Stock code: 3051

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Financial Statements

Independent Auditors' Report

The 114th and 113th years of the Republic of China

Address: No. 37, Lane 659, Pingdong Road,
Pingzhen District, Taoyuan City

Tel: (03)460-6677

This English version of the financial report is a translation from the original Chinese version. It is unaudited by certified public accountants.

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.

Table of contents

project	Pages
1. Cover	1
2. Directory	2
3. Accountant's audit report	10
4. Individual balance sheet	11~14
5. Individual comprehensive income statement	15~16
6. Statement of changes in individual equity	17~18
7. Individual cash flow statement	19~20
8. Notes to Individual Financial Reports	21~115
(1) Company history	21
(2) Date and procedures for approving financial reports	21
(3) Application of newly released and revised standards and interpretations	21~23
(4) Summary explanation of significant accounting policies	23~47
(5) Main sources of uncertainty in major accounting judgments, estimates and assumptions	47~49
(6) Description of important accounting items	49~99
(7) Related party transactions	99~102
(8) Pledged assets	102~103
(9) Significant contingent liabilities and unrecognized contractual commitments	103
(10) Major disaster losses	103
(11) Significant post-period events	103~104
(12) Others	104
(13) Matters disclosed in the notes	104
1. Information related to major transaction matters	104
2. Information related to reinvestment business	104
3. Mainland investment information	104~105
(14) Department information	105
9. Detailed list of important accounting items	116~133

Accountant's audit report

NO.18231140A

To Optimax Technology Corporation:

Check comments

The individual balance sheets of Optimax Technology Corporation, as of December 31, 114 and 113, as well as the individual comprehensive income statement, individual statement of changes in equity, individual cash flow statement, and individual financial report notes (including a summary of significant accounting policies) from January 1 to December 31, 114 and 113, have been reviewed by our accountants.

In the opinion of this accountant, based on the audit results of this accountant and the audit reports of other accountants (please refer to the Other Matters section), the above individual financial report has been prepared in all material aspects in accordance with the financial reporting preparation standards of securities issuers, and is sufficient to adequately express the individual financial status of Optimax Technology Corporation as of December 31, 114 and 113, as well as the individual financial performance and individual cash flow from January 1 to December 31, 114 and 113.

Basis for checking opinions

This accountant performs the audit work in accordance with the rules and auditing standards for auditing financial statements entrusted by accountants. The accountant's responsibilities under these standards are further described in the section on the accountant's responsibilities for auditing individual financial reports. The personnel of the accounting firm affiliated to the firm who are subject to independence regulations have maintained detachment and independence from

Optimax Technology Corporation in accordance with the professional ethics of accountants and performed other responsibilities under the regulations. Based on the audit results of the accountant and the audit reports of other accountants, the accountant believes that sufficient and appropriate audit evidence has been obtained as the basis for expressing the audit opinion.

Key things to check

The key audit matters refer to the matters that are most important to the audit of the individual financial report of Optimax Technology Corporation for the year 114 of the Republic of China based on the professional judgment of this accountant. These matters have been addressed in the process of reviewing the overall individual financial report and forming an audit opinion. The accountant does not express an independent opinion on these matters.

The key verification matters of the individual financial report of Optimax Technology Corporation for the 114th year of the Republic of China are as follows:

Inventory evaluation

For inventory accounting policies, please refer to Note 4 (5) of the individual financial report; for the uncertainty of accounting estimates and assumptions for inventory evaluation, please refer to Note 5 of the individual financial report; for descriptions of inventory accounting items, please refer to Note 6 (6) of the individual financial report.

The main business of Optimax Technology Corporation is the manufacturing and sales of polarizers. Since inventory is easily affected by the market demand of the products used and the yield rate of the production process, resulting in inventory depreciation or sluggish losses, inventory evaluation is listed as one of the key inspection items.

The accountant performs the following main audit procedures:

Review the inventory age report and analyze the changes in inventory age in each period.
Evaluate the rationality of accounting policies, such as policies on inventory depreciation or sluggish provision.
Evaluate whether the inventory evaluation is in accordance with the company's established accounting policies.
Obtain the inventory net realizable value statement at the end of the financial reporting period, check the commodity selling price or purchase price and other data sources used for the net realizable value, and recalculate the accrued inventory allowance for depreciation losses to confirm that the implementation of such accounting estimates is consistent with its policies.
Understand the inventory management process, review its annual inventory plan and participate in annual inventory inventory, and check inventory details to evaluate the effectiveness of management in distinguishing and controlling obsolete inventory.

Impairment assessment of property, plant and equipment

For the accounting policy of impairment of non-financial assets, please refer to Note 4 (10) of the individual financial report; for the uncertainty of accounting estimates and assumptions in the assessment of impairment of non-financial assets, please refer to Note 5 of the individual financial report; for descriptions of accounting items of real estate, plant and equipment, please refer to Note 6 (8) of the individual financial report.

Optimax Technology Corporation is a highly capitalized industry and is facing interference from many factors such as the economic environment and industry competition. As the assessment of impairment of real estate, plant and equipment requires processes such as forecasting and discounting future cash flows to estimate

the recoverable amount, and this process is inherently highly uncertain, the assessment of impairment of real estate, plant and equipment is listed as one of the key audit items.

The accountant performs the following main audit procedures:

Understand the relevant policies and procedures for impairment assessment, and evaluate the rationality of management's identification of possible impairments to cash-generating units.
Regarding the recoverable amount of the independent valuation report issued by a third party appointed by Optimax Technology Corporation, review the rationality of the relevant assumptions and evaluate the qualifications and independence of the valuer.

Other matters

Included in the individual financial reports of the 113th year of the Republic of China, the financial reports of related companies recognized using the equity method have not been reviewed by this accountant, but have been reviewed by other accountants. Therefore, the opinion expressed by this accountant on the above-mentioned individual financial report, regarding the amount listed in the financial report of the aforementioned related enterprise recognized using the equity method, is based on the audit report of other accountants. As of December 31, 113, the balance of the above-mentioned investments using the equity method that had not been reviewed by the accountant was NT$36,000 thousand, accounting for 1% of the total assets; the share of comprehensive profits and losses of associated enterprises recognized using the equity method in 113 was NT$(71,663) thousand, accounting for (21)% of the total comprehensive profits and losses.

Responsibility of management and governance entities for individual financial reporting

The responsibility of the management is to prepare individual financial reports that adequately express themselves in accordance with the financial reporting standards for securities issuers, and to maintain necessary internal controls related to the preparation of individual financial reports to ensure that individual financial reports do not contain material misrepresentations resulting from fraud or error.

When preparing individual financial reports, the management's responsibilities also include assessing the ability of Optimax Technology Corporation to continue operating, the disclosure of relevant matters, and the adoption of the going concern accounting basis, unless the management intends to liquidate Optimax Technology Corporation or cease operations, or there is no practical alternative to liquidation or suspension of operations.

The governance unit of Optimax Technology Corporation (including the audit committee) is responsible for supervising the financial reporting process.

Accountants' responsibilities for reviewing individual financial reports

The purpose of the accountant's review of individual financial reports is to obtain reasonable confidence as to whether there are any material misrepresentations resulting from fraud or error in the entire individual financial report, and to issue an review report. Reasonable certainty means a high degree of confidence, but there is no guarantee that the review work performed in accordance with auditing standards will be able to detect material misrepresentations in individual financial reports. Misrepresentation may result from fraud or error. Misrepresentation of individual amounts or aggregate amounts is considered material if it can reasonably be expected to affect the economic decisions of

individual users of financial reports.

Our accountants use professional judgment and professional skepticism when conducting audits in accordance with auditing standards. The accountant also performs the following tasks:

Identify and assess the risk of material misrepresentation of individual financial reports due to fraud or error; design and implement appropriate countermeasures for the assessed risks; and obtain sufficient and appropriate audit evidence as the basis for audit opinions. Because fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls, the risk of not detecting a material misrepresentation resulting from fraud is higher than that resulting from error.
Obtain the necessary understanding of the internal controls related to the audit in order to design appropriate audit procedures under the circumstances, but the purpose is not to express an opinion on the effectiveness of the internal controls of Optimax Technology Corporation.
Evaluate the appropriateness of the accounting policies adopted by the management and the reasonableness of the accounting estimates and related disclosures made.
Based on the audit evidence obtained, make a conclusion on the appropriateness of the management's adoption of the going concern accounting basis and whether there are significant uncertainties in events or circumstances that may cast significant doubt on Optimax Technology Corporation's ability to continue operating. If the accountant believes that there are significant uncertainties in such events or circumstances, he must remind users of individual financial reports in the audit report to pay attention to the relevant disclosures in the individual financial reports, or revise the audit opinions when such disclosures are inappropriate. The accountant's conclusion is based on the audit evidence obtained as of the date of the audit report. However, future events or circumstances may cause Optimax Technology Corporation to no longer have the

ability to continue operating.

Evaluate the overall expression, structure and content of individual financial reports (including relevant notes), and whether individual financial reports appropriately express relevant transactions and events.
Obtain sufficient and appropriate verification evidence for the financial information of the entities within Optimax Technology Corporation to express opinions on the individual financial reports. The accountant is responsible for the guidance, supervision and execution of audit cases, and is responsible for forming the audit opinions of Optimax Technology Corporation.

The matters that the accountant communicates with the governance unit include the planned scope and time of the audit, as well as significant audit findings (including significant deficiencies in internal control identified during the audit process).

The accountant also provides the governance unit with a statement that the personnel of the accounting firm that are subject to independence regulations have complied with the independence-related statements in the professional ethics for accountants, and communicates with the governance unit all relationships and other matters that may be considered to affect the accountant's independence (including relevant protective measures).

Based on the matters communicated with the management unit, the accountant decided on the key audit matters for the review of the individual financial report of Optimax Technology Corporation for the 114th year of the Republic of China. The accountant will describe these matters in the audit report, unless the public disclosure of specific matters is prohibited by law, or in extremely rare circumstances, the accountant decides not to communicate specific matters in the audit report because the negative impact of such communication can reasonably be expected to outweigh the public interest that is enhanced.

BAKER TILLY CLOCK & CO.

Accountant: Wu, Hsin-Liang

Accountant: Lai, Chia-Yu

Approval number:
Financial Management Certificate Six-Character No. 09600000880
Financial Management Certificate Shen Zi No. 1050043092

March 16, 115th year of the Republic of China

OPTIMAX TECHNOLOGY CORPORATION

Individual balance sheet

December 31, 114th and 113th years of the Republic of China

Unit: Thousands of New Taiwan Dollars

assets		Note	December 31, 114		December 31, 113
code	Accounting project		Amount	%	Amount	%
	current assets
1100	Cash and cash equivalents	six (one)	$ 154,662	4	$ 143,046	4
1136	Current financial assets at amortized cost	Six (three), eight	3,500	—	19,895	—
1170	Accounts receivable,net	Six (four, twenty), seven	596,749	16	715,379	17
1200	Other receivables	Six (five), seven	89,177	2	173,322	4
130x	Inventory	six(six)	496,776	13	603,022	15
1410	Prepayments		8,249	—	6,790	—
1476	Other financial assets - current	eight	21,445	1	3,521	—
1470	Other current assets	six (four)	1,133	—	1,312	—
11xx	Total current assets		1,371,691	36	1,666,287	40
	non-current assets
1517	FVOCI - Non-current	six (two)	150,000	4	—	—
1550	Investments accounted for using equity method	six(seven)	138,922	4	110,189	3
1600	Property, plant and equipment	Six (eight), eight	1,397,852	36	1,491,235	36
1755	right-of-use assets	six(nine)	8,689	—	11,286	—
1760	investment real estate	Six (11), eight	671,650	18	622,523	15
1840	Deferred tax assets	six(twenty-four)	92,475	2	116,121	3
1975	Net defined benefit assets - non-current	six(seventeen)	15,020	—	13,340	—
1900	Other non-current assets	six (two), eight	7,875	—	128,306	3

15xx	Total non-current assets		2,482,483	64	2,493,000	60
1xxx	Total assets		$ 3,854,174	100	$ 4,159,287	100

(continued on next page)

OPTIMAX TECHNOLOGY CORPORATION
Individual Balance Sheet (continued)
December 31, 114th and 113th years of the Republic of China
Unit: Thousands of New Taiwan Dollars

Liabilities and Equity		Note	December 31, 114		December 31, 113
code	Accounting project		Amount	%	Amount	%
2100	current liabilities	six(twelve)	$ 271,991	7	$ 302,166	7
2170	short term borrowing	Six (thirteen), seven	38,515	1	33,653	1
2200	Other payables	six(fourteen)	145,249	4	165,082	4
2230	Current income tax liability	six(twenty-four)	36,705	1	870	—
2250	Liability Provision – Current	six(fifteen)	17,346	1	16,565	1
2280	Lease liability – Current	six(nine)	4,475	—	3,851	—
2322	Current Portion of Long-Term Loans Payable	six(sixteen)	728,600	19	21,600	1
2365	Refund Liabilities – Current	six(twenty)	1,457	—	3,767	—
2300	Other current liabilities	six(twenty)	8,104	—	15,848	—
21xx	Total current liabilities		1,252,442	33	563,402	14
2540	long term borrowing	six(sixteen)	101,400	3	980,000	24
2570	Deferred income tax liability	six(twenty-four)	4,805	—	8,394	—
2580	Lease liability – non-current	six(nine)	5,629	—	8,750	—
2645	deposit deposit		10,567	—	9,827	—
25xx	Total non-current liabilities		122,401	3	1,006,971	24
2xxx	total liabilities		1,374,843	36	1,570,373	38
3110	rights and interests common stock capital retained earnings	Six (eighteen)	1,670,000	43	1,690,000	41
3310	Statutory surplus reserve		131,249	3	101,883	2
3320	special surplus reserve		2,376	—	29,948	1
3350	undistributed earnings		688,669	18	811,058	19
3400	Other rights and interests		28,636	1	(2,376)	—

3500	treasury stocks		(41,599)	(1)	(41,599)	(1)
3xxx	Total equity		2,479,331	64	2,588,914	62
	Total liabilities and equity		$ 3,854,174	100	$ 4,159,287	100

(Please refer to the accompanying notes to the individual financial statements)

Chairman: Chao,Jih-Yun
Manager: Chao,Wei-Son
Accounting Supervisor: Chen, Tsong-Tse

OPTIMAX TECHNOLOGY CORPORATION

Individual comprehensive income statement

January 1 to December 31, 114 and 113 years of the Republic of China

Unit: Thousands of New Taiwan Dollars

code	project	Note	114 years		113 years
			Amount	%	Amount	%
4000	Revenue	Six (twenty), seven	$ 1,875,460	100	$ 1,887,383	100
5000	Cost of Sales	Six (six, twenty-five), seven	(1,268,350)	(68)	(1,193,692)	(63)
5900	Gross Profit		607,110	32	693,691	37
6000	operating expenses	Six (twenty-five), seven
6100	Selling expenses		(154,566)	(8)	(135,661)	(7)
6200	Administrative expenses		(150,696)	(8)	(140,206)	(8)
6300	research and development expenses		(46,080)	(2)	(42,308)	(2)
6450	Expected credit impairment gain (loss)	Six (four), seven	10,081	1	(4,089)	-
	Total operating expenses		(341,261)	(17)	(322,264)	(17)
6900	Operating Income		265,849	15	371,427	20
7000	Non-operating income and expenses
7100	interest income		1,543	-	3,257	-
7010	other income	Six (ten, twenty-one)	51,579	3	46,922	3
7020	Other profits and losses	six(twenty-two)	(47,549)	(3)	50,328	3
7050	financial cost	six(twenty-three)	(29,343)	(2)	(30,554)	(2)
7055	Expected credit impairment gain	Six (five), seven	477	-	513	-
7070	Share of profits and losses of subsidiaries and affiliated enterprises recognized using the equity method	six(seven)	(19,147)	(1)	(67,823)	(4)
	Total non-operating income and expenses		(42,440)	(3)	2,643	-
7900	Income before tax		223,409	12	374,070	20
7950	income tax expense	six(twenty-four)	(55,481)	(3)	(36,800)	(2)
8200	Net Income		167,928	9	337,270	18
8300	Other comprehensive gains and losses
8310	Items not reclassified to profit or loss
8311	Remeasurement numbers for defined benefit plans	six(seventeen)	1,530	-	5,002	-
8316	At fair value through other comprehensive profit or loss	Six (eighteen)	33,288	2	-	-
	Unrealized evaluation of measured equity instrument investments

	Price profit and loss
8336	Unrealized valuation gains and losses on equity instrument investments measured at fair value through other comprehensive gains and losses for subsidiaries recognized using the equity method	Six(eighteen)	(5,537)	-	-	-
8360	Items that may be subsequently reclassified to profit or loss
8361	Conversion of financial statements of foreign operating institutions exchange difference	Six(eighteen)	3,484	-	1,349	-
8399	Income tax related to components of other comprehensive income that will be reclassified to profit or loss	Six (eighteen, twenty-four)	(223)	-	-	-
8500	Other Comprehensive Income for the Year (net after tax)		32,542	2	6,351	-
	Total Comprehensive Income for the Year		$ 200,470	11	$ 343,621	18
	Earnings per share (yuan)
9750	Basic earnings per share	six(nineteen)	$ 1.01		$ 2.01
9850	Diluted earnings per share		$ 1.01		$ 2.01

(Please refer to the accompanying notes to the individual financial statements)

Chairman: Chao,Jih-Yun

Manager: Chao,Wei-Son

Accounting Supervisor: Chen, Tsong-Tse

OPTIMAX TECHNOLOGY CORPORATION

Individual equity change table

January 1 to December 31, 114 and 113 years of the Republic of China

Unit: Thousands of New Taiwan Dollars

project	common stock capital	retained earnings			Other equity items		treasury stocks	Total equity
		Statutory surplus reserve	special surplus reserve	undistributed earnings	foreign operating organizations Financial statement conversion exchange difference	Unrealized valuation (gains) and losses on financial assets measured at fair value through other comprehensive gains and losses
Balance as of January 1,113	$ 1,700,000	$ 81,278	$ 35,651	$ 700,304	$ (3,719)	$ (26,229)	$ (41,599)	$ 2,445,686
Earnings allocation and distribution:
Set aside statutory surplus reserve	—	20,605	—	(20,605)	—	—	—	—
Special surplus reserve reversal	—	—	(5,703)	5,703	—	—	—	—
Common stock cash dividends	—	—	—	(168,000)	—	—	—	(168,000)
Net profit for this period	—	—	—	337,270	—	—	—	337,270
Other comprehensive gains and losses for the period	—	—	—	5,002	1,349	—	—	6,351
Total comprehensive profit and loss for the period	—	—	—	342,272	1,349	—	—	343,621
Disposal of equity instruments measured at fair value through other comprehensive profit or loss	—	—	—	(26,223)	—	26,223	—	—
Treasury stock buyback	—	—	—	—	—	—	(32,393)	(32,393)
Cancellation of treasury shares	(10,000)	—	—	(22,393)	—	—	32,393	—
Balance as of December 31, 113	$ 1,690,000	$ 101,883	$ 29,948	$ 811,058	$ (2,370)	$ (6)	$ (41,599)	$ 2,588,914
Balance as of January 1, 114	$ 1,690,000	$ 101,883	$ 29,948	$ 811,058	$ (2,370)	$ (6)	$ (41,599)	$ 2,588,914

Earnings allocation and distribution:
Set aside statutory surplus reserve	—	29,366	—	(29,366)	—	—	—	—
Special surplus reserve reversal	—	—	(27,572)	27,572	—	—	—	—
Common stock cash dividends	—	—	—	(250,500)	—	—	—	(250,500)
Net profit for this period	—	—	—	167,928	—	—	—	167,928
Other comprehensive gains and losses for the period	—	—	—	1,530	3,261	27,751	—	32,542
Total comprehensive profit and loss for the period	—	—	—	169,458	3,261	27,751	—	200,470
Treasury stock buyback	—	—	—	—	—	—	(59,553)	(59,553)
Cancellation of treasury shares	(20,000)	—	—	(39,553)	—	—	59,553	—
Balance as of December 31, 114	$ 1,670,000	$ 131,249	$ 2,376	$ 688,669	$ 891	$ 27,745	$ (41,599)	$ 2,479,331

(Please refer to the accompanying notes to the individual financial statements)

Chairman: Chao,Jih-Yun

Manager: Chao,Wei-Son

Accounting Supervisor: Chen, Tsong-Tse

OPTIMAX TECHNOLOGY CORPORATION

Individual cash flow statement

January 1 to December 31, 114 and 113 years of the Republic of China

Unit: Thousands of New Taiwan Dollars

project	114 years	113 years
Cash flow from operating activities:
Net profit before tax for the current period	$ 223,409	$ 374,070
Adjustment items:
Income and expense items
depreciation expense	64,031	63,638
Amortization expense	647	49
Expected credit impairment (profit) losses	(10,558)	3,576
interest expense	29,343	30,554
interest income	(1,543)	(3,257)
Share of profits and losses of subsidiaries and affiliated enterprises recognized using the equity method	19,147	67,823
Disposal of losses to real property, plant and equipment	12,993	12,053
Disposal of losses on investment real estate	32	20
Non-financial asset impairment reversal benefits	(6,777)	(4,332)
Unrealized foreign currency exchange losses (gains)	19,207	(56,803)
Prepaid equipment payment transferred to expenses	3	—
Changes in assets/liabilities related to operating activities
Accounts receivable	122,071	(133,777)
Other receivables	27,234	1,259
Inventory	106,246	83,932
advance payment	(1,459)	4,601
Other current assets	179	110
net defined benefit assets	(150)	(1,910)
accounts payable	4,266	2,256
Other payables	(17,927)	11,269
Other current liabilities	(9,273)	2,349
Cash inflow from operations	581,121	457,480
interest charged	1,739	3,134
Interest paid	(29,556)	(30,947)
Refund (payment) of income tax	188	(13,023)
Net cash inflow from operating activities	553,492	416,644

(continued on next page)

OPTIMAX TECHNOLOGY CORPORATION

Individual Cash Flow Statement (continued)

January 1 to December 31, 114 and 113 years of the Republic of China

Unit: Thousands of New Taiwan Dollars

project	114 years	113 years
Cash flows from investing activities:
Acquiring financial assets measured at amortized cost	$ —	$ (16,395)
Disposal of financial assets measured at amortized cost	16,395	—
Increase in prepaid investment	—	(120,000)
Acquisition of property, plant and equipment	(22,331)	(14,066)
Disposal of property, plant and equipment	8	714
Acquire investment real estate	—	(50,546)
Other financial assets (increase) decrease	(17,924)	79,411
Increase in other non-current assets	(1,148)	(1,322)
Net cash outflow from investing activities	(25,000)	(122,204)
Cash flow from financing activities:
Short-term borrowings (decrease) increase	(30,815)	107,229
long-term borrowing	—	270,000
repay long-term borrowings	(171,600)	(478,400)
Deposit margin increase	740	1,395
Pay cash dividends	(250,500)	(168,000)
Lease principal repayment	(4,165)	(3,651)
Treasury stock buyback cost	(59,553)	(32,393)
Net cash outflow from financing activities	(515,893)	(303,820)
The impact of exchange rate changes on cash and cash equivalents	(983)	7,511
Increase (decrease) in cash and cash equivalents during the period	11,616	(1,869)
Opening cash and cash equivalent balances	143,046	144,915
Closing cash and equivalent cash balances	$ 154,662	$ 143,046

(Please refer to the accompanying notes to the individual financial statements)

Chairman: Chao,Jih-Yun
Manager: Chao,Wei-Son
Accounting Supervisor: Chen, Tsong-Tse

OPTIMAX TECHNOLOGY CORPORATION

Notes to individual financial reports

The 114th and 113th years of the Republic of China

(Amounts are in NT$1,000 unless otherwise noted)

Company history

Optimax Technology Corporation (hereinafter referred to as the company) was established in March 87. The company's main business items are the manufacturing and sales of polarizing plates.

The company was approved for listing in August 91, and its shares have been listed and traded on the Taiwan Stock Exchange since October 91.

This individual financial report is expressed in New Taiwan Dollars, the Company's functional currency.

Date and procedures for approving financial reports

This individual financial report was approved by the board of directors on March 12, 115.

Application of newly released and revised standards and interpretations

(1) The impact of adopting the newly released and revised IFRS accounting standards approved and effective by the Financial Supervisory Commission (hereinafter referred to as the "Financial Supervisory Commission")

The following table summarizes the newly released, revised and revised standards and interpretations of the IFRS accounting standards that were approved and issued by the Financial Supervisory Commission and became effective in 114:

Newly released/amended/revised standards and explanations	International Accounting Standards Board Effective date will be announced
Amendment to IAS 21 “Lack of Convertibility”	January 1, 114th year of the Republic of China

The Company's application of the above standards and interpretations has no significant impact on the Company's financial position and financial performance.

(2) The impact of not yet adopting the newly released and revised IFRS accounting standards approved by the Financial Supervisory Commission

The following table summarizes the newly released, revised and revised standards and interpretations of the IFRS accounting standards approved by the Financial Supervisory Commission and applicable in 115:

Newly released/amended/revised standards and explanations	International Accounting Standards Board Effective date will be announced
Amendments to IFRS 9 and IFRS 7 "Amendments to the Classification and Measurement of Financial Instruments"	January 1, 115th year of the Republic of China
Amendments to IFRS 9 and IFRS 7 "Contracts involving nature-dependent electricity"	January 1, 115th year of the Republic of China
IFRS 17 “Insurance Contracts”	January 1, 112 Years of the Republic of China
Amendments to IFRS 17 “Contracts of Insurance”	January 1, 112 Years of the Republic of China
Amendments to IFRS 17 "Initial Application of IFRS 17 and IFRS 9 – Comparative Information"	January 1, 112 Years of the Republic of China
Annual Improvements to IFRS Accounting Standards – Volume 11	January 1, 115th year of the Republic of China

The Company has assessed that the above standards and interpretations have no significant impact on the Company's financial position and financial performance.

(3) The impact of IFRS accounting standards that have been issued by the International Accounting Standards Board but have not yet been approved by the Financial Supervisory Commission

The following table summarizes the newly issued, revised and revised standards and interpretations that have been issued by the International Accounting Standards Board but have not yet been incorporated into the IFRS accounting standards approved by the Financial Supervisory Commission:

Newly released/amended/revised standards and explanations	International Accounting Standards Board Effective date will be announced
Amendments to IFRS 10 and IAS 28 "Asset sales or contributions between investors and their affiliates or joint ventures"	International accounting standards Board decision
IFRS 18 "Presentations and Disclosures in Financial Statements"	January 1, 116th year of the Republic of China (Note)
IFRS 19 "Subsidiaries not publicly accountable: Disclosure"	January 1, 116th year of the Republic of China
Amendments to IAS 21 "Conversion to Currency Expression of High Inflation"	January 1, 116th year of the Republic of China

Note: The Financial Supervisory Commission announced in a press release on September 25, 114 that publicly listed companies will apply International Financial Reporting Standards No. 18 (hereinafter referred to as IFRS 18) starting from 117. If an enterprise needs to apply IFRS 18 in advance, it may choose to apply IFRS 18 in advance after the Financial Supervisory Commission approves IFRS 18.

Except for the explanation below, the Company has assessed that the above standards and interpretations have no significant impact on the Company's financial position and financial performance.

IFRS 18 "Presentation and Disclosures in Financial Statements" replaces International Accounting Standard 1 and updates the structure of the consolidated income statement, adds disclosures on management performance measurement, and strengthens the principles of aggregation and segmentation applied in the main financial statements and notes.

Summary of significant accounting policies

(1) Comply with the statement

This individual financial report is prepared in accordance with the Financial Reporting Standards for Securities Issuers.

(2) Basis for compilation

Except for financial instruments measured at fair value and net defined benefit assets recognized as the present value of defined benefit obligations less the fair value of plan assets, this individual financial report is prepared on the historical cost basis.

The preparation of individual financial reports requires the use of some important accounting estimates. In the process of applying the company's accounting policies, management also needs to use its judgment. For projects involving a high degree of judgment or complexity, or projects involving significant assumptions and estimates in individual financial reports, please refer to Note 5.

When preparing individual financial reports, the Company adopts the equity method for investing in subsidiaries or related enterprises. In order to make the current year's profits and losses, other comprehensive profits and losses and equity in this individual financial report the same as the current year's profits and losses, other comprehensive profits and losses and equity attributable to the company's owners in the company's consolidated financial report, certain accounting treatment differences between the individual basis and the consolidated basis are adjustments to "investments using the equity method", "shares of profits and losses of subsidiaries and affiliates using the equity method", "shares of other

comprehensive profits and losses of subsidiaries and affiliates using the equity method" and related equity items.

(3) Criteria for distinguishing current and non-current assets and liabilities

Assets that meet one of the following conditions are classified as current assets; assets that are not current assets are classified as non-current assets:

(1) Those who expect to realize the asset during the normal operating cycle, or intend to sell or consume it.

(2) Those held mainly for trading purposes.

(3) Expected to be realized within twelve months after the balance sheet date.

(4) Cash or cash equivalents, except those that are restricted from being exchanged or used to settle liabilities at least twelve months after the balance sheet date.

Liabilities that meet one of the following conditions are classified as current liabilities; liabilities that are not current liabilities are non-current liabilities:

(1) Those expected to be repaid during the normal operating cycle.

(2) Those held mainly for trading purposes.

(3) Those that are expected to be due and repaid within twelve months after the balance sheet date (even if a long-term refinancing or rescheduled payment agreement has been completed between the balance sheet date and the date of issuance of financial reports, it is also a current liability).

(4) Liabilities for which there is no substantial right on the balance sheet

date to defer the repayment period to at least twelve months after the balance sheet date.

(4) Foreign currency

When the company prepares financial reports, transactions in currencies other than the company's functional currency (foreign currencies) are converted into functional currency records based on the exchange rate on the transaction date.

Foreign currency monetary items are translated at the closing exchange rate on each balance sheet date. Exchange differences arising from the delivery or conversion of monetary items are recognized in profit or loss in the current period.

Foreign currency non-monetary items measured at fair value are converted at the exchange rate on the day when the fair value is determined, and the resulting exchange differences are listed in current profits and losses. However, if changes in fair value are recognized in other comprehensive gains and losses, the resulting exchange differences are listed in other comprehensive gains and losses.

Foreign currency non-monetary items measured at historical cost are converted at the exchange rate on the transaction date and will not be re-converted.

When preparing individual financial reports, the assets and liabilities of foreign operating entities (including subsidiaries operating in countries or using currencies different from the Company's) are translated into New Taiwan dollars at the exchange rate on each balance sheet date. Income and expense items are converted at the current average exchange rate, and the resulting exchange differences are listed in other comprehensive gains and losses.

If the Company disposes of all the interests in a foreign operating

institution, or disposes of part of the interests in a subsidiary of a foreign operating institution but loses control, all accumulated exchange differences related to the foreign operating institution will be reclassified to profit or loss.

If the partial disposal of a subsidiary of a foreign operating institution does not result in a loss of control, the accumulated exchange difference will be re-attributed to the non-controlling interests of the subsidiary in proportion and will not be recognized as profit or loss.

(5) Inventory

Inventories are measured at the lower of cost and net realizable value. Inventories are calculated based on the weighted average method. Net realizable value refers to the balance of the estimated selling price minus the estimated costs required to complete the project and the estimated costs required to complete the sale.

(6) Investments using the equity method

The Company adopts the equity method to handle investments in subsidiaries and related enterprises.

Investment in subsidiaries

A subsidiary is an entity over which the Company has control. Under the equity method, investments are initially recognized at cost, and the carrying amount after acquisition increases or decreases with the company's share of the subsidiary's profits and losses and other comprehensive profits and losses and profit distribution. In addition, changes in the Company's other interests in subsidiaries are recognized in proportion to its shareholding.

When the company's change in ownership interest in a subsidiary does not result in a loss of control, it is treated as an equity transaction. The

difference between the carrying amount of the investment and the fair value of the consideration paid or received is recognized directly as equity.

When the Company's share of losses to a subsidiary is equal to or exceeds its equity in the subsidiary (including the carrying amount of the subsidiary under the equity method and other long-term interests that are essentially part of the Company's net investment in the subsidiary), losses will continue to be recognized in proportion to the shareholding.

The amount by which the acquisition cost exceeds the Company's share of the net fair value of the identifiable assets and liabilities of the subsidiary that constitutes the business on the date of acquisition is classified as goodwill. This goodwill is included in the book amount of the investment and cannot be amortized; the amount by which the Company's share of the net fair value of the identifiable assets and liabilities of the subsidiary that constitutes the business exceeds the acquisition cost on the date of acquisition is recorded as income for the current period.

When the Company assesses impairment, it considers the cash-generating unit as a whole through financial reporting and compares its recoverable amount to its carrying amount. If the recoverable amount of the asset subsequently increases, the reversal of the impairment loss will be recognized as profit. However, the carrying amount of the asset after the reversal of the impairment loss shall not exceed the carrying amount of the asset after deducting amortization if no impairment loss is recognized. Impairment losses attributable to goodwill may not be reversed in subsequent periods.

When the company loses control of a subsidiary, the company measures its remaining investment in the former subsidiary based on the fair value on the date of loss of control. The difference between the fair value of the remaining investment and any disposal price and the book amount of the investment on the date of loss of control is included in the current profit and loss. In addition, the accounting treatment for all amounts related to the subsidiary recognized in other comprehensive profits and losses is the same as the basis that the company must follow if it directly disposes the relevant assets or liabilities.

Unrealized gains and losses from downstream transactions between the Company and its subsidiaries are eliminated from the individual financial reports. The profits and losses arising from the counter-current and side-stream transactions between the Company and its subsidiaries are recognized in individual financial reports only to the extent that they are not related to the Company's interest in the subsidiaries.

Investment in related enterprises

Affiliated enterprises refer to enterprises that have significant influence on the company but are not subsidiaries or joint ventures.

The Company adopts the equity method for investments in related enterprises.

Under the equity method, investments in affiliated enterprises are initially recognized at cost, and the carrying amount after acquisition increases or decreases with the company's share of the affiliated enterprise's profits and losses and other comprehensive profits and

losses and profit distribution. In addition, changes in the Company's interests in related enterprises are recognized in proportion to its shareholding.

When an affiliated enterprise issues new shares, if the company fails to subscribe according to the shareholding ratio, resulting in a change in the shareholding ratio and an increase or decrease in the net equity value of the investment, the increase or decrease is adjusted to the capital reserve - the change in the net equity value of the affiliated enterprise is recognized using the equity method and the investment is recognized using the equity method. However, if the ownership interest in an affiliated enterprise is reduced due to failure to subscribe or acquire according to the shareholding ratio, the amount recognized in other comprehensive profits and losses related to the affiliated enterprise will be reclassified according to the reduction ratio. The accounting treatment basis is the same as the basis that the affiliated enterprise must follow if it directly disposes the relevant assets or liabilities. If the adjustment in the preceding paragraph should be debited to capital reserve, and if the capital reserve balance generated by the investment using the equity method is insufficient, the difference shall be debited to retained earnings.

When the Company's share of losses from an affiliated enterprise is equal to or exceeds its equity in the affiliated enterprise (including the carrying amount of the investment in the affiliated enterprise under the equity method and other long-term interests that are essentially part of

the Company's net investment in the affiliated enterprise), it will stop recognizing further losses. The Company recognizes additional losses and liabilities only to the extent that it has incurred legal obligations, constructive obligations or has made payments on behalf of related enterprises.

When assessing impairment, the Company treats the overall carrying amount of the investment (including goodwill) as a single asset, compares the recoverable amount with the carrying amount, and performs impairment testing. The recognized impairment loss is not allocated to any assets that form part of the carrying amount of the investment, including goodwill. Any reversal of impairment losses is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company ceased to use the equity method from the date when its investment ceased to be an associated enterprise, and its retained interests in the original associated enterprise were measured at fair value. The difference between the fair value and disposal price and the book amount of the investment on the date when it stopped using the equity method was included in the current year's profit and loss. In addition, the accounting treatment basis for all amounts recognized in other comprehensive profits and losses related to the related enterprise is the same as the basis that the related enterprise must follow if it directly disposes the relevant assets or liabilities.

Profit and loss arising from counter-current, downstream and side-stream transactions between the Company and its affiliated enterprises are recognized in this financial report only to the extent that

they are not related to the Company's interest in the affiliated enterprise.

(7) Real estate, plant and equipment

Property, plant and equipment are recognized at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment losses.

Real estate, plant and equipment under construction are recognized at cost less accumulated impairment losses. Costs include professional service fees and borrowing costs eligible for capitalization.

The samples produced to test whether the assets can operate normally before reaching the expected use status are measured at the lower of cost and net realizable value, and the sales price and cost are recognized in profit and loss.

When these assets are completed and reach their intended use, they are classified into the appropriate categories of property, plant and equipment and depreciation begins.

Except for self-owned land, which is not depreciated, other real estate, plants and equipment are depreciated separately on a straight-line basis within their useful lives. The Company reviews the estimated useful life, residual value and depreciation method at least at the end of each year, and defers the impact of changes in applicable accounting estimates.

When property, plant and equipment are declassified, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

(8) Investment real estate

Investment real estate is real estate held to earn rentals or capital appreciation, or both (including right-of-use assets that meet the definition of investment real estate). Investment real estate also includes land held for which future use has not yet been determined.

Self-owned investment real estate is initially measured at cost (including transaction costs), and subsequently measured at cost less accumulated depreciation and accumulated impairment losses.

Investment real estate acquired under lease is initially measured at cost (including the original measured amount of the lease liability and the lease payments paid before the start of the lease), and is subsequently measured at cost less accumulated depreciation and accumulated impairment losses, and the remeasured amount of the lease liability is adjusted.

All investment properties are depreciated on a straight-line basis.

Investment real estate is classified as real estate, plant and equipment based on the carrying amount on the date when it is transferred to self-use. Real estate, plant and equipment are classified as investment real estate based on their carrying amounts at the end of their own use.

When investment real estate is delisted, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

(9) Intangible assets

Obtained separately

Intangible assets with limited useful lives acquired separately are

initially measured at cost and subsequently at cost less accumulated amortization and accumulated impairment losses. Intangible assets are amortized on a straight-line basis over their useful lives. The Company reviews the estimated useful lives, residual values and amortization methods at least at the end of each year, and defers the impact of changes in applicable accounting estimates.

2. Remove columns

When an intangible asset is delisted, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

(10) Impairment of non-financial assets

The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment, right-of-use assets, investment properties and intangible assets may have been impaired. If any indication of impairment exists, estimate the asset's recoverable amount. If the recoverable amount of an individual asset cannot be estimated, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs of disposal and value in use. If the recoverable amount of an individual asset or cash-generating unit is lower than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, and the impairment loss is recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised recoverable

amount, provided that the increased carrying amount does not exceed the carrying amount (less amortization or depreciation) that would have been determined if the asset or cash-generating unit had not recognized an impairment loss in previous years. The reversal of impairment losses is recognized in profit or loss.

(11) Financial instruments

Financial assets and financial liabilities are recognized in the individual balance sheet when the Company becomes a party to the contractual terms of the instrument.

When financial assets and financial liabilities are initially recognized, if the financial assets or financial liabilities are not measured at fair value through profit or loss, they are measured at fair value plus transaction costs directly attributable to the acquisition or issuance of the financial assets or financial liabilities. Transaction costs that are directly attributable to the acquisition or issue of a financial asset or financial liability measured at fair value through profit or loss are recognized immediately in profit or loss.

Financial assets

Conventional transactions of financial assets are subject to accounting recognition and delisting on the transaction date.

(1) Measurement types

The types of financial assets held by the Company include financial assets measured at amortized cost and equity instrument investments measured at fair value through other comprehensive gains and losses.

A. Financial assets measured at amortized cost

If the Company's investment financial assets meet both of the following conditions, they will be classified as financial assets measured at amortized cost:

(a) It is held under a business model whose purpose is to hold financial assets to collect contractual cash flows; and
(b) The terms of the contract generate cash flows on a specific date, which cash flows are solely for the payment of principal and interest on the outstanding principal amount.

After original recognition, financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable, other receivables and other financial assets measured at amortized cost) are measured at amortized cost based on the total carrying amount determined by the effective interest method less any impairment losses. Any foreign currency exchange gains and losses are recognized in profit and loss.

Except for the following two situations, interest income is calculated by multiplying the effective interest rate by the total carrying amount of financial assets:

(a) For credit-impaired financial assets purchased or originated, interest income is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial asset.
(b) For financial assets that are not purchased or originated with credit impairment, but subsequently become credit impaired,

interest income shall be calculated based on the effective interest rate multiplied by the amortized cost of the financial asset starting from the next reporting period after the credit impairment.

Cash equivalents include time deposits that are highly liquid within 3 months from the date of acquisition, can be converted into fixed amounts of cash at any time, and have little risk of value changes, and are used to meet short-term cash commitments.

B. Equity instrument investments measured at fair value through other comprehensive gains and losses

At the time of original recognition, the Company may make an irrevocable choice to designate investments in equity instruments that are not held for trading and are not recognized or subject to consideration by the acquirer of a business combination to be measured at fair value through other comprehensive gains and losses.

Equity instrument investments measured at fair value through other comprehensive profit or loss are measured at fair value, and subsequent changes in fair value are reported in other comprehensive profit or loss and accumulated in other equity. When an investment is disposed of, accumulated profits and losses are transferred directly to retained earnings and are not reclassified as profit or loss.

Dividends from equity instrument investments measured at fair value through other comprehensive profit or loss are recognized in profit or loss when the Company's right to receive payment is established, unless the dividend clearly represents the recovery of part of the investment cost.

(2) Impairment of financial assets

A. The Company assesses impairment losses on financial assets (including accounts receivable) and lease receivables measured at amortized cost based on expected credit losses on each balance sheet date.

B. Accounts receivable and lease receivables are recognized as allowance losses based on expected credit losses during the duration. For other financial assets, it is first assessed whether the credit risk has increased significantly since the original recognition. If there has not been a significant increase, an allowance loss will be recognized based on the 12-month expected credit losses. If it has increased significantly, an allowance loss will be recognized based on the expected credit losses during the duration.

C. Expected credit loss is the weighted average credit loss with the risk of default as the weight. The 12-month expected credit losses represent the expected credit losses caused by possible default events of the financial instrument within 12 months after the reporting date, and the duration expected credit losses represent

the expected credit losses caused by all possible default events of the financial instrument during the expected duration.

Impairment losses on all financial assets are reduced through the allowance account to reduce their carrying amounts.

(3) Delisting of financial assets

The Company only removes financial assets when the contractual rights to the cash flows from the financial assets expire, or when the financial assets have been transferred and substantially all the risks and rewards of ownership of the assets have been transferred to other entities.

When a financial asset measured at amortized cost is eliminated in its entirety, the difference between its carrying amount and the consideration received is recognized in profit or loss. When equity instrument investments measured at fair value are eliminated as a whole through other comprehensive profit or loss, accumulated profits and losses are transferred directly to retained earnings and are not reclassified as profit or loss.

Financial liabilities and equity instruments

(1) Classification of liabilities or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity based on the substance of the contractual agreement and the definition of financial liabilities and equity instruments.

An equity instrument is any contract that represents the Company's remaining interest in its assets after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the amount obtained after deducting direct issuance costs.

The company's own equity instruments subsequently recovered are recognized and deducted under equity. The purchase, sale, issuance or cancellation of the company's own equity instruments is not recognized in profit or loss.

(2) Financial liabilities

If financial liabilities are not held for trading and are not designated as measured at fair value through profit or loss (including accounts payable), they are measured at fair value plus directly attributable transaction costs when initially recognized; subsequent evaluation is measured at amortized cost using the effective interest method.

(3) Exclusion of financial liabilities

When excluding financial liabilities, the difference between their carrying amount and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized as profit or loss.

(12) Liability provision

When the company has current obligations (statutory or constructive obligations) due to past events, and it is very likely that it will have to repay the obligation, and the amount of the obligation can be reliably estimated, a liability reserve is recognized. The amount recognized as liability provision takes into account the risks and uncertainties of the obligation and is the best estimate of the expenditure required to settle the obligation on the balance sheet date. Liability provisions are measured as the estimated discounted cash flows to settle the obligation.

(13) Revenue recognition

After the Company identifies performance obligations in customer contracts, it allocates the transaction price to each performance obligation and recognizes revenue when each performance obligation is satisfied.

merchandise sales revenue

Revenue from product sales comes from the manufacturing and sales of polarizing plates. Revenue from sales is recognized when control of the product is transferred to the customer, that is, when the product is delivered to the customer and the Company has no outstanding performance obligations that may affect the customer's acceptance of the product. Because when the goods arrive at the customer's designated location, the customer has the right to set a price and use the goods and has the main responsibility for resale, and bears the risk of obsolescence of the goods. The company recognizes revenue and accounts receivable at that point in time. Advances received before the goods arrive are recognized as contract liabilities.
Revenue from merchandise sales is measured based on the fair value of the consideration received or receivable, excluding estimated customer returns, discounts and other similar allowances. The company estimates possible sales returns and discounts based on historical experience and other known reasons, and accordingly recognizes refund liabilities and related rights to products to be returned.

(14) Leasing

The Company evaluates whether the contract is (or contains) a lease on the date of establishment of the contract.

The company is the lessor

When the terms of the lease transfer substantially all the risks and rewards of ownership of the asset to the lessee, it is classified as a finance lease. All other leases are classified as operating leases.

When the Company subleases right-of-use assets, it determines the classification of the sublease based on the right-of-use assets (rather than the underlying assets). However, if the main lease is a short-term lease for which the Company applies the recognition exemption, the sublease is classified as an operating lease.

Under an operating lease, the lease payments after deducting lease incentives are recognized as income on a straight-line basis during the relevant lease period. Lease negotiations with lessees are treated as new leases from the effective date of the lease modification.

The company is the lessee

Except for leases of low-value underlying assets that are subject to the recognition exemption and lease payments for short-term leases, which are recognized as expenses on a straight-line basis during the lease period, all other leases recognize right-of-use assets and lease liabilities on the inception date of the lease.

The right-of-use asset is initially measured at cost (including the original measurement amount of the lease liability, the lease payments paid before the lease commencement date minus the lease incentives received, the original direct costs and the estimated cost of restoring the underlying asset). It is subsequently measured at cost minus accumulated depreciation and accumulated impairment losses, and the remeasurement amount of the lease liability is adjusted.

Except for those that meet the definition of investment real estate, right-of-use assets are expressed separately on individual balance sheets. For the recognition and measurement of right-of-use assets that meet the definition of investment real estate, please refer to Note 4 (8) Accounting Policy for Investment Real Estate.

Right-of-use assets are depreciated on a straight-line basis from the date of lease inception to the earlier of the expiry of the useful life or the expiration of the lease period.

The lease liability is initially measured at the present value of the lease payments. If the interest rate implicit in the lease is easily determined, the lease payments are discounted using that interest rate. If this rate is not readily determinable, the lessee's incremental borrowing rate is used.

Subsequently, the lease liability is measured on an amortized cost basis using the effective interest method, and the interest expense is amortized over the lease period. If changes in the lease period or in the index or rate used to determine lease payments lead to changes in future lease payments, the company will remeasure the lease liability and adjust the right-of-use assets accordingly. However, if the book value of the right-of-use assets has been reduced to zero, the remaining remeasured amount will be recognized in profit or loss. For lease modifications that are not treated as separate leases, the remeasurement of lease liabilities due to reduction in the scope of the lease is to reduce the right-of-use assets, and the profit or loss from partial or full termination of the lease is recognized; the remeasurement of lease liabilities due to other modifications is to adjust the right-of-use assets.

Lease liabilities are expressed separately on the individual balance sheet.

(15) Employee benefits

Short-term employee benefits

Short-term employee benefits are measured as the undiscounted amount expected to be paid and recognized as an expense when the related services are provided.

Pension

(1) Determine the withdrawal plan

For determined withdrawal plans, the amount of pension funds that should be withdrawn is recognized as pension expenses for the current period on an accrual basis. Prepaid provisions are recognized as assets to the extent that they can be refunded in cash or reduce future payments.

(2) Defined benefit plan

The net obligation under the defined benefit plan is calculated by discounting the future benefit amount earned by the employee during the current period or past service, and subtracting the fair value of the plan assets from the present value of the defined benefit obligation at the balance sheet date. The net defined benefit obligation is calculated annually by the actuary using the estimated unit benefit method, and the discount rate is determined with reference to the market yield of high-quality corporate bonds on the balance sheet date that is consistent with the currency and period of the defined benefit plan; in countries where there is no deep market for high-quality corporate bonds, the market yield of government bonds (on the balance sheet date) is used. Remeasurements arising

from defined benefit plans are recognized in other comprehensive profits and losses in the current period and included in retained earnings. Expenses related to upfront service costs are immediately recognized as profit or loss.

Termination benefits

Termination benefits are benefits provided to employees when their employment is terminated before the normal retirement date or when the employee decides to accept the company's welfare offer in exchange for the termination of employment. The Company recognizes expenses when it is no longer possible to revoke the offer of severance benefits or when it recognizes related restructuring costs, whichever is earlier. Benefits that are not expected to be fully settled within 12 months after the balance sheet date should be discounted.

(16) Income tax

Income tax expense is the sum of current income tax and deferred income tax.

Current income tax

The company determines the current income (loss) in accordance with the Income Tax Law of the Republic of China and calculates the income tax payable (recoverable) accordingly.

The additional income tax levied on the undistributed earnings calculated in accordance with the Income Tax Law of the Republic of China is recognized in the year of resolution of the shareholders' meeting.

Adjustments to the income tax payable in previous years are included in the current income tax.

Deferred income tax

Deferred income tax is calculated based on temporary differences arising from the carrying amounts of assets and liabilities and the tax basis for calculating taxable income. Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred tax assets are recognized to the extent that it is probable that taxable income will be available against which the temporary differences or losses can be utilised.

Taxable temporary differences related to investment subsidiaries are recognized as deferred income tax liabilities, except if the company can control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences related to such investments are recognized as deferred income tax assets only to the extent that it is probable that sufficient taxable income will be available to realize the temporary differences and that they are expected to reverse in the foreseeable future.

The carrying amount of deferred income tax assets is re-examined at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to recover all or part of the asset. Those that were not originally recognized as deferred income tax assets will be re-examined at each balance sheet date, and if it is likely that taxable income will be generated in the future for them to recover all or part of the assets, the book amount will be increased.

Deferred income tax assets and liabilities are measured based on the tax rate expected in the current period when liabilities are settled or assets are realized. This tax rate is based on tax rates and tax laws that have

been enacted or substantively enacted on the balance sheet date. The measurement of deferred income tax liabilities and assets reflects the tax consequences of the manner in which the Company expects to recover or settle the carrying amounts of its assets and liabilities at the balance sheet date.

Current and deferred income taxes

Current and deferred income tax are recognized in profit or loss, except that current and deferred income tax related to items recognized in other comprehensive profit or loss or directly included in equity are recognized in other comprehensive profit or loss or directly included in equity respectively.

Main sources of uncertainty in major accounting judgments, estimates and assumptions

When the Company adopts the accounting policies described in Note 4, if information on the carrying amount of assets and liabilities is not easily obtained from other sources, the management must make relevant judgments, estimates and assumptions based on historical experience and other relevant factors. Estimates and related assumptions are based on historical experience and other factors considered relevant. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. If the estimate revision affects only the current period, it is recognized in the current period when the accounting estimate is revised. If the revision of accounting estimates affects both the current and future periods, it is recognized in the current period and future periods of the estimate revision.

The main sources of uncertainty in the Company's significant accounting judgments, estimates and assumptions are as follows:

(1) Evaluation of inventory

Since inventories must be measured at the lower of cost and net realizable value, the Company must use judgment and estimates to determine the net realizable value of inventories at the end of the financial reporting period. Due to the rapid changes in the industry, the Company evaluates the amount of inventory due to normal wear and tear, obsolescence or no market value at the end of the financial reporting period, and writes down the inventory cost to the net realizable value. This inventory evaluation is mainly based on estimates of product demand within a specific future period, so significant changes may occur.

(2) Financial asset impairment assessment

The estimated impairment of accounts receivable is based on the Company's assumptions about default rates and expected loss rates. The Company considers historical experience, current market conditions and forward-looking information to formulate assumptions and select input values for impairment assessment. Please refer to Note 6 (4) for the important assumptions and input values used. If actual future cash flows are less than expected, significant impairment losses may occur.

(3) Impairment assessment of non-financial assets

During the asset impairment assessment process, the Company needs to rely on subjective judgment and based on asset usage patterns and industry characteristics to determine the independent cash flows of a specific asset group, asset durability, and possible future income and

losses. Any changes in estimates due to changes in economic conditions or company strategies may cause significant impairments in the future or reverse recognized impairment losses.

(4) Realizability of deferred income tax assets

Deferred income tax assets are recognized when it is probable that sufficient taxable income will be available in the future to deduct temporary differences. Evaluating the realizability of deferred income tax assets must involve management's significant accounting judgments and estimates, including assumptions such as expected future sales revenue growth and profit margins, tax-free periods, available income tax credits and tax planning. Any changes in the global economic environment, industrial environment and changes in laws and regulations may cause significant adjustments to deferred income tax assets.

Description of important accounting items

(1) Cash and cash equivalents

	December 31, 114	December 31, 113
cash on hand	$ 5,879	$ 921
Bank demand deposits and check deposits	148,783	125,730
Equivalent to cash (investment with original maturity date within 3 months)
bank time deposit	—	16,395
Total	$ 154,662	$ 143,046

(2) Financial assets measured at fair value through other comprehensive gains and losses

Equity Instrument Investment

December 31, 114 December 31, 113

illiquid

Domestic unlisted (counter) joint stock limited company $ 150,000 $ —

On December 19, 113, the company approved the investment in Jubilee International Biomedical Technology Co., Ltd. (hereinafter referred to as Jubilee Company) by resolution of the board of directors. The base date for the capital increase of Jubilee Company is January 2, 114. The company has paid an investment amount of 120,000 thousand yuan in December 113, participated in the subscription of 15,000 thousand shares, and holds shares. The ratio is 20.841%; Jubilee Company completed a cash capital increase in April 114. The company gave up the subscription, causing the shareholding ratio to drop from the original 20.841% to 19.834%. The Company has assessed that it does not have significant influence over it, so it transfers financial assets measured at fair value through other comprehensive profit or loss.
The company invests in domestic unlisted OTC companies for the purpose of medium- and long-term holdings, and expects to make profits through long-term investment. The management believes that including the fluctuations in the fair value of these investments in profit and loss is inconsistent with the aforementioned investment plan, and therefore chooses to designate the investments as measured at fair value through other comprehensive profit and loss.

(3) Financial assets measured at amortized cost

December 31, 114

December 31, 113

flow

Domestic investment

Time deposits with original maturity exceeding 3 months $ 3,500 $ 3,500
Restricted time deposits — 16,395
Total $ 3,500 $ 19,895
interest rate range 1.69% 1.69%~4.55%

Financial assets measured at amortized cost - For information on current guarantees, please refer to Note 8.

(4) Notes receivable and accounts receivable

	December 31, 114	December 31, 113
Notes receivable
(Show other current assets)
Occurs due to business	$ 3,724	$ 3,718
Less: Allowance for losses	(3,413)	(3,413)
	$ 311	$ 305
Accounts receivable
Measured at amortized cost
Total carrying amount	$ 657,933	$ 786,644
Less: Allowance for losses	(61,184)	(71,265)
	$ 596,749	$ 715,379

In principle, the company's credit period to customers is 30 to 120 days after the monthly settlement date. In order to mitigate credit risk, the company's management has assigned a dedicated team to be responsible for the determination of credit limits, credit approval and other monitoring procedures to ensure that appropriate actions are taken to collect overdue accounts receivable. In addition, the Company will review the recoverable amount of accounts receivable one by one on the balance sheet date to ensure that appropriate impairment losses have been made for uncollectible accounts receivable.
The company recognizes allowance losses for accounts receivable based on expected credit losses during the duration. The expected credit

losses during the duration are based on the past default record of the customer, the current financial situation, the industrial economic situation, and the overall economic and industry outlook. Divide individual customers into different risk groups and recognize loss allowances based on the expected loss rates of each group.

If there is evidence that the counterparty is facing serious financial difficulties and the company cannot reasonably expect the recoverable amount, the company will directly write off the relevant accounts receivable, but will continue to pursue recovery activities, because the amount recovered will be recognized in profit and loss.
The allowance losses for the company's accounts receivable (including related parties) are as follows:

	December 31, 114
	Not overdue	Overdue 1~30 days	Overdue 31~60 days	Overdue 61~120 days	Overdue More than 121 days	Total
expected credit loss rate	0.11%~0.18%	0.13%~0.20%	0.15%~0.22%	0.18%~0.27%	0.23%~100%
Total carrying amount	$ 443,354	$ 76,776	$ 17,671	$ 15,979	$104,153 (Note)	$ 657,933
Allowance for losses (expected credit losses during the duration)	(514)	(100)	(26)	(30)	(60,514)	(61,184)
amortized cost	$ 442,840	$ 76,676	$ 17,645	$ 15,949	$ 43,639	$ 596,749
	December 31, 113
	Not overdue	Overdue 1~30 days	Overdue 31~60 days	Overdue 61~120 days	Overdue More than 121 days	Total
expected credit loss rate	0.18%~0.32%	0.20%~0.36%	0.22%~0.41%	0.25%~0.49%	0.30%~100%
Total carrying amount	$ 532,443	$ 97,876	$ 23,931	$ 11,077	$121,317 (Note)	$ 786,644
Allowance for losses (expected credit losses during the duration)	(1,675)	(351)	(99)	(52)	(69,088)	(71,265)
amortized cost	$ 530,768	$ 97,525	$ 23,832	$ 11,025	$ 52,229	$ 715,379

Note: The overall collection status of the company's accounts receivable is in good condition, but some accounts are overdue due to factors of specific customers. In order to ensure payment, the customer has provided deposits of 42,819 thousand yuan and 60,281 thousand yuan respectively as guarantees on December 31, 114 and 113.

Information on changes in allowance losses for notes receivable and accounts receivable (including related parties) is as follows:

	114 years
	Notes receivable	Accounts receivable
Opening balance	$ 3,413	$ 71,265
Provision for impairment losses in this period	—	(10,081)
Ending balance	$ 3,413	$ 61,184
	113 years
	Notes receivable	Accounts receivable
Opening balance	$ 3,413	$ 69,402
Provision for impairment losses in this period	—	4,089
Number of write-offs in the current period	—	(2,226)
Ending balance	$ 3,413	$ 71,265
(5) Other receivables	December 31, 114	December 31, 113
Operating lease receivables	$ 15	$ 13
Business tax refundable	7,386	10,274
Other receivables - other	241	429
Other receivables - related parties	92,554	174,102
small plan	100,196	184,818
Less: Allowance for losses	(11,019)	(11,496)
Total	$ 89,177	$ 173,322

Information on changes in allowance losses for other receivables is as

follows:

	114 years	113 years
Opening balance	$ 11,496	$ 12,009
Reversal of impairment losses in the current period	(477)	(513)
Ending balance	$ 11,019	$ 11,496

(6) Inventory

	December 31, 114	December 31, 113
Finished products	$ 134,270	$ 148,640
work in progress	173,944	211,722
raw materials	183,547	241,211
Inventory in transit	5,015	1,449
Total	$ 496,776	$ 603,022

Inventory-related expenses and losses recognized in the current period are as follows:

	114 years	113 years
cost of inventory sold	$ 1,270,597	$ 1,232,850
Inventory recovery benefits	(34,757)	(77,263)
Unallocated manufacturing overhead	47,698	58,661
income from selling scraps	(15,186)	(20,784)
other	(2)	228
Total	$ 1,268,350	$ 1,193,692

The increase in the net realizable value of the company's inventory in 114 and 113 was mainly due to the sale of inventory that had been recognized as appraisal losses in previous years.

(7) Investments using the equity method

	December 31, 114	December 31, 113
investment subsidiary
Unlisted (counter) company
OPTIMAX
OPTOELECTRONIC
(MAURITIUS) CORP.	$ 133,517	$ 73,345
ART OPTRONICS CORP.	816	844

Individually insignificant
associated enterprises

Unlisted (counter) company
Intelligent Information Security
Technology Inc.
4,589
36,000
$ 138,922
$ 110,189

The Company’s ownership interests and voting rights percentages in subsidiaries and related enterprises on the balance sheet date are as follows:

Company Name	December 31, 114	December 31, 113
OPTIMAX
OPTOELECTRONIC
(MAURITIUS) CORP.	100%	100%
ART OPTRONICS CORP.	100%	100%
Intelligent Information
Security Technology Inc.	24.54%	24.54%

For the business nature, main business place and country of company registration of the above-mentioned investment subsidiaries and affiliated enterprises, please refer to Appendix 4 "Name of the invested company, location...and other relevant information".

Individually insignificant associated enterprises:

	114 years	113 years
The company’s share
Net profit for the period	$ (34,699)	$ (71,663)
Other comprehensive gains and losses	—	—
Total comprehensive profit and loss	$ (34,699)	$ (71,663)

(8) Real estate, plant and equipment

project	114 years
	Opening balance	add	Punishment	Reclassify	Ending balance
cost
land	$ 364,697	$ —	$ —	$ (43,123)	$ 321,574
Houses and buildings	2,377,524	386	(70,324)	(39,284)	2,268,302
Machinery and equipment	2,822,549	10,558	(88,390)	11,987	2,756,704
transportation equipment	101,045	—	(901)	—	100,144

office equipment	84,455	1,229	(59,371)	—	26,313
Other equipment	31,637	854	(8,656)	—	23,835
unfinished	11,987	8,739	—	(11,987)	8,739
project
small plan	5,793,894	21,766	(227,642)	(82,407)	5,505,611
Accumulated depreciation
Houses and buildings	1,413,790	33,845	(68,514)	(17,206)	1,361,915
Machinery and equipment	2,680,786	8,875	(80,844)	—	2,608,817
transportation equipment	97,552	198	(883)	—	96,867
office equipment	76,921	307	(55,934)	—	21,294
Other equipment	24,529	499	(8,466)	—	16,562
small plan	4,293,578	43,724	(214,641)	(17,206)	4,105,455
Cumulative impairment
Houses and buildings	17	—	—	—	17
Machinery and equipment	5,188	—	(4,080)	—	1,108
transportation equipment	1,157	—	—	—	1,157
office equipment	2,691	—	(2,686)	—	5
Other equipment	28	—	(11)	—	17
small plan	9,081	—	(6,777)	—	2,304
Net amount	$ 1,491,235	$ (21,958)	$ (6,224)	$ (65,201)	$ 1,397,852
project	113 years
---	---	---	---	---	---
	Opening balance	add	Punishment	Reclassify	Ending balance
cost
land	$ 364,697	$ —	$ —	$ —	$ 364,697
Houses and buildings	2,493,034	1,228	(65,107)	(51,631)	2,377,524
Machinery and equipment	3,074,656	14,334	(275,721)	9,280	2,822,549
transportation equipment	101,787	—	(742)	—	101,045
office equipment	97,634	836	(14,015)	—	84,455
Other equipment	37,794	314	(6,471)	—	31,637
unfinished project	21,267	—	—	(9,280)	11,987
small plan	6,190,869	16,712	(362,056)	(51,631)	5,793,894
Accumulated depreciation
Houses and buildings	1,463,145	36,329	(62,548)	(23,136)	1,413,790

Machinery and equipment	2,939,271	7,897	(266,382)	—	2,680,786
transportation equipment	98,066	215	(729)	—	97,552
office equipment	89,918	281	(13,278)	—	76,921
Other equipment	30,396	485	(6,352)	—	24,529
small plan	4,620,796	45,207	(349,289)	(23,136)	4,293,578
Cumulative impairment
Houses and buildings	17	—	—	—	17
Machinery and equipment	9,504	—	(4,316)	—	5,188
transportation equipment	1,157	—	—	—	1,157
office equipment	2,707	—	(16)	—	2,691
Other equipment	28	—	—	—	28
small plan	13,413	—	(4,332)	—	9,081
Net amount	$ 1,556,660	$ (28,495)	$ (8,435)	$ (28,495)	$ 1,491,235

The company's real estate, plants and equipment are depreciated based on the following useful life:

Houses and Construction

Factory main building 9 to 50 years

House accessories 2 to 18 years

Machinery and equipment 1 to 24 years

Rest of equipment 2 to 17 years

For information on guarantees provided for real estate, plant and equipment, please refer to Note 8.

(9) Lease Agreement – Lessee

Right-of-use assets

(1) Information on the book value of right-of-use assets and recognized depreciation expenses is as follows:

December 31, 114

December 31, 113

Carrying amount of right-of-use asset

Land	$ 5,140	$ 7,709
transportation equipment	2,549	2,310
office equipment	1,000	1,267
Total	$ 8,689	$ 11,286

114 years

Depreciation expense for right-of-use assets
Land	$ 2,569	$ 2,570
transportation equipment	1,429	1,293
office equipment	267	266
Total	$ 4,265	$ 4,129

(2) The Company's increase in right-of-use assets in 114 and 113 was RMB 1,668,000 and RMB 2,067,000 respectively.

(3) Except for the above-mentioned additions and depreciation expenses, the company's right-of-use assets did not undergo significant sublease or impairment in 114 and 113.

Lease liabilities

	December 31, 114	December 31, 113
Carrying amount of lease liability
flow	$ 4,475	$ 3,851
Non-current	$ 5,629	$ 8,750

The discount rate range for lease liabilities is as follows:

December 31, 114

December 31, 113

Land	2.5580%	2.5580%
transportation equipment	2.5580%~2.7200%	1.8513%~2.5580%
office equipment	2.5580%	2.5580%

3. Important leasing activities and terms

The assets leased by the company include land, official vehicles and photocopier equipment, etc. The lease contract period usually ranges from 3 to 6 years. Lease contracts are negotiated individually and contain various terms and conditions. No other restrictions are imposed except that the leased assets cannot be used as loan security.

4. Other leasing information

	114 years		113 years
short term rental fees	$	25	$	108
Low value asset leasing expenses	$	22	$	26
Total cash outflow from leases	$	4,506	$	4,109

The Company chooses to apply the recognition exemption to transportation equipment that qualifies as short-term leases and certain office equipment leases that qualify as low-value asset leases, and does not recognize related right-of-use assets and lease liabilities for these leases.

(10) Lease Agreement - Lessor

The assets leased by the company include land and buildings. The lease contract period ranges from 1 to 5 years. The lease contract is negotiated individually and contains various terms and conditions. In order to preserve the use of the leased assets, the lessee is usually required not to sublease, sublease or pledge all or part of the leased

subject matter and other restrictions and stipulations.

The benefits recognized by the company based on the operating lease contract are as follows:

	114 years	113 years
rental income	$ 61,604	$ 53,077

The maturity date analysis of the total lease payments receivable of the Company under operating leases is as follows:

	December 31, 114	December 31, 113
first year	$ 62,014	$ 58,183
second year	24,020	57,034
third year	17,190	20,863
fourth year	12,833	14,040
fifth year	—	10,470
Total	$ 116,057	$ 160,590

(11) Investment real estate

project	114 years
	Opening balance	add	Punishment	Reclassify	Ending balance
cost
land	$ 159,910	$ —	$ —	$ 43,123	$ 203,033
Houses and buildings	806,243	—	(2,310)	39,284	843,217
small plan	966,153	—	(2,310)	82,407	1,046,250
Accumulated depreciation
Houses and buildings	343,604	16,042	(2,278)	17,206	374,574
small plan	343,604	16,042	(2,278)	17,206	374,574
Cumulative impairment
Houses and buildings	26	—	—	—	26
Net amount	$ 622,523	$ (16,042)	$ (32)	$ 65,201	$ 671,650

project	113 years
	Opening balance	add	Punishment	Reclassify	Ending balance
cost
land	$ 133,248	$ 26,662	$ -	$ -	$ 159,910
Houses and buildings	731,378	23,884	(650)	51,631	806,243
small plan	864,626	50,546	(650)	51,631	966,153
Accumulated depreciation
Houses and buildings	306,796	14,302	(630)	23,136	343,604
small plan	306,796	14,302	(630)	23,136	343,604
Cumulative impairment
Houses and buildings	26	-	-	-	26
Net amount	$ 557,804	$ 36,244	$ (20)	$ 28,495	$ 622,523

The company's investment real estate is depreciated based on the following service life:

Houses and Construction

Factory main building 9 to 50 years

House accessories 14 to 16 years

The fair value of the investment real estate held by the Company is evaluated by independent evaluation experts on each balance sheet date using Level 3 input values. The evaluation is carried out with reference to comparison methods, income methods, cost methods and fixed rate methods (declining balance method) similar to real estate market transaction prices. The unobservable input values used include discount rates and depreciation rates.

The fair value of the company's investment real estate as of December 31, 2014 and 2013 is as follows:

	December 31, 114	December 31, 113
fair value	$ 1,187,050	$ 1,040,732

Rental income and direct operating expenses from the company's investment real estate:

	114 years	113 years
Rental income from investment real estate	$ 59,766	$ 51,301
Direct operating expenses incurred by investment properties that generate rental income in the current period	$ 20,289	$ 18,195

The company acquired 18,248 thousand yuan of land in the 111th year of the Republic of China. Since the land was classified as agricultural and animal husbandry land, it could not be transferred in the name of the company. Instead, it was registered in the name of the chairman of the company, and a name-borrowing registration deed was signed to clearly define the rights and obligations of both parties.
For information on guarantees provided for investment real estate, please refer to Note 8.

(12) Short-term borrowings

December 31, 114 December 31, 113

bank guaranteed loan
$ 271,991
$ 302,166

interest rate range
1.75%~2.725%
1.60%~2.725%

For information on assets providing security for short-term borrowings, please refer to Note 8.

(13) Accounts payable

	December 31, 114	December 31, 113
accounts payable	$ 38,515	$ 33,653

The average credit period for accounts payable is 30 to 180 days. The company has a financial risk management policy to ensure that all accounts payable are repaid within the pre-agreed credit period.
For disclosures related to accounts payable and other payables that the Company is exposed to exchange rate and liquidity risks, please refer to Note 6 (28).

(14) Other payables

	December 31, 114	December 31, 113
Salaries and bonuses payable	$ 63,004	$ 67,650
Remuneration payable to employees and directors	7,200	7,703
Insurance premium payable	6,713	6,258
Pension payable	2,560	2,421
interest payable	1,650	1,863
Equipment payment payable	1,573	3,067
Commission payable	17,051	28,964
other	45,498	47,156
Total	$ 145,249	$ 165,082

Others under other payables mainly consist of payables such as house tax, rent, labor fees, water, electricity and gas fees, freight, import and export fees and repair fees.

(15) Liability reserves - current

	December 31, 114	December 31, 113
Provision for employee benefit liabilities	$ 17,346	$ 16,565

Employee benefit liability reserve is an estimate of employees' vested vacation rights, which is reversed when employees actually take vacations or receive cash payments.
The above provisions are not discounted because they are short-term or have little impact on discounting.

(16) Long-term loans

	December 31, 114	December 31, 113
Bank medium and long-term mortgage loans	$ 830,000	$ 1,001,600
Less: Part due within one year	(728,600)	(21,600)
long term borrowing	$ 101,400	$ 980,000
interest rate range	2.675% ~ 2.72%	2.675% ~ 2.72%

Due to the overall operation and capital planning, the company signed a five-year loan contract with the Cooperative Bank on August 22, 113. The total amount is 270,000 thousand yuan, with one installment every three months, and the loan will be repaid in 20 installments, including The loan principal of 5,400 thousand yuan will be repaid each period from the 1st to the 10th period, and the loan principal of 10,800 thousand yuan will be repaid each period from the 11th to the 19th period. The remaining outstanding loan balances are due to be paid off in one go. The due date is August 22, 118. The company's borrowing

balances as of December 31, 114 and 113 were 123,000 thousand yuan and 194,600 thousand yuan respectively.

Due to the overall operation and capital planning, the company signed a three-year loan contract with Suntrust Bank on September 27, 112, with a total amount of 1,360,000 thousand yuan, and one installment every three months. The loan will be repaid in 12 installments. Among them, the loan principal of 30,000 thousand yuan will be repaid in each period from the 1st to the 11th period, and the remaining outstanding loan balance will be paid off at one time when it is due. The borrower can repay it in advance and incorporate it into the repayment amount of subsequent periods. The due date is October 6, 115. The company's borrowing balances as of December 31, 114 and 113 were 707,000 thousand yuan and 807,000 thousand yuan respectively.
Please refer to Note 8 for the situation of assets providing security for long-term borrowings.

(17) Pension

Determine the withdrawal plan

Since July 1, 1994, the company has established a defined contribution retirement method in accordance with the "Labor Pension Ordinance", which is applicable to employees of local nationality. The company chooses to apply the labor pension system stipulated in the "Labor Pension Ordinance" to employees, and contributes 6% of the salary to the employee's personal account of the Labor Insurance Bureau every month. The employee pension is paid in the form of monthly pension or

lump-sum pension based on the employee's personal pension account and the amount of accumulated income. The company recognized pension expenses related to the defined contribution plan in 114 and 113 as NTD$15,417 thousand yuan and NTD$14,630 thousand yuan respectively.

2. Defined benefit plan

In accordance with the provisions of the "Labor Standards Act", the company has a defined-benefit retirement policy, which is applicable to the service years of all regular employees before the implementation of the "Labor Pension Ordinance" on July 1, 94, as well as the subsequent service years of employees who choose to continue to be subject to the Labor Standards Law after the implementation of the "Labor Pension Ordinance". For employees who meet the retirement conditions, pension payment will be calculated based on the service years and the average salary in the 6 months before retirement. 2 base points will be given for each full year of service for less than 15 years (inclusive), and 1 base will be given for each full year of service for more than 15 years, but the cumulative maximum is limited to 45 bases. The company allocates 2% of the total salary to the retirement fund on a monthly basis and deposits it in a special account in the Bank of Taiwan in the name of the Labor Retirement Reserve Supervisory Committee. In addition, before the end of each year, the company estimates the balance of the special labor pension reserve account mentioned in the

preceding paragraph. If the balance is insufficient to pay the pension amount calculated as mentioned above to the employees who are expected to meet the retirement conditions in the next year, the company will allocate the difference in one lump sum before the end of March of the next year. This special account is entrusted to the Labor Fund Utilization Bureau of the Ministry of Labor for management. The company has no right to influence the investment management strategy. The amounts of defined benefit plans recognized in the balance sheet are as follows:

	December 31, 114	December 31, 113
Determining the present value of benefit obligations	$ (71,008)	$ (67,567)
Fair value of project assets	86,028	80,907
net defined benefit assets	$ 15,020	$ 13,340

Changes in net defined benefit assets are as follows:

	Determining the present value of benefit obligations	Fair value of project assets	net defined benefit assets
Balance as of January 1, 114	$ (67,567)	$ 80,907	$ 13,340
Service cost
Current service cost	(50)	—	(50)
Interest (fee) income	(1,014)	1,214	200
Recognized in profit or loss	(1,064)	1,214	150
remeasurement number
Return on plan assets (excluding amounts included in interest income or expenses)	—	5,668	5,668
Number of impacts of changes in demographic assumptions	—	—	—
Impact of changes in financial assumptions	(888)	—	(888)
experience adjustment	(3,250)	—	(3,250)
Recognized in other	(4,138)	5,668	1,530

The Company is exposed to the following risks due to the pension system of the Labor Standards Act:

(1) Investment risk: The Labor Fund Utilization Bureau of the Ministry of Labor invests labor retirement funds in domestic (foreign) equity securities, debt securities, bank deposits and other subjects through its own use and entrusted operation. However, according to the provisions of the "Labor Standards Act", the overall return on assets

comprehensive profit or loss
Contribute to retirement funds	—	—	—
Pay pension	1,761	(1,761)	—
Balance as of December 31, 114	$ (71,008)	$ 86,028	$ 15,020
	Determining the present value of benefit obligations	Fair value of project assets	net defined benefit assets
Balance as of January 1, 113	$ (65,959)	$ 72,387	$ 6,428
Service cost
Current service cost	(48)	—	(48)
Interest (fee) income	(825)	940	115
Recognized in profit or loss	(873)	940	67
remeasurement number
Return on plan assets (excluding amounts included in interest income or expenses)	—	6,247	6,247
Number of impacts of changes in demographic assumptions	—	—	—
Impact of changes in financial assumptions	42	—	42
experience adjustment	(1,287)	—	(1,287)
Recognized in other comprehensive profit or loss	(1,245)	6,247	5,002
Contribute to retirement funds	—	1,843	1,843
Pay pension	510	(510)	—
Balance as of December 31, 2013	$ (67,567)	$ 80,907	$ 13,340

shall not be lower than the local bank's 2-year time deposit interest rate; if it is lower than the interest rate, the national treasury will make up the amount.

(2) Interest rate risk: The decline in interest rates on government bonds will increase the present value of defined benefit obligations, but the debt investment returns on planned assets will also increase accordingly. The two have a partially offsetting effect on the net defined benefit liabilities.

(3) Salary risk: The calculation to determine the present value of benefit obligations is based on the future salary of plan members. Therefore, an increase in plan member salaries will increase the present value of defined benefit obligations.

The main assumptions of the actuarial evaluation are set out below:

	December 31, 114	December 31, 113
discount rate	1.375%	1.500%
Expected salary increase rate	2.25%	2.25%

Changes in the main actuarial assumptions adopted on December 31, 114 and 113 will increase (decrease) the present value of defined benefit obligations by the following amounts:

December 31, 114	Actuarial assumptions increase by 0.25%	Actuarial assumptions 0.25% reduction
discount rate	$ (1,761)	$ 1,827
Future salary increase rate	$ 1,778	$ (1,723)

December 31, 113	Actuarial assumptions increase by 0.25%	Actuarial assumptions 0.25% reduction
discount rate	$ (1,739)	$ 1,806
Future salary increase rate	$ 1,758	$ (1,702)

The above sensitivity analysis is based on analyzing the impact of changes in a single assumption while holding other assumptions unchanged. In practice, changes in many assumptions may be linked. The sensitivity analysis is consistent with the approach used to calculate the net pension liability on the balance sheet. The methods and assumptions used in preparing the sensitivity analysis for this period are the same as those for the previous period.

The amount of provision for defined benefit plans and the weighted average duration of the retirement plan in the year following the reporting date of December 31, 114 and 113 are as follows:

	December 31, 114	December 31, 113
Amount expected to be withdrawn within 1 year	$ -	$ -
Determine the average maturity period of benefit obligations	10.1 years	10.5 years

(18) Rights and interests

Common stock capital

	December 31, 114	December 31, 113
Rated share capital	$ 10,000,000	$ 10,000,000

issued share capital

$ 1,670,000

$ 1,690,000

On May 8, 114, the company decided to reduce capital and cancel 2,000 thousand treasury shares with a cancellation amount of NTD$ 59,553 thousand yuan, May 8, 114 was used as the base date for capital reduction, and the relevant legal registration procedures have been completed.

On December 19, 113, the company decided to reduce its capital by canceling 1,000,000 treasury shares with a cancellation amount of NTD$ 32,393 thousand yuan. December 19, 113 was used as the base date for capital reduction, and the relevant legal registration procedures have been completed.

As of December 31, 114 and 113 of the Republic of China, the company's rated number of shares was 1,000,000 thousand shares, with a par value of 10 yuan per share, and the issued shares were 167,000 thousand shares and 169,000 thousand shares respectively.

Retained earnings and dividend policy

(1) According to the provisions of the company's articles of association, if there is a surplus in the annual final accounts, taxes should be paid first to make up for the accumulated losses, and 10% should be allocated as a statutory surplus reserve. However, when the statutory surplus reserve has reached the amount of paid-in capital, it may no longer be allocated, and the remainder shall be allocated later. When necessary, the special surplus reserve may be appropriated or reversed by resolution of the shareholders' meeting or in accordance

with legal provisions; if there is still a balance and undistributed surplus accumulated from previous years, the board of directors shall prepare a surplus distribution proposal and submit it to the shareholders' meeting to resolve the distribution of dividends to shareholders.

(2) The company's earnings distribution shall be based on the company's current and future development plans, consideration of the investment environment, capital needs, domestic and foreign competition, and taking into account factors such as shareholders' interests. At least 30% of the current year's earnings shall be allocated to shareholders as dividends, but the accumulated distributable earnings are lower than the paid-in share capital. 30%, it may not be distributed; the board of directors shall, based on the operating results and capital planning situation, formulate the method and amount of surplus distribution, and submit it to the shareholders' meeting for resolution. When distributing dividends to shareholders, they may be distributed in the form of cash or stocks, of which the cash dividend shall not be less than 10% of the total shareholder dividends to be distributed in the current year.

(3) The statutory surplus reserve shall not be used except to make up for the company's losses and issue new shares or cash to shareholders in proportion to their original shares. However, if new shares or cash are issued, the amount of the reserve shall be limited to the amount exceeding 25% of the paid-in capital.

(4) When the company distributes surplus, according to legal provisions, it must set aside special surplus reserves based on the debit balance

of other equity items on the balance sheet date of the current year before it can be distributed. When the debit balance of other equity items is subsequently reversed, the reversal amount may be included in the surplus available for distribution.

(5) The company passed the resolution of the board of directors on March 12, 115, and proposed the profit distribution plan for 114. The distribution is as follows:

	Amount	Dividend per share (yuan)
Statutory surplus reserve	$ 12,990	$ —
special surplus reserve	$ (2,376)	—
cash dividend	$ 82,500	0.5

The profit distribution proposal for the year 114 of the Republic of China is yet to be resolved at the shareholders' regular meeting held on June 24, 115. For relevant information on the above-mentioned earnings distribution, please inquire from the Taiwan Stock Exchange's "Public Information Observatory" and other channels.

(6) The company's shareholders' regular meetings on June 24, 114 and June 20, 2013 passed the profit distribution plan for 113 and 112. The distribution is as follows:

	113 years	112 years
Statutory surplus reserve	$ 29,366	$ 20,605
special surplus reserve	$ (27,572)	$ (5,703)
cash dividend	$ 250,500	$ 168,000
Cash dividend per share (yuan)	$ 1.518181	$ 1

For relevant information on the above-mentioned earnings

distribution, please inquire from the Taiwan Stock Exchange's "Public Information Observatory" and other channels.

3. Other equity items

	foreign operating organizations Financial statement conversion exchange difference	through other comprehensive Profit and loss Unrealized valuation (gain) and loss on financial assets measured at fair value	Total
Balance as of January 1, 114	$ (2,370)	$ (6)	$ (2,376)
Produced in the current period
Differences in conversion of financial statements of foreign operating institutions	3,484	—	3,484
Rating adjustment	—	27,751	27,751
Income tax impact number	(223)	—	(223)
Balance as of December 31, 114	$ 891	$ 27,745	$ 28,636
	foreign operating organizations Financial statement conversion exchange difference	through other comprehensive Profit and loss Unrealized valuation (gain) and loss on financial assets measured at fair value	Total
Balance as of January 1, 113	$ (3,719)	$ (26,229)	$ (29,948)
Produced in the current period
Differences in conversion of financial statements of foreign operating institutions	1,349	—	1,349
Accumulated gains and losses from disposal of equity instruments	—	26,223	26,223
Transfer to retained earnings
Balance as of December 31, 113	$ (2,370)	$ (6)	$ (2,376)

4. Treasury stocks

(1) Reasons for share withdrawal and changes in quantity:

(Unit: Thousand shares)

114 years

Reason for withdrawal	Number of shares at the beginning of the period	Received in this period	Cancel this period	Number of shares at the end of the period
Transfer shares to employees	2,000	-	-	2,000
Maintain company credit and shareholders' rights and interests	-	2,000	(2,000)	-
	2,000	2,000	(2,000)	2,000
	113 years
Reason for withdrawal	Number of shares at the beginning of the period	Received in this period	Cancel this period	Number of shares at the end of the period
Transfer shares to employees	2,000	-	-	2,000
Maintain company credit and shareholders' rights and interests	-	1,000	(1,000)	-
	2,000	1,000	(1,000)	2,000

(2) The Securities and Exchange Law stipulates that the company's proportion of the number of outstanding shares to be repurchased shall not exceed $10\%$ of the company's total issued shares, and the total amount of shares purchased shall not exceed the retained earnings plus the premium for issued shares and the amount of capital reserves that have been realized.
(3) The treasury stocks held by the company cannot be pledged in accordance with the provisions of the Securities and Exchange Act, nor can they enjoy shareholder rights before being transferred.
(4) According to the provisions of the Securities and Exchange Act, shares purchased back for transfer of shares to employees must be

transferred within five years from the date of purchase. If the shares are not transferred within five years, the company shall be deemed to have unissued shares, and the shares shall be canceled by change registration. For shares purchased back in order to protect the company's credit and shareholders' rights and interests, the shares should be changed to be registered and canceled within six months from the date of purchase.

(5) In order to protect the company's credit and shareholders' rights and interests, the company repurchased 1,000 treasury shares by resolution of the board of directors on March 13, 114. The scheduled repurchase period is from March 17, 114 to March 28, 114. The repurchase price ranges from 21.67 yuan to 45.95 yuan per share. The company completed the execution on March 28, 114, and bought back 1,000 thousand shares for a total amount of 32,169 thousand yuan.

In order to protect the company's credit and shareholders' rights and interests, the company repurchased 1,000 thousand treasury shares by resolution of the board of directors on April 11, 114. The scheduled repurchase period is from April 14, 114 to May 13, 114. The repurchase price ranges from 16.87 yuan to 45.11 yuan per share. The company completed the execution on April 21, 114, and bought back 1,000 thousand shares for a total amount of 27,384 thousand yuan.

The above-mentioned repurchased treasury shares were approved by the board of directors to reduce capital and cancel 2,000 thousand

treasury shares on May 8, 114. The base date for capital reduction was May 8, 114.

In order to protect the company's credit and shareholders' rights and interests, the company repurchased 1,000 thousand treasury shares through a resolution of the board of directors on October 17, 2013. The scheduled repurchase period is from October 18, 113 to November 17, 113. The repurchase price ranges from 21.46 yuan to 45.23 yuan per share. The company completed the execution on November 4, 113, and bought back 1,000 thousand shares for a total amount of 32,393 thousand yuan. The repurchased treasury shares were approved by the board of directors to reduce capital and cancel 1,000,000 treasury shares on December 19, 113. The base date for capital reduction was December 19,113.

(19) Earnings per share

	114 years	113 years
Basic earnings per share (yuan)	$ 1.01	$ 2.01
Diluted earnings per share (yuan)	$ 1.01	$ 2.01

The company's basic and diluted earnings per share are as follows:

Basic earnings per share

The calculation of basic earnings per share and weighted average number of common shares is as follows:

	114 years	113 years
Net profit for the current period (thousand yuan)	$ 167,928	$ 337,270

Weighted average number of common shares to calculate basic earnings per share (thousand shares)	165,537	167,841
Basic earnings per share (yuan)	$ 1.01	$ 2.01

2. Diluted earnings per share

The earnings and weighted average number of common shares used to calculate diluted earnings per share are as follows:

	114 years	113 years
Net profit for the current period (thousand yuan)	$ 167,928	$ 337,270
Weighted average number of common shares to calculate basic earnings per share (thousand shares)	165,537	167,841
Employee dividend expense (thousand shares)	147	209
Calculation of diluted earnings per share weighted average number of common shares (thousand shares)	165,684	168,050
Diluted earnings per share (yuan)	$ 1.01	$ 2.01

If the company has the option to pay employee compensation in stocks or cash, then when calculating diluted earnings per share, the weighted average number of outstanding shares when the potential ordinary shares have a dilutive effect should be included in the calculation of diluted earnings per share. When calculating diluted earnings per share before deciding on the number of shares to distribute employee compensation in the following year, the dilutive effect of these potential ordinary shares will also continue to be considered.

(20) Revenue

	114 years	113 years
Customer contract revenue
merchandise sales revenue	$ 1,875,460	$ 1,887,383

Please refer to Note 4 (13) for the description of the company’s income.
Contract balance

	December 31, 114	December 31, 113	January 1, 113
Accounts receivable (Note 6(4))	$ 596,749	$ 715,379	$ 548,234
Contract liabilities – current (Show other liabilities)
Product sales	$ 1,101	$ 2,791	$ 3,374

The amounts recognized as operating income from the opening contract liabilities in 114 and 113 were 2,108 thousand yuan and 2,762 thousand yuan respectively.

Refund liability

Based on historical experience and other known reasons, the company estimated that the refund liabilities for possible sales returns and discounts in 114 and 113 were 9,019 thousand yuan and 15,868 thousand yuan respectively. As of December 31, 114 and 113, the balances of refund liabilities were 1,457 thousand yuan and 3,767 thousand yuan respectively.

(21) Other income

	114 years	113 years
rental income	$ 61,604	$ 53,077
Less: depreciation	(16,063)	(14,251)

other	6,038	8,096
Total	$ 51,579	$ 46,922

(22) Other profit and losses

	114 years	113 years
Disposal of losses to real property, plant and equipment	$ (12,993)	$ (12,053)
Disposal of losses on investment real estate	(32)	(20)
Foreign Currency Exchange (Loss) Benefits	(34,446)	60,591
Impairment Reversal Benefit - Property, Plant and Equipment	6,777	4,332
depreciation expense	(117)	(454)
What expenditures	(6,738)	(2,068)
Total	$ (47,549)	$ 50,328

(23) Financial costs

	114 years	113 years
interest expense
bank borrowing	$ 28,932	$ 30,150
Lease liability	294	324
other	117	80
Total	$ 29,343	$ 30,554

(24) Income tax

The adjustment of the company's income tax expenses recognized in profit and loss in 114 and 113 is as follows:

	114 years	113 years
Income tax on net profit before tax calculated at statutory tax rate	$ 44,682	$ 74,814
The income tax impact of excluding items according to	116	(12,714)

tax laws

Income tax impact of loss deduction	(11,121)	(62,100)
The impact of temporary differences in the current period	19,834	35,642
Undistributed Earnings Levy	3,188	1,158
Previous year income tax adjustments	(1,218)	—
income tax expense	$ 55,481	$ 36,800

The main components of income tax expenses recognized in profit and loss are as follows:

	114 years	113 years
Current income tax
Produced in this period	$ 36,865	$ 1,158
Previous year adjustments	(1,218)	—
deferred income tax
Occurrence and reversal of temporary differences	19,834	35,642
Income tax expense recognized in profit or loss	$ 55,481	$ 36,800

The Company had no income tax directly recognized in equity in 114 and 113.
The details of the company's income tax recognized in other comprehensive profits and losses in 114 and 113 are as follows:

	114 years	113 years
deferred income tax
Replacement of financial statements of foreign operating institutions	$ 223	$ —

exchange difference

Income tax liabilities for the current period

	December 31, 114	December 31, 113
Current income tax liability	$ 36,705	$ 870

Deferred income tax assets and liabilities

(1) The analysis of deferred income tax assets is as follows:

	114 years
	Opening balance	Recognized in profit or loss	recognized in Other comprehensive gains and losses	Ending balance
temporary difference
Unrealized inventory depreciation losses	$ 18,805	$ (6,951)	$ -	$ 11,854
Exceeded limit of allowance for doubtful debts	15,662	(1,855)	-	13,807
Unrealized asset impairment on non-financial assets	4,570	(1,355)	-	3,215
Investments using the equity method	66,207	(7,577)	-	58,630
sales in transit	170	424	-	594
Unrealized employee paid leave	3,313	156	-	3,469
Unallocated manufacturing overhead	862	(243)	-	619
Unrealized sales discount	739	(452)	-	287
Loss deduction	5,793	(5,793)	-	-
Total	$ 116,121	$ (23,646)	$ -	$ 92,475
	113 years
---	---	---	---	---
	Opening balance	Recognized in profit or loss	recognized in Other comprehensive gains and losses	Ending balance
temporary difference
unrealized exchange loss	$ 4,689	$ (4,689)	$ -	$ -

(2) Analysis of deferred income tax liabilities is as follows:

	114 years
	Opening balance	Recognized in profit or loss	recognized in Other comprehensive gains and losses	Ending balance
temporary difference
Unrealized exchange benefits	$ 6,672	$ (3,842)	$ -	$ 2,830
Pension withdrawal amount exceeds withdrawal amount	1,722	30	-	1,752
Exchange balance of foreign operating institutions	-	-	223	223
Total	$ 8,394	$ (3,812)	$ 223	$ 4,805
	113 years

	Opening balance	Recognized in profit or loss	recognized in Other comprehensive gains and losses	Ending balance
temporary difference
Unrealized exchange benefits	$ -	$ 6,672	$ -	$ 6,672
sales in transit	27	(27)	-	-
Pension withdrawal amount exceeds withdrawal amount	1,340	382	-	1,722
Total	$ 1,367	$ 7,027	$ -	$ 8,394

Items not recognized as deferred income tax assets

	December 31, 114	December 31, 113
Loss deduction amount	$ -	$ 28,965
Amount of temporary difference	$ 325,412	$ 301,470

The company's profit-making enterprise income tax settlement declaration has been approved by the tax collection authority until the 112th year of the Republic of China. According to the provisions of the Income Tax Law, losses for the previous ten years as determined by the tax collection authority can be deducted from the net income of the current year, and then income tax will be assessed. As of December 31, 114, the company's loss deductions have been fully deducted for the current year.

(25) Additional information on the nature of fees

The functional categories of employee benefits, depreciation and

amortization expenses incurred in the current period are summarized as follows:

Function Nature	114 years
	Belongs to business Coster	Belongs to business fee payer	Belongs to non-business fee payer	Total
Employee benefits expenses
Salary expenses	$ 268,124	$ 124,472	$ —	$ 392,596
Labor health insurance expenses	29,911	11,263	—	41,174
Pension expenses	10,386	4,881	—	15,267
Director's remuneration	—	1,310	—	1,310
Other employee benefits expenses	23,787	4,769	—	28,556
depreciation expense	39,008	8,843	16,180	64,031
Amortization expense	27	620	—	647
Function Nature	113 years
---	---	---	---	---
	Belongs to business Coster	Belongs to business fee payer	Belongs to non-business fee payer	Total
Employee benefits expenses
Salary expenses	$ 252,137	$ 114,704	$ —	$ 366,841
Labor health insurance expenses	27,670	10,404	—	38,074
Pension expenses	10,779	3,784	—	14,563
Director's remuneration	—	2,127	—	2,127
Other employee benefits expenses	21,713	3,975	—	25,688
depreciation expense	39,072	9,861	14,705	63,638
Amortization expense	—	49	—	49

(1) The average number of employees of the company in 114 and 113 was 600 and 590 respectively, of which the number of directors who were not part-time employees was 10.

(2) The company's average employee welfare expenses in 114 and 113 were 809 thousand yuan and 768 thousand yuan respectively, and the average employee salary expenses were 665 thousand yuan and 632 thousand yuan respectively. The average employee salary expense adjustment change was 5.22%.

(3) The company's salary and remuneration policies for directors, managers and employees are as follows:

A. Directors: The remuneration of the directors of the company shall be handled in accordance with the articles of association of the company, and the board of directors shall be authorized to set it based on the degree of participation of the directors in the company's operations and the value of their contributions, as well as the domestic and foreign industry standards.

B. Manager: The amount of remuneration distributed to the company's managers shall be reviewed by the remuneration committee and submitted to the board of directors for resolution based on their duties, contributions, and the company's operating performance for the year.

C. Employees: The company's employee salary and remuneration

policy is to provide employees with average salary and benefits. The year-end bonus and related remuneration are determined based on the company's operating performance and each employee's position, contribution, and performance. The amount and distribution method are recommended by the Remuneration Committee for approval by the Board of Directors.

2. Employee welfare expenses

(1) The company's pre-tax profits before deducting employee compensation and director's compensation for the current year are allocated to employee compensation at 1% to 10%, which can be distributed in stocks or cash as decided by the board of directors, and the recipients may include employees of subsidiary companies who meet certain conditions. In addition, no more than 1% is allocated to directors' compensation. The distribution of employee remuneration and directors' remuneration shall be made by the board of directors with the approval of more than two-thirds of the directors present and approved by more than half of the directors present, and shall be reported to the shareholders' meeting.

(2) The Company's estimated employee remuneration and director's remuneration in 114 and 113 were resolved by the board of directors on March 12, 115 and March 13, 114, respectively, as follows:

Estimated listing ratio

114 years	Year 113

employee compensation	1%	1%
Directors' remuneration	0.5%	0.5%
Amount
	114 years	Year 113
employee compensation	$ 2,268	$ 3,798
Directors' remuneration	$ 1,134	$ 1,899

If there is still a change in the amount after the company's annual financial report is released, it will be treated as a change in accounting estimates and will be adjusted and accounted for in the next year.

(3) There is no difference between the amount of employee remuneration and director remuneration decided to allot in 113 and 112 and the amount recognized in the financial reports of 113 and 112.

(4) Information related to employee remuneration and director remuneration approved by the company's board of directors can be found at the "Public Information Observation Station" of the Taiwan Stock Exchange.

(26) Cash flow information

Investment activities that affect both cash and non-cash items

(1) Non-current assets to be sold

	114 years	113 years
Punishment in the current period	$ —	$ —
Add: equipment receivable at the beginning of the period	3,019	2,827

(2) Real estate, plant and equipment

	114 years	113 years
Added in current period	$ 21,766	$ 16,712
Add: Equipment payment payable at the beginning of the period	3,067	1,093
Less: Equipment payment payable at the end of the period	(1,573)	(3,067)
Less: Number of prepaid equipment transfers	(929)	(672)
Pay cash this period	$ 22,331	$ 14,066
	114 years	113 years
Punishment in the current period	$ 8	$ 714
Add: equipment receivable at the beginning of the period	5,830	5,600
Less: Equipment receivables at the end of the period	(5,679)	(5,830)
Exchange rate impact number	(151)	230
Receive cash in this period	$ 8	$ 714

Changes in liabilities from financing activities

short term borrowing	long term borrowing	deposit deposit	Lease liability	Total liabilities from financing activities

January 1, 114th year of the Republic of China	$ 302,166	$1,001,600	$ 9,827	$ 12,601	$1,326,194
Changes in financing cash flows	(30,815)	(171,600)	740	(4,165)	(205,840)
Changes in lease liabilities	—	—	—	1,668	1,668
Impact of exchange rate changes	640	—	—	—	640
December 31, 114th year of the Republic of China	$ 271,991	$ 830,000	$ 10,567	$ 10,104	$1,122,662
	short term borrowing	long term borrowing	deposit deposit	Lease liability	Total liabilities from financing activities
---	---	---	---	---	---
January 1, 113 Years of the Republic of China	$ 196,323	$1,210,000	$ 8,432	$ 14,185	$1,428,940
Changes in financing cash flows	107,229	(208,400)	1,395	(3,651)	(103,427)
Changes in lease liabilities	—	—	—	2,067	2,067
Impact of exchange rate changes	(1,386)	—	—	—	(1,386)
December 31, 113 Years of the Republic of China	$ 302,166	$1,001,600	$ 9,827	$ 12,601	$1,326,194

(27) Capital Management

Based on the characteristics of the current operating industry and future company development, and taking into account changes in the external environment and other factors, the company plans the working capital requirements (including research and development expenses and debt repayment, etc.) required by the company in the future period to ensure the company's sustainable operations, give back to shareholders while taking into account the interests of other stakeholders, and maintain the best capital structure to enhance shareholder value. Overall, the Company adopts prudent risk management strategies.

(28) Financial instruments

1. Types of financial instruments

December 31, 114 December 31, 113

financial assets

	December 31, 114	December 31, 113
Cash and cash equivalents	$ 154,662	$ 143,046
Financial assets measured at amortized cost – current	3,500	19,895
Financial assets measured at fair value through other comprehensive profit or loss – non-current	150,000	—
Notes receivable	311	305
Accounts receivable	596,749	715,379
Other receivables	89,177	173,322
Other financial assets	21,445	3,521
Deposit margin	6,705	6,960
financial liabilities
short term borrowing	271,991	302,166
Notes payable	148	178
accounts payable	38,515	33,653
Other payables	63,039	78,374
long term borrowing (Including part due within one year)	830,000	1,001,600
deposit deposit	10,567	9,827

Financial risk management purpose

The company's financial risk management objective is to manage exchange rate risks, interest rate risks, credit risks and liquidity risks related to operating activities. In order to reduce related financial risks, the Company is committed to identifying, evaluating and avoiding market uncertainties to reduce the potential adverse impact of market changes on the Company's financial performance. The company's important financial activities are reviewed by the board of directors and

in accordance with relevant regulations and internal control systems. During the execution of the financial plan, the Company must strictly comply with relevant financial operating procedures regarding overall financial risk management and division of responsibilities.

3. Market risk

The Company is mainly exposed to market risks such as changes in foreign currency exchange rates and interest rates.

(1) Foreign currency exchange rate risk

The Company's operating activities and net investments in foreign operating institutions are mainly conducted in foreign currencies, thus generating foreign currency exchange rate risks. In order to avoid the decrease in the value of foreign currency assets and the fluctuation of future cash flows due to exchange rate changes, the company uses currency conversion of short-term borrowings to avoid exchange rate risks.

Since the net investment in foreign operating institutions is a strategic investment, the Company has not hedged its risks.

A. The information of the Company's significant foreign currency financial assets and liabilities is as follows:

Unit: foreign currency yuan/NTS thousand

December 31, 114

	foreign currency	exchange rate	New Taiwan Dollar	sensitivity analysis
				Assumption changes	Changes in pre-tax (profit) loss	Changes in equity
financial assets
monetary items
Japanese yen	47,583,820	0.2008	9,555	+10%	955	764

December 31, 114

	foreign currency	exchange rate	New Taiwan Dollar	Assumption changes	sensitivity analysis
					Changes in pre-tax (profit) loss	Changes in equity
US dollars	26,892,481	31.43	845,231	+10%	84,523	67,618
EUR	1,300	36.9	48	+10%	5	4
RMB	3,779,032	4.496	16,991	+10%	1,699	1,359
non-monetary items
Japanese yen	34,846,908	0.2051	7,148
RMB	10,500	4.222	44
financial liabilities
monetary items
Japanese yen	733,098,968	0.2008	147,206	+10%	(14,721)	(11,777)
US dollars	833,130	31.43	26,185	+10%	(2,619)	(2,095)
RMB	1,488	4.496	7	+10%	(1)	(1)
non-monetary items
US dollars	48,002	31.43	1,509
RMB	6,859	4.411	30

December 31, 113

	foreign currency	exchange rate	New Taiwan Dollar	Assumption changes	sensitivity analysis
					Changes in pre-tax (profit) loss	Changes in equity
financial assets
monetary items
Japanese yen	65,993,990	0.2099	13,852	+10%	1,385	1,108
US dollars	32,130,586	32.79	1,053,562	+10%	105,356	84,285
EUR	1,300	34.14	44	+10%	4	4
Korean won	40,000	0.0225	1	+10%	-	-
RMB	3,875,172	4.478	17,353	+10%	1,735	1,388
non-monetary items
Japanese yen	22,734,058	0.2099	4,773
US dollars	19,837	32.47	644
financial liabilities
monetary items
Japanese yen	713,265,909	0.2099	149,715	+10%	(14,971)	(11,977)

December 31, 113

	foreign currency	exchange rate	New Taiwan Dollar	Assumption changes	sensitivity analysis
					Changes in pre-tax (profit) loss	Changes in equity
US dollars	1,207,768	32.79	39,603	+10%	(3,960)	(3,168)
non-monetary items
US dollars	192,598	32.74	6,305
RMB	111,412	4.443	495

B. The aggregate amounts of all exchange (loss) gains (including realized and unrealized) recognized in 114 and 113 due to the significant impact of exchange rate fluctuations on the Company's monetary items were (34,446) thousand yuan and 60,591 thousand yuan respectively.

(2) Interest rate risk

Interest rate risk refers to the risk of changes in the fair value of financial instruments due to changes in market interest rates. The Company's interest rate risk mainly comes from bank borrowings. Borrowings issued at floating interest rates expose the Company to cash flow interest rate risk, and part of the risk is offset by cash and cash equivalents held at floating rates. Borrowings issued at fixed interest rates expose the Company to fair value interest rate risk.

The sensitivity analysis of interest rate risk is based on changes in the fair value of fixed and floating rate borrowings at the end of the financial reporting period. If interest rates increase by ten basis points, the company's net profit after tax in 114 and 113 will decrease by NTD$1,089 thousand yuan and NTD$1,148 thousand yuan respectively.

Credit risk management

Credit risk refers to the risk that a counterparty breaches its contractual obligations and causes financial losses to the Company. The Company's credit risk mainly comes from receivables arising from operating activities. Operational-related credit risks and financial credit risks are managed separately.

(1) Operation-related credit risk

In order to maintain the quality of accounts receivable, the Company has established operations-related credit risk management procedures.

The risk assessment of individual customers takes into account a number of factors that may affect the customer's ability to pay, including the customer's financial status, credit rating agency rating, the company's internal credit rating, historical transaction records and current economic conditions. The Company will also use certain credit enhancement tools, such as prepayments and credit insurance, at appropriate times to reduce the credit risk of specific customers.

As of December 31, 114 and 113, the accounts receivable balance of the top ten customers accounted for 71% and 72% of the company's accounts receivable balance respectively. The credit concentration risk of the remaining accounts receivable is relatively insignificant.

(2) Financial credit risk

The credit risk of bank deposits, fixed income investments and other financial instruments is measured and monitored by the Company's financial department. Since the company's transaction partners and

performance parties are all banks with good credit, financial institutions, corporate organizations and government agencies with investment grade or above, there are no major performance concerns, and therefore there is no major credit risk.

5. Liquidity risk management

The company's goal in managing liquidity risk is to maintain the cash and equivalent cash required for operations and sufficient bank financing lines to ensure that the company has sufficient financial flexibility.

The following table summarizes and presents an analysis of the Company's financial liabilities during the agreed repayment period based on maturity date and undiscounted maturity amount:

	December 31, 114
	less than 1 year	2 to 3 years	4 to 5 years	More than 5 years	Total
non-derivative financial liabilities
Notes and accounts payable	$ 38,663	$ —	$ —	$ —	$ 38,663
Other payables	63,039	—	—	—	63,039
Lease liability	4,677	5,505	216	—	10,398
borrow money	1,017,781	85,493	22,179	—	1,125,453
deposit deposit	277	7,427	2,863	—	10,567
Total	$ 1,124,437	$ 98,425	$ 25,258	$ —	$ 1,248,120
	December 31, 113
---	---	---	---	---	---
	less than 1 year	2 to 3 years	4 to 5 years	More than 5 years	Total
non-derivative financial liabilities
Notes and accounts payable	$ 33,831	$ —	$ —	$ —	$ 33,831
Other payables	78,374	—	—	—	78,374
Lease liability	4,121	8,493	504	—	13,118
borrow money	326,904	908,540	126,188	—	1,361,632

deposit deposit	277	7,187	2,363	—	9,827
Total	$ 443,507	$ 924,220	$ 129,055	$ —	$ 1,496,782

6. Fair value of financial instruments

(1) The book amount of the Company's financial instruments measured by amortized cost (including cash and cash equivalents, financial assets measured at amortized cost, notes receivable, accounts receivable, other receivables, other financial assets, deposits, short-term loans, notes payable, accounts payable, other payables, long-term loans and deposits, etc.) is a reasonable approximation of fair value.

(2) The various levels of evaluation techniques used to measure the fair value of financial and non-financial instruments are defined as follows:

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

Level 2: Inputs other than publicly quoted prices included in Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, as derived from prices).

Level 3: Inputs for assets or liabilities that are not based on observable market data.

(3) Financial instruments measured at fair value as of December 31, 114 and 113 are classified by the consolidated company based on the nature, characteristics and risks of assets and liabilities and fair value levels. The relevant information is as follows:

December 31, 114

recurring fair value	first level	Second level	third level	Total
Financial assets measured at fair value through other comprehensive profit or loss	$ -	$ -	$ 150,000	$ 150,000
recurring fair value	December 31, 113
---	---	---	---	---
	first level	Second level	third level	Total
Financial assets measured at fair value through other comprehensive profit or loss	$ -	$ -	$ -	$ -

(4) Evaluation techniques and assumptions used to measure fair value

The fair value of financial assets is determined in the following manner:

The fair value of financial assets held by the Company that are measured at fair value through other comprehensive gains and losses is estimated using the market comparable company method. The main assumptions are based on the multiplier derived from the net profit or net equity value of the investee and the market quotation of comparable listed (counter) companies. The estimate adjusts for the discount effect of the equity security's lack of market liquidity.

(5) There was no transfer of the fair value hierarchy of financial assets in 114 and 113.
(6) The detailed list of changes to the third level is as follows:

	114 years
	Opening balance	Reclassificatio n in this issue	recognized among others Comprehensive profit and loss	Punishment in this period	Ending balance
Financial assets measured at fair value through other comprehensive profit or loss	$ -	$ 116,712	$ 33,288	$ -	$ 150,000

	113 years
	Opening balance	Purchase this issue	recognized among others Comprehensive profit and loss	Punishment in this period	Ending balance
Financial assets measured at fair value through other comprehensive profit or loss	$ -	$ -	$ -	$ -	$ -

(7) Quantitative information on fair value measurement of significant unobservable inputs (Level 3) The company's fair value measurement is classified as Level 3, which mainly includes financial assets measured at fair value through other comprehensive gains and losses - equity securities investments.

The list of quantitative information with significant unobservable input values is as follows:

project	Evaluation technology	Not serious Observe input values	Significant unobservable Input values and fairness value relationship
Financial assets measured at fair value through other comprehensive profit or loss – Investments in equity instruments with no active market	Comparable to the Over-the-Counter Listed Company Law	Weighted average price-to-book multiplier taking into account liquidity haircuts	The higher the multiplier, the higher the fair value; the higher the liquidity discount, the lower the fair value.

7. Related party transactions

(1) Name of related person and their relationship

Relation person name	Relationship with our company
ART OPTRONICS CORP.(ART)	Subsidiaries
Optimax Technology (Suzhou) Co., Ltd.	Subsidiaries
Shenzhen Lihuasheng Technology Co., Ltd. (Lihuasheng Technology)	Other related persons (note)
Lihuasheng (Hong Kong)
Photoelectric Technology Co., Ltd. (Li Huasheng Hong Kong)	Other related persons (note)

Jubilee International Biomedical Co., Ltd.(Jubilee) Other related persons (Note 1)

Note: The company's subsidiary, Optimax Technology (Suzhou) Co., Ltd., sold 13% of the equity of Shenzhen Lihuasheng Technology Co., Ltd. in November 113, and the change was completed on December 9, 113, with the shareholding ratio reduced to 19%.

Note 1: The company is one of its board members.

(2) Major transactions with related parties

1. Net sales

Name of related person	114 years	113 years
Li Huasheng Hong Kong	$ —	$ 7,584
Lihuasheng Technology	15,274	11,249
	$ 15,274	$ 18,833

The price of transactions between the company and its related parties has no other similar transactions for comparison in 2014 and 2013. The credit period for related parties is approximately 90 to 120 days per month, and for general customers is approximately 30 to 120 days per month.

2. Net purchase amount

Name of related person	114 years	113 years
ART OPTRONICS CORP.	$ 25,277	$ 21,358
Jubilee	500	—
	$ 25,777	$ 21,358

Purchase transactions with the above-mentioned related parties are handled according to the conditions for general customers.

3. Manufacturing cost-processing fee

Name of related person	114 years	113 years
Li Huasheng Hong Kong	$ —	$ 495

4. Operating cost deduction - sales scrap income

Name of related person	114 years	113 years

Li Huasheng Hong Kong	$	-	$	420

5. Operating expenses

Name of related person	114 years	113 years
Optimax Technology (Suzhou) Co., Ltd.	$ 25,250	$ 7,563
Li Huasheng Hong Kong	862	98
Lihuasheng Technology	14,315	5,123
Jubilee	158	-
	$ 40,585	$ 12,784

6. Accounts receivable

Name of related person	December 31, 114	December 31, 113
Li Huasheng Hong Kong	$ 60,403	$ 65,968
Less: Allowance for losses	(60,403)	(65,968)
	$ -	$ -

Information on changes in allowance for losses is as follows:

	114 years	113 years
Opening balance	$ 65,968	$ 64,333
Provision for impairment losses in the current period (reversal)	(5,565)	1,635
Ending balance	$ 60,403	$ 65,968

7. Other receivables (excluding capital loans)

Name of related person	December 31, 114	December 31, 113
Li Huasheng Hong Kong	$ 11,019	$ 11,496
Less: Allowance for losses	(11,019)	(11,496)
	$ -	$ -

Information on changes in allowance for losses is as follows:

	114 years	113 years
Opening balance	$ 11,496	$ 12,009

Reversal of impairment losses in the current period	(477)	(513)
Ending balance	$ 11,019	$ 11,496

Accounts payable

Name of related person	December 31, 114	December 31, 113
ART OPTRONICS CORP.	$ —	$ 2,888

Lending money to related parties

Other receivables

Name of related person	December 31, 114	December 31, 113
Optimax Technology (Suzhou) Co., Ltd.	$ 81,535	$ 162,606

interest income

Name of related person	December 31, 114	December 31, 113
Optimax Technology (Suzhou) Co., Ltd.	$ —	$ —

(3) Rewards and remuneration for key management levels

Remuneration information for directors and other key management members is as follows:

	114 years	113 years
Salary and other short-term benefits	$ 20,493	$ 17,659
severance benefits	125	108
Total	$ 20,618	$ 17,767

Pledged assets

project	content	book value
		December 31, 114	December 31, 113
Financial assets measured at amortized cost – current	Time deposits, provided to financial institutions as collateral for short-term borrowings	$ —	$ 16,395
Other financial assets -	Demand deposits, provided to financial institutions as	21,445	3,521

current	collateral	for	short-term
	borrowings
Property, plant and equipment	Provided	to	financial
	institutions	as collateral	for
	long-term	and	short-term
	borrowings
investment real estate	Provided	to	financial
	institutions	as collateral	for
	long-term	and	short-term
	borrowings
Deposit margin	Customs bureau's		security
	deposit and rental		security
	deposit, etc.
Total			$ 1,876,689

Significant contingent liabilities and unrecognized contractual commitments

In addition to those mentioned in other notes, the Company's major commitments and contingencies on the balance sheet date are as follows:

(1) The balance of the company's issued and unused letters of credit for imported raw materials is listed as follows:

Currency	December 31, 114	Unit: thousand yuan December 31, 113
Japanese yen	$ 164,056	$ 156,071
US dollars	$ 81	$ 109
New Taiwan Dollar	$ 6,205	$ 1,706

(2) The amount of deposit guarantee notes issued by the company to apply for a loan line from the bank is listed as follows:

December 31, 114	December 31, 113
$ 1,126,450	$ 1,172,367

Major disaster losses: None.
Significant post-period events

The company passed the resolution of the board of directors on January 8, 115. In order to improve the efficiency of capital utilization, the company plans to participate in the third round of cash capital increase of Zhibili

International Biomedical Technology Co., Ltd. based on its shareholding ratio, with a planned investment amount of 44,333 thousand yuan. The company paid an investment of 44,333 thousand yuan in January 115.

Others: None.
Matters disclosed in the notes

(1) Information related to major transaction matters:

Loans of funds to others: Appendix 1.
Endorsement guarantee for others: None.
Significant marketable securities held at the end of the period (excluding investment subsidiaries, affiliated enterprises and joint venture interests): Appendix 2.
The amount of goods purchased and sold with related parties reaches NT$100 million or more than 20% of the paid-in capital: None.
Amounts receivable from related parties amount to NT$100 million or more than 20% of the paid-in capital: None.
Business relationships and major transactions and amounts between the parent company and its subsidiaries and between each subsidiary company: Appendix 3.

(2) Information related to reinvestment business:

The name of the invested company, the region where it is located, and other related information (excluding mainland invested companies): Appendix 4.

(3) Mainland investment information:

Name of the mainland invested company, main business items, paid-in capital, investment method, capital remittances and inflows,

104

shareholding ratio, investment profits and losses, book value of investments at the end of the period, repatriated investment profits and losses, and investment limits in the mainland: Appendix 5.

Major transactions that occur directly or indirectly with mainland invested companies through third regions, as well as relevant information on their prices, payment terms, unrealized profits and losses, etc.: Appendix 1 to Appendix 5.
Department information

Please refer to the 2014 Consolidated Financial Report.

105

106

Schedule 1

Loans of funds to others

Unit: Thousands of New Taiwan Dollars

No. (Note 1)	lending funds company	Loans and objects	Current items (Note 2)	Is it Relevant person	This issue maximum amount (Note 3)	Ending balance (Note 8)	Actual expenditure Amount	interest rate interval	funds loan nature (Note 4)	business dealings Amount (Note 5)	Reasons why short-term financing is necessary (Note 6)	provision Amount of loss	collateral		Fund loan limits for individual objects (Notes 7, 9, 10)	funds loan total limit (Note 7, 9, 10)
													name	value
0	OPTIMAX	Optimax Technology (Suzhou) Co., Ltd	Other receivables	yes	$ 162,606	$ 81,535	$ 81,535	—	The need for short-term financing	$ —	for operational turnover	$ —	none	none	$ 991,732	$ 991,732
1	Optimax Technology (Suzhou) Co., Ltd	Shenzhen Lihuasheng Technology Co., Ltd.	Other receivables	yes	5,945	2,784	2,784	1%	The need for short-term financing	$ —	for operational turnover	$ 2,784	none	none	53,407	53,407

Note 1: The description of the number column is as follows:
A. Fill in 0 for the issuer.
B. The invested companies are numbered sequentially by company number starting from Arabic numeral 1.
Note 2: Items such as accounts receivable from related enterprises, accounts receivable from related parties, shareholders' transactions, advance payments, temporary payments, etc. must be filled in this field if they are in the nature of a capital loan.
Note 3: The maximum balance of funds loaned to others in the current year.
Note 4: The nature of the loan should be listed as business transactions or the need for short-term financing.
Note 5: If the nature of the fund loan is a business transaction, the business transaction amount should be filled in. The business transaction amount refers to the business transaction amount between the company lending the funds and the loan recipient from the transaction to the previous year.
Note 6: If the nature of the fund loan requires short-term financing, the reason for the necessary loan and the purpose of the loan should be specified, such as: repayment of loans, purchase of equipment, business turnover, etc.
Note 7: The company should fill in the fund loan limit for individual objects and the total fund loan limit set by the company in accordance with the operating procedures for loaning funds to others, and explain the calculation method of fund loan to individual objects and the total limit in the remarks column.
Note 8: If a publicly listed company submits fund loans to the board of directors on a case-by-case basis in accordance with Paragraph 1 of Article 14 of the Guidelines for the Handling of Fund Loans and Endorsement Guarantees for Publicly Offered Companies, even if no funds have been allocated, the amount determined by the board of directors should still be included in the announced balance to disclose the risks it bears; however, if the funds are subsequently repaid, the balance after repayment should be disclosed to reflect the risk adjustment. If a publicly listed company authorizes the chairman of the board of directors to allocate loans in installments or make recurring use within a certain amount and within a one-year period in accordance with Paragraph 2 of Article 14 of the Code of Conduct, the loan amount approved by the board of directors should still be used as the balance for announcement reporting.
Note 9: The company's working methods for loaning funds to others are as follows:

A. The amount of the company's loans to individual objects due to business transactions shall not exceed the amount of the company's business transactions with individual objects, and shall not exceed 40% of the total net value of the company's most recent financial report certified by an accountant; the total loan amount shall not exceed 40% of the total net value of the company's most recent financial report certified by an accountant. The above-mentioned business transaction amount refers to the purchase or sales amount between the two parties, whichever is higher.

B. Due to the need for short-term financing of funds, the company's loan amount to individual objects shall not exceed 40% of the total net worth of the company's most recent financial report certified by an accountant.

C. Due to the necessity of business transactions and short-term financing of the company, the total loan amount shall not exceed 40% of the total net worth of the company's most recent financial report certified by an accountant.

Note 10: The working methods of Lite Optoelectronics Technology (Suzhou) Co., Ltd.'s capital loan to others are as follows:

C. The company needs short-term financing due to business dealings or companies holding more than 20% (inclusive) of the shares. The total loan amount shall not exceed 40% of the total net worth of the company's most recent financial report certified by an accountant.

107

Schedule 2

Significant marketable securities held at the end of the period (excluding investment subsidiaries, affiliated enterprises and joint venture interests)

Unit: Thousands of New Taiwan Dollars

Company held	Types and names of securities (Note 1)	and securities Issuer relationship	Ledger column subject	end of term
				Number of shares/number of units	Carrying amount (Note 3)	Shareholding ratio	fair value
OPTIMAX	Jubilee International Biomedical Co., Ltd.	—	Financial assets measured at fair value through other comprehensive profit or loss – non-current	15,000,000	$ 150,000	19.834%	$ 150,000
Optimax Technology (Suzhou) Co., Ltd.	BOE Varitronix Limited	—	//	1,000,000	20,713	0.126%	20,713

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates and securities derived from the above items within

the scope of IFRS No. 9 "Financial Instruments".

Note 2: If measured at fair value, please fill in the amount after adjustment for fair value evaluation in column B of the book amount; if not measured at fair value, please fill in the original acquisition cost or amortized cost minus accumulated impairments in column B of the book balance.

Note 3: The above disclosure standard amount is based on 1% of consolidated total assets.

109

Schedule Three

Business relationships and major transactions between parent and subsidiary companies

January 1st to December 31st, 114th year of the Republic of China

Unit: Thousands of New Taiwan Dollars

serial number (Note 1)	Trader name	Transaction objects	with traders relationship (Note 2)	Transactions
				suject	Amount	Transaction conditions	of total consolidated revenue or ratio of total assets (Note 3, 4)
0	OPTIMAX	Optimax Technology (Suzhou) Co., Ltd	1	Other receivables	$ 81,535		2%
1	Optimax Technology (Suzhou) Co., Ltd	OPTIMAX	2	other income	25,250		1%
2	ART OPTRONICS CORP.	OPTIMAX	2	sales revenue	25,277	The credit period is 7 days after the arrival of the goods. Telegraphic transfer is required.	1%

Note 1: Information on business transactions between the parent company and its subsidiaries should be indicated in the number column respectively. The method of filling in the number is as follows:
1. Fill in 0 for the parent company.
2. Subsidiaries are numbered sequentially starting from Arabic numeral 1 according to company number.

Note 2: There are the following three types of relationships with traders, just indicate the type (if it is the same transaction between parent and subsidiary companies or between subsidiaries, there is no need to disclose it repeatedly. For example: a transaction between a parent company and a subsidiary company, if the parent company has disclosed it, the subsidiary part does not need to be disclosed repeatedly; a transaction between a subsidiary company and a subsidiary

company, if one subsidiary has disclosed it, the other subsidiary does not need to disclose it again):

Parent company versus subsidiary company.
Subsidiary to parent company.
Subsidiary to subsidiary.

Note 3: The calculation of the ratio of the transaction amount to the consolidated total revenue or total assets. If it is an asset and liability account, it is calculated as the closing balance to the consolidated total assets; if it is a profit and loss account, it is calculated as the cumulative amount to the consolidated total revenue.

Note 4: Individual transaction amounts that do not reach 1% of consolidated total revenue or total assets will not be disclosed; other methods of disclosure are asset and income.

111

Schedule 4

The name of the invested company, the region where it is located, and other related information (excluding mainland invested companies)

investment company Name	Investee company name (Note 1, 2)	area	Main business Project	Original investment amount		End of period held			Investee company's profit and loss for the current period (Note 2(2))	Investment (loss) recognized in the current period (Note 2(3))	Remark
				End of current period	end of last year	Number of shares	ratio%	Carrying amount
OPTIMAX	ART OPTRONICS CORP..	Taiwan	trading industry	$ 2,011	$ 2,011	225,000	100%	$ 816	$ (28)	$ (28)	Subsidiaries of the Company
	OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP. (OOMC)	Mauritius	investment industry	614,524 (USD 19,000 thousand yuan)	614,524 (USD 19,000 thousand yuan)	19,000,000	100%	133,517	15,580	15,580	Subsidiaries of the Company
	Intelligent Information Security Technology Inc.	Taiwan	IC design related industries	120,000	120,000	24,000,000	24.54%	4,589	(32,663)	(31,411)	Affiliated enterprises

Note 1: If a publicly listed company has a foreign holding company and uses consolidated statements as its main financial report in accordance with local laws and regulations, the disclosure of

information about the foreign invested company may only disclose relevant information to the holding company.

Note 2: If the situation is not described in Note 1, fill in according to the following provisions:

(1) Columns such as "Name of Invested Company", "Region", "Main Business Items", "Original Investment Amount" and "Ending Shareholding Status" should be filled in in order according to the reinvestment situation of the (public offering) company and the reinvestment situation of each directly or indirectly controlled invested company, and the relationship between each invested company and the (public offering) company (such as a subsidiary or subsidiary company) should be noted in the remarks column.

(2) Column B of "Invested Company's Profit and Loss for the Current Period" should fill in the current period's profit and loss amount for each invested company.

(3) In column B of "Investment Profit and Loss Recognized in the Current Period", you only need to fill in the profit and loss amount of each subsidiary recognized by this (publicly issued) company for direct investment and each invested company evaluated using the equity method, and the rest is not required. When filling in the "current profit and loss amount of each subsidiary recognized as direct reinvestment", it should be confirmed that the current profit and loss amount of each subsidiary has included the investment profit and loss that should be recognized by its reinvestment in accordance with regulations.

113

Schedule Five

Mainland investment information

Mainland is invested Company Name	Main business items	Paid-in capital (Note 5)	Investment method	From the beginning of this period Taiwan remits accumulated investment amount (Note 5)	Remit or withdraw in this period Amount of investment		From the end of this period Taiwan remits accumulated investment amount (Note 5)	Investee company Profit and loss for the current period	The company's direct or indirect investment shareholding ratio	Recognition in this issue Investment gains and losses (Note 2)	end of period investment book value	As of this period Investment has been repatriated income
					remit	take back
Lite Optoelectronics Technology (Suzhou) Co., Ltd.	Manufacturing and sales of polarizing plates	$614,524 (USD 19,000 thousand yuan)	Note 1	$614,524 (USD 19,000 thousand yuan)	$ -	$ -	$614,524 (USD 19,000 thousand yuan)	$ 15,580	100%	$ 15,580	$ 133,517	$ -

114

| Accumulated remittances from Taiwan at the end of this period
Amount of investment in mainland China (Note 5) | The investment amount is approved by the Investment Review Committee of the Ministry of Economic Affairs
(Note 4) | Investment limits in mainland China as stipulated by the Investment Review Committee of the Ministry of Economic Affairs
(Note 3) |
| --- | --- | --- |
| $614,524 (USD 19,000 thousand yuan) | $694,603 (USD 22,100 thousand yuan) | $ 1,487,599 |

Note 1: Invest in mainland China through OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP.

Note 2: Based on the financial report of the invested company audited by the certified accountant of the Taiwan parent company during the same period.

Note 3: According to the "Principles for Review of Investment or Technical Cooperation in the Mainland Area" of the Investment Review Commission of the Ministry of Economic Affairs, the cumulative amount of investment in the Mainland is limited to NT$80 million, or 60% of the net value or consolidated net value, whichever is higher.

Note 4: If foreign currencies are involved, they are converted into New Taiwan dollars based on the spot exchange rate and average exchange rate on the financial reporting date.

Note 5: If foreign currencies are involved, the conversion into New Taiwan dollars shall be based on the actual exchange rate on the date of remittance from Taiwan.

OPTIMAX TECHNOLOGY CORPORATION

Table of contents of important accounting items

The 114th year of the Republic of China

(Amounts are in NT$1,000 unless otherwise noted)

No./Index Details List Name

Cash and cash equivalents

Note 6(3). Financial assets measured at amortized cost

-flow

Accounts receivable

Note 6(5). Other receivables

Stock
Advance payments
Other current assets
Investments using the equity method

Note 6(8). Property, plant and equipment

Right-of-use assets

Note 6(11). Investment real estate

Note 6(24). Deferred income tax assets

Other non-current assets
Short-term borrowings
Accounts payable

Note 6(14). Other payables

Note 6(15). Liabilities provision

Other current liabilities
Long-term borrowings

Note 6(24). Deferred income tax liabilities

Lease liabilities
Other non-current liabilities
Operating income
Operating costs
Operating expenses
Interest income

Note 6(21). Other income

Note 6(22). Other profits and losses

Note 6(23). Financial costs

Note 6 (25). Employee benefits, depreciation and depletion incurred in the current period and amortization expense function summary table

Detailed statement of cash and cash equivalents

December 31, 114th year of the Republic of China

Schedule 1

project	Abstract	Amount
cash on hand	Including US dollars, RMB and other foreign currencies	$ 5,879
bank deposit
Check deposit		74
demand deposit		39,381
foreign currency deposits	Japanese yen 16,377,072 yuan	3,288
	USD 3,271,609 yuan	102,827
	RMB 714,595 yuan	3,213
Total		$ 154,662

Exchange rate: Japanese yen 0.2008

US Dollar 31.43

RMB 4.496

Accounts Receivable Details

December 31, 114th year of the Republic of China

Schedule 2

Customer name	Abstract	Amount
Non-related persons:
Company A		$ 88,641
Company B		81,515
C Company		78,269
Company D		77,186
E company		60,403
F company		46,966
G Company		42,544
H company		36,076
other	(Amount less than 5%)	85,930
Total		597,530
Less: Allowance for losses		(781)
Net amount		596,749
Relevant person:
Lihuasheng (Hong Kong) Optoelectronics Technology Co., Ltd.		60,403
Less: Allowance for losses		(60,403)
Net amount		$ -

118

Inventory details

December 31, 114th year of the Republic of China

Schedule 3

project	Amount
	cost	net realizable value
Finished products	$ 144,451	$ 139,736
work in progress	192,425	178,439
raw materials	214,154	197,508
Inventory in transit	5,015	5,015
small plan	556,045	$ 520,698
Allowance for impairment losses	(59,269)
Total	$ 496,776

Detailed list of prepayments

December 31, 114th year of the Republic of China

Schedule 4

project	Abstract	Amount
Prepaid insurance premium	property insurance	$ 59
Other prepaid expenses	other	275
Advance payment		7,190
Input tax		725
Total		$ 8,249

119

120

Other asset details

December 31, 114th year of the Republic of China

Schedule 5

project	Abstract	Amount
flow
Notes receivable		$ 311
Provisional payment		822
Other financial assets - current	Demand deposits, provided to financial institutions as collateral for short-term borrowings	21,445
Total		$ 22,578
illiquid
intangible assets		$ 1,170
Deposit margin		6,705
Total		$ 7,875

Detailed statement of investment changes using the equity method

January 1st to December 31st, 114th year of the Republic of China

Schedule 6

Name	Opening balance		Increase (decrease) in this period		Investment gains and losses recognized using the equity method	Exchange differences recognized using the equity method	other	Ending balance			Market price or net equity value		provide guarantee or Pledge situation	Remark
	Number of shares	Amount	Number of shares	Amount				Number of shares	Shareholding ratio	Amount	Unit price (yuan)	total price
OPTIMAX
OPTOELECTRONIC
(MAURITIUS) CORP.	19,000,000	$ 73,345	—	$ —	$ 15,580	$ 3,484	$ 41,108	19,000,000	100%	$ 133,517	—	$ 133,517	none	Note 1
Yate Optoelectronics Co., Ltd.	225,000	844	—	—	(28)	—	—	225,000	100%	816	—	816	n
Intelligent Information Security Technology Co., Ltd.	24,000,000	36,000	—	—	(31,411)	—	—	24,000,000	24.54%	4,589	—	4,589	n
Smart International Biomedical Technology Co.,	—	—	15,000,000	120,000	(3,288)	—	(116,712)			—	—	—		Note 2

121

Ltd.
Total		$ 110,189		$ 120,000	$ (19,147)	$ 3,484	$ (75,604)			$ 138,922	-	$ 138,922

Note 1: Others are the unrealized gains and losses of equity instruments measured at fair value through other comprehensive gains and losses (5,537) thousand yuan that are recognized using the equity method; others are the asset reserve generated from the reduction of part of the liabilities of Optimax Technology (Suzhou) Co., Ltd. 46,645 thousand yuan.
Note 2: Others are due to the cash capital increase of Jubilee International Biomedical Co., Ltd., Ltd. The company gave up the subscription, resulting in the shareholding ratio falling below $20\%$ , so it was transferred to financial assets measured at fair value through other comprehensive gains and losses.

Detailed statement of changes in right-of-use assets

January 1st to December 31st, 114th year of the Republic of China

Schedule 7

project	Opening balance	add	Punishment	Reclassify	Ending balance
cost:
land	$ 12,849	$ —	$ —	$ —	$ 12,849
transportation equipment	4,258	1,668	(2,191)	—	3,735
office equipment	1,600	—	—	—	1,600
small plan	18,707	1,668	(2,191)	—	18,184
Accumulated depreciation:
land	5,140	2,569	—	—	7,709
transportation equipment	1,948	1,429	(2,191)	—	1,186
office equipment	333	267	—	—	600
small plan	7,421	4,265	(2,191)	—	9,495
Net amount	$ 11,286	$ (2,597)	$ —	$ —	$ 8,689

123

Short-term loan details

December 31, 114th year of the Republic of China

Schedule 8

creditor	Borrowing type	Ending balance	Repayment period for the amount spent	interest rate range	Financing amount	mortgage or guarantee
SUNNY Bank	Guaranteed borrowing	$ 84,000	115.10.27	2.6200%	$ 350,000	Note 8
Taiwan Cooperative Bank	Guaranteed borrowing	75,599	115.01.11~115.05.04	1.75%~1.85%	230,000	//
First Bank	Guaranteed borrowing	109,673	115.01.12~115.04.27	2.143%~2.725%	269,500	//

124

Mega ICBC	Guaranteed borrowing	2,719	115.10.21	—	250,000	//
Total		$ 271,991

125

126

Accounts Payable Details

December 31, 114th year of the Republic of China

Schedule 9

Customer name	Abstract	Amount
Non-related persons:
Company A		$ 9,052
Company B		5,174
C Company		3,002
Company D		2,741
E company		2,659
F company		2,355
G Company		2,008
other	Payment (amount less than 5%)	11,524
Total		$ 38,515

127

Details of other liabilities

December 31, 114th year of the Republic of China

Schedule 10

project	Abstract	Amount	Remark
flow
Contract liabilities		$ 1,101
Notes payable		148
advance payment		112
Temporarily collect payment		2,355
Collect payment on behalf of		4,388
Total		$ 8,104
non-current deposit deposit		$ 10,567

Long-term loan details

December 31, 114th year of the Republic of China

Schedule 11

creditor	Amount of loan	Contract term	interest rate	mortgage or guarantee
medium term mortgage loan
SUNNY Bank	$ 707,000	Every 3 months is one period, and the loan will be repaid in 12 periods in total. The loan principal of 30,000 yuan will be repaid in each period from the 1st to the 11th period. The remaining outstanding loan balance will be paid off at one time when it is due. The borrower can repay in advance and include it in the repayment amount of each subsequent period. The maturity date is October 6, 115, the Republic of China.	2.72%	real estate
Taiwan Cooperative Bank	123,000	Each period is 3 months, and the loan will be repaid in 20 installments. The 1st to 10th installments will repay a loan principal of 5,400,000 yuan each, and the 11th to 19th installments will repay a loan principal of 10,800,000 yuan each. The remaining outstanding loan balance will	2.675%	real estate

128

		be paid off in one go, with the expiry date being August 22, 118, the Republic of China.
small plan
Less: Long-term borrowings due within one year	830,000
(728,600)
Total	$ 101,400

129

130

Lease liability schedule

December 31, 114th year of the Republic of China

Schedule 12

project	rental period	discount rate	Amount
land	5 years	2.5580%	$ 6,496
transportation equipment	3 years	1.8513%~2.5580%	2,579
office equipment	6 years	2.5580%	1,029
Total			10,104
Less: Listed as current part			(4,475)
Lease liability – non-current			$ 5,629

Operating Income Detailed Statement

January 1st to December 31st, 114th year of the Republic of China

Schedule 13

project	Abstract	Amount
merchandise sales revenue	Polarizing plate for TFT LCD display	$ 1,437,229
	Polarizing plate for TN/STN LCD display	384,108
	other	54,123
Total		$ 1,875,460

Operating cost schedule

January 1st to December 31st, 114th year of the Republic of China

Schedule 14

project	Amount	Remark
Beginning inventory	$ —
Add: net purchase amount for this period	500
Less: Closing inventory	—
Purchase and sale costs	500
Direct raw material consumption
Beginning raw materials	286,834
Add: net amount of feed in this period	632,256
Less: ending inventory	(218,375)
Transfer fees	(73,314)
	627,401
Indirect raw material consumption
Beginning raw materials	927
Add: net amount of feed in this period	21,700
Less: ending inventory	(794)
Transfer fees	(21,833)
	—
direct labor	263,185
manufacturing overhead	303,273
manufacturing cost	1,193,859
Add: Beginning work in progress	243,182
Purchase this issue	4,475
Less: Ending work in progress	(192,425)
loss	2
Transfer fees	2,687
finished goods cost	1,251,780
Add: Beginning finished goods	166,105
Less: Finished goods at the end of the period	(144,451)
Transfer fees	(3,337)
Cost of goods sold for homemade products	1,270,097
income from selling scraps	(15,186)
Benefit from recovery in net realizable value of inventories	(34,757)
Unallocated fixed manufacturing overhead	47,698
loss	(2)
Operating costs	$ 1,268,350

131

Business expense schedule

January 1st to December 31st, 114th year of the Republic of China

Schedule 15

project	Abstract	Promotional expenses	overhead	R&D expenses	expected credit derogation of benefits
salary		$ 25,039	$ 78,270	$ 26,416	$ -
Repair fee		50	7,509	320	-
insurance		3,054	6,609	3,122	-
depreciation		28	6,420	2,395	-
Research experiment fee		-	-	8,303	-
Commission expenses		48,350	-	-	-
Import and export charges		27,040	1	1,301	-
expected credit derogation of benefits	Accounts receivable	-	-	-	(10,081)
Other expenses	(If a single amount does not reach 5%)	51,005	51,887	4,223	-
Total		$ 154,566	$ 150,696	$ 46,080	$ (10,081)

132

Interest income schedule

January 1st to December 31st, 114th year of the Republic of China

Schedule 16

project	Abstract	Amount
bank deposit interest		$ 1,539
Other interest income		4
Total		$ 1,543

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OPTIMAX TECHNOLOGY CORPORATION

Notes to individual financial reports

(2) Basis for compilation

2. Remove columns

(10) Impairment of non-financial assets

3. Important leasing activities and terms

4. Other leasing information

(10) Lease Agreement - Lessor

(15) Liability reserves - current

(16) Long-term loans

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2. Diluted earnings per share

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Schedule 1

Loans of funds to others

Schedule 2

Schedule 4

OPTIMAX TECHNOLOGY CORPORATION

Table of contents of important accounting items

The 114th year of the Republic of China

No./Index Details List Name

December 31, 114th year of the Republic of China

Accounts Payable Details

Details of other liabilities

Lease liability schedule

Operating Income Detailed Statement

Interest income schedule

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