Compensation related to share-based payment 42,263 - 147,713 Expiration of employee stock options 37,525 - 37,525) ( Changes in net equity of long-term equity investments - 32,062 - At December 31 94,106,611 $ 56,303 $ 1,697,935 $ 2013		2013

(47) Retained earnings

A.In accordance with the Company’s Articles of Incorporation, net income must be distributed in the following order:

183

(a)To pay all tax accruals and payables arising from the current year and to cover prior years’ losses, if any;
(b)As legal reserve equal to 10% of net income after tax and distribution pursuant to clause (a);
(c)As any special reserve;
(d)To pay dividends on preferred shares;
(e)To pay bonuses to employees not less than 5% of net income after tax and distribution pursuant to clauses (a) to (d); and
(f)The remaining amount, if any, shall be distributed pursuant to the proposal of the Board of Directors in accordance with the Company’s dividend policy and the resolution approved at the stockholders’ meeting, of which 0.1% should be paid as remuneration to directors and supervisors and the remaining amount as dividends to stockholders.
- Dividends distributed in respect of any fiscal year in the form of shares shall not exceed two-thirds of total dividends to stockholders.
B.Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
C.The Board of Directors proposed to cover accumulated deficit for the year ended December 31, 2012 and the proposal was approved by the stockholders in June 2013. It was resolved not to distribute dividends or accrue employees’ bonus and directors’ and supervisors’ remuneration. As approved by the stockholders in June 2013, the Company covered accumulated deficit amounting to $27,308,220 by using additional paid-in capital in excess of par value of common stock. In June 2014, the shareholders approved and resolved the deficit compensation amendment for 2012 which is to compensate deficit with legal reserve of $2,328,981 and $24,979,239 by using additional paid-in capital in excess of par value of common stock.
D.The details of the appropriation of 2013 net income which was approved at the stockholders’ meeting in June 2014 are as follows:

meeting in June 2014 are as follows:
Legal reserve Special reserve Cash dividends	YearendedDecember31,2013
	Amount 509,272 $ 1,144,229 90,495 1,743,996 $	Dividends per share (indollars)
		0.01 $

Furthermore, the Company’s stockholders have resolved to distribute $0.14 cash per share with capital surplus amounting to $1,266,944. The Company distributed a total of $0.15 cash dividend per share.

184

E.Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. For the year ended December 31, 2014, employees’ bonus was accrued at $1,436,187.
Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(48) Other equity items

Available- Currency for-sale translation investments At January 1 78,074) ($ 1,544,345) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 536,429 Revaluation transfer of available-for-sale investment - gross - 251,483) ( Currency translation differences 3,087,368 - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of other comprehensive income (loss) of associates 73,654 8,005 Effect of income tax - 8,453) ( At December 31 3,082,948 $ 1,259,847) ($			2014

185

2013

Available- Currency for-sale translation investments At January 1 2,818,705) ($ 1,609,513) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 1,875,599 Revaluation transfer of available-for-sale investment - gross - 1,858,827) ( Currency translation differences 2,703,765 - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of other comprehensive income (loss) of associates 36,866 744) ( Effect of income tax - 49,140 At December 31 78,074) ($ 1,544,345) ($	Employee Hedging unearned reserve compensation Total 423,629 $ - $ 4,004,589) ($ 3,210) ( - 3,210) ( 82,687 - 82,687 - - 1,875,599 - - 1,858,827) ( - - 2,703,765 - 754,166) ( 754,166) ( - 366,898 366,898 36,122 24,916) ( - 24,224 478,190 $ 387,268) ($ 1,531,497) ($	Total

(49) Other income

Other income
Rental revenue Interest income Dividend income Other income	Years ended December31,
	2014 634,368 $ 328,633 39,958 1,731,993 2,734,952 $	2013
		823,063 $ 293,741 58,897 1,452,167 2,627,868 $

(50) Other gains and losses

Interest income Dividend income Other income Other gains and losses	$	328,633 39,958 1,731,993 2,734,952	293,741 58,897 1,452,167 2,627,868 $	293,741 58,897 1,452,167 2,627,868 $
		Years ended	December31,
		2014		2013
Net loss on financial assets and liabilities at fair
value through profit or loss	($	976,857)	($	1,060,390)
Net currency exchange gain		1,242,754		2,488,707
Gain on disposal of investments		794,041		1,977,799
Loss on disposal of property, plant and equipment	(	179,758)	(	138,658)
Impairment loss	(	351,066)	(	921,828)
Litigation loss and others	(	5,659,589)	(	9,512,404)
	($	5,130,475)	($	7,166,774)

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(51) Finance costs

Finance costs
			Years ended	December31,
			2014		2013
Interest expense:
Bank borrowings		$	3,579,026	$	5,026,870
Bonds			-		5,662
Others			7,555		19,428
(Gain) loss on fair value change of financial
instruments:
(Gain) loss on cash flow hedges, reclassified
from equity	(		277,234)		82,687
Fair value hedges			-	(	31,642)
Financing charges incurred on accounts
receivable factoring			-		225
		$	3,309,347	$	5,103,230
Expenses by nature
			Years ended	December31,
			2014		2013
Employee benefit expense		$	46,106,336	$	38,023,935
Depreciation			59,387,107		75,549,643
Amortization			1,512,449		2,301,795
		$	107,005,892	$	115,875,373
Employee benefit expense
			Years ended	December31,
			2014		2013
Salaries and other-term employee benefits		$	43,517,392	$	35,697,937
Share-based payments			578,227		556,874
Termination benefits			2,010,717		1,769,124
		$	46,106,336	$	38,023,935

(52) Expenses by nature

(53) Employee benefit expense

187

(54) Income tax

A.Income tax expense

(a)Components of income tax expense:

me tax come tax expense )Components of income tax expense:
Current tax: Current tax on profit for the period Adjustments in respect of prior years Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	2014 2013 791,019 $ 1,082,714 $ 104,819 76,992) ( 895,838 1,005,722 38,406) ( 457,388 857,432 $ 548,334 $ Years ended December31,
	2014 791,019 $ 104,819 895,838 38,406) ( 857,432 $

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

follows:
		Years ended	December31,
		2014	2013
Fair value gains/losses on available-for-sale
financial assets	$	8,453	($	49,140)
Cash flow hedges	(	47,338)		24,916
Actuarial gains/losses on defined benefit
obligations	(	9,484)	(	2,018)
	($	48,369)	($	26,242)

B.Reconciliation between income tax expense and accounting profit

		Years ended	December	December	31,
		2014		2013
Tax calculated based on profit before tax and
statutory tax rate	$	4,535,027	$		1,868,960
Effects from items disallowed by tax regulation	(	533,680)			152,713
Under (over) provision of prior year's income tax		104,819	(		76,992)
Additional 10% tax on undistributed earnings		334,872			-
Effect from Alternative Minimum Tax		74,672			118,725
Change in assessment of realization of deferred tax
assets	(	3,658,278)	(		1,515,072)
Tax expense	$	857,432	$		548,334

188

C.Amounts of deferred tax assets or liabilities as a result of temporary differences, loss carryforward and investment tax credits were as follows:

				Year	Year	endedDecember31,2014	endedDecember31,2014	endedDecember31,2014	endedDecember31,2014
								Recognised
								in other
				Recognised in			comprehensive
			January1		profit or loss			income			December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount		$	288,013	($		121,640)	$		-		$	166,373
provisions
Accrued royalties and
warranty provisions			364,411	(		36,493)			-			327,918
Unrealised gain (loss) on
financial instruments			448,380			260,035	(	8,453)				699,962
Depreciation expense			97,965	(		57,171)			-			40,794
Unrealised exchange loss			-			200,697			-			200,697
Net operating loss
carryforward			16,702,351	(		708,777)			-			15,993,574
Others			222,749			116,965		9,484				349,198
		$	18,123,869	($		346,384)	$	1,031			$	17,778,516
-Deferred tax liabilities:
Unrealised exchange gain	($		51,357)		$	51,357	$		-		$	-
Unrealised gain on cash
flow hedges	(		97,943)			-		47,338		(		50,605)
Amortisation charges on
goodwill	(		726,842)			332,155			-	(		394,687)
Others	(		33,566)			1,278			-	(		32,288)
	($		909,708)	$		384,790	$	47,338		($		477,580)
Total		$	17,214,161	$		38,406	$	48,369			$	17,300,936

189

Year ended December 31, 2013

									Recognised
									in other
					Recognised in		comprehensive
			January1		profit or loss				income			December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount
provisions		$	98,369		$	189,644		$		-		$	288,013
Accrued royalties and
warranty provisions			169,057			195,354				-			364,411
Unrealised gain (loss) on
financial instruments			482,738	(		83,498)			49,140				448,380
Depreciation expense			5,256	(		3,006)				-			2,250
Prior year’s expense
carryforward			243,826	(		145,861)				-			97,965
Net operating loss
carryforward			16,500,416			201,935				-			16,702,351
Others			319,435	(		100,954)			2,018				220,499
		$	17,819,097		$	253,614		$	51,158			$	18,123,869
-Deferred tax liabilities:
Unrealised exchange gain	($		455,343)		$	403,986		$		-	($		51,357)
Unrealised gain on cash
flow hedges	(		73,027)			-	(		24,916)		(		97,943)
Amortisation charges on
goodwill	(		533,081)	(		193,761)				-	(		726,842)
Others	(		27,115)	(		6,451)				-	(		33,566)
	($		1,088,566)		$	203,774	($		24,916)		($		909,708)
Total		$	16,730,531		$	457,388		$	26,242			$	17,214,161

D.Details of investment tax credits and unrecognised deferred tax assets are as follows:

December 31, 2013

Qualifyingitems Machinery and equipment	Unused tax credits 409,544 $	Unrecognised deferred tax assets 409,544 $	Final year tax credits are due
			2014

190

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

		December31,2014
Year incurred 2010 2011 2012	Amount filed / assessed Assessed Assessed Filed	Unused amount 14,641,521 $ 63,808,943 43,505,968 121,956,432 $ December 31,2013	Unrecognised deferred taxassets 3,414,183 $ 14,879,288 10,055,723 28,349,194 $	Usable untilyear
				2015~2020 2021 2022
Year incurred 2009 2010 2011 2012	Amount filed / assessed Assessed Assessed Filed Filed	Unused amount 44,982,156 $ 22,184,259 63,324,406 43,601,064 174,091,885 $	Unrecognised deferred taxassets 37,405,250 $ 9,273,300 17,700,435 12,053,847 76,432,832 $	Usable untilyear
				2014 2015~2020 2021 2022

F.The amounts of deductible temporary differences that are not recognised as deferred tax assets were as follows:

Deductible temporary differences

December31,2014 31,105,662 $	December31,2013
	81,415,741 $

G.The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2014 and 2013, the amounts of temporary differences unrecognised as deferred tax liabilities were $20,486,590 and $12,677,405, respectively.
H.Certain revenue from the design, research, development, manufacture and sale of the thin film transistor - liquid crystal displays (TFT-LCD) and LCDs is exempt from income tax from 2008 to 2015.
I.The Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority.
J.Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.

191

K.The details of imputation system are as follows:

(a)Balance of tax credit account (b)Estimated creditable tax rate

December31,2014 738,931 $ 2014(Estimate) 2.96%	December31,2013
	1,082,780 $
	2013 (Actual)
	20.48%

(55) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Basic earnings per share (in dollar) Diluted earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Assumed conversion of all dilutive potential ordinary shares: -Employees’ bonus -Restricted stocks Diluted earnings per share (in dollar)	Years endedDecember31,
	2014 21,676,759 $ 9,377,302 2.31 $ 21,676,759 $ 9,377,302 106,514 41,875 9,525,691 2.28 $	2013
		5,102,568 $ 8,967,080 0.57 $ 5,102,568 $ 8,967,080 15,173 27,609 9,009,862 0.57 $

As employee stock options had anti-dilutive effect for the years ended December 31, 2014 and 2013, they were not included in the calculation of diluted earnings per share.

(56) Non-cash transaction

A.Investing activities with partial cash payments:

on-cash transaction .Investing activities with partial cash payments:
Purchase of property, plant and equipment Add: opening balance of payable on equipment Less: ending balance of payable on equipment ( Cash paid during the year	Years ended December31,
	2014 19,832,267 $ 3,383,261 2,688,976) ( 20,526,552 $	2013
		18,102,828 $ 3,650,776 3,383,261)
		18,370,343 $

192

B.Investing activities with partial cash receipts:

Investing activities with partial cash receipts:
Disposal of property, plant and equipment Add: opening balance of receivable on equipment Less: ending balance of receivable on equipment Cash received during the year	2014 2013 1,839,001 $ 3,390,107 $ 2,414,208 - - 2,414,208) ( 4,253,209 $ 975,899 $ Years endedDecember31,
	2014 1,839,001 $ 2,414,208 - 4,253,209 $

7. RELATED PARTY TRANSACTIONS

(57) Significant related party transactions

A.Operating revenue

ATED PARTY TRANSACTIONS Significant related party transactions .Operating revenue
Sales of goods: Others Associates	Years ended December31,
	2014 14,450,540 $ 33,263 14,483,803 $	2013
		5,814,715 $ 13,940
		5,828,655 $

The collection period was 30~120 days upon delivery or on a monthly-closing basis to related parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related parties above were not significantly different from those of sales to third parties.

B.Purchases of goods

.Purchases of goods
Others Associates Purchases of goods:	Years ended December31,
	2014 13,019,919 $ 11,275,187 24,295,106 $	2013
		7,813,860 $ 17,054,293
		24,868,153 $

The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-related parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms to related parties above were not materially different from those of purchases from third parties.

193

C.Consigned processing

(a)Consigned processing

signed processing Consigned processing
	Years ended	December	31,
	2014	2013
Processing costs:
Others $	124,425	$	163,027
Associates	-		8,412
$	124,425	$	171,439
Balance of consigned processing at the end of year (shown as “Other payables”)
December 31,2014		December 31,2013
Payables to related parties:
Others $	2,505,250	$	2,576,372

(b)Balance of consigned processing at the end of year (shown as “Other payables”)

The Group subcontracted the processing of products of associates in Mainland China. The processing fees were mainly charged based on cost plus method.

D.Accounts receivable

.Accounts receivable
Receivables from related parties: Others Associates	December31,2014 6,084,501 $ 27,899 6,112,400 $	December31,2013
		2,047,883 $ 2,102 2,049,985 $

The receivables from related parties arise mainly from sales transactions. The receivables are due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

E.Accounts payable

Accounts payable
Payables to related parties: Others Associates	December31,2014 5,225,129 $ 27,817 5,252,946 $	December31,2013
		4,522,389 $ 4,233,854 8,756,243 $

The payables to related parties arise mainly from purchase transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

194

F.Property transactions

Purchase of property

(a)Acquisition of property, plant and equipment:

perty transactions rchase of property Acquisition of property, plant and equipment:
		Years endedDecember		31,
		2014		2013
Associates	$	639,044	$	1,277,032
Others		21,407		67,197
	$	660,451	$	1,344,229
Period-end balances arising from purchases of	property	(shown as “Other payables”):
	December31,2014		December31,2013
Associates	$	229	$	32,374
Others		748		10,887
	$	977	$	43,261

(b)Period-end balances arising from purchases of property (shown as “Other payables”):

Sale of property

(a)Proceeds from sale of property and gain (loss) on disposal:

				Years ended December31,
		2014			2013
		Disposal	Gain (loss) on Disposal		Gain (loss) on
		proceeds		disposal proceeds		disposal
Others	$	46,157	$	2,807 91,960 $ $		12,418
Period-end	balances arising	from sale of	property (shown as “Other receivables”):
				December 31,2014	December 31,2013
Others				46,382 $	$	82,280

(b)Period-end balances arising from sale of property (shown as “Other receivables”):

(58) Key management compensation

Others )Key management compensation	December 31,2014 December 31,2013 46,382 $ 82,280 $	December 31,2014 December 31,2013 46,382 $ 82,280 $
Salaries and other short-term employee benefits Share-based payments Post-employment benefits	Years ended December31,
	2014 73,982 $ 18,638 216 92,836 $	2013
		46,386 $ 27,582 334
		74,302 $

195

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

PLEDGED ASSETS The Group’s assets pledged ollows:	as collateral are as
Pledged asset Other financial assets- current Time deposits Time deposits Demand deposits Property, plant and equipment Other financial assets- non-current Refundable deposits Time deposits	Book	December31,2013 Purpose 5,603 $ Tariff guarantee, letter of credit and short-term borrowings - Land lease 2,538,964 Syndicated bank loans 211,132,039 Long-term loans and performance guarantee for lease payable 12,327,000 Guarantee to European Commission for litigation 722 Guarantee for contract 226,004,328 $ value	Purpose
	December31,2014 253 $ - 2,284,617 163,632,314 11,079,360 80,722 177,077,266 $

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

－ (59) Contingencies Significant Litigations

A.Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc. were investigated under the Anti-Trust competition by the United States (the “U.S.”) Department of Justice. Moreover, authorities of some U.S state governments, the European Union’s, Brazil’s and Korea’s governments are starting to investigate this case. In addition, certain downstream customers and consumers in the TFT-LCD industry of the U.S. and Canada are now bringing up class-actions or individual civil lawsuits against the TFT-LCD companies; in certain lawsuits, CMO and Chi Mei Optoelectronics USA Inc. were listed as defendants. Details for investigations on significant cases related to the Anti-Trust Act are as follows:
(a)Regarding the above lawsuits, the Company had reached an agreement with the United States Department of Justice in December 2009, agreeing to pay penalties of US$220 million in installment over five years. As of December 31, 2014, the unpaid penalties amounted to US$35 million.
- The Company had reached settlement agreements with the plaintiffs on individual civil lawsuits in the U.S. since 2012 and recognized related losses.

196

The Company reached an out-of-court settlement with twelve State Governments, agreeing to pay the plaintiffs as civil statutory damages since November 2011.

(b)In December 2010, the Company received a notice from the European Commission, requesting the Company to pay a penalty of EUR 300 million to the account as specified by the European Commission within three months upon receipt of the notice. The Company appealed this case with the Court of Justice of the European Union in February 2011 and deposited EUR 300 million to the above account on March 14, 2011. The principal and interest accrued in this account will be refunded to the Company depending on the final outcome of this case. The Court of Justice of the European Union has rendered that partial of the Company’s appeal was reasonable and lowered the penalty from EUR 300 million to EUR 288 million. The Company has decided to appeal against partial judgement within the prescribed time.
(c)Except for the Anti-Trust litigations the ultimate outcome of which cannot be reliably estimated, the Company has recognised actual or estimated losses or liabilities in “other payables” and “other non-current liabilities”.
B.Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and its subsidiaries in the US with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014 and the Company remained positive on its defense. The United States Court of Appeals for the Federal Circuit has held a hearing in November 2014 but has not ruled any judgment. The Company is currently assessing the status of the litigation. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term.

(60) Commitments

A.Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:

Property, plant and equipment B.Operating lease commitments	December 31,2014 15,338,375 $	December 31,2013
		13,229,191 $

The Group leases plant, land and warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than one year Later than one year but not later than five years Later than five years	December31,2014 571,800 $ 2,152,538 1,541,309 4,265,647 $	December31,2013
		572,237 $ 2,132,349 1,961,865
		4,666,451 $

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C.Outstanding letters of credit

The outstanding letters of credit for the purchase of property, plant and equipment are as follows:

follows:
Outstanding letters of credit	December 31,2014 693,635 $	December 31,2013
		390,027 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

(1) Details of cancellation of issuance of global depository receipts (the “GDR”) as approved by the Financial Supervisory Commission (FSC) on January 30, 2015 are provided in Note 6(16) C.
(2) Details of the proposal of syndicated credit line contract with financial institution creditors that

was approved by the Board of Directors on February 10, 2015 are provided in Note 6(12) F.

12. OTHERS

(1) Capital risk management

The Group’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity.

(2) Financial instruments

A.Fair value information of financial instruments

Except those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, short-term notes payable, accounts payable and other payables) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

December	December	31,2013
Bookvalue 11,160,082 $ 108,456,086 $	Bookvalue 12,327,722 $ 169,097,708 $	Fairvalue
		12,265,170 $
		169,097,708 $

B.Financial risk management policies

(a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance. The Group uses derivative financial instruments to hedge certain risk

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exposures (see Notes 6(2), (4)).

(b)Risk management is carried out by each treasury department (of all group companies) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity.
C.Significant financial risks and degrees of financial risks
(a)Market risk

Foreign exchange risk

a)The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
b)Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via their treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.
c)The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: RMB). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be an increase of $304,219 or a decrease of $439,379 for the years ended December 31, 2014 and 2013, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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	Foreign Currency Amount Exchange Book Value (In Thousands) Rate (NTD) 7,672,372 $ 31.65 242,830,574 $ 6,197,615 0.26 1,611,380 363,657 38.47 13,989,885 2,217,538 $ 31.65 70,185,078 $ 322,534 4.08 1,315,939 5,383,824 0.26 1,399,794 3,834 38.47 147,494 6,531,987 $ 31.65 206,737,389 $ 38,466,012 0.26 10,001,163 292,992 38.47 11,271,402 December 31,2014	December 31,2013	December 31,2013
	Foreign Currency Amount Exchange (In Thousands) Rate 7,672,372 $ 31.65 6,197,615 0.26 363,657 38.47 2,217,538 $ 31.65 322,534 4.08 5,383,824 0.26 3,834 38.47 6,531,987 $ 31.65 38,466,012 0.26 292,992 38.47	Foreign Currency Exchange Amount rate (In Thousands) (Note) 4,077,314 $ 29.81 761,223 0.28 405,043 41.09 2,108,219 $ 29.81 266,670 3.84 4,813,897 0.28 3,651 41.09 5,531,327 $ 29.81 36,451,156 0.28 176,291 41.09	Book Value (NTD)
Financial assets Monetary items USD JPY EUR Non-monetary items USD HKD JPY EUR Financial liabilities Monetary items USD JPY EUR			121,544,730 $ 213,142 16,643,217 62,846,008 $ 1,024,013 1,347,891 150,020 164,888,858 $ 10,206,324 7,243,797

Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged.

Price risk

a)The Group is exposed to equity securities price risk because of investments held by the Group that are classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio in accordance with the policy set by the Group.
b)The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, post-tax profit for the years ended December 31, 2014 and 2013 would have increased/decreased by $121,031 and $142,521, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss; other components of equity would have increased/decreased by $1,027,423 and $746,506, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

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Interest rate risk

a)The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2014 and 2013, the Group’s borrowings at variable rate were denominated in the NTD, USD and RMB.
b)The Group analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.
c)Based on the simulations performed, the impact on post-tax profit of a 0.1% shift would be a maximum increase of $271,243 or decrease of $423,213 for the years ended December 31, 2014 and 2013, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.
d)Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. The Group agrees with other parties to exchange interest rate, at specified intervals. The difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts.
(b)Credit risk
a)Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Customer credit quality is assessed via internal risk control, considering customer financial position, past experience and other factors. Individual risk limits are set by the board of directors based on internal or external ratings. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. Because the Company's counterparties and executor are banks

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with good credit standing and financial institutions and Government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk.

b)No credit limits were exceeded during the reporting periods. Management does not expect any significant losses from non-performance by these counterparties.

c)The individual analysis of financial assets that had been impaired is provided in Note 6.
(c)Liquidity risk
a)Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 6(12)) at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, external regulatory or legal requirements.
b)Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing saving accounts, time deposits, money market deposits and marketable securities. The Group chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk.
c)The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

Less than Between 1 December31,2014 1year and3 years Short-term borrowings 22,526,999 $ - $ Accounts payable 80,207,385 - Other payables 23,912,180 - Long-term borrowings (including current portion) 66,192,903 42,304,435 Other financial liabilities 36,821 10,938,112 Less than Between 1 December31,2013 1year and 3 years Short-term borrowings 31,179,767 $ - $ Accounts payable 74,191,829 - Other payables 20,715,595 - Long-term borrowings (including current portion) 169,097,708 - Other financial liabilities 114,516 8,220,937 Derivative financial liabilities: December31,2014 Less than 1year Forward exchange contracts $ 605,016 Interest rate swap contracts 1,351 December31,2013 Less than 1year Forward exchange contracts $ 689,097 Interest rate swap contracts -	Between 3 Over 5 and5 years years - $ - $ - - - - - - 663 6,344 Between 3 Over 5 and 5 years years - $ - $ - - - - - - 29,493 25,582 Between 1 and 3 years $ - $ - Between 1 and3 years $ - $ 21,918	Between 3 Over 5 and5 years years - $ - $ - - - - - - 663 6,344 Between 3 Over 5 and 5 years years - $ - $ - - - - - - 29,493 25,582 Between 1 and 3 years $ - $ - Between 1 and3 years $ - $ 21,918	Total 22,526,999 $ 80,207,385 23,912,180 108,497,338 10,981,940 Total 31,179,767 $ 74,191,829 20,715,595 169,097,708 8,390,528 Total 605,016 1,351 Total 689,097 21,918
		$
		$

(3) Fair value estimation

A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset

or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at December 31, 2014 and 2013:

December31,2014 Financial assets: Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts Cross currency swap contracts Derivative financial liabilities for hedging Interest rate swap contracts	Level 1 605,155 $ - 3,296,020 220,000 4,121,175 $ - $ - - - $	Level 2 - $ 52,453 - - 52,453 $ 605,016 $ - 1,351 606,367 $	Level3 - $ - 1,841,097 - 1,841,097 $ - $ - - - $	Total
				605,155 $ 52,453 5,137,117 220,000
				6,014,725 $
				605,016 $ - 1,351
				606,367 $

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December31,2013 Financial assets: Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts Derivative financial liabilities for hedging Interest rate swap contracts	Level 1 712,603 $ - 2,028,601 220,000 2,961,204 $ - $ - - $	Level 2 - $ 227,703 - - 227,703 $ 689,097 $ 21,918 711,015 $	Level3 - $ - 1,703,929 - 1,703,929 $ - $ - - $	Total
				712,603 $ 227,703 3,732,530 220,000
				4,892,836 $
				689,097 $ 21,918
				711,015 $

B.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments and debt instruments classified as financial assets/financial liabilities at fair value through profit or loss or available-for-sale financial assets.
C.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
E.Specific valuation techniques used to value financial instruments include:
(a)Quoted market prices or dealer quotes for similar instruments.
(b)The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
(c)The fair value of forward foreign exchange contracts is determined using forward exchange

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rates at the balance sheet date, with the resulting value discounted back to present value.

(d)Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.
F.All of the resulting fair value estimates are included in level 2 except for certain forward foreign exchange contracts where forward exchange rates are not observable directly in the market.
G.The following table presents the changes in level 3 instruments as at December 31, 2014 and 2013:

2013:
			Equitysecurities
			2014		2013
At January 1		$	1,703,929	$	610,017
Acquired in the period			162,730		-
Gains and losses recognized in profit or loss			10,701		420,922
Gains and losses recognized in other comprehensive income			196,382		1,350,330
Disposed in the period	(		232,645)	(	126,563)
Transfers out from level 3			-	(	550,777)
At December 31		$	1,841,097	$	1,703,929

(4) Turnaround plan

The Group’s current liabilities exceeded its current assets by $9,754,686 as of December 31, 2014.

The Group’s management adopted the following measures to improve its operations and financial position:

A.Negotiation with the creditor banks as to the debt issue

On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with creditor banks. Under the agreement, creditor banks agreed to extend the due dates for the repayment of the Company’s short, medium and long-term loans and to renew the Company’s credit lines to safeguard creditors’ rights and ensure the Company’s continuing operations. More information is described in Note 6(12)C.

In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal of syndicated credit line of NTD$68.5 billion with financial institutions.

B.Capital increase by cash

According to the “Agreed-upon Repayment Agreement” (the Agreement) stated in Note 6(12)C, the Company shall increase its capital in certain amount of cash within three years starting from 2012. From 2012 to 2014, the Company has completed some cash capital increase required by the Agreement. For more information, please refer to Notes 6(16)B and D.

As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval. Details are provided in Note 6(16) C.

C.Improvements in operations

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The Company continuously adjusts its product lines according to the market demands to increase operating revenue and gross profit. The Company also tries to strictly control various expenses and expenditures to effectively enhance operational performance to create cash inflows from operating activities.

D.Capital expenditure control program

Future capital expenditures will focus on the upgrading technology, improving efficiency and expanding production capacity. Capital expenditure budgets and amounts will be controlled strictly to maximize the benefits of capital expenditures.

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13. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU

(1) Related information of significant transactions

A.Loans granted during the year ended December 31, 2014:

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2014	Balance at December 31,2014	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short- term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted Note
													Item Value
1 2 2 2 2 3 4 5 6	Innolux Optoelectronics Europe B.V. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology USA Inc. Innolux Technology Europe B.V. Bright Information Holding Limited	Chi Mei Optoelectronics Germany GmbH Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Displays Hong Kong Ltd. Innolux Displays Hong Kong Ltd. Kunpal Optoelectronics Ltd.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Receivables from related parties Receivables from related parties Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	30,776 $ 822,900 3,339,075 949,500 949,500 3,620,680 189,900 1,491,707 63,300	30,776 $ - 3,165,000 949,500 949,500 3,620,680 189,900 1,491,707 -	- $ - 3,165,000 949,500 949,500 3,563,266 189,900 1,461,161 -	- - 2.7641% ~2.7807% 2.7626% 2.6506% 5.400% 0.16% ~0.56% 0.007% ~0.269% -	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- $ - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	- $ - - - - - - - -	- - $ - - - - - - - - - - - - - - - -	227,690,063 $ 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063 105,729	227,690,063 $ A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 105,729 B

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No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2014	Balance at December 31,2014	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short- term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted Note
													Item Value
7 8 9 10 11	Innolux Technology Germany GmbH Innolux Hong Kong Ltd. Innolux Technology Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Foshan Innolux Optoelectronics Ltd.	Innolux Hong Kong Ltd. Shanghai Innolux Optoelectronics Ltd. Leadtek Global Group Limited Innolux Corporation Nanhai Chi Mei Optoelectronics Ltd.	Receivables from related parties Receivables from related parties Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties	24,927 $ 499,941 1,375,920 396,900 2,532,000	- $ - 1,375,920 396,900 -	- $ - 1,375,920 396,900 -	- - 1.475% 1.380% -	Short-term financing Short-term financing Short-term financing Business association Business association	- $ - - 2,256,506 -	Operating support Operating support Operating support - -	- $ - - - -	- - $ - - - - - - - -	227,690,063 $ 227,690,063 227,690,063 569,824 227,690,063	227,690,063 $ A 227,690,063 A 227,690,063 A 569,824 C 227,690,063 A,D

Note A: The Company – Innolux Corporation

1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the company.
2.The financial limit on loans granted shall not exceed 40% of the company’s net equity. If it is for short-term capital needs, the limit shall not exceed 30% of the company’s net equity.
3.The policy for loans granted to direct or indirect wholly-owned overseas subsidiaries is as follows: for short-term capital needs, financial limit shall not be below the 40% requirement, but should not exceed 100% of the company’s net equity.
Note B: The subsidiary - Bright Information Holding Limited
1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the company. 2.The financial limit on loans granted shall not exceed 30% of the company’s net equity.
3.For the short-term capital needs of direct or indirect wholly-owned subsidiaries, the above two limitations are not required. However, the financial limit on loans granted shall not exceed 100% of the company’s net equity.

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Note C: Innolux Optoelectronics Japan Co., Ltd.

1.For the company’s short-term capital needs, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the parent company.
2.The financial limit on loans granted shall not exceed 30% of the company’s net equity, based on the most recent audited financial statements of the parent company; with intercompany transaction, the company’s financial limit on loans granted shall not exceed 40% of the company’s equity.

3.The amount of loans provided by the company and intercompany shall not exceed 40% of the company’s equity.

Note D: Foshan Innolux Optoelectronics Ltd. entered into a merger agreement with Nanhai Chi Mei Optoelectronics Ltd. on January 1, 2014 and Foshan Innolux Optoelectronics Ltd. is the surviving company B.Endorsements and guarantees provided during the year ended December 31, 2014:

Number	Endorsement /guarantee provider	Guaranteed party	Guaranteed party	Limit on endorsement/ guarantee amount provided to each counterparty	Maximum balance for the year	Ending balance	Actual amount drawndown	Amount of endorsement/ guarantee collateralized by properties	Ratio of accumulated endorsement/ guarantee to net equity per latest financial statements	Maximum endorsement/ guarantee amounts allowable	Provision of endorsement/ guarantees by parent company to subsidiary	Provision of endorsement/ guarantees by subsidiary to parent company	Provision of endorsements /guarantees to the party in Mainland China	Note
		Name	Nature of relationship
0	Innolux Corporation	Leadtek Global Group Limited	An indirect wholly- owned subsidiary	$113,845,032	$16,901,100	$16,901,100	$10,140,660	$ -	7.42%	$113,845,032	Y	N	N	A,B

Note A: Limits on endorsement/guarantee amount provided to each counterparty did not exceed 0.5% of the Company’s net equity based on the most recent audited financial statements of the Company. Maximum endorsement/guarantee amounts allowable should not exceed 1% of the Company’s net equity based on the most recent audited financial statements of the Company. For subsidiaries with over 90% of shares directly or indirectly owned by the Company, the endorsement / guarantee amount provided by the Company shall not exceed 10% of the Company’s net equity. The limitation is not required for direct or indirect wholly-owned subsidiaries of the Company.

Note B: Accumulated endorsement/guarantee amount provided by the Company shall not exceed 50% of the Company’s net equity.

C.Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures):

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Securitiesheld by	Relationship Kind andname of marketable securities with the Company Commonstock AvanStrate Inc. None TPV Technology Ltd. None Chi Lin Optoelectronics Co., Ltd. None Epistar Corp. None Chi Mei Materials Technology Corporation None Bond Unsecured subordinated bonds of Cathay Financial Holdings None Commonstock Trillion Science, Inc. None China Electric Mfg. Corp. None Tera Xtal Technology Corporation None Advanced Optoelectronic Technology, Inc. None J TOUCH Corporation None Fitipower Integrated Technology Inc. None G-TECH Optoelectronics Corporation None	General ledgeraccount		December31,2014	December31,2014		Note
			Numberofshares	Bookvalue	Percentage	Fairvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation		Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial asset at fair value through profit or loss Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current	900,000 150,500,000 48,283,725 89,072 45,068,305 - 1,439,180 13,000,000 4,900,000 11,165,222 1,080,749 10,000,000 6,311,734	$ 80,302 1,031,587 483,194 5,603 1,500,775 220,000 2,252 140,400 56,693 605,155 19,507 343,350 184,934	1 6 19 - 9 - 2 3 3 8 1 8 2	$ 80,302 1,031,587 483,194 5,603 1,500,775 220,000 2,252 140,400 56,693 605,155 19,507 343,350 184,934

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Relationship Securitiesheld by Kind andname of marketable securities with the Company InnoJoy Investment Corporation Entire Technology Co., Ltd. None Warriors Technology Investments Ltd. OED Holding Ltd. None Warriors Technology Investments Ltd. General Interface Solution (GIS) Holding Limited None Warriors Technology Investments Ltd. Perfect Optronics Limited None Nets Trading Ltd. PilotTech Global Fund None	General ledgeraccount		December31,2014	December31,2014		Note
		Numberofshares	Bookvalue	Percentage	Fairvalue
	Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current	7,506,326 16,000,000 40,500,000 22,000,000 90	$ 177,900 3,553 900,242 178,621 28,204	5 6 14 2 -	$ 177,900 3,553 900,242 178,621 28,204

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D.Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital:

Company name	Marketable securities type and name	Financial statement account	Counterparty	Nature of relationship	Beginning balance	Beginning balance	Acquisition	Acquisition		Disposal	Disposal		Shares/units Amount Note Ending balance	Shares/units Amount Note Ending balance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Amount	Carrying value	Gain (loss) on disposal	Shares/units
Innolux Corporation Toppoly Optoelectronics (B.V.I.) Ltd. Toppoly Optoelectronics (Cayman) Ltd. Innolux Corporation Innolux Corporation Warriors Technology Investments Ltd.	Toppoly Optoelectronics (B.V.I.) Ltd. Toppoly Optoelectronics (Cayman) Ltd. Nanjing Innolux Optoelectronics Ltd. Chi Mei Materials Technology Corporation Contrel Technology Co., Ltd. Perfect Optronics Limited	Investments accounted for under the equity method Investments accounted for under the equity method Investments accounted for under the equity method Available- for-sale financial assets - non current Available- for-sale financial assets - non current Available- for-sale financial assets - non current	A A A Open market Open market Open market	B C C None None None	126,847,000 126,817,000 - 80,184,305 17,009,330 -	3,064,699 $ 3,040,776 2,935,314 2,372,660 464,322 -	17,600,000 17,600,000 - - - 66,000,000	531,608 $ 531,608 531,608 - - 77,236	- - - 35,116,000) ( 17,009,330) ( 44,000,000) (	- $ - - 1,308,457 314,798 317,743	- $ - - 871,885) ( 464,322) ( 51,491) (	- $ - - 436,572 149,524) ( 266,252	144,447,000 144,417,000 - 45,068,305 - 22,000,000	3,596,307 $ 3,572,384 3,466,922 1,500,775 D - D 25,745 E

Note A: Cash capital increase implemented by an investee. Note B: A subsidiary of the Company.

213

Note C: An indirect wholly-owned subsidiary.

Note D: The beginning carrying balance included profits and losses from investments and cash dividends.

Note E: Ending book value excludes gain (loss) on valuation of financial assets.

E.Acquisition of real estate reaching $300 million or 20% of paid-in capital or more for the year ended December 31, 2014: None.

F.Disposal of real estate reaching $300 million or 20% of paid-in capital or more for the year ended December 31, 2014: None.

G.Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more:

214

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Shenzhen Fu Tai Hong Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Lakers Trading Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Technology USA Inc. Foshan Innolux Optoelectronics Ltd. Innolux Optoelectronics USA, Inc. Innolux Hong Kong Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. FuTaiJing Precision Electronics (Yantai) Co., Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	$ 5,497,697 3,977,339 3,558,807 2,687,589 1,757,646 1,231,983 850,573 714,609 635,548 391,448 341,756 191,636	1 1 1 1 - - - - - - - -	60 days 45-60 days 45-90 days 60-90 days 45 days 60 days 90 days 45 days 60 days 45-60 days 60 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparsion Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 1,543,053 1,875,465 1,282,691 - 186,694 173,861 1,649 133,856 - 93,428 7,469 179,404	2 3 2 - - - - - - - - -

215

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd.	Ambit Microsystem (Shanghai) Co., Ltd. HongFuJin Precision Electronics (HengYang) Co., Ltd. Chi Mei Materials Technology Corporation Hon Hai Precision Industry Co., Ltd. Chi Lin Optoelectronics Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An investee company accounted for under the equity method Same major stockholder The company is a corporate director of Chi Lin Optoelectronics Co., Ltd. A subsidiary of the Company A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	Sales Sales Purchases Purchases Purchases Purchases Processing expense Processing expense Processing expense Processing revenue Processing revenue Processing revenue	$ 133,220 101,020 4,407,106 1,820,509 898,860 296,646 78,866,584 53,598,757 35,408,180 41,971,830 36,601,008 34,677,066	- - 1 - - - 20 14 9 91 48 97	60 days 45 days 90 days after acceptance 60~90 days after acceptance 120 days after acceptance 30 days after acceptance 60-90 days 60-90 days 60-90 days 90 days 60 days 90 days	Similar with general sales Similar with general sales Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Cost plus Cost plus Cost plus Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 2,036 - - ( 726,789) ( 609,775) ( 16,826) ( 42,634,612) ( 32,726,649) ( 8,444,162) 19,784,634 22,267,762 7,884,481	- - - 1 1 - 36 28 7 92 94 97

216

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Ningbo Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Ltd. Ningbo Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Ningbo Lin Moug Optronics Co., Ltd. Hon Hai Precision Industry Co., Ltd.	A subsidiary of the Company A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Subsidiary of an investee company accounted for under the equity method An indirect wholly-owned subsidiary of Chi Lin Optoelectronics Co., Ltd. Same major stockholder	Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Service revenue Sales Sales Purchases Purchases Purchases	$ 19,610,772 16,648,612 12,863,897 3,116,868 1,226,867 306,702 2,079,743 723,106 3,169,506 2,921,686 1,903,333	92 17 95 98 47 85 2 4 4 3 2	90 days 90 days 60 days 90 days 60 days 60 days 90 days 60 days 90 days after goods are shipped 60 days after goods are shipped 90 days after goods are shipped	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 6,966,625 - 3,069,946 986,622 2,158,754 45,553 965,551 142,914 - ( 1,188,883) ( 388,841)	90 - 95 100 58 94 3 3 - 6 1

217

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd.	Hon Hai Precision Industry Co., Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Hon Hai Precision Industry Co., Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Chi Mei Materials Technology Corporation Hongfujin Precision Industry (Shenzhen) Co., Ltd. GIO Optoelectronics Corp. Ningbo Lin Moug Optronics Co., Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Hon Hai Precision Industry Co., Ltd.	Same major stockholder Subsidiary of an investee company accounted for under the equity method Same major stockholder Subsidiary of an investee company accounted for under the equity method An investee company accounted for under the equity method An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An investee company accounted for under the equity method An indirect wholly-owned subsidiary of Chi Lin Optoelectronics Co., Ltd. Subsidiary of an investee company accounted for under the equity method Same major stockholder	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	$ 1,860,997 1,546,583 1,022,838 779,482 701,095 539,927 412,044 364,731 179,536 155,767	2 1 3 2 1 1 - 1 4 3	60 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 120 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	($ 688,812) - ( 300,694) - - ( 173,670) ( 26,952) ( 200,785) - ( 63,614)	3 - 3 - - 1 - 2 - 6

218

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Foshan Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Ampower Technology Co., Ltd. Jizhun Precision Industry (Huizhou) Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd.	The company is a corporate director of Ampower Technology Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Purchases Processing expense Processing expense	$ 130,295 167,217 114,341	- 9 6	90 days after goods are shipped 30 days 30 days	Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference	($ 3,401) ( 21,059) ( 23,662)	- 3 4

Note A: Accounts for the cost of goods sold ratio.

219

H.Receivables from related parties exceeding $100 million or 20% of the Company’s paid-in capital:

Company	Counterparty	Relationship with the Company	Balance of receivable from relatedparties	Turnover rate	Overduereceivables	Overduereceivables	Subsequent collection	Allowance for doubtful accounts provided
					Amount	Action adopted for overdue accounts
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Shenzhen Fu Tai Hong Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Kang Zhun Electronical Technology (Kunshan) Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Innolux Technology USA Inc. Innolux Optoelectronics USA, Inc. Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. A subsidiary of the Company An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 1,543,053 1,875,465 1,282,691 489,164 186,694 179,404 173,861 133,856 22,267,762 19,784,634 7,884,481 6,966,625 3,069,946 2,158,754	7.12 3.85 3.28 - 11.39 2.14 9.93 5.93 2.34 2.29 3.73 3.10 5.48 0.77	$ - 110,139 209,867 71,285 - 1,802 - - 17,331,083 4,667,893 - 928,046 579,608 1,622,044	- Subsequent collection Subsequent collection Subsequent collection - Subsequent collection - - Subsequent collection Subsequent collection - Subsequent collection Subsequent collection Subsequent collection	$ 661,954 78,424 378,539 106,435 - 8,405 - 96,199 3,896,237 3,165,386 2,943,828 2,025,388 579,608 -	$ - - - - - - - - - - - - - -

220

Company	Counterparty	Relationship with the Company	Balance of receivable from related parties	Turnover rate	Overduereceivables	Overduereceivables	Subsequent collection	Allowance for doubtful accounts provided
					Amount	Action adopted for overdue accounts
Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Lakers Trading Ltd. Ningbo Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	$ 986,622 965,551 142,914 111,123	6.45 2.87 5.36 -	$ - 54,787 - 111,123	- Subsequent collection - Subsequent collection	$ 89,598 681,627 - -	$ - - - -

I. Derivative financial instruments undertaken during the year ended December 31, 2014: Please refer to Notes 6(2) and 6(4).

J. Significant inter-company transactions during the year ended December 31, 2014:

221

Number 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 3 3 3 4 4 5 5 6	Name ofcounterparty Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Technology Japan Co., Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Ningbo Innolux Optoelectronics Ltd.	Name oftransactionparties Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics USA, Inc. Innolux Optoelectronics USA, Inc. Innolux Technology USA Inc. Innolux Technology USA Inc. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3 3 Relationship (NoteA)	General ledger Transaction account Amount terms (NoteB) Sales 635,548 $ - Processing expense 35,408,180 - Accrued expense 8,444,162) ( - Sales 1,757,646 - Accounts receivable 186,694 - Purchases 296,646 - Sales 714,609 - Accounts receivable 133,856 - Sales 1,231,983 - Accounts receivable 173,861 - Sales 2,687,589 - Processing expense 53,598,757 - Accrued expense 32,726,649) ( - Processing expense 78,866,584 - Accrued expense 42,634,612) ( - Sales 850,573 - Service revenue 306,702 - Processing revenue 12,863,897 - Accounts receivable 3,069,946 - Sales 723,106 - Accounts receivable 142,914 - Processing revenue 36,601,008 - Accounts receivable 22,267,762 - Processing revenue 16,648,612 - Processing revenue 34,677,066 - Accounts receivable 7,884,481 - Processing revenue 1,226,867 - Accounts receivable 2,158,754 - Processing revenue 41,971,830 - Information fromtransactions (Note C)	Percentage of totoal combined revenue or totalassets
				General ledger account Amount Sales 635,548 $ Processing expense 35,408,180 Accrued expense 8,444,162) ( Sales 1,757,646 Accounts receivable 186,694 Purchases 296,646 Sales 714,609 Accounts receivable 133,856 Sales 1,231,983 Accounts receivable 173,861 Sales 2,687,589 Processing expense 53,598,757 Accrued expense 32,726,649) ( Processing expense 78,866,584 Accrued expense 42,634,612) ( Sales 850,573 Service revenue 306,702 Processing revenue 12,863,897 Accounts receivable 3,069,946 Sales 723,106 Accounts receivable 142,914 Processing revenue 36,601,008 Accounts receivable 22,267,762 Processing revenue 16,648,612 Processing revenue 34,677,066 Accounts receivable 7,884,481 Processing revenue 1,226,867 Accounts receivable 2,158,754 Processing revenue 41,971,830
					- 8 2 - - - - - - - 1 12 8 18 10 - - 3 1 - - 8 5 4 8 2 - 1 9

222

Number 6 6 6 7 7 8 8	Name ofcounterparty Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd.	Name oftransactionparties Leadtek Global Group Limited Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	Relationship (NoteA) 3 3 3 3 3 3 3	General ledger Transaction account Amount terms (NoteB) Information fromtransactions (Note C) Accounts receivable 19,784,634 $ - Sales 2,079,743 - Accounts receivable 965,551 - Processing revenue 19,610,772 - Accounts receivable 6,966,625 - Processing revenue 3,116,868 - Accounts receivable 986,622 -	General ledger Transaction account Amount terms (NoteB) Information fromtransactions (Note C) Accounts receivable 19,784,634 $ - Sales 2,079,743 - Accounts receivable 965,551 - Processing revenue 19,610,772 - Accounts receivable 6,966,625 - Processing revenue 3,116,868 - Accounts receivable 986,622 -	Percentage of totoal combined revenue or totalassets
				General ledger account Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	Amount 19,784,634 $ 2,079,743 965,551 19,610,772 6,966,625 3,116,868 986,622
						5 - - 4 2 1 -

Note A: Relationship with the transaction company:

1. The parent company to the subsidiary.

3. The subsidiary to the subsidiary.

Note B: Except for no comparable transactions from related parties, sales prices were similar to non-related parties transactions and the collection period was 30~120 days; the purchases from related parties were at market prices and payment term was 30~120 days upon receipt of goods.

Note C: Amount disclosure standard: purchases, sales and receivables from related parties in excess of $100 million or 20% of capital.

223

(2) Information on investees

The information on the name, the location…etc of the investee companies is shown below (not including investees in Mainland China):

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Bright Information Holding Ltd. Gold Union Investments Ltd. Golden Achiever International Ltd. Innolux Holding Ltd. Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Europe B.V.	Hong Kong Samoa BVI Samoa Samoa Samoa BVI Hong Kong BVI Taiwan Taiwan Netherlands	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Order swap company Investment company Investment company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT- LCD monitors	119,724 $ 348,999 9,083 7,858,300 197,554 32,925,315 3,596,307 2,107,291 - 1,217,235 1,078,166 121,941	74,924 $ 779,152 9,083 8,000,912 197,554 32,925,315 3,064,699 2,107,291 - 1,217,235 1,078,166 121,941	4,910,000 31,783,000 39,250 246,768,185 5,656,410 693,100,000 144,447,000 1,158,844,000 50,000,000 - 167,405,392 180	100 100 100 100 100 100 100 100 100 100 100 100	185,214 $ 116,227 21,849) ( 16,796,396 277,422 41,425,623 5,945,861 2,393,227 358,432) ( 918,468 1,670,083 152,269	423 $ 111,306 573) ( 324,999 5,890 4,430,141 740,811 493,840 96,260) ( 31,904 162,272) ( 7,361	114 $ 111,306 6,829 311,917 5,890 4,356,784 740,811 518,932 96,260) ( 31,904 162,272) ( 7,361

224

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd.	Innolux Optoelectronics Japan Co., Ltd. Ampower Holding Ltd. Jetronics International Corp. FI Medical Device Manufacturing Co., iZ3D, Inc. Chi Mei Lighting Technology Corporation Chi Mei El Corporation GIO Optoelectronics Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation	Japan Cayman Samoa Taiwan USA Taiwan Taiwan Taiwan Samoa Samoa Samoa USA	Researching, manufacturing and selling of the film transistor liquid crystal display Investment holdings Investment holdings Photographic and optical instruments manufacturing Research and development and sale of 3D flat monitor Manufacturing of electronic equipment and lighting equipment Developing, designing, manufacturing and selling of organic light emitting diodes Developing, designing, manufacturing and selling of components of back light module on TFT-LCD Investment holdings Investment holdings Order swap company Distributor company	1,335,486 $ 1,717,714 86,149 73,500 - 819,312 361,382 800,892 7,296,530 555,422 - 6,348	1,335,486 $ 1,717,714 145,600 - - 819,312 361,382 800,892 7,426,240 568,324 - 6,348	80 14,062,500 726,941 7,350,000 4,333 78,195,856 155,500,000 63,521,501 226,504,550 18,177,052 1 2,000	100 47 32 49 35 33 97 24 100 100 100 100	1,572,495 $ 1,477,199 1,771) ( 73,164 - - 24,799 449,994 15,261,115 1,404,398 241,128 88,218) (	68,864 $ 276,629) ( 85,293) ( 686 - - 5,702) ( 112,745) ( 71,583 255,129 - 1,722) (	68,864 $ 90,897) ( 41,869 336 - - 5,541) ( 26,811) ( 71,583 255,129 - 1,722) (

225

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Optoelectronics Europe B.V. Innolux Optoelectronics Japan Co., Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd.	Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Ltd. Innolux Hong Kong Ltd. Innolux Technology Europe B.V. Innolux Technology Japan Co., Ltd. Innolux Technology USA Inc. Chi Mei Optoelectronics Germany GmbH Innolux Optoelectronics USA, Inc. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd.	Cayman Hong Kong Hong Kong Netherlands Japan USA Germany USA Samoa Samoa Samoa Samoa	Investment holdings Investment holdings Order swap company Holding company and R&D testing company Distributor company Distributor company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT- LCD monitors Selling of electronic equipment and computer monitors Investment holdings Investment holdings Investment holdings Investment holdings	3,572,384 $ - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370 5,391,125	3,040,776 $ - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370 5,391,125	144,417,000 162,897,802 35,000,000 375,810 201 1,000 250 1,000 10,000,001 18,000,000 38,000,001 164,000,000	100 100 100 100 100 100 100 100 100 100 100 100	6,181,164 $ 780,296 2,095,946) ( 2,410,215 1,647,930 326,317 26,937 258,769 255,806 421,268 1,018,638 13,534,845	740,811 $ 233,398 320,095 35,651 128,257) ( 31,730 3,753 23,063 36,380 1,221 3,328 36,362	740,811 $ 233,398 320,095 35,651 128,257) ( 31,730 3,753 23,063 36,380 1,221 3,328 36,362

226

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Rockets Holding Ltd. Suns Holding Ltd. Innolux Technology Europe B.V. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Asiaward Investment Ltd. Main Dynasty Investment Ltd. Sun Dynasty Development Ltd. Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp. Chi Mei Logistics Corp. TOA Optronics Corporation	Samoa Samoa Germany Hong Kong Hong Kong Hong Kong Taiwan Taiwan Taiwan Taiwan	Investment company Investment company Testing and maintenance company Investment holdings Investment holdings Investment holdings Trading business, manufacturing of electronic equipment and lighting equipment Developing, designing, manufacturing and selling of components of back light module on TFT-LCD Warehousing services Selling electronic materials, trading business, manufacturing of electronic equipments and lighting equipments	27,477 $ 555,422 33,735 314,740 573,940 1,146,370 263,812 6,881 - 423,606	- $ 568,324 33,735 314,740 573,940 1,146,370 263,812 6,881 124,485 423,606	900,001 18,177,052 100,000 77,830,001 139,623,801 295,969,001 19,673,402 467,519 - 58,007,000	100 100 100 100 100 100 8 - - 40	30,441 $ 1,404,397 63,152 255,806 421,267 1,018,638 - 732 - 364,907	- $ 255,127 41 36,380 1,221 3,328 - 112,745) ( 5,843 105,740) (	- $ 255,127 41 36,380 1,221 3,328 - 203) ( 2,863 45,764) (

227

(3) Information on investments in Mainland China

A.Basic information:

3)Information on investments in Mainland China A.Basic information:
Name of investee in Mainland China Main activities of investee Capital (Note A) Method of Investment (Note D) Balance of amount remitted from Taiwan on January1,2014	Transactions during (inthousands ofUSD) Jan. 1, 2014~Dec. 31, 2014		Balance of amount remitted from Taiwan as of Dec. 31,2014	Net income of investee for the year ended Dec. 31,2014	Ownership percentage held by the Company (Direct/indirect)	Profit recognized during Jan. 1, 2014~ Dec. 31, 2014 (NoteB)	Profit Book value remitted to of investment Taiwan during as of Jan. 1, 2014 ~ Dec. 31,2014 Dec. 31,2014
	Remittance out	Remittance in
Innocom Technology (Shenzhen) Co., Ltd. Manufacturing and selling of LCD backend module and related components 5,190,600 $ 1 4,016,756 $ Innocom Technology (Chengdu) Co., Ltd. Manufacturing and selling of LCD backend module and related components 1,202,700 1 1,202,700 OED Company Manufacturing and selling of electronic paper 256,112 1 63,300 Ningbo Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 9,811,500 2 1,396,613 Ningbo Innolux Technology Ltd. Manufacturing and selling of LCD backend module and related components 4,114,500 2 4,114,500 Foshan Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 12,121,950 2 12,121,950 Ningbo Innolux Display Ltd. Manufacturing and selling of LCD backend module and related components 949,500 3 949,500	- $ - - - - - -	- $ - - 1,163,508) ( - - -	4,016,756 $ 1,202,700 63,300 233,105 4,114,500 12,121,950 949,500	36,362 $ 3,328 140,976) ( 2,070,696 491,039 1,866,041 34,860	100 100 5 100 100 100 100	36,362 $ 3,328 - 2,070,696 491,039 1,866,041 34,860	13,534,833 $ 1,173,844 $ 1,018,638 - 12,989 - 20,601,650 5,463,896 3,218,102 - 18,607,398 - 260,746 -

228

Name of investee in Mainland China Main activities of investee Capital (Note A) Method of Investment (Note D) Balance of amount remitted from Taiwan on January1,2014	Transactions during (in thousands of USD) Jan. 1, 2014~Dec. 31, 2014	Transactions during (in thousands of USD) Jan. 1, 2014~Dec. 31, 2014	Balance of amount remitted from Taiwan as of Dec. 31,2014	Net income of investee for the year ended Dec. 31,2014	Ownership percentage held by the Company (Direct/indirect)	Profit recognized during Jan. 1, 2014~ Dec. 31, 2014 (NoteB)	Profit Book value remitted to of investment Taiwan during as of Jan. 1, 2014 ~ Dec. 31,2014 Dec. 31,2014
	Remittance out	Remittance in
Nanjing Innolux Technology Ltd. Purchases and sales of monitor-related components company 66,465 $ 4 66,465 $ Kunpal Optoelectronics Ltd. Glass thinning processing service 126,600 5 71,744 VAP Optoelectronics (Nanjing) Corp. Manufacturing and selling of LCD backend module and related components 208,890 6 9,495 Nanjing Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 4,494,300 4 3,937,260 Ningbo Innolux Logistics Ltd. Warehousing services 126,600 8 126,600 Shanghai Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 664,650 7 - Foshan Innolux Logistics Ltd. Warehousing services 47,475 8 47,475 Amlink (Shanghai) Ltd. Manufacturing and selling of power supply, modem, ADSL, and other IT equipments 633,000 9 316,500	- $ 47,951 - 557,040 - - - -	- $ - - - - - - -	66,465 $ 119,695 9,495 4,494,300 126,600 - 47,475 316,500	11,797 $ 942 574) ( 729,013 5,729 233,398 161 8,949) (	100 100 100 100 100 100 100 47	11,797 $ 942 574) ( 729,013 5,729 233,398 161 4,206) (	606,961 $ - $ 79,430 - 43,749) ( - 5,574,181 - 168,311 - 780,296 - 66,633 - 594,508 -

229

Profit Transactions during Balance of recognized Profit Balance of Jan. 1, 2014~Dec. 31, 2014 amount Net income of Ownership during Book value remitted to Method of amount remitted (in thousands of USD) remitted from investee for percentage held Jan. 1, 2014~ of investment Taiwan during Name of investee Main activities of Capital Investment from Taiwan on Remittance Remittance Taiwan as of the year ended by the Company Dec. 31, 2014 as of Jan. 1, 2014 ~ in Mainland China investee (Note A) (Note D) January 1, 2014 out in Dec. 31, 2014 Dec. 31, 2014 (Direct/indirect) (Note B) Dec. 31, 2014 Dec. 31, 2014 Kunshan GuannManufacturing of $ 265,860 10 $ 85,139 $ - $ - $ 85,139 $ - 32 $ - $ - $ - Jye Electronics transformers Co., Ltd. Interface Development of new 2,095,230 1 427,275 - - 427,275 - 14 - 900,242 - Optoelectronics type of flat panel (Shenzhen) Co., display, monitor and Ltd. peripherals, production and management, and offer of after-sales service

B. Information on investments in Mainland China (Note C):

Company Innolux Corporation	Accumulated amount wired out from Taiwan to Mainland China as of the end of the year 29,846,173 $	Investment amount approved by FIC of MOEA 44,838,617 $	Ceiling of investment amount of the Company
			- $

C. Significant transactions with investees in Mainland China directly or indirectly through the third areas:

The significant transactions between the Company and the investee companies for the year ended December 31, 2014 were eliminated in these financial statements and shown in Notes 13(1) A、G、H、J. Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate.

Note B: Profit or loss recognised for the year ended December 31, 2014 was audited by independent accountants.

Note C: Pursuant to the Jing-Shen-Zi Letter No. 10100485600 of the Ministry of Economic Affairs, R.O.C., dated June 29, 2012, as the Company has obtained the certificate of conforming to the business scope of headquarters, issued by the Industrial Development Bureau, MOEA, the investment ceiling regulation for Taiwan-based companies investing in Mainland China is not applicable to the Company. Note D: The investment methods are as follows:

1.Through investing in Innolux Holding Ltd. in the third area, which then invested in the investee in Mainland China.

230

2.Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.

3.Through investing in Gold Union Investments Ltd. in the third area, which then invested in the investee in Mainland China.

4.Through investing in Toppoly Optoelectronics (B.V.I) Ltd. in the third area, which then invested in the investee in Mainland China.

5.Through investing in Bright Information Holding Ltd. in the third area, which then invested in the investee in Mainland China.

6.Through investing in Golden Achiever International Ltd. in the third area, which then invested in the investee in Mainland China.

7.Through investing in Innolux Hong Kong Holding Ltd. in the third area, which then invested in the investee in Mainland China.

8.Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.

9.Through investing in Ampower Holding Ltd. in the third area, which then invested in the investee in Mainland China.

10.Through investing in Jetronics International Corporation in the third area, which then invested in the investee in Mainland China.

231

14. SEGMENT INFORMATION

(5) General information

The Group is primarily engaged in the research, development, manufacture and sales of TFT LCD. The chief operating decision-maker considered the business from a perspective of product size of TFT LCD. TFT LCD products are currently classified into big size and small-medium size. Because the Company met the criteria for combining the segment information of big-size and small-medium-size TFT LCD departments, the Company disclosed only one reportable operating segment for all TFT LCD products. The Company’s operating segment information was prepared in accordance with the Company’s accounting policies. The chief operating decision-maker allocates resources and assesses performance of the operating segments primarily based on the operating revenue and profit (loss) before tax and discontinued operations of individual operating segment.

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

The segment information provided to the chief operating decision-maker for the reportable segment is as follows:

segment is as follows:
Segment revenue Segment income Depreciation and amortisation Capital expenditure-property, plant and equipment Segment assets	Years ended December31,
	2014 TFT LCD 428,661,898 $ 22,523,244 $ 60,883,074 $ 20,526,552 $ 480,984,747 $	2013
		TFT LCD
		422,729,420 $
		5,645,922 $
		77,845,557 $
		18,370,343 $
		507,927,783 $

(7) Reconciliation for segment income

A reconciliation of reported segment income and income from continuing operations before tax is provided as follows:

A.Reconciliation of segment revenue with operating revenue:

Segment revenue Other revenue Operating revenue	Years ended December31,	Years ended December31,
	2014 428,661,898 $ - 428,661,898 $	2013
		422,729,420 $ 1,080 422,730,500 $

232

B.Reconciliation of segment income with income from continuing operations before income tax:

Segment income Others Income before income tax C.Reconciliation of segment assets with total assets: Segment assets Others D.Other significant reconciliation: Depreciation and amortization Others Capital expenditure - property, plant and equipment Others	Years endedDecember31,	Years endedDecember31,
	2014 2013 22,523,244 $ 5,645,922 $ 11,096 2,569) ( 22,534,340 $ 5,643,353 $ December31,2014 December31,2013 480,984,747 $ 507,927,783 $ 1,531,808 273,102 482,516,555 $ 508,200,885 $ Years ended December31,	2013
		5,645,922 $ 2,569) 5,643,353 $ December31,2013
	2014 60,883,074 $ 16,482 60,899,556 $ 20,526,552 $ - 20,526,552 $	2013
		77,845,557 $ 5,881 77,851,438 $ 18,370,343 $ - 18,370,343 $

(8) Information on product

Revenue from external customers is mainly from TFT-LCD product. Details of revenue are as follows:

follows:
Sales of TFT LCD products Other revenues	Years endedDecember31,
	2014 428,661,898 $ - 428,661,898 $	2013
		422,729,420 $ 1,080 422,730,500 $

233

(9) Geographical information

Geographical information for the years ended December 31, 2014 and 2013 is as follows:

Years ended December 31,

Revenue Non-current assets 91,333,989 $ 214,158,469 $ 124,681,779 - 103,061,439 41,762,276 31,048,822 28,601 11,727,851 513 66,808,018 140,789 428,661,898 $ 256,090,648 $ 2014	2013	2013
Revenue 91,333,989 $ 124,681,779 103,061,439 31,048,822 11,727,851 66,808,018 428,661,898 $	Revenue 71,710,289 $ 147,983,751 74,639,122 28,876,735 30,837,604 68,682,999 422,730,500 $	Non-current assets
		255,437,219 $ - 40,949,233 30,474 1,862 44,270
		296,463,058 $

(10) Major customer information

None of the individual sales to the Group’s customers exceeds 10% of the sales in the consolidated statement of comprehensive income for the years ended December 31, 2014 and 2013.

234

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Innolux Corporation

We have audited the accompanying parent company only balance sheets of Innolux Corporation as of December 31, 2014 and 2013, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These parent company only financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these parent company only financial statements based on our audits. We did not audit the financial statements of certain investments accounted for under equity method for the year ended December 31, 2013. The long-term equity investments amounted to NT$2,618,196,000 as of December 31, 2013, and the comprehensive income (including share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method and share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method) was NT$451,716,000 for the year then ended. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

In our opinion, based on our audits and the reports of other independent accountants, the parent company only financial statements referred to above present fairly, in all material respects, the

235

financial position of Innolux Corporation as of December 31, 2014 and 2013, and their financial performance and cash flows for the years then ended in conformity with the “Regulations Governing the Preparations of Financial Statements by Securities Issuers”.

Innolux Corporation’s current liabilities have exceeded its current assets by NT$42,313,979,000 as of December 31, 2014. As set forth in Note 12(4), management has designed a turnaround plan to improve the Company’s operating efficiency.

PricewaterhouseCoopers, Taiwan

February 10, 2015

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

236

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(5) 7 7 6(6) 8 6(3) 6(7) 6(8), 7 and 8 6(9) 6(10) 6(25) 8	2014 $ 55,543,195 52,453 220,000 68,858,149 6,067,658 699,592 691,024 27,938,165 542,334 2,250,035 12,542 162,875,147 3,101,461 73,096,389 192,599,182 693,677 20,127,184 17,575,426 11,160,082 625,863 318,979,264 $ 481,854,411	2013
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current Accounts receivable, net Accounts receivable, net - related parties Other receivables Other receivables - related parties Inventory Prepayments Other financial assets - current Other current assets Total current assets Non-current assets Available-for-sale financial assets - non-current Investments accounted for under equity method Property, plant and equipment Investment property, net Intangible assets Deferred income tax assets Other financial assets - non-current Other non-current assets Total non-current assets Total assets			$ 27,604,892 227,703 - 63,763,265 2,409,842 609,036 787,951 39,510,209 849,108 2,485,841 26,684
			138,274,531
			1,824,122 67,860,212 233,557,614 706,850 21,114,443 17,835,399 12,327,722 57,553
			355,283,915
			$ 493,558,446

(Continued)

237

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS

DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(11) 6(2) 6(4) 7 7 and 9 6(15) 6(12) 6(4) 6(12) 6(25) 6(13) and 9 6(16) 6(14)(17) 6(18) 6(19) 9 6(12)(16) and 11	2014 2013 $ 1,300,000 $ 1,943,565 605,016 689,097 1,351 - 33,731,780 29,023,925 85,171,012 81,977,746 18,688,940 15,090,951 3,133,489 1,949,029 61,092,333 155,569,218 1,465,205 1,170,242 205,189,126 287,413,773 - 21,918 37,223,093 - 477,579 909,708 11,274,550 12,169,818 48,975,222 13,101,444 254,164,348 300,515,217 99,545,364 91,094,288 99,584,369 96,058,741 509,272 2,328,981 1,144,229 - 24,979,173 5,092,716 1,927,656 ( 1,531,497) 227,690,063 193,043,229 $ 481,854,411 $ 493,558,446
Current liabilities Short-term borrowings Financial liabilities at fair value through profit or loss - current Derivative financial liabilities for hedging - current Accounts payable Accounts payable - related parties Other payables Provisions - current Long-term liabilities, current portion Other current liabilities Total current liabilities Non-current liabilities Derivative financial liabilities for hedging - non-current Long-term borrowings Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity Share capital - common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Other equity interest Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date Total liabilities and equity

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 10, 2015.

238

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

Items

Notes
2014
2013
7
$ 426,005,033
$ 419,738,269
6(6)(23)(24) and
7
(
389,609,785)(
392,206,451)
36,395,248
27,531,818
6(23)(24)
(
1,092,207)(
1,105,609)
(
3,451,341)(
3,997,111)
(
11,412,260)(
11,128,979)
(
15,955,808)(
16,231,699)
20,439,440
11,300,119
6(20)
1,379,919
1,222,075
6(21)
(
3,418,822)(
8,950,438)
6(22)
(
2,721,239)(
4,369,834)
5,998,536
5,233,229
1,238,394 (
6,864,968)
21,677,834
4,435,151
6(25)
(
1,075)
667,417
$ 21,676,759
$ 5,102,568
$ 3,087,368
$ 2,703,765
6(3)
103,510 (
223,008)
6(4)
(
278,458)
79,477
6(13)
(
55,790)(
11,870)
263,095
275,902

6(25)
48,369
26,242
$ 3,168,094
$ 2,850,508
$ 24,844,853
$ 7,953,076
6(26)
$ 2.31
$ 0.57
$ 2.28
$ 0.57

Sales revenue
Operating costs
Net operating margin
Operating expenses
Selling expenses
General and administrative expenses
Research and development expenses
Total operating expenses
Operating profit
Non-operating income and expenses
Other income
Other gains and losses
Finance costs
Share of profit of subsidiaries and
associates accounted for under equity
method
Total non-operating income and
expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Financial statements translation
differences of foreign operations
Unrealized gain (loss) on valuation of
available-for-sale financial assets
Cash flow hedges
Actuarial loss on defined benefit plan
Share of other comprehensive income
of associates and joint ventures
accounted for under equity method
Income tax relating to the components
of other comprehensive income
Other comprehensive income for the
year, net of tax
Total comprehensive income for the
year
Earnings per share (in dollars)
Basic earnings per share
Diluted earnings per share

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 10, 2015.

239

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

2013 Balance at January 1, 2013 Capital surplus offset against accumulated deficit Global depositary receipt issued for cash Issuance of restricted stock to employees Cancellation of restricted stock to employees Compensation related to share-based payment Changes in net equity of long-term equity investments Profit for the year Other comprehensive income for the year Balance at December 31, 2013 2014 Balance at January 1, 2014 Capital issued for cash Appropriations of 2013 earnings: Legal reserve Special reserve Cash dividends Cash paid from capital surplus Capital surplus offset against accumulated deficit Cancellation of restricted stock to employees Changes in restricted stock to employees Compensation related to share-based payment Changes in net equity of long-term equity investments Profit for the year Other comprehensive income for the year Balance at December 31, 2014	Notes	Commonstock	Capitalsurplus				RetainedEarnings			Otherequityinterest	Otherequityinterest	Otherequityinterest			Total
					Legal reserve		Special reserve	Unappropriated earnings	Financial statements translation differences of foreign operations	Unrealized gain (loss) on available-for- sale financial assets		Changes in gain (loss) on cash flow hedge	Employee unearned compensation
	6(16) 6(14) 6(14) 6(19) 6(16) 6(18) 6(18) 6(18) 6(14) 6(19)	$ 79,129,708 - 11,250,000 725,260 ( 10,680 ) - - - - $ 91,094,288 $ 91,094,288 8,500,000 - - - - - ( 48,924 ) - - - - - $ 99,545,364	$ 119,677,980 ( 27,308,220 ) 3,269,051 187,212 10,680 189,976 32,062 - - $ 96,058,741 $ 96,058,741 2,125,000 - - - ( 1,266,944 ) 2,328,981 48,924 47,174 289,523 ( 47,030 ) - - $ 99,584,369	$ 2,328,981 - - - - - - - - $2,328,981 $ 2,328,981 - 509,272 - - - ( 2,328,981 ) - - - - - - $ 509,272			$ - - - - - - - - - $ - $ - - - 1,144,229 - - - - - - - - - $ 1,144,229	($ 27,308,220 ) 27,308,220 - - - - - 5,102,568 ( 9,852 ) $ 5,092,716 $ 5,092,716 - ( 509,272 ) ( 1,144,229 ) ( 90,495 ) - - - - - - 21,676,759 ( 46,306 ) $24,979,173	($ 2,818,705 ) - - - - - - - 2,740,631 ($ 78,074 ) ($ 78,074 ) - - - - - - - - - - - 3,161,022 $3,082,948	($ 1,609,513 ) - - - - - - - 65,168 ($1,544,345 ) ($ 1,544,345 ) - - - - - - - - - - - 284,498 ($1,259,847 )	$ 423,629 - - - - - - - 54,561 $ 478,190 $ 478,190 - - - - - - - - - - - ( 231,120 ) $ 247,070		$ - - - ( 754,166 ) - 366,898 - - - ($ 387,268 ) ($ 387,268 ) - - - - - - - ( 43,951 ) 288,704 - - - ($ 142,515 )	$169,823,860 - 14,519,051 158,306 - 556,874 32,062 5,102,568 2,850,508 $193,043,229 $193,043,229 10,625,000 - - ( 90,495 ) ( 1,266,944 ) - - 3,223 578,227 ( 47,030 ) 21,676,759 3,168,094 $227,690,063

Employees' bonus and directors' and supervisors' remuneration accrued at $172,217 and $4,004 had been deducted from the statement of comprehensive income for the year ended December 31, 2013.

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 10, 2015.

240

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year
Adjustments to reconcile net income to net cash provided by
operating activities
Income and expenses having no effect on cash flows
Depreciation and amortization
Compensation related to share-based payment
Share of profit of subsidiaries and associates accounted
for under equity method
Gain from disposal of investments
Impairment loss
(Gain) loss on disposal of property, plant and equipment
Interest income
Dividend income
Interest expense
Unrealized foreign exchange loss (gain)
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Financial assets /liabilities at fair value through profit
or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Net changes in liabilities relating to operating activities
Derivative financial liabilities for hedging
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash generated from operations
Cash paid for income tax
Net cash provided by operating activities

Notes
2014
2013
$ 21,677,834
$ 4,435,151
6(23)
56,134,539
71,068,428
6(14)
578,227
556,874
(
5,998,536 ) (
5,233,229 )
6(21)
(
452,613 ) (
18,366 )
6(21)
-
204,721
6(21)
(
22,568 )
6,065
6(20)
(
126,493 ) (
112,782 )
6(20)
(
7,567 ) (
43,822 )
6(22)
2,998,473
4,318,564
6(21)
1,188,553
(
468,215 )

91,169
(
706,193 )
(
5,094,884 )
5,437,335
(
3,657,816 )
10,145,135
(
89,561 )
194,789
11,572,044
(
4,133,091 )
306,774
(
580,008 )
14,142
(
9,872 )
(
299,025 ) (
290,235 )
4,707,855
(
22,695,791 )
3,193,266
(
7,322,352 )
4,125,260
(
8,943,611 )
1,184,460
814,253
309,564
(
248,257 )
(
951,067)
3,361,094
91,382,030
49,736,585
(
1,075)
-
91,380,955
49,736,585

(Continued)

241

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in other receivables - related parties
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Proceeds from disposal of financial assets carried at cost -
non-current
Acquisition of investment accounted for under equity
method
Proceeds from disposal of investment accounted for under
equity method
Proceeds from capital reduction of investments accounted
for under equity method
Acquisition of property, plant and equipment
Decrease in other financial assets
Proceeds from disposal of property, plant and equipment
Increase in other non-current assets
Interest received
Dividends received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Decrease in short-term notes and bills payable
Payment of long-term borrowings
Payment of bonds payable
Decrease in accrued lease payments
Stock issued for cash
Cash dividends paid
Cash paid from capital surplus
Proceeds from issuance of restricted stock to employees
Repurchase from issuance of restricted stock to employees
Interest paid
Net cash used in financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2014
2013
$ 96,927
$ 547,891
(
135,456 ) (
292,854 )

167,288
201,107
-
192,758
(
753,906 ) (
1,381,019 )
1,550,113
3,557
736,214
3,278,146
6(27)
(
14,629,033 ) (
16,072,136 )
440,446
877,470
12,761
111,287
(
568,172 ) (
13,819 )
125,498
113,894
1,444,112
5,859,537
(
11,513,208) (
6,574,181 )
(
643,565 )
1,943,565
-
(
699,430 )
(
57,625,650 ) (
49,210,951 )
-
(
2,000,000 )
-
(
980,000 )
6(16)
10,625,000
14,519,051
(
90,495 )
-
(
1,266,944 )
-
6(14)
-
181,315
(
7,754 ) (
8,260 )
(
2,920,036) (
4,239,118)
(
51,929,444) (
40,493,828)
27,938,303
2,668,576
27,604,892
24,936,316
$ 55,543,195
$ 27,604,892

The accompanying notes are an integral part of these financial statements. See report of independent accountants dated February 10, 2015.

242

INNOLUX CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated )

1. HISTORY AND ORGANIZATION

(1)Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity.
(2)The Company is engaged in the research, development, design, manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on February 10, 2015.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(61) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) None.

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

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" effective January 1, 2015 (collectively referred herein as the “2013 version of IFRSs”) in preparing the parent company only financial statements. The related new standards, interpretations and amendments are listed below:

Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Limited exemption from comparative IFRS 7 July 1, 2010 disclosures for first-time adopters (amendment to IFRS 1) Severe hyperinflation and removal of fixed dates July 1, 2011 for first-time adopters (amendment to IFRS 1)

243

New Standards,Interpretations andAmendments
Government loans (amendment to IFRS 1)
Disclosures－Transfers of financial assets
(amendment to IFRS 7)
Disclosures－Offsetting financial assets and financial
liabilities (amendment to IFRS 7)
IFRS 10, ‘Consolidated financial statements’
IFRS 11, ‘Joint arrangements’
IFRS 12, ‘Disclosure of interests in other entities’
IFRS 13, ‘Fair value measurement’
Presentation of items of other comprehensive income
(amendment to IAS 1)
Deferred tax: recovery of underlying assets
(amendment to IAS 12)
IAS 19 (revised), ‘Employee benefits’
IAS 27 (revised), ‘Separate financial statements’
Investments in associates and joint ventures
(amendment to IAS 28)
Offsetting financial assets and financial liabilities
(amendment to IAS 32)
IFRIC 20, ‘Stripping costs in the production phase
of a surface mine’
Improvements to IFRSs 2010
Improvements to IFRSs 2009－2011

Effective Date by
International Accounting
StandardsBoard

January 1, 2013
July 1, 2011
January 1, 2013
January 1, 2013
(Investment entities: January 1, 2014)
January 1, 2013
January 1, 2013
January 1, 2013
July 1, 2012
January 1, 2012
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
January 1, 2011
January 1, 2013

Based on the Company’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the parent company only financial statements of the Company, except the following: A. IAS 19, ‘Employee benefits’

B. IAS 1, ‘Presentation of financial statements’

The amendment requires entities to separate items presented in other comprehensive income (OCI) classified by nature into two groups on the basis of whether they may be reclassified to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Company will adjust its presentation of the statement of comprehensive income.

244

C. IFRS 12, ‘Disclosure of interests in other entities’

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Company will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.
D. IFRS 13, ‘Fair value measurement’

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

Based on the Company’s assessment, the adoption of the 2013 version of IFRSs has no significant impact on the parent company only financial statements of the Company.

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

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

version of IFRS as endorsed by the FSC:

New Standards,Interpretations and Amendments

Effective Date by
International Accounting
Standards Board

January 1, 2018
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014

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New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014	January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 January 1, 2016

The Company is assessing the impact of the new standards and interpretations above and the impact will be disclosed when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(64) Compliance statement

These parent company only financial statements are prepared by the Company in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers.

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

(66) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in NTD, which is the Company’s functional and presentation currency.

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A.Foreign currency transactions and balances
(a)Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges.
(b)Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c)Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d)All foreign exchange gains and losses are presented in the statement of comprehensive income under “other gains and losses”.
B.Translation of foreign operations
(a)The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i.Assets and liabilities for each balance sheet presented are translated at the exchange rate prevailing at the dates of that balance sheet;
- ii.Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period;

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

(b)When a foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c)When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, if the Company retains

247

partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(67) Classification of current and non-current items

A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a)Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
- (b)Assets held mainly for trading purposes;
- (c)Assets that are expected to be realized within twelve months from the balance sheet date;
- (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a)Liabilities that are expected to be paid off within the normal operating cycle;
- (b)Liabilities arising mainly from trading activities;
- (c)Liabilities that are to be paid off within twelve months from the balance sheet date;
- (d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(68) Cash equivalents
Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. Time deposits and bonds sold under repurchase agreements that meet the above criteria and held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

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

A.Financial assets at fair value through profit or loss are financial assets held for trading or designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of sale in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a)Hybrid (combined) contracts; or
(b)They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

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B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
(70) Available-for-sale financial assets
A.Available-for-sale financial assets are non-derivatives that are designated in this category. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
B.Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.
(71) Loans and receivables
Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable which are non-interest bearing are subsequently measured at initial invoice amount as the effect of discounting is insignificant.
(72) Impairment of financial assets
A.The Company assesses at each balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of an individual financial asset or group of financial assets that can be reliably estimated.
B.The objective evidence that the Company uses to determine whether there is an impairment loss is as follows:
- (a)Significant financial difficulty of the issuer or debtor;
- (b)A breach of contract, such as a default or delinquency in interest or principal payments;
- (c)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
- (d)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C.When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

249

(a)Financial assets measured at amortized cost
- The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.
(b)Available-for-sale financial assets
- The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from “other comprehensive income” to “profit or loss”. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.
(73) Inventories

(74) Investments accounted for under the equity method / subsidiaries / associates

A.Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies. In general, control is presumed when the parent owns, directly or indirectly, more than half of the voting power of an entity. The Company evaluates investments in subsidiaries accounted using equity method in these parent company only financial statements.
B.Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

250

C.The Company's share of its subsidiaries' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.
D.If changes in the Company’s shares in subsidiaries do not result in loss in control (transactions with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity.
E.When the Company loses its control in a subsidiary, the Company revalues the remaining investment in the prior subsidiary at fair value, and recognises the difference between fair value and book value in the profit or loss for the period. The Company should reclassify all amounts previously recognised as other comprehensive income and amounts relating to the prior subsidiary to profit or loss.
F.Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
G.The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
H.When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes all the change in equity in “capital surplus” in proportion to its ownership.
I.Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
J.In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then “capital surplus” and “investments accounted for under the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the

251

Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

K.When the Company loses its control in an associate, the Company revalues the remaining investment in the prior associate at fair value, and recognises the difference between fair value and book value in the profit or loss for the period.
L.When the Company disposes its investment in an associate and loses significant influence over the associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of.
M.When the Company disposes its investment in an associate and loses significant influence over the associate, capital surplus in relation to the associate is transferred to profit or loss; if it retains significant influence over the associate, the amounts are transferred in accordance with the disposal ratio to profit or loss.
N.Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.
(75) Property, plant and equipment
A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B.Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss when incurred.
C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately.
D.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant

252

and equipment are as follows:

Buildings 3~50 years Machinery and equipment 2~9 years Others 2~6 years

(76) Investment property

(77) Intangible assets

A.Goodwill arises in a business combination accounted for by applying the acquisition method.
B.Intangible assets, mainly patents, royalties and other intangible assets, are amortized on a ～
straight-line basis over their estimated useful lives of 2 10 years.

(78) Impairment of non-financial assets

A.The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the asset’s carrying amount greater than its amortized cost where no impairment loss was recognized.
B.The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.
C.For impairment testing purpose, goodwill is allocated to cash generating units. This allocation is based on operating segments. Goodwill is allocated to a cash generating unit or a group of cash generating units that expects to benefit from business combination that will produce goodwill.

(79) Financial liabilities at fair value through profit or loss

A.Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B.Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.

253

(80) Derivative financial instruments and hedging activities

A.Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss.
B.The Company designates certain derivatives as either:
(a)Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge).
(b)Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).
C.The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
D.The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.
E.Fair value hedge
(a)Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Company only applies fair value hedge accounting for hedging foreign currency on long-term borrowings. The gain or loss relating to the effective portion of currency swaps hedging long-term borrowings denominated in foreign currency is recognized in the statement of comprehensive income within “finance costs”. The gain or loss relating to the ineffective portion is recognized in the statement of comprehensive income within “other gains and losses”. Changes in the fair value of the hedge long-term borrowings denominated in foreign currency attributable to interest rate risk are recognized in the statement of comprehensive income within “finance costs”.
(b)If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity.
F.Cash flow hedge
(a)The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of

254

comprehensive income within “other gains and losses”.

  - (b)Amounts accumulated in other comprehensive income are reclassified into profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement of comprehensive income within “finance costs”.

  - (c)When a hedging instrument expires, or is sold, cancelled or executed, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is transferred to profit or loss in the periods when the hedged forecast cash flow affects profit or loss.

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

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

B.Pensions
(a)Defined contribution plans

(b)Defined benefit plans
- i.The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bond (at the balance sheet date).
- ii.Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise.
- iii.Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period.
C.Employees’ bonus and directors’ and supervisors’ remuneration
Employees’ bonus and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should

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be recognized based on the accounting for changes in estimates. The Company calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

(82) Employee share based payment
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B.Restricted stocks to employees:
- (a)Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period.
- (b)For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Company and the Company must refund their payments on the stocks. The Company recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”.
C.The grant date for the shares reserved for employee preemption in cash capital increase is the date on which the Company informs employees of the grant and both the Company and employees agree to the number of shares granted and the price for subscription.
(83) Income tax
A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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C.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E.A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(84) Revenue recognition

The Company manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities.

(85) Business combinations

A.The Company uses the acquisition method to account for business combinations. The Company chooses to measure the non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets on an acquisition-by-acquisition basis.
B.If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the acquisition-date fair value of any previous equity interest in the acquiree is higher than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recorded as goodwill; if less than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recognized directly in profit or loss.

(86) Operating segments

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

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgments in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and

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are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

(87) Critical judgments in applying the Company’s accounting policies

－ Financial assets impairment of equity investments

The Company follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgment. In making this judgment, the Company evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

(88) Critical accounting estimates and assumptions

The Company makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

A.Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Company’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(10) for the information on goodwill impairment.

B.Reliability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. Assessment of the reliability of deferred income tax assets involves critical accounting judgments and estimates of the management, including the assumptions of expected future sales, revenue growth rate, profit rate, tax holiday, available tax credits, and tax planning, etc. Any change in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets.

C.Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value.

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D.Financial assets - fair value measurement of unlisted stocks without active market

The fair value of unlisted stocks held by the Company that are not traded in an active market is determined considering those companies’ recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgments and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(89) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS )Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Cash equivalents - Repurchase Bonds	December31,2014 255 $ 40,578,940 11,394,000 51,973,195 3,570,000 55,543,195 $	December31,2013
		581 $ 25,816,011 1,788,300
		27,604,892 -
		27,604,892 $

A.The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Company’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.
B.The above time deposits and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote.

(90) Financial assets and liabilities at fair value through profit or loss

Assets Current items Financial assets held for trading Forward foreign exchange contracts Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts	December31,2014 52,453 $ December31,2014 605,016 $	December31,2013
		227,703 $
		December31,2013
		689,097 $

A.The Company recognized net loss of $883,120 and $1,587,910 on financial assets held for trading for the years ended December 31, 2014 and 2013, respectively.

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B.The non-hedging derivative financial assets and liabilities transaction information are as follows:

		December 31,	2014		December 31,	2013
	Contract Amount			Contract Amount
Derivative financial	(Notional Principal)			(Notional	Principal)
assets and liabilities	(in thousands)		Contract Period	(in thousands)		Contract Period
Current items
Forward foreign	USD (sell)	425,000 $	2014/10~2015/3	USD (sell)	467,000 $	2013/10~2014/3
exchange contracts	JPY (buy)	48,580,180	2014/10~2015/3	JPY (buy)	47,065,250	2013/10~2014/3
Forward foreign	EUR (sell)	38,000	2014/10~2015/2	EUR (sell)	188,000	2013/10~2014/3
exchange contracts	USD (buy)	47,574	2014/10~2015/2	USD (buy)	256,665	2013/10~2014/3
				TWD (sell)	26,762,745	2013/12~2014/3
				USD (buy)	904,000	2013/12~2014/3

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds and foreign currency. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

(91) Available-for-sale financial assets

)Available-for-sale financial assets
Items Current items Bond investments Non-current items Listed stocks and bond investments Emerging and unlisted stocks	December31,2014 220,000 $ 2,537,965 $ 563,496 3,101,461 $	December31,2013
		- $
		1,150,866 $ 673,256
		1,824,122 $

A.The Company recognized gain in other comprehensive income for the fair value change for the years ended December 31, 2014 and 2013 in the amount of $138,700 and $211,410, respectively. B.The counterparties of the Company’s debt instrument investments have good credit quality, all with credit rating of twA+ above. The maximum exposure to credit risk at balance sheet date is the carrying amount of available-for-sale financial asstes - debt instruments.

(92) Hedging derivative financial liabilities

)Hedging derivative financial liabilities
Items Current item Interest rate swap - cash flow hedges Non-current item Interest rate swap - cash flow hedges	December31,2014 1,351 $ - $	December31,2013
		- $
		21,918 $

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Cash flow hedges

Designated as Hedging Instruments

Hedged Items Long-term borrowings	Derivative Instruments Designated as Hedges Interest rate swap	December 31, December 31, 2014 2013 1,351) ($ 21,918) ($ Fair Value	Period of Anticipated Cash Flow	Period of Gain (Loss) Expected to be Recognised in Profit or Loss
		December 31, 2014 1,351) ($
			2008~2015	2008~2015

(a)The Company was exposed to significant risk of future cash flow changes on principal payments associated with the Company’s floating interest rate bearing borrowings, both current and long-term portion. Therefore, the Company entered into interest rate swap contracts for exchanging floating interest rate for fixed interest rate (TWD90/180CP (Page51328) to hedge such exposures.
(b)Information about gain or loss arising from cash flow hedges recognized in profit or loss and other comprehensive income:

Items Amount of gain or loss adjusted in other comprehensive income Amount of gain or loss transferred from other comprehensive income to profit or loss	2014 2013 1,224 $ 3,210 $ 277,234 82,687) ( Years endedDecember31,

(c)The gain/(loss) relating to the ineffective portion of cash flow hedges recognized in profit or loss amounted to $289 for the year ended December 31, 2013.

(93) Accounts and notes receivable

)Accounts and notes receivable
		December31,2014			December31,2013
Notes receivable	$		21,447	$		21,447
Accounts receivable			69,802,557			65,425,580
			69,824,004			65,447,027
Less: allowance for sales returns and discounts	(		827,583)	(		1,545,279)
allowance for bad debts	(		138,272)	(		138,483)
	$		68,858,149	$		63,763,265

A.The Company’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability.

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

impaired is as follows:
Up to 60 days 61 to 180 days Over 180 days	December31,2014 534,490 $ 64,153 4,309 602,952 $	December31,2013
		3,048,292 $ 561,008 65,816 3,675,116 $

The above ageing analysis was based on past due date.

C.Movement analysis of accounts receivable and notes receivable that were impaired is as follows:

(a)As of December 31, 2014 and 2013, the Company’s accounts receivable that were impaired were $138,272 and $138,483, respectively.
(b)Movement on allowance for bad debts for impairment loss based on individual provision is as follows:

At January 1 Allowance for bad debts - reclassified Allowance for bad debts - write-offs At December 31	2014 138,483 $ - 211) ( 138,272 $	2013 117,036 $ 21,447 - 138,483 $

D.The maximum exposure to credit risk was the carrying amount of each class of accounts receivable.

(94) Inventories

Raw materials and supplies Work in process Finished goods	December31,2014 1,780,875 $ 16,122,356 10,034,934 27,938,165 $

Expenses and losses incurred on inventories for the years ended December 31, 2014 and 2013 are as follows:

ollows:
		Years ended	December31,
		2014		2013
Cost of inventories sold	$	389,619,753	$	393,083,704
Reversal of allowance for scrap, obsolescence	(	383,000)	(	1,423,000)
and price decline
Disposal loss and others		373,032		545,747
	$	389,609,785	$	392,206,451

The Company had disposed its expired and slow-moving inventories. Thus, the risk of reduction in the inventory’s market price had been decreased and the net realizable value of inventories had been

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recovered.

(95) Investments accounted for under the equity method

recovered. )Investments accounted for under the equity method
Landmark International Ltd. Innolux Holding Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Japan Co., Ltd. Ampower Holding Ltd. Yuan Chi Investment Co., Ltd. GIO Optoelectronics Corporation Chi Mei Materials Technology Contrel Technology Co., Ltd. Others	December31,2014 41,425,623 $ 16,796,396 5,945,861 2,393,227 1,670,083 1,572,495 1,477,199 918,468 449,994 - - 447,043 73,096,389 $	December31,2013
		36,005,637 $ 15,866,385 4,347,392 2,164,447 1,721,618 1,574,455 1,526,449 1,015,867 475,253 1,883,267 473,259 806,183
		67,860,212 $

1. The Company’s subsidiaries

The Company has invested in the Mainland subsidiary through Landmark International Ltd., Innolux Holding Ltd., Toppoly Optoelectronics (B.V.I.) Ltd. and Innolux Hong Kong Holding Ltd. The subsidiary is engaged in the research and development, assembly processing and after-sale services of LCD modules and LCD monitors. Information on investees in Mainland China is provided in Note 13.

The Company’s associates

A.The financial information of the Company’s associates is summarized below:

December 31, 2014 December 31, 2013	Assets 3,908,085 $ 22,729,921	Liabilities 1,297,031 $ 7,107,607	Revenue Profit/(Loss) 1,798,602 $ 475,353) ($ 20,087,705 2,302,711

B.The fair value of the Company’s associates which have quoted market price is as follows:

Chi Mei Materials Technology Contrel Technology Co., Ltd.	Stockpriceper share(in dollars)
	December31,2013
	36.45 $ 16.95

C.During 2014, the Company sold its interests in Chi Mei Materials Technology and Contrel Technology Co., Ltd. Since the Company lost control, the investment was reclassified as “available-for-sale financial assets - non-current”.
D.The Company recognized impairment loss on associates for the year ended December 31, 2013 in the amount of $204,721.

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(96) Property, plant and equipment

2014

)Property, plant and equipment 2014
At January1 Additions Disposals Cost: Land 3,852,792 $ - $ - $ Buildings 156,365,038 - 303,647) ( Machinery and equipment 376,152,145 51,347 14,314,548) ( Others 20,655,250 2,223 2,591,901) ( 557,025,225 53,570 17,210,096) ( Accumulated depreciation and impairment: Buildings 59,116,947) ( 13,954,331) ( 302,794 Machinery and equipment 252,063,722) ( 37,915,245) ( 14,309,885 ( Others 15,428,084) ( 2,767,296) ( 2,588,567 ( 326,608,753) ( 54,636,872) ( 17,201,246 ( Unfinished construction and equipment under acceptance 3,141,142 14,127,037 130) ( ( 233,557,614 $ At January1 Additions Disposals Cost: Land 3,852,792 $ - $ - $ Buildings 153,864,439 - 78,689) ( Machinery and equipment 347,222,768 330 2,556,036) ( Others 17,895,333 215 1,692,005) ( 522,835,332 545 4,326,730) ( Accumulated depreciation and impairment: Buildings 44,259,742) ( 14,939,334) ( 58,594 Machinery and equipment 200,871,601) ( 51,214,999) ( 2,138,976 Others 12,598,062) ( 3,023,762) ( 1,689,971 257,729,405) ( 69,178,095) ( 3,887,541 Unfinished construction and equipment under acceptance 21,945,408 15,812,656 - 287,051,335 $ 2013	Transfer, net exchange differences and others At December 31 - $ 3,852,792 $ 797,338 156,858,729 13,181,365 375,070,309 4,518,734 22,584,306 18,497,437 558,366,136 1,528 72,766,956) ( 8,533,930) 284,203,012) ( 1,983,547) 17,590,360) ( 10,515,949) 374,560,328) ( 8,474,675) 8,793,374 192,599,182 $
	Transfer, net exchange differences and others - $ 2,579,288 31,485,083 4,451,707 38,516,078 23,535 2,116,098) ( 1,496,231) ( 3,588,794) ( 34,616,922) (	At December 31
		3,852,792 $ 156,365,038 376,152,145 20,655,250 557,025,225 59,116,947) ( 252,063,722) ( 15,428,084) ( 326,608,753) ( 3,141,142 233,557,614 $

Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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(97) Investment property

Investment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings (		2014	At December 31 188,247 $ 568,440 756,687 $ 63,010) ( 693,677 $		2013	At December 31 188,247 $ 568,440 756,687 $ 49,837) 706,850 $
	At January1 188,247 $ 568,440 756,687 $ 49,837) ( 706,850 $	Additions - $ - - $ 13,173) (		At January1 188,247 $ 568,440 756,687 $ 36,664) ( 720,023 $	Additions - $ - - $ 13,173) (

The fair value of the investment property held by the Company as at December 31, 2014 and 2013 was $1,110,523 and $721,774, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information.

(98) Intangible assets

A.Intangible assets are goodwill, payments for TFT-LCD related technology and royalty.

Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others				2014
	At January1 Additions Disposals 8,807,308 $ - $ 673,622) ($ 17,096,628 - - 3,267,074 - 79,340) ( 29,171,010 - 752,962) ( 5,215,968) ( 1,193,337) ( 673,622 2,840,599) ( 291,157) ( 79,340 ( 8,056,567) ( 1,484,494) ( 752,962 ( 21,114,443 $				Transfer, net exchange differences and others At December 31 3,349 $ 8,137,035 $ - 17,096,628 498,811 3,686,545 502,160 28,920,208 - 5,735,683) ( 4,925) 3,057,341) ( 4,925) 8,793,024) ( 20,127,184 $

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2013

At January1 Additions Cost: Patents and royalty 8,805,608 $ - $ Goodwill 17,096,628 - Others 3,150,228 - ( 29,052,464 - ( Accumulated amortisation and impairment: Patents and royalty 3,709,759) ( 1,506,209) ( Others 2,546,004) ( 370,951) ( 6,255,763) ( 1,877,160) ( 22,796,701 $	Disposals - $ - 14,561) 14,561) - 14,561 14,561	Transfer, net exchange differences and others At December 31 1,700 $ 8,807,308 $ - 17,096,628 131,407 3,267,074 133,107 29,171,010 - 5,215,968) ( 61,795 2,840,599) ( 61,795 8,056,567) ( 21,114,443 $

B.Details of amortisation on intangible assets are as follows:

Operating costs Operating expenses	Years ended December31,	Years ended December31,
	2014 954,350 $ 530,144 1,484,494 $	2013
		961,945 $ 915,215
		1,877,160 $

(99) Short-term borrowings

Type of borrowings December 31, 2014 December 31, 2013 Collateral Bank loans Credit loans $ 1,300,000 $ 1,943,565 None ～ Range of interest rates 2.5% 2.858% 4.050%

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- (100) Long term borrowings

Type of loans Syndicated bank loans Guaranteed commercial papers Credit loans Less: Administrative expenses charged by syndicated banks Current portion Range of interest rates	Period December31,2014 December31,2013 2005/03~2016/11 98,227,530 $ 139,125,971 $ 2012/11~2015/07 129,148 258,354 2009/09~2014/06 - 16,372,450 98,356,678 $ 155,756,775 $ 41,252) ( 187,557) ( 61,092,333) ( 155,569,218) ( 37,223,093 $ - $ 1.2474%~2.4737% 1.3115%~2.795%

A.Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.
B.The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, which were based on the Company’s annual parent company only financial statements audited by independent auditors. The Company’s financial ratios on the parent company only financial statements for the years ended December 31, 2014 and 2013 are in accordance with the covenants on the syndicated loan agreement.
C.In December 2011, the Company applied for the assistance of Ministry of Economic Affairs to negotiate the debt with the syndicated banks, in accordance with the “Procedures for the Assistance of Ministry of Economic Affairs in the Negotiation of Enterprise and Financial Institution relating to the Debt Issue”. On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with all financial institution creditors based on the framework of the resolutions during the creditors and debtors negotiation meeting. The major terms of the agreement were as follows:
(a)Medium and long-term syndicated loans
The medium and long-term syndicated loans due between 2012 to 2014 will be extended for 2-3 years. Principal is repayable every year based on a certain percentage; interest is charged at the original interest rate or at the original interest rate plus premium rate.
(b)Short and medium-term non-syndicated loans

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(c)Credit lines of derivative financial instruments

At least two-thirds of the original credit lines of derivative financial instruments are renewed based on the original terms and all extended to December 31, 2013. Before maturity, the Company may apply for the extension of such credit lines for another one year for each application, with a maximum of two applications with each bank. Extension fee is charged at a certain percentage.
(d)Other matters
a)All financial institution creditors agreed to waive the 2011 and 2012 covenants, the interest penalty, and default penalty arising from the violation of covenants.
b)All financial institution creditors agreed to waive the agreement that the Company shall early repay whole or part of the loans as prescribed by the original agreements before the extension agreements were approved by all financial institution creditors.
(e)The Company’s significant commitments

The Company is committed to increase capital in certain amounts of cash within 3 years starting from 2012, to focus on its main business activities, and not to make investments out of its main business lines, except for equipment improvements or equipment additions for its main business. Further, the Company shall not apply for bankruptcy or reorganisation during the period of negotiation for the extension of the due date on the Company’s debt.

D.Because the Company failed to meet the requirements specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2013, the syndicated banks may take measures, in accordance with the agreement, including, but not limited to the outstanding principal, interest expenses, and other payables be due immediately. Therefore, the Company reclassified syndicated loans and other long-term borrowings as of December 31, 2013 amounting to $155,569,218 (including administrative expenses charged by syndicated banks) to “long-term liabilities - current portion”. However, the deadline was extended to the end of 2014 through the concession of financial institution creditors on January 27, 2014.
E.Though the Company failed to meet the requirement specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2014, the deadline was extended to the end of 2015 through the concession of financial institution creditors.
F. In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal for the company to apply for a syndicated credit line of NT$68.5 billion with financial institutions.

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(101) Pensions

A.Defined benefit pension plan
(a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforecment of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, employees are entitled to two base points for every year of service for the first 15 years and one base point for each additional year thereafter, up to a maximum of 45 base points. The pension payment to employees was computed based on years of service and average salaries or wages of the last six months prior to approved retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

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

Present value of funded obligations Fair value of plan assets ( Net liability in the balance sheet (shown as “Other non-current liabilities”)	December31,2014 1,605,920 $ 1,488,938) ( 116,982 $	December31,2013 1,504,354 $ 1,454,627) 49,727 $

(c)Changes in present value of funded obligations were as follows:

		2014		2013
Present value of funded obligations
At January 1	$	1,504,354	$	1,464,983
Current service cost		10,470		9,148
Interest expense		30,087		21,975
Actuarial gain and loss		61,009		8,248
At December 31	$	1,605,920	$	1,504,354
Changes in fair value of plan assets were as follows:
		2014		2013
Fair value of plan assets
At January 1	$	1,454,627	$	1,398,638
Expected return on plan assets		29,092		20,980
Actuarial gain and loss		5,219	(	3,622)
Employer contributions		-		38,631
At December 31	$	1,488,938	$	1,454,627

(d)Changes in fair value of plan assets were as follows:

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(e)Expenses recognised in statements of comprehensive income were as follows:

Current service cost Interest cost Expected return on plan assets ( Current pension costs	2014 2013 10,470 $ 9,148 $ 30,087 21,975 29,092) 20,980) ( 11,465 $ 10,143 $ Years ended December31,
	2014 10,470 $ 30,087 29,092) ( 11,465 $

Details of cost and expenses recognised in statements of comprehensive income were as follows:

ollows:
Cost of sales Selling expenses General and administrative expenses Research and development expenses	Years ended December31,
	2014 7,991 $ 184 848 2,442 11,465 $	2013
		6,593 $ 329 1,058 2,163
		10,143 $

(f)Amounts recognised under other comprehensive income were as follows:

Recognition for current period Accumulated amount	Years ended December31,	Years ended December31,
	2014 55,790 $ 68,243 $	2013
		11,870 $
		12,453 $

(g)The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The composition of fair value of plan assets as of December 31, 2014 and 2013 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings

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attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

For the years ended December 31, 2014 and 2013, the actual return on plan assets was $34,311 and $17,358, respectively.

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

Discount rate Future salary increases Expected return on plan assets	Years ended December31,	Years ended December31,
	2014 2.25% 3.00% 2.25%	2013
		2.00%
		3.00%
		2.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Morality Table.

(i)Historical information of experience adjustments was as follows:

Present value of defined benefit obligation Fair value of plan assets ( Deficit in the plan Experience adjustments on plan liabilities Experience adjustments on plan assets	2014 2013 1,605,920 $ 1,504,354 $ 1,488,938) 1,454,627) ( 116,982 $ 49,727 $ 60,201 $ 320,046 $ 5,219 $ 3,622) ($ Years ended December31,
	2014 1,605,920 $ 1,488,938) ( 116,982 $ 60,201 $ 5,219 $ (

(j)The Company suspended its contributions to the pension reserve as agreed by the Science Park Administration in June 2013.
B.Defined contribution pension plan
(a)Effective July 1, 2005, the Company has established a defined contribution pension plan (the
- “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b)The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2014 and 2013 were $939,629 and $842,000, respectively.

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(102) Share-based payment

A.As of December 31, 2014, the Company’s share-based payment transactions are set forth below (excluding employee stock options assumed because of the merger stated in Note B):

Type of arrangement Employee stock options Employee stock options Employee stock options Reservation for new share subscription by employees Restricted stocks to employees- shares subscribed with consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration -shares without consideration Reservation for new share subscription by employees	Quantity granted Contract period Grant date (in thousand units) (inyears) Vestingconditions 2007.12.20 25,000 6 Note (b),(c) 2010.05.13 20,000 5 Note (a) 2011.05.19 50,000 5 Note (a) 2013.01.17 36,122 - Vested immediately 2013.01.30 31,151 3 Note (d),(e) 2013.01.30 31,151 3 Note (d),(e) 2013.03.29 844 3 Note (d),(e) 2013.03.29 844 3 Note (d),(e) 2013.12.12 4,628 3 Note (d),(e) 2013.12.12 4,628 3 Note (d),(e) 2014.07.09 85,000 - Vested immediately	Vestingconditions

(a)The employees may exercise the stock options by stage based on 30%, 30% and 40% of total options granted on completion of the specified year(s) of service (one to four years) from the grant date.
(b)The employees may exercise the stock options by stage based on 40%, 30% and 30% of total options granted on completion of the specified year(s) of service (three to five years) from the grant date.
(c)The employee stock options had already expired.
(d)The employees may exercise the stock options by stage based on 20%, 40% and 40% of total options granted on completion of the specified year(s) of service (one to three years) from the grant date.
(e)The restricted stocks issued by the Company cannot be transferred. Voting right and dividend right are restricted on these stocks before vested.

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(f)The fair value of stock options granted from 2010 to first quarter of 2014 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Reservation for new share subscription by employees 2014.07.09 14.90 $ 12.50 $ Restricted stocks to employees - shares subscribed with consideration 2013.12.12 10.65 - - shares issued with no consideration 2013.12.12 10.65 5.00 - shares subscribed with consideration 2013.03.29 18.40 - - shares issued with no consideration 2013.03.29 18.40 5.00 - shares subscribed with consideration 2013.01.30 15.35 - - shares issued with no consideration 2013.01.30 15.35 5.00 Reservation for new share subscription by employees 2013.01.17 14.15 12.98 Employee stock options 2011.05.19 26.70 26.70 Employee stock options 2010.05.13 39.85 39.85	Expected volatility (%) 36.01 - - - - - - 48.20 35.67 51.57	Expected duration (month) 0.84 - - - - - - 0.36 48.60 48.60	Risk Expected free Fair value dividend interest per unit yield(%) rate(%) (in dollars) - 0.42 2.42 $ - - 10.65 - - 5.65 - - 18.40 - - 13.40 - - 15.35 - - 10.35 - 0.65 1.17 - 1.00 7.31 ~8.32 - 0.80 15.12 ~16.98	Risk Expected free Fair value dividend interest per unit yield(%) rate(%) (in dollars) - 0.42 2.42 $ - - 10.65 - - 5.65 - - 18.40 - - 13.40 - - 15.35 - - 10.35 - 0.65 1.17 - 1.00 7.31 ~8.32 - 0.80 15.12 ~16.98
				2.42 $ 10.65 5.65 18.40 13.40 15.35 10.35 1.17 7.31 ~8.32 15.12 ~16.98

B.Employee stock options acquired because of merger

(a)Details:

Type of arrangement Grant date Employee stock options 2009.09.30 Employee stock options 2007.07.02 Employee stock options 2007.12.27	24,819 5 years 21 (Note i) 6 years 2 (Note i) 6 years Quantity granted (in thousand units) Contractperiod	Vestingconditions Note ii, iv Note iii, iv Note iii, iv

i.Each unit of stock options can subscribe for 1,000 shares of common stock.

ii.The employees may exercise the stock options by stage based on 50% and 50% of total options granted on completion of the specified years of service (two to three years) from the grant date.

iii.The employees may exercise the stock options by stage based on 25%, 25%, 25% and 25% of total options granted on completion of the specified years of service (two to five years) from the grant date.

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iv.The employee stock options had already expired.

v.The units of employee stock options above were adjusted by share conversion rate.

(b)The fair value of employee stock options was estimated using the Hull & White (2002) Enhanced FASB 123 of the aforementioned binomial model. The information was as follows:

follows:
Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Employee stock options 2009.09.30 51.60 $ 39.20 $ Employee stock options 2007.07.02 51.60 67.53 Employee stock options 2007.12.27 51.60 80.63	Expected volatility (%) 45.10 45.10 45.10	Expected duration (month) 36.78 24.78 48.54	Risk Expected free dividend interest yield(%) rate(%) 0.61 0.82 0.61 0.82 0.61 0.82	Fair value per unit (in dollars)
				$3.57~4.14 4.23~4.41 3.65~3.82

C.The details of the employee stock option plan for the years ended December 31, 2014 and 2013 were as follows:

were as follows:
Weighted average Range of Quantity exercise exercise (in thousand price price StockOptions units) (in dollars) (in dollars) Outstanding options at the beginning of the year 94,819 $ 28.71 Options exercised - - Options expired ( 24,819) 32.10 Outstanding options at the end of the year 70,000 25.63 $ 32.59 0.38 years 22.85 1.39 yeas Exercisable options at the end of the year 50,000 26.75 period Year ended December31,2014 Weighted average remaining vesting	Year ended December31,2014
		Weighted average stock price of stock options at exercise date(in dollars)
		$ 12.68

274

Year ended December 31, 2013

						Weighted
		Weighted			Weighted	average
		average	Range of		average	stock price of
	Quantity	exercise	exercise		remaining	stock options
	(in thousand	price		price	vesting	at exercise
StockOptions	units)	(in dollars)	(in dollars)		period	date(in dollars)
Outstanding options at the	119,842	$ 41.79
beginning of the year
Options exercised	-	-				$ 14.98
Options expired	(25,023)	57.05
Outstanding options at the
end of the year	94,819	28.71	$	34.46	1.38 years
				23.82	2.39 years
				33.93	0.75 years
Exercisable options at the
end of the year	51,819	31.13

D.For the years ended December 31, 2014 and 2013, the expenses incurred from share-based payment arrangements were $578,227 and $556,874, respectively.

(103) Provisions-current

At January 1, 2014 Addition Used during the year ( At December 31, 2014	Warranty 140,809 $ 2,723,491 2,117,279) ( 747,021 $	Litigationand others 1,808,220 $ 2,451,275 1,873,027) ( 2,386,468 $	Total 1,949,029 $ 5,174,766 3,990,306) 3,133,489 $

A.Warranty

The Company provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products.

B.Litigation and others

Litigation and other provision for the Company are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

275

(104) Share capital

A.As of December 31, 2014, the Company’s authorized and outstanding capital were $120,000,000 (including $500,000 reserved for employee stock options) and $99,545,364, respectively, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Employee stock options exercised Issuance of restricted shares to employees Cancellation of restricted stock to employees ( At December 31	2014 Number of ordinary shares (inthousands) 9,109,429 850,000 - 4,893) ( 9,954,536	2013 Number of ordinary shares (inthousands) 7,912,971 1,125,000 72,526 1,068) 9,109,429

B.The Company’s Board of Directors resolved to increase capital through cash on December 17, 2013 by issuing common shares of no more than 2 billion shares, in exchange for cash domestically or by using cash from capital increase to issue common shares in exchange for the issuance of foreign depository receipts. On June 19, 2014, the shareholders approved the capital increase. On June 20, 2014, the Board of Directors approved the domestic capital increase of 10,625,000 shares. The issue price was determined to be $12.5 in July 2014, and the capital increase was effective on August 12, 2014.
C.The Board of Directors of the Company resolved to increase capital for cash by issuing global depositary receipts (the “GDR”). The amount of $9,360,000 is tentatively scheduled for release, (approximately equivalent to US$312,625 thousand). As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval on January 30, 2015.
D.As authorized by the shareholders during their meeting in June 2012, the Board of Directors of the Company resolved to increase capital for cash by issuing the GDR on July 18, 2012, and had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, including 112,500 thousand shares regarded as employee stock options, and 101,250,000 units of GDRs which represent 1,012,500 thousand shares of common stock, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange. Per unit was issued at a premium of US$4.481, which was equivalent to $12.98 per share and raised a total of $14,519,051, net of issuance cost. As of December 31, 2014, there were 69 thousand units outstanding, representing 692 thousand shares of common stocks.
E.As authorized by the shareholders at the shareholders’ meeting in June, 2012, the Board of

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Directors of the Company adopted a resolution on January 30, 2013, March 29, 2013 and November 12, 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). The effective dates of the issuance were on January 30, 2013, March 29, 2013 and December 12, 2013. Until the vesting conditions are met by employees, those shares are restricted to transfer voting rights, dividend and other rights. As of December 31, 2014, the Company bought back 4,893 shares of unvested restricted stocks to employees, and decreased capital in accordance with related regulation.

F.The stockholders at the stockholders’ meeting on January 6, 2010 approved the merger of the Company with another company by issuing new shares, with the Company as the surviving company. The Company issued 4,046,382 thousand new shares according to the merger contract. The new shares included the common stock issued by the acquired companies in May and December 2006 through private placement. The issuance of 570,929 thousand shares was determined based on the exchange ratio in the merger contract. The rights and obligations of the private common shares were the same as other issued common shares, except for the transfer restriction under R.O.C. Securities and Exchange Act and the listing restriction that no public listing will be allowed within three years since the day of issuance and only if the Company completes the application to publicly issue the shares. The aforementioned private common shares have not been publicly issued as of December 31, 2014.
G.In accordance with the Board of Directors’ resolution in August 2007, the Company decided to issue 300 million shares of common stock for cash, including 149,967,500 units of GDRs which represent 299,935 thousand shares of common stock with a unit of GDR representing 2 shares of common stock. Per unit was issued at premium of US$9.02 (in dollars). In accordance with the Board of Directors’ resolution in March 2013, the Company terminated the abovementioned GDR, and the effective date of termination was in May 2013. The depository trust company completed the cancellation and distributed proceeds in November 2013.
(105) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

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2014

						2014
			Share of profit
			(loss) of
			associates
			accounted for					Restricted
			under equity			Employee		stock to
	Sharepremium		method		stock option			employees				Total
At January 1	$	94,106,611	$	56,303	$	1,697,935		$	197,892		$	96,058,741
Capital issued for cash		2,125,000		-		-				-		2,125,000
Cash paid from capital surplus	(	1,266,944)		-		-				-	(	1,266,944)
Capital surplus offset against
accumulated deficit		2,328,981		-		-				-		2,328,981
Cancellation of restricted stock to
employees		-		-		-				48,924		48,924
Vested restricted stock to employees		65,665		-		-	(			65,665)		-
Changes in restricted stock to
employees		-		-		-				47,174		47,174
Compensation related to share-based
payment		205,700		-		83,823				-		289,523
Expiration of employee stock options		407,899		-	(	407,899)				-		-
Changes in net equity of long-term
equity investments		-	(	47,030)		-				-	(	47,030)
At December 31	$	97,972,912	$	9,273	$	1,373,859		$	228,325		$	99,584,369
						2013
			Share of profit
				(loss) of
			associates
			accounted for					Restricted
			under equity			Employee				stock to
	Sharepremium			method		stock option		employees				Total
At January 1	$	118,065,992	$	24,241	1,587,747 $			$		-	$	119,677,980
Capital surplus offset against
accumulated deficit	(	27,308,220)		-		-				-	(	27,308,220)
Global depositary receipt issued for
cash		3,269,051		-		-				-		3,269,051
Issuance of restricted stock to
employees		-		-		-				187,212		187,212
Cancellation of restricted stock to
employees		-		-		-				10,680		10,680
Compensation related to share-based
payment		42,263		-		147,713						189,976
Expiration of employee stock options		37,525		-	(	37,525)						-
Changes in net equity of long-term
equity investments		-		32,062		-				-		32,062
At December 31	$	94,106,611	$	56,303	1,697,935 $			$		197,892	$	96,058,741

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(106) Retained earnings

A.In accordance with the Company’s Articles of Incorporation, net income must be distributed in the following order:
(a)To pay all tax accruals and payables arising from the current year and to cover prior years’ losses, if any;
(b)As legal reserve equal to 10% of net income after tax and distribution pursuant to clause (a);
(c)As any special reserve;
(d)To pay dividends on preferred shares;
(e)To pay bonuses to employees not less than 5% of net income after tax and distribution pursuant to clauses (a) to (d); and
(f)The remaining amount, if any, shall be distributed pursuant to the proposal of the Board of Directors in accordance with the Company’s dividend policy and the resolution approved at the stockholders’ meeting, of which 0.1% should be paid as remuneration to directors and supervisors and the remaining amount as dividends to stockholders.
Dividends distributed in respect of any fiscal year in the form of shares shall not exceed two-thirds of total dividends to stockholders.
B.Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
C.The Board of Directors proposed to cover accumulated deficit for the year ended December 31, 2012 and the proposal was approved by the stockholders in June 2013. It was resolved not to distribute dividends or accrue employees’ bonus and directors’ and supervisors’ remuneration. As approved by the stockholders in June 2013, the Company covered accumulated deficit amounting to $27,308,220 by using additional paid-in capital in excess of par value of common stock. In June 2014, the shareholders approved and resolved the deficit compensation amendment for 2012 which is to compensate deficit with legal reserve of $2,328,981 and $24,979,239 by using additional paid-in capital in excess of par value of common stock.
D.The details of the appropriation of 2013 net income which was approved at the stockholders’ meeting in June 2014 are as follows:

279

Legal reserve Special reserve Cash dividends	YearendedDecember31,2013	YearendedDecember31,2013
	Amount 509,272 $ 1,144,229 90,495 1,743,996 $	Dividends per share (indollars)
		0.01 $

E.Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. For the year ended December 31, 2014, employees’ bonus was accrued at $1,436,187.
Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

280

(107) Other equity items

Other equity items
Available- Currency for-sale translation investments At January 1 78,074) ($ 1,544,345) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 138,700 Revaluation transfer of available-for-sale investment - gross - 35,190) ( Currency translation differences 3,087,368 - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of subsidiaries and other comprehensive income (loss) of associates 73,654 189,441 Effect of income tax - 8,453) ( At December 31 3,082,948 $ 1,259,847) ($ Available- Currency for-sale translation investments At January 1 2,818,705) ($ 1,609,513) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 211,410) ( Revaluation transfer of available-for-sale investment - gross - 11,598) ( Currency translation differences 2,703,765 - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of subsidiaries and other comprehensive income (loss) of associates 36,866 239,036 Effect of income tax - 49,140 At December 31 78,074) ($ 1,544,345) ($			2014
	Currency translation 78,074) ($ - - - - 3,087,368 - - 73,654 - 3,082,948 $	Available- for-sale investments 1,544,345) ($ - - 138,700 35,190) ( - - - 189,441 8,453) ( 1,259,847) ($	Employee Hedging unearned reserve compensation 478,190 $ 387,268) ($ 1,224) ( - 277,234) ( - - - - - - - - 43,951) ( - 288,704 - - 47,338 - 247,070 $ 142,515) ($ 2013

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(108) Other income

)Other income
Rental revenue Interest income Dividend income Other income	Years ended December31,
	2014 139,286 $ 126,493 7,567 1,106,573 1,379,919 $	2013
		129,511 $ 112,782 43,822 935,960
		1,222,075 $

(109) Other gains and losses

Interest income Dividend income Other income )Other gains and losses	$	126,493 7,567 1,106,573 1,379,919	112,782 43,822 935,960 1,222,075 $	112,782 43,822 935,960 1,222,075 $
		Years ended	December31,
		2014		2013
Net loss on financial assets and liabilities at fair value through profit or loss	($	883,120)	($	1,587,910)
Net currency exchange gain		1,143,155		2,252,870
Gain on disposal of investments		452,613		18,366
Gain (loss) on disposal of property, plant and equipment		22,568	(	6,065)
Impairment loss		-	(	204,721)
Litigation loss and others	(	4,154,038)	(	9,422,978)
	($	3,418,822)	($	8,950,438)

(110) Finance costs

)Finance costs
			Years ended	December31,
			2014		2013
Interest expense:
Bank borrowings		$	2,984,966	$	4,292,335
Bonds			-		5,662
Others			13,507		20,567
(Gain) loss on fair value change of financial
instruments:
(Gain) loss on cash flow hedges, reclassified
from equity	(		277,234)		82,687
Fair value hedges			-	(	31,642)
Financing charges incurred on accounts receivable factoring			-		225
		$	2,721,239	$	4,369,834

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(111) Expenses by nature

)Expenses by nature
Employee benefit expense Depreciation Amortization	Years ended December31,
	2014 26,411,358 $ 54,650,045 1,484,494 82,545,897 $	2013
		20,699,447 $ 69,191,268 1,877,160
		91,767,875 $

(112) Employee benefit expense

Employee benefit expense Depreciation Amortization )Employee benefit expense	26,411,358 $ 20,699,447 $ 54,650,045 69,191,268 1,484,494 1,877,160 82,545,897 $ 91,767,875 $	26,411,358 $ 20,699,447 $ 54,650,045 69,191,268 1,484,494 1,877,160 82,545,897 $ 91,767,875 $
Salaries and other-term employee benefits Share-based payments Termination benefits	Years ended December31,
	2014 24,882,037 $ 578,227 951,094 26,411,358 $	2013
		19,290,430 $ 556,874 852,143
		20,699,447 $

283

(113) Income tax

A.Income tax expense

(a)Components of income tax expense:

me tax me tax expense mponents of income tax expense:
Current tax: Current tax on profit for the period Adjustments in respect of prior years Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense (benefit)	Years ended December31,
	2014 123,787 $ 1,075 124,862 123,787) ( 1,075 $	2013
		- $ 2,985 2,985 670,402) ( 667,417) ($

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

ollows:
		Years ended	December31,
		2014	2013
Fair value gains/losses on available-for-sale
financial assets	$	8,453	($	49,140)
Cash flow hedges	(	47,338)		24,916
Actuarial gains/losses on defined benefit
obligations	(	9,484)	(	2,018)
	($	48,369)	($	26,242)

B.Reconciliation between income tax expense and accounting profit

		Years ended	December31,	December31,
		2014		2013
Tax calculated based on profit before tax and
statutory tax rate	$	3,685,232	$	753,976
Effects from items disallowed by tax regulation	(	575,514)		166,080
Under provision of prior year's income tax		1,075		2,985
Additional 10% tax on undistributed earnings		334,872		-
Effect from Alternative Minimum Tax		74,672		118,725
Change in assessment of realization of deferred tax
assets	(	3,519,262)	(	1,709,183)
Tax expense	$	1,075	($	667,417)

284

C.Amounts of deferred tax assets or liabilities as a result of temporary differences, loss carryforward and investment tax credits were as follows:

			Year	Year	endedDecember31,2014	endedDecember31,2014	endedDecember31,2014
							Recognised
							in other
			Recognised in			comprehensive
		January1		profit or loss			income		December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount	$	288,013	($		121,640)	$	-	$		166,373
provisions
Accrued royalties and
warranty provisions		364,411	(		36,493)		-			327,918
Unrealised exchange loss		-			200,697		-			200,697
Unrealised loss on
financial instruments		449,511			258,904	(	8,453)			699,962
Net operating loss
carryforward		16,520,833	(		672,645)		-			15,848,188
Others		212,631			110,173		9,484			332,288
	$	17,835,399	($		261,004)	$	1,031	$		17,575,426
-Deferred tax liabilities:
Unrealised exchange gain	($	51,357)	$		51,357	$	-	$		-
Unrealised gain on cash
flow hedges	(	97,943)			-		47,338	(		50,605)
Amortisation charges on
goodwill	(	726,842)			332,155		-	(		394,687)
Others	(	33,566)			1,279		-	(		32,287)
	($	909,708)	$		384,791	$	47,338	($		477,579)
Total	$	16,925,691	$		123,787	$	48,369	$		17,097,847

285

					Year	endedDecember31,2013	endedDecember31,2013	endedDecember31,2013	endedDecember31,2013	endedDecember31,2013
									Recognised
									in other
					Recognised in		comprehensive
			January1		profit or loss				income			December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount
provisions		$	98,369		$	189,644		$		-		$	288,013
Accrued royalties and
warranty provisions			169,057			195,354				-			364,411
Unrealised loss on
financial instruments			483,870	(		83,499)			49,140				449,511
Net operating loss
carryforward			16,285,600			235,233				-			16,520,833
Others			322,918	(		112,305)			2,018				212,631
		$	17,359,814		$	424,427		$	51,158			$	17,835,399
-Deferred tax liabilities:
Unrealised exchange gain	($		455,343)		$	403,986		$		-	($		51,357)
Unrealised gain on cash
flow hedges	(		73,027)			-	(		24,916)		(		97,943)
Amortisation charges on
goodwill	(		533,081)	(		193,761)				-	(		726,842)
Others	(		69,316)			35,750				-	(		33,566)
	($		1,130,767)		$	245,975	($		24,916)		($		909,708)
Total		$	16,229,047		$	670,402		$	26,242			$	16,925,691

D.Details of investment tax credits and unrecognised deferred tax assets are as follows:

December 31, 2013

Qualifyingitems Machinery and equipment	Unused tax credits 409,544 $	Unrecognised deferred tax assets 409,544 $	Final year tax credits are due
			2014

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

		December31,2014
Year incurred 2010 2011 2012	Amount filed / assessed Assessed Assessed Filed	Unused amount 14,641,521 $ 63,808,943 43,123,373 121,573,837 $ December 31,2013	Unrecognised deferred taxassets 3,414,183 $ 14,879,288 10,055,723 28,349,194 $	Usable untilyear
				2015~2020 2021 2022
Year incurred 2009 2010 2011 2012	Amount filed / assessed Assessed Assessed Filed Filed	Unused amount 44,934,812 $ 22,184,259 63,324,400 43,123,373 173,566,844 $	Unrecognised deferred taxassets 37,357,906 $ 9,273,300 17,700,435 12,053,847 76,385,488 $	Usable untilyear
				2014 2015~2020 2021 2022

F.The amounts of deductible temporary differences that are not recognised as deferred tax assets were as follows:

Deductible temporary differences

December31,2014 31,105,662 $	December31,2013
	81,368,397 $

G.The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2014 and 2013, the amounts of temporary differences unrecognised as deferred tax liabilities were $20,486,590 and $12,677,405, respectively.
H.Certain revenue from the design, research, development, manufacture and sale of the thin film transistor - liquid crystal displays (TFT-LCD) and LCDs is exempt from income tax from 2008 to 2015.
I.The Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority.
J.Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.

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K.The details of imputation system are as follows:

K.The details of imputation system are as follows:
(a)Balance of tax credit account (b)Estimated creditable tax rate (114)Earnings per share Basic earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Basic earnings per share (in dollar) Diluted earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Assumed conversion of all dilutive potential ordinary shares: -Employees’ bonus -Restricted stocks Diluted earnings per share (in dollar)	December31,2014 738,931 $ 2014(Estimate) 2.96% 2014 21,676,759 $ 9,377,302 2.31 $ 21,676,759 $ 9,377,302 106,514 41,875 9,525,691 2.28 $ Years ended		December31,2013 1,082,780 $ 2013 (Actual) 20.48% December31,
	$



		2014		2013
		21,676,759 $ 9,377,302 2.31 $ 21,676,759 $ 9,377,302 106,514 41,875 9,525,691 2.28 $		5,102,568 $
				8,967,080
				0.57 $
				5,102,568 $
				8,967,080 15,173 27,609
				9,009,862
				0.57 $

As employee stock options had anti-dilutive effect for the years ended December 31, 2014 and 2013, they were not included in the calculation of diluted earnings per share.

(115) Non-cash transaction

Investing activities with partial cash payments:

)Non-cash transaction Investing activities with partial cash payments:
Purchase of property, plant and equipment Add: opening balance of payable on equipment Less: ending balance of payable on equipment ( Cash paid during the year	2014 2013 14,180,607 $ 15,813,201 $ 3,180,964 3,439,899 2,732,538) 3,180,964) ( 14,629,033 $ 16,072,136 $ Years ended December31,
	2014 14,180,607 $ 3,180,964 2,732,538) 14,629,033 $

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7. RELATED PARTY TRANSACTIONS

(116) Significant related party transactions

A.Operating revenue

TED PARTY TRANSACTIONS Significant related party transactions Operating revenue
Sales of goods: Others Subsidiaries Associates	Years ended December31,
	2014 14,374,629 $ 7,967,864 27,050 22,369,543 $	2013
		5,617,759 $ 6,111,580 -
		11,729,339 $

Purchases of goods
Associates Others Subsidiaries Purchases of goods:	Years endedDecember31,
	2014 4,431,198 $ 2,767,390 420,519 7,619,107 $	2013
		5,287,598 $ 1,772,885 1,712,587
		8,773,070 $

C.Consigned processing

(a)Consigned processing

ird parties. onsigned processing )Consigned processing
Processing costs: Subsidiaries Associates Others	Years ended December31,
	2014 167,873,521 $ - 15,192 167,888,713 $	2013
		148,212,172 $ 8,412 -
		148,220,584 $

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(b)Balance of consigned processing at the end of year (shown as “Other payables”)

December 31,2014 Payables to related parties: Subsidiaries 2,677,593 $ The Company subcontracted the processing of products of associates in processing fees were mainly charged based on cost plus method.	December 31,2013 283,023 $ Mainland China. The

D.Accounts receivable

Accounts receivable
		December31,2014			December31,2013
Receivables from related parties:
Others	$		5,821,222	$		1,833,860
Subsidiaries			774,814			1,095,893
Associates			27,899			-
			6,623,935			2,929,753
Less: transfer to other receivables	(		556,217)	(		519,851)
allowance for bad debts	(		60)	(		60)
	$		6,067,658	$		2,409,842

(a) The receivables from related parties arise mainly from sales transactions. The receivables are due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

(b) The above receivables from related parties that exceed normal granting periods were transferred to ‘other receivables – related parties’.

E.Other receivables

E.Other receivables
		December31,2014			December31,2013
Transfer from accounts receivable	$		556,217	$		519,851
Other receivables			134,807			268,100
	$		691,024	$		787,951
F.Accounts payable
	December31,2014			December31,2013
Payables to related parties:
Subsidiaries	$		83,822,951	$		80,095,077
Others			1,347,900			442,802
Associates			161			1,439,867
	$		85,171,012	$		81,977,746

The payables to related parties arise mainly from purchase transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

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G.Other payables-short-term financing

2014

			2014
Subsidiaries Subsidiaries	Maximum outstanding balance 396,900 $	Actual amount drawndown 396,900 $	Interestrate 1.38% 2013	Interest expenses 5,952 $	Accrued expenses - $ Accrued expenses - $
	Maximum outstanding balance 425,850 $	Actual amount drawn down 425,850 $	Interest rate 1.40%	Interest expenses 6,533 $

H.Property transactions

Purchase of property

(a)Acquisition of property, plant and equipment:

sidiaries 425,850 $ 425,850 $ erty transactions hase of property cquisition of property, plant and equipment:	1.40% 6,533 $ - $	1.40% 6,533 $ - $
Subsidiaries Associates Others	Years ended December31,
	2014 597,848 $ 510,051 2,398 1,110,297 $	2013
		865,847 $ 1,095,965 -
		1,961,812 $

(b)Period-end balances arising from purchases of property (shown as “Other payables”):

Associates Subsidiaries Others	December31,2014 - $ 586,682 748 587,430 $	December31,2013
		227,734 $ 218,466 2,034
		448,234 $

I. Endorsements and guarantees

As of December 31, 2014 and 2013, the balances of endorsement/guarantee provided by the Company for bank borrowings are as follows. Details are provided in Note 13(1)B.

Subsidiaries

December 31,2014 16,901,100 $	December 31,2013
	15,915,870 $

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(117) Key management compensation

7)Key management compensation
Salaries and other short-term employee benefits Share-based payments Post-employment benefits	Years ended December31,
	2014 73,982 $ 18,638 216 92,836 $	2013
		46,386 $ 27,582 334
		74,302 $

8. PLEDGED ASSETS

The Company’s assets pledged as collateral are as follows:

Book value

Pledged asset Other financial assets- current Demand deposits Property, plant and equipment Other financial assets- non-current Refundable deposits Time deposits	December31,2014 2,250,035 $ 163,632,314 11,079,360 80,722 177,042,431 $	December31,2013 Purpose 2,485,841 $ Syndicated bank loans 211,132,039 Long-term loans and performance guarantee for lease payable 12,327,000 Guarantee to European Commission for litigation 722 Guarantee for contract 225,945,602 $	Purpose

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

－ (118) Contingencies Significant Litigations

A.Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc. were investigated under the Anti-Trust competition by the United States (the “U.S.”) Department of Justice. Moreover, authorities of some U.S state governments, the European Union’s, Brazil’s and Korea’s governments are starting to investigate this case. In addition, certain downstream customers and consumers in the TFT-LCD industry of the U.S. and Canada are now bringing up class-actions or individual civil lawsuits against the TFT-LCD companies; in certain lawsuits, CMO and Chi Mei Optoelectronics USA Inc. were listed as defendants. Details for investigations on significant cases related to the Anti-Trust Act are as follows:
(a)Regarding the above lawsuits, the Company had reached an agreement with the United States Department of Justice in December 2009, agreeing to pay penalties of US$220 million in installment over five years. As of December 31, 2014, the unpaid penalties amounted to US$35 million.

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The Company had reached settlement agreements with the plaintiffs on individual civil lawsuits in the U.S. since 2012 and recognized related losses.

  - The Company reached an out-of-court settlement with twelve State Governments, agreeing to pay the plaintiffs as civil statutory damages since November 2011.

(b)In December 2010, the Company received a notice from the European Commission, requesting the Company to pay a penalty of EUR 300 million to the account as specified by the European Commission within three months upon receipt of the notice. The Company appealed this case with the Court of Justice of the European Union in February 2011 and deposited EUR 300 million to the above account on March 14, 2011. The principal and interest accrued in this account will be refunded to the Company depending on the final outcome of this case. The Court of Justice of the European Union has rendered that partial of the Company’s appeal was reasonable and lowered the penalty from EUR 300 million to EUR 288 million. The Company has decided to appeal against partial judgement within the prescribed time.
(c)Except for the Anti-Trust litigations the ultimate outcome of which cannot be reliably estimated, the Company has recognised actual or estimated losses or liabilities in “other payables” and “other non-current liabilities”.
B.Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and its subsidiaries in the US with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014 and the Company remained positive on its defense. The United States Court of Appeals for the Federal Circuit has held a hearing in November 2014 but has not ruled any judgment. The Company is currently assessing the status of the litigation. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term.

(119) Commitments

A.Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows:

December 31, 2014 December 31, 2013 Property, plant and equipment $ 19,350,952 $ 13,229,191

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B.Operating lease commitments

The Company leases plant, land and warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

leases are as follows:
Not later than one year Later than one year but not later than five years Later than five years	December31,2014 500,648 $ 1,943,776 1,490,584 3,935,008 $	December31,2013
		500,648 $ 1,982,908 1,952,100
		4,435,656 $

C.Outstanding letters of credit

The outstanding letters of credit for the purchase of property, plant and equipment are as follows:

Outstanding letters of credit	December 31,2014 693,635 $	December 31,2013
		390,027 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

(1) Details of cancellation of issuance of global depository receipts (the “GDR”) as approved by the Financial Supervisory Commission (FSC) on January 30, 2015 are provided in Note 6(16) C.
(2) Details of the proposal of syndicated credit line contract with financial institution creditors that was approved by the Board of Directors on February 10, 2015 are provided in Note 6(12) F.

12. OTHERS

(11) Capital risk management

The Company’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity.

(12) Financial instruments

A.Fair value information of financial instruments

Except those listed in the table below, the carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, short-term notes payable, accounts payable and other payables) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

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December	December	31,2013
Bookvalue 11,160,082 $ 98,315,426 $	Bookvalue 12,327,722 $ 155,569,218 $	Fairvalue
		12,265,170 $
		155,569,218 $

B.Financial risk management policies
(a)The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2), (4)).
(b)Risk management is carried out by the treasury department under policies approved by the board of directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity.
C.Significant financial risks and degrees of financial risks (a)Market risk

Foreign exchange risk

d) The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
e) Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via their treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Company use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.

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f) The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be a decrease of $13,765 or $324,198 for the years ended December 31, 2014 and 2013, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

materially affected by the exchange rate fluctuations	is as follows:	is as follows:
Foreign Currency Exchange Amount Rate Book Value (In Thousands) (Note) (NTD) Financial asstes Monetary items USD 3,689,844 $ 31.65 116,783,563 $ JPY 2,740,487 0.26 725,133 EUR 363,356 38.47 13,978,305 Non-monetary items USD 2,217,538 $ 31.65 70,185,078 $ HKD 278,754 4.08 1,137,316 JPY 5,383,824 0.26 1,424,560 EUR 3,834 38.47 147,494 Monetary items USD 3,568,162 $ 31.65 112,932,327 $ JPY 32,732,829 0.26 8,661,107 EUR 292,958 38.47 11,270,094 December 31,2014 Financial liabilities	December 31,2013
	Foreign Currency Exchange Amount Rate (In Thousands) (Note) 2,580,180 $ 29.81 761,223 0.28 405,043 41.09 2,108,219 $ 29.81 266,670 3.84 4,813,897 0.28 3,651 41.09 3,647,810 $ 29.81 36,451,156 0.28 176,291 41.09	Book Value (NTD)
		76,915,166 $ 213,142 16,643,217 62,846,008 $ 1,024,013 1,347,891 150,020 108,741,216 $ 10,206,324 7,243,797

Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged.

Price risk

c)The Company is exposed to equity securities price risk because of investments held by the Company that are classified on the parent company only balance sheet either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio in accordance with the policy set by the Company.
d)The Company’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, other components of equity for the years ended December 31, 2014 and 2013 would have increased/decreased by $620,292 and $320,825, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

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Interest rate risk

e)The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During the years ended December 31, 2014 and 2013, the Company’s borrowings at variable rate were denominated in the NTD, USD and RMB.
f) The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.
g)Based on the simulations performed, the impact on post-tax profit of a 25% shift would be a maximum increase of $245,892 or decrease of $389,392 for the years ended December 31, 2014 and 2013, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.
h)Based on the various scenarios, the Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Company raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Company borrowed at fixed rates directly. The Company agrees with other parties to exchange interest rate, at specified intervals. The difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts.
(b)Credit risk
d)Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Customer credit quality is assessed via internal risk control, considering customer financial position, past experience and other factors. Individual risk limits are set by the board of directors based on internal or external ratings. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. Because the Company's counterparties and executor

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are banks with good credit standing and financial institutions and government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk.

e)No credit limits were exceeded during the reporting periods. Management does not expect any significant losses from non-performance by these counterparties.
f) The individual analysis of financial assets that had been impaired is provided in Note 6.
(c)Liquidity risk
d)Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 6(12)) at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.
e)Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing savings accounts, time deposits, money market deposits and marketable securities. The Company chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk.
f) The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

Less than Between 1 December31,2014 1year and 3 years Short-term borrowings 1,300,000 $ - $ Accounts payable 118,902,792 - Other payables 18,688,940 - Long-term borrowings (including current portion) 61,122,573 37,234,105 Other financial liabilities - 11,230,850 Financial guarantee contracts 10,140,660 - Less than Between 1 December31,2013 1year and 3 years Short-term borrowings 1,943,565 $ - $ Accounts payable 111,001,671 - Other payables 15,090,951 - Long-term borrowings (including current portion) 155,756,775 - Other financial liabilities - 12,111,981 Financial guarantee contracts 13,528,490 - Derivative financial liabilities: December31,2014 Less than 1year Forward exchange contracts $ 605,016 Interest rate swap contracts 1,351 December31,2013 Less than 1year Forward exchange contracts $ 689,097 Interest rate swap contracts -	Between 3 Over 5 and 5 years years - $ - $ - - - - - - - 6,344 - - Between 3 Over 5 and 5 years years - $ - $ - - - - - - 5,992 38 - - Between 1 and 3 years $ - $ - Between 1 and 3 years $ - $ 21,918	Between 3 Over 5 and 5 years years - $ - $ - - - - - - - 6,344 - - Between 3 Over 5 and 5 years years - $ - $ - - - - - - 5,992 38 - - Between 1 and 3 years $ - $ - Between 1 and 3 years $ - $ 21,918	Total 1,300,000 $ 118,902,792 18,688,940 98,356,678 11,237,194 10,140,660 Total 1,943,565 $ 111,001,671 15,090,951 155,756,775 12,118,011 13,528,490 Total 605,016 1,351 Total 689,097 21,918
		$
		$

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(13) Fair value estimation

A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data.

The following table presents the Company’s financial assets and liabilities that are measured at fair value at December 31, 2014 and 2013:

December31,2014 Financial assets: Financial assets at fair value through profit or loss Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts Derivative financial liabilities for hedging Interest rate swap contracts	Level 1 - $ 2,537,965 220,000 2,757,965 $ - $ - - $	Level 2 52,453 $ - - 52,453 $ 605,016 $ 1,351 606,367 $	Level3 - $ 563,496 - 563,496 $ - $ - - $	Total
				52,453 $ 3,101,461 220,000
				3,373,914 $
				605,016 $ 1,351
				606,367 $

300

December31,2013 Financial assets: Financial assets at fair value through profit or loss Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts Derivative financial liabilities for hedging Interest rate swap contracts	Level 1 - $ 959,461 220,000 1,179,461 $ - $ - - $	Level 2 227,703 $ - - 227,703 $ 689,097 $ 21,918 711,015 $	Level3 - $ 644,661 - 644,661 $ - $ - - $	Total
				227,703 $ 1,604,122 220,000
				2,051,825 $
				689,097 $ 21,918
				711,015 $

B.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments and debt instruments classified as financial assets/financial liabilities at fair value through profit or loss or available-for-sale financial assets.
C.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
E.Specific valuation techniques used to value financial instruments include:
(a)Quoted market prices or dealer quotes for similar instruments.
(b)The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.
(c)The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

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(d)Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

F.All of the resulting fair value estimates are included in level 2 except for certain forward foreign

exchange contracts where forward exchange rates are not observable directly in the market.

G.The following table presents the changes in level 3 instruments as at December 31, 2014 and 2013:

2013:
		Equity securities
		2014		2013
At January 1	$	644,661	$	441,853
Acquired in the period		135,456		-
Gains and losses recognized in other comprehensive income	(	216,621)		313,274
Disposed in the period		-	(	110,466)
At December 31	$	563,496	$	644,661

(14) Turnaround plan

The Company’s current liabilities exceeded its current assets by $42,313,979 as of December 31, 2014. The Company’s management adopted the following measures to improve its operations and financial position:

A.Negotiation with the creditor banks as to the debt issue

In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal for the Company to apply for a syndicated credit line of NTD$68.5 billion with financial institutions.

B.Capital increase by cash

C.Improvements in operations

The Company continuously adjusts its product lines according to the market demands to increase operating revenue and gross profit. The Company also tries to strictly control various

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expenses and expenditures to effectively enhance operational performance to create cash inflows from operating activities.

D.Capital expenditure control program
Future capital expenditures will focus on the upgrading technology, improving efficiency and expanding production capacity. Capital expenditure budgets and amounts will be controlled strictly to maximize the benefits of capital expenditures.

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13. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU

(1) Related information of significant transactions

A.Loans granted during the year ended December 31, 2014:

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2014	Balance at December 31,2014	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short- term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted Note
													Item Value
1 2 2 2 2 3 4 5	Innolux Optoelectronics Europe B.V. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology USA Inc. Innolux Technology Europe B.V.	Chi Mei Optoelectronics Germany GmbH Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Receivables from related parties Receivables from related parties	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	30,776 $ 822,900 3,339,075 949,500 949,500 3,620,680 189,900 1,491,707	30,776 $ - 3,165,000 949,500 949,500 3,620,680 189,900 1,491,707	- $ - 3,165,000 949,500 949,500 3,563,266 189,900 1,461,161	- - 2.7641% ~2.7807% 2.7626% 2.6506% 5.400% 0.16% ~0.56% 0.007% ~0.269%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- $ - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	- $ - - - - - - -	- - $ - - - - - - - - - - - - - -	227,690,063 $ 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063 227,690,063	227,690,063 $ A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A 227,690,063 A

304

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2014	Balance at December 31,2014	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short- term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted Note
													Item Value
6 7 8 9 10 11	Bright Information Holding Limited Innolux Technology Germany GmbH Innolux Hong Kong Ltd. Innolux Technology Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Foshan Innolux Optoelectronics Ltd.	Kunpal Optoelectronics Ltd. Innolux Hong Kong Ltd. Shanghai Innolux Optoelectronics Ltd. Leadtek Global Group Limited Innolux Corporation Nanhai Chi Mei Optoelectronics Ltd.	Other receivables Receivables from related parties Receivables from related parties Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties	63,300 $ 24,927 499,941 1,375,920 396,900 2,532,000	- $ - - 1,375,920 396,900 -	- $ - - 1,375,920 396,900 -	- - - 1.475% 1.380% -	Short-term financing Short-term financing Short-term financing Short-term financing Business association Business association	- $ - - - 2,256,506 -	Operating support Operating support Operating support Operating support - -	- $ - - - - -	- - $ - - - - - - - - - -	105,729 $ 227,690,063 227,690,063 227,690,063 569,824 227,690,063	105,729 $ B 227,690,063 A 227,690,063 A 227,690,063 A 569,824 C 227,690,063 A,D

Note A: The Company – Innolux Corporation

1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the company.
2.The financial limit on loans granted shall not exceed 40% of the company’s net equity. If it is for short-term capital needs, the limit shall not exceed 30% of the company’s net equity.
3.The policy for loans granted to direct or indirect wholly-owned overseas subsidiaries is as follows: for short-term capital needs, financial limit shall not be below the 40% requirement, but should not exceed 100% of the company’s net equity.
Note B: The subsidiary - Bright Information Holding Limited
1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the company. 2.The financial limit on loans granted shall not exceed 30% of the company’s net equity.
3.For the short-term capital needs of direct or indirect wholly-owned subsidiaries, the above two limitations are not required. However, the financial limit on loans granted shall not exceed 100% of the company’s net equity.

305

Note C: Innolux Optoelectronics Japan Co., Ltd.

1.For the company’s short-term capital needs, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the parent company.
2.The financial limit on loans granted shall not exceed 30% of the company’s net equity, based on the most recent audited financial statements of the parent company; with intercompany transaction, the company’s financial limit on loans granted shall not exceed 40% of the company’s equity.

3.The amount of loans provided by the company and intercompany shall not exceed 40% of the company’s equity.

B.Endorsements and guarantees provided during the year ended December 31, 2014:

Number	Endorsement /guarantee provider	Guaranteed party	Guaranteed party	Limit on endorsement/ guarantee amount provided to each counterparty	Maximum balance for the year	Ending balance	Actual amount drawndown	Amount of endorsement/ guarantee collateralized by properties	Ratio of accumulated endorsement/ guarantee to net equity per latest financial statements	Maximum endorsement/ guarantee amounts allowable	Provision of endorsement/ guarantees by parent company to subsidiary	Provision of endorsement/ guarantees by subsidiary to parent company	Provision of endorsements /guarantees to the party in Mainland China	Note
		Name	Nature of relationship
0	Innolux Corporation	Leadtek Global Group Limited	An indirect wholly- owned subsidiary	$113,845,032	$16,901,100	$16,901,100	$10,140,660	$ -	7.42%	$113,845,032	Y	N	N	A,B

endorsement/guarantee amounts allowable should not exceed 1% of the Company’s net equity based on the most recent audited financial statements of the Company. For subsidiaries with over 90% of shares directly or indirectly owned by the Company, the endorsement/guarantee amount provided by the Company shall not exceed 10% of the Company’s net equity. The limitation is not required for direct or indirect wholly-owned subsidiaries of the Company.

Note B: Accumulated endorsement/guarantee amount provided by the Company shall not exceed 50% of the Company’s net equity.

C.Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures):

306

Securitiesheld by	Relationship Kind andname of marketable securities with the Company Commonstock AvanStrate Inc. None TPV Technology Ltd. None Chi Lin Optoelectronics Co., Ltd. None Epistar Corp. None Chi Mei Materials Technology Corporation None Bond Unsecured subordinated bonds of Cathay Financial Holdings None Commonstock Trillion Science, Inc. None China Electric Mfg. Corp. None Tera Xtal Technology Corporation None Advanced Optoelectronic Technology, Inc. None J TOUCH Corporation None Fitipower Integrated Technology Inc. None G-TECH Optoelectronics Corporation None	General ledgeraccount		December31,2014	December31,2014		Note
			Numberofshares	Bookvalue	Percentage	Fairvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation		Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Financial asset at fair value through profit or loss Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current	900,000 150,500,000 48,283,725 89,072 45,068,305 - 1,439,180 13,000,000 4,900,000 11,165,222 1,080,749 10,000,000 6,311,734	$ 80,302 1,031,587 483,194 5,603 1,500,775 220,000 2,252 140,400 56,693 605,155 19,507 343,350 184,934	1 6 19 - 9 - 2 3 3 8 1 8 2	$ 80,302 1,031,587 483,194 5,603 1,500,775 220,000 2,252 140,400 56,693 605,155 19,507 343,350 184,934

307

Relationship Securities held by Kind and name of marketable securities with the Company InnoJoy Investment Corporation Entire Technology Co., Ltd. None Warriors Technology Investments Ltd. OED Holding Ltd. None Warriors Technology Investments Ltd. General Interface Solution (GIS) Holding Limited None Warriors Technology Investments Ltd. Perfect Optronics Limited None Nets Trading Ltd. PilotTech Global Fund None	General ledger account		December31,2014	December31,2014		Note
		Number of shares	Book value	Percentage	Fair value
	Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current Available-for-sale financial assets - non-current	7,506,326 16,000,000 40,500,000 22,000,000 90	$ 177,900 3,553 900,242 178,621 28,204	5 6 14 2 -	$ 177,900 3,553 900,242 178,621 28,204

308

D.Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital:

Companyname	Marketable securities type andname	Financial statement account	Counterparty	Nature of relationship	Beginning balance	Beginning balance	Acquisition	Acquisition		Disposal	Disposal		Shares/units Amount Note Ending balance	Shares/units Amount Note Ending balance
					Shares/units	Amount	Shares/units	Amount	Shares/units	Amount	Carrying value	Gain (loss) on disposal	Shares/units
Innolux Corporation Toppoly Optoelectronics (B.V.I.) Ltd. Toppoly Optoelectronics (Cayman) Ltd. Innolux Corporation Innolux Corporation Warriors Technology Investments Ltd.	Toppoly Optoelectronics (B.V.I.) Ltd. Toppoly Optoelectronics (Cayman) Ltd. Nanjing Innolux Optoelectronics Ltd. Chi Mei Materials Technology Corporation Contrel Technology Co., Ltd. Perfect Optronics Limited	Investments accounted for under the equity method Investments accounted for under the equity method Investments accounted for under the equity method Available- for-sale financial assets - non- current Available- for-sale financial assets - non- current Available- for-sale financial assets - non- current	A A A Open market Open market Open market	B C C None None None	126,847,000 126,817,000 - 80,184,305 17,009,330 -	3,064,699 $ 3,040,776 2,935,314 2,372,660 464,322 -	17,600,000 17,600,000 - - - 66,000,000	531,608 $ 531,608 531,608 - - 77,236	- - - 35,116,000) ( 17,009,330) ( 44,000,000) (	- $ - - 1,308,457 314,798 317,743	- $ - - 871,885) ( 464,322) ( 51,491) (	- $ - - 436,572 149,524) ( 266,252	144,447,000 144,417,000 - 45,068,305 - 22,000,000	3,596,307 $ 3,572,384 3,466,922 1,500,775 D - D 25,745 E

Note A: Cash capital increase implemented by an investee. Note B: A subsidiary of the Company.

309

Note C: An indirect wholly-owned subsidiary.

Note D: The beginning carrying balance included profits and losses from investments. The beginning shares included stock dividends. Note E: Ending book value excludes gain (loss) on valuation of financial assets.

E.Acquisition of real estate reaching $300 million or 20% of paid-in capital or more for the year ended December 31, 2014: None.

F.Disposal of real estate reaching $300 million or 20% of paid-in capital or more for the year ended December 31, 2014: None.

G.Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more:

310

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unitprice	Terms	Balance	Percentage of balance
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Shenzhen Fu Tai Hong Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Lakers Trading Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Technology USA Inc. Foshan Innolux Optoelectronics Ltd. Innolux Optoelectronics USA, Inc. Innolux Hong Kong Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. FuTaiJing Precision Electronics (Yantai) Co., Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	$ 5,497,697 3,977,339 3,558,807 2,687,589 1,757,646 1,231,983 850,573 714,609 635,548 391,448 341,756	1 1 1 1 - - - - - - -	60 days 45-60 days 45-90 days 60-90 days 45 days 60 days 90 days 45 days 60 days 45-60 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparsion Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 1,543,053 1,875,465 1,282,691 - 186,694 173,861 1,649 133,856 - 93,428 7,469	2 3 2 - - - - - - - -

311

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Ningbo Innolux Optoelectronics Ltd.	Futaijing Precision Electronics (Beijing) Co., Ltd. Ambit Microsystem (Shanghai) Co., Ltd. HongFuJin Precision Electronics (HengYang) Co., Ltd. Chi Mei Materials Technology Corporation Hon Hai Precision Industry Co., Ltd. Chi Lin Optoelectronics Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Ltd. Leadtek Global Group Limited	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An investee company accounted for under the equity method Same major stockholder The company is a corporate director of Chi Lin Optoelectronics Co., Ltd. A subsidiary of the Company A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company	Sales Sales Sales Purchases Purchases Purchases Purchases Processing expense Processing expense Processing expense Processing revenue	$ 191,636 133,220 101,020 4,407,106 1,820,509 898,860 296,646 78,866,584 53,598,757 35,408,180 41,971,830	- - - 1 - - - 20 14 9 91	60 days 60 days 45 days 90 days after acceptance 60~90 days after acceptance 120 days after acceptance 30 days after acceptance 60-90 days 60-90 days 60-90 days 90 days	Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Single purchases target, no basis for comparsion Cost plus Cost plus Cost plus Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 179,404 2,036 - - ( 726,789) ( 609,775) ( 16,826) ( 42,634,612) ( 32,726,649) ( 8,444,162) 19,784,634	- - - - 1 1 - 36 28 7 92

312

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd.	Lakers Trading Ltd. Innolux Hong Kong Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Ltd. Ningbo Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Chi Mei Materials Technology Co., Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Subsidiary of an investee company accounted for under the equity method	Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Service revenue Sales Sales Purchases	$36,601,008 34,677,066 19,610,772 16,648,612 12,863,897 3,116,868 1,226,867 306,702 2,079,743 723,106 3,169,506	48 97 92 17 95 98 47 85 2 4 4	60 days 90 days 90 days 90 days 60 days 90 days 60 days 60 days 90 days 60 days 90 days after goods are shipped	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$22,267,762 7,884,481 6,966,625 - 3,069,946 986,622 2,158,754 45,553 965,551 142,914 -	94 97 90 - 95 100 58 94 3 3 -

313

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd.	Ningbo Lin Moug Optronics Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Hon Hai Precision Industry Co., Ltd. Ningbo Chi Mei Materials Technology Co., Ltd. Chi Mei Materials Technology Corporation Hongfujin Precision Industry (Shenzhen) Co., Ltd. GIO Optoelectronics Corp. Ningbo Lin Moug Optronics Co., Ltd.	An indirect wholly-owned subsidiary of Chi Lin Optoelectronics Co., Ltd. Same major stockholder Same major stockholder Subsidiary of an investee company accounted for under the equity method Same major stockholder Subsidiary of an investee company accounted for under the equity method An investee company accounted for under the equity method An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An investee company accounted for under the equity method An indirect wholly-owned subsidiary of Chi Lin Optoelectronics Co., Ltd.	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	$ 2,921,686 1,903,333 1,860,997 1,546,583 1,022,838 779,482 701,095 539,927 412,044 364,731	3 2 2 1 3 2 1 1 - 1	60 days after goods are shipped 90 days after goods are shipped 60 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 120 days after goods are shipped	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	($ 1,188,883) ( 388,841) ( 688,812) - ( 300,694) - - ( 173,670) ( 26,952) ( 200,785)	6 1 3 - 3 - - 1 - 2

314

Company	Counterparty	Relationship with the Company		Transactions	Transactions		Difference with general transactions (NoteA)	Difference with general transactions (NoteA)	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases/ sales	Amount	Percentage of purchases/ sales	Terms	Unit price	Terms	Balance	Percentage ofbalance
Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Ningbo Chi Mei Materials Technology Co., Ltd. Hon Hai Precision Industry Co., Ltd. Ampower Technology Co., Ltd. Jizhun Precision Industry (Huizhou) Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd.	Subsidiary of an investee company accounted for under the equity method Same major stockholder The company is a corporate director of Ampower Technology Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Purchases Purchases Purchases Processing expense Processing expense	$ 179,536 155,767 130,295 167,217 114,341	4 3 - 9 6	90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 30 days 30 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No significant difference No significant difference No significant difference No significant difference No significant difference	$ - ( 63,614) ( 3,401) ( 21,059) ( 23,662)	- 6 - 3 4

Note A: Accounts for the cost of goods sold ratio.

315

H.Receivables from related parties exceeding $100 million or 20% of the Company’s paid-in capital:

Company	Counterparty	Relationship with the Company	Balance of receivable from related parties	Turnover rate	Overduereceivables	Overduereceivables	Subsequent collection	Allowance for doubtful accounts provided
					Amount	Action adopted for overdue accounts
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Shenzhen Fu Tai Hong Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Kang Zhun Electronical Technology (Kunshan) Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Innolux Technology USA Inc. Innolux Optoelectronics USA, Inc. Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. A subsidiary of the Company An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 1,543,053 1,875,465 1,282,691 489,164 186,694 179,404 173,861 133,856 22,267,762 19,784,634 7,884,481 6,966,625 3,069,946 2,158,754	7.12 3.85 3.28 - 11.39 2.14 9.93 5.93 2.34 2.29 3.73 3.10 5.48 0.77	$ - 110,139 209,867 71,285 - 1,802 - - 17,331,083 4,667,893 - 928,046 579,608 1,622,044	- Subsequent collection Subsequent collection Subsequent collection - Subsequent collection - - Subsequent collection Subsequent collection - Subsequent collection Subsequent collection Subsequent collection	$ 661,954 78,424 378,539 106,435 - 8,405 - 96,199 3,896,237 3,165,386 2,943,828 2,025,388 579,608 -	$ - - - - - - - - - - - - - -

316

Company	Counterparty	Relationship with the Company	Balance of receivable from relatedparties	Turnover rate	Overduereceivables	Overduereceivables	Subsequent collection	Allowance for doubtful accounts provided
					Amount	Action adopted for overdue accounts
Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd.	Lakers Trading Ltd. Ningbo Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	$ 986,622 965,551 142,914 111,123	6.45 2.87 5.36 -	$ - 54,787 - 111,123	- Subsequent collection - Subsequent collection	$ 89,598 681,627 - -	$ - - - -

I. Derivative financial instruments undertaken during the year ended December 31, 2014: Please refer to Notes 6(2) and 6(4).

J. Significant inter-company transactions during the year ended December 31, 2014:

317

Number 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 3 3 3 4 4 5 5 6	Name ofcounterparty Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Technology Japan Co., Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Ningbo Innolux Optoelectronics Ltd.	Name oftransactionparties Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics USA, Inc. Innolux Optoelectronics USA, Inc. Innolux Technology USA Inc. Innolux Technology USA Inc. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3 3 Relationship (NoteA)	General ledger Transaction account Amount terms (NoteB) Sales 635,548 $ - Processing expense 35,408,180 - Accrued expense 8,444,162) ( - Sales 1,757,646 - Accounts receivable 186,694 - Purchases 296,646 - Sales 714,609 - Accounts receivable 133,856 - Sales 1,231,983 - Accounts receivable 173,861 - Sales 2,687,589 - Processing expense 53,598,757 - Accrued expense 32,726,649) ( - Processing expense 78,866,584 - Accrued expense 42,634,612) ( - Sales 850,573 - Service revenue 306,702 - Processing revenue 12,863,897 - Accounts receivable 3,069,946 - Sales 723,106 - Accounts receivable 142,914 - Processing revenue 36,601,008 - Accounts receivable 22,267,762 - Processing revenue 16,648,612 - Processing revenue 34,677,066 - Accounts receivable 7,884,481 - Processing revenue 1,226,867 - Accounts receivable 2,158,754 - Processing revenue 41,971,830 - Information fromtransactions (Note C)	Percentage of totoal combined revenue or totalassets
				General ledger account Amount Sales 635,548 $ Processing expense 35,408,180 Accrued expense 8,444,162) ( Sales 1,757,646 Accounts receivable 186,694 Purchases 296,646 Sales 714,609 Accounts receivable 133,856 Sales 1,231,983 Accounts receivable 173,861 Sales 2,687,589 Processing expense 53,598,757 Accrued expense 32,726,649) ( Processing expense 78,866,584 Accrued expense 42,634,612) ( Sales 850,573 Service revenue 306,702 Processing revenue 12,863,897 Accounts receivable 3,069,946 Sales 723,106 Accounts receivable 142,914 Processing revenue 36,601,008 Accounts receivable 22,267,762 Processing revenue 16,648,612 Processing revenue 34,677,066 Accounts receivable 7,884,481 Processing revenue 1,226,867 Accounts receivable 2,158,754 Processing revenue 41,971,830
					- 8 2 - - - - - - - 1 12 8 18 10 - - 3 1 - - 8 5 4 8 2 - 1 9

318

Number 6 6 6 7 7 8 8	Name ofcounterparty Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd.	Name oftransactionparties Leadtek Global Group Limited Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	3 3 3 3 3 3 3 Relationship (NoteA)	General ledger Transaction account Amount terms (NoteB) Accounts receivable 19,784,634 $ - Sales 2,079,743 - Accounts receivable 965,551 - Processing revenue 19,610,772 - Accounts receivable 6,966,625 - Processing revenue 3,116,868 - Accounts receivable 986,622 - Information fromtransactions (Note C)	General ledger Transaction account Amount terms (NoteB) Accounts receivable 19,784,634 $ - Sales 2,079,743 - Accounts receivable 965,551 - Processing revenue 19,610,772 - Accounts receivable 6,966,625 - Processing revenue 3,116,868 - Accounts receivable 986,622 - Information fromtransactions (Note C)	Percentage of totoal combined revenue or totalassets
				General ledger account Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	Amount 19,784,634 $ 2,079,743 965,551 19,610,772 6,966,625 3,116,868 986,622
						5 - - 4 2 1 -

Note A: Relationship with the transaction company:

The parent company to the subsidiary.
The subsidiary to the subsidiary.

Note C: Amount disclosure standard: purchases, sales and receivables from related parties in excess of $100 million or 20% of capital.

319

(2) Information on investees

The information on the name, the location…etc of the investee companies is shown below (not including investees in Mainland China):

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Bright Information Holding Ltd. Gold Union Investments Ltd. Golden Achiever International Ltd. Innolux Holding Ltd. Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Europe B.V.	Hong Kong Samoa BVI Samoa Samoa Samoa BVI Hong Kong BVI Taiwan Taiwan Netherlands	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Order swap company Investment company Investment company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT- LCD monitors	119,724 $ 348,999 9,083 7,858,300 197,554 32,925,315 3,596,307 2,107,291 - 1,217,235 1,078,166 121,941	74,924 $ 779,152 9,083 8,000,912 197,554 32,925,315 3,064,699 2,107,291 - 1,217,235 1,078,166 121,941	4,910,000 31,783,000 39,250 246,768,185 5,656,410 693,100,000 144,447,000 1,158,844,000 50,000,000 - 167,405,392 180	100 100 100 100 100 100 100 100 100 100 100 100	185,214 $ 116,227 21,849) ( 16,796,396 277,422 41,425,623 5,945,861 2,393,227 358,432) ( 918,468 1,670,083 152,269	423 $ 111,306 573) ( 324,999 5,890 4,430,141 740,811 493,840 96,260) ( 31,904 162,272) ( 7,361	114 $ 111,306 6,829 311,917 5,890 4,356,784 740,811 518,932 96,260) ( 31,904 162,272) ( 7,361

320

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd.	Innolux Optoelectronics Japan Co., Ltd. Ampower Holding Ltd. Jetronics International Corp. FI Medical Device Manufacturing Co., Ltd. iZ3D, Inc. Chi Mei Lighting Technology Corporation Chi Mei El Corporation GIO Optoelectronics Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation	Japan Cayman Samoa Taiwan USA Taiwan Taiwan Taiwan Samoa Samoa Samoa USA	Researching, manufacturing and selling of the film transistor liquid crystal display Investment holdings Investment holdings Photographic and optical instruments manufacturing Research and development and sale of 3D flat monitor Manufacturing of electronic equipment and lighting equipment Developing, designing, manufacturing and selling of organic light emitting diodes Developing, designing, manufacturing and selling of components of back light module on TFT-LCD Investment holdings Investment holdings Order swap company Distributor company	1,335,486 $ 1,717,714 86,149 73,500 - 819,312 361,382 800,892 7,296,530 555,422 - 6,348	1,335,486 $ 1,717,714 145,600 - - 819,312 361,382 800,892 7,426,240 568,324 - 6,348	80 14,062,500 726,941 7,350,000 4,333 78,195,856 155,500,000 63,521,501 226,504,550 18,177,052 1 2,000	100 47 32 49 35 33 97 24 100 100 100 100	1,572,495 $ 1,477,199 1,771) ( 73,164 - - 24,799 449,994 15,261,115 1,404,398 241,128 88,218) (	68,864 $ 276,629) ( 85,293) ( 686 - - 5,702) ( 112,745) ( 71,583 255,129 - 1,722) (	68,864 $ 90,897) ( 41,869 336 - - 5,541) ( 26,811) ( 71,583 255,129 - 1,722) (

321

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Hong Kong Holding Ltd. Innolux Optoelectronics Europe B.V. Innolux Optoelectronics Japan Co., Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd.	Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Ltd. Innolux Hong Kong Ltd. Innolux Technology Europe B.V. Innolux Technology Japan Co., Ltd. Innolux Technology USA Inc. Chi Mei Optoelectronics Germany GmbH Innolux Optoelectronics USA, Inc. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd.	Cayman Hong Kong Hong Kong Netherlands Japan USA Germany USA Samoa Samoa Samoa Samoa	Investment holdings Investment holdings Order swap company Holding company and R&D testing company Distributor company Distributor company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT- LCD monitors Selling of electronic equipment and computer monitors Investment holdings Investment holdings Investment holdings Investment holdings	3,572,384 $ - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370 5,391,125	3,040,776 $ - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370 5,391,125	144,417,000 162,897,802 35,000,000 375,810 201 1,000 250 1,000 10,000,001 18,000,000 38,000,001 164,000,000	100 100 100 100 100 100 100 100 100 100 100 100	6,181,164 $ 780,296 2,095,946) ( 2,410,215 1,647,930 326,317 26,937 258,769 255,806 421,268 1,018,638 13,534,845	740,811 $ 233,398 320,095 35,651 128,257) ( 31,730 3,753 23,063 36,380 1,221 3,328 36,362	740,811 $ 233,398 320,095 35,651 128,257) ( 31,730 3,753 23,063 36,380 1,221 3,328 36,362

322

Name of company	Investee company	Location	Mainoperating activities	Originalcost	Originalcost	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Held by the Company atDecember31,2014	Net income (loss) of the investee company	Investment income (loss) recognized by the Company
				December 31, 2014	December 31, 2013	Numberofshares	Percentage of ownership (%)	Bookvalue
Rockets Holding Ltd. Suns Holding Ltd. Innolux Technology Europe B.V. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Asiaward Investment Ltd. Main Dynasty Investment Ltd. Sun Dynasty Development Ltd. Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp. Chi Mei Logistics Corp. TOA Optronics Corporation	Samoa Samoa Germany Hong Kong Hong Kong Hong Kong Taiwan Taiwan Taiwan Taiwan	Investment company Investment company Testing and maintenance company Investment holdings Investment holdings Investment holdings Trading business, manufacturing of electronic equipment and lighting equipment Developing, designing, manufacturing and selling of components of back light module on TFT-LCD Warehousing services Selling electronic materials, trading business, manufacturing of electronic equipments and lighting equipments	27,477 $ 555,422 33,735 314,740 573,940 1,146,370 263,812 6,881 - 423,606	- $ 568,324 33,735 314,740 573,940 1,146,370 263,812 6,881 124,485 423,606	900,001 18,177,052 100,000 77,830,001 139,623,801 295,969,001 19,673,402 467,519 - 58,007,000	100 100 100 100 100 100 8 0 0 40	30,441 $ 1,404,397 63,152 255,806 421,267 1,018,638 - 732 - 364,907	- $ 255,127 41 36,380 1,221 3,328 - 112,745) ( 5,843 105,740) (	- $ 255,127 41 36,380 1,221 3,328 - 203) ( 2,863 45,764) (

323

(3) Information on investments in Mainland China

A.Basic information:

ormation on investments in Mainland China Basic information:
Name of investee in Mainland China Main activities of investee Capital (Note A) Method of Investment (Note D) Balance of amount remitted from Taiwan on January1,2014	Transactions during Jan. 1, 2014~Dec. 31, 2014 (inthousands ofNTD)		Balance of amount remitted from Taiwan as of Dec. 31,2014	Net income of investee for the year ended Dec. 31,2014	Ownership percentage held by the Company (Direct/indirect)	Profit recognized during Jan. 1, 2014~ Dec. 31, 2014 (NoteB)	Profit Book value remitted to of investment Taiwan during as of Jan. 1, 2014 ~ Dec. 31,2014 Dec. 31,2014
	Remittance out	Remittance in
Innocom Technology (Shenzhen) Co., Ltd. Manufacturing and selling of LCD backend module and related components 5,190,600 $ 1 4,016,756 $ Innocom Technology (Chengdu) Co., Ltd. Manufacturing and selling of LCD backend module and related components 1,202,700 1 1,202,700 OED Company Manufacturing and selling of electronic paper 256,112 1 63,300 Ningbo Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 9,811,500 2 1,396,613 Ningbo Innolux Technology Ltd. Manufacturing and selling of LCD backend module and related components 4,114,500 2 4,114,500 Foshan Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 12,121,950 2 12,121,950 Ningbo Innolux Display Ltd. Manufacturing and selling of LCD backend module and related components 949,500 3 949,500	- $ - - - - - -	- $ - - 1,163,508) ( - - -	4,016,756 $ 1,202,700 63,300 233,105 4,114,500 12,121,950 949,500	36,362 $ 3,328 140,976) ( 2,070,696 491,039 1,866,041 34,860	100 100 5 100 100 100 100	36,362 $ 3,328 - 2,070,696 491,039 1,868,407 34,860	13,534,833 $ 1,173,844 $ 1,018,638 - 12,989 - 20,601,650 5,463,896 3,218,102 - 18,607,398 - 260,746 -

324

Name of investee in Mainland China Main activities of investee Capital (Note A) Method of Investment (Note D) Balance of amount remitted from Taiwan on January1,2014	Transactions during Jan. 1, 2014~Dec. 31, 2014 (inthousands ofNTD)	Transactions during Jan. 1, 2014~Dec. 31, 2014 (inthousands ofNTD)	Balance of amount remitted from Taiwan as of Dec. 31,2014	Net income of investee for the year ended Dec. 31,2014	Ownership percentage held by the Company (Direct/indirect)	Profit recognized during Jan. 1, 2014~ Dec. 31, 2014 (NoteB)	Profit Book value remitted to of investment Taiwan during as of Jan. 1, 2014 ~ Dec. 31,2014 Dec. 31,2014
	Remittance out	Remittance in
Nanjing Innolux Technology Ltd. Purchases and sales of monitor-related components company 66,465 $ 4 66,465 $ Kunpal Optoelectronics Ltd. Glass thinning processing service 126,600 5 71,744 VAP Optoelectronics (Nanjing) Corp. Manufacturing and selling of LCD backend module and related components 208,890 6 9,495 Nanjing Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 4,494,300 4 3,937,260 Ningbo Innolux Logistics Ltd. Warehousing services 126,600 8 126,600 Shanghai Innolux Optoelectronics Ltd. Manufacturing and selling of LCD backend module and related components 664,650 7 - Foshan Innolux Logistics Ltd. Warehousing services 47,475 8 47,475 Amlink (Shanghai) Ltd. Manufacturing and selling of power supply, modem, ADSL, and other IT equipments 633,000 9 316,500	- $ 47,951 - 557,040 - - - -	- $ - - - - - - -	66,465 $ 119,695 9,495 4,494,300 126,600 - 47,475 316,500	11,797 $ 942 574) ( 729,013 5,729 233,398 161 8,949) (	100 100 100 100 100 100 100 47	11,797 $ 942 574) ( 729,013 5,729 233,398 161 4,206) (	606,961 $ - $ 79,430 - 43,749) ( - 5,574,181 - 168,311 - 780,296 - 66,633 - 594,508 -

325

Name of investee in Mainland China Main activities of investee Capital (Note A) Method of Investment (Note D) Balance of amount remitted from Taiwan on January1,2014	Transactions during Jan. 1, 2014~Dec. 31, 2014 (inthousands ofNTD)	Transactions during Jan. 1, 2014~Dec. 31, 2014 (inthousands ofNTD)	Balance of amount remitted from Taiwan as of Dec. 31,2014	Net income of investee for the year ended Dec. 31,2014	Ownership percentage held by the Company (Direct/indirect)	Profit recognized during Jan. 1, 2014~ Dec. 31, 2014 (NoteB)	Profit Book value remitted to of investment Taiwan during as of Jan. 1, 2014 ~ Dec. 31,2014 Dec. 31,2014
	Remittance out	Remittance in
Kunshan Guann- Jye Electronics Co., Ltd. Manufacturing of transformers 265,860 $ 10 85,139 $ Interface Optoelectronics (Shenzhen) Co., Ltd. Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after-sales service 2,095,230 1 427,275	- $ -	- $ -	85,139 $ 427,275	- $ -	32 14	- $ -	- $ - $ 900,242 -

B. Information on investments in Mainland China (Note C):

Company Innolux Corporation	Accumulated amount wired out from Taiwan to Mainland China as of December 31, 2014 29,846,173 $	Investment amount approved by FIC of MOEA 44,838,617 $	Ceiling of investment amount of the Company
			- $

C. Significant transactions with investees in Mainland China directly or indirectly through the third areas:

Note B: Profit or loss recognised for the year ended December 31, 2014 was audited by independent accountants.

1.Through investing in Innolux Holding Ltd. in the third area, which then invested in the investee in Mainland China.
2.Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.

326