INX — Audit Report / Information 2015

Nov 12, 2015

INNOLUX CORPORATION

PARENT COMPANY ONLY 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 parent company only balance sheets of Innolux Corporation as of December 31, 2015 and 2014, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These parent company only financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these parent company only financial statements based on our audits.

We 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 parent company only financial statements referred to above present fairly, in all material respects, the financial position of Innolux Corporation 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”.

PricewaterhouseCoopers, Taiwan February 2, 2016

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

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INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2015 AND 2014

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 2015 6(1) $ 35,279,610 6(2) 81,858 6(3) - 6(5) 45,755,129 7 2,904,753 872,255 7 377,364 6(6) 24,546,126 705,456 6(1) and 8 1,400,856 3,001 111,926,408 6(3) 1,944,917 6(7) 81,315,320 6(8), 7 and 8 163,921,697 6(9) 680,503 6(10) 19,264,025 6(25) 15,722,814 8 119,703 6(8) 3,144,234 286,113,213 $ 398,039,621 (Continued)	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 - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1410 Prepayments 1476 Other financial assets - current 1479 Other current assets 11XX Total current assets Non-current assets 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		$ 55,543,195 52,453 220,000 68,858,149 6,067,658 699,592 691,024 27,938,165 542,334 2,250,035 12,542
		162,875,147
		3,101,461 73,096,389 192,599,182 693,677 20,127,184 17,575,426 11,160,082 625,863
		318,979,264
		$ 481,854,411

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INNOLUX CORPORATION

PARENT COMPANY ONLY 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(25) 6(15) 6(12) 6(12) 6(25) 6(13) 6(16) 6(14)(17) 6(18) 6(19) 9	2015 $ - 53,921 - 27,731,035 45,433,862 24,387,687 902,134 5,551,759 16,361,238 835,806 121,257,442 43,629,968 514,094 373,394 44,517,456 165,774,898 99,532,372 99,643,564 2,676,947 - 27,661,503 2,750,337 232,264,723 $ 398,039,621	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 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity 3110 Share capital - common stock 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments 3X2X Total liabilities and equity			$ 1,300,000 605,016 1,351 33,731,780 85,171,012 18,688,940 - 3,133,489 61,092,333 1,465,205
			205,189,126
			37,223,093 477,579 11,274,550
			48,975,222
			254,164,348
			99,545,364 99,584,369 509,272 1,144,229 24,979,173 1,927,656
			227,690,063
			$ 481,854,411

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

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INNOLUX CORPORATION

PARENT COMPANY ONLY 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 $ 360,638,133 $ 426,005,033 6(6)(23) and 7 ( 326,925,887) ( 389,609,785) 33,712,246 36,395,248 6(23) ( 1,167,637) ( 1,092,207) ( 3,183,374) ( 3,451,341) ( 13,534,326) ( 11,412,260) ( 17,885,337) ( 15,955,808) 15,826,909 20,439,440 6(20) 1,301,865 1,379,919 6(21) ( 7,842,919) ( 3,418,822) 6(22) ( 1,310,112) ( 2,721,239) 5,833,198 5,998,536 ( 2,017,968) 1,238,394 13,808,941 21,677,834 6(25) ( 2,993,347) ( 1,075) $ 10,815,594 $ 21,676,759 6(13) ( $ 195,939) ( $ 55,790) 33,309 9,484 ( 162,630) ( 46,306) ( 1,392,086) 3,087,368 ( 1,149,260) 103,510 6(4) ( 297,675) ( 278,458) 3,420,038 263,095 6(25) 118,551 38,885 699,568 3,214,400 $ 536,938 $ 3,168,094 $ 11,352,532 $ 24,844,853 6(26) $ 1.09 $ 2.31 $ 1.07 $ 2.28

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 7070 Share of profit of subsidiaries, 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 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 (loss) gain on valuation of available-for-sale financial assets 8363 Cash flow hedges 8380 Share of other comprehensive income of subsidiaries, 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 Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

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INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

(Expressed in thousands of New Taiwan dollars)

Notes 2014 Balance at January 1, 2014 Capital issued for cash 6(16) Appropriation of 2013 earnings(Note1): 6(18) Legal reserve Special reserve Cash dividends Cash paid from capital surplus 6(18) Capital surplus offset against accumulated deficit Cancellation of restricted stock to employees Changes in restricted stock to employees Compensation related to share-based payment 6(14) Changes in net equity of long-term equity investments Profit for the year Other comprehensive income for the year 6(19) Balance at December 31, 2014 2015 Balance at January 1, 2015 Appropriation of 2014 earnings(Note2): 6(18) Legal reserve Special reserve Cash dividends Cancellation of restricted stock to employees Changes in restricted stock to employees Compensation related to share-based payment 6(14) Changes in net equity of long-term equity investments Changes in non-controlling interests Profit for the year Other comprehensive income for the year 6(19) Balance at December 31, 2015	Common stock $ 91,094,288 8,500,000 - - - - - ( 48,924) - - - - - $ 99,545,364 $ 99,545,364 - - - ( 12,992) - - - - - - $ 99,532,372	Capital surplus $ 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			Retained Earnings	Unappropriated earnings $ 5,092,716 - ( 509,272 ) ( 1,144,229 ) ( 90,495 ) - - - - - - 21,676,759 ( 46,306) $ 24,979,173 $ 24,979,173 ( 2,167,675 ) 1,144,229 ( 6,947,188 ) - - - - - 10,815,594 ( 162,630) $ 27,661,503		Other EquityInterest	Other EquityInterest		Total
			Legal reserve $ 2,328,981 - 509,272 - - - ( 2,328,981) - - - - - - $ 509,272 $ 509,272 2,167,675 - - - - - - - - - $ 2,676,947				Financial statements translation differences of foreign operations	Unrealized gain (loss) on available- for-sale financial assets	Changes in gain (loss) on cash flow hedges $ 478,190 - - - - - - - - - - - ( 231,120) $ 247,070 $ 247,070 - - - - - - - - - ( 247,070) $ -	Employee unearned compensation
							( $ 78,074) - - - - - - - - - - - 3,161,022 $ 3,082,948 $ 3,082,948 - - - - - - - - - ( 1,387,654) $ 1,695,294	( $ 1,544,345 ) - - - - - - - - - - - 284,498 ( $ 1,259,847 ) ( $ 1,259,847 ) - - - - - - - - - 2,334,292 $ 1,074,445		($ 387,268 ) - - - - - - - ( 43,951 ) 288,704 - - - ($ 142,515 ) ($ 142,515 ) - - - - 2,411 120,702 - - - - ($ 19,402 )	$193,043,229 10,625,000 - - ( 90,495 ) ( 1,266,944 ) - - 3,223 578,227 ( 47,030 ) 21,676,759 3,168,094 $227,690,063 $227,690,063 - - ( 6,947,188 ) - ( 1,349 ) 143,442 27,185 38 10,815,594 536,938 $232,264,723

Note1: Employees’ bonus and directors’ and supervisors’ remuneration accrued at $172,217 and $4,004 had been deducted from the statement of comprehensive income for the year ended December 31, 2013.

Note2: Employee’s bonus and directors’ and supervisors’ remuneration accrued at $1,436,187 and $6,954 had been deducted from the statement of comprehensive income for the year ended December 31, 2014.

The accompanying notes are an integral part of these financial statements. ~5~

INNOLUX CORPORATION

PARENT COMPANY ONLY 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 Profit before tax for the year Adjustments to reconcile net income to net cash provided by operating activities Income and expenses having no effect on cash flows Depreciation and amortization Compensation related to share-based payment Share of profit of subsidiaries and associates accounted for under equity method Loss (gain) on disposal of investments Loss (gain) on disposal of property, plant and equipment Interest income Dividend income Interest expense 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 $ 13,808,941 $ 21,677,834 6(23) 49,383,090 56,134,539 6(14) 143,442 578,227 ( 5,833,198 ) ( 5,998,536 ) 6(21) 112,058 ( 452,613 ) 6(21) 100,841 ( 22,568 ) 6(20) ( 144,282 ) ( 126,493 ) 6(20) ( 117,882 ) ( 7,567 ) 6(22) 1,607,782 2,998,473 ( 148,786 ) 1,188,553 ( 580,500 ) 91,169 23,103,020 ( 5,094,884 ) 3,162,905 ( 3,657,816 ) ( 178,584 ) ( 89,561 ) 3,392,039 11,572,044 ( 143,809 ) 306,774 9,541 14,142 ( 299,026 ) ( 299,025 ) ( 6,000,745 ) 4,707,855 ( 39,736,875 ) 3,193,266 4,001,150 4,125,260 2,418,270 1,184,460 ( 577,572 ) 309,564 ( 17,734 ) ( 951,067) 47,464,086 91,382,030 ( 38,833) ( 1,075) 47,425,253 91,380,955

(Continued)

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INNOLUX CORPORATION

PARENT COMPANY ONLY 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 Decrease in other receivables – related parties 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 Acquisition of property, plant and equipment Decrease in other financial assets Proceeds from disposal of property, plant and equipment Decrease (increase) in other non-current assets Interest received Dividends received Cash inflow from incorporation of subsidiary 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 Cash dividends paid Cash paid from capital surplus Repurchase from issuance of restricted stock to employees Acquisition of subsidiary stock Interest paid Net cash used in financing activities (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 $ 225,689 $ 96,927 - ( 135,456 ) 231,275 167,288 ( 623,249 ) ( 753,906 ) - 1,550,113 531,696 736,214 6(27) ( 21,096,240 ) ( 14,629,033 ) 810,198 440,446 42,240 12,761 329 ( 568,172 ) 138,837 125,498 141,053 1,444,112 11,874 - ( 19,586,298) ( 11,513,208) ( 1,300,000 ) ( 643,565 ) 68,100,131 - ( 106,427,892 ) ( 57,625,650 ) 6(16) - 10,625,000 6(18) ( 6,947,188 ) ( 90,495 ) 6(18) - ( 1,266,944 ) ( 3,676 ) ( 7,754 ) ( 50 ) - ( 1,523,865) ( 2,920,036) ( 48,102,540) ( 51,929,444 ) ( 20,263,585 ) 27,938,303 55,543,195 27,604,892 $ 35,279,610 $ 55,543,195

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

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INNOLUX CORPORATION

NOTES TO THE PARENT COMPANY ONLY 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 engages in the research, development, design, manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on February 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 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 Company 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 Company will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly.

• D. IFRS 13, ‘Fair value measurement’

• The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value 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 Company’s assessment, the adoption of the standard has no significant impact on its parent company only financial statements, and the Company will disclose additional information about fair value measurements accordingly.

Based on the Company’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the parent company only 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 Company

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 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)	Effective Date by International Accounting Standards Board
	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 andAmendments 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

Effective Date by International Accounting StandardsBoard

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 Company 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 parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

These parent company only financial statements are prepared by the Company in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers.

(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (b) Available-for-sale financial assets measured at fair value.

• (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of

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judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in NTD, which is the Company’s functional and presentation currency.

• 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

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or loss as part of the gain or loss on sale. In addition, if the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

• (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, if the Company retains 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.

(4) Classification of current and non-current items

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

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

  • (b) Assets held mainly for trading purposes;

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

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

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

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

  • (b) Liabilities arising mainly from trading activities;

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

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

• (5) 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.

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

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

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short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

• (a) Hybrid (combined) contracts; or

• (b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

• 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.

(7) 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.

• (8) Loans and receivables

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

(9) Impairment of financial assets

• A. The Company assesses at each balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of an individual financial asset or group of financial assets that can be reliably estimated.

• B. The objective evidence that the Company uses to determine whether there is an impairment loss is as follows:

• (a) Significant financial difficulty of the issuer or debtor;

• (b) A breach of contract, such as a default or delinquency in interest or principal payments;

• (c) Information about significant changes with an adverse effect that have taken place in the

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technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or

• (d) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• C. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

• (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.

• (10) 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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(11) Investments accounted for under the equity method / subsidiaries / associates

• A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company's share of its subsidiaries' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.

• D. If changes in the Company’s shares in subsidiaries do not result in loss in control (transactions with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity.

• E. When the Company loses control of a subsidiary, the Company remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. The Company should reclassify all amounts previously recognized as other comprehensive income and amounts relating to the prior subsidiary to profit or loss.

• F. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

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

• H. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes all the change in equity in “capital surplus” in proportion to its ownership.

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• I. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• J. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then “capital surplus” and “investments accounted for under the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• K. When the Company loses its control in an associate, the Company revalues the remaining investment in the prior associate at fair value, and recognises the difference between fair value and book value in the profit or loss for the period.

• L. When the Company disposes its investment in an associate and loses significant influence over the associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of.

• M. When the Company disposes its investment in an associate and loses significant influence over the associate, capital surplus in relation to the associate is transferred to profit or loss; if it retains significant influence over the associate, the amounts are transferred in accordance with the disposal ratio to profit or loss.

• N. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.

• (12) Property, plant and equipment

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

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying

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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

• (13) 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.

(14) 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.

• (15) Impairment of non-financial assets

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

• B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.

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• 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.

(16) 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.

• (17) Derivative financial instruments and hedging activities

• A. Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss.

• B. The Company designates certain derivatives as either:

  • (a) Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge).

  • (b) Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

• C. The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

• D. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

• E. Fair value hedge

  • (a) Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Company only applies fair value hedge accounting for hedging foreign currency on long-term borrowings. The gain or loss relating to the effective portion of currency swaps hedging long-term

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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.

• (18) Employee benefits

• A. Short-term employee benefits

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

• B. Pensions

  • (a) Defined contribution plans

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

• (b) Defined benefit plans

• i. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent

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

  - ii. 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.

- (19) Employee share based payment

• A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

• B. Restricted stocks to employees:

• (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period.

• (b) For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Company and the Company must refund their payments on the stocks. The Company recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”.

• C. The grant date for the shares reserved for employee preemption in cash capital increase is the date on which the Company informs employees of the grant and both the Company and employees agree to the number of shares granted and the price for subscription.

(20) 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.

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• 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 parent company only balance sheet. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

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

(21) Revenue recognition

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

(22) Business combinations

• A. The Company uses the acquisition method to account for business combinations. The Company chooses to measure the non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets on an acquisition-by-acquisition basis.

• B. If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the acquisition-date fair value of any previous equity interest in the acquiree is higher than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recorded as goodwill; if less than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recognized directly in profit or loss.

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5. CRITICALACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

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

• (1) Critical judgments in applying the Company’s accounting policies

• Financial assets - impairment of equity investments

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

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

• A. Impairment assessment of goodwill

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

• B. 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

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

• E. Financial assets - fair value measurement of unlisted stocks without active market The fair value of unlisted stocks held by the Company that are not traded in an active market is determined considering those companies’ recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgments and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(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 255 $ 22,427,408 12,851,947 35,279,610 - 35,279,610 $	December31,2014
		255 $ 40,578,940 11,394,000
		51,973,195 3,570,000
		55,543,195 $

• A. The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The above time deposits 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 $1,400,000 at December 31, 2015, and were classfied as ‘other financial assets-current’.

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

Assets Current items Financial assets held for trading Forward foreign exchange contracts Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts	December31,2015 81,858 $ December31,2015 53,921 $	December31,2014
		52,453 $ December31,2014
		605,016 $

• A. The Company recognized net loss of $133,873 and $883,120 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,	2015		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)	295,000 $	2015/10~2016/3	USD (sell)	425,000 $	2014/10~2015/3
exchange contracts	JPY (buy)	35,649,520	2015/10~2016/3	JPY (buy)	48,580,180	2014/10~2015/3
Forward foreign	USD (sell)	150,000	2015/10~2016/2	EUR (sell)	38,000	2014/10~2015/2
exchange contracts	TWD (buy)	4,896,705	2015/10~2016/2	USD (buy)	47,574	2014/10~2015/2
Forward foreign	EUR (sell)	5,000	2015/11~2016/1
exchange contracts	TWD (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

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

(3) Available-for-sale financial assets

Available-for-sale financial assets
Items Current items Bond investments Non-current items Listed stocks and bond investments Emerging and unlisted stocks	December31,2015 - $ 1,562,871 $ 382,046 1,944,917 $	December31,2014
		220,000 $
		2,537,965 $ 563,496 3,101,461 $

• A. The Company 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. The counterparties of the Company’s debt instrument investments have good credit quality.

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(4) Hedging derivative financial liabilities

	Items December31,2015 - cash flow hedges - $ Derivative Instruments Period of Designated Fair Value Anticipated as Hedges December 31,2014 Cash Flow Interest rate swap 1,351) ($ 2008~2015 Designated as HedgingInstruments	Items December31,2015 - cash flow hedges - $ Derivative Instruments Period of Designated Fair Value Anticipated as Hedges December 31,2014 Cash Flow Interest rate swap 1,351) ($ 2008~2015 Designated as HedgingInstruments	Items December31,2015 - cash flow hedges - $ Derivative Instruments Period of Designated Fair Value Anticipated as Hedges December 31,2014 Cash Flow Interest rate swap 1,351) ($ 2008~2015 Designated as HedgingInstruments	Items December31,2015 - cash flow hedges - $ Derivative Instruments Period of Designated Fair Value Anticipated as Hedges December 31,2014 Cash Flow Interest rate swap 1,351) ($ 2008~2015 Designated as HedgingInstruments	December31,2014	December31,2014
Cash flow hedges Current item Interest rate swap Hedged Items Long-term borrowings					$	1,351 Period of Gain (Loss) Expected to be Recognised in Profit or Loss
	Derivative Instruments Designated as Hedges Interest rate swap
		(	1,351) $	2008~2015		2008~2015

• A. The Company was exposed to significant risk of future cash flow changes on principal payments associated with the Company’s floating interest rate bearing borrowings, both current and long-term portion. Therefore, the Company entered into interest rate swap contracts for exchanging floating interest rate for fixed interest rate (TWD90/180CP (Page51328) to hedge such exposures. The contract had matured and was settled in February, 2015.

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

B. Information about gain or loss arising from cash other comprehensive income:	flow hedges recognized in profit or loss and	flow hedges recognized in profit or loss and
Accounts and notes receivable Items Amount of gain or loss adjusted in other comprehensive income Amount of gain or loss transferred from other comprehensive income to profit or loss Notes receivable Accounts receivable Less: Allowance for sales returns and discounts Allowance for bad debts	2015 2014 5 $ 1,224 $ 297,670 277,234 Years ended December31, December31,2015 December31,2014 - $ 21,447 $ 46,508,958 69,802,557 46,508,958 69,824,004 636,330) ( 827,583) ( 117,499) ( 138,272) ( 45,755,129 $ 68,858,149 $
	2015 5 $ 297,670 December31,2015 - $ 46,508,958 46,508,958 636,330) ( 117,499) ( 45,755,129 $
		21,447 $ 69,802,557 69,824,004 827,583) ( 138,272) ( 68,858,149 $

(5) Accounts and notes receivable

• A. The Company’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability.

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• B. The aging analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

mpaired is as follows:
Up to 60 days 61 to 180 days Over 180 days	December31,2015 482,335 $ 14,480 14,481 511,296 $	December31,2014
		534,490 $ 64,153 4,309
		602,952 $

The above ageing analysis was based on past due date.

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

• (a) As of December 31, 2015 and 2014, the Company’s accounts receivable that were impaired were $117,499 and $138,272, respectively.

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

as follows:
			2015			2014
At January 1		$	138,272		$	138,483
Allowance for bad debts - reclassified			674			-
Allowance for bad debts - write-offs	(		21,447)	(		211)
At December 31		$	117,499		$	138,272
Inventories
		December31,2015			December31,2014
Raw materials and supplies		$	1,954,960	$		1,780,875
Work in process			11,769,129			16,122,356
Finished goods			10,822,037			10,034,934
		$	24,546,126		$	27,938,165
Expenses and losses incurred on inventories are as follows:
			Years ended December31,
			2015			2014
Cost of inventories sold	$		326,638,579	$		389,619,753
Gain on reversal of decline in market value	(		602,500)	(		383,000)
Disposal loss and others			889,808			373,032
	$		326,925,887		$	389,609,785

(6) Inventories

Expenses and losses incurred on inventories are as follows:

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

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(7) Investments accounted for under the equity method

Investments accounted for under the equity method
Subsidiaries: Landmark International Ltd. Innolux Holding Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. Innolux Optoelectronics Japan Co., Ltd. InnoJoy Investment Corporation Yuan Chi Investment Co., Ltd. Others Associates: Ampower Holding Ltd. GIO Optoelectronics Corporation Others	December31,2015 45,888,559 $ 20,242,553 6,787,268 2,907,677 1,507,382 1,242,760 1,137,982 301,375 881,351 98,785 319,628 81,315,320 $	December31,2014
		41,425,623 $ 16,796,396 5,945,861 2,393,227 1,572,495 1,670,083 918,468 375,650 1,477,199 449,994 71,393
		73,096,389 $

A. The Company’s subsidiaries

• (a)Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2015.

• (b)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. The Company’s associates

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

summarized below:
Profit or loss for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	Years ended December31,
	2015 268,381 $ 4,437 272,818 $	2014
		101,899 $ 74,419 176,318 $

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(8) Property, plant and equipment

Property, plant and equipment	ment
At January1 Additions Disposals Transfer At December 31 Cost: Land 3,852,792 $ - $ - $ - $ 3,852,792 $ Buildings 156,858,729 40,626 19,452) ( 782,147 157,662,050 Machinery and equipment 375,070,309 62,167 6,453,017) ( 11,658,328 380,337,787 Others 22,584,306 - 2,164,598) ( 6,204,932 26,624,640 558,366,136 102,793 8,637,067) ( 18,645,407 568,477,269 Accumulated depreciation and impairment: Buildings 72,766,956) ( 11,798,206) ( 19,172 24,146) ( 84,570,136) ( Machinery and equipment 284,203,012) ( 32,843,077) ( 6,259,044 5,127,045) ( 315,914,090) ( Others 17,590,360) ( 3,522,586) ( 2,163,943 3,182,164) ( 22,131,167) ( 374,560,328) ( 48,163,869) ( 8,442,159 8,333,355) ( 422,615,393) ( Unfinished construction and equipment under acceptance 8,793,374 22,380,334 - 13,113,887) ( 18,059,821 192,599,182 $ 163,921,697 $ 2015 At January1 Additions Disposals Transfer At December 31 Cost: Land 3,852,792 $ - $ - $ - $ 3,852,792 $ Buildings 156,365,038 - 303,647) ( 797,338 156,858,729 Machinery and equipment 376,152,145 51,347 14,314,548) ( 13,181,365 375,070,309 Others 20,655,250 2,223 2,591,901) ( 4,518,734 22,584,306 557,025,225 53,570 17,210,096) ( 18,497,437 558,366,136 Accumulated depreciation and impairment: Buildings 59,116,947) ( 13,954,331) ( 302,794 1,528 72,766,956) ( Machinery and equipment 252,063,722) ( 37,915,245) ( 14,309,885 8,533,930) ( 284,203,012) ( Others 15,428,084) ( 2,767,296) ( 2,588,567 1,983,547) ( 17,590,360) ( 326,608,753) ( 54,636,872) ( 17,201,246 10,515,949) ( 374,560,328) ( Unfinished construction and equipment under acceptance 3,141,142 14,127,037 130) ( 8,474,675) ( 8,793,374 233,557,614 $ 192,599,182 $ 2014			2015
					At December 31

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

B. 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.

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(9) Investment property

nvestment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings (		At Additions Disposals December 31 - $ - $ 188,247 $ - 4,331) ( 564,109 - 4,331) ( 752,356 13,174) 4,331 71,853) ( ( 680,503 $ 2015	At At January1 Additions December 31 188,247 $ - $ 188,247 $ 568,440 - 568,440 756,687 - 756,687 49,837) 13,173) ( 63,010) ( 706,850 $ 693,677 $ 2014
	At January1 188,247 $ 568,440 756,687 63,010) ( 693,677 $	Additions - $ - ( - ( 13,174)

The fair value of the investment property held by the Company 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.

(10) Intangible assets

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

Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others				2015
	At January1 Additions 8,137,035 $ - $ 17,096,628 - 3,686,545 - ( 28,920,208 - ( 5,735,683) ( 933,024) ( 3,057,341) ( 273,023) ( 8,793,024) ( 1,206,047) ( 20,127,184 $			Disposals - $ - 113,730) 113,730) - 113,730 113,730 2014	Transfer At December 31 15,650 $ 8,152,685 $ - 17,096,628 327,238 3,900,053 342,888 29,149,366 - 6,668,707) ( - 3,216,634) ( - 9,885,341) ( 19,264,025 $	At December 31
	At January1 Additions Disposals 8,807,308 $ - $ 673,622) ($ 17,096,628 - - 3,267,074 - 79,340) ( 29,171,010 - 752,962) ( 5,215,968) ( 1,193,337) ( 673,622 2,840,599) ( 291,157) ( 79,340 ( 8,056,567) ( 1,484,494) ( 752,962 ( 21,114,443 $				Transfer At December 31 3,349 $ 8,137,035 $ - 17,096,628 498,811 3,686,545 502,160 28,920,208 - 5,735,683) ( 4,925) 3,057,341) ( 4,925) 8,793,024) ( 20,127,184 $	At December 31

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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 998,974 $ 207,073 1,206,047 $	2014
		954,350 $ 530,144
		1,484,494 $

• 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

Short-term borrowings
Type of borrowings Bank loans Credit loans Interest rate	December31,2014 1,300,000 $ 2.5%	Collateral
		None

As of December 31, 2015, the Company has no short-term borrowing.

- (12) Long term borrowings

Type of loans Syndicated bank loans Guaranteed commercial papers Less: Administrative expenses charged by syndicated banks Current portion Range of interest rates	Period December31,2015 December31,2014 2015/3/12 ~2018/3/12 60,280,000 $ 98,227,530 $ - 129,148 60,280,000 98,356,678 288,794) ( 41,252) ( 16,361,238) ( 61,092,333) ( 43,629,968 $ 37,223,093 $ 1.90%~2.19% 1.25%~2.47%

• A. Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.

• B. The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, which were based on the Company’s annual parent company only financial statements audited by independent auditors. The Company’s financial ratios on the parent company only financial statements for the years

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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 has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who 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:

Year ended December 31, 2015 Balance at January 1 Current service cost Interest expense/income Remeasurements: Change in financial assumptions Experience adjustments Balance at December 31 Year ended December 31, 2014 Balance at January 1 Current service cost Interest expense/income Remeasurements: Change in demographic assumptions Change in financial assumptions Experience adjustments Balance at December 31		Present value of defined benefit obligations		Fair value of plan assets		Net defined benefit liability
		1,605,920 $ 8,228 36,133 44,361 172,133 30,491 202,624 1,852,905 $ Present value of defined benefit obligations		1,488,938 $ - 33,501 33,501 - 6,685 6,685 1,529,124 $ Fair value of plan assets		116,982 $ 8,228 2,632 10,860 172,133 23,806 195,939 323,781 $ Net defined benefit liability
	1,504,354 $ 10,470 30,087 40,557 77,419 76,611) ( 60,201 61,009 1,605,920 $			1,454,627 $ - 29,092 29,092 - - 5,219 5,219 1,488,938 $	49,727 $ 10,470 995 11,465 77,419 76,611) ( 54,982 55,790 116,982 $

(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 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 composition of fair value of plan assets as of December 31, 2015

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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		2015 2014 1.70% 2.25% 3.00% 3.00% Years ended December 31,	2015 2014 1.70% 2.25% 3.00% 3.00% Years ended December 31,	2015 2014 1.70% 2.25% 3.00% 3.00% Years ended December 31,
		2015 1.70%
		3.00%		3.00%

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

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

Discount rate Future salary increases Increase 1% Decrease 1% Increase 1% Decrease 1% December 31, 2015 Effect on present value of defined benefit obligation ($ 299,276) $ 367,992 $ 337,723 ($ 283,242)

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 has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2015 and 2014 were $1,003,836 and $939,629, respectively.

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(14) Share-based payment

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

Type of arrangement 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	Quantity granted Contract period Grant date (in thousand units) (inyears) Vestingconditions 2010.05.13 20,000 5 Note (a), (b) 2011.05.19 50,000 5 Note (a) 2013.01.30 31,151 3 Note (c), (d) 2013.01.30 31,151 3 Note (c), (d) 2013.03.29 844 3 Note (c), (d) 2013.03.29 844 3 Note (c), (d) 2013.12.12 4,268 3 Note (c), (d) 2013.12.12 4,268 3 Note (c), (d) 2014.07.09 85,000 - Vested immediately	Vestingconditions

• (a) The employees may exercise the stock options by stage based on 30%, 30% and 40% of total options granted on completion of the specified year(s) of service (one to four years) from the grant date.

• (b) The 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:

Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Reservation for new share subscription by employees 2014.07.09 14.90 $ 12.50 $ Restricted stocks to employees - shares issued with no consideration 2013.12.12 10.65 - - shares subscribed with consideration 2013.12.12 10.65 5.00 - shares issued with no consideration 2013.03.29 18.40 - - shares subscribed with consideration 2013.03.29 18.40 5.00 - shares issued with no consideration 2013.01.30 15.35 - - shares subscribed with consideration 2013.01.30 15.35 5.00 Employee stock options 2011.05.19 26.70 26.70 Employee stock options 2010.05.13 39.85 39.85	Expected volatility (%) 36.01 - - - - - - 35.67 51.57	Expected duration (month) 0.84 - - - - - - 48.60 48.60	Risk Expected free Fair value dividend interest per unit yield(%) rate(%) (in dollars) - 0.42 2.42 $ - - 10.65 - - 5.65 - - 18.40 - - 13.40 - - 15.35 - - 10.35 0.00 1.00 7.31 ~8.32 0.00 0.80 15.12 ~16.98	Risk Expected free Fair value dividend interest per unit yield(%) rate(%) (in dollars) - 0.42 2.42 $ - - 10.65 - - 5.65 - - 18.40 - - 13.40 - - 15.35 - - 10.35 0.00 1.00 7.31 ~8.32 0.00 0.80 15.12 ~16.98
				2.42 $ 10.65 5.65 18.40 13.40 15.35 10.35 7.31 ~8.32 15.12 ~16.98

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

Year ended December 31, 2015

Weighted average Range of Quantity exercise exercise (in thousand price price StockOptions units) (in dollars) (in dollars) Outstanding options at the beginning of the year 70,000 $ 25.63 Options exercised - - Options expired ( 20,000) 32.59 Outstanding options at the end of the year 50,000 22.85 $ 22.85 0.39 years Exercisable options at the end of the year 50,000 22.85 period Weighted average remaining vesting

Weighted average stock price of stock options at exercise date(in dollars) $ 13.61

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Year ended December 31, 2014

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

• 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.

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

• B. Litigation and others

Litigation and other provision for the Company are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

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(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 (inthousands) 9,954,536 - 1,299) ( 9,953,237	2014 Number of ordinary shares (inthousands) 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. As the Company has received the bank’s approval for extending capital increase, 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, 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

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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.

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

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2014

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

(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.

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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).

• (19) Other equity items

2015

Available- Currency for-sale translation investments At January 1 3,082,948 $ 1,259,847) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 1,145,267) ( Revaluation transfer of available-for-sale investment - gross - 3,993) ( Currency translation differences 1,392,086) ( - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of subsidiaries and other comprehensive income of associates 4,432 3,415,606 Effect of income tax - 67,946 At December 31 1,695,294 $ 1,074,445 $	Employee Hedging unearned reserve compensation Total 247,070 $ 142,515) ($ 1,927,656 $ 5) ( - 5) ( 297,670) ( - 297,670) ( - - 1,145,267) ( - - 3,993) ( - - 1,392,086) ( - 2,411 2,411 - 120,702 120,702 - - 3,420,038 50,605 - 118,551 - $ 19,402) ($ 2,750,337 $	Total

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2014

	2014
Available- Currency for-sale translation investments At January 1 78,074) ($ 1,544,345) ($ Fair value losses of cash flow hedges - - Reclassified as current income of cash flow hedges - - Revaluation of available-for-sale investments - gross - 138,700 Revaluation transfer of available-for-sale investment - gross - 35,190) ( Currency translation differences 3,087,368 - Issuance of restricted stocks to employees - - Compensation related to share-based payment - - Share of subsidiaries and other comprehensive income of associates 73,654 189,441 Effect of income tax - 8,453) ( At December 31 3,082,948 $ 1,259,847) ($	Employee Hedging unearned reserve compensation Total 478,190 $ 387,268) ($ 1,531,497) ($ 1,224) ( - 1,224) ( 277,234) ( - 277,234) ( - - 138,700 - - 35,190) ( - - 3,087,368 - 43,951) ( 43,951) ( - 288,704 288,704 - - 263,095 47,338 - 38,885 247,070 $ 142,515) ($ 1,927,656 $	Total
		1,927,656 $

(20) Other income

Other income
Rental revenue Interest income Dividend income Other income	2015 2014 165,372 $ 139,286 $ 144,282 126,493 117,882 7,567 874,329 1,106,573 1,301,865 $ 1,379,919 $ Years ended December31,
	2015 165,372 $ 144,282 117,882 874,329 1,301,865 $

(21) Other gains and losses

Other gains and losses
		Years ended	December31,
		2015		2014
Net loss on financial assets and liabilities at fair
value through profit or loss	($	133,873)	($	883,120)
Net currency exchange (loss) gain	(	66,797)		1,143,155
(Loss) gain on disposal of investments	(	112,058)		452,613
(Loss) gain on disposal of property, plant and
equipment	(	100,841)		22,568
Litigation loss and others	(	7,429,350)	(	4,154,038)
	($	7,842,919)	($	3,418,822)

~41~

(22) Finance costs

Finance costs
Interest expense: Bank borrowings Others Gain on cash flow hedges, reclassified from equity	2015 2014 1,601,674 $ 2,984,966 $ 6,108 13,507 297,670) ( 277,234) ( 1,310,112 $ 2,721,239 $ Years ended December31,
	2015 1,601,674 $ 6,108 297,670) ( 1,310,112 $

(23) Expenses by nature

Expenses by nature
Employee benefit expense: Salaries and other short-term employee benefits Share-based payments Post-employment benefits Depreciation Amortization	Years ended December31,
	2015 26,436,720 $ 143,442 1,014,696 48,177,043 1,206,047 76,977,948 $	2014
		24,882,037 $ 578,227 951,094 54,650,045 1,484,494 82,545,897 $

(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.

~42~

• 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 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.

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(25) Income tax

A. Income tax expense

(a) Components of income tax expense:

Income tax A. Income tax expense (a) Components of income tax expense:
			Years ended	December31,
			2015		2014
Current tax:
Current tax on profit for the year		$	42	$	123,787
Tax on undistributed surplus earnings			915,947		-
Adjustments in respect of prior years			36,371		1,075
Total current tax			952,360		124,862
Deferred tax:
Origination and reversal of temporary differences			2,040,987	(	123,787)
Income tax expense		$	2,993,347	$	1,075
(b) The income tax (charge)/credit relating to components of other comprehensive					income is as
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)
B. Reconciliation between income tax expense and accounting profit:
			Years ended December31,
			2015		2014
Tax calculated based on profit before tax and
statutory tax rate	$		2,347,520	$	3,685,232
Effects from items disallowed by tax regulation	(		975,322)	(	575,514)
Under provision of prior year's income tax			36,371		1,075
Additional 10% tax on undistributed earnings			915,947		-
Effect from estimated investment tax credit			-		74,672
Effect from Alternative Minimum Tax			42		-
Change in assessment of realization of deferred tax
assets			668,789	(	3,184,390)
Tax expenses	$		2,993,347	$	1,075

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

Year ended December 31, 2015

Recognised in January1 profit or loss Temporary differences: -Deferred tax assets: Sales returns and discount provisions 166,373 $ 77,153 $ Accrued royalties and warranty provisions 327,918 326,639 Unrealized exchange loss (gain) 200,697 81,480) ( Unrealized loss on financial instruments 699,962 158,326 Net operating loss carryforward 15,848,188 2,385,024) ( Others 332,288 49,481) ( 17,575,426 $ 1,953,867) ($ -Deferred tax liabilities: Unrealized (gain) loss on cash flow hedges 50,605) ($ - $ Amortisation charges on goodwill 394,687) ( 82,369) ( Others 32,287) ( 4,751) ( 477,579) ($ 87,120) ($ 17,097,847 $ 2,040,987) ($

Recognised in other comprehensive income December31 - $ 243,526 $ - 654,557 - 119,217 67,946 926,234 - 13,463,164 33,309 316,116 101,255 $ 15,722,814 $ 50,605 $ - $ - 477,056) ( - 37,038) ( 50,605 $ 514,094) ($ 151,860 $ 15,208,720 $

~45~

Year ended December 31, 2014

							Recognised
							in other
			Recognised in			comprehensive
		January1		profit or loss			income		December31
Temporary differences:
-Deferred tax assets:
Sales returns and	$	288,013	($		121,640)	$	-	$		166,373
discount provisions
Accrued royalties and
warranty provisions		364,411	(		36,493)		-			327,918
Unrealized exchange
loss (gain)		-			200,697		-			200,697
Unrealized loss (gain) on
financial instruments		449,511			258,904	(	8,453)			699,962
Net operating loss
carryforward		16,520,833	(		672,645)		-			15,848,188
Others		212,631			110,173		9,484			332,288
	$	17,835,399	($		261,004)	$	1,031		$	17,575,426
-Deferred tax liabilities:
Unrealized exchange
(gain) loss	($	51,357)	$		51,357	$	-	$		-
Unrealized (gain) loss on
cash flow hedges	(	97,943)			-		47,338	(		50,605)
Amortisation charges
on goodwill	(	726,842)			332,155		-	(		394,687)
Others	(	33,566)			1,279		-	(		32,287)
	($	909,708)	$		384,791	$	47,338	($		477,579)
	$	16,925,691	$		123,787	$	48,369		$	17,097,847

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

follows:
		December31,2015
Year incurred 2011 2012	Amount filed / assessed Assessed Filed	Unused amount 66,433,000 $ 43,123,372 109,556,372 $	Unrecognised deferred tax assets 18,410,536 $ 11,950,753 30,361,289 $	Usable untilyear 2021 2022

~46~

December 31, 2014

		December31,2014
Year incurred 2010 2011 2012	Amount filed / assessed Assessed Assessed Filed	Unused amount 14,641,521 $ 63,808,943 43,123,373 121,573,837 $	Unrecognised deferred tax assets 3,414,183 $ 14,879,288 10,055,723 28,349,194 $	Usable untilyear
				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

December31,2015 33,185,717 $	December31,2014
	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.

• J. 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 (Estimate) 6.06%	December31,2014
		738,931 $
		2014(Actual)
		3.9%

• (b)Estimated (Actual) creditable tax rate

~47~

(26) Earnings per share

Basic earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Basic earnings per share (in dollar) Diluted earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Assumed conversion of all dilutive potential ordinary shares: -Employees’ bonus -Restricted stocks Diluted earnings per share (in dollar)	Years ended December31,	Years ended December31,
	2015 10,815,594 $ 9,922,525 1.09 $ 10,815,594 $ 9,922,525 116,513 27,519 10,066,557 1.07 $	2014
		21,676,759 $
		9,377,302
		2.31 $
		21,676,759 $
		9,377,302 106,514 41,875
		9,525,691
		2.28 $

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.

(27) Non-cash transaction

Investing activities with partial cash payments:

Non-cash transaction Investing activities with partial cash payments:
Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment ( Cash paid during the year	2015 2014 22,483,127 $ 14,180,607 $ 2,732,538 3,180,964 4,119,425) 2,732,538) ( 21,096,240 $ 14,629,033 $ Years ended December31,
	2015 22,483,127 $ 2,732,538 4,119,425) 21,096,240 $

~48~

7. RELATED PARTY TRANSACTIONS

(1) Significant related party transactions

A. Operating revenue

TED PARTY TRANSACTIONS gnificant related party transactions Operating revenue
Sales of goods: Subsidiaries Others Associates	Years ended December31,
	2015 13,048,043 $ 13,019,281 233,299 26,300,623 $	2014
		7,967,864 $ 14,374,629 27,050 22,369,543 $

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

B. Purchases of goods

Purchases of goods
Others Associates Subsidiaries Purchases of goods:	Years ended December31,
	2015 2,960,453 $ 311,987 123,169 3,395,609 $	2014
		2,767,390 $ 4,431,198 420,519 7,619,107 $

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

C. Consigned processing

(a) Consigned processing

d parties. nsigned processing Consigned processing
Processing costs: Subsidiaries Others	Years ended December31,
	2015 122,717,171 $ 31,116 122,748,287 $	2014
		167,873,521 $ 15,192 167,888,713 $

~49~

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

The Company subcontracted the processing of products of associates in processing fees were mainly charged based on cost plus method. December 31,2015 Payables to related parties: Subsidiaries 3,765,006 $	Mainland China. The December 31,2014 2,677,593 $

D. Accounts receivable

Accounts receivable
		December31,2015		December31,2014
Receivables from related parties:
Others	$		2,659,151	$	5,821,222
Subsidiaries			519,539		774,814
Associates			81,427		27,899
			3,260,117		6,623,935
Less: Transfer to other receivables	(		355,364)	(	556,217)
Allowance for bad debts			-	(	60)
	$		2,904,753	$	6,067,658

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

• (b) The above receivables from related parties that exceed normal granting periods were transferred to ‘other receivables – related parties’.

E. Other receivables

E.Other receivables
F.Accounts payable Transfer from accounts receivable Other receivables Payables to related parties: Subsidiaries Others Associates	December31,2015 355,364 $ 22,000 377,364 $ December31,2015 44,235,860 $ 1,130,282 67,720 45,433,862 $	December31,2014
		556,217 $ 134,807 691,024 $ December31,2014 83,822,951 $ 1,347,900 161 85,171,012 $

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.

~50~

2015

G. Other payables-short-term financing

			2015
Subsidiaries Subsidiaries	Maximum outstanding balance 410,850 $	Actual amount drawndown - $	Interestrate 0.00% 2014	Interest expense 2,168 $	Accrued expense
					- $
	Maximum outstanding balance 396,900 $	Actual amount drawn down 396,900 $	Interest rate 1.38%	Interest expense 5,952 $	Accrued expense
					- $

H. Property transactions

Purchase of property

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

perty transactions chase of property Acquisition of property, plant and	equipment:
		Years ended	December31,
		2015		2014
Subsidiaries	$	148,450	$	597,848
Others		7,820		2,398
Associates		220		510,051
	$	156,490	$	1,110,297
Period-end balances arising from	purchases of property	(shown as “Other payables”):
	December31,2015		December31,2014
Subsidiaries	$	542,694	$	586,682
Others		6,273		748
	$	548,967	$	587,430

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

I. Endorsements and guarantees

As of December 31, 2014, the balances of endorsement/guarantee provided by the Company for bank borrowings are as follows. Details are provided in Table 2.

Subsidiaries

December 31, 2014 $ 16,901,100

As of December 31, 2015, the Company has no endorsements/guarantees provided to other subsidiaries.

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(2) Key management compensation

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

8. PLEDGED ASSETS

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

Book value

Pledged asset Other financial assets-current Demand deposits Time deposits Property, plant and equipment Other financial assets-non-current Refundable deposits Time deposits	December31,2015 - $ 856 59,669,639 - 119,703 59,790,198 $	December31,2014 Purpose 2,250,035 $ Syndicated bank loans - Land lease 163,632,314 Long-term loans and performance guarantee for lease payable 11,079,360 Guarantee to European Commission for litigation 80,722 Tariff guarantee, land lease and guarantee for contract 177,042,431 $	Purpose

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.

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

December 31, 2015 December 31, 2014 Property, plant and equipment $ 38,262,634 $ 19,350,952

B. Operating lease commitments

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

~53~

Not later than one year Later than one year but not later than five years Later than five years	December31,2015 508,974 $ 1,873,940 1,207,891 3,590,805 $	December31,2014
		500,648 $ 1,943,776 1,490,584
		3,935,008 $

C. Outstanding letters of credit

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

Outstanding letters of credit	December31,2015 474,222 $	December31,2014
		693,635 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

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

(2) Financial instruments

• A. Fair value information of financial instruments

The carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, accounts payable, other payables and long-term loans) are approximate to their 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 Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2), (4)).

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

~54~

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• a) The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

• 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 the Company’s treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Company use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.

• c) The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be an increase of $29,120 or a decrease of $13,765 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:

Foreign Currency Exchange Amount Rate Book Value (In Thousands) (Note) (NTD) Financial asstes Monetary items USD 2,229,374 $ 32.83 73,190,348 $ JPY 1,607,428 0.27 434,006 EUR 75,928 35.88 2,724,297 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 Monetary items USD 1,990,752 $ 32.83 65,356,388 $ JPY 29,475,552 0.27 7,958,399 EUR 3,397 35.88 121,884 December 31,2015 Financial liabilities	December 31,2014	December 31,2014
	Foreign Currency Exchange Amount Rate (In Thousands) (Note) 3,689,844 $ 31.65 2,740,487 0.26 363,356 38.47 2,217,538 $ 31.65 278,754 4.08 5,383,824 0.26 3,834 38.47 3,568,162 $ 31.65 32,732,829 0.26 292,958 38.47	Book Value (NTD)
		116,783,563 $ 725,133 13,978,305 70,185,078 $ 1,137,316 1,424,560 147,494 112,932,327 $ 8,661,107 11,270,094

~55~

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

• d)Total exchange loss (gain), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2015 and 2014 amounted $66,797 and ($1,143,155), respectively.

Price risk

• a) The Company is exposed to equity securities price risk because of investments held by the Company that are classified on the parent company only balance sheet either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio in accordance with the policy set by the Company.

• b) The Company’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, other components of equity for the years ended December 31, 2015 and 2014 would have increased/decreased by $388,983 and $620,292, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

Interest rate risk

• a) The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During the years ended December 31, 2015 and 2014, the Company’s borrowings at variable rate were denominated in the NTD and USD.

• b) The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.

• c) Based on the simulations performed, the impact on post-tax profit of a 25% shift would be a maximum increase of $150,700 or decrease of $245,892 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 Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Company raises long-term borrowings at floating rates and swaps them into fixed rates that are

~56~

lower than those available if the Company borrowed at fixed rates directly. The Company agrees with other parties to exchange interest rate, at specified intervals. The difference between fixed contract rates and floating-rate interest amounts are calculated by reference to the agreed notional amounts.

• (b) Credit risk

• a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Customer credit quality is assessed via internal risk control, considering customer financial position, past experience and other factors. Individual risk limits are set by the board of directors based on internal or external ratings. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. Because the Company's counterparties and executor are banks with good credit standing and financial institutions and government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk.

• 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) Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 6(12)) at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.

• b) Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing savings accounts, time deposits, money market deposits and marketable securities. The Company chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk.

~57~

• c) The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31,2015 Accounts payable Other payables Long-term borrowings (including current portion) December 31,2014 Short-term borrowings Accounts payable Other payables Long-term borrowings (including current portion) Other financial liabilities Financial guarantee contracts	Less than 1year 73,164,897 $ 24,387,687 16,440,000 Less than 1year 1,300,000 $ 118,902,792 18,688,940 61,122,573 - 10,140,660	Between 1 and 3years - $ - 43,840,000 Between 1 and 3years - $ - - 37,234,105 11,230,850 -	Between 3 and 5years - $ - - Between 3 and 5years - $ - - - - -	Over 5 years - $ - - Over 5 years - $ - - - 6,344 -	Total
					73,164,897 $ 24,387,687 60,280,000 Total
					1,300,000 $ 118,902,792 18,688,940 98,356,678 11,237,194 10,140,660

Derivative financial liabilities:

Derivative financial liabilities:
December31,2015 Forward exchange contracts December31,2014 Forward exchange contracts Interest rate swap contracts	Less than 1year $ 53,921 Less than 1year $ 605,016 1,351	Between 1 and3 years $ - Between 1 and3 years $ - -	Total
			$ 53,921 Total
			$ 605,016 1,351

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).

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(3) Fair value estimation

• A. Details of the fair value of the Company’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 Company’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 Company’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 Company’s investment in derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’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:

December31,2015 Assets Recurring fair value measurements Financial assets at fair value through profit or loss 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	Level 1 - $ 1,562,871 1,562,871 $ - $	Level 2 81,858 $ - 81,858 $ 53,921 $	Level3 - $ 382,046 382,046 $ - $	Total
				81,858 $ 1,944,917
				2,026,775 $
				53,921 $

~59~

December31,2014 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Forward exchange contracts Available-for-sale financial assets Equity securities Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Derivative financial liabilities for hedging Interest rate swap contracts	Level 1 - $ 2,537,965 220,000 2,757,965 $ - $ - - $	Level 2 52,453 $ - - 52,453 $ 605,016 $ 1,351 606,367 $	Level3 - $ 563,496 - 563,496 $ - $ - - $	Total
				52,453 $ 3,101,461 220,000
				3,373,914 $
				605,016 $ 1,351
				606,367 $

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

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

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

• (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 parent company only 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 Company 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

~60~

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 Company’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 Company’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 parent company only balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• (f) The Company 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 Company’s credit quality.

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

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

2014:
At January 1 Acquired in the period Gains and losses recognized in other comprehensive income At December 31	2015 2014 563,496 $ 644,661 $ - 135,456 181,450) ( 216,621) ( 382,046 $ 563,496 $ Equitysecurities
	2015 563,496 $ - 181,450) ( ( 382,046 $

• G. For the years ended December 31, 2015 and 2014, there was no transfer into or out from Level 3.

• 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.

~61~

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.

• 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	Fair value at December Valuation Significant 31,2015 technique unobservable input Discount for lack of marketability 382,046 $ Market comparable companies Price to earnings ratio multiple, price to book ratio multiple controll premium	Range (Weighted Relationship of average) 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 20%~30% (22%) 0.56~1.41 (0.70)

• J. The Company 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 Equity instrument Equity instrument	Period 2015/12/31 2014/12/31	Input 382,046 $ 563,496	Change ± 1% ± 1%	Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable Unfavourable change change 3,820 $ 3,820) ($ 5,635 5,635) (	Unfavourable change

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.

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• 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

None.

~63~

Innolux Corporation

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 occured 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 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

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 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 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

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

Table 6

Innolux Corporation

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

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 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

INNOLUX CORPORATION SUMMARY OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 1

Items Petty cash Cash in banks Demand deposits Foreign deposits Time deposits	Abstract Amount $ 255 5,171,934 USD 513,641In thousands Exchange rate 32.825 16,860,258 JPY 1,351,418In thousands Exchange rate 0.2727 368,532 EUR 672In thousands Exchange rate 35.88 24,104 HKD 182In thousands Exchange rate 4.235 770 KRW 64,658In thousands Exchange rate 0.028 1,810 3,000,000 USD 300,000In thousands Exchange rate 32.825 9,847,500 HKD 1,050In thousands Exchange rate 4.235 4,447 $ 35,279,610	Amount
		$ 35,279,610

Summary 1, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS RECEIVABLE

DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 2

Items	Abstract	Amount	Remark
Third parties Company A Company B Company C Company D Others Less: Allowance for returns and discount Allowance for bad debts		$ 5,984,540 3,460,464 2,986,599 2,668,006 31,409,349	Balance of individual customers is under 5% of this account’s balance.
		46,508,958 ( 636,330) ( 117,499)
		$ 45,755,129

Summary 2, Page 1

INNOLUX CORPORATION SUMMARY OF INVENTORY DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 3

Items	Abstract	Cost	Market price $ 1,345,999 24,430,228 11,823,395	Remark Use net realisable value as market price Use net realisable value as market price Use net realisable value as market price
Raw materials Work in process Finished goods		$ 1,954,960 11,769,129 10,822,037
		$ 24,546,126	$ 37,599,622

(Remainder of page intentionally left blank)

Summary 3, Page 1

INNOLUX CORPORATION

MOVEMENT SUMMARY OF INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 4

Company name Landmark International Ltd. Innolux Holding Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Japan Co., Ltd. Yuan Chi Investment Co., Ltd. Ampower Holding Ltd. GIO Optoelectronics Corp. Others	As of January 1, 2015 In thousand shares Amount 693,100 $ 41,425,623 246,768 16,796,396 144,447 5,945,861 1,158,844 2,393,227 167,405 1,670,083 - 1,572,495 - 918,468 14,063 1,477,199 63,522 449,994 - 447,043 $ 73,096,389	As of January 1, 2015 In thousand shares Amount 693,100 $ 41,425,623 246,768 16,796,396 144,447 5,945,861 1,158,844 2,393,227 167,405 1,670,083 - 1,572,495 - 918,468 14,063 1,477,199 63,522 449,994 - 447,043 $ 73,096,389	Additions	Additions	Deductions	As of December 31, 2015	As of December 31, 2015	As of December 31, 2015	Market value or net equity value	Market value or net equity value
	In thousand shares 693,100 246,768 144,447 1,158,844 167,405 - - 14,063 63,522 -		In thousand shares 16,350 - - - - - - - - -	Amount	In thousand shares		Ownership (%)	Amount	Unit price	Total price
		$ 41,425,623 16,796,396 5,945,861 2,393,227 1,670,083 1,572,495 918,468 1,477,199 449,994 447,043		$ 5,616,201 3,700,773 986,930 660,141 - 82,822 434,578 10,492 5,210 1,166,526	- - - - - - - - - -		100% 100% 100% 100% 100% 100% 100% 50% 24% -
		$ 73,096,389		$ 12,663,673

Note 1: Additions include acquisition costs, gains on investment accounted for using equity method, cumulative translation adjustment and recognition of unrealised gain on investees’ financial instruments. Note 2: Deductions include disposal costs, losses on investment accounted for using equity method, cumulative translation adjustment, cash dividend received, and recognition of unrealised loss on investees’ financial instruments.

Summary 4, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS PAYABLE

DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 5

Items Abstract Amount Third parties Company A $ 2,232,970 Company B 1,772,376 Company C 1,537,831 Company D 1,507,397 Others 20,680,461 $ 27,731,035 (Remainder of page intentionally left blank)	Amount $ 2,232,970 1,772,376 1,537,831 1,507,397 20,680,461	Remark Balance of individual suppliers is under 5% of this account’s balance.
	$ 27,731,035

Summary 5, Page 1

INNOLUX CORPORATION SUMMARY OF OTHER PAYABLES DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 6

Items Payable on machinery and equipment Wages, salaries and bonus payable Payable on processing fees Payable on repairs and maintenance expense Payable on royalty and others	Amount $ 4,119,425 3,677,229 3,773,453 1,503,122 11,314,458	Remark
	$ 24,387,687

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Summary 6, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2015 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 7

Items	Quantity (in thousands)	Amount
TFT-LCD products	374,858	$ 356,848,691
Others	-	3,789,442
		$ 360,638,133
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Summary 7, Page 1

INNOLUX CORPORATION

SUMMARY OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 8 Items Beginning raw materials Incoming inventory Less: Ending raw materials Loss on physical inventory Transfer to expenses Scrapping materials Warranty expiration Sale of materials Material consumption Direct labour Manufacturing expenses Manufacturing costs Add: Beginning work in process Incoming inventory Less: Ending work in process Transfer to expenses Warranty expiration Scrapping work in process Cost of finished goods Add: Beginning finished goods Acquisition of finished goods Less: Ending finished goods Transfer to expenses Scrapping finished goods Warranty expiration Cost of goods manufactured Add: Cost of sales of materials Loss on scrapping inventory Loss on physical inventory Less: Revenue from sale of scraps Gain on reversal of inventory valuation Operating costs

Amount $ 2,053,559 120,772,675 ( 2,074,179) ( 10,914) ( 6,032,380) ( 1,091,303) ( 49,290) ( 189,204) 113,378,964 12,916,823 186,239,609 312,535,396 16,730,810 10,813,911 ( 12,378,127) ( 495,160) ( 1,968) ( 20,953) 327,183,909 11,365,526 601,781 ( 11,708,306) ( 131,953) ( 70,359) ( 791,223) 326,449,375 189,204 1,182,615 10,914 ( 303,721) ( 602,500) $ 326,925,887

Summary 8, Page 1

INNOLUX CORPORATION SUMMARY OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2015 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 9

Items Processing fee Depreciation and amortisation Utilities expense Other expenses	Amount $ 106,676,329 46,061,356 11,848,583 21,653,341 $ 186,239,609	Remark
		Balance of individual accounts is under 5% of this account’s balance.

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Summary 9, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 10

Items Wages and salaries Depreciation expenses Royalty expenses Indirect materials Other expenses	Selling expenses $ 331,939 38,524 - 2,034 795,140 $ 1,167,637	General and administrative expenses $ 1,364,191 221,930 - 730 1,596,523 $ 3,183,374	Research and development expenses $ 4,087,919 2,273,686 4,007,710 1,132,376 2,032,635 $ 13,534,326	Total $ 5,784,049 2,534,140 4,007,710 1,135,140 4,424,298 $ 17,885,337	Remark
					Balance of individual accounts is under 5% of this account’s balance.

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Summary 10, Page 1

INNOLUX CORPORATION

SUMMARY OF EMPLOYEE BENEFITS EXPENSES, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2015

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 11

By nature Employee benefits expenses (Note) Salary and bonus Labor and health insurance Pension Others Depreciation Amortization		Year ended December 31,2015	Year ended December 31,2015	Total $ 23,081,012 2,026,063 1,014,696 1,473,087 $ 27,594,858 $ 48,177,043 $ 1,206,047		Year ended December 31,2014	Year ended December 31,2014
	Classified as Operating Costs $ 17,296,963 1,573,883 752,707 1,117,260 $ 20,740,813 $ 45,062,382 $ 998,974	Classified as Operating Expenses $ 5,784,049 452,180 261,989 355,827 $ 6,854,045 $ 2,534,140 $ 207,073	Classified as Non-operating Expenses $- - - - $- $ 580,521 $-		Classified as Operating Costs $ 16,268,829 1,428,274 704,911 1,254,802 $ 19,656,816 $ 52,091,334 $ 954,350	Classified as Operating Expenses $ 5,584,413 414,665 246,183 509,281 $ 6,754,542 $ 2,242,496 $ 530,144	Classified as Non-operating Expenses $- - - - $- $ 316,215 $-	Total
								$ 21,853,242 1,842,939 951,094 1,764,083
								$ 26,411,358
								$ 54,650,045
								$ 1,484,494

Note ： As of December 31, 2015 and 2014, the Company had 35,573 and 36,161 employees, respectively.

Summary 11, Page 1