INX — Audit Report / Information 2015

Nov 12, 2015

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2015 AND 2014

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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, 2015 and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

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

We have also audited the separate financial statements of Innolux Corporation as of and for the years ended December 31, 2015 and 2014, and have expressed an unqualified opinion on such financial statements.

PricewaterhouseCoopers, Taiwan

February 2, 2016

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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.

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2015 AND 2014

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(5) 7 7 6(6) 6(1) and 8 6(2) 6(3) 6(7) 6(8), 7 and 8 6(9) 6(10) 6(25) 8 6(8)	2015 $ 52,522,790 120,036 - 48,189,791 2,632,853 2,024,204 30,198,432 1,107,869 1,979,467 91,545 138,866,987 281,922 7,123,034 1,610,586 199,482,740 680,503 19,342,856 15,888,467 119,703 4,045,538 248,575,349 $ 387,442,336	2014
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1125 Available-for-sale financial assets - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1476 Other financial assets - current 1479 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1523 Available-for-sale financial assets - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1980 Other financial assets - non-current 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			$ 70,989,741 52,453 220,000 70,976,005 6,112,400 2,849,589 33,787,842 1,441,603 2,802,110 149,069
			189,380,812
			605,155 5,137,117 2,364,225 233,609,843 693,677 20,219,137 17,778,516 11,160,082 1,567,991
			293,135,743
			$ 482,516,555

(Continued)

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2015 AND 2014

(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(12) 6(25) 6(13) 6(16) 6(14)(17) 6(18) 6(19) 9	2015 $ - 265,525 - 57,069,951 3,359,933 24,912,360 1,819,368 5,551,759 16,361,238 1,131,329 110,471,463 43,629,968 514,094 562,088 44,706,150 155,177,613 99,532,372 99,643,564 2,676,947 - 27,661,503 2,750,337 232,264,723 - 232,264,723 $ 387,442,336	2014
Current Liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2125 Derivative financial liabilities for hedging - current 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2250 Provisions - current 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent 3110 Share capital - common stock 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments 3X2X Total liabilities and equity			$ 22,526,999 605,016 1,351 74,954,439 5,252,946 23,912,180 582,258 3,133,489 66,162,663 2,004,157
			199,135,498
			42,293,423 477,580 11,438,618
			54,209,621
			253,345,119
			99,545,364 99,584,369 509,272 1,144,229 24,979,173 1,927,656
			227,690,063
			1,481,373
			229,171,436
			$ 482,516,555

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

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

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

Items

Notes 2015 2014 7 $ 364,132,984 $ 428,661,898 6(6)(23) and 7 ( 317,492,879) ( 378,276,897) 46,640,105 50,385,001 6(23) ( 3,204,824) ( 3,224,079) ( 6,600,082) ( 6,810,443) ( 14,404,490) ( 12,177,083) ( 24,209,396) ( 22,211,605) 22,430,709 28,173,396 6(20) 2,313,182 2,734,952 6(21) ( 8,683,203) ( 5,130,475) 6(22) ( 1,415,088) ( 3,309,347) 213,587 65,814 ( 7,571,522) ( 5,639,056) 14,859,187 22,534,340 6(25) ( 4,045,046) ( 857,432) $ 10,814,141 $ 21,676,908

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

(Continued)

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

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

Items

Notes 2015 2014 6(13) ($ 195,939) ($ 55,790) 6(25) 33,309 9,484 ( 162,630) ( 46,306) ( 1,421,828) 3,078,767 2,266,346 284,946 6(4) ( 297,675) ( 278,458) 4,432 81,659 6(25) 118,551 38,885 669,826 3,205,799 $ 507,196 $ 3,159,493 $ 11,321,337 $ 24,836,401 $ 10,815,594 $ 21,676,759 ( 1,453) 149 $ 10,814,141 $ 21,676,908 $ 11,352,532 $ 24,844,853 ( 31,195) ( 8,452) $ 11,321,337 $ 24,836,401 6(26) $ 1.09 $ 2.31 $ 1.07 $ 2.28

Other comprehensive income (net) Components of other comprehensive loss that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8349 Income tax relating to the components of other comprehensive income that will not be reclassified 8310 Components of other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealized gain on valuation of available-for-sale financial assets 8363 Cash flow hedges 8370 Share of other comprehensive income of associates and joint ventures accounted for under equity method 8399 Income tax relating to the components of other comprehensive income that will be reclassified 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income for the year, net of tax 8500 Total comprehensive income for the year Profit attributable to: 8610 Owners of the parent 8620 Non-controlling interest Total Other comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(Expressed in thousands of New Taiwan dollars)

Equity attributable to owners of the parent

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 Changes in non-controlling interests Profit for the year Other comprehensive income for the year Balance at December 31, 2014 2015 Balance at January 1, 2015 Appropriations of 2014 earnings: Legal reserve Special reserve Cash dividends 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 Changes in non-controlling interests Profit for the year Other comprehensive income for the year Balance at December 31, 2015	Notes	Common stock	Capital surplus			Retained Earnings	Retained Earnings		Other Equity	Interest		Total	Non- controlling interest	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(18) 6(18) 6(18) 6(18) 6(14) 6(19) 6(18) 6(14) 6(19)	$91,094,288 8,500,000 - - - - - ( 48,924 ) - - - - - - $99,545,364 $99,545,364 - - - ( 12,992 ) - - - - - - $99,532,372	$96,058,741 2,125,000 - - - ( 1,266,944 ) 2,328,981 48,924 47,174 289,523 ( 47,030 ) - - - $99,584,369 $99,584,369 - - - 12,992 ( 3,760 ) 22,740 27,185 38 - - $99,643,564	$ 2,328,981 - 509,272 - - - ( 2,328,981 ) - - - - - - - $ 509,272 $ 509,272 2,167,675 - - - - - - - - - $2,676,947	$ - - - 1,144,229 - - - - - - - - - - $ 1,144,229 $ 1,144,229 - ( 1,144,229 ) - - - - - - - - $ -									$ 194,577,854 10,625,000 - - ( 90,495) ( 1,266,944) - - 3,223 578,227 ( 47,030) ( 44,800) 21,676,908 3,159,493 $ 229,171,436 $ 229,171,436 - - ( 6,947,188) - ( 1,349) 143,442 27,185 ( 1,450,140) 10,814,141 507,196 $ 232,264,723

The accompanying notes are an integral part of these consolidated financial statements. ~6~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(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 of associates and joint ventures accounted for under equity method Loss (gain) on disposal of investments Loss on disposal of property, plant and equipment Impairment loss Interest expense Interest income Dividend income Unrealized foreign exchange (gain) loss 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 2015 2014 $ 14,859,187 $ 22,534,340 6(23) 53,571,172 60,899,556 6(14) 143,442 578,227 6(5) - 820 ( 213,587 ) ( 65,814 ) 6(21) 47,583 ( 794,041 ) 6(21) 180,829 179,758 6(21) 589,911 351,066 6(22) 1,712,758 3,586,581 6(20) ( 484,873 ) ( 328,633 ) 6(20) ( 224,441 ) ( 39,958 ) ( 225,917 ) 1,417,004 ( 83,841 ) 198,617 22,786,214 ( 4,618,534 ) 3,479,547 ( 4,062,415 ) 849,827 ( 1,047,816 ) 3,589,410 16,736,314 333,734 ( 246,732 ) 57,524 259,826 ( 299,026 ) ( 299,025 ) ( 17,884,488 ) 9,518,853 ( 1,893,013 ) ( 3,503,297 ) ( 713,699 ) 4,070,494 2,418,270 1,184,460 ( 821,001 ) ( 290,486 ) 6,891 ( 721,826) 81,782,413 105,497,339 ( 718,120) ( 768,062) 81,064,293 104,729,277

(Continued)

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(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 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 (increase) in other financial assets Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Proceeds from disposal of intangible assets Increase 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 Increase in long-term borrowings Payment of long-term borrowings Capital issued for cash Repurchase from issuance of restricted stock to employees Changes in non-controlling interests Interest paid Cash paid from capital surplus Cash dividends paid Net cash used in financing activities Effect of changes in foreign currency exchange (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2015 2014 $ - ($ 240,167 ) 450,057 802,524 - ( 73,500 ) - 1,685,201 - 59,451 783,662 ( 52,903 ) 6(27) ( 24,511,490 ) ( 20,526,552 ) 6(27) 1,798,359 4,253,209 ( 16,392 ) ( 18,140 ) 856 - ( 4,453 ) ( 22,070 ) 449,038 368,335 247,612 64,221 ( 20,802,751 ) ( 13,700,391 ) ( 22,449,868 ) ( 8,881,219 ) 68,100,131 - ( 116,527,861 ) ( 61,671,395 ) 6(16) - 10,625,000 ( 3,676 ) ( 7,754 ) ( 50 ) ( 44,800 ) ( 1,628,841 ) ( 3,608,923 ) 6(18) - ( 1,266,944 ) 6(18) ( 6,947,188 ) ( 90,495 ) ( 79,457,353 ) ( 64,946,530 ) 728,860 769,567 ( 18,466,951 ) 26,851,923 70,989,741 44,137,818 $ 52,522,790 $ 70,989,741

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

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INNOLUX CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(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 and its subsidiaries (the “Group”) engage 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 2, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

• A. IAS 19 (revised), ‘Employee benefits’

  • The revised standard makes amendments that net interest amount, calculated by applying the discount rate to the net defined benefit asset or liability, replaces the finance charge and expected return on plan assets. Additional disclosures are required for defined benefit plans.

• B. IAS 1, ‘Presentation of financial statements’

  • The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassifiable 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.

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

  • The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. Also, 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 from market participants’ perspective, and requires disclosures about fair value measurements. For non-financial assets only, fair value is determined based on the highest and best use of the asset. 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 IFRS has no significant impact on the consolidated financial statements for the years ended December 31, 2015 and 2014.

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

None.

(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’ IFRS 16, ‘Leases’ Disclosure initiative (amendments to IAS 1) Disclosure initiative (amendments to IAS 7) Recognition of deferred tax assets for unrealised losses (amendments to IAS 12)	January 1, 2018 To be determined by International Accounting Standards Board January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2018 January 1, 2019 January 1, 2016 January 1, 2017 January 1, 2017

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New Standards,Interpretations and Amendments

Effective Date by International Accounting Standards Board

Clarification of acceptable methods of depreciation and amortisation (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) Defined benefit plans: employee contributions (amendments to IAS 19R) Equity method in separate financial statements (amendments to IAS 27) Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014

January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2016 January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 January 1, 2016

The Group is assessing the potential impact of the new standards, interpretations and amendments above. 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.

(1) Compliance statement

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

(2) Basis of preparation

• A. Except for the following items, 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

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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.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements

  • (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

  • (b) Inter-company transactions, balances and 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 recognised directly in equity.

  • (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2015	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. 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 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	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Order swapping Investment company Investment company Investment and distribution company Investment and distribution company Production and distribution 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 97	- (d) - - - - - - - - - - - (a)

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Name of Investor	Name ofSubsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2015	2014
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.	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. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display 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.)	Processing company Processing company Processing company Investment holdings Investment holdings Order swapping Distribution company Warehousing company Warehousing company Processing company Processing company Processing company Processing company Investment holdings Investment holdings Order swapping 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	- (c) - - - - - - - - - - (c) - - -

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2015	2014
Innolux Hong Kong Holding Ltd. Innolux Optoelectronics Europe B.V. Innolux Optoelectronics Japan Co., Ltd. Rockets Holding Ltd. Suns Holding Ltd. Toppoly Optoelectronics (Cayman) 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.) Innolux Optoelectronics Germany GmbH (Former Chi Mei Optoelectronics Germany GmbH) Innolux Optoelectronics USA, Inc. (Former Chi Mei Optoelectronics, USA, Inc.) Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd. Nanjing Innolux Technology Ltd. (Former TPO Displays (Shinepal) Ltd.) Nanjing Innolux Optoelectronics Ltd.	Investment and R&D company R&D company Distribution company After sales service company Distribution company Investment holdings Investment holdings Investment holdings Investment holdings Investment company Investment company Distribution company Processing 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	- - - - - - - - - - - - -

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Name of Investor	Name ofSubsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December31,
			2015	2014
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. Sun Dynasty Development Ltd. Ningbo Innolux Display 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) Co., Ltd. Innocom Technology (Chengdu) Co., Ltd. Ningbi Innolux Electronics Ltd.	Processing company Testing and maintenance company Investment holdings Investment holdings Investment holdings Processing company Processing company Distribution company	100 100 100 100 100 100 - 100	100 100 100 100 100 100 100 -	- - - - - - (b) (e)

• (a) The Board of Directors of the Company in July, 2015 resolved to conduct a simple merger with Chi Mei El Corporation (Chi Mei El), a 97%-owned subsidiary of the Company effective September 1, 2015. The Company was the surviving company while Chi Mei El was dissolved after the merger. Said merger was accounted for an as equity transaction.

• (b) Innocom Technology (Chengdu) Ltd. ceased operations and was liquidated in the first quarter of 2015.

• (c) Ningbo Innolux Display Ltd., a wholly-owned subsidiary of Gold Union Investments Ltd., became Landmark International Ltd.’s subsidiary after the reorganization in August 2015.

• (e) Gold Union Investments Ltd. ceased operations and was liquidated in the fourth quarter of 2015.

• (f) Ningbo Innolux Electronics Ltd. was established in November 2015 and was included in the consolidated financial statements since the date of establishment.

• 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.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

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(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in 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, even the Group still retains partial interest in the former foreign associate after losing significant influence over the former

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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 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.

(5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within twelve months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be paid off within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

• 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.

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

• A. Financial assets at fair value through profit or loss are financial assets held for trading or 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

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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.

• 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.

(8) 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.

• (9) 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.

(10) 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

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• (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 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.

(11) 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.

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

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 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 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

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amounts previously recognized as capital surplus in relation to the associate are reclassified to profit or loss proportionately.

(13) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss 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

(14) 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.

(15) 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.

(16) 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

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  - 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.

• (17) 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.

• (18) 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

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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 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.

(19) Employee benefit

• 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.

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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. 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) of a currency and term consistment with the currency and term of the employment benefit abligations.

  • ii. Remeasurement arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  • iii. Past service costs are recognized immediately in profit or loss.

• C. Employees’, directors’ and supervisors’ remuneration

• Employees’ remuneration 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.

- (20) Employee share based payment

• A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are 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

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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.

• (21) 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.

(22) 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.

(23) 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

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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, 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.

(24) 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. CRITICALACCOUNTING 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:

• (1) Critical judgements 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 judgement. In making this judgement, 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.

• (2) 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

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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. Impairment assessment of tangible and intangible assets (excluding goodwill) The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

• C. Realizability 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 realizability 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.

• D. 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.

• E. 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

(1) 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	December31,2015 2,255 $ 28,526,258 23,331,155 51,859,668 663,122 52,522,790 $	December31,2014
		2,572 $ 45,954,667 20,806,255
		66,763,494 4,226,247
		70,989,741 $

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• 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.

• B. The above time deposits and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote. The remaining time deposits which did not meet the definition of cash equivalents were $1,973,263 and $517,240 at December 31, 2015 and December 31, 2014 respectively, and were classfied as ‘other financial assets - current’.

(2) 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	December31,2015 120,036 $ 77,019 $ 204,903 281,922 $ 265,525 $	December31,2014
		52,453 $ 77,019 $ 528,136 605,155 $ 605,016 $

• A. The Group recognized net loss of $663,075 and $976,857 on financial assets held for trading for the years ended December 31, 2015 and 2014, respectively.

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

		December 31,	December 31,	2015		December 31,	December 31,	2014
	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)	$	150,000	2015/10-2016/2 USD (sell)		$	425,000	2014/10-2015/3
exchange contracts	TWD (buy)		4,896,705	2015/10-2016/2 JPY (buy)		48,580,180		2014/10-2015/3
Forward foreign	USD (sell)		295,000	2015/10-2016/3 EUR (sell)			38,000	2014/10-2015/2
exchange contracts	JPY (buy)		35,649,520	2015/10-2016/3 USD (buy)			47,574	2014/10-2015/2
Forward foreign	EUR (sell)		5,000	2015/11-2016/1
exchange contracts	USD (buy)		175,075	2015/11-2016/1
Forward foreign	EUR (sell)		80,500	2015/10-2016/3
exchange contracts	JPY (buy)		10,668,495	2015/10-2016/3
Forward foreign	HKD (sell)		321,477	2015/11-2016/1
exchange contracts	EUR (buy)		39,000	2015/11-2016/1
Forward foreign	USD (sell)		240,000	2015/10-2016/2
exchange contracts	RMB (buy)		1,541,675	2015/10-2016/2

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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.

(3) Available-for-sale financial assets

not accounted for under hedge accounting. Available-for-sale financial assets
Items Current items Bond investments Non-current items Listed stocks and bond investments Emerging and unlisted stocks	December31,2015 - $ 6,403,449 $ 719,585 7,123,034 $	December31,2014
		220,000 $
		3,582,677 $ 1,554,440
		5,137,117 $

• A. The Group recognised net gain (loss) in other comprehensive income for fair value change and reclassified from equity to profit or loss for the years ended December 31, 2015 and 2014. Please refer to Note 6(19).

• B. For the years ended December 31, 2015, the Group assessed that investment value of certain investee companies was impaired and recognized impairment loss of $108,000 which is listed as ‘other gains and losses’.

• C. The counterparties of the Group’s debt instrument investments have good credit quality.

(4) Hedging derivative financial liabilities

‘other gains and losses’. C. The counterparties of the Group’s debt instrument investments have good credit quality. Hedging derivative financial liabilities	redit quality.	redit quality.
Cash flow hedges Items December31,2015 December31,2014 Current items Interest rate swap - cash flow hedges - $ 1,351 $ Derivative Period of Gain Instruments Period of (Loss) Expected Designated FairValue Anticipated to be Recognized Hedged Items as Hedges December31,2014 Cash Flow in Profit or Loss Long-term borrowings Interest rate swap 1,351) ($ 2008~2015 2008~2015 Designated as HedgingInstruments	December31,2014
	$	1,351
		Period of Gain (Loss) Expected to be Recognized in Profit or Loss
Long-term borrowings		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. The contract had matured and was settled in February, 2015.

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B. Information about gain or loss arising from cash flow hedges recognized in profit or loss and other comprehensive income:

other comprehensive income:
		Years ended December		31,
Items		2015		2014
Amount of gain or loss adjusted in other	$	5	$		1,224
comprehensive income
Amount of gain or loss transferred from other		297,670		277,234
comprehensive income to profit or loss
Accounts and notes receivable
	December31,2015		December		31,2014
Notes receivable	$	-	$		21,447
Accounts receivable		48,944,637		71,922,008
		48,944,637		71,943,455
Less: Allowance for sales returns and discounts	(	636,330)	(		827,583)
Allowance for bad debts	(	118,516)	(		139,867)
	$	48,189,791	$	70,976,005

(5) Accounts and notes receivable

• 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	December 31,2015 644,656 $ 42,281 15,766 702,703 $	December 31,2014
		611,670 $ 64,488 73,023 749,181 $

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

• (a) As of December 31, 2015 and 2014, the Group’s accounts receivable that were impaired were $118,516 and $139,867, respectively.

• (b) Movement on allowance for bad debts for impairment loss on individual provision is as follows:

follows:
		2015			2014
At January 1	$	139,867	$		139,221
Allowance for bad debts - provision		-			820
Allowance for bad debts - write-offs	(	21,447)	(		211)
Net exchange difference		36			37
Allowance for bad debts - reclassifications		60			-
At December 31	$	118,516		$	139,867

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(6) Inventories

Inventories
Raw materials and supplies Work in process Finished goods	December31,2015 3,952,699 $ 13,906,846 12,338,887 30,198,432 $	December31,2014
		3,851,583 $ 17,996,857 11,939,402
		33,787,842 $

Expenses and losses incurred on inventories are as follows:

		Years ended	December31,	December31,	December31,
		2015			2014
Cost of inventories sold	$	317,186,303	$		378,358,466
Gain on reversal of decline in market value	(	602,609)	(		473,142)
Disposal loss and others		909,185			391,573
	$	317,492,879		$	378,276,897

The Group had disposed its expired and slow-moving inventories for the years ended December 31, 2015 and 2014. Thus, the risk of reduction in the inventory’s market price had decreased and the net realizable value of inventories had been recovered.

(7) Investments accounted for under the equity method

realizable value of inventories had been recovered. Investments accounted for under the equity method
Ampower Holding Ltd. TOA Optronics Corporation GIO Optoelectronics Corporation Others	December31,2015 881,351 $ 310,074 99,533 319,628 1,610,586 $	December31,2014
		1,477,199 $ 364,907 450,726 71,393
		2,364,225 $

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

below:
Profit or loss for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	Years ended December31,
	2015 213,587 $ 4,432 218,019 $	2014
		65,814 $ 81,659 147,473 $

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2015

(8) Property, plant and equipment

								2015
										Transfer, net
										exchange
										differences
		At January1				Additions		Disposals		and others	At December 31
Cost:
Land		$		3,852,792	$	-	$	-	$	-	$		3,852,792
Buildings			185,352,098			77,904	(	285,434)		551,758		185,696,326
Machinery and equipment			432,578,807			745,188	(	11,488,751)		10,624,985		432,460,229
Others				30,029,064		311,893	(	3,317,504)		6,609,029			33,632,482
			651,812,761			1,134,985	(	15,091,689)		17,785,772			655,641,829
Accumulated depreciation
and impairment:
Buildings	(			83,503,695)	(	13,130,422)		216,190		525,499	(		95,892,428)
Machinery and equipment	(		325,264,992)		(	35,070,724)		10,473,424	(	2,464,586)	(	352,326,878)
Others	(			22,124,028)	(	4,123,746)		3,167,673	(	3,800,392)	(		26,880,493)
	(		430,892,715)		(	52,324,892)		13,857,287	(	5,739,479)	(		475,099,799)
Unfinished construction
and equipment under
acceptance				12,689,797		24,661,681	(	796,613)	(	17,614,155)			18,940,710
	$		233,609,843									$	199,482,740
								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

A. The Group evaluated the recoverable amount for assets with impairment indicators; the impairment loss for the years ended December 31, 2015 and 2014 was $481,911 and $351,066, respectively, shown under “other gains and losses”.

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

• C. As of December 31, 2015 and 2014, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $3,110,696 and $591,998, respectively.

(9) Investment property

respectively. Investment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings ( Cost: Land Buildings Accumulated depreciation and impairment: Buildings (		2015		At December31 188,247 $ 564,109 752,356 71,853) 680,503 $ At December31 188,247 $ 568,440 756,687 63,010) 693,677 $
	AtJanuary1 188,247 $ 568,440 756,687 63,010) ( 693,677 $ (	Additions Disposals - $ - $ - 4,331) ( - 4,331) ( 13,174) 4,331 ( 13,174) $ - $ 2014
	AtJanuary1 188,247 $ 568,440 756,687 49,837) ( 706,850 $ (	Additions - $ - - 13,173) 13,173) $	Disposals - $ - - - ( - $

The fair value of the investment property held by the Group as at December 31, 2015 and 2014 was $1,077,466 and $1,110,523, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information.

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(10) Intangible assets

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

2015

									2015
										Transfer, net
										exchange
										differences
		AtJanuary1				Additions		Disposals		and others		At December31
Cost:
Patents and royalty	$		8,137,035	$		-	$		-	$	15,650	$		8,152,685
Goodwill			17,096,628			-			-		-			17,096,628
Others			3,993,161			16,392	(	116,305)			322,252			4,215,500
			29,226,824			16,392	(	116,305)			337,902			29,464,813
Accumulated
amortization and
impairment:
Patents and royalty	(		5,735,685)	(		933,024)			-		-	(		6,668,709)
Others	(		3,272,002)	(		300,082)		115,449			3,387	(		3,453,248)
	(		9,007,687)	(		1,233,106)		115,449			3,387	(		10,121,957)
	$		20,219,137	($		1,216,714)	($		856)	$	341,289		$	19,342,856
									2014
										Transfer, net
										exchange
										differences
		AtJanuary1				Additions		Disposals		and others		At December31
Cost:
Patents and royalty	$		8,807,308	$		-	673,622) ($			$	3,349	$		8,137,035
Goodwill			17,096,628			-			-		-			17,096,628
Others			3,497,213			18,140	(		8,911)		486,719			3,993,161
			29,401,149			18,140	(	682,533)			490,068			29,226,824
Accumulated
amortization and
impairment:
Patents and royalty	(		5,215,970)	(	1,193,337)			673,622			-	(		5,735,685)
Others	(		2,970,185)	(		319,112)			7,012		10,283	(		3,272,002)
	(		8,186,155)	(		1,512,449)		680,634			10,283	(		9,007,687)
	$		21,214,994	($		1,494,309)	($		1,899)	$	500,351		$	20,219,137

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

Operating costs Operating expenses	Years ended December31,	Years ended December31,
	2015 1,005,129 $ 227,977 1,233,106 $	2014
		960,230 $ 552,219
		1,512,449 $

• 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 5.72% and 4.89% for the years ended December 31, 2015 and 2014, 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, 2015 and 2014.

(11) Short-term borrowings

As of December 31, 2015, the Group has no short-term borrowings. Long-term borrowings Type of borrowings December31,2014 Bank loans Credit loans 22,526,999 $ Range of interest rates 1.20%~3.92% Type of loans Period December31,2015 Syndicated bank loans 2015/3/12~2018/3/12 60,280,000 $ Guaranteed commercial papers - 60,280,000 Less: Administrative expenses charged by syndicated banks 288,794) ( Current portion 16,361,238) ( 43,629,968 $ Range of interest rates 1.90%~2.19%

• (12) Long term borrowings

• 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

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Company’s financial ratios on the consolidated financial statements for the years ended December 31, 2015 and 2014 are in compliance with the covenants on the syndicated loan agreement.

• C. In order to repay the unpaid balance of the medium and long-term syndicated loans as specified in the “Agreed-upon Repayment Agreement” which was signed on April 5, 2012, the Board of Directors during its meeting on February 10, 2015 approved the proposal for the Company to apply for a new syndicated credit line of $68.5 billion with certain financial institutions. Subsequently, on March 12, 2015, the Company acquired consent of all financial institution creditors to terminate the ‘‘Agreed-upon Repayment Agreement’’, and waive negotiation on the debt issue.

(13) Pensions

• A. Defined benefit pension plan

• (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last six months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by next March.

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

Present value of defined benefit obligations Fair value of plan assets ( Net defined benefit liability	December31,2015 1,852,905 $ 1,529,124) ( 323,781 $	December31,2014 1,605,920 $ 1,488,938) 116,982 $

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

Present value of defined benefit obligations Year ended December 31, 2015 Balance at January 1 1,605,920 $ Current service cost 8,228 Interest expense/income 36,133 44,361 Remeasurements: Change in financial assumptions 172,133 Experience adjustments 30,491 202,624 Balance at December 31 1,852,905 $ Present value of defined benefit obligations Year ended December 31, 2014 Balance at January 1 1,504,354 $ Current service cost 10,470 Interest expense/income 30,087 40,557 Remeasurements: Change in demographic assumptions 77,419 Change in financial assumptions 76,611) ( Experience adjustments 60,201 61,009 Balance at December 31 1,605,920 $

Fair value of Net defined plan assets benefit liability 1,488,938 $ 116,982 $ - 8,228 33,501 2,632 33,501 10,860 - 172,133 6,685 23,806 6,685 195,939 1,529,124 $ 323,781 $ Fair value of Net defined plan assets benefit liability 1,454,627 $ 49,727 $ - 10,470 29,092 995 29,092 11,465 - 77,419 - 76,611) ( 5,219 54,982 5,219 55,790 1,488,938 $ 116,982 $

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits

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with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The compositon of fair value of plan assets as of December 31, 2015 and 2014 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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

Discount rate Future salary increases	Years ended December31,	Years ended December31,
	2015 1.70% 3.00%	2014
		2.25%
		3.00%

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

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

December 31, 2015 Effect on present value of defined benefit obligation	Increase1% Decrease1% 299,276) ($ 367,992 $ Discount rate	Increase1% Decrease1% 337,723 $ 283,242) ($ Future salaryincreases
	Increase1% 299,276) ($	Increase1% 337,723 $ (

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

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

• (g) As of December 31, 2015, the weighted average duration of that retirement plan is 19 years.

• 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

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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, 2015 and 2014 were $2,283,605 and $1,999,252, respectively.

• (14) Share-based payment

• A. As of December 31, 2015, the Company’s share-based payment transactions were set forth below:

below:
Type of arrangement	Quantity Contract granted (in period Grant date thousand units) (inyears) 2010.05.13 20,000 5 2011.05.19 50,000 5 2013.01.30 31,151 3 2013.01.30 31,151 3 2013.03.29 844 3 2013.03.29 844 3 2013.12.12 4,268 3 2013.12.12 4,268 3 2014.07.09 85,000 -		Vesting conditions
Employee stock options Employee stock options Restricted stocks to employees - shares without consideration - shares subscribed with consideration - shares without consideration - shares subscribed with consideration - shares without consideration - shares subscribed with consideration Reservation for new share subscription by employees		5 5 3 3 3 3 3 3 -	Note (a), (b) Note (a) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d) Vested immediately

• (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 employee stock options had already expired.

• (c) 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.

• (d) 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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• (e) 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:

Type of arrangement	Grant date	Price (in dollars)	Exercise price (in dollars)	Expected volatility (%)	Expected duration (month)	Expected dividend yield(%)	Free Fair value interest per unit rate(%) (in dollars) 0.42 $ 2.42 - 10.65 - 5.65 - 18.40 - 13.40 - 15.35 - 10.35 1.00 7.31 ~8.32 0.80 15.12 ~16.98	Free Fair value interest per unit rate(%) (in dollars) 0.42 $ 2.42 - 10.65 - 5.65 - 18.40 - 13.40 - 15.35 - 10.35 1.00 7.31 ~8.32 0.80 15.12 ~16.98
Reservation for new share subscription by employees Restricted stocks to employees: - shares issued with no consideration - shares subscribed with consideration - shares issued with no consideration - shares subscribed with consideration - shares issued with no consideration - shares subscribed with consideration Employee stock options Employee stock options	2014.7.9 2013.12.12 2013.12.12 2013.3.29 2013.3.29 2013.1.30 2013.1.30 2011.05.19 2010.05.13	$ 14.9 10.65 10.65 18.4 18.4 15.35 15.35 26.7 39.85	$ 12.5 - 5.00 - 5.00 - 5.00 26.7 39.85	36.01 - - - - - - 35.67 51.57	0.84 - - - - - - 48.60 48.60	- - - - - - - 0.00 0.00		$ 2.42 10.65 5.65 18.40 13.40 15.35 10.35 7.31 ~8.32 15.12 ~16.98

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• B. The details of the employee stock option plan for the years ended December 31, 2015 and 2014 are as follows:

are as follows:
Quantity (in thousand StockOptions units) Outstanding options at the beginning of the year 70,000 Options exercised - Options expired 20,000) ( Outstanding options at the end of the year 50,000 Exercisable options at the end of the year 50,000 Quantity (in thousand StockOptions units) Outstanding options at the beginning of the year 94,819 Options exercised - Options expired 24,819) ( Outstanding options at the end of the year 70,000 Exercisable options at the end of the year 50,000		Year ended December31,2015
		Weighted Weighted average Range of average exercise exercise remaining price price vesting (in dollars) (in dollars) period 25.63 $ - 32.59 22.85 22.85 $ 0.39years 22.85 Year ended December31,2014		Weighted average stock price of stock options at exercise date(in dollars)
				13.61 $
		Weighted average exercise price (in dollars) 28.71 $ - 32.10 25.63 26.75	Weighted Range of average exercise remaining price vesting (in dollars) period 32.59 $ 0.38years 22.85 1.39years	Weighted average stock price of stock options at exercise date(in dollars)
				12.68 $

• C. For the years ended December 31, 2015 and 2014, the expenses incurred from share-based payment arrangements were $143,442 and $578,227, respectively.

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(15) Provisions-current

At January 1, 2015 Addition Used during the year ( At December 31, 2015	Warranty 747,021 $ 1,970,000 1,908,885) 808,136 $	Litigation and others 2,386,468 $ 4,626,005 2,268,850) ( 4,743,623 $	Total 3,133,489 $ 6,596,005 4,177,735) ( 5,551,759 $

• 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 provisions 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).

(16) Share capital

• A. As of December 31, 2015, the Company’s authorized and outstanding capital were $120,000,000 (including $500,000 reserved for employee stock options) and $99,532,372, 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 Capital issued for cash Cancellation of restricted stock to employees ( At December 31	2015 Number of ordinary shares(in thousands) 9,954,536 - 1,299) ( 9,953,237	2014 Number of ordinary shares(in thousands) 9,109,429 850,000 4,893) 9,954,536

• B. On June 20, 2014, the Board of Directors approved the domestic capital increase with 850,000,000 shares. The issue price was determined to be $12.5 in July 2014. The Company’s capital has increased by $10,625,000 on August 12, 2014 and has been effective on September 5, 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 (approximately equivalent to US$312,625 thousand) is tentatively scheduled for release. Based on shareholder’s 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,

~43~

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, 2015, there were 193 thousand units outstanding, representing 1,939 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 with regard to transfer of voting rights, dividend and other rights. As of December 31, 2015 and 2014, the Company bought back 1,299 and 4,893 thousand shares of unvested restricted stocks to employees, respectively, and decreased capital in accordance with related regulation.

• F. The stockholders during their 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 Board of Directors of the Company approved the public issuance of the above private common shares on April 28, 2015. As approved by Financial Supervisory Committee on July 30, 2015, the stocks were officially listed in the Taiwan Stock Exchange starting from August 7, 2015.

(17) 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.

~44~

2015

								2015
				Share of profit
					(loss) of
					associates
				accounted for					Restricted
				under equity				Employee		stock to
	Sharepremium					method	stock options		employees			Total
At January 1		$	97,972,912		$	9,273	$	1,373,859	$	228,325	$	99,584,369
Cancellation of restricted stock to
employees			-			-		-		12,992		12,992
Vested restricted stock to employees			125,600			-		-	(	125,600)			-
Changes in restricted stock to
employees			-			-		-	(	3,760)	(	3,760)
Compensation related to share-based
payment			-			-		22,740		-		22,740
Expiration of employee stock options			1,003,099			-	(	1,003,099)		-			-
Changes in net equity of long-term
equity investments			-			27,185		-		-		27,185
Changes in non-controlling interests			38			-		-		-		38
At December 31		$	99,101,649		$	36,458	$	393,500	$	111,957	$	99,643,564
								2014
				Share of profit
					(loss) of
					associates
				accounted for					Restricted
				under equity			Employee		stock to
	Sharepremium					method	stock options		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 $

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(18) 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 details of the appropriation of 2014 net income which was approved at the stockholders’ meeting in June 2015 and the appropriation of 2013 net income which was approved at the stockholders’ meeting in June 2014 are as follows:

Legal reserve Special reserve Cash dividends	Dividends per Amount share(in dollars) 2,167,675 $ - 6,947,188 0.70 $ 9,114,863 $ 2014	2013	2013
	Amount 2,167,675 $ - 6,947,188 9,114,863 $	Amount 509,272 $ 1,144,229 90,495 1,743,996 $	Dividends per share(in dollars)
			0.01 $

Furthermore, the Company’s stockholders have resolved to distribute $0.14 per share as cash dividend from capital surplus amounting to $1,266,944 in June 2014. Accordingly, the Company distributed a total of $0.15 cash dividend per share.

The Company’s appropriations of earnings for 2015 are to be authorized by the Board of Directors and presented for approval in the Company’s stockholders’ meeting for 2016.

• D. For the information relating to employees’ remuneration (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(24).

~46~

(19) Other equity items

Other equity items
								2015
					Available-					Employee
			Currency		for-sale		Hedging				unearned
		translation			investments			reserve	compensation					Total
At January 1	3,082,948 $			1,259,847) ($		$		247,070	($		142,515)		1,927,656 $
Fair value losses of cash flow hedges			-		-	(		5)			-	(		5)
Reclassified as current income of cash
flow hedges			-		-	(		297,670)			-	(		297,670)
Revaluation of available-for-sale
investments - gross			-		2,304,633			-			-			2,304,633
Revaluation transfer of
available-for-sale investment - gross			-	(	38,287)			-			-	(		38,287)
Currency translation differences	(	1,392,086)			-			-			-	(		1,392,086)
Issuance of restricted stocks to
employees			-		-			-			2,411			2,411
Compensation related to share-based
payment			-		-			-			120,702			120,702
Share of subsidiaries and other
comprehensive income of associates			4,432		-			-			-			4,432
Effect of income tax			-		67,946			50,605			-			118,551
At December 31	1,695,294 $				1,074,445 $		$	-	($		19,402)			2,750,337 $
								2014
					Available-					Employee
			Currency		for-sale		Hedging				unearned
		translation			investments			reserve	compensation					Total
At January 1	($		78,074)	1,544,345) ($		$		478,190	($		387,268)	1,531,497) ($
Fair value losses of cash flow hedges			-		-	(		1,224)			-	(		1,224)
Reclassified as current income of cash
flow hedges			-		-	(		277,234)			-	(		277,234)
Revaluation of available-for-sale
investments - gross			-		536,429			-			-			536,429
Revaluation transfer of
available-for-sale investment - gross			-	(	251,483)			-			-	(		251,483)
Currency translation differences		3,087,368			-			-			-			3,087,368
Issuance of restricted stocks to
employees			-		-			-	(		43,951)	(		43,951)
Compensation related to share-based
payment			-		-			-			288,704			288,704
Share of other comprehensive
income of associates			73,654		8,005			-			-			81,659
Effect of income tax			-	(	8,453)			47,338			-			38,885
At December 31	3,082,948 $			1,259,847) ($			247,070 $		($		142,515)		1,927,656 $

~47~

(20) Other income

Other income
Rental revenue Interest income Dividend income Other interest income	Years ended December31,
	2015 182,349 $ 484,873 224,441 1,421,519 2,313,182 $	2014
		634,368 $ 328,633 39,958 1,731,993
		2,734,952 $

(21) Other gains and losses

Net loss on financial assets and liabilities at fair value through profit or loss Net currency exchange gain (Loss) gain on disposal of investments Loss on disposal of property, plant and equipment Impairment loss Litigation loss and others

	Years ended	December	31,
	2015	2014
($	663,075)	($	976,857)
	814,978		1,242,754
(	47,583)		794,041
(	180,829)	(	179,758)
(	589,911)	(	351,066)
(	8,016,783)	(	5,659,589)
($	8,683,203)	($	5,130,475)

(22) Finance costs

Finance costs
Expenses by nature Interest expense: Bank borrowings Others Gain on cash flow hedges, reclassified from equity Employee benefit expense: Salaries and other short-term employee benefits Share-based payments Post-employment benefits Depreciation Amortization	2015 2014 1,707,993 $ 3,579,026 $ 4,765 7,555 297,670) ( 277,234) ( 1,415,088 $ 3,309,347 $ Years ended December31, 2015 2014 43,675,968 $ 43,517,392 $ 143,442 578,227 2,294,465 2,010,717 52,338,066 59,387,107 1,233,106 1,512,449 99,685,047 $ 107,005,892 $ Years ended December31,
	2015 43,675,968 $ 143,442 2,294,465 52,338,066 1,233,106 99,685,047 $

(23) Expenses by nature

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• (24) Employees’, directors’ and supervisors’ remuneration

• A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute bonus to the employees and pay remuneration to the directors and supervisors that account for 5% and 0.1%, respectively, of the total distributed amount. However, in accordance with the Company Act amended on May 20, 2015, a company shall distribute employee remuneration, based on the current year's profit condition, in a fixed amount or a proportion of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. Aforementioned employee remuneration could be paid by cash or stocks. Specifics of the compensation are to be determined in a board meeting that registers two-thirds of directors in attendance, and the resolution must receive support from half of participating members. The resolution should be reported during the shareholders' meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. The board of directors of the Company has approved the amended Articles of Incorporation of the Company on February 2, 2016. According to the amended articles, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees' compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation and shall not be higher than 0.1% for directors’ and supervisors’ remuneration. The amended articles will be resolved during the shareholders’ meeting in 2016.

• B. For the years ended December 31, 2015 and 2014, employees’ compensation (bonus) was accrued at $734,524 and $1,436,187, respectively; while directors’ and supervisors’ remuneration was accrued at $5,000 and $0, respectively. The aforementioned amounts were recognized in expenses.

  • The expenses recognized for 2015 were accrued based on the earnings of current year and are to be presented for approval by the Board of Directors and reported during the Company’s stockholders’ meeting.

  • The expenses recognized for 2014 were accrued based on the net income for 2014 and the percentage specified in the Articles of Incorporation of the Company, taking into account other factors such as legal reserve. Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $1,436,187 and $0, respectively, for the year ended December 31, 2014. Employees’ bonus and directors’ and supervisors’ remuneration for 2014 as resolved by the stockholders were $1,436,187 and $6,954, respectively. The difference of $6,954 between employees’ bonus (directors’ and supervisors’ remuneration) as resolved by the stockholders and the amount recognized in the 2014 financial statements was caused by a different accrual ratio which was accounted for as a change in accounting estimate after being approved at the stockholders’ meeting and recorded as expense in 2015.

  • Information about employees’ compensation and directors’ and supervisors’ remuneration of

~49~

the Company as resolved by the board of directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• (25) Income tax

• A. Income tax expense

  • (a) Components of income tax expense:

t System” at the website of the Taiwan Stock e tax ome tax expense Components of income tax expense:	Exchange.
Current tax: Current tax on profit for the year Tax on undistributed surplus earnings Adjustments in respect of prior years Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	2015 2014 1,010,940 $ 791,019 $ 915,947 - 39,736 104,819 1,966,623 895,838 2,078,423 38,406) ( 4,045,046 $ 857,432 $ Years ended December31,
	2015 1,010,940 $ 915,947 39,736 1,966,623 2,078,423 4,045,046 $

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

follows:
		Years ended	December31,
		2015			2014
Fair value gains/losses on available-for-sale
financial assets	($	67,946)		$	8,453
Cash flow hedges	(	50,605)	(		47,338)
Actuarial gains/losses on defined benefit
obligations	(	33,309)	(		9,484)
	($	151,860)	($		48,369)
Reconciliation between income tax expense and	accounting profit:
		Years ended December31,
		2015			2014
Tax calculated based on profit before	$	3,623,079	$		4,535,027
tax and statutory tax rate
Effects from items disallowed by tax regulation	(	929,272)	(		533,680)
Under provision of prior year's income tax		39,736			104,819
Additional 10 percent tax on undistributed		915,947			-
earnings
Effect from Alternative Minimum Tax		42			74,672
Change in assessment of realization
of deferred tax assets		395,514	(		3,323,406)
Tax expenses	$	4,045,046	$		857,432

B. Reconciliation between income tax expense and accounting profit:

~50~

C.Amounts of deferred tax assets or liabilities as a result of temporary differences and taxable loss are as follows:

are as follows:
				Year ended December31,2015
							Recognised
								in other
					Recognised in		comprehensive
			January1		profit or loss			income		December 31
Temporary differences:
-Deferred tax assets:
Sales returns and discount		$	166,373		$	77,153	$	-		$	243,526
provisions
Accrued royalties and
warranty provisions			327,918			326,639		-			654,557
Unrealized loss on
financial instruments			699,962			158,326		67,946			926,234
Unrealized expenses			40,794	(		29,924)		-			10,870
Unrealized exchange loss (gain)			200,697	(		81,480)		-			119,217
Net operating loss
carryforward			15,993,574	(		2,375,483)		-		13,618,091
Others			349,198	(		66,535)		33,309			315,972
	$		17,778,516	($		1,991,304)	$	101,255	15,888,467 $
-Deferred tax liabilities:
Unrealized (gain) loss on
cash flow hedges	($		50,605)	$		-	$	50,605	$		-
Amortization charges on
goodwill	(		394,687)	(		82,369)		-	(		477,056)
Others	(		32,288)	(		4,750)		-	(		37,038)
	($		477,580)	($		87,119)	$	50,605	($		514,094)
	$		17,300,936	($		2,078,423)	$	151,860	15,374,373 $

~51~

Recognised in other Recognised in comprehensive January1 profit or loss income December 31 Temporary differences: -Deferred tax assets: Sales returns and discount provisions 288,013 $ 121,640) ($ - $ 166,373 $ Accrued royalties and warranty provisions 364,411 36,493) ( - 327,918 Unrealized loss (gain) on financial instruments 448,380 260,035 8,453) ( 699,962 Unrealized expenses 97,965 57,171) ( - 40,794 Unrealized exchange loss (gain) - 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: Unrealized exchange (gain) loss 51,357) ($ 51,357 $ - $ - $ Unrealized (gain) loss on cash flow hedges 97,943) ( - 47,338 50,605) ( Amortization charges on goodwill 726,842) ( 332,155 - 394,687) ( Others 33,566) ( 1,278 - 32,288) ( 909,708) ($ 384,790 $ 47,338 $ 477,580) ($ 17,214,161 $ 38,406 $ 48,369 $ 17,300,936 $ Year ended December31,2014	Year ended December31,2014
		December 31

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

follows:
		December31,2015
Year incurred	Amount filed / assessed Assessed Filed	Unused amount 66,433,000 $ 43,278,299 109,711,299 $	Unrecognised deferred tax assets 18,410,536 $ 11,950,753 30,361,289 $	Usable until
2011 2012				2021 2022

~52~

December 31, 2014

		December 31,2014
Year incurred	Amount filed / assessed Assessed Filed Filed	Unused amount 14,641,521 $ 63,808,943 43,505,968 121,956,432 $	Unrecognised deferred tax assets 3,414,183 $ 14,879,288 10,055,723 28,349,194 $	Usable until
2010 2011 2012				2015~2020 2021 2022

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

Deductible temporary differences

December 31,2015 33,185,717 $	December 31,2014
	31,105,662 $

• F. The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2015 and 2014, the amounts of temporary differences unrecognised as deferred tax liabilities were $29,289,598 and $20,486,590, respectively.

• G. 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.

• H. The Company’s income tax returns through 2013 have been assessed and approved by the Tax Authority.

• I. Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.

• K. The details of imputation system are as follows:

• (a) Balance of tax credit account

• (b) Estimated (Actual) creditable tax rate

December31,2015 761,660 $ 2015 (Estimated) 6.06%	December31,2014
	738,931 $
	2014(Actual)
	3.90%

~53~

(26) Earnings per share

(27)

As employee stock options had anti-dilutive effect for the years ended December 31, 2015 and 2014, they were not included in the calculation of diluted earnings per share. Non-cash transaction A. Investing activities with partial cash payments: B. Investing activities with partial cash receipts: 2015 2014 Basic earnings per share Profit attributable to ordinary shareholders of the parent 10,815,594 $ 21,676,759 $ Weighted average number of ordinary shares outstanding (shares in thousands) 9,922,525 9,377,302 Basic earnings per share (in dollar) 1.09 $ 2.31 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 10,815,594 $ 21,676,759 $ Weighted average number of ordinary shares outstanding (shares in thousands) 9,922,525 9,377,302 Assumed conversion of all dilutive potential ordinary shares: -Employees’ bonus 116,513 106,514 -Restricted stocks 27,519 41,875 10,066,557 9,525,691 Diluted earnings per share (in dollar) 1.07 $ 2.28 $ Years ended December31, 2015 2014 Purchase of property, plant and equipment 25,796,666 $ 19,832,267 $ Add: Opening balance of payable on equipment 2,688,976 3,383,261 Less: Ending balance of payable on equipment 3,974,152) ( 2,688,976) ( Cash paid during the year 24,511,490 $ 20,526,552 $ Years ended December31, Year ended December31,2014 Disposal of property, plant and equipment 1,839,001 $ Add: Opening balance of receivable on equipment 2,414,208 Less: Ending balance of receivable on equipment - Cash received during the year 4,253,209 $

~54~

7. RELATED PARTY TRANSACTIONS

(1) Significant related party transactions

A. Operating revenue

Sales of goods: Others Associates	Years ended December31,	Years ended December31,
	2015 13,068,072 $ 233,299 13,301,371 $	2014
		14,450,540 $ 33,263 14,483,803 $

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
Purchases of goods: Others Associates	Years ended December31,
	2015 8,949,014 $ 360,626 9,309,640 $	2014
		13,019,919 $ 11,275,187
		24,295,106 $

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 from related parties above were not materially different from those of purchases from third parties.

C. Consigned processing

(a) Consigned processing

rom third parties. Consigned processing (a) Consigned processing
		Years ended December31,
		2015	2014
Processing costs:
Others	$	99,587	124,425 $
(b) Balance of consigned processing at the end of period		(shown as “Other payables”)
	December31,2015		December31,2014
Payables to related parties:
Others	$	70,229	2,505,250 $

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

~55~

D. Accounts receivable

Receivables from related parties: Others Associates	December31,2015 2,551,425 $ 81,428 2,632,853 $	December31,2014
		6,084,501 $ 27,899 6,112,400 $

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

Payables to related parties: Others Associates	December31,2015 3,284,529 $ 75,404 3,359,933 $	December31,2014 5,225,129 $ 27,817 5,252,946 $

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.

F. Property transactions

Purchase of property

• (a) Acquisition of property, plant and equipment:

erty transactions chase of property Acquisition of property, plant and equipment:
		Years ended	December31,
		2015		2014
Others	$	41,366	$	21,407
Associates		220		639,044
	$	41,586	$	660,451
Period-end balances arising from purchases of	property	(shown as “Other		payables”):
	December31,2015		December31,		2014
Others	$	7,365	$		748
Associates		-			229
	$	7,365	$		977

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

Sale of property

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

Years ended December 31

Others	Disposal Gain on proceeds disposal 1,812 $ 45 $ 2015	2014	2014
	Disposal proceeds 1,812 $	Disposal proceeds 46,157 $	Gain on disposal
			2,807 $

~56~

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

(2)	Key management compensation Others Salaries and other short-term employee benefits Share-based payments Post-employment benefit	December31,2015 December31,2014 794 $ 46,382 $ Years ended December31,	December31,2014
		2015 136,698 $ 6,286 220 143,204 $	2014
			73,982 $ 18,638 216 92,836 $

8. PLEDGED ASSETS

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

Pledged asset Other financial assets-current Time deposits Demand deposits Property, plant and equipment Other financial assets-non-current Refundable deposits Time deposits	December31,2015 December31,2014 Purpose 6,204 $ 253 $ Tariff guarantee and land lease - 2,284,617 Syndicated bank loans 59,669,639 163,632,314 Long-term loans and performance guarantee for lease payable - 11,079,360 Guarantee to European Commission for litigation 119,703 80,722 Tariff guarantee, land lease and guarantee for contract 59,795,546 $ 177,077,266 $ Bookvalue	Purpose
	December31,2015 6,204 $ - 59,669,639 - 119,703 59,795,546 $

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

- (1) 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 by the United States (the “U.S.”) Department of Justice in December 2006 for alleged violation of the anti-trust laws. Moreover, authorities of some U.S state governments, as well as the governments of the European Union, China, Brazil and Korea also started to investigate this case. In addition, certain downstream customers and consumers brought class-actions and/or individual civil lawsuits in the U.S. and Canada against the TFT-LCD companies; and in certain lawsuits, CMO and Chi Mei Optoelectronics USA Inc. were listed as defendants. Details of the investigations on significant cases related to the alleged violation of the anti-trust laws are as follows:

• (a) The Company had reached a plea agreement with the U.S. Department of Justice in December 2009, agreeing to pay a fine of US$220 million through installment over five years. The fine had been fully paid as of February 2015.

  • The Company had also reached out-of-court settlement agreements with the plaintiffs on separate civil lawsuits in the U.S. since 2012 and recognized related losses. Further, the Company had reached out-of-court settlement agreements with fourteen State Governments since November 2011, agreeing to pay civil statutory damages in order to settle these civil lawsuits. All civil lawsuits between the Company and the U.S state governments have been settled.

• (b) In December 2010, the Company had been ordered by the European Commission to pay a fine of EUR 300 million. The Company appealed the case in February 2011, and the General Court of the European Union rendered a judgment in February 2014 lowering the fine from EUR 300 million to EUR 288 million. The Company further filed an appeal against a part of the judgment and the Court of Justice of the European Union has adjudicated to maintain the aforementioned amount of fine.

• (c) Except for those anti-trust litigations for which the ultimate results cannot be reliably estimated, the Company has recognized 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 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. The United States Court of Appeals for the Federal Circuit has rejected the judgement and sent back to the United States District Court in March 2015. The Company submitted an application to ask the United States

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Court of Appeals for the Federal Circuit to rehear en banc in April 2015. Though the United States Court of Appeals rejected the request in June 2015, the Company appealed to the Supreme Court in September 2015 and petitioned for writ of certiorari. The Supreme Court of the United States has denied the appeal of the Company in November 2015. The case remains at the ruling by the United States Court of Appeals for the Federal Circuit in March 2015. However, the results of the litigation are uncertain and are dependent on the future litigation progress. 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.

(2) Commitments

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

Property, plant and equipment	December31,2015 37,625,398 $	December31,2014 15,338,375 $

B. Operating lease commitments

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:

Outstanding letters of credit The outstanding letters of credit for the purchase o No later than one year Later than one year but no later than five years Later than five years Outstanding letters of credit	f property, plant and equipment are as follow December31,2015 December31,2014 581,145 $ 571,800 $ 2,150,162.00 2,152,538.00 1,219,709 1,541,309 3,951,016 $ 4,265,647 $ December31,2015 December31,2014 474,222 $ 693,635 $	December31,2014

• C. Outstanding letters of credit

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

10. SIGNIFICANT DISASTER LOSS

None.

11. SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital 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

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, accounts payable, other payables and long-term loans) are approximate to their

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fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

• B.Financial risk management policies

• (a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance. The Group uses derivative financial instruments to hedge certain risk 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 $161,700 and $304,219 for the years ended December 31, 2015 and 2014, 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 Exchange Amount Rate Book Value (In Thousands) (Note) (NTD) Financial assets Monetary items USD 4,589,186 $ 32.83 150,662,976 $ JPY 9,363,752 0.27 2,528,213 EUR 75,963 35.88 2,725,552 Non-monetary items USD 2,342,530 $ 32.83 76,905,260 $ HKD 178,232 4.24 755,704 JPY 5,527,619 0.27 1,492,457 EUR 3,697 35.88 132,648 USD 4,009,239 $ 32.83 131,623,316 $ JPY 29,629,471 0.27 7,999,957 EUR 3,440 35.88 123,427 December 31,2015 Financial liabilities Monetary items		December 31,2014	December 31,2014
		Foreign Currency Exchange Amount Rate (In Thousands) (Note) 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	Book Value (NTD) 242,830,574 $ 1,611,380 13,989,885 70,185,078 $ 1,315,939 1,399,794 147,494 206,737,389 $ 10,001,163 11,271,402

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

• d) Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2015 and 2014 amounted $814,978 and $1,242,754, respectively.

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, 2015 and 2014 would have increased/decreased by $56,384 and $121,031, 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 $1,424,607 and $1,027,423, 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, 2015 and 2014, 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 $150,700 or decrease of $271,243 for the years ended December 31, 2015 and 2014, 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 are 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 savings 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.

Non-derivative financial liabilities:

December 31,2015 Accounts payable Other payables Long-term borrowings (including current portion)	Less than 1year 60,429,884 $ 24,912,360 16,440,000	Between 1 and 3years - $ - 43,840,000	Between 3 and 5years - $ - -	Over 5 years - $ - -	Total
					60,429,884 $ 24,912,360 60,280,000

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Less than Between 1 December 31,2014 1year and 3years 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 December31,2015 Less than 1year Forward exchange contracts 265,525 $ $ Derivative financial liabilities: December 31,2014 Less than 1year Forward exchange contracts 605,016 $ $ Interest rate swap contracts 1,351	Less than Between 1 December 31,2014 1year and 3years 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 December31,2015 Less than 1year Forward exchange contracts 265,525 $ $ Derivative financial liabilities: December 31,2014 Less than 1year Forward exchange contracts 605,016 $ $ Interest rate swap contracts 1,351	Between 3 and 5years - $ - - - 663 Between 1 and3 years	Over 5 years Total - $ 22,526,999 $ - 80,207,385 - 23,912,180 - 108,497,338 6,344 10,981,940 Total 265,525 $ Total 605,016 $ 1,351	Total
	$	- Between 1 and 3years
	$	- -

     - d) The related information on the repayment of the medium and long-term syndicated loans from the ‘‘Agreed-upon Agreement’’ is described in Note 6(12).

• (3) Fair value estimation

• A.Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(9).

• B.The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks and on-the-run bonds is included in Level 1.

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.

  • Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

• C.The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2015 and 2014 is as follows:

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December31,2015 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts December31,2014 Assets Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Liabilities Financial liabilities at fair value through profit or loss Forward exchange contracts Derivative financial liabilities for hedging Interest rate swap contracts Recurring fair value measurements Recurring fair value measurements	Level 1 281,922 $ - 6,403,449 6,685,371 $ - $ Level 1 605,155 $ - 3,296,020 220,000 4,121,175 $ - $ - - $	Level 2 - $ 120,036 - 120,036 $ 265,525 $ Level 2 - $ 52,453 - - 52,453 $ 605,016 $ 1,351 606,367 $	Level3 - $ - 719,585 719,585 $ - $ Level3 - $ - 1,841,097 - 1,841,097 $ - $ - - $	Total
				281,922 $ 120,036 7,123,034
				7,524,992 $
				265,525 $
				Total
				605,155 $ 52,453 5,137,117 220,000
				6,014,725 $
				605,016 $ 1,351
				606,367 $

• D.The methods and assumptions the Group used to measure fair value are as follows:

• (a)The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Market quoted price	Listed shares Closing price	Emerging stocks Last transaction price	Corporate bond
			Weighted average quoted price

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• (b)Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

• (c)When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• (d)The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

• (e)The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• (f)The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.

• E.For the years ended December 31, 2015 and 2014, there was no transfer between Level 1 and Level 2.

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• F.The following table presents the changes in level 3 instruments as at December 31, 2015 and 2014:

2014:
		Equitysecurities
		2015			2014
At January 1	$	1,841,097	$		1,703,929
Acquired in the period		-			162,730
Transfers out from level 3	(	903,073)			-
Gains and losses recognized in profit or loss		-			10,701
Gains and losses recognized in other comprehensive income	(	218,439)			196,382
Disposed in the period		-	(		232,645)
At December 31	$	719,585		$	1,841,097

• G.For the year ended December 31, 2014, there was no transfer into or out from Level 3. As the shares of General Interface Solution (GIS) Holding Limited had been listed in June 2015, the Group transferred the fair value from Level 3 into Level 1 at the end of month when the event occurred.

• H.Investment management segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

• Investment management segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS.

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• I.The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment Private placement shares (emerging companies)	Fair value at December 31,2015	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value The higher the net asset value, the higher the fair value The higher the discount for lack of marketability, the lower the fair value
	388,799 $ 28,596 $ 302,190	Market comparable companies Net asset value Market price method	Price to earnings ratio multiple, price to book ratio multiple, control premium Discount for lack of marketability Not applicable Discount for lack of marketability	0.56~1.41 (0.70) 20%~70% (22%) 318 (318) 30% (30%)

J.The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

Financial assets	Period	Input	Change	Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable change	Unfavourable change
Equity instrument Equity instrument	2015/12/31 2014/12/31	$ 719,585 1,841,097	± 1% ± 1%	$ 7,196 18,411	($ 7,196) ( 18,411)

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2) and 6(4).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 8.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Notes 13(1)A, G, H, J.

14. SEGMENT INFORMATION

(1) General information

The Group is primarily engaged in research, development, manufacture and sale 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 allocated 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.

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(2) Segment information

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

segments is as follows:
Segment revenue Segment income Depreciation and amortization Capital expenditure-property, plant and equipment Segment assets	Years ended December31
	2015 TFT LCD 364,132,984 $ 14,862,088 $ 53,557,244 $ 24,511,490 $ 387,442,336 $	2014
		TFT LCD
		428,661,898 $ 22,523,244 $ 60,883,074 $ 20,526,552 $ 480,984,747 $

(3) Reconciliation for segment income (loss)

A reconciliation of reported segment income (loss) 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
	2015 364,132,984 $ - 364,132,984 $	2014
		428,661,898 $ - 428,661,898 $

• B. Reconciliation of segment income with income (loss) from continuing operations before income tax:

income tax:
		Years ended	December31
		2015		2014
Reportable segments income/(loss)	$	14,862,088	$	22,523,244
Others	(	2,901)		11,096
Income/(loss) before tax from continuing
operations	$	14,859,187	$	22,534,340
Reconciliation of segment assets with total	assets:
	December31,2015		December31,2014
Segment assets	$	387,442,336	$	480,984,747
Others		-		1,531,808
	$	387,442,336	$	482,516,555

• C. Reconciliation of segment assets with total assets:

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D. Other significant reconciliation:

Other significant reconciliation:
Depreciation and amortization Others Capital expenditure - property, plant and equipment Others	2015 2014 53,557,244 $ 60,883,074 $ 13,928 16,482 53,571,172 60,899,556 24,511,490 20,526,552 - - 24,511,490 $ 20,526,552 $ Years ended December31
	2015 53,557,244 $ 13,928 53,571,172 24,511,490 - 24,511,490 $

(4) Information on product

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

Information on product Revenue from external customers is mainly from follows:	TFT-LCD product. Details of revenue are	TFT-LCD product. Details of revenue are
Sales of TFT LCD products Other revenues	Years ended December31
	2015 364,132,984 $ - 364,132,984 $	2014
		428,661,898 $ - 428,661,898 $

(5) Geographical information

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

Years ended December 31

Taiwan China Hong Kong Europe USA Others	Revenue Non-current assets 103,617,666 $ 187,010,460 $ 92,893,492 36,492,781 73,942,347 181 24,000,586 25,094 16,352,055 450 53,326,838 22,671 364,132,984 $ 223,551,637 $ 2015	2014	2014
		Revenue Non-current asset 91,333,989 $ 214,158,469 $ 103,061,439 41,762,276 124,681,779 - 31,048,822 28,601 11,727,851 513 66,808,018 140,789 428,661,898 $ 256,090,648 $
			214,158,469 $ 41,762,276 - 28,601 513 140,789
			256,090,648 $

(6) 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 year ended December 31, 2014. The individual sales to the Group’s customers that exceed 10% of the sales in the statements of comprehensive income for the year ended December 31, 2015 are set forth below:

Customer A

below:	below:
Year ended December31,2015
Sales 39,802,830 $	Percentage of sales
	11%

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Innolux Corporation and subsidiaries

Loans to others

Table 1

For the year ended December 31, 2015

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2015	Balance at December 31, 2015	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	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
1 1 2 2 2 2 3 4 5 6 6	Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology USA Inc. Innolux Technology Europe B.V. Innolux Technology Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd.	Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Leadtek Global Group Limited Innolux Corporation Leadtek Global Group Limited	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	3,282,500 $ 1,969,500 4,549,500 707,700 909,900 808,800 196,950 1,391,278 1,418,040 409,050 681,750	$ - - 4,549,500 707,700 909,900 808,800 196,950 1,391,278 1,418,040 - 681,750	$ - - 4,493,390 707,700 909,900 808,800 196,950 1,362,788 1,418,040 - 681,750	- - 1.925%~ 2.00% 2% 2% 2% 0.16%~ 0.56% 0.000%~ 0.269% 1% - 1%	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 Business association Short-term financing	- - - - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support - Operating support	- - - - - - - - - - -	- - - - - - - - - - -	- - - - - - - - - - -	$ 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 602,953 232,264,723	$ 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 232,264,723 602,953 232,264,723	A A A A A A A A A B A

Table 1,Page 1

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 - 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; for the companies having

2. business relationship with the Company, financial limit on loans granted to a single party shall not exceed the amount of business transactions occurred between the creditor and borrower.

3. 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

4. exceed 40% of the company's equity.

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

Table 1,Page 2

Innolux Corporation and subsidiaries Provision of endorsements and guarantees to others For the year ended December 31, 2015

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Number	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a singleparty	Maximum outstanding endorsement/ guarantee amount as of December 31, 2015	Outstanding endorsement/ guarantee amount at December 31, 2015	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor
0	Innolux Corporation	Leadtek Global Group Limited	An indirect wholly- owned subsidiary	$ 116,132,362	$ 17,528,550	$ -	$ -	$ -	-	$ 116,132,362	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.

Table 2, Page 1

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Innolux Corporation and subsidiaries

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

December 31, 2015

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2015	As of December31,2015		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation Warriors Technology Investments Ltd. Warriors Technology Investments Ltd. Nets Trading Ltd.	Common stock	None None None None None None None None None None None None None None None	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 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 44,741,305 1,209 1,439,180 12,283,000 11,165,222 10,000,000 6,311,734 7,271,326 16,000,000 40,500,000 90	$ 62,091 650,115 319,955 2,271 910,485 - 694 97,281 281,922 302,190 78,266 189,782 6,058 4,475,250 28,596	1 6 19 - 9 - 2 3 8 7 2 6 6 13 -	$ 62,091 650,115 319,955 2,271 910,485 - 694 97,281 281,922 302,190 78,266 189,782 6,058 4,475,250 28,596
	AvanStrate Inc. TPV Technology Ltd. Chi Lin Optoelectronics Co., Ltd. Epistar Corporation Chimei Materials Technology Corp. Allied Material Technology Corp. Trillion Science Inc. China Electric Mfg. Corp. Advanced Optoelectronic Technology, Inc. Fitipower Integrated Technology Inc. G-TECH Optoelectronics Corporation Entire Technology Co., Ltd. OED Holding Ltd. General Interface Solution (GIS) Holding Limited PilotTech Global Fund

Table 3, Page 1

Innolux Corporation and subsidiaries Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the year ended December 31, 2015

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Lakers Trading Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Shenzhen FuTaiHong Precision Industry Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Technology USA Inc. Competition Team Ireland Ltd. Innolux Optoelectronics USA, Inc. Futaijing Precision Electronics (Yantai) Co., Ltd. Innolux Hong Kong Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Hongfujin Precision Electronics (Zhengzhou) Co., Ltd.	An indirect wholly-owned subsidiary 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 An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. 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 Sales	$ 8,538,206 3,414,590 3,187,388 2,488,188 1,561,151 1,512,160 1,393,483 734,048 645,222 628,495 441,462 437,312	2 1 1 1 - - - - - - - -	60 days 45~60 days 45~60 days 60 days 45 days 60 days 45 days 45 days 60 days 60 days 60 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single sales target, no basis for comparison 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 material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	- $ 1,031,767 404,513 133,501 138,810 173,166 - 71,538 35,124 - - 74,849	- 2 1 - - - - - - - - -

Table 4, Page 1

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Nanjing Innolux Optoelectronics Ltd.	Honfujin Precision Electronics (Shenzhen) Co., Ltd. FI Medical Device Manufacturing Co., Ltd. Honfujin Precision Electronics (Wuhan) Co., Ltd. Competition Team Technology (India) Private Ltd. Chi Lin Optoelectronics Co., Ltd. Hon Hai Precision Industry Co., Ltd. Chi Lin Optoelectronics Co., Ltd. FI Medical Device Manufacturing Co., Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. The company's investments accounted for under the equity method An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. The company is a corporate director of Chi Lin Optoelectronics Same major stockholder The company is a corporate director of Chi Lin Optoelectronics The company's investments accounted for under the equity method A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	Sales Sales Sales Sales Sales Purchases Purchases Purchases Processing expense Processing expense Processing expense Processing revenue	$ 331,460 233,299 231,303 186,962 133,737 2,087,965 822,868 302,010 44,091,210 44,600,117 34,025,843 33,337,143	- - - - - 1 - - 13 14 10 98	60 days 90 days 45 days 90 days 45~90 days 60~90 days after acceptance 120 days after acceptance 30 days after acceptance 60~90 days 60~90 days 60~90 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Cost plus Cost plus Cost plus Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	$ 139,373 81,427 76,783 144,167 40,420 ( 821,291) 289,219) ( 58,375) ( 20,900,275) ( 14,958,119) ( 8,331,372) ( 7,831,158	- - - - - 1 - - 29 20 11 98

Table 4, Page 2

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Technology 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. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	Leadtek Global Group Limited Lakers Trading Ltd. 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 Innolux Display Ltd. Ningbo Lin Moug Optronics Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd.	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 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 of Chi Lin Optoelectronics Co., Ltd. Same major stockholder Same major stockholder	Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Service revenue Sales Sales Sales Purchases Purchases Purchases	$ 28,498,599 26,744,283 16,347,277 12,905,853 4,597,437 644,975 275,557 3,479,126 658,797 263,304 1,720,767 744,581 742,147	84 69 91 95 100 46 92 6 3 - 3 1 1	60 days 60 days 60 days 60 days 60 days 60 days 60 days 90 days 60 days 60 days 120 days after goods are shipped 60 days after goods are shipped 90 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	$ 14,623,208 8,018,465 2,204,994 2,149,428 1,027,542 3,360,510 48,127 742,775 119,316 161,406 617,975) ( 249,403) ( 294,409) (	91 82 78 95 100 92 85 3 3 1 4 2 1

Table 4, Page 3

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Ningbo Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd.	Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Shenzhen) Co., Ltd. Ningbo Lin Moug Optronics Co., Ltd. Hon Hai Precision Industry Co., Ltd.	Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Chi Lin Optoelectronics Co., Ltd. Same major stockholder	Purchases Purchases Purchases Purchases Purchases	$ 729,655 491,739 465,072 453,764 311,236	3 1 1 2 6	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	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference	185,937) ($ 112,654) ( 117,821) ( 190,049) ( 187,611) (	3 1 1 3 7

Table 4, Page 4

Innolux Corporation and subsidiaries Receivables from related parties reaching $100 million or 20% of paid-in capital or more December 31, 2015

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2015	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
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. Innocom Technology (Shenzhen) Co., Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Leadtek Global Group Limited	Shenzhen FuTaiHong Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Kangzhun Electronics Technology (Kunshan) Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Technology USA Inc. Hongfujin Precision Electronics (Shenzhen) Co., Ltd. Competition Team Technology (India) Private Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Lakers Trading Ltd. Ningbo Innolux Display 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 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 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 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	$ 133,501 1,031,767 404,513 286,218 138,810 173,166 139,373 144,167 8,018,465 14,623,208 7,831,158 2,204,994 3,360,510 2,149,428 119,316 742,775 161,406 1,027,542 518,992	2.97 2.35 3.78 - 9.59 8.71 4.17 2.59 1.77 1.66 4.24 3.56 0.23 4.95 5.36 4.07 1.63 4.57 -	$ - 84,118 10,639 31,754 - - - 5,729 8,018,465 13,732,390 3,085,461 150,784 2,910,074 - - 92,453 - - 150,784	- Subsequent collection Subsequent collection Subsequent collection - - - Subsequent collection Subsequent collection Subsequent collection Subsequent collection Subsequent collection Subsequent collection - - Subsequent collection - - Subsequent collection	$ 88,285 212,224 78,969 59,298 - - 97,623 39,233 5,284,848 3,349,891 2,975,253 1,587,768 - 545,267 - 442,391 37,153 598,463 241,922	- - - - - - - - - - - - - - - - - - -

Table 5, Page 1

Innolux Corporation and subsidiaries Significant inter-company transactions during the reporting periods For the year ended December 31, 2015

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction (Note C)

Number	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 2 2 3 3 4 4 5 5	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 Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai 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 Technology Ltd. Ningbo Innolux Technology Ltd.	Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Innolux Optoelectronics Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. 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 Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Ltd. Innolux Hong Kong Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited	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	Sales Processing expense Accrued expenses Sales Accounts receivable Sales Sales Accounts receivable Sales Processing expense Accrued expenses Processing expense Accrued expenses Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	628,495 $ 34,025,843 8,331,372) ( 1,561,151 138,810 734,048 1,512,160 173,166 8,538,206 44,600,117 14,958,119) ( 44,091,210 20,900,275) ( 658,797 119,316 12,905,853 2,149,428 26,744,283 8,018,465 33,337,143 7,831,158 644,975 3,360,510 16,347,277 2,204,994	- - - - - - - - - - - - - - - - - - - - - - - - -	- 9 2 - - - - - 2 12 4 12 5 - - 4 1 7 2 9 2 - 1 4 1

Table 6, Page 1

Transaction (Note C)

Number	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	Percentage of consolidated total operating revenues or total assets
6 6 6 6 6 6 7 7 8 9	Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Innolux Technology Japan Co., Ltd. Leadtek Global Group Limited	Leadtek Global Group Limited Leadtek Global Group Limited Ningbo Innolux Technology Ltd. Ningbo Innolux Technology Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Ltd. Ningbo Innolux Display Ltd.	3 3 3 3 3 3 3 3 3 3	Processing revenue Accounts receivable Sales Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Service revenue Accounts receivable	28,498,599 $ 14,623,208 3,479,126 742,775 263,304 161,406 4,597,437 1,027,542 275,557 518,992	- - - - - - - - - -	8 4 1 - - - 1 - - -

Note A: 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.

Table 6, Page 2

Innolux Corporation and subsidiaries

Information on investees For the year ended December 31, 2015

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2015	as at December31,2015	Net profit (loss) of the investee for the year ended December 31,2015	Investment income (loss) recognised by the Company for the year ended December 31, 2015	Footnote
				Balance as at December 31, 2015	Balance as at December 31, 2014	Number of shares	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 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. Innolux Optoelectronics Japan Co., Ltd. Ampower Holding Ltd. Jetronics International Corp. FI Medical Device Manufacturing Co., Ltd. iZ3D, Inc.	Hong Kong Samoa BVI Samoa Samoa Samoa BVI Hong Kong BVI Taiwan Taiwan Netherlands Japan Cayman Samoa Taiwan USA	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 Researching, manufacturing and selling of the film transistor liquid crystal display Investment holdings Investment holdings Production and selling of the absorption for medical element Research and development and sale of 3D flat monitor	119,724 $ - 119,106 7,858,300 197,554 33,438,542 3,596,307 2,107,291 - 1,217,235 1,674,054 121,941 1,335,486 1,717,714 86,149 73,500 -	119,724 $ 348,999 9,083 7,858,300 197,554 32,925,315 3,596,307 2,107,291 - 1,217,235 1,674,054 121,941 1,335,486 1,717,714 86,149 73,500 -	4,910,000 - 40,250 246,768,185 5,656,410 709,450,000 144,447,000 1,158,844,000 50,000,000 - 167,405,392 180 80 14,062,500 726,941 7,350,000 4,333	100 - 100 100 100 100 100 100 100 100 100 100 100 50 32 49 35	104,699 $ - 65,966 20,242,553 230,932 45,888,559 6,787,268 2,907,677 232,863) ( 1,137,982 1,242,760 132,641 1,507,382 881,351 2,055) ( 321,683 -	205) ($ 104,634 2,048) ( 293,551 3,746) ( 4,159,463 751,258 687,929 103,103) ( 215,059) ( 338,289) ( 4,827) ( 36,154 271) ( 1,268 554,470 -	2,044) ($ 104,634 5,354 295,014 3,746) ( 4,281,112 751,258 660,141 103,103) ( 215,059) ( 338,289) ( 4,827) ( 36,154 8,925) ( 406 271,690 -

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2015	as at December31,2015	Net profit (loss) of the investee for the year ended December 31,2015	Investment income (loss) recognised by the Company for the year ended December 31, 2015	Footnote
				Balance as at December 31, 2015	Balance as at December 31, 2014	Number of shares	Ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd. Innolux Holding Ltd. 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.	Chi Mei Lighting Technology Corporation Chi Mei El Corporation GIO Optoelectronics Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation 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. Innolux Optoelectronics Germany GmbH Innolux Optoelectronics USA, Inc. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd.	Taiwan Taiwan Taiwan Samoa Samoa Samoa USA Cayman Hong Kong Hong Kong Netherlands Japan USA Germany USA Samoa Samoa Samoa	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 Investment holdings Investment holdings Order swap company Holding company and R&D testing company R&D testing 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	819,312 $ - 800,892 7,296,530 555,422 - 6,348 3,572,384 - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370	819,312 $ 361,382 800,892 7,296,530 555,422 - 6,348 3,572,384 - - 3,073,072 1,815,603 263,685 10,324 2,400 314,740 573,940 1,146,370	78,195,856 - 63,521,501 226,504,550 18,177,052 1 2,000 144,417,000 162,897,802 35,000,000 375,810 201 1,000 250 1,000 10,000,001 18,000,000 38,000,001	33 - 24 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100	- $ - 98,785 15,064,678 5,041,225 250,080 92,865) ( 6,786,885 1,055,807 1,845,021) ( 2,281,088 1,706,959 363,492 17,023 277,704 266,110 438,237 1,092,270	- $ 51,718) ( 21,911 102,191 192,687 - 1,327) ( 751,258 295,546 317,860 32,523 17,594 24,231 7,957) ( 9,020 781 1,286 92,832	- $ 50,265) ( 5,210 102,191 192,687 - 1,327) ( 751,258 295,546 317,860 32,523 17,594 24,231 7,957) ( 9,020 781 1,286 92,832

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2015	as at December31,2015	Net profit (loss) of the investee for the year ended December 31,2015	Investment income (loss) recognised by the Company for the year ended December 31, 2015	Footnote
				Balance as at December 31, 2015	Balance as at December 31, 2014	Number of shares	Ownership (%)	Bookvalue
Rockets Holding Ltd. 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.	Stanford Developments 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. TOA Optronics Corporation	Samoa Samoa Samoa Germany Hong Kong Hong Kong Hong Kong Taiwan Taiwan Taiwan	Investment holdings 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 Selling electronic materials, trading business, manufacturing of electronic equipments and lighting equipments	5,391,125 $ 27,477 555,422 33,735 314,740 573,940 1,146,370 263,812 6,881 423,606	5,391,125 $ 27,477 555,422 33,735 314,740 573,940 1,146,370 263,812 6,881 423,606	164,000,000 900,001 18,177,052 100,000 77,830,001 139,623,801 295,969,001 19,673,402 467,519 58,007,000	100 100 100 100 100 100 100 8 - 40	13,237,023 $ 30,916 5,041,223 59,078 266,110 438,236 1,092,270 - 748 310,074	7,291 $ - 192,687 173 781 1,286 92,832 - 21,911 237,256) (	7,291 $ - 192,687 173 781 1,286 92,832 - 39 54,833) (

Table 7, Page 3

Innolux Corporation and subsidiaries Information on investments in Mainland China For the year ended December 31, 2015

Expressed in thousands of NTD (Except as otherwise indicated)

Table 8

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (Note C)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2015	Amount remitted Mainlan Amount re to Taiwan for t December	from Taiwan to d China/ mitted back he year ended 31,2015	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2015	Net income (loss) of investee for the year ended December 31 , 2015	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2015 (Note B)	Book value of investments in Mainland China as of December 31, 2015	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2015	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Innocom Technology (Shenzhen) Co., Ltd. OED Company Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Kunpal Optoelectronics Ltd. VAP Optoelectronics (Nanjing) Corp. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Logistics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Logistics Ltd. Amlink (Shanghai) Ltd. Kunshan Guann-Jye Electronics Co., Ltd. Interface Optoelectronics (Shenzhen) Co., Ltd. Ningbo Innolux Electronics Ltd.	Manufacturing and selling of LCD backend module and related components Manufacturing and selling of electronic paper Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Purchases and sales of monitor-related components company Glass thinning processing service Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Warehousing services Manufacturing and selling of LCD backend module and related components Warehousing services Manufacturing and selling of power supply, modem, ADSL, and other IT equipments Manufacturing of transformers Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after-sales service Manufacturing and selling of LCD backend module and related components	$ 5,383,300 318,465 10,175,750 4,267,250 12,571,975 984,750 68,933 131,300 331,533 4,661,150 131,300 689,325 49,238 656,500 275,730 3,157,765 151,650	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3	$ 4,165,878 65,650 241,758 4,267,250 12,571,975 984,750 68,933 124,139 9,848 4,661,150 131,300 - 49,238 328,250 88,299 443,138 -	$ - - - - - - - - 114,888 - - - - - - - -	$ - - - - - - - - - - - - - - - - -	$ 4,165,878 65,650 241,758 4,267,250 12,571,975 984,750 68,933 124,139 124,735 4,661,150 131,300 - 49,238 328,250 88,299 443,138 -	$ 7,291 ( 248,223) 2,185,851 299,191 1,669,650 105,005 12,948 234 ( 2,048) 738,310 ( 6,907) 295,546 3,161 ( 19,288) - - 38	100 4 100 100 100 100 100 100 100 100 100 100 100 50 32 13 100	$ 7,291 - 2,185,851 299,191 1,672,129 105,005 12,948 234 ( 2,048) 738,310 ( 6,907) 295,546 3,161 ( 9,065) - - 38	$ 13,237,010 14,840 22,305,061 3,442,283 19,839,990 359,195 606,121 77,861 66,172 6,180,741 157,669 1,055,807 68,266 372,990 - 4,475,256 151,688	$ 1,217,422 - 5,666,742 - - - - - - - - - - - - - -	2.1 2.1 2.2 2.2 2.2 2.2 2.3 2.4 2.5 2.3 2.7 2.6 2.7 2.8 2.9 2.1 3.1

Table 8, Page 1

Ceiling on investments in Mainland China:

Companyname		Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2015		Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Innolux Corporation		29,821,744 $		40,547,247 $	139,358,834 $

Note A: The relevant figures are 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, 2015 was audited by independent accountants. Note C: The investment methods are as follows:

1. Directly investing in Mainland China.

2. Through investing in companies in the third area, which then invested in the investee in Mainland China.

3. 2.1.Through investing in Innolux Holding Ltd. in the third area, which then invested in the investee in Mainland China.

4. 2.2.Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.

5. 2.3.Through investing in Toppoly Optoelectronics (B.V.I.) Ltd. in the third area, which then invested in the investee in Mainland China.

6. 2.4.Through investing in Bright Information Holding Ltd. in the third area, which then invested in the investee in Mainland China.

7. 2.5.Through investing in Golden Achiever International Ltd. in the third area, which then invested in the investee in Mainland China.

8. 2.6.Through investing in Innolux Hong Kong Holding Ltd. in the third area, which then invested in the investee in Mainland China.

9. 2.7.Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.

10. 2.8.Through investing in Ampower Holding Ltd. in the third area, which then invested in the investee in Mainland China.

11. 2.9.Through investing in Jetronics International Corporation in the third area, which then invested in the investee in Mainland China.

12. Others.

13. 3.1.The company invests in the company via investee companies in Mainland China is Ningbo Innolux Electronics Ltd. Except for the investment via the holding companies in Mainland China, other investments shall be approved by Investment Commission of the Ministry of Economic Affairs.

Table 8, Page 2