Innolux Corporation 2014 Annual Report

Stock Code: 3481

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

Notice to readers This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail.

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

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

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

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

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

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

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

Innolux Corporation Chairman: Hsing-Chien Tuan

Contents

I. Letter to Shareholders...... 1

II. Company Profile...... 4 2.1 Date of Incorporation...... 4 2.2 Company History ...... 4

III. Corporate Governance Report...... 9 3.1 Organization...... 9 3.2 Directors, Supervisors and Management Team...... 11 3.3 Remuneration of Directors, Supervisors, President, and Vice President ...... 21 3.4 Implementation of Corporate Governance...... 28 3.5 Information Regarding Innolux’s Independent Auditors ...... 54 3.6 Replacement of independent auditors:...... 55 3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise...... 55 3.8 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders...... 56 3.9 Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders...... 57 3.10 The number of shares held by the Company, the Company’s directors and supervisors, managerial officers and enterprises under control, either directly or indirectly, with consolidated calculation of the comprehensive shareholding ratio...... 58

IV. Capital Overview...... 59 4.1 Capital and Shares...... 59 4.2 Issuance of Corporate Bonds ...... 65 4.3 Preferred Shares: None...... 65 4.4 Issuance of Global Depositary Shares...... 66 4.5 Employee Stock Options...... 67 4.6 Status of Employee Restricted Stock ...... 69 4.7 Status of New Share Issuance in Connection with Mergers and Acquisitions...... 71 4.8 Financing Plans and Implementation...... 71

V. Operational Highlights...... 72 5.1 Business Activities ...... 72 5.2 Market and Sales Overview ...... 81 5.3 Human Resources...... 88 5.4 Environmental expenditures Information ...... 89 5.5 Labor Relations...... 89 5.6 Important Contracts...... 94

VI. Financial Information ...... 96 6.1 Five-Year Financial Summary...... 96 6.2 Five-Year Financial Analysis ...... 104 6.3 Supervisors’ Report in the Most Recent Year ...... 113 6.4 Financial Statements for the Years Ended December 31, 2014 and 2013, and Independent Auditors’ Report ...... 116 6.5 Consolidated Financial Statements for the Years Ended December 31, 2014 and 2013, and Independent Auditors’ Report...... 116

6.6 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties...... 116

VII. Review of Financial Conditions, Operating Results, and Risk Management ...... 117 7.1 Analysis of Financial Status...... 117 7.2 Analysis of Operating Results...... 118 7.3 Analysis of Cash Flow ...... 119 7.4 Major Capital Expenditure Items...... 120 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year ...... 120 7.6 Analysis of Risk Management ...... 121 7.7 Other Important Matters...... 125

VIII. Special Disclosure ...... 126 8.1 Summary of Affiliated Companies...... 126 8.2 Private Placement Securities in the Most Recent Years: None...... 136 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years...... 136 8.4 Special Notes...... 136

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

I. Letter to Shareholders

1.1 2014 Operating Report It is an improvement and achievement year in 2014, we achieved record-breaking gross profit margin, operating income ratio and net margin since the merger. Inventory turnover days and net debt ratio also hit a new low. Especially net debt ratio down to 27.2% in the end of 2014 compared to 153.2% debt negotiation in Q1 2012, improved significantly and better than the same industry. All the way along, our management team worked tirelessly and employees go all out in the work.

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

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

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

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

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

(II) Budget Implementation No financial forecast disclosed for 2014, therefore not applicable to disclose budget implementation.

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

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

1.2 Summary of 2015 Business Plan

(I) Enhancement of quality and improvement of technique 1. Strength quality The key point of improvement is to improve the yield rate of middle and small products and set the target for yield rate. 2. Process/ Product technique improvement Shorten the Cycle time to mass production. Improve IPS production capacity and improve TOD technique. Increase the proportion of high resolution (FHD/HD) product.

(II) Continuous growth on middle and small size products 1. Speed up the process from new product development to mass production 2. Continuous improve market share

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

(IV) Automation upgrade 1. Keep constructing automatic production line and improving the competitive advantage. 2. While upgrading the equipment (from manual to automatic), reduced the Assembly Times of the Company.

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

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

II. Company Profile 2.1 Date of Incorporation: January 14 2003 2.2 Company History January 2003 Inception and registration of the Company March 2003 Invested in a subsidiary, Innolux Holding Ltd. May 2003 Ground breaking ceremony for the TFT and Color Filter Plant In Jhunan August 2003 The TFT and Color Filter Plant In Jhunan commenced construction March 2004 Entered into a 7-year NT$20 billion syndicated loan contract with a syndicate including Bank of Communications June 2004 Machinery installation started in the TFT factory and Color Filter Plant In Jhunan September 2004 Birth of the first TFT-LCD panel October 2004 Invested in Innocom Technology (Shenzhen) Ltd. in China January 2005 Public issuance of the Company’s shares approved by the Financial Supervisory Commission February 2005 Invested in Innolux Corporation Ltd. in the U.S. March 2005 Obtained ISO 9001 certification Granted the “2005 Outstanding Award in Makingthe Science Park Green by Planting Trees” by the Science Park Administration July 2005 Registered as an emerging stock on the GreTai Securities Market Obtained ISO 14001 and OHSAS 18001 certifications August 2005 Ranked 51st nationwide in actual import/export performance in 2004 Granted the Excellent Award in Import/Export Performance by the Ministry of Economic Affairs and Bureau of Foreign Trade November 2005 Recognized as an outstanding waste disposal model factory by the Environmental Protection Administration, Executive Yuan December 2005 Recognized as an Occupational Safety and Health Administration Voluntary Protection Unit by the Council of Labor Affairs, Executive Yuan October 2006 Shares became listed on the Taiwan Stock Exchange on 24 October November 2006 The Board passed the resolution of merging with Jemitek Electronics Corp. on 21 November March 2007 Completed merger with Jemitek Electronics Corp. June 2007 Invested in InnoJoy Investment Corporation August 2007 Invested in InnoFun Investment Corporation November 2007 Global Deposit Receipts became listed on the London Stock Exchange on 7 November June 2008 Topping out ceremony for the sixth generation factory of the Company July 2008 Granted the “Outstanding Award in Making Green by Planting Trees” by the Science Park Administration Recognized as one of the TOP 10 Leading Companies among the “Taiwan Technology Top 100” Ranked sixth among Deloitte Technology FAST50 Taiwan in terms of profit growth September 2008 Entered into a 5-year NT$24 billion and US$200 million syndicated loan contract with a syndicate of 20 banks including Mega International Commercial Bank Selected as one of the 12 units in the national industrial group by the Water Assessment Programme organized by the Ministry of Economic Affairs October 2008 Received the Bronze Award of the National QCC Competition from the Corporate Synergy Development Center of the Industrial Development Bureau, Ministry of Economic Affairs Granted the 2008 Excellence Award in Recycling and Reducing Waste Production by the Environmental Protection Administration, Executive Yuan

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

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

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

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

III. Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

3.1.2 Major Corporate Functions

Divisions Main duties Manage the businesses of the Company according to the resolutions passed by the President’s Office shareholders’ meetings and the Board and the orders of the Board Responsible for assessing the soundness of the internal control system and all the standards, checking whether the internal control system is operating effectively on a Auditor's Office continual basis, measuring the operating results of the departments and providing improvement recommendations for efficient operation Set up business and support units for different types of customers to provide a one-stop Global Sales Business Center solution for all customers’ needs Integrate the research and development of technologies and products, and assess and Product Technology Center introduce new technologies and new products Production Technology Responsible for process technology, automation technology and initial equipment and Center material purchase, etc. LCD Panel Manufacturing Responsible for the production of large-size LCD panel products. Center Module Manufacturing Responsible for the production of LCD module products Center Responsible for the sales and marketing, technology development and production of Touch Panel Business Unit touch panel products. Mobile Device Business Responsible for the sales, marketing, and product development of LCD wireless Unit communication and audio-visual systems as well as production of panel production Sales & Marketing Responsible for market development, promotion, and customer service Technology Development Develop, improve, verify, and test new technologies and new processes Development and improvement of new products; design, development, verification, and Product Development testing of products Manufacturing Production, packaging, and repair of products Responsible for handling company-wide issues including environmental protection, Environmental & Safety occupational safety, damage prevention, and risk control of the factories, staff health Division management and workplace improvement, and greenhouse gas reduction; implementing and managing the environmental safety and health policies of the Company. Responsible for the quality management of the Company; providing the best and the most efficient quality management services (including quality control, product quality Quality Management Center guarantee, quality system, and documentary management); and promoting the concept of total quality control Coordinate the capital operating system of the Company, provide financial and Finance & Accounting Center accounting information, manage investment plans and risk aversion, and manage overall financial, investment, accounting, and tax matters. Responsible for drafting and reviewing contracts; providing business-related legal Legal and Intellectual consultation services; and coordinating local and international intellectual property Property Center matters of the Company Responsible for the overall procurement strategy of the Company, strategic planning of Strategic Procurement Center important parts and components, material preparation for the introduction of products and standardized cost management Responsible for the operation and management, industrial engineering and information system of the Company; profits and losses of cost accounting, business strategy Business Management Center consultation, work-flow efficiency improvement, capacity expansion planning, production efficiency enhancement, hardware and software infrastructure, and information system construction Responsible for overall human resources policy, promotion of talent selection, Human Resources education, deployment and retention, employee communications, general administration Management Center and corporate social responsibilities, etc.

3.2 Directors, Supervisors and Management Team

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

Executives, Directors or Spouse & Shareholding Date Shareholding Current Supervisors who are Name Date Term Minor by Nominee Title Citizenship First when Elected Shareholding Experience (Education) Other Position spouses or within two Note 1 Elected (Years) Shareholding Arrangement Elected degrees of kinship Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation Ph. D of Mechanical Independent Chi-Chia Jun 19, Jun 19, Taiwan 3 －－－－－－－－ Engineering, Santa Clara Note 6 －－－ Director Hsieh 2013 2013 University, USA Professor at National Bachelor of Laws, Soochow Taiwan University, University Master of international banking School of Law Ren-Guang Jun 19, Jun 29, law, Boston University, USA Supervisor Taiwan 3 －－－－－－－－ Director of －－－ Lin 2013 2012 Master of Law, Duke Securities and University,USA Futures Ph. D of Law, Duke Investors University,USA Protection Center M.S., Accounting, Soochow University Yi-Fang Jun 19, Jun 29, Supervisor Taiwan 3 －－－－－－－－ Lecturer, Accounting Soochow Note 7 －－－ Chen 2013 2012 University Former PwC Partner I-Chen Jun 19, May 19, Supervisor Taiwan Investment 3 25,611,545 0.28 27,535,972 0.28 －－－－－－－－－ 2013 2004 Ltd. Graduated from National Chiao Tung University Manager, Philips Taiwan Ltd. Te-Tsai Jun 19, Jul 1, Representative Taiwan － N.A. － 212,619 －－－－－ CFO, Vanguard International Note 8 －－－ Huang 2013 2010 Semiconductor Corporation CFO, Foxconn Precision Components Co., Ltd. Note 1: Existing Directors and Supervisor as of the date of the annual report. Note 2: Concurrently as chairman of the board: Innolux Holding Ltd., Rockets Holding Ltd., Stanford Developments Ltd., Nets Trading Ltd., Mega Chance Investments Ltd., Main Dynasty Investment Ltd., Best China Investments Ltd., Asiaward Investment Ltd., Lakers Trading Ltd., Magic Sun Ltd., Sun Dynasty Development Ltd. Note3: Concurrently as chairman of the board: AOT, FuChu Technology, General Interface Solution (GIS) Holding Limited, Rchiuan Investment, HungWei Investment, LianJiu Investment, HungHan Investment, YungLi Investment and YiGuei Investment Concurrently as director: UER Technology Corporation (Statutory representative) Note4: Concurrently as chairman of the board: Landmark International Ltd., Gold Union Investments Ltd., Keyway Investment Management Ltd., Toppoly Optoelectronics (B.V.I.) Ltd., Innolux Hong Kong Holding Ltd., Innolux Optoelectronics Hong Kong Holding Ltd., Innolux Hong Kong Limited, Bright Information Holding Ltd., Toppoly

Optoelectronics (Cayman) Ltd., Leadtek Global Group Ltd., Innolux Technology Germany GmbH, Innolux Technology Europe B.V., Innolux Technology USA Inc., Yuan Chi Investment Co., Ltd.(Statutory representative) Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co.,Ltd., InnoJoy Investment Corporation(Statutory representative), FI Medical Device Manufacturing Co., (Statutory representative) Note5: A founder and Executive Director of S.A.S. Dragon Holding Limited, a member of Justices of Peace in the Government of the Hong Kong Special Administrative Region, the deputy chairman of Hong Kong Electronic Industry Association, a permanant member of Hong Kong Trade Services Council, a member of Hong Kong Professionals and Senior Executive Assoication; the chairman of District Fight Crime Committee, Tsuen Wan District Office; a counselor for Coucil of Yan Chai Hospital, a committee member of Political Consultative Conference Shanghai Committee; and a honoary member of Junior Police Call Committee, Tsuen Wan District. Note 6: Concurrently as chairman of the board: Microelectironics Technology Inc., IQE Taiwan Corporation, Jupiter Network Corp., Jupiter Technology (Wuxi) Co., Ltd. Concurrently as independent director: AcBel Polytech Inc. Concurrently as director: Taiwan Cement Corporation (Statutory representative), E-ONE MOLI ENERGY CORP. (Statutory representative), Advanced Wireless Semiconductor Company, Bright Led Electronics Corp., Kobrite Taiwan Corporation (Statutory representative), Bright Crystal Company Limited (Statutory representative), Advanced Crystal Application Technology, Inc. (Statutory representative), KoBrite Corp., Sasson Capital (Statutory representative) The convener of the 11th supvervision meeting for the Allied Association for Science Park Industries Note7: A lead accountant of YiFang CPA firm, and a Supervisor of YKK Taiwan Co. and NatureWise Biotech & Medicals Corp. Note8: Concurrently as chairman of the board: Hyield Venture Capital Co., Ltd. (Statutory representative) Concurrently as director Director position in HungChi International Investment (Statutory representative), Pao Shin International Investment Co., Ltd. (Statutory representative), HungChiau International Investment, FuRuei International Investment; and Fuxuntong Trading, ShenZhen. Concurrently as supervisor: Hold a concurrent Supervisor position in: HungJing International Investment (Statutory representative), LiYi International Investment (Statutory representative), HungYuan International Investment (Statutory representative), Advanced Optoelectronic Technology (Statutory representative), and Pan-International.

Major shareholders of the institutional shareholders April 10, 2015

Name of institutional shareholders Major shareholders of the institutional shareholders

Hon Hai Precision Components Co., Ltd. (97.95%), Chiu-Lien Huang (0.2 0%), Hyield Venture Capital Co., Ltd. Hsiang-Fu Yu (0.20%), Terry Tai-Ming Gou (1.23 %), Pao Shin International Investment Co., Ltd. (0.41%) Jialian Investment Co.,Ltd. Super Venture Investments Limited, Samoa （100% ）

I-Chen Investment Ltd. Company Objective Developments Limited, Samoa (100%)

Major shareholders of the major shareholders that are juridical persons April 10, 2015 Name of juridical persons Major shareholders of the juridical persons Terry Tai-Ming Gou (12.28%), JPMorgan hosting Saudi-Arabia Central Bank investment account (2.11%), Citi Managed Government of Singapore Investment accounts (1.94%), Citigroup hosting Hon Hai Precision Ind. Co. Ltd. Depositary Receipts account (1.81%), Standard Chartered hosting Vatican Gardner emerging market equity index fund account (1.56%), JP Morgan HON HAI PRECISION IND. CO., LTD. (Note) Chase Bank hosted Abu Dhabi Investment Authority invested more than accounts (1.29%), J P Morgan Chase Bank hosted Norges Bank Investment account (1.17%), JPMorgan Managed STICHTING Depositary APG investment account (1.14%), Standard Chartered Hosting Fidelity light called Trust: Fidelity Low of shares of the Fund (1.07%), Cathay Life Insuran ce Co., Ltd. (1.00%) Pao Shin International Investment Co., Ltd. Hon Hai Precision Industry Co., Ltd. (100%) Super Venture Investments Limited, Samoa （100% ） Diamond Luck Enterprises Ltd （100% ） Company Objective Developments Limited, Samoa Perfect Impulse Investments Limited （100% ） (100%) Note: The information is derived from the close of registrar information of the company dated 27 April 2015.

Professional qualifications and independence analysis of directors and supervisors April 10, 2015 Meet One of the Following Professional Qualification Requirements, Together with at Independence Criteria (Note) Least Five Years of Work Experience A Judge, Public Prosecutor, Criteria An Instructor or Higher Attorney, Certified Public Number of Other Position in a Department of Accountant, or Other Have Work Experience in Public Companies in Commerce, Law, Finance, Professional or Technical the Areas of Commerce, Which the Individual Accounting, or Other Specialist Who has Passed a Law, Finance, or is Concurrently Academic Department 1 2 3 4 5 6 7 8 9 10 National Examination and Accounting, or Otherwise Serving as an Related to the Business Needs been Awarded a Certificate Necessary for the Independent Director Name of the Company in a Public or in a Profession Necessary Business of the Company Private Junior College, for the Business of the College or University Company Hsing-Chien Tuan －－ V －－ V V V V V V V V － Hyield Venture Capital Co., Ltd －－ V －－ V V V V V V V －－ Hong-Jen Chuang Jialian Investment Co., Ltd. －－ V －－ V V V V V V V －－ Jyh-Chau Wang Stanley Yuk Lun Yim －－ V V V V V V V V V V V － Chi-Chia Hsieh －－ V V V V V V V V V V V 1 Ren-Guang Lin V V V V V V V V V V V V V － Yi-Fang Chen V V V V V V V V V V V V V － I-Chen Investment Ltd. －－ V V － V V V V V V V V － Te-Tsai Huang Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office. 1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares. 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under someone else's name(s), in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the

preceding three subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services, or consultation to the Company or to any affiliate of the Company, or a spouse thereof. 8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company. 9. Not been a person of any conditions defined in Article 30 of the Company Law. 10. Not a governmental, juridical person, or its representative as defined in Article 27 of the Company Law.

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

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

Shareholding Managers who are Spouse & Minor Name Effecti ve Shareholding by Nominee Spouses or Within Two Title Citizenship Shareholding Experience (Education) Other Position Note 1 Date Arrangement Degrees of Kinship Shares ％ Shares ％ Shares ％ Title Name Relation General Manager of TPO Displays (Nanjing) Ltd. General Manager of Flash Electronics Inc. (Shanghai) Operating Officer of Solectron Co. Bachelor of Industrial Engineering and Management, National Chiao Tung University Assistant Person-in-charge of BU, GIO Optoelectronics Zheng-Xia Sept 23, Director of Ampower Vice Taiwan 389,802 － 22,000 －－－ Corp. －－－ Kuo 2013 Holding Ltd. President Manager of Chi Mei Lighting Technology Corporation Engineer of Chunghwa Picture Tubes, Ltd. Engineer of Behavior Tech Computer Corp. Master of Electrical Engineering, National Taiwan University Assistant Advisor to General Manager's Office, Unity Sept 23, Vice Taiwan Tian-Ren Lin 1,065,554 0.01 311,081 －－－ Opto Technology Co., Ltd. －－－－ 2013 President Director of Head Office of Product Development, Chi Mei Lighting Technology Corporation Master of Mechanical Engineering, Yuan Ze University Assistant Dec 1, Associate President of Entire Technology Co. Vice Taiwan Yu Shui Kuo 80,000 －－－－－－－－－ 2014 Ltd. President Manager of AU Optronics Corp. Associate Manager of Prodisc Master of Business Administration, Baruch College, College of the City of New York Finance May 7, Taiwan Chien-Lang Lo 177,431 － 198 －－－ Assitant manager of Sumitomo Mitsui Note 9 －－－ Supervisor 2014 Banking Corporation. Deputy manager of HSBC Master of Business Administration, National Chengchi University Account Chin-Yuan Jan 9, Vice President of Finance, Xiamen Overseas Taiwan 408,192 －－－－－ Note 10 －－－ Supervisor Chang 2009 Chinese Electronic Co., Ltd. CFO, Information Product Business Group, BENQ Note 1: Existing Managers as of the date of the annual report. Note 2: Concurrently as chairman of the board: Innolux Holding Ltd., Rockets Holding Ltd., Stanford Developments Ltd., Nets Trading Ltd., Mega Chance Investments Ltd., Main Dynasty Investment Ltd., Best China Investments Ltd., Asiaward Investment Ltd., Lakers Trading Ltd., Magic Sun Ltd., Sun Dynasty Development Ltd.

Note3: Concurrently as chairman of the board: Landmark International Ltd., Gold Union Investments Ltd., Keyway Investment Management Ltd., Toppoly Optoelectronics (B.V.I.) Ltd., Innolux Hong Kong Holding Ltd., Innolux Optoelectronics Hong Kong Holding Ltd., Innolux Hong Kong Limited, Bright Information Holding Ltd., Toppoly Optoelectronics (Cayman) Ltd., Leadtek Global Group Ltd., Innolux Technology Germany GmbH, Innolux Technology Europe B.V., Innolux Technology USA Inc., Yuan Chi Investment Co., Ltd. (Statutory representative) Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co., Ltd., InnoJoy Investment Corporation (Statutory representative), FI Medical Device Manufacturing Co. (Statutory representative) Note 4: Concurrently as chairman of the board: GIO Optoelectronics Corp. Concurrently as director: Innolux Optoelectronics Japan Co., Ltd., TOA Optronics Corporation (Statutory representative) Note 5: Promoted to deputy Vice President on 9 May 2013 Concurrently as chairman of the board: Suns Holding Ltd., Warriors Technology Investments Ltd., InnoJoy Investment Corporation (Statutory representative) Concurrently as director: Yuan Chi Investment Co., Ltd. (Statutory representative) Note 6: Concurrently as chairman of the board: Innolux Corporation (U.S.), Foshan Innolux Optoelectronics Ltd, Foshan Innolux Logistics Co., Ltd. Note 7: Concurrently as chairman of the board: Ningbo Innolux Logistics Co., Ltd., Ningbo Innolux Technology Ltd., Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd. Concurrently as director: Chi Mei Frozen Food Co., Ltd. Note8: Concurrently as chairman of the board: Nanjing Innolux Optoelectronics Ltd., Kunpal Optoelectronics Ltd., VAP Optoelectronics (Nanjing) Corp., Shanghai Innolux Optoelectronics Ltd. Note 9: Concurrently as director: Ningbo Innolux Logistics Co., Ltd., Ningbo Innolux Technology Ltd., Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd., InnoJoy Investment Corporation, Yuan Chi Investment Co., Ltd. Note 10: Concurrently as director: Innolux Optoelectronics Europe B.V., Chi Mei Optoelectronics Germany GmbH Concurrently as director: Innocom Technology (Shenzhen) Co., Ltd., Nanjing Innolux Optoelectronics Ltd., Kunpal Optoelectronics Ltd., Nanjing Innolux Technology Ltd., VAP Optoelectronics (Nanjing) Corp., Shanghai Innolux Optoelectronics Ltd. Concurrently as supervisor: Ningbo Innolux Logistics Co., Ltd., , Ningbo Innolux Technology Ltd., , Ningbo Innolux Optoelectronics Ltd., Ningbo Innolux Display Ltd., Innolux Optoelectronics Japan Co., Ltd., Innolux Technology Japan Co., Ltd., Foshan Innolux Optoelectronics Ltd., Foshan Innolux Logistics Co., Ltd., Chi Mei El Corporation, InnoJoy Investment Corporation

3.3 Remuneration of Directors, Supervisors, President, and Vice President 3.3.1 Remuneration of Directors Unit: NT$; Shares: thousands Director Remuneration Remuneration received as an employee Ratio of total Anyremuneration received from Recipients Ratio of total Number of Number of new Profit Salary, shares shares obtained compensation Service remuneration Profit distribution as Compensation distribution as Bonuses, and Pensions (F) subscribed with restrictive (A+B+C+D+E Pensions (B) execution fees (A+B+C+D) to employees’ bonuses (G) (A) (Note 1) remuneration Allowances (E) (Note 5) under employee rights of +F+G) to net (D) (Note 3) net income (%) (Note 2) other thansubsidiaries (C) (Note 2) (Note 4) stock options employees income (%) (Note 6) (Note 7) All companies All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein All All companies thein in the Title Name The company financialreport financialreport financialreport financialreport financialreport financialreport financialreport financialreport financialreport financialreport financial The companyThe The companyThe The companyThe The companyThe The companyThe The companyThe The companyThe The companyThe The companyThe The companyThe report

Cash Stock Cash Stock

Chairman & Hsing-Chien Chief Tuan Executive Officer Hyield Institutional Venture director Capital Co., Ltd Hong-Jen Representative 8,045 8,045 －－ 4,636 4,636 330 330 0.06 0.06 25,137 25,137 －－ 29,868 － 29,868 － 1,200 1,200 800 800 0.31 0.31 － Chuang Jialian Institutional Investment director Co., Ltd. Jyh-Chau Representative Wang Independent Stanley Yuk Director Lun Yim Independent Chi-Chia Director Hsieh Note 1: Refers to directors’ remuneration paid in 2014. Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 3: Refers to the relevant service execution fees of directors in 2014. Note 4: Refers to the salaries, bonuses and special disbursement, etc. received as employees by directors in 2014. Note 5: Refers to the amounts transferred to government authorities in 2014. Note 6: Number of shares subscribed under employee stock options excludes the exercised portion. Note 7: Number of shares subscribed under restrictive rights of employees excludes the exercised portion.

Range of remuneration table

Name of Directors

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

3.3.2 Remuneration of Supervisors Unit: NT$; Share: thousands Supervisors’ Remuneration Ratio of total remuneration Base Compensation (A) Bonus to Supervisors (B) Allowances (C) (A+B+C) to net income (%) Any remuneration received from Title Name (Note 1) (Note 2) (Note 3) All companies in Recipients other The All companies in The All companies in The All companies in The the financial than subsidiaries company the financial report company the financial report company the financial report company report Supervisor Ren-Guang Lin Supervisor Yi-Fang Chen 3,122 3,122 2,318 2,318 180 180 0.03% 0.03% － I-Chen Investment Ltd. Supervisor Te-Tsai Huang Note 1: Refers to the remuneration paid to supervisors in 2014. Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 3: Refers to the relevant service execution fees of supervisors in 2014.

Range of remuneration table

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

3.3.3 Compensation of President and Vice President Unit: NT$ thousands Ratio of total Number of new shares Bonuses and special Number of employee Amount of profit distribution compensation obtained with restrictive Salary (A) (Note 1) Pensions (B) (Note 2) disbursement, etc. stock options obtained as employees’ bonuses (D) (Note 4) (A+B+C+D) to net rights of Any (C) (Note 3) (Note 5) income (%) employees(Note 6) remuneration Title Name received from All All All All companies in All All All Recipients other The companies in The companies in The companies in The company the financial The companies in The companies in The compani es in than subsidiaries company the financial company the financial company the financial report company the financial company the financial company the financial report report report Cash Stock Cash Stock report report report Chief Hsing-Chien Executive Tuan Officer President Jyh-Chau Wang Vice Wen-Jyh Sah President 24,121 24,121 216 216 30,227 30,227 44,631 － 44,631 － 0.46 0.46 2,475 2,475 1,468 1,468 － Vice Yao-Tong Chen President Vice Chin-Lung Ting President Vice Chih-Hung President Hsiao Note 1: Refers to remuneration paid in 2014. Note 2: Refers to amounts transferred to government authorities in 2014. Note 3: Refers to the bonuses , special disbursement and 491 tousand for a car and oil costs for CEO & President. Note 4: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date. Note 5: Number of shares subscribed under employee stock options excludes the exercised portion. Note 6: Number of shares subscribed under restrictive rights of employees excludes the exercised portion.

Range of remuneration table

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

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

Unit: NT$ thousands as of April 30, 2015 Amount of Ratio of Total Name Amount of Title cash bonus Total Amount to Net (Note 1) stock bonus (Note 2) Income (%) Chief Executive Officer Hsing-Chien Tuan President Jyh-Chau Wang Vice President Wen-Jyh Sah Vice President Chin-Lung Ting Vice President Yao-Tong Chen Vice President Chih-Hung Hsiao Associate Vice President Chen-Hua Luo Associate Vice President Hung-Wen Yang Associate Vice President Ke-Yi Kao Associate Vice President Chih-Ming Chen Managerial Associate Vice President Chu-Hsiang Yang - 103,225 103,225 0.48% officers Associate Vice President Tai-Chi Pan Associate Vice President Kuo-Hsiung Kuo Associate Vice President Chung-Kuang Wei Associate Vice President Jia-Pang Pang Associate Vice President Nai-Jian Zheng Associate Vice President Zheng-Xia Kuo Associate Vice President Tian-Ren Lin Associate Vice President Yu Shui Kuo Manager Chien-Lang Lo Manager Chin-Yuan Chang Note 1: Refers to current managerial officers as of the printing date of the annual report. Note 2: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date.

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

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

2013 2014 (Note) Companies in the Companies in the The company consolidated financial The company consolidated financial statements statements Directors 0.42 0.42 0.31 0.31 Supervisors 0.06 0.06 0.03 0.03 Presidents & Vice 0.64 0.64 0.46 0.46 Presidents Note 1: The proposal of 2014 profit distribution has not resolved by the shareholders‘ meeting as of the Annual Report date.

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

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

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

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

3.4 Implementation of Corporate Governance 3.4.1 Board of Directors A total of 7 meetings of the board of directors were held in the previous period. Director and supervisor attendance was as follows: Attendance Attendance By Title Name in Person Rate (%) Remarks Proxy (B) [B/A] Chairman Hsing-Chien Tuan 7 0 100% - Hyield Venture Capital Director Co., Ltd 7 0 100% - Hong-Jen Chuang Jialian Investment Co., Director Ltd. 7 0 100% - Jyh-Chau Wang Independent Stanley Yuk Lun Yim 7 0 100% - Director Independent Chi-Chia Hsieh 5 2 71.40% - Director Other mentionable items: 1. If the circumstances referred to in Article 14-3 of the Securities and Exchange Act and resolutions of the directors’ meetings objected to by Independent Directors or subject to qualified opinion and recorded or declared in writing exist, the dates of meetings, sessions, contents of motions, all independent opinions, and the Company’s response to the independent directors’ opinions should be specified: None 2. If the Directors avoid motions in a conflict of interest, the Directors’ names, contents of motions, causes for avoidance, and voting should be specified: Name Contents of motions Causes for avoidance Voting Hsing-Chien Tuan The Compensation The board member Hsing-Chien Tuan and Did not for the Jyh-Chau Wang Committee is board member and manager Jyh-Chau disucssion proposing manager Wang have a vital interest in the items on bonus for the year of the agenda, therefore they avoided 2013. participating in the voting process in accordance with the regulations specified in Article 178 of the Company Act. Hsing-Chien Tuan The Compensation The board member Hsing-Chien Tuan and Did not for the Jyh-Chau Wang Committee is board member and manager Jyh-Chau disucssion proposing manager Wang have a vital interest in the items on bonus for the year of the agenda, therefore they avoided 2014 and participating in the voting process in amendment the rule accordance with the regulations specified of Reward System in Article 178 of the Company Act. of executives. 3. Measures taken to strengthen the functionality of the Board: (1) The Compnay has set up a Compensation Committee on August 25, 2011 for assisting the Board to conduct regular compensation review and set up compenstation standard for the Directors and managers. The Committee is also in charged of making regular review of performance of the Director and managers, and the related remuneration policy, system, standard, and structure. Please see page 36 for the detail of the Committee’s operation. (2) The Company has re-elected its Board Director on 19 June, 2013. The new Board is made of five board member, including two independent directs and three supervisors fors strengthening the Board function and Corporate Governance.

3.4.2 Audit Committee

A. Audit Committee: N.A.

3.4.3 Attendance of Supervisors for Board Meetings

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

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

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

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

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

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

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

Difference from corporate Operation governance practice principles for Item TWSE/GTSM-Listed companies Yes No Reasons and reasons

(IV) Directors and Supervis ors Profession Enhancement Status Innolux’s shareholders and monitors have both professional background and practical experience. The company arranges further studies for shareholders and monitors every year. For the latest further study updates please refer to page 37 of this annual report.

(V) Risk Management Running a company may face risks like economic recession, regulation changes, markets with grueling competition, damage to the company’s reputation, and business suspension. Innolux has established a risk management system to regularly monitor the related financial risks, regulation risks, climate change risks, water resource risks, supplier chain risks, information safety risks, and the environment, safety, and health risks. We implements Business Imp act Analysis (BIA) and risk Assessment (RA) concepts from 2012. We analyze major business activities and organization management, and carry out BIA and Business Continuity planning. The factories in Taiwan and mainland China have reduced the risks of business suspension and improved the survival capability to face hazard incidents by implementing business continuity plans, including the subjects of earthquake, fire, information interrupts, and infectious disease in 2014.

(VI) The implementation of customer policy 1. The customer satisfaction service The company upholds the principle of “the highest quality” to carry out social responsibility and business continuity, practice the quality policy, and views customer service as the core value of this company. We continuously implement improvement plans for our internal process, such as the quality concepts of product design, manufacturing, information systems, and logistic cooperation, to provide the most competitive service in order to reach the highest customer satisfaction. Therefore, we can pursue the final win-win-win goal for customers, Innolux, and suppliers. 2. Customer satisfaction The company values the customer’s needs. We collect the KPI of services, and we monitor, analyze, and improve the feedback from customers. We also keep interacting with customers pro-actively.

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

3.4.5 Composition, Responsibilities and Operations of the Compensation Committee

A. The Compensation Committee Members’ Professional Qualifications and Independent Analysis Number of Other Public Companies in Which the Criteria Meet One of the Following Professional Qualification Requirements, Together with at Least Independence Criteria(Note 2) Individual is Concurrently Five Years of Work Experience Serving for Compensation

Committee(Note3)

An Instructor or Higher A Judge, Public Prosecutor, Have Work Experience in Position in a Department of Attorney, Certified Public the Areas of Commerce, Commerce, Law, Finance, Accountant, or Other Law, Finance, or Accounting, or Other Professional or Technical Accounting, or Otherwise Academic Department Specialist Who has Passed a Necessary for the Business 1 2 3 4 5 6 7 8 Name Related to the Business Needs National Examination and been of the Company (Note 1) of the Company in a Public or Awarded a Certificate in a Private Junior College, Profession Necessary for the College or University Business of the Company Independent Director －－ v V V V V V V V V V Chi-Chia Hsieh External Expert －－ v V V V V V V V V V Chi-Lin Wei External Expert v －－ V V V V V V V V － Guan-Jun Wang Note 1: Director; Independent Director or others. Note 2: If Compensation Committee Members, during the two years before being elected or during the term of office, meet any of the following situations, please tick the appropriate corresponding boxes: 1. Not an employee of the company or any of its affiliates; 2. Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which the company holds, directly or indirectly, more than 50 percent of the voting shares; 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under someone else’s name(s), in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking as one of its top ten shareholders; 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any of the above persons in the preceding three subparagraphs; 5. Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the

company or ranking as one of its top five shareholders; 6. Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company; 7. Not a professional individual or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services, or consultation to the company or to any affiliate of the company, or a spouse thereof; 8. Has not been a person under any conditions defined in Article 30 of the Company Law. Note 3: If the identity of the member is a board member, please state if that meets Article 6 Section 5 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter.

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

Title Name Attendance in Person (B) By Proxy Attendance rate (%) [B/A] Remarks Chair Chi-Chia Hsieh 3 － 100 - Member Chi-Lin Wei 3 － 100 - Member Guan-Jun Wang 3 － 100 - Annotation: 1. There was no recommendation of the Compensation Committee which was not adopted or was modified by the Board of Directors in 2014. 2. There were no written or otherwise recorded resolutions on which a member of the Compensation Committee had a dissenting opinion or qualified opinion.

3.4.6 Social Contributions

Difference from Operation company social responsibility Item practice principles for TWSE/GTSM-Listed Yes No Reasons companies and reasons I. Implementation of Corporate Compared to the Governance CSR guidelines and (I) Corporate social Yes (I) Innolux has established relevant CSR practices adopted by responsibility policy and policies that have not only been authorized other OTC/listed performance evaluation by the highest management and companies, Innolux’s announcement internally at the company. In CSR policies have no addition, relevant policies and guidelines distinctive have also been made available on the differences. company’s website as a declaration of Innolux’s committment and obligation to fulfilling its corporate social responsibilities.

(II) Has the company been Yes (II) In the orientation training for new routinely organizing CSR employees, Innolux Code of Conduct trainings? training has been incorporated as a component. In addition, the company has also incorporated concepts of CSR by emphasizing values such as labor rights in the trainings for assembly line foreman and supervisors.

(III) Has the company established Yes (III) Innolux has established a designated unit a designated unit in charge of responsible for the promotion and planning promoting CSR that consists of CSR in addition to the formulation of of members of senior approaches and objectives for sustainable management authorized by development. Innolux also convenes CSR the board and report to the committee meetings on a quarterly basis, board regarding its operation? although the company has not yet to report and CSR issue to Board of Director meeting directly but the President serving as the management representative. The meeting is attended by senior supervisors from various business divisions, HR, EHS department, green product management department and so forth to discuss the performance of CSR promotion and rate of object accomplishsment in an effort to fulfill the company’s corproate social responsibilities.

(IV) Has the company established Yes (IV) Innolux takes the issue of employee benefit reasonable salary and and welfare very seriously and has taken renumeration policies that steps to ensure that factors such as gender incorporate employee would result in different wage/benefit for performance evaluation and employees. By taking various factors (such CSR policies to create an as employees‘ academic backgrounds, definitive and effective professional experience and surveys of system of merits/demerits? reasonable market salaries) into consideration, Innolux is able to offer competitive salaries. Through „Preliminary Goal Setting“ „Performance management and development“ was implemented with

Difference from Operation company social responsibility Item practice principles for TWSE/GTSM-Listed Yes No Reasons companies and reasons the pilot incorporation of „Daily Management Record“ in 2014 to accomplish the objective of „Identifying and Developing Talents“. Employees found violating the „Employee Code of Conduct“ would receive appropriate disciplinary action in accordance with the „Employee Reward/Punishment Procedure“ depending on the severity of their offenses. II. Sustainable Environment Compared to the Development CSR guidelines and (I) Commitment to improving Yes (I) Through improvement in relevant practices adopted by resource utilization and the technologies, Innolux has not only reduced other OTC/listed use of renewable materials its discharge of contaminants from the companies, Innolux’s source but also reduced the quantity of CSR policies have no pollutants in its waste water discharge to distinctive increase its recycling rate. Innolux has differences. continued to improve upon its recycling rate in 2014.

(II) Environmental management Yes (II) The company has been actively promoting system designed for industry relevant EHS management systems such as characteristics. the ISO 14001, TOSHMS, OHSAS18001 and so forth in order to Facilitate a positive cycle of gradual improvement for green sustainability and safety culture.

(III) Company strategy for climate Yes (III) Starting from 2005, Innolux has completed change, energy conservation, its GHG inventory and 3rd party audit as and greenhouse gas reduction prescribed by ISO 14064-1. Innolux has not to reflect the affects on only managed its GHG emission operating activities. information through a GHG Information Platform but also actively participated in the international Carbon Disclosure Project (CDP). Innolux scored 96 points for disclosure in 2014 (a 7-point improvement compared to 2013) and was the top-ranking company in the panel industry. On top of that, Innolux was also selected as Asian Region’s (excluding Japan) top 10% company for carbon disclosure in the Carbon Disclosure Leadership Index (CDLI). III. Maintaining social services Compared to the (I) Has the company established Yes (I) Innolux makes an effort to adhere to CSR guidelines and relevant management policies pertinent regulations prescribed in the practices adopted by and procedures for social Labor Standards Act. In addition, specific other OTC/listed services in accordance with regulations on labor rights have also been companies, Innolux’s pertinent regulations and established in accordance with the CSR policies have no international conventions on Electronic Industry Code of Conduct in the distinctive human rights? company’s CSR Management Handbook, differences. which states that employees shall be free from harrassments or discriminations for reasons including (but not limited to) race, skin color, age, gender, sexual orientation,

Difference from Operation company social responsibility Item practice principles for TWSE/GTSM-Listed Yes No Reasons companies and reasons disability, martial status and so forth in their employment and benefits. In addition, Innolux also implements methods such as legal verification and internal audits to ensure compliance with pertinent labor rights requirements.

(II) Has the company established Yes (II) Innolux has established a number of systems/channels for channels for employees filing complaints, employee complaints and including „Communication Hotline“, handle the complaints in an „Employee Communication Email“ and appropriate manner? „Suggestion Box“ that have been setup at various facilities for employees to voice their opinions/thoughts with/without stating their names.

(III) Does the company offer a safe Yes (III) The company has also established its EHS and healthy working Division to take charge of operations environment for its employees including loss and risk aversion and EHS and conduct safety and health management. The Facility EHS Committee education for employees on a is responsible for reporting to the highest regular basis? ranking supervisor, relevant competent units and labor representatives on a quarterly basis. The disabling frequency rate (F.R) has lowered from 0.52 in 2010 to 0.20 in 2014 (equivalent to a margin of 61.5%). The disabling severity rate (S.R) has also fallen from 11.59 in 2010 to 4.30 in 2014 (a margin of 62.9%).

(IV) Has the company established Yes (IV) By establishing comprehensive channels of a system for routine communication and convening communication with its labor-management meetings and employee employees and to inform welfare commitee meetings on a quarterly employees regarding basis, representatives of management significant changes to the (consisting of senior-ranking supervisors) company’s operation in a and labor representatives (elected by reasonable manner? employees) are able to engage in direct, bi-lateral communications. With regards to the notice of labor contract termination, relevant notification procedures are fully compliant with pertinent regulations.

(V) Has the company established Yes (V) Guided by the philosophy that „talents are effective career competence the foundation of the company’s development/training plan for development“, Innolux has established the its employees? „Employee Career Development Roadmap“ so that all Innolux employees are adeuqately informed regarding the prospects of their career development. In addition, it would also enable supervisors to manage their subordinates efficiently and cultivate Innolux’s DNA of „self-monitoring and self-management“ among all employees. At the same time, the company also offers a

Difference from Operation company social responsibility Item practice principles for TWSE/GTSM-Listed Yes No Reasons companies and reasons list of qualifications that correspond to specific positions, legal certificates and other diplomas in order to boost employees‘ vocational tenacity, competence and competitiveness.

(VI) Has the company established Yes (VI) Innolux has established operating principles relevant policies and that are customer-oriented and through complaint procedures for means of telephone calls, email exchanges operations such as R&D, and face-to-face meetings, we are able to purchasing, production, have solid grasp of customers‘ needs so as operation and services to to formulate improvement strategies to safeguard consumers‘ rights? respond to customers in a timely manner.

(VII) Has the company adhered to Yes (VII) Product safety has always been the most pertinent regulations and important consideration for consumers. And international standards for the as such, safe product design and a series of marketing and labeling of its safety specification accreditations have products and services? been incorporated at the early stage of proeduct design to ensure the safety of consumers. Innolux has taken the initiative to apply for international standard accreditation labels for its LCD panels in order to help consumers identify safe products at a glance.

(VIII) Does the company evaluate Yes (VIII) With regards to new suppliers, Innolux suppliers‘ past records of will refer to relevant guidelines on environmental/social impacts social/economic/environmental and supply before forming partnerships chain assessment along with adequate risk with them? evaluation to screen candidates before choosing official suppliers. Suppliers with actual/potential flaws in operation that have failed to show effective improvement despite notification and guidance from Innolux would be included in the list of forbidden/restricted suppliers.

(IX) Does the company’s contract Yes (IX) Innolux reserves the right to halt with its key suppliers include payment/immediately terminate or rescind specific clauses that entail any contract of transaction/order and revoke immediate termination or the undersigned vendor or its affiliated rescission of the contract businesses‘ qualification as an authorized should the supplier be found supplier. Innolux would also be entitled to to violate the company’s CSR file for compensation for any losses policies or cause significant incurred on the company’s part. impact on the environment/society? IV. Enhanced information Compared to the disclosure CSR guidelines and (I) Has the company disclosed Yes Innolux has established a „Corporate Social practices adopted by relevant and reliable Responsibilities“ section on its official website other OTC/listed information relating to Website: companies, Innolux’s corporate social (http://www.innolux.com/Pages/TW/CSR/Repor CSR policies have no responsibilities on its website t_Download_TW.html) distinctive and/or MOPS? differences.

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

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

Difference from Operation corporate integrity practice principles for Item TWSE/GTSM-Listed Yes No Reasons companies and reasons I. Set up operational integrity Conformity with the policy and programs Integrity Operation (I) The company clarifies the Yes (I) Integrity and honesty are the groundwork Practice Principles for integrity operation policy in its of Innolux’s management and operation. TWSE/GTSM-Listed regulations and external The company has clearly laid out the Companies documents and the management’s philosophy of honest commitment of the board of management in the „CSR Management directors and managers to Handbook“ and „Code of Moral active implementation. Conduct“. These documentations strictly require all employees to adhere to the company’s policies on honesty. Additionally, Innolux’s honest management policy and implementations by the board and management are duly disclosed in both the annual report and CSR report.

(II) Has the company established Yes (II) With regards to the prevention of solutions for the prevention of dishonest behavior, Innolux has dishonest behaviors and established clearly defined regulations for specify relevant operating appropriate behaviors in the „Code of procedures, guidelines, Moral Conduct“, which states that any act disciplinary actions for of violation shall be subjected to violations and system of corresponding punitive actions in complaint and carried out accordance with pertinent regulations and relevant operations work regulations. In addition, Innolux has accordingly? also established relevant systems for loding complaints as a means for offending employees to seek aid.

(III) Has the company taken Yes (III) Should any Innolux employee be found to preventive measures for take part in any act of dishonesty, the operations specified in item 2, offending employee shall receive Article 7 of the Corporate corresponding disciplinary actions. Social Responsibility Best Should said employee be found to be Practice Principles for involved in incidents of corruption, TWSE/GTSM Listed receiving bribery/commission, theft, Companies and other business misappropriate/embezzle company activities of higher risks of property to result in loss of dishonest behaviors? property/significant damage to the company’s reputation would face dismissal. Should any supplier be found to violate the commitment to honesty and integrity (including the offering/acceptance of bribery, offering illegal political contributions and so forth), Innolux would revoke the supplier’s status as a qualified supplier and cease all collaboration with said supplier.

Difference from Operation corporate integrity practice principles for Item TWSE/GTSM-Listed Yes No Reasons companies and reasons II. Putoperation integrity into Conformity with the practice Integrity Operation (I) Does the company evaluate Yes (I) The company request for global suppliers Practice Principles for past records of businesses that has a cooperation relationship to follow TWSE/GTSM-Listed deal with the company and the Supplier CSR Code of Conduct Companies incorporate terms of honest Operating Standards and sign the behavior in relevant contracts? Supplier's Undertaking About the Code of Conduct Integrity, the company request suppliers to guarantee that they will refrain from bribes or offering to bribe Innolux's employees. Suppliers shall also not offer bribes or benefits to political parties or candidates.

(II) Has the company established a Yes (II) The company has not yet established a designated unit or personnel in designated unit or personnel in charge charge of promoting corporate of promoting corporate ethical ethical management and management for the time being. In reporting the status of accordance with the philosophy of implementation to the board on “Corporate Integrity Practice Principles a routine basis? of Companies Listed on the Taiwan Stock Exchange or Over-the-Counter Securities Exchange”, nevertheless, The company has established an Audit Office, which is directly subordinate to the board. The Audit Office performs an audit business report on a quarterly basis.

(III) Has the company established Yes (III) The company clearly makes rules about relevant policies to prevent preventing conflicts of interest in the conflicts of interests and Code of Conduct. If there is any offered suitable channels of violation, the company also provides a communication? Has the proper way to report, including a Mailbox company conducted relevant for Anti-Corruption Reporting operations according to said ([email protected]) and staff policies? complaint mailboxes.

(IV) Has the company established Yes (IV) Based on the annual audit plan approved effective systems of by the Board of Directors, perform the accounting and internal control internal audit's fieldwork auditing or in an effort to achieve honest review depending on the risk. Report of management? Has the the audit results on a regular basis to company designated internal ensure that the board and managers are audit unit or appointed aware of the level of goal achievement in qualified accountants to carry the fields of operational results and out routine audits? efficiency, financial reports are reliable, and the company complies with the relevant decrees.

(V) Does the company conduct Yes (V) We have made all of our various policies internal/external training on available through easy access on our honest management routinely? intranet and require all employees to be trained on corporate social responsibility, also promoted via internal computer boot screens, newsletters, and posters to enhance the staff’s un derstanding of these

Difference from Operation corporate integrity practice principles for Item TWSE/GTSM-Listed Yes No Reasons companies and reasons policies. We also require our stakeholders, such as our suppliers and vendors, to accept and abide by the integrity policy

III. Implementation Status of the Conformity with the Company establishes the Integrity Operation channels for reporting any Practice Principles for ethical irregularities TWSE/GTSM-Listed (I) Has the company established a Yes (I) Innolux has implemented a Mailbox for Companies concrete whistleblowing and Anti-Corruption Reporting and staff reward system? Has the complaint mailboxes to encourage company established a employees and related people to report convenient reporting channel evidence. For anti-integrity and for whistleblowers and anti-corruption incidents, investigators assigned appropriate personnel will conduct confidential factual to handle the personnel being investigations. The investigation reports reported? are submitted to the Integrity Commission for resolution and penalties are imposed internally or the incident is prosecuted.

(II) Has the company established Yes (II) Innolux Corporation ratified the standard operating procedures “Operating Standards for the for whistleblowing and Investigation and Management of relevent confidentiality Corruption Cases” as the investigation system? standard for incidents and related confidentiality systems.

(III) Has the company adopted any Yes (III) The company designed a confidentiality measures to safeguard system to protect the informants and employees from being listed it in the Code of Conduct; the subjected to inappropriate company will protect employees from treatment due to accusations of any revenge due to reporting an incident. misconduct? IV. Enhanced information Yes The company discloses the Code of Conduct Conformity with the disclosure on the Company’s official website Integrity Operation (I) The company discloses the (http://www.innolux.com ) and Taiwan Stock Practice Principles for code of operational integrity Exchange's Market Observation Post System. TWSE/GTSM-Listed and implements the results in It also discloses related information about Companies its website and the Taiwan operational integrity and implements results in Stock Exchange's Market the official website and corporate social Observation Post System. responsibility report. V. If the company makes its own integrity operation according to the Integrity Operation Best Practice Principles for TWSE/GTSM-Listed Companies, please state the differences. The Company has not yet enacted “Corporate Integrity Practice Principles for TWSE/GTSM” for the time being, guided by the spirit of Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, Innolux has been updating relevant regulati ons such as the „CSR Management Handbook“ and „Code of Moral Conduct“ and taken practical approaches to champion the spirit of honest management. VI. Other important information for better understanding of the integrity operation (such as the company’s review and revise the regulations on integrity operation). In order to ensure full compliance to the company’s policies for honest management, all newcomers are required to sign a „Honesty, Integrity & IP Protection Agreement“ and suppliers over the world that collaborate with Innolux to sign the „Vendor Commitment“ in the hopes of helping all employees and collaborating partners of

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

3.4.8 Corporate Governance Guidelines and Regulations Please refer to the Company’s website at www. innolux.com 3.4.9 Other Important Information Regarding Corporate Governance 1. Standard operating procedures for the handling of vital internal information: Innolux has established its „Vital Internal Information Handling Procedure“ that clearly regulates the handling of important internal information and system of disclosure as a working reference for board members, supervisors, managers and employees to follow. Relevant procedures have been submitted to the board for approal and internal announcements have been made in the company along with relevant trainings for all employees. 2. Status of Directors and Supervisors' participation in corporate governance related courses and trainings as of the deadline of annual report publication; April 30, 2015 Title Name Date Sponsoring Organization Course Training hours Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Hsing-Chien Related Tax discussion Chairman Tuan Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Association Practice Discussion Hyield venture Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Capital Co., Ltd. Related Tax discussion Director Hong-Jen Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Chuang Association Practice Discussion Jialian Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Investment Co., Related Tax discussion Director Ltd. Jyh-Chau Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Wang Association Practice Discussion Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Independent Related Tax discussion Chi-Chia Hsieh Director Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Association Practice Discussion Parent company business structure and May 05, 2014 Securities & Futures Institute division of power 3 related to directors and supervisors Case of public May 06, 2014 Securities & Futures Institute company insider 3 Independent Stanley Yuk Lun manipulate market Director Yim The function of the Board of Directors and June 24, 2014 Securities & Futures Institute 3 the competence of the Committee belongs Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Related Tax discussion Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Association Practice Discussion Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Related Tax discussion Supervisor Ren-Guang Lin Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Association Practice Discussion Legal liability and risk control of Finance Sept 03, 2014 Securities & Futures Institute 3 Report for directors and supervisors Supervisor Yi-Fang Chen Business Operation and Sept 26, 2014 Securities & Futures Institute 3 Related Tax discussion Taiwan Corporate Governance Audit Committee Mar 20, 2015 3 Association Practice Discussion Business Operation and I-Chen Sept 26, 2014 Securities & Futures Institute 3 Related Tax discussion Supervisor investment Ltd. Taiwan Corporate Governance Audit Committee Te-Tsai Huang Mar 20, 2015 3 Association Practice Discussion

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

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

4. Certification Details of Employees Whose Jobs are Related to the Release of the Company’s Financial Information Number of Employees Certification Finance&Accounting Internal Audit Certified Public Accountants (CPA) 1 - Certified Internal Auditor (CIA) - 2 Chartered Financial Analyst (CFA) 1 - Financial Risk Manager (FRM) 1 - Senior Securities Specialist 6 - Securities Specialist 6 - Internal controller test of Securities & 1 - Futures Institute

3.4.10 Internal Control System 1. Statement of internal control system

Innolux Corporation Statement of Internal Controls Date: Feb 10, 2015 According to the examination on internal control systems done by the Company itself in 2014, we hereby state as follows: I. The Company’s board of directors and management team understand their responsibilities of developing, implementing and maintaining the Company’s internal control system, and such a system has been established. The purpose of establishing the internal control system is to reasonably assure the following objectives: (a) The effectiveness and efficiency of business operation (including earnings, operation performance, and the safeguard of company assets); (b) The reliability of the financial and related reports; and (c) The compliance of the relevant laws/regulations and company policies; II. Due to the innate limitations in designing a faultless internal control system, this system can only assure that the reasonableness of the above three objectives has been fairly achieved. In addition, the effectiveness of the internal control system may change over time due to the change of the business environment or situation. Since the Company’s internal control system has included a self-examination capability, the Company will make immediate corrections when errors are detected. III. The evaluation of effectiveness of the internal control system design and implementation is made in accordance with the “Guidelines for the Establishment of Internal Control Systems by Public Companies” (the Guidelines). The Guidelines are made to examine the following five factors during the management and control process: (1) control environment, (2) risk assessment and response, (3) control activities, (4) information and communication, and (5) supervision. Each factor also includes several items. Details of each factor can be found in the Guidelines. IV. The Company has examined the effectiveness of each respected area in the internal control system based on the Guidelines. V. The examination results indicated that the Company’s internal control system (including subsidiary governance) dated December 31, 2013 had effectively assured that the following objectives had been reasonably achieved during the assessing period: (a) The degree of effectiveness and efficiency of business operation; (b) The reliability of the financial and related reports; (c) The compliance of the relevant laws/regulations and company policies VI. This Statement is a significant part of the Company’s annual report and prospectus available to the general public. If it contains false information or omits any material content, the Company is in violation of Article 20, Article 32, Article 171, and Article 174 set forth in the Taiwan’s Securities and Exchange Act. VII. The Company hereby declares that this statement had been approved by the Board of Directors on Feb 10, 2015. Among the 5 attending Directors, no one raised any objection to the contents of this statement.

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

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

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

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

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

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

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

None

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

March 31, 2015 REASONS FOR DATE OF DATE OF TITLE NAME RESIGNATION APPOINTED TERMINATION OR DISMISSAL Finance Jimmy January, 09, Plan of Personal General 05, 06, 2014 Chiu 2009 Career. Director

3.5 Information Regarding Innolux’s Independent Auditors

Accounting Firm Name of CPA Audit Period Note Pricewaterhousecoopers Wu, Han-Chi Sheng-Chung Hsu Jan 1, 2014 - Dec 31, 2014

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

3.5.1 Non-audit fee paid to auditors, the audit firm and its affiliates accounted for more than one-fourth of total audits Fees should disclosure the audit fee and non-audit fee amount and non-audit service content Audit Fee: NT$ Thousands Non-Audit Fee Accounting Audit Name of CPA System Company Human Audit Period Note Firm Fee Others Subtotal Design Registration resource Pricewaterho Han-Chi Wu Jan 1, 2014 12,000 200 200 usecoopers Sheng-Chung Hsu Dec 31, 2014

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

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

3.6 Replacement of independent auditors: 3.6.1 About predecessor CPA Date of change March 24, 2014 Due to accounting firm’s job rotation in accordance to relevant Reason for Replacement regulations, the CPA Hsiao Chun-Yuan & Wu Han-Chi replaced to Wu, Han-Chi & Hsu, Sheng-Chung since Q1 2014. Parties CPA The company Descriptions whether the Status Company terminated or the Termination of appointment －－ CPA did not accept the No longer accepted appointment －－ (continued) appointment Other than unqualified issues in the audit reports within last None two years － Accounting principles or practices － Disclosure of Financial Yes Differences with the Statements Company － Audit scope or steps － Others None V Descriptions Other Revealed Matters (Required to be disclosed by Accounting Standards Article None 20 section 2 first paragraph item 4) 3.6.2 About the Successor CPA: Accounting Firm Pricewaterhousecoopers Name of CPA Wu, Han-Chi & Hsu, Sheng-Chung Date of appointment March 24, 2014 Consulting results regarding accounting methods or accounting principles to specific None transactions or opinions on the financial statements before appointment Successor CPA written disagreements to None former CPA 3.6.3 Reply of the Previous Accountant: N/A

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

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

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

Unit: Per share 2013 2014 As of Apr. 30, 2015 Pledged Pledged Pledged Holding Holding Holding Title Name (Note 1) Holding Holding Holding Increase Increase Increase Increase Increase Increase (Decrease) (Decrease) (Decrease) (Decrease) (Decrease) (Decrease) Chairman & CEO Hsing-Chien Tuan (750,000) (5,000,000) 1,414,994 － 90,000 (4,000,000) Institutional Hyield Venture Capital Co., －－ 12,321,996 －－－ Director Ltd Representative Hong-Jen Chuang －－－－－－ Institutional Director Jialian investment Co., Ltd －－ 745,888 －－－ Representative Jyh-Chau Wang (9,000) － 121,179 － 167,000 － Independent Director Stanley Yuk Lun Yim －－－－－－ Independent Director Chi-Chia Hsieh －－－－－－ Supervisor Ren-Guang Lin －－－－－－ Supervisor Yi-Fang Chen －－－－－－ Supervisor I-Chen investment Ltd. －－ 1,924,427 －－－ Representative Te-Tsai Huang (54,000) － 14,859 －－－ Vice President Wen-Jyh Sah 210,000 － 352,000 － 18,000 － Vice President Chin-Lung Ting (145,000) － 165,068 － (378,000) － Vice President Yao-Tong Chen 420,000 － (255,196) － 80,000 － Vice President Chih-Hung Hsiao 120,000 － 872,544 － (70,000) － Associate Vice Chen-Hua Luo (473,000) － 443,690 － 140,000 － President Associate Vice Hung-Wen Yang (509,000) － 23,846 － 160,000 － President Associate Vice Ke-Yi Kao －－ 198,554 － 111,000 － President Associate Vice Chih-Ming Chen 233,000 － (45,807) － 67,000 － President Associate Vice Chu-Hsiang Yang 249,000 － 406,537 － 113,000 － President Associate Vice Tai-Chi Pan 170,000 － 412,423 － 70,000 － President Associate Vice Kuo-Hsiung Kuo －－ 188,005 － 120,000 － President Associate Vice Chung-Kuang Wei (53,000) － (64,508) － 93,000 － President Associate Vice Jia-Pang Pang －－ 308,980 － 120,000 － President Associate Vice Yu Shui Kuo (Note 2) －－－－ 80,000 － President Associate Vice Nai-Jian Zheng(Note3) －－ 988,837 － 92,000 － President Associate Vice Zheng-Xia Kuo(Note3) －－ 229,802 － 34,000 － President Associate Vice Tian-Ren Lin(Note3) －－ 526,353 － 64,000 － President Manager Chien-Lang Lo(Note4) －－－－ 1,000 － Manager Chin-Yuan Chang 280,000 － 32,339 － 42,000 － Note 1: Refers to current managerial officers as of the printing date of the annual report Note 2: Appointed to office on December 1, 2014 thus the change in equity in 2013 was not calculated. Note 3: Appointed to office on September 23, 2013 thus the change in equity in 2013 was not calculated. Note 4: Appointed to office on May 7, 2014 thus the change in equity in 2014 was not calculated. Note 5: The increase(decrease) of the shares held includes the inward or outward transfer of the trusted shareholding..

3.8.2 Shares Trading with Related Parties

None

3.8.3 Shares Pledge with Related Parties

None

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

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

3.10 The number of shares held by the Company, the Company’s directors and supervisors, managerial officers and enterprises under control, either directly or indirectly, with consolidated calculation of the comprehensive shareholding ratio. As of 12/31/2014 Ownership by Directors, Managers, and Ownership by INX Total Ownership Long-term Investment Directly/Indirectly Owned Subsidiaries Shares % Shares % Shares % Asiaward Investment Ltd. - - 77,830,001 100% 77,830,001 100% Best China Investments Ltd. - - 10,000,001 100% 10,000,001 100% Bright Information Holding Ltd. 4,910,000 100% - - 4,910,000 100% Chi Mei Optoelectronics Germany GmbH - - 250 100% 250 100% Gold Union Investments Limited 31,783,000 100% - - 31,783,000 100% Golden Achiever International Limited 39,250 100% - - 39,250 100% InnoLux Corporation - - 2,000 100% 2,000 100% Innolux Holding Ltd. 246,768,185 100% - - 246,768,185 100% Innolux Hong Kong Holding Limited 1,158,844,000 100% - - 1,158,844,000 100% Innolux Hong Kong Limited - - 35,000,000 100% 35,000,000 100% Innolux Optoelectronics Europe B.V. 180 100% - - 180 100.% Innolux Optoelectronics Hong Kong - - 162,897,802 100% 162,897,802 100% Holding Ltd. Innolux Optoelectronics Japan Co., Ltd. 80 100% - - 80 100% Innolux Optoelectronics USA, Inc. - - 1,000 100% 1,000 100% Innolux Technology Europe B.V. - - 375,810 100% 375,810 100% Innolux Technology Germany GmbH - - 100,000 100% 100,000 100% Innolux Technology Japan Co., Ltd. - - 201 100% 201 100% Innolux Technology USA Inc. - - 1,000 100% 1,000 100% Keyway Investment Management Limited 5,656,410 100% - - 5,656,410 100% Lakers Trading Ltd. - - 1 100% 1 100% Landmark International Ltd. 693,100,000 100% - - 693,100,000 100% Leadtek Global Group Limited 50,000,000 100% - - 50,000,000 100% Magic Sun Ltd. - - 38,000,001 100% 38,000,001 100% Main Dynasty Investment Ltd. - - 139,623,801 100% 139,623,801 100% Mega Chance Investments Ltd. - - 18,000,000 100% 18,000,000 100% Nets Trading Ltd. 900,001 100% 900,001 100% Rockets Holding Ltd. - - 226,504,550 100% 226,504,550 100% Stanford Developments Ltd. - - 164,000,000 100% 164,000,000 100% Sun Dynasty Development Ltd. - - 295,969,001 100% 295,969,001 100% Suns Holding Ltd. - - 18,177,052 100% 18,177,052 100% Toppoly Optoelectronics (B.V.I.) Ltd. 144,447,000 100% - - 144,447,000 100% Toppoly Optoelectronics (Cayman) Ltd. - - 144,417,000 100% 144,417,000 100% Warriors Technology Investments Ltd. - - 18,177,052 100% 18,177,052 100% Shanghai Innolux Optoelectronics Ltd. - - - 100% - 100% Yuan Chi investment co., Ltd - 100% - - - 100% Foshan Innolux Optoelectronics Ltd. - - - 100% - 100% Foshan Innolux Logistics Ltd. - - - 100% - 100% Chi Mei EL Corp. 155,500,000 97.19% - - 155,500,000 97.19% VAP Optoelectromics (NanJing) Corp. - - - 100% - 100% Kunpal Optoelectronics Ltd. - - - 100% - 100% Nanjing Innolux Technology Ltd. - - - 100% - 100% Nanjing Innolux Optoelectronics Ltd. - - - 100% - 100% InnoJoy Investment Corp. 167,405,392 100% - - 167,405,392 100% Innocom Technology (Chengdu) Co., LTD - - - 100% - 100% Innocom Technology (Shenzhen) Co., LTD - - - 100% - 100% Ningbo Innolux Technology Co., LTD - - - 100% - 100% Ningbo Innolux Optoelectronics Co., LTD - - - 100% - 100% Ningbo Innolux Display LTD - - - 100% - 100% Ningbo Innolux Logistics LTD - - - 100% - 100%

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Type of Stock

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

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

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

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

C. Information for Shelf Registration: None

4.1.2 Status of Shareholders As of 04/10/2015 Foreign Domestic Government Financial Other Juridical Institutions & Item Natural Total Agencies Institutions Person Natural Persons Persons Number of Shareholders 8 125 537 337,133 1,133 338,936 Shareholding (shares) 106,789,730 486,026,176 2,194,194,944 3,141,208,497 4,026,004,630 9,954,223,977 Percentage 1.07% 4.88% 22.04% 31.56% 40.45% 100.00%

4.1.3 Shareholding Distribution Status

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

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

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share Unit: NT$ Thousand share Year 2013 2014 As of 03/31/2015 Item Highest Market Price 20.95 15.95 17.60 Market Price Lowest Market Price 9.75 10.05 15.00 per Share Average Market Price 14.91 12.77 16.02 Net Worth per Before Distribution 21.19 22.87 23.61 Share Weighted Average Shares 8,967,080 9,377,302 9,916,297 (thousand shares) Earnings per Diluted Share Adjusted Diluted Earnings Per 0.57 2.31 0.87 Earnings Per Share Share Cash Dividends 0.15 0.7(Note) N.A. Dividends from －－－ Stock Retained Earnings Dividends per Dividends Dividends from Share(Note2) －－－ Capital Surplus Accumulated Undistributed None None None Dividends Price/Earnings Ratio N.A. N.A. N.A. Return on Price/Dividend Ratio N.A. N.A. N.A. Investment Cash Dividend Yield Rate N.A. N.A. N.A. Note: 2014 Distribution of Dividends already gets approval from the Board of Directors, subject to shareholders’ approval in Annual General Shareholders’ Meeting.

4.1.6 Dividend Policy and Implementation Status

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

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

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

4.1.7 Effect of 2014 Share Dividends to Operating Performance and EPS Not applicable. No financial forecast disclosed for 2015, therefore not applicable.

4.1.8 Employee Bonus and Directors' and Supervisors' Remuneration

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

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

B. Estimate Foundation of Employee Bonus and Directors’ and Supervisors’ Remuneration

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

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

C. Profit Distribution of 2015 Approved in Board of Directors Meeting for Employee Bonus and Directors’ and Supervisors’ Remuneration

(1) Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: (NT$) Employee Bonus – in Cash $1,436,186,891 Directors' and Supervisors' Remuneration $6,954,142 (2) Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings: Not applicable as the Company did not allocate stock bonus to employees in that year. (3) Recounted EPS after Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: (NT$ thousands) Not applicable. Since 2008, employee profit share and remuneration to Directors and Supervisors required expensing.

D. Information of 2014 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration: Distribution of 2014 Earnings (NT$) Stock Dividends $0 Cash Dividends $0.15 Directors' and Supervisors' Remuneration $90,587 Employee Bonus $343,921,549 Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. (NT$ Thousand)

4.1.9 Buyback of Common Stock: None

4.2 Issuance of Corporate Bonds

4.2.1 Corporate Bonds: None. 4.2.2 Convertible Bonds: None. 4.2.3 Exchangeable Bonds: None. 4.2.4 Shelf Registration: None. 4.2.5 Bond with Warrants: None. 4.2.6 Private placement of Corporate Bonds: None.

4.3 Preferred Shares: None.

4.4 Issuance of Global Depositary Shares

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

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options Unit: NT $: per share Type of Stock Option 2009 2010 Regulatory approval date Aug 4, 2009 Jun 9, 2010 Issue date May 13, 2010 May 19, 2011 Units issued 20,000,000 50,000,000 Option shares to be issued as a percentage of 0.20% 0.50% outstanding shares Duration 5 Years 5 Years Conversion measures New Common Share New Common Share Conditional conversion periods and 2nd Year: 30% 2nd Year: 30% percentages 3rd Year: 60% 3rd Year: 60% 4th Year: 100% 4th Year: 100% Converted shares －－ Exercised amount －－ Number of shares yet to be converted 20,000,000 50,000,000 Adjusted exercise price for those who have yet 32.59 22.85 to exercise their rights Unexercised shares as a percentage of total 0.20% 0.50% issued shares Impact on possible dilution of shareholdings Dilution to Dilution to Shareholders’ Equity is Shareholders’ Equity is limited limited Note: The aggregate total of issued and outstanding shares represents the aggregate total of issued and outstanding shares having been reported to and registered in the Ministry of Economic Affairs as of the Annual Report date.

4.5.2 List of Executives and the Top 10 Employees Receiving Employee Stock Options Apr 30, 2015; Unit: Thousand

Option SharesOption as a Exercised Unexercised No. OptionNo. of Percentage of Shareslssued (NT$ thousand)(NT$ (NT$ thousand)(NT$ No. SharesNo. of Percentage of SharesNo. of Percentage of Shareslssued Shareslssued Strike Price Strike Strike Price Strike Shares as a Shares as a Converted Converted Converted Converted Converted Converted Shares Shares Amount Amount Amount Amount (NT$) (NT$) Title Name

Hsing-Chie Chairman n Tuan Jyh-Chau President Wang Wen-Jyh Vice President Sah Chin-Lung Vice President Ting Yao-Tong Vice President Chen Chih-Hung Vice President Hsiao Associate Vice Chen-Hua President Luo Associate Vice Hung-Wen President Yang Associate Vice Ke-Yi Kao President Associate Vice Chih-Ming President Chen Associate Vice Chu-Hsian 22.85 5,485 0.06% －－－－ 5,485 141,744 0.06% President g Yang ~32.59 Associate Vice Tai-Chi President Pan Associate Vice Kuo-Hsiun President g Kuo Associate Vice Chung-Kua President ng Wei Associate Vice Jia-Pang President Pang Associate Vice Nai-Jian President Zheng Associate Vice Zheng-Xia President Kuo Associate Vice Tian-Ren President Lin Associate Vice Yu Shui President Kuo Managerial Chien-Lang Officer Lo Managerial Chin-Yuan Officer Chang Jian-Ting Employees Lai Qiu-Lian Employees Yang Zheng-Xu Employees Zhou Kun-Feng Employees Huang Zong-Ren Employees Kuo 22.85 1,750 0.02% －－－－ 1,750 46,319 0.02% Hao-Kun ~32.59 Employees Liu Shu-Fu Employees Hsu Yang-Feng Employees Lin Fu-Shou Employees Wu Min-Zheng Employees Wang Note 1: Refers to the current management officers and employees up to the date of the Annual Report Note 2: The total number of issued shares represents the number of issued shares registered with the Ministry of Economic Affairs as of the date of the printing of the Annual Report.

4.6 Status of Employee Restricted Stock

4.6.1 Status of Employee Restricted Stock 30 April 2014 First time Second time Third time Class of new restricted shares New restricted shares New restricted shares New restricted shares Effective date of registration Dec 13, 2012 Issue date Jan 30, 2013 Mar 29, 2013 Dec 12, 2013 Number of new restricted shares issued 62,302,000 （Note1 ） 1,688,000 （Note 2 ） 8,536,000 （Note 3 ） Issue price 0.00/5.00 Number of new restricted shares issued as a percentage of the total number of 0.63% 0.02% 0.09% issued shares (Note 4) Employees shall be in active service during each of the following vesting periods since the capital increase base date with the attainment of the annual individual performance appraisal result of Grade B or G or above over the years. Besides, they shall have fully complied with the service code and have not violated the Company’s service agreement and integrity and intellectual Vesting conditions for new restricted property agreement, work rules, stipulations in contracts with the Company or shares the regulations of the Company. The percentages of shares in which the vesti ng conditions are fulfilled are set out below. Upon expiration of one year: 20% of the number of shares subscribed Upon expiration of two years: 40% of the number of shares subscribed Upon expiration of three years: 40% of the number of shares subscribed (1) shall not be sold, pledged, transferred, given to others as gifts, attached or otherwise dealt with. (2) no voting rights at general meetings. (3) not entitled to participating in the placement (subscription) of shares, dividend distribution for the original shareholders. (4) From the book closure day for the placement of shares at nil consideration, the book closure day for cash dividends, the book closure day for share Restrictions of new restricted shares subscription in connection with a cash capital increase, the book closure period for general meetings as stipulated in Paragraph 3 under Section 165 of the Company Law, or other statutory book closure periods based on the occurrence of facts to the entitlement distribution date, shares without restrictions of employees who fulfill the vesting conditions in this duration are still not entitled to any voting rights, surplus distribution rights, share placement (subscription) rights, and/or dividend distribution rights. Custody of new restricted shares Custody of shares in trust Being placed with new shares: Shares will be reacquired by the Company at nil If the vesting conditions are not consideration for cancellation. fulfilled after employees are placed Subscribing for new shares: All shares will be repurchased by the Company at with or subscribe for new shares the closing price or the original subscription price, whichever is lower, on the expiry dates of the respective periods for cancellation. Number of new restricted shares 6,017,600 318,000 426,000 reacquired or repurchased Number of shares without restrictions 33,828,800 817,200 1,616,800 Number of shares with restrictions 22,455,600 552,800 6,493,200 Number of shares with restrictions as a percentage of the total number of issued 0.23% 0.01% 0.07% shares (%) The impact is limited as The impact is limited as The impact is limited as Impact on interests of shareholders the dilution ratio is low the dilution ratio is low the dilution ratio is low Note1: Allotment of 31,151,000 shares at nil consideration; subscription of 31,151,000 shares at a consideration. Note2: Allotment of 844,000 shares at nil consideration; subscription of 844,000 shares at a consideration. Note3: Allotment of 4,268,000 shares at nil consideration; subscription of 4,268,000 shares at a consideration. Note4: The total number of issued shares represents the number of issued shares registered with the Ministry of Economic Affairs as of the date of the printing of the Annual Report.

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

30 April 2015: Unit: in dollars, in thousand units Number new restrictedof Number new restrictedof

number of issuedshares Without restrictions With restrictions percentage of the total sharesacquired as a Subscription amount (in (in thousand dollars) sharesacquired with restrictionswith as a withoutrestrictions withoutrestrictions the total the number of as a percentageas of Number shares of Number shares of Number shares of Number shares of thousanddollars) percentage of the Issue Issue amount(in with restrictionswith total numbertotal of (Note 2) (Note2) issuedshares issuedshares Issue Issue price Issue Issue price Title Name

Hsing-Chien Chairman Tuan Jyh-Chau President Wang Vice President Wen-Jyh Sah Chin-Lung Vice President Ting Yao-Tong Vice President Chen Chih-Hung Vice President Hsiao Associate Vice Chen-Hua President Luo Associate Vice Hung-Wen President Yang Associate Vice Ke-Yi Kao President Associate Vice Chih-Ming President Chen Associate Vice Chu-Hsiang President Yang 7,930 0.08% 4,686 0/5 11,715 0.05% 3,244 0/5 8,110 0.03% Associate Vice Tai-Chi Pan President Associate Vice Kuo-Hsiung President Kuo Associate Vice Chung-Kuan President g Wei Associate Vice Jia-Pang President Pang Associate Vice Nai-Jian President Zheng Associate Vice Zheng-Xia President Kuo Associate Vice Tian-Ren Lin President Associate Vice Yu Shui Kuo President Managerial Chien-Lang Officer Lo Managerial Chin-Yuan Officer Chang Mao-Sheng Employees Hong Employees Yong-Yu Cai Chao-Jun Employees Zhong Zheng-Xu Employees Zhou Employees Jun-Yi Yu Dong-Rong 2,710 0.03% 1,506 0/5 3,765 0.02% 1,204 0/5 3,010 0.01% Employees Wang Employees Geng Ron Xu Zan-Ren Employees Chen Min-Zheng Employees Wang Kun-Feng Employees Huang Note 1: Refers to the current management officers and employees up to the date of the Annual Report Note 2: The total number of issued shares represents the number of issued shares registered with the Ministry of Economic Affairs as of the date of the printing of the Annual Report.

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

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

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

2. Combined Weighing of Different Business Operations in the Year of 2013 Unit: NT$ thousand Major Divisions Total Sales in 2014 (%) of total sales TFT-LCD 428,661,898 100% Total 428,661,898 100%

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

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

5.1.2 Industry Overview

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

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

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

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

Glass Panel Reticle ITO Conduct

LCD Up stream stream Up Polarized Driving IC PCB Backit Modules

Colour Filter INX Electronics Electronics INX LCD Panel

Middle Middle stream stream

LCM Modules Downstream Downstream

LCD Monitor LCD TVs NB Mobile, PDA Others

Consumers

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

developing trend of these products are listed below:

(i) Mobile Computers (Notebooks & Tablets)

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

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

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

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

(ii) LCD Monitor

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

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

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

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

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

(iii) LCD TV

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

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

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

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

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

(iv) Medium and small size panel

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

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

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

5.1.3 Research and Development

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

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

(1) In the aspect of upgrade of product quality: Including the technology & know-how for broad visual angle, high solution, low energy consumption, thin thickness, high hue, dyamic image, high dynamic range, narrow frames, new touch panel and the like.

(2) New material technical process: Including IGZO, In-Cell Touch Technique, Copper Manufacture Procedure, COA(Color Filter on Array), Photo-Alignment, Horizontal Electronic Field High Transparency and High Contract Positive Magnetic Susceptibility, Reducing Mask and Automotive wide temperature range display material technique.

(3) In the aspect of new product application: The up-to-date technology & know-how developed by the Company have been put into volume production one after another and applied onto a good number of products, including notably general cell phones, cameras, MPD, electronic paper, tablets, notebooks, desk monitors, AIO, television, medical treatment services, vehicular carriage, aerospace and touch panel and the like, in the dimensions ranging from 1.36” to 85” TFT-LCD products. In the days and years ahead, we shall continually invest in the research & development oriented human resources and fund to develop more and more TFT-LCD display and monitor products of added dimensions, application ranges, thinner, more environmental protection friendly and high efficiency to live up to the future trends in application and satisfy customers in varied ranges.

3. The consolidated research & development costs invested in the latest year as of the Annual Report date. Unit: NT$ thousand Item 2014 As of 3/31/2015 R & D expense 12,177,083 3,970,262 Net Revenue 428,661,898 100,157,867 Percentage of 2.80% 4.00% revenue (%)

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

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

(3) Notebook: A. Release whole series light-weight notebook panel, the thickness of whole series of notebook (11.6-inch/12.5-inch/13.3-inch/14-inch/15.6-inch) is only 2.6mm, show light feature and solve the heavy problem of notebook. B. Interface technical of Notebook panel is totally from LVDS to eDP. It can connect to high resolution trend, also can save space to help thinner design of the system and lower the energy consumption. C. Release whole series FHD AAS wide viewing angle notebook panel and goes with Low Power-consumption & Wide Color Gamut to increase color range but not increase energy consumption to increase visual performance. D. Develop TOD technical on notebook panel, through touch integration, notebook not only can be thinner but also can reduce produce process of the module and simplify the complexity of new product.

(4) Small/Medium: A. Develop oxide TFT technical, using the technique goes with wide viewing angle technique, reduce power consumption and increase optical performance, further can improve optical specification and realize high quality panel product. B. Develop high resolution panel and smart phone panel, resolution can reach above 500ppi, at the same time have high quality, low energy consumption features to delicate the image but not cost too much energy. The product successfully equipped with better viewing quality and lasting for long time to use in portable product. C. Develop display with Low Power-consumption & Wide Color Gamut, increasing color gamut but not increase energy consumption in smart phone panel and tablet, can reach 130% sRGB color gamut and increase competitiveness of the product. D. Develop LTPS AAS panel of frames narrow than 0.6mm and high resolution, reduce the size of the panel module to fit the narrow frames demand from smart phone and tablet user, increase the design freedom of portable device display appearance.

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

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

5.1.4 Long- and Short-Term Business Development Plans

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

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

5.2 Market and Sales Overview

5.2.1 Market Analysis

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

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

3. The supply and demand situation and growth of the future market Due to the outstanding product feature and the continuous improvement of cost and quality, TFT-LCD already become the mainstream of flat display and the sales will keep growth as the improvement of application level and penetration. According to the estimation of IHS/DisplaySearch, the global shipment of big size (over 9-inch) TFT-LCD panel will be 534 million chips. If analyzing market size of several main application level, about LCD TV part, as new size development and new technical input and plus new capacity growth stable, expecting global shipment of LCD TV will be 238 million in 2015 and even will be 242 million shipment in 2016. About LCD monitor, the shipment forecast is 148 million and will slightly decline to 145 million, but as the demand increased of big size and high resolution product, the penetration rate of high value product will increase gradually. About mobile PC (including notebook and tablet), due to tablet trend, shipment grow fast in 2013, notebook have slightly growth in 2014, but growth momentum of tablet slowing down, the shipment slightly declined in 2014. However, overall forecast of mobile PC market will growth again in 2015, will be reach to 438 million, even reach to 455 million in 2016.

Unit: million

LCD TV

LCD

Laptop (including tablet)

Data Source: DisplaySearch

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

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

Data Source: DisplaySearch

Amidst the unpredictable macroeconomy, competition amidst the industries, expansion and competition by newly joining competitors amidst products and technology & know-how that have been developed and changed in each and every passing day, the TFT-LCD products would be subject to high level circulation uncertainty. In the face of the mounting cutthroat competition, we shall launch overall upgrade of all substances to deal with all sorts of challenges. We shall boost marketing by means of improved operating efficiency, refined management, product development, customer services, technical research & development and such efforts. In turn, we will be able to intensify gross profit in sales, cost control to further intensify competitive edge. Continued investment in research & development to suffice technical talents, improve product design and application of materials. We shall proceed with research & development of advanced and improved manufacturing process and new generation monitor technology & know-how so as to create added lead in know-how of products and production costs. With wholehearted efforts, we shall deploy integrated product lines for new products. The products manufactured by our Company cover televisions, computers, mobile devices, vehicles- and medical treatment oriented products. We provide varied modes to sell panels, whole machines, touch integration and the like. Through such efforts, we virtually bring

down the potential risks of fluctuation with single products. We intensify integration of supply chains to stay in close teamwork with suppliers to deepen deployment of strategic customers, strengthen responsiveness toward supply and demand fluctuation and, meanwhile, boost approval-level from customers.

4. Niches in competition.

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

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

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

(4) Our advantages in costs: Through the hands-on experiences accumulated by TFT-LCD manufacturers at home and abroad, we could conserve quite a few time which is normally indispensable to try & err. In procurement of machinery & equipment, the hands-on experiences accumulated by the suppliers in installation could help us conserve partially the costs. Further coupled with the aforementioned advantages in the unique operation mode and vertical integration, we well outperform horizontal trades in terms of costs required for production.

(5) Concerted performance (synergy) in marketing: We are dominant of sound marketing channels to get connected with world class customers. Toward those world-class giant customers, we are capable of rendering prompt design, integrated products with global services through which our customers enjoy the excitements of one-stop shopping.

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

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

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

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

5. Advantage and disadvantage of long term development and reaction strategy

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

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

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

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

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

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

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

(2) Disadvantage and Reaction Strategy A. The balance of supply and demand is hard to keep due to the intense competition in this industry. LCD panel industry’s economy cycle is more obvious than other industry and the balance of supply and demand is more difficult to maintain because the high capital intensity and long establishment time. Other competitors in Taiwan, Japan and Korea are planning to build up next generation panel factories and the rising production capability in China since 2012 also brought competition to the industry. Innolux has 3.5th generation, 4th generation, 4.5th generation, 5th generation, 6th generation, 7.5th generation and 8.5th generation production lines, which can produce all sizes of LCD panels and touch panels. The production capability is the 3rd largest panel manufacturer. We try to produce the best combination of products and adjust the production allocation according to market supply-demand condition, so that we can optimize the use our production capacity.

B. The complicated technology and patent portfolio The design and production of TFT-LCD requires highly professional technology. All companies that in this industry are aggressively making their portfolio in technology and patent applications. To avoid the violation of patent rights in the production process, Innolux has been developing our own patents and technology since the beginning of this company. We recruited domestic and international talents to join the research team, and evaluate the feasibility of getting the usage rights of some key technology from foreign companies at the same time. Regarding to intellectual poverty, we not only aggressively conduct R&D and the patent applications, we also keep strong legal support team to protect our intellectual poverty.

C. The global economy influences demand and supply The global economy has become less stable due to the sub-prime mortgage crisis and the European debt crisis. Although it is recovering gradually, it’s hard to say that the global economy had recovered to the positive growth completely. The demand can be influenced dramatically once regional or global economy fluctuate, and moreover, influence the demands of LCD monitor products. We provide products that are

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

5.2.2 The Production Procedures of Main Products

1. Important function of main products (1) TFT-LCD TFT-LCD products are display application for digital information delivery, its wide application including information display equipment for business and industry, computer, telecom related and consumer electronics display equipment, etc. As the development of integrated digital age 3C market, the main area of TFT-LCD product are: Information Technology, IT: such as Desktop monitor and Notebooks, etc. LCD TV Communications and Consumer Electronics: Mobile phone, digital camera, digital video, digital photo frame, automotive display, portable DVD player, portable game console, tablet and other high mobility and portable electronic products application. Special application: medical display, Avionics display, automotive display and other touch panel application. (2) Touch Panel business Small size (below 7 inch) products mainly apply to smart phone, multimedia player, GPS and digital camera, etc. Medium size (7 inch to 19 inch) products mainly apply to tablet, eBook, Ultrabook, notebook, etc. Large size (above 20 inch) products mainly apply to All-in-one computer (AIO), Public Information Display, etc.

2. Production process of main products (1) Three Steps in the TFT-LCD Production Process: In the Array or TFT Process mentioned in the preceding paragraph, injection and washing for glass baseplates →gate metallic layer sputtered coating →gatemetallic layer lithography →Semiconductor layer continued filming →Semiconductor lithography →source/drain film-forming →source/ drain medal sputtered coating →source/drain lithography →Protection film manufacturing process →Protection film lithography →Transparent conducting layer sputtered coating transparent conducting layer lithography →thin film transistor electrical analysis →thin film transistor completion. Cell or LCD Process: The Cell process fits the Array substrate to a color-filter substrate; liquid crystal is then inserted between the two substrate layers. Module Assembly or LCM Process: taking the panel from the Cell process and bonding the assembling backlights, IC and frame and other components to make the Open cell, module and system and other types based on clients’ demand. (2) Touch Panel business Sensor Process: Use Semiconductor Litho process to put sensor on the glass. Lamination & FPC Bonding Process: Touch panel modules and LCD/LCM assembling process (TP & LCD/LCM Direct Bonding & Advanced Direct Bonding): A.TP & LCM: taking LCM as the baseplates to be attached to the touch panel modules for overall combination. B.TP & LCD: 以 LCD(Open-Cell) as the baseplates to be attached to the touch panel modules for overall combination before being assembled with Back Light modules(BLM).

5.2.3 Supply Status of Main Materials

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

5.2.4 Major Suppliers and Clients

A. Major Clients Information for the Last Two Calendar Years Unit ：NT Thousand$ 2013 2014 Relation Relation Item Company Company Amount Percent with Amount Percent with Name Name Issuer Issuer 1 Customer A －－－－－－－ 2 Others 422,730,500 100.00 Others 428,661,898 100.00 Net Total Net Total 422,730,500 100.00 428,661,898 100.00 Supplies Supplies

B. Major Suppliers Information for the Last Two Calendar Years Unit ：NT Thousand$ 2013 2014 Relation Relation Item Company Company Amount Percent with Amount Percent with Name Name Issuer Issuer 1 Others 279,778,851 100.00 - Others 248,184,050 100.00 - Net Sales 279,778,851 100.00 Net Sales 248,184,050 100.00

5.2.5 Production over the Last Two Years

Unit: NT Thousand$ Year 2013 2014 Output

Capacity Quantity Amount Capacity Quantity Amount Major Products (or by departments) TFT-LCD 602,919 552,668 390,036,096 605,200 574,940 371,700,000 Total 602,919 552,668 390,036,096 605,200 574,940 371,700,000

5.2.6 Shipments and Sales over the Last Two Years

Unit ：NT Thousand$ Year 2013 2014 Shipments & Sales Local Export Local Export

Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Major Products (or by departments) TFT-LCD 56,087 91,333,989 405,536 337,327,909 54,028 71,710,073 510,097 351,019,347 Others - - - - - 216 - 864 Total 56,087 91,333,989 405,536 337,327,909 54,028 71,710,289 510,097 351,020,211

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

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

1. Jan 9, 2014, Taiwan T3 factory of Innolux Japan had been reported for a violation of environmental protection incidents and the compensations was NTD 60,000. This reported incident happened because the inventory we reported on the online reporting system didn’t match the factory actual inventory. Corrective action: Innolux has completed the improvement of out online digital system, which will implement systematic error preventing and correcting functions by audition remarks. 2. Dec 12, 2014, the Taiwan c3 factory of Innolux Japan had an environmental pollution incident. This incident happened because we reported as “0” ton inventory of D-1504, C-0202, and C-0110 on the system, which didn’t match the actual disposal inventory, and violated the Waste Disposal Act’s rule. Corrective actions: (1) Create the checklist of materials of waste disposal plan and the waste. (2) Conduct inspection and estimation operation for all waste (including liquid waste) in factories in the end of every month, so that we will be able to report the temporary inventory in the end of every month. (3) Confirm the balance and contents of material use and the reported waste every month. (4) Control the time limitation of disposal reporting of polluted business regularly. (need to apply for expansion of temporary inventory if the disposal hasn’t been removed within a year) (5) We plan to complete the consensus and corrective actions in all factories before Jan 31, 2015 (able to track back to Jan 2014 system reporting) to avoid the compensations from happening again with the same reason in other factory. 3. 5 Dec 2013, Innolux in Nang Jing had a fire in the dormitory. According to the investigation, the reason of this fire was due to the left tinder ignites the surrounding combustibles. The range of the fire covered 5 square meters and burned one closet. The Nanjing City Jiangning District Gong An Xiao Fang Da Dui had issued ticket and 10,000rmb compensations in 2014/1/15 due to the violation of the rule of “Nana Jing City Xiao Fang Act”. Corrective Action: Conduct safety inspection at the public areas like dormitory and restaurant, remove, and improve the hidden dangers.

5.5 Labor Relations

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

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

development, and we earned the golden prize of TTQS’ evaluation in 2011. (4) We promote the quality training and activities to maintain our competitiveness with high quality, and we had earned several related awards too. (5) Strengthening the concepts of sustainable management: we hire mentally or physically ill employees insist in environmental protection, and being responsible to social welfare. (6) We provide internal and external trainings, such as professional studies, headquarter training, oversea training to develop employees’ professional knowledge and skills. (7) We provide internal and external trainings, such as professional studies, headquarter training, oversea training to develop employees’ professional knowledge and skills. (8) With the concepts of energy, comfortable life, and happiness, we build the employee’s center, which provide the leisure and exercise functions to release employees’ mental and physical stress. (9) We have employees’ restaurants in all factories, and provide meal substitutes according to the company rules. (10) We set up the employee welfare committee to be responsible to welfare planning and execution. Including: club activities, art and culture season, company trip, exercise season, family day, special discounts, and substitutes of festivals, wedding or other special events, and emergencies. (11) We provide health promotion and mental consulting plan to take care of employees’ mental and physical health.

2. Retirement structure and the situation of implement (1) Retirement structure and the situation of implement. (2) We hire actuary to evaluate our employees’ retirement preparation fund and issue the evaluation report according to the ROC’s financial principles. (3) We transfer 2%~15% monthly salary to retirement preparation every month. (4) We will conduct the new retirement structure according to the laws from Jul 1, 2005.

3. Labor and management settlement The rights and obligations of our labor and management follow the rules of our company operation. The relations between labor and management are good without and dispute settlements. In order to maintain mutual communications and interactions, we have communicating meetings such as management interviews and mobilization meetings, issuing INX digital news, establishing employee communication mailbox to listen and solve employees’ opinions and thoughts.

4. Working environment and individual safety protection (1) Safety and Health organization and operation The company has an environmental safety office to be in charge of all safety and health risks in company operation management, and to integrate the safety and health departments in all factories. The environmental safety office reports to the factory manager, related departments and the soviet in “factory fields’ safety and environmental protection committee” every season. There are 208 worker representatives of Taiwan factory fields in 2014, which is 45% of the committee; there are 96 worker representatives of Mainland factory fields in 2014, which is 43% of the committee. These worker representatives in behave of all employees to discuss the safety and health issues such as legality, internal and external communications, safety and health issues, objects and KPI, and the latest outer environmental trends.

Analysis and Statistics of Occupational Hazards

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

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

ESH Training 'Employees are the most valuable asset. Training is an investment that never depreciates.' ESH training is the basis for the promotion and practical implementation of our ESH management. We make long-term investments in human and material resources according to the hazard profile of each plant. We plan, design and deliver training to the staff regarding ESH knowledge and skills, such as handling chemicals, dangerous machinery and equipment, injury prevention, machinery safety, fire safety management, and plant safety management. We also monitor and control the training quality and effectiveness. In 2014, 1,609 ESH training sessions were held, for a total of 277,858 participants. On average, employees joined over 3 training sessions per person per year.

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

Self-audit on Injury Prevention and Risk Management

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

Prevention of manmade disasters Due to musculoskeletal disorders percentage increase this few years, prevention of company as below: A. Identification and analysis of the risk of job-specific processes of a systematic, resource and continuous improvement mode execution. B. Occupational Safety and Health Act will trigger repetitive operations, such as pre-musculoskeletal diseases Anti concept implanted "hazard identification and risk assessment norms" to implement career

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

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

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

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

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

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

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

through more efficient handling of cases.

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

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

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

VI. Financial Information

6.1.1 Five-Year Financial Summary

1. Condensed Balance Sheet-IFRS-Consolidate Unit: NT Thousand Financial Year Five-Year Financial Summary(Note1) data of

ending date

in March Item 2010 2011 2012 2013 2014 31, 2015 Current assets －－ 173,139,399 171,701,969 189,380,812 145,539,799 Fixed assets －－ 332,525,859 273,505,759 233,609,843 222,590,627 Intangible assets －－ 22,909,059 21,214,994 20,219,137 19,968,114 Other assets －－ 42,888,840 41,778,163 39,306,763 36,368,319 Total assets －－ 571,463,157 508,200,885 482,516,555 424,466,859 Current Before distribution －－ 237,566,939 300,586,751 199,135,498 125,777,294 liabilities After distribution －－ 237,566,939 301,944,190 Note 3 － Non current liabilities －－ 162,539,193 13,036,280 54,209,621 62,267,502 Before distribution －－ 400,106,132 313,623,031 253,345,119 188,044,796 Total liabilities After distribution －－ 400,106,132 314,980,470 Note 3 － Equity attributable to owners of the 169,823,860 193,043,229 227,690,063 234,969,894 parent Capital stock －－ 169,823,860 193,043,229 227,690,063 99,542,240 Capital surplus －－ 119,677,980 96,058,741 99,584,369 99,602,249 Retained Before distribution －－ (24,979,239) 7,421,697 26,632,674 35,283,281 earnings After distribution －－ (24,979,239) 7,331,202 Note 3 － Other equity interest －－ (4,004,589) (1,531,497) 1,927,656 542,124 Treasury stock －－－－－－ Non controlling interest －－ 1,533,165 1,534,625 1,481,373 1,452,169 Total Before distribution －－ 171,357,025 194,577,854 229,171,436 236,422,063 shareholders’ －－－ equity After distribution 171,357,025 193,220,415 Note 3 Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited. Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

2. Condensed Statement of Income-IFRS-Consolidate Unit: NT Thousand Financial Year Five-Year Financial Summary (Note1) data of

ending date

in March Item 2010 2011 2012 2013 2014 31, 2015 Operating revenue －－ 483,609,931 422,730,500 428,661,898 100,157,867 Gross profit (loss) from －－ 4,499,935 37,759,115 50,385,001 17,744,057 operations Net operating income (loss) －－ (19,749,654) 15,349,268 28,173,396 11,216,791 Non-operating income and －－ (11,064,521) (9,705,915) (5,639,056) (1,156,562) expenses Profit (loss) before tax －－ (30,814,175) 5,643,353 22,534,340 10,060,229 Profit (loss) from continuing －－ (30,167,283) 5,095,019 21,676,908 8,649,289 operations Profit (loss) from discontinued －－－－－－ operations Profit (loss) －－ (30,167,283) 5,095,019 21,676,908 8,649,289 Other comprehensive income, net －－ (1,975,663) 2,859,517 3,159,493 (1,445,244) Comprehensive income －－ (32,142,946) 7,954,536 24,836,401 7,204,045 Profit (loss), attributable to owners －－ (29,899,236) 5,102,568 21,676,759 8,650,607 of parent Profit (loss), attributable to －－ (268,047) (7,549) 149 (1,318) non-controlling interests Comprehensive income, attributable －－ (31,688,130) 7,953,076 24,844,853 7,233,249 to owners of parent Comprehensive income, attributable －－ (454,816) 1,460 (8,452) (29,204) to non-controlling interests Earnings per share －－ (4.00) 0.57 2.31 0.87 Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited. Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

3. Condensed Balance Sheet-IFRS-Alone Unit: NT Thousand Year Five-Year Financial Summary(Note1)

Item 2010 2011 2012 2013 2014 Current assets －－ 147,154,273 138,274,531 162,875,147 Fixed assets －－ 287,051,335 233,557,614 192,599,182 Intangible assets －－ 22,796,701 21,114,443 20,127,184 Other assets －－ 100,240,714 100,611,858 106,252,898 Total assets －－ 557,243,023 493,558,446 481,854,411 Current Before distribution －－ 238,165,426 287,413,773 205,189,126 liabilities After distribution －－ 238,165,426 288,771,212 Note 3 Non current liabilities －－ 149,253,737 13,101,444 48,975,222 Before distribution －－ 387,419,163 300,515,217 254,164,348 Total liabilities After distribution －－ 387,419,163 301,872,656 Note 3 Equity attributable to owners of the －－ 169,823,860 193,043,229 227,690,063 parent Capital stock －－ 79,129,708 91,094,288 99,545,364 Capital surplus －－ 119,677,980 96,058,741 99,584,369 Retained Before distribution －－ (24,979,239) 7,421,697 26,632,674 earnings After distribution －－ (24,979,239) 7,331,202 Note 3 Other equity interest －－ (4,004,589) (1,531,497) 1,927,656 Treasury stock －－－－－ Non controlling interest －－－－－ Total Before distribution －－ 169,823,860 193,043,229 227,690,063 shareholders’ －－ equity After distribution 169,823,860 191,685,790 Note 3 Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited. Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

4. Condensed Statement of Income-IFRS-Alone Unit: NT Thousand Year Five-Year Financial Summary (Note1)

Item 2010 2011 2012 2013 2014

Operating revenue －－ 471,524,374 419,738,269 426,005,033 Gross profit (loss) from operations －－ (7,116,158) 27,531,818 36,395,248 Net operating income (loss) －－ (24,249,282) 11,300,119 20,439,440 Non-operating income and expenses －－ (7,431,680) (6,864,968) 1,238,394 Profit (loss) before tax －－ (31,680,962) 4,435,151 21,677,834 Profit (loss) from continuing operations －－ (29,899,236) 5,102,568 21,676,759 Profit (loss) from discontinued operations －－－－－ Profit (loss) －－ (29,899,236) 5,102,568 21,676,759 Other comprehensive income, net －－ (1,788,894) 2,850,508 3,168,094 Comprehensive income －－ (31,688,130) 7,953,076 24,844,853 Profit (loss), attributable to owners of －－ (29,899,236) 5,102,568 21,676,759 parent Profit (loss), attributable to non-controlling －－－－－ interests Comprehensive income, attributable to －－ (31,688,130) 7,953,076 24,844,853 owners of parent Comprehensive income, attributable to －－－－－ non-controlling interests Earnings per share －－ (4.00) 0.57 2.31 Note 1: Financial data by IFRS less than 5 years, preparing the following report by ROC GAAP Note 2: Numbers are audited. Note 3: Pending on approval of shareholders at Annual General Shareholders’ Meeting

6.1.2 Five-Year Financial Summary

1. Condensed Balance Sheet-GAAP-Consolidate Unit: NT Thousand Year Five-Year Financial Summary(Note)

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

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2. Condensed Statement of Income-GAAP-Consolidate Unit: NT Thousand Year Five-Year Financial Summary (Note1)

Item 2010 2011 2012 2013 2014 Operating Revenue 493,084,954 510,081,200 483,609,931 －－ Gross profit (loss) from 21,621,735 (35,208,648) 4,737,345 －－ operations Net operating income (loss) (4,596,422) (62,700,308) (19,344,622) －－ Non-operating revenue and 5,863,594 8,311,203 6,999,454 －－ gain Non-operating expense and (14,679,737) (15,341,165) (17,725,537) －－ loss Profit (loss) from continuing －－ (13,412,565) (69,730,270) (30,070,705) operations Before tax Profit (loss) from continuing －－ (12,214,041) (64,760,598) (29,473,396) operations Profit (loss) from discontinued －－－－－ operations Extraordinary gain or loss －－－－－ Cumulative effect of accounting －－－－－ principle changes Net income (14,214,041) (64,760,598) (29,473,396) －－ Earnings per share (2.29) (8.81) (3.91) －－ Note 1: Numbers are audited.

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3. Condensed Balance Sheet-GAAP-Alone Unit: NT Thousand Year Five-Year Financial Summary(Note1)

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

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4. Condensed Statement of Income-GAAP-Alone Unit: NT Thousand Year Five-Year Financial Summary (Note1)

Item 2010 2011 2012 2013 2014 Operating Revenue 473,695,780 485,403,114 471,524,374 －－ Gross profit (loss) from 8,338,094 (43,979,512) (6,872,735) －－ operations Net operating income (loss) (10,492,493) (63,395,419) (23,838,237) －－ Non-operating revenue and 9,709,522 7,966,978 7,345,941 －－ gain Non-operating expense and (14,112,329) (14,733,347) (14,445,196) －－ loss Profit (loss) from continuing (14,895,300) (70,161,788) (30,937,492) －－ operations Before tax Profit (loss) from continuing －－－－－ operations Profit (loss) from discontinued －－－－－ operations Extraordinary gain or loss －－－－－ Cumulative effect of accounting －－－－－ principle changes Net income (14,835,437) (64,439,778) (29,205,349) －－ Earnings per share (2.29) (8.81) (3.91) －－ Note 1: Numbers are audited.

6.1.3 Auditors’ Opinions from 2010 to 2014

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

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

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

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

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increase in cash in schedule under the “Agreement for Syndicated Loan & Reimbursement”. As a result, on December 31, 2013, the balance of the syndicated loan was converted from long-term loan to “long-term liabilities due within one year or within one business cycle”. The Company, nevertheless, was aproved by the creditor financial institution that the capital increase through cash injection previously scheduled as of December 31, 2013 be extended as of December 31, 2014. 2. Interest coverage folds: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control costs and upgrade the operating efficiency. As a result, the profits earned in 2014 significantly increased over 2013’s while the interest expenses significantly dropped. 3. Turnover rate of real estate, plant biuldings and equipment & facilities: In 2014, the net sales increased over 2013’s. Meanwhile, service life of real estate, plant biuldings and equipment & facilities was due in some cases. As a result, the net value in 2014 decreased from 2013’s. 4. Various ratios of profitability rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. 5. Various ratios of cash flow rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. As a result, the net cash inflow in operating activities incrased. 6. Business operation leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014. 7. Financial leverage: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control cost and boost operating efficiency, the operating profit in 2014 significantly increased over 2013’s. Besides, as the interest expenses significantly dropped, the financial leverage dropped in 2014. Note 1: We adopted International Financial Reporting Standards ( IFRS). For period less than five(5) years, we worked Table 4 below, adopted the Financial Reporting Standards of the Republic of China. Note 2: Numbers are audited. Note 3: Financial Ratio Formula 1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net 2. Liquidity analysis (1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense 3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover (3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets 4. Return on investment analysis (1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares 5. Cash flow (1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital) 6. Leverage (1) Operating Leverage= (Net sales – Variable cost) / Operating income (2) Financial leverage = Operating income / (Operating income – Interest expenses)

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2. Financial Analysis-IFRS-Alone

Year (Note 1) Financial analysis in the past five years

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

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Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.) 1. The ratio of long-term funds to real estate, plant buildings, current ratio and quick ratio increased over 2013, due primarily to the fact that in 2013, the Company did not live up to the commitment for capital increase in cash in schedule under the “Agreement for Syndicated Loan & Reimbursement”. As a result, on December 31, 2013, the balance of the syndicated loan was converted from long-term loan to “long-term liabilities due within one year or within one business cycle”. The Company, nevertheless, was aproved by the creditor financial institution that the capital increase through cash injection previously scheduled as of December 31, 2013 be extended as of December 31, 2014. 2. Interest coverage folds: Due primarily to the facts that in 2014, the Company put forth maximum possible efforts to control costs and upgrade the operating efficiency. As a result, the profits earned in 2014 significantly increased over 2013’s while the interest expenses significantly dropped. 3. Turnover rate of real estate, plant buildings and equipment & facilities: Due primarily to the facts th at in 2014, the net sales increased over 2013 and that the service life spans of rate of real estate, plant buildings and equipment & facilities were due in 2014, the net values decreased from 2013. 4. Various ratios of profitability rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. 5. Various ratios of cash flow rose due primarily to the facts that in 2014, the profits earned by the Company significantly increased over 2013’s. As a result, the net cash inflow in operating activities incrased. 6. Business operation leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014. 7. Financial leverage: In 2014, the Company put forth maximum possible efforts to control costs and enhance operating efficiency. As a result, in 2014, the profits earned by the Company significantly increased over 2013’s, leading to a drop of business operation leverage of 2014. Note 1: We adopted International Financial Reporting Standards ( IFRS). For period less than five(5) years, we worked Table 3 below, adopted the Financial Reporting Standards of the Republic of China. Note 2: Numbers are audited. Note 3: Financial Ratio Formula 1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net 2. Liquidity analysis (1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense 3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover (3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets 4. Return on investment analysis (1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares 5. Cash flow (1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital)

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

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3. Financial Analysis-GAAP-Consolidate

Year (Note 1) Financial analysis in the past five years

Item (Note 2) 2010 2011 2012 2013 2014 Ratio of liabilities to assets 63.04 70.94 69.79 －－ Financial Ratio of long-term capital to structure (%) 100.03 65.50 101.68 －－ fixed assets Current ratio 78.81 50.71 73.67 －－ Solvency (%) Quick ratio 52.72 36.10 54.89 －－ Times interest earned ratio (1.87) (10.85) (2.91) －－ Accounts receivable turnover 7.28 6.11 7.28 －－ (turns) Average collection period 50 60 50 －－ Inventory turnover (turns) 7.87 8.50 7.87 －－ Operating Accounts payable turnover ability 4.76 4.46 4.76 －－ (turns) Average days in sales 46 43 46 －－ Fixed assets turnover (turns) 1.18 1.32 1.18 －－ Total assets turnover (turns) 0.73 0.77 0.73 －－ Return on total assets (%) (2.46) (8.54) (3.64) －－ Return on stockholders' equity (8.30) (27.92) (15.74) －－ (%) Profitability Ratio to issued capital (%) (6.29) (85.74) (24.45) －－ Ratio to Profit before tax (18.34) (95.35) (38.00) －－ Profit ratio (%) (3.01) (12.63) (6.04) －－ Earnings per share ($) (2.29) (8.81) (3.91) －－ Cash flow ratio (%) 30.94 6.71 18.36 －－ Cash flow Cash flow adequacy ratio (%) 57.62 56.37 62.57 －－ Cash reinvestment ratio (%) 13.22 5.75 6.89 －－ Operating leverage －－－－－ Leverage Financial leverage －－－－－ Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.):N.A. Note 1: Numbers are audited. Note 2: Calculation formula of financial ratio 1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net 2. Liquidity analysis (1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense 3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover (3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets 4. Return on investment analysis

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(1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares 5. Cash flow (1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital) 6. Leverage (1) Operating Leverage= (Net sales – Variable cost) / Operating income (2) Financial leverage = Operating income / (Operating income – Interest expenses)

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4. Financial Analysis-GAAP-Alone

Year (Note 1) Financial analysis in the past five years

Item (Note 2) 2011 2012 2013 2014 2015 Ratio of liabilities to assets 68.44 69.29 －－－ Financial Ratio of long-term capital to structure (%) 67.17 109.10 －－－ fixed assets Current ratio 40.87 62.54 －－－ Solvency (%) Quick ratio 27.31 46.93 －－－ Times interest earned ratio (14.02) (4.93) －－－ Accounts receivable turnover 7.13 6.16 －－－ (turns) Average collection period 51 59 －－－ Inventory turnover (turns) 8.81 9.99 －－－ Operating Accounts payable turnover ability 3.75 3.13 －－－ (turns) Average days in sales 41 37 －－－ Fixed assets turnover (turns) 1.31 1.50 －－－ Total assets turnover (turns) 0.75 0.80 －－－ Return on total assets (%) (9.36) (4.22) －－－ Return on stockholders' equity (28.33) (15.91) －－－ (%) Profitability Ratio to issued capital (%) (86.69) (30.13) －－－ Ratio to Profit before tax (95.94) (39.10) －－－ Profit ratio (%) (13.28) (6.19) －－－ Earnings per share ($) (8.81) (3.91) －－－ Cash flow ratio (%) 16.16 14.96 －－－ Cash flow Cash flow adequacy ratio (%) 73.1 79.33 －－－ Cash reinvestment ratio (%) 15.98 6.65 －－－ Operating leverage －－－－－ Leverage Financial leverage －－－－－ Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.):N.A. Note 1: Financial data by IFRS less than 5 years, preparing the following table 3 by ROC GAAP Note 2: Numbers are audited. Note 3: Financial Ratio Formula 1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property, plant and equipment, net 2. Liquidity analysis (1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense 3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales / Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover (3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets

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4. Return on investment analysis (1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted average outstanding shares 5. Cash flow (1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense + Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property, plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital) 6. Leverage (1) Operating Leverage= (Net sales – Variable cost) / Operating income (2) Financial leverage = Operating income / (Operating income – Interest expenses)

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6.3 Supervisors’ Report in the Most Recent Year

Innolux Corporation Supervisors’ Audit Report

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

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

General Shareholders Meeting of the Company in 2015

Supervisor: Lin, Ren-Guang

Date: April 28, 2015

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Innolux Corporation Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2015

Supervisor: Chen, Yi-Fang

Date: April 28, 2015

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Innolux Corporation Supervisors’ Audit Report

General Shareholders Meeting of the Company in 2015

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

Date: April 28, 2015

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

Please refer to page 137 of the annual report.

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

Please refer to page 235 of the annual report.

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

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

7.1 Analysis of Financial Status Unit: NT Thousand Year Difference 2013 2014 Item Amount % Current Assets 171,701,969 189,380,812 17,678,843 10.30 Fixed Assets 273,505,759 233,609,843 (39,895,916) (14.59) Intangible assets 21,214,994 20,219,137 (995,857) (4.69) Other Assets 41,778,163 39,306,763 (2,471,400) (5.92) Total Assets 508,200,885 482,516,555 (25,684,330) (5.32) Current Liabilities (1) 300,586,751 199,135,498 (101,451,253) (33.75) Long-term Liabilities (1) 13,036,280 54,209,621 41,173,341 315.84 Total Liabilities 313,623,031 253,345,119 (60,277,912) (19.22) Capital stock 91,094,288 99,545,364 8,451,076 9.28 Capital surplus (2) 96,058,741 99,584,369 3,525,628 3.67 Retained Earnings (3) 7,421,697 26,632,674 19,210,977 258.85 Other equity (1,531,497) 1,927,656 3,459,153 (225.87) Non controlling equity 1,534,625 1,481,373 (53,252) (3.47) Total Stockholders' Equity 194,577,854 229,171,436 34,593,582 17.78 Analysis of changes in financial ratios: 1. Due primarily to the facts that as of December 31, 2013, the Company did not conform with the commitment in capital increase through cash injection within the time schedule as set forth under “Agreement for Reimbursement under Syndicated Accord”, the banks in the syndicated loan were entitled to take such acts including (but not limited to) that all principal, interest, expense and other sums payable under the Agreement having been disbursed but not yet reimbursed should become due on the very day ahead of expiry. The long-term loans were converted into “Long-term liabilities due within one year or one business cycle”. 2. Mainly attributed to massive increase in profit. 3. Due primarily to the facts that in the wake of the change in exchange rate, the margin of exchange in conversion in financial statements in the operating institutions in the long-term investment was recognized.

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

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7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Year

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

7.3.2 Cash Flow Analysis for the Coming Year

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

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

7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year In terms of outward investment, the Company focused on the up- and down-streams of TFT-LCD industries to assure effective vertical itnegration as the final objectives. Given the worsening fluctuation of panel industry and the mature development of the industrial chains, the Company held a policy of being increasingly conservative. Other than the effortswe try to refrain from investing toward the businesses irrelevant to the Company’s principal business, the Company disposed non-core investment and investment insignificant in strategies. In the consolidated financial report of the Company in 2014, the investment gain recognized in equity method came to NT$65.814 million, thanks primarily to the upturn of the overall economy where the business performance of the invested businesses turned better. Some outward investments appeared at a loss. Overall, the performance with the Company’s outward reinvestments have been well up to our expectation and have been continually integrated with our business development.

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7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures 1. Interest rate The American economy rallied at a slow pace. The Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan anticipated the economic growth rate (yoy) by 2015 would hit 3.5%, 0.07% outgrew the annual rate of 2014 at 3.43%. Given the factors of economic growth and commodity prices, the Central Bank would maintain an easy interest rate policy in 2015. The M2 currency growth targets were set at 2.5%~6.5%. To prevent an increase in the Company’s loan costs as a result of an adjustment of currency policy and rise in interest rate in the market, the Company would undertake interest swap transactions in due time over the current loans in floating interest rates so as to evade the risks of the change in cash flow possibly incurred by fluctuation of interest rate. 2. Foreign exchange rates a. To prevent a potential disadvantage to the foreign currencies in input, ouput, investment and financing activities to the Company’s assets, liabilities values, operating results due to fluctuation in exchange rates, the Company, in due time, would undertake forward foreign exchange to evade potential risks in fluctuation in exchange rates. b. The Company adopted Natural Hedge in principle to evade exchange rate risks by taking the revenues from sales in foreign currencies to pay off required foreign currencies. We, therefore, only undertook the hedge transaction aiming at the positions of net assets or liabilities in foreign currencies. c. In the Company, over 90% of the operating revenues came from U. S. Dollars and other foreign currencies. For capital expenditures and manufacturing costs, the primary demand for foreign currencies came from U. S. Dollars and Japanese yen. Any unfavorable significant change in exchange rate would lead to a passive impact upon the financial profit and/or loss. In calculation with the Company’s output and marketing as well as cost structure in 2014, where the New Taiwan Dollars is appreciated by 1% over U. S. Dollars, the Company’s gross profit would drop 0.4%~0.55%. 3. Inflation As officially promulgated by the Directorate General of Budget, Accounting and Statistics (DGBAS) of Executive Yuan, in 2014, the average consumer price index (CPI) rose by 0.79% annually, not yet significantly affected by the tremendous oil price drop in 2014. The commodity prices might look stable in years ahead. The high-speed inflation and deflation would interfere with the efficiency in the markets, discourage investment, consumption, savings and such behaviors. To prevent potential impact on the negative aspect from high speed inflation which would, in turn, dampen investment, consumption and savings, the communications has tried by all means of lower various costs to enhance competitive edge and would be closely watchful the change in the supply and demand in the market, to flexbly adjust product portfolio to closely live up to actual demand in the market.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions 1. The Company had not engaged in highly risky and high financial leverage investment.

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Exactly as required by the Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan and the laws and ordinances concerned, we have set up wholesome financial and operating grounds in the managerial regulations and operating procedures, including “Procedures to Engage in Transaction and Disposal of Derivatives”, “Procedures for Loaning of Funds to Others” and “Operating Procedures of Endorsements/Guarantees”. 2. In an attempt to control potential risks in finance, we hold a very wholesome and conservative principle in derivative financial instruments to primarily evade the potential risks of the exchange rates in the substantial positions incurred by input, output and financing activities. In the days and years ahead, we shall stick to such same principle to coordinate with the trends of exchange rates and interest rates as well as the Company’s business operation, we shall adjust the financial risk management in real time in accordance with laws and ordinances concerned, internal managerial rule and operating procedures.

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

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

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales 1. Technology Change The TFT-LCD industry is challenged by the constantly upgraded know-how and new products while the mainstream products are being replaced by new generation at a quickening pace. Should we fail to deal with the impact incurred by the change in science and technology, that would be an impact upon the business and financial standing on the seamy sides. Since the Company first came into being, we have spared no effort to accumulate the technical capability of TFT-LCD displays to deal with the impact incurred by the change in science and technology. Other than investment in high level research & development toward high display quality, high solution, broad vision angles, high open rates, quick response, thin and light designs, narrow frames, ultra energy conservaton and

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such technology & know-how, we have, as wll, tried to develop low temperature LTPS and organic lighting display OLED and such technology & know-how to assure firm competitive edge and effective growth in the Company’s business and financial standing. 2. Industry Change TFT-LCD features high economic cycle and drastic fluctuation. Any sort of economic trend drop might lead to a shock to the Company’s business operation on the seamy side. Here at the Company, all our teammates would be closely watchful of fluctuation that might hit the Company ito passive aspect and work out sound countermeasures beforehand. In terms of financial operation, we adopt sound and stable financial operation to deal with potential fluctuation in the businesses.

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

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans At the moment, the Company has no plan to launch a merger with another enterprise. Toward potential strategic investment or vertical integration, and the cost benefit and the potential risk so arising, the Company’s management would conduct appropriate evaluation and evasion as appropriate.

7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans We all have those related technical groups to perform the professional feasibility assessment for expansion and build out of new generation factory

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

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10% As of the date of this Annual Report, there were no such risks for Innolux.

7.6.11 Effects of, Risks Relating to and Response to Changes in Control over the Company As of the date of this Annual Report, there were no such risks for Innolux.

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

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stockholder's equity and securities price: None. 7.6.13 Other Major Risks:None. 7.7 Other Important Matters: None.

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VIII. Special Disclosure

8.1 Summary of Affiliated Companies

QunKang Technology (Chengdu) Co. Ltd.

QunKang Technology (Shenzhen) Co. Ltd.

Qun Zhi Qun You Qun Zhi Optronics Corp. Optronics Corp. Optronics Corp. (Nanjing) (Nanjing) (Shanhai)

Qun Yi Yuan Chi Investment Investment Company Company

Innolux Corp. Ltd Innolux Corporation (Tree Valley Park)

Innolux Corp. Ltd (Tree Valley Park)

Qun Zhi Qun Zhi Chyun Huei Chyun Huei Kuen Bao Qun You Qun Huei Tai Kang Optronics Co., Optronics Co., Logistics Logistics Photoelectric Optronics Co., Optronics Co., Technology Co., Ltd (Ningbo) Ltd (Foshan) Company. Company. Material Co., Ltd Ltd (Ningbo) Ltd (Ningbo) Ltd (Nanjing) (Foshan) (Ningbo) (Nanjing)

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

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

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

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

8.1.4 Business Scope of INX and Its Subsidiaries: The company and its subsidiary operating business include the development, manufacture, after service and sale of TFT-LCD. By the layout of globalization, combine the distribution of Taiwan and China production base; provide downstream manufacturer or panel module manufacturer to have high flexibility supply capacity. There are a small number of affiliated companies are setting investment business as operating scope, to strength vertical integration and strategy investment and coordinate the company’s future operation.

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

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

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

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

Ningbo Innolux Logistics LTD Chairman Keyway Investment - 100% Management Ltd. Representative - Kuo-Hsiung

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

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

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

8.2 Private Placement Securities in the Most Recent Years: None. 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: None. 8.4 Special Notes: None.

136

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Innolux Corporation:

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

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

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

137

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

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

PricewaterhouseCoopers, Taiwan February 10, 2015

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

138 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Assets Notes 2014 2013 Current assets

Cash and cash equivalents 6(1) $ 70,989,741 $ 44,137,818

Financial assets at fair value through pr ofit 6(2)

or loss - current 52,453 227,703

Available-for-sale financial assets - current 6(3) 220,000 -

Accounts receivable, net 6(5) 70,976,005 66,358,291

Accounts receivable, net - related parties 7 6,112,400 2,049,985

Other receivables 7 2,849,589 4,255,683

Inventory 6(6) 33,787,842 50,524,156

Prepayments 1,441,603 1,194,871

Other financial assets - current 8 2,284,870 2,544,567

Other current assets 666,309 408,895

Total current assets 189,380,812 171,701,969

Non-current assets

Financial assets at fair value through profit 6(2)

or loss - non-current 605,155 712,603

Available-for-sale financial assets - 6(3)

non-current 5,137,117 3,952,530

Investments accounted for under equity 6(7)

method 2,364,225 4,919,134

Property, plant and equipment 6(8), 7 and 8 233,609,843 273,505,759

Investment property, net 6(9) 693,677 706,850

Intangible assets 6(10) 20,219,137 21,214,994

Deferred income tax assets 6(25) 17,778,516 18,123,869

Other financial assets - non-current 8 11,160,082 12,327,722

Other non-current assets 1,567,991 1,035,455

Total non-current assets 293,135,743 336,498,916

Total assets $ 482,516,555 $ 508,200,885

(Continued)

139 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes 2014 2013 Current liabilities Short-term borrowings 6(11) $ 22,526,999 $ 31,179,767 Financial liabilities at fair value through 6(2) profit or loss - current 605,016 689,097 Derivative financial liabilities for hedging - 6(4) current 1,351 - Accounts payable 74,954,439 65,435,586 Accounts payable - related parties 7 5,252,946 8,756,243 Other payables 7 23,912,180 20,715,595 Current income tax liabilities 582,258 454,482 Provisions - current 6(15) 3,133,489 1,949,029 Long-term liabilities, current portion 6(12) 66,162,663 169,097,708 Other current liabilities 2,004,157 2,309,244 Total current liabilities 199,135,498 300,586,751 Non-current liabilities Derivative financial liabilities for hedging - 6(4) non-current - 21,918 Long-term borrowings 6(12) 42,293,423 - Deferred income tax liabilities 6(25) 477,580 909,708 Other non-current liabilities 9 11,438,618 12,104,654 Total non-current liabilities 54,209,621 13,036,280 Total liabilities 253,345,119 313,623,031 Equity attributable to owners of the parent Share capital - common stock 6(16) 99,545,364 91,094,288 Capital surplus 6(17) 99,584,369 96,058,741 Retained earnings 6(18) Legal reserve 509,272 2,328,981 Special reserve 1,144,229 - Unappropriated retained earnings 24,979,173 5,092,716 Other equity interest 6(19) 1,927,656 ( 1,531,497) Equity attributable to owners of the parent 227,690,063 193,043,229 Non-controlling interest 1,481,373 1,534,625 Total equity 229,171,436 194,577,854 Significant contingent liabilities and 9 unrecognized contract commitments Significant events after the balance sheet 6(12)(16) and 11 date Total liabilities and equity $ 482,516,555 $ 508,200,885 The accompanying notes are an integral part of these consolidated financial statements. See report of independent accountants dated February 10, 2015.

140 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Items Notes 2014 2013 Sales revenue 7 $ 428,661,898 $ 422,730,500 Operating costs 6(6)(23)(24) and 7 ( 378,276,897) ( 384,971,385 ) Net operating margin 50,385,001 37,759,115 Operating expenses 6(23)(24) Selling expenses ( 3,224,079) ( 2,974,223 ) General and administrative expenses ( 6,810,443) ( 7,169,974 ) Research and development expenses ( 12,177,083) ( 12,265,650 ) Total operating expenses ( 22,211,605) ( 22,409,847 ) Operating profit 28,173,396 15,349,268 Non-operating income and expenses Other income 6(20) 2,734,952 2,627,868 Other gains and losses 6(21) ( 5,130,475) ( 7,166,774 ) Finance costs 6(22) ( 3,309,347) ( 5,103,230 ) Share of profit/(loss) of associates and joint ventures accounted for under equity method 65,814 ( 63,779 ) Total non-operating income and expenses ( 5,639,056) ( 9,705,915 ) Profit before income tax 22,534,340 5,643,353 Income tax expense 6(25) ( 857,432) ( 548,334 ) Profit for the year $ 21,676,908 $ 5,095,019 Other comprehensive income (net) Financial statements translation differences of foreign operations $ 3,078,767 $ 2,712,774 Unrealized gain on valuation of 6(3) available-for-sale financial assets 284,946 16,772 Cash flow hedges 6(4) ( 278,458) 79,477 Actuarial loss on defined benefit plan 6(13) ( 55,790) ( 11,870 ) Share of other comprehensive income of associates and joint ventures accounted for under equity method 81,659 36,122 Income tax relating to the components of 6(25) other comprehensive income 48,369 26,242 Other comprehensive income for the year, net of tax $ 3,159,493 $ 2,859,517 Total comprehensive income for the year $ 24,836,401 $ 7,954,536 Profit attributable to: Owners of the parent $ 21,676,759 $ 5,102,568 Non-controlling interest 149 ( 7,549 ) Total $ 21,676,908 $ 5,095,019 Other comprehensive income attributable to: Owners of the parent $ 24,844,853 $ 7,953,076 Non-controlling interest ( 8,452) 1,460 Total $ 24,836,401 $ 7,954,536

Earnings per share (in dollars) 6(26) Basic earnings per share $ 2.31 $ 0.57 Diluted earnings per share $ 2.28 $ 0.57

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

141 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Equity attributable to owners of the parent Retained Earnings Other equity interest Financial statements Unrealized translation gain (loss) on Changes in Employee differences of available-for- gain (loss) unearned Legal Unappropriated foreign sale financial on cash compensatio Non-controlling Notes Common stock Capital surplus reserve Special reserve earnings operations assets flow hedge n Total interest Total

2013 Balance at January 1, 2013 $ 79,129,708 $ 119,677,980 $ 2,328,981 $ - ($ 27,308,220 ) ($ 2,818,705 ) ($ 1,609,513 ) $ 423,629 $ - $ 169,823,860 $ 1,533,165 $ 171,357,025 Capital surplus offset against accumulated deficit - ( 27,308,220 ) - - 27,308,220 ------Global depositary receipt issued 6(16) for cash 11,250 ,000 3,269,051 ------14,519,051 - 14,519,051 Issuance of restricted stock to 6(14) employees 725,260 187,212 ------( 754,166) 158,306 - 158,306 Cancellation of restri cted stock to employees ( 10,680 ) 10,680 ------Compensation related to 6(14) share-based payment - 189,976 ------366,898 556,874 - 556,874 Changes in net equity of long-term equity investments - 32,062 ------32,062 - 32,062 Profit for the year - --- 5,102,568 - - - - 5,102,568 ( 7,549 ) 5,095,019 Other comprehensive income for 6(19) the year - ---( 9,852 ) 2,740,631 65,168 54,561 - 2,850,508 9,009 2,859,517 Balance at December 31, 2013 $ 91,094,288 $ 96,058,741 $ 2,328,981 $ - $ 5,092,716 ($ 78,074 ) ($ 1,544,345 ) $ 478,190 ( $387,268) $ 193,043,229 $ 1,534,625 $ 194,577,854 2014 Balance at January 1, 2014 $ 91,094,288 $ 96,058,741 $ 2,328,981 $ - $ 5,092,716 ($ 78,074 ) ($ 1,544,345 ) $ 478,190 ( $387,268) $ 193,043,229 $ 1,534,625 $ 194,577,854 Capital issued for cash 6(16) 8,500,000 2,125,000 ------10,625,000 - 10,625,000 Appropriations of 2013 earnings: 6(18) Legal reserve - - 509,272 - ( 509,272 )------Special reserve - - - 1,144,229 ( 1,144,229 )------Cash dividends - ---( 90,495 )- - - - ( 90,495 ) - ( 90,495 ) Cash paid from capital surplus 6(18) - ( 1,266,944 ) ------( 1,266,944 ) - ( 1,266,944 ) Capital surplus offset against 6(18) accumulated deficit - 2,328,981 ( 2,328,981 ) ------Cancellation of restricted stock to employee ( 48,924 ) 48,924 ------Changes in restricted stock to employees - 47,174 ------( 43,951) 3,223 - 3,223 Compensation related to 6(14) share-based payment - 289,523 ------288,704 578,227 - 578,227 Changes in net equity of long-term equity investments - ( 47,030 ) ------( 47,030 ) - ( 47,030 ) Changes in non-controlling interests ------( 44,800 ) ( 44,800 ) Profit for the year - --- 21,676,759 - - - - 21,676,759 149 21,676,908 Other comprehensive income for 6(19) the year - ---( 46,306 ) 3,161,022 284,498 ( 231,120 ) - 3,168,094 ( 8,601 ) 3,159,493 Balance at December 31, 2014 $ 99,545,364 $ 99,584,369 $ 509,272 $ 1,144,229 $ 24,979,173 $ 3,082,948 ($ 1,259,847 ) $ 247,070 ( $142,515) $ 227,690,063 $ 1,481,373 $ 229,171,436

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

142 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Notes 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated profit before tax for the year $ 22,534,340 $ 5,643,353 Adjustments to reconcile net income to net cash provided by operating activities Income and expenses having no effect on cash flows Depreciation and amortization 6(23) 60,899,556 77,851,438 Compensation related to share-based payment 6(24) 578,227 556,874 Provision for doubtful accounts 6(5) 820 453 Share of profit (loss) of associates and joint ventures accounted for under equity method ( 65,814 ) 63,779 Gain from disposal of investments 6(21) ( 794,041 ) ( 1,977,799 ) Loss on disposal of property, plant and equipment 6(21) 179,758 138,658 Impairment loss 6(21) 351,066 921,828 Interest expense 6(22) 3,586,581 5,051,960 Interest income 6(20) ( 328,633 ) ( 293,741 ) Dividend income ( 39,958 ) ( 58,897 ) Unrealized foreign exchange loss (gain) 1,417,004 ( 310,450 ) Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets /liabilities at fair value through profit or loss 198,617 ( 1,275,676 ) Accounts receivable ( 4,618,534 ) 8,336,807 Accounts receivable - related parties ( 4,062,415 ) 6,500,243 Other receivables ( 1,047,816 ) 734,595 Inventories 16,736,314 ( 8,456,587 ) Prepayments ( 246,732 ) ( 226,676 ) Other current assets ( 257,414 ) ( 123,046 ) Net changes in liabilities relating to operating activities Derivative financial liabilities for hedging ( 299,025 ) ( 399,357 ) Accounts payable 9,518,853 ( 16,066,134 ) Accounts payable - related parties ( 3,503,297 ) ( 4,958,074 ) Other payables 4,070,494 749,050 Provisions - current 1,184,460 814,253 Other current liabilities ( 290,486 ) 513,119 Other non-current liabilities ( 721,826 ) 3,133,498 Cash generated from operations 104,980,099 76,863,471 Cash paid for income tax ( 768,062 ) ( 974,312 ) Net cash provided by operating activities 104,212,037 75,889,159

(Continued)

143 INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Notes 2014 2013

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of available-for-sale financial assets ($ 240,167 ) ($ 916,909 ) Proceeds from disposal of available-for-sale financial assets 802,524 3,963,684 Proceeds from disposal of financial assets carried at cost - non-current - 192,758 Proceeds from disposal of non-current assets held for sale - 279,312 Acquisition of investment accounted for under equity method ( 73,500 ) - Proceeds from disposal of investment accounted for under equity method 1,685,201 136,185 Proceeds from capital reduction of investments accounted for under equity method 59,451 - Decrease in other financial assets 464,337 941,407 Acquisition of property, plant and equipment 6(27) ( 20,526,552 ) ( 18,370,343 ) Proceeds from disposal of property, plant and equipment 6(27) 4,253,209 1,174,898 Acquisition of intangible assets ( 18,140 ) ( 157,781 ) (Increase) decrease in other non-current assets ( 22,070 ) 29,586 Interest received 368,335 364,391 Dividends received 64,221 201,765 Net cash used in investing activities ( 13,183,151 ) ( 12,161,047 )

CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings ( 8,881,219 ) ( 14,499,547 ) Decrease in short-term notes and bills payable - ( 699,430 ) Payment of long-term borrowings ( 61,671,395 ) ( 51,589,030 ) Payment of bonds payable - ( 2,000,000 ) Decrease in accrued lease payments - ( 980,000 ) Stock issued for cash 6(16) 10,625,000 14,519,051 Cash dividends paid 6(18) ( 90,495 ) - Cash paid from capital surplus ( 1,266,944 ) - Proceeds from issuance of restricted stock to employees 6(14) - 181,315 Repurchase from issuance of restricted stock to employees ( 7,754 ) ( 8,260 ) Changes in non-controlling interests ( 44,800 ) - Interest paid ( 3,608,923 ) ( 5,586,134 ) Net cash used in financing activities ( 64,946,530 ) ( 60,662,035 ) Effect of changes in foreign currency exchange 769,567 173,764 Increase in cash and cash equivalents 26,851,923 3,239,841 Cash and cash equivalents at beginning of year 44,137,818 40,897,977 Cash and cash equivalents at end of year $ 70,989,741 $ 44,137,818

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

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INNOLUX CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (All amounts expressed in thousands of New Taiwan dollars)

1. HISTORY AND ORGANIZATION (1)Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity. (2)The Company and its subsidiaries (the “Group”) are engaged in the research, development, design, manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD. 2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These consolidated financial statements were authorized for issuance by the Board of Directors on February 10, 2015. 3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) None. (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" effective January 1, 2015 (collectively referred herein as the “2013 version of IFRSs”) in preparing the consolidated financial statements. The related new standards, interpretations and amendments are listed below: Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Limited exemption from comparative IFRS 7 July 1, 2010 disclosures for first-time adopters (amendment to IFRS 1)

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Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Severe hyperinflation and removal of fixed dates July 1, 2011 for first-time adopters (amendment to IFRS 1) Government loans (amendment to IFRS 1) January 1, 2013 Disclosures －Transfers of financial assets July 1, 2011 (amendment to IFRS 7) Disclosures －Offsetting financial assets and financial January 1, 2013 liabilities (amendment to IFRS 7) IFRS 10, ‘Consolidated financial statements’ January 1, 2013 (Investment entities: January 1, 2014) IFRS 11, ‘Joint arrangements’ January 1, 2013 IFRS 12, ‘Disclosure of interests in other entities’ January 1, 2013 IFRS 13, ‘Fair value measurement’ January 1, 2013 Presentation of items of other comprehensive income July 1, 2012 (amendment to IAS 1) Deferred tax: recovery of underlying assets January 1, 2012 (amendment to IAS 12) IAS 19 (revised), ‘Employee benefits’ January 1, 2013 IAS 27 (revised), ‘Separate financial statements’ January 1, 2013 Investments in associates and joint ventures January 1, 2013 (amendment to IAS 28) Offsetting financial assets and financial liabilities January 1, 2014 (amendment to IAS 32) IFRIC 20, ‘Stripping costs in the production phase January 1, 2013 of a surface mine’ Improvements to IFRSs 2010 January 1, 2011 Improvements to IFRSs 2009 －2011 January 1, 2013 Based on the Group’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the consolidated financial statements of the Group, except the following: A.IAS 19, ‘Employee benefits’ Under the revised standard, net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. Additional disclosures are also required. B.IAS 1, ‘Presentation of financial statements’ The amendment requires entities to separate items presented in other comprehensive income (OCI) classified by nature into two groups on the basis of whether they may be reclassified to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Group will adjust its presentation of the statement of comprehensive income.

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C.IFRS 12, ‘Disclosure of interests in other entities’ The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Group will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly. D.IFRS 13, ‘Fair value measurement’ The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. The standard requires disclosures about fair value measurements. Based on the Group’s assessment, the adoption of the standard has no significant impact on its consolidated financial statements and the Group will disclose additional information about fair value measurements accordingly. Based on the Group’s assessment, the adoption of the 2013 version of IFRSs has no significant impact on the consolidated financial statements of the Group. (3) IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC: Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board IFRS 9, ‘Financial instruments’ January 1, 2018 Sale or contribution of assets between an investor and its associate January 1, 2016 or joint venture (amendments to IFRS 10 and IAS 28) Investment entities: applying the consolidation exception January 1, 2016 (amendments to IFRS 10, IFRS 12 and IAS 28) Accounting for acquisition of interests in joint operations January 1, 2016 (amendments to IFRS 11) IFRS 14 , ‘Regulatory deferral accounts’ January 1, 2016 IFRS 15 , ‘Revenue from contracts with customers’ January 1, 2017 Disclosure initiative (amendments to IAS 1) January 1, 2016 Clarification of acceptable methods of depreciation and amortisation January 1, 2016 (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016 Defined benefit plans: employee contributions July 1, 2014 (amendments to IAS 19) Equity method in separate financial statements January 1, 2016 (amendments to IAS 27) Recoverable amount disclosures for non-financial assets January 1, 2014 (amendments to IAS 36)

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Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Novation of derivatives and continuation of hedge accounting January 1, 2014 (amendments to IAS 39) IFRIC 21 , ‘Levies’ January 1, 2014 Improvements to IFRSs 2010-2012 July 1, 2014 Improvements to IFRSs 2011-2013 July 1, 2014 Improvements to IFRSs 2012-2014 January 1, 2016 The Group is assessing the impact of the new standards and interpretations above and the impact will be disclosed when the assessment is complete. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (4) Compliance statement These consolidated financial statements are the consolidated financial statements prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”). (5) Basis of preparation A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention: (a)Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. (b)Available-for-sale financial assets measured at fair value. (c)Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations. B.The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. (6) Basis of consolidation A.Basis for preparation of consolidated financial statements (a)All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are

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all entities over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. (b)Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group. (c)Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. (d)Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity. (e)When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of. B. Subsidiaries included in the consolidated financial statements: Ownership (%) Main Business December 31, Name of Investor Name of Subsidiary Activities 2014 2013 Description Innolux Corporation Bright Information Investment holdings 100 57 ( a ) Holding Ltd. Gold Union Investments Investment holdings 100 100 - Ltd. Golden Achiever Investment holdings 100 100 - International Ltd. Innolux Holding Ltd. Investment holdings 100 100 - Keyway Investment Investment holdings 100 100 - Management Limited Landmark International Investment holdings 100 100 - Ltd.

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

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Ownership (%) Main Business December 31, Name of Investor Name of Subsidiary Activities 2014 2013 Description Landmark Foshan Innolux Processing company 100 100 ( b ) International Ltd. Optoelectronics Ltd. (Former Nanhai Chi Mei Electronics Ltd.) Nanhai Chi Mei Processing company - 100 ( b ) Optoelectronics Ltd. Toppoly Toppoly Optoelectronics Investment holdings 100 100 - Optoelectronics (Cayman) Ltd. (B.V.I.) Ltd. Innolux Hong Kong Innolux Optoelectronics Investment holdings 100 100 - Holding Ltd. Hong Kong Holding Ltd. (Former TPO Displays Hong Kong Holding Ltd.) Innolux Hong Kong Ltd. Order swapping 100 100 - (Former TPO Displays company Hong Kong Ltd.) Innolux Technology Investment and R&D 100 100 - Europe B.V. company (Former TPO Displays Europe B.V.) Innolux Technology Distribution company 100 100 - Japan Co., Ltd. (Former TPO Displays Japan K.K.) Innolux Technology USA Distribution company 100 100 - Inc. (Former TPO Displays USA Inc.) Innolux Chi Mei Optoelectronics After sales service 100 100 - Optoelectronics Europe Germany GmbH company B.V. Innolux Innolux Optoelectronics Distribution company 100 100 - Optoelectronics Japan USA, Inc. Co., Ltd. Rockets Holding Ltd. Best China Investments Investment holdings 100 100 - Ltd. Mega Chance Investment holdings 100 100 - Investments Ltd. Magic Sun Ltd. Investment holdings 100 100 - Stanford Developments Investment holdings 100 100 - Ltd. Sonics Trading Ltd. Order swapping - 100 ( c ) company Nets Trading Ltd. Investment company 100 100 - Suns Holding Ltd. Warriors Technology Investment company 100 100 - Investments Ltd.

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Ownership (%) Main Business December 31, Name of Investor Name of Subsidiary Activities 2014 2013 Description Toppoly Nanjing Innolux Distribution company 100 100 - Optoelectronics Technology Ltd. (Cayman) Ltd. (Former TPO Displays (Shinepal) Ltd. Nanjing Innolux Processing company 100 100 - Optoelectronics Ltd. Innolux Shanghai Innolux Processing company 100 100 - Optoelectronics Hong Optoelectronics Ltd. Kong Holding Ltd. Innolux Technology Innolux Technology Testing and 100 100 - Europe B.V. Germany GmbH maintenance company (Former TPO Displays Germany GmbH) Best China Investments Asiaward Investment Investment holdings 100 100 - Ltd. Ltd. Mega Chance Main Dynasty Investment Investment holdings 100 100 - Investments Ltd. Ltd. Magic Sun Ltd. Sun Dynasty Investment holdings 100 100 - Development Ltd. Stanford Developments Innocom Technology Processing company 100 100 - Ltd. (Shenzhen) Ltd. Asiaward Investment Innocom Technology Processing company - 100 ( c ) Ltd. (Xiamen) Ltd. Sun Dynasty Innocom Technology Processing company 100 100 - Development Ltd. (Chengdu) Co., Ltd. (a)In July, 2014, the Company obtained the remaining 43% interest of its subsidiary, Bright Information Holding Ltd., and the transaction was accounted as equity transaction. (b)In June, 2013, the Board of Directors of the Company adopted a resolution for the merger of two wholly-owned subsidiaries, Foshan Innolux Optoelectronics Ltd. and Nanhai Chi Mei Optoelectronics Ltd., with Foshan Innolux Optoelectronics Ltd. as the surviving company. Effective date of this merger was January 1, 2014, and it was accounted for as a reorganization. (c)Chi Mei Optoelectronics (Singapore) Pte Ltd., Sonics Trading Ltd., and Innocom Technology (Xiamen) Ltd. ceased operations and were all liquidated in the first quarter of 2014. C.Subsidiaries not included in the consolidated financial statements: None. D.Adjustments for subsidiaries with different balance sheet dates: None. E.The restrictions on fund remittance from subsidiaries to the parent company: None. (7) Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional

152 currency”). The consolidated financial statements are presented in NTD, which is the Company’s functional and the Group’s presentation currency. A.Foreign currency transactions and balances (a)Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges. (b)Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. (c)Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions. (d)All foreign exchange gains and losses are presented in the statement of comprehensive income under “other gains and losses”. B.Translation of foreign operations (a)The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows: i.Assets and liabilities for each balance sheet presented are translated at the exchange rate prevailing at the dates of that balance sheet; ii.Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; iii.All resulting exchange differences are recognized in other comprehensive income. (b)When a foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations. (c)When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred

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to the non-controlling interest in this foreign operation. In addition, if the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation. (8) Classification of current and non-current items A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a)Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle; (b)Assets held mainly for trading purposes; (c)Assets that are expected to be realized within twelve months from the balance sheet date; (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date. B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a)Liabilities that are expected to be paid off within the normal operating cycle; (b)Liabilities arising mainly from trading activities; (c)Liabilities that are to be paid off within twelve months from the balance sheet date; (d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. (9) Cash equivalents Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. Time deposits and bonds sold under repurchase agreements that meet the above criteria and held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents. (10) Financial assets at fair value through profit or loss A.Financial assets at fair value through profit or loss are financial assets held for trading or designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of sale in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition: (a)Hybrid (combined) contracts; or (b)They eliminate or significantly reduce a measurement or recognition inconsistency; or (c)They are managed and their performance is evaluated on a fair value basis, in accordance with

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a documented risk management or investment strategy. B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting. C.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss. (11) Available-for-sale financial assets A.Available-for-sale financial assets are non-derivatives that are designated in this category. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting. B.Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. (12) Loans and receivables Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable which are non-interest bearing are subsequently measured at initial invoice amount as the effect of discounting is insignificant. (13) Impairment of financial assets A.The Group assesses at each balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of an individual financial asset or group of financial assets that can be reliably estimated. B.The objective evidence that the Group uses to determine whether there is an impairment loss is as follows: (a)Significant financial difficulty of the issuer or debtor; (b)A breach of contract, such as a default or delinquency in interest or principal payments; (c)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or (d)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost. C.When the Group assesses that there has been objective evidence of impairment and an

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impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets: (a)Financial assets measured at amortized cost The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account. (b)Available-for-sale financial assets The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from “other comprehensive income” to “profit or loss”. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account. (14) Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average cost method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses. (15) Investments accounted for under the equity method / associates A.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. B.The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or

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

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as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss when incurred. C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately. D.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant and equipment are as follows: Buildings 3~50 years Machinery and equipment 2~9 years Others 2~6 years (17) Investment property An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25~50 years. (18) Intangible assets A.Goodwill arises in a business combination accounted for by applying the acquisition method. B.Intangible assets, mainly patents, royalties and other intangible assets, are amortized on a straight-line basis over their estimated useful lives of 2 ～10 years. (19) Impairment of non-financial assets A.The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the asset’s carrying amount greater than its amortized cost where no impairment loss was recognized. B.The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall

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not be reversed in the following years. C.For impairment testing purpose, goodwill is allocated to cash generating units. This allocation is based on operating segments. Goodwill is allocated to a cash generating unit or a group of cash generating units that expects to benefit from business combination that will produce goodwill. (20) Financial liabilities at fair value through profit or loss A.Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. B.Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss. (21) Derivative financial instruments and hedging activities A.Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss. B.The Group designates certain derivatives as either: (a)Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge). (b)Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge). C.The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. D.The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities. E.Fair value hedge (a)Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Group only applies fair value hedge accounting for hedging foreign currency on long-term borrowings. The gain or loss relating to the effective portion of currency swaps hedging long-term borrowings denominated in

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foreign currency is recognized in the statement of comprehensive income within “finance costs”. The gain or loss relating to the ineffective portion is recognized in the statement of comprehensive income within “other gains and losses”. Changes in the fair value of the hedge long-term borrowings denominated in foreign currency attributable to interest rate risk are recognized in the statement of comprehensive income within “finance costs”. (b)If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity. F.Cash flow hedge (a)The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of comprehensive income within “other gains and losses”. (b)Amounts accumulated in other comprehensive income are reclassified into profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement of comprehensive income within “finance costs”. (c)When a hedging instrument expires, or is sold, cancelled or executed, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is transferred to profit or loss in the periods when the hedged forecast cash flow affects profit or loss. (22) Employee benefits A.Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and should be recognized as expenses in that period when the employees render service. B.Pensions (a)Defined contribution plans For defined contribution plans, the contributions are recognized as pension expenses on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments. (b)Defined benefit plans i.The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit obligation is calculated annually by independent actuaries using the

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projected unit credit method. The rate used to discount is determined by using interest rates of government bond (at the balance sheet date). ii.Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise. iii.Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period. C.Employees’ bonus and directors’ and supervisors’ remuneration Employees’ bonus and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should be recognized based on the accounting for changes in estimates. The Group calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends. (23) Employee share-based payment A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest. B.Restricted stocks to employees: (a)Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period. (b)For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Group and the Group must refund their payments on the stocks. The Group recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”. C.The grant date for the shares reserved for employee preemption in cash capital increase is the date on which the Company informs employees of the grant and both the Company and employees agree to the number of shares granted and the price for subscription.

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(24) Income tax A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity. B.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings. C.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed. E.A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized. (25) Revenue recognition The Group manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. (26) Business combinations A.The Group uses the acquisition method to account for business combinations. The Group chooses to measure the non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets on an acquisition-by-acquisition basis. B.If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the acquisition-date fair value of any previous equity interest in the acquiree is higher than the fair value of the Group’s share of the identifiable net assets acquired,

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the difference is recorded as goodwill; if less than the fair value of the Group’s share of the identifiable net assets acquired, the difference is recognized directly in profit or loss. (27) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments. 5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below: (28) Critical judgments in applying the Group’s accounting policies Financial assets －impairment of equity investments The Group follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgment. In making this judgment, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the accumulated fair value adjustments recognized in other comprehensive income on the impaired “available-for-sale financial assets” is transferred to profit or loss. (29) Critical accounting estimates and assumptions The Group makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: A.Impairment assessment of goodwill The impairment assessment of goodwill relies on the Group’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(10) for the information on goodwill impairment. B.Reliability of deferred income tax assets Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized.

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Assessment of the reliability of deferred income tax assets involves critical accounting judgments and estimates of the management, including the assumptions of expected future sales, revenue growth rate, profit rate, tax holiday, available tax credits, and tax planning, etc. Any change in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets. C.Evaluation of inventories As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. D.Financial assets - fair value measurement of unlisted stocks without active market The fair value of unlisted stocks held by the Group that are not traded in an active market is determined considering those companies’ recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgments and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information. 6. DETAILS OF SIGNIFICANT ACCOUNTS (30) Cash and cash equivalents December 31, 2014 December 31, 2013 Cash on hand and revolving funds $ 2,572 $ 2,809 Checking accounts and demand deposits 45,954,667 32,827,254 Time deposits 20,806,255 11,028,129 66,763,494 43,858,192 Cash equivalents - Repurchase Bonds 4,226,247 279,626 $ 70,989,741 $ 44,137,818 A.The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents. B.The above time deposits and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote.

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

Assets December 31, 2014 December 31, 2013 Current items Financial assets held for trading Forward foreign exchange contracts $ 52,453 $ 227,703 Non-current items: Financial assets held for trading Stock-Advanced Optoelectronic Technology Inc. $ 77,019 $ 78,337 Valuation adjustment 528,136 634,266 $ 605,155 $ 712,603 Liabilities December 31, 2014 December 31, 2013 Current items Financial liabilities held for trading $ 605,016 $ 689,097 Forward foreign exchange contracts A.The Group recognized net loss of $976,857 and $1,060,390 on financial assets held for trading for the years ended December 31, 2014 and 2013, respectively. B.The non-hedging derivative financial assets and liabilities transaction information are as follows:

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(32) Available-for-sale financial assets Items December 31, 2014 December 31, 2013 Current items Bond investments $ 220,000 $ - Non-current items Listed stocks and bond investments $ 3,582,677 $ 1,896,076 Emerging and unlisted stocks 1,554,440 2,056,454 $ 5,137,117 $ 3,952,530 A.The Group recognized gain in other comprehensive income for the fair value change for the years ended December 31, 2014 and 2013 in the amount of $536,429 and $1,875,599, respectively. B.As approved by the Board of Directors in June 2013, the Group sold the shares and depositary receipts of Himax Technologies, Inc. and recognized gain on disposal of investments of $1,880,884 (shown as “other gains and losses”). C.The counterparties of the Group’s debt instrument investments have good credit quality, all with credit rating of twA+ above. The maximum exposure to credit risk at balance sheet date is the carrying amount of available-for-sale financial asstes - debt instruments. (33) Hedging derivative financial liabilities Items December 31, 2014 December 31, 2013 Current item Interest rate swap - cash flow hedges $ 1,351 $ - Non-current item $ - $ 21,918 Interest rate swap - cash flow hedges

Cash flow hedges

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Years ended December 31, Items 2014 2013 Amount of gain or loss adjusted in other comprehensive income $ 1,224 $ 3,210 Amount of gain or loss transferred from other comprehensive income to profit or loss 227,234 ( 82,687) (c)The gain/(loss) relating to the ineffective portion of cash flow hedges recognized in profit or loss amounted to $289 for the year ended December 31, 2013. (34) Accounts and notes receivable December 31, 2014 December 31, 2013 Notes receivable $ 21,447 $ 24,516 Accounts receivable 71,922,008 68,063,587 71,943,455 68,088,103 Less: allowance for sales returns and discounts ( 827,583) ( 1,590,591) allowance for bad debts ( 139,867) ( 139,221) $ 70,976,005 $ 66,358,291 A.The Group’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability. B.The aging analysis of accounts receivable and notes receivable that were past due but not impaired is as follows: December 31, 2014 December 31, 2013 Up to 60 days $ 611,670 $ 3,259,953 61 to 180 days 64,488 594,665 Over 180 days 73,023 157,567 $ 749,181 $ 4,012,185 C.Movement analysis of accounts receivable and notes receivable that were impaired is as follows: (a)As of December 31, 2014 and 2013, the Group’s accounts receivable that were impaired were $139,867 and $139,221, respectively. (b)Movement on allowance for bad debts for impairment loss based on individual provision is as follows: 2014 2013 At January 1 $ 139,221 $ 117,322 Allowance for bad debts - provision 820 453 Allowance for bad debts - reclassified - 21,447 Allowance for bad debts - write - offs ( 211) - Net exchange difference 37 ( 1) At December 31 $ 139,867 $ 139,221

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D.The maximum exposure to credit risk was the carrying amount of each class of accounts receivable. (35) Inventories December 31, 2014 December 31, 2013 Raw materials and supplies $ 3,851,583 $ 3,970,268 Work in process 17,996,857 29,182,602 Finished goods 11,939,402 17,371,286 $ 33,787,842 $ 50,524,156 Expenses and losses incurred on inventories for the years ended December 31, 2014 and 2013 are as follows: Years ended December 31, 2014 2013 Cost of inventories sold $ 378,358,466 $ 384,541,919 Reversal of allowance for scrap, obsolescence and price decline ( 473,142) ( 1,397,747) Disposal loss and others 391,573 1,827,213 $ 378,276,897 $ 384,971,385

The Group had disposed its expired and slow-moving inventories. Thus, the risk of reduction in the inventory’s market price had been decreased and the net realizable value of inventories had been recovered. (36) Investments accounted for under the equity method December 31, 2014 December 31, 2013 Ampower Holding Ltd. $ 1,477,199 $ 1,526,449 GIO Optoelectronics Corporation 450,726 476,176 TOA Optronics Corporation 364,907 410,671 Chi Mei Materials Technology - 1,883,267 Contrel Technology Co., Ltd. - 473,259 Others 71,393 149,312 $ 2,364,225 $ 4,919,134 A.The financial information of the Group’s associates is summarized below: Assets Liabilities Revenue Profit/(Loss) December 31, 2014 $ 5,190,457 $ 1,417,506 $ 2,211,238 ($ 581,093) December 31, 2013 24,441,179 7,330,642 21,222,917 2,223,356 B.The fair value of the Group’s associates which have quoted market price is as follows:

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Stock price per share (in dollars) December 31, 2013 Chi Mei Materials Technology $ 36.45 Contrel Technology Co., Ltd. 16.95 C.During 2014, the Company sold its interests in Chi Mei Materials Technology and Contrel Technology Co., Ltd. Since the Company lost control, the investment was reclassified as “available-for-sale financial assets - non-current”. D.The Group recognized impairment loss on associates for the year ended December 31, 2013 in the amount of $245,253. (37) Property, plant and equipment 2014 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Land $ 3,852,792 $ - $ - $ - $ 3,852,792 Buildings 184,139,364 8,652 ( 341,088) 1,545,170 185,352,098 Machinery and equipment 433,442,047 393,335 ( 19,161,213) 17,904,638 432,578,807 Others 29,178,672 210,165 ( 4,149,307) 4,789,534 30,029,064 650,612,875 612,152 ( 23,651,608) 24,239,342 651,812,761 Accumulated depreciation and impairment: Buildings ( 68,425,305) ( 15,250,980) 327,125 ( 154,535) ( 83,503,695) Machinery and equipment ( 291,198,835) ( 40,505,195) 18,063,267 ( 11,624,229) ( 325,264,992) Others ( 20,748,143) ( 3,617,759) 4,042,819 ( 1,800,945) ( 22,124,028) ( 380,372,283) ( 59,373,934) 22,433,211 ( 13,579,709) ( 430,892,715) Unfinished construction and equipment under acceptance 3,265,167 19,220,115 ( 814,963) ( 8,980,522) 12,689,797 $ 273,505,759 $ 233,609,843

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2013 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Land $ 3,852,792 $ - $ - $ - $ 3,852,792 Buildings 179,137,767 96,030 ( 326,605) 5,232,172 184,139,364 Machinery and equipment 405,398,313 808,409 ( 9,815,779) 37,051,104 433,442,047 Others 26,297,094 305,186 ( 3,255,595) 5,831,987 29,178,672 614,685,966 1,209,625 ( 13,397,979) 48,115,263 650,612,875 Accumulated depreciation and impairment: Buildings ( 51,417,547) ( 16,270,281) 300,169 ( 1,037,646) ( 68,425,305) Machinery and equipment ( 238,302,893) ( 55,655,014) 6,605,916 ( 3,846,844) ( 291,198,835) Others ( 18,162,188) ( 3,611,175) 2,832,151 ( 1,806,931) ( 20,748,143) ( 307,882,628) ( 75,536,470) 9,738,236 ( 6,691,421) ( 380,372,283) Unfinished construction and equipment under acceptance 25,722,521 16,893,203 - ( 39,350,557) 3,265,167 $ 332,525,859 $ 273,505,759 a.The Group evaluated the recoverable amount for assets with impairment indicators; the impairment loss for the years ended December 31, 2014 and 2013 was $351,066 and $676,575, respectively, shown under “other gains and losses”. b.Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8. (38) Investment property 2014 2013 At At At At January 1 Additions December 31 January 1 Additions December 31 Cost: Land $ 188,247 $ - $ 188,247 $ 188,247 $ - $ 188,247 Buildings 568,440 - 568,440 568,440 - 568,440 $ 756,687 $ - $ 756,687 $ 756,687 $ - $ 756,687 Accumulated depreciation and impairment: Buildings ( 49,837) ( 13,173) ( 63,010) ( 36,664) ( 13,173) ( 49,837) $ 706,850 $ 693,677 $ 720,023 $ 706,850 The fair value of the investment property held by the Group as at December 31, 2014 and 2013 was $1,110,523 and $721,774, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information. (39) Intangible assets A.Intangible assets are goodwill, payments for TFT-LCD related technology, and royalty.

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2014 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Patents and royalty $ 8,807,308 $ - ($ 673,622) $ 3,349 $ 8,137,035 Goodwill 17,096,628 - - - 17,096,628 Others 3,497,213 18,140 ( 8,911) 486,719 3,993,161 29,401,149 18,140 ( 682,533) 490,068 29,226,824 Accumulated amortisation and impairment: Patents and royalty ( 5,215,970) ( 1,193,337) 673,622 - ( 5,735,685) Others ( 2,970,185) ( 319,112) 7,012 10,283 ( 3,272,002) ( 8,186,155) ( 1,512,449) 680,634 10,283 ( 9,007,687) $ 21,214,994 $ 20,219,137 2013 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Patents and royalty $ 8,805,803 $ 1,700 ($ 195) $ - $ 8,807,308 Goodwill 17,096,628 - - - 17,096,628 Others 3,437,199 156,081 ( 144,553) 48,486 3,497,213 29,339,630 157,781 ( 144,748) 48,486 29,401,149 Accumulated amortisation and impairment: Patents and royalty ( 3,709,759) ( 1,507,211) 195 805 ( 5,215,970) Others ( 2,720,812) ( 333,127) 142,720 ( 58,966) ( 2,970,185) ( 6,430,571) ( 1,840,338) 142,915 ( 58,161) ( 8,186,155) $ 22,909,059 $ 21,214,994 B.Details of amortisation on intangible assets are as follows: Years ended December 31, 2014 2013 Operating costs $ 960,230 $ 1,068,073 Operating expenses 552,219 772,265 $ 1,512,449 $ 1,840,338

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

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(40) Short-term borrowings Type of borrowings December 31, 2014 December 31, 2013 Collateral Bank loans Credit loans $ 22,526,999 $ 31,179,767 None 1.2046%~3.9235% 1.7461%～3.8919% Range of interest rates (41) Long-term borrowings

Type of loans Period December 31, 2014 December 31, 2013 Syndicated bank loans 2005/03~2016/11 $ 108,368,190 $ 152,654,461 Guaranteed commercial papers 2012/11~2015/07 129,148 258,354 Credit loans 2009/09~2014/06 - 16,372,450 108,497,338 169,285,265 Less: Administrative expenses charged by syndicated banks ( 41,252) ( 187,557) Current portion ( 66,162,663) ( 169,097,708) $ 42,293,423 $ - Range of interest rates 1.2474%~2.4737% 0.995%~2.795% A.Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings. B.The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, which were based on the Company’s annual consolidated financial statements audited by independent auditors. The Company’s financial ratios on the consolidated financial statements for the year ended December 31, 2014 and 2013 are in accordance with the covenants on the syndicated loan agreement. C.In December 2011, the Company applied for the assistance of Ministry of Economic Affairs to negotiate the debt with the syndicated banks, in accordance with the “Procedures for the Assistance of Ministry of Economic Affairs in the Negotiation of Enterprise and Financial Institution relating to the Debt Issue”. On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with all financial institution creditors based on the framework of the resolutions during the creditors and debtors negotiation meeting. The major terms of the agreement were as follows: (a)Medium and long-term syndicated loans The medium and long-term syndicated loans due between 2012 to 2014 will be extended for 2-3 years. Principal is repayable every year based on a certain percentage; interest is charged at the original interest rate or at the original interest rate plus premium rate. (b)Short and medium-term non-syndicated loans

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

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approved the proposal of syndicated credit line of NT$68.5 billion with financial institutions. (42) Pensions A.Defined benefit pension plan (a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforecment of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, employees are entitled to two base points for every year of service for the first 15 years and one base point for each additional year thereafter, up to a maximum of 45 base points. The pension payment to employees was computed based on years of service and average salaries or wages of the last six months prior to approved retirement. The Company contributed monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. (b)The amounts recognised in the balance sheet were determined as follows: December 31, 2014 December 31, 2013 Present value of funded obligations $ 1,605,920 $ 1,504,354 Fair value of plan assets ( 1,488,938) ( 1,454,627) Net liability in the balance sheet (shown as $ 116,982 $ 49,727 “Other non-current liabilities”) (c)Changes in present value of funded obligations were as follows: 2014 2013 Present value of funded obligations At January 1 $ 1,504,354 $ 1,464,983 Current service cost 10,470 9,148 Interest expense 30,087 21,975 Actuarial gain and loss 61,009 8,248 $ 1,605,920 $ 1,504,354 At December 31 (d)Changes in fair value of plan assets were as follows: 2014 2013 Fair value of plan assets At January 1 $ 1,454,627 $ 1,398,638 Expected return on plan assets 29,092 20,980 Actuarial gain and loss 5,219 ( 3,622) Employer contributions - 38,631 $ 1,488,938 $ 1,454,627 At December 31

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(e)Expenses recognised in statements of comprehensive income were as follows: Years ended December 31, 2014 2013 Current service cost $ 10,470 $ 9,148 Interest cost 30,087 21,975 Expected return on plan assets ( 29,092) ( 20,980) $ 11,465 $ 10,143 Current pension costs Details of cost and expenses recognised in statements of comprehensive income were as follows: Years ended December 31, 2014 2013 Cost of sales $ 7,991 $ 6,593 Selling expenses 184 329 General and administrative expenses 848 1,058 Research and development expenses 2,442 2,163 $ 11,465 $ 10,143

(f)Amounts recognised under other comprehensive income were as follows: Years ended December 31, 2014 2013 Recognition for current period $ 55,790 $ 11,870 Accumulated amount $ 68,243 $ 12,453 (g)The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. The composition of fair value of plan assets as of December 31, 2014 and 2013 is given in the Annual Labor Retirement Fund Utilisation Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilisation by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings

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attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. For the years ended December 31, 2014 and 2013, the actual return on plan assets was $34,311 and $17,358, respectively. (h)The principal actuarial assumptions used were as follows: Years ended December 31, 2014 2013 Discount rate 2.25% 2.00% Future salary increases 3.00% 3.00% Expected return on plan assets 2.25% 2.00% Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Morality Table. (i)Historical information of experience adjustments was as follows: Years ended December 31, 2014 2013 Present value of defined benefit obligation $ 1,605,920 $ 1,504,354 Fair value of plan assets ( 1,488,938) ( 1,454,627) Deficit in the plan $ 116,982 $ 49,727 Experience adjustments on plan liabilities $ 60,201 $ 320,046 Experience adjustments on plan assets $ 5,219 ($ 3,622) (j)The Group suspended its contributions to the pension reserve as agreed by the Science Park Administration in June 2013. B.Defined contribution pension plan (a)Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. (b)The subsidiaries in Mainland China have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentages of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations. (c)The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2014 and 2013 were $1,999,252 and $1,758,981, respectively.

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

Quantity granted Contract period Type of arrangement Grant date (in thousand units) (in years) Vesting conditions Employee stock options 2007.12.20 25,000 6 Note (b),(c) Employee stock options 2010.05.13 20,000 5 Note (a) Employee stock options 2011.05.19 50,000 5 Note (a) Reservation for new share 2013.01.17 36,122 - Vested immediately subscription by employees Restricted stocks to employees- shares subscribed with consideration -shares subscribed with consideration 2013.01.30 31,151 3 Note (d),(e) -shares without consideration 2013.01.30 31,151 3 Note (d),(e) -shares subscribed with consideration 2013.03.29 844 3 Note (d),(e) -shares without consideration 2013.03.29 844 3 Note (d),(e) -shares subscribed with consideration 2013.12.12 4,628 3 Note (d),(e) -shares without consideration 2013.12.12 4,628 3 Note (d),(e) Reservation for new share subscription 2014.07.09 85,000 - Vested immediately by employees (a)The employees may exercise the stock options by stage based on 30%, 30% and 40% of total options granted on completion of the specified year(s) of service (one to four years) from the grant date. (b)The employees may exercise the stock options by stage based on 40%, 30% and 30% of total options granted on completion of the specified year(s) of service (three to five years) from the grant date. (c)The employee stock options had already expired. (d)The employees may exercise the stock options by stage based on 20%, 40% and 40% of total options granted on completion of the specified year(s) of service (one to three years) from the grant date. (e)The restricted stocks issued by the Company cannot be transferred. Voting right and dividend right are restricted on these stocks before vested.

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

Exercise Expected Expected Expected Free Fair value Type of Price price volatility duration dividend interest per unit arrangement Grant date (in dollars) (in dollars) (%) (month) yield (%) rate (%) (in dollars) Reservation for new 2014.07.09 14.90 12.50 36.01 0.84 - 0.42 2.42 share subscription by employees Restricted stocks to employees - shares subscribed 2013.12.12 10.65 - - - - - 10.65 with consideration - shares issued with 2013.12.12 10.65 5.00 - - - - 5.65 no consideration - shares subscribed 2013.03.29 18.40 - - - - - 18.40 with consideration - shares issued with 2013.03.29 18.40 5.00 - - - - 13.40 no consideration - shares subscribed 2013.01.30 15.35 - - - - - 15.35 with consideration - shares issued with 2013.01.30 15.35 5.00 - - - - 10.35 no consideration Reservation for new 2013.01.17 14.15 12.98 48.20 0.36 - 0.65 1.17 share subscription by employees Employee stock 2011.05.19 26.70 26.70 35.67 48.60 - 1.00 7.31 options ~8.32 Employee stock 2010.05.13 39.85 39.85 51.57 48.60 - 0.80 15.12 options ~16.98 B.Employee stock options acquired because of merger (a)Details: Quantity granted Type of arrangement Grant date (in thousand units) Contract period Vesting conditions Employee stock options 2009.09.30 24,819 5 years Note ii, iv Employee stock options 2007.07.02 21 (Note i) 6 years Note iii, iv Employee stock options 2007.12.27 2 (Note i) 6 years Note iii, iv i. Each unit of stock options can subscribe for 1,000 shares of common stock. ii. The employees may exercise the stock options by stage based on 50% and 50% of total options granted on completion of the specified years of service (two to three years) from the grant date. iii. The employees may exercise the stock options by stage based on 25%, 25%, 25% and 25% of total options granted on completion of the specified years of service (two to five years) from the grant date.

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iv. The employee stock options had already expired. v. The units of employee stock options above were adjusted by share conversion rate. (b)The fair value of employee stock options was estimated using the Hull & White (2002) Enhanced FASB 123 of the aforementioned binomial model. The information was as follows: Exercise Expected Expected Expected Free Fair value Type of Price price volatility duration dividend interest per unit arrangement Grant date (in dollars) (in dollars) (%) (month) yield (%) rate (%) (in dollars) Employee stock 2009.09.30 51.60 39.20 45.10 36.78 0.61 0.82 3.57~4.14 options Employee stock 2007.07.02 51.60 67.53 45.10 24.78 0.61 0.82 4.23~4.41 options Employee stock 2007.12.27 51.60 80.63 45.10 48.54 0.61 0.82 3.65~3.82 options C.The details of the employee stock option plan for the years ended December 31, 2014 and 2013 were as follows: Year ended December 31, 2014 Weighted WeightedWeighted average average Range ofaverage stock price of Quantity exercise exercise remaining stock options (in thousand price price vesting at exercise Stock Options units) (in dollars) (in dollars) period date (in dollars) Outstanding options at the 94,819 $ 28.71 beginning of the year Options exercised - - $ 12.68 Options expired ( 24,819) 32.10 Outstanding options at the end of the year 70,000 25.63 $ 32.59 0.38 years 22.85 1.39 yeas Exercisable options at the 50,000 26.75 end of the year

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Year ended December 31, 2013 Weighted WeightedWeighted average average Range ofaverage stock price of Quantity exercise exercise remaining stock options (in thousand price price vesting at exercise Stock Options units) (in dollars) (in dollars) period date (in dollars) Outstanding options at the 119,842 $ 41.79 beginning of the year Options exercised - - $ 14.98 Options expired ( 25,023) 57.05 Outstanding options at the end of the year 94,819 28.71 $ 34.46 1.38 years 23.82 2.39 years 33.93 0.75 years Exercisable options at the 51,819 31.13 end of the year D.For the years ended December 31, 2014 and 2013, the expenses incurred from share-based payment arrangements were $578,227 and $556,874, respectively. (44) Provisions-current Warranty Litigation and others Total At January 1, 2014 $ 140,809 $ 1,808,220 $ 1,949,029 Addition 2,723,491 2,451,275 5,174,766 Used during the year ( 2,117,279) ( 1,873,027) ( 3,990,306) At December 31, 2014 $ 747,021 $ 2,386,468 $ 3,133,489 A.Warranty The Group provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products. B.Litigation and others Litigation and other provision for the Group are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1). (45) Share capital A.As of December 31, 2014, the Company’s authorized and outstanding capital were $120,000,000 (including $500,000 reserved for employee stock options) and $99,545,364, respectively, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. Movements in the number of the Company’s ordinary shares outstanding are as follows:

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2014 2013 Number of ordinary Number of ordinary shares (in thousands) shares (in thousands) At January 1 9,109,429 7,912,971 Employee stock options exercised 850,000 1,125,000 Issuance of restricted shares to employees - 72,526 Cancellation of restricted stock to employees ( 4,893) ( 1,068) At December 31 9,954,536 9,109,429 B.The Company’s Board of Directors resolved to increase capital through cash on December 17, 2013 by issuing common shares of no more than 2 billion shares, in exchange for cash domestically or by using cash from capital increase to issue common shares in exchange for the issuance of foreign depository receipts. On June 19, 2014, the shareholders approved the capital increase. On June 20, 2014, the Board of Directors approved the domestic capital increase of 10,625,000 shares. The issue price was determined to be $12.5 in July 2014, and the capital increase was effective on August 12, 2014. C. The Board of Directors of the Company resolved to increase capital for cash by issuing global depositary receipts (the “GDR”). The amount of $9,360,000 is tentatively scheduled for release, (approximately equivalent to US$312,625 thousand). As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval on January 30, 2015. D.As authorized by the shareholders during their meeting in June 2012, the Board of Directors of the Company resolved to increase capital for cash by issuing the GDR on July 18, 2012, and had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, including 112,500 thousand shares regarded as employee stock options, and 101,250,000 units of GDRs which represent 1,012,500 thousand shares of common stock, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange. Per unit was issued at a premium of US$4.481, which was equivalent to $12.98 per share and raised a total of $14,519,051, net of issuance cost. As of December 31, 2014, there were 69 thousand units outstanding, representing 692 thousand shares of common stocks. E.As authorized by the shareholders at the shareholders’ meeting in June, 2012, the Board of Directors of the Company adopted a resolution on January 30, 2013, March 29, 2013 and November 12, 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). The effective dates of the issuance were on January 30, 2013, March 29, 2013 and December 12, 2013. Until the vesting conditions are met by employees, those shares are restricted to transfer voting rights, dividend and other rights. As of December 31, 2014, the Company bought back 4,893 shares of unvested restricted stocks to employees,

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

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

2013 Share of profit (loss) of associates accounted for Restricted under equity Employee stock to Share premium method stock option employees Total At January 1 $ 118,065,992 $ 24,241 $ 1,587,747 $ - $ 119,677,980 Capital surplus offset against accumulated deficit ( 27,308,220) - - - ( 27,308,220) Global depositary receipt issued for cash 3,269,051 - - - 3,269,051 Issuance of restricted stock to employees - - - 187,212 187,212 Cancellation of restricted stock to employees - - - 10,680 10,680 Compensation related to share-based payment 42,263 - 147,713 189,976 Expiration of employee stock options 37,525 - ( 37,525) - Changes in net equity of long-term equity investments - 32,062 - - 32,062 At December 31 $ 94,106,611 $ 56,303 $ 1,697,935 $ 197,892 $ 96,058,741 (47) Retained earnings A.In accordance with the Company’s Articles of Incorporation, net income must be distributed in the following order:

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(a)To pay all tax accruals and payables arising from the current year and to cover prior years’ losses, if any; (b)As legal reserve equal to 10% of net income after tax and distribution pursuant to clause (a); (c)As any special reserve; (d)To pay dividends on preferred shares; (e)To pay bonuses to employees not less than 5% of net income after tax and distribution pursuant to clauses (a) to (d); and (f)The remaining amount, if any, shall be distributed pursuant to the proposal of the Board of Directors in accordance with the Company’s dividend policy and the resolution approved at the stockholders’ meeting, of which 0.1% should be paid as remuneration to directors and supervisors and the remaining amount as dividends to stockholders. Dividends distributed in respect of any fiscal year in the form of shares shall not exceed two-thirds of total dividends to stockholders. B.Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital. C.The Board of Directors proposed to cover accumulated deficit for the year ended December 31, 2012 and the proposal was approved by the stockholders in June 2013. It was resolved not to distribute dividends or accrue employees’ bonus and directors’ and supervisors’ remuneration. As approved by the stockholders in June 2013, the Company covered accumulated deficit amounting to $27,308,220 by using additional paid-in capital in excess of par value of common stock. In June 2014, the shareholders approved and resolved the deficit compensation amendment for 2012 which is to compensate deficit with legal reserve of $2,328,981 and $24,979,239 by using additional paid-in capital in excess of par value of common stock. D.The details of the appropriation of 2013 net income which was approved at the stockholders’ meeting in June 2014 are as follows: Year ended December 31, 2013 Dividends per Amount share (in dollars) Legal reserve $ 509,272 Special reserve 1,144,229 Cash dividends 90,495 $ 0.01 $ 1,743,996 Furthermore, the Company’s stockholders have resolved to distribute $0.14 cash per share with capital surplus amounting to $1,266,944. The Company distributed a total of $0.15 cash dividend per share.

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E.Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. For the year ended December 31, 2014, employees’ bonus was accrued at $1,436,187. Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange. (48) Other equity items 2014 Available- Employee Currency for-sale Hedging unearned translation investments reserve compensation Total At January 1 ($ 78,074) ($ 1,544,345) $ 478,190 ($ 387,268) ($ 1,531,497) Fair value losses of cash flow hedges - - ( 1,224) - ( 1,224) Reclassified as current income of cash flow hedges - - ( 277,234) - ( 277,234) Revaluation of available-for-sale investments - gross - 536,429 - - 536,429 Revaluation transfer of available-for-sale investment - gross - ( 251,483) - - ( 251,483) Currency translation differences 3,087,368 - - - 3,087,368 Issuance of restricted stocks to employees - - - ( 43,951) ( 43,951) Compensation related to share-based payment - - - 288,704 288,704 Share of other comprehensive income (loss) of associates 73,654 8,005 - - 81,659 Effect of income tax - ( 8,453) 47,338 - 38,885 At December 31 $3,082,948 ($ 1,259,847) $ 247,070 ($ 142,515) $ 1,927,656

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2013 Available- Employee Currency for-sale Hedging unearned translation investments reserve compensation Total At January 1 ($2,818,705) ($ 1,609,513) $ 423,629 $ - ($ 4,004,589) Fair value losses of cash flow hedges - - ( 3,210) - ( 3,210) Reclassified as current income of cash flow hedges - - 82,687 - 82,687 Revaluation of available-for-sale investments - gross - 1,875,599 - - 1,875,599 Revaluation transfer of available-for-sale investment - gross - ( 1,858,827) - - ( 1,858,827) Currency translation differences 2,703,765 - - - 2,703,765 Issuance of restricted stocks to employees - - - ( 754,166) ( 754,166) Compensation related to share-based payment - - - 366,898 366,898 Share of other comprehensive income (loss) of associates 36,866 ( 744) 36,122 Effect of income tax - 49,140 ( 24,916) - 24,224 At December 31 ($ 78,074) ($ 1,544,345) $ 478,190 ($ 387,268) ($ 1,531,497) (49) Other income Years ended December 31, 2014 2013 Rental revenue $ 634,368 $ 823,063 Interest income 328,633 293,741 Dividend income 39,958 58,897 Other income 1,731,993 1,452,167 $ 2,734,952 $ 2,627,868 (50) Other gains and losses Years ended December 31, 2014 2013 Net loss on financial assets and liabilities at fair value through profit or loss ($ 976,857) ($ 1,060,390) Net currency exchange gain 1,242,754 2,488,707 Gain on disposal of investments 794,041 1,977,799 Loss on disposal of property, plant and equipment ( 179,758) ( 138,658) Impairment loss ( 351,066) ( 921,828) Litigation loss and others ( 5,659,589) ( 9,512,404) ($ 5,130,475) ($ 7,166,774)

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(51) Finance costs Years ended December 31, 2014 2013 Interest expense: Bank borrowings $ 3,579,026 $ 5,026,870 Bonds - 5,662 Others 7,555 19,428 (Gain) loss on fair value change of financial instruments: (Gain) loss on cash flow hedges, reclassified from equity ( 277,234) 82,687 Fair value hedges - ( 31,642) Financing charges incurred on accounts receivable factoring - 225 $ 3,309,347 $ 5,103,230 (52) Expenses by nature Years ended December 31, 2014 2013 Employee benefit expense $ 46,106,336 $ 38,023,935 Depreciation 59,387,107 75,549,643 Amortization 1,512,449 2,301,795 $ 107,005,892 $ 115,875,373 (53) Employee benefit expense Years ended December 31, 2014 2013 Salaries and other-term employee benefits $ 43,517,392 $ 35,697,937 Share-based payments 578,227 556,874 Termination benefits 2,010,717 1,769,124 $ 46,106,336 $ 38,023,935

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(54) Income tax A.Income tax expense (a)Components of income tax expense: Years ended December 31, 2014 2013 Current tax: Current tax on profit for the period $ 791,019 $ 1,082,714 Adjustments in respect of prior years 104,819 ( 76,992) Total current tax 895,838 1,005,722 Deferred tax: Origination and reversal of temporary differences ( 38,406) 457,388 Income tax expense $ 857,432 $ 548,334 (b)The income tax (charge)/credit relating to components of other comprehensive income is as follows:

Years ended December 31, 2014 2013 Fair value gains/losses on available-for-sale financial assets $ 8,453 ($ 49,140) Cash flow hedges ( 47,338) 24,916 Actuarial gains/losses on defined benefit obligations ( 9,484) ( 2,018) ($ 48,369) ($ 26,242) B.Reconciliation between income tax expense and accounting profit Years ended December 31, 2014 2013 Tax calculated based on profit before tax and statutory tax rate $ 4,535,027 $ 1,868,960 Effects from items disallowed by tax regulation ( 533,680) 152,713 Under (over) provision of prior year's income tax 104,819 ( 76,992) Additional 10% tax on undistributed earnings 334,872 - Effect from Alternative Minimum Tax 74,672 118,725 Change in assessment of realization of deferred tax assets ( 3,658,278) ( 1,515,072) Tax expense $ 857,432 $ 548,334

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C.Amounts of deferred tax assets or liabilities as a result of temporary differences, loss carryforward and investment tax credits were as follows: Year ended December 31, 2014 Recognised in other Recognised in comprehensive January 1 profit or loss income December 31 Temporary differences: -Deferred tax assets: Sales returns and discount $ 288,013 ($ 121,640) $ - $ 166,373 provisions Accrued royalties and warranty provisions 364,411 ( 36,493) - 327,918 Unrealised gain (loss) on financial instruments 448,380 260,035 ( 8,453) 699,962 Depreciation expense 97,965 ( 57,171) - 40,794 Unrealised exchange loss - 200,697 - 200,697 Net operating loss carryforward 16,702,351 ( 708,777) - 15,993,574 Others 222,749 116,965 9,484 349,198 $ 18,123,869 ($ 346,384) $ 1,031 $ 17,778,516 -Deferred tax liabilities: Unrealised exchange gain ($ 51,357) $ 51,357 $ - $ - Unrealised gain on cash flow hedges ( 97,943) - 47,338 ( 50,605) Amortisation charges on goodwill ( 726,842) 332,155 - ( 394,687) Others ( 33,566) 1,278 - ( 32,288) ($ 909,708) $ 384,790 $ 47,338 ($ 477,580) Total $ 17,214,161 $ 38,406 $ 48,369 $ 17,300,936

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Year ended December 31, 2013 Recognised in other Recognised in comprehensive January 1 profit or loss income December 31 Temporary differences: -Deferred tax assets: Sales returns and discount provisions $ 98,369 $ 189,644 $ - $ 288,013 Accrued royalties and warranty provisions 169,057 195,354 - 364,411 Unrealised gain (loss) on financial instruments 482,738 ( 83,498) 49,140 448,380 Depreciation expense 5,256 ( 3,006) - 2,250 Prior year’s expense carryforward 243,826 ( 145,861) - 97,965 Net operating loss carryforward 16,500,416 201,935 - 16,702,351 Others 319,435 ( 100,954) 2,018 220,499 $ 17,819,097 $ 253,614 $ 51,158 $ 18,123,869 -Deferred tax liabilities: Unrealised exchange gain ($ 455,343) $ 403,986 $ - ($ 51,357) Unrealised gain on cash flow hedges ( 73,027) - ( 24,916) ( 97,943) Amortisation charges on goodwill ( 533,081) ( 193,761) - ( 726,842) Others ( 27,115) ( 6,451) - ( 33,566) ($ 1,088,566) $ 203,774 ($ 24,916) ($ 909,708) Total $ 16,730,531 $ 457,388 $ 26,242 $ 17,214,161 D.Details of investment tax credits and unrecognised deferred tax assets are as follows: December 31, 2013 Unrecognised Final year tax Qualifying items Unused tax credits deferred tax assets credits are due Machinery and equipment $ 409,544 $ 409,544 2014

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

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

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

December 31, 2014 December 31, 2013 Deductible temporary differences $ 31,105,662 $ 81,415,741 G.The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2014 and 2013, the amounts of temporary differences unrecognised as deferred tax liabilities were $20,486,590 and $12,677,405, respectively. H.Certain revenue from the design, research, development, manufacture and sale of the thin film transistor - liquid crystal displays (TFT-LCD) and LCDs is exempt from income tax from 2008 to 2015. I.The Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority. J.Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.

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K.The details of imputation system are as follows:

December 31, 2014 December 31, 2013 (a)Balance of tax credit account $ 738,931 $ 1,082,780 2014 (Estimate) 2013 (Actual) 2.96% 20.48% (b)Estimated creditable tax rate (55) Earnings per share

Years ended December 31, 2014 2013 Basic earnings per share Profit attributable to ordinary shareholders of the parent $ 21,676,759 $ 5,102,568 Weighted average number of ordinary shares outstanding (shares in thousands) 9,377,302 8,967,080 Basic earnings per share (in dollar) $ 2.31 $ 0.57 Diluted earnings per share Profit attributable to ordinary shareholders of the parent $ 21,676,759 $ 5,102,568 Weighted average number of ordinary shares outstanding (shares in thousands) 9,377,302 8,967,080 Assumed conversion of all dilutive potential ordinary shares: -Employees’ bonus 106,514 15,173 -Restricted stocks 41,875 27,609 9,525,691 9,009,862 Diluted earnings per share (in dollar) $ 2.28 $ 0.57

As employee stock options had anti-dilutive effect for the years ended December 31, 2014 and 2013, they were not included in the calculation of diluted earnings per share. (56) Non-cash transaction A.Investing activities with partial cash payments: Years ended December 31, 2014 2013 Purchase of property, plant and equipment $ 19,832,267 $ 18,102,828 Add: opening balance of payable on equipment 3,383,261 3,650,776 Less: ending balance of payable on equipment ( 2,688,976) ( 3,383,261) Cash paid during the year $ 20,526,552 $ 18,370,343

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B.Investing activities with partial cash receipts:

Years ended December 31, 2014 2013 Disposal of property, plant and equipment $ 1,839,001 $ 3,390,107 Add: opening balance of receivable on equipment 2,414,208 - Less: ending balance of receivable on equipment - ( 2,414,208) $ 4,253,209 $ 975,899 Cash received during the year 7. RELATED PARTY TRANSACTIONS (57) Significant related party transactions A.Operating revenue Years ended December 31, 2014 2013 Sales of goods: Others $ 14,450,540 $ 5,814,715 Associates 33,263 13,940 $ 14,483,803 $ 5,828,655 The collection period was 30~120 days upon delivery or on a monthly-closing basis to related parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related parties above were not significantly different from those of sales to third parties. B.Purchases of goods Years ended December 31, 2014 2013 Purchases of goods: Others $ 13,019,919 $ 7,813,860 Associates 11,275,187 17,054,293 $ 24,295,106 $ 24,868,153 The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-related parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms to related parties above were not materially different from those of purchases from third parties.

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

The Group subcontracted the processing of products of associates in Mainland China. The processing fees were mainly charged based on cost plus method. D.Accounts receivable December 31, 2014 December 31, 2013 Receivables from related parties: Others $ 6,084,501 $ 2,047,883 Associates 27,899 2,102 $ 6,112,400 $ 2,049,985 The receivables from related parties arise mainly from sales transactions. The receivables are due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties. E.Accounts payable December 31, 2014 December 31, 2013 Payables to related parties: Others $ 5,225,129 $ 4,522,389 Associates 27,817 4,233,854 $ 5,252,946 $ 8,756,243 The payables to related parties arise mainly from purchase transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

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F.Property transactions Purchase of property (a)Acquisition of property, plant and equipment: Years ended December 31, 2014 2013 Associates $ 639,044 $ 1,277,032 Others 21,407 67,197 $ 660,451 $ 1,344,229 (b)Period-end balances arising from purchases of property (shown as “Other payables”): December 31, 2014 December 31, 2013 Associates $ 229 $ 32,374 Others 748 10,887 $ 977 $ 43,261 Sale of property (a)Proceeds from sale of property and gain (loss) on disposal: Years ended December 31, 2014 2013 Disposal Gain (loss) on Disposal Gain (loss) on proceeds disposal proceeds disposal Others $ 46,157 $ 2,807 $ 91,960 $ 12,418 (b)Period-end balances arising from sale of property (shown as “Other receivables”): December 31, 2014 December 31, 2013 Others $ 46,382 $ 82,280 (58) Key management compensation Years ended December 31, 2014 2013 Salaries and other short-term employee benefits $ 73,982 $ 46,386 Share-based payments 18,638 27,582 Post-employment benefits 216 334 $ 92,836 $ 74,302

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8. PLEDGED ASSETS The Group’s assets pledged as collateral are as follows: Book value Pledged asset December 31, 2014 December 31, 2013 Purpose Other financial assets- current Time deposits $ 253 $ 5,603 Tariff guarantee, letter of credit and short-term borrowings Time deposits - - Land lease Demand deposits 2,284,617 2,538,964 Syndicated bank loans Property, plant and 163,632,314 211,132,039 Long-term loans and performance equipment guarantee for lease payable Other financial assets- non-current Refundable deposits 11,079,360 12,327,000 Guarantee to European Commission for litigation Time deposits 80,722 722 Guarantee for contract $ 177,077,266 $ 226,004,328 9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS (59) Contingencies －Significant Litigations A.Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc. were investigated under the Anti-Trust competition by the United States (the “U.S.”) Department of Justice. Moreover, authorities of some U.S state governments, the European Union’s, Brazil’s and Korea’s governments are starting to investigate this case. In addition, certain downstream customers and consumers in the TFT-LCD industry of the U.S. and Canada are now bringing up class-actions or individual civil lawsuits against the TFT-LCD companies; in certain lawsuits, CMO and Chi Mei Optoelectronics USA Inc. were listed as defendants. Details for investigations on significant cases related to the Anti-Trust Act are as follows: (a)Regarding the above lawsuits, the Company had reached an agreement with the United States Department of Justice in December 2009, agreeing to pay penalties of US$220 million in installment over five years. As of December 31, 2014, the unpaid penalties amounted to US$35 million. The Company had reached settlement agreements with the plaintiffs on individual civil lawsuits in the U.S. since 2012 and recognized related losses.

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The Company reached an out-of-court settlement with twelve State Governments, agreeing to pay the plaintiffs as civil statutory damages since November 2011. (b)In December 2010, the Company received a notice from the European Commission, requesting the Company to pay a penalty of EUR 300 million to the account as specified by the European Commission within three months upon receipt of the notice. The Company appealed this case with the Court of Justice of the European Union in February 2011 and deposited EUR 300 million to the above account on March 14, 2011. The principal and interest accrued in this account will be refunded to the Company depending on the final outcome of this case. The Court of Justice of the European Union has rendered that partial of the Company’s appeal was reasonable and lowered the penalty from EUR 300 million to EUR 288 million. The Company has decided to appeal against partial judgement within the prescribed time. (c)Except for the Anti-Trust litigations the ultimate outcome of which cannot be reliably estimated, the Company has recognised actual or estimated losses or liabilities in “other payables” and “other non-current liabilities”. B.Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and its subsidiaries in the US with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014 and the Company remained positive on its defense. The United States Court of Appeals for the Federal Circuit has held a hearing in November 2014 but has not ruled any judgment. The Company is currently assessing the status of the litigation. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term. (60) Commitments A.Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows: December 31, 2014 December 31, 2013 $ 15,338,375 $ 13,229,191 Property, plant and equipment B.Operating lease commitments The Group leases plant, land and warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: December 31, 2014 December 31, 2013 Not later than one year $ 571,800 $ 572,237 Later than one year but not later than five years 2,152,538 2,132,349 Later than five years 1,541,309 1,961,865 $ 4,265,647 $ 4,666,451

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C.Outstanding letters of credit The outstanding letters of credit for the purchase of property, plant and equipment are as follows: December 31, 2014 December 31, 2013 $ 693,635 $ 390,027 Outstanding letters of credit 10. SIGNIFICANT DISASTER LOSS None. 11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE (1) Details of cancellation of issuance of global depository receipts (the “GDR”) as approved by the Financial Supervisory Commission (FSC) on January 30, 2015 are provided in Note 6(16) C. (2) Details of the proposal of syndicated credit line contract with financial institution creditors that was approved by the Board of Directors on February 10, 2015 are provided in Note 6(12) F. 12. OTHERS (1) Capital risk management The Group’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity. (2) Financial instruments A.Fair value information of financial instruments Except those listed in the table below, the carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, short-term notes payable, accounts payable and other payables) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3). December 31, 2014 December 31, 2013 Book value Fair value Book value Fair value Financial assets: Other financial assets - non-current $ 11,160,082 $ 11,103,454 $ 12,327,722 $ 12,265,170 Financial liabilities: Long-term borrowings (including current portion) $ 108,456,086 $ 108,456,086 $ 169,097,708 $ 169,097,708

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

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exposures (see Notes 6(2), (4)). (b)Risk management is carried out by each treasury department (of all group companies) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity. C.Significant financial risks and degrees of financial risks (a)Market risk Foreign exchange risk a) The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. b) Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via their treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. c) The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: RMB). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be an increase of $304,219 or a decrease of $439,379 for the years ended December 31, 2014 and 2013, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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December 31, 2014 December 31, 2013 Foreign Foreign Currency Currency Exchange Amount Exchange Book Value Amount rate Book Value (In Thousands) Rate (NTD) (In Thousands) (Note) (NTD) Financial assets Monetary items USD $ 7,672,372 31.65$ 242,830,574 $ 4,077,314 29.81$ 121,544,730 JPY 6,197,615 0.26 1,611,380 761,223 0.28 213,142 EUR 363,657 38.47 13,989,885 405,043 41.09 16,643,217 Non-monetary items USD $ 2,217,538 31.65$ 70,185,078 $ 2,108,219 29.81$ 62,846,008 HKD 322,534 4.08 1,315,939 266,670 3.84 1,024,013 JPY 5,383,824 0.26 1,399,794 4,813,897 0.28 1,347,891 EUR 3,834 38.47 147,494 3,651 41.09 150,020 Financial liabilities Monetary items USD $ 6,531,987 31.65$ 206,737,389 $ 5,531,327 29.81$ 164,888,858 JPY 38,466,012 0.26 10,001,163 36,451,156 0.28 10,206,324 EUR 292,992 38.47 11,271,402 176,291 41.09 7,243,797 Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged. Price risk a) The Group is exposed to equity securities price risk because of investments held by the Group that are classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio in accordance with the policy set by the Group. b) The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, post-tax profit for the years ended December 31, 2014 and 2013 would have increased/decreased by $121,031 and $142,521, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss; other components of equity would have increased/decreased by $1,027,423 and $746,506, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

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

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with good credit standing and financial institutions and Government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk. b) No credit limits were exceeded during the reporting periods. Management does not expect any significant losses from non-performance by these counterparties. c) The individual analysis of financial assets that had been impaired is provided in Note 6. (c)Liquidity risk a) Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 6(12)) at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, external regulatory or legal requirements. b) Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing saving accounts, time deposits, money market deposits and marketable securities. The Group chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk. c) The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

Less than Between 1 Between 3 Over 5 December 31, 2014 1 year and 3 years and 5 years years Total Short-term $22,526,999 $ - $ - $ - $ 22,526,999 borrowings Accounts payable 80,207,385 - - - 80,207,385 Other payables 23,912,180 - - - 23,912,180 Long-term borrowings (including current portion) 66,192,903 42,304,435 - - 108,497,338 Other financial liabilities 36,821 10,938,112 663 6,344 10,981,940

Less than Between 1 Between 3 Over 5 December 31, 2013 1 year and 3 years and 5 years years Total Short-term $31,179,767 $ - $ - $ - $ 31,179,767 borrowings Accounts payable 74,191,829 - - - 74,191,829 Other payables 20,715,595 - - - 20,715,595 Long-term borrowings (including current portion) 169,097,708 - - - 169,097,708 Other financial liabilities 114,516 8,220,937 29,493 25,582 8,390,528

Derivative financial liabilities: Between 1 December 31, 2014 Less than 1 year and 3 years Total Forward exchange contracts $ 605,016 $ - $ 605,016 Interest rate swap contracts 1,351 - 1,351 Between 1 December 31, 2013 Less than 1 year and 3 years Total Forward exchange contracts $ 689,097 $ - $ 689,097 Interest rate swap contracts - 21,918 21,918 (3) Fair value estimation A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

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Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data. The following table presents the Group’s financial assets and liabilities that are measured at fair value at December 31, 2014 and 2013: December 31, 2014 Level 1 Level 2 Level 3 Total Financial assets: Financial assets at fair value through profit or loss Equity securities $ 605,155 $ - $ - $ 605,155 Forward exchange contracts - 52,453 - 52,453 Available-for-sale financial assets Equity securities 3,296,020 - 1,841,097 5,137,117 Debt securities 220,000 - - 220,000 $ 4,121,175 $ 52,453 $ 1,841,097 $ 6,014,725 Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts $ - $ 605,016 $ - $ 605,016 Cross currency swap contracts - - - - Derivative financial liabilities for hedging Interest rate swap contracts - 1,351 - 1,351 $ - $ 606,367 $ - $ 606,367

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December 31, 2013 Level 1 Level 2 Level 3 Total Financial assets: Financial assets at fair value through profit or loss Equity securities $ 712,603 $ - $ - $ 712,603 Forward exchange contracts - 227,703 - 227,703 Available-for-sale financial assets Equity securities 2,028,601 - 1,703,929 3,732,530 Debt securities 220,000 - - 220,000 $ 2,961,204 $ 227,703 $ 1,703,929 $ 4,892,836 Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts $ - $ 689,097 $ - $ 689,097 Derivative financial liabilities for hedging Interest rate swap contracts - 21,918 - 21,918 $ - $ 711,015 $ - $ 711,015 B.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments and debt instruments classified as financial assets/financial liabilities at fair value through profit or loss or available-for-sale financial assets. C.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. E.Specific valuation techniques used to value financial instruments include: (a)Quoted market prices or dealer quotes for similar instruments. (b)The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. (c)The fair value of forward foreign exchange contracts is determined using forward exchange

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rates at the balance sheet date, with the resulting value discounted back to present value. (d)Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. F.All of the resulting fair value estimates are included in level 2 except for certain forward foreign exchange contracts where forward exchange rates are not observable directly in the market. G.The following table presents the changes in level 3 instruments as at December 31, 2014 and 2013: Equity securities 2014 2013 At January 1 $ 1,703,929 $ 610,017 Acquired in the period 162,730 - Gains and losses recognized in profit or loss 10,701 420,922 Gains and losses recognized in other comprehensive income 196,382 1,350,330 Disposed in the period ( 232,645) ( 126,563) Transfers out from level 3 - ( 550,777) At December 31 $ 1,841,097 $ 1,703,929 (4) Turnaround plan The Group’s current liabilities exceeded its current assets by $9,754,686 as of December 31, 2014. The Group’s management adopted the following measures to improve its operations and financial position: A.Negotiation with the creditor banks as to the debt issue On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with creditor banks. Under the agreement, creditor banks agreed to extend the due dates for the repayment of the Company’s short, medium and long-term loans and to renew the Company’s credit lines to safeguard creditors’ rights and ensure the Company’s continuing operations. More information is described in Note 6(12)C. In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal of syndicated credit line of NTD$68.5 billion with financial institutions. B.Capital increase by cash According to the “Agreed-upon Repayment Agreement” (the Agreement) stated in Note 6(12)C, the Company shall increase its capital in certain amount of cash within three years starting from 2012. From 2012 to 2014, the Company has completed some cash capital increase required by the Agreement. For more information, please refer to Notes 6(16)B and D. As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval. Details are provided in Note 6(16) C. C.Improvements in operations

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The Company continuously adjusts its product lines according to the market demands to increase operating revenue and gross profit. The Company also tries to strictly control various expenses and expenditures to effectively enhance operational performance to create cash inflows from operating activities. D.Capital expenditure control program Future capital expenditures will focus on the upgrading technology, improving efficiency and expanding production capacity. Capital expenditure budgets and amounts will be controlled strictly to maximize the benefits of capital expenditures.

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13. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU (1) Related information of significant transactions A.Loans granted during the year ended December 31, 2014:

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

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7 Innolux Innolux Hong Receivables Related $ 24,927 $ - $ - - Short-term $ - Operating $ - -$ - $ 227,690,063 $ 227,690,063 A Technology Kong Ltd. from related parties financing support Germany GmbH parties 8 Innolux Hong Shanghai Innolux Receivables Related 499,941 - - - Short-term - Operating - - - 227,690,063 227,690,063 A Kong Ltd. Optoelectronics from related parties financing support Ltd. parties 9 Innolux Leadtek Global Other Related 1,375,920 1,375,920 1,375,920 1.475% Short-term - Operating - - - 227,690,063 227,690,063 A Technology Group Limited receivables parties financing support Japan Co., Ltd. 10 Innolux Innolux Other Related 396,900 396,900 396,900 1.380% Business 2,256,506 - - - - 569,824 569,824 C Optoelectronics Corporation receivables parties association Japan Co., Ltd. 11 Foshan Innolux Nanhai Chi Mei Other Related 2,532,000 - - - Business - - - - - 227,690,063 227,690,063 A,D Optoelectronics Optoelectronics receivables parties association Ltd. Ltd.

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

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Note C: Innolux Optoelectronics Japan Co., Ltd. 1.For the company’s short-term capital needs, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the parent company. 2.The financial limit on loans granted shall not exceed 30% of the company’s net equity, based on the most recent audited financial statements of the parent company; with intercompany transaction, the company’s financial limit on loans granted shall not exceed 40% of the company’s equity. 3.The amount of loans provided by the company and intercompany shall not exceed 40% of the company’s equity. Note D: Foshan Innolux Optoelectronics Ltd. entered into a merger agreement with Nanhai Chi Mei Optoelectronics Ltd. on January 1, 2014 and Foshan Innolux Optoelectronics Ltd. is the surviving company B.Endorsements and guarantees provided during the year ended December 31, 2014:

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

Note A: Limits on endorsement/guarantee amount provided to each counterparty did not exceed 0.5% of the Company’s net equity based on the most recent audited financial statements of the Company. Maximum

endorsement/guarantee amounts allowable should not exceed 1% of the Company’s net equity based on the most recent audited financial statements of the Company. For subsidiaries with over 90% of shares directly

or indirectly owned by the Company, the endorsement / guarantee amount provided by the Company shall not exceed 10% of the Company’s net equity. The limitation is not required for direct or indirect

wholly-owned subsidiaries of the Company.

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

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

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Relationship December 31, 2014 Securities held by Kind and name of marketable securities with the Company General ledger account Number of shares Book value Percentage Fair value Note Common stock Innolux Corporation AvanStrate Inc. None Available-for-sale financial 900,000 $ 80,302 1 $ 80,302 assets - non-current Innolux Corporation TPV Technology Ltd. None Available-for-sale financial 150,500,000 1,031,587 6 1,031,587 assets - non-current Innolux Corporation Chi Lin Optoelectronics Co., Ltd. None Available-for-sale financial 48,283,725 483,194 19 483,194 assets - non-current Innolux Corporation Epistar Corp. None Available-for-sale financial 89,072 5,603 - 5,603 assets - non-current Innolux Corporation Chi Mei Materials Technology None Available-for-sale financial 45,068,305 1,500,775 9 1,500,775 Corporation assets - non-current

Bond

Innolux Corporation Unsecured subordinated bonds of Cathay None Available-for-sale financial - 220,000 - 220,000 Financial Holdings assets - non-current

Common stock

Yuan Chi Investment Co., Ltd. Trillion Science, Inc. None Available-for-sale financial 1,439,180 2,252 2 2,252 assets - non-current Yuan Chi Investment Co., Ltd. China Electric Mfg. Corp. None Available-for-sale financial 13,000,000 140,400 3 140,400 assets - non-current

Yuan Chi Investment Co., Ltd. Tera Xtal Technology Corporation None Available-for-sale financial 4,900,000 56,693 3 56,693 assets - non-current

InnoJoy Investment Corporation Advanced Optoelectronic Technology, Inc. None Financial asset at fair value 11,165,222 605,155 8 605,155 through profit or loss InnoJoy Investment Corporation J TOUCH Corporation None Available-for-sale financial 1,080,749 19,507 1 19,507 assets - non-current InnoJoy Investment Corporation Fitipower Integrated Technology Inc. None Available-for-sale financial 10,000,000 343,350 8 343,350 assets - non-current InnoJoy Investment Corporation G-TECH Optoelectronics Corporation None Available-for-sale financial 6,311,734 184,934 2 184,934 assets - non-current

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Relationship December 31, 2014 Securities held by Kind and name of marketable securities with the Company General ledger account Number of shares Book value Percentage Fair value Note

InnoJoy Investment Corporation Entire Technology Co., Ltd. None Available-for-sale financial 7,506,326 $ 177,900 5 $ 177,900 assets - non-current Warriors Technology Investments OED Holding Ltd. None Available-for-sale financial 16,000,000 3,553 6 3,553 Ltd. assets - non-current Warriors Technology Investments General Interface Solution (GIS) Holding None Available-for-sale financial 40,500,000 900,242 14 900,242 Ltd. Limited assets - non-current Warriors Technology Investments Perfect Optronics Limited None Available-for-sale financial 22,000,000 178,621 2 178,621 Ltd. assets - non-current Nets Trading Ltd. PilotTech Global Fund None Available-for-sale financial 90 28,204 - 28,204 assets - non-current

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

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

Warriors Perfect Available- Open market None - - 66,000,000 77,236 ( 44,000,000) 317,743 ( 51,491) 266,252 22,000,000 25,745 E Technology Optronics for-sale Investments Limited financial Ltd. assets - non current

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

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Note C: An indirect wholly-owned subsidiary. Note D: The beginning carrying balance included profits and losses from investments and cash dividends. Note E: Ending book value excludes gain (loss) on valuation of financial assets.

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

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

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

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

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

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

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

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Foshan Innolux Ampower Technology Co., Ltd. The company is a corporate Purchases $ 130,295 - 90 days after Similar with No significant ($ 3,401) - Optoelectronics director of Ampower goods are general sales difference Ltd. Technology Co., Ltd. shipped Innocom Jizhun Precision Industry An indirect wholly-owned Processing 167,217 9 30 days Similar with No significant ( 21,059) 3 Technology (Huizhou) Co., Ltd. subsidiary of Hon Hai expense general sales difference (Shenzhen) Co., Precision Industry Co., Ltd. Ltd. Innocom Hongfujin Precision Industry An indirect wholly-owned Processing 114,341 6 30 days Similar with No significant ( 23,662) 4 Technology (Shenzhen) Co., Ltd. subsidiary of Hon Hai expense general sales difference (Shenzhen) Co., Precision Industry Co., Ltd. Ltd.

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

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

Balance of Overdue receivables Allowance for Relationship with receivable from Turnover Action adopted for Subsequent doubtful accounts Company Counterparty the Company related parties rate Amount overdue accounts collection provided Innolux Corporation Shenzhen Fu Tai Hong An indirect wholly-owned subsidiary of Hon Hai $ 1,543,053 7.12 $ - - $ 661,954 $ - Precision Industry Co., Ltd. Precision Industry Co., Ltd. Innolux Corporation Hon Hai Precision Industry 1,875,465 3.85 110,139 Subsequent 78,424 - Co., Ltd. Same major stockholder collection Innolux Corporation Honfujin Precision Electronics An indirect wholly-owned subsidiary of Hon Hai 1,282,691 3.28 209,867 Subsequent 378,539 - (Chongqing) Co., Ltd. Precision Industry Co., Ltd. collection Innolux Corporation Kang Zhun Electronical An indirect wholly-owned subsidiary of Hon Hai 489,164 - 71,285 Subsequent 106,435 - Technology (Kunshan) Co., Precision Industry Co., Ltd. collection Ltd. Innolux Corporation Innolux Optoelectronics Japan A subsidiary of the Company 186,694 11.39 - - - - Co., Ltd. Innolux Corporation Futaijing Precision Electronics An indirect wholly-owned subsidiary of Hon Hai 179,404 2.14 1,802 Subsequent 8,405 - (Beijing) Co., Ltd. Precision Industry Co., Ltd. collection Innolux Corporation Innolux Technology USA Inc. An indirect wholly-owned subsidiary 173,861 9.93 - - - -

Innolux Corporation Innolux Optoelectronics USA, An indirect wholly-owned subsidiary 133,856 5.93 - - 96,199 - Inc. Foshan Innolux Lakers Trading Ltd. An indirect wholly-owned subsidiary 22,267,762 2.34 17,331,083 Subsequent 3,896,237 - Optoelectronics Ltd. collection Ningbo Innolux Leadtek Global Group Limited A subsidiary of the Company 19,784,634 2.29 4,667,893 Subsequent 3,165,386 - Optoelectronics Ltd. collection Nanjing Innolux Innolux Hong Kong Ltd. An indirect wholly-owned subsidiary 7,884,481 3.73 - - 2,943,828 - Optoelectronics Ltd. Ningbo Innolux Leadtek Global Group Limited A subsidiary of the Company 6,966,625 3.10 928,046 Subsequent 2,025,388 - Technology Ltd. collection Shanghai Innolux Lakers Trading Ltd. An indirect wholly-owned subsidiary 3,069,946 5.48 579,608 Subsequent 579,608 - Optoelectronics Ltd. collection Innocom Technology Lakers Trading Ltd. An indirect wholly-owned subsidiary 2,158,754 0.77 1,622,044 Subsequent - - (Shenzhen) Co., Ltd. collection

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Ningbo Innolux Display Lakers Trading Ltd. An indirect wholly-owned subsidiary $ 986,622 6.45 $ - - $ 89,598 $ - Ltd. Ningbo Innolux Ningbo Innolux Technology An indirect wholly-owned subsidiary 965,551 2.87 54,787 Subsequent 681,627 - Optoelectronics Ltd. Ltd. collection Shanghai Innolux Nanjing Innolux An indirect wholly-owned subsidiary 142,914 5.36 - - - - Optoelectronics Ltd. Optoelectronics Ltd. Innocom Technology Honfujin Precision Electronics An indirect wholly-owned subsidiary of Hon Hai 111,123 - 111,123 Subsequent - - (Shenzhen) Co., Ltd. (Chongqing) Co., Ltd. Precision Industry Co., Ltd. collection

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

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

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

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6 Ningbo Innolux Optoelectronics Ltd. Leadtek Global Group Limited 3 Accounts receivable$ 19,784,634 - 5 6 Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. 3 Sales 2,079,743 - - 6 Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Technology Ltd. 3 Accounts receivable 965,551 - - 7 Ningbo Innolux Technology Ltd. Leadtek Global Group Limited 3 Processing revenue 19,610,772 - 4 7 Ningbo Innolux Technology Ltd. Leadtek Global Group Limited 3 Accounts receivable 6,966,625 - 2 8 Ningbo Innolux Display Ltd. Lakers Trading Ltd. 3 Processing revenue 3,116,868 - 1 8 Ningbo Innolux Display Ltd. Lakers Trading Ltd. 3 Accounts receivable 986,622 - -

Note A: Relationship with the transaction company:

1. The parent company to the subsidiary.

3. The subsidiary to the subsidiary.

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

prices and payment term was 30~120 days upon receipt of goods.

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

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(2) Information on investees

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

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

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

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

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Rockets Holding Nets Trading Ltd. Samoa Investment company $ 27,477 $ - 900,001 100 $ 30,441 $ - $ - Ltd. Suns Holding Ltd. Warriors Technology Samoa Investment company 555,422 568,324 18,177,052 100 1,404,397 255,127 255,127 Investments Ltd.

Innolux Innolux Technology Germany Testing and maintenance 33,735 33,735 100,000 100 63,152 41 41 Technology Germany GmbH company Europe B.V.

Best China Asiaward Investment Hong Kong Investment holdings 314,740 314,740 77,830,001 100 255,806 36,380 36,380 Investments Ltd. Ltd.

Mega Chance Main Dynasty Hong Kong Investment holdings 573,940 573,940 139,623,801 100 421,267 1,221 1,221 Investments Ltd. Investment Ltd.

Magic Sun Ltd. Sun Dynasty Hong Kong Investment holdings 1,146,370 1,146,370 295,969,001 100 1,018,638 3,328 3,328 Development Ltd.

Yuan Chi Chi Mei Lighting Taiwan Trading business, 263,812 263,812 19,673,402 8 - - - Investment Co., Technology manufacturing of electronic Ltd. Corporation equipment and lighting equipment Yuan Chi GIO Optoelectronics Taiwan Developing, designing, 6,881 6,881 467,519 - 732 ( 112,745) ( 203) Investment Co., Corp. manufacturing and selling of Ltd. components of back light module on TFT-LCD Yuan Chi Chi Mei Logistics Taiwan Warehousing services - 124,485 - - - 5,843 2,863 Investment Co., Corp. Ltd. Yuan Chi TOA Optronics Taiwan Selling electronic materials, 423,606 423,606 58,007,000 40 364,907 ( 105,740) ( 45,764) Investment Co., Corporation trading business, manufacturing Ltd. of electronic equipments and lighting equipments

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(3) Information on investments in Mainland China A.Basic information:

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

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Nanjing Innolux Purchases and sales $ 66,465 4$ 66,465 $ - $ - $ 66,465 $ 11,797 100$ 11,797 $ 606,961 $ - Technology Ltd. of monitor-related components company

Kunpal Glass thinning 126,600 5 71,744 47,951 - 119,695 942 100 942 79,430 - Optoelectronics processing service Ltd.

VAP Manufacturing and 208,890 6 9,495 - - 9,495 ( 574) 100( 574) ( 43,749) - Optoelectronics selling of LCD (Nanjing) Corp. backend module and related components Nanjing Innolux Manufacturing and 4,494,300 4 3,937,260 557,040 - 4,494,300 729,013 100 729,013 5,574,181 - Optoelectronics selling of LCD Ltd. backend module and related components Ningbo Innolux Warehousing services 126,600 8 126,600 - - 126,600 5,729 100 5,729 168,311 - Logistics Ltd. Shanghai Innolux Manufacturing and 664,650 7 - - - - 233,398 100 233,398 780,296 - Optoelectronics selling of LCD Ltd. backend module and related components Foshan Innolux Warehousing services 47,475 8 47,475 - - 47,475 161 100 161 66,633 - Logistics Ltd. Amlink Manufacturing and 633,000 9 316,500 - - 316,500 ( 8,949) 47( 4,206) 594,508 - (Shanghai) Ltd. selling of power supply, modem, ADSL, and other IT equipments

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Kunshan Guann- Manufacturing of $ 265,860 10$ 85,139 $ - $ - $ 85,139 $ - 32$ - $ - $ - Jye Electronics transformers Co., Ltd.

Interface Development of new 2,095,230 1 427,275 - - 427,275 - 14 - 900,242 - Optoelectronics type of flat panel (Shenzhen) Co., display, monitor and Ltd. peripherals, production and management, and offer of after-sales service B. Information on investments in Mainland China (Note C):

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

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

The significant transactions between the Company and the investee companies for the year ended December 31, 2014 were eliminated in these financial statements and shown in Notes 13(1) A、G、H、J.

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate.

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

Note C: Pursuant to the Jing-Shen-Zi Letter No. 10100485600 of the Ministry of Economic Affairs, R.O.C., dated June 29, 2012, as the Company has obtained the certificate of conforming to the business scope of

headquarters, issued by the Industrial Development Bureau, MOEA, the investment ceiling regulation for Taiwan-based companies investing in Mainland China is not applicable to the Company.

Note D: The investment methods are as follows:

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

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

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

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

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

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

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

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

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

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

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14. SEGMENT INFORMATION (5) General information The Group is primarily engaged in the research, development, manufacture and sales of TFT LCD. The chief operating decision-maker considered the business from a perspective of product size of TFT LCD. TFT LCD products are currently classified into big size and small-medium size. Because the Company met the criteria for combining the segment information of big-size and small-medium-size TFT LCD departments, the Company disclosed only one reportable operating segment for all TFT LCD products. The Company’s operating segment information was prepared in accordance with the Company’s accounting policies. The chief operating decision-maker allocates resources and assesses performance of the operating segments primarily based on the operating revenue and profit (loss) before tax and discontinued operations of individual operating segment. (6) Information about segment profit or loss, assets and liabilities The segment information provided to the chief operating decision-maker for the reportable segment is as follows: Years ended December 31, 2014 2013 TFT LCD TFT LCD Segment revenue $ 428,661,898 $ 422,729,420 Segment income $ 22,523,244 $ 5,645,922 Depreciation and amortisation $ 60,883,074 $ 77,845,557 Capital expenditure-property, plant and equipment $ 20,526,552 $ 18,370,343 Segment assets $ 480,984,747 $ 507,927,783 (7) Reconciliation for segment income A reconciliation of reported segment income and income from continuing operations before tax is provided as follows: A.Reconciliation of segment revenue with operating revenue: Years ended December 31, 2014 2013 Segment revenue $ 428,661,898 $ 422,729,420 Other revenue - 1,080 Operating revenue $ 428,661,898 $ 422,730,500

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B.Reconciliation of segment income with income from continuing operations before income tax: Years ended December 31, 2014 2013 Segment income $ 22,523,244 $ 5,645,922 Others 11,096 ( 2,569) $ 22,534,340 $ 5,643,353 Income before income tax C.Reconciliation of segment assets with total assets: December 31, 2014 December 31, 2013 Segment assets $ 480,984,747 $ 507,927,783 Others 1,531,808 273,102 $ 482,516,555 $ 508,200,885 D.Other significant reconciliation: Years ended December 31, 2014 2013 Depreciation and amortization $ 60,883,074 $ 77,845,557 Others 16,482 5,881 $ 60,899,556 $ 77,851,438 Capital expenditure - property, plant and equipment $ 20,526,552 $ 18,370,343 Others - - $ 20,526,552 $ 18,370,343 (8) Information on product Revenue from external customers is mainly from TFT-LCD product. Details of revenue are as follows: Years ended December 31, 2014 2013 Sales of TFT LCD products $ 428,661,898 $ 422,729,420 Other revenues - 1,080 $ 428,661,898 $ 422,730,500

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(9) Geographical information Geographical information for the years ended December 31, 2014 and 2013 is as follows: Years ended December 31, 2014 2013 Revenue Non-current assets Revenue Non-current assets Taiwan $ 91,333,989 $ 214,158,469 $ 71,710,289 $ 255,437,219 Hong Kong 124,681,779 - 147,983,751 - China 103,061,439 41,762,276 74,639,122 40,949,233 Europe 31,048,822 28,601 28,876,735 30,474 USA 11,727,851 513 30,837,604 1,862 Others 66,808,018 140,789 68,682,999 44,270 $ 428,661,898 $ 256,090,648 $ 422,730,500 $ 296,463,058 (10) Major customer information None of the individual sales to the Group’s customers exceeds 10% of the sales in the consolidated statement of comprehensive income for the years ended December 31, 2014 and 2013.

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Innolux Corporation

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

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

235

financial position of Innolux Corporation as of December 31, 2014 and 2013, and their financial performance and cash flows for the years then ended in conformity with the “Regulations Governing the Preparations of Financial Statements by Securities Issuers”. Innolux Corporation’s current liabilities have exceeded its current assets by NT$42,313,979,000 as of December 31, 2014. As set forth in Note 12(4), management has designed a turnaround plan to improve the Company’s operating efficiency.

PricewaterhouseCoopers, Taiwan

February 10, 2015

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

236 INNOLUX CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Assets Notes 2014 2013 Current assets

Cash and cash equivalents 6(1) $ 55,543,195 $ 27,604,892

Financial assets at fair value through profit 6(2)

or loss - current 52,453 227,703

Available-for-sale financial assets - current 6(3) 220,000 -

Accounts receivable, net 6(5) 68,858,149 63,763,265

Accounts receivable, net - related parties 7 6,067,658 2,409,842

Other receivables 699,592 609,036

Other receivables - related parties 7 691,024 787,951

Inventory 6(6) 27,938,165 39,510,209

Prepayments 542,334 849,108

Other financial assets - current 8 2,250,035 2,485,841

Other current assets 12,542 26,684

Total current assets 162,875,147 138,274,531

Non-current assets

Available-for-sale financial assets - 6(3)

non-current 3,101,461 1,824,122

Investments accounted for under equity 6(7)

method 73,0 96,389 67,860,212

Property, plant and equipment 6(8), 7 and 8 192,599,182 233,557,614

Investment property, net 6(9) 693,677 706,850

Intangible assets 6(10) 20,127,184 21,114,443

Deferred income tax assets 6(25) 17,575,426 17,835,399

Other financial assets - non-current 8 11,160,082 12,327,722

Other non-current assets 625,863 57,553

Total non-current assets 318,979,264 355,283,915

Total assets $ 481,854,411 $ 493,558,446

(Continued)

237 INNOLUX CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

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

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

238 INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

Items Notes 2014 2013 Sales revenue 7 $ 426,005,033 $ 419,738,269 Operating costs 6(6)(23)(24) and 7 ( 389,609,785) ( 392,206,451 ) Net operating margin 36,395,248 27,531,818 Operating expenses 6(23)(24) Selling expenses ( 1,092,207) ( 1,105,609 ) General and administrative expenses ( 3,451,341) ( 3,997,111 ) Research and development expenses ( 11,412,260) ( 11,128,979 ) Total operating expenses ( 15,955,808) ( 16,231,699 ) Operating profit 20,439,440 11,300,119 Non-operating income and expenses Other income 6(20) 1,379,919 1,222,075 Other gains and losses 6(21) ( 3,418,822) ( 8,950,438 ) Finance costs 6(22) ( 2,721,239) ( 4,369,834 ) Share of profit of subsidiaries and associates accounted for under equity method 5,998,536 5,233,229 Total non-operating income and expenses 1,238,394 ( 6,864,968 ) Profit before income tax 21,677,834 4,435,151 Income tax expense 6(25) ( 1,075) 667,417 Profit for the year $ 21,676,759 $ 5,102,568 Other comprehensive income Financial statements translation differences of foreign operations $ 3,087,368 $ 2,703,765 Unrealized gain (loss) on valuation of 6(3) available-for-sale financial assets 103,510 ( 223,008 ) Cash flow hedges 6(4) ( 278,458) 79,477 Actuarial loss on defined benefit plan 6(13) ( 55,790) ( 11,870 ) Share of other comprehensive income of associates and joint ventures accounted for under equity method 263,095 275,902 Income tax relating to the components 6(25) of other comprehensive income 48,369 26,242 Other comprehensive income for the year, net of tax $ 3,168,094 $ 2,850,508 Total comprehensive income for the year $ 24,844,853 $ 7,953,076

Earnings per share (in dollars) 6(26) Basic earnings per share $ 2.31 $ 0.57 Diluted earnings per share $ 2.28 $ 0.57

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

239 INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Retained Earnings Other equity interest Financial statements Unrealized gain translation (loss) on Changes in differences of available-for- gain (loss) on Employee Unappropriated foreign sale financial cash flow unearned Notes Common stock Capital surplus Legal reserve Special reserve earnings operations assets hedge compensation Total

2013 Balance at January 1, 2013 $ 79,129,708 $ 119,677,980 $ 2,328,981 $ - ($ 27,308,220 ) ($ 2,818,705 ) ($ 1,609,513 ) $ 423,629 $ - $169,823,860 Capital surplus offset against accumulated deficit - ( 27,308,220 ) - - 27,308,220 - - - -- Global depositary receipt issued for 6(16) cash 11,250,000 3,269,051 ------14,519,051 Issuance of restricted stock to 6(14) employees 725,260 187,212 ------( 754,166 ) 158,306 Cancellation of restricted stock to employees ( 10,680 ) 10,680 ------Compensation related to 6(14) share-based payment - 189,976 ------366,898 556,874 Changes in net equity of long-term equity investments - 32,062 ------32,062 Profit for the year - - - - 5,102,568 - - - - 5,102,568 Other comprehensive income for the 6(19) year - - - - ( 9,852 ) 2,740,631 65,168 54,561 - 2,850,508 Balance at December 31, 2013 $ 91,094,288 $ 96,058,741 $ 2,328,981 $ - $ 5,092,716 ($ 78,074 ) ($ 1,544,345 ) $ 478,190 ($ 387,268 ) $193,043,229 2014 Balance at January 1, 2014 $ 91,094,288 $ 96,058,741 $ 2,328,981 $ - $ 5,092,716 ($ 78,074 ) ($ 1,544,345 ) $ 478,190 ($ 387,268 ) $193,043,229 Capital issued for cash 6(16) 8,500,000 2,125,000 ------10,625,000 Appropriations of 2013 earnings: 6(18) Legal reserve - - 509,272 - ( 509,272 ) - - - -- Special reserve - - - 1,144,229 ( 1,144,229 ) - - - -- Cash dividends - - - - ( 90,495 ) - - - - ( 90,495 ) Cash paid from capital surplus 6(18) - ( 1,266,944 ) ------( 1,266,944 ) Capital surplus offset against 6(18) accumulated deficit - 2,328,981 ( 2,328,981 ) ------Cancellation of restricted stock to employees ( 48,924 ) 48,924 ------Changes in restricted stock to employees - 47,174 ------( 43,951 ) 3,223 Compensation related to 6(14) share-based payment - 289,523 ------288,704 578,227 Changes in net equity of long-term equity investments - ( 47,030 ) ------( 47,030 ) Profit for the year - - - - 21,676,759 - - - - 21,676,759 Other comprehensive income for the 6(19) year - - - - ( 46,306 ) 3,161,022 284,498 ( 231,120 ) - 3,168,094 Balance at December 31, 2014 $ 99,545,364 $ 99,584,369 $ 509,272 $ 1,144,229 $ 24,979,173 $ 3,082,948 ($ 1,259,847 ) $ 247,070 ($ 142,515 ) $227,690,063

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

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

240 INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Notes 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year $ 21,677,834 $ 4,435,151 Adjustments to reconcile net income to net cash provided by operating activities Income and expenses having no effect on cash flows Depreciation and amortization 6(23) 56,134,539 71,068,428 Compensation related to share-based payment 6(14) 578,227 556,874 Share of profit of subsidiaries and associates accounted for under equity method ( 5,998,536 ) ( 5,233,229 ) Gain from disposal of investments 6(21) ( 452,613 ) ( 18,366 ) Impairment loss 6(21) - 204,721 (Gain) loss on disposal of property, plant and equipment 6(21) ( 22,568 ) 6,065 Interest income 6(20) ( 126,493 ) ( 112,782 ) Dividend income 6(20) ( 7,567 ) ( 43,822 ) Interest expense 6(22) 2,998,473 4,318,564 Unrealized foreign exchange loss (gain) 6(21) 1,188,553 ( 468,215 ) Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets /liabilities at fair value through profit or loss 91,169 ( 706,193 ) Accounts receivable ( 5,094,884 ) 5,437,335 Accounts receivable - related parties ( 3,657,816 ) 10,145,135 Other receivables ( 89,561 ) 194,789 Inventories 11,572,044 ( 4,133,091 ) Prepayments 306,774 ( 580,008 ) Other current assets 14,142 ( 9,872 ) Net changes in liabilities relating to operating activities Derivative financial liabilities for hedging ( 299,025 ) ( 290,235 ) Accounts payable 4,707,855 ( 22,695,791 ) Accounts payable - related parties 3,193,266 ( 7,322,352 ) Other payables 4,125,260 ( 8,943,611 ) Provisions - current 1,184,460 814,253 Other current liabilities 309,564 ( 248,257 ) Other non-current liabilities ( 951,067 ) 3,361,094 Cash generated from operations 91,382,030 49,736,585 Cash paid for income tax ( 1,075 ) - Net cash provided by operating activities 91,380,955 49,736,585

(Continued)

241 INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars)

Notes 2014 2013

CASH FLOWS FROM INVESTING ACTIVITIES Decrease in other receivables - related parties $ 96,927 $ 547,891 Acquisition of available-for-sale financial assets ( 135,456 ) ( 292,854 ) Proceeds from disposal of available-for-sale financial assets 167,288 201,107 Proceeds from disposal of financial assets carried at cost - non-current - 192,758 Acquisition of investment accounted for under equity method ( 753,906 ) ( 1,381,019 ) Proceeds from disposal of investment accounted for under equity method 1,550,113 3,557 Proceeds from capital reduction of investments accounted for under equity method 736,214 3,278,146 Acquisition of property, plant and equipment 6(27) ( 14,629,033 ) ( 16,072,136 ) Decrease in other financial assets 440,446 877,470 Proceeds from disposal of property, plant and equipment 12,761 111,287 Increase in other non-current assets ( 568,172 ) ( 13,819 ) Interest received 125,498 113,894 Dividends received 1,444,112 5,859,537 Net cash used in investing activities ( 11,513,208 ) ( 6,574,181 ) CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings ( 643,565 ) 1,943,565 Decrease in short-term notes and bills payable - ( 699,430 ) Payment of long-term borrowings ( 57,625,650 ) ( 49,210,951 ) Payment of bonds payable - ( 2,000,000 ) Decrease in accrued lease payments - ( 980,000 ) Stock issued for cash 6(16) 10,625,000 14,519,051 Cash dividends paid ( 90,495 ) - Cash paid from capital surplus ( 1,266,944 ) - Proceeds from issuance of restricted stock to employees 6(14) - 181,315 Repurchase from issuance of restricted stock to employees ( 7,754 ) ( 8,260 ) Interest paid ( 2,920,036 ) ( 4,239,118 ) Net cash used in financing activities ( 51,929,444 ) ( 40,493,828 ) Increase in cash and cash equivalents 27,938,303 2,668,576 Cash and cash equivalents at beginning of year 27,604,892 24,936,316 Cash and cash equivalents at end of year $ 55,543,195 $ 27,604,892

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

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INNOLUX CORPORATION NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated )

1. HISTORY AND ORGANIZATION (1)Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity. (2)The Company is engaged in the research, development, design, manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD. 2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION These parent company only financial statements were authorized for issuance by the Board of Directors on February 10, 2015. 3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (61) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) None. (62) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’) as endorsed by the FSC and the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" effective January 1, 2015 (collectively referred herein as the “2013 version of IFRSs”) in preparing the parent company only financial statements. The related new standards, interpretations and amendments are listed below:

Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Limited exemption from comparative IFRS 7 July 1, 2010 disclosures for first-time adopters (amendment to IFRS 1) Severe hyperinflation and removal of fixed dates July 1, 2011 for first-time adopters (amendment to IFRS 1)

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Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Government loans (amendment to IFRS 1) January 1, 2013 Disclosures －Transfers of financial assets July 1, 2011 (amendment to IFRS 7) Disclosures －Offsetting financial assets and financial January 1, 2013 liabilities (amendment to IFRS 7) IFRS 10, ‘Consolidated financial statements’ January 1, 2013 (Investment entities: January 1, 2014) IFRS 11, ‘Joint arrangements’ January 1, 2013 IFRS 12, ‘Disclosure of interests in other entities’ January 1, 2013 IFRS 13, ‘Fair value measurement’ January 1, 2013 Presentation of items of other comprehensive income July 1, 2012 (amendment to IAS 1) Deferred tax: recovery of underlying assets January 1, 2012 (amendment to IAS 12) IAS 19 (revised), ‘Employee benefits’ January 1, 2013 IAS 27 (revised ), ‘Separate financial statements’ January 1, 2013 Investments in associates and joint ventures January 1, 2013 (amendment to IAS 28) Offsetting financial assets and financial liabilities January 1, 2014 (amendment to IAS 32) IFRIC 20, ‘Stripping costs in the production phase January 1, 2013 of a surface mine’ Improvements to IFRSs 2010 January 1, 2011 Improvements to IFRSs 2009 －2011 January 1, 2013 Based on the Company’s assessment, the adoption of the 2013 version of IFRS has no significant impact on the parent company only financial statements of the Company, except the following: A. IAS 19, ‘Employee benefits’ Under the revised standard, net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. Additional disclosures are also required. B. IAS 1, ‘Presentation of financial statements’ The amendment requires entities to separate items presented in other comprehensive income (OCI) classified by nature into two groups on the basis of whether they may be reclassified to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Accordingly, the Company will adjust its presentation of the statement of comprehensive income.

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C. IFRS 12, ‘Disclosure of interests in other entities’ The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Company will disclose additional information about its interests in consolidated entities and unconsolidated entities accordingly. D. IFRS 13, ‘Fair value measurement’ The standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard sets out a framework for measuring fair value using the assumptions that market participants would use when pricing the asset or liability; for non-financial assets, fair value is determined based on the highest and best use of the asset. The standard requires disclosures about fair value measurements. Based on the Company’s assessment, the adoption of the standard has no significant impact on its parent company only financial statements and the Company will disclose additional information about fair value measurements accordingly. Based on the Company’s assessment, the adoption of the 2013 version of IFRSs has no significant impact on the parent company only financial statements of the Company. (63) IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by IASB but not yet included in the 2013 version of IFRS as endorsed by the FSC: Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board IFRS 9, ‘Financial instruments’ January 1, 2018 Sale or contribution of assets between an investor and its associate January 1, 2016 or joint venture (amendments to IFRS 10 and IAS 28) Investment entities: applying the consolidation exception January 1, 2016 (amendments to IFRS 10, IFRS 12 and IAS 28) Accounting for acquisition of interests in joint operations January 1, 2016 (amendments to IFRS 11) IFRS 14 , ‘Regulatory deferral accounts’ January 1, 2016 IFRS 15 , ‘Revenue from contracts with customers’ January 1, 2017 Disclosure initiative (amendments to IAS 1) January 1, 2016 Clarification of acceptable methods of depreciation and amortisation January 1, 2016 (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016 Defined benefit plans: employee contributions July 1, 2014 (amendments to IAS 19) Equity method in separate financial statements January 1, 2016 (amendments to IAS 27) Recoverable amount disclosures for non-financial assets January 1, 2014 (amendments to IAS 36)

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Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Novation of derivatives and continuation of hedge accounting January 1, 2014 (amendments to IAS 39) IFRIC 21 , ‘Levies’ January 1, 2014 Improvements to IFRSs 2010-2012 July 1, 2014 Improvements to IFRSs 2011-2013 July 1, 2014 Improvements to IFRSs 2012-2014 January 1, 2016 The Company is assessing the impact of the new standards and interpretations above and the impact will be disclosed when the assessment is complete. 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (64) Compliance statement These parent company only financial statements are prepared by the Company in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers. (65) Basis of preparation A.Except for the following items, these parent company only financial statements have been prepared under the historical cost convention: (a)Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. (b)Available-for-sale financial assets measured at fair value. (c)Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations. B.The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5. (66) Foreign currency translation Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in NTD, which is the Company’s functional and presentation currency.

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A.Foreign currency transactions and balances (a)Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges. (b)Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. (c)Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions. (d)All foreign exchange gains and losses are presented in the statement of comprehensive income under “other gains and losses”. B.Translation of foreign operations (a)The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows: i.Assets and liabilities for each balance sheet presented are translated at the exchange rate prevailing at the dates of that balance sheet; ii.Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; iii.All resulting exchange differences are recognized in other comprehensive income. (b)When a foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations. (c)When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, if the Company retains

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partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation. (67) Classification of current and non-current items A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets: (a)Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle; (b)Assets held mainly for trading purposes; (c)Assets that are expected to be realized within twelve months from the balance sheet date; (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date. B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities: (a)Liabilities that are expected to be paid off within the normal operating cycle; (b)Liabilities arising mainly from trading activities; (c)Liabilities that are to be paid off within twelve months from the balance sheet date; (d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. (68) Cash equivalents Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. Time deposits and bonds sold under repurchase agreements that meet the above criteria and held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents. (69) Financial assets at fair value through profit or loss A.Financial assets at fair value through profit or loss are financial assets held for trading or designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of sale in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition: (a)Hybrid (combined) contracts; or (b)They eliminate or significantly reduce a measurement or recognition inconsistency; or (c)They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

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B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting. C.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss. (70) Available-for-sale financial assets A.Available-for-sale financial assets are non-derivatives that are designated in this category. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting. B.Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. (71) Loans and receivables Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable which are non-interest bearing are subsequently measured at initial invoice amount as the effect of discounting is insignificant. (72) Impairment of financial assets A.The Company assesses at each balance sheet date whether there is objective evidence that an individual financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of an individual financial asset or group of financial assets that can be reliably estimated. B.The objective evidence that the Company uses to determine whether there is an impairment loss is as follows: (a)Significant financial difficulty of the issuer or debtor; (b)A breach of contract, such as a default or delinquency in interest or principal payments; (c)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or (d)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost. C.When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

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(a)Financial assets measured at amortized cost The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account. (b)Available-for-sale financial assets The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from “other comprehensive income” to “profit or loss”. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, then such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account. (73) Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average cost method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses. (74) Investments accounted for under the equity method / subsidiaries / associates A.Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies. In general, control is presumed when the parent owns, directly or indirectly, more than half of the voting power of an entity. The Company evaluates investments in subsidiaries accounted using equity method in these parent company only financial statements. B.Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

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C.The Company's share of its subsidiaries' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership. D.If changes in the Company’s shares in subsidiaries do not result in loss in control (transactions with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity. E.When the Company loses its control in a subsidiary, the Company revalues the remaining investment in the prior subsidiary at fair value, and recognises the difference between fair value and book value in the profit or loss for the period. The Company should reclassify all amounts previously recognised as other comprehensive income and amounts relating to the prior subsidiary to profit or loss. F.Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. G.The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. H.When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes all the change in equity in “capital surplus” in proportion to its ownership. I.Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company. J.In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then “capital surplus” and “investments accounted for under the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the

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Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of. K.When the Company loses its control in an associate, the Company revalues the remaining investment in the prior associate at fair value, and recognises the difference between fair value and book value in the profit or loss for the period. L.When the Company disposes its investment in an associate and loses significant influence over the associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. M.When the Company disposes its investment in an associate and loses significant influence over the associate, capital surplus in relation to the associate is transferred to profit or loss; if it retains significant influence over the associate, the amounts are transferred in accordance with the disposal ratio to profit or loss. N.Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation. (75) Property, plant and equipment A.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. B.Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss when incurred. C.Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately. D.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant

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and equipment are as follows: Buildings 3~50 years Machinery and equipment 2~9 years Others 2~6 years (76) Investment property An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25~50 years. (77) Intangible assets A.Goodwill arises in a business combination accounted for by applying the acquisition method. B.Intangible assets, mainly patents, royalties and other intangible assets, are amortized on a straight-line basis over their estimated useful lives of 2 ～10 years. (78) Impairment of non-financial assets A.The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss. Such recovery of impairment loss shall not result to the asset’s carrying amount greater than its amortized cost where no impairment loss was recognized. B.The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years. C.For impairment testing purpose, goodwill is allocated to cash generating units. This allocation is based on operating segments. Goodwill is allocated to a cash generating unit or a group of cash generating units that expects to benefit from business combination that will produce goodwill. (79) Financial liabilities at fair value through profit or loss A.Financial liabilities at fair value through profit or loss are financial liabilities held for trading. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. B.Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.

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(80) Derivative financial instruments and hedging activities A.Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Any changes in the fair value are recognized in profit or loss. B.The Company designates certain derivatives as either: (a)Hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge). (b)Hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge). C.The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. D.The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities. E.Fair value hedge (a)Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The Company only applies fair value hedge accounting for hedging foreign currency on long-term borrowings. The gain or loss relating to the effective portion of currency swaps hedging long-term borrowings denominated in foreign currency is recognized in the statement of comprehensive income within “finance costs”. The gain or loss relating to the ineffective portion is recognized in the statement of comprehensive income within “other gains and losses”. Changes in the fair value of the hedge long-term borrowings denominated in foreign currency attributable to interest rate risk are recognized in the statement of comprehensive income within “finance costs”. (b)If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity. F.Cash flow hedge (a)The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of

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comprehensive income within “other gains and losses”. (b)Amounts accumulated in other comprehensive income are reclassified into profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement of comprehensive income within “finance costs”. (c)When a hedging instrument expires, or is sold, cancelled or executed, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in other comprehensive income at that time remains in other comprehensive income. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is transferred to profit or loss in the periods when the hedged forecast cash flow affects profit or loss. (81) Employee benefits A.Short-term employee benefits Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and should be recognized as expenses in that period when the employees render service. B.Pensions (a)Defined contribution plans For defined contribution plans, the contributions are recognized as pension expenses on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments. (b)Defined benefit plans i.The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bond (at the balance sheet date). ii.Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise. iii.Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period. C.Employees’ bonus and directors’ and supervisors’ remuneration Employees’ bonus and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should

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be recognized based on the accounting for changes in estimates. The Company calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends. (82) Employee share-based payment A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest. B.Restricted stocks to employees: (a)Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period. (b)For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Company and the Company must refund their payments on the stocks. The Company recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”. C.The grant date for the shares reserved for employee preemption in cash capital increase is the date on which the Company informs employees of the grant and both the Company and employees agree to the number of shares granted and the price for subscription. (83) Income tax A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity. B.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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C.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed. E.A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized. (84) Revenue recognition The Company manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities. (85) Business combinations A.The Company uses the acquisition method to account for business combinations. The Company chooses to measure the non-controlling interest in the acquiree at the non-controlling interest’s proportionate share of the acquirer’s identifiable net assets on an acquisition-by-acquisition basis. B.If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the acquisition-date fair value of any previous equity interest in the acquiree is higher than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recorded as goodwill; if less than the fair value of the Company’s share of the identifiable net assets acquired, the difference is recognized directly in profit or loss. (86) Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments. 5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these parent company only financial statements requires management to make critical judgments in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and

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are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below: (87) Critical judgments in applying the Company’s accounting policies Financial assets －impairment of equity investments The Company follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgment. In making this judgment, the Company evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the accumulated fair value adjustments recognized in other comprehensive income on the impaired “available-for-sale financial assets” is transferred to profit or loss. (88) Critical accounting estimates and assumptions The Company makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: A.Impairment assessment of goodwill The impairment assessment of goodwill relies on the Company’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(10) for the information on goodwill impairment. B.Reliability of deferred income tax assets Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. Assessment of the reliability of deferred income tax assets involves critical accounting judgments and estimates of the management, including the assumptions of expected future sales, revenue growth rate, profit rate, tax holiday, available tax credits, and tax planning, etc. Any change in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets. C.Evaluation of inventories As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value.

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D.Financial assets - fair value measurement of unlisted stocks without active market The fair value of unlisted stocks held by the Company that are not traded in an active market is determined considering those companies’ recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgments and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the financial instruments fair value information. 6. DETAILS OF SIGNIFICANT ACCOUNTS (89) Cash and cash equivalents December 31, 2014 December 31, 2013 Cash on hand and revolving funds $ 255 $ 581 Checking accounts and demand deposits 40,578,940 25,816,011 Time deposits 11,394,000 1,788,300 51,973,195 27,604,892 Cash equivalents - Repurchase Bonds 3,570,000 - $ 55,543,195 $ 27,604,892 A.The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Company’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents. B.The above time deposits and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote. (90) Financial assets and liabilities at fair value through profit or loss Assets December 31, 2014 December 31, 2013 Current items Financial assets held for trading Forward foreign exchange contracts $ 52,453 $ 227,703 Liabilities December 31, 2014 December 31, 2013 Current items Financial liabilities held for trading $ 605,016 $ 689,097 Forward foreign exchange contracts A.The Company recognized net loss of $883,120 and $1,587,910 on financial assets held for trading for the years ended December 31, 2014 and 2013, respectively.

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

December 31, 2014 December 31, 2013 Contract Amount Contract Amount Derivative financial (Notional Principal) (Notional Principal) assets and liabilities (in thousands) Contract Period (in thousands) Contract Period Current items Forward foreign USD (sell) $ 425,000 2014/10~2015/3 USD (sell) $ 467,000 2013/10~2014/3 exchange contracts JPY (buy) 48,580,180 2014/10~2015/3 JPY (buy) 47,065,250 2013/10~2014/3 Forward foreign EUR (sell) 38,000 2014/10~2015/2 EUR (sell) 188,000 2013/10~2014/3 exchange contracts USD (buy) 47,574 2014/10~2015/2 USD (buy) 256,665 2013/10~2014/3 TWD (sell) 26,762,745 2013/12~2014/3 USD (buy) 904,000 2013/12~2014/3 The Company entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds and foreign currency. However, these forward foreign exchange contracts are not accounted for under hedge accounting. (91) Available-for-sale financial assets Items December 31, 2014 December 31, 2013 Current items Bond investments $ 220,000 $ - Non-current items Listed stocks and bond investments $ 2,537,965 $ 1,150,866 Emerging and unlisted stocks 563,496 673,256 $ 3,101,461 $ 1,824,122 A.The Company recognized gain in other comprehensive income for the fair value change for the years ended December 31, 2014 and 2013 in the amount of $138,700 and $211,410, respectively. B.The counterparties of the Company’s debt instrument investments have good credit quality, all with credit rating of twA+ above. The maximum exposure to credit risk at balance sheet date is the carrying amount of available-for-sale financial asstes - debt instruments. (92) Hedging derivative financial liabilities Items December 31, 2014 December 31, 2013 Current item Interest rate swap - cash flow hedges $ 1,351 $ - Non-current item $ - $ 21,918 Interest rate swap - cash flow hedges

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Cash flow hedges

Designated as Hedging Instruments Derivative Period of Gain Instruments Fair Value Period of (Loss) Expected Designated December 31, December 31, Anticipated to be Recognised Hedged Items as Hedges 2014 2013 Cash Flow in Profit or Loss Long-term borrowings Interest rate swap ($ 1,351) ($ 21,918) 2008~2015 2008~2015 (a)The Company was exposed to significant risk of future cash flow changes on principal payments associated with the Company’s floating interest rate bearing borrowings, both current and long-term portion. Therefore, the Company entered into interest rate swap contracts for exchanging floating interest rate for fixed interest rate (TWD90/180CP (Page51328) to hedge such exposures. (b)Information about gain or loss arising from cash flow hedges recognized in profit or loss and other comprehensive income: Years ended December 31, Items 2014 2013 Amount of gain or loss adjusted in other comprehensive income $ 1,224 $ 3,210 Amount of gain or loss transferred from other comprehensive income to profit or loss 277,234 ( 82,687) (c)The gain/(loss) relating to the ineffective portion of cash flow hedges recognized in profit or loss amounted to $289 for the year ended December 31, 2013. (93) Accounts and notes receivable December 31, 2014 December 31, 2013 Notes receivable $ 21,447 $ 21,447 Accounts receivable 69,802,557 65,425,580 69,824,004 65,447,027 Less: allowance for sales returns and discounts ( 827,583) ( 1,545,279) allowance for bad debts ( 138,272) ( 138,483) $ 68,858,149 $ 63,763,265 A.The Company’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability.

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B.The aging analysis of accounts receivable and notes receivable that were past due but not impaired is as follows: December 31, 2014 December 31, 2013 Up to 60 days $ 534,490 $ 3,048,292 61 to 180 days 64,153 561,008 Over 180 days 4,309 65,816 $ 602,952 $ 3,675,116 The above ageing analysis was based on past due date. C.Movement analysis of accounts receivable and notes receivable that were impaired is as follows: (a)As of December 31, 2014 and 2013, the Company’s accounts receivable that were impaired were $138,272 and $138,483, respectively. (b)Movement on allowance for bad debts for impairment loss based on individual provision is as follows: 2014 2013 At January 1 $ 138,483 $ 117,036 Allowance for bad debts - reclassified - 21,447 Allowance for bad debts - write-offs ( 211) - At December 31 $ 138,272 $ 138,483 D.The maximum exposure to credit risk was the carrying amount of each class of accounts receivable. (94) Inventories December 31, 2014 December 31, 2013 Raw materials and supplies $ 1,780,875 $ 1,985,689 Work in process 16,122,356 26,186,168 Finished goods 10,034,934 11,338,352 $ 27,938,165 $ 39,510,209 Expenses and losses incurred on inventories for the years ended December 31, 2014 and 2013 are as follows: Years ended December 31, 2014 2013 Cost of inventories sold $ 389,619,753 $ 393,083,704 Reversal of allowance for scrap, obsolescence ( 383,000) ( 1,423,000) and price decline Disposal loss and others 373,032 545,747 $ 389,609,785 $ 392,206,451

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

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recovered. (95) Investments accounted for under the equity method December 31, 2014 December 31, 2013 Landmark International Ltd. $ 41,425,623 $ 36,005,637 Innolux Holding Ltd. 16,796,396 15,866,385 Toppoly Optoelectronics (B.V.I.) Ltd. 5,945,861 4,347,392 Innolux Hong Kong Holding Ltd. 2,393,227 2,164,447 InnoJoy Investment Corporation 1,670,083 1,721,618 Innolux Optoelectronics Japan Co., Ltd. 1,572,495 1,574,455 Ampower Holding Ltd. 1,477,199 1,526,449 Yuan Chi Investment Co., Ltd. 918,468 1,015,867 GIO Optoelectronics Corporation 449,994 475,253 Chi Mei Materials Technology - 1,883,267 Contrel Technology Co., Ltd. - 473,259 Others 447,043 806,183 $ 73,096,389 $ 67,860,212 1. The Company’s subsidiaries The Company has invested in the Mainland subsidiary through Landmark International Ltd., Innolux Holding Ltd., Toppoly Optoelectronics (B.V.I.) Ltd. and Innolux Hong Kong Holding Ltd. The subsidiary is engaged in the research and development, assembly processing and after-sale services of LCD modules and LCD monitors. Information on investees in Mainland China is provided in Note 13. 2. The Company’s associates A.The financial information of the Company’s associates is summarized below: Assets Liabilities Revenue Profit/(Loss) December 31, 2014 $ 3,908,085 $ 1,297,031 $ 1,798,602 ($ 475,353) December 31, 2013 22,729,921 7,107,607 20,087,705 2,302,711 B.The fair value of the Company’s associates which have quoted market price is as follows: Stock price per share (in dollars) December 31, 2013 Chi Mei Materials Technology $ 36.45 Contrel Technology Co., Ltd. 16.95 C.During 2014, the Company sold its interests in Chi Mei Materials Technology and Contrel Technology Co., Ltd. Since the Company lost control, the investment was reclassified as “available-for-sale financial assets - non-current”. D.The Company recognized impairment loss on associates for the year ended December 31, 2013 in the amount of $204,721.

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(96) Property, plant and equipment 2014 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Land $ 3,852,792 $ - $ - $ - $ 3,852,792 Buildings 156,365,038 - ( 303,647) 797,338 156,858,729 Machinery and equipment 376,152,145 51,347 ( 14,314,548) 13,181,365 375,070,309 Others 20,655,250 2,223 ( 2,591,901) 4,518,734 22,584,306 557,025,225 53,570 ( 17,210,096) 18,497,437 558,366,136 Accumulated depreciation and impairment: Buildings ( 59,116,947) ( 13,954,331) 302,794 1,528 ( 72,766,956) Machinery and equipment ( 252,063,722) ( 37,915,245) 14,309,885 ( 8,533,930) ( 284,203,012) Others ( 15,428,084) ( 2,767,296) 2,588,567 ( 1,983,547) ( 17,590,360) ( 326,608,753) ( 54,636,872) 17,201,246 ( 10,515,949) ( 374,560,328) Unfinished construction and equipment under acceptance 3,141,142 14,127,037 ( 130) ( 8,474,675) 8,793,374 $ 233,557,614 $ 192,599,182 2013 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Land $ 3,852,792 $ - $ - $ - $ 3,852,792 Buildings 153,864,439 - ( 78,689) 2,579,288 156,365,038 Machinery and equipment 347,222,768 330 ( 2,556,036) 31,485,083 376,152,145 Others 17,895,333 215 ( 1,692,005) 4,451,707 20,655,250 522,835,332 545 ( 4,326,730) 38,516,078 557,025,225 Accumulated depreciation and impairment: Buildings ( 44,259,742) ( 14,939,334) 58,594 23,535 ( 59,116,947) Machinery and equipment ( 200,871,601) ( 51,214,999) 2,138,976 ( 2,116,098) ( 252,063,722) Others ( 12,598,062) ( 3,023,762) 1,689,971 ( 1,496,231) ( 15,428,084) ( 257,729,405) ( 69,178,095) 3,887,541 ( 3,588,794) ( 326,608,753) Unfinished construction and equipment under acceptance 21,945,408 15,812,656 - ( 34,616,922) 3,141,142 $ 287,051,335 $ 233,557,614 Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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(97) Investment property 2014 2013 At At At At January 1 Additions December 31 January 1 Additions December 31 Cost: Land $ 188,247 $ - $ 188,247 $ 188,247 $ - $ 188,247 Buildings 568,440 - 568,440 568,440 - 568,440 $ 756,687 $ - $ 756,687 $ 756,687 $ - $ 756,687 Accumulated depreciation and impairment: Buildings ( 49,837) ( 13,173) ( 63,010) ( 36,664) ( 13,173) ( 49,837) $ 706,850 $ 693,677 $ 720,023 $ 706,850 The fair value of the investment property held by the Company as at December 31, 2014 and 2013 was $1,110,523 and $721,774, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information. (98) Intangible assets A.Intangible assets are goodwill, payments for TFT-LCD related technology and royalty. 2014 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Patents and royalty $ 8,807,308 $ - ($ 673,622) $ 3,349 $ 8,137,035 Goodwill 17,096,628 - - - 17,096,628 Others 3,267,074 - ( 79,340) 498,811 3,686,545 29,171,010 - ( 752,962) 502,160 28,920,208 Accumulated amortisation and impairment: Patents and royalty ( 5,215,968) ( 1,193,337) 673,622 - ( 5,735,683) Others ( 2,840,599) ( 291,157) 79,340 ( 4,925) ( 3,057,341) ( 8,056,567) ( 1,484,494) 752,962 ( 4,925) ( 8,793,024) $ 21,114,443 $ 20,127,184

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2013 Transfer, net exchange differences At January 1 Additions Disposals and others At December 31 Cost: Patents and royalty $ 8,805,608 $ - $ - $ 1,700 $ 8,807,308 Goodwill 17,096,628 - - - 17,096,628 Others 3,150,228 - ( 14,561) 131,407 3,267,074 29,052,464 - ( 14,561) 133,107 29,171,010 Accumulated amortisation and impairment: Patents and royalty ( 3,709,759) ( 1,506,209) - - ( 5,215,968) Others ( 2,546,004) ( 370,951) 14,561 61,795 ( 2,840,599) ( 6,255,763) ( 1,877,160) 14,561 61,795 ( 8,056,567) $ 22,796,701 $ 21,114,443 B.Details of amortisation on intangible assets are as follows: Years ended December 31, 2014 2013 Operating costs $ 954,350 $ 961,945 Operating expenses 530,144 915,215 $ 1,484,494 $ 1,877,160

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(100) Long-term borrowings

Type of loans Period December 31, 2014 December 31, 2013 Syndicated bank loans 2005/03~2016/11 $ 98,227,530 $ 139,125,971 Guaranteed commercial papers 2012/11~2015/07 129,148 258,354 Credit loans 2009/09~2014/06 - 16,372,450 $ 98,356,678 $ 155,756,775 Less: Administrative expenses charged by syndicated ( 41,252) ( 187,557) banks Current portion ( 61,092,333) ( 155,569,218) $ 37,223,093 $ - Range of interest rates 1.2474%~2.4737% 1.3115%~2.795% A.Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings. B.The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, which were based on the Company’s annual parent company only financial statements audited by independent auditors. The Company’s financial ratios on the parent company only financial statements for the years ended December 31, 2014 and 2013 are in accordance with the covenants on the syndicated loan agreement. C.In December 2011, the Company applied for the assistance of Ministry of Economic Affairs to negotiate the debt with the syndicated banks, in accordance with the “Procedures for the Assistance of Ministry of Economic Affairs in the Negotiation of Enterprise and Financial Institution relating to the Debt Issue”. On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with all financial institution creditors based on the framework of the resolutions during the creditors and debtors negotiation meeting. The major terms of the agreement were as follows: (a)Medium and long-term syndicated loans The medium and long-term syndicated loans due between 2012 to 2014 will be extended for 2-3 years. Principal is repayable every year based on a certain percentage; interest is charged at the original interest rate or at the original interest rate plus premium rate. (b)Short and medium-term non-syndicated loans The outstanding balances or the original amounts of each loan are renewed based on the original terms and all extended to December 31, 2013. Before maturity, the Company may apply for the extension of such loans for another year for each application, with a maximum of two applications with each bank. Interest is charged at the original interest rate plus premium rate and extension fee is charged at a certain percentage.

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(c)Credit lines of derivative financial instruments At least two-thirds of the original credit lines of derivative financial instruments are renewed based on the original terms and all extended to December 31, 2013. Before maturity, the Company may apply for the extension of such credit lines for another one year for each application, with a maximum of two applications with each bank. Extension fee is charged at a certain percentage. (d)Other matters a)All financial institution creditors agreed to waive the 2011 and 2012 covenants, the interest penalty, and default penalty arising from the violation of covenants. b)All financial institution creditors agreed to waive the agreement that the Company shall early repay whole or part of the loans as prescribed by the original agreements before the extension agreements were approved by all financial institution creditors. (e)The Company’s significant commitments The Company is committed to increase capital in certain amounts of cash within 3 years starting from 2012, to focus on its main business activities, and not to make investments out of its main business lines, except for equipment improvements or equipment additions for its main business. Further, the Company shall not apply for bankruptcy or reorganisation during the period of negotiation for the extension of the due date on the Company’s debt. D.Because the Company failed to meet the requirements specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2013, the syndicated banks may take measures, in accordance with the agreement, including, but not limited to the outstanding principal, interest expenses, and other payables be due immediately. Therefore, the Company reclassified syndicated loans and other long-term borrowings as of December 31, 2013 amounting to $155,569,218 (including administrative expenses charged by syndicated banks) to “long-term liabilities - current portion”. However, the deadline was extended to the end of 2014 through the concession of financial institution creditors on January 27, 2014. E.Though the Company failed to meet the requirement specified in the “syndicated repayment agreement” signed for the cash capital increase for the year ended December 31, 2014, the deadline was extended to the end of 2015 through the concession of financial institution creditors. F. In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal for the company to apply for a syndicated credit line of NT$68.5 billion with financial institutions.

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(101) Pensions A.Defined benefit pension plan (a)The Company has established a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforecment of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, employees are entitled to two base points for every year of service for the first 15 years and one base point for each additional year thereafter, up to a maximum of 45 base points. The pension payment to employees was computed based on years of service and average salaries or wages of the last six months prior to approved retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. (b)The amounts recognised in the balance sheet were determined as follows: December 31, 2014 December 31, 2013 Present value of funded obligations $ 1,605,920 $ 1,504,354 Fair value of plan assets ( 1,488,938) ( 1,454,627) Net liability in the balance sheet (shown as $ 116,982 $ 49,727 “Other non-current liabilities”) (c)Changes in present value of funded obligations were as follows: 2014 2013 Present value of funded obligations At January 1 $ 1,504,354 $ 1,464,983 Current service cost 10,470 9,148 Interest expense 30,087 21,975 Actuarial gain and loss 61,009 8,248 $ 1,605,920 $ 1,504,354 At December 31 (d)Changes in fair value of plan assets were as follows: 2014 2013 Fair value of plan assets At January 1 $ 1,454,627 $ 1,398,638 Expected return on plan assets 29,092 20,980 Actuarial gain and loss 5,219 ( 3,622) Employer contributions - 38,631 $ 1,488,938 $ 1,454,627 At December 31

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attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. For the years ended December 31, 2014 and 2013, the actual return on plan assets was $34,311 and $17,358, respectively. (h)The principal actuarial assumptions used were as follows: Years ended December 31, 2014 2013 Discount rate 2.25% 2.00% Future salary increases 3.00% 3.00% Expected return on plan assets 2.25% 2.00% Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Morality Table. (i)Historical information of experience adjustments was as follows: Years ended December 31, 2014 2013 Present value of defined benefit obligation $ 1,605,920 $ 1,504,354 Fair value of plan assets ( 1,488,938) ( 1,454,627) Deficit in the plan $ 116,982 $ 49,727 Experience adjustments on plan liabilities $ 60,201 $ 320,046 Experience adjustments on plan assets $ 5,219 ($ 3,622) (j)The Company suspended its contributions to the pension reserve as agreed by the Science Park Administration in June 2013. B.Defined contribution pension plan (a)Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. (b)The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2014 and 2013 were $939,629 and $842,000, respectively.

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

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(f)The fair value of stock options granted from 2010 to first quarter of 2014 is measured using the Black-Scholes option-pricing model. Relevant information is as follows: Risk Exercise Expected Expected Expected free Fair value Type of Price price volatility duration dividend interest per unit arrangement Grant date (in dollars) (in dollars) (%) (month) yield (%) rate (%) (in dollars) Reservation for new 2014.07.09 $ 14.90 $ 12.50 36.01 0.84 - 0.42$ 2.42 share subscription by employees Restricted stocks to employees - shares subscribed 2013.12.12 10.65 - - - - - 10.65 with consideration - shares issued with 2013.12.12 10.65 5.00 - - - - 5.65 no consideration - shares subscribed 2013.03.29 18.40 - - - - - 18.40 with consideration - shares issued with 2013.03.29 18.40 5.00 - - - - 13.40 no consideration - shares subscribed 2013.01.30 15.35 - - - - - 15.35 with consideration - shares issued with 2013.01.30 15.35 5.00 - - - - 10.35 no consideration Reservation for new 2013.01.17 14.15 12.98 48.20 0.36 - 0.65 1.17 share subscription by employees Employee stock 2011.05.19 26.70 26.70 35.67 48.60 - 1.00 7.31 options ~8.32 Employee stock 2010.05.13 39.85 39.85 51.57 48.60 - 0.80 15.12 options ~16.98 B.Employee stock options acquired because of merger (a)Details: Quantity granted Type of arrangement Grant date (in thousand units) Contract period Vesting conditions Employee stock options 2009.09.30 24,819 5 years Note ii, iv Employee stock options 2007.07.02 21 (Note i) 6 years Note iii, iv Employee stock options 2007.12.27 2 (Note i) 6 years Note iii, iv i.Each unit of stock options can subscribe for 1,000 shares of common stock. ii.The employees may exercise the stock options by stage based on 50% and 50% of total options granted on completion of the specified years of service (two to three years) from the grant date. iii.The employees may exercise the stock options by stage based on 25%, 25%, 25% and 25% of total options granted on completion of the specified years of service (two to five years) from the grant date.

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iv.The employee stock options had already expired. v.The units of employee stock options above were adjusted by share conversion rate. (b)The fair value of employee stock options was estimated using the Hull & White (2002) Enhanced FASB 123 of the aforementioned binomial model. The information was as follows: Risk Exercise Expected Expected Expected free Fair value Type of Price price volatility duration dividend interest per unit arrangement Grant date (in dollars) (in dollars) (%) (month) yield (%) rate (%) (in dollars) Employee stock 2009.09.30 $ 51.60 $ 39.20 45.10 36.78 0.61 0.82 $3.57~4.14 options Employee stock 2007.07.02 51.60 67.53 45.10 24.78 0.61 0.82 4.23~4.41 options Employee stock 2007.12.27 51.60 80.63 45.10 48.54 0.61 0.82 3.65~3.82 options C.The details of the employee stock option plan for the years ended December 31, 2014 and 2013 were as follows: Year ended December 31, 2014 Weighted WeightedWeighted average average Range ofaverage stock price of Quantity exercise exercise remaining stock options (in thousand price price vesting at exercise Stock Options units) (in dollars) (in dollars) period date (in dollars) Outstanding options at the 94,819 $ 28.71 beginning of the year Options exercised - - $ 12.68 Options expired ( 24,819) 32.10 Outstanding options at the end of the year 70,000 25.63 $ 32.59 0.38 years 22.85 1.39 yeas Exercisable options at the 50,000 26.75 end of the year

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(103) Provisions-current Warranty Litigation and others Total At January 1, 2014 $ 140,809 $ 1,808,220 $ 1,949,029 Addition 2,723,491 2,451,275 5,174,766 Used during the year ( 2,117,279) ( 1,873,027) ( 3,990,306) At December 31, 2014 $ 747,021 $ 2,386,468 $ 3,133,489 A.Warranty The Company provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products. B.Litigation and others Litigation and other provision for the Company are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

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(104) Share capital A.As of December 31, 2014, the Company’s authorized and outstanding capital were $120,000,000 (including $500,000 reserved for employee stock options) and $99,545,364, respectively, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. Movements in the number of the Company’s ordinary shares outstanding are as follows: 2014 2013 Number of ordinary Number of ordinary shares (in thousands) shares (in thousands) At January 1 9,109,429 7,912,971 Employee stock options exercised 850,000 1,125,000 Issuance of restricted shares to employees - 72,526 Cancellation of restricted stock to employees ( 4,893) ( 1,068) At December 31 9,954,536 9,109,429 B.The Company’s Board of Directors resolved to increase capital through cash on December 17, 2013 by issuing common shares of no more than 2 billion shares, in exchange for cash domestically or by using cash from capital increase to issue common shares in exchange for the issuance of foreign depository receipts. On June 19, 2014, the shareholders approved the capital increase. On June 20, 2014, the Board of Directors approved the domestic capital increase of 10,625,000 shares. The issue price was determined to be $12.5 in July 2014, and the capital increase was effective on August 12, 2014. C.The Board of Directors of the Company resolved to increase capital for cash by issuing global depositary receipts (the “GDR”). The amount of $9,360,000 is tentatively scheduled for release, (approximately equivalent to US$312,625 thousand). As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval on January 30, 2015. D.As authorized by the shareholders during their meeting in June 2012, the Board of Directors of the Company resolved to increase capital for cash by issuing the GDR on July 18, 2012, and had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, including 112,500 thousand shares regarded as employee stock options, and 101,250,000 units of GDRs which represent 1,012,500 thousand shares of common stock, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange. Per unit was issued at a premium of US$4.481, which was equivalent to $12.98 per share and raised a total of $14,519,051, net of issuance cost. As of December 31, 2014, there were 69 thousand units outstanding, representing 692 thousand shares of common stocks. E.As authorized by the shareholders at the shareholders’ meeting in June, 2012, the Board of

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Directors of the Company adopted a resolution on January 30, 2013, March 29, 2013 and November 12, 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). The effective dates of the issuance were on January 30, 2013, March 29, 2013 and December 12, 2013. Until the vesting conditions are met by employees, those shares are restricted to transfer voting rights, dividend and other rights. As of December 31, 2014, the Company bought back 4,893 shares of unvested restricted stocks to employees, and decreased capital in accordance with related regulation. F.The stockholders at the stockholders’ meeting on January 6, 2010 approved the merger of the Company with another company by issuing new shares, with the Company as the surviving company. The Company issued 4,046,382 thousand new shares according to the merger contract. The new shares included the common stock issued by the acquired companies in May and December 2006 through private placement. The issuance of 570,929 thousand shares was determined based on the exchange ratio in the merger contract. The rights and obligations of the private common shares were the same as other issued common shares, except for the transfer restriction under R.O.C. Securities and Exchange Act and the listing restriction that no public listing will be allowed within three years since the day of issuance and only if the Company completes the application to publicly issue the shares. The aforementioned private common shares have not been publicly issued as of December 31, 2014. G.In accordance with the Board of Directors’ resolution in August 2007, the Company decided to issue 300 million shares of common stock for cash, including 149,967,500 units of GDRs which represent 299,935 thousand shares of common stock with a unit of GDR representing 2 shares of common stock. Per unit was issued at premium of US$9.02 (in dollars). In accordance with the Board of Directors’ resolution in March 2013, the Company terminated the abovementioned GDR, and the effective date of termination was in May 2013. The depository trust company completed the cancellation and distributed proceeds in November 2013. (105) Capital surplus Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

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

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

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Year ended December 31, 2013 Dividends per Amount share (in dollars) Legal reserve $ 509,272 Special reserve 1,144,229 Cash dividends 90,495 $ 0.01 $ 1,743,996 Furthermore, the Company’s stockholders have resolved to distribute $0.14 cash per share with capital surplus amounting to $1,266,944. The Company distributed a total of $0.15 cash dividend per share. E.Employees’ bonus and directors’ and supervisors’ remuneration were accrued at $172,217 and $4,004, respectively, for the year ended December 31, 2013. The amount was accrued by considering the period’s net profit after tax, legal reserve amongst other factors and the Company’s Articles of Incorporation. As resolved by the stockholders in June 2014, employees’ bonus and directors’ and supervisors’ remuneration were $343,922 and $90, respectively, resulting to a difference of $167,791 from the amounts in 2013 financial statements. The difference was caused by different accrual ratio which has been processed as accounting estimates after being approved at the stockholders’ meeting and recorded as expense in 2014. For the year ended December 31, 2014, employees’ bonus was accrued at $1,436,187. Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

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(107) Other equity items

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

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(108) Other income Years ended December 31, 2014 2013 Rental revenue $ 139,286 $ 129,511 Interest income 126,493 112,782 Dividend income 7,567 43,822 Other income 1,106,573 935,960 $ 1,379,919 $ 1,222,075 (109) Other gains and losses

Years ended December 31, 2014 2013 Net loss on financial assets and liabilities at fair ($ 883,120) ($ 1,587,910) value through profit or loss Net currency exchange gain 1,143,155 2,252,870 Gain on disposal of investments 452,613 18,366 Gain (loss) on disposal of property, plant and 22,568 ( 6,065) equipment Impairment loss - ( 204,721) Litigation loss and others ( 4,154,038) ( 9,422,978) ($ 3,418,822) ($ 8,950,438) (110) Finance costs Years ended December 31, 2014 2013 Interest expense: Bank borrowings $ 2,984,966 $ 4,292,335 Bonds - 5,662 Others 13,507 20,567 (Gain) loss on fair value change of financial instruments: (Gain) loss on cash flow hedges, reclassified from equity ( 277,234) 82,687 Fair value hedges - ( 31,642) Financing charges incurred on accounts - 225 receivable factoring $ 2,721,239 $ 4,369,834

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(111) Expenses by nature Years ended December 31, 2014 2013 Employee benefit expense $ 26,411,358 $ 20,699,447 Depreciation 54,650,045 69,191,268 Amortization 1,484,494 1,877,160 $ 82,545,897 $ 91,767,875 (112) Employee benefit expense Years ended December 31, 2014 2013 Salaries and other-term employee benefits $ 24,882,037 $ 19,290,430 Share-based payments 578,227 556,874 Termination benefits 951,094 852,143 $ 26,411,358 $ 20,699,447

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(113) Income tax A.Income tax expense (a)Components of income tax expense: Years ended December 31, 2014 2013 Current tax: Current tax on profit for the period $ 123,787 $ - Adjustments in respect of prior years 1,075 2,985 Total current tax 124,862 2,985 Deferred tax: Origination and reversal of temporary ( 123,787) ( 670,402) differences Income tax expense (benefit) $ 1,075 ($ 667,417) (b)The income tax (charge)/credit relating to components of other comprehensive income is as follows:

Years ended December 31, 2014 2013 Fair value gains/losses on available-for-sale financial assets $ 8,453 ($ 49,140) Cash flow hedges ( 47,338) 24,916 Actuarial gains/losses on defined benefit obligations ( 9,484) ( 2,018) ($ 48,369) ($ 26,242) B.Reconciliation between income tax expense and accounting profit Years ended December 31, 2014 2013 Tax calculated based on profit before tax and statutory tax rate $ 3,685,232 $ 753,976 Effects from items disallowed by tax regulation ( 575,514) 166,080 Under provision of prior year's income tax 1,075 2,985 Additional 10% tax on undistributed earnings 334,872 - Effect from Alternative Minimum Tax 74,672 118,725 Change in assessment of realization of deferred tax assets ( 3,519,262) ( 1,709,183) Tax expense $ 1,075 ($ 667,417)

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C.Amounts of deferred tax assets or liabilities as a result of temporary differences, loss carryforward and investment tax credits were as follows: Year ended December 31, 2014 Recognised in other Recognised in comprehensive January 1 profit or loss income December 31 Temporary differences: -Deferred tax assets: Sales returns and discount $ 288,013 ($ 121,640) $ - $ 166,373 provisions Accrued royalties and warranty provisions 364,411 ( 36,493) - 327,918 Unrealised exchange loss - 200,697 - 200,697 Unrealised loss on financial instruments 449,511 258,904 ( 8,453) 699,962 Net operating loss carryforward 16,520,833 ( 672,645) - 15,848,188 Others 212,631 110,173 9,484 332,288 $ 17,835,399 ($ 261,004) $ 1,031 $ 17,575,426 -Deferred tax liabilities: Unrealised exchange gain ($ 51,357) $ 51,357 $ - $ - Unrealised gain on cash flow hedges ( 97,943) - 47,338 ( 50,605) Amortisation charges on goodwill ( 726,842) 332,155 - ( 394,687) Others ( 33,566) 1,279 - ( 32,287) ($ 909,708) $ 384,791 $ 47,338 ($ 477,579) Total $ 16,925,691 $ 123,787 $ 48,369 $ 17,097,847

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Year ended December 31, 2013 Recognised in other Recognised in comprehensive January 1 profit or loss income December 31 Temporary differences: -Deferred tax assets: Sales returns and discount provisions $ 98,369 $ 189,644 $ - $ 288,013 Accrued royalties and warranty provisions 169,057 195,354 - 364,411 Unrealised loss on financial instruments 483,870 ( 83,499) 49,140 449,511 Net operating loss carryforward 16,285,600 235,233 - 16,520,833 Others 322,918 ( 112,305) 2,018 212,631 $ 17,359,814 $ 424,427 $ 51,158 $ 17,835,399 -Deferred tax liabilities: Unrealised exchange gain ($ 455,343) $ 403,986 $ - ($ 51,357) Unrealised gain on cash flow hedges ( 73,027) - ( 24,916) ( 97,943) Amortisation charges on goodwill ( 533,081) ( 193,761) - ( 726,842) Others ( 69,316) 35,750 - ( 33,566) ($ 1,130,767) $ 245,975 ($ 24,916) ($ 909,708) Total $ 16,229,047 $ 670,402 $ 26,242 $ 16,925,691 D.Details of investment tax credits and unrecognised deferred tax assets are as follows: December 31, 2013 Unrecognised Final year tax Qualifying items Unused tax credits deferred tax assets credits are due Machinery and equipment $ 409,544 $ 409,544 2014

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

December 31, 2014 Unrecognised Amount filed / deferred Usable Year incurred assessed Unused amount tax assets until year 2010 Assessed $ 14,641,521 $ 3,414,183 2015~2020 2011 Assessed 63,808,943 14,879,288 2021 2012 Filed 43,123,373 10,055,723 2022 $ 121,573,837 $ 28,349,194 December 31, 2013 Unrecognised Amount filed / deferred Usable Year incurred assessed Unused amount tax assets until year 2009 Assessed $ 44,934,812 $ 37,357,906 2014 2010 Assessed 22,184,259 9,273,300 2015~2020 2011 Filed 63,324,400 17,700,435 2021 2012 Filed 43,123,373 12,053,847 2022 $ 173,566,844 $ 76,385,488

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

December 31, 2014 December 31, 2013 Deductible temporary differences $ 31,105,662 $ 81,368,397 G.The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2014 and 2013, the amounts of temporary differences unrecognised as deferred tax liabilities were $20,486,590 and $12,677,405, respectively. H.Certain revenue from the design, research, development, manufacture and sale of the thin film transistor - liquid crystal displays (TFT-LCD) and LCDs is exempt from income tax from 2008 to 2015. I.The Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority. J.Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.

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K.The details of imputation system are as follows:

December 31, 2014 December 31, 2013 (a)Balance of tax credit account $ 738,931 $ 1,082,780 2014 (Estimate) 2013 (Actual) 2.96% 20.48% (b)Estimated creditable tax rate (114) Earnings per share

As employee stock options had anti-dilutive effect for the years ended December 31, 2014 and 2013, they were not included in the calculation of diluted earnings per share. (115) Non-cash transaction Investing activities with partial cash payments: Years ended December 31, 2014 2013 Purchase of property, plant and equipment $ 14,180,607 $ 15,813,201 Add: opening balance of payable on equipment 3,180,964 3,439,899 Less: ending balance of payable on equipment ( 2,732,538) ( 3,180,964) Cash paid during the year $ 14,629,033 $ 16,072,136

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7. RELATED PARTY TRANSACTIONS (116) Significant related party transactions A.Operating revenue Years ended December 31, 2014 2013 Sales of goods: Others $ 14,374,629 $ 5,617,759 Subsidiaries 7,967,864 6,111,580 Associates 27,050 - $ 22,369,543 $ 11,729,339 The collection period was 30~120 days upon delivery or on a monthly-closing basis to related parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related parties above were not significantly different from those of sales to third parties. B.Purchases of goods Years ended December 31, 2014 2013 Purchases of goods: Associates $ 4,431,198 $ 5,287,598 Others 2,767,390 1,772,885 Subsidiaries 420,519 1,712,587 $ 7,619,107 $ 8,773,070 The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-related parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms to related parties above were not materially different from those of purchases from third parties. C.Consigned processing (a)Consigned processing Years ended December 31, 2014 2013 Processing costs: Subsidiaries $ 167,873,521 $ 148,212,172 Associates - 8,412 Others 15,192 - $ 167,888,713 $ 148,220,584

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(b)Balance of consigned processing at the end of year (shown as “Other payables”) December 31, 2014 December 31, 2013 Payables to related parties: Subsidiaries $ 2,677,593 $ 283,023 The Company subcontracted the processing of products of associates in Mainland China. The processing fees were mainly charged based on cost plus method. D.Accounts receivable December 31, 2014 December 31, 2013 Receivables from related parties: Others $ 5,821,222 $ 1,833,860 Subsidiaries 774,814 1,095,893 Associates 27,899 - 6,623,935 2,929,753 Less: transfer to other receivables ( 556,217) ( 519,851) allowance for bad debts ( 60) ( 60) $ 6,067,658 $ 2,409,842 (a) The receivables from related parties arise mainly from sales transactions. The receivables are due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties. (b) The above receivables from related parties that exceed normal granting periods were transferred to ‘other receivables – related parties’. E.Other receivables December 31, 2014 December 31, 2013 Transfer from accounts receivable $ 556,217 $ 519,851 Other receivables 134,807 268,100 $ 691,024 $ 787,951 F.Accounts payable December 31, 2014 December 31, 2013 Payables to related parties: Subsidiaries $ 83,822,951 $ 80,095,077 Others 1,347,900 442,802 Associates 161 1,439,867 $ 85,171,012 $ 81,977,746 The payables to related parties arise mainly from purchase transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

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G.Other payables-short-term financing

2014 Maximum outstanding Actual amount Interest Accrued balance drawn down Interest rate expenses expenses Subsidiaries $ 396,900 $ 396,900 1.38% $ 5,952 $ -

2013 Maximum outstanding Actual amount Interest Accrued balance drawn down Interest rate expenses expenses Subsidiaries $ 425,850 $ 425,850 1.40% $ 6,533 $ - H.Property transactions Purchase of property (a)Acquisition of property, plant and equipment: Years ended December 31, 2014 2013 Subsidiaries $ 597,848 $ 865,847 Associates 510,051 1,095,965 Others 2,398 - $ 1,110,297 $ 1,961,812 (b)Period-end balances arising from purchases of property (shown as “Other payables”): December 31, 2014 December 31, 2013 Associates $ - $ 227,734 Subsidiaries 586,682 218,466 Others 748 2,034 $ 587,430 $ 448,234 I. Endorsements and guarantees As of December 31, 2014 and 2013, the balances of endorsement/guarantee provided by the Company for bank borrowings are as follows. Details are provided in Note 13(1)B. December 31, 2014 December 31, 2013 Subsidiaries $ 16,901,100 $ 15,915,870

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(117) Key management compensation Years ended December 31, 2014 2013 Salaries and other short-term employee benefits $ 73,982 $ 46,386 Share-based payments 18,638 27,582 Post-employment benefits 216 334 $ 92,836 $ 74,302 8. PLEDGED ASSETS The Company’s assets pledged as collateral are as follows: Book value Pledged asset December 31, 2014 December 31, 2013 Purpose Other financial assets- current Demand deposits $ 2,250,035 $ 2,485,841 Syndicated bank loans Property, plant and 163,632,314 211,132,039 Long-term loans and performance equipment guarantee for lease payable Other financial assets- non-current Refundable deposits 11,079,360 12,327,000 Guarantee to European Commission for litigation Time deposits 80,722 722 Guarantee for contract $ 177,042,431 $ 225,945,602 9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS (118) Contingencies －Significant Litigations A.Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc. were investigated under the Anti-Trust competition by the United States (the “U.S.”) Department of Justice. Moreover, authorities of some U.S state governments, the European Union’s, Brazil’s and Korea’s governments are starting to investigate this case. In addition, certain downstream customers and consumers in the TFT-LCD industry of the U.S. and Canada are now bringing up class-actions or individual civil lawsuits against the TFT-LCD companies; in certain lawsuits, CMO and Chi Mei Optoelectronics USA Inc. were listed as defendants. Details for investigations on significant cases related to the Anti-Trust Act are as follows: (a)Regarding the above lawsuits, the Company had reached an agreement with the United States Department of Justice in December 2009, agreeing to pay penalties of US$220 million in installment over five years. As of December 31, 2014, the unpaid penalties amounted to US$35 million.

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The Company had reached settlement agreements with the plaintiffs on individual civil lawsuits in the U.S. since 2012 and recognized related losses. The Company reached an out-of-court settlement with twelve State Governments, agreeing to pay the plaintiffs as civil statutory damages since November 2011. (b)In December 2010, the Company received a notice from the European Commission, requesting the Company to pay a penalty of EUR 300 million to the account as specified by the European Commission within three months upon receipt of the notice. The Company appealed this case with the Court of Justice of the European Union in February 2011 and deposited EUR 300 million to the above account on March 14, 2011. The principal and interest accrued in this account will be refunded to the Company depending on the final outcome of this case. The Court of Justice of the European Union has rendered that partial of the Company’s appeal was reasonable and lowered the penalty from EUR 300 million to EUR 288 million. The Company has decided to appeal against partial judgement within the prescribed time. (c)Except for the Anti-Trust litigations the ultimate outcome of which cannot be reliably estimated, the Company has recognised actual or estimated losses or liabilities in “other payables” and “other non-current liabilities”. B.Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and its subsidiaries in the US with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014 and the Company remained positive on its defense. The United States Court of Appeals for the Federal Circuit has held a hearing in November 2014 but has not ruled any judgment. The Company is currently assessing the status of the litigation. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term. (119) Commitments A.Capital expenditures contracted for at the balance sheet date but not yet incurred are as follows: December 31, 2014 December 31, 2013 $ 19,350,952 $ 13,229,191 Property, plant and equipment

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B.Operating lease commitments The Company leases plant, land and warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: December 31, 2014 December 31, 2013 Not later than one year $ 500,648 $ 500,648 Later than one year but not later than five years 1,943,776 1,982,908 Later than five years 1,490,584 1,952,100 $ 3,935,008 $ 4,435,656

C.Outstanding letters of credit The outstanding letters of credit for the purchase of property, plant and equipment are as follows: December 31, 2014 December 31, 2013 $ 693,635 $ 390,027 Outstanding letters of credit 10. SIGNIFICANT DISASTER LOSS None. 11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE (1) Details of cancellation of issuance of global depository receipts (the “GDR”) as approved by the Financial Supervisory Commission (FSC) on January 30, 2015 are provided in Note 6(16) C. (2) Details of the proposal of syndicated credit line contract with financial institution creditors that was approved by the Board of Directors on February 10, 2015 are provided in Note 6(12) F. 12. OTHERS (11) Capital risk management The Company’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity. (12) Financial instruments A.Fair value information of financial instruments Except those listed in the table below, the carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, short-term notes payable, accounts payable and other payables) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

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December 31, 2014 December 31, 2013 Book value Fair value Book value Fair value Financial assets: Other financial assets - non-current $ 11,160,082 $ 11,103,454 $ 12,327,722 $ 12,265,170 Financial liabilities: Long-term borrowings (including $ 98,315,426 $ 98,315,426 $ 155,569,218 $ 155,569,218 current portion) B.Financial risk management policies (a)The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2), (4)). (b)Risk management is carried out by the treasury department under policies approved by the board of directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity. C.Significant financial risks and degrees of financial risks (a)Market risk Foreign exchange risk d) The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. e) Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via their treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Company use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.

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f) The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be a decrease of $13,765 or $324,198 for the years ended December 31, 2014 and 2013, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows: December 31, 2014 December 31, 2013 Foreign Foreign Currency Exchange Currency Exchange Amount Rate Book Value Amount Rate Book Value (In Thousands) (Note) (NTD) (In Thousands) (Note) (NTD) Financial asstes Monetary items USD $ 3,689,844 31.65$ 116,783,563 $ 2,580,180 29.81$ 76,915,166 JPY 2,740,487 0.26 725,133 761,223 0.28 213,142 EUR 363,356 38.47 13,978,305 405,043 41.09 16,643,217 Non-monetary items USD $ 2,217,538 31.65$ 70,185,078 $ 2,108,219 29.81$ 62,846,008 HKD 278,754 4.08 1,137,316 266,670 3.84 1,024,013 JPY 5,383,824 0.26 1,424,560 4,813,897 0.28 1,347,891 EUR 3,834 38.47 147,494 3,651 41.09 150,020 Financial liabilities Monetary items USD $ 3,568,162 31.65$ 112,932,327 $ 3,647,810 29.81$ 108,741,216 JPY 32,732,829 0.26 8,661,107 36,451,156 0.28 10,206,324 EUR 292,958 38.47 11,270,094 176,291 41.09 7,243,797 Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged. Price risk c) The Company is exposed to equity securities price risk because of investments held by the Company that are classified on the parent company only balance sheet either as available-for-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio in accordance with the policy set by the Company. d) The Company’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, other components of equity for the years ended December 31, 2014 and 2013 would have increased/decreased by $620,292 and $320,825, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

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Interest rate risk e) The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During the years ended December 31, 2014 and 2013, the Company’s borrowings at variable rate were denominated in the NTD, USD and RMB. f) The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions. g) Based on the simulations performed, the impact on post-tax profit of a 25% shift would be a maximum increase of $245,892 or decrease of $389,392 for the years ended December 31, 2014 and 2013, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management. h) Based on the various scenarios, the Company manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Company raises long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Company borrowed at fixed rates directly. The Company agrees with other parties to exchange interest rate, at specified intervals. The difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts. (b)Credit risk d) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Customer credit quality is assessed via internal risk control, considering customer financial position, past experience and other factors. Individual risk limits are set by the board of directors based on internal or external ratings. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. Because the Company's counterparties and executor

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are banks with good credit standing and financial institutions and government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk. e) No credit limits were exceeded during the reporting periods. Management does not expect any significant losses from non-performance by these counterparties. f) The individual analysis of financial assets that had been impaired is provided in Note 6. (c)Liquidity risk d) Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 6(12)) at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements. e) Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing savings accounts, time deposits, money market deposits and marketable securities. The Company chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk. f) The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

Less than Between 1 Between 3 Over 5 December 31, 2014 1 year and 3 years and 5 years years Total Short-term $ 1,300,000 $ - $ - $ - $ 1,300,000 borrowings Accounts payable 118,902,792 - - - 118,902,792 Other payables 18,688,940 - - - 18,688,940 Long-term borrowings (including current portion) 61,122,573 37,234,105 - - 98,356,678 Other financial liabilities - 11,230,850 - 6,344 11,237,194 Financial guarantee contracts 10,140,660 - - - 10,140,660 Less than Between 1 Between 3 Over 5 December 31, 2013 1 year and 3 years and 5 years years Total Short-term $ 1,943,565 $ - $ - $ - $ 1,943,565 borrowings Accounts payable 111,001,671 - - - 111,001,671 Other payables 15,090,951 - - - 15,090,951 Long-term borrowings (including current portion) 155,756,775 - - - 155,756,775 Other financial liabilities - 12,111,981 5,992 38 12,118,011 Financial guarantee contracts 13,528,490 - - - 13,528,490 Derivative financial liabilities: Between 1 December 31, 2014 Less than 1 year and 3 years Total Forward exchange contracts $ 605,016 $ - $ 605,016 Interest rate swap contracts 1,351 - 1,351 Between 1 December 31, 2013 Less than 1 year and 3 years Total Forward exchange contracts $ 689,097 $ - $ 689,097 Interest rate swap contracts - 21,918 21,918

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(13) Fair value estimation A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data. The following table presents the Company’s financial assets and liabilities that are measured at fair value at December 31, 2014 and 2013: December 31, 2014 Level 1 Level 2 Level 3 Total Financial assets: Financial assets at fair value through profit or loss Forward exchange contracts $ - $ 52,453 $ - $ 52,453 Available-for-sale financial assets Equity securities 2,537,965 - 563,496 3,101,461 Debt securities 220,000 - - 220,000 $ 2,757,965 $ 52,453 $ 563,496 $ 3,373,914 Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts $ - $ 605,016 $ - $ 605,016 Derivative financial liabilities for hedging Interest rate swap contracts - 1,351 - 1,351 $ - $ 606,367 $ - $ 606,367

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December 31, 2013 Level 1 Level 2 Level 3 Total Financial assets: Financial assets at fair value through profit or loss Forward exchange contracts $ - $ 227,703 $ - $ 227,703 Available-for-sale financial assets Equity securities 959,461 - 644,661 1,604,122 Debt securities 220,000 - - 220,000 $ 1,179,461 $ 227,703 $ 644,661 $ 2,051,825 Financial liabilities: Financial liabilities at fair value through profit or loss Forward exchange contracts $ - $ 689,097 $ - $ 689,097 Derivative financial liabilities for hedging Interest rate swap contracts - 21,918 - 21,918 $ - $ 711,015 $ - $ 711,015 B.The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments and debt instruments classified as financial assets/financial liabilities at fair value through profit or loss or available-for-sale financial assets. C.The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. E.Specific valuation techniques used to value financial instruments include: (a)Quoted market prices or dealer quotes for similar instruments. (b)The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. (c)The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

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(d)Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. F.All of the resulting fair value estimates are included in level 2 except for certain forward foreign exchange contracts where forward exchange rates are not observable directly in the market. G.The following table presents the changes in level 3 instruments as at December 31, 2014 and 2013: Equity securities 2014 2013 At January 1 $ 644,661 $ 441,853 Acquired in the period 135,456 - Gains and losses recognized in other comprehensive income ( 216,621) 313,274 Disposed in the period - ( 110,466) $ 563,496 $ 644,661 At December 31 (14) Turnaround plan The Company’s current liabilities exceeded its current assets by $42,313,979 as of December 31, 2014. The Company’s management adopted the following measures to improve its operations and financial position: A.Negotiation with the creditor banks as to the debt issue On April 5, 2012, the Company signed an “Agreed-upon Repayment Agreement” with creditor banks. Under the agreement, creditor banks agreed to extend the due dates for the repayment of the Company’s short, medium and long-term loans and to renew the Company’s credit lines to safeguard creditors’ rights and ensure the Company’s continuing operations. More information is described in Note 6(12)C. In order to repay the unpaid balance of the medium and long-term syndicated loans from the above “Agreed-upon Repayment Agreement”, on February 10, 2015, the Board of Directors has approved the proposal for the Company to apply for a syndicated credit line of NTD$68.5 billion with financial institutions. B.Capital increase by cash According to the “Agreed-upon Repayment Agreement” (the Agreement) stated in Note 6(12)C, the Company shall increase its capital in certain amount of cash within three years starting from 2012. From 2012 to 2014, the Company has completed some cash capital increase required by the Agreement. For more information, please refer to Notes 6(16)B and D. As the Company has received bank’s approval for extending capital increase, based on shareholders’ interest, the issuance of the GDR was cancelled in accordance with the Financial Supervisory Commission (FSC)’s approval. Details are provided in Note 6(16) C. C.Improvements in operations The Company continuously adjusts its product lines according to the market demands to increase operating revenue and gross profit. The Company also tries to strictly control various

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expenses and expenditures to effectively enhance operational performance to create cash inflows from operating activities. D.Capital expenditure control program Future capital expenditures will focus on the upgrading technology, improving efficiency and expanding production capacity. Capital expenditure budgets and amounts will be controlled strictly to maximize the benefits of capital expenditures.

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13. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU (1) Related information of significant transactions A.Loans granted during the year ended December 31, 2014:

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

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Note C: Innolux Optoelectronics Japan Co., Ltd. 1.For the company’s short-term capital needs, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the parent company. 2.The financial limit on loans granted shall not exceed 30% of the company’s net equity, based on the most recent audited financial statements of the parent company; with intercompany transaction, the company’s financial limit on loans granted shall not exceed 40% of the company’s equity. 3.The amount of loans provided by the company and intercompany shall not exceed 40% of the company’s equity. Note D: Foshan Innolux Optoelectronics Ltd. entered into a merger agreement with Nanhai Chi Mei Optoelectronics Ltd. on January 1, 2014 and Foshan Innolux Optoelectronics Ltd. is the surviving company. B.Endorsements and guarantees provided during the year ended December 31, 2014:

or indirectly owned by the Company, the endorsement/guarantee amount provided by the Company shall not exceed 10% of the Company’s net equity. The limitation is not required for direct or indirect wholly-owned

subsidiaries of the Company.

Note B: Accumulated endorsement/guarantee amount provided by the Company shall not exceed 50% of the Company’s net equity. C.Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures):

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Bond

Innolux Corporation Unsecured subordinated bonds of Cathay None Available-for-sale financial - 220,000 - 220,000 Financial Holdings assets - current

Common stock

Yuan Chi Investment Co., Ltd. Tera Xtal Technology Corporation None Available-for-sale financial 4,900,000 56,693 3 56,693 assets - non-current

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Relationship December 31, 2014 Securities held by Kind and name of marketable securities with the Company General ledger account Number of shares Book value Percentage Fair value Note InnoJoy Investment Corporation Entire Technology Co., Ltd. None Available-for-sale financial 7,506,326 $ 177,900 5 $ 177,900 assets - non-current Warriors Technology Investments OED Holding Ltd. None Available-for-sale financial 16,000,000 3,553 6 3,553 Ltd. assets - non-current Warriors Technology Investments General Interface Solution (GIS) Holding None Available-for-sale financial 40,500,000 900,242 14 900,242 Ltd. Limited assets - non-current Warriors Technology Investments Perfect Optronics Limited None Available-for-sale financial 22,000,000 178,621 2 178,621 Ltd. assets - non-current Nets Trading Ltd. PilotTech Global Fund None Available-for-sale financial 90 28,204 - 28,204 assets - non-current

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

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

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

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Note C: An indirect wholly-owned subsidiary. Note D: The beginning carrying balance included profits and losses from investments. The beginning shares included stock dividends. Note E: Ending book value excludes gain (loss) on valuation of financial assets.

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

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

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

310

311

Difference with general Notes and accounts receivable Transactions transactions (Note A) (payable) Percentage Relationship with the Purchases/ of purchases/ Percentage Company Counterparty Company sales Amount sales Terms Unit price Terms Balance of balance Note Innolux Futaijing Precision Electronics An indirect wholly-owned Sales $ 191,636 - 60 days Similar with No significant $ 179,404 - Corporation (Beijing) Co., Ltd. subsidiary of Hon Hai general sales difference Precision Industry Co., Ltd. Innolux Ambit Microsystem (Shanghai) An indirect wholly-owned Sales 133,220 - 60 days Similar with No significant 2,036 - Corporation Co., Ltd. subsidiary of Hon Hai general sales difference Precision Industry Co., Ltd. Innolux HongFuJin Precision An indirect wholly-owned Sales 101,020 - 45 days Similar with No significant - - Corporation Electronics (HengYang) Co., subsidiary of Hon Hai general sales difference Ltd. Precision Industry Co., Ltd. Innolux Chi Mei Materials Technology An investee company Purchases 4,407,106 1 90 days after Single purchases No significant - - Corporation Corporation accounted for under the acceptance target, no basis difference equity method for comparsion Innolux Hon Hai Precision Industry Same major stockholder Purchases 1,820,509 - 60~90 days Single purchases No significant ( 726,789) 1 Corporation Co., Ltd. after target, no basis difference acceptance for comparsion Innolux Chi Lin Optoelectronics Co., The company is a corporate Purchases 898,860 - 120 days after Single purchases No significant ( 609,775) 1 Corporation Ltd. director of Chi Lin acceptance target, no basis difference Optoelectronics Co., Ltd. for comparsion Innolux Innolux Optoelectronics Japan A subsidiary of the Company Purchases 296,646 - 30 days after Single purchases No significant ( 16,826) - Corporation Co., Ltd. acceptance target, no basis difference for comparsion Innolux Leadtek Global Group Limited A subsidiary of the Company Processing 78,866,584 20 60-90 days Cost plus No significant ( 42,634,612) 36 Corporation expense difference Innolux Lakers Trading Ltd. An indirect wholly-owned Processing 53,598,757 14 60-90 days Cost plus No significant ( 32,726,649) 28 Corporation subsidiary expense difference Innolux Innolux Hong Kong Ltd. An indirect wholly-owned Processing 35,408,180 9 60-90 days Cost plus No significant ( 8,444,162) 7 Corporation subsidiary expense difference Ningbo Innolux Leadtek Global Group Limited A subsidiary of the Company Processing 41,971,830 91 90 days Similar with No significant 19,784,634 92 Optoelectronics revenue general sales difference Ltd.

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Difference with general Notes and accounts receivable Transactions transactions (Note A) (payable) Percentage Relationship with the Purchases/ of purchases/ Percentage Company Counterparty Company sales Amount sales Terms Unit price Terms Balance of balance Note Foshan Innolux Lakers Trading Ltd. An indirect wholly-owned Processing $36,601,008 48 60 days Similar with No significant $22,267,762 94 Optoelectronics subsidiary revenue general sales difference Ltd. Nanjing Innolux Innolux Hong Kong Ltd. An indirect wholly-owned Processing 34,677,066 97 90 days Similar with No significant 7,884,481 97 Optoelectronics subsidiary revenue general sales difference Ltd. Ningbo Innolux Leadtek Global Group Limited A subsidiary of the Company Processing 19,610,772 92 90 days Similar with No significant 6,966,625 90 Technology Ltd. revenue general sales difference Foshan Innolux Leadtek Global Group Limited A subsidiary of the Company Processing 16,648,612 17 90 days Similar with No significant - - Optoelectronics revenue general sales difference Ltd. Shanghai Innolux Lakers Trading Ltd. An indirect wholly-owned Processing 12,863,897 95 60 days Similar with No significant 3,069,946 95 Optoelectronics subsidiary revenue general sales difference Ltd. Ningbo Innolux Lakers Trading Ltd. An indirect wholly-owned Processing 3,116,868 98 90 days Similar with No significant 986,622 100 Display Ltd. subsidiary revenue general sales difference Innocom Lakers Trading Ltd. An indirect wholly-owned Processing 1,226,867 47 60 days Similar with No significant 2,158,754 58 Technology subsidiary revenue general sales difference (Shenzhen) Co., Ltd. Innolux Innolux Hong Kong Ltd. An indirect wholly-owned Service 306,702 85 60 days Similar with No significant 45,553 94 Technology subsidiary revenue general sales difference Japan Co., Ltd. Ningbo Innolux Ningbo Innolux Technology An indirect wholly-owned Sales 2,079,743 2 90 days Similar with No significant 965,551 3 Optoelectronics Ltd. subsidiary general sales difference Ltd. Shanghai Innolux Nanjing Innolux An indirect wholly-owned Sales 723,106 4 60 days Similar with No significant 142,914 3 Optoelectronics Optoelectronics Ltd. subsidiary general sales difference Ltd. Ningbo Innolux Ningbo Chi Mei Materials Subsidiary of an investee Purchases 3,169,506 4 90 days after Similar with No significant - - Optoelectronics Technology Co., Ltd. company accounted for under goods are general sales difference Ltd. the equity method shipped

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Difference with general Notes and accounts receivable Transactions transactions (Note A) (payable) Percentage Relationship with the Purchases/ of purchases/ Percentage Company Counterparty Company sales Amount sales Terms Unit price Terms Balance of balance Note Ningbo Innolux Ningbo Lin Moug Optronics An indirect wholly-owned Purchases $ 2,921,686 3 60 days after Similar with No significant ($ 1,188,883) 6 Optoelectronics Co., Ltd. subsidiary of Chi Lin goods are general sales difference Ltd. Optoelectronics Co., Ltd. shipped Foshan Innolux Hon Hai Precision Industry Same major stockholder Purchases 1,903,333 2 90 days after Similar with No significant ( 388,841) 1 Optoelectronics Co., Ltd. goods are general sales difference Ltd. shipped Ningbo Innolux Hon Hai Precision Industry Same major stockholder Purchases 1,860,997 2 60 days after Similar with No significant ( 688,812) 3 Optoelectronics Co., Ltd. goods are general sales difference Ltd. shipped Foshan Innolux Ningbo Chi Mei Materials Subsidiary of an investee Purchases 1,546,583 1 90 days after Similar with No significant - - Optoelectronics Technology Co., Ltd. company accounted for under goods are general sales difference Ltd. the equity method shipped Ningbo Innolux Hon Hai Precision Industry Same major stockholder Purchases 1,022,838 3 90 days after Similar with No significant ( 300,694) 3 Technology Ltd. Co., Ltd. goods are general sales difference shipped Ningbo Innolux Ningbo Chi Mei Materials Subsidiary of an investee Purchases 779,482 2 90 days after Similar with No significant - - Technology Ltd. Technology Co., Ltd. company accounted for under goods are general sales difference the equity method shipped Foshan Innolux Chi Mei Materials Technology An investee company Purchases 701,095 1 90 days after Similar with No significant - - Optoelectronics Corporation accounted for under the goods are general sales difference Ltd. equity method shipped Ningbo Innolux Hongfujin Precision Industry An indirect wholly-owned Purchases 539,927 1 90 days after Similar with No significant ( 173,670) 1 Optoelectronics (Shenzhen) Co., Ltd. subsidiary of Hon Hai goods are general sales difference Ltd. Precision Industry Co., Ltd. shipped Foshan Innolux GIO Optoelectronics Corp. An investee company Purchases 412,044 - 90 days after Similar with No significant ( 26,952) - Optoelectronics accounted for under the goods are general sales difference Ltd. equity method shipped Ningbo Innolux Ningbo Lin Moug Optronics An indirect wholly-owned Purchases 364,731 1 120 days after Similar with No significant ( 200,785) 2 Technology Ltd. Co., Ltd. subsidiary of Chi Lin goods are general sales difference Optoelectronics Co., Ltd. shipped

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

315

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

316

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

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

317

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

318

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

Note A: Relationship with the transaction company:

1. The parent company to the subsidiary.

3. The subsidiary to the subsidiary.

prices and payment term was 30~120 days upon receipt of goods.

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

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(2) Information on investees

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

Innolux Innolux Hong Kong Hong Kong Investment holdings 2,107,291 2,107,291 1,158,844,000 100 2,393,227 493,840 518,932 Corporation Holding Ltd. Innolux Leadtek Global Group BVI Order swap company - - 50,000,000 100( 358,432) ( 96,260) ( 96,260) Corporation Limited Innolux Yuan Chi Investment Taiwan Investment company 1,217,235 1,217,235 - 100 918,468 31,904 31,904 Corporation Co., Ltd. Innolux InnoJoy Investment Taiwan Investment company 1,078,166 1,078,166 167,405,392 100 1,670,083 ( 162,272) ( 162,272) Corporation Corporation Innolux Innolux Optoelectronics Netherlands Importing, exporting, buying, 121,941 121,941 180 100 152,269 7,361 7,361 Corporation Europe B.V. selling and logistics services of electronic equipment and TFT- LCD monitors

320

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

321

Innolux Hong Innolux Technology Netherlands Holding company and R&D 3,073,072 3,073,072 375,810 100 2,410,215 35,651 35,651 Kong Holding Ltd. Europe B.V. testing company

Innolux Hong Innolux Technology Japan Distributor company 1,815,603 1,815,603 201 100 1,647,930 ( 128,257) ( 128,257) Kong Holding Ltd. Japan Co., Ltd.

Innolux Hong Innolux Technology USA Distributor company 263,685 263,685 1,000 100 326,317 31,730 31,730 Kong Holding Ltd. USA Inc.

Innolux Chi Mei Optoelectronics Germany Importing, exporting, buying, 10,324 10,324 250 100 26,937 3,753 3,753 Optoelectronics Germany GmbH selling and logistics services of Europe B.V. electronic equipment and TFT- LCD monitors Innolux Innolux Optoelectronics USA Selling of electronic equipment 2,400 2,400 1,000 100 258,769 23,063 23,063 Optoelectronics USA, Inc. and computer monitors Japan Co., Ltd. Rockets Holding Best China Investments Samoa Investment holdings 314,740 314,740 10,000,001 100 255,806 36,380 36,380 Ltd. Ltd. Rockets Holding Mega Chance Samoa Investment holdings 573,940 573,940 18,000,000 100 421,268 1,221 1,221 Ltd. Investments Ltd. Rockets Holding Magic Sun Ltd. Samoa Investment holdings 1,146,370 1,146,370 38,000,001 100 1,018,638 3,328 3,328 Ltd. Rockets Holding Stanford Developments Samoa Investment holdings 5,391,125 5,391,125 164,000,000 100 13,534,845 36,362 36,362 Ltd. Ltd.

322

Innolux Innolux Technology Germany Testing and maintenance 33,735 33,735 100,000 100 63,152 41 41 Technology Germany GmbH company Europe B.V.

Best China Asiaward Investment Hong Kong Investment holdings 314,740 314,740 77,830,001 100 255,806 36,380 36,380 Investments Ltd. Ltd.

Mega Chance Main Dynasty Hong Kong Investment holdings 573,940 573,940 139,623,801 100 421,267 1,221 1,221 Investments Ltd. Investment Ltd.

Magic Sun Ltd. Sun Dynasty Hong Kong Investment holdings 1,146,370 1,146,370 295,969,001 100 1,018,638 3,328 3,328 Development Ltd.

Yuan Chi Chi Mei Lighting Taiwan Trading business, manufacturing 263,812 263,812 19,673,402 8 - - - Investment Co., Technology Corporation of electronic equipment and Ltd. lighting equipment

Yuan Chi GIO Optoelectronics Taiwan Developing, designing, 6,881 6,881 467,519 0 732 ( 112,745) ( 203) Investment Co., Corp. manufacturing and selling of Ltd. components of back light module on TFT-LCD Yuan Chi Chi Mei Logistics Corp. Taiwan Warehousing services - 124,485 - 0 - 5,843 2,863 Investment Co., Ltd. Yuan Chi TOA Optronics Taiwan Selling electronic materials, 423,606 423,606 58,007,000 40 364,907 ( 105,740) ( 45,764) Investment Co., Corporation trading business, manufacturing Ltd. of electronic equipments and lighting equipments

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(3) Information on investments in Mainland China A.Basic information:

Profit Transactions during Balance of recognized Profit Balance of Jan. 1, 2014~Dec. 31, 2014 amount Net income of Ownership during Book value remitted to Method of amount remitted (in thousands of NTD) remitted from investee for percentage held Jan. 1, 2014~ of investment Taiwan during Name of investee Main activities of Capital Investment from Taiwan on Remittance Remittance Taiwan as of the year ended by the Company Dec. 31, 2014 as of Jan. 1, 2014 ~ in Mainland China investee (Note A) (Note D) January 1, 2014 out in Dec. 31, 2014 Dec. 31, 2014 (Direct/indirect) (Note B) Dec. 31, 2014 Dec. 31, 2014 Innocom Manufacturing and $ 5,190,600 1$ 4,016,756 $ - $ - $ 4,016,756 $ 36,362 100$ 36,362 $ 13,534,833 $ 1,173,844 Technology selling of LCD (Shenzhen) Co., backend module and Ltd. related components Innocom Manufacturing and 1,202,700 1 1,202,700 - - 1,202,700 3,328 100 3,328 1,018,638 - Technology selling of LCD (Chengdu) Co., backend module and Ltd. related components OED Company Manufacturing and 256,112 1 63,300 - - 63,300 ( 140,976) 5 - 12,989 - selling of electronic paper Ningbo Innolux Manufacturing and 9,811,500 2 1,396,613 - ( 1,163,508) 233,105 2,070,696 100 2,070,696 20,601,650 5,463,896 Optoelectronics selling of LCD Ltd. backend module and related components Ningbo Innolux Manufacturing and 4,114,500 2 4,114,500 - - 4,114,500 491,039 100 491,039 3,218,102 - Technology Ltd. selling of LCD backend module and related components Foshan Innolux Manufacturing and 12,121,950 2 12,121,950 - - 12,121,950 1,866,041 100 1,868,407 18,607,398 - Optoelectronics selling of LCD Ltd. backend module and related components Ningbo Innolux Manufacturing and 949,500 3 949,500 - - 949,500 34,860 100 34,860 260,746 - Display Ltd. selling of LCD backend module and related components

324

Kunpal Glass thinning 126,600 5 71,744 47,951 - 119,695 942 100 942 79,430 - Optoelectronics processing service Ltd.

325

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

Accumulated amount wired out from Taiwan Company to Mainland China as of December 31, 2014 Investment amount approved by FIC of MOEA Ceiling of investment amount of the Company Innolux Corporation $ 29,846,173 $ 44,838,617 $ -

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

The significant transactions between the Company and the investee companies for the year ended December 31, 2014 were eliminated in these financial statements and shown in Notes 13(1) A 、G、H、J.

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate.

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

headquarters, issued by the Industrial Development Bureau, MOEA, the investment ceiling regulation for Taiwan-based companies investing in Mainland China is not applicable to the Company.

Note D: The investment methods are as follows:

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

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

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