Walsin Lihwa Corporation

Transcription

1 Stock code: 1605 Walsin Lihwa Corporation 2013 Annual Shareholders Meeting Handbook Date : June 11, 2013 (Tuesday) Time : 9:00 AM Place : 1 st floor banquet hall of the Grand Victoria Hotel (No. 168, Jingye 4 th Road, Zhongshan District, Taipei)

2 Walsin Lihwa Corporation 2013 Annual Shareholders Meeting Handbook Table of contents Meeting procedure and agenda. 1 Management presentations (company reports) 1. General Manager s Report Supervisor s Report Other reports Proposals and discussions 1. Adoption of the 2012 business report and final account report Adoption of the proposal for appropriation of 2012 profit or loss The company is proposed to issue new common shares privately placed and/or sponsor privately placed GDR, or combination of both Discussion on amendment to the Regulations Governing Management of the Company s Asset Acquisition and Disposal Discussion on amendment to the Regulations Governing Management of the capital lending to Other Parties Discussion on proposal for the removal of prohibition of directors engagement in similar businesses Discussion on the re-institution for the Company s rules and

3 procedures governing shareholders meetings 16 Extemporary motions Appendix business report statement of final accounts Auditors report Supervisor s audit report The Company s mainland China investment status Comparison table for pre and post amendments of the Company s Rules and Procedures Governing Board of Directors Meetings Full text of post amendments of the Company s Rules and Procedures Governing Board of Directors Meetings Shareholding status of the Company s directors and supervisors Comparison Table for Pre and Post Amendments of Regulations Governing Management of the Company s Asset Acquisition and Disposal Comparison Table for Pre and Post Amendments of Regulations Governing Management of the Capital Lending to Other Parties Post amendments of the Rules of Shareholders Meeting.. 76 Articles of the Corporate Constitution 1. Corporate Constitution Rules and Procedures Governing Shareholders Meetings.. 99

4 Walsin Lihwa Corporation Meeting Procedure and Agenda of the 2013 Annual Shareholders Meeting Time: 9:00 AM on June 11, 2013 (Tuesday) Place: 1 st floor banquet hall of the Grand Victoria Hotel (No. 168, Jingye 4 th Road, Zhongshan District, Taipei) 1. Call the meeting to order 2. Chairperson s address 3. Management presentations (company reports) (1) General Manager Report (2012 business report and final account report) (2) Supervisor Report (3) Other Reports 4. Proposals and discussions (1) Adoption of the 2012 business report and final account report. (2) Adoption of the proposal for appropriation of 2012 profit or loss. (3) The company is proposed to issue new common shares privately placed and/or sponsor privately placed GDR, or combination of both. (4) Discussion on amendment to the Regulations Governing Management of the Company s Asset Acquisition and Disposal (5) Discussion on amendment to the Regulations Governing Management of the capital lending to Other Parties - 1 -

5 (6) Discussion on proposal for the prohibition of directors engagement in similar businesses (7) Discussion on the re-institution for the Company s rules and procedures governing shareholders meetings. 5. Extemporary motion 6. Adjournment - 2 -

6 Management presentations (company reports) 1. General Manager Report Please refer to the Company s 2012 business report and final account report. For the business report, balance sheet, income statement, statement of changes in Shareholders equity and statement of cash flows, please see P. 18 through P. 43 in the Appendix of the Handbook for details. 2. Supervisor Report Please refer to the supervisor s examination of the Company s 2012 final account report (please see P. 48 in the Appendix of the Handbook). 3. Other reports (1) Report on the Company s endorsements and guarantees to its subsidiaries. 1. The Company s endorsements and guarantees and its capital lending to its subsidiaries as of March 31, March 31, 2013 Unit: NTD Name of the company Amount of Endorsement/ guarantee net worth rate Walsin Lihwa Holdings Limited. USD 797,000, % Walsin Precision Technology S/B MYR 21,000, % Borrego Solar System, Inc. USD 24,000, % GLC - (CA) SDCCD, LLC USD 6,000, % GLC - Solar Fund II, LLC USD 10,300, % GLC - Solar Fund V, LLC USD 14,628, % GLC - Solar Fund VI, LLC USD 19,600, % Sub-total USD 863,528, % MYR 21,000, % Grand total 42.60% 2. Given that the company s subsidiary Touch Micro-System Technology Corp. (TMTC) did not comply with the individual - 3 -

7 quota stipulated in the company s Endorsement/guarantee Management Regulations as a result of its net worth being less than 1/2 of its paid-up capital, the company requested TMTC to liquidate all the remaining loans and revoke related documents by the end of August, The financial institution already notified the company in writing on August 28, 2012 of removal of the company s endorsement/guarantee liability. (2) Report on the Company s investment in mainland China as of March 31, Please see P. 49 in the Appendix of the Handbook for details. (3) Report on the company s actual execution of repurchase of its shares: 1. In 2010, the company did its 19 th repurchase of 40 million shares of its stock for transferring to its employees. The average repurchase price was NTD12.74 per share. Up to date, no transfer of those repurchased shares has been processed. 2. The shares repurchased this time should be, by law, transferred to the company s employees before May 6, 2013 (i.e. within 3 years after the repurchase date). For the shares not to be transferred in due time, the company should revoke them and register the change at the Ministry of Economic Affairs. 3. Given the fact that the share prices have yet to meet the company s expectation and the company could not find a good time to transfer them, the company will not process the share transfer to its employees, and instead will revoke the shares in accordance with the preceding paragraph. (4) Report on the status of the amendment to the Company s Rules and Procedures Governing Board of Directors Meeting as below: The resolution of the amendments to the Company s Rules and Procedures Governing Board of Directors Meetings was adopted on March 21, 2013 at the 20 th board meeting in the 16 th year. Please refer to P. 52 in the Appendix of the Handbook for the comparison table of pre and post amendments and full amended text. (5) Report on the status of shareholdings of the Company s directors and supervisors, which is as below: - 4 -

8 1. Given that the institutional director Ruihua Investment Co., Ltd. merged with Da-Cheng Investment Co., Ltd. and Chin-Xin Investment Co., Ltd. on December 31, 2012 and became extinct entity, its rights and obligations should be generally assumed by the remained company Chin-Xin Investment Co., Ltd. 2. Due to heavy amount of work, Mr. Jiao You-Qi resigned as the company s director on February 25, Currently, the company has ten directors. 3. According to Article 26 of the Securities and Exchange Act and the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, the minimum shareholding ratio of all the Company s directors shall be 3% of the Company outstanding shares, whereas it shall be 0.3% for minimum shareholding ratio of all the Company s supervisors. 4. For the status of shareholdings of individuals and all directors and supervisors recorded in the registration of shareholders before the share ownership transfer deadline for the 2013 annual regular shareholders meeting, please see P. 71 in the Appendix of the Handbook. 5. The shareholdings of the Company s total directors and supervisors have all attained the statutory equity ratio. (6) Report that no shareholders had submitted any proposal in writing to the Company for the 2013 annual Shareholders Regular Meeting in accordance with Article of the Company Act during the proposal acceptance period (from April 2, 2013 until April 11, 2013) announced by the Company

9 Proposals and discussions Proposal 1 Proposed by the board of directors Subject: Adoption of the Company s 2012 business report, balance sheet, income statement, statement of changes in shareholders equity and statement of cash flows. Explanations: Resolution: 1. Please see P. 18 in the Appendix of the Handbook for the business report, balance sheet, income statement, Statement of Changes in Shareholders Equity and statement of cash flows. 2. The aforesaid financial statements were approved at the Company s 20 th board meeting of the 16 th year, and audited as well as certified by the CPA. They were sent along with the business report to the supervisor, and the supervisor has finished the audit

10 Proposal 2 Proposed by the board of directors Subject: Adoption of the proposal for the Company s 2012 appropriation of profit or loss. Explanations: Resolution: 1. Please see the attachment for the appropriation of profit or loss of This proposal was approved at the Company s 20 th board meeting of the 16 th year and sent to the supervisor, and the supervisor s audit has finished

11 Summary Undistributed earnings of prior years Walsin Lihwa Corporation Appropriation of profit or loss 2012 Minus: Current period net loss after tax Less: Special reserve set aside by prior years surplus in accordance with the Letter No. (2000) Tai- Tsai-Cheng (1) (note 1) Plus: Special reserve for covering losses Plus: Legal reserve for covering losses Loss yet to be covered at end of the period Unit: NTD Amount 0 (3,328,458,040) (794,295,717) 1,136,327,836 2,986,425,921 0 Note 1: According to the Letter No. (2000) Tai-Tsai-Cheng (1) , TWSE and GTSM listed companies shall follow Article 41 of the Securities and Exchange Act, which prescribes the amount occurring in the current year shall be debited to the shareholder equity (e.g. unrealized loss on market value from long term equity investment and foreign currency cumulative translation adjustment, etc.); the same amount of Special reserve set aside from the earnings after tax of the year in question and undistributed earnings of prior periods are not allowed to be distributed. In the case that the amount debited to shareholder equity is reversed afterwards, the earnings can be distributed according to the reversed part. Note 2: According to document Chin-Kuan-Cheng-Fa Tzu No issued by the Financial Supervisory Commission on April 6, 2012, the report was prepared by adopting the International Financial Reporting Standards, with which the distributable earnings were adjusted and the special reserve was set aside as follows: - 8 -

12 a. Since the company adopted the International Financial Reporting Standards, its unappropriated earnings increased by NTD7,321,607,807 and decreased by NTD133,500,433 on the conversion date of January 1, 2012 and comparison period of 2012 respectively. b. To comply with the aforesaid regulation stipulated by the Financial Supervisory Commission, the company adopted the International Financial Reporting Standards for the first time and listed NTD426,404,809 for unrealized revaluation increment and NTD2,543,514,960 for cumulative translation adjustment benefits. For the part transferred into retained earnings on January 1, 2012 by being subject to the exemption item listed in No. 1 of the International Financial Reporting Standards, the company set NTD2,969,919,769 aside as the special reserve. Responsible person: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief Accountant: WU, CHIN-SHENG - 9 -

13 Proposal 3 Proposed by the board of directors Subject: The company is proposed to issue new common shares privately placed and/or sponsor privately placed GDR, or combination of both, to raise capital. Explanations: 1. In order to solidify the company s working capital, strengthen its capital structure, diversify its capital raising channels and give more flexibility for capital raising, the company is proposed to issue new common shares privately placed and/or sponsor privately placed GDR, or combination of both, to raise capital at an appropriate time by viewing the market status and the company s capital requirement and in accordance with the Corporate Constitution, relevant statutory laws and regulations and the various principles stated below: 2. The quota of the issuance proposed to be authorized by shareholders: no more than 400 million shares of the common stock. 3. Issuance method: to be processed by private placement. 4. The pricing basis of private placement and its reasonableness: the private placement price per share shall not be lower than 80% of (1) the average of closing prices of the shares of the Company on Taiwan Stock Exchange over the period of one, three or five business days prior to the pricing date of the private placement, after adjustment for any distribution of stock dividends and cash dividends and any capital decrease, if applicable; or (2) the average of closing prices of the shares of the Company on Taiwan Stock Exchange over the period of 30 business days prior to the pricing date of the private placement, after adjustment for any distribution of stock dividends and cash dividends and any capital decrease, if applicable; whichever is higher

14 It is proposed that the board of directors are authorized to follow the aforesaid pricing principles to determine the actual issuance price in accordance with the market status and objective terms and within the range no lower than the ratio of the stock price resolved in the shareholders meeting while complying with private placement related statutory laws and regulation. In the case that, by following the aforesaid pricing methods, the price of the common stock or GDR to be privately placed this time becomes lower than the stock s face value and results in accumulated losses, the company will process capital reduction or cover the losses from surplus or the capital reserve according to the market or the company s business status. The aforesaid pricing methods all comply with the laws and regulations stipulated by competent authorities, whereas the price will be set according to the market status and no lower than 80% of the reference price, which should be reasonable. 5. Selection of specific targets: Currently, no specific subscribers are available. In the future, those investors who can measure the risk and return and take up the risk shall be the primary target of the private placement. The issues regarding the contact with specific targets will be subject to Article 43-6 of the Securities and Exchange Act. It is proposed that the shareholders authorize the board of directors to handle it with full authority. 6. Reasons for private placement: (1) Reason for not using public offering to raise capital: The Company s 2012 final account showed a loss. By aiming at the private placement targets which are mostly institutional legal persons or those who have strong financial capacity and profound experience, it is hoped that raising the capital from those targets as specific investors could enhance timeliness and convenience of the company s capital raising, and further reinforce the company s competitiveness. In doing so, the company s financial structure will be strengthened and working capital will be solidified. (2) Amount for the private placement, application of the capital to be raised through the private placement and expected results: The amount for this time of issuance of private placement common stock and/or private

15 placement GDR shall not exceed 400 million shares of the common stock. In case of alternatively or simultaneously using the two capital raising instruments, the total amount for the issuance combining all the capital raising instruments shall not exceed 400 million shares of the common stock. The board of shareholders shall authorize the board of directors to adjust the issuance amount within the range of the aforesaid amount according to the market status, and issue the shares at a time within one year. The acquired capital will be used for solidifying the company working capital, which is expected to improve the company s capital structure and reduce interest expenditure. The implementation of the plan is expected to strengthen the company s competitiveness and bring about benefit to shareholders equity. 7. In principle, the major rights and obligations of the common stock to be honored from this time of private placement common stock and/or private placement GDR are the same as the common stock which has been issued by the company. However, according to the Securities and Exchange Act, the common stock and/or GDR (including the common stock acquired from redemption of the GDR) to be privately placed this time shall not be resold within three years after their delivery dates, except that they are sold to the ones prescribed by Article 43-8 of the Securities and Exchange Act for eligible transfer. After three years from the delivery date of this time of private common stock and/or private placement GDR, the company shall follow the Securities and Exchange Act to apply to the competent authorities for public offering and listing of the common stock honored from the private placement common stock and/or private placement GDR. 8. In terms of original shareholders equity, if the issuance is totally made with private placement common stock and/or private placement GDR, the maximum equity dilution for original shareholders is 9.96%. Furthermore, after the effect of capital increase shows up, the company s competitiveness will be elevated, which will benefit the shareholders. 9. The major content of this issuance of private placement common stock and/or private placement GDR includes private placement price, the number of private placement shares, private placement terms, private placement amount, capital increase base day, planned items, expected schedule and expected effects, etc. It is proposed that the board of

16 shareholders authorize the board of directors to adjust the issuance, institute required regulations and work on required procedures in accordance with the market status or objective environment. However, the private placement price shall not be lower than 80% of the reference price. In the future, if revisions are required or there are other matters not covered as a result of change in statutory laws and regulations, opinions or instructions from the competent authorities, change of the market status, operating assessment or change of the objective environment, the board of shareholders shall also authorize the board of directors to handle it with full authority. 10. In conjunction with this issuance of new common shares privately placed or sponsor privately placed GDR, or combination of both, it is proposed that the board of shareholders authorize the Chairman of the board of directors or his or her designated person to represent the company to handle all the issues regarding this issuance of new common shares privately placed or sponsor privately placed GDR, and sign related contracts and documents. 11. This case shall be proposed to the board of shareholders for approval after passing examination of the board of directors. Resolution:

17 Proposal 4 Proposed by the board of directors Subject: Discussion on amendment to the Regulations Governing Management of the Company s Asset Acquisition and Disposal. Explanations: Resolution: 1. This proposal shall be processed in accordance with the Q&A of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies released on November 30, 2012, and the Regulations Governing Preparation of Financial Reports by Securities Issuers amended and decreed as per the document Ching-Kuan-Cheng-Shen Tzu No issued by Financial Supervisory Commission on December 22, Based on the preceding official document, it is planned to revise the definition of the related party and subsidiary, with which the comparison table for amendments shall be revised accordingly. Please see P. 73 of the Appendix of the Manual for details. Proposal 5 Proposed by the board of directors Subject: Discussion on amendment to the Regulations Governing Management of the capital lending to Other Parties Explanations: To comply with the legislative spirit of external statutory laws and regulations, please see P. 75 in the Appendix of the Handbook for the comparison table for pre and post article amendments. Resolution:

18 Proposal 6 Proposed by the board of directors Subject: Removal of the restriction on the prohibition of directors engagement in similar businesses as stipulated in Article 209 of the Company Act. Explanations: 1. Processed according to Paragraph 1 of Article 209 of the Company Act: Directors shall elaborate on the major content of their act conducted for themselves or other persons within the scope of the company s business and obtain approval at the Shareholders Meeting. 2. The company s director Jiao You-Hui has additionally taken up the post of the director of Jiangyin Walsin Steel Cable Co., Ltd. engaging in the same or similar businesses to the company. It is proposed to shareholders meeting to remove the restriction on the prohibition of the aforesaid directors business strife within the scope of the Company s business, and not to exercise the disgorgement starting from the day that the aforesaid directors serve as the director for the companies in the same industry against the aforesaid directors. Explanation for businesses conducted for the company Other Company Name Jiangying Walsin Steel Cable Co., Ltd. Position taken Director Engaging in same or similar businesses to the company Production and sales businesses on special steel cables Resolution:

19 Proposal 7 Proposed by the board of directors Subject: The proposal is submitted to re-institute the company s rules and procedures governing shareholders meetings, and revoke the original rules and procedures governing shareholders meetings. Explanations: Resolution: 1. This proposal shall be processed by referring to the example of the Rules and Procedures Governing a Corporation s Shareholders Meeting enacted by the TWSE 2. The company used to follow the Rules Governing the Conduct of Shareholders Meetings by Public Companies enacted by the Financial Supervisory Commission to institute the rules of its shareholders meetings. As announced on May 15, 2012, the aforesaid rules are no longer applicable. Hence, the company has referred to the example of the Rules and Procedures Governing a Corporation s Shareholders Meeting enacted by the TWSE to re-institute the rules of its shareholders meetings. Please see P. 77 of the Appendix of this Manual. Extemporary motions Adjournment

20 Appendix

21 Walsin Lihwa Corporation 2012 Business Report business report The Company s 2012 operating revenues was NTD69.3 billion, with which the gross profit was NTD4.1 billion, the operating profit was NTD2.4 billion, the loss before tax was NTD3.3 billion and the net loss of the current period was NTD3.3 billion. The consolidated operating revenues of the Company and its subsidiaries in 2012 was NTD157.4 billion, with which the gross profit was NTD7.5 billion, the operating profit was NTD2.3 billion, the loss before tax was NTD1.9 billion and the total consolidated net loss was NTD3.3 billion business summary As affected by Europe s debt crises and decline of the global economy in 2012, international copper and nickel prices started to slip from the beginning of the year and intense competition in the China market. Thus, the businesses of Walsin Lihwa Corporation have all faced the severe challenge of achieving their production and sales goals. The Company s subsidiaries have continued to suffer losses as a result of aforesaid business stagnation and market weakness, the Company therefore set NTD2.7 billion aside for impairment loss. The operating status of the Company s core businesses in 2012 and the Company s 2013 operating outlook are described as below: Wire and cable business Due to sluggish copper prices and fierce market competition, sales of copper materials have been negatively affected. Thus, the company has reduced its sales to the low value-added clients in an attempt to maintain its profit level. Even though it resulted in decrease in sales volume and value in 2012, the gross profit slightly rose. Under the circumstance where the supply outstrips the demand in the copper material market, the Company has pursued stable profits as its goal, while it also made every effort to enhance its production efficiency and control the costs of raw

22 materials and capital. Due to China s macroscopic control in 2012, its government capital became tense. As a result, China s state bidding activities for high voltage cables had slowed down. Thus, the overall profit of the Company s cable business in 2012 paled in comparison to To compound matters, the inventory control reinforced by the down-stream clients also contributed to the slower pace of their bidding invitations. In 2013, the Company will aggressively participate in the competition of the local market and win more public construction cases. For continuously developed industrial cables, the company has already had its various products certified and is ready for order taking. Specialty steel business Due to market downswing, prices of raw materials continuously declining quarter by quarter and terminated production of carbon steel slabs, the sales of the company s stainless steel materials were affected in 2012, which resulted in decrease in the company s operating income compared to the previous year. Even though the market has stagnated, the company s sales of stainless steel materials (including hot rolled steel bars and seamless steel tubes, etc) in 2012 still achieved 520,000 tons, a level on par with that of Looking ahead to 2013, the company has planned to adjust its production line structure for its plants in China, so as to elevate the output of Yantai plant s refined steel and add product value. As for Taiwan s Yanshui plant, the company will continue to improve its equipment and expand its steel refining capacity. By adding the Taichung Harbor steel roll plant, which is expected to start its mass production in the second quarter, the company will use the steel slabs produced by its Yanshui plant to further process its products so as to add more value to its products. Precision material business As affected by the slowdown of China s public construction and keen competition in the oversupplied market, Jiangyin steel wire

23 plant gained less profit in However, for 2013, the company will focus more on high-quality clients and endeavor to increase the ratio of its high-value added zinc coated steel wire products. Micro-electro mechanical business In 2012, the LED product prices had continued to decline and there were no substantial improvement in the production yield rate. Therefore, the margin contribution were not enough, which led to operating losses. Currently, the company has devoted its efforts to enhance its production yield and continue to reinforce its research/development, production/sales and business management, so as to elevate its sales volume and gross profits. Solar business The company s U.S. solar construction operation in 2012 showed stable performance, and its operating income and profits were on par with Given that the company s self-operating solar power generation capacity in the U.S. already reached 27.8 MW by the end of 2012, the company will continue to focus on construction project s construction management and long-term power sale contracts. Real estate business The rental of Walsin headquarters A6 building already exceeded 90% in the end of In view of the upward trend of office rental, the rental rate is expected to continue to grow. The office building built on the C1 district of Nanjing Walsin Central has been smoothly handed over since the end of The residential building at the C2 district will start to be contracted for construction from early 2012, and the sale of the building is expected to be launched in As for the D and AB districts, the spaces are larger and there are more floors to be built, which would be developed separately depending on company capital plan. 3. Please refer to the Company s 2012 annual report for more details

24 Responsible person: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief Accountant: WU, CHIN-SHENG

25 Walsin Lihwa Corporation Balance Sheet December 31, 2012 and 2011 Unit:In Thousand NTD Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Code Assets Amount % Amount % Code Liabilities and Shareholders Equity Amount % Amount % Current assets Current liabilities 1100 Cash & cash equivalents $ 607,238 1 $ 2,444, Short-term debts $ 7,360,812 9 $ 8,257, Financial assets at fair value through profit or loss-current 43,383-13, Financial liabilities at fair value through profit or loss-current 4,207-61, Notes receivable, net 54,563-51, Accounts payable 2,510, ,974, Accounts receivable, net 1,955, ,817, Income tax payable 158, ,676 - Derivative financial liabilities held for hedging 1150 Accounts receivable-net related parties 974, , current , Other financial assets-current 196, , Other payables 990, ,273, X Inventories 6,208, ,329, Long-term liabilities due in one year - - 9,500, Restricted assets 305, , Other current liabilities 147, , Other current assets 442, , XX Total current liabilities 11,172, ,701, XX Total current assets 10,787, ,736, Long-term liabilities Fund and investments 2420 Long-term debts 10,200, Long-term equity investment accounted for by Derivative financial liabilities held for hedging 1421 the equity method 47,042, ,177, noncurrent Real estate investments 146, ,714-24XX Total long-term liabilities 10,200, Prepayment for investments 79, Land value increment tax reserve 131, ,132 - Financial assets at fair value through profit or 1430 loss-noncurrent , Available-for-sale financial assets -noncurrent 681, , Held-to-maturity financial assets- noncurrent ,080 - Other liabilities Derivative financial assets held for hedging noncurrent - - 3, Accrued pension cost 1,296, ,306,147 2 Unrealized profits from intercompany 1480 Financial assets carried at cost-noncurrent 399, ,265, transactions ,482-14XX Total fund and investments 48,349, ,511, Other 151, ,514 - Property, plant and equipment 28XX Total other liabilities 1,447, ,552,143 2 Original cost of Property, plant and equipment 1501 Land 7,397, ,363, XXX Total liabilities 22,951, ,384, Buildings and improvements 8,666, ,600, Machinery and equipment 11,342, ,397, Shareholders Equity 1681 Other equipment 3,008, ,955, Capital common stock 36,160, ,160, X8 Revaluation increment 677, ,798 1 Capital surplus Total original cost and revaluation increments 31,093, ,994, Additional paid-in capital 11,060, ,042, X9 Less accumulated depreciation ( 13,733,017) ( 17) ( 12,862,254) ( 15) 3220 Treasury stock transactions 1,580, ,580,468 2 Gain on disposal of Property, plant and 1599 Less accumulated impairment ( 1,140,178) ( 1) ( 1,016,731) ( 1) 3240 equipment 2,074, ,074,231 2 Adjustment on long-term equity 1670 Construction in progress & prepayments 4,456, , investments 4,432, ,508, XX Property, plant and equipment, net 20,676, ,901, Others 1,027, ,027,451 1 Retained earnings Other assets 3310 Legal reserve 5,424, ,424, Refundable deposits 29,372-33, Special reserve 1,136, ,859,

26 1830 Deferred charges 28,523-10, Accumulated deficit ( 3,328,458) ( 4) ( 2,723,036) ( 3) 1860 Deferred income tax assets-noncurrent 733, ,000 1 Other subjects of Shareholders Equity 1880 Other 182, Cumulative translation adjustments 1,022, ,473, XX Total other assets 973, , Unrealized profit or loss on financial instruments ( 2,243,041) ( 3) ( 2,695,200) ( 3) 3460 Unrealized revaluation increment 426, , Treasury stock ( 936,297) ( 1) ( 650,178) ( 1) 3XXX Total Shareholders Equity 57,836, ,509, XXX Total assets $ 80,788, $ 88,894, Total liabilities & Shareholders Equity $ 80,788, $ 88,894, (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

27 Walsin Lihwa Corporation Income Statement From January 1 to December 31, 2012 and 2011 Unit: In Thousands of NTD, Except loss per share Code Amount % Amount % Operating income 4110 Sales income $ 69,139, $ 74,267, Less: sales return & discount ( 487,229) ( 1) ( 539,550) ( 1) Rental income 518, , Engineering income 9, Other operating income 103, , Net operating income 69,282, ,246, Operating cost 65,196, ,116, Realized sales gross profit on inter-affiliate accounts ( 14,564) - 23, Operating gross profit 4,072, ,154,508 6 Operating expenses 6100 Promotion expense 491, , Management & general affairs expenses 938, , R & D expense 197, , Total operating expenses 1,627, ,092, Operating profit 2,444, ,061,680 3 Nonoperating income & profit 7110 Interest income 19,606-28, Investment income 36,651-11,673 - Gain on disposal of Property, plant and 7130 equipment 30, ,491 - Gain on disposal of 7140 investments , Exchanged gain 168, Gain on valuation of financial assets 16,841-27, (Carried Forward)

28 (Bought Forward) Code Amount % Amount % 7320 Gain on valuation of financial liabilities 56, Other 42, , Total nonoperating income and profit 371, ,055,433 1 Nonoperating expenses & losses 7510 Interest expense $ 305,809 1 $ 372, Investment loss recognized under equity method 3,872, ,831, Other investment loss 39, Loss on disposal of Property, plant and equipment 272-1, Loss on disposal of investments 197, Exchanged loss , Impairment loss 1,662, ,074, Loss on valuation of financial liabilities , Other 61,487-50, Total nonoperating expenses & losses 6,138, ,504, Loss before tax ( 3,322,458) ( 5) ( 4,387,036) ( 6) 8110 Income tax profit (expense) ( 6,000) - 116, Net loss of this period ($ 3,328,458) ( 5) ($ 4,271,036) ( 6) Code Before tax After tax Before tax After tax Loss per share 9750 Basic loss per share ($ 0.93) ($ 0.94) ($ 1.23) ($ 1.20) The pro-forma amounts, assuming common shares of the company held by subsidiaries were not treated as treasury stock: Net loss of this period ($ 3,328,458) $ 4,263,449 Before tax After tax Before tax After tax Basic loss per share ($ 0.93) ($ 0.93) ($ 1.23) ($ 1.20) (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.)

29 Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

30 Common Stock- Capital Stock Advance Receipts for Capital Stock Additional Paid-in Capital Walsin Lihwa Corporation Statement of Changes in Shareholders Equity From January 1 to December 31, 2012 and 2011 Treasury stock transaction Unit: In Thousands of NTD Capital surplus Retained earnings Other subjects of Shareholders Equity Gain from Disposal of Property, plant and equipment Adjustment on longterm equity investments Conversion Option Cumulative Accumulated translation profit (loss) adjustments Unrealized profit or loss on financial instruments Unrealized revaluation increments Total Shareholders Equity Other Legal reserve Special reserve Treasury stock Balance, Jan. 1, 2011 $ 36,148,908 $ 5,547 $ 11,039,521 $ 1,428,077 $ 2,074,231 $ 4,533,246 $ 211,462 $ 958,841 $ 4,946,856 $ 1,442,424 $ 5,873,011 ($ 299,869) ($ 2,480,944) $ 426,405 ($ 964,154) $ 65,343,562 Appropriation of 2010 earnings Legal reserve ,671 - ( 477,671) Cash dividends ( 1,430,400) ( 1,430,400) Special reserve ,416,940 ( 2,416,940) Net loss in ( 4,271,036) ( 4,271,036) Conversion of convertible bonds 5,547-3, ( 1,210) ,279 Transfer from advance receipts to common stock 5,547 ( 5,547) Net worth change adjustment of Long-term investment share equity ( 24,269) ( 24,269) Distribution of prior year s cash dividends ( 3) ( 3) Adjustments on capital surplus of conversion option for redemption of bonds ( 68,613) 68, Translation adjustments on foreign subsidiaries ,131, ,131,140 Translation adjustments on long-term equity investment of investees , ,273 Adjustments on changes of unrealized loss on availablefor-sale financial assets ,112, ,112,739 Adjustments on changes of unrealized gain (loss) on cash flow hedge , ,989 Unrealized gain (loss) on financial instruments of investees ( 1,405,984) - - ( 1,405,984) Adjustments on issuance costs of global depositary shares - - ( 778) ( 778) Treasury stock transferred to employees , ( 141,639) , ,141 Cash dividends of shares of WLC held by subsidiaries transferred to paid in capital from treasury stock , ,587 Balance, Dec. 31, 2011 $ 36,160,002 $ - $ 11,042,685 $ 1,580,468 $ 2,074,231 $ 4,508,977 $ - $ 1,027,451 $ 5,424,527 $ 3,859,364 ($ 2,723,036) $ 2,473,544 ($ 2,695,200) $ 426,405 ($ 650,178) $ 62,509,240 Reversal of Special reserve ( 2,354,409) 2,354, Special reserve used to offset deficit ( 368,627) 368,

31 Net loss in ( 3,328,458) ( 3,328,458) Net worth change adjustment of Long-term investment share equity ( 50,776) ( 50,776) Disposal of Long-term investment write-off to the adjustment of capital surplus ( 25,859) ( 25,859) Distribution of prior year s cash dividends ( 8) ( 8) Translation adjustments on foreign subsidiaries ( 1,113,913) ( 1,113,913) Cumulative Translation adjustment listed to invested company ( 340,153) ( 340,153) Adjustments of cumulative translation adjustments due to the sale of long-term investments , ,863 Adjustments on changes of unrealized loss on availablefor-sale financial assets , ,769 Adjustments on changes of unrealized gain (loss) on cash flow hedge , ,718 Unrealized gain (loss) on financial instruments of investees , ,538 Adjustments on issuance costs of global depositary shares , ,134 Cost adjustment - global depositary Receipts , ,897 Parent company s stock held by subsidiary ( 286,119) ( 286,119) Balance, Dec. 31, 2012 $ 36,160,002 $ - $ 11,060,582 $ 1,580,468 $ 2,074,231 $ 4,432,342 $ - $ 1,027,443 $ 5,424,527 $ 1,136,328 ($ 3,328,458) $ 1,022,341 ($ 2,243,041) $ 426,405 ($ 936,297) $ 57,826,873 (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

32 Walsin Lihwa Corporation Statement of Cash Flows From January 1 to December 31, 2012 and 2011 Unit: In Thousands of NTD Cash flows from operating activities Net Loss of this period ($ 3,328,458) ($ 4,271,036) Depreciation expense 1,041,728 1,069,461 Amortization expense 10,607 14,551 Net loss (gain) on valuation of financial assets and liabilities ( 73,120) 9,492 Net loss (gain) on disposal of investment 197,474 ( 661,777) Disinvestment exchanged loss for Long-term equity investment recognized under equity method - 122,055 Liquidation loss of long-term equity investments recognized under equity method 39,380 - Investment loss of long-term equity investments recognized under equity method 3,872,105 3,831,331 Cash dividends from investment under equity method 109,598 88,657 Net gain on disposal of Property, plant and equipment ( 30,680) ( 138,511) Amortization of discount on overseas convertible bonds - 26,679 Foreign exchange adjustment on overseas convertible bonds - 17,943 Impairment loss 1,662,472 3,074,591 Unrealized valuation loss (gain) on financial instruments for held for hedging 18,623 ( 18,623) Unrealized exchange loss on held to maturity financial instruments 7,740 - Net changes in operating assets and liabilities Financial assets at fair value through profit and loss-current ( 73,557) 502,900 Notes receivable ( 3,126) ( 14,130) Accounts receivable ( 137,787) ( 222,678) Accounts receivable-related parties ( 115,057) 118,608 Other financial assets -current 18,126 72,539 (Carried Forward)

33 (Bought Forward) Inventories 3,121,816 3,258,864 Other current assets 160,593 ( 81,814) Deferred income tax assets 34,000 ( 406,000) Other assets ( 154,489) ( 1,534) Accounts payable ( 2,463,646) 1,445,341 Income tax payable ( 154,972) ( 231,157) Other payables ( 223,798) ( 329,352) Other current liabilities ( 126,536) 66,410 Accrued pension cost ( 9,501) 69,757 Other liabilities ( 36,234) 69,085 Net cash provided by operating activities 3,363,301 7,481,652 Cash flows from investing activities Proceeds from disposal of financial assets carried at cost 106, ,908 Financial assets carried at cost - noncurrent increase ( 281,312) ( 550,000) Disinvestment and capital return due to liquidation of financial assets carried at cost ,033 Increase of long-term equity investment accounted for by the equity method ( 790,083) ( 7,339,736) Disinvestment and capital return due to liquidation of long-term equity investment accounted for by the equity method 61,016 1,646,009 Proceeds disposal of from long-term equity investment accounted for by the equity method 503,306 - Increase in long-term investment paid in advance ( 79,683) - Management expenses for investment activity ( 523,557) ( 540,809) Acquisition of held-to-maturity financial assets - ( 235,080) Acquisition of Property, plant and equipment ( 4,133,443) ( 1,580,231) Proceeds from the sale of the Property, plant and equipment 143,571 1,101,178 Increase in deferred expense ( 8,000) ( 457) Net cash used in investing activities ( 5,001,054) ( 7,364,185) Cash flows from financing activities Decrease (Increase) in short-term debts ( 896,834) 2,386,405 Payment of long-term debts expenses ( 20,400) - Proceeds from disposal of treasury stock - 317,141 (Carried Forward)

34 (Bought Forward) Return of related issuance cost of global depositary shares 17,897 55,623 Increase in long-term debts (Repayment) 700,000 ( 3,500,000) Repayment of corporate bonds - ( 512,364) Distribution of cash dividends - ( 1,430,400) Decrease in pledged time deposits - 2,423,840 Distribution of prior year s cash dividends ( 8) ( 3) Net cash (used in) financing activities ( 199,345) ( 259,758) Net (decrease) increase in cash and cash equivalent of this period ( 1,837,098) ( 142,291) Cash and cash equivalent, Beginning of year 2,444,336 2,586,627 Cash and cash equivalent, End of year $ 607,238 $ 2,444,336 Supplemental Disclosure of cash flows information Interest paid of this period $ 304,533 $ 352,917 Income tax paid of this period $ 294,984 $ 473,158 Investment & financial activities no effect to cash flows Long-term liabilities due in one year $ - $ 9,500,000 (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

35 Walsin Lihwa Corporation and its subsidiaries Consolidated Balance Sheet December 31, 2012 and 2011 Unit:In Thousand NTD Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2011 Code Assets Amount % Amount % Code Liabilities and Shareholders Equity Amount % Amount % Current assets Current liabilities 1100 Cash & cash equivalents $ 6,060,115 6 $ 12,939, Short-term debts $ 11,772, $ 12,378, Financial assets at fair value through profit 1310 or loss-current 50,191-12, Short-term bills payable 95, Available-for-sale financial assets Financial liabilities at fair value through current 4,413-4, profit or loss-current 4,529-69,632 - Derivative financial liabilities held for 1120 Notes receivable, net 5,407, ,532, hedging-current , Accounts receivable, net 10,770, ,027, Notes payable 907, , Other financial assets-current 503,293-1,906, Accounts payable 5,037, ,554, Inventories 22,366, ,074, Income tax payable 923, , Noncurrent assets classified as held for sale 33, Other payables 3,811, ,631, Restricted assets-current 649, , Advance receipts on real estate - - 2,931, Other current assets 1,821, ,683, Long-term liabilities due in one year 126,174-27,134, XX Total current assets 47,666, ,885, Other current liabilities 1,357, ,489, XX Total current liabilities 24,036, ,577, Fund and investments 1421 Long-term equity investment accounted for by the equity method 17,300, ,399, Long-term liabilities 1423 Real estate investments 163, , Long-term debts 19,589, ,106, Prepayment for long-term investments - - 6, Long-term accounts payable 74,574-39,769 - Financial assets at fair value through profit 1430 or loss-noncurrent ,849-24XX Total Long-term liabilities 19,663, ,145,846 1 Available-for-sale financial assets noncurrent 1,265, ,048, Held-to-maturity financial assets - noncurrent ,080 - Derivative financial assets held for hedging -noncurrent - - 3, Land value increment tax reserve 131, , Financial assets carried at cost-noncurrent 1,547, ,587, XX Total fund and investments 20,276, ,457, Other liabilities 2810 Accrued pension cost 1,328, ,334,199 1 Property, plant and equipment 2860 Deferred income tax liabilities 65,583-78,325 - Original cost of Property, plant and Unrealized profits from intercompany equipment 2881 transactions , Land 7,658, ,624, Other 1,483, ,407, Buildings and improvements 13,713, ,831, XX Total other liabilities 2,878, ,878, Machine and equipment 25,555, ,944, Other equipment 6,457, ,347, XXX Total liabilities 46,710, ,732, X8 Revaluation increment 677, ,798-15XY Original cost & revaluation increment 54,063, ,425, Shareholders Equity of the parent 15X9 Less accumulated depreciation ( 22,431,584) ( 21) ( 20,436,061) ( 16) 3110 Capital common stock 36,160, ,160, Less accumulated impairment ( 1,914,126) ( 2) ( 1,338,292) ( 1) 1670 Construction in progress & prepayments 5,255, ,468,019 3 Capital surplus 15XX Net Property, plant and equipment 34,973, ,119, Additional paid-in capital 11,060, ,042, Treasury stock transactions 1,580, ,580,468 1 Intangible assets 3240 Gain on disposal of Property, plant and equipment 2,074, ,074,231 2 Adjustment on long-term equity investments 4,432, ,508, Land use right 1,469, ,568, Other intangible assets 191, , Others 1,027, ,027, Total intangible assets 1,661, ,755,266 1 Retained earnings Other assets 3310 Legal reserve 5,424, ,424, Refundable deposits 417, , Special reserve 1,136, ,859, Deferred charges 109, , Accumulated deficit ( 3,328,458) ( 3) ( 2,723,036) ( 2) 1860 Deferred income tax assets-noncurrent 1,005, ,570 1 Other subjects of Shareholders Equity 1880 Other 2,694, ,281, Cumulative translation adjustments 1,022, ,473,544 2

36 Unrealized profit or loss on financial 18XX Total other assets 4,225, ,895, instruments ( 2,243,041) ( 2) ( 2,695,200) ( 2) 3460 Unrealized revaluation increment 426, , Treasury stock ( 936,297) ( 1) ( 650,178) - Total Shareholders Equity of parent company 57,836, ,509, Minority Interest 4,256, ,871, XXX Total Shareholders Equity 62,092, ,381, XXX Total assets $ 108,803, $ 126,113, Total liabilities & Shareholders Equity $ 108,803, $ 126,113, (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

37 Walsin Lihwa Corporation and its subsidiaries Consolidated Income Statement From January 1 to December 31, 2012 and 2011 Unit: In Thousands of NTD, Except loss per share Code Amount % Amount % 4110 Operating income $ 158,612, $ 191,435, Less: sales return & discount ( 1,171,908) ( 1) ( 1,542,350) ( 1) Net operating income 157,440, ,893, Operating cost 149,905, ,561, Operating gross profit 7,534, ,331,256 3 Operating expenses 6100 Promotion expense 1,800, ,750,237 1 Management & general 6200 affairs expenses 3,003, ,210, R & D expense 450, ,020 - Total operating 6000 expenses 5,254, ,857, Operating profit (loss) 2,280,690 2 ( 526,230) - Nonoperating income & profit 7110 Interest income 459, , Investment income 55,353-32, Gain on disposal of Property, plant and equipment 49, , Gain on disposal of investments , Exchanged gain 160, , Gain on valuation of financial assets 24, (Carried Forward)

38 (Bought Forward) Code Amount % Amount % 7320 Gain on valuation of financial liabilities 64, Other 221,811-1,109, Total nonoperating income and profit 1,035, ,672, Nonoperating expenses & losses 7510 Interest expense 617,547-1,290, Investment loss recognized under equity method 837, , Other investment loss 39, Loss on disposal of investments 835, Loss on disposal of Property, plant and equipment 38,154-52, Impairment loss 2,669, ,998, Loss on valuation of financial assets , Loss on valuation of financial liabilities , Other 183, , Total nonoperating expenses & losses 5,221, ,975, Loss before tax ( 1,905,454) ( 1) ( 3,829,514) ( 2) 8110 Income tax expense ( 1,361,302) ( 1) ( 363,112) Total consolidated net loss ($ 3,266,756) ( 2) ($ 4,192,626) ( 2) Attributable to: 9601 Parent company s shareholders ($ 3,328,458) ( 2) ($ 4,271,036) ( 2) 9602 Minority interest 61,702-78,410 - ($ 3,266,756) ( 2) ($ 4,192,626) ( 2) Code Before tax After tax Before tax After tax 9750 Basic loss per share Loss per share before not 9740AA deducting minority interest ($ 0.54) ($ 0.92) ($ 1.08) ($ 1.18) Basic loss per share 9750 (Attributable to Parent company s shareholders) ($ 0.94) $ - ($ 1.20)

39 The pro-forma amounts, assuming common shares of parent company held by subsidiaries were not treated as treasury stock: Before not deducting Minority interest After tax belonging to parent company s shareholders before not deducting Minority interest After tax belonging to parent company s shareholders Consolidated loss of this period (Attributable to Parent company s shareholders) ($3,328,458) ($4,263,449) Basic loss per share ($ 0.53) ($ 0.93) ($ 1.08) ($ 1.20) (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

40 Capital stock Advance Receipts for Capital Stock Additional Paid-in Capital Walsin Lihwa Corporation and its subsidiaries Consolidated Statement of Changes in Shareholders Equity From January 1 to December 31, 2012 and 2011 Treasury stock transaction Capital Surplus Retained Earnings Other subjects of Shareholders Equity Gain from Disposal Unrealized of Adjustment profit or Property, on longterm Conversion Cumulative loss on Unrealized equity plant and Option translation financial revaluation Legal reserve Special reserve Accumulated profit (loss) Unit: In Thousands of NTD Treasury stock Minority Interest Total Shareholders Equity equipment investments Other adjustments instruments increments Balance, Jan. 1, 2011 $ 36,148,908 $ 5,547 $ 11,039,521 $ 1,428,077 $ 2,074,231 $ 4,533,246 $ 211,462 $ 958,841 $ 4,946,856 $ 1,442,424 $ 5,873,011 ($ 299,869) ($ 2,480,944) $ 426,405 ($ 964,154 $ 1,662,692 $ 67,006,254 Appropriation of 2010 earnings Legal reserve ,671 - ( 477,671) Cash dividends ( 1,430,400) ( 1,430,400) Special reserve ,416,940 ( 2,416,940) Total consolidated net loss in ( 4,271,036) ,410 ( 4,192,626) Conversion of convertible bonds 5,547-3, ( 1,210) ,279 Transfer from advance receipts to common stock 5,547 ( 5,547) Net worth change adjustment of Longterm investment share equity ( 24,269) ( 24,269) Distribution of prior year s cash dividends ( ( 3) Adjustments on capital surplus of conversion option for redemption of bonds ( 68,613) 68, Foreign subsidiaries consolidated statement translation adjustment ,131, ,131,140 Translation adjustments on longterm equity investment of investees , ,273 Adjustments on changes of unrealized loss on available-for-sale financial assets , ( ,817 Adjustments on changes of unrealized gain (loss) on cash flow hedge , ,989

41 Unrealized gain (loss) on financial instruments of investees ( 639,123) ( 639,123) Adjustments on issuance costs of global depositary shares - - ( 778) ( 778) Treasury stock transferred to employees , ( 141,639) , ,141 Dividends of shares of WLC held by subsidiaries transferred to paid in capital from treasury stock , ,587 Net change of minority interest , ,884 Balance, Dec. 31, ,160,002-11,042,685 1,580,468 2,074,231 4,508,977-1,027,451 5,424,527 3,859,364 ( 2,723,036) 2,473,544 ( 2,695,200) 426,405 ( 650,178 1,871,925 64,381,165 Reversal of Special reserve ( 2,354,409) - 2,354, Special reserve used to offset deficit ( 368,627) 368, Total consolidated net loss in ( 3,328,458) ,702 ( 3,266,756) Net worth change adjustment of Longterm investment share equity ( 50,776) ( 50,776) Disposal of Long-term investment write-off to the adjustment of capital surplus ( 25,859) ( 25,859) Distribution of prior year s cash dividends ( ( 8) Foreign subsidiaries consolidated statement translation adjustment ( 1,113,913) ( 1,113,913) Cumulative Translation adjustment listed to invested company ( 340,153) ( 340,153) Adjustments of cumulative translation adjustments due to the sale of long-term investments , ,863 Adjustments on changes of unrealized loss on available-for-sale financial assets , ( ,

42 Adjustments on changes of unrealized gain (loss) on cash flow hedge , ,718 Unrealized gain (loss) on financial instruments of investees , ,882 Adjustments on issuance costs of global depositary shares , ,133 Cost adjustment - global depositary Receipts , ,897 Parent company s stock held by subsidiary ( 286,119 ( 539,429 ( 825,548) Net change of minority interest ,862,615 2,862,615 Balance, Dec. 31, 2012 $ 36,160,002 $ - $ 11,060,582 $ 1,580,468 $ 2,074,231 $ 4,432,342 $ - $ 1,027,443 $ 5,424,527 $ 1,136,328 ($3,328,458) $ 1,022,341 ($ 2,243,041) $ 426,405 ($ 936,297 $ 4,256,072 $ 62,092,945 (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.) Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

43 Walsin Lihwa Corporation and its subsidiaries Consolidated Statement of Cash Flows From January 1 to December 31, 2012 and 2011 Unit: In Thousands of NTD Cash flows from operating activities Total consolidated net (loss) profit ($ 3,266,756) ($ 4,192,626) Depreciation expense & various amortization 2,697,835 2,345,045 Investment loss recognized under equity method, net 837, ,802 Cash dividends from equity-method investees 68,342 92,462 Disinvestment exchanged loss for Long-term equity investment recognized under equity method - 122,055 Liquidation loss of long-term equity investments recognized under equity method 39,380 - Impairment loss 2,669,437 3,998,323 Net gain on disposal of Property, plant and equipment ( 11,226) ( 161,537) Net loss (gain) on disposal of investments 835,771 ( 165,938) Net loss (gain) on valuation of financial assets and liabilities ( 88,677) 100,222 Amortization of discount on overseas convertible bonds - 26,679 Foreign exchange adjustment on overseas convertible bonds - 17,943 Unrealized valuation loss (gain) on financial instruments for held for hedging 18,623 ( 18,623) Unrealized exchange loss on held to maturity financial instruments 7,740 - Cost of employee stock options 6,887 - Net changes in operating assets and liabilities Financial assets at fair value through profit and loss-current ( 307,181) 398,342 Notes and accounts receivable 382,601 ( 2,486,752) Other financial assets -current ( 299,052) ( 201,277) Deferred income tax assets & liabilities 388,715 ( 56,827) Inventories 7,707,390 5,392,080 Other current assets 512,732 ( 109,948) Other assets ( 63,537) ( 665,400) Notes & accounts payable ( 4,519,599) ( 75,474) Income tax payable 492,888 ( 344,548) Other payables 1,179,642 ( 659,461) (Carried Forward)

44 (Bought Forward) Other current liabilities ( 132,072) ( 175,379) Advance real estate receipts ( 2,931,938) 2,931,938 Accrued pension cost ( 5,311) 71,743 Other liabilities 169,101 ( 69,837) Net cash provided by operating activities 6,389,120 6,524,007 Cash flows from investing activities Acquisition of financial assets carried at cost ( 281,312) ( 634,488) Proceeds from disposal of financial assets carried at cost 168, ,785 Acquisition of available-for-sale financial assets - ( 1,314,538) Acquisition of held-to-maturity financial assets - ( 235,080) Disinvestment and capital return due to liquidation of financial assets carried at cost ,252 Proceeds from sale of available-for-sale financial assets - 66,508 Increase of long-term equity investment accounted for by the equity method ( 534,780) ( 816,107) Proceeds from disposal of long-term equity investment accounted for by the equity method 811, ,060 Capital return due to liquidation of long-term equity investment accounted for by the equity method 59,110 89,009 Net cash provided by subsidiaries 518, Net cash received from (used in) disposal of subsidiaries ( 13,957) 971,104 Acquisition of Property, plant and equipment ( 6,297,946) ( 6,155,184) Proceeds from sale of Property, plant and equipment 285, ,622 Other financial assets-current decrease (increase) 1,108,419 ( 1,129,917) Acquisition of land use rights ( 227) ( 108,390) Proceeds from disposal of land use rights 6,335 18,985 Increase in deferred expense ( 38,420) ( 86,698) Acquisition of intangible assets - ( 200) Net cash used in investing activities ( 4,207,902) ( 8,004,425) Cash flows from financing activities Decrease in short-term debts ( 461,702) ( 7,823,036) Increase in short-term bills payable 95,956 - Decrease in pledged time deposits 39,697 3,127,090 (Decrease) increase in long-term debts ( 7,899,649) 7,774,416 Payment of long-term debts expenses ( 20,400) - Repayment of corporate bonds - ( 512,364) (Carried Forward)

45 (Bought Forward) Distribution of minority interest dividends ( 55,531) ( 285,306) Distribution of prior year s cash dividends ( 8) ( 3) Capital contribution from minority interest ( 9,257) 656,137 Return of related issuance cost of global depositary shares 17,897 55,623 Proceeds from disposal of treasury stock - 317,141 Cash dividends - ( 1,422,813) Net cash (used in) provided by financing activities ( 8,292,997) 1,886,885 Effect of exchange rate changes 767,942 2,314,730 Increase in cash & cash equivalents of this period ( 6,879,721) 2,721,197 Cash and cash equivalent, Beginning of year 12,939,836 10,218,639 Cash and cash equivalent, End of year $ 6,060,115 $ 12,939,836 Supplemental Disclosure of cash flows information Interest paid of this period $ 597,714 $ 1,340,415 Income tax paid of this period $ 543,475 $ 780,852 Investment & financial activities no effect to cash flows Long-term liabilities due in one year $ 126,174 $ 27,104,912 On December 31, 2012, Chin-Xin Investment Co., Ltd., the Company s subsidiary, acquired 100% of the share of Dachien Investing Corp. and Win Investment Inc. though stock swap. The fair values of the assets and liabilities of the acquired companies were as follows: Amount Cash $ 518,486 Other current assets 88 Long-term equity investment accounted for by the equity method 625,868 Available-for-sale financial assets - noncurrent 1,095,799 Financial assets carried at cost - noncurrent 419,338 Property, plant and equipment 102 Refundable deposits 2,450 Temporary income tax payments 158 Other assets - other 1,230 Other payables ( 137) Other current liabilities ( 11) Net assets of Dachien Investing Corp. and Win Investment Inc. 2,663,371 Deduction: Long-term equity investment accounted for by the equity method - Dachien Investing Corp. ( 18,007) Deduction: Issuance of new shares (common stock $2,418,677 thousand and additional paid-in capital in excess of par $226,687 thousand) ( 2,645,364) Payment for stock swap $ - (Please see the Auditors Report made on Mach 21, 2013 by Deloitte & Touche.)

46 Chairman: CHIAO, YU-LUN Manager: CHENG, HUI-MING Chief accountant: WU, CHIN-SHENG

47 To. Walsin Lihwa Corporation Auditors Report We have audited the accompanying balance sheets of Walsin Lihwa Corporation (the Company ) as of December 31, 2012 and 2011, and the related statements of income, changes in stockholders equity, and 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. The financial statements as of and for the years ended December 31, 2012 and 2011 of certain equitymethod investees were audited by other auditors. Our opinion, insofar as it relates to such investments, is based solely on the reports of other auditors. The investments in such investees amounted to NT$2,858,516 thousand and NT$2,732,915 thousand which constituted 3.54% and 3.07% of the total assets as of December 31, 2012 and 2011, and the investment loss amounted to NT$53,424 thousand and NT$132,262 thousand for the years then ended. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China. We have also audited the consolidated balance sheets of Walsin Lihwa

48 Corporation and its sbusidiaries as of December 31, 2012 and 2011, and the related consolidated statemnets of income, changes in stockholders equity, and cash flows for the years then ended ( not presented herewith) and have expressed an unqualified opinion thereon in our report with explanatory paragraphs dated March 21, Deloitte & Touche. CPA CHIU, MING-YU CPA HUNG, KUO-TIEN Approval File No. of Financial Supervisory Commission, Executive Yuan: Chin-kuancheng-6-tzu-ti March 21, 2013 Approval File No. of Securities and Futures Management Committee MOF: Tai-tsai-chen-6- tzu-ti

49 Auditors Report To. Walsin Lihwa Corporation We have audited the accompanying consolidated balance sheets of Walsin Lihwa Corporation and subsidiaries (the Company ) as of December 31, 2012 and 2011, and the related consolidated statements of income, changes in stockholders equity, and 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. The financial statements of certain subsidiaries included in the consolidated financial statements as of and for the years ended December 31, 2012 and 2011 were audited by other auditors. Our opinion, insofar as it relates to such subsidiaries, is based solely on the reports of other auditors. The total assets of such subsidiaries amounted to NT$6,942,403 thousand and NT$4,352,612 thousand which constituted 6.38% and 3.45% of the consolidated total assets as of December 31, 2012 and 2011, and the total net operating revenues amounted to NT$3,701,373 thousand and NT$1,132,308 thousand which constituted 2.35% and 0.60% of the consolidated total net operating revenues for the years then ended. The financial statements as of and for the years ended December 31, 2012 and 2011 of certain equity-method investees were audited by other auditors. Our opinion, insofar as it relates to such investments, is based solely on the reports of other auditors. The investments in such investees amounted to NT$331,307 thousand and NT$1,220,116 thousand which constituted 0.30% and 0.97% of the consolidated total assets as of December 31, 2012 and 2011, and the investment loss amounted to NT$112,287 thousand and NT$121,476 thousand for the years then ended. We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and 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,

50 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 and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China. Deloitte & Touche. CPA CHIU, MING-YU CPA HUNG, KUO-TIEN Approval File No. of Financial Supervisory Commission, Executive Yuan: Chin-kuancheng-6-tzu-ti March 21, 2013 Approval File No. of Securities and Futures Management Committee MOF: Tai-tsai-chen-6- tzu-ti

51 Supervisors audit report The Company s 2012 standalone financial statements and 2012 consolidated financial statements0 prepared by the board of directors were audited by CPAs CHIU, Ming-Yu and HUNG Kuo-Tien of Deloitte & Touche., and the auditor report was put forth. As examined by the undersigned supervisors, the auditor report adequately expressed the Company s financial status, and no non-conformity have been found in the business report, affiliated enterprise consolidated business report, affiliated enterprise consolidated financial statements, and the motion for appropriation of profit and loss. Hence, according to Article 219 of the Company Act, the report is submitted as above. To The Company s 2013 annual Shareholders Meeting Walsin Lihwa Corporation Supervisor: Zhu Wen-Yuan Supervisor: Walsin Technology Corp. Representative: Zhu You-Yi March 21,