COMPANY PROFILE

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Company ProfileCOMPANY PROFILE

Chunghwa Picture Tubes Ltd. (hereinafter referred to as“CPT”) was founded on May 4, 1971. The company went public on September 17, 2001 (TWSE Ticker Symbol 2475). In Taiwan, the company is mainly engaged in the development, manufacture, and sale of TFT-LCDs, color filters (CF), and small and medium sized touch panels. CPT Technology (Group), Co., Ltd. was officially established in China in January 2011 (Ticker Symbol 000536). This company mainly focuses on TFT-LCD back-end module assembly. The main business area of Kornerstone Materials Technology Co., Ltd. (KMTC) is cover glass. Mantix Display Technology Co., Ltd. completed the construction and electrical and mechanical engineering operations for the clean room in late 2016. In January 2017, production facilities were installed and tested.

On November 24, 2016, the board passed a resolution to sell Giantplus Technology Co., Ltd. to the Japanese company Ortus Technology Co., Ltd. The total transaction amount reached NT$ 2.535 billion and private equity had been settled by the end of March 2017.*1On November 25, 2016, the company sold the land and buildings of the Bade Plant to Giantplus Technology for a total transaction amount of NT$ 3.84 billion.*2CPT sold its equity stake in Giantplus and the Bade Plant land and buildings to replenish its operating capital and enhance shareholder rights and interests. On the other hand, these transactions are also conducive to the long-term development of Giantplus and create a win-win scenario for both parties.

CPT will continue to focus on the development of the profitable small- and medium-sized products, enhance product quality and integrated services, develop green products to meet customer demands, develop higher product values and upgrade overall operating efficiency to achieve the profit goals.

Full company name Chunghwa Picture Tubes, Co., Ltd.Date of establishment May 4, 1971

HQ address No.1, Huaying Rd., Longtan Dist., Taoyuan City 325, Taiwan (R.O.C.)

Total capital NT$ 64.79 billion

Total workforce 10,053 people

Chairman Mr. Wei-Shan Lin

General Manager Mr. Sheng-Chang Lin

Key productsAnd technologies

Thin film transistor liquid crystal display*3 (TFT-LCD)Color Filter Touch Panel *4 Touch SensorLiquid Crystal Module*5 (LCM)Cover Lens*6

CPT News Site

Note *1

CPT News Site

Note *2

Thin Film Transistor Liquid Crystal Display

Note *3

Touch Sensor

Note *4

Liquid Crystal Module

Note *5

Cover Lens

Note *6

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Business philosophyCPT’s cardinal rules for business management are based

on a fusion of a corporate culture of “Integrity, Honesty, Diligence, and Frugality”, a business philosophy characterized by Creation, Perfection, and Teamwork” as well as the six core values of “Agility, Accountability, Integrity, Innovation, Cooperation, and Passion” with the goal of realizing the vision and fulfilling the mission of CPT in an effort to manufacture products that meet the needs of consumers.

● Corporate vision: Pursuit of the physical and mental well-being of employees and contribution to social progress

● Corporate mission: Stable profits, Continued growth, constant innovation, fulfillment of social responsibility

● Quality policy: Customer first, staff participation, zero-defect target

Foundation and GrowthSince its inception in 1971, the company has witnessed numerous industrial transformations and has been engaged in the research and manufacture

of CRT and TFT. CPT constantly develops and deploys products with high growth potential to increase market response flexibility by relying on its solid foundation and long-year experience in the development and mass production of display products. In recent years, CPT has made an all-out effort in the field of transformation and development in pursuit of industrial technology upgrades. The company focuses on strategic production line transformations, flexible adjustment of product mixes, and the manufacture of products with high added value. It is fully committed to the development of small and medium-sized TFT-LCD niche products and touch panels.

Quick response to changes in business strategies and rising opportunities.

Agile

Take action and responsibility for optimum results; giving everything one more ounce of effort in the pursuit of perfection.

Accountability

The basic principles of honesty and prudence: business with Integrity, Honesty, Diligence, and Frugality.

Integrity

Transcending creative ideas into innovation, active pursuit of breakthroughs and overcoming challenges in the market with innovative ideas.

Innovation

Taking the spirit of teamwork into cross-departmental collaboration and integration to optimize organizational performance.

Cooperation

Creating a LOHAS workplace and inspiring passion for work, courage for challenge and positive thinking.

Passion

EAMWORK

團結合作

TERFECTION

追求完美

PREATION

創造革新

C

Core Values

迅捷Agile

Accountability當責

合作Cooperation

創新Innovation

廉正Integrity

熱情Passion

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Broadening of horizons through six core values combined with celebrity lectures

Major Milestones in 2016 ESH Awards and Recognitions in 2016

To promote the six core values of agility, accountability, cooperation, integrity, passion, and innovation, workshops for newly inducted engineers incorporate these six values and daily work practices. These workshops employ group discussions to provide guidance for trainees and enable them to boost their team spirit and accomplish their tasks in a timely manner through coordination and communication under conditions of limited resources and time constraints. This gives newly hired engineers a better understanding of the company’s core values and corporate culture, and strengthens their sense of identification with the organization. Hands-on activities allow them to internalize key aspects of team communication and cooperation which boost work morale and is conducive to consensus building.

▲ Workshops for newly inducted engineers incorporate key elements of the company’s six core values and strengthen the sense of identifica-tion with these values.

▲ A Reading Corner is set up in the Company’s internal website, pro-viding CPT employees articles on the six core values with guiding notes on a regular basis.

■ Official inauguration of the Longtan Plant Full Wastewater Recycling and Zero Discharge Facility

■ Announce corporate sustainability policies■ Promotion of environmental education and training courses in

2016■ Completion of third-party verification of SO14064 GHG

inventory

First quarter

■ Commemoration of the completion of zero wastewater discharge by the Taoyuan Mayor.

■ Longtan Plant receives a Letter of Appreciation presented by the Taoyuan City Government for its active participation in the river adoption program for corporate groups

■ Honored for outstanding achievements in blood donation excellence award in 2015 by the Ministry of the Interior

■ Letter of Appreciation by the Hsinchu Blood Donation Center for the donation of 198 bags of blood to save patients’ lives

■ Letter of Appreciation by the Hsinchu Blood Donation Center for the donation of 261 bags of blood to save patients’ lives

■ Accredited Healthy Workplace and Health Promotion Badge (2015-2017) awarded by the Health Promotion Administration of the Ministry of Health and Welfare

■ Letter of Appreciation for the sponsorship of Hakka Artistic and Cultural Competitions awarded by Sanhe Elementary School

Longtan Plant

■ Honored with a letter of appreciation for the provision of labor health service physician training in 2016 presented by the Taiwan Environmental and Occupational Medicine Association

■ Yangmei Plant is honored with a Letter of Appreciation presented by the Taoyuan City Government for its active participation in the river adoption program for corporate groups

■ Third place in the 333 healthy and smoke-free weight loss competition organized by the Department of Public Health, Taoyuan City

■ Honored with a letter of appreciation for the charitable donation of recycled waste IT products to the Development Center for the Spinal Cord Injured

Yangmei Plant

■ Assistance in the organization of the Hakka Tong Blossom Festival by the Sanhe Community in Longtan District

■ Completion of the third-party verification of the ISO14001/OHSAS18001/CNS15506 management system

■ Completion of the third-party verification of ISO 22301■ Convening of the Annual Shareholders’ Meeting in 2016

Second quarter

■ Organization of the 2016 CPT Green Expo Event■ Participation in the 2016 Smart Display and Touch Panel

Exhibition■ CPT Technology (Group) Co., Ltd. establishes and Industrial

Technology Innovation Research Center■ The China Securities Regulatory Commission officially

approves the non-public offering of no more than 952,380,952 new shares by CPT Technology (Group)

Third quarter

■ Announcement of the AOE (Association for Enterprise Opportunity) project policy

■ Completion of the ISO50001 third-party verification ■ Completion of the IECQ QC080000 third-party verification■ Honored with the silver award at the 9th Taiwan Corporate

Sustainability Awards■ Honored with an Excellence Award for green procurement in

excess of NT$ 5 million presented by Taoyuan City■ Creation of a win-win-win situation through the sale of

Giantplus Technology Co., Ltd. to the Japanese company Ortus

■ Sale of the land and buildings of the Bade Plant to support the long-term development of Giantplus Technology

■ Transfer of carbon rights to support carbon neutrality and an exhibition with zero carbon emissions

■ Mantix Display Technology Co., Ltd. in Fujian completed the construction and electrical and mechanical engineering operations for the clean room

■ The Wujiang Plant was recognized as an advanced unit in the field of safe production in the development zone

■ The Wujiang Plant received the first special funds and subsidies in the Wujiang District

Fourth quarter

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From 2010 to 2011, CPT underwent a series of product line upgrade and replacement of non-profit making machines. Along with the increases in production volume of small- and medium-sized products and optimization of product portfolio, CPT is now focusing on the development of small- and medium-sized products using its advantages in the fully laid-out production lines. Due to the acquisition of the FFS (Fringe Field Switching) patent license in late 2012, the company has been able to satisfy the demands of mobile device customers in the field of wide viewing angles, power conservation, and high resolution. CPT will also continue to integrate wide viewing angle products into the main product lines in line with trends of raised specifications based on dedicated promotion efforts. In addition, embedded touch technologies are incorporated to optimize competitiveness and added value. In 2015, the shipping volume of small- and medium-sized panels reached 395 million. Due to the trend of rising panel size and despite the decreased volume compared to the previous year, CPT was still able to maintain its leadership position with the highest global market share of 10% in the small- and medium-sized panel market according to shipping volume statistics for all technology types released by IHS Markit. Despite the sluggish growth of CPT’s end products in 2016, the growth rates for smartphones and automotive display panels still reached 4.2% and 13.5%, respectively. Under the impact of a continued enlargement of the dimensions of all applications and a continued optimization of product and customer mixes, the overall shipping volume of small- and medium-sized panels still reached 372 million in 2016. It is expected that the company will be able to maintain its leadership position in the domestic and international market for small- and medium-sized panels.

In the field of small-sized panels, technical specifications (including resolution and narrow border frames) are raised for all models and the ratio of FFS products is increased. In the field of cell phone panels, against the backdrop of the conversion to smartphones from feature phones. Despite the cutthroat price competition and sluggish growth of the smartphone market in 2015, the shipping volume still reached 140 million panels due to dedicated efforts in the field of brand customers and the Chinese market. A 6th generation panel plant was established for the wholly owned subsidiary Mantix Display Technology Co., Ltd. subordinate to CPT Technology (another CPT subsidiary) in June 2015 to strengthen the competitiveness of smartphone products and spur the development of new technologies. This plant is expected to initiate mass production in 2017. This plant gives the brand greater proximity to Chinese customers and provides all customers with highly sophisticated, power-efficient, and cost-competitive products based on Metal Oxide technologies. In 2016, the company redeployed its production lines to improve the profitability of its smartphone products and reduce the output of smartphone panels. In response to the trend of increasing panel sizes, the company adjusted its production machinery and enhanced the overall quality of its products. Despite an expected significant reduction in 2016, the output volume of smartphones still exceeded 89 million due to the acquisition of orders from Chinese smartphone manufacturers with high growth potential.

▲ Global market share of small- and medium-sized display panel manufacturers (Data source: IHS S&M display market tracker, Q1. 2016)

Product overviewCPT is a professional display component manufacturer with extensive experience in R&D and mass production of video products. CPT continues

to develop and deploy high-growth products in response to market trends. With its advantages and experiences in small and medium size applications, CPT launched a project to upgrade its production lines to achieve the goals of technology upgrade, product differentiation, flexible production and diversified product portfolio. CPT puts in full force to develop small- and medium-sized and touch panel products, focusing on areas of applications: smartphone, tablet PC, automotive display and Industrial display, as well as integration of embedded touch-control (On-Cell/In-Cell) functions, aiming to create higher product values.

CPT11.4%

CPT10.0%

BOE10.2%

HannStar7.5%

Century9.4%

Hann Star8.8%

Innolux7.7%

Tianma7.2%Tianma

7.0%

BOE9.8%

LGD6.0%

JDI5.2%

LGD5.4%

Innolux5.0%

Truly5.2%

SDC6.0%

IVO5.0%

Sharp4.8% Truly

4.9%

JDI5.9%

Others28.6% Others

28.9%

2014 2015

Current state

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In the field of medium-sized panels, the tablet panel market shows negative growth due to a sluggish demand for end products. However, the shipping volume in 2016 only slightly decreased by 3% compared to 2015, and reached a total of 44.71 million panels due to model convergence strategies, raised technical specifications in the field of tablets and CE products, stable demand in Greater China and emerging markets, and the securing of large orders and continued cooperation with brand customers. It is expected that CPT’s share of the global tablet market will reach 21.3%, which represents an increase of 3.2% compared to the previous year, consolidating the company’s position as the 2nd largest supplier of tablet panels in the world.

Automotive display products: Diverse display panels, including special instrument clusters, center informative display, and HUDs, are developed in response to the latest trends in the field of smart cars and IoV. The ratio of the before market has been gradually increased and the company has successfully expanded its market to Japanese, North American, and Chinese car makers. CPT has also gained a foothold in the European market. Following a shipping volume of 12 million panels in 2015, a total of 13.4 million panels were shipped in 2016. This marks a 11.7% increase compared to the previous year. Excellent results were achieved in 2016 in the field of automotive display panels compared to the mere 2.2 million panels which were shipped in 2011. The compound annual growth rate amounted to 43.5% and it is expected that the company will be ranked among the six largest suppliers of automotive display panel manufacturers worldwide.

In response to new business opportunities generated by industrial automation, smart devices, and the Internet, the Industrial Service Department cooperates with relevant product development departments in the continued development of new customer bases and the provision of customized high-quality products. In addition to the stable growth of demand for industrial panels for POS devices and industrial computers, the company successfully penetrated the supply chain for navigation, household appliance, and commercial advertising applications in 2016. In the future, the company will gradually increase the ratio of industrial products to enhance product value and generate profits. Other niche products developed by the company are highly regarded by customers. CPT strives to get closer to customer needs in an effort to create joint market opportunities.

▲ Shipping volumes and market shares of tablet panel manufacturers all over the world (IHS/Witsview 2017 & CPT MKT)

▲ Shipping volume of CPT automotive display panels (source) CPT)

In the face of the fierce price competition in the smartphone and tablet computer market, CPT continues to invest considerable resources in the removal of bottlenecks, the improvement of overall production capacities and efficiency, and the enhancement of product quality and specifications to reduce the impact on profitability and adjust the allocation of production lines in line with demand trends in the field of enlargement of dimensions, high definition, and embedded touch panels. The main focus of the company does not lie in the maximization of resources, but an active increase of the shipping ratio of niche products and overall profits. Product development processes have been shortened to consolidate the company’s leadership position in the small- and medium sized panel market. CPT product development now lasts 4 months on average. Dedicated efforts in the field

of development of customized products serve the purpose of increasing added value and generating higher profits. Both automotive and industrial products are customized products. By taking advantage of the competitive edge generated by fully planned production lines for small- and medium-sized applications, the company will continue its focus on a strategy layout characterized by high gross profit, high technology content, development of niche products, optimization of product mixes, upgrade of technological capabilities, and increase of the added value of touch products.

In the field of small-sized panels, the smartphone market, which represents the main application area, exhibits sluggish growth in 2017. The demand for panels for mid and low-end smartphones is the main growth momentum and low-priced high-end smartphones still represent the mainstream. CPT will therefore shift its focus to the development of In-cell products with narrow border frames of less than 0.1mm in the field of smartphone panels in line with the latest trends in slimness, HD, power conservation, and differentiation. Profits are maximized through small-sized product mixes with a focus on demands in the fields of smartphones, touch sensors, stable CE products, and functional cell phones to increase overall productivity. In the wake of trial operations of the Metal Oxide technology in the Longtan Plant in 2016, it is expected that mass production of the 6th generation production line of Mantix Display Technology will be officially initiated in the third quarter of 2017. In the first stage, Mantix Display Technology will adopt a-Si and Metal Oxide technologies. The a-Si production capacities will be utilized to manufacture HD smartphone panels, while the higher-end Metal Oxide technologies will be employed for the production of HD and FHD panels to gain the ability to respond to customer demands in a timely manner. Production capacities are allocated based on the customer order volume. The company will also continue to develop new AMOLED technologies to gain the ability to provide customers with more competitive products.

As for medium-sized panels, tablets exhibited negative growth in 2017. The gradual move to larger dimension tablet panels facilitates the full utilization of production capacities of panel manufacturers. In response to the latest market trends, CPT further enhances the resolutions of its panel products and moves toward larger dimension panels. The company is deeply engaged in the Greater China area and emerging markets, and focuses on the demand for educational and commercial applications (e.g. two-in-one tablets). In addition, overall market demand is expanded through ODM

Others44.7%

LGD12.7%

CPT18.1%

BOE24.5%

2015 2016

Others41.5%

CPT21.3%

LGD12.6%

BOE24.6%YoY

CPT Car display

Unit:M pcs

Compound Annual

Growth Rate of 49.5%

2.2 4.17.5

10.7

12

13.4

2011 2012 2013 2014 2015 2016

Direction of future efforts

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and solution provider channels. As for on-cell flat touch panels, 7, 8, and 10” on-cell panels and 7-inch in-cell panels entered mass production in 2015 and 2016, respectively. In response to the rising demand for 2-in-1 large-sized panels, the company has developed 12.9” models that will enter mass production in Q2 2016. In 2017, the company will develop 10.5-inch and 12-13.3-inch panels to meet market demands.

The global sales volume of automotive display panels exhibits stable growth due to the continued economic recovery in China, the USA, and the EU, and policy support. Market growth is further fueled by significant increases in electric vehicle sales and developments in the fields of IoV, ADAS (advanced driver-assistance systems), and autonomous vehicles. Market research institutes therefore forecast an aggregate demand of 127 million automotive display panels in 2017 as TFT LCD panels gradually turn into the mainstream. Specifications of CPT automotive display panels are constantly optimized (e.g., resolutions, contrast, reduced low-temperature reaction times, and high NTSC), quality and technological capabilities are enhanced, and total solutions are adopted.6.9-inch, 8-inch, 10.1-inch, and 10.4-inch on-cell panels were already in production in 2016. In 2017, the company will continue to develop and promote other dimensions to meet potential customer demands. In addition, the company develops rearview mirror products for its customers to meet the rising demand generated by vehicle safety legislation. The development of contour cutting, 2.5D/3D TTS technologies, and transparent displays in response to future development trends in the field of automotive display panels is currently in the planning stage.

In the field of industrial panels, CPT continues to focus on the development of customized services and the building of long-term cooperative relationships with its customers. In addition to existing customers in the Japanese market, the company continues to build new customer bases. The company already has complete product lines for dimensions below 11 inches and continues to develop and promote products with dimensions greater than 12 inches. The company successfully penetrated the supply chain for navigation, household appliance, and commercial advertising applications in 2016. CPT has developed samples and aggressively seizes business opportunities in the field of niche products, such as aerospace, household appliance and medical care applications, and transparent displays. The company also enhances technologies, quality, reliability, and production capacity deployment with regard to product specifications for special demands to generate added value and differentiation of product mixes.

CPT is dedicated to securing the market of TFT-LCD. We improved our profitability from optimized control of stock and costs and getting to know customers in different regions and industries, striving to bring our customers the products and services they expect through various business models. CPT lays out clear directions and works with our employees hand-in-hand to achieve the ultimate goals.

The government administers financial aid programs that provide tax reductions and exemptions, incentives, and subsidies for industries on an annual basis as required in accordance with economic, industrial, and monetary policies to facilitate the promotion and implementation of relevant policies. CPT interacts and cooperates with government departments on a regular basis and strives to gain a better understanding of relevant policies and programs. CPT submits applications for applicable policies and programs in accordance with relevant regulations. An efficient use of government resources helps alleviate the financial burden of compliance with government policies and enhance the industrial competitiveness of CPT and enables it to earn profits and fulfill its corporate social responsibility.

Financial performance

Chart of associated enterprises

Dalemont Investment Ltd. and three other

investment companies

Kornerstone Materials

Technology Co., Ltd.

Sandi Optical Glass Co., Ltd.

Ying Yuan Equity Investment

Management Co., Ltd. (Fuzhou)

Kunshan Giantplus Optronics Display Technology Co., Ltd.

Shenzhen Giantplus Optoelectronics Display Co., Ltd.

Kunshan Giantplus Optoelectronics Technology Co., Ltd.

100.00%53.67%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Giantplus (Samoa) Holding Co., Ltd.

Chunghwa Picture Tubes, Co., Ltd.

100.00%

100.00%

75.00%100.00%

100.00%

100.00%

55.00%

100.00%

100.00%

100.00%

5.00%28.68%

89.69%

CPT Display Technology (Fujian) Ltd.

Giantplus Technology Co., Ltd.

Giantplus Holding L.L.C.

CPT Technology (Group) Co., Ltd.

CPTF Visual Display (Fuzhou)

Ltd.

1.74%

25.00%

CPT Technology (Labuan) Co., Ltd.

Chunghwa Picture Tubes (Wujiang) Ltd.

(CPTW)

75.00%

CPTF OptronicsCo., Ltd.

6.68%

75.00%

10.00%15.00%

51.00%

13.46%

61.73%

100.00%

58.97%

Chunghwa P.T.(Bermuda) Ltd.

Chunghwa P.T. (Labuan) Ltd.

Hsh Heng Investment Co. Ltd.

Chunghwa Picture Tubes (Malaysia)

Sdn. Bhd.

CPT TPV Optical (Fujian)

Co., Ltd.

CPTF Optronics (HK) Co., Ltd.

Huallar Optronics (Fuzhou) Co. Ltd.

CPTF Optronic (Shen-Zhen)

Co., Ltd.

Mantix Display Technology Co.,

Ltd.

New Kingston

Enterprises Limited

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CPT operations are managed and controlled by Tatung Co. (shareholding ratio of 8.46%). In 2016, the CPT plants in Taiwan were exempt from taxes due to their losses and did not receive any financial assistance from the government. CPT TPV Optical (Fujian) Co., Ltd. and CPTF Visual Display (Fuzhou) Ltd. received real estate tax exemptions from local governments amounting to RMB 595,000.

The supply and demand situation for small and medium-sized panels in 2016 can be described as follows: The growth of panel production capacities was inhibited by the decommissioning of old TFT production lines or the conversion to new technologies in line with active adjustments of capacity portfolios by the panel industry as well as force majeure events such as the earthquake in southern Taiwan in early 2016. In the second half of the year, small and medium-sized panels were in short supply. A situation of demand exceeding supply, especially in the field of smartphone and tablet panels, helped increase the profitability of CPT products and improved overall business performance. Furthermore, the strategic sale of the company’s equity stake in Prima and Giantplus strengthened the financial structure, enhanced shareholder rights and interests, and consolidated operations to achieve increased competitiveness. In 2016, CPT’s consolidated net revenue amounted to NT$ 33.07 billion and the company recorded gross profits of NT$ 5.21 billion and a gross profit margin of 15.8%. Net operating losses and after-tax net losses equaled NT$ 1.4 and 0.895 billion, respectively. Losses decreased by NT$ 7.5 billion (90%) compared to the previous year as a result of active operational improvements. CPT continues to focus on the optimization of product mixes of smartphone, tablet computer, automotive display, and industrial niche applications and actively develops touch technologies that support these applications. The total shipping volume of small and medium-sized panels and large-sized panels in 2016 reached 372 million and 940 thousand units, respectively. In the field of smartphone panels, the profit and value oriented order acceptance strategy is showing positive effects, resulting in a simultaneous increase of revenues and profits. CPT accounted for 6% of the global shipping volume. In the field of tablet computers, CPT has maintained its second-place ranking with a market share of 21%. As for automotive displays, the company has been able to achieve its goal of 13 million shipped units (global market share of 10%) due to its dedicated efforts and achievements in the emerging automotive market of China in 2016. The shipping volume of before market products which are characterized by high profit margins continues to rise. Revenues derived from these products account for over 40% of the total automotive display revenues. Customer bases for industrial niche products are gradually expanding and development focuses on diversified business opportunities.

Looking ahead to the industry and market conditions of small and medium-sized panels in 2017, CPT will continue to face an arduous challenge of supply exceeding demand as a result of increased competition caused by continued expansion of new production capacities in the industry and mass production of new LPTS and OLED products. In addition to the adoption of lean production approaches, CPT must rely on advanced product technologies and increased added value to achieve constant improvements in the field of profitability, and maintain

Note: Manpower costs include salaries, labor and health insurance fees, pension fund contributions, and other manpower expenses Earnings distribution includes legal reserves, cash dividends, and employee bonuses. No earnings and employee stock option certificates were distributed between 2014 to 2015. Employee and director/supervisor compensations were not estimated due to the fact that CPT recorded net losses in 2016.

Investor: Mr. Liu

Investor: Ms. Guo

2014 2015 2016

Net operating revenue 56,391,377 47,319,711 33,069,645

Operating costs -50,013,775 -47,609,448 -27,860,267

Gross operating profit (loss) 6,377,602 -289,737 5,209,378

Operating Losses -2,109,671 -7,876,775 -1,402,976

Gain (Loss) before income tax -3,317,826 -7,446,671 237,290

Net gain (loss) attribute to : Shareholders of the parent -3,981,524 -8,761,984 -1,776,479

Manpower costs 9,151,875 9,396,346 5,988,446

Consolidated financial statement (Unit: 1000NTD)

Voice of the Stakeholders

GovernmentInstitution

FinancialInstitution

OthersJuristic Person

IndividualForeign Institution

And Foreign Nationals

Treasury Stock Total

2014 0.00 0.00 37.00 54.28 8.72 0.00 100.00

2015 0.00 0.00 37.00 54.61 8.39 0.00 100.00

2016 0.00 0.00 36.97 55.23 7.80 0.00 100.00

Shareholder Structure

Year

Shareholder ratio (shareholding ratio)

its position as a key supplier in the small and medium-sized panel market.

CPT adopted the following business strategies to achieve its target of a total shipping volume of 250 million units in 2017:

1. Smartphone and tablet computer panels: In addition to the enhancement of yield rates and cost competitiveness of mainstream resolution (HD/FHD) products, the official initiation of mass producing the new 6th generation production line of Mantix Display Technology in Putian City, Fujian Province, China, an investment project of CPT Technology (Group) [a subsidiary of CPT], is expected to increase the group’s market share in the third quarter in the field of mid and high-end smartphones. This strategy is also expected to enhance the competitiveness of products with new technologies such as in-cell touch and on-cell touch.

2. Automotive displays and industrial niche products: In response to the growing demand of displays for IoV and energy vehicles, the company is actively engaged in the development of instrument cluster, central console, and rearview mirror applications. In addition to the continued increase of before market and FFS wide viewing angle product shipping ratios, the company also develops total solutions. In the field of industrial niche applications, the company maintains a firm grasp of business opportunities in the areas of IoV, smart factory, and smart home to strengthen its client structure and gain the ability to provide customized and high added value products.

The fact that the CPT business operations took a turn for the better in the second quarter of 2016 deserves praise. The net value and stock price increased significantly, which clearly indicates that CPT’s product mix adjustment strategy is correct. Last year, the demand for small and medium-sized panels exceeded the supply. CPT was able to seize this excellent opportunity to increase the revenues and profits derived from small and medium-sized panels. The automotive display panel business unit also exhibited stable growth. As external investors, the gradually improving financial statements give us a glimpse of the dedicated efforts of the CPT management team.

We have gleaned from research reports by market analysis organizations and financial news coverage that the Korean panel industry has shifted its focus to OLED, Chinese panel manufacturers are constantly expanding their TFT production capacities, and Taiwanese competitors are actively adopting high-end and high added value strategies. The panel industry is characterized by fierce competition. We hope CPT will continue to improve its financial performance and identify competitive advantages that will ensure its survival in this industry. In the field of new technologies, such as Oxide and AMOLED, we expect continued progress and growth on the part of CPT in 2017. We also expect the company to enhance investment values.

CPT has faced a lot of adversity in its operations in the panel industry. As investors, we sincerely hope that CPT will be able to turn losses into profits. We saw that the panel market heated up slightly last year. The fact that small and medium-sized panels were in short supply led to higher revenues and profits for CPT. We also witnessed efforts by CPT to improve its corporate competitiveness and corporate structure through the raising of capital, activation of assets, and adjustments of equity strategies, which is good news for the company’s business operations. However, the market is highly volatile. We therefore hope that CPT will be able to identify its competitive advantages and differentiate itself from its competitors. For instance, the automotive display market has a high growth potential due to the rising demand for energy vehicles and digitized displays. CPT must make an effort to maintain its leading market share. Despite the fact that industry and niche applications are characterized by small-scale production of a large variety of products, their contribution to gross profits is significant. The smartphone and tablet market, on the other hand, is characterized by significant fluctuations and fierce price competition. We are aware of the fact that the CPT joint venture Mantix Display Technology is making active preparations for the initiation of mass production in the second half of the year. We expect this move to enhance the competitiveness of the whole group.

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In 2016, CPT will strengthen its customer layout in the aforementioned markets in line with future growth trends of market demand for automotive displays. The company has increased the shipping volume of automotive display panels to over 13 million this year. Based on a continued expansion of supreme product lines and global customer layout, the company aims to achieve a shipping volume of 18 million automotive display panels by 2018 and turn the company into one of the three largest suppliers of automotive display panels worldwide. In 2015, CPT turned from the third largest to second largest global supplier of tablet panels as far as shipping volume is concerned. The company maintained this position in 2016 and will continue its efforts to become the largest tablet panel supplier worldwide through a firm grasp of market trends, and an extension of diverse consumer and commercial applications.

Display panel technology is moving towards high-resolution and high-definition. Therefore, in addition to upgrading the existing a-Si technology, CPT continues to invest in the development of Metal Oxide, AMOLED and flexible displays. Mass production of the 6th generation Metal Oxide panel production line of Mantix Display Technology in Fujian Province, China is expected to begin according to plan in 2017. Production relied on a-Si and Metal Oxide technologies in the past. AMOLED technologies will be adopted in the future. CPT currently cooperates with the Dutch companies TNO and IMEC with the goal of acquiring

their current AMOLED technologies and experiences, and achieving breakthroughs in the fields of identification rate limitations of FMM (Fine Metal Mask) technologies and the relatively short service life of AMOLED. Mantix Display Technology aims to acquire a patent license from the joint venture of TNO and IMEC and has dispatched a technical team to Europe to gain valuable experience and learn how to apply key AMOLED technologies to the future production operations of Mantix Display Technology. In the field of flexible panels, the first full-color flexible AMOLED display worldwide was developed through technical cooperation with FlexEnable, a leading manufacturer of flexible organic electronics. The product was showcased at SID Display Week on June 2015. This was followed by the signing of a Flexible AMOLED Technology Transfer Agreement with the Industrial Technology Research Institute (ITRI) in August. CPT has made a long-term commitment to constant investment of resources in the development of next generation display technologies. In addition to the independent development of technologies, revolutionary patents and new process technologies and materials are also developed through industry-government-academia collaboration to strengthen the competitive edge of the company in the field of manufacturing and gain the ability to provide customers with high added value products.

CPT strives to be the best supplier of small- and medium-sized panel manufacturers all over the world and aims to consolidate its leadership position with regard to

Note: the number of employees refers to the total number of employees employed by CPT by the end of 2016, including full-time and contract workers and employees recruited through the Replacement Military Service Program.

Global DeploymentCPT focuses on its role as a supplier of professional displays. Through its global layout and systematic integration of the up- and downstream industry chain,

the company is able to provide customers with comprehensive service packages and highly competitive products. TFT-LCD and touch panels represent the main products that are mainly sold in Taiwan, Mainland China, and other regions in Asia with an eye to global expansion. Internationally renowned manufacturers of mobile, automotive, and industrial devices and OSM/back-end module manufacturers represent the main customer base.

As for the main applications and market layout of small- and medium-sized panels, CPT mobile phone panels are currently widely used by mobile phone manufacturers all over the world including major international brands, Chinese brands, and unknown brands (small brands in China and emerging markets). The company will continue to consolidate relations with existing customers by providing them with high-quality and competitive products. In the field of tablet panels, end clients include Google, Samsung, Asus, Amazon, Lenovo, and Huawei. Adoption rates in China and emerging markets are also extremely high. In line with future supply chain developments, the company will direct its attention to international brands and VARs. With regard to automotive display panels, the company will continue its efforts to expand from the after to the before market and from the Japanese market to other regional markets in China, Europe, and America. This deployment has generated significant effects over the past two years and is expected to facilitate gradual expansion all over the world. In the field of industrial panels, the focus has shifted from the Japanese to the global marketCPT will continue to move towards its goal of global expansion and strives to become the best supplier of small- and medium-sized display panels in the world.

Plant area/BranchPlant

constructionYear

Number of male

employees

Number of female employees

Chunghwa Picture Tubes,

Co., Ltd.

Longtan Plant (CPTL) 2003, 2004 2,377 1,150Yangmei Plant (CPTY) 2004, 2005 767 350Taoyuan Plant (CPTT) 1971, 2001 116 13

Subsidiary

CPT Technology

(Group) Co., Ltd.

CPT TPV Optical (Fujian) Co., Ltd. (CTOC) 2005 277 164

Chunghwa Picture Tubes (Wujiang) Ltd. (CPTW) 2002 244 132

CPT Display Technology (Fujian) Ltd. (FDT) 2004 1,019 489

CPTF Optronics Co., Ltd. (CPTF) 1994 1,044 734CPTF Visual Display (Fuzhou) Ltd. (FVD) 2008 440 303

Kornerstone Materials Technology Co., Ltd. (KMTC) 2014 318 116

its share of this market. The company accelerates the pace of technology development in its progress toward next generation panels. It continues to provide customers with high-quality and low-cost products to satisfy customer growth demands in line with market development trends. Customer demands are closely observed to create mutually beneficial, win-win situations.

Continued pursuit of goals

CPT Global Deployment Chart

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CPT Global Deployment Chart

Longtan Plant (L1)-TaiwanEstablished in 2003

Taoyuan Plant (T2)- TaiwanEstablished in 2001

Longtan Plant (L2)-TaiwanEstablished in 2004

Yangmei Plant (Y1)-TaiwanEstablished in 2004

Yangmei Plant (Y2)-TaiwanEstablished in 2005

CPTF Optronics Co., Ltd. - ChinaEstablished in 1994

CPT Display Technology (Fujian) Ltd.-ChinaEstablished in 2004

CPT TPV Optical (Fujian) Co., Ltd.-ChinaEstablished in 2005

CPTF Visual Display (Fuzhou) Ltd.-ChinaEstablished in 2008

Kornerstone Materials Technology Co., Ltd.- ChinnaEstablished in 2014

Chunghwa Picture Tubes (Wujiang) Ltd. (CPTW)-ChinaEstablished in 2002

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hunghwa Picture Tubes C

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