Qisda - Annual Report 2015 | FinancialReports.eu

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QISDA 2015 ANNUAL REPORT

Printed on April 19, 2016 Qisda Annual report is available at http://Qisda.com

Table of Content & Contact Information

Message to Our Shareholders ……………………………………………………………………………… 2 Overview of Operation …...……………………………….……………………………………………..…. 3 Corporate Governance …………………………………………………………………………………….. 9 Company Financials …………………………………………………………………………………………. 15

Contact Information

QISDA CORPORATION

Headquarters / Taoyuan Plant 157 Shan-Ying Road, Gueishan, Taoyuan 333, Taiwan, R.O.C. Phone: 886-3-359-8800 Taipei office 18 Jihu Road, Neihu, Taipei 114, Taiwan, R.O.C. Phone: 886-2-2799-8800

REGISTRAR & TRANSFER AGENT

Taishin International Bank

B1, 96 Jianguo N. Road, Sec. 1, Taipei 104, Taiwan, R.O.C. Phone: 886-2-2504-8125 http://www.taishinbank.com.tw

INDEPENDENT ACCOUNTANTS

INVESTOR RELATIONS CONTACTS

Spokesperson David Wang Senior Vice President and CFO Phone: 886-3-359-8800 [email protected] Deputy Spokesperson Jasmin Hung Associate Vice President Phone: 886-3-359-8800 [email protected]

Tang, Tzu Chieh & Chen, Mei Yen CPA KPMG Peat Marwick 68Fl, Taipei 101 Tower No. 7, Sec.5, Xinyi Road, Taipei 11049, Taiwan, R.O.C. Phone: 886-2-8101-6666 http://www.kpmg.com.tw

DOMESTIC STOCK EXCHANGE LISTING Qisda Common shares Taiwan Stock Exchange Corporation http://www.tse.com.tw/en/

QISDA ON THE INTERNET

Qisda’s Investor Relations home page on the worldwide website offers a wealth of corporate information, including the latest annual report and financial results. Website: Qisda.com/ir.htm

OVERSEAS SECURITY EXCHANGE LISTING

For further information, visit Qisda worldwide website and Login at Investor Relations Qisda Global Depositary Shares Luxemburg Stock Exchange ISIN: US0823012010 http://www.bourse.lu

Message to our Shareholders

Dear esteemed Qisda shareholders,

In 2015, Qisda’s consolidated revenue reached NT$133.1 billion. The consolidated net income was NT$2.59 billion, and the consolidated profit after tax was NT$2.25 billion. Net profit attributable to owners of the parent company was NT$2.17 billion, with an after tax earnings per share at NT$1.1.

Qisda has three main operating focuses – optimization of existing business operations, rapid expansion of the medical business, and acceleration of solution development. With extensive efforts in business development and expansion, Qisda has accomplished the following achievements in 2015:

Optimization of existing business operations: Qisda was able to sustain a steady progress and market leadership with its two main product lines: monitors and projectors. The monitor product line kept investing in the development of professional and medical monitors, as well as high-end, high-unit-price products. As a result, more than 1.6 million high-end and professional monitors were sold in 2015. Taking as a whole, the monitor product line performed better than the industry average and ranked number 2 in the world. The projector product line ranked number 1 among the global ODM manufacturers. WUXGA projectors, smart projectors, and new ultra-short-throw projectors for high-end educational market were introduced in 2015. With the solid improvement in its product mix, sales of high-unit-price models upheld 25% of the total sales.
Rapid expansion of the medical business: In 2015, Qisda’s consolidated revenue from the medical business exceeded NT$6 billion. Meanwhile, BenQ Medical Technology was listed on over-the-counter market, and revenue from both Suzhou and Nanjing BenQ Hospitals grew by leaps and bounds. In terms of medical business development, Qisda not only offered medical products and solutions via BenQ Medical Technology for operating room, ultrasound, and medical supplies but also introduced 3D dental implant integrated services via BenQ AB DentCare Corp. (a joint venture with AB Dental of Israel). Moreover, Qisda also entered into the hemodialysis field through cooperation with Medica SPA of Italy.
Acceleration of solution development: In order to become a comprehensive hardware and software solution provider, Qisda has targeted its development strategies on six smart fields including Smart Store, Smart City, Smart Enterprise, Smart Factory, Smart Hospital and Smart Campus. Meanwhile, Qisda also invested in DFI Inc. to immediately occupy a stand in the market of factory integration service.

For 2016, Qisda will continue to aim at the three main operating focuses in order to further create long-term value for the company. The plans are as follows:

Optimization of existing business operations: Keep focusing on developing high-end, high-unit-price, large-size and niche monitors for medical, graphic, design, and gaming applications to increase sales proportion and profit margin. Expand projector market share and hold the global leading position by offering a variety of high-end and high-brightness products.
Rapid expansion of the medical business: Maintain a 30% growth rate on the medical business field by enhancing sales channel penetration and developing proprietary products and technologies. In addition to the integration of group resources, Qisda will also adopt win-win acquisition and joint venture strategies to further strengthen its foothold on the medical business market.
Acceleration of solution development: Carry on the development strategies on the six smart fields and build a stronger relationship with partners in order to provide better solutions and services. Aside from existing China and Taiwan markets, explore sales in the Europe, America and Asian-Pacific areas.

Qisda maintains its competitive advantage by stressing on innovation and technological development. An average of 2%~3% of its annual revenue was spent each year in research and development, which earned Qisda approximately 1,100 patents around the world.

Qisda is committed to sustainable development, implementation of corporate governance, and social responsibility. In 2015, Qisda was not only ranked top 5% of Corporate Governance Evaluation System of TWSE, but also awarded first prize in the environment friendly category of the 2015 Global View Monthly CSR award, and ranked number 12 in Channel NewsAsia Sustainability Ranking for its efforts in economic, environmental and social responsibilities.

Qisda is extremely grateful to shareholders for their long-term support and encouragement. The management team will continue to work relentlessly to deliver the greatest benefit to both the company and its shareholders.

Sincerely,

K.Y. Lee, Chairman Peter Chen, President

Overview of Operations

Operational Guidelines

Business Scope

1. Overview of Business Operations

LCD Monitor: Qisda maintains the 2[nd] largest DMS (Design and Manufacturing Services) manufacturer in the industry. Qisda will continue to focus on fortifying relationship with customers, developing new product features and engaging in value-added vertical integration activities such as panel module assembly and in-house mechanical parts manufacture. The global market share of BenQ LCD monitors increased slightly in 2015 with the company’s continuous focus on the development and growth of high-end professional, e-sports, and large-sized monitors. Thanks to the gains in market share, the average selling price and added-value of BenQ’s product offerings improved considerably. Furthermore, BenQ continued with its active research and development of new functions for professional and integrated design display solutions in order to gain a larger share of the professional monitor market.

Projector: Qisda’s DMS projector business maintained the No.1 position worldwide in 2015. Qisda is the only manufacturer in Taiwan that is capable of both DLP and LCD projector mass production and shipment. In 2015, Qisda continued to maintain the No. 1 ODM manufacturer, No.1 DLP brand and No.2 projector brand positions worldwide. On the other hand, BenQ remained the world’s 2[nd] largest projector brand and the largest DLP projector brand in 2015. Compared with 2014, the global projector market volume slightly decreased; nevertheless BenQ still maintained a 12% market share. In addition, BenQ established an interchangeable lens projector product line in 2015 to aggressively address the professional audio video market.

Medical Service: The Nanjing BenQ Hospital, with more than 780,000 annual patient visits in 2015, has five major province- and city-level divisions and is currently the 2nd largest parturition hospital in Nanjing. In 2015, more than 1,100 cardiac catheterizations were performed by Nanjiang BenQ Hospital. Based on current foundation, intensive care, high-end obstetrics, pediatrics and postnatal care services are being developed to fulfill specific demands. Meanwhile, the Suzhou BenQ Hospital opened in May 2013, with more than 350,000 annual patient visits in 2015, which mainly focuses on medical diagnosis/treatment and high-end health examination services.

2. Product Offering

LCD Monitor: 17”/18.5”/19”/19.5”/21.5”/23”/23.x”/24”/27”/32”/34”/35” consumer and commercial LCD monitors, wide-screen and professional LCD monitors, all-in-one PCs and 32”/42”/46”/ 55”/65” public displays.

Projector: A wide range of projectors for home, office and educational applications.

Medical Service: General medical diagnosis/treatment, high-end health examination, medical aesthetics and postnatal care services.

Industry Overview

1. Current Status and Trends in Development of the Industry

LCD Monitor: As indicated by market research reports, LCD monitor market declined at an annual rate of 6% in 2015. The market forecast for LCD monitors in 2016 is expected to have a 4% further decrease due to the impact of the substitution effect caused by handheld devices. Moreover, the competition among system integrators will also remain severe. In order to enhance the competitive edge, Qisda is planning to place its focus on value-added product development and optimization of vertical integration in supply chain with economies of scale.

Projector: According to industry analysis reports, the total number of projector shipment worldwide with brightness over 500lms was 7.5 million units in 2015, with a flat or minor growth expectation for 2016. The volume ratio for high

Overview of Operations

brightness, high resolution and non-light ball (LED and laser) source projectors will continue to increase in the future. Also the growth in home and personal/mobile scenarios enables the sales volume of projectors with 1080p and 3D features to grow rapidly. Educational and office applications are supposed to decline due to the expansion of flat panel displays.

Medical Service: The medical market in China is expected to grow rapidly in parallel with the country’s swift economic development and increase of medical insurance coverage. Plus, the country’s governmental policies encourage the establishment of non-governmental medical institutes and such policies will further accelerate the expansion of market size of non-governmental hospitals.

2. Overview of Supply Chain

LCD Monitor: Upstream business partners consist mainly of LCD panel manufacturing and module assembling plants, including key components such as LCD panels, LED backlight modules and control chipsets. Midstream and downstream partners include system integrators and brand customers, which represent a mature and competitive market. Qisda has developed and maintained strong and long-term relationship with all of its upstream strategic suppliers and downstream brand customers.

Projector: Upstream partners consist of a line of optoelectronic device makers, including panel chipset, lens and specialized lamp manufacturers. Midstream and downstream partners include projector manufacturers and brand customers. An intimate yet intricate relationship exists amid upstream, midstream and downstream partners as alliance and competition intertwines among business competitors.

Medical Service: The Nanjing BenQ Hospital is one of the first civil pediatric doctor standardization bases in the Jiangsu Province of China where 50 pediatric doctors were trained annually. In 2011, the hospital became the fourth clinical school of the Nanjing Medical University with 11 clinical professors and established a cooperation and transfer procedure with top-level medical centers in Jianyeh, Lishui, Pukou and Luhe District of Nanjing City as well as medical cooperation with secondary-level medical centers in nearby cities such as Yangzhou, Huaian and Ma An Shan in the same province and Chuzhou, Hefei in the Anhui Province. The Suzhou BenQ Hospital opened in May 2013 and is now a subordinate hospital of the Nanjing Medical University.

3. Trends in Development and Market Competition of the Company’s Product

LCD Monitor: To survive the mature LCD monitor market, in addition to increasing cost competitiveness and offering flexible delivery, Qisda aims to work closely with brand customers to develop gaming monitors and monitors with ultra-high resolution, cloud connectivity, wireless application and other customized and specialty application products to fulfill diverse demands of the niche market.

Projector: The projector market has expanded as improvements applied to commercial projectors accelerated due to the advent of the latest technologies. In addition to an economical price tag, projectors have become smaller and lighter while the brightness and resolution have been vastly enhanced. It is estimated that the demand for projectors ~~will~~ may increase globally with the expansion of ultra-short-throw interactive projectors for classrooms, high-resolution and high-brightness projectors for meeting rooms and multi-media home entertainment projectors for home theaters. Meanwhile, due to the popularity of personal mobile devices and variety of wireless data applications, the growth of personal and home multimedia markets over the commercial and educational ones is becoming a foreseeable trend in the future.

Medical Service: The Chinese government has permitted private and foreign capitals to invest in the medical service industry. Taiwan investors, such as the Formosa Plastic group, Want Want group and BenQ group as well as a number of renowned domestic medical organizations, all actively filed applications in order to seek new opportunities abroad. In 2015, the Medical Fund Across the Taiwan Straits also invested in the establishment of a new hospital in Quenzhou City of China.

Overview of Operations

Research & Development

1. Technologies in Deployment

LCD Monitor: Curved displays, precision color management edge-to-edge monitors, Smart device displays, medical monitors and professional gaming monitors.

Projector: High-brightness interchangeable lens projectors for large venue, industry-leading home entertainment high resolution 4K/2K projectors, UST projectors with interactive module for educational market, laser-based and LED-based projectors.

Medical Service: The BenQ Hospitals have already established the thoracic surgery division (a nationally recognized clinical division), the radiology division (a municipally recognized clinical division, also honored the major division of the Nanjing Medical University), oncology division (a municipally recognized clinical division) as well as the urology, neurology and dermatology divisions.

2. Highlights in Future Technological Development

LCD Monitor: 5K3K high-definition monitors, DP 1.3 application monitors, USB type C application monitors, medical monitors, professional gaming monitors, eco-friendly monitors, wireless charging monitors, complete color adjustment solutions and complete digital signage solutions.

Projector: SSL-based light source, Ultra short-throw ratio, high resolution, high brightness, touch-panel projectors, and projectors for educational purposes as well as large commercial projectors with ultra-high brightness capability, maintaining balance between technological advancement and practical application while continuing with the improvement in color management and resolution. High-resolution projectors and interactive solutions for educational market and improvement of user interface are also considered important in future technological development.

Medical Service: The BenQ Hospitals have implemented the “patient-centric and complete medical care” concept to promote the medical care systems currently being adopted in Taiwan, which includes the attending physician system, nursing duty system, medical counseling/tracking system and pharmacist system. The Nanjing BenQ Hospital plans to establish 5 specific medical centers including oncology, thoracic, neurosurgery rehabilitation, obstetrics / gynecology / pediatrics and cardiovascular centers. The Suzhou BenQ Hospital plans to establish 4 specific medical centers including severe illness, oncology, obstetrics/gynecology/pediatrics and health management centers.

Overview of Operations

Long- and Short-term Business Development Plans

1. Short Term Business Development Plans

LCD Monitor:

(1) Solidify the leading position and provide high-end products.
(2) Provide all sizes of LCD displays and promote large-size, high-performance and LED backlight models while actively engaging in monitor-related application researches as ways to maintain Qisda’s position as one of the top three manufacturers worldwide.
(3) Increase add-on value in value chains through vertical integration, such as panel module assembly, backlight module design, in-house stamping and in-house plastic injection.

Projector:

(1) Solidify the leading position and provide one-stop services featuring hardware and software integrated solutions.
(2) Continue developing DLP and LCD projector technologies in order to maintain technological advantage and
superiority within the industry.
(3) Cultivate the home projector market utilizing comprehensive product lines. Keep developing solutions for interactive teaching. Improve the quality of wireless transmission.

Medical Service:

(1) Solidify the capability of each division as a general hospital and develop specialized divisions.
(2) Develop the capabilities of medical services for specific demands like postnatal care and medical aesthetic services.

2. Long Term Business Development Plans

LCD Monitor:

(1) Enhance product customization capabilities and eliminate inefficient activities within the value chain through the synchronization of design and production process of backlight module and displays, thus offering diversified and value-added products.
(2) Continue cooperating with AU Optronics Corp. Meanwhile, form strategic alliances with other major panel suppliers.
(3) Expand professional monitor offerings to industrial design, professional CAD/CAM usage, color management and medical application markets.
(4) Optimize hardware and software integrated solutions to provide better user experience in order to create value-added services and increase customers’ brand loyalty.

Projector:

(1) Expand and enhance product diversifications for mainstream product lines.
(2) Accelerate the development of high-end models to complete product offering.

Medical Service:

(1) Strengthen cooperation with medical schools and enhance personnel training.
(2) Enter into the hospital management business by utilizing experiences in the BenQ Hospitals and skills of the team.

Overview of Operations

Markets and Sales

Market Analysis

1. Major Sales Markets

LCD Monitor: Worldwide

Projector: Worldwide

Medical Service: The cities of Nanjing and Suzhou in China

2. Market Share

LCD Monitor: Being one of the top two LCD monitor manufacturers worldwide that occupies the leading position in the industry, Qisda held an approximately 13.4% of market share in 2015. 23”-plus monitors occupy 46.8% in product portfolio, which is better than industry average.

Projector: With market share at approximately 18%, Qisda is the No. 1 projector ODM worldwide in 2015.

Medical Service: The Nanjing BenQ Hospital is the only third-class general hospital in the Jianyeh District; while the Suzhou BenQ Hospital is the only third-class general hospital in the Gaoxin District.

3. Strategies Formulated Based on Future Demands, Growth, Competitive Niche, as well as Positive and Negative Factors in Market Trends

LCD Monitor:

(1) Positive factors: As the industry consolidates, big players are likely to remain large.
(2) Negative factors: Severe price competition in a matured market as cost and price become extremely important to brand customers and consumers. Moreover, the trend for mobile devices to replace personal computers further impacts the demands for consumer and commercial LCD monitors.
(3) Strategies:
i. Provide displays with all panel sizes and promote large-size, high-performance and LED backlight monitors where Qisda is believed to possess distinct advantage over competitors.
ii. Cultivate and maintain strategic partnerships with top-tier panel vendors to ensure smooth supply of critical parts.
iii. Increase add-on value within the value chain through vertical integration, such as integrating the design/assembly process for panel module and backlight module and increasing the ratio of in-house stamping and in-house plastic injection.
iv. Optimize product portfolio by strengthening large-size and high-end professional models.
v. Product differentiation: Continue with the development of value-added products to increase profitability, avoid price wars and satisfy the demand for multiple displays per room/family.

Projector:

(1) Positive factors: In addition to the benefit from economies of scale, leading technologies allow Qisda’s projectors to remain competitive on a global scale and market share is expected to continue its growth.
(2) Negative factors: Shorter projector product lifecycle and market price disruption caused by growing number of competitors and similar products.
(3) Strategies:
i. Increase operational efficiency in order to control inventory and fulfill customer needs.
ii. Strengthen product lineup by increasing the ratio of products with high gross profits.

Overview of Operations

iii. Deeply understand consumer needs and accelerate product development lead-time.
iv. Provide a comprehensive solution for interactive teaching.
v. Improve price margin by strengthening product portfolio.

Medical Service:

(1) Positive factors: The demand for medical services in China is expected to increase due to the reformation of medical administration on a national scale. A high entry barrier bars competitors from entering into the general hospital business and years of hospital management experience also makes it impossible for competitors to catch up instantly.
(2) Negative factors: Over 90% of the hospitals in China are state-owned, and doctors usually hesitate about joining private-owned hospitals. This forms an obstacle in personnel recruitment and development.
(3) Strategies: China government encourages the investment of hospitals by private capitals. In the future, private-owned hospitals will gradually benefit from policies that were only favorable to their state-owned counterparts in the past. With highly advanced hospital management skills and an experienced team backed by the strength of vertical integration within the BenQ group, undoubtedly the BenQ Hospitals will become the leader in the field of medical industry in China.

Product Application and Manufacture Process

1. Product Application

LCD Monitor : Visual display of computer outputs.

Projector : Portable and multi-user capacity; specifically, conferences, meetings and trainings for commercial and educational institutions, as well as provide theater-quality videos for home theaters and gaming consoles.

Medical Service : N.A.

2. Manufacture Process

LCD Monitor : Incoming inspection � Assembly � Pre-set � Burn-in � Function test � Exterior inspection � Packaging � Inventory � Shipping.

Projector : Incoming inspection � Optical system assembly � Module assembly � Burn-in � Final test � Packaging � Inventory � Shipping.

Medical Service : N.A.

Overview of Raw Material Supply

LCD Monitor: Continue cooperating with AU Optronics Corp. to develop superior vertical integration as well as maintaining close partnerships with Taiwan, China & Korea panel vendors in order to ensure smooth supply of panels at lower costs.

Projector: The stable supply of key components, such as DMD and LCD panels, are crucial to projector business as suppliers are limited to TI, Epson and Sony. Lamp suppliers are in a similar state due to the industry’s high entry barrier. Qisda has maintained close relationship with suppliers to ensure smooth supply of key components.

Medical Service: N.A.

Corporate Governance

Corporate Governance Structure

Qisda complies with Company Law, the Securities and Exchange Act, and other relevant laws and regulations of the Republic of China to formulate and implement the company's corporate governance structure. Qisda's corporate governance structure model is made up of three units, the board of directors, audit committee and remuneration committee. The audit committee is made up all of independent members of the board of directors. The remuneration committee members were appointed by resolution of the board of directors. Members of the board of directors (including independent directors) are selected based on shareholder votes. In principal, the responsibilities of the board of directors are carried out in accordance with relevant laws, company regulations, and shareholder resolutions. The board of directors is also responsible for supervision of company management and overall operational status. The audit committee's responsibilities include accurate financial reporting, selection and performance of independent accountants, effective implementation of internal controls in accordance with relevant laws and regulations, and management of existing and/or potential risk. The remuneration committee will exercise the care of a good administrator in faithfully performing the official powers, and shall submit its recommendations for deliberation by the board of directors.

Qisda has always believed that upholding shareholder rights and interests is a primary task. In addition to having a professional management team rich in experience, the board of directors also possesses the necessary executive knowledge, technological know-how, professional accomplishments, and devotion to the maximizing shareholder rights and interests. The board of directors has 9 members (including 3 independent directors). The chairman is elected by the board. Board members all have 5 or more years experience in business administration, legal, finance, accounting, or other professional experience required by the company.

Primary Roles of Governance Entities

Qisda's board of directors considers company and shareholder interests as top priorities in performing operational evaluations and passing significant resolutions. The audit committee fulfills a supervisory role through prudent and careful oversight of the operations of the company and the board of directors.

Board of Directors

According to the Securities and Exchange Act Article 26, Paragraph 3, Subparagraph 8 regulations, Qisda created the "Regulations Governing Procedure for Board of Directors Meetings". Official board of director business, operational procedures, records of official business, and announcements on company and other related matters are carried out according to these regulations. Qisda's board of directors shall convene at least once per quarter. The guiding policy of the board members shall be to maximize shareholder rights and interests through upright management, faithful obligation, the highest degree of personal oversight, and prudent application of the authority of their positions.

Audit Committee

In 2008, the company set up independent directors and an audit committee in accordance with the Securities and Exchange Act and shareholder resolutions. Through the "Audit Committee Charter" as defined by the board of directors, the audit committee preserves and strengthens the organization's strategic policies and works to increase operational efficiency through practical application of corporate governance. Qisda's audit committee must convene at least once per quarter and request the attendance of accountants, internal auditors, risk management, legal, and finance department representatives. By providing information on audit committee reports and inquiries into recent financial reporting status, the results of internal audits, significant litigation, and financial operating status, the audit committee can assist investors in ensuring that company governance is transparent and shareholder rights and interests are safeguarded.

Corporate Governance

Remuneration Committee

The remuneration committee will exercise the care of a good administrator in faithfully performing the official powers listed below, and shall submit its recommendations for deliberation by the board of directors; A. Prescribe and review the performance review and remuneration policy, system, standards, and structure for directors, supervisors and managerial officers. B. Evaluate and prescribe the remuneration of directors, supervisors, and managerial officers.

Board of Directors

Board Members

Date: April 17, 2016

Title	Name	Education & Experience	Current Positions
Chairman	K.Y. Lee	MBA, Switzerland IMD B.S., Electrical Engineering, National Taiwan University VP, Acer PC Product Marketing	Chairman: Qisda Corp., BenQ Corp. Director: AU Optronics Corp., Darfon Electronics Corp., BenQ Materials Corporation, BenQ Foundation
Director	Stan Shih	Honorary Doctor of International Law, Thunderbird, American Graduate School of International Management Honorary Fellowship, University of Wales, Cardiff Honorary Doctor of Technology, The Hong Kong Polytechnic University Honorary EE Ph.D., MSEE, BSEE, National Chiao Tung University Co-Founder, Chairman Emeritus of the acer Group	Chairman: iD SoftCapital Group Director: acer Inc., Qisda Corp., Wistron Corp., Nan Shan Life Insurance Company Ltd., Egis Technology Inc. Independent Director: Taiwan Semiconductor Manufacturing Company
Director	Peter Chen	Technology Management Program, National Cheng Chi University M.S., International Business Management, Thunderbird, The American Graduate School B.S., Electrical Engineering, National Cheng Kung University Technology Product Center EVP, BenQ Corp.	Chairman: BenQ Medical Technology Corporation, Partner Tech Corp. Director: BenQ AB Dentcare Corporation, Darfon Electronics Corp., BenQ Corp., BenQ Materials Corporation, Crystalvue Medical Corporation, BenQ Foundation Director and President: Qisda Corp.
Director	Sheaffer Lee	EMBA, National Cheng Chi University B.S., Electrical Engineering, National Cheng Kung University AVP, acer America President, Qisda Corp.	Chairman: Dazzo Technology Corp., Director: Qisda Corp., Raydium Semiconductor Corporation, Sanda Materials Corp.
Director	AU Optronics Corp.- Wei-Lung Liau	M.S., Applied Chemistry, National Chiao Tung University	Director: Qisda Corp., Darwin Precisions Corp. GM: Video Solutions Business Group, AU Optronics Corp.
Director	China Development Industrial Bank- Cathy Han	MBA, Central Connecticut State University	VP: China Development Industrial Bank Director: Qisda Corp., CDIB Private Equity (China) Corp., China Development Asset Management Corp. Supervisor: CDIB Capital Management Corporation, CBID Innovative Management Corp.
Independent Director	Kane K. Wang	Ph.D., The Structure of Technology, Demand, and ,Market of US Automobile Industry, MIT M.S., Transportation Planning and B.S., Civil Engineering, National Taiwan University Director and Professor, Graduate Institution of Industrial Economics, National Central University	Director & Chief Professor: China University of Technology Independent Director: Qisda Corp., Formosa Advanced Technologies Co., Ltd, Formosa Chemical Co., Ltd. Supervisor: Platinum Optics Technology Inc.
Independent Director	Allen Fan	B.S., Electrical Engineering, National Taiwan University General Manager, WKTechnology Fund President, Microsoft Taiwan VP, Twinhead International Corp. VP, HP Taiwan	Chairman: Yu Xuan Corp. Director: Belden International Inc., Cyberon Corporation Independent Director: Qisda Corp., Wistron Information Technology and Services Corporation
Independent Director	Jeffrey Y.C. Shen	EMBA certificate, University of Michigan B.S., Mechanical Engineering, National Cheng Kung University President, Changan Ford Mazda Automobile Company President, Ford Lio Ho Motor Company	Independent Director: Qisda Corp.

Corporate Governance

Material Resolutions Approved by Board Meetings

Date	Approval Events
2015.03.19	1. Approved Qisda's financial results of 2014 2. Approved the proposal for distribution of 2014 profits 3. Approved to convene 2015 Qisda Annual General Meeting 4. Approved to donate to BenQFoundation NT$2.5 million
2015.05.05	1. Approved Qisda’s consolidated financial results of 2015 Q1 2. Approved toprovide Guarantees USD 60M forQisda(L)Corp.
2015.05.15	1. Approved to acquire the common shares of DFI Inc.
2015.08.12	1. ApprovedQisda’s consolidated financial results of 2015 1H.
2015.11.11	1. ApprovedQisda's consolidated financial results of 2015Q3
2016.03.08	1. Approved Qisda's financial results of 2015 2. Approved the proposal for distribution of 2015 profits 3. Approved to convene 2016 Qisda Annual General Meeting 4. Approved to donate to BenQFoundation NT$2.5 million

Corporate Governance

Corporate Executive Officers

Date: April 19, 2016

Title	Name	Personnel Education & Experience	Other Current Positions
President	Peter Chen	Thunderbird, The American Graduate School Technology Product Center EVP, BenQ Corp.	Chairman: BenQ Medical Technology Corporation, Partner Tech Corp. Director: BenQ AB Dentcare Corporation, Darfon Electronics Corp., BenQ Corp., BenQ Materials Corporation, Crystalvue Medical Corporation, BenQ Foundation Director and President: Qisda Corp.
Senior Vice President & GM, Information Technology Products Group	Joe Huang	EMBA, Tsing Hua University in Beijing	-
Senior Vice President & GM, Supply Chain Management	C.M. Wu	EMBA, Pacific Western University	-
Senior Vice President & GM, Manufacturing Operations	Mark Hsiao	B.S., Chemical Engineering, Tamkang University AVP, AU Optronics Corp.	-
Senior Vice President & CFO, Finance & Administration	David Wang	M.S., Computer Science, University of Massachusetts CEO of Yageo, Ferroxcube	Director: Darfon Electronics Corp., Partner Tech Corp.
Vice President & GM, Commercial & Industrial Products Group	April Huang	EMBA, National Taiwan University Marketing Manager, BenQ Materials Corporation	-
Vice President & GM, Medical Devices Products Group	Jason Tyan	Ph.D., Electrical Engineering, State University of New York at Stony Brook	Chairman: BenQ Dialysis Technology Corp.
Vice President & GM, Business Solution Group	TL Tseng	M.S., Industrial Engineering, University of Florida	Director: BenQ Guru Corp., BenQ ESCO Corp.
Vice President, Manufacturing Operations	James T. Wang	Ph.D., Mechanical Engineering, Ohio State University	-
Vice President, Corporate Quality Management	CY Ho	EMBA, National Taiwan University	-
Vice President , Information Technology Service	S.C. Chao	M.S., Electrical Engineering, Utah State University	-

Corporate Governance

Group Organization

Company Organization Chart

Date: December 31, 2015

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Shareholder’s
Meeting
Audit Committee
Board of
Audit Office
Directors
Remuneration
Committee
Chairman
President
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Manufacturing Information Finance &
Product Strategy
Operations Technology PG Administration
Supply Chain Commercial & Innovation Information
Management Industrial PG Development Technology
Center Service
Corporate
Quality Mobile PG
Management
Lifestyle Design Business Solution
Center Group
Medical Devices
PG
Manufacturing
Service
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Corporate Governance

Date: December 31, 2015

Affiliated Companies

Qisda Corporation

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Manufacturing Subsidiaries Sales Subsidiaries Investment/Holding Companies
87.7% 100% 100%
Qisda Mexicana S.A. De C.V. Qisda Japan Co., Ltd. BenQ Corp.
(QMMX) (QJTO)
QLLB 100% 88.2% BenQ Dialysis Technology Corp.
100% Qisda (Suzhou) Co., Ltd. Qisda America Corp.
(QCSZ) (QALA)
13.6% BenQ Materials Corp.
QCHK Qisda Electronics (Suzhou)
100%
Co. Ltd. (QCES)
100% Qisda Optronics Corp.
QCHK Qisda Optronics (Suzhou)
100%
Co. Ltd. (QCOS) 100%
Darly Venture, Inc.
QCHK Qisda (Shanghai) Co., Ltd.
72.2%
(QCSH) 100% Darly Venture (L) Ltd.
(DVLB)
QCHK 100% Qisda Precision Industry (SuZhou) Co., 100% Qisda Sdn. Bhd.
Ltd. (QCPS)
(QLPG)
18.1% BenQ BM Holding Cayman Corp.
(BBHC)
100% Qisda (L) Corp.
(QLLB)
100% Qisda (Hong Kong) Limited
(QCHK)
----- End of picture text -----

Company Financials

Capital and Shares

Shares Type and Shares Outstanding

	Authorized Shares	Authorized Shares	Authorized Shares
				Notes
Shares Type	Outstanding shares	Un-issued shares	Total shares

Common Shares	1,966,781,958	3,033,218,042	5,000,000,000	-

Ownershi and Distribution of Shares p

		As of April 17, 2016
	Number of shareholders	Number of shares held	% of shares held
Domestic Individuals Other Domestic Corporations Foreign Institutions and Individuals Domestic Financial Institutions Government Agencies Total	147,572 163 329 39 3 148,106	1,284,481,853 291,618,748 226,685,945 163,994,912 500 1,966,781,958	65.31% 14.83% 11.52% 8.34% 0.00% 100.00%

Net Worth, Earning, Dividends and Market Price Per Share

			Unit: NT$;Per 1,000 Share	Unit: NT$;Per 1,000 Share
		Mar. 31, 2016	2015	2014
Market Price Per Share	Highest Market Price Lowest Market Price AverageMarketPrice	11.05 9.30 10.37	15.85 8.45 12.45	16.70 7.28 13.10
Net Worth Per Share (Note 1)	Before Distribution After Distribution	- -	13.87 -	13.37 12.77
Earnings Per Share (EPS)	Weighted Average Shares EPS EPS-adjusted(Note 2)	1,966,782 - -	1,966,782 1.10 -	1,966,757 1.51 1.51
Dividends Per Share	Cash dividends Stock dividends- Earnings Stock dividends- Capital Surplus AccumulatedUndistributed Dividend	- - - -	- - - -	0.6 - - -
Return On Investment	Price/Earning Ratio(Note 3) Price/Dividend Ratio(Note 4) Cash Dividend Yield Rate(Note 5)	- - -	11.32 - -	8.68 21.83 4.6%

Note 1: Subject to change after shareholders’ meeting resolution Note 2: Retroactive adjustment for capitalization of bonus

Note 3: Price/Earning ratio = Average market price/Earnings per share Note 4: Price/Dividend ratio = Average market price/Cash dividends per share

Note 5: Cash dividend yield rate = Cash dividends per share/ Average market price

Company Financials

Dividend Policy

According to Qisda's Article of Incorporation, the company's dividend policy is as follows:

After making the final settlement of account, the Company shall allocate the net profit, if any, according to the following sequences: paying the taxes, making up loss for preceding years, setting aside 10% thereof for legal reserve, setting aside or reversing special reserve in accordance with the regulations of the competent authorities. If there is any residual amount after deducting the amounts stated above, the Company shall distribute the residual amount in accordance with the following orders:

5%~20% of the residual amount to employees as bonus;
No more than 1% of residual amount for remuneration of directors;
All or part of the remaining residual amount to the shareholders as dividend and bonus.

In the event that the employee bonus provided in Item 1 of the preceding paragraph is share bonus, the employees of domestic or foreign affiliates of the Company are entitled to receive such share bonuses. The Board of Directors or any other person authorized by the Board of Directors is authorized to determine the qualifications and distribution method for distributing the share bonuses.

To comply with the amendment of Article 235 and Article 235-1 of the Company Act which were promulgated by the Hua-Zong-One-Yi-10400058161 Presidential Decree of May 20, 2015, it is proposed to amend the Articles of Incorporation in the Annual General Meeting as below:

“Where the Company has a profit before tax for each fiscal year, the Company shall first reserve certain amount of the profit to recover losses for preceding years, and then set aside 5%~20% of the remaining profit for distribution to employees as remuneration and no more than 1% of the remaining profit for distribution to directors as remuneration. The Company may allocate employees’ remuneration prescribed in the preceding paragraph in the form of stock or cash to employees of an affiliated company meeting certain conditions. The Board or the person duly designated by the Board is authorized to decide the conditions and allocation method.

After making the final settlement of account, the Company shall allocate the net profit, if any, according to the following sequences: paying the taxes, making up loss for preceding years, setting aside 10% thereof for legal reserve, setting aside or reversing special reserve in accordance with the regulations of the competent authorities. If there is any residual amount after deducting the amounts stated above, together with accumulated unappropriated retained earnings can be distributed after the distribution plan proposed by the Board and approved by the shareholders’ meeting.”

The Company is belonged to technological and capital capacity high tech industry and is in the growing period. In order to execute long-term capital planning and satisfy the shareholders with cash flow demand, the Company adopts dividend surplus as its dividend policy. Therefore, the Company could keep growing and operating ever. If the Company has surplus profit at the end of the fiscal year, when distributing dividend, the Company should consider the future expanding and cash flow demand and distribute dividend by stock mainly and cash partially. Principally, the ratio of cash dividend to total dividend should not lower than Ten percent of total dividend.

Company Financials

Most Recent 5-year Financial Analysis

1. Consolidated Financial Analysis under International Financial Reporting Standards (“IFRS”)

		Year	Year	Year	Year	Year
	Item
		2015	2014	2013	2012	2011

Financial ratio	Total liabilities to total assets (%)	69	71	74	76	-
	Financial capital to fixed assets (%)	246	243	208	223	-
Ability to Pay off debt	Currentratios (%)	107	105	97	102	-
	Quick ratios (%)	75	73	66	65	-
	Timeinterest earned	4.64	5.21	2.70	-	-
Ability to Operate	A/Rturnover(times)	5.00	6.11	8.57	9.60	-
	A/R turnover days	73	60	43	38	-
	Inventory turnover (times)	6.94	7.30	7.18	7.15	-
	A/Pturnover(times)	4.37	4.44	4.65	4.91	-
	Inventory turnover days	53	50	51	51	-
	Fixedassets turnover(times)	6.75	6.66	5.90	5.72	-
	Totalassets turnover(times)	1.29	1.36	1.35	1.30	-
Earning Ability	Return on assets (%)	3	4	3	(5)	-
	Return on equity (%)	7	12	6	(15)	-
	Operatingincome to paid-in-capital(%)	13	15	8	(4)	-
	PBTto paid-in-capital(%)	15	19	9	(14)	-
	Netincomeratio (%)	2	2	1	(3)	-
	EPS (NT$)	1.10	1.51	0.36	(1.41)	-
Cash Flow	Cash flow ratio (%)	10	(9)	12	(1)	-
	Cash flow adequacy (%)	29	9	1	1	-
	Cash reinvestmentratio (%)	11	(17)	18	(1)	-
Leverage	Operatingleverage	7	6	10	-	-
	Financial Leverage	1	1	3	-	-

2. Financial Analysis under International Financial Reporting Standards (“IFRS”)

		Year	Year	Year	Year	Year
	Item
		2015	2014	2013	2012	2011

Financial ratio	Total liabilities to totalassets (%)	60	63	62	62	-
	Financial capital to fixed assets (%)	2,401	2,258	1,817	1,874	-
Ability to Pay off debt	Current ratios (%)	94	93	85	89	-
	Quick ratios (%)	84	84	72	72	-
	Timeinterest earned	8.90	9.77	2.93	-	-
Ability to Operate	A/Rturnover(times)	3.47	4.14	5.53	6.54	-
	A/Rturnover days	105	88	66	56	-
	Inventory turnover (times)	27.8	27.87	24.18	27.16	-
	A/P turnover (times)	3.30	3.74	4.51	5.64	-
	Inventory turnover days	13	13	15	13	-
	Fixedassets turnover(times)	59.22	58.04	45.75	43.90	-
	Totalassets turnover(times)	1.33	1.48	1.47	1.44	-
Earning Ability	Returnonassets (%)	3	5	2	(5)	-
	Return on equity (%)	8	13	4	(14)	-
	Operating income to paid-in-capital (%)	6	6	0	(5)	-
	PBTto paid-in-capital(%)	12	15	4	(14)	-
	Netincomeratio (%)	2	3	1	(4)	-
	EPS (NT$)	1.1	1.51	0.36	(1.41)	-
Cash Flow	Cash flowratio (%)	5.84	(0.41)	(2)	3	-
	Cash flow adequacy (%)	142	13	3	5	-
	Cash reinvestment ratio (%)	2	(4)	(2)	2	-
Leverage	Operatingleverage	4	4	-	-	-
	Financial Leverage	1	1	0	1	-

Company Financials

3. Consolidated Financial Analysis under Statements of Financial Accounting Standards (“SFAS”)

		Year	Year	Year	Year	Year
	Item
		2015	2014	2013	2012	2011

Financial ratio	Total liabilities to totalassets (%)	-	-	-	76	74
	Financialcapitaltofixedassets (%)	-	-	-	197	229
Ability to Pay off debt	Currentratios (%)	-	-	-	101	110
	Quick ratios (%)	-	-	-	64	75
	Time interest earned	-	-	-	-	-
Ability to Operate	A/Rturnover(times)	-	-	-	9.71	10.31
	A/Rturnover days	-	-	-	38	35
	Inventory turnover(times)	-	-	-	7.11	7.02
	A/Pturnover(times)	-	-	-	4.89	4.75
	Inventory turnover days	-	-	-	51	52
	Fixed assets turnover (times)	-	-	-	5.36	5.89
	Totalassets turnover(times)	-	-	-	1.35	1.31
Earning Ability	Returnonassets (%)	-	-	-	(3)	(3)
	Returnonequity (%)	-	-	-	(14)	(13)
	Operatingincome to paid-in-capital(%)	-	-	-	(3)	2
	PBT to paid-in-capital (%)	-	-	-	(13)	(16)
	Net income ratio (%)	-	-	-	(3)	(3)
	EPS (NT$)	-	-	-	(1.32)	(1.74)
Cash Flow	Cash flowratio (%)	-	-	-	0	0
	Cash flow adequacy (%)	-	-	-	1	0
	Cash reinvestmentratio (%)	-	-	-	0	(2)
Leverage	Operating leverage	-	-	-	-	42
	Financial Leverage	-	-	-	0	-

4. Financial Analysis under Statements of Financial Accounting Standards (“SFAS”)

		Year	Year	Year	Year	Year
	Item
		2015	2014	2013	2012	2011

Financial ratio	Total liabilities to totalassets (%)	-	-	-	63	61
	Financialcapitaltofixedassets (%)	-	-	-	2,080	2,320
Ability to Pay off debt	Currentratios (%)	-	-	-	87	104
	Quick ratios (%)	-	-	-	70	91
	Time interest earned	-	-	-	-	-
Ability to Operate	A/R turnover (times)	-	-	-	6.62	6.45
	A/Rturnover days	-	-	-	55	57
	Inventory turnover(times)	-	-	-	27.16	31.09
	A/Pturnover(times)	-	-	-	5.64	7.90
	Inventory turnover days	-	-	-	13	12
	Fixed assets turnover (times)	-	-	-	50.36	46.77
	Total assets turnover (times)	-	-	-	1.53	1.24
Earning Ability	Returnonassets (%)	-	-	-	(4)	(5)
	Returnonequity (%)	-	-	-	(13)	(14)
	Operatingincome to paid-in-capital(%)	-	-	-	(4)	2
	PBTto paid-in-capital(%)	-	-	-	(13)	(17)
	Net income ratio (%)	-	-	-	(3)	(5)
	EPS (NT$)	-	-	-	(1.32)	(1.74)
Cash Flow	Cash flowratio (%)	-	-	-	3	18
	Cash flow adequacy (%)	-	-	-	6	-
	Cash reinvestmentratio (%)	-	-	-	2	10
Leverage	Operatingleverage	-	-	-	-	176
	Financial Leverage	-	-	-	-	-

Company Financials

Attachment 1：Independent Auditor’s Report & Audited Financial Statements

Independent Auditors’ Report

The Board of Directors Qisda Corporation:

We have audited the accompanying consolidated balance sheet of Qisda Corporation (the “Company”) and subsidiaries as of December 31, 2015, and their restated consolidated balance sheet as of December 31, 2014, and the related consolidated statements of comprehensive income, restated changes in equity, and cash flows for the years ended December 31, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

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

As described in Note 3 of the consolidated financial statements, starting January 1, 2015, the Company and its subsidiaries prepared the consolidated financial statements in accordance with International Accounting Standards 19 “Employee Benefits” of 2013 Taiwan-IFRS version endorsed by the Financial Supervisory Commission. Consequently, the consolidated financial statements as of and for the year ended December 31, 2014 have been restated retrospectively.

We have also audited the parent-company-only financial statements of Qisda Corporation as of and for the years ended December 31, 2015 and 2014, on which we have issued modified unqualified opinion and unqualified opinion, respectively.

KPMG

Taipei, Taiwan (the Republic of China) March 8, 2016

Notes to Readers

The accompanying consolidated financial statements are intended only to present the financial position, results of operations, and cash flows in accordance with the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the Financial Supervisory Commission of the Republic of China. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese language versions of auditors’ report and consolidated financial statements shall prevail.

Company Financials

Qisda Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2015 and 2014

(In thousands of New Taiwan Dollars)

Assets Current assets: Cash and cash equivalents $ Financial assets at fair value through profit or loss－current Available-for-sale financial assets－current Notes and accounts receivable, net Notes and accounts receivable from related parties Other receivables Other receivables from related parties Inventories Other current assets Other financial assets－current Non-current assets held for sale Total current assets Non-current assets: Available-for-sale financial assets－non-current Investments accounted for using equity method Property, plant and equipment Investment property Intangible assets Deferred income tax assets Other non-current assets Other financial assets－non-current Long-term prepaid rents Total non-current assets Total assets $	2015.12.31 9,036,050 510,683 261,343 20,407,299 4,655,002 148,493 208,580 16,386,780 1,503,817 2,710,710 - 55,828,757 856,956 15,858,890 19,545,376 2,989,618 198,299 1,775,567 185,380 207,126 2,797,862 44,415,074 100,243,831	2014.12.31 (Restated) 8,988,974 477,624 534,674 22,879,253 5,337,771 688,988 182,598 17,772,185 1,504,410 1,595,226 54,065
		60,015,768
		904,407 15,581,079 19,892,498 3,109,718 208,428 1,802,527 171,250 973,520 2,860,935
		45,504,362
		105,520,130

(Continued)

Company Financials

Qisda Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2015 and 2014

(In thousands of New Taiwan Dollars)

Liabilities and Equity Current liabilities: Short-term borrowings $ Financial liabilities at fair value through profit or loss－current Notes and accounts payable Accounts payable to related parties Other payables Other payables to related parties Other current liabilities Current portion of long-term debt Provisions－current Total current liabilities Non-current liabilities: Long-term debt Lease obligations payable－non-current Provisions－non-current Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to shareholders of the Company: Common stock Capital surplus Retained earnings Other equity Total equity attributable to shareholders of the Company Non-controlling interests Total equity Total liabilities and equity $	2015.12.31 14,288,274 72,260 23,053,173 2,279,949 8,816,651 16,756 671,409 2,489,197 387,719 52,075,388 14,071,273 1,182,786 784,043 68,402 691,216 16,797,720 68,873,108 19,667,820 2,179,038 3,545,665 1,879,359 27,271,882 4,098,841 31,370,723 100,243,831	2014.12.31 (Restated) 14,138,414 120,653 26,167,639 2,672,799 9,631,495 26,705 625,377 3,217,919 500,283 57,101,284 14,943,270 961,605 800,880 147,213 531,415 17,384,383 74,485,667 19,667,820 1,990,292 2,556,556 2,072,349 26,287,017 4,747,446 31,034,463 105,520,130

Company Financials

Qisda Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan Dollars, Except Earnings Per Share)

Net sales $ Cost of sales Gross profit Operating expenses: Selling expenses Administrative expenses Research and development expenses Total operating expenses Operating income Non-operating income and loss: Other income Other gains and losses – net Finance costs Share of profits of associates and joint ventures Total non-operating income and loss Income before income tax Income tax expense Net income Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Share of other comprehensive income of associates and joint ventures Less:Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Change in fair value of available-for-sale financial assets Share of other comprehensive income of associates and joint ventures Less:Income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax Total comprehensive income for the year $ Net income attributable to: Shareholders of the Company $ Non-controlling interests $ Total comprehensive income attributable to: Shareholders of the Company $ Non-controlling interests $ Earnings per share (in New Taiwan dollars)) : Basic earnings per share $ Diluted earnings per share $	2015 133,102,431 118,462,432 14,639,999 5,750,745 2,822,983 3,468,591 12,042,319 2,597,680 444,392 132,445 (786,033) 472,871 263,675 2,861,355 615,871 2,245,484 (47,824) (17,256) - (65,080) 378,935 (544,925) 5,990 - (160,000) (225,080) 2,020,404 2,169,178 76,306 2,245,484 1,976,188 44,216 2,020,404 1.10 1.09		2014 133,510,923 118,453,278 15,057,645 5,997,189 2,923,642 3,208,567 12,129,398 2,928,247 366,026 64,467 (876,317) 1,205,447 759,623 3,687,870 354,731 3,333,139 (38,232) 3,454 - (34,778) 910,814 66,939 175,286 - 1,153,039 1,118,261 4,451,400 2,971,068 362,071 3,333,139 3,890,695 560,705 4,451,400 1.51 1.50

Qisda Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the years ended December 31, 2015 and 2014 (In thousands of New Taiwan Dollars)

				Attribu	table to shareholders o	f the Company	f the Company			Total equity
Common stock 19,667,820 - 19,667,820 - - - - - - - - - - 19,667,820 - - - - - - - - - - - 19,667,820	Capital Surplus - - - - - - 259,674 1,730,618 - - - - - 1,990,292 - - 116,004 - - (54,935) 127,677 - - - - 2,179,038		Retained earnings	Total (447,263) 99,926 (347,337) (66,279) (896) - - - - - 2,971,068 - 2,971,068 2,556,556 - (1,180,069) - - - - - - 2,169,178 - 2,169,178 3,545,665		Other equity		Total 1,331,522 (99,926) 1,231,596 - - - - (78,874) - - - 919,627 919,627 2,072,349 - - - - - - - - - (192,990) (192,990) 1,879,359	Treasury stock (213) - (213) - 213 - - - - - - - - - - - - - - - - - - - - -
		Legal reserve - - - - - - - - - - - - - - 242,689 - - - - - - - - - - 242,689	Retained earnings (accumulated deficit) (447,263) 99,926 (347,337) (66,279) (896) - - - - - 2,971,068 - 2,971,068 2,556,556 (242,689) (1,180,069) - - - - - - 2,169,178 - 2,169,178 3,302,976		Foreign currency translation differences 832,371 - 832,371 - - - - (78,874) - - - 900,839 900,839 1,654,336 - - - - - - - - - 442,935 442,935 2,097,271	Unrealized gain (loss) from available-for-sale financial assets 499,151 - 499,151 - - - - - - - - 48,528 48,528 547,679 - - - - - - - - - (575,201) (575,201) (27,522)	Remeasurements of defined benefit plans - (99,926) (99,926) - - - - - - - - (29,740) (29,740) (129,666) - - - - - - - - - (60,724) (60,724) (190,390)
										23,424,708 -
										23,424,708
										(66,279) (683) (61,039) 270,820 3,030,402 9,513 (24,379) 3,333,139 1,118,261
										4,451,400
										31,034,463 - (1,180,069) 116,004 51,635 (247,319) (721,883) 304,890 (7,402) 2,245,484 (225,080)
										2,020,404
										31,370,723

Company Financials

Qisda Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax $ Adjustments for: Depreciation Amortization Reversal of bad debt expense Interest expense Interest income Dividend income Share-based compensation cost Share of profits of associates and joint ventures Loss (gain) on disposal of property, plant and equipment and long-term prepaid rents, net Gain on disposal of non-current assets held for sale Gain on disposal of investments Impairment loss on financial assets Total non-cash profit and loss Changes in operating assets and liabilities: Financial assets and liabilities at fair value through profit or loss Notes and accounts receivable Notes and accounts receivable from related parties Other receivables Other receivables from related parties Inventories Other current assets Other non-current assets Net changes in operating assets Notes and accounts payable Accounts payable to related parties Other payables to related parties Provisions Other current liabilities Other non-current liabilities Net changes in operating liabilities Total changes in operating assets and liabilities Cash provided by (used in) operations Interest received Dividend received Interest paid Income taxes paid Net cash provided by (used in) operating activities	2015 2,861,355 1,992,523 219,458 (9,763) 786,033 (166,504) (42,223) 51,635 (472,871) (17,591) (112,180) (268,976) 148,922 2,108,463 (80,688) 2,550,769 682,769 545,916 (652) 1,387,798 4,486 (7,620) 5,082,778 (3,118,271) (392,850) (9,949) (129,774) (482,752) 112,228 (4,021,368) 1,061,410 6,031,228 161,083 445,293 (723,669) (664,369) 5,249,566	2014 3,687,870 1,996,479 182,313 (1,214) 876,317 (274,554) (40,275) 9,513 (1,205,447) 11,234 - (161,497) - 1,392,869 (186,638) (10,220,585) (2,528,589) 653,678 1,333 (3,100,406) 736,130 (46,578) (14,691,655) 3,528,751 788,218 (35,666) 50,356 929,459 112,747 5,373,865 (9,317,790) (4,237,051) 257,964 192,497 (845,445) (624,459) (5,256,494) (Continued)

Company Financials

Qisda Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan Dollars)

Cash flows from investing activities: Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Purchase of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Proceeds from disposal of non-current assets held for sale Additions to property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in loan receivables from related parties Additions to intangible assets Decrease in long-term prepaid rents Additions to investment property Increases in other financial assets Acquisition of a subsidiary, net of cash acquired Net cash outflow from deconsolidation of subsidiaries Net cash used in investing activities Cash flows from financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in long-term debt Repayment of long-term debt Decrease in lease obligations payable Cash dividends distributed to shareholders Acquisition of subsidiary’s interests from non-controlling interests Proceeds from disposal of subsidiary’s interests (without losing control) Capital injection from non-controlling interests Cash dividends paid to non-controlling interests Net cash provided by (used in) financing activities Effects of foreign exchange rate changes Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $	2015 (612,664) 412,882 (115,120) - 145,092 (1,594,545) 60,930 (25,330) (110,319) 24,660 (99,826) (347,265) (75,538) - (2,337,043) 8,387,454 (8,239,190) 8,455,300 (10,074,280) (19,934) (1,180,069) (902,950) 181,067 304,890 (247,319) (3,335,031) 469,584 47,076 8,988,974 9,036,050	2014 (373,162) 44,986 (325,072) 2,460 - (1,413,320) 25,596 (30,861) (148,564) 51,807 (437,940) (22,508) - (35,855) (2,662,433) 13,957,514 (9,681,056) 10,634,750 (13,211,069) (46,360) - (69,410) 344,950 3,030,402 (61,039) 4,898,682 529,329
		(2,490,916) 11,479,890 8,988,974

Company Financials

Independent Auditors’ Report

The Board of Directors Qisda Corporation:

We have audited the accompanying parent-company-only balance sheet of Qisda Corporation (the “Company”) as of December 31, 2015, and their restated parent-company-only balance sheet as of December 31, 2014, and the related parent-company-only statements of comprehensive income, restated changes in equity, and cash flows for the years ended December 31, 2015 and 2014. These parent-company-only financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the parent-company-only financial statements referred to in the first paragraph present fairly, in all material respects, the parent-company-only financial position of Qisda Corporation as of December 31, 2015 and 2014, and the results of their financial performance and their cash flows for the years ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Starting January 1, 2015, the Company prepared the parent-company-only financial statements in accordance with International Accounting Standards 19 “Employee Benefits” of 2013 Taiwan-IFRS version endorsed by the Financial Supervisory Commission. Consequently, the financial statements as of and for the year ended December 31, 2014 have been restated retrospectively.

KPMG Taipei, Taiwan (the Republic of China) March 8, 2016

Company Financials

Qisda Corporation Parent Company Only Balance Sheets December 31, 2015 and 2014

(In thousands of New Taiwan dollars)

Assets Current assets: Cash and cash equivalents $ Financial assets at fair value through profit or loss－current Available-for-sale financial assets－current Notes and accounts receivable, net Notes and accounts receivable from related parties Other receivables Other receivables from related parties Inventories Other financial assets－current Other current assets Total current assets Non-current assets: Available-for-sale financial assets－non-current Investments accounted for using equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Other financial assets－non-current Total non-current assets Total assets $	2015.12.31 860,964 82,154 90,458 10,917,468 13,254,566 26,300 17,404 3,071,579 716,636 81,525 29,119,054 480,989 35,533,178 1,531,870 16,122 1,042,935 35,924 36,907 38,677,925 67,796,979	2014.12.31 (Restated) 388,333 74,803 238,414 13,127,736 15,649,089 156,668 11,635 3,213,410 - 70,907 32,930,995 22,062 34,614,189 1,574,819 20,706 1,040,455 26,334 809,482 38,108,047 71,039,042

(Continued)

Company Financials

Qisda Corporation Parent Company Only Balance Sheets December 31, 2015 and 2014 (In thousands of New Taiwan dollars)

Liabilities and Equity Current liabilities: Short-term borrowings $ Notes and accounts payable Accounts payable to related parties Other payables Other payables to related parties Current portion of long-term debt Provisions－current Other current liabilities Total current liabilities Non-current liabilities: Long-term debt Provisions－non-current Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity Common stock Capital surplus Retained earnings Other equity Total equity Total liabilities and equity $	2015.12.31 3,743,575 2,743,528 21,523,935 2,406,485 123,363 250,000 30,343 191,089 31,012,318 9,089,500 205,265 13,966 204,048 9,512,779 40,525,097 19,667,820 2,179,038 3,545,665 1,879,359 27,271,882 67,796,979	2014.12.31 (Restated) 2,648,170 3,566,024 25,184,494 2,263,271 266,850 1,280,464 38,282 236,785 35,484,340 8,870,891 226,079 11,486 159,229 9,267,685 44,752,025 19,667,820 1,990,292 2,556,556 2,072,349 26,287,017 71,039,042

Company Financials

Qisda Corporation Parent Company Only Statements of Comprehensive Income For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan dollars, Except Earnings Per Share)

Net sales $ Cost of sales Gross profit Unrealized gross profit on sales to subsidiaries Realized gross profit Operating expenses: Selling expenses Administrative expenses Research and development expenses Total operating expenses Operating income Non-operating income and loss: Other income Other gains and losses – net Finance costs Share of profits of subsidiaries and associates Total non-operating income and loss Income before income tax Income tax expense Net income Other comprehensive income: Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Share of other comprehensive income of subsidiaries and associates Less:Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Change in fair value of available-for-sale financial assets Share of other comprehensive income of subsidiaries and associates Less:Income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax Total comprehensive income for the year $ Earnings per share (in New Taiwan dollars): Basic earnings per share $ Diluted earnings per share $	2015 91,996,634 87,362,824 4,633,810 (5,681) 4,628,129 794,477 461,374 2,141,661 3,397,512 1,230,617 79,235 81,878 (287,426) 1,165,287 1,038,974 2,269,591 100,413 2,169,178 (37,181) (23,543) - (60,724) 442,935 (79,555) (495,646) - (132,266) (192,990) 1,976,188 1.10 1.09		2014 92,772,579 87,900,735 4,871,844 (128,066) 4,743,778 858,288 514,417 2,260,469 3,633,174 1,110,604 38,383 (7,384) (338,594) 2,168,059 1,860,464 2,971,068 - 2,971,068 (24,876) (4,864) - (29,740) 732,521 18,011 198,835 - 949,367 919,627 3,890,695 1.51 1.50

Qisda Corporation Parent Company Only Statements of Changes in Equity For the years ended December 31, 2015 and 2014 (In thousands of New Taiwan dollars)

	Retained earnings Retained earnings (accumulated deficit) Total (447,263) (447,263) 99,926 99,926 (347,337) (347,337) (66,279) (66,279) (896) (896) - - 2,971,068 2,971,068 - - 2,971,068 2,971,068 2,556,556 2,556,556 (242,689) - (1,180,069) (1,180,069) - - - - 2,169,178 2,169,178 - - 2,169,178 2,169,178 3,302,976 3,545,665		Other equity	Other equity	Total equity
Legal reserve - - - - - - - - - - 242,689 - - - - - - 242,689	Retained earnings (accumulated deficit) (447,263) 99,926 (347,337) (66,279) (896) - 2,971,068 - 2,971,068 2,556,556 (242,689) (1,180,069) - - 2,169,178 - 2,169,178 3,302,976	Foreign currency translation differences 832,371 - 832,371 (78,874) - - - 900,839 900,839 1,654,336 - - - - - 442,935 442,935 2,097,271	Unrealized gain (loss) from available-for-sale financial assets 499,151 - 499,151 - - - - 48,528 48,528 547,679 - - - - - (575,201) (575,201) (27,522)	Remeasurement s of defined benefitplans - (99,926) (99,926) - - - - (29,740) (29,740) (129,666) - - - - - (60,724) (60,724) (190,390)
					20,551,866 -
					20,551,866
					1,585,465 (683) 259,674 2,971,068 919,627
					3,890,695
					26,287,017 - (1,180,069) 243,681 (54,935) 2,169,178 (192,990)
					1,976,188
					27,271,882

Company Financials

Qisda Corporation Parent Company Only Statements of Cash Flows For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan dollars)

Cash flows from operating activities: Income before income tax $ Adjustments for: Depreciation Amortization Interest expense Interest income Dividend income Share of profits of subsidiaries and associates Loss (gain) on disposal of property, plant and equipment, net Gain on disposal of investments Unrealized gross profit on sales to subsidiaries Total non-cash profit and loss Changes in operating assets and liabilities: Financial assets and liabilities at fair value through profit or loss Notes and accounts receivable Notes and accounts receivable from related parties Other receivables Other receivables from related parties Inventories Other current assets Other non-current assets Net changes in operating assets Notes and accounts payable Accounts payable to related parties Other payables to related parties Provisions Other payables and other current liabilities Other non-current liabilities Net changes in operating liabilities Total changes in operating assets and liabilities Cash provided by operations Interest received Dividend received Interest paid Income taxes paid Net cash provided by (used in) operating activities	2015 2,269,591 77,516 10,599 287,426 (2,867) (32,584) (1,165,287) 930 (17,021) 5,681 (835,607) (7,351) 2,210,268 2,394,523 128,432 11,767 141,831 (9,214) (23,041) 4,847,215 (822,496) (3,660,559) (143,487) (28,753) (2,588) 7,638 (4,650,245) 196,970 1,630,954 4,803 450,542 (274,282) (1,404) 1,810,613	2014 2,971,068 79,519 18,710 338,594 (6,479) (12,315) (2,168,059) (724) (94,502) 128,066 (1,717,190) (47,503) (7,751,206) (5,021,982) 493,184 8,867 (108,625) 18,783 (16,800) (12,425,282) 1,269,649 9,228,439 249,503 3,163 391,476 76,572 11,218,352 (1,206,930) 46,948 7,237 136,554 (332,437) (3,377) (145,075) (Continued)

Company Financials

Qisda Corporation Parent Company Only Statements of Cash Flows For the years ended December 31, 2015 and 2014

(In thousands of New Taiwan dollars)

Cash flows from investing activities: Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Purchase of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Additions to property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in loan receivables from related parties Additions to intangible assets Decreases in other financial assets Net cash used in investing activities Cash flows from financing activities: Increase in short-term borrowings Increase in long-term debt Repayment of long-term debt Cash dividends distributed to shareholders Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $	2015 (450,101) 76,596 (64,859) 10 (35,497) - (17,536) (6,015) 55,939 (441,463) 1,095,405 6,795,300 (7,607,155) (1,180,069) (896,519) 472,631 388,333 860,964	2014 - 24,460 (432,065) - (33,265) 1,457 108,752 (13,556) 52,925 (291,292) 1,575,190 9,120,650 (10,686,988) - 8,852 (427,515) 815,848 388,333

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Qisda — Annual Report 2015

52023_rns_2016-07-25_277a355e-4001-44c6-aa3d-2b6b5de6ff9b.pdf

QISDA 2015 ANNUAL REPORT

Table of Contents

Contact Information

QISDA CORPORATION

REGISTRAR & TRANSFER AGENT

INDEPENDENT ACCOUNTANTS

INVESTOR RELATIONS CONTACTS

QISDA ON THE INTERNET

OVERSEAS SECURITY EXCHANGE LISTING

Message to our Shareholders

Overview of Operations

Operational Guidelines

Business Scope

1. Overview of Business Operations

2. Product Offering

Industry Overview

1. Current Status and Trends in Development of the Industry

2. Overview of Supply Chain

3. Trends in Development and Market Competition of the Company’s Product

Research & Development

1. Technologies in Deployment

2. Highlights in Future Technological Development

Long- and Short-term Business Development Plans

1. Short Term Business Development Plans

Projector:

2. Long Term Business Development Plans

LCD Monitor:

Projector:

Medical Service:

Markets and Sales

Market Analysis

1. Major Sales Markets

2. Market Share

3. Strategies Formulated Based on Future Demands, Growth, Competitive Niche, as well as Positive and Negative Factors in Market Trends

LCD Monitor:

Projector:

Product Application and Manufacture Process

1. Product Application

2. Manufacture Process

Overview of Raw Material Supply

Corporate Governance

Corporate Governance Structure

Primary Roles of Governance Entities

Board of Directors

Audit Committee

Remuneration Committee

Board of Directors

Board Members

Material Resolutions Approved by Board Meetings

Corporate Executive Officers

Group Organization

Company Organization Chart

Affiliated Companies

Qisda Corporation

Company Financials

Capital and Shares

Shares Type and Shares Outstanding

Ownershi and Distribution of Shares p

Net Worth, Earning, Dividends and Market Price Per Share

Dividend Policy

Most Recent 5-year Financial Analysis

1. Consolidated Financial Analysis under International Financial Reporting Standards (“IFRS”)

2. Financial Analysis under International Financial Reporting Standards (“IFRS”)

3. Consolidated Financial Analysis under Statements of Financial Accounting Standards (“SFAS”)

4. Financial Analysis under Statements of Financial Accounting Standards (“SFAS”)

Attachment 1：Independent Auditor’s Report & Audited Financial Statements

Independent Auditors’ Report

The Board of Directors Qisda Corporation:

KPMG

Notes to Readers

Qisda Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2015 and 2014

Qisda Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2015 and 2014

Qisda Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2015 and 2014

Qisda Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the years ended December 31, 2015 and 2014 (In thousands of New Taiwan Dollars)

Qisda Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2015 and 2014

Qisda Corporation and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2015 and 2014

Independent Auditors’ Report

Qisda Annual Report 2015