name, title, telephone number and e-mail of the spokesperson and Deputy spokesperson 1. Spokesperson Name: Chui-Chuan Chang Title: Vice President Tel: 886-3-5638951 E-mail:

I. The name, title, telephone number and e-mail of the spokesperson and Deputy spokesperson

1. Spokesperson

Name: Chui-Chuan Chang Title: Vice President

Tel: 886-3-5638951 E-mail: [email protected]

2. Deputy Spokesperson

Name: Chien-Chang Chen Title: Vice Manager

Tel: 886-3-5638951 E-mail: [email protected]

II. The Address and telephone number of the company and manufactories

The company

Address: No. 8, Innovation 1st Rd., Hsinchu Science Park, Hsinchu, 300 Taiwan R.O.C.

Tel: 886-3-5777481

Manufactory Ⅰ

Address: No. 8, Innovation 1st Rd., Hsinchu Science Park, Hsinchu, 300 Taiwan R.O.C.

Tel: 886-3-5777481

Manufactory Ⅱ

Address: No. 1, Li-hsin Rd. V, Hsinchu Science Park, Hsinchu 300, Taiwan. R.O.C.

Tel: 886-3-5638951

III. Stock Transfer Agent

Taishin International Bank Stock Affairs Department

Address: B1, No.96, SEC. 1, JIANGUO N. RD., TAIPEI, TAIWAN

Website: http://www.taishinbank.com.tw

Tel: 886-2- 25048125

IV. The name of the certified public accountant who duly audited the annual reports for the most

recent fiscal year and telephone number of said person’s accounting firm

Accountants: Philine Lee, Wilson Wang

Accounting firm: PricewaterhouseCoopers, Taiwan

Address:27F,333 Keelung Rd,, Sec. 1,Taipei, Taiwan

Website: http://www.pwc.com

Tel: 886-2-27296666

V. Overseas Securities Exchange

Not applicable

VI. Corporate Website

http://www.opto.com.tw

Contents

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

II. Company Profile 1. Date of Incorporation ······························································································································· 4 2. Company History ····································································································································· 4

III. Corporate Governance Report 1. Organization ·········································································································································· 5 2. Directors, Supervisors and Management Team ······················································································· 8 3. Implementation of Corporate Governance ·························································································· 18 4. Information Regarding the Company’s Audit Fee ·············································································· 34 5. Replacement Of CPA ···························································································································· 34 6. The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in

charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates in the most recent two years ················································ 35

7. Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders ····················· 35 8. Relationship among the Top Ten Shareholders ····················································································· 36 9. Ownership of Shares in Affiliated Enterprises ······················································································ 36

IV.Capital Overview 1. Capital and Shares ································································································································· 37 2. Bonds ····················································································································································· 42 3. Preferred stock ······································································································································· 42 4. Global Depository Receipts ··················································································································· 42 5. Employee Stock Options ······················································································································· 42 6. Status of New Shares Issuance in Connection with Mergers and Acquisitions····································· 43 7. Financing Plans and Implementation ····································································································· 43

V. Operational Highlights 1. Business Activities ································································································································ 44 2. Market and Sales Overview ··················································································································· 50 3. Human Resources ·································································································································· 56 4. Environmental Protection Expenditure ·································································································· 57 5. Labor Relations ······································································································································ 57 6. Important Contracts ······························································································································· 61

VI.Financial Information 1. Five-Year Financial Summary ··············································································································· 62 2. Five-Year Financial Analysis ················································································································ 68 3. Supervisors’ Report for the Most Recent Year ······················································································ 74 4. Consolidated Financial Statements for the Years Ended December 31, 2014 and 2013, and

Independent Auditors’ Report ··············································································································· 75

VII.Review of Financial Conditions, Operating Results, and Risk Management 1. Analysis of Financial Status ················································································································ 131 2. Analysis of Financial Performance ······································································································ 131 3. Analysis of Cash Flow ························································································································· 132 4. Major Capital Expenditure Items and Source of Capital1 ··································································· 132 5. Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the

Investment Plans for the Coming Year ································································································ 132 6. Analysis of Risk Management ············································································································· 132 7. Other Major events ······························································································································ 136

VIII.Special Disclosure 1. Summary of Affiliated Companies ······································································································ 136 2. Private Placement Securities in the Most Recent Years ······································································ 141 3. The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ············· 141 4. Others supplementary events ··············································································································· 141 5. Matters Significantly Influenced on Shareholders’ Equity or Securities Price ································· 141

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I、 Letter to shareholders 1. Operating Performance in 2014: (1) Outcome of business plan of 2014:

A. The Company has put efforts to improve competitiveness, continue internal vertical integration, enhance light emitting rate of flip-chip products, and to reduce cost through vertical synergy, in order to offer end products with competitive prices. In order to enter the special lighting application market and to cooperate with suppliers of major international brands, the Company has used new material to manufacture high wattage LED products and has currently reach the stage of packaging integration.

B. The ratio of revenue from export of silicon transistor products has continuously increased, thereby diversifying risks and enhancing product features as well as product added values. R&D for new products will continue.

C. Backed by the Company’s design and integration capabilities, Company system products provide total solutions for clients in order to attract clients searching for high-tech and customized products. The Company has also developed more competitive products through cooperation with suppliers and thereby increases the Company’s market share.

D. Overall, operating revenue in 2014 reaches NT$6.317 billion, net profit after tax reaches NT$561.691 million, with an EPS of NT$1.03.

(2) Budget implementation of 2014： Unit: Million pieces

Major Divisions Sales of 2014

Expected Actual Light emitting devices 31,365 32,870

Sensor devices 21,908 22,832 Total 53,273 55,702

(3) Profitability analysis: Unit: NT$ thousands

Item 2014 Operating revenues 6,317,383 Operating income 746,399

Profit before income tax 667,750 Interest expense 56,670

Ratio of interest expense to operating income (%) 7.59％

Unit: NT$ thousands；%

Year/Item 2014 Basic

information Total liabilities 4,579,775

Financial structure

Ratio of capital owned 62.29％

Ratio of liabilities to assets 37.71％ Ratio of long-term capital to Property, plant

and equipment 270.19％

Solvency Current ratio 249.77％

Quick ratio 207.96％ Times interest earned ratio 12.78

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(4) Research and development status

A. The Company aims to continue deepening blue-light flip-clip and advanced packaging technologies as well as the vertical integration of wafer level packaging. The Company also continues technological strategizing on the semiconductor material for the special lighting application market.

B. Silicon transistor products are designed to accommodate requirements for consumer electronic products. The Company integrates IC design vendors to provide total solutions responding to different application requirements.

2. Business plan in 2015：

(1) Business objectives:

A. The Company has enhanced the quality of two-element and three-element photovoltaic products, adjusted the ratio between the high-end and low-end four-element LED products and offered full wavelength product packages to enhance net profit and market share.

B. In terms of the technological strategy for PV products, the Company has utilized its current technological edges in areas such as the manufacturing procedures of high voltage MOS, high voltage transistors, the optical technologies for light-sensing components, the Schottky manufacturing procedure as well as the MEMS manufacturing procedure. Combining the aforementioned technologies, the Company has produced high voltage, high-power and highly sensitive light sensing components.

C. The packaging arm of the Company has benefited from the technological know-how and experience of the Company’s other businesses such as PV, silicon transistor and system solutions. With an advantage provided by vertical integration, the Company has enhanced the capabilities of its products as well as its packaging quality, offering its clients the most competitive solutions.

(2) Forecast of sales volume and its basis:

Due to the continuous growth of the LED lighting market, the global lighting market is expected to reach US$82.1 billion in 2015, in which LED lighting will contribute up to US$25.7 billion with a market penetration rate of 31%. (Source：LEDinside) Our business goals are as follows：

Unit: Million pieces

Major Divisions Expected sales of 2015 Light emitting devices 35,783

Sensor devices 26,652 Total 62,435

(3) Sales forecast and sales policie:

A. The continuous upgrading of the OEM manufacturing procedure capability and quality of high-output blue-light dies has paved inroads to high-end markets in South Korea and China.

B. Utilizing current technological edges in the manufacturing procedures for silicon transistor product and through technological exchanges with vendors, the Company has enhanced the quality and market share of silicon transistor products.

C. By offering reasonable pricing for its system products, the Company has increased its market share. With the backing of the Company’s design and integration capabilities, Optotech has provided total solutions to its clients in order to attract clients searching for high-tech and customized products.

3. Impact of the company’s future development strategy, external competitive environment, legal environment and Macroeconomic environment on the company:

(1) The company’s future development strategy:

The Company is a professional manufacturer providing total PV semiconductor solutions, from LED epitaxial materials, die manufacturing, component packaging, to manufacturing LED application products. The needs of our clients have always been the Company’s priority. Under the Company’s core values, the Company provides products and customer service with qualities that not only meet

3

international industrial standards but also meet the requirements of professional use. Through our excellent R & D team and superb manufacturing technologies, the Company continues to develop more innovative design and high performance products. In addition to providing products that meet the needs of clients, we are unique in maintaining long-term trusted partnerships with customers through the interaction and cooperation of marketing department. Issues such as customer relations, product quality, and environmental protection are pursued through an honest attitude and innovative thinking. We aim to gradually fulfill our insistence and commitment, and to create value and achieve a better future with our customers.

(2) External competitive environment：

Looking ahead to 2015, demands for LED lighting will continue to grow, but due to the economies of scale created by the rapid increase in Chinese LED manufacturers and the price advantage entailed, prices competition in the LED lighting market will escalate, reducing overall gross profit. As the technology of Chinese manufacturers matures and no longer rely on foreign and Taiwanese investment, Chinese manufacturers have seen market share increases; yet the Chinese government’s expected move to cancel the LED industry subsidies is expected to help balancing supply and demand in the LED lighting market and further expand the LED application market. The Company should actively and continuously develop its distribution in order to improve market share rate and penetration. The Company should also seek lower cost and application-specific models, in order to maximize benefit.

(3) Impact of the legal environment：

To actively develop green industry, the Executive Yuan has included the LED lighting optoelectronic industry as one of the core industries in the approved "Green Energy Industry Elevation Plan". The plan aims to drive the industry capacity of LED lighting and LED automotive lights by utilizing Taiwan’s international competitive advantage in LED components and LED backlight modules. The government will continue to promote the plan to phase out mercury street lamps and subsidize local governments to completely replace mercury streetlights with LEDs. And through trade promotions and subsidizing manufacturers to participate in the international exhibitions, the government aims to help businesses to actively explore overseas markets with diverse marketing campaigns, in order to enhance Taiwan’s international visibility in the LED lighting market.

(4) Macroeconomic environment:：

In summary, the LED lighting industry will continue to grow in 2015, thanks to the Chinese government’s abolishment of LED industry subsidies. Although the market could be seeing capacity expansion peak in the short-term, in the long-term the imbalance between supply and demand will gradually ease; and as LED components have become the alternative light source products, the government’s plans to develop green industry will implement the development of LED industry and stimulate domestic demand for LED lighting. The Company will continue to cooperate with the government strategy, cultivate foreign markets in the future, seek better profits amid stable operation, actively dedicate itself to deepening the industry, and implement corporate governance practices and corporate social responsibility, in order to increase the return on shareholders’ equity.

Finally, we would like to thank our colleagues, customers, suppliers and shareholders for your support and affirmation over the past year. They enable Optotech to pursue growth and innovation in stabilized operation and to achieve sustained profitability for our shareholders. Looking ahead, the Company will accommodate the domestic and international response to energy-saving policies and commit to the promotion of the LED energy-saving products. The Company will uphold sustainable development as our long-term operational goals, carefully laying out strategies and fulfilling corporate social responsibility to create a win-win situation for both us and stakeholders. Chairman: President: Head of Accounting:

Yung-Chiang Huang Hung-Tung Wang Tzu-Chun Lin

4

II、 Company Profile 1. Date of Incorporation: December 21st, 1983 2. Company History:

December, 1983 company was founded

January, 1984 Bank of Communications invested our company, and we began factory construction and equipment installation.

June, 1984 Test run began. July, 1984 the production and sales of LED chips began February, 1986 Operation broke even

September, 1987 the development of high brightness LED chip was completed and mass production began

December, 1991 the production of LED large-size display began

August, 1992 Securities and Exchange Commission of Ministry of Finance approved the re-submission of IPO of our company

March, 1993 our LED large-size display was granted US patent for 17 years December, 1993 the civil construction of the first factory of OPTOTECH was completed May, 1995 our stock was listed on Taiwan Stock Exchange August, 1996 received RWTUV ISO-9001 certificate

December, 1999 signed development project of “organic LED material and device technologies” with Material Laboratory of ITRI

September, 2000 the civil construction of the second factory of OPTOTECH was completed. All departments were gradually moved to the second factory on Li Hsin Road.

March, 2001 successfully developed 2.5 inch and 3.3 inch OLED (Organic Light Emitting Diode) display with panels of 16 grey scales such as red, yellow, green, blue, and white

December, 2001 developed new generation high brightness AlGaInP LED chip

January, 2002 our company signed with Advanced TEK International Corporation to begin “ERP+MES implementation” project

May, 2002 authorized by ISO 14001 and OHSAS 18001

July, 2005 successfully introduced Japanese investment from Nichia during company capital increase and promoted mutual collaboration and exchange.

June, 2006 Taiwan Nichia was elected to be our board members August, 2006 received SGS IECQ HSPM (QC080000) certificate

December, 2006 temporary shareholders’ meeting was convened to report that the operation of our Flat Panel Display Business Unit was ceased.

June, 2007 shareholders’ meeting decided to eliminate 255,965,785 of common shares for covering business losses.

June, 2007 invested and founded Optotech Semiconductor (Ningbo) Co., Ltd.

January, 2008 officially launched all new corporate identity system (CIS) to create new corporate brand image and strengthen international competitiveness.

December, 2008 Involving in the cash capital increase plan of an international LED manufactory, Nichia Japan

June, 2009 the annual shareholders’ meeting in 2009 had passed the resolution of private equity capital increase

March, 2011 Ningbo OPTOTECH Semiconductor started to be built. September, 2012 LED products passed carbon footprint check February, 2013 Launched a new product image

August, 2013 Secured energy saving label certification from the Bureau of Energy, Ministry of Economic Affairs (street lighting lamps)

5

III、 Corporate Governance Report 1. Organization：

(1) Organization Chart OPTOTECH CORPORATION

6

(2) Major Corporate Functions A. Chairman & Chief Strategy Officer

In charge of all business matters on behalf of OPTOTECH.

Provides the board of directors with the company's mid- and long-term development

strategies.

B. Chairman’s Office

Assist the chairman to fulfill power and responsibilities conferred by the Companies Act, and

to assist the convention of board meetings to discuss the Company's major proposals and

strategies; to implement the resolutions of the board, and to ensure that all actions of the

Company are in compliance with the law and the interests of shareholders; responsible for all

shareholders.

Legal Affairs Roome：Planning and management of corporate law and intellectual property

rights.

Stock Affairs Room：Handles affairs related to stocks, organizes board meetings and

stockholders' meetings.

C. President Office

Formulates the company's overall operating objectives and responsible for matters related to

the implementation of management objectives. Prepares and adjusts annual operating plans

and formulates mid- and long-term operating and development plans.

Drafts rules governing the management of businesses in which the company invests.

Brand strategy planning and brand promotion and management.

D. Management Division

Formulation of objectives and strategies for the Management Division in line with

OPTOTECH’s corporate vision and overall goals, and plan implementation.

Oversees the daily operations of all the units under the Management Division.

Implementation of tasks falling with the scope of the Managemen Division’s responsibilities.

E. Sales & Marketing Division

Formulation of objectives and strategies for the Sales & Marketing Division in line with


Oversees the daily operations of all the units under the Sales & Marketing Division.

Implementation of tasks falling with the scope of the Sales & Marketing Division’s

responsibilities.

F. Material Management Division

Formulation of objectives and strategies for the Material Management Division in line with


Oversees the daily operations of all the units under the Materials Management Division.

Implementation of tasks falling with the scope of the Material Management Division’s

responsibilities.

G. Facility & Equipment Division

Formulation of objectives and strategies for the Facility & Equipment Division in line with


Oversees the daily operations of all the units under the Facility & Equipment Division.

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Implementation of tasks falling with the scope of the Facility & Equipment Division’s

responsibilities.

H. Optoelectronics Division

Formulation of objectives and strategies for the Optoelectronics Division in line with


Oversees the daily operations of all the units under the Optoelectronics Division.

Implementation of tasks falling with the scope of the Optoelectronics Division’s

responsibilities.

I. Silicon Division

Formulation of objectives and strategies for the Silicon Division in line with OPTOTECH’s

corporate vision and overall goals, and plan implementation.

Oversees the daily operations of all the units under the Silicon Division.

Implementation of tasks falling with the scope of the Silicon Division’s responsibilities.

J. Systems Division

Formulation of objectives and strategies for the Systems Division in line with OPTOTECH’s


Oversees the daily operations of all the units under the Systems Division.

Carrying out of tasks relating to LED markets, customers and technologies, etc.

Implementation of tasks falling with the scope of the Systems Division’s responsibilities

K. Research Center

Formulation of objectives and strategies for the Research Center in line with OPTOTECH’s


Oversees and inspects the daily operations of all the units under the Research Center.

Implementation of tasks falling with the scope of the Research Center’s responsibilities.

L. Safety & Health Office

Drafts occupational disaster prevention and management plans and environmental protection

implementation plans.

Handles matters related to the safety, hygiene, and environmental protection of employees of

various departments and oversees their implementation.

Handles other labor safety, hygiene, and environmental protection related matters and other

matters as instructed by senior management.

M. Auditing Office

Reviewing the design and implementation of internal control systems, providing suggestions

for improvement, and submitting periodic follow-up reports.

Other matters as instructed by senior management.

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2. Directors, Supervisors and Management Team：

(1) Directors and Supervisors Apr. 26, 2015

Title Nationality/ Country of Origin

Name Date

Elected Term

(Years) Date First Elected

Shareholding when Elected

Current Shareholding

Spouse & Minor

Shareholding

Shareholding by Nominee Arrangement

Experience（Education） Other Position

Executives, Directors or Supervisors who are spouses or within two

degrees of kinship Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation

Chairman Taiwan Yung-Chiang Huang 2014.06.17 3 1990.05.26 2,625,600 0.48 2,625,600 0.48 3,891 0.00 0 0.00

Dept. of Electrical Engineering, Chung Yuan Christian University Chairman of OptoTech

Chairman of Opto Tech Corp. Chairman and President of Viking Tech Corp. Chairman of Ho Chung Investment Co.,Ltd. Chairman of Jyu Shin Investment Co.,Ltd. Director of Shin-Etsu Opto Electronic Co., Ltd. Director of Giga Epitaxy Technology Corp.

None None None

Director Taiwan Hung-Tung Wang 2014.06.17 3 2002.05.29 2,219,743 0.41 2,219,743 0.41 13,790 0.00 0 0.00

Dept. of Chemistry, National Changhua University of Education President of OptoTech

Chairman of CS Bright Corp. Chairman of Opto Tech (Suzhou) Co., Ltd. Chairman of Opto Tech Semiconductor(Ningbo) Co.,Ltd Chairman of Opto Plus Technology Co., Ltd. Director of Viking Tech Corp. Director of Ho Chung Investment Co., Ltd. Director of Jyu Shin Investment Co., Ltd. Director of OPTO Tech (Macao) Co., Ltd. President of Opto Tech Corp.

None None None

Director Taiwan Chui-Chuan Chang 2014.06.17 3 2008.06.13 377,503 0.07 417,503 0.08 0 0.00 0 0.00

Master of International Business, National Taiwan University Vice President of OptoTech

Director of CS Bright Corp. Director of Opto Tech (Suzhou) Co., Ltd. Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd. Director of Opto Plus Technology Co., Ltd. Vice President of Opto Tech Corp.

None None None

Director

Taiwan Nichia Taiwan Corp. 2014.06.17 3 2006.06.14 31,755,947 5.82 31,755,947 5.82 0 0.00 0 0.00 - - None None None

Japan Rep. of legal person: Masao Shono

2014.06.17 3 2006.06.14 0 0.00 0 0.00 0 0.00 0 0.00

Dept. of Chemical Application, Div. of Engineering, Kinki University Chairman and President of Nichia Taiwan Corp.

Chairman of Nichia Taiwan Corp. Director of Advanced Optoelectronic Technology, Inc. Vice Chairman of Nichia ShangHai Corp. Chairman of Nichia ShenZhen Corp.

None None None

9

Title Nationality/ Country of Origin

Name Date

Elected Term

(Years) Date First Elected

Shareholding when Elected

Current Shareholding

Spouse & Minor

Shareholding

Shareholding by Nominee Arrangement Experience（Education） Other Position

Executives, Directors or Supervisors who are spouses or within two

degrees of kinship Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation

Director

Taiwan Lee Tech Co., Ltd. 2014.06.17 3 2011.06.17 2,020,000 0.37 1,972,000 0.36 0 0.00 0 0.00 - - None None None

Taiwan Rep. of legal person: Zong-Xing Wu

2014.06.17 3 2011.06.17 0 0.00 8,000 0.00 0 0.00 0 0.00 Dept. of International Trade Tamkang University

Chairman of Lee Tech Co., Ltd. Chairman of Giga Epitaxy Technology Corp.

None None None

Director

Taiwan Shin-Etso Opto Electronic Co.,Ltd (NOTE 1)

2014.06.17 3 2014.06.17 930,232 0.17 930,232 0.17 0 0.00 0 0.00 - - None None None

Japan Rep of legal person: Shuji Ogasawara ( NOTE 2)

2014.06.17 3 2014.06.17 0 0.00 21,006 0.00 0 0.00 0 0.00

Department of Economics Rakuno Gakuen University

Chairman of Shin-Etso Opto Electronic Co.,Ltd None None None

Director Taiwan Shun-Chih Chen ( NOTE 3)

2014.06.17 3 2008.06.13 250,694 0.05 250,694 0.05 0 0.00 0 0.00

Sec. Electrical Engineering,, Dept. of Engineering Education , National Changhua University of EducationDeputy Assistant General Manager for System Dept., OptoTech

Director of CS Bright Corp. Director of United Radiant Technology Corp. Director of Opto Tech (Suzhou) Co., Ltd. Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd Deputy Assistant General Manager for System Dept., OptoTech

None None None

Supervisor

Taiwan Medison Pacific Investment Co., Ltd.

2014.06.17 3 2005.06.10 5,361,681 0.98 5,361,681 0.98 0 0.00 0 0.00 - - None None None

Taiwan Rep of legal person: Tsang-Der Ni

2014.06.17 3 2005.06.10 0 0.00 298,548 0.05 66,642 0.01 0 0.00 PhD of Electrical Engineering, Drexel University, USA

Director of J-MEX Inc. Director of United Radiant Technology Corp. Supervisor of CS Bright Corp.

None None None

Supervisor Taiwan Tzu-Hua Han 2014.06.17 3 2005.06.10 245,000 0.04 245,000 0.04 110,000 0.02 0 0.00 Dept. of Radar Engineering,Air Force Institute of Technology

Chairman of United Radiant Technology Corp. Chairman of LT Lighting (Taiwan) Corp. Supervisor of Viking Tech Corp. Supervisor of QinSi Investment Co., Ltd.

None None None

NOTE 1:Shin-Etso Opto Electronic Co.,Ltd was elected director on Jun. 17th, 2014. NOTE 2:Mr. Shuji Ogasawara was representative of Shin-Etso Opto Electronic Co.,Ltd on Jun. 17th, 2014. NOTE 3:Mr. Shun-Chih Chen retired director on Jun. 17th, 2011, and re- elected as director on Jun. 17th, 2014. NOTE 4:Hitachi Metals, Ltd. and Shuang Xin Investment Consulting Co., Ltd. retired director on Jun. 17th ,2014.

10

A. Major shareholders of the institutional shareholders Mar. 31, 2015

Name of Institutional Shareholders

Major shareholders of the institutional shareholders Ratio of

shareholding (%)

Nichia Taiwan Corp. Nichia Corp. 99.74Kan-Lin Yen 0.13Jo-Li Chang 0.13

Lee Tech Co., Ltd.

Zong-Xing Wu 18.40Yu-Hui Chen 38.46Fei-Yu Wu 21.57Qian-Hua Wu 21.57

Shin-Etso Opto Electronic Co.,Ltd

Shin-Etsu Handotai Co., Ltd. 80.00 Opto Tech Corp. 10.00 TOPCO Co., Ltd. 10.00

Medison Pacific Investment Co., Ltd.

Ting-Hu Shao 25.00

Ru-Mei Chia Chiu 14.50

Feng-Kang Ni 12.00

Ai-Ti Chao 9.90

Ying Wan 9.50

Kuei-Cheng Liu 7.60

Ying Chang 7.00

Yu-Hsun Shao 6.00

Mei Ling Wang Lin 5.50

Hsiang-Yun Yang 2.00

11

B. Major shareholders of the Company’s major institutional shareholders

Mar. 31, 2015

Name of Institutional Shareholders

Major Shareholders Ratio of

shareholding (%)

Nichia Corp.

日亜持株組合 14.10

株式会社協同医薬研究所 6.10

Tokushima Bank,Ltd. 4.90The Awa Bank, Ltd 4.80

Shikoku Bank, Ltd. 4.80Citizen Holdings Co., Ltd. 3.70Mizuho Bank, Ltd. 3.50The Iyo Bank, Ltd. 3.10The Bank of Tokyo-Mitsubishi UFJ 2.90Sony Corporation 2.60

Shin-Etsu Handotai Co., Ltd Shin-Etsu Chemical Co., Ltd. 100.00

Opto Tech Corp.

Nichia Taiwan Corp. 5.82Hitachi Metals, Ltd. entrusted to Chinatrust Commercial Bank

4.08

Nichia Corp. entrusted to Chinatrust Commercial Bank 2.96Dimensional Emerging Markets Value Fund 1.65Investment Portfolio of Emerging Market Funds, entrusted to Deutsche Bank, Taipei Branch

1.01

Medison Pacific Investment Co., Ltd 0.98JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank

0.81

The Emerging Markets Small Cap Series of The DFA Investment Trust Company

0.70

EMERGING MARKETS CORE EQUITY PORTFOLIO OF DFA INVESTMENT DIMENSIONS GROUP INC.

0.61

JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds

0.61

TOPCO Co., Ltd.

J.W. Kuo 8.29Nan Shan Life Insurance Company, Ltd. 4.21Kuei-Yu Chang Chiu 2.48Mercuries Life Insurance Co., Ltd. 1.28JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank

1.04

Jeffery C.L. Pan 1.03Pei-Fen Chang 0.98Chinatrust Commercial Bank 0.87Chia Pin Technology Co., Ltd. 0.84United Bank of Switzerland entrusted to HSBC 0.84

12

C. Professional qualifications and independence analysis of directors and supervisors

Criteria Name

Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience

Independence Criteria(Note)

Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director

An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University

A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company

Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company

1 2 3 4 5 6 7 8 9 10

Yung-Chiang Huang 0 Hung-Tung Wang 0 Chui-Chuan Chang 0 Masao Shono-Nichia Taiwan 0 Zong-Xing Wu-Lee Tech Co., Ltd.

0

Shuji Ogasawara-Shin-Etso Opto Electronic Co.,Ltd

0

Shun-Chih Chen 0 Tsang-Der Ni-Medison Pacific Investment CO., Ltd.

0

Tzu-Hua Han 0 Note: Please tick the corresponding boxes that apply to the directors or supervisors 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. Not applicable 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 others’ names, 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 third degree of kinship, of any of the persons in the preceding three subparagraphs. (5). Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five

holdings. (6). Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company. (7). Not a professional individual who is 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. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.

(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.

13

(2) Management Team Apr. 26, 2015

Title Nationality/ Country of

Origin Name

Date Effective

Shareholding Spouse & Minor

Shareholding

Shareholding by Nominee Arrangement Experience（Education） Other Position

Managers who are Spouses or Within Two

Degrees of Kinship Shares ％ Shares ％ Shares ％ Title Name Relation

President Taiwan Hung-Tung Wang 2008.06.16 2,219,743 0.41 13,790 0.00 0 0.00 Dept. of Chemistry, National Changhua University of Education President of OPTOTECH

Chairman of CS Bright Corp. Chairman of Opto Tech (Suzhou) Co., Ltd. Chairman of Opto Tech Semiconductor(Ningbo) Co.,Ltd Chairman of Opto Plus Technology Co., Ltd.Director of Viking Tech Corp. Director of Ho Chung Investment Co., Ltd. Director of Jyu Shin Investment Co., Ltd. Director of OPTO Tech (Macao) Co., Ltd.

None None None

Vice President Taiwan Chui-Chuan

Chang 2008.06.16 417,503 0.08 0 0.00 0 0.0

Master of International Business, National Taiwan University Vice President of OPTOTECH

Director of CS Bright Corp. Director of Opto Tech (Suzhou) Co., Ltd. Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd. Director of Opto Plus Technology Co., Ltd.

None None None

Vice President (Head of

Financing and Accounting)

Taiwan Tzu-Chun Lin 2012.01.01 300,548 0.06 0 0.00 0 0.00 Dept. of Comprehensive Commerce, Hsinchu Commercial High School Vice President of OPTOTECH

Director of CS Bright Corp. Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd. Supervisor of Ho Chung Investmetn Co., Ltd.Supervisor of Jyu Shin Investment Co., Ltd.

None None None

Deputy Assistant General Manager

Taiwan Jung-Huan Lee 2006.01.01 304,442 0.06 2,000 0.00 0 0.00 Dept. of Chemical Engineering, Tamkang University Deputy Assistant General Manager at Dept. of Silicon, OPTOTECH

Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd.

None None None


Taiwan Shun-Chih Chen 2008.01.01 250,694 0.05 0 0.00 0 0.00

Sec. Electrical Engineering,Dept. of Engineering Education, National Changhua University of Education Deputy Assistant General Manager at Dept. of Systems, OPTOTECH

Director of CS Bright Corp. Director of United Radiant Technology Corp.Director of Opto Tech (Suzhou) Co., Ltd. Director of Opto Tech Semiconductor(Ningbo) Co.,Ltd

None None None


Taiwan Chin-Lung Ma 2009.01.01 91,639 0.02 48 0.00 0 0.00

Dept. of Electronic Engineering, Ta Hwa Institute of Technology Deputy Assistant General Manager at Dept. of Facility & Equipment, OPTOTECH

None None None None

14

(3) Remuneration of Directors, Supervisors, President, and Vice President A. Remuneration of Directors Unit: NT$ thousands / Thousand shares

Title Name

Remuneration Ratio of total remuneration

(A+B+C+D) to net income(%)

Relevant remuneration received by directors who are also employees Ratio of total compensation

(A+B+C+D+E+F+G) to net income(%)

Compensation paid to directors from an invested company other than

the company’s subsidiary

Base Compensation

(A)

Severance Pay (B)

Bonus to Directors(C)

Allowances(D)Salary, Bonuses, and

Allowances (E) Severance Pay

(F) Profit Sharing- Employee Bonus (G)

Exercisable Employee Stock

Options (H)

New Restricted Employee Shares (I)

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OPTOTECH Companies in the

consolidated financial statements

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

OP

TO

TE

CH

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial s

tate

men

ts

Cash Stock Cash Stock

Chairman Yung-Chiang Huang

0 0 0 0 20,193 20,193 1,357 1,357 3.84％ 3.84％ 19,885 20,593 662 662 13,475 0 13,475 0 0 0 0 0 9.89％ 10.02％ 9,496

Director Hung-Tung Wang Director Chui-Chuan Chang

Director Nichia Taiwan Corp. Rep. of legal person: Masao Shono

Director

Hitachi Metals, Ltd. Rep. of legal person: Masahiko Kobayashi (Note 1)

Director Lee Tech Co., Ltd. Rep. of legal person: Zong-Xing Wu

Director

Shuang Xin Investment Consulting Co., Ltd. Rep. of legal person: Yin-Long Hsieh (Note 1)

Director

Shin-Etso Opto Electronic Co.,Ltd Rep. of legal person: Shuji Ogasawara (Note 2)

Director Shun-Chih Chen (Note 2)

Note 1：Hitachi Metals, Ltd. and Shuang Xin Investment Consulting Co., Ltd. retired director on Jun. 17th ,2014. Note 2：:Shin-Etso Opto Electronic Co.,Ltd and was Shun-Chih Chen elected director on Jun. 17th, 2014.

Range of Remuneration

Name of DirectorTotal of (A+B+C+D) Total of (A+B+C+D+E+F+G)

OPTOTECH Companies in the consolidated financial

statements OPTOTECH

Companies in the consolidated financial statements

Under NT$ 2,000,000

Hitachi Metals, Ltd.、 Shuang Xin Investment Consulting Co., Ltd.、 Shin-Etso Opto Electronic Co.,Ltd、Masao Shono、Zong-Xing Wu、Yin-Long Hsieh、Shuji Ogasawara、Shun-Chih Chen

Hitachi Metals, Ltd.、 Shuang Xin Investment Consulting Co., Ltd.、 Shin-Etso Opto Electronic Co.,Ltd、Masao Shono、Zong-Xing Wu、Yin-Long Hsieh、Shuji Ogasawara、Shun-Chih Chen

Hitachi Metals, Ltd.、 Shuang Xin Investment Consulting Co., Ltd.、 Shin-Etso Opto Electronic Co.,Ltd、Masao Shono、Zong-Xing Wu、Yin-Long Hsieh、Shuji Ogasawara

Hitachi Metals, Ltd. .、 Shuang Xin Investment Consulting Co., Ltd.、 Shin-Etso Opto Electronic Co.,Ltd、Masao Shono、Zong-Xing Wu、Yin-Long Hsieh、Shuji Ogasawara

NT$2,000,000 ~ NT$5,000,000 Nichia Taiwan Corp.、Lee Tech Co., Ltd.、Yung-Chiang Huang、Hung-Tung Wang、Chui-Chuan Chang

Nichia Taiwan Corp.、Lee Tech Co., Ltd、Yung-Chiang Huang、Hung-Tung Wang、Chui-Chuan Chang

Nichia Taiwan Corp.、 Lee Tech Co., Ltd、Shun-Chih Chen

Nichia Taiwan Corp.、 Lee Tech Co., Ltd、Shun-Chih Chen

NT$5,000,000 ~ NT$10,000,000 - - - -

NT$10,000,000 ~ NT$15,000,000 - - Hung-Tung Wang、Chui-Chuan Chang Hung-Tung Wang、Chui-Chuan Chang

NT$15,000,000 ~ NT$30,000,000 - - Yung-Chiang Huang Yung-Chiang Huang

NT$30,000,000 ~ NT$50,000,000 - - - -

NT$50,000,000 ~ NT$100,000,000 - - - -

Over NT$100,000,000 - - - -

Total 13 13 13 13

15

B. Remuneration of Supervisors Unit: NT$ thousands / Thousand shares

Title Name

Remuneration Ratio of Total Remuneration (A+B+C)

to Net Income (%)

Compensation Paid to

Supervisors from an Invested

Company Other than the

Company’s Subsidiary

Base Compensation (A) Bonus to Supervisors (B) Allowances (C)

OPTOTECH

Companies in the

consolidated financial

statements

OPTOTECH

Companies in the


statements

OPTOTECH

Companies in the


statements

OPTOTECH

Companies in the


statements

Supervisor

Medison Pacific Investment Co., Ltd. Rep. of legal person: Tsang-Der Ni 0 0 5,385 5,385 360 360 1.02％ 1.02％ 2,040

Supervisor Tzu-Hua Han

Range of Remuneration

Name of Supervisors Total of (A+B+C+D)

OPTOTECH Companies in the consolidated financial statements

Under NT$ 2,000,000 Tsang-Der Ni Tsang-Der Ni

NT$2,000,000 ~ NT$5,000,000 Medison Pacific Investment Co., Ltd.、

Tzu-Hua Han Medison Pacific Investment Co., Ltd.、

Tzu-Hua Han 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 3 3

16

C. Remuneration of the President and Vice President Unit: NT$ thousands / Thousand shares

Title Name

Salary(A) Severance Pay (B)Bonuses and

Allowances (C) Profit Sharing- Employee Bonus

(D)

Ratio of total compensation

(A+B+C+D) to netincome(%)

Exercisable Employee Stock

Options

Obtaining new shares that restrict employees’ rights

Com

pens

atio

n pa

id to

the

pres

iden

t an

d vi

ce p

resi

dent

fro

m a

n in

vest

ed

com

pany

oth

er th

an th

e co

mpa

ny’s

su

bsid

iary

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fi

nanc

ial

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

OPT

OT

EC

H

Com

pani

es in

the

cons

olid

ated

fin

anci

al

stat

emen

ts

Cash Stock Cash Stock

Chief Strategy officer

Yung-Chiang Huang

15,685 16,394 752 752 6,707 6,707 15,600 0 15,600 0 6.90％ 7.02％ 0 0 0 0 4,925 President

Hung-Tung Wang

Vice President

Chui-Chuan Chang

Vice President

Tzu-Chun Lin

Range of Remuneration Name of President and Vice President

OPTOTECH Companies in the consolidated

financial statements Under NTD2,000,000 - - NT$2,000,000 ~ NT$5,000,000 - - NT$5,000,000 ~ NT$10,000,000 Chui-Chuan Chang、Tzu-Chun Lin Chui-Chuan Chang、Tzu-Chun Lin NT$10,000,000 ~ NT$15,000,000 Yung-Chiang Huang、Hung-Tung Wang Yung-Chiang Huang、Hung-Tung Wang 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

17

D. Employee Bonus for Management Unit: NT$ thousands

Title Name

Employee Bonus

- in Stock(Fair Market

Value)

Employee Bonus

- in Cash Total

Ratio of Total Amount to Net

Income (%)

Executive

O f f i c e r s

Chairman & Chief Strategy officer

Yung-Chiang Huang

0 21,200 21,200 3.77％

President Hung-Tung Wang Vice President Chui-Chuan Chang Vice President

(Head of Financing and Accounting)

Tzu-Chun Lin


Jung-Huan Lee


Shun-Chih Chen


Chin-Lung Ma

Note: The earnings to be allocated for the year 2014 has not been resolved at the shareholders’ meeting yet. The above figures are only estimates.

(4) 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

Item

Title

Ratio of total remuneration to net income

2014 2013





Director 3.84％ 3.84％ 4.15％ 4.15％

Supervisor 1.02％ 1.02％ 1.11％ 1.11％

President & Vice President 6.90％ 7.02％ 8.73％ 8.89％

a. The remuneration paid to Director and Supervisor for the year 2014 was based on applicant provisions of our Articles of Incorporation and was resolved by the board of directors and approved at the shareholders’ meeting.

b. The remuneration to President and Vice President has been handled in compliance with Article 27 of OPTOTECH’s Corporate Charter and Article 29 of the Company Act.

c. Director/supervisor remuneration and employee bonuses shall be distributed from retained earnings, so when retained earnings are not available, there will be no distribution in this regard.

d. We had set up the Remuneration Committee. The Remuneration Committee periodically evaluate the performance of directors, supervisors and managers and review the Company’s remuneration policy, system, standard and structure.

18

3. Implementation of Corporate Governance

(1) Board of Directors：

Before the re-election of directors and supervisors at the shareholders' meeting on June 17, 2014 , the Board of Directors met for a total of three times; the directors and supervisors of attendance is as follows:

Title Name Attendance

in Person(B)By Proxy

Attendance rate (%)【Ｂ/Ａ】

Remarks

Chairman Yung-Chiang Huang 3 0 100％

Director Hung-Tung Wang 3 0 100％

Director Chui-Chuan Chang 3 0 100％


3 0 100％

Director Hitachi Metals, Ltd. Rep. of legal person: Masahiko Kobayashi

2 0 67％


3 0 100％

Director Shuang Xin Investment Consulting Co., Ltd. Rep. of legal person: Yin-Long Hsieh

3 0 100％

Supervisor Medison Pacific Investment Co., Ltd. Rep. of legal person: Tsang-Der Ni

2 0 67％

Supervisor Tzu-Hua Han 3 0 100％

Other mentionable items: 1. If there are 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, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: None

2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

(1) The 20th meeting of the tenth term Board of Directors on March 25, 2014: Approve to Ho Chung Investment Co., Ltd as representative of United Radiant Technology Corporation. Mr. Tsang-Der Ni and Mr. Tzu-Hua Han did not attend the discussion in accordance with the law due to the conflict of interest.

(2) The 20th meeting of the tenth term Board of Directors on March 25, 2014: Approve to disposal of common share of the “United Radiant Technology Corporation”. Mr. Tsang-Der Ni and Mr. Tzu-Hua Han did not attend the discussion in accordance with the law due to the conflict of interest.

3. Measures taken to strengthen the functionality of the board: (1) To strengthen corporate governance, OPTOTECH has laid down the “Rules of Procedure for Board of Directors

Meeting”, and post the status of directors’ attendance of board meetings on the Market Observation Post System. (2) OPTOTECH has the “Remuneration Committee” with the function to assist the board of directors in executing their

duties. Please refer to the “Composition, Responsibilities and Operations of Remuneration Committee” in the annual report.(P.24)

(3) To help directors enhance their corporate governance related abilities, OPTOTECH from time to time to provide the course information compliance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors” for directors and supervisors.

(4) OPTOTECH has valued its shareholders’ equity and enhanced its corporate information transparency. The important resolutions made in each board meeting have all been posted on OPTOTECH’s coporate website.

(5) OPTOTECH has instituted the “Procedures for Handling Material Inside Information”, and informed its directors, supervisors, managers and employees across the board of the procedure. At the same time, the procedure has also been posted on OPTOTECH’s coporate website at http://www.opto.com.tw for reference.

19

Since the full re-election of directors and supervisors at the June 17, 2014 shareholders’ meeting till December 31, 2014, the Board of Directors met for a total of four times; the directors and supervisors of attendance is as follows:

Title Name Attendance

in Person(B)

By Proxy Attendance rate (%)【Ｂ/Ａ】

Remarks

Chairman Yung-Chiang Huang 4 0 100％

Director Hung-Tung Wang 4 0 100％

Director Chui-Chuan Chang 4 0 100％


2 2 50％


4 0 100％

Director Shin-Etso Opto Electronic Co.,Ltd Rep. of legal person:Shuji Ogasawara

4 0 100％

Director Shun-Chih Chen 4 0 100％

Supervisor Medison Pacific Investment Co., Ltd. Rep. of legal person: Tsang-Der Ni

4 0 100％

Supervisor Tzu-Hua Han 4 0 100％

Other mentionable items: 1. If there are 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, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: None.

2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

(1) The 3th meeting of the tenth term Board of Directors on August 8, 2014: The Company resolved the remuneration for the Chairman. The Chairman- MR. Huang Yung-chiang did not attend the discussion in accordance with the law due to the conflict of interest.

(2) The 3th meeting of the tenth term Board of Directors on August 8, 2014: The Company resolved the remuneration for the President. The President- MR. Hung-Tung Wang did not attend the discussion in accordance with the law due to the conflict of interest.

(3) The 3th meeting of the tenth term Board of Directors on August 8, 2014: The Company resolved the remuneration for the Manager.The Manager - MR. Chui-Chuan Chang and MR. Shun-Chih Chen did not attend the discussion in accordance with the law due to the conflict of interest.

(4) The 3th meeting of the tenth term Board of Directors on August 8, 2014: The Company resolved the allocation plans for manager and employee bonuses. MR. Huang Yung-chiang, MR. Hung-Tung Wang, MR. Chui-Chuan Chang and MR. Shun-Chih Chen did not attend the discussion in accordance with the law due to the conflict of interest.

3. Measures taken to strengthen the functionality of the board: (1) To strengthen corporate governance, OPTOTECH has laid down the “Rules of Procedure for Board of Directors

Meeting”, and post the status of directors’ attendance of board meetings on the Market Observation Post System. (2) OPTOTECH has the “Remuneration Committee” with the function to assist the board of directors in executing their

duties. Please refer to the “Composition, Responsibilities and Operations of Remuneration Committee” in the annual report.(P.24)

(3) To help directors enhance their corporate governance related abilities, OPTOTECH from time to time to provide the course information compliance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors” for directors and supervisors.

(4) OPTOTECH has valued its shareholders’ equity and enhanced its corporate information transparency. The important resolutions made in each board meeting have all been posted on OPTOTECH’s coporate website.

(5) OPTOTECH has instituted the “Procedures for Handling Material Inside Information”, and informed its directors, supervisors, managers and employees across the board of the procedure. At the same time, the procedure has also been posted on OPTOTECH’s coporate website at http://www.opto.com.tw for reference.

(2) Audit Committee: OPTOTECH do not establish the Audit Commission.

20

(3) Attendance of Supervisors at Board Meetings:

Before the re-election of directors and supervisors at the shareholders' meeting on June 17, 2014 , the Board of Directors met for a total of three times; the supervisors of attendance is as follows:

Title Name Attendance in

Person(B) Attendance rate (%)

【Ｂ/Ａ】 Remarks

Supervisor Medison Pacific Investment Co., Ltd.Rep. of legal person: Tsang-Der Ni

2 67％

Supervisor Tzu-Hua Han 3 100％

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.): Supervisors shall properly exercise its supervision rights. When necessary, they shall communicate with our employees and shareholders in an appropriate manner. Also, supervisors are allowed to review our internal audit reports, trace our execution of internal control and audit. Furthermore, they can use the spokesperson to communicate with our employees and shareholders through telephone, e-mail and shareholders meetings, etc.

(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. Our supervisors shall regularly come to OPTOTECH to check and review the reports submitted by the audit unit,

and communicate with the internal audit chief through telephone or e-mail. B. The CPA shall quarterly submit its audit results of the financial reports to supervisors.

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 our response to supervisor’s opinion should be specified: None.

Since the full re-election of directors and supervisors at the June 17, 2014 shareholders’ meeting till December 31, 2014, the Board of Directors met for a total of four times; the supervisors of attendance is as follows:


Person(B) Attendance rate (%)

【Ｂ/Ａ】 Remarks

Supervisor Medison Pacific Investment Co., Ltd.Rep. of legal person: Tsang-Der Ni

4 100％

Supervisor Tzu-Hua Han 4 100％

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.): Supervisors shall properly exercise its supervision rights. When necessary, they shall communicate with our employees and shareholders in an appropriate manner. Also, supervisors are allowed to review our internal audit reports, trace our execution of internal control and audit. Furthermore, they can use the spokesperson to communicate with our employees and shareholders through telephone, e-mail and shareholders meetings, etc. (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. Our supervisors shall regularly come to OPTOTECH to check and review the reports submitted by the audit unit,

and communicate with the internal audit chief through telephone or e-mail. B. The CPA shall quarterly submit its audit results of the financial reports to supervisors.

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 our response to supervisor’s opinion should be specified: None.

21

(4) Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Evaluation Item

Implementation Status Deviations from “the Corporate Governance Best-Practice

Principles for TWSE/TPEx Listed Companies” and Reasons

Yes No Abstract Illustration

1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?

V Although the Company has not established the "Corporate Governance Best-Practice Principles ", it has been implementing the spirit of corporate governance among the various internal controls in accordance with the "Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies ".

None

2. Shareholding structure & shareholders’ rights

(1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure?

(2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?

(3) Does the company establish and execute the risk management and firewall system within its conglomerate structure?

(4) Does the company establish internal rules against insiders trading with undisclosed information?

V

V

V

V

(1) In addition to commissioning a shareholder services agent to handle relevant services, the Company has also put in place spokesman and deputy spokesman to deal with issues related to shareholders, and when necessary commissions legal counsel to provide assistance.

(2) The Company regularly reports the changes in directors and managers of equity transaction based on the list of major shareholders and ultimate controllers of the Company complied by the shareholder service agent.

(3) OPTOTCH has instituted regulations to control and manage the trading, endorsement guarantee and capital loans (to others) between OPTOTECH and the related parties of our affiliated enterprises. In addition, according to the “Regulations Governing Establishment of Internal Control Systems by Public Companies” stipulated by Financial Supervisory Committee, our has laid down the “Rules Governing for Subsidiary” to carry out the subsidiary risk control and management mechanism.

(4) The Company has established “Rules of Procedure for the Handling of Major Internal Information" to ensure that the consistency and accuracy of company-published information, to avoid undue leakage of information, and to prevent the use of undisclosed insider information to trade securities on the market.

None

3. Composition and Responsibilities of the Board of Directors

(1) Does the Board develop and implement a diversified policy for the composition of its members?

(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?

(3) Does the company establish a standard to measure the performance of the Board, and implement it annually?

V

V

V

(1) The Board of Directors of the Company is formed with members from different professional backgrounds and includes foreign national members, providing objective and professional assessments of the decisions of the board.

(2) The Company has established the Remuneration Committee in accordance with the law. In addition to establishing an Audit Committee in the future, the Company will evaluate the establishment of other types of functional committees based on its actual operational situation.

(3) The Company has not yet to establish board performance assessment methods, but the operations of the Board of Directors are in compliance with laws and regulations as well as the Company’s corporate governance spirit.

None

22

Evaluation Item




(4) Does the company regularly evaluate the independence of CPAs?

V (4) The Company’s board annually evaluates the independence of the certified public accountants, checks for any joint ventures or other shared interests between the accountants and the Company or its affiliated businesses, and examines whether the accountants hold posts in the Company and its affiliated enterprises, as well as if the accountants have violated The "Code of Ethics Gazette No. 10”.

None

4. Does the company establish a communication channel and build a designated section on its website for stakeholders, as well as handle all the issues they care for in terms of corporate social responsibilities?

V OPTOTECH has a spokesperson, who can communicate with stakeholdersthrough OPTOTECH’s coporate website, telephone and fax, etc.

None

5. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?

V The Company has appointed Taishin International Bank as its Shareholder Service Agency, specializing in handling matters related to shareholders' meetings.

None

6. Information Disclosure

(1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance?

(2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?

V

V

(1) As regulated, OPTOTECH has periodically or non-periodically reported a variety of its financial and business information on the website of the Market Observation Post System. At the same time, it has also posted the above mentioned information on its own website at http://www.opto.com.tw for its shareholders and the public to refer to.

(2) Our has designated exclusive personnel to collect and disclose its information, and followed statutory regulations to fulfill the spokesperson system. Also, by going to the website of the Market Observation Post System, investors can obtain the information regarding our finance, business and corporate governance.

None

7. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

V (1) Status of employee rights and employee wellness: OPTOTECH has been based on the spirit of faith, innovation and pragmatism to give sustainable operation, take good care of its employees and clients and take up its social responsibility. At the same time, it has adopted the following measures to protect its employees’ rights and interests and care for its employees. A. Based on the Gender Equality Act, our employees are eligible to request for the

baby nursing leave, baby feeding time, maternity leave and childbirth leave. B. OPTOTECH has taken out labor and health insurance as well as medical insurance

and provided regular physical examinations at no charge for its employees. C. OPTOTECH has established the employee welfare committee to arrange

employee tours and take care of a variety of employee welfare related matters. D. OPTOTECH has contributed employee pensions by law. E. OPTOTECH has provided on-the-job training for its employees. F. OPTOTECH has taken sex harassment and irrational management prevention

measures, and punished violators. G. Stipulate personal information protection and management regulations.

None

23

Evaluation Item




(2) Investor relations, supplier relations and rights of stakeholders: OPTOTECH has designated exclusive personnel to handle investor’s recommendations or problems, and has good financial and business relationships with its suppliers and rights of stakeholders, for which it hopes to generate a win-win benefit based on the equal and reciprocal principle.

(3) Directors’ and supervisors’ training records:

Title Name Course Training hours

Chairman Yung-Chiang Huang The corporate governance structure 3

Director Hung-Tung Wang The corporate governance structure 3 Director Masao Shono The corporate governance structure 3 Director Chui-Chuan Chang The corporate governance structure 3 Director Shuji Ogasawara The corporate governance structure 3 Director Shun-Chih Chen The corporate governance structure 3 Director Zong-Xing Wu The corporate governance structure 3

Supervisor Tsang-Der Ni The corporate governance structure 3 Supervisor Tzu-Hua Han The corporate governance structure 3

8. Has the company implemented a self-evaluation report on corporate governance or has it authorized any other professional organization to conduct such evaluation? If so, please describe the opinion from the Board, the result of self or authorized evaluation, the major deficiencies, suggestions, or improvements.

V The Company has not yet to establish Corporate Governance Assessment Report or to commission external assessment on its corporate governance, but the operations of the Company are in compliance with laws and regulations as well as the Company’s corporate governance spirit. None

24

(5) Composition, Responsibilities and Operations of the Remuneration Committee:

A. Information of the remuneration committee member

Title

Criteria

Name

Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work

Experience

Independence Criteria (Note)

Number of Other Public Companies in Which the Individual is Concurrently Serving as an Remuneration Committee Member

Rem

arks

An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university

A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company

Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company

1 2 3 4 5 6 7 8

Other Hsueh-Liang Wu 1

Other Chung-Hsing Huang

0

Other Yen-Ming Hsu 0 Note: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the 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 others’ names, 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 third degree of kinship, of any of the persons in the preceding three sub-paragraphs.

5. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.

6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.

7. Not a professional individual, who is 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 a person of any conditions defined in Article 30 of the Company Law.

B. Attendance of Members at Remuneration Committee Meetings

(a). There are 3 members in the Remuneration Committee.

(b). Current term of members: From July 9, 2014 to June 16, 2017. A total of 2 (A) Remuneration Committee meetings were held in the previous period. The attendance record of the Remuneration Committee members was as follows:


Person(B) By Proxy

Attendance Rate (%)【Ｂ/Ａ】 Remarks

Convener Hsueh-Liang Wu 2 0 100%

Committee Member

Chung-Hsing Huang 2 0 100%

Committee Member

Yen-Ming Hsu 2 0 100%

Other mentionable items: 1. If the Board of Directors shall not accept or revise the suggestions proposed by the remuneration committee, the dates of meetings,

sessions, contents of motions, all independents’ opinion and the Company’s response to the remuneration committee’ opinion should be specified(i.e., the remuneration passed by the Board of Directors is better than the remuneration suggested by the remuneration committee, reasoning for the deviation shall be stated.): None.

2. If the committee member is in opposition or reservation the suggestions proposed by the remuneration committee and he/she has record or written statement, information such as remuneration committee date, committee number, meeting content, suggestions of all members and how these suggestions were handled shall be clearly stated: None.

25

(6) Corporate Social Responsibility:

Evaluation Item

Implementation Status Deviations from “the Corporate Social Responsibility

Best-Practice Principles for TWSE/TPEx Listed

Companies” and Reasons Yes No Abstract Explanation

1. Corporate Governance Implementation

(1) Does the company declare its corporate social responsibility policy and examine the results of the implementation?

(2) Does the company provide educational training on corporate social responsibility on a regular basis?

(3) Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?

(4) Does the company declare a reasonable salary remuneration policy, and integrate the employee performance appraisal system with its corporate social responsibility policy, as well as establish an effective reward and disciplinary system?

V

V

V

V

(1) The company has yet to establish its corporate social responsibility policy, but has always upheld the spirit to implement the concept of social responsibility, the maintenance of the ecological environment, and the promotion of carbon reduction. The Company has also actively participated in community activities to make a contribution to the society and to provide employee a safe and healthy work environment.

(2) Management and staff hold annual in-house management courses and introduce social responsibilities among various courses.

(3) Other than environmental protection and safety as well as health which are taken care of by the safety & Health Office, our administrative department has taken charge of remaining issues, such as social and public welfare and human rights.

(4) OPTOTECH has periodically provided internal training and management courses every year for its management executives and other employees. In addition, it has also instituted the employee performance management regulations, while specifically included the reward and punishment system in employees’ work rules, so the employees may fully understand the rules.

None

2. Sustainable Environment Development

(1) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?

(2) Does the company establish proper environmental management systems based on the characteristics of their industries?

V

V

(1) OPTOTECH has implemented water recycling, for which the volume of water usage and water recycling rate are monthly monitored. Furthermore, indoor and outdoor lighting equipment has also been gradually replaced with LED lights, so as to save the energy and maximize the efficiency of resources. As for the waste, it has been disposed for re-utilization under the circumstance where it can be re-used. At the same time, the use of materials is in line with the Company’s policy to ban and cut environmentally hazardous materials, in order to reduce impacts on the environment.

(2) By executing the ISO14001 management system, OPTOTECH has periodically appraised its processes, operation activities, products and service environment, so as to evaluate the environmental impact on its employees and interested parties, use of hazardous substances, working sites and the environment. OPTOTECH has also used the results as the reference for setting the industrial safety and health goal, and taking measures, such as operation control and educational training, to control the environmental impact. OPTOTECH has reviewed the goal, and considered the environmental impact, safety and health risks, statutory

None

26

Evaluation Item




(3) Does the company monitor the impact of climate change on its operations and conduct greenhouse gas inspections, as well as establish company strategies for energy conservation and carbon reduction?

V

laws and regulations, international standards, technological feasibility , economic feasibility and interested parties’ opinions every year to continue to make improvement and fulfill its commitment of pollution prevention.

(3) Implementation of energy saving and carbon elimination, secure ISO/DIS 14067 certification of carbon footprint of product and certification of use of energy saving label of Bureau of Energy, Ministry of Economic Affairs, regularly examine the emission of greenhouse gas that passes international audit organizations, and obtained the ISO 14064-1 Greenhouse Gas Verification Statement as the basis for preparation of energy saving strategy in order to slow down global warming.

None

3. Preserving Public Welfare

(1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?

(2) Has the company set up an employee hotline or grievance mechanism to handle complaints with appropriate solutions?

(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?

(4) Does the company setup a communication channel with employees on a regular basis, as well as reasonably inform employees of any significant changes in operations that may have an impact on them?

V

V

V

V

(1) OPTOTECH has abided by related labor laws and regulations, instituted the management regulations and systems and disclosed its information through public channels, so employees can fully understand the details and their legal rights and interest can be protected. At the same time, OPTOTECH has also respected the internationally recognized basic labor rights and not allowed any hindrance to labor’s basic rights.

(2) The Company has developed sexual harassment and unreasonable management prevention measures as well as guidance for complaints and disciplinary actions, providing employees channel to file complaints in order to property handle employees’ complaints.

(3) Our emphasizes the management of safety, sanitation and occupational health and has secured certificates including CNS15506 Taiwan Occupational Safety and Health Management System (TOSHMS), and Occupational Health and Safety Assessment Series (OHSAS 18001) in continuation of providing a safe and healthy working environment. In the execution portion of safety and health related operations, OPTOTECH in addition to carrying out requirements based on legal regulations also continued to handle hazard warning activities and promoted machine safety standard mechanism so as to escalate employee safety and health awareness and maintain factory safety. In the health management portion, we also continued to plan and promote all kinds of health improvement activities such as Health Forum, Women Health Activities, and Bone Mineral Intensity Checks, etc. and reduce safety and health risks in company operations.

(4) Besides the Labor-Management Meeting held quarterly, the employee mailbox feature was incorporated into the homepage of employees for improving their dialogue with the management.

None

27

Evaluation Item




(5) Does the company provide its employees with career development and training sessions?

(6) Does the company establish any consumer protection mechanisms and appealing procedures regarding research development, purchasing, producing, operating and service?

(7) Does the company advertise and label its goods and services according to relevant regulations and international standards?

(8) Does the company evaluate the records of suppliers’ impact on the environment and society before taking on business partnerships?

(9)Do the contracts between the company and its major suppliers include termination clauses which come into force once the suppliers breach the corporate social responsibility policy and cause appreciable impact on the environment and society?

V

V

V

V

V

(5)OPTOTECH has periodically training survey every year,and implementation of the annual training plan. Then according to the results after training to estimate efficacy, in order to strengthen staff functions, improve business performance and competitiveness.

(6) Even though our clients are not the end-users, OPTOTECH has still been devoted to fulfilling the standards of IECQ-QC-080000, so as to reduce the product’s hazardous substances and protect consumers’ safety.

(7) The marketing and labeling of the Company's products are in accordance with the laws and regulations.

(8) The Company pays attention to environmental protection and energy saving. The Company pays attention to environmental protection as a criterion in the choice of suppliers, in order to fulfill its corporate social responsibility.

(9)The cooperation between the Company and its suppliers is in accordance with the laws and international regulations. If suppliers have significantly negative impacts on the environment and society, the Company may at any time terminate or cancel the terms of the contracts.

None

4. Enhancing Information Disclosure

(1) Does the company disclose relevant and reliable information regarding its corporate social responsibility on its website and the Market Observation Post System (MOPS)?

V

(1) The Company exposes from time to time crucial and reliable information relating to corporate social responsibility in the Company's website and the Taiwan Exchange’s Market Observation Post System, etc.

None

5. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation:

The Company is committed to enhance corporate governance, to continue urging and practicing corporate social responsibility, and to keep reviewing the effectiveness of its implementation and continuously improve its policies.

6. Other important information to facilitate better understanding of the company’s corporate social responsibility practices:

A. Environmental protection:

a. OPTOTECH has enhanced its sewage purification, so water resources can be reutilized and the water quality of rivers can be improved.

b. OPTOTECH has reinforced its waste management and minimization, classified garbage, promoted office dematerialization in order to reduce the use of paper.

c. OPTOTECH has aggressively developed and promoted the use of green raw materials, in an attempt to continuously cut down the impact of its products on the environment. In the end, our hopes to develop the products which can be harmoniously blended with nature and friendly to the earth.

d. OPTOTECH applied to Hsinchu Science Park for re-use of industrial waste case.

28

Evaluation Item




B. Community participation: Participated in the ACCTON Dream Actualization Plan, with which our employees were called to donate the Christmas gifts underprivileged children wanted.

C.Contribution to society: OPTOTECH has been devoted to R&D for enhancement of LED product effect and reduction of resource waste.

D. Service to society, social and public interests: a. OPTOTECH participated in the 2012 blood donation activity showing its enthusiasm for blood donation related public welfare activities. b. OPTOTECH has continued to promote its ISO-14001 environmental management system and avoid polluting and hurting the neighboring environment. c. Our Employees were called to donate the Christmas gifts underprivileged children wanted and received certificate of appreciation.

E. Consumer rights and interests: Our clients are not the end-users, but we have devoted our efforts to fulfilling the rules of IECQ-QC-080000, so as to reduce hazardous substances of our products and protect consumers’ safe use of our products.

F. Human rights: OPTOTECH has good labor relations, and provides the following fringe benefits for its employees: a. Health insurance, labor insurance, medical insurance and casualty insurance for its employees b. Various prizes, employee bonuses and the stock ownership plan. c. Establishment of the employee welfare committee d. Integrated study and training measures e. Integrated retirement system.

G. Safety and health: The Company participates in Taiwan’s LED industry association (Taiwan Optoelectronic Semiconductor Industry Association, TOSIA), and promotes the improvement of fire regulations for high-tech fabs, in order to engender a more appropriate link between fire facilities in the clean rooms of high-tech industries in Taiwan and legal regulations.

7. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions:

Sep. 2005:As recommended by SGS, OPTOTECH passed the ISO14001:2004 version Environment Management System Verification.

Aug. 2006: As recommended by SGS, OPTOTECH passed the IECQ HSPM(QC080000)version Environment Management System Verification.

Oct. 2008: As recommended by SGS, OPTOTECH passed the OHSAS 18001:2007 version Environment Management System Verification.

July 2010: As recommended by SGS, our Optoelectronics Division/ Silicon Division passed ISO/TS16949: 2009 Quality Management System Certification.

Oct. 2010: As recommended by SGS, OPTOTECH passed the ISO 9001:2008 Management System Verification.

Aug. 2012: As recommended by SGS, our system products MR-16 passed ISO/DIS 14067 Verification certificate .

Sep. 2013: As recommended by SGS, OPTOTECH passed the CNS15506: 2011 Management System Verification.

29

(7) Ethical Corporate Management

Evaluation Item

Implementation Status Deviations from “the Ethical Corporate

Management Best-Practice Principles for TWSE/TPEx Listed

Companies” and Reasons


1. Establishment of ethical corporate management policies and programs

(1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?

(2) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?

(3) Does the company establish appropriate precautions against high-potential unethical conducts or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?

V

V

V

(1) The operation of OPTOTECH has followed applicable laws. Related operating procedures and regulations for the operation of OPTOTECH have been established and announced on OPTOTECH’s corporate website. The Board of Directors and management will perform necessary practices to fulfill ethical corporate management.

(2) We will offer non-scheduled courses relating to corporate working rules and announced the related regulations on OPTOTECH’s corporate website for people to follow.

(3) It has been clearly stated in corporate working rules that our employees should stay on their post and strictly follow all applicable regulations. Our employees, when conducting businesses, shall not offer or accept any improper benefits including rebates, commissions, grease payments, etc.

None

2. Fulfill operations integrity policy

(1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?

(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity?

(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?

(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis?

V

V

V

V

(1) Prior to any commercial transactions with other companies, we shall take into consideration their legality and records of unethical conduct, if any. Rules and regulations relating to ethical conduct shall be clearly stated in the contract of any commercial transaction.

(2) The Company has yet to set up a dedicated unit to implement operating integrity of the enterprise, but the moral conducts of the Company’s directors and supervisors, managers and all its employees are in compliance with regulations and norms for business integrity.

(3) Directors shall exercise a high degree of self-discipline, a director is prohibited from participating in discussion of or voting on any proposal where the director or the juristic person that the director represents is an interested party, and such participation is likely to prejudice the interests of OPTOTECH. Employees when encounters conflicts in interests while conducting businesses shall report to their supervisors or the dedicated unit.

(4) We have established effective accounting systems and internal control systems according to the related laws and regulations. We also assigned Legal and Audition Departments to ensure the legality of operation activities, conduct auditing mechanisms, and control risk management, and report the results to the Board of Directors periodically.

None

30

Evaluation Item

Implementation Status Deviations from “the Ethical Corporate

Management Best-Practice Principles for TWSE/TPEx Listed

Companies” and Reasons


(5)Does the company regularly hold internal and external educational trainings on operational integrity?

V (5)The Company holds annual internal promotion, in which the chairman, general manager, or other senior executives convey the importance of integrity to the directors, the employees and the mandatories of the Company.

None

3. Operation of the integrity channel

(1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?

(3) Does the company provide proper whistleblower protection?

V

V

V

(1) We established “Directors, Supervisors and Management Ethical Conduct Principles” and “Working Rules” to clearly state the disciplinary and complaint system. The above regulations were announced on OPTOTECH’s corporate internal website.

(2) The Company has been actively assessing its standard operating procedures and confidentiality mechanisms for the handling of reports on violations.

(3) The company promises that people reporting on violations will not be subjected to undue disposals due to their reports.

None

4. Strengthening information disclosure

(1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?

V (1) The operation of OPTOTECH has followed applicable laws. Related operating procedures and regulations for the operation of OPTOTECH have been established and announced on OPTOTECH’s corporate website. It has been clearly stated in corporate working rules that our employees should stay on their post and strictly follow all applicable regulations. Our employees, when conducting businesses, shall not offer or accept any improper benefits including rebates, commissions, grease payments, etc.

None

5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.

The Company has yet to establish "Procedures for Ethical Management" but bases its business activities on principles of fairness, honesty, trustworthiness, and transparency, in order to implement business integrity policies and to actively prevent acts of bad faith.

6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies).

We will at all times monitor the development of relevant local and international regulations concerning ethical corporate management, so as to review and improve our ethical corporate management principles and achieve better results from implementing the principles.

(8) Corporate Governance Guidelines and Regulations:

OPTOTECH has yet to institute any corporate governance rules, but it has fulfilled the corporate governance spirit, including internal control and various kinds of management. Its control and management functions have been operated smoothly.

31

A. Based on the “Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies”, OPTOTECH has instituted the following regulations: (a) Rules of Procedure for Shareholders Meeting (b) Rules of Procedure for Board of Directors Meeting (c) Rules of Election of Directors and Supervisors (d) Remuneration Committee Charter (e) Procedures for Acquistion or Disposal Assets (f) Procedures for Endorsement and Guarantee (g) Procedures for Lending Funds to Other Parties (h) Rules Governing for Subsidiary (i) Rules Governing for Investments (j) Procedures for Handling Material Inside Information (k) Directors, Supervisors and Management Ethical Conduct Principles

B. Enquiry: OPTOTECH’s corporate website at http://www.opto.com.tw for the financial data and corporate governance information disclosed by OPTOTECH.

(9) Other Important Information Regarding Corporate Governance:

A. Program and training of manager:

Title Name Date or program /training

Organizing unit Program Name Hours

Vice President (Head of Financing and Accounting)

Tzu-Chun Lin 2014/04/11 Accounting Research and Development Foundation

Continuous advancing classes for issuer, security broker, and accounting department head of security trading office

12

Chief of Auditing Office

Chien-Chang Chen

2014/10/31 The Institute of Internal Auditors, R.O.C (Taiwan)

Performance assessment skills of Internal Audit

6

2014/12/12 The Institute of Internal Auditors, R.O.C (Taiwan)

Risk management of company compliance with applicable laws, regulations, and bylaws

6

B. Procedures for Handling Material Inside Information: To manage our internal material information, our board of directors instituted the “Procedure for Handling Internal Material Information”, and informed its directors, supervisors, managers and employees. At the same time, the procedure system and precautious matters have been posted on OPTOTECH’s corporate website for all the colleagues across the board to comply with. In so doing, it is hoped that there will be no violation or insider trading occurring in the company.

(10) Internal Control System:

A. Internal control statement: (P.33)

B. Those that entrust a CPA to examine the internal control system as a project shall disclose the CPA’s audit report: None.

(11) For the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, disclose any sanctions imposed in accordance with the law upon the company or its internal personnel, any sanctions imposed by the company upon its internal personnel for violations of internal control system provisions, principal deficiencies, and the state of any efforts to make improvements: None.

(12) Major Resolutions of Shareholders’ Meeting and Board Meetings:

A. Major resolutions made in the 2014 regular shareholders’ meeting:

Major Resolutions Implementation Status

The 11th Election of Directors and Supervisors

The registration for the change was completed on July 1, 2014 in accordance with the amendment procedure. The elected directors and supervisors are as below:

Directors:Yung-Chiang Huang, Hung-Tung Wang, Chui-Chuan Chang, Shun-Chih Chen, Nichia Taiwan Corp., Lee Tech Co., Ltd., Shin-Etso Opto Electronic Co.,Ltd Supervisors: Medison Pacific Investment Co., Ltd., Tzu-Hua Han

32

Major Resolutions Implementation Status

Approval of the 2013 business report and financial statements. All the resolutions of the Shareholders’ Meeting have been fully implemented in accordance with the resolutions.

Approval of the distribution of 2013 retained earningsResolved to revise the “Regulations Governing the Acquisition and Disposal of Assets” Resolved to revise the “Rules of Procedure for Shareholders Meetings” Removal of the restriction against the ban on newly elected directors’ engagement in similar businesses

B. Major resolutions made in board meetings include the following:

Year Major Resolutions Implementation Status

2014

Approval of the 2013 business report and financial statements.

Approval of the distribution of 2013 retained earnings

Approval of the 2013 Internal Control System Statement

The 11th Election of Directors and Supervisors

Convening the 2014 Annual Shareholders’ Meeting.

Resolved to revise the “Regulations Governing the Acquisition and Disposal of Assets”

Resolved to revise the “Rules of Procedure for Shareholders Meetings”

Re-election of Yung-Chiang Huang as the Chairman

Resolved to set the company’s ex-dividend date

Approving the appointment of the threee members of the Compensation Committee

Removal of the restriction against the ban on managers’ engagement in similar businesses

Approval of the 2015 annual audit plans

All the resolutions of the Board Meeting have been fully implemented in accordance with the resolutions.

2015

Resolved to revise the”Regulations Internal Control System” and ”Regulations Governing

the Implementation of Internal Control”

Approval of the 2014 business report and financial statements.

Approval of the distribution of 2014 retained earnings

Convening the 2015 Annual Shareholders’ Meeting.

Approval of the 2014 Internal Control System Statement

All the resolutions of the Board Meeting have been fully implemented in accordance with the resolutions.

(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.

(14) Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D :None.

33

Optotech Corporation Limited Statement of Internal Control System

Date:March 23,2015

Based on its internal control system in 2014, Optotech Corporation Limited (OPTOTECH) declares the results of its self-examination as below:

1. OPTOTECH is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. OPTOTECH has established such a system aimed at providing reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations (including profitability, performance, and safeguarding of assets), reliability of financial reporting, and compliance with applicable laws and regulations.

2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of OPTOTECH contains self-monitoring mechanisms, and OPTOTECH takes corrective actions whenever a deficiency is identified.

3. OPTOTECH evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: 1.control environment, 2.risk assessment, 3.control activities, 4.information and communication, and 5.monitoring. Each component further contains several items. Please refer to the Regulations for details.

4. OPTOTECH has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

5. Based on the findings of the evaluation mentioned in the preceding paragraph, OPTOTECH believes that, during the year 2014, its internal control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.

6. This Statement will be an integral part of OPTOTECH’s Annual Report for the year 2014 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

7. This Statement has been passed by the Board of Directors in their meeting held on March 23, 2015, with zero of the Seven attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

OPTOTECH Corporation Limited

Chairman: Yung-Chiang Huang

President: Hung-Tung Wang

34

4. Information Regarding the Company’s Audit Fee

Accounting Firm Name of CPA Period Covered by

CPA’s Audit Remarks

Pricewaterhouse Coopers Philine Lee Wilson Wang 2014.01.01-2014.12.31

Fee Items Fee Range Audit Fee Non-audit Fee Total

1 Under NT$ 2,000,000 V

2 NT$2,000,001 ~ NT$4,000,000

3 NT$4,000,001 ~ NT$6,000,000 V V

4 NT$6,000,001 ~ NT$8,000,000

5 NT$8,000,001 ~ NT$10,000,000

6 Over NT$100,000,000

(1) In the case that the amount of the non-audit fee paid to the CPA, the CPA’s firm or its affiliated enterprise is more than 1/4 of that of the audit fee, the audit and non-audit amounts and non- nonauditservices shall be disclosed: None.

(2) In the case that the accounting firm is replaced and the audit fee paid for the year making replacement is less than that of the year before replacement, the audit fees before and after replacement of the accounting firm and the reason for replacement shall be disclosed: None.

(3) The company whose audit fee is reduced by no less than 15% from the previous year shall disclose the audit fee reduction amount, ratio and reason. The audit fee referred to in item (1) is the amount paid by the company to the CPA for audit, examination, re-review of financial reports, financial prediction review and taxation certificat: None.

5. Replacement of CPA (1) Regarding the former CPA

Replacement Date Resolved by the board of directors on Mar. 25, 2013

Reason of change and explanation

As PricewaterhouseCoopers reorganized its internal structure, the CPAs auditing the financial statements of 2013 would be changed from the CPAs Charles Lai and Wilson Wang to the CPAs Philine Lee and Wilson Wang.

Describe whether the Company terminated or the CPA did not accept the appointment

PartiesStatus CPA CPA

Termination of appointment Charles Lai Wilson Wang

Did not accept (continue) the appointment

Other issues (except for unqualified issues) in the audit reports within the last two years

None

Differences with the company None

Other Revealed Matters None

35

(2) Regarding the successor CPA

Name of accounting firm PricewaterhouseCoopers Name of CPA Philine Lee /Wilson Wang Date of appointment Mar. 25, 2013 Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company's financial reports that the CPA might issue prior to the engagement.

None

Succeeding CPA’s written opinion of disagreement toward the former CPA

None

(3) Reply letter from the former CPA: None. 6. The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers

in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates in the most recent two years.

7. Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders (1) Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders:

Title Name

2014 As of Mar. 31, 2015

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Chairman& Chief Strategy

Officer Yung-Chiang Huang 0 0 0 0

Director & President

Hung-Tung Wang 0 0 0 0

Director & Vice President

Chui-Chuan Chang 40,000 0 0 0

Director & Deputy Assistant

General Manager

Shun-Chih Chen 0 0 0 0

Director Nichia Taiwan Corp. 0 0 0 0Director Lee Tech Co., Ltd. (48,000) 0 0 0Director Shin-Etso Opto Electronic Co.,Ltd 0 0 0 0Director Hitachi Metals, Ltd. 0 0 - -Director Shuang Xin Investment Consulting Co., Ltd. 0 0 - -

Supervisor Medison Pacific Investment Co., Ltd. 0 0 0 0Supervisor Tzu-Hua Han 0 0 0 0

Vice President (Head of

Financing and Accounting)

Tzu-Chun Lin 0 0 0 0


Jung-Huan Lee 0 0 0 0


Chin-Lung M 0 0 0 0

(2) Shares Trading with Related Parties: None.

(3) Shares Pledge with Related Parties: None.

36

8. Relationship among the Top Ten Shareholders As of 04/26/2015

Name

Current

Shareholding

Spouse’s

/minor’s

Shareholding

Shareholding

by Nominee

Arrangement

Name and Relationship

Between the Company’s Top

Ten Shareholders, or Spouses or

Relatives Within Two Degrees

Rem

arks

Shares % Shares % Shares % Name Relationship

Nichia Taiwan Corp. 31,755,947 5.82 0 0.00 0 0.00

Hitachi Metals,

Ltd. entrusted to

Chinatrust

Commercial Bank

Parent

company

Hitachi Metals, Ltd. entrusted

to Chinatrust Commercial

Bank

22,246,600 4.08 0 0.00 0 0.00 None None

Nichia Corp. entrusted to

Chinatrust Commercial Bank 16,163,760 2.96 0 0.00 0 0.00

Nichia Taiwan

Corp. Subsidiary

Dimensional Emerging

Markets Value Fund 8,999,000 1.65 0 0.00 0 0.00 None None

Investment Portfolio of

Emerging Market Funds,

entrusted to Deutsche Bank,

Taipei Branch

5,500,400 1.01 0 0.00 0 0.00 None None

Medison Pacific Investment

Co., Ltd 5,361,681 0.98 0 0.00 0 0.00 None None

JPMorgan Chase Bank N.A.

Taipei Branch in custody for

Norges Bank

4,436,007 0.81 0 0.00 0 0.00 None None

The Emerging Markets Small

Cap Series of The DFA

Investment Trust Company

3,841,886 0.70 0 0.00 0 0.00 None None

Emerging Markets Core

Equity Portfolio Of Dfa

Investment Dimensions

Group Inc.

3,331,713 0.61 0 0.00 0 0.00 None None

JPMorgan Chase Bank N.A.,

Taipei Branch in custody for

Vanguard Total International

Stock Index Fund, a series of

Vanguard Star Funds

3,319,000 0.61 0 0.00 0 0.00 None None

9. Ownership of Shares in Affiliated Enterprises

As of 12/31/2014 Unit:shares/%

Affiliated Enterprises Ownership by the Company

Direct or Indirect Ownership by Directors, Supervisors, Managers

Total Ownership

Shares % Shares % Shares %

Viking Tech Corp. 9,189,994 7.83 11,587,883 9.88 20,777,877 17.71

37

IV、 Capital Overview 1. Capital and Shares (1) Source of Capital

A. Issued Shares

Month/

Year

Par

Value

(NTD)

Authorized Capital Paid-in Capital Remark

Thousand

Shares

Amount

(Thousand

NTD)

Thousand

Shares

Amount

(Thousand

NTD)

Sources of

Capital

Capital

Increased by

Assets Other

than Cash

Other

2012.01 - 1,000,000 10,000,000 548,188 5,481,881 Cancellation of treasury shares:

8,170 None Note 1

2012.04 - 1,000,000 10,000,000 545,662 5,456,621 Cancellation of

treasury stocks:25,260

None Note 2

Note 1: yuan-shang-tzu no.1010001657 by Science Park Administration on Jan. 17, 2012 Note 2: yuan-shang-tzu no.1010012297 by Science Park Administration on Apr. 24, 2012 Note 3: No change in capital stocks in fiscal year 2013 and as of printing of annual report.

B. Type of Stock

C. Information for Shelf Registration: None.

(2) Status of Shareholders

As of 04/26/2015

Share Type

Authorized Capital Remark

Issued Shares Un-issued Shares Total Employees’

warrant (Share)

Shares convertible from converted bonds (Share)

Common stock

545,662,115 454,337,885 1,000,000,000 60,000,000 150,000,000

Item Government

Agencies Financial

Institutions

Other Juridical Persons

Domestic Natural Persons

Foreign Institutions &

Natural Persons Total

Number of Shareholders

2 17 64 62,260 141 62,484

Shareholding (shares)

212,006 1,634,801 46,958,050 399,324,559 97,532,699 545,662,115

Percentage 0.04％ 0.30％ 8.61％ 73.18％ 17.87％ 100.00％

38

(3) Shareholding Distribution Status (Common Shares)

As of 04/26/2015

Class of Shareholding (Unit: Share)

Number of Shareholders

Shareholding (Shares)

Percentage

1 ~ 999 15,850 4,031,732 0.74％

1,000 ~ 5,000 32,227 76,417,435 14.00％

5,001 ~ 10,000 7,611 62,976,028 11.54％

10,001 ~ 15,000 1,971 25,484,262 4.67％

15,001 ~ 20,000 1,685 32,142,167 5.89％

20,001 ~ 30,000 1,205 31,489,400 5.77％

30,001 ~ 50,000 890 36,565,339 6.70％

50,001 ~ 100,000 609 45,618,833 8.36％

100,001 ~ 200,000 254 36,675,353 6.72％

200,001 ~ 400,000 104 29,016,993 5.32％

400,001 ~ 600,000 23 11,705,447 2.15％

600,001 ~ 800,000 16 11,066,775 2.03％

800,001 ~ 1,000,000 12 10,432,617 1.91％

1,000,001 or over 27 132,039,734 24.20％

Total 62,484 545,662,115 100.00％

(4) List of Major Shareholders

As of 04/26/2015

Shareholder's Name Shares Percentage

Nichia Taiwan Corp. 31,755,947 5.82％

Hitachi Metals, Ltd. entrusted to Chinatrust Commercial Bank 22,246,600 4.08％

Nichia Corp. entrusted to Chinatrust Commercial Bank 16,163,760 2.96％

Dimensional Emerging Markets Value Fund 8,999,000 1.6％5

Investment Portfolio of Emerging Market Funds, entrusted to Deutsche Bank, Taipei Branch

5,500,400 1.01％

Medison Pacific Investment Co., Ltd 5,361,681 0.98％

JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank

4,436,007 0.81％

The Emerging Markets Small Cap Series of The DFA Investment Trust Company

3,841,886 0.70％

Emerging Markets Core Equity Portfolio Of Dfa Investment Dimensions Group Inc.

3,331,713 0.61％

JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds

3,319,000 0.61％

39

(5) Market Price, Net Worth, Earnings, and Dividends per Share

Items 2013 2014 01/01/2015

- 03/31/2015

Market Price per

Share

Highest Market Price 13.35 17.55 13.65

Lowest Market Price 10.95 11.60 13.00

Average Market Price 11.90 14.57 13.37

Net Worth per Share

Before Distribution 13.33 13.89 14.11

After Distribution 12.72 - -

Earnings per Share

Weighted Average Shares (thousand shares)

544,554,839 544,554,839 544,554,839

Diluted Earnings Per Share 0.77 1.03 0.20

Dividends per Share

Cash Dividends 0.60 0.75 -

Stock Dividends

Dividends from Retained Earnings

- - -

Dividends from Capital Surplus

- - -

Accumulated Undistributed Dividends

- - -

Return on Investment

Price / Earnings Ratio (Note 1) 18.14 13.96 -

Price / Dividend Ratio (Note 2) 19.83 - -

Cash Dividend Yield Rate (Note 3) 3.54% - -

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

(6) Dividend Policy and Implementation Status

A. Dividend Policy:

Since OPTOTECH engages in high tech business and is under the growth period in its business cycle, it requires capital expenditure and well-rounded financial planning in order to pursue sustainable development. Hence, we will distribute both stock dividend and cash dividend in accordance with our growth rate and capital expenditure status, in which the cash dividend shall be no less than 20% of the total amount of the dividend distribution of the year that the dividend occurs.

B. Proposed Distribution of Dividend:

As resolved in the board meeting held on March 23, 2015, the company’s 2014 surplus distribution is as below. The case will be sent to the board of supervisors for examination and approval and submitted to the regular shareholders meeting for recognition. Then, the board of directors will separately determine a base day to distribute the stock (cash) dividend.

40

OPTOTECH Corporation Statement of Earning Distribution 2014

Unit: NT$

Item Amount Undistributed earnings at the beginning of year(IFRS) 524,917,256 Less: Retained earnings translation adjustment recognized under equity method to the invested company

（12,662,388）

Less: Adjustment of retained earnings for the deletion of treasury stock

0

Plus: Actuarial gains and losses of current fiscal year 9,922,775 After-tax profit of the year 561,682,540 Less: Allocated legal earning reserve （56,168,254） Plus: Rotating special reserves. 13,331,136 Distributable retained earnings 1,041,023,065 Cash dividends to shareholders （409,246,586） Undistributed surplus at year end. 631,776,479 ＊Distributed employees’ bonus – Remuneration 76,733,735 ＊Distributed in cash to directors and supervisors 25,577,912

Note :The TSEC and GTSM listed companies shall set aside a special surplus reserve from the net amount on the debit side of shareholders’equity (including financial product’s unrealized loss, foreign currency translation adjustment and net loss of un-recognized pension cost, for which any unrealized profit can be included in calculation), in accordance with the explanation 2 of the document (2000) Tai-Tsai-Cheng (1) No 100116 issued by former Securities and Futures Institute of the Ministry of Finance on January 3, 2000.

(7) Effect of the free share allotment to be proposed at the shareholders’ meeting on the Company’s business performance and its EPS:

According to the resolution by the board of directors on March 23, 2015, neither stock dividends to shareholders nor stock bonus to employees will be distributed for the year 2014.

(8) Employee Bonus and Directors' and Supervisors' Remuneration:

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

If there is any surplus in the company’s yearly final accounts, it will be distributed as follows: (a). Offset the losses from previous years. (b). Withdrawing 10% statutory surplus reserve until the accumulated amount has reached the total capital

of OPTOTECH. (c). Provision or rotation of special reserves depending on company’s need of operation and legal

requirement. (d). Deduction of balance required by article (a) to article (c), adding the undistributed surplus

accumulated in the previous fiscal year. Except for a reserved portion, the stockholder’s meeting has decided the amount to be appropriated according to the ratio listed below: 80% as bonus for stockholder’. 15% as bonus employees. 5% as remuneration for directors and supervisors.

Employees of the affiliated companies approved by the Board of Directors or its representatives shall have the right to receive stock bonuses.

41

B. The Estimated Basis for Calculating the Employee Bonus and Directors’ and Supervisors’ Remuneration:

Based on the corporate constitution, OPTOTECH has estimated its employee bonus and director / supervisor remuneration every month. Also, in accordance with the document (2007) Chi-Mi No. 052 for “Accounting Process of Employee Bonus and Director/Supervisor Remuneration”issued by Accounting Research and Development foundation, when the amount can be reasonably estimated under the legal obligation or assumed obligation, the employee bonus and director / supervisor remuneration shall be recognized as expenses and liabilities. In the case that there is any difference between the actually distributed amount as resolved in the shareholders meeting held later on and the estimated amount, the difference shall be listed as next year’s gain or loss, for which the stock bonus for the current period will not be distributed.

C. Profit Distribution for Employee Bonus and Directors’ and Supervisors’ Remuneration for 2014 Approved in Board of Directors Meeting：

(a). Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration:

(NT$ thousands)

Directors' and Supervisors' Remuneration $25,577,912

Employee Bonus – in Cash $76,733,735

Total $102,311,647

(b).Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings:

As resolved in OPTOTECH’s board meeting held on March 23, 2015, we would not distribute the employee stock bonus.

(c). Recounted EPS after Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration:

The EPS is 1.03, which is calculated after distributing employee bonus and directors’ and supervisors’ remuneration.

(d). Information of 2013 Earnings Set Aside for Employee Bonus and Directors’ and Supervisors’ Remuneration:

Distribution of 2013 Earnings (NT$ thousands)

Distributed actually

according to the resolution at the shareholders’ meeting

Proposed to be distributed by the board of directors

Difference

Bonus for shareholders 327,397,269 327,397,269 0

Remuneration to directors and supervisors

20,462,329 20,462,329 0

Bonus for employees 61,386,987 61,386,987 0

Note:There is no difference between the employees’ bonus and remuneration to directors and supervisors actually distributed and those proposed to be distributed by the board of directors.

(9) Buyback of Treasury Stock:None.

42

2. Bonds:None.

3. preferred stock:None. 4. Global Depository Receipts:None. 5. Employee Stock Options (1) Status of Employee Stock Options

A. Issuance of Employee Stock Options Mar. 31, 2015

Type of Stock Option Employees’ stock option voucher for year 2010

Regulatory approval date Aug. 09, 2010

Issue date Aug. 26, 2010

Units issued 13,910,000 units

(1 common share of the Company to be subscribed by every unit)Option shares to be issued as a percentage of outstanding shares

2.55%

Duration Till Dec. 31, 2017

Conversion measures Issuing new shares

Conditional conversion periods and percentages（%）

Duration of allocating stock option vouchers

Ratio of stock options to be exercised

2 years 50% 3 years 75% 4 years 100%

Converted shares 0

Exercised amount 0

Number of shares yet to be converted 11,057,250units

(1 common share of the Company to be subscribed by every unit)Adjusted exercise price for those who have yet to exercise their rights

NTD 18.4

Unexercised shares as a percentage of total issued shares（%） 2.03%

Impact on possible dilution of shareholdings

The stock option vouchers are used to subscribe 13,910,000 common shares. It does not have much effect on dilution of original shareholders’ equity and shareholders’ equity.

43

B. List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock Options Mar. 31, 2015

Title Name No. of Option

Shares

Option Shares as a Percentage of Shares Issued

Exercised Unexercised

No. of Shares Converted

Strike Price (NT$)

Amount (NT$

thousand)

Converted Shares as a

Percentage of shares Issued

No. of Shares Converted

Strike Price (NT$)

Amount (NT$ thousand)

Converted Shares as a

Percentage of shares Issued

Executive Officers

Chairman & Chief Strategy Officer

Yung-Chiang Huang

2,830,000 0.52% －－－－ 2,830,000 18.4 52,072,000 0.52%

President Hung-Tung Wang Vice President Chui-Chuan Chang Vice President

(Head of Financing and Accounting)

Tzu-Chun Lin


Jung-Huan Lee


Shun-Chih Chen


Chin-Lung Ma

Chairman & Chief Strategy Officer

Yung-Chiang Huang

President Hung-Tung Wang

Employee

Manager Wen-cong Lai

1,388,000 0.25% －－－－ 1,388,000 18.4 25,539,200 0.25%

Manager Shu-zhen You Manager Qian-yan Huang Manager Yin-rui Chen Manager Ming-song Hsieh Manager Jia-zhang Hsieh Manager Zhi-hong Chen Manager Jie-yi Chen Manager Ru-yuan You

Sales Executive Hui-chao Chen Manager Yun-qiang Mo Manager Hong-ji Lee

Vice Manager Feng-jiao Liu

(2) Issuance of New Restricted Employee Shares:None.

6. Status of New Shares Issuance in Connection with Mergers and Acquisitions:None.

7. Financing Plans and Implementation:None.

44

V、 Operational Highlights 1. Business Activitie (1) Business Scope:

A. Main areas of business operations: (A) Production and sales of opto-electronic semiconductor devices:

(a) LED (b) Infrared LED (c) Photodiode (d) Phototransistor (e) Opto-electronic coupler (f) Laser diode (g) Optical integrated circuit

(B) Production and sales of semiconductor electronic devices: (a) Varactor diode (b) Field effect transistor (c) Microwave transistor (d) Diode (e) Transistor (f) All kinds of semiconductor devices

(C) Production and sales of wireless communication equipments: UHF wireless hopping communication device.

(D)Production and sales of wired communication equipments:intercom system inside the artillery armored vehicle.

(E) The research, development, design, manufacturing, sales, leasing (only for self-owned products), promotion and after-sale service of aforementioned items and associated system products.

(F) We are also involved in export/import trading activities associated with our company’s business.

B. Revenue distribution: Unit: NT$ thousands

Major products 2013 revenue, net Ratio % Light emitting devices 2,803,057 44.37

Sensor devices 2,086,419 33.03

System product 1,138,635 18.02

Packaging Products 283,534 4.49

Others 5,738 0.09

Total 6,317,383 100.00

C. Main products: In the aspect of LED products, the opto-electronic product division has devoted its efforts to servicing each of its clients with its well-rounded resources and processes and providing innovative resolution schemes to meet its clients’ respective requirements. These products include GaP (red, yellowish green, standard green, pure green), VPE (red, orange, light orange, yellow), AlGaAs (SH, DH, DDH), IR (infrared LED), AlGaInP (red, orange, yellow, yellowish green, pure green), InGaN (green, cyanine, blue, purple), and Flip-Chip (green, blue) LED chip. We will continue to focus on enhancing brightness and efficiency in order to develop LED chip products at a higher level.

The silicon electronic product division has combined current technology, integrated the resources to be developed in the years to come and adopted the cutting edge process to provide clients with flexible services and the overall resolution schemes. Just in a few short years, this new integration technology has gained recognition and support from clients. The silicon electronic product division is still making every effort to provide its clients with on-time delivery and low-defect quality products, in an attempt to become its clients’ “most reliable partner”. Its products are especially acclaimed by its Japanese clients.

System Products division - full-color display: using unique technologies, with 16-bit red, green and blue bands to achieve the best gamma curve to allow delicate and vivid color distribution on the display. At the same time, the Company has overcome the flashing and interference effects of low-level color and low brightness in order to create clearer screen rendition; in addition, pixel sharing technology can enhance the overall resolution of the display, producing superb high-quality images. Lighting products (including streetlights, project lamps, patio lights, T8, LED lights, down lights) use modular design that allows easy

45

removal as well as unique cooling technology to rapidly and effectively reduce the heat generated by the optical module. Equipped with excellent power module, the lights’ conversion efficiency is up to 90%, and with the characteristics of a constant current output, reducing the long-term decay of LED. Other system products include LED car lighting systems, variable information sign board and LED traffic lights, etc.

D. New products development (A) Light emitting devices

(a) High-power InGaN LED flip chip (b)High light emitting efficiency MOCVD IR chip. (c) Surface-emitting laser diode (d)LPE and LED infrared dies

(B) Sensor devices (a)Development of THB-verified 800V

zero-crossing & non-zero-crossing shutter fluid products

(b) To develop high power thyristor components

(c) Development of Pressure sensor (d)Development of III -V based Schottky diode (e) Development of APD (f) Development of Visible light detector

(C) System products (a)To develop full-color LED traffic

information panels (b) High resolution full-color module development

(c)To develop color vehicle information display products

(d)To develop 2K／4K LED Display control system

(e)Transmissive architectural lighting display module

(f) Special Purpose LED lighting development

(e)Smart lighting control system

(D) LED packaging devices (a)Inorganic UV packaging technology as well

as the development and the establishment of UV high-illumination wattage lamp module board and mass production line

(b)Using flip-chips to develop white light dies & light board module sales

(c)Development, verification and manufacturing process-building for new automotive light products development

(d)Development of COB-flip chip white high wattage> 100w products and LM-80 to verification process-building

(e)Development of AC Module Light board product entire-circumference light board series

(f)GaNon GaN packaging process development & in-house development of CHIP verification

(2) Industry Overview: A. Current status and future development:

According to LEDinside’s latest "2015 global LED lighting market trends" report, the global lighting market will reach US$82.1 billion in 2015, of which LED lighting market will reach US$25.7 billion US, with a market penetration rate of 31%. Observing the 2015 global LED market in regional terms, Europe holds 23% of the market share, China holds 21% of market share. US see a market share of 19% while the market share for Japan is 9%. Other emerging markets, including the other Asian nations, the Middle East and India, and Latin America hold 28% in total. Looking ahead to 2015, thanks to steady growth of demand in the lighting market, demand for China's lighting market will continue to improve even more both domestically and internationally. However, product prices are subject to intensified competition due to the large number of suppliers. If businesses fail to continuously develop new distribution network, eventually some businesses will face the crisis of being forced out of the market. Major regional driving forces in the emerging markets include population size, governmental policies to promote and specific project promotion. The door to the emerging markets will be drastically opened in 2015.

B. Relationship with Up-, Middle- and Downstream Companies: The current LED supply chain is relatively excessively lengthy: from upstream raw materials supplying:

46

single crystal wafer, epitaxial wafer to midstream electrode production, die cutting, die testing, the downstream die bonding, wire bonding to packaging, and finally into the application side. The packaging production capacity in the fourth quarter of 2013 is mainly to meet the demand gap, but in the first quarter of 2014, the release of double capacity almost dealt a catastrophic blow to the market. Packaging prices began a cycle of endless descent. By the first quarter of 2014, doubled demands were released en masse, leading to the tight supply for the entire first half of the wafer market. From the wafer side, the biggest problem currently seems to be the high exit costs. On the one hand a large part of wafer cost comes from investment in equipment, which boosts the sunk costs. On the other hand, since the Chinese government are highly involved in many projects, often allowing success and not failure, even for doomed projects clearly without long-term competitiveness. The relevant firms will not or dare not to recognize a failure and stop the losses by exiting. Yet only when such a competitive landscape forces competitors to give up on additional investment or even exit the industry can the entire wafer industry have a chance to restore normal competition.

C. Product trends: LED emits cold light, and the advantages of low electricity consumption, long lifetime, no need for warm-up, quick response time, small dimension, vibration resistant and suitable for mass production have made LED applicable to all kinds of electronic products. The development overview is shown below: ◎Backlight application

In response to the demand of compact and space saving dimension, along with the advancing technology, the cold light and compact feature of LED have been utilized for the backlight applications for electronic products such as cell phone display panel, LCD TV, and NB display panel.

◎Lighting application In light of the environmental protection issues such as greenhouse effect and energy saving, the low electricity consumption and cold light features of LED have enabled the applications as street lights, traffic signals, car lights and household lighting.

◎Large-size display Due to the compact size, good plasticity, and full-color capability, the system-controlled large-size LED displays have been constantly applied to entertainment venues, shopping malls, and concerts.

◎Sensor product This kind of product is usually based on LED with invisible light, and the applications are mainly consumer products such as household appliance, communication devices, computers, remote controls, ear thermometers, rapid temperature measuring devices, and temperature sensors for car or household appliance.

D. Product competition: The LEDinside’s latest "2015 global LED lighting market trends" research report shows that LED elements have successfully become the alternative light source products, benefitting from the expansion of the commercial lighting market. Lighting tubes become the most demanded products in the market, followed by light bulbs. In terms of lighting fixture market, ceiling lighting products continue to be the major product in the 2014-2015 market, serving mostly the home lighting market. The big players will get bigger in the bulb market in 2015. Lighting brand manufacturers will enhance the B2C image, i.e. to increase consumer brand image, of their bulb products and thus to enhance the B2B professional lighting markets, while small manufacturers without sales channels advantage or niche markets will become OEM or exit the market. No mater for traditional or emerging LED lighting manufacturers, the focus on the global lighting market trends in 2013-2015 will include the significant increase of LED lighting product penetration; and while brand manufacturers see revenue growth year after year, they still need to consider profit. Therefore, starting from 2014 many manufacturers are expected to become profit-oriented, in order to promote the professional lighting LED lighting products market and improve profit margins.

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(3) Research and Development A. R&D expense of the most recent fiscal year up to the publication date of this annual report:

Year Total Expenses (NT$ thousands) 2014 283,256

20145(As of March 31) 63,283

B. Technologies and R&D achievements R&D and innovation have been the driving force behind everlasting growth of Optotech. There are R&D engineering units under each business division with major objectives including new product development, innovative improvement of existing products, and development of customer service oriented customized products. The technologies and R&D achievements of R&D engineering units in each division is shown below:

◎Optoelectronics Division

(A) Organization This unit is mainly in charge of the development, the characteristic improvement, process stability and the mass production of compound semiconductor LED materials and devices. Currently the organization is divided into several sectors based on product features such as epitaxial material development sector, R&D and specifications formulation of new devices and new processes sector, process parameter setting sector, process technology improvement and upgrading sector, process capability control sector and yield improvement sector for satisfying customers’ demands.

(B) Strategy (a). Continue to invest in the development and production of four element epitaxial wafer and

understand the trend of using four element to replace two element and three element products to respond to the change in the market.

(b). Engage in strategic alliance with substrate material and epitaxial wafer suppliers in achieving vertical integration and complementary for epitaxial wafer and chip production in anticipation of stable expansion market share.

(c). Under the pretext of quality requirement, continue to reduce production cost and further expand market share.

(d). To focus on patent deployment and alliance for breaking through LED patent dilemma in addition to continuously improving existing high power LED efficiency, so as to respond to the future demand in the high power LED market,in response to future market of high power LED.

(e). Expand market share for traditional LED and IR products. Aggressively win LED market orders. (f). Continue to cooperate with our R&D center and R&D units of silicon electronic departments and

system departments in the development of new and niche products. (g). To continue to cooperate with Nichia Corp and Hitachi Metals to expand the market. (h). Continue to deepen blue light flip-chip technology and advanced packaging technology as well as

the vertical integration of wafer level package. (i). Strategize for special semiconductor materials technology for the special lighting application

market.

(C) Performance and achievement (a). Stabilize quality standards of two element and three element products. Win new traditional two

element and three element LED orders from Japanese customers. Expand market share and continue to maintain number one for traditional LED production capacity.

(b). Adjust the ratio of high-end and low-end four-element LED products, and full wavelength product packages to enhance the net profit margin and market share.

(c). Complete development of new IR products required by customers in cooperation with customer’s new demand and expand IR new market and achieve continuous increase in market share. Currently the market share of IR chips are still number one in the application of CCD camera and opto-electronic coupling application. The shipment is already stable in Japanese market in 2013. We will continue to win more customers and orders subsequently.

(d). High brightness blue light chip OEM process technology capability and quality continue to rise, and continue to expand markets in China and Korea.

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◎Silicon Division: (A) Organization

Major duties are to assist the mass production of silicon electronic products and the development of new products. This unit will enhance competitiveness among peers and expand the scope of applications by improving product features and satisfying customers’ demand based on existing foundation.

(B) Strategy (a). Our current technology advantages are in the field of high voltage MOS manufacturing process,

high voltage transistor manufacturing process, optical technology of light sensor device, Schottky manufacturing process and MEMS manufacturing process. Light sensor devices with high voltage, high power and high sensitivity will be developed by integrating the aforementioned technologies.

(b). Based on our current capability of high voltage process, we will conduct technology exchange with or partners to enhance the quality and market share of our high voltage products.

(c). In response to the demand of consumer electronic products, comprehensive solution will be provided in conjunction with IC design house to meet different application demands.

(d). In response to the demand for LED lighting and backlighting, the Company has developed a semiconductor protection and sensing component.

(e). To have technological cooperation with foreign manufacturers, so as to combine advantages of both sides and develop competitive products.

(C) Performance and achievement (a). Semiconductor component of simple structure with environment optical sensing function is

already in mass production. (b). Bidirection vertical structure high voltage zener diode is already in mass production and is

applied in LED lighting and backlighting. (c). Thyristor having high inrush current impact prevention capability is already in mass production. (d). IR band pass light detector diodes: development has completed. Client authentication in

process. (e). Small flip type Zener diode

◎Systems Division (A) Organization

(a). The first R&D Department of Optotech plays the role of developer for large-size full color LED display panel with several sectors responsible for software, hardware, firmware, and mechanism design, respectively.

(b). The second R&D Department of Optotech plays the role of developer for lighting system, LED billboard, and car use headlight products.

(c). The third R&D Department of Optotech plays the role of developer for whole new application products.

(B) Strategy (a). Insist on providing high-quality products and complete after-sales service. (b). Integration of the supply chain for the best interest of the Company group. (c). Prioritize technology in order to meet the engineering and product needs of high-end customers. (d). Implement materials and component verification to ensure product quality. (e). Combine global customer demand to develop future products. (f). Gradually expand production energy to establish Taiwan's manufacturing reputation.

(C) Performance and achievement (a).Completed the New York Times Square P10

outdoor display (b).Transmissive architectural lighting display

system in Australia (c).TAITRA HD indoor display. (d).The world's first high-definition 8-meter

diameter dome screen (e).500-sq. meters SMD display in Shibuya,

Japan (f).800-sq. meters transmissive high-brightness

display in Taipei (g).Officially shipped Full-color MRT-board

monitor (h).Full-color road information system in

Singapore.

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(i).Exported hospital special lighting fixtures to Japan

(k).Baseball field display system in Japan

(l).Anti-chlorine display systems in a swimming pool complex in Japan

(m).HD transmissive stage display in Japan

(n).NBA venues display system in the U.S. (o).Outdoor lighting display system for a high-rise building in Moscow

(p).P6 SMD outdoor display in Japan

◎R&D Center (A) Organization

The Center is responsible for the evaluation and development of new products and technologies. Within the Center, there is one R&D Division responsible for the development of LED advanced packaging technology and related technologies.

(B) Strategy In terms of packaging process technology, the Company verifies the performance of the in-house self-sourced material of high-power wafer (epitaxy, die), and use the advantages of vertical integration and open cooperation projects with clients, to form a strategic alliance for cost optimization and quality assurance.

(C) Performance and achievement (a).Completed the white light and monochromatic

mass production manufacturing techniques of the 2016 LED package and established packaging production line.

(b).Completed the verification, packaging technology, mass production and packaging production line for the 3535 series high-power ultraviolet UV light and special wavelength LED.

(c).Completed technology development for white LED light die package, currently assessing mass production equipment and establishment of production lines.

(d).Completed the production of 5050 LED small-angle package. Manufacturing technology and packaging production line under establishment.

(e).Set up LM-80 laboratory in-house, certified by the international certification company TAF.

(4) Long-term and Short-term Development A. Short-term Development

(A) With our sound and down-to-earth corporate culture, we have accumulated profound experience and professionalism. Also, with our dedication to clients and our focus on the LED business, we have provided diversified products and customized services for our clients, and come up with resolution schemes exclusively for our respective clients.

(B) Our goal of strategic alliance with Nichia Corp. has been successfully achieved. In addition to developing a whole series of quaternary LED with Hitachi Metals, we have also cooperated with Nichia Corp to build a cooperation platform for the blue ray, in which OPTOTECH is responsible for producing epitaxial dies. Our obtaining of the material patented by Hitachi Metals enable us to produce LED epitaxial dies without worrying about infringement.

(C) We will increase production capacity of LED and silicon electronic products in response to market demand by bottleneck analysis and expansion of key production equipments. In light of the potential risk after production expansion, other than adopting selective approaches for hardware expansion, the observation on customer orders and global economy will be early warning signs for potential dangerous situations.

B. Long-term Development (A) In order to pursue product innovation, technological sophistication, quality enhancement and cost

reduction, our has constantly devoted to the research and development of new products such as high-brightness chip, light emitting device product with high response speed, high frequency high power silicon electronics products, in the hope of further developing the market and enhancing our company’s overall competiveness.

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(B) OPTOTECH has many LED international technology patents, and they all came from many years of professionalism and originality of our R&D crew. We have especially accumulated rich experience and fruition in die process technology and design of application products. Also, in response to the change in the world industrial trends, we have combined the aggressive corporate management concept and outstanding technological capacity to make every effort to promote the innovative, environmentally friendly and energy efficiency products.

2. Market and Sales Overview (1) Market Analysis

A. Sales (Service) Region: Our major products include LED Light emitting devices, Sensor devices and system products. The sales of 2014 are as follows:

Unit: NT$ thousands

Year 2014 Item Subtotal Total

Operating income from import of domestic region (i.e. Taiwan) 2,219,715 2,219,715Operating income from export of domestic region (i.e. Taiwan) Europe 252,883America 620,553Southeast Asia 2,610,184Northeast Asia 515,127Other areas (not reaching 10%) 98,921Operating income from export 4,097,668Net operating income 6,317,383

B. Market Share: Taiwan LED Lighting Industry Alliance (TLLIA) said that in 2014, Taiwan's LED production value is about US$4.7 billion; in 2015, LED components industry will continue to grow to US$5.4 billion. The LED lighting market will not only become dominant throughout the LED optoelectronics industry, but will also see business opportunities in automotive, advertising billboards, UV, IR, architectural lighting, plant lighting and other wide applications. Calculating with product revenues of the Company’s light emitting components, packaging products and system products in 2014 of NT$ 4,225 million, the Company’s market share is about 3.00%.

C. Market Analysis of Major Product Categories: "Looking at the global lighting market from 2011 to 2013, the traditional incandescent, halogen lamp market will shrink further." Under the trend of the global market, the market share of LED lighting products is rising rapidly, in which China's LED market growth speed is most apparent. Data shows that by 2020, the global lighting market is estimated to reach 100 billion euros, in which general lighting will account for around 83 billion euros. By then, 46% of the global lighting market will be in Asia; China will account for 50% of the Asian lighting market. "Under the rapid development of China's LED market, the penetration of LED in the Chinese market will be further enhanced." "China's LED market penetration will continue to have much room for improvement." These data are showing that the LED market has become increasingly popular; this is mainly because the rapid rate of cost decline of LED light source cannot be compared by other products. "The cost of LED products will continue to decline, so the market will still continue to growth rapidly."

D. Competitive niche LED chips are our core business. With the core business, we have built our position today, earned trust and respect in the industry and gained a place in the local and foreign market. Our advantages are as below:

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(A) Owning a vertical integration supply chain By having the advantage of vertical integration of our supply chain, we are in the position to establish a strong strategic alliance with our suppliers, buyers or customers in the aspects covering material sources and chip and LED related product lines. We have made every effort to promote stable growth. On the other hand, we and our cooperation partners all consider good faith and customer prioritization the core of our business conviction.

(B) Put stress on patent technology research and development and yield rate improvement We have put focus on technology research and development and accumulation of experiences and strength in order to overcome the risk resulting from rapid change of the market. Our R&D crew are constituted by the professionals integrated across the board, so professionals in different fields can be gathered to research and develop new products and new technologies. As a result of our research and development, we have more than 100 patents in the world. Furthermore, with our product strategy to broaden and strengthen our cooperation with Hitachi Metals and Nichia Corp., we hope to overcome patent related problems.

(C) Equipped with strong and extraordinarily flexible capacity to customize our products. Our products are all customer oriented. Our professional crew have specifically tailored the resolution scheme for our respective clients, which enable us to respond to extensive requirements and produce the products which can meet the needs of varying projects. With OPTOTECH’s customizing capacity, we can always actualize our client’s design originality, and that is why we are popular for cooperation among dealers, agents and even proprietors throughout the world.

E. Favorable and unfavorable factors and countermeasures for development outlook (A) Favorable factors

(a). In the global market where competition is keen, how to use your competition edge to have a presence in the market turns out to be the challenge every enterprise would face. To look into the future, we will make the most of our operating advantages including integration of the following three major categories of products: light emitting components, sensor components and system products, which are not available to our competitors, to create profuse operating income.

(b). To integrate “vertical alliance” and “horizontal alliance”, give aggressive strategic deployment and provide customers with most efficient services: With our professional teamwork, we use our rich talent resources and profound experience to keep pursuing innovation.

(c). As a member of the LED energy efficiency industry, we have devoted our efforts to develop LED energy efficiency products so as to counter the problem of global warming, actualize environmental protection and do our share of corporate social responsibility.

(B) Unfavorable factors (a). The risk of patent infringement

Currently there are four major high brightness LED makers in the world such as Nichia, Samsung LED, OSRAM, Philips, and LG Innotek, and together they occupy 75% of global market share. Almost all patents associated with LED technology are in the hands of these major players, and most of them are not open for licensing. Therefore Taiwanese companies have been facing the risk of patent infringement. Corresponding measures: Our strong R&D team has been actively developing products and manufacturing processes different from other companies and applying for all kinds of patent with the objectives of mutual licensing and collaboration. We will also expand our collaboration with Nichia Chemical in order to obtain patented epitaxial materials.

(b). With China’s enterprises on the rise, the price war is ignited. The scale of China’s local market is greater and greater, so more and more Chinese enterprises have jumped on the bandwagon. Our LED lighting market is still threatened by China’s seizure

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of the market share with low-price competition. Corresponding measures: In order to initiate new markets and expand production capacity, we have established Suzhou plant and Ningbo plant, in an attempt to use the low development cost and product innovation capacity to get into the market. In so doing, we will be able to serve the nearby markets and OPTOTECH will turn out to be maturer and stronger.

(2) Key Performance Indicator (KPI): Product yield of our optoelectronic products is 91% Product yield of our silicon electronic products is 90%

(3) The Production Procedures of Main Products A. Important applications

Product Name Important applications

Light

Emitting

Device

LED chip

Full color LED, digital display, Dot-Matrix display, light

source display for fax machine, indicating devices for

consumer products such as household appliance,

communication and computers, indoor lighting, car lights and

tail lights, display backlight and lighting products

IR emitting diode chip Remote control device for infrared LED, photo-coupler,

photo-replay, and infrared lighting applications

Sensor

Device

Photodiode chip

Phototransistor chip

Liquid crystal light valve

FET chip

Photodiode, phototransistor device, devices for remote control

reception of consumer products such as home appliance,

communication, computers and cars.

AC motor driving, SSR (Solid State Relay), Dimming control.

Condenser microphone.

High power electric device Devices for opto-electronic solid-state relay and power supply

System

Product

LED Information Display Road condition display, indoor display, outdoor display

LED lighting system and

LED head light

Indoor and outdoor lighting system, all kinds of head lights

53

B. Manufacturing Process

(A) Light emitting device (LED chip)

○Epitaxial chip growth |

○Grinding |

○Vapor deposition |

○Photolithography |

○Etching |

○Sintering |

○Cutting |

□Testing |

□Visual inspection |

Stocking

(B) Sensor device (Phototransistor chip)

○Silicon wafer │

○Oxidation │

○Base photolithography │

○Diffusing │

○Emitter photolithography │

○Diffusion │

○Photolithography │

○Metal layer vapor deposition │


○Protection laypr deposition │


○Grinding │

○Back metal deposition │

□Testing │

□Visual inspection │

▽Stocking

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(C) System product (LED Display) ○Central

control panel

○Address control panel

○50W Power supply

○Control box chassis

○LED ○Display circuit board

○ASIC chip ○Other electric Components

○Driver circuit board

○300W Power supply

○Cables ○Body materials

○Assembly of control box

○Brightness classification

○Point testing

○Assembly of main body

□Testing of

control box ○Assembly of

display unit○Packaging ○Wiring

□Testing of display unit

○Classificaton

○Power configuration

○Assembly of driving unit

□Testing of

driving unit

○Assembly of display module

□Testing of display module

○Assembly ofdisplay system

□Testing of

display system

○Assembly of

control system

□Reliability

test ▽Stocking

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(4) Supply Status of Main Materials

Product Group Major Raw Materials Source of Supply Supply

Situation

Light emitting devices

GaAs, GaAlAs, GaP, GaAsP, AlInGaN wafers Japan, Korea, Taiwan Sufficient

Sensor devices Silicon wafer Germany, Japan, Taiwan

Sufficient

System product Chip, control IC, circuit board Taiwan Sufficient

(5) Major Suppliers and Clients

A. Major Clients to which products have been sold: Revenue of OPTOTECH from a single Clients has not reached above 10% of combined income in 2013 and 2014.

B. Major Suppliers to which products have been purchased: (A) Major Suppliers in the Last Two Calendar Years

Unit: NT$ thousands

2013 2014 2015 (As of March 31)

Item

Company Name

Amount Percent Relation

with Issuer

CompanyName

Amount PercentRelation

with Issuer

Company Name

Amount PercentRelation

with Issuer

1 Supplier A 1,113,260 30.92

OPT

OT

EC

H’s

di

rect

or

Supplier A 828,864 24.88

OPT

OT

EC

H’s

di

rect

or

Supplier A 144,883 21.61

OPT

OT

EC

H’s

di

rect

or

2 Supplier B 319,021 8.86 - Supplier B 393,512 11.81 - Supplier B 95,210 14.20 -

3 Others 2,167,712 60.22 - Others 2,108,543 63.31 - Others 430,464 64.19 -

Net purchase

3,599,993 100.00 Net

purchase3,330,919 100.00

Net purchase

670,557 100.00

Note:Please list the name of each supplier accounting for more than 10% of OPTOTECH’s total purchase over the past two years, and the amount as well as the ratio of OPTOTECH’s purchase from them. However, in the case that, as stipulated in the contract, the supplier’s name is not allowed to be disclosed or the transaction counterparty is an individual and a non-related party, the name can be replaced by a code No.

(B) Explanation of reasons of any change, increase or decrease: There is no obvious difference between the ratio of purchase from major suppliers of 2014 and that of 2013.

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(6) Production in the Last Two Years

Unit: NT$ thousands/Thousand pieces Year

Output 2013 2014

Major Products Capacity Quantity Amount Capacity Quantity Amount Light emitting devices

43,500,000 26,144,724 1,746,089 43,500,000 31,253,672 1,858,105

Sensor devices 20,400,000 20,314,579 1,222,987 23,500,000 23,422,025 1,335,449

System product - - 753,258 - - 738,439Packaging Products

399,777 95,254 170,359 265,525 131,474 210,947

Other products - - 190,804 - - -

Total 64,299,777 46,554,557 4,083,497 67,265,525 54,807,171 4,142,940

Note: System products vary, with different types, so there is no meaning to compare the quantity.

(7) Shipments and Sales in the Last Two Years

Unit: NT$ thousands/Thousand pieces Year Shipments& Sales

2013 2014

Local Export Local Export

Major Products

Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Light emitting devices

8,836,219 1,311,721 22,611,877 1,868,975 9,013,704 992,942 23,856,414 1,813,029

Sensor devices

9,087,611 806,475 10,839,468 1,046,384 10,869,534 958,516 11,962,239 1,125,064

System product

- 100,126 - 888,691 - 195,932 - 890,842

Packaging Products

22,057 50,870 62,719 297,372 24,976 38,081 111,133 252,383

Other products

126 8,268 576 12,712 38 34,244 16 16,350

Total 17,946,013 2,277,460 33,514,640 4,114,134 19,908,252 2,219,715 35,929,802 4,097,668

Note: System products vary, with different types of compounds to be sold, so there is no meaning to compare the quantity.

3. Human Resources Mar. 31, 2015

Year 2013 2014 As of Mar. 31, 2015

Number of Employees

Management personnel

547 551 579

Technology personnel

335 334 332

Direct personnel 884 868 853Total 1,766 1,753 1,764

Average Age 34.64 35.39 35.73Average Years of Service 7.13 6.74 7.58

Education

Ph.D. 0.17 0.17 0.17Masters 4.36 4.80 5.05Bachelor’s Degree 53.46 52.08 50.90Senior High School 28.71 30.01 30.10Below Senior High School

13.31 12.95 13.78

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4. Environmental Protection Expenditure The loss or penalty caused by environmental pollution during the latest year and up to the printing date of this annual report: None.

5. Labor Relations (1) A variety of employee welfare measures, studies, training and retirement system taken by the

company and the implementation status, and the progress made for agreements with employees and protection of employee rights and interests.

A. Employee welfare measures and the implementation status: (A) OPTOTECH began production in July 1984, and, based on the Rules Governing Organization of

Employees’ Welfare Committee decreed by the Ministry of the Interior, OPTOTECH set up its employees’ welfare committee on August 7, 1984 to carry out various welfare matters. Our current welfare measures, such as local and foreign travel activities, annual physical examinations, birthday gift coupons, presents given for festivals, wedding, funeral and childbirth subsidies and employee counseling, have all been literally executed by our employees’ welfare committee in accordance with our status and employees’ demands.

(B) Other than the labor insurance and national health insurance, OPTOTECH has also purchased group life insurance, casualty insurance, serious disease and hospitalization insurance for its employees at its expense. At the same time, OPTOTECH has also assisted the spouses, children and parents of its employees in purchasing the medical insurance, in which t OPTOTECH shares half of the premium.

B. Employee studies and training: OPTOTECH has gone to great lengths to cultivate its employees. Based on the perspectives on lifetime learning and career development education training, OPTOTECH has made every effort to elevate its labor quality and nurture its future operating management talents, so as to shape a good corporate culture and generate better performance. In order to cultivate the talents required by OPTOTECH for its operating development, OPTOTECH has planned a well-rounded education training system and laid down an annual education training plan according to OPTOTECH’s annual business status, so as to provide its employees with a good learning environment. Also, by holding a variety of training through the talent cultivation system, OPTOTECH has strengthened its employees’ talent development and professional expertise. On the other hand, OPTOTECH has also encouraged its employees to give self studies.

(A) Our training comes in on-the-job training and out-of-the-job training, whereas its training system is divided into management, professionalism and self-development training and joint training, etc. After enrolling in OPTOTECH, the new entrants will receive the pre-job training and on-the-job training. At the same time, according to the annual training requirement survey, OPTOTECH will map out an annual training plan for implementation, and give an evaluation of the implementation efficiency, so, by using job functions along with job improvement, employees’ competence will be reinforced and our operating performance and competition will therefore be further enhenced.

(B) OPTOTECH’s education training system is shown below:

Management training

High-ranking director training

Medium level director training

General management training Basic director training

Professional training Advanced skill training

Basic skill training

Self-

Development training

Common training

Languages, computer and etc.

Policy and mission of the Company

Quality control training, new employees’ training, security and health training and etc.

General employee Supervisor / Vice Manager Manager /

Vice Manager

High-ranking management such as

Deputy Assistant General Manager, Vice

President (included)

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(C) OPTOTECH 2014 education training courses came in five major categories. A total of 4,623 employees participated in the training courses, which included the ones held by OPTOTECH, various competent authorities, the CPA firm and the industry. The following are the names of the training courses and the training execution status:

Program name Number of

classes Number of total

people Total hours Total fee

General knowledge

162 912 3,317 4,750

Management 7 246 1,349 276,900Computer 18 81 358 6,600

Professional program

155 1,360 3,079 363,230

Environmental safety and health

163 2,024 7,572 445,740

Total 505 4,623 15,674 1,097,220

C. Implementation status of the retirement system: OPTOTECH set up a supervisory committee of workers’ retirement reserve on November 19, 1986 to supervise labor retirement reserve related contribution and payment. In conjunction with the new system of the Labor Standards Act enacted on July 1, 2005, our old employees are allowed to have the optional choice while the new entrants shall follow the new system. In addition, OPTOTECH has also instituted its own retirement system, which is better than what is regulated in the Labor Standards Act, and reported it to the competent authorities for approval and future reference. Also, in order to encourage its employees to contribute their professionalism and provide good post-retirement life for its employees, OPTOTECH has allowed the employees eligible for retirement to apply for extension of their service period when they are willing to retain themselves in OPTOTECH and OPTOTECH considers the retention necessary.

D. Employee behavior and ethics rules: OPTOTECH uses the exclusive stamp of “service discipline” included in its working rules to discipline its employees’ behavior and ethics. The following articles are the excerpt from the working rules of the industry attendants:

Chapter 3 Service discipline Article 18: Employees shall be devoted to their work, follow OPTOTECH’s regulations and obey reasonable command from respective ranks of superiors. They are not allowed to be delinquent and give feign compliance. On the other hand, all ranks of superiors shall guide the employees in an obliging and earnest manner. Article 19:Inside OPTOTECH, employees shall work hard, well protect public property, reduce wear and tear, enhance quality and increase production. Outside the company, they shall keep trade or task secrets. Article 20:Employees shall directly report to their immediate superior. Bypassing immediate superior to report is not allowed. However, it is not limited to the emergency or special situation. Article 21:After enrollment and proper task assignment, employees are not allowed to use any excuse to request changes. Article 22:Employees are not allowed to leave their posts without permission during the working hours. Article 23:Without permission, employees are not allowed to bring their friends or relatives into the working site. Article 24:Employees are not allowed to bring contraband goods or the ones irrelevant to production into the working site. Article 25:Without permission, employees are not allowed to bring public property out of the factory. In the case that the public property is required to be brought out of the factory, the employee shall process the required procedure before bringing it out of the factory.

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Article 26:Employees shall not take advantage of their authority to benefit themselves or others. Article 27:Employees are not allowed to engage in the business same as or similar to OPTOTECH’s. Article 28:Employees shall not have the violating behavior, such as receiving entertainment treats, presents, kickbacks or other illegal benefits. Article 29:Employees shall abide by labor safety and health laws and regulations and OPTOTECH’s regulations, protect the working site, keep the environment clean and safe, and prevent occurrence of theft, fires or other natural disasters. Article 30:Employees shall wear work uniforms along with I.D. badges at work as regulated. The original work uniform and I.D. badge shall be returned to OPTOTECH when they are changed or re-issued or the employee leaves his or her job. Article 31: Employees are not allowed to discretionarily read the documents, correspondence and account books not in their charge. They shall also not to present the documents in their charge to the persons irrelevant to the task. Article 32:When getting off work, employees shall tidy away all the used tools before leaving the working site. In case of working on shift, the employees shall clearly hand over the work to the next shift employees before departing the working site. Article 33:Except for the errand-running leave, employees shall follow the regulated working time to work and leave on time, and clock in and out accordingly.

E. Measures taken to protect the working environment and employees’ personal safety: (A) Environment safety and health management meeting company management system policy:

(a). Well-rounded quality together with sustainable ecology concept Optotech has placed a high premium on the well-rounded quality for its products, environment and safety and health issues. In addition to continuously improving the efficiency of its process and operation activities, it has also banned or cut down on environmentally hazardous substances. As a whole, Optotech has been devoted to fulfilling energy efficiency and waste reduction as an enterprise citizen, in order to create an environmentally friendly living space.

(b). Present management efficiency through self-discipline By using internal education training and communication, Opotech has made every effort with high standard self-discipline to enhance its employees’ perception of product quality, prohibition from use of environmentally hazardous substances, and environmental safety and health. With education and fulfillment of product and environmental safety and health related laws and regulations, Optotech has come a long way to produce the products which even surpass customers’ expectations. Moreover, Optotech has even showcased its overall management efficiency by presenting its internal safety and unpolluted environment.

(B) Concrete safety and health management measures (a). Hazard appraisal, risk evaluation and countermeasures

Each department shall determine unacceptable risks, acceptable high risks, and items not meeting regulations, etc. after distinguishing risk assessment and prepare, stipulate management solutions or control risk measure to prevent occurrence of accidents. Subsequently carry out progress and report to environment safety committee for follow up in order to protect employee’s health and OPTOTECH’s assets.

(b). Health management In accordance with the “Labor Health Protection Regulations”, OPTOTECH has provided health examinations for the employees involved in the general operation and special hazardous operation respectively. For the working personnel having to touch ionizing radiation, organic solvents and specific chemical substances, OPTOTECH has provided with many items of the special health examination. The results of the special health examination will be graded for management. Other than the items required to be included in the health examination as regulated

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in the statutory laws and regulations, OPTOTECH has also additionally included other items, such as cancer detection and abdominal echo, etc, in the annual health examination. It shows that what OPTOTECH has provided for its employees’ health is better than the items regulated in laws and regulations. To give more care for its employees’ health, OPTOTECH has also cooperated with the hospital to provide its employees with free services of health consultation and women and children health and nutrition consultation, so as to develop its employees’ health care habit.

(c). Operation environment testing In accordance with the “Regulations Governing Implementation of Labor Operation Environment Testing”, OPTOTECH has conducted chemical factor and physical factor operation environment testing. The chemical factors include organic solvents, specific chemical substances, and heavy metal ,whereas the physical factor refers to noise, for which OPTOTECH has entrusted a qualified operation environment testing agency to test and inspect if the noise is within the standard regulated in statutory laws and regulations. In the case that irregularity is found, We will proceed with project management and give remediation, so as to protect employees’ health.

(d). Hazard prevention education training To have employees better understand the danger resulting from hazardous factors in various kinds of operations and the prevention measures, OPTOTECH has periodically or non-periodically held hazard prevention education training. The education training teaches employees how to prevent hazard other than wearing required protection devices, and reinforce their occupational safety and health professional knowledge. In so doing, the risk of occupational disasters in the working environment will be greatly reduced.

(e). Contractor management As stipulated in labor safety and health related laws and regulations, the undertaking construction unit shall process safety and health operation control, in which, in addition to the hazard notification given by the contractor on the site and education training, general work permission and special operation shall also be controlled. Furthermore, when working on the high risk operation, the safety and health personnel shall be designated to oversee and ensure safety of the construction operation all the way through. Also, the task safety protection schedule shall be submitted, examined and approved before going into operation. In order to fulfill contractor’s safety and health supervision, OPTOTECH has laid down related operation controls and promoted safety and health related experiences for all the units and employees to refer to accordingly.

(f). Automatic examination In accordance with the “Labor Safety and Health Organizational Management and Automatic Examination Regulations”, OPTOTECH has laid down an annually automatic examination schedule for routine examinations of the hazardous machines and equipment in the factory zone, in which other than the items and frequency as regulated in laws and regulations, other examination items required by respective units for hazardous prevention have been added and a surveillance and audit mechanism has been executed, so as to prevent accidents from happening.

(g). Safety and health round checks In order to carry out the safety and health management system and establish the mechanism for the safety and health personnel to make round checks of the factory zone and give mobile checks of the operation status in the factory zone so as to effectively prevent accidents from happening or reduce the frequency of accident occurrence, in addition to monitoring the surrounding operation environment, the safety and health personnel shall come to assist in emergency rescue for the accidents occurring in the factory zone, so property loss and personnel casualties can be reduced.

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(h). Traffic improvement inside the factory To ensure traffic safety for Our employees and suppliers’ personnel having to move around in the factory zone, OPTOTECH has given an overall review of the factory zone traffic safety, taken improvement measures and promoted improvement engineering.

(i). Radiation protection management To ensure the actual execution of routine detection and inspection work, avoid anomaly of the equipment and resulting in radiation damage of operating personnel, workers are required to wear radiation detection badges during work and attend radiation operation medical checks in order to specifically grasp operating personnel’s health condition.

F. Current labor relations Based on the conviction of taking good care of its employees, OPTOTECH has provided its employees with various welfare benefits, retirement system and management system regulated in the Labor Standards Act or better than what are regulated the Act. Also, OPTOTECH has mostly handled its labor issues by mutual coordination and communication, so its employees have high sense of coherence to OPTOTECH, its labor relationship is based on mutual respect and understanding, and there is no labor dispute.

(2) Loss resulting from labor disputes in the latest year and before the annual report was published, and disclosure of estimated losses for the current and future periods and the countermeasures to be taken: There had been no labor dispute occurring to OPTOTECH in the latest year and before the annual report was published.

6. Important Contracts Mar. 31, 2014

Agreement Counterparty Period Main contents Restrictions

Lease of land Science Park

Administration

2010.11.25 ~

2029.12.31 Rental of land of Ke-Guan Sec.

Limited to the usfor the target business

Lease of land Science Park

Administration

1997.06.16 ~

2017.06.15 Rental of land of the 3rd phase of the Park

Limited to the use for the target business

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VI、 Financial Information 1. Five-Year Financial Summary (1) Condensed Balance Sheet -IFRSs

A. Condensed Balance Sheet (Consolidated) Unit: NT$ thousands

Year Item

Three-Year Financial Summary Financial data as of

Mar. 31, 20152012 2013 2014

Current assets 6,272,497 7,038,371 7,402,548 7,646,451

Property, Plant and Equipment 3,789,902 3,601,183 3,398,412 3,103,674

Intangible assets 11,648 13,498 12,930 12,809

Other assets 1,395,411 1,328,081 1,331,993 1,282,228

Total assets 11,469,458 11,981,133 12,145,883 12,045,162

Current liabilities Before distribution 3,220,433 2,798,072 2,963,709 2,771,722

After distribution 3,465,981 3,125,469 - -

Non-current liabilities 1,230,406 1,922,766 1,616,066 1,586,738

Total liabilities Before distribution 4,450,839 4,720,838 4,579,775 4,358,460

After distribution 4,696,387 5,048,235 - -

Equity attributable to shareholders of the parent

7,015,085 7,256,768 7,562,554 7,683,153

Capital stock 5,456,621 5,456,621 5,456,621 5,456,621

Capital surplus 610,447 624,100 640,826 640,826

Retained earnings Before distribution 1,031,380 1,203,440 1,434,986 1,542,976

After distribution 785,832 876,043 - -

Other equity interest (56,664) (694) 56,820 69,429

Treasury stock (26,699) (26,699) (26,699) (26,699)

Non-controlling interest 3,534 3,527 3,554 3,549

Total equity Before distribution 7,018,619 7,260,295 7,566,108 7,686,702

After distribution 6,773,071 6,932,898 - -Note1：The financial data of latest 3 years have been audited and certified by CPAs. Note2：The financial data of the 1st quarter of 2015 have been approved by CPAs.

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B. Condensed Balance Sheet (Unconsolidated) Unit: NT$ thousands

Year Item

Three -Year Financial Summary

2012 2013 2014

Current assets 5,576,697 6,303,350 6,731,584

Property, plant and equipment 3,176,684 2,925,116 2,814,558

Intangible assets 10,408 12,443 12,048

Other assets 2,245,593 2,166,371 2,004,246

Total assets 11,009,382 11,407,280 11,562,436

Current liabilities

Before distribution 2,787,838 2,243,957 2,396,306

After distribution 3,033,386 2,571,354 -

Non-current liabilities 1,206,459 1,906,555 1,603,576

Total liabilities


After distribution 4,239,845 4,477,909 -

Capital 5,456,621 5,456,621 5,456,621

Capital reserves 610,447 624,100 640,826

Retained earnings


After distribution 785,832 876,043 -

Other Equity Adjustments (56,664) (694) 56,820

Treasury stocks (26,699) (26,699) (26,699)

Total equity


After distribution 6,769,537 6,929,371 - Note：The financial data of latest 3 years have been audited and certified by CPAs.

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(2) Condensed Balance Sheet –ROC GAAP A. Condensed Balance Sheet (Consolidated)

Unit: NT$ thousands

Year

Item


2010 2011 2012

Current assets 7,567,021 6,943,750 6,314,549

Funds and investments 947,354 899,527 906,921

Property, plant and equipment 3,378,237 3,762,529 3,746,919


Other assets 512,164 406,093 378,280

Total assets 12,517,305 12,090,170 11,421,944

Current liabilities

Before distribution

4,018,913 3,585,129 3,199,345

After distribution 4,567,919 3,914,532 3,444,893

Long-term liabilities 1,266,272 1,167,590 849,605

Other liabilities 153,828 163,217 251,775

Total liabilities

Before distribution

5,439,013 4,915,936 4,300,725


Capital 5,490,051 5,481,881 5,456,621


Retained earnings

Before distribution

1,206,243 1,088,283 1,093,988

After distribution 657,237 758,880 848,440

Unrealized gain or loss on available-for-sale financial assets

(52,220) (40,058) (27,534)

Cumulative translation adjustments

(7,678) 67,992 38,836

Treasury stocks (26,699) (26,699) (26,699)

Unrecognized pension cost (93,124) (78,296) (134,198)

Minority interests 3,578 3,592 3,534

Total shareholders’ equity

Before distribution

7,078,292 7,174,234 7,121,219


Note：The financial data of latest 3 years have been audited and certified by CPAs.

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B. Condensed Balance Sheet (Unconsolidated) Unit: NT$ thousands

Year Item


2010 2011 2012

Current assets 6,615,052 6,021,408 5,618,749

Funds and investments 1,779,636 1,939,349 1,839,304

Property, plant and equipment

3,083,368 3,256,946 3,133,701


Other assets 475,715 382,164 365,593

Total assets 11,955,953 11,601,831 10,959,092

Current liabilities

Before distribution

3,461,702 3,104,233 2,767,824

After distribution

4,010,708 3,433,636 3,013,372

Long-term liabilities 1,266,272 1,167,590 849,605

Other liabilities 153,265 159,366 223,978

Total liabilities

Before distribution

4,881,239 4,431,189 3,841,407

After distribution

5,430,245 4,760,592 4,086,955

Capital 5,490,051 5,481,881 5,456,621


Retained earnings

Before distribution

1,206,243 1,088,283 1,093,988

After distribution

657,237 758,880 848,440

Unrealized gain or loss on available-for-sale financial assets

(52,220) (40,058) (27,534)

Cumulative translation adjustments

(7,678) 67,992 38,836

Unrecognized pension cost (93,124) (78,296) (134,198)

Total shareholders’ equity

Before distribution

7,074,714 7,170,642 7,117,685

After distribution

6,525,708 6,841,239 6,872,137

Note：The financial data of latest 3 years have been audited and certified by CPAs.

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(3) Condensed Statement of Comprehensive Income -IFRSs A. Condensed Statement of Comperehensive Income (Consolidated)

Unit: NT$ thousands

Year Item

Three -Year Financial Summary Financial data as of

Mar. 31, 2015 2012 2013 2014

Operating revenue 6,844,325 6,391,594 6,317,383 1,381,014Gross profit 1,278,316 1,409,113 1,671,922 384,152Income from operations 407,548 487,047 746,399 164,930Non-operating income 15,737 31,155 (78,649) (24,708)Non-operating expenses 423,285 518,202 667,750 140,222Income before tax 341,100 420,047 561,691 107,986Net income (Loss) 341,100 420,047 561,691 107,986Other comprehensive income (income after tax)

(65,369) 53,524 67,439 12,608

Total comprehensive income

275,741 473,571 629,130 120,594

Net income attributable to shareholders of the parent

341,167 420,061 561,682 107,990

Net income attributable to non-controlling interest

(57) (14) 9 (4)

Comprehensive income attributable to Shareholders of the parent

275,799 473,578 629,119 120,599

Comprehensive income attributable to non-controlling interest

(58) (7) 11 (5)

Earnings per share 0.63 0.77 1.03 0.20Note1:The financial data have been audited and certified by CPAs. Note2:The financial data of the 1st quarter of 2015 have been approved by CPAs.

B. Condensed Statement of Comperehensive Income (Unconsolidated) Unit: NT$ thousands

Year Item


2012 2013 2014

Operating revenue 6,586,467 6,113,156 5,986,572

Gross profit 1,259,566 1,384,592 1,633,905

Income from operations 488,306 556,790 847,120

Non-operating income (77,796) (30,750) (179,451)

Non-operating expenses 410,510 526,040 667,669

Income before tax 341,167 420,061 561,682

Net income (Loss) 341,167 420,061 561,682

Other comprehensive income (income after tax)

(65,368) 53,517 67,437

Total comprehensive income

275,799 473,578 629,119

Earnings per share 0.63 0.77 1.03

Note:The financial data have been audited and certified by CPAs.

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(4) Condensed Statement of Comprehensive Income – ROC GAAP

A. Condensed Statement of Income (Consolidated) Unit: NT$ thousands

Year Item


2010 2011 2012


Gross profit 1,976,420 1,554,629 1,278,316


Non-operating income 243,432 173,451 103,897



Income from operations of continued segments - after tax

698,744 453,402 335,987

Income from discontinued operations

- - -

Extraordinary gain or loss - - -

Cumulative effect of accounting principle changes

- - -

Net income 698,744 453,402 335,987

Net income attributable to shareholders of the parent

688,115 453,423 336,044

Net income attributable to Minority interests

10,629 (21) (57)



B. Condensed Statement of Income (Unconsolidated) Unit: NT$ thousands

Year Item


2010 2011 2012


Gross profit 1,886,344 1,482,389 1,259,423


Non-operating income 142,374 65,669 40,128



Income from operations of continued segments - after tax

688,115 453,423 336,044

Income from discontinued operations

- - -

Extraordinary gain or loss - - -

Cumulative effect of accounting principle changes

- - -

Net income 688,115 453,423 336,044



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(5) Auditors’ Opinions from 2010 to 2014 Year CPA’s Name Auditing Opinion Remark

2010 Charles Lai,

Wilson Wang Modified unqualified

opinions

For the needs of the adjustment of internal operation, the auditing CPAs have been changed to the CPAs Charles Lai and Wilson Wang.

2011 Charles Lai,

Wilson Wang Modified unqualified

opinions

2012 Charles Lai,

Wilson Wang Unqualified opinions

2013 Philine Lee,


For the needs of the adjustment of internal operation, the auditing CPAs have been changed to the CPAs Philine Lee and Wilson Wang.

2014 Philine Lee,


2. Five-Year Financial Analysis (1) Consolidated Financial Analysis – Based on IFRS

A. Financial Analysis (Consolidated) Year

Item

Financial analysis in the past three years Financial dataas of Mar. 31,

2015 2012 2013 2014

Financial structure (%)

Debt Ratio 38.81 39.40 37.71 36.18Ratio of long-term capital to property, plant and equipment

207.61 244.30 270.19 298.79

Solvency (%) Current ratio 194.77 251.54 249.77 275.87Quick ratio 154.99 207.19 207.96 220.69Interest earned ratio (times) 10.07 11.74 12.78 12.36

Operating performance

Accounts receivable turnover (times) 3.50 3.23 3.42 3.11Average collection period 104 113 107 117Inventory turnover (times) 4.16 4.01 3.82 3.26Accounts payable turnover (times) 3.87 3.61 3.86 3.67Average days in sales 88 91 96 112Property, plant and equipment turnover (times)

1.80 1.73 1.81 1.70

Total assets turnover (times) 0.58 0.55 0.52 0.46

Profitability

Return on total assets (%) 3.22 3.92 5.05 3.91Return on stockholders' equity (%) 4.85 5.88 7.58 5.56Pre-tax income to paid-in capital (%) 7.76 9.50 12.24 2.57Profit ratio (%) 4.98 6.57 8.89 7.82Earnings per share (NT$) 0.63 0.77 1.03 0.20

Cash flow

Cash flow ratio (%) 36.38 22.17 36.06 3.30

Cash flow adequacy ratio (%) 124.31 139.03 123.16 123.70

Cash reinvestment ratio (%) 5.46 2.25 4.33 0.53

Leverage Operating leverage 3.25 2.92 1.79 1.87

Financial leverage 1.13 1.11 1.08 1.08

◎ Analysis of financial ratio change in the last two years： 1. Return on total assets, and return on equity: Mainly due to increase of profit after tax in this fiscal year. 2. Pre-tax income to paid-in capital. Profit ratio and EPS:Mainly due to increase of profit after tax in this fiscal year. 3. Cash flow ratio: Mainly due to increase in net inflow current of operational activity. 4. Cash reinvestment ratio: Mainly due to increase in capital expenditure. 5. Operating leverage: Mainly due to increase in Operating Income.

Note 1: The financial data of latest 3 years have been audited and certified by CPAs. Note 2 : The financial data of the 1st quarter of 2015 were calculated based on the financial statements audited by CPAs.

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B. Financial Analysis (Unconsolidated) Year

Item

Financial analysis in the past three years

2012 2013 2014


Debt Ratio 36.28 36.38 34.59

Ratio of long-term capital to property, plant and equipment

247.58 300.64 312.62

Solvency (%)

Current ratio 200.04 280.90 280.92

Quick ratio 157.97 230.94 232.36

Interest earned ratio (times) 15.24 17.76 18.49

Operating performance

Accounts receivable turnover (times) 3.52 3.28 3.48

Average collection period 104 111 105

Inventory turnover (times) 4.44 4.26 3.86

Accounts payable turnover (times) 3.82 3.58 3.79

Average days in sales 82 86 95

Property, plant and equipment turnover (times)

2.03 2.00 2.09

Total assets turnover (times) 0.58 0.55 0.52

Profitability

Return on total assets (%) 3.22 3.98 5.17

Return on stockholders' equity (%) 4.85 5.89 7.58

Pre-tax income to paid-in capital (%) 7.52 9.64 12.24

Profit ratio (%) 5.18 6.87 9.38

Earnings per share (NT$) 0.63 0.77 1.03

Cash flow

Cash flow ratio (%) 41.72 28.92 44.16

Cash flow adequacy ratio (%) 131.86 153.76 134.01

Cash reinvestment ratio (%) 5.52 2.47 4.39

Leverage Operating leverage 1.97 1.23 1.60

Financial leverage 1.06 1.06 1.05

◎ Analysis of financial ratio change in the last two years： 1. Return on total assets, and return on equity: Mainly due to increase of profit after tax in this fiscal year. 2. Pre-tax income to paid-in capital .Profit ratio and EPS: Mainly due to increase of profit after tax in this fiscal year.3. Cash flow ratio:Mainly due to increase in net inflow current of operational activity. 4. Cash flow adequacy ratio: Mainly due to increase in capital expenditure 5. Operating leverage: Mainly due to increase in Operating Income. Note :financial data of latest 3 years have been audited and certified by CPAs.

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1.Financial structure

(1)Ratio of liabilities to assets＝Total liabilities／Total assets

(2)Ratio of long-term capital to Property, plant and equipment＝（Total equity＋Non-current liabilities）／ Net


2. Solvency

(1)Current ratio＝Current assets／Current liabilities

(2)Quick ratio＝（Current assets－ Inventory － Prepaid expenses）／Current liabilities

(3)Times interest earned ＝ Profit before income tax and Interest expense／ Interest expenses of the period

3.Operation ability

(1)Receivables (including accounts receivable and notes receivable from business) turnover ratio＝ Net sales ／

Balance of average receivables (including accounts receivable and notes receivable from business)

(2)Average collection period (days)＝365／Receivables turnover ratio

(3)Inventory turnover ratio＝ Sales cost／ Average inventory

(4)Payables (including accounts payable and notes payable from business) turnover ratio ＝ Sales cost ／Balance

of average payables (including accounts payable and notes payable from business)

(5)Inventory turnover in days＝365／Inventory turnover ratio

(6)Property, plant and equipment turnover ratio＝ Net sales／ Net average property, plant and equipment

(7)Total assets turnover ratio＝Net sales／Average total assets

4.Profitability

(1)Return on assets＝〔After-tax profit or loss＋Interest expense×（１－Tax rate）〕／ Average Total assets

(2)Return on shareholders’ equity ＝After-tax profit or loss／Net average total equity

(3)Net profit ratio＝After-tax profit or loss／Net sales

(4)EPS＝（Equity attributable to owners of parent－ Dividends of preferred stock）／Weighted average shares issued

5.Cash flows

(1)Cash flows ratio＝Net cash flows of operating activities／Current liabilities

(2)Net cash flow adequacy ratio＝Net cash flows of operating activities in latest 5 years／(Capital expense＋

Increase in inventories ＋Cash Dividends) in latest 5 years

(3)Cash re-investment ratio＝(Net cash flows of operating activities－Cash Dividends)／(Gross of property, plant

and equipment ＋ Long-term investments ＋Other non-current assets＋Operational funds)

6.Leverage:

(1)Degree of operational leverage＝(Net operating income－ Variable operating costs and expenses) ／ Operating

profit

(2)Degree of financial leverage＝Operating profit ／ (Operating profit－Interest expense)

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(2) Consolidated Financial Analysis – Based on ROC GAAP

A. Financial Analysis (Consolidated) Year

Item Financial analysis in the past three years

2010 2011 2012


Ratio of liabilities to assets 43.45 40.66 37.65

Ratio of long-term capital to fixed assets

247.01 221.71 212.73

Solvency (%)

Current ratio 188.29 193.68 197.37

Quick ratio 150.38 153.59 157.32

Times interest earned ratio 16.29 12.22 9.93

Operating ability

Accounts receivable turnover (turns) 3.95 3.70 3.50


Inventory turnover (turns) 4.41 3.99 4.16

Accounts payable turnover (turns) 3.62 3.64 3.87


Fixed assets turnover (turns) 2.39 2.06 1.82

Total assets turnover (turns) 0.65 0.60 0.58

Profitability



Ratio to issued capital (%)

Operating income

14.35 11.26 7.36

Pre-tax income 14.96 9.73 7.64

Profit ratio (%) 8.71 6.17 4.91

Earnings per share ($) 1.28 0.83 0.62

Cash flow

Cash flow ratio (%) 31.24 32.81 36.73





Note :financial data of latest 3 years have been audited and certified by CPAs.

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B. Financial Analysis (Unconsolidated)

YearItem

Financial analysis in the past three years

2010 2011 2012

Financial structure

(%)

Ratio of liabilities to assets 40.83 38.19 35.05

Ratio of long-term capital to fixed assets 270.52 256.01 254.25

Solvency (%)

Current ratio 191.09 192.96 203.00

Quick ratio 151.68 151.32 160.63

Times interest earned ratio 22.82 17.87 15.03

Operating ability

Accounts receivable turnover (turns) 3.86 3.42 3.38


Inventory turnover (turns) 3.70 3.43 3.40

Accounts payable turnover (turns) 3.71 3.65 3.82


Fixed assets turnover (turns) 2.52 2.23 2.06

Total assets turnover (turns) 0.65 0.60 0.58

Profitability



Ratio to issued capital (%)

Operating income 15.53 12.31 8.83

Pre-tax income 14.76 9.66 7.41

Profit ratio (%) 8.97 6.42 5.10

Earnings per share ($) 1.26 0.83 0.62

Cash flow

Cash flow ratio (%) 35.57 40.52 42.15





Note :financial data of latest 3 years have been audited and certified by CPAs.

73

1.Financial structure

(1)Ratio of liabilities to assets＝Total liabilities／Total assets

(2)Ratio of long-term fund to fixed assets＝（Net shareholders’ equity＋Long-term liabilities）／ Net fixed assets

2. Solvency

(1)Current ratio＝Current assets／Current liabilities

(2)Quick ratio＝（Current assets－ Inventory － Prepaid expenses）／Current liabilities

(3)Times interest earned ＝ Profit before income tax and Interest expense／ Interest expenses of the period

3.Operation ability

(1)Receivables (including accounts receivable and notes receivable from business) turnover ratio＝ Net sales ／

Balance of average receivables (including accounts receivable and notes receivable from business)

(2)Average collection period (days)＝365／Receivables turnover ratio

(3)Inventory turnover ratio＝ Sales cost／ Average inventory

(4)Payables (including accounts payable and notes payable from business) turnover ratio ＝ Sales cost ／Balance

of average payables (including accounts payable and notes payable from business)

(5)Inventory turnover in days＝365／Inventory turnover ratio

(6)fixed assets turnover ratio＝ Net sales／ Net fixed assets

(7)Total assets turnover ratio＝Net sales／Total assets

4.Profitability

(1)Return on assets＝〔After-tax profit or loss＋Interest expense×（１－Tax rate）〕／ Average Total assets

(2)Return on shareholders’ equity ＝After-tax profit or loss／Net average shareholders’ equity

(3)Net profit ratio＝After-tax profit or loss／Net sales

(4)EPS＝（After-tax profit－ Dividends of preferred stock）／Weighted average shares issued

5.Cash flows

(1)Cash flows ratio＝Net cash flows of operating activities／Current liabilities

(2)Net cash flow adequacy ratio＝Net cash flows of operating activities in latest 5 years／(Capital expense＋

Increase in inventories ＋Cash Dividends) in latest 5 years

(3)Cash re-investment ratio＝(Net cash flows of operating activities－Cash Dividends)／(Gross of fixed assets ＋

Long-term investments ＋Other assets＋Operational funds)

6.Leverage:

(1)Degree of operational leverage＝(Net operating income－ Variable operating costs and expenses) ／ Operating

profit

(2)Degree of financial leverage＝Operating profit ／ (Operating profit－Interest expense)

74

3. Supervisors’ Report for the Most Recent Year

Supervisors’ Auditing Report

To: The General Meeting of Shareholders as of year 2015

We have reviewed and audited the business report, statement of earning distribution and financial

statements of the year 2014 (including the consolidated financial statements), which were prepared

by the Board of Directors and audited and certified by the CPAs Philine Lee and Wilson Wang of

PricewaterhouseCoopers. We hereby issue this report in compliance with Article 219 of the

Company Act.

OPTOTECH Corporation

Supervisor: Tzu-Hua Han

Supervisor: Tsang-Der Ni

Mar. 23, 2015

75

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

OPTO TECH CORPORATION AND SUBSIDIARIES Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2014, pursuant to the “Criteria Governing Preparation of

Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of

Affiliated Enterprises,” the company that is required to be included in the consolidated financial

statements of affiliates, is the same as the company that is required to be included in the

consolidated financial statements of parent and subsidiary companies under International Financial

Reporting Standard 27. And if relevant information that should be disclosed in the consolidated

financial statements of affiliates has all been disclosed in the consolidated financial statements of

parent and subsidiary companies, it shall not be required to prepare separate consolidated financial

statements of affiliates.

Hereby declare,

76

Report of Independent Accountants

(14)PWCR14002923

To the Board of Directors and Stockholders of Opto Tech Corporation

We have audited the accompanying consolidated balance sheets of Opto Tech Corporation and

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 conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of

Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the

Republic of China. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An

audit also includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation. We believe that our audits provide a

reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the consolidated financial position of Opto Tech Corporation and subsidiaries as of December 31,

2014 and 2013, and their performance and cash flows for the years then ended in conformity with the “Rules

Governing the Preparation of Financial Statements by Securities Issuers”, the International Financial

Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as

endorsed by the Financial Supervisory Commission.

We have also audited the parent company only financial statements of Opto Tech 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 March 23, 2015 The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows of the Company in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

ASSETS Note Amount % Amount %

Current Assets Cash and cash equivalents 6(1) 3,840,208$ 32 3,614,203$ 30 Financial assets at fair value through profit or loss - current 6(2) 462,413 4 220,744 2 Notes receivable - net 26,562 - 20,904 - Notes receivable - related parties - net 7 252 - - - Accounts receivable - net 6(4) 1,620,590 14 1,672,866 14 Accounts receivable - related parties - net 7 156,599 1 201,959 2 Other receivables 29,460 - 37,483 1 Inventories - net 6(5) 1,218,061 10 1,214,846 10 Prepayments 21,293 - 26,235 - Other current assets 8 27,110 - 29,131 -

Current assets 7,402,548 61 7,038,371 59

Non-current assets Available-for-sale financial assets - non - current 6(3) 622,786 5 590,188 5 Investments accounted for using equity method 6(6) 427,435 3 359,052 3 Property, plant and equipment - net 6(7) and 8 3,398,412 28 3,601,183 30 Intangible assets 6(8) 12,930 - 13,498 - Deferred tax assets 6(25) 186,960 2 277,914 2 Other non-current assets 6(9) and 8 94,812 1 100,927 1

Non-current assets 4,743,335 39 4,942,762 41

Total assets 12,145,883$ 100 11,981,133$ 100

LIABILITIES AND EQUITY

Current Liabilities Short-term loans 6(10) and 8 924,225$ 8 850,351$ 7 Financial liabilities at fair value through profit or loss - current 6(2) 2,492 - 1,631 - Notes payable 3,402 - 21,476 - Accounts payable 6(11) 770,006 6 767,324 6 Accounts payable - related parties 7 406,982 4 438,838 4 Other payables 457,922 4 431,824 4 Current income tax liabilities 8,128 - 5 - Provision for liabilties - current 6(15) 11,411 - 22,344 - Other current liabilities 6(12) 379,141 3 264,279 2

Current liabilities 2,963,709 25 2,798,072 23

Non-current liabilities Long-term loans 6(12),8 and 9 1,236,418 10 1,537,398 13 Provisions for liabilities - non - current 6(15) 47,644 - 45,433 - Deferred tax liabilities 6(25) 2,892 - 1,105 - Other non-current liabilities 6(13) 329,112 3 338,830 3

Non-current liabilities 1,616,066 13 1,922,766 16

Total Liabilities 4,579,775 38 4,720,838 39

EquityEquity attributable to owners of parentCapital Common stock 6(14)(16) 5,456,621 45 5,456,621 46 Capital Reserves 6(17) Capital reserve 640,826 5 624,100 5 Retained Earnings 6(18) Legal reserve 337,793 3 295,787 3 Special reserve 13,333 - 133,363 1 Unappropriated earnings 1,083,860 9 774,290 6 Other Equity Adjustments Other equity adjustments 6(19) 56,820 - 694)( - Treasury stocks 6(16) 26,699)( - 26,699)( -

Equity attributable to owners of parent 7,562,554 62 7,256,768 61

Non-controlling interest 3,554 - 3,527 -

Total equity 7,566,108 62 7,260,295 61

Total liabilities and equity 12,145,883$ 100 11,981,133$ 100

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

OPTO TECH CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

December 31, 2013December 31, 2014

77

Note Amount % Amount %

Operating revenues 7 6,317,383$ 100 6,391,594$ 100

Operating costs 6(5)(23)

(24) and 7 4,645,461)( 73)( 4,982,481)( 78)(

Gross profit, net 1,671,922 27 1,409,113 22

Operating Expenses 6(23)(24)

Selling expenses 159,566)( 3)( 188,813)( 3)(

General and administrative expenses 482,701)( 8)( 463,240)( 7)(

Research and development expenses 283,256)( 4)( 270,013)( 4)(

Total operating expenses 925,523)( 15)( 922,066)( 14)(

Operating income 746,399 12 487,047 8

Non-operating income and expenses

Other income 6(20) 61,010 1 37,929 1

Other gains and losses 6(21) 107,011)( 2)( 12,797 -

Finance costs 6(22) 58,483)( 1)( 50,268)( 1)(

Share of profit of associates and joint ventures

accounted for using equity method 6(6) 25,835 1 30,697 -

Total non-operating income and expenses 78,649)( 1)( 31,155 -

Profit before income tax 667,750 11 518,202 8

Income tax expense 6(25) 106,059)( 2)( 98,155)( 2)(

Net income 561,691$ 9 420,047$ 6

Other comprehensive income (loss)

Currency translation differences of foreign operations 25,203$ - 44,779$ 1

Unrealized gain on available-for-sale financial assets 31,893 1 10,392 -

Actuarial gains (losses) on defined benefit plans 11,969 - 2,953)( -

Share of other comprehensive income (loss) of associates and

joint ventures accounted for using equity method 420 - 806 -

Income tax related to components of other comprehensive income 2,046)( 1 500 -

Other comprehensive income (loss) for the year, net of income tax 67,439$ 1 53,524$ 1

Total comprehensive income for the year 629,130$ 10 473,571$ 7

Profit attributable to:

Owners of the parent 561,682$ 9 420,061$ 6

Non-controlling interest 9 - 14)( -

561,691$ 9 420,047$ 6

Total comprehensive income (loss) attributable to:

Owners of the parent 629,119$ 10 473,578$ 7

Non-controlling interest 11 - 7)( -

629,130$ 10 473,571$ 7

Basic earnings per share 6(26)

Profit for the year

Diluted earnings per share 6(26)

Profit for the year

0.77$

0.76$


1.03$

1.02$

OPTO TECH CORPORATION AND SUBSIDIARIES

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT FOR EARNINGS PER SHARE AMOUNTS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

20132014

78

Currency Unrealized gaintranslation or loss on

differences of available-for-Common Legal Special Unappropriated foreign sale financial Treasury Non-controlling

Note stock Capital reserves reserve reserve earnings operations assets stock Total interest Total equity

2013Balance at January 1, 2013 5,456,621$ 610,447$ 262,183$ 90,871$ 678,326$ 29,130)($ 27,534)($ 26,699)($ 7,015,085$ 3,534$ 7,018,619$ Distribution of 2012 earnings : Legal reserve - - 33,604 - 33,604)( - - - - - - Special reserve - - - 42,492 42,492)( - - - - - - Cash dividends - - - - 245,548)( - - - 245,548)( - 245,548)( Changes in other capital reserve: Changes in share of profit of associates and joint ventures accounted for using equity method 6(6) - 726)( - - - - - - 726)( - 726- Changes in capital reserve for dividends paid to subsidiaries - 498 - - - - - - 498 - 498 Net income for the year - - - - 420,061 - - - 420,061 14)( 420,047 Other comprehensive income for the year 6(19) - - - - 2,453)( 45,578 10,392 - 53,517 7 53,524 Share-based payment transactions 6(14) - 13,881 - - - - - - 13,881 - 13,881

Balance at December 31, 2013 5,456,621$ 624,100$ 295,787$ 133,363$ 774,290$ 16,448 17,142)($ 26,699)($ 7,256,768$ 3,527$ 7,260,295$

2014Balance at January 1, 2014 5,456,621$ 624,100$ 295,787$ 133,363$ 774,290$ 16,448$ 17,142)($ 26,699)($ 7,256,768$ 3,527$ 7,260,295$ Distribution of 2013 earnings : Legal reserve - - 42,006 - 42,006)( - - - - - - Reversal of special reserve - - - 120,030)( 120,030 - - - - - - Cash dividends - - - - 327,397)( - - - 327,397)( - 327,397)( Changes in other capital reserve: Changes in share of loss of associates and joint ventures accounted for using equity method 6(6) - 1,861)( - - - - - - 1,861)( - 1,861)( Difference between consideration

and carrying amount ofsubsidiaries acquired or disposed - 12,646 - - 12,662)( - - - 16)( 16 -

Changes in capital reserve for dividends paid to subsidiaries - 665 - - - - - - 665 - 665 Net income for the year - - - - 561,682 - - - 561,682 9 561,691 Other cornprehensive income for the year 6(19) - - - - 9,923 25,621 31,893 - 67,437 2 67,439 Share-based payment transactions 6(14) - 5,276 - - - - - - 5,276 - 5,276

Balance at December 31, 2014 5,456,621$ 640,826$ 337,793$ 13,333$ 1,083,860$ 42,069 14,751 26,699)($ 7,562,554$ 3,554$ 7,566,108$

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

OPTO TECH CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Retained Earnings

Equity attributable to owners of parent

Other Equity Adjustments

79

Note 2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before income tax 667,750$ 518,202$

Adjustments to reconcile profit before income tax to net cash provided

by operating activities

Depreciation 6(7)(23) 428,171 450,393

Amortization 6(8)(23) 11,628 9,960

(Recovery of) bad debts expense 12,634)( 29,928

Net (gain) loss on financial assets and liabilities at fair value through

or loss 6(2) 808)( 722

Interest expense 6(22) 56,670 48,236

Interest income 6(20) 24,226)( 20,280)(

Dividends income 6(20) 14,720)( 7,880)(

Compensation cost of employee stock options 6(24) 5,276 13,881

Share of profit of associates and joint ventures accounted for

using equity method 25,835)( 30,697)(

Loss (gain) on disposal of property, plant and equipment 6(21) 176 3,695)(

Loss (gain) on sale of investments 6(21) 824 2,313)(

Impairment loss on financial assets 6(21) 16,776 6,000

Impairment loss on non-financial assets 6(21) 91,909 8,502

Changes in assets and liabilities relating to operating activities

Changes in operating assets

Financial assets at fair value through profit or loss 239,680)( 220,834)(

Notes receivable – net 5,658)( 6,985

Notes receivable – related parties – net 252)( -

Accounts receivable – net 64,502 179,324

Accounts receivable – related parties – net 44,647 44,005)(

Other receivables 120 4,116)(

Inventories 3,215)( 52,464

Prepayments 3,163)( 12,978)(

Other current assets 2,021 380)(

Other non-current assets 7,499 5,128

Changes in operating liabilities

Notes payable 18,189)( 7,551

Accounts payable 2,682 30,293

Accounts payable – related parties 31,856)( 345,685)(

Other payables 26,297 17,334

Provisions for liabilities 8,585)( 3,583

Other current liabilities 14,862 19,421)(

Accrued pension liabilities 2,267 1,345

Net cash provided by operations 1,055,256 677,547

Interest received 30,789 16,958

Dividends received 45,187 27,000

Interest paid 56,754)( 47,442)(

Income tax paid 5,901)( 53,700)(

Net cash provided by operating activities 1,068,577 620,363

CONSOLIDATED STATEMENTS OF CASH FLOWS


(Continued)


80

Note 2014 2013

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of available-for-sale financial assets 18,626)($ 25,532)($

Proceeds from disposal of available-for-sale financial assets - 3,147

Acquisition of investments accounted for using equity method 74,429)( -

Acquisition of property, plant and equipment 6(7) 288,853)( 249,515)(

Proceeds from disposal of property, plant and equipment 6(7) 321 9,897

(Increase) decrease in deposits-out 1,530)( 13,459

Acquisition of intangible assets 6(8) 11,042)( 10,007)(

Net cash used in investing activities 394,159)( 258,551)(

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in short-term loans 2,337,053 2,066,659

Decrease in short-term loans 2,263,179)( 2,249,092)(

Increase in long-term loans - 884,264

Decrease in long-term loans 200,980)( 96,471)(

Increase in guarantee deposits 130 11

Payment of cash dividends 326,732)( 245,548)(

Net cash (used in) provided by financing activities 453,708)( 359,823

Effect of change in exchange rate 5,295 9,998

Net increase in cash and cash equivalents 226,005 731,633

Cash and cash equivalents at beginning of year 3,614,203 2,882,570

Cash and cash equivalents at end of year 3,840,208$ 3,614,203$


CONSOLIDATED STATEMENTS OF CASH FLOWS



81

82

OPTO TECH CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,EXCEPT AS OTHERWISE INDICATED)

1.HISTORY AND ORGANIZATION

Opto Tech Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The shares of the Company have been traded on the Taiwan Stock Exchange since May 2, 1995. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sales of semiconductor components as well as research and development, design, manufacture and sales of systems products.

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 March 23, 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 Taipei Exchange or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, ‘Financial instruments’ but including the "Regulations Governing the Preparation of Financial Reports by Securities Issuers " effective January 1, 2015) 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:

New Standards, Interpretations and Amendments

Effective Date by International Accounting

Standards Board Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1)

July 1, 2010

Severe hyperinflation and removal of fixed dates for first-time adopters (amendment to IFRS 1)

July 1, 2011

Government loans (amendment to IFRS 1) January 1, 2013

Disclosures－Transfers of financial assets (amendment to IFRS 7) July 1, 2011

Disclosures－Offsetting financial assets and financial liabilities (amendment to IFRS 7)

January 1, 2013

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

83


Effective Date by International Accounting

Standards Board Presentation of items of other comprehensive income (amendment to IAS 1)

July 1, 2012

Deferred tax: recovery of underlying assets (amendment to IAS 12) January 1, 2012

IAS 19 (revised), ‘Employee benefits’ January 1, 2013

IAS 27,‘Separate financial statements’ (as amended in 2011) January 1, 2013

IAS 28,‘Investments in associates and joint ventures’(as amended in 2011)

January 1, 2013

Offsetting financial assets and financial liabilities (amendment to IAS 32)

January 1, 2014

IFRIC 20, ‘Stripping costs in the production phase of a surface mine’ January 1, 2013

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.

(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 byInternational Accounting

Standards Board

IFRS 9, ‘Financial instruments’ Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)

January 1, 2018 January 1, 2016

Investment entities: applying the consolidation exception (amendments to IFRS 10, IFRS 12 and IAS 28)

January 1, 2016

Accounting for acquisition of interests in joint operations (amendments to IFRS 11)

January 1, 2016

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 (amendments to IAS 16 and IAS 38)

January 1, 2016

Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016

Defined benefit plans: employee contributions (amendments to IAS 19R) Equity method in separate financial statements (amendments to IAS 27)

July 1, 2014 January 1,2016

Recoverable amount disclosures for non-financial assets (amendments to IAS 36)

January 1, 2014

Novation of derivatives and continuation of hedge accounting (amendments to IAS 39)

January 1, 2014

IFRIC 21, ‘Levies’ January 1, 2014

Improvements to IFRSs 2010-2012 July 1, 2014

Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014

July 1, 2014 January 1, 2016

84

The Group is assessing the potential impact of the new standards, interpretations and amendments above. The impact on the consolidated financial statements will be disclosed when the assessment is complete.

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. (1)Compliance statement

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

(2)Basis of preparation A.Except for the following items, the 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 recognised based on present value of defined benefit

obligation less the net amount of pension fund assets. 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.

(3)Basis of consolidation A.Basis for preparation of consolidated financial statements:

a)All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including special purpose 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. The existence and effect of potential voting rights that are currently exercisable or convertible have been considered when assessing whether the Group controls another 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

85

are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

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

B.Subsidiaries included in the consolidated financial statements: Ownership (%)

Name of Investor

Name of Subsidiary

Main BusinessActivities

December 31, 2014

December 31, 2013 Description

Opto Tech Corp.

Ho Chung Investment Co., Ltd. (Ho Chung Investment)

Investment business

100.00 100.00 Note

Opto Tech Corp.

Opto Technology International Group Co., Ltd. (Opto)

Investment business

100.00 100.00 -

Opto Tech Corp.

Jyu Shin Investment Co., Ltd. (Jyu Shin Investment)

Investment business

100.00 100.00 -

Opto Tech Corp.

Source Ever Limited (Source)

International trading

100.00 100.00 -

Opto Opto Tech (Cayman) Co., Ltd. (Cayman)

Investment business

100.00 100.00 -

Opto Opto Grand (Cayman) Co., Ltd. (Opto Grand)

Investment business

100.00 100.00 -

Opto Everyung Investment Ltd. (Everyung)

Investment business

50.00 44.44 -

Jyu Shin Investment Co., Ltd.

CS Bright Corporation (CSB)

Manufacture and sales of LED and electronic products

99.87 99.87 -

Cayman Opto Tech (Macao) Co., Ltd. (Opto Macao)

International trading

100.00 100.00 -

86

Ownership (%)

Name of Investor

Name of Subsidiary

Main BusinessActivities

December 31, 2014

December 31, 2013 Description

Cayman Opto Tech (Suzhou) Co., Ltd. (Opto Tech Suzhou)

Research, design and manufacture of LED display, wireless communication equipment and related parts

100.00 100.00 -

Opto Grand Opto Tech Semiconductor (Ningbo) Co., Ltd. (Opto Tech Ningbo)


100.00 100.00 -

CSB Bright Investment International Ltd. (Bright)

Investment business

100.00 100.00 -

Bright Everyung Investment

Ltd. (Everyung)

Investment business

50.00 55.56 -

Everyung Opto Plus Technology Co., Ltd. (Opto Plus)


100.00 100.00 -

Note : Ho Chung Investment has been continuously acquiring the Company’s common

stock amounting to 1,107 thousand shares from 1998 to 2000. It holds about 0.2% of the Company’s outstanding common stock.

C.Subsidiaries not included in the consolidated financial statements：None. D.Adjustments for subsidiaries with different balance sheet dates：None. E.Nature and extent of the restrictions on fund remittance from subsidiaries to the parent

company：None. F.Details of the parent’s stock that is held by the subsidiary：Please refer to Note 13(1) C for

holdings of marketable securities at the end of the period. (4)Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollar, 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 recognised in profit or loss in the period in which they arise.

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 recognised in profit or loss.

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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 recognised in profit or loss as part of the fair value gain 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 recognised 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.

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 closing

exchange rate at the date of that balance sheet; ii. Income and expenses for each statement of comprehensive income are translated

at average exchange rates of that period; and iii. All resulting exchange differences are recognised in other comprehensive

income. b)When a foreign associate operation is partially disposed of or sold, exchange

differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group still retains partial interest in the former 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 a foreign subsidiary operation is partially disposed of or sold, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group still 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 operations.

(5)Classification of current and non-current items A.Assets that meet one of the following criteria are classified as current assets; otherwise

they are classified as non-current assets: a)Assets arising from operating activities that are expected to be realised, 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 realised 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.

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(6)Cash equivalents Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

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

Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term.

B.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

C.Financial assets at fair value through profit or loss are initially recognised 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 recognised in profit or loss.

(8)Available-for-sale financial assets A.Available-for-sale financial assets are non-derivatives that are either designated in this

category or not classified in any of the other categories. B.On a regular way purchase or sale basis, available-for-sale financial assets are recognised

and derecognised using trade date accounting. C.Available-for-sale financial assets are initially recognised 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 recognised in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.

(9)Loans and receivables Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is insignificant.

(10)Impairment of financial assets A. The Group assesses at each balance sheet date whether there is objective evidence that a

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 (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

B. The criteria that the Group uses to determine whether there is objective evidence of 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)The Group, for economic or legal reasons relating to the borrower’s financial

difficulty, granted the borrower a concession that a lender would not otherwise consider;

d)It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

e) The disappearance of an active market for that financial asset because of financial difficulties;

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f)Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

g)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

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

C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets: a) Financial assets measured at amortized cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognised 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 recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised 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 recognised in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. Impairment loss of an investment in an equity instrument recognised in profit or loss shall not be reversed through profit or loss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset directly.

(11)Derecognition of financial assets The Group derecognises a financial asset when one of the following conditions is met: A. The contractual rights to receive cash flows from the financial asset expire. B. The contractual rights to receive cash flows from the financial asset have been

transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

C. The contractual rights to receive cash flows from the financial asset have been transferred and however, it has not retained control of the financial asset.

(12)Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average 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 realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

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(13)Investments accounted for using 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 percent or more of the voting power of the investee. Investments in associates are accounted for using equity method and are initially recognised at cost.

B. The Group’s share of its associates’ 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 Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise 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 that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised 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 using 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 recognised 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.

(14)Property, plant and equipment A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred

during the construction period are capitalised. B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate

asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are 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. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be 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 10~50 yearsMachinery 8~10 years

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Utility facilities 6~25 yearsPollution prevention facilities 8~20 yearsTransportation equipment 3~5 yearsOffice equipment 3~7 yearsOther equipment 3~25 years

(15)Leased assets/ leases (lessee) Payments net of any incentives received from the lessor made under an operating lease are recognised in profit or loss on a straight-line basis over the lease term.

(16)Intangible assets Intangible assets, mainly computer software, is stated at cost and amortised on a straight-line basis over its estimated useful lives of 2~10 years.

(17)Impairment of non-financial assets 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 recognised 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. When the circumstances or reasons for recognizing impairment loss for an asset in prior years decrease or no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss.

(18)Borrowings A. Borrowings are recognised initially at fair value, net of transaction costs incurred.

Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(19)Notes and accounts payable Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is insignificant.

(20)Financial liabilities at fair value through profit or loss 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 and are initially recognised at fair value. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. 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 recognised in profit or loss.

(21)Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(22)Offsetting financial instruments Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

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(23)Derivative financial instruments Derivatives are initially recognised 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 recognised in profit or loss.

(24)Provisions Provisions, mainly warranties, are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(25)Employee benefits A. Short-term employee benefits

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

B. Pensions a) Defined contribution plans

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

b)Defined benefit plans i. The liability recognised in the balance sheet in respect of defined benefit pension

plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds (at the balance sheet date) instead.

ii. Actuarial gains and losses arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise.

C. Termination benefits Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises termination benefits when it is demonstrably committed to a termination, when it has a detailed formal plan to terminate the employment of current employees and when it can no longer withdraw the plan. In the case of an offer made by the Group to encourage voluntary termination of employment, the termination benefits are recognised as expenses only when it is probable that the employees are expected to accept the offer and the number of the employees taking the offer can be reliably estimated. Benefits falling due more than 12 months after balance sheet date are discounted to their present value.

D. Employees’ bonus and directors’ and supervisors’ remuneration Employees’ bonus and directors’ and supervisors’ remuneration are recognised 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

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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 recognised 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.

(26)Employee share-based payment 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 recognised 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. And ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(27)Income tax A. The tax expense for the period comprises current and deferred tax. Tax is recognised in

profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

B. The current income tax charge 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 tax is recognised, 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 sheets. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred 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 tax asset is realised or the deferred tax liability is settled.

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

E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

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F.Part of unused investment tax credits which are arising from expenditures incurred on acquisitions of equipment or technology, research and development are recognised as deferred tax assets that are only to the extent which is probable that future taxable profit will be available against the investment tax credits.

(28)Share capital A. Ordinary shares are classified as equity. Incremental costs directly attributable to the

issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(29)Dividends Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(30)Revenue recognition A. Sales of goods

Revenue is measured at the fair value of the consideration received or receivable taking into account of value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the G roup retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. Sales of services Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognised only to the extent that contract costs incurred are likely to be recoverable.

C.A sale agreement comprising of multiple components A sale agreement offered by the Group might comprise of multiple components, including sale of goods and subsequent repair services, etc. If a sale agreement comprises of multiple identifiable components, the fair value of the consideration received or receivable in respect of the sale agreement shall be allocated between those components based on the relative fair value of each component. The amount of proceeds allocated to each component is recognised as revenue in profit or loss following the revenue recognition criteria applied to each component. The fair value of each component is determined by its market value when it is sold separately.

(31)Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group’s chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

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5.CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Judgements and estimates are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below: (1)Critical judgements in applying the Group’s accounting policies

Financial assets—impairment of equity investments The Group follows the guidance of IAS 39 to determine whether a financial asset—equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the Group would transfer the accumulated fair value adjustment recognised in other comprehensive income on the available-for-sale financial assets to profit or loss and recognise the impairment loss on the financial assets measured at cost. As of December 31, 2014, the Group recognised loss of $16,776 in its financial statements.

(2)Critical accounting estimates and assumptions A.Impairment assessment of tangible and intangible assets (excluding goodwill)

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industry characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future. As of December 31, 2014, the Group recognised the impairment loss on the tangible and intangible assets amounting to $91,909.

B.Impairment assessment of investments accounted for using equity method The Group assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recoverable. The Group assesses the recoverable amounts of an investment accounted for using equity method based on the present value of the Group’s share of expected future cash flows of the investee and analyzes the reasonableness of related assumptions. As of December 31, 2014, the Group has not recognised any impairment loss on its investments accounted for using equity method.

C.Realisability of deferred tax assets Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industry environment, and laws and regulations might cause material adjustments to deferred tax assets. As of December 31, 2014, the Group recognised deferred tax assets amounting to $186,960.

D.Evaluation of inventories

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As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements 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 realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. As of December 31, 2014, the carrying amount of inventories was $1,218,061.

E.Calculation of accrued pension obligations When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations. As of December 31, 2014, the carrying amount of accrued pension obligations was $328,726.

F.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 funding 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 judgements 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. As of December 31, 2014, the carrying amount of unlisted stocks was $572,621.

6.DETAILS OF SIGNIFICANT ACCOUNTS (1)Cash and cash equivalents

December 31, 2014 December 31, 2013Cash on hand $ 797 $ 870Checking and demand deposits 937,678 857,819Cash equivalents -Time deposits 2,279,733 1,915,514

-Resale bonds 622,000 840,000 $ 3,840,208 $ 3,614,203

A.The Group transacts 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 Group has no cash and cash equivalents pledged to others. (2)Financial assets and financial liabilities at fair value through profit or loss

Items December 31, 2014 December 31, 2013

Current items: Financial assets held for trading Funds $ 460,000 $ 220,000 Valuation adjustment of financial assets

held for trading Funds 2,413 744

Total $ 462,413 $ 220,744

Valuation adjustment of financial liabilities held for trading

Forward exchange contracts $ 2,492 $ 1,631

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A.The Group recognised net gain (loss) of $808 and ($722) for the years ended December 31, 2014 and 2013, respectively.

B.The non-hedging derivative instruments transaction and contract information are as follows: December 31, 2014

Derivative Instruments Contract Amount

(Nominal Principal) Contract Period Current items Forward exchange contract USD $ 3,000 2014.11.19~2015.01.20 December 31, 2013

Derivative Instruments Contract Amount

(Nominal Principal) Contract Period Current items Forward exchange contract USD $ 6,000 2013.12.06~2014.02.06

The Group entered into forward exchange contracts to sell USD and buy TWD to hedge exchange rate risk of export proceeds. However, these forward exchange contracts are not accounted for under hedge accounting.

C.The Group has no financial assets at fair value through profit or loss pledged to others. (3)Available-for-sale financial assets

December 31, 2014 December 31, 2013 Non-current items:

Listed stocks $ 35,414 $ 53,292 Unlisted stocks 572,621 554,038

Subtotal 608,035 607,330 Valuation adjustment of

available-for-sale financial assets 14,751 ( 17,142) Total $ 622,786 $ 590,188

A.The Group recognised fair value change of $31,893 and $10,392 in other comprehensive income for the years ended December 31, 2014 and 2013, respectively.

B.As of December 31, 2014 and 2013, the Group recognized impairment loss of $16,776 and $6,000 (shown as “Other gains and lossess”) on its investment in United Radiant Technology Corp. and Giga Epitaxy Technology Corp. because the values of the companies have been impaired, and recovery were unlikely.

(4)Accounts receivable December 31, 2014 December 31, 2013 Accounts receivable $ 1,720,927 $ 1,791,615 Less: Allowance for doubtful accounts ( 100,337) ( 118,749) $ 1,620,590 $ 1,672,866

A.The Group’s accounts receivable that were neither past due nor impaired had good credit quality.

B.The ageing analysis of accounts receivable that were overdue but not impaired is as follows: December 31, 2014 December 31, 2013Up to 180 days $ 117,208 $ 151,170181 to 365 days 14,479 6,864Over 365 days 46,667 30,030 $ 178,354 $ 188,064

The above ageing analysis was based on past due date.

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C.Movements on the group provision for impairment of accounts receivable are as follows: a)As of December 31, 2014 and 2013, accounts receivable that had been individual

provision impaired were $57,168 and $55,700, respectively. b)Movements on the group provision for impairment of accounts receivable are as

follows: 2014

Individual provision Group provision At January 1 $ 55,700 $ 63,049 Reversal of impairment - ( 14,815) Provision for impairment 1,468 - Write-off during the period - ( 6,185) Effect of exchange rate - 1,120 At December 31 $ 57,168 $ 43,169

2013

Individual provision Group provision At January 1 $ 18,194 $ 72,103Reversal of impairment - ( 10,921)Provision for impairment 40,993 -Write-off during the period ( 3,487) -Effect of exchange rate - 1,867At December 31 $ 55,700 $ 63,049

D.The maximum exposure to credit risk at December 31, 2014 and 2013 was the carrying amount of each class of accounts receivable.

E.The Group does not hold any collateral as security. (5)Inventories

December 31, 2014

Cost Allowance for valuation loss Book value

Raw materials $ 532,757 ($ 250,887) $ 281,870Supplies 207,244 ( 22,381) 184,863Work-in-process 323,186 ( 13,763) 309,423Semi-finished goods 188,270 ( 93,322) 94,948Finished goods 419,103 ( 72,146) 346,957 $ 1,670,560 ($ 452,499) $ 1,218,061

December 31, 2013

Cost Allowance for valuation loss Book value

Raw materials $ 554,028 ($ 234,974) $ 319,054Supplies 206,439 ( 17,090) 189,349Work-in-process 329,719 ( 32,887) 296,832Semi-finished goods 192,296 ( 48,885) 143,411Finished goods 363,678 ( 97,478) 266,200 $ 1,646,160 ($ 431,314) $ 1,214,846

The cost of inventories recognised as expense for the years ended December 31, 2014 and 2013 was $4,645,461 and $4,982,481, respectively, including the amounts of $17,922 and $0, respectively, that the Group wrote down from cost to net realisable value accounted for as ‘cost of goods sold’, as well as the amounts of $0 and $14,653, respectively, that the Group reversed from a previous inventory write-down and accounted for as reduction of

99

‘cost of goods sold’ because of the rising prices of products and the inventory of low-priced stocks are declining.

(6)Investments accounted for using equity method 2014 2013

At January 1 $ 359,052 $ 347,395Additional investments accounted for using equity method 74,429 -

Share of profit of investment accounted for using quity method 25,835 30,697

Earnings distribution of investments accounted for using equity method ( 30,467) ( 19,120)

Change in capital reserve ( 1,861) ( 726)Change in other equity items (Note 6(19)) 420 806Gain on disposal of investments 27 -At December 31 $ 427,435 $ 359,052

Associated enterprises December 31, 2014 December 31, 2013Viking Tech Corporation $ 427,435 $ 359,052VML TECHNOLOGIES B.V. - - $ 427,435 $ 359,052

A. The financial information of the Group’s principal associates is summarized below:

December 31, 2014 Assets Liabilities Revenue Profit (Loss)

% interest held

Viking Tech Corporation $ 3,455,209 $ 984,699 $ 1,437,079 $ 148,846 17.30%VML TECHNOLOGIES B.V. 13,413 31,668 619 ( 2,908) 25.00% $ 3,468,622 $ 1,016,367 $ 1,437,698 $ 145,938

December 31, 2013 Assets Liabilities Revenue Profit (Loss)

% interest held

Viking Tech Corporation $ 2,651,854 $ 681,793 $ 1,317,901 $ 172,683 18.24%VML TECHNOLOGIES B.V. 26,113 43,177 93,023 ( 9,223) 25.00% $ 2,677,967 $ 724,970 $ 1,410,924 $ 163,460

B. The Group’s investment in Viking Tech Corporation has quoted market price. The fair value of Viking Tech Corporation as of December 31, 2014 and 2013 was $480,361 and $374,427, respectively.

C.The Company invested directly and indirectly through its subsidiaries to Viking Tech Corporation totaling 17.30% of the total ownership, which does not exceed 20%. However, the Company has the highest ownership percentage and is represented by two directors in Viking Tech Corporation. As a result of the significant influence, the Group’s investment in Viking Tech Corporation is accounted for using equity method.

100

Buildings Machinery

Utility

facilit ies

Pollution

prevention

facilit ies

Transportat ion

equipment

Office

equipment

Other

equipment

Construction in

progress and

prepayment for

equipment Total

At January 1, 2014Cost 2,377,411$ 5,701,376$ 1,079,152$ 631,209$ 15,538$ 73,918$ 1,708,328$ 105,544$ 11,692,476$

Accumulated depreciation 840,155)( 3,478,331)( 875,701)( 540,177)( 10,888)( 65,613)( 1,311,450)( - 7,122,315)(

Accumulated impairment 59)( 968,247)( - - 423)( 33)( 216)( - 968,978)(

1,537,197$ 1,254,798$ 203,451$ 91,032$ 4,227$ 8,272$ 396,662$ 105,544$ 3,601,183$

2014Opening net book amount 1,537,197$ 1,254,798$ 203,451$ 91,032$ 4,227$ 8,272$ 396,662$ 105,544$ 3,601,183$

Additions 4,683 17,438 12,492 4,353 110 5,956 19,020 224,801 288,853

Disposals - 353)( 4)( - - 46)( 94)( - 497)( Reclassifications 667 199,215 382 2,444 - - 11,692 206,295)( 8,105 Depreciation expense 79,705)( 273,654)( 15,541)( 10,521)( 985)( 4,291)( 43,474)( - 428,171)( Impairment loss 93,184)( 1,275 - - - - - - 91,909)(

Net exchange differences 16,520 2,153 2,099 - 146)( 62 147 13 20,848

Closing net book amount 1,386,178$ 1,200,872$ 202,879$ 87,308$ 3,206$ 9,953$ 383,953$ 124,063$ 3,398,412$

At December 31, 2014Cost 2,405,338$ 5,889,255$ 1,094,708$ 638,006$ 14,810$ 79,136$ 1,737,425$ 124,063$ 11,982,741$


Accumulated impairment 93,636)( 966,924)( - - 424)( 33)( 216)( - 1,061,233)(

1,386,178$ 1,200,872$ 202,879$ 87,308$ 3,206$ 9,953$ 383,953$ 124,063$ 3,398,412$

(7)Property, plant and equipment

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Buildings Machinery

Utility

facilit ies

Pollution

prevention

facilit ies

T ransportation

equipment

Office

equipment

Other

equipment

Construction in

progress and

prepayment for

equipment Total

At January 1, 2013Cost 2,085,013$ 5,669,850$ 1,006,227$ 589,342$ 12,624$ 72,705$ 1,683,574$ 408,596$ 11,527,931$


Accumulated impairment 59)( 1,012,875)( - - 64)( 19)( 98)( - 1,013,115)(

1,319,486$ 1,435,569$ 143,000$ 57,689$ 3,841$ 12,080$ 409,641$ 408,596$ 3,789,902$

2013Opening net book amount 1,319,486$ 1,435,569$ 143,000$ 57,689$ 3,841$ 12,080$ 409,641$ 408,596$ 3,789,902$

Additions 9,966 31,578 9,365 3,365 200 1,687 9,409 183,945 249,515

Disposals - 5,745)( 349)( - - 26)( 82)( - 6,202)( Reclassifications 261,516 109,319 63,729 38,502 1,475 14)( 20,159 501,396)( 6,710)( Depreciation expense 68,549)( 311,388)( 12,360)( 8,524)( 1,246)( 5,604)( 42,722)( - 450,393)( Impairment loss - 8,502)( - - - - - - 8,502)(

Net exchange differences 14,778 3,967 66 - 43)( 149 257 14,399 33,573

Closing net book amount 1,537,197$ 1,254,798$ 203,451$ 91,032$ 4,227$ 8,272$ 396,662$ 105,544$ 3,601,183$

At December 31, 2013Cost 2,377,411$ 5,701,376$ 1,079,152$ 631,209$ 15,538$ 73,918$ 1,708,328$ 105,544$ 11,692,476$


Accumulated impairment 59)( 968,247)( - - 423)( 33)( 216)( - 968,978)(

1,537,197$ 1,254,798$ 203,451$ 91,032$ 4,227$ 8,272$ 396,662$ 105,544$ 3,601,183$

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A.Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows: For the years ended December 31, 2014 2013 Amount capitalised $ 763 $ 780Interest rate 0.52%~0.94% 0.35%~1.00%

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

(8)Intangible assets Software At January 1, 2014 Cost $ 36,726 Accumulated amortisation ( 23,228) $ 13,498

2014 Opening net book amount $ 13,498 Additions 11,042 Amortisation expense ( 11,628) Net exchange differences 18 Closing net book value $ 12,930 At December 31, 2014 Cost $ 33,099 Accumulated amortisation ( 20,169) $ 12,930

Software At January 1, 2013 Cost $ 34,941 Accumulated amortisation ( 23,293) $ 11,648

2013 Opening net book amount $ 11,648 Additions 10,007 Reclassification 1,753 Amortisation expense ( 9,960) Net exchange differences 50 Closing net book value $ 13,498 At December 31, 2013 Cost $ 36,726 Accumulated amortisation ( 23,228) $ 13,498

The details of amortisation are as follows: For the years ended December 31, 2014 2013

Operating costs $ 3,305 $ 2,711Selling expenses 865 722General and administrative expenses 4,552 3,855Research and development expenses 2,906 2,672Total $ 11,628 $ 9,960

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(9)Long-term prepaid rents (shown as “Other non-current assets”) December 31, 2014 December 31, 2013

Land-use rights $ 77,116 $ 76,174

(10)Short-term loans Type of loans December 31, 2014 December 31, 2013

Unsecured bank loans $ 924,225 $ 850,351Interest rate range 0.65%~7.20% 0.70%~6.90%Please refer to Note 8 for details of the collateral.

(11)Accounts payable December 31, 2014 December 31, 2013

Accounts payable $ 742,323 $ 736,910Estimated accounts payable 27,683 30,414 $ 770,006 $ 767,324

(12)Long-term loans

Type of loans Credit line Period Interest rate

range December 31,

2014 Syndicated loans with 10 financial

institutions including Taiwan Cooperative Bank

$ 2,000,000 2012.12.06~ 2017.12.06

1.5539%~ 2.4842%

$ 1,412,300

Chinatrust Commercial Bank

850,000 2011.03.29~ 2016.03.29

1.6580%~ 1.6980%

120,589

1,532,889Less: Current portion (shown as “Other non-current liabilities”) ( 296,471)

$ 1,236,418

Type of loans Credit line Period Interest rate

range December 31,

2013 Syndicated loans with 10 financial

institutions including Taiwan Cooperative Bank

$ 2,000,000 2012.12.06~ 2017.12.06

1.5539%~ 2.2727%

$ 1,516,810

Chinatrust Commercial Bank

850,000 2011.03.29~ 2016.03.29

1.6630%~ 1.6970%

217,059

1,733,869Less: Current portion (shown as “Other non-current liabilities”) ( 196,471)

$ 1,537,398A.On August 10, 2012, the Company signed a 5-year mortgage contract with a credit limit

of $2 billion with 10 banks, including Taiwan Cooperative Bank, and paid the loans used for plants to Taishin International Bank. At the same time, the Company transferred the mortgaged assets, which was originally pledged to Taishin International Bank, to the 10 banks including Taiwan Cooperative Bank.

B.Pursuant to the syndicated loan facility agreement entered into by the Company with Taiwan Cooperative Bank and 9 other banks, the Company is required to maintain certain financial ratios during the period of the syndicated loan facility agreement. Please refer to Note 9.

C.Please refer to Note 8 for details of the collateral.

(13)Pensions A. a) The Company and CS Bright Corporation have a defined benefit pension plan in

accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional

104

year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and CS Bright Corporation contribute monthly an amount equal to 4.89% and 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 are as follows: December 31, 2014 December 31, 2013

Present value of funded defined benefit obligations $ 590,381 $ 589,011

Fair value of plan assets ( 261,655) ( 250,583)Net liability in the balance sheet $ 328,726 $ 338,428

c)Movements in present value of defined benefit obligations are as follows: 2014 2013 Present value of defined benefit obligations At January 1 $ 589,011 $ 574,271Current service cost 10,279 11,105 Interest cost 11,781 8,615Actuarial (profit) loss ( 11,132) 1,798Benefits paid ( 9,558) ( 6,778)At December 31 $ 590,381 $ 589,011

d)Movements in fair value of plan assets are as follows: 2014 2013 Fair value of plan assets At January 1 $ 250,583 $ 240,106Expected return on plan assets 5,012 4,203Actuarial profit (loss) 837 ( 1,129)Employer contributions 14,781 14,181Benefits paid ( 9,558) ( 6,778)At December 31 $ 261,655 $ 250,583

e)Amounts of expenses recognised in comprehensive income statements are as follows: For the years ended December 31, 2014 2013

Current service cost $ 10,279 $ 11,105Interest cost 11,781 8,615Expected return on plan assets ( 5,012) ( 4,203)Current pension costs $ 17,048 $ 15,517Details of cost and expenses recognised in comprehensive income statements are as follows:

For the years ended December 31, 2014 2013

Cost of sales $ 10,405 $ 9,477Selling expenses 511 475General and administrative expenses 4,510 4,138Research and development expenses 1,622 1,427 $ 17,048 $ 15,517

f)Amounts recognised under other comprehensive income are as follow: For the years ended December 31, 2014 2013

Recognition for current period ($ 11,969) $ 2,953Accumulated amount $ 49,734 $ 61,703

105

g)The Bank of Taiwan was commissioned to manage the Fund of the Company’s and CS Bright Corporation’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 constitution 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.

For the years ended December 31, 2014 and 2013, the Company and domestic subsidiaries’ actual returns on plan assets was $5,849 and $3,074, respectively.

h)The principal actuarial assumptions used were as follows: For the years ended December 31, 2014 2013 Discount rate 2.125%~2.25% 2.00%Future salary increases 2.25%~3.00% 2.25%~3.00%Expected return on plan assets 1.75%~2.25% 2.00%Future mortality rate was estimated based on the Taiwan Standard Ordinary Experience Mortality Table (2012).

i)Historical information of experience adjustments was as follows: For the years ended December 31, 2014 2013 2012

Present value of defined benefit obligation $ 590,381 $ 589,011 $ 574,271

Fair value of plan assets ( 261,655) ( 250,583) ( 240,106)Deficit in the plan $ 328,726 $ 338,428 $ 334,165Experience adjustments on plan

liabilities $ 2,611 $ 7,449 $ 22,923Experience adjustments on plan

assets ($ 829) $ 1,120 $ 1,904

j)Expected contributions to the defined benefit pension plans of the Group within one year from December 31, 2014 amounts to $14,781.

B. a) Effective July 1, 2005, the Company and CS Bright Corporation established a funded 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 CS Bright Corporation 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 portable upon termination of employment.

b)The Company’s mainland subsidiaries, Opto Tech (Suzhou) Co., Ltd., Opto Plus Technology Co., Ltd. and Opto Tech Semiconductor (Ningbo) Co., Ltd, have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (P.R.C.) are based on certain percentage of employees’ monthly salaries and wages. The mainland subsidiaries’ contribution percentage for both the years ended December 31, 2014 and 2013 was 20%, 14% and 14%, respectively. Other than the monthly contributions, the Group has no further obligations.

106

c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2014 and 2013 were $38,100 and $35,770, respectively.

(14)Share-based payment On November 29, 2007 and August 9, 2010, as a result of setting up rules for the employee stock options for the years 2007 and 2010, the Company issued 10,000 and 15,000 thousands units of employee stock options on December 21, 2007 and August 26, 2010, respectively. Each unit could buy one share, and the exercise price is based on the closing price of the Company’s common stock quoted in the Taiwan Stock Exchange and GreTai Securities Market at the issued date. The exercise price under the stock-based employee compensation plan is based on the closing price of the Company’s common stock at the grant date and is subject to adjustments due to changes in the number of common shares and issuance of cash dividends. The vesting period of the Company’s employee stock option plan is 7 years. The employees may exercise the stock options in installment within a period of 2 years after the stock options are granted. The Company recognised compensation costs under the stock-based employee compensation plan for the years ended December 31, 2014 and 2013, amounting to $5,276 and $13,881, respectively. A.Details of the employee stock options are set forth below:


Stock options No. of shares (in thousands)

Weighted- average

exercise price (in dollars)

No. of shares (in thousands)

Weighted- average

exercise price (in dollars)

Options outstanding at beginning of year 18,285 $ 20.99 19,548 $ 21.74

Options exercised - - - -Options revoked ( 7,127) ( 1,263) Options outstanding at

end of year 11,158 18,285 Options exercisable at

end of year 11,098 15,364

B.Details of the employee stock options outstanding as of December 31, 2014 and 2013 are set forth below:

Stock options outstanding as at

December 31, 2014 Stock options exercisable as at

December 31, 2014

Range of exercise price

(in dollars) No. of shares (in thousands)

Weighted- average expected remaining

vesting period(in years)

Weighted- average exercise price (in dollars)



$ 18.40 11,158 3 $ 18.40 11,098 $ 18.40

Stock options outstanding as at

December 31, 2013 Stock options exercisable as at

December 31, 2013

Range of exercise price

(in dollars) No. of shares (in thousands)

Weighted- average expected remaining

vesting period(in years)




$ 24.10 6,908 1 $ 24.10 6,908 $ 24.1019.10 11,377 4 19.10 8,456 19.10

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On July 9, 2014, the Board of Directors of the Company approved the issuance of employee stock options authorized in 2007 and 2010. The exercise price were adjusted from $24.1 and $19.1 to $23.2 and $18.4 on July 31, 2014. On June 19, 2013, the Board of Directors of the Company approved the issuance of employee stock options authorized in 2007 and 2010. The exercise price were adjusted from $25.0 and $19.8 to $24.1 and $19.1 on July 14, 2013.

C.The fair value of stock options granted after January 1, 2008 is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement

Grant date

Stock price (in dollars)

Exercise price

(in dollars)

Expected price

volatiltity

Expected option life(in years)

Expected dividends

Risk-free interest

rate

Fair value per unit

(in dollars)Employee

stock options

August 26,

2010

$ 22

$ 22

4.88%

7.35

- 1.1858% $ 11.321

(15)Provisions Warranty At January 1, 2014 $ 67,777Additional provisions 19,756Used during the period ( 27,728)Reversal of unused amount ( 613)Exchange differences ( 137)At December 31, 2014 $ 59,055Analysis of total provisions: December 31, 2014 December 31, 2013Current $ 11,411 $ 22,344Non-current $ 47,644 $ 45,433The Group provides warranties on LED products sold. Provision for warranty is estimated based on historical warranty data of LED products.

(16)Share capital A.On June 16, 2009, the Company’s stockholders during their meeting resolved to increase

its capital by cash infusion through the private equity method. With the price per share of $21.5, the Company issued 18,708 thousand shares and raised $402,221, and set the record date on July 31, 2009. With the price per share of $20.5, the Company issued 1,000 thousand shares and raised $20,500 and set the record date on June 8, 2010. The shares raised through the private placement had expired three years since the delivery date, and have been registered for public offering which have been approved by the Jin-Guan-Zheng-Zi No. 1020044410 of Securities and Futures Bureau of Financial Supervisory Commission, R.O.C. on November 5, 2013. As of December 31, 2014, the Company’s authorized capital was $10,000,000, consisting of 1,000,000 shares of common stock, and the paid-in capital was $5,456,621, consisting of 545,662 thousand shares of common stock with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

B.The number of the Company’s oridinary shares outstanding are the same for the years ended December 31, 2014 and 2013.

108

C.Treasury stock a)Reason for share reacquisition and movements in the number of the Company’s

treasury shares are as follows: December 31, 2014

Name of company holding the shares Reason for reacquisition

Number of Shares

(thousand) Carrying amount

The Company Subsidiary-Ho Chung Investment Co., Ltd.

The Company’s shares held by its subsidiary

1,107 $ 26,699 December 31, 2013

Name of company holding the shares Reason for reacquisition

Number of Shares

(thousand) Carrying amount

The Company Subsidiary-Ho Chung Investment Co., Ltd.

The Company’s shares held by its subsidiary

1,107 $ 26,699

b)Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital reserve.

c)Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

d)Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to the employees within three years and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(17)Capital reserve Pursuant to the R.O.C. Company Law, capital reserve 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 reserve to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(18)Retained earnings A.Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall

first be distributed as follows: 1)Offset prior years’ operating losses. 2)10% of the remaining amount shall be set aside as legal reserve, unless the

accumulated legal reserve equals the total capital of the Company. 3)Appropriation of the remainder shall be proposed by the Board of Directors and

resolved by the stockholders. 4)Bonus distributed to the employees and shareholders, and remuneration paid to the

directors and supervisors should account for 15%, 80% and 5%, respectively, of the total distributed amount.

B.The Company operates in the high-tech industry and its business life cycle is in the growth stage. In view of its capital expenditure demand and comprehensive financial

109

plan for continuous development, the Company issues both stock and cash dividends. The proportion of dividends to be distributed in stocks and cash is determined based on the Company’s rate of growth and capital expenditures. However, the amount of cash dividends shall not be lower than 20% of the dividends distributed.

C.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 excess 25% of the Company’s paid-in capital.

D.In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

E.For the years ended December 31, 2014 and 2013, the estimated amounts of employees’ bonus were $76,734 and $61,387, respectively; directors’ and supervisors’ remuneration were $25,578 and $20,462, respectively based on 15% and 5% (as prescribed by the Company’s Articles of Incorporation) of net income for the year ended December 31, 2014, after taking into account the legal reserve and other factors. The amount approved by the stockholders for the 2013 employees’ bonus and directors’ and supervisors’ remuneration is the same with the 2013 financial statements. Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

F.The appropriation of 2013 and 2012 earnings had been resolved at the stockholders’ meeting on June 17, 2014 and June 19, 2013, respectively. Details are summarized below: 2013 2012

Amount

Dividends per share

(in dollars)

Amount

Dividends per share

(in dollars) Legal reserve $ 42,006 $ 33,604 Special reserve ( 120,030) 42,492 Cash dividends 327,397 $ 0.60 245,548 $ 0.45 Total $ 249,373 $ 321,644

The above-mentioned 2013 earnings appropriation as approved by the stockholders were in agreement with those amounts approved by the Board of Directors on March 25, 2014. Information on the appropriation of the Company’s earnings as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

G.The appropriation of 2014 earnings had been proposed by the Board of Directors on March 23, 2015. Details are summarized below: 2014

Amount

Dividends per share

(in dollars) Legal reserve $ 56,169 Special reserve ( 13,333) Cash dividends 409,247 $ 0.75Total $ 452,083 As of March 23, 2015, the appropriation of 2014 earnings had not been approved by the stockholders.

110

(19)Other equity items

Currency translation differences of foreign

operations

Unrealized gains or losses for

available-for-sale financial assets Total

At January 1, 2014 $ 16,448 ($ 17,142) ($ 694)Change in unrealized gains or

losses for available-for-sale financial assets - 31,893

31,893Currency translation

differences:

-Group 25,201 - 25,201 -Associates 420 - 420 At December 31, 2014 $ 42,069 $ 14,751 $ 56,820

Currency translation differences of foreign

operations

Unrealized gains or losses for

available-for-sale financial assets Total

At January 1, 2013 ($ 29,130) ($ 27,534) ($ 56,664)Change in unrealized gains or

losses for available-for-sale financial assets - 10,392

10,392Currency translation

differences:

-Group 44,772 - 44,772 -Associates 806 - 806

At December 31, 2013 $ 16,448 ($ 17,142) ($ 694)

(20)Other income For the years ended December 31, 2014 2013 Rental revenue $ 1,930 $ 2,392 Dividend income 14,720 7,880 Interest income Interest income from bank deposits 19,831 15,875 Interest income from resale bonds 4,386 4,363 Other interest income 9 42 Recovery of bad debts expense 12,634 -Others 7,500 7,377 $ 61,010 $ 37,929

(21)Other gains and losses For the years ended December 31, 2014 2013 Net gains (losses) on financial assets at fair value

through profit or loss $ 808

($ 722)

Impairment loss on property, plant and equipment ( 91,909) ( 8,502)Net currency exchange gains 24,520 22,517 (Losses) gains on disposal of property, plant and

equipment ( 176) 3,695 (Losses) gains on disposal of investments ( 824) 2,313Impairment losses from financial assets ( 16,776) ( 6,000)Others ( 22,654) ( 504) ($ 107,011) $ 12,797

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(22)Finance costs For the years ended December 31, 2014 2013 Interest expense:

Bank loans $ 57,318 $ 48,889 Others 115 127

Less:capitalisation of qualifying assets ( 763) ( 780) 56,670 48,236Other financial cost 1,813 2,032 $ 58,483 $ 50,268

(23)Expenses by nature For the years ended December 31, 2014 2013 Employee benefit expense $ 1,180,883 $ 1,129,760Depreciation on property, plant and equipment 428,171 450,393Amortization on intangible assets 11,628 9,960 $ 1,620,682 $ 1,590,113

(24)Employee benefit expense For the years ended December 31, 2014 2013 Wages and salaries $ 1,012,615 $ 961,745Employee stock options 5,276 13,881Labor and health insurance fees 84,081 78,307Pension costs 55,148 51,287Other personnel expenses 23,763 24,540 $ 1,180,883 $ 1,129,760

(25)Income tax A.Income tax expense

a) Components of income tax expense: For the years ended December 31, 2014 2013 Current tax:

Current tax on profits for the year $ 23 $ 44Tax on undistributed earnings 12,704 -Understatement of income tax payable 2,133 1,030Prepaid and withholding taxes from

foreign income which will not be realized 504 269

Total current tax 15,364 1,343Deferred tax:

Origination and reversal of temporary differences 90,695 96,812

Income tax expense $ 106,059 $ 98,155

b)The income tax charged relating to components of other comprehensive income is as follows: For the years ended December 31, 2014 2013 Actuarial (losses) gains on defined

benefit obligation ($ 2,046) $ 500

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B.Reconciliation between income tax expense and accounting profit. For the years ended December 31, 2014 2013 Tax calculated based on profit before tax and

statutory tax rate $ 117,614

$ 87,412

Effect from item disallowed by tax regulation ( 1,867) ( 11,765)Tax exempted income by tax regulation ( 56) ( 393)Taxable loss of unrecognized deferred tax

assets ( 24,973) 26,972 Understatement of income tax payable 2,133 1,030Effect of tax-exempt income - ( 6,810)Prepaid withholding taxes from foreign

income which will not be realized 504 269 Tax on undistributed earnings 12,704 1,440 $ 106,059 $ 98,155

C.Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carryforward and investment tax credit are as follows: For the year ended December 31, 2014

January 1

Recognised in profit or loss

Recognised in other

comprehensive income December 31

Temporary differences: －Deferred tax assets(liabilities): Loss on inventory value decline $ 22,682 $ 6,958 $ - $ 29,640 Over provision of allowance for bad debts

13,075 ( 3,629) - 9,446

Service warranty expense 7,429 ( 626) - 6,803 Investment loss 11,481 ( 8,581) - 2,900 Impairment loss 15,335 14,984 - 30,319 Net pension costs 46,637 338 - 46,975 Loss carryforwards 142,971 ( 98,220) - 44,751 Actuarial losses on defined benefit plans

10,488 - ( 2,046) 8,442

Others 6,711 ( 1,919) - 4,792 Total $ 276,809 ($ 90,695) ($ 2,046) $ 184,068

For the year ended December 31, 2013

January 1

Recognised in profit or loss

Recognised in other

comprehensive income December 31

Temporary differences: －Deferred tax assets(liabilities): Loss on inventory value decline $ 22,434 $ 248 $ - $ 22,682Over provision of allowance for bad debts

9,196 3,879 - 13,075

Service warranty expense 6,595 834 - 7,429Investment loss 11,481 - - 11,481Impairment loss 14,938 397 - 15,335Net pension costs 46,766 ( 129) - 46,637Loss carryforwards 224,530 ( 81,559) - 142,971Investment tax credits 19,239 ( 19,239) - -Actuarial losses on defined benefit plans

9,988 - 500 10,488

Others 7,954 ( 1,243) - 6,711Total $ 373,121 ($ 96,812) $ 500 $ 276,809

113

D.According to the Act for Statute for Upgrading Industries (before its abolishment), details of the amount the Company is entitled as investment tax credit and unrecognised deferred tax assets are as follows: As of December 31, 2014, there is no investment tax credit and unrecognised deferred tax assets.

December 31, 2013

Qualifying items

Unused tax

credits

Unrecognised deferred tax

assets

Final year tax credits are due

Machinery and equipment $ 4,119 $ 4,119 2014

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

December 31, 2014

Year incurred

Amount filed/ assessed

Unused amount

Amount of unrecognised deferred tax

assets

Usable until year

2005 $ 210,768 $ 54,835 $ 48,071 2015 2006 49,454 49,454 49,454 2016 2007 54,255 54,255 54,255 2017 2008 131,461 131,461 12,202 2018 2009 96,314 96,314 38,634 2019 2010 19,318 19,318 9,659 2020 2011 7,266 7,266 3,633 2021 2012 10,332 10,332 5,166 2022 2013 122,164 122,164 61,082 2023

$ 701,332 $ 545,399 $ 282,156

December 31, 2013

Year incurred

Amount filed/ assessed

Unused amount

Amount of unrecognised deferred tax

assets

Usable until year

2004 $ 902,729 $ 462,325 $ 40,501 2014 2005 210,768 210,768 48,071 2015 2006 49,454 49,454 49,454 2016 2007 54,255 54,255 54,255 2017 2008 131,461 131,461 12,202 2018 2009 96,314 96,314 38,634 2019 2010 19,318 19,318 9,659 2020 2011 7,266 7,266 3,633 2021 2012 10,332 10,332 5,166 2022 2013 122,176 122,176 61,088 2023

$ 1,604,073 $ 1,163,669 $ 322,663

F.The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows: December 31, 2014 December 31, 2013Deductible temporary differences $ 391,974 $ 572,144

G.As of December 31, 2014, the Company’s income tax returns through 2012 have been assessed and approved by the Tax Authority.

114

H.Unappropriated retained earnings: December 31, 2014 December 31, 2013 Earnings generated in and after 1998 $ 1,083,860 $ 774,290

I.As of December 31, 2014 and 2013, the balance of the imputation tax credit account was $29,805 and $33,703, respectively. The creditable tax rate was estimated to be 3.50% for 2014 and actual creditable tax rate was 4.82% for 2013.

(26)Earnings per share For the year ended December 31, 2014

Profit after tax

Weighted-average outstanding

common shares (in thousands)

Earnings per share(in dollars)

Basic earnings per share Profit attributable to owners

of the parent $ 561,682 544,555 $ 1.03Dilutive effect of common

stock equivalents:

Stock options - - Employees’ bonus - 7,624

Diluted earnings per share Profit attributable to owners

of the parent plus dilutive effect of common stock equivalents $ 561,682 552,179 $ 1.02


Profit after tax

Weighted-average outstanding

common shares (in thousands)

Earnings per share(in dollars)

Basic earnings per share Profit attributable to owners

of the parent $ 420,061 544,555 $ 0.77Dilutive effect of common

stock equivalents:

Stock options - - Employees’ bonus - 6,617

Diluted earnings per share Profit attributable to owners

of the parent plus dilutive effect of common stock equivalents

$ 420,061

551,172 $ 0.76

(27)Operating leases The Company had entered into an agreement to lease land from Hsinchu Science Park for the period from 1997 to 2029, and CS Bright Corporation had entered into an agreement to lease office from a non-related party. For the years ended December 31, 2014 and 2013, the Company and CS Bright Corporation together recognised rental expenses of $18,608 and $18,570, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: December 31, 2014 December 31, 2013Not later than 1 year $ 18,228 $ 17,887Later than 1 year but not later than 5 years 41,286 51,361Later than 5 years 33,022 35,829 $ 92,536 $ 105,077

115

(28)Non-cash transactions Non-cash flows from investing and financing activities:

For the years ended December 31, 2014 2013 Long-term liabilities maturing within one year $ 296,471 $ 196,471

7.RELATED PARTY TRANSACTIONS (1)Significant transactions and balances with related parties

A.Operating revenue: For the years ended December 31, 2014 2013 Sales of goods:

Associates $ 3,391 $ 28,008Other related parties 525,846 528,446

Total $ 529,237 $ 556,454

The selling prices charged to the above related parties are not materially different from those charged to non-related parties. For the years ended December 31, 2014 and 2013, the credit term was 66~136 days and 45~136 days for the related parties respectively, and 90~150 days for the non-related parties for both periods.

B.Purchases: For the years ended December 31, 2014 2013 Purchases of goods:

Associates $ 158 $ 88Other related parties 1,079,669 1,409,423

Total $ 1,079,827 $ 1,409,511

The purchase prices charged by the above related parties were not materially different from those charged by non-related parties. For the years ended December 31, 2014 and 2013, the credit term was 60~120 days for the related parties for both periods, and 90~120 days for the non-related parties for both periods.

C.Notes receivable: December 31, 2014 December 31, 2013 Receivables from related parties:

Other related parties $ 252 $ -

D.Accounts receivable: December 31, 2014 December 31, 2013 Receivables from related parties:

Associates $ 2,659 $ -Other related parties 154,653 201,959

Less:Allowance for doubtful accounts ( 713) - Total $ 156,599 $ 201,959

E.Accounts payable: December 31, 2014 December 31, 2013 Payables to related parties:

Associates $ 128 $ 19Other related parties 406,854 438,819

Total $ 406,982 $ 438,838

116

(2)Key management compensation For the years ended December 31, 2014 2013 Salaries and other short-term

employee benefits $ 47,288 $ 41,951Termination benefits - -Post-employment benefits 752 603Other long-term benefits - -Share-based payments 836 2,338Total $ 48,876 $ 44,892

8.PLEDGED ASSETS The Group’s assets pledged as collateral are as follows:

Book value Purpose of pledge

Pledged assets December 31,

2014 December 31,

2013 Creditor Bank Type

Restricted assets- Time deposits, shown as "other current assets"

$ 20,860 $ 20,860 Chang Hwa Commercial Bank

Lease deposits


843,625 878,555 Taiwan Cooperative Bank and 9 other banks

Long-term loans

Property, plant and equipment and land-use rights, shown as "other non-current assets"

73,937 76,946 Chung Hsin Bank (Mainland China)

Short-term loans


440,320 540,696 Chinatrust Commercial Bank

Long-term loans

$ 1,378,742 $ 1,517,057

9.SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS (1)As of December 31, 2014, the guarantees provided by the Group through banks were as

follows: Guarantor Nature of Guarantee Amount

Chang Hwa Commercial Bank Customs duty $ 19,000Mega International Commercial Bank Product performance bond and warranty 4,735 $ 23,735

(2)As of December 31, 2014, the outstanding letters of credit issued for the importation of raw materials and machinery were as follows:

Currency Amount NTD $ 27,575JPY 30,136USD 1,114

(3)Operating lease commitments: See Note 6(27).

(4)Pursuant to the syndicated loan facility agreement entered into by the Company with Taiwan Cooperative Bank and 9 other banks, the Company is required to maintain its every half-year current ratio at 100% or above, debt ratio at 150% or below, interest coverage ratio at 300% or above and net value of tangible assets at $5 billion or above. If the Company breaches the above debt covenants, it is required to adjust interest rates as committed in the

117

agreement. If the Company fails to improve its interest rates before examination day, the Company will violate the above debt covenants.

(5)As of December 31, 2014 and 2013, the promissory notes issued by the Company and CS Bright Corporation for loans, performance guarantee for purchases and loans granted for subsidiaries amounted to $6,860,582 and $7,398,629, respectively.

10.SIGNIFICANT DISASTER LOSS None.

11.SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE As of March 23, 2015, the Company’s Board of Directors had resolved to sell the plant, accessory equipment and land-use rights of the subsidiary, Opto Tech Semiconductor (Ningbo) Co., Ltd., to a non-related party. The contract amount is RMB 62,750 thousand dollars as approved by the Board of Directors. As a result, the Group will recognise a loss on disposal of assets amounting to approximately RMB 6,000 thousand dollars.

12.OTHERS (1)Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt. As of December 31, 2014 and 2013, the gearing ratios was (22.37%) and (16.53%), respectively.

(2)Financial instruments A.Fair value information of financial instruments

The Group used the book value of financial instruments measured at cost (including notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable and other payables) as its reasonable fair value. The fair value of long-term loans is based on the present value of expected future cash flows. Since long-term loans have floating interest rates, the carrying value is equivalent to the fair value. For information of financial instruments measured at fair value, please refer to Note 12(3).

B.Financial risk management policies a) The Group’s activities expose it to a variety of financial risks: market risk (including

foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.

b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. During the implementation of such plans, the Group must provide guiding principle for overall financial risk management and segregation of duties.

c) Market risk Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and JPY.

118

Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group treasury. The expired dates of these forward foreign exchange contracts are shorter than 6 months and are not accounted for under hedge accounting. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

As the foreign operations are strategic investments, the Company does not hedge for them.

The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other subsidiaries’ functional currency: RMB). 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 Sensitivity Analysis

Foreign currency amount

(in thousands) Exchange

rate Book value

(NTD)

Extent of

variation

Effect on profit or

loss

Effect on

equity(Foreign currency: functional currency)

Financial assets Monetary items

USD : NTD $ 58,148 31.60 $ 1,837,477 1% $ 18,375 $ -JPY : NTD 835,721 0.2626 219,460 1% 2,195 -USD : RMB (Note) 8,304 6.204 262,406 1% 2,624 -

Non-monetary items : None Financial liabilities Monetary items

USD : NTD $ 45,053 31.70 $ 1,428,180 1% $ 14,282 $ -JPY : NTD 1,014,628 0.2666 270,500 1% 2,705 -USD : RMB (Note) 7,391 6.204 233,556 1% 2,336 -

Non-monetary items : None December 31, 2013 Sensitivity Analysis

Foreign currency amount

(in thousands) Exchange

rate Book value

(NTD)

Extent of

variation

Effect on profit or

loss

Effect on

equity(Foreign currency: functional currency)

Financial assets Monetary items


Non-monetary items : None Financial liabilities Monetary items


Non-monetary items : None

119

Note：If the consolidated entities’ functional currency is not NTD, the foreign currency denominated assets and liabilities of the consolidated entities should be disclosed. For example, when the functional currency of a subsidiary is RMB, its USD foreign currency positions should also be disclosed.

Price risk

The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed to commodity price risk. 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 domestic funds, equity securities of listed company or unlisted company had increased/decreased by 5%, 20% or 10%, respectively, with all other variables held constant, post-tax profit for the years ended December 31, 2014 and 2013 would have increased/decreased by $19,190 and $9,161, 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 $67,295 and $62,634 as a result of gains/losses on equity securities classified as available-for-sale.

Interest rate risk

The Group’s interest rate risk arises from long-term loans. Loans issued at floating rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at floating rates. During the years ended December 31, 2014 and 2013, the Group’s loans at floating rate were denominated in NTD and USD.

At December 31, 2014 and 2013, if interest rates on loans had been 100 basis point higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2014 and 2013 would have been $12,723 and $14,342 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate loans.

b)Credit risk i. 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 analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors, the utilisation 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 operating activities, including outstanding receivables.

ii. As the counterparties of deposits and other financial instruments are creditworthy banks and financial institutions with good rating, there is no significant doubt arising from default and credit risk.

iii As of December 31, 2014 and 2013, the Group’s 10 largest customers accounted for 62% and 60% of the balance of the Group’s accounts receivable, respectively. The centralized credit risk of other accounts receivable is not relatively significant.

iv. Ageing analysis of financial assets that were overdue but not impaired: Please refer to Note 6(4).

v. The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.

120

c) Liquidity risk i. Cash flow forecasting is performed in the operating entities of the Group and

aggregated by Group treasury. 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 at all times.

ii. The table below analyses the Group’s non-derivative financial liabilities and 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.

Between Between Between

Less than 1 and 2 2 and 3 3 and 5 Over 5

1 year years years years years

Short-term loans 924,225$ -$ -$ -$ -$

Notes payable 3,402 - - - -

Accounts payable 1,176,988 - - - -

(including related parties)

Other payables 457,922 - - - -

Long-term loans 325,429 247,325 997,200 - -

(including current portion)

December 31, 2014

Non-derivative financial liabilities：

Between Between Between

Less than 1 and 2 2 and 3 3 and 5 Over 5

1 year years years years years

Short-term loans 850,351$ -$ -$ -$ -$

Notes payable 21,476 - - - -

Accounts payable 1,206,162 - - - -

(including related parties)

Other payables 431,824 - - - -

Long-term loans 227,741 322,331 244,663 979,761 -

(including current portion)

December 31, 2013

Non-derivative financial liabilities：

Derivative financial liabilities： As of December 31, 2014 and 2013, the periods of derivative financial liabilities are all less than 1 year.

(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. 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.

121

December 31, 2014 Level 1 Level 2 Level 3 Total

Financial assets:Financial assets at fair value through profit or loss Domestic funds 462,413$ -$ -$ 462,413$

Available-for-sale financial assets

Equity securities 50,165 - 572,621 622,786

Total 512,578$ -$ 572,621$ 1,085,199$

Financial liabilities:

Financial liabilities at fair value through profit or loss

Forward exchange contracts -$ 2,492$ -$ 2,492$

December 31, 2013 Level 1 Level 2 Level 3 Total

Financial assets:

Financial assets at fair value through profit or loss

Domestic funds 220,744$ -$ -$ 220,744$

Available-for-sale financial assets

Equity securities 36,150 - 554,038 590,188

Total 256,894$ -$ 554,038$ 810,932$

Financial liabilities:

Financial liabilities at fair value through profit or loss

Forward exchange contracts -$ 1,631$ -$ 1,631$

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 maximise 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 forward foreign exchange contracts is determined using forward

exchange rates at the balance sheet date, with the resulting value discounted back to present value.

c)Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

122

F.The following table presents the changes in level 3 instruments for the years ended December 31, 2014 and 2013. 2014 2013

At January 1 $ 554,038 $ 533,768Acquired 18,557 26,270Impairment loss - ( 6,000)Net exchange differences 26 - At December 31 $ 572,621 $ 554,038

13.SUPPLEMENTARY DISCLOSURES (1)Significant transactions information

A.Loans to others:

Item Value

1CS Bright Corp.

Opto Plus

Otherreceivables-Relatedpart ies

Yes 40,349$ 40,349$ 40,349$ - 1 200,634$ None -$ None -$ 200,634$ 17,877$ Note 6

Collateral

Limit onloans

granted to asingle party

(Note 3)

Ceiling ontotal loans

granted(Note 4、5) Remark

Allowancefor

doubtfulaccounts

Number(Note 1) Creditor Borrower

Is arelatedparty

Maximumoutstanding

balance duringthe year endedDecember 31,

2014

Balance atDecember31, 2014

Actualamount

drawn downInterest

rate

Natureof

loan(Note 2)

Amountof

transactionswith

the borrower

Reasonfor

short-term

financing

Generalledger

account

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1) The Company is “0”.

(2) The subsidiaries are numbered in order starting from “1”.

Note 2: Relationship with the borrower is classified into the following categories:

(1) The borrower having business relationship is numbered as “1”.

(2) The borrower having the needs of short-term financing is numbered as “2”.

Note 3: Limit on loans granted to a single party, which has the needs of short-term financing with the Company should not exceed 10% of the Company’s latest net asset value. Besides, limit on loans granted to a single party, which has business relationship with the subsidiaries should not exceed total amount that the two sides trade in the recent year.

Note 4: Total amount of loans of the Company should not exceed 40% of the net value of the Company’s latest net asset value, and total amount of loans of the subsidiaries should not exceed 20% of the net values of the subsidiaries’ latest net asset values.

Note 5: At first, the amount of loans which CS Bright Corp. (the indirect subsidiary of Opto Tech Corp.) granted to Opto Plus (the indirect subsidiary of Opto Tech Corp.) did not exceed the ceiling on total loans granted. However, due to disadvantageous operating conditions and decreasing net asset value of CS Bright Corp., the loans granted have exceeded the limit.

Note 6: The transaction is eliminated in the consolidated financial statements.

123

B.Endorsements and guarantees provided for the year ended December 31, 2014:

Companyname

Relationshipwith theendorser/guarantor(Note 2)

0 Opto Tech Corp.

Opto Tech (Suzhou) Co., Ltd.

3 1,512,511$ 379,800$ 379,800$ 231,045$ - 5.02 3,781,277$ Y N Y -

0 " CS Bright Corp.

3 1,512,511 79,495 79,495 45,000 - 1.05 3,781,277 Y N N -

0 " Opto Tech (Macao) Co., Ltd.

3 1,512,511 63,300 63,300 - - 0.84 3,781,277 Y N N -

0 " Opto Plus Technology Co., Ltd.

3 1,512,511 189,900 189,900 174,147 - 2.51 3,781,277 Y N Y -

Provision ofendorsements

/guaranteesto the partyin Mainland

China Remark


/guaranteesby subsidiary

to parentcompany

Number(Note 1)

Endorser/guarantor

Limit onendorsements/

guaranteesprovide for asingle party

(Note 3)

Maximumoutstanding

endorsement/guarantee

amount duringthe year endedDecember 31,

2014

Outstandingendorsement/

guaranteeamount at

December 31,2014

Actual amountdrawn down

Amount ofendorsements/

guaranteessecured with

collateral

Ratio ofaccumulated

endorsement/guarantee

amount to netasset value ofthe endorser/

guarantorcompany

Ceiling on totalamount of

endorsements/guaranteesprovided(Note 3)


/guaranteesby parent

company tosubsidiary

Party beingendorsed/guaranteed

Note 1: The numbers filled in for the endorsement/ guarantees provided by the Company or subsidiaries are as follows:

(1) The Company is “0”.

(2) The subsidiaries are numbered in order starting from “1”.

Note 2: Relationship with the endorser/guarantor is classified into the following categories:

(1) Having business relationship.

(2) The Company owns more than 50% voting shares of the endorsed/guaranteed company.

(3) The Company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(4) The endorsed/guaranteed company directly or indirectly owns more than 50% voting shares of the endorser/guarantor.

(5) Mutual guarantees in the same trade due to construction undertaking pursuant to the contracts.

(6) Due to joint venture, each shareholder provides guarantees for the company in proportion to its ownership.

Note 3: Under the Company’s “Procedures for Provision of Endorsements and Guarantees”, the Company’s total guarantees and endorsements to others should not exceed 50% of the Company’s net asset value, and total guarantees and endorsements provided for a single party should not exceed 20% of the Company’s net asset value. The calculation is shown below:

(1) $7,562,554 thousand dollars × 20% ＝ $1,512,511 thousand dollars

(2) $7,562,554 thousand dollars × 50% ＝ $3,781,277 thousand dollars

124

C.Marketable securities held as at December 31, 2014 (not including subsidiaries, associates and joint ventures): For the information of marketable securities, the book value was calculated based on the exchange rate as of December 31, 2014.

Securities held by

Type of marketable securities

Name of marketable securities

Relationship with the securities issuer General ledger account

As of December 31, 2014

Number of shares Book value Ownership (%) Fair value Remark

Opto Tech Corp. Stock

United Radiant Technology Corp.

Subsidiary is the director of this company.

Available-for-sale financial assets-non-current

3,950,425 $ 33,184 3.71 $ 33,184 None

〞〞

AXT, Inc. None. 〞 124,100 - - - Note 1

〞〞

Nichia Corp. This company is the parent company of Nichia Taiwan Corp.

〞 10,000 405,272 0.47 405,272 None

〞〞

Lu Zhu Development Co., Ltd.

None. 〞 12,551,625 100,212 6.38 100,212 None

〞〞

Giga Epitaxy Technology Corp.

The Company is the director of this company.

〞 13,794,000 24,393 19.00 24,393 None

〞〞

Shin-Etsu Opto Electronic Co., Ltd.


〞 2,000,000 41,980 10.00 41,980 None

〞〞

Top Increasing Technology Co., Ltd.

None. 〞 10,000,000 - 16.67 - None

〞〞

Pictologic Inc. None. 〞 400,000 - 1.71 - None

〞〞

LT LIGHTING (TAIWAN) Corp.

None. 〞 119,628 - 1.16 - None

〞

〞

Action Media Technologies, Inc.

None. 〞 75,000 - 1.96 - None

Ho Chung Investment Co.,Ltd.

stock

Opto Tech Corp. Parent company Financial assets at fair value through profit or loss - current

1,107,276 $ 14,837 0.20 $ 14,837 Note 2


〞

United Radiant Technology Corp.


Available-for-sale financial assets-non-current

2,021,568 16,981 1.90 16,981 None

Opto Tech (Suzhou) Co.,Ltd.

others

Jin Misa Technology Co., Ltd

None. 〞 - 764 15.00 764 None

Note 1 : The 124,000 shares of AXT, Inc. which are owned by the Company, are preferred stocks. Note 2: The transaction is eliminated in the consolidated financial statements.

D.Aggregate purchases or sales of the same securities reaching NT$300 million or 20% of paid-in capital or more: None E.Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None F.Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None

125

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

Transaction

Differences in transaction terms compared to third

party transactions Notes/accounts

receivable (payable)

Purchaser/seller

Counterparty Relationship with the

Company Purchases

(sales)

Amount

Percentage of total purchases

(sales) Credit term Unit price Credit term

Balance

Percentage of total

notes/accounts receivable (payable)

Remark Opto Tech Corp. Nichia Taiwan Corp.

This company is the director of the Company

Purchases $ 827,004 26 120 days Equivalent to normal transaction

- ($ 359,821) ( 31) None.

Opto Tech Corp. Shin-Etsu. Opto Electronic Co., Ltd.

The Company is the director of this company

Purchases 115,997 4 90 days Equivalent to normal transaction

- ( 21,783) ( 2) None.

Opto Tech Corp. Nichia Taiwan Corp.

This company is the director of the Company

Sales ( 208,300) ( 3) 136 days Equivalent to normal transaction

- 72,149 4 None.

Opto Tech Corp. Shin-Etsu. Opto Electronic Co., Ltd.

The Company is the director of this company

Sales ( 317,294) ( 5) 90 days Equivalent to normal transaction

- 79,823 4 None.

H.Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None I.Derivative financial instruments undertaken during the year ended December 31, 2014: See Note 6(2). J.Significant inter-company transactions during the year ended December 31, 2014:

General ledger account Amount Transaction terms

Percentage ofconsolidated total

operating revenuesor total assets

1 CS Bright Corp. Opto Plus 1 Accounts receivable 64,439$ Note 4 1%2 Opto Plus CS Bright Corp. 2 Sales 200,634 Note 4 3%

Number Company name Counterparty Relationship

Transaction

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’. (2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary. (2)Subsidiary to parent company. (3)Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The unit sales prices are equivalent to third parties. The credit term was 30~136 days for the related parties.

Note 5: The unit purchase prices are equivalent to third parties. The credit term was 30~120 days for the related parties.

Note 6: The disclosure standard requires above $50,000 thousand for the transaction amount. Only assets and revenue are disclosed, related transactions are not disclosed.

Note 7: The transactions between the Company and subsidiaries are eliminated.

126

(2)Information on investees (not including investees in Mainland China) The information of investee companies was calculated based on the exchange rate as of December 31, 2014, except for the net income (loss), which applied the average exchange rate of each month for the year ended December 31, 2014.

Investor Investee

Location

Main business activities

Initial investment amount Shares held as at December 31, 2014Net income (loss) of the

investee

Investment income (loss) recognized by

investor Remark Balance as of

12/31/2014Balance as of

12/31/2013 No. of shares

Ownership (%) Book value

Opto Tech Corp.

Opto Technology International Group Co., Ltd.

Cayman Islands

Holding Company $1,120,084 $1,090,254 34,769,90

6

100.00 $ 624,327 ($

206,555)

($ 206,555) Subsidiary of the Company (Note)

Opto Tech Corp.

Ho Chung Investment Co., Ltd.

Taiwan Investment business 310,300 288,300 6,494,000 100.00 120,171 686 ( 754) Subsidiary of the Company (Note)

Opto Tech Corp.


Taiwan Investment business 125,687 125,687 12,568,70

6

100.00 270,647 16,925 16,925 Subsidiary of the Company (Note)

Opto Tech Corp.

Source Ever Limited B.V.I. International trading 5,725 5,725 200,001 100.00 1,929 111 111 Subsidiary of the Company (Note)

Opto Tech Corp.

Viking Tech Corporation

Taiwan R&D, Manufacture and Sales of SMD Chip Resistor, DIP Power Resistor, High Frequency Ceramic Chip Inductor, SMD Ferrite Inductor, Power Inductor, Capacitor Integrated Passive Devices

324,977 291,301 9,189,994 7.83 193,397 148,846 11,689 Investment accounted for using equity method


VML TECHNOLOGIES B.V

Holland Manufacture and Design of system products

37,436 37,436 6,000 25.00 - - - Investment accounted for using equity method




57,268 45,468 3,220,120 2.74 67,765 148,846 4,096 Investment accounted for using equity method


CS Bright Corporation

Taiwan Manufacture and Sales of Displays, SMD Lamps and other LED related products

50,170 50,170 4,993,562 99.87 85,833 6,900 6,891 Indirect subsidiary of the Company (Note)




$ 107,604 $ 78,651 7,901,120 6.73 $ 166,273 $ 148,846 $ 10,050 Investment accounted for using equity method

127

Investor Investee

Location

Main business activities

Initial investment amount Shares held as at December 31, 2014Net income (loss) of the

investee

Investment income (loss) recognized by

investor Remark Balance as of

12/31/2014Balance as of

12/31/2013 No. of shares

Ownership (%) Book value

CS Bright Corporation

Bright Investment International Ltd.

B.V.I. Investment business 171,332 171,332 5,100,000 100.00 ( 3,664) ( 2,944) ( 2,944) Indirect Subsidairy (Notes)

Bright Investment International Ltd.

Everyung Investment Ltd.

Samoa Investment business 168,421 168,421 5,000,000 50.00 35,336 ( 3,913) ( 1,966) Indirect subsidiary (Note)


Opto Tech (Cayman) Co., Ltd.

Cayman Islands

Holding Company 316,203 316,203 9,669,906 100.00 7,644 ( 88,624) ( 88,624) Indirect subsidiary (Note)


Opto Grand (Cayman) Co., Ltd.

Cayman Islands

Holding Company 651,721 651,721 20,000,000 100.00 578,192 ( 116,326) ( 116,326) Indirect subsidiary (Note)


Everyung Investment Ltd.

Samoa Investment business 148,910 118,920 5,000,000 50.00 35,336 ( 3,913) ( 1,947) Indirect subsidiary (Note)

Opto Tech (Cayman) Co., Ltd.

Opto Tech (Macao) Co., Ltd.

Macao International trading 4,096 4,096 - 100.00 14,702 ( 600) ( 600) Indirect subsidiary (Note)

Note : The investments are eliminated in the consolidated financial statements.

128

(3)Information on investments in Mainland China A. Information on Mainland China investments for the year ended December 31, 2014：

Investee in Mainland China Main activities Paid-in capital

Investment method (Note 1)

Accumulated amount of

remittance toMainland

China as of January 1,

2014

Amount remitted

to Mainland China

during the period

Amount remitted back to Taiwan

during the period

Accumulated amount of

remittance to Mainland

China as of December 31,

2014

Net income of investee

as of December 31, 2014

Ownership held by the Company(direct and indirect)

Investment income (loss)

recognised by the

Company for the year

ended December 31, 2014 (Note 2)

Book value of

investments in Mainland China as of December 31, 2014

Accumulated amount of investment

income remitted back to Taiwan

as of December 31,

2014

Remark Opto Tech (Suzhou) Co., Ltd.

Research, Design and Manufacture of LED Display, Wireless Communication Equipment and related parts

$ 294,708

(2) (Cayman island)

$ 294,708

$ - $ -

$ 294,708 ($ 88,560) 100.00 ($ 88,560) ($ 16,399)

$ -

-

Opto Tech Semiconductor (Ningbo) Co., Ltd.

Manufacture and Sales of LED and Electronic products

651,721 (2) (Cayman island)

651,721 - - 651,721

( 116,352) 100.00 ( 116,352) 577,747

- -

Opto Plus Technology Co., Ltd.

Manufacture and Sales of LED and Electronic products

317,341 (2) (Samoa)

287,341 30,000 - 317,341

( 3,922) 99.94 ( 3,913) 70,672 - -

Note 1: The investment methods are classified into three categories as follows:

(1) Directly investing in the investee company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee company in Mainland China.

(3) Others.

Note 2: The investment income or loss was recognised by indirect weighted ownership based on the financial statements of these investees which were audited by the independent accountants of the parent company for

the corresponding periods.

B. Investments in Mainland China for the year ended December 31, 2014:

Name of company

Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2014

Investment amount approved by the Investment Commission of the

Ministry of Economic Affairs (MOEA)

Ceiling on investments in Mainland China imposed by

the Investment Commission of MOEA Opto Tech

Corp. $ 1,263,770 $ 1,264,278 $ 4,537,532

129

C. The significant events occurring due to investment through the third area and the investees in Mainland China for the year ended December 31, 2014 are as follows: (1)The Company sold inventories to Opto Tech (Suzhou) Co., Ltd. during the year ended December

31, 2014 amounting to $433, comprising 0.007% of net sales of the Company. As of December 31, 2014, accounts receivable from Opto Tech (Suzhou) Co., Ltd. was $6,763, comprising 0.41% of the accounts receivable of the Company. The Company sold finished goods to Opto Plus Technology Co., Ltd. during the year ended December 31, 2014 amounting to $12,228, comprising 0.20% of net sales of the Company. As of December 31, 2014, accounts receivable from Opto Plus Technology Co., Ltd. was $2,218, comprising 0.13% of the accounts receivable of the Company.

(2)The Company purchased components from Opto Tech (Suzhou) Co., Ltd. during the year ended December 31, 2014 amounting to $151, comprising 0.005% of net purchases of the Company. As of December 31, 2014, accounts payable from Opto Tech (Suzhou) Co., Ltd. was $0.

D. The investments and transactions are eliminated in the consolidated financial statements.

14.SEGMENT INFORMATION (1)General information

The Group identifies the entity’s operating segments based on the decision of the chief operating decision-maker and in accordance with IFRS 8 “Operating Segments”. For the years ended December 31, 2014 and 2013, operating segments required to be disclosed are categorized as LED and Silicon Sensor Chips Group, Displays and Lighting Group and Packaging Business Group.

(2)Measurement of segment information The Group’s segment is measured by Board of Directors with operating profit (loss) before tax, which is used as a basis for the Group in assessing the performance of the operating segments. The accounting policies of the operating segments are in agreement with the significant accounting policies summarised in Note 4.

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


LED and Silicon Sensor Chips

Group Displays and

Lighting Group

Packaging Business

Group Other

segments

Total Revenue from external

customers $ 4,889,476 $1,138,635 $ 283,534 $ 5,738 $6,317,383Segment income (loss) $ 812,960 ($ 6,916) ($ 111,350) ($ 26,944) $ 667,750


LED and Silicon Sensor Chips

Group Displays and

Lighting Group

Packaging Business Group

Other segments

Total Revenue from external

customers $ 5,041,954 $1,126,699 $ 222,036 $ 905 $6,391,594Segment income (loss) $ 585,204 $ 15,406 ($ 52,313) ($ 30,095) $ 518,202

(4)Reconciliation for segment income (loss) a)The revenue from external customers reported to the chief operating decision-maker is

measured in a manner consistent with that in the statement of comprehensive income. b)A reconciliation of reportable segment income or loss to the income/(loss) before tax from

continuing operations is measured in a manner consistent with that in the statement of comprehensive income.

130

(5)Information on products and services External revenue mainly comes from sales of semiconductor, system and packaging products. Summary of balance of revenue is as follows:


Semiconductor products revenues LED $ 2,803,057 $ 3,187,343Silicon sensor 2,086,419 1,854,611

System product revenues 1,138,635 1,126,699Packaging product revenues 283,534 222,036Others 5,738 905 $ 6,317,383 $ 6,391,594

(6)Geographical information Geographical information for the years ended December 31, 2014 and 2013 is as follows: For the years ended December 31, 2014 2013

Revenues Non-current

assets

Revenues Non-current

assets Taiwan $ 2,219,715 $ 2,843,494 $ 2,277,460 $ 2,962,528Mainland China 2,091,436 662,660 2,128,676 752,933Other countries 2,006,232 - 1,985,458 - $ 6,317,383 $ 3,506,154 $ 6,391,594 $ 3,715,461

(7)Major customer information For the years ended December 31, 2014 and 2013, revenue from each customer were not more than 10% of consolidated operating revenues.

131

VII、 Review of Financial Conditions, Financial Performance, and Risk Management

1. Analysis of Financial Status Unit: NT$ thousands

Year Item 2014 2013

Difference Amount %

Current Assets 7,402,548 7,038,371 364,177 5.17

Funds and Investments 1,050,221 949,240 100,981 10.64

Property, plant and equipmen 3,398,412 3,601,183 (202,771) (5.63)

Other Assets 294,702 392,339 (97,637) (24.89)

Total Assets 12,145,883 11,981,133 164,750 1.38

Current Liabilities 2,963,709 2,798,072 165,637 5.92

Long-term Liabilities 1,616,066 1,922,766 (306,700) (15.95)

Total Liabilities 4,579,775 4,720,838 (141,063) (2.99)

Capital 5,456,621 5,456,621 - -

Capital reserves 640,826 624,100 16,726 (2.68)

Retained Earnings 1,434,986 1,203,440 231,546 19.24

Other equity interest 30,121 (27,393) 57,514 209.95

Non-controlling interest 3,554 3,527 27 0.77

Total shareholders’ Equity 7,566,108 7,260,295 305,813 4.21 ◎ Analysis of changes in financial ratios: Other assets decreased by 24.89%, mainly due to decrease in deferred tax assets.

2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2

years Unit: NT$ thousands

Year

Item 2014 2013

Increase（Decrease）

Ratio of change ％

Operating revenue 6,317,383 6,391,594 (74,211) (1.16)Operating cost 4,645,461 4,982,481 (337,020) (6.76)Gross profit 1,671,922 1,409,113 262,809 18.65Operating expense 925,523 922,066 3,457 0.37Income from operations 746,399 487,047 259,352 53.25Non-operating income (78,649) 31,155 (109,804) (352.44)Income before tax 667,750 518,202 149,548 28.86Tax Benefit (Expense) 106,059 98,155 7,904 8.05Net income (Loss) 561,691 420,047 141,644 33.72◎ Analysis and explanation of changes in ratio of increase or decrease during latest 2 years： 1. Non-operating income:Mainly due to the loss incurred by the asset impairment by the Company’s

subsidiary. 2. Income from operations,Income before tax and Net income:Mainly due to a substantial decline in

operating costs.

(2) Effect of change on the company’s future business and future response plans: Please refer to P. 1 of the annual report for more details.

132

3. Analysis of Cash Flow (1) Cash Flow Analysis for the Current Year

Year Item

2014 2013 Ratio of increase

of decrease % Cash flow ratio(%) 36.06 22.17 62.65 Cash Flow Adequacy Ratio(%) 123.16 139.03 （11.44） Cash Reinvestment Ratio(%) 4.33 2.25 92.44

1. Cash flow ratio:Mainly due to increase in net cash flow 2. Cash Reinvestment Ratio:Mainly due to increase in capital expenditure.

(2) Cash Flow Analysis for the Coming Year Unit: NT$ thousands

Cash and Cash Equivalents,

Beginning of Year

Net Cash Flow from Operating

Activities Cash Outflow

Cash Surplus (Deficit)

Leverage of Cash Deficit Investment

Plans Financing Plans

3,840,208 917,274 923,071 3,834,411 －－ 1.Analysis of change in cash flow in the current year:

A. Operating activities:The expectation for continuous operating growth resulted in net cash inflow from operating activities.

B. Investing activities:The expectation for continuous reinforcement of production capacity resulted in increase of capital expenditure.

C. Financing activities: It mainly resulted from cash dividend distribution and loan repayments. 2. Remedy for cash shortage and its liquidity analysis：None

4. Major Capital Expenditure Items and Source of Capital:None.

5. Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year:

(1) Investment loss of OPTOTECH in 2014 is mainly due to loss recognition from part of reinvestment operating performance unable to increase.

(2) OPTOTECH will continue to devote its efforts to growing its core business. For its Investment policy, we will place focus on following the product trend to give up and down-stream integration. At the same time, we will persistently supervise and assist its subsidiaries, so as to accelerate its speed to make more profits. In the future, it will be in conjunction with the market’s overall trend to timely adjust its product policy and reinforce its investment effects.

6. Analysis of Risk Management (1) Risk organizational structure

In order to strengthen its operating performance and elevate its risk management, OPTOTECH has integrated its respective units, identified the potential risks which may impact our operating and profit and taken proper measures to control, manage and supervise in accordance with statutory laws and overall environmental trends. Based on varying risk characteristics and levels, OPTOTECH has established a variety of risk management mechanisms in an attempt to effectively control the risks. President Office: In charge of formulation, promotion and operation of the risk management plan, and evaluation of mid and long term investment effects, so as to reduce strategic risks. Management Division: In charge of human resources deployment and management, execution of a variety of safety operations, operation of maintaining system structure, establishment and maintenance of a safe and health environment, and media PR as well as external communication, etc. Sales & Marketing Division: In charge of formulating marketing strategy, promoting products, collecting and compiling market information, building customer relationship and handling as well as tracing receivables, so as to reduce the business operating risk.

133

Financial accounting Division: Based on financial risk, liquidity risk and credit risk to map out various strategies, and following statutory laws, policies and market changes to take up varying countermeasures, so as to reduce the financial risk. R&D Division: In charge of new product development risk evaluation and control of R&D schedule. Information Division: In charge of information safety control and protection, so as to reduce the information safety risk. Manufacturing Division: In charge of the management relating to production, manufacturing, equipment maintenance, labor safety and health, so as to reduce the production risk. Auditing office: Based on the internal control and annual audit plan to routinely audit respective units, so as to fulfill management related mechanisms and carry out various risk management controls.

(2) Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Unit: NT$ thousands

Item 2014 Ratio on net revenue Ratio on net operating

profit Net interest income or expense

(32,444) 0.51％ 4.35％

Net foreign exchange gain or loss

24,520 0.39％ 3.29％

Operating revenue 6,317,383Income from operations 746,399

A. Interest rate Since OPTOTECH has good financial status, sound system and good as well as close long term cooperation with its banks, it has obtained better interest rates. At the same time, OPTOTECH has closely watched the trend of market interest rates and adjusted its position of its floating rate loans and fixed rate loans at any time when necessary. By taking risks into consideration, OPTOTECH will still stably handle its cash management.

B. Foreign exchange rates Given that OPTOTECH has the substantive demand for foreign currencies (such as U.S. dollars and Japanese yen, etc.), except for reducing required hedge position through natural hedge, lowering the impact of changes in currency rates on operating gain or loss, we will use spot swap and forward foreign exchange contracts and currency options to hedge the risk resulting from exchange rate volatility.

C. Inflation The quotations provided by OPTOTECH for its clients or suppliers are mostly flexibly adjusted according to the market status. Hence, OPTOTECH is not significantly affected by inflation. Nevertheless, it will devote its efforts to improve its product structure and production process while continuously executing the cost efficiency plan to counter the problem of inflation.

(3) 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: A. Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk,

High-leveraged Investments: OPTOTECH has handled its financial affairs with stability, so it has a sound financial base. It does not give high leverage investment.

134

B. Lending or Endorsement Guarantees: (A) Our endorsement guarantee and capital loans to others are mainly made to meet business

requirements of its re-investment companies. Based on the laws and regulations stipulated by Securities and Futures Bureau, OPTOTECH has instituted “Procedures for Endorsement and Guarantee” and “Procedures for Lending Funds to Other Parties”, and evaluated and controlled risks through internal responsible units. At the same time, based on the “Regulations Governing Establishment of Internal Control Systems by Public Companies” stipulated by Securities and Futures Bureau, the audit unit of OPTOTECH has also laid down relevant systems for management and risk evaluation and regular audits of execution status.

(B) OPTOTECH has currently only endorsed and guaranteed the affiliated enterprises under its control. The endorsement and guarantee items are mostly in the nature of financing, Since its affiliated enterprises have healthy finance and have been stably operating, it has never inflicted any loss from endorsement and guarantee.

C. Derivatives Transactions: (A) OPTOTECH has engaged in derivative product trading in accordance with its regulated

“Procedures for Acquistion or Disposal Assets”. (B) The main purpose for OPTOTECH to engage in derivative financial product transactions is to

hedge our operating and financial risk. OPTOTECH assets in US dollar is greater than liabilities, and the NT dollar exchange rate is rising such that there is loss on exchange.

(C) To meet our future requirements, we will engage in the transactions related to forward foreign exchange and currency swap contracts and options, and adjust its foreign asset and liability positions as needed, so as to hedge the risk resulting from changes in exchange rates.

(4) Future Research & Development Projects and Corresponding Budget Unit：NTD

Research projects Present progress

Expected research

expenditure in the future

Expected completion schedule

Major factors that will impact future success

800V zero-crossing & non-zero-crossing shutter fluid product development in compliance with the THB verification

In the process of development and design

1,000,000 2015/12 Process control ability and product characteristics.

Development of high power thyristor components


2,000,000 2015/12 Product design and process control capability

Development of Pressure sensor In the process of development and design


Development of III-V based Schottky diode



Development of APD In the process of development and design


Development of Visible light detector In the process of development and design

500,000 2015/12 Product design and process control capability

High power InGaN LED flip chip die In trial production 7,000,000 2015/12 Capability of key process technology and stability

Development of IR LED custom product group

Process development and customer verification

3,000,000 2015/09 Stability of key process

Development of special angle light engine LED for 3535/5050 packaging assembly

In trial production 2,000,000 2015/05 Angle mold design and production

Established LM-80 certification for high wattage COB product

In trial production 5,000,000 2015/12 Product reliability

Development of LED white die package

In trial production 8,000,000 2015/05 Phosphor process evenness & consistency rate

135

Research projects Present progress

Expected research

expenditure in the future

Expected completion schedule

Major factors that will impact future success

Development of headlight source new product

In the process of development

6,000,000 2015/07 High-performance white light wafer and manufacturing processes yield

Established inorganic UV packaging technology and development & mass production of high intensity UV lamp wattage module plates

In the process of development

5,000,000 2015/10 UV / special wavelength wafer quality and UV-specific inorganic materials

Development of GaNon GaN packaging process & in-house CHIP verification

In trial production 5,000,000 2015/12 Development of GaN wafers & high thermally conductive substrate and the design of optical LENS

(5) Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales: OPTOTECH has complied with government policies and national laws and regulations. The Management division of OPTOTECH has kept abreast of major policies and changes of laws and abided by them. In addition, our business activities and governance directions have also been flexibly and timely adjusted to meet the change of policies, laws and regulations, so as to maintain smooth business operation.By now OPTOTECH has not yet been penalized by supervisor by law or supervisory authority, nor has it suffered any major financial or reputational loss.

(6) Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales: To ensure autonomy and legality in technical application, other than having its R&D workforce develop new techniques, OPTOTECH has also aggressively worked with respective local research institutes on emerging technology, in an attempt to keep its leading position in technology. Furthermore, to prevent its newly developed technology from being taken out a patent by its competitors resulting in loss of enormous business opportunity, we will take lead to aggressively apply for a patent to European and American countries, Japan and mainland China after a new technology being developed, so as to secure its R&D outcome, protect its business interests and reduce its overall operating risk.

(7) The impacts of changes to corporate image on the management of corporate crisis, and the corresponding measures: After the launch of the new brand image in the 30th anniversary of Optotech in 2013, the Company will introduce a new image in 2014 to convey its ideas, re-designing related brand designs. The new brand design will feature "light, sensing, interaction" as the main concepts combining elements such as innovation, dynamism, art and mobile trends in the design. To accommodate the adjustment in brand image of the Company, four items including the graphic designs of printed propaganda for the Company and its products, the corporate website, brand image film and Company introduction film are scheduled for publication in 2015. Our change in enterprise image is to make fine adjustment based on the original vision of the company and brand value, but does not create any impact to the enterprise management philosophy. Also, OPTOTECH continues to promote brand internalization educational training in order to establish the recognition of company among entire staff based on the conveying of corporate vision and brand knowledge, such that all staff can fulfill their duties in their positions while implementing the brand values of our company in terms of “professionalism”, “trust”, “innovation”, and “flexibility”. From the management aspect, our company requires the behaviors of all employees to be in compliance with company’s business philosophy by providing customers with high quality product and service. We must all be in compliance with government laws and regulations, and all management regulations and systems of our company must be formulated and amended according to law in order to surely maintain our corporate image. For the latest year until the publication date of the annual report, there is no incident occurring to affect our corporate image.

136

(8) Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: As of the publication date of the annual report, OPTOTECH had not had any acquisition plan.

(9) Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: In view of business volatility in the industry, the silicon division of OPTOTECH gives a production expansion plan in order to meet the market demand, for which, by analyzing the bottleneck area and expanding major production equipment. Regarding the potential risk after production expansion, other than prudently selecting required hardware for expansion, the silicon division has also carefully observed client order placement status and the world economy as the indicator for risk management. In addition, new product development, market survey and new product application have all been included in the measures to counter the potential risk.

(10) Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration:

A. Our raw materials have all been purchased from more than two suppliers and the individual supplier having the highest supply ratio in terms of the company’s procurement only takes up 25.90% of the company’s total procurement, so the company does not have the risk resulting from too much concentration of goods purchase on an individual supplier. .

B. Our major sales client is an acknowledged firm do not more than taking up 10% of our total sales, so OPTOTECH does not have the risk resulting from too much sales concentration on an individual client.

(11) 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%: Before the publication day of the annual report, there had been no mass equity transfer or replacement from our directors, supervisors or major shareholders holding more than 10% of our shares.

(12) Effects of Risks Relating to and Response to Changes in Control over the Company: As of the publication date of latest year annual reports, there had not been such incident occurring to OPTOTECH.

(13) Litigation or Non-litigation Matters: As of the publication dates of 2013 and 2012 annual reports, there had not been such incident occurring to OPTOTECH.

(14) Other Major Risks: None.

7. Other Major events:None.

VIII、 Special Disclosure

1. Summary of Affiliated Companies

(1) Consolidated business report of affiliated enterprises (Base date：Dec. 31, 2014) Please refer page 137-141

(2) Consolidated financial statements of affiliated enterprises: Please refer the consolidated financial statements and auditors’ report.

(3) Affiliation report:None.

137

A. OPTO Subsidiaries Chart

OPTO TECHNOLOGY INTERNATIONAL

GROUP CO.,LTD. (Cayman) Ho Chung Investment Co.,

Ltd. (Taiwan)

CS Bright Corp.

(Taiwan)

OPTO TECH

(CAYMAN)CO.,LTD.

(Cayman)

OPTO TECH (SUZHOU)

Co.,Ltd (China)

BRIGHT INVESTMENT

INTERNATIONAL LIMITED

EVERYUNG

INVESTMENT LTD.

OPTO Plus Technology Co.,

Ltd.(China)

OPTO GRAND

(CAYMAN)CO.,LTD.

( C ayman)

OPTO TECH Semiconductor

(Ningbo) Co., Ltd. (China)

OPTO TECH (Macao) Co.,

Ltd. (Macao)

100.00% 100.00% 0.20%

99.87%

100.00%

100.00% 100.00% 100.00%

50.00%

100.00% 100.00% 100.00%

Jyu Shin

Investment Co., Ltd.

(Taiwan)

100.00%

OPTOTECH CORP.

SOURCE EVER LIMITED

(BVI)

100.00%

50.00%

138

B. OPTO Subsidiaries Unit: NT$ thousands

Company Date of

IncorporationPlace of Registration Capital Stock Business Activities

Ho Chung Investment Co.,Ltd. 1998.03.24 2F, No. 363, Sec. 2, Gong-Dao 5th Rd., Hsinchu City 64,940 General investment

CS Bright Corp. 1973.03.01 11F, No.659, Bannan Rd., Zhonghe Dist., New Taipei City 49,999Manufacturing and sale of LED

OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD

2002.05.07 3rd Floor, Queensgate House, 113 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands

1,120,084 Holding company

OPTO TECH (Macao) Co., Ltd 2007.02.14 Alameda Dr. Carlos D’ Assumpcao No.258, Praca Kin Heng Long, 13 Andar P , Macao

4,096Distribution of LED system products

OPTO TECH (CAYMAN) CO., LTD 2002.05.07 3rd Floor, Queensgate House, 113 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands

316,203 Holding company

Jyu Shin Investment Co., Ltd. 2008.05.19 2F, No. 363, Sec. 2, Gong-Dao 5th Rd., Hsinchu City 125,687 General investment BRIGHT INVESTMENT INTERNATIONAL LTD.

2002.07.31 TRUSTNET CHAMBERS,P.O.BOX 3444 ROAD TOWN,TORTOLA,BRITISH VIRGIN ISLANDS


EVERYUNG INVESTMENT LTD. 2002.07.31 TRUSTNET CHAMBERS LOTEMAU CENTRE,P.O.BOX1225 APIA,SAMOA


OPTO Plus Technology Co., Ltd. 2002.09.19 No. 696, Shunjiang Rd., Jishan St., Shaoxing City, Zhejiang Province, China

317,341Manufacturing and sale of LED

OPTO TECH (Suzhou) Co., Ltd. 2002.06.24 No. 735, Changjiang Rd., Suzhou Gaoxin Dist., Suzhou City, Jiangsu Province, China

294,708Manufacturing and sale of LED system products

OPTO GRAND (CAYMAN) CO.,LTD.

2007.03.06 Floor 4, Willow House, Cricket Square, P O Box 2804, Grand Cayman KY1-1112, Cayman Islands


OPTO TECH Semiconductor (Ningbo) Co., Ltd.

2007.06.18 No.1, Shan Shan Rd., Wangchun Industrial Zone, Yinzhou District, Ningbo City, Zhejiang Province, China.

651,721Manufacturing and sale of LED

SOURCE EVER LIMITED 2010.04.26 P.O. Box 957,Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands


Note:All amounts involving in foreign currencies were converted into NTD at the exchange rate used for original investments of each company.

C. Data of the shareholders presumed having control or subordinate relationship with the company: None.

139

D. Businesses and related details covered in the overall affiliated enterprises and their labor division status: (A) Businesses covered in the overall affiliated enterprises:

They are mainly LED downstream and application related manufacturing, sales and service footholds, while part of them are investment, share holding and international trading businesses.

(B) Business exchange and labor division among respective affiliated enterprises: (a). In order to expand its business to China and other foreign countries, OPTOTECH has set up

subsidiaries at Macao, Hong Kong, Suzhou and Ningbo respectively to engage in LED downstream and application related manufacturing and sales businesses.

(b). In order to build a well-rounded industrial structure, OPTOTECH has invested in CS Bright Corporation, a downstream manufacturer which has set up subsidiaries in Shaoxing, Zhejiang to produce and sell its products, so as to expand its markets in Mainland China and other foreign countries.

E. Rosters of Director, Supervisor and President of OPTO Subsidiaries

Company Title Name Shareholding

Shares Percentage


Chairman OPTO TECH Corp. 6,494,000 100.00Yung-Chiang Huang - -

Director OPTO TECH Corp. 6,494,000 100.00Hung-Tung Wang - -

Director OPTO TECH Corp. 6,494,000 100.00Chien-Chang Chen - -

Supervisor OPTO TECH Corp. 6,494,000 100.00Tzu-Chun Lin - -

CS Bright Corp.

Chairman Jyu Shin Investment Co., Ltd. 4,993,562 99.87Hung-Tung Wang - -

Director Jyu Shin Investment Co., Ltd. 4,993,562 99.87Chui-Chuan Chang - -

Director Jyu Shin Investment Co., Ltd. 4,993,562 99.87Zhi-Yuan Yan - -

Director Jyu Shin Investment Co., Ltd. 4,993,562 99.87Shun-Chih Chen - -

Director Jyu Shin Investment Co., Ltd. 4,993,562 99.87Tzu-Chun Lin - -

Supervisor Jyu Shin Investment Co., Ltd. - -Supervisor Chien-Chang Chen - -

OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD.

Director OPTO TECH Corp. 34,769,906 100.00

Yung-Chiang Huang - -

OPTO TECH (CAYMAN) CO., LTD.

Director OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD.

9,669,906 100.00

Yung-Chiang Huang - -BRIGHT INVESTMENT INTERNATIONAL LTD

Director CS Bright Corp. 5,100,000 100.00Hung-Tung Wang - -

EVERYUNG INVESTMENT LTD.

Director

OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD.

5,000,000 50.00

BRIGHT INVESTMENT INTERNATIONAL LTD

5,000,000 50.00

Hung-Tung Wang - -

140

Company Title Name Shareholding

Shares Percentage

OPTO Plus Technology Co. Ltd.

Chairman EVERYUNG INVESTMENT LTD. 9,000,000 100.00 Hung-Tung Wang - -

Director EVERYUNG INVESTMENT LTD. 9,000,000 100.00 Chui-Chuan Chang - -

Director EVERYUNG INVESTMENT LTD. 9,000,000 100.00 Chen-Ch Wu - -

Supervisor

EVERYUNG INVESTMENT LTD. 9,000,000 100.00 Qian-Yan Huang - -

OPTO TECH (Suzhou) Co. Ltd.

Chairman OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Hung-Tung Wang - -

Director OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Shun-Chih Chen - -

Director OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Hong-Xiang Tan - -

Director OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Hui -Chao Chen - -

Director OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Chui-Chuan Chang - -

Supervisor

OPTO TECH (CAYMAN) CO., LTD. 9,000,000 100.00 Qian-Yan Huang - -

OPTO GRAND (CAYMAN) CO.,LTD.

Director OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD.

20,000,000 100.00

Hung-Tung Wang - -

SOURCE EVER LIMITED

Director OPTO TECH Corp. 200,001 100.00 Hung-Tung Wang - -

OPTO Tech Semiconductor (Ningbo) Co., Ltd.

Chairman OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Hung-Tung Wang - -

Director OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Chui-Chuan Chang - -

Director OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Jung-Huan Lee - -

Director OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Shun-Chih Chen - -

Director OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Tzu-Chun Lin - -

Supervisor

OPTO GRAND (CAYMAN) CO.,LTD. 20,000,000 100.00 Yin-Rui Chen - -

OPTO TECH (Macao) Co., Ltd.

Director OPTO TECH (CAYMAN) CO., LTD. 989,000 100.00Hung-Tung Wang - -


Chairman OPTO TECH Corp. 12,568,706 100.00Yung-Chiang Huang - -

Director OPTO TECH Corp. 12,568,706 100.00Hung-Tung Wang - -

Director OPTO TECH Corp. 12,568,706 100.00Chien-Chang Chen - -

Supervisor OPTO TECH Corp. 12,568,706 100.00Tzu-Chun Lin - -

141

F. Operational Highlights of OPTO Subsidiaries Unit: NT$ thousands

Name of Enterprise Capital Total AssetsTotal

Liabilities Net Worth

Operating Income

Operating Profit

Profit / Loss Of The Period

(After-Tax)

EPS (NTD) (After-Tax)

Ho Chung Investment Co.,Ltd. 64,940 135,049 40 135,009 5,807 686 686 0.11

Jyu Shin Investment Co. Ltd. 125,687 270,687 40 270,647 17,082 16,947 16,925 1.35 OPTO Tech (Macao) Co., Ltd. 4,096 17,452 2,749 14,703 6,930 (625) (600) - CS Bright Corp. 49,999 210,633 121,247 89,386 264,253 7,035 6,900 1.38 OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD.

1,120,084 624,393 - 624,393 - (300) (206,555) -

OPTO TECH (CAYMAN) CO., LTD. 316,203 7,644 - 7,644 - - (88,624) - BRIGHT INVESTMENT INTERNATIONAL LIMITED

171,332 36,685 - 36,685 - (1,073) (2,944) -

EVERYUNG INVESTMENT LTD. 317,331 70,672 - 70,672 - - (3,913) - OPTO Plus Technology Co. Ltd.(China) 317,341 421,209 350,537 70,672 263,879 5,257 (3,922) - OPTO TECH (Suzhou) Co., Ltd (China) 294,708 271,201 287,600 (16,399) 55,288 (84,343) (88,560) - OPTO GRAND (CAYMAN) CO.,LTD. 651,721 578,192 - 578,192 - - (116,326) - OPTO Semiconductor (Ningbo) Co., Ltd. 651,721 604,274 26,527 577,747 - (26,625) (116,352) - SOURCE EVER LIMITED 5,725 1,929 - 1,929 - - 111 -

Note:For all amounts involving in foreign currencies, the capital was converted into NTD at the exchange rate used for original investments of each company, and the rest was converted into NTD at the exchange rate of Dec. 31, 2014.

2. Private Placement Securities in the Most Recent Years: None.

3. The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: Unit: NT$ thousands；Shares；％

Name of subsidiary

Stock capital collected

Fund source

Shareholding ratio of the company

Date of acquisition or

disposition

Shares and amount acquired

Shares and amount

disposed of

Investment gain (loss)

Shareholdings & amount in the most recent year Mortgage

Endorsement amount made for the subsidiary

Amount loaned to the subsidiary

Ho Chung

Investment

Co.,Ltd.

64,940

Self- owned

capital 100% －－－－

1,107,276 Shares

NTD 15,059 None None None

4. Others supplementary events:None.

5. Matters Significantly Influenced on Shareholders’ Equity or Securities Price:None.

OPTOTECH Co., Ltd

Chairman:

Yung-Chiang Huang

Documents

name, title, telephone number and e-mail of the spokesperson and Deputy spokesperson 1. Spokesperson Name: Chui-Chuan Chang Title: Vice President Tel: 886-3-5638951 E-mail: