CHC Healthcare Group Meeting Minutes for 2016 Annual Shareholders Meeting

Transcription

1 Meeting Minutes for 2016 Annual Shareholders Meeting Date: June 13th, 2016 at 09:00 a.m. Place: 1F., No.30, Sec. 3, Xinsheng S. Rd., Da an Dist., Taipei City 106, Taiwan (Room 103 of Howard Civil Service International House) Attendants: CHC s total outstanding shares are 139,733,750 shares. 84,655,306 shares were represented by the shareholders and proxies present, which amounted to 60.58% of the Company s 139,733,750 issued and outstanding shares. Chairman: Pei-Lin, Lee, Chairman of CHC Recorder: Chia-Wen, Wang In Attendance: Tien-Ying, Lee, Director Gui-Duan, Chen, Independent Director Geng-Wang, Laiw, Independent Director Hwai, Wang, Supervisor Guo-Dong, Lin, Supervisor Fu-Du, Chen, Supervisor 1. Commencement: The aggregate shareholdings of the shareholders and proxies present constituted a quorum. The Chairman called the meeting to order. 2. Chairman s Address: Dear Shareholders, thank you for visiting 2016 Annual Shareholders Meeting of CHC. Let s proceed according to the agenda. 3. Discussion Items (1). Amendment to the Company's Articles of Incorporation (Proposed by Board of Directors) Explanation: (1). It is conducted in accordance with Presidential Decree issued on May 20, 2015 to amend Article 235, and 240 of Company Act, also pursuant to the Letter No issued on Jun. 11, 2015 and Letter No issued on Oct. 15, 2015 by Ministry of Economic Affairs. 1

2 (2). Amendment about distribution of the compensations for employees and remunerations for directors and supervisors made to the Company's Articles of Incorporation according to Article of Company Act is approved by the Third Compensation Committee s fourth meeting on Nov. 11, (3). Please refer to Attachment 1 for relevant information. (4). Please start discussion. Resolution: Approved as proposed by all the shareholders present to the Meeting when the Chairman opened the inquiry. (2). To release the directors from non-competition restrictions (Proposed by Board of Directors) Explanation: (1). According to Article 209 of Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval. (2). In order to meet the Company s business needs and operations development, it requests shareholders approval on the Meeting to release the directors from non-competition restrictions. Please refer to Attachment 2 for relevant information. (3). Please start discussion. Resolution: Approved as proposed by all the shareholders present to the Meeting when the Chairman opened the inquiry. 4. Reporting Items (1). To report 2015 Business Report: Please refer to Attachment 3. (2). To report Supervisor s Report on review of 2015 audited financial reports: Please refer to Attachment 4. (3). To report the distribution of the compensations for employees and remunerations for directors and supervisors of 2015 (4). To report the information of endorsements/guarantees in 2015: Please refer to Attachment 5. (5). To report the status of Secured Convertible Bond (41642) 2

3 5. Approval Items (1) Business Report and Financial Statements (Proposed by Board of Directors) Explanation: (1). The Company s 2015 Financial Statements (including Consolidated Financial Statements) were audited by CPA, Hui-Chin, Chou Tseng and Sheng-Wei, Teng of PricewaterhouseCoopers (PwC) Taiwan. Supervisors of the Company have examined both 2015 Business Report and Financial Statements and issued Supervisor s Report. (2). For 2015 Business Report, Supervisor s Report, Report of Independent Auditors and 2015 Financial Statements (including Consolidated Financial Statements), please refer to Attachment 3, Attachment 4 and Attachment 6. (3). Please approve it. Resolution: Approved as proposed by all the shareholders present to the Meeting when the Chairman opened the inquiry. (2). Proposal for Distribution of 2015 Profits (Proposed by Board of Directors) Explanation: (1). The Company s net profit after tax of 2015 is NT$ 226,517,857. After setting aside the legal reserve for NT$ 22,651,786, special reserve for NT$ 87,626,385 based on Article 41-1 of Securities and Exchange Act and then adding unappropriated retained earnings at the beginning of 2015 for NT$ 536,041,126, the unappropriated retained earnings for 2015 is NT$ 652,280,812. Proposal for distribution is as followed: 3

4 2015 Earning Distribution Table Item Amount(NT$) Subtotal Total Unappropriated retained earnings at 536,041,126 the beginning of 2015 Add: Net profit after tax of ,517,857 Deduct: Legal Reserve (22,651,786) Deduct: Special reserve (87,626,385) Subtotal 116,239,686 Distributable Unappropriated Retained 652,280,812 Earnings at the end of 2015 Distribution Items: Cash Dividends (NT$2.004 per share) 279,964,311 Unappropriated retained earnings at 372,316,501 the end of 2015 Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen (2) Earning distribution is first distributed from earnings in 2015 that are available for distribution. (3) Earning distribution is based on the number of outstanding shares on Dec. 31, 2015(139,702,750 shares), and will distribute cash dividend of NT$2.004 per share. The cash dividend will be paid with calculation rounded down to the nearest one NTD (any amount under one NTD will be discarded). The remaining fraction will be incorporated into Other Income of the Company. (4). It requests shareholders approval on the Meeting that the Chairman will be authorized to adjust the dividend distribution ratio based on the actual number of outstanding shares if there is any change in number of common shares of the Company which consequently leads to a change in the ratio. (5). The record date and payment date for cash dividends payment will be decided by the Chairman as authorized by shareholders after approved on the Meeting. (6). Please approve it. Resolution: Approved as proposed by all the shareholders present to the Meeting when the Chairman opened the inquiry. 4

5 6. Extempore Motion: None 7. Meeting Adjourned (June 13th, 2016 at 09:12 a.m.) 5

6 Attachment 1 6 Comparison Table of Revised Articles of Articles of Incorporation Article Before Revision Article After Revision Explanation (Blank) Article 24-1 When allocating the profit of current year (profit before tax and compensations for employees and remunerations for directors and supervisors), accumulated losses shall be first covered, and then set aside no less than 0.05% of the balance as compensations for employees and no more than 5% as remunerations for directors and supervisors. Compensations for employees and remunerations for directors and supervisors mentioned above shall be conducted after a resolution made by majority of directors present at a meeting attended by more than two thirds of directors and shall also be reported to the shareholders meeting. Compensations for employees shall be paid by either shares or cash. The employees to receive compensations shall include certain qualified employees from affiliate companies and the rules of distribution shall be made by the Chairman. Article 25 If the Company has earnings in a fiscal year, the Company shall, after paying all taxes, offsetting all prior losses, set aside a legal reserve at 10% of the earnings unless the accumulated amount of the legal reserve has reached the total authorized capital of the Company and set aside or reserving a special reserve according to relevant regulations when necessary. Any remaining amount after the abovementioned payments are made shall be distributed as followed: Article 25 If the Company has earnings in a fiscal year, the Company shall, after paying all taxes, offsetting all prior losses, set aside a legal reserve at 10% of the earnings unless the accumulated amount of the legal reserve has reached the total authorized capital of the Company and set aside or reserving a special reserve according to relevant regulations when necessary. Any remaining amount after the abovementioned payments are made shall be distributed as followed: Newly added article in compliance with Article of Company Act and Letter No issued by Ministry of Economic Affairs. Amend in compliance with Article 235 and of Company Act. 6

7 7 1. Compensations for employees shall be no less than 0.05% of the balance. 2. Remunerations for directors and supervisors shall be no more than 5% of the balance. 3. The balance after abovementioned payments are made, together with unappropriated retained earnings at the beginning of the fiscal year, shall be allocated as shareholders dividends pursuant to resolution of the shareholders meeting proposed by Board of Directors. The employees to receive share dividends shall include certain qualified employees from affiliate companies and the qualification of such employees is to be decided by the Chairman. Because the Company is still in its growth stage, dividend policy that the Company intends to adopt is Balanced Dividend Policy, dividends may be paid in both cash and shares in moderation. The cash dividend distributed annually may not be less than 20% of the total dividends. However, the actual amount of profit distribution shall be determined according to the actual amount profits of the year and capital needs of the Company in the future. Article 28 The Article was enacted on Nov. 25, 2009 and amended on Nov. 28, 2009 for the first time, on Jan 15, 2010 for the second time, on Feb. 10, 2010 for the third time, on Jun. 30, 2011 for the fourth time, on Jan. 6, 2012 for the fifth time, on Jun. 14, 2013 for the sixth time. 1. Compensations for employees shall be no less than 0.05% of the balance. 2. Remunerations for directors and supervisors shall be no more than 5% of the balance. 3. The balance after abovementioned payments are made, together with unappropriated retained earnings at the beginning of the fiscal year, shall set aside at least 50% as unappropriated retained earnings for shareholders. Proposal for Distribution shall be submitted to shareholders meeting for approval by Board of Directors. The employees to receive share dividends shall include certain qualified employees from affiliate companies and the qualification of such employees is to be decided by the Chairman. Because the Company is still in its growth stage, dividend policy that the Company intends to adopt is Balanced Dividend Policy, dividends may be paid in both cash and shares in moderation. The cash dividend distributed annually may not be less than 20% of the total dividends. However, the actual amount of profit distribution shall be determined according to the actual amount profits of the year and capital needs of the Company in the future. Article 28 The Article was enacted on Nov. 25, 2009 and amended on Nov. 28, 2009 for the first time, on Jan 15, 2010 for the second time, on Feb. 10, 2010 for the third time, on Jun. 30, 2011 for the fourth time, on Jan. 6, 2012 for the fifth time, on Jun. 14, 2013 for the sixth time, on Jun. 13, 2016 for the seventh time. Amending date added. 7

8 Attachment 2 Detail List of the Directors to Be Released From Non-Competition Restrictions Director Independent Director Geng-Wang, Laiw Director Tien-Ying, Lee Restricted Position to Be Released Adjunct Director of Research Department in Yee Zen General Hospital Director of Swissray Healthcare Holding (H.K.) Limited 8

9 Attachment 3 Dear Shareholders, 2015 Business Report Thank you very much for your continuous support and advice to let keep on growing in such competitive environment. We would like to take the opportunity to express our deepest appreciations to all the shareholders. With all the support by shareholders and efforts by employees, CHC has done a pretty good job in China markets in In the future, we will work even harder to create both customers' and shareholders' interest. 1. Operating Results of 2015 (1). Implementation of 2015 Business Plan 2015 consolidated revenue totals NT$2,395,331 thousand, which is a growth over NT$2,091,026 thousand in Mainly reason for the growth is the synergy effect of acquisition a subsidiary in 2015 has shown up profit is NT$222,687 thousand, which decreased comparing with 2014 profit NT$263,793 thousand. Cost of acquisition the subsidiary, expenses of repurchasing unsecured convertible bond and issuing secured convertible bond are the cause of decrease in profit. Operating Results of 2015 is as followed: NT$ Thousand Item 2015 Operating Revenue 2,395,331 Gross Profit 759,729 Operating Expenses 389,815 Operating Income 369,914 Profit Before Tax 282,868 Profit for the year 222,687 (2). Implementation of Budget It s unnecessary for the Company to disclose the implementation for budget because the 2015 financial forecast was not released previously. (3). Financial Analysis Capital Structure & Liquidity Item Debts Ratio (%) 43.82% 38.37% Current Ratio (%) % % Profitability Return on Total Assets (%) 3.32% 4.29% Return on Equity (%) 4.34% 5.64% Net Margin (%) 9.30% 12.62% Basic Earnings Per Share NT$1.73 NT$2.04 9

10 (4). Research and Developments Work The Group is not in manufacturing industry, thus there is no R&D department. 2. Perspectives and Operating Strategy for 2016 (1). Product Development Strategy CHC has always devoted to introducing high-end medical equipment and technology to the country in order to improve the standard of medical treatment and achieve an all-win situation for CHC, patients and medical institutions. Besides maintaining sound relationships with our world renowned manufacturers, we are also in search of new products aggressively through joining exhibitions expected to extend our product line and improve sales revenue using existing sales channels. (2). Market Expansion Plan CHC has established a full-service medical management business model with medical institutions in China, in expectation of managing procedure improvement and revenue increase using our rich experience and resources operating radiation oncology departments throughout the years. These are planned to be the demo sites for business expansion in the future. The assessment of introducing radiation oncology equipments into Myanmar, Indonesia and Vietnam are constantly under process considering the lack of large medical equipment in South-East Asia. The official entering into the market has been carried out with our joint venture subsidiary in Indonesia started this Spring. (3). Technical Training Plan We believe that quality service and professional employees are the biggest competing advantage of. We will keep recruiting and training well-qualified teammates, reproducing our profitable business model in Taiwan, no matter to cope with new product introduction or gain access to new market for maintaining high-quality service and good reputation whereas our fast expansion. We have successfully entered China market by offering our technical services, and will continue nurturing our talents to extend the service line into other territories. (4). Medical Services Policy Besides rooting in Taiwan s medical centers by providing medical service of radiation oncology and reproducing the same model into China, CHC is also eager to extend the width and depth in the field of medical service and enhances pattern of cooperation with medical institutions for the purpose of becoming a comprehensive turn-key solution provider. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 10

11 Attachment 4 Supervisor s Report on Review of 2015 Audited Financial Reports TO: 2016 Annual Shareholders Meeting of The Board of Directors reports 2015 financial statement (including Consolidated Financial Statements), and were audited by CPA, Hui-Chin, Chou Tseng and Sheng-Wei, Teng of PricewaterhouseCoopers (PwC) Taiwan, which they considered to present a fair view of the Company s financial position, operating results and cash flows Financial Statements, together with 2015 Business Report and Proposal for Distribution of 2015 Profits, have all been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. Pursuant to Article 219 of Company Act, we hereby present the Supervisor s Report. Please review. Mar. 24, 2016 Supervisor: Hwai, Wang Supervisor: Fu-Du, Chen Supervisor: Guo-Dong, Lin 11

12 Attachment 5 Information of Endorsements/Guarantees in 2015 The Company s information of endorsements/guarantees by Dec. 31, 2015: 1. Counterparty: Ten 100% owned subsidiaries 2. Total Amount of Endorsements/Guarantees: NT$ 6,319,812 thousand 3. Purpose of Endorsements/Guarantees: For subsidiaries financing needs 4. According to the net value on Dec. 31, 2015, the ceiling on total amount of the Company s endorsements/guarantees is NT$ 15,483,738 thousand and the ceiling on amount of the Company s endorsements/guarantees to any individual entity is NT$ 10,322,492 thousand. All endorsements/guarantees the Company made are pursuant to Procedures for Endorsement & Guarantee and there is no circumstance that the amount exceeds the ceiling. Item Counterparty Amount (NT$ thousand) 1 Chiu Ho Medical System Co., Ltd. 3,835,000 2 Tomorrow Medical System Co., Ltd. 1,120,948 3 Chiu Ho Scientific Co., Ltd. 111,000 4 J.AB Beauty Co., Ltd. 6,000 5 Hua Lin Instruments Co., Ltd. 175,264 6 E Century Health Care Corporation 120,000 7 Tong-Lin Instruments Co., Ltd. 130,000 8 Chiu Ho Biotech Co., Ltd. 274,000 9 CHC Healthcare (HK), Ltd. 262, Medlink Healthcare, Ltd. 285,000 Total Amount 6,319, Subsidiaries information of endorsements/guarantees by Dec. 31, 2015: Item Provider Counterparty Amount (NT$ thousand) 1 Hsing-Yeh Biotechnology Co., Ltd. 361,482 2 Hsing-Yeh Biotechnology Co., Ltd. Chiu Ho Medical System Co., Ltd. 933,474 3 Hsing-Yeh Biotechnology Co., Ltd. Medlink Healthcare, Ltd. 108,444 Total Amount 1,403,400 12

13 Attachment 6 CPA Audit Report Translated From Chinese PWCR To the Board of Directors and Shareholders of We have audited the accompanying standalone balance sheets of as of December 31, 2015 and 2014, and the related standalone statements of comprehensive income, of change in equity and of cash flows for the years ended December 31, 2015 and These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing Examination of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Those standards and rules 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 provides a reasonable basis for our opinion. In our opinion, based on our audits, the standalone financial statements referred to above present fairly, in all material respects, the financial position of as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years ended December 31, 2015 and 2014, in conformity with the Rules Governing the Preparation of Financial Statements by Securities Issuers. PricewaterhouseCoopers, Taiwan March 24, 2016 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying financial statements and CPA audit report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in 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. 13

14 Standalone Balance Sheet December 31, 2015 & 2014 (Expressed in Thousands of New Taiwan Dollars) 2015/12/ /12/31 Assets Notes Amount % Amount % Current assets 1100 Cash and cash equivalents 6(1) $ 568,774 8 $ 77, Accounts receivable due from 7 related parties, net 1,806-4, Other receivables 1, Other receivables due from 7 related parties 140, , Prepayments 3,601-1,135-11XX Total current assets 716, ,071 2 Non-current assets 1523 Non-current available-for-sale financial assets 6(2),12(3) 228, , Investments accounted for under 6(3) equity method 6,028, ,285, Property, plant and equipment 4,538-5, Deferred tax assets 6(18) 17,386-2, Other non-current financial 8 assets 4, Other non-current assets 12 2,071-1,125-15XX Total non-current assets 6,285, ,615, XXX Total assets $ 7,001, $ 5,758, Liabilities and Equity Current liabilities 2100 Short-term borrowings 6(5) $ - - $ 70, Current financial liabilities at fair 6(4)(6),12(3) value through profit or loss , Notes payable 2,507-2, Accounts payable Other payables 13,875-12, Other payables to related parties , Current tax liabilities - - 3, Other current liabilities 1, XX Total current liabilities 18, ,730 2 Non-current liabilities 2500 Non-current financial liabilities at fair value through profit or loss 6(4)(6),12(3) 4, Bonds payable 6(6) 963, , Long-term borrowings 6(7),7 850, Deferred tax liabilities 6(18) 4,561-4,877-25XX Total non-current liabilities 1,822, , XXX Total liabilities 1,840, ,071, Equity Share capital 3110 Ordinary share 1,6(10) 1,397, ,303, Capital surplus 6(6)(9)(11) 3200 Capital surplus 2,882, ,379, Retained earnings 6(11)(12)(18) 3310 Legal reserve 206, , Special reserve 5, Unappropriated retained earnings 762, , Other equity interest 3400 Other equity interest ( 93,145 ) ( 1 ) ( 5,520 ) - 3XXX Total equity 5,161, ,686, Significant contingent liabilities and unrecorded contract commitments 7,9 3X2X Total liabilities and equity $ 7,001, $ 5,758, The accompanying notes are an integral part of the standalone financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 14

15 Standalone Statements of Comprehensive Income For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share Data) Item Notes Amount % Amount % 4000 Operating revenue 6(13),7 $ 377, $ 368, Operating costs 6(8)(9)(17),7 ( 101,480) ( 27) ( 82,243) ( 23) 5900 Gross profit 275, , Non-operating income and expenses 7010 Other income 6(14),7 4, , Other gains and losses 6(4)(15) ( 31,238) ( 8) ( 1,014) Finance costs 6(16) ( 28,385) ( 7) ( 23,923) ( 7) 7000 Total non-operating income and expenses ( 54,931) ( 14) ( 22,667) ( 6) 7900 Profit before tax 221, , Tax income 6(18) 5, , Profit from continuing operations 226, , Other comprehensive income Components of other comprehensive income that will be reclassified to profit (loss) 8361 Exchange differences on translation ( 1,883) - 12, Unrealized losses on valuation of available-for-sale financial assets 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity 6(2) ( 91,121) ( 24) ( 32,049) ( 9) method ( 5,877) ( 2) Tax related to components of other comprehensive income 6(18) 11, Other comprehensive income, net ($ 87,625) ( 23) ($ 19,222) ( 5) 8500 Total comprehensive income $ 138, $ 246, Basic earnings per share 9750 Total basic earnings per share 6(19) $ 1.73 $ 2.04 Diluted earnings per share 9850 Total diluted earnings per share 6(19) $ 1.54 $ 2.03 The accompanying notes are an integral part of the standalone financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 15

16 16 Standalone Statements of Change in Equity For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars) For the year ended December 31, 2014 Notes Share capital Ordinary share Share premium Treasury share Capital surplus Retained earnings Other equity Employee stock option Others Legal reserve Special reserve Unappropriated retained earnings Exchange differences on translation Unrealized gains (losses) on valuation of available-for-sale Balance at January 1, 2014 $ 1,300,000 $ 2,238,362 $ - $ 44,457 $ 57,700 $ 150,398 $ - $ 852,749 $ 2,115 $ 11,587 $ 4,657,368 Appropriations of 2013 earnings 6(12) Legal reserve ,686 - ( 29,686 ) Cash dividends ( 260,000 ) - - ( 260,000 ) Exercise of employee stock options 3,460 27,554 - ( 16,690 ) ,324 Employee stock option compensation cost 6(9) , ,163 Employee stock option compensation cost of subsidiary , ,371 Profit for the year , ,766 Other comprehensive income (loss) for the year ,372 ( 29,594 ) ( 19,222 ) Balance at December 31, 2014 $ 1,303,460 $ 2,265,916 $ - $ 56,301 $ 57,700 $ 180,084 $ - $ 828,829 $ 12,487 ( $ 18,007 ) $ 4,686,770 financial assets Total equity For the year ended December 31, 2015 Balance at January 1, 2015 $ 1,303,460 $ 2,265,916 $ - $ 56,301 $ 57,700 $ 180,084 $ - $ 828,829 $ 12,487 ( $ 18,007 ) $ 4,686,770 Appropriations of 2014 earnings 6(12) Legal reserve ,577 - ( 26,577 ) Special reserve ,519 ( 5,519 ) Cash dividends ( 260,692 ) - - ( 260,692 ) Cash capital increase 6(10) 90, , ,200 Employee stock option compensation cost - cash capital increase 6(9) - 4,813 - ( 4,813 ) Convertible bonds reverse sold - 57, ( 57,527 ) Convertible bonds repurchased ( 173 ) Conversion option of convertible bonds 6(6) , ,600 Exercise of employee stock options 3,568 27,625 - ( 12,121 ) ,072 Employee stock option compensation cost 6(9) , ,141 Employee stock option compensation cost of subsidiary , ,262 Profit for the year , ,518 Other comprehensive income (loss) for the year ( 1,562 ) ( 86,063 ) ( 87,625 ) Balance at December 31, 2015 $ 1,397,028 $ 2,795,081 $ 173 $ 59,770 $ 27,600 $ 206,661 $ 5,519 $ 762,559 $ 10,925 ( $ 104,070 ) $ 5,161,246 Note: Compensations for employees $980 in 2014 and $325 in 2013 and remunerations for directors and supervisors $4,800 for both 2014 and 2013 had been deducted from Statements of Comprehensive Income of the year. The accompanying notes are an integral part of the standalone financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 16

17 Standalone Statements of Cash Flows For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars) Notes Cash flows from operating activities Profit before tax $ 221,066 $ 263,593 Adjustments Adjustments to reconcile profit or loss Depreciation expenses 6(17) 1, Amortization expenses 6(17) Net loss on financial liabilities at fair value through 6(4) profit or loss 31,219 1,000 Interest expenses 6(16) 12, Interest income 6(14) ( 4,681 ) ( 2,268 ) Employee stock option compensation cost 6(9) 6,141 8,163 Share of profit of subsidiaries, associates and joint 6(13) ventures accounted for under equity method ( 276,567 ) ( 263,503 ) Discount and amortization on bonds payable 6(16) 15,932 23,551 Changes in operating assets and liabilities Changes in operating assets Accounts receivable due from related parties, net 2,394 ( 4,200 ) Other receivables - 3 Prepayments ( 2,466 ) 375 Other non-current financial assets ( 4,200 ) - Other non-current assets ( 1,299 ) ( 116 ) Changes in operating liabilities Notes payable Accounts payable 5 - Other payables 1,354 ( 1,233 ) Other payables to related parties ( 4,100 ) 4,100 Other current liabilities 1,141 ( 138 ) Cash inflow generated from operations ,693 Interest received 3,963 3,276 Dividends received 87, ,685 Taxes paid ( 3,849 ) ( 1,852 ) Interest paid ( 12,383 ) ( 356 ) Net cash provided by operating activities 75, ,446 Cash flows from investing activities Increase (Decrease) in other receivables due from related parties ( 80,000 ) 114,000 Acquisition of non-current available-for-sale financial 6(2) assets - ( 312,000 ) Acquisition of investments accounted for under equity method ( 620,915 ) ( 121,973 ) Proceeds from capital reduction of investments accounted for under equity method 74,000 59,181 Acquisition of property, plant and equipment ( 52 ) ( 5,738 ) Increase in refundable deposits ( 19 ) ( 1 ) Net cash used in investing activities ( 626,986 ) ( 266,531 ) Cash flows from financing activities Decrease (Increase) in short-term borrowings 6(5) ( 70,000 ) 70,000 Repayments of bonds ( 1,020,040 ) - Proceeds from issuing bonds 6(6) 1,000,000 - Cost of issuing bonds 6(6) ( 4,750 ) - Proceeds in long-term borrowings 850,000 - Cash dividends 6(12) ( 260,692 ) ( 260,000 ) Cash capital increase 6(10) 529,200 - Exercise of employee stock options 19,072 14,324 Net cash provided by (used in) financing activities 1,042,790 ( 175,676 ) Net increase (decrease) in cash and cash equivalents 491,262 ( 117,761 ) Cash and cash equivalents at beginning of period 77, ,273 Cash and cash equivalents at end of period $ 568,774 $ 77,512 The accompanying notes are an integral part of the standalone financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 17

18 Representation Letter The entities that are required to be included in the combined financial statements of as of and for the year ended December 31, 2015, under Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standards No. 10, Consolidated Financial Statements. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, and Subsidiaries do not prepare a separate set of combined financial statements. Very truly yours, By Pei-Lin, Lee Chairman March 24,

19 CPA Audit Report Translated From Chinese PWCR To the Board of Directors and Shareholders of We have audited the accompanying consolidated balance sheets of and its subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, of change in equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the Rules Governing Examination 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of and its subsidiaries as of December 31, 2015 and 2014, and their financial performance and their cash flows for the years then ended, in conformity with the Rules Governing the Preparation of Financial Statements by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission(FSC). We have also audited the standalone financial statements of as of and for the years ended December 31, 2015 and 2014, on which we have expressed a standard unqualified opinion on such financial statements. PricewaterhouseCoopers, Taiwan March 24, 2016 The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and CPA audit report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in 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. 19

20 And Subsidiaries Consolidated Balance Sheet December 31, 2015 & 2014 (Expressed in Thousands of New Taiwan Dollars) Current assets 2015/12/ /12/31 Assets Notes Amount % Amount % 1100 Cash and cash equivalents 6(1) $ 1,257, $ 558, Notes receivable, net 6(3),8 57, , Notes receivable due from 7 related parties, net 157, , Accounts receivable, net 6(4) 851, , Accounts receivable due from 7 related parties, net 41,206-1, Other receivables 1, Other receivables due from 7 related parties 2, Current tax assets 5,195-13, X Inventories 6(5)(6) 327, , Prepayments 7 133, , Other current assets 8 2,902-22,053-11XX Total current assets 2,838, ,813, Non-current assets 1523 Non-current available-for-sale 6(2),7 financial assets 263, , Property, plant and equipment 6(6),8 4,550, ,671, Investment property, net 6(7),8 1,160, Intangible assets 6(28) 161, , Deferred tax assets 6(25) 49,139-15, Other non-current assets 6(6)(8),7,8 883, , XX Total non-current assets 7,068, ,797, XXX Total assets $ 9,907, $ 7,611, (Continued) 20

21 And Subsidiaries Consolidated Balance Sheet December 31, 2015 & 2014 (Expressed in Thousands of New Taiwan Dollars) 2015/12/ /12/31 Liabilities and Equity Notes Amount % Amount % Current liabilities 2100 Short-term borrowings 6(9),8 $ 274,988 3 $ 650, Current financial liabilities at fair 6(10)(12) value through profit or loss , Notes payable 6(6)(11) 54, , Accounts payable 156, , Accounts payable to related 7 parties 15,307-10, Other payables 6(6) 70, , Other payables to related parties 7 6, Current tax liabilities 50,986-32, Current provisions 21,871-14, Other current liabilities 6(13) 100, , XX Total current liabilities 751, ,073, Non-current liabilities 2500 Non-current financial liabilities at 6(10)(12) fair value through profit or loss 4, Bonds payable 6(12) 963, , Long-term borrowings 6(13),8 2,523, , Non-current provisions 10,631-13, Deferred tax liabilities 6(25) 45,772-5, Other non-current liabilities 6(14) 41,842-15,005-25XX Total non-current liabilities 3,589, ,847, XXX Total liabilities 4,340, ,920, Equity attributable to owners of parent Share capital 6(17) 3110 Ordinary share 1,397, ,303, Capital surplus 6(12)(16)(18) 3200 Capital surplus 2,882, ,379, Retained earnings 6(19)(25) 3310 Legal reserve 206, , Special reserve 5, Unappropriated retained earnings 762, , Other equity interest 6(2) 3400 Other equity interest ( 93,145 ) ( 1 ) ( 5,520 ) - 31XX Total equity attributable to owners of parent 5,161, ,686, XX Non-controlling interests 404, ,774-3XXX Total equity 5,566, ,690, Significant contingent liabilities 9 and unrecorded contract commitments Significant subsequent events 11 3X2X Total liabilities and equity $ 9,907, $ 7,611, The accompanying notes are an integral part of the consolidated financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 21

22 And Subsidiaries Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share Data) Item Notes Amount % Amount % 4000 Operating revenue 6(20)(27),7 $ 2,395, $ 2,091, Operating costs 6(5)(24),7 ( 1,635,602) ( 68) ( 1,484,277) ( 71) 5950 Gross profit 759, , Operating expenses 6(15)(16)(24)(27) (28) 6100 Selling expenses ( 136,711) ( 6) ( 95,402) ( 4) 6200 Administrative expenses ( 253,104) ( 10) ( 137,901) ( 7) 6000 Total operating expenses ( 389,815) ( 16) ( 233,303) ( 11) 6900 Net operating income 369, , Non-operating income and expenses 7010 Other income 6(21) 7,656-7, Other gains and losses 6(6)(10)(22) ( 28,185) ( 1) ( 15,830) ( 1) 7050 Finance costs 6(12)(23) ( 66,517) ( 3) ( 40,897) ( 2) 7000 Total non-operating income and expenses ( 87,046) ( 4) ( 49,038) ( 2) 7900 Profit before tax 282, , Tax expense 6(25) ( 60,181) ( 3) ( 60,615) ( 3) 8200 Profit $ 222,687 9 $ 263, Other comprehensive income Components of other comprehensive income that will be reclassified to profit (loss) 8361 Exchange differences on translation ( $ 1,883 ) - $ 12, Unrealized losses on valuation of available-for-sale financial 6(2) assets ( 97,800 ) ( 4 ) ( 32,049 ) ( 2 ) 8399 Tax related to components of other comprehensive 6(25) income 12, Other comprehensive income, net ( $ 87,625 ) ( 3 ) ( $ 19,222 ) ( 1 ) 8500 Total comprehensive income $ 135,062 6 $ 244, Profit (loss), attributable to: 8610 Owners of parent $ 226,518 9 $ 265, Non-controlling interests ( $ 3,831 ) - ( $ 1,973 ) - Comprehensive income attributable to: 8710 Owners of parent $ 138,893 6 $ 246, Non-controlling interests ( $ 3,831 ) - ( $ 1,973 ) - Basic earnings per share 6(26) 9750 Total basic earnings per share $ 1.73 $ 2.04 Diluted earnings per share 6(26) 9850 Total diluted earnings per share $ 1.54 $ 2.03 The accompanying notes are an integral part of the consolidated financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 22

23 23 And Subsidiaries Consolidated Statements of Change in Equity For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars) Equity attributable to owners of parent Capital surplus Retained earnings Other equity Unrealized gains (losses) on valuation of Notes Share capital Ordinary share Share premium Treasury share Employee stock option Others Legal reserve Special reserve Unappropriated retained earnings Exchange differences on translation available- for- sale financial assets Total Non- controlling interests Total equity For the year ended December 31, 2014 Balance at January 1, 2014 $ 1,300,000 $ 2,238,362 $ - $ 44,457 $ 57,700 $ 150,398 $ - $ 852,749 $ 2,115 $ 11,587 $ 4,657,368 $ 5,747 $ 4,663,115 Appropriations of 2013 earnings 6(19) Legal reserve ,686 - ( 29,686 ) Cash dividends ( 260,000 ) - - ( 260,000 ) - ( 260,000 ) Exercise of employee stock options 3,460 27,554 - ( 16,690 ) ,324-14,324 Employee stock option compensation cost , ,163-8,163 Employee stock option compensation cost of subsidiary , ,371-20,371 Profit for the year , ,766 ( 1,973 ) 263,793 Other comprehensive income (loss) for the year ,372 ( 29,594 ) ( 19,222 ) - ( 19,222 ) Balance at December 31, 2014 $ 1,303,460 $ 2,265,916 $ - $ 56,301 $ 57,700 $ 180,084 $ - $ 828,829 $ 12,487 ( $ 18,007 ) $ 4,686,770 $ 3,774 $ 4,690,544 For the year ended December 31, 2015 Balance at January 1, 2015 $ 1,303,460 $ 2,265,916 $ - $ 56,301 $ 57,700 $ 180,084 $ - $ 828,829 $ 12,487 ( $ 18,007 ) $ 4,686,770 $ 3,774 $ 4,690,544 Appropriations of 2014 earnings 6(19) Legal reserve ,577 - ( 26,577 ) Special reserve ,519 ( 5,519 ) Cash dividends ( 260,692 ) - - ( 260,692 ) - ( 260,692 ) Cash capital increase 6(17) 90, , , ,200 Employee stock option compensation cost - cash capital increase - 4,813 - ( 4,813 ) Convertible bonds reverse sold - 57, ( 57,527 ) Convertible bonds repurchased ( 173 ) Conversion option of convertible bonds , ,600-27,600 Exercise of employee stock options 6(17) 3,568 27,625 - ( 12,121 ) ,072-19,072 Employee stock option compensation cost 6(16) , ,141-6,141 Employee stock option compensation cost of subsidiary 6(16) , ,262-14,262 Profit for the year , ,518 ( 3,831 ) 222,687 Other comprehensive income (loss) for the year ( 1,562 ) ( 86,063 ) ( 87,625 ) - ( 87,625 ) Non-controlling interests , ,000 Balance at December 31, 2015 $ 1,397,028 $ 2,795,081 $ 173 $ 59,770 $ 27,600 $ 206,661 $ 5,519 $ 762,559 $ 10,925 ( $ 104,070 ) $ 5,161,246 $ 404,943 $ 5,566,189 The accompanying notes are an integral part of the consolidated financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 23

24 And Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars) Notes Cash flows from operating activities Profit before tax $ 282,868 $ 324,408 Adjustments Adjustments to reconcile profit or loss Provision for bad debt expense 1, Depreciation expenses 6(6) 389, ,329 Loss on disposal of property, plant and 6(6) equipment 304 3,126 Interest expenses 56,702 23,013 Interest income 6(21) ( 3,045 ) ( 1,653 ) Net loss on financial liabilities at fair value 6(22) through profit or loss 31,219 1,000 Discount and amortization on bonds payable 6(23) 15,932 23,551 Employee stock option compensation cost 6(16) 20,403 28,534 Changes in operating assets and liabilities Changes in operating assets Notes receivable, net 151,674 ( 24,311 ) Notes receivable due from related parties, 7 net ( 154,589 ) ( 3,365 ) Accounts receivable, net ( 194,961 ) ( 86,902 ) Accounts receivable due from related 7 parties, net ( 42,018 ) ( 1,750 ) Other receivables ( 1,309 ) 295 Inventories 6(5) 116,066 ( 22,140 ) Prepayments ( 25,656 ) 37,044 Other current assets 9,614 ( 618 ) Other non-current assets - Long-term notes 6(8) and accounts receivable ( 70,760 ) 77,338 Changes in operating liabilities Notes payable ( 17,832 ) ( 8,883 ) Accounts payable 62,126 ( 27,287 ) Other payables 33,027 ( 902 ) Current provisions 7,457 1,519 Other current liabilities ( 33,775 ) 45,463 Non-current provisions ( 3,335 ) 4,857 Other non-current liabilities ( 11,127 ) ( 14,129 ) Cash inflow generated from operations 620, ,984 Interest paid 6(23) ( 55,709 ) ( 24,459 ) Interest received 3,025 1,653 Taxes paid ( 62,525 ) ( 74,945 ) Net cash provided by operating activities 504, ,233 (Continued) 24

25 Cash flows from investing activities And Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2015 and 2014 (Expressed in Thousands of New Taiwan Dollars) Notes Decrease in other current assets $ 10,158 $ 102,908 Acquisition of non-current available-for-sale financial assets 6(2) - ( 353,400 ) Acquisition of property, plant and equipment 6(6) ( 242,905 ) ( 871,434 ) Capitalize interest associated with acquisition of property, plant and equipment ( 8,681 ) ( 9,678 ) Proceeds from disposal of property, plant and equipment 6(6) 48 1,000 Increase in refundable deposits 6(8) ( 74,497 ) ( 128,180 ) Decrease in refundable deposits 6(8) 57, ,322 Increase in other non-current assets ( 62,990 ) ( 78,822 ) Net cash flow from acquisition of subsidiaries 6(28) ( 1,134,428 ) - Net cash used in investing activities ( 1,455,608 ) ( 1,236,284 ) Cash flows from financing activities Increase in short-term borrowings 4,063,842 2,065,114 Decrease in short-term borrowings ( 4,444,714 ) ( 2,138,468 ) Repayments of bonds ( 1,020,040 ) - Proceeds from issuing bonds 6(12) 1,000,000 - Cost of issuing bonds 6(12) ( 4,750 ) - Proceeds from long-term borrowings 1,782, ,111 Repayments of long-term borrowings ( 461,123 ) ( 71,433 ) Cash dividends 6(19) ( 260,692 ) ( 260,000 ) Increase in guarantee deposits received 36,658 3,471 Cash capital increase 6(17) 529,200 - Exercise of employee stock options 19,072 14,324 Change in non-controlling interests 405,000 - Net cash provided by financing activities 1,645, ,119 Effect of exchange rate changes on cash and cash equivalents 4,955 6,645 Net increase (decrease) in cash and cash equivalents 699,500 ( 146,287 ) Cash and cash equivalents at beginning of period 558, ,620 Cash and cash equivalents at end of period $ 1,257,833 $ 558,333 The accompanying notes are an integral part of the consolidated financial statements. Chairman: Pei-Lin, Lee CEO: Kung-Yu, Chen CFO: Yi-Chun, Chen 25