2010 Corporate Social Responsibility Report

Hannstar Display. Display Happiness.

Please do not hesitate to contact us if you have any suggestions regarding the 2010 HannStar CSR Report:

HannStar Display CorporationMr. Fong-cheng Yeh, Assistant Manager, Office of Environmental SafetyTelephone: (06) 505-2880 Ext. 3571E-mail: tnyeh@hannstar.comAddress: No. 35, Nanke 2nd Rd., Xinshi District, Tainan City 741, Tainan Science Industrial Park, Taiwan

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Editorial PolicyWelcome to the second “Corporate Social Responsibility Report” published by the HannStar Display Corporation. The report is published in both Chinese and English. Downloads are available from the HannStar website http://www.hannstar.com

We took the opportunity of preparing this report to review our performance in economic, environmental and social issues over the past year. We hope the more transparent disclosure will provide our stakeholders with a better understanding of the efforts and accomplishments we made during 2010.

Reporting PeriodThis report covers the performance of HannStar’s CSR management directions, key issues, responses and actions for 2010 (January 1 ~ December 31, 2010).

Report Scope and BoundaryThis organizational boundary of this report encompasses HannStar Display Corporation in Taiwan (including the Wugu Office and Tainan Plant) and in China (including the Nanjing Plant, Wuhan Plant and BrightBridge Plant).

Reporting GuidelinesThis report conforms to the G3.1 Guidelines of the Global Reporting Initiative (GRI) and is self-declared to conform to GRI Application Level B.

Table of Contents

Editorial Policy 2

From the Management 4

About HannStar 8

Brand Development 9

Awards 11

Corporate Governance 12

Risk Management 14

Sustainable Management 15

Stakeholder Communication 15

Environmental Sustainability 16

Response to Climate Change 16

Green-Hanns Actions 18

Action 1: Promote energy-saving in the plants 18

Action 2: Implement Green Management 20

Action 3: Implement Green Supply Chain 24

Action 4: Develop Environmentally Friendly & Energy

Efficient Products 25

Action 5: Effective Treatment of e-Waste 26

Action 6: Water Resource Management 27

Social Responsibility 28

Employee Security 29

Customer Satisfaction 34

Local Community Support and Participation 38

GRI G3.1 Index 41

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From the Management

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CEO’s Message

This is the second year after HannStar began publishing our CSR report. In last year’s CSR report, we committed ourselves to supply a high volume of high quality green products and services, environmental protection, resource conservation, sound corporate governance and value innovation. Looking back at 2010, we have achieved the following:

1 High volume of high quality green products and services: HannStar developed the HS-IPS wide viewing angle technology in 2010. Features such as wide viewing angle, low color bias, high contrast and immunity from the rainbow effect make it suitable for tablet PC applications. We also successfully developed an external projected capacitive touch panel technology and a variety of touch module bonding techniques. The technology is now being introduced into new products for mass production. In 2010 we combined low-power driver IC with low-voltage panel energy-saving technologies. We also calculated a product carbon footprint and successfully received the world’s first Carbon Footprint Verification for our touch panel product.

2 GHG emission reduction: HannStar continued to review all of our energy-saving efforts to promote improvement actions and improvements in plant utilization in order to reduce our GHG emissions. We successfully reduced the GHG emissions to 0.08 tonnes per square meter of glass, a reduction of 55% on the 0.18 tonnes per sq. m from 2005.

For 2011, our company will continue to live up to our CSR mission by continuing to focus on energy efficiency and carbon reduction. We will launch a range of small to mid-sized HS-IPS wide viewing angle panel products as well as promote LED monitors, fashionable LCD TVs and tablet PCs from our own Hanns·G and Hannspree brands. The green products will satisfy the consumer demand for integrated devices and cloud access.

In response to global warming and climate change, HannStar will work to fulfill the following CSR tasks: •GPM/QC0800 certification of products and develop complete range of LED-based products• Implementation of energy-saving, carbon reduction and halogen-free product design•Establishing a RoHS-compliant and Halogen-free green supply chain•Strengthening GHG emission reduction and waste recycling efforts

Products are now progressively receiving green certification from global standards such as TCO, GS and Energy Star. This will in turn help boost product quality, strengthening our corporate image and values.

Local environmental efforts continued to be a key focus at HannStar in 2011 with student river patrol camps and the Southern Taiwan Science Park (STSP) environmental volunteer guide workshops. Guided by our corporate values, we will continue to promote environmental protection education and introduce high quality products into the community culture to communicate our commitment to the protection of the natural environment for future generations.

Corporate social responsibility is defined by sustainability and practicality. We will continue to promote reform and innovation in order to create even more value for our customers. We will also continue to embrace a philosophy of thinking globally and localized management. By drawing on our corporate culture, we will continue to take decisive action on CSR issues encountered by customers of our local services so that we can all grow and prosper together. We will do our utmost to meet the expectations of our shareholders, suppliers, customers and the general public. It has been a long road but we have now completed our CSR report for 2010. Thank you once again for your support and we look forward to working with all our stakeholders in order to continue sharing and growing together.

Yu-Chi Chiao, Yu-Chi Chiao, Chairman&CEO

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President’s Message HannStar has always been devoted to the development, integration and innovation of TFT-LCD manufacturing processes and products. We are also continuously developing new products and technologies to meet the strong demand for mid-sized panels from smart phones, onboard displays and tablet PCs.

During 2010, HannStar continued to reinforce our product portfolio and build a technology platform through vertical integration. We also refitted our large-panel capacity to produce small and mid-sized panels instead. We are actively searching for partners in touch panel development and expanding our touch control module production lines with the goal of realizing a fully integrated supply chain.

To complement our rapid transformation into a manufacturer of small and mid-sized touch panels for niche applications as well as meet the needs of portable products, HannStar is actively working on a range of unique technologies. For wide viewing angle technology, we developed the HS-IPS wide view technology. Features such as wide viewing angle, low color bias, high contrast and immunity from the rainbow effect make it suitable for tablet PC applications. For touch panel technology we successfully developed an external projected capacitive touch panel technology and a variety of touch module bonding techniques. The technology is now being introduced into new products and will be mass produced to meet customer requiring lightness and thinness.

For 2011, HannStar’s 5.3 generation capacity will be focused on small and mid-sized panel products that offer the most cost-effective cutting ratio. Conventional TN technology will also be gradually transitioned over to advanced HS-IPS wide viewing angle technology to meet the requirements of high-end touch control smart phones and tablet PC products. For our self-owned brand Hanns·G, sales of monitors and TV products will continue to target the 3 million unit mark. We will strive to boost HannStar’s performance with the continued support of our shareholders, employees and customers.

David Joe,David Joe, President

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Establishment Date

June 18, 1998

TSE Listing Date September, 2004

Chairman Mr. Yu-Chi Chiao

President Mr. David Joe

Paid-in Capital NTD 58.58 Billion

Employees 2,500 (by December 2010 in Taiwan)

Net Sales NTD 54.9 Billion (2010)

Main Businesses

The development, design, manufacture, sale and repair of Thin Film

Transistor Liquid Crystal Displays (TFT-LCD)

Locations

▎Taiwan

Taipei Headquarters

Address: 26F, No. 1 Songzhi Rd. Xinyi District, Taipei City 110

Telephone: 02-27297777

Wugu Office

Address: 4F, 48 Wuquan Rd. Wugu Industrial Park, Wugu District, New

Taipei City 248

Telephone: 02-55911888

Tainan Branch

Address: 35 Nanke 2nd Rd.Xinshi District, Tainan City, Tainan

Science-based Industrial Park 741

Telephone: 06-5052880

▎China

Nanjing

Address: 18 Hengfei Rd. Nanjing Economic & Technology Development

Zone, Nanjing

Telephone: (86)25-85803888

Wuhan

Address: Unique No. 9 Zhuankou Development District, Economic

Technological Development Zone, Wuhan City

Telephone: (86)027-84220188

BrightBridge

Address: 168 Panjing Rd. Songling Township, Wujiang City, Jiangsu

Province

Telephone: (86)0512-63038601

Company Profile

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The Chinese name of HannStar Display Corporation (“HannStar”) is derived from “vast and boundless universe”. The company is dedicated to “opening up the boundless frontiers of technology” through innovative developments in color LCD technology to provide mankind with a richer and wider visual space.

The business philosophy of HannStar since our founding has been to “provide mankind with the most healthy visual environment through the development, manufacture and sale of low-radiation, low power-consumption, light, thin and convenient Thin-Film Transistor Liquid Crystal Display panels”. As the age of high-definition LCD descends upon us, we continue to believe that HannStar’s reason for existence is to provide the next generation with the most natural and accessible window to the world!

About HannStar

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About H

annStar

Brand Development

HannStar has been developing the HANNspree and Hanns·G brands for the global market in recent years. In addition to continuing to expand our channels and markets around the world, we have also invested significant financial resources on brand marketing to improve brand image, boost brand value and establish a comprehensive after-sales support center. Our efforts have created countless employment opportunities around the world.

HANNspree currently has three global concept stores located in San Francisco, Los Angeles and the United Kingdom. The brand also has sales and support centers in 43 countries. Apart from the brand stores, HANNspree has company websites in 20 countries and participates in large local and overseas trade exhibitions (e.g., CES US, IFA Berlin, Computex Taipei and GITEX Dubai).

The development of the self-owned brand Hanns·G by HannStar is intended to expand our competitive advantage through vertical integration. With China embarking on the 12th Five-Year Plan to increase domestic consumption, we are planning to establish an integrated marketing & retail channel in China. Company-owned stores will be expanded to capture a slice of the Chinese display, TV and tablet PC market. In 2010 we achieved sales of 2.8 million units. Excellent results have been achieved in brand development and we are now ranked among the top 10 brands for the North American, European and Chinese markets.

Products

TFT-LCD for TabletsWe offer 5” ~ 10.1” wide viewing angle panels and accompanying multi-touch control products to

meet the demand from the fast-growing tablet market.

Small & mid-sized TFT-LCDs for special applicationsWe offer a variety of 2” ~ 11” panel products to meet the diverse needs of the consumer market

including. Applications include netbooks, digital picture frames, smart phones, language learning

devices, PMPs, personal navigation devices, portable DVD players, onboard displays and industrial

displays.

TFT-LCD for NotebooksWe have developed a range of light, thin and low-power 16:9 LED Notebook panels in

the following sizes: 11”, 12.1”, 14”, 16” and 17.3”.

TFT-LCD19” (SXGA), 19” Wide (WXGA), 22” Wide (WSXGA), 25” Wide (Full HD) and 28” Wide (WUXGA)

display products that offer high brightness, high contrast, high saturation and fast response times.

Branded Merchandise 19” ~ 42” LED TVs and 17” W ~ 28” W monitors under the Hanns.G brand. The

multimedia models offer 1920x1200 Full HD resolution, our proprietary X-Contrast technol-

ogy for 15000:1 dynamic contrast, 3ms response times and HDMI input connectors for the

ultimate AV entertainment experience.

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Business Performance

In 2010 the TFT-LCD market experienced a slump in demand. To counter the economic impact on the industry, HannStar focused on strengthening our product structure and establishing a technology platform through vertical integration. The large-panel capacity of our 5.3 generation plant was also refitted to produce small and mid-sized panels instead to reduce the risk from fluctuations in large panel pricing.

Efforts on strengthening our product structure continued to focus on the netbook and mobile phone panel markets to exploit the yield advantage of by small and mid-sized panels at the 5.3 generation plant. We also gradually expanded the share of small and mid-sized applications including smart phones, GPS, netbook and onboard displays.

For vertical integration, we not only continued to collaborate with HannsTouch on touch panel development but also installed equipment at the Southern Taiwan plant to increase the monthly output of color filters by 50,000 units. Touch control module production lines were also added at our Nanjing plant in China as part of our move to establish an integrated supply chain for touch control.

To improve our business management, we adopted an order-based production model to manage our raw material, semi-product and final product inventories. We also improved our cash flow management by strengthening collections and debt repayment in order to maintain a sound financial structure.

The goal in 2011 will be to maintain a monthly capacity utilization of over 90% with a focus on small and mid-sized panel products. Conventional TN technology will also be gradually transitioned over to advanced HS-IPS wide view technology to meet the requirements of high-end touch control smart phones and tablet PC products.

HannStar is actively implementing the following strategies to realize the targets for 2011

Equip the STSP 5.3 generation plant with the capacity to produce

50,000 touch sensors a month in order to improve our self-suffi-

ciency on touch panels. There are also plans to add glass thinning

and glazing production lines at the Nanjing module plant to realize

an integrated solution for producing over 1 million touch panels a

month.

Create consumer electronics products targeted at niche

applications to improve product differentiation, establish a

technology platform for small and mid-sized panels, use high-end

HS-IPS wide viewing angle panels to develop an integrated touch

panel, and make use of glass thinning, 3D and Transflective

technology for improving outdoor contrast to provide customers

with more convenient, high value-added products.

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Establish and maintain long-

term partnerships with leading

global consumer electronics

brands and system makers.

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Strengthen the vertically

integrated manufacturing

capacity and global channels

for LCD TVs, monitors and

3C products from self-owned

HANNspree and Hanns·G

brands.

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Revenue Mix Unit: 1,000 NTD

Product Category2010

Amount Percentage (%)

TFT-LCD 52,577,658 96

Other 2,351,368 4

Total 54,929,026 100

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About H

annStar

Global Presence

In 2010 we accounted for 64% of all local assembly in Europe based on volume of TV shipments. To meet our customers’ demand for just-in-time delivery, we set up regional warehouses for Europe (in the Netherlands and Poland). The local warehouses will allow us to ship orders more quickly and also generate local employment opportunities.

Research and Innovation

HannStar is cultivating our R&D expertise by actively developing different interfaces and module designs based on customer requirements. We seek to expand our market share by producing low-radiation, thin, light, low-power and highly reliable TFT-LCD panels as part of our full-spectrum service to customers. In 2010 HannStar secured a total of 103 TFT-LCD patents worldwide. At the end of 2010, we hold 869 patents worldwide with a further 567 pending.

Awards

2009"Excellence in Environmental Management", Bureau of Environmental Protection,

Tainan County

"Excellence in Voluntary Reduction of Industrial Greenhouse Gas Emissions", Industrial

Development Bureau

2010"Excellence in Healthy Workplace Self-management Certification", Environmental and

Occupational Medicine Association of R.O.C.

On-site inspection, "Excellence in Energy Conservation"

Received Carbon Footprint Verification certification for 10.1" netbook LCD and 10.1"

Tablet touch panel from SGS. The touch panel verification was the first of its kind in the

world.

Technology and R&D Overview Unit: 1000 NTD

Year 2009 2010

Net Sales Income 50,693,834 54,929,026

R&D Expenditure 1,595,259 1,700,844

Ratio of R&D to Net Sales Income (%) 3.15 3.10

65%

35%

2010 Shipment Distribution United States Europe

86.79%

9.23%

2.69% 1.29%

Domestic/Overseas Purchasing Ratio Taiwan China Korea Other

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The Chairman of HannStar is also the CEO. The Board has 7 directors including 2 independent directors. All proposals are discussed by the Board. The supervisors on the Board perform the role and function of the Audit Committee. There is currently no requirement for a nomination, remuneration or other functional committees. HannStar will set up a remuneration committee at the end of September, 2011, in accordance with government regulations.

The role and responsibility of the Board of Directors is set out in the company charter. We have also drawn up a “Code of Practice for Board Meetings” including a conflict- of-interest clause. The code of practice is followed strictly to ensure the proper operation of the Board. HannStar has issued Working Rules for Employees governing business confidentiality and ethical behavior. Employees are encouraged to be honest and trustworthy in the execution of their duties. Directors are encouraged to further their studies. Courses organized by approved organizations such as the Securities & Futures Institute (SFI) and the Taiwan Corporate Governance Association (CGA) are made available to directors as necessary to strengthen our corporate governance.

All directors, supervisors, managers and employees have been notified of the “Internal Disclosure Procedure” for managing important internal information. The procedure is now available from the document management system on intranet for all employees to use for compliance.

Market Observation Post System website http://newmpos.tse.com.tw 2010 Financial Report http//www.hannstar.com Investor Relations

Corporate Governance

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As a result of the U.S. anti-trust investigations, HannStar has been issued with fines of 30 Million USD and 8.1 Million Euro. The fines have been reflected in the accounts or paid by their due date so should have no major impact on future operations.

Financial Performance Unit: Million NTD

Year 2008 2009 2010

Operating Income 60,322 50,694 54,929

Operating Profit 320 -(9,240) -(5,214)

Income Tax 2,861 -(6) -

Net Profit after Tax -(6,722) -(13,430) -(7,611)

Earnings Per Share (NTD) -(1.23) (2.57) -(1.46)

Shareholder Structure

Government institutions

Financial institutions

Other legal entities Individuals

Foreign institutions and

individualsTotal

Number 8 44 181 255,887 407 256,527

Shareholding

ratio(%)0.01% 0.11% 17.43% 59.53% 22.92% 100%

Quantity

Shareholderstructure

General Shareholders’ Meeting

Supervisors

Board of Directors

Auditing Department

Office of the Chairman

General Administration Department

Financial & Accounting Center

Legal Affairs Office

Business Service & Administration Management Center

Occupational Safety, Environment& Risk Management Office

Touch Panel Center (Mobile)

Touch Panel Center

LCM Manufacturing

Center

Touch Panel Logistics Center

Touch Panel Quality Center

Touch Panel Module Integration Center

President’s Office

IT & Innovations Center CE Center

Organizational Structure

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Risk Management

HannStar has established an Auditing Department that reports to the Board of Directors to help the Board and managers identify risk events and reduce their negative impact. Our risk management policy can be divided into finance, information, climate change and supply chain.

Risk Management Measures

Financial Risk Management

Please refer to the “Analysis of Financial Situation, Business Results and Risks” section in the

2011 Financial Report.

Information Risk Management

The emphasis is on the continuity of operations and ensuring the effectiveness of IT security. IT

security focuses on preventing hacker attacks, unauthorized access to internal company data

and the prohibition on use of instant messaging software by employees.

Climate Change Risk Management

HannStar is continuing to engage in environmentally friendly practices to reduce our

environmental impact. R&D is also being carried out into water-saving and recovery technologies

to ensure stable production.

Supply Chain Risk Management

All supplier management information is loaded into our Green Product Management (GPM)

system to ensure that that supplied materials conform to HannStar’s green product policy,

international regulations and customer product specifications.

Quarterly Business Review (QBR) and periodic meetings are held to review the quality of our

suppliers. Hazardous substance control is also included in our annual audit. Suppliers are

monitored through the supplier evaluation and inbound material inspection system to ensure that

suppliers are following all relevant environmental regulations to become our best green partner.

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Internal Audit

HannStar is engaged in the trading of derivative products. The relevant risk assessment,

oversight and controls are carried out by internal auditors that report to Board, or high-

level executives not responsible for the trading activities or decision-making designated

by the Board. The personnel responsible for the above-mentioned risk assessment,

oversight and controls must be in different department to personnel responsible for

confirmation and finalization.

Internal auditors should regularly check the internal controls for derivative products and

conduct monthly audits on the transaction procedure of the department involved in

trading derivative products. An audit report should be produced and the supervisors

notified of any serious violations in writing.

Internal auditors should submit the audit report and the results of the annual internal

audit to the Securities & Futures Institute by the end of February of the following year.

Corrective action taken on any abnormal items should be submitted to the SFI for

reference by the end of May of the following year.

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Sustainable Management

HannStar does not have a dedicated CSR charter or unit. Similar roles are however incorporated into the charter and activities of all centers in order to promote and carry out internal CSR activities. We also organize training courses at regular or irregular intervals on CSR-related issues. CSR is also integrated with performance evaluations to a significant extent.

During the preparation of this report, we surveyed each department on the priority of CSR issues and their impact on the company. Key issues and stakeholders were then laid out. Our communication and relationship with these key stakeholders are shown in a table format.

Stakeholder Communication

StakeholdersIssues concerning the

stakeholdersCommunication Channel

Customers

Reliability / Quality

• Hanns Customer e-Platform

• Customer support hotline

• Local customer support centers

• Satisfaction survey

Green products

Supply chain

Use of restrictive

substances

Technology develop-

ment to innovation

Employees

Training

• Regular employer-employee meetings

• Internal online communications

• Employee welfare committee

• Labor safety & health committee

• New recruit orientation

• General employee meeting/Monthly meeting

Compensation /

Benefits

Career development

Healthy & Safety

Working & Contract

conditions

Shareholders/

Investors

Profitability • Company website

• Spokesperson System

• Investor & Community Services Department

and Share Affairs Office

• General Shareholders’ Meeting

• Market Observation Post System

Market share

Compliance

Risk management

CSR implementation

Supplier/

Contrctors

Environmental safety &

health requirements • Supplier Management System

Health & Safety

Fair Trading

Communities

Environmental impact • Charity sponsorship

• Cooperation with community NPOs

• Voluntary community service

Social contributions

ESH

Awards&Recognition

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Response to Climate Change

HannStar carries out the following activities as part of our environmental responsibility to cope with global warming and climate change:

• GPM/QC0800 certification of products• Developing a full-range of LED-based products• Implementation of energy-saving, carbon reduction and halogen-free product design• Establishing a ROHS-compliant and Halogen-free green supply chain• Strengthening GHG emission reduction and waste recycling efforts• Products are now progressively receiving green certification from global standards such as TCO, GS and Energy Star. This will in turn help boost product quality, strengthening our brand image and values

HannStar has a quality center responsible for promoting our green quality policy. A separate environmental protection department implements environmental management policies and the GHG emission reduction plan. Every center also carries out green management, green supply chain and the development of green energy-saving products.

HannStar is continuing to use total energy-saving proposals to reduce our GHG emissions. In 2010 we successfully reduced the GHG emissions to 0.08 tonnes per square meter of glass, a reduction of 55% on the 0.18 tonnes per sq. m from 2005. Perfluorinated compounds (PFCs) produced during etching and chemical gas deposition processes have a very high global warming potential (GWP). HannStar has installed combustion-type PFC burners to reduce the amount of SF6, NF3 and other PFCs that we release. The equipment reduced in GHG emission reductions equivalent to 980,000 tonnes of CO2 between 2005 and 2010.

Environmental Sustainability

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Comply with legal requirementsReview environment-related legislation to

ensure compliance.

1Pollution prevention and risk reduction Define guidelines for emission,

wastewater and waste management to

prevent accidental discharges.

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Energy conservationMake good use of available resources

and reduce waste. Improve yields and

production processes to reduce the

amount of waste produced and avoid

wasting resources.

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Continuous improvement in environmental & safety performanceSet up improvement plan based on

environmental, safety & health risks to reduce

environmental impact.

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Improved communications and trainingImplement environmental safety & health

(ESH) education/awareness initiatives to

emphasize the importance of the ESH

management to all employees.

Stakeholder education should also be

strengthened so that employees,

suppliers, contractors and other

stakeholders can all understand and

comply with HannStar’s ESH policies and

regulations.

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Reduce product environmental impactReduce the amount of hazardous

substances contained in products in

accordance with international trends.

Products should be easy to disassemble

and reuse.

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HannStar’s Environmental Safety & Health Policy

For carbon and water footprint verification, we received the first Carbon Footprint Verification in the world for 10.1” tablet touch panels in December, 2010. Carbon footprint labeling was introduced in May, 2011, and we will also complete the Water Footprint Verification process for the 10.1” tablet touch panel at the end of October.

In the future, we will continue to conduct carbon emission inventory to accurately track the carbon emissions produced during production, internal/external logistics and employees’ business travel. Awareness and communication initiatives will be used to extend our company’s influence and gradually help our suppliers establish their own disclosure framework for their products’ carbon emissions and GHG inventories. Together, we will make our own contribution to reducing GHG emissions.

There has been no regulatory action or protests due to environmental pollution in recent years. The environmental safety & health certification of HannStar plants are available here: http://www.hannstar.com/Common.aspx?mid=125&tmid=6&modid=1

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Energy-saving measures at the LCD plant

To promote a green corporate culture and realize the targets on energy-saving and carbon reduction, it is essential for the STSP plant to rationalize energy consumption during production. Adjustments were therefore made to machines’ energy consumption, clean room temperature/humidity, Fan Filter Unit (FFU) operation and ambient lighting to reduce electricity consumption without affecting product quality.

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The following improvements were made in 2010

In 2010 the LCD plant began adopting the concept of “Hibernation” mode for production machinery. When a machine is not in use, it automatically enters “Hibernation” mode. The mode greatly reduces electricity consumption when

not in operation.

For plant administration, the consumption of utilities was optimized by making

adjustments to the chilled-water/compressed dry air (CDA) systems.

Several energy-saving initiatives were implemented in the offices. There are fewer workers on weekends so the office air-conditioning is set to 27˚C instead of 25˚C. The amount of office lighting was rationalized and switches installed as well so people can turn off the lighting in their area when they leave. All office lighting was upgraded to LED lighting in 2010 as well to reduce electricity consumption.

Over 30 energy-saving initiatives were carried out in the LCD plant during 2010. Electricity consumption per sq. m at the STSP plant has decreased by 20% from 104kWh in 2007 to 84kWh in 2010. Our target of reducing electricity consumption by 20% in 2011 was therefore realized a year early. In the future, we hope to continue carrying out further measures to reduce energy consumption and carbon emissions.

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Green Hanns ActionsAction 1 Promote energy-saving in the plants

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Energy-Saving Plan

Item MeasuresElectricity

Cost (KNTD/Y)MWH/Y

CO2Emission(Tonnes)

1 Reduced FFU operation at Array plant 3,641 1,655 1,031

2 Reduced FFU operation at CF plant 7,735 3,516 2,190

3Addition of automatic water drainage to

CDA system3,620 1,645 1,025

4Increase air-conditioning temperature of

FAB3 transformer station by 1˚C1,200 545 340

5Addition of heater switch to left/right

cylinder sheath of power generator617 280 175

6Modification of discharge pipeline to use

gravity feed760 345 215

7Power-off switch for STK ionizer in CF

area302 137 86

8 Install personal light switches 150 68 42

Total 18,025 8,193 5,104

Electricity Consumption Analysis

Year 2008 2009 2010

Power Consumption (kWh) 375,693,941 320,701,382 335,102,204

Glass Production (Sq.M) 3,653,639 3,345,334 4,007,943

Power Consumption

per Unit Produced (kWh/㎡)103 96 84

Reduction (%) 1% 8% 20%

Trend in Electricity Consumption per unit at the Southern Taiwan Science Park Plant

Electricity consumption per Unit (KWH/㎡)

0

60

40

20

80

120

100

2008 2009 2010

10396

84 20%

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Target consumption was reduced by 20% in 2010 compared to 2009PR consumption was reduced by 14% compared to 2009 while the recovery rate was also increased to 47% (2010 average), up from 44%.Thinner/developer reduction and recovery reduced by 26% and 18% compared to 2009 as well. 2010 coincided with product transition at the plant so there was an increase in the consumption of lab chemicals compared to 2009 because process improvements have not yet fully in effect. Nevertheless, chemical consumption dropped to 0.021 tonnes/sq. m compared to 0.025 tonnes/sq. m in 2008, an improvement of 15%.

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Chemical Consumption at the STSP Plant

Year 2008 2009 2010

Chemicals (tonnes) 93,125.23 68,137.50 82,983.45

Glass Production(㎡) 3,653,639 3,345,334 4,007,943

Chemical Consumption

per Unit (tonnes/㎡)0.025 0.020 0.021

Reduction(%) - 4% 17% 15%

Action 2 Implement Green Management

Green Product Development Planning

HannStar spares no effort when it comes to the development and promotion of green products. The design of green products and use of green materials are given the highest priority by R&D units. We have now expanded our product carbon footprint audit to support the global green trend and meet customers’ requirement for green products. By the end of 2011, we will have at least 4 carbon footprint and 1 water footprint product certifications so we can provide more green products to our customers.

Chemical Reduction at LCD PlantChemicals in use: • Photoresist (PR)• Thinner• Developer• Etchant• Stripper• Isopropyl Alcohol (IPA)

The STSP plant has been reviewing the use of chemical agents since 2007. Reductions and recycling improvements have been progressively carried out to the targets as well as chemical agents used during the Array/Color and Filter/Cell processes, including stripper acid reduction, PR recovery and reduction, thinner reduction as well as etchant and developer reduction. In 2010 improvements focused mainly on consumption rationalization, maintenance rationalization, introduction of the A1 process and improvements to the PR recovery process. The results were as follow:

GO

Chemical consumption per Unit (Tonnes/㎡)

0.000

0.015

0.010

0.005

0.020

0.030

0.025

2008 2009 2010

0.025

0.020.021 15%

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Packaging Improvements at the LCD Plant

Packaging materials have traditionally being designed to absorb shock and impacts in order to prevent damage to LCD products during shipment. Due to the greater size and weight of full and quarter sheet shipments, they were usually packaged in PP cartons. The smaller number of pieces (20) and large size meant packaging materials were consumed at a high rate. As a result, the STSP plant began using vacuum packaging in cartons (30 pcs per carton). To produce further savings, 40pcs cartons were introduced in 2010, reducing the consumption of packaging materials by 33%.

Returns Shipping

Carbon emissions produced during transportation is an invisible yet major source of environmental impact. To reduce our environmental impact and costs, HannStar set up a logistics hub to collect all returns for monthly shipment instead of shipping each return separately. The reduction in the number of vehicle movements/trips reduces the damage to the environment and shipping costs as well.

RMA Return Shipping

Return Method Frequency Reduction

Returns before Hub 5,223

96.6%Returns after Hub (One grouped

shipment a month from 12 sites)100

Illustration of Quarter Sheet Packaging Improvement

Current method (30pcs/carton) Improved method (40pcs/carton)

5 sheets x 6 packs = 30 sheets 5 sheets x 8 packs = 40 sheets

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Compliance with U.S. Energy Star Design Requirements

Energy Star is a voluntary energy efficiency program launched by the US Environmental Protection Agency (EPA). The purpose of the program is to provide consumers with energy rating labeling on products. By improving the energy efficiency of products, energy consumption can be reduced and the rate of global warming slowed. Energy Star is now the most well-known energy-saving certification used in the world. HannStar has been an Energy Star partner since 2005 and our LCD monitors conform to the Energy Star 5.1 requirements on energy conservation during sleep and off modes. Our LCD TVs conform to the Energy Star 5.3 requirements that power consumption should be ≦1W in sleep mode.

LCD Monitor Requirements

Status Energy Star Tier 1 Energy Star Tier 2

Maximum Power

Consumption in Sleep Mode≦2W ≦1W

Maximum Power

Consumption in Off Mode≦1W ≦1W

Green Product Compliance

Compliance with Energy-related Products (ErP) Design Requirements

On October 31, 2009, the European Union issued the 2009/125/EC European Ecodesign Directive. The new directive replaced the old 2005/32/EC directive and expanded the scope from energy-using products to all energy-related products. The ErP directive sets out the ecodesign requirements for all energy-related products to improve their energy efficiency and environmental performance.

The standby and off modes of all LCD TVs, displays and computer products produced by HannStar conforms to ErP requirements.

LCD TV Requirements

StatusProduct requirements

after 2010/01/07

Product requirements

after 2011/08/20

Off 1W 0.3W

Standby(Standby Enabled) 1W 0.5W

Standby(Standby Enabled + Display) 2W 1W

LCD Monitor Requirements

Status

Product Requirements 1

Year after New Directive

(2010/01/07)

Product Requirements 4

Years after New Directive

(2013/01/07)

Off ≦1W ≦0.5W

Standby(Standby Enabled) ≦1W ≦0.5W

Standby(Standby Enabled + Display) ≦2W ≦1W

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European Energy Labeling Directive 106/2010

The European Energy Labelling Directive 106/2010 requires all TVs imported into Europe to display an energy efficiency label from December 2011 onwards. The energy efficiency label is familiar to European consumers as it is already required for home appliances such as refrigerators. Each label shows a 7-grade energy rating (from A to G). A red “G”rating means “Poor energy efficiency” while a green “A” rating means “Very good energy efficiency”. In addition to the energy rating, the new label must also indicate the diagonal length of the screen, power consumption, average annual power consumption (4 hours of use a day), standby power consumption and regulatory code. HannStar has been working on optimizing the energy efficiency of all TVs produced for Europe since the start of 2011.

Green Product

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Green Purchasing Management

HannStar not only carries out green product audits on vendors in the supply chain but also green management on the source of production materials and consumables. When new materials are introduced, the supplier must provide the internal control program (ICP) report and Certificate of Non-Use from an independent third party. The HannStar Green Management System will also notify suppliers to update the ICP report every year.

Example of the supplier management checklist :

NO AUDIT ITEM

Hazardous Substance Process Management (HSPM)

1Are persons in charge of the operation fully understand HannStar’s Hazardous Substances controlled requirements?

2Do you frame your own envirmental policy and requirements for the Hazardous Substances? Is a list with the maxmium concentration value for each Hazardous Substance available, for example, at the manufacture steps in which potentially.

3Do the reduction plans of the Hazardous Substances in place to meet HannStar Hazardous Substances controlled requirements?

Supplier Management

4Is a procedure in place to further secure the compliance of supplier’s products with HannStar Hazadous Substances controlled requirements? Measures might include outgoing tests at supplier’s site, incoming lots with the...

5Is a supplier audit periodically performed to verify the compliance of your suppliers?

6Are actions(i.e., further tighten criteria, immediately inform HannStar, etc.) incoming inspection station.

7Is your BOM system(or MRP system) modified to clearly indicate the readiness of components(or material) for HannStar Hazardous Substances controlled requirements?

GOAction 3 Implement Green Supply Chain

Supplier systems and production processed must undergo our green product audit before they can become a qualified supplier. Suppliers are also given Software Quality Engineering (SQE) assistance to help them progressively establish their own green product management framework. HannStar and our suppliers can then work together to realize our goals of reducing energy consumption, reducing carbon emissions and meeting the Hazardous Substance Free Standard and Requirements (HSF).

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A comparison of normal and high-efficiency LEDs is provided below:

P (Power consumption) = I (Current) * V (Voltage)

Normal =>20mA*3.3V = 66mW

High efficiency =>20mA*2.8V = 56Mw; the above is the difference between single LEDs

If a 10” product uses 36 LEDs then the power savings are as follow: (66m-56m)*36=0.36W. The power savings for the backlight are then 0.36/2.376=15.1%.Reducing power consumption by 15% means the tablet PC’s endurance is extended by 1 hour.

Slim, Energy Saving and GreenEnergy Saving and eco-friendly LED Backlight

Advances in technology means portable LCD products are no in great demand. Tablet products are particularly popular today. To take advantage of this trend HannStar pays particular emphasis to the energy efficiency of new product designs. As LCDs do not emit light and are reliant on the LED backlights for illumination, LEDs have become a major source of power consumption in LCD panels.

To overcome this challenge, HannStar partnered with Unity Opto Technology to develop a 10” tablet product that uses high-efficiency (low-voltage) LEDs. The new product not only meets market requirements but also improves display brightness, making it a green, energy-efficiency and cost-effective product. We will continue to develop even more energy efficient and LCD products that meet public demand.

Action 4 Develop Environmentally Friendly &EnergyEfficientProducts

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Comparison of ROK repaired using recycled components, 2010

ROK repaired with new components ROK repaired with recycled components

GO

ProductCarbonFootprintVerificationIn recent years, the influence of global warming, ISO 14064 GHG audit and BSI Pas 2050 product carbon footprint audit has seen “Carbon Disclosure” become an important environmental issue among international enterprises. Green products & services are constructed from green design, green purchasing, green manufacturing and recycling. HannStar has embraced the ideals of green products and is determined to join the ranks of suppliers that have made a contribution or difference in this field as part of our social responsibility.

HannStar is committed to the development and manufacture of green products. In December 2010 we became the first company to receive Carbon Footprint Verification for a 10.1” tablet touch panel and carbon footprint labeling will be introduced in May, 2011. Starting in 2011 Q2, we will complete the carbon footprint audit for one product a month and complete the carbon footprint audits for 4 products by the end of 2011. The audits will enable to accurately track the carbon emissions generated during production, internal/external logistics and employees’ business travel.

Awareness and communication initiatives will be used to extend our company’s influence and gradually help our suppliers establish their own disclosure framework for their products’ carbon emissions and GHG audits. Together, we will make our own contribution to reducing GHG emissions.

2010 December Carbon Footprint Verification

Suppliers must pass the HSD QSA/QPA/GP system audit

Appropriate reports or certification must be provided before new materials

can be introduced and used (e.g. ICP, Certificate of Non-Use)

Supplier are required to update the ICP report annually

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Action 5 Effective Treatment of e-Waste

Recycling of Defective Returns

HannStar applies the requirements of the Waste Electrical and Electronic Equipment Directive (WEEE) to returned defective panels as well. Scrapped panels are disassembled and usable materials recovered for use with other serviceable products. Contracted repair centers are also being progressively trained on product assembly and repairs using recovered components to increase their reuse rate. Non-serviceable products as well recyclable glass and semi-assemblies are all collected by qualified waste disposal companies for processing. Our initiative has begun producing results in the second half of 2010. In the future, we will strive to increase the ratio of products repaired using recovered materials to 25%.

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Water Consumption Analysis

Year 2008 2009 2010

Tap Water (tonne) 3,414,198 2,625,540 2,699,730

Glass Production(Sq. M) 3,653,639 3,345,334 4,007,943

Water Consumption per

Unit(tonne/㎡)0.93 0.78 0.67

Reduction(%) 4% 20% 31%

Trend in Water Consumption per Unit at the Southern Taiwan Science Park Plant

GO

0.00

0.60

0.40

0.20

0.80

1.20

1.00

2008 2009 2010

32%0.93

0.78

0.67

Water Consumption per Unit (Tonnes/㎡)

Action 6 Water Resource Management

Product Water Footprint Verification

Unequal distribution of water resources caused by climate change may lead to water shortages in the future. Water resource management is therefore becoming increasingly important and water footprint is now a very real risk for the global industry. Being a sub-tropical island, Taiwan’s annual rainfall is 3.4 times the world average rainfall. The amount of usable water is just 1/6 of the world average so water consumption is an important issue for businesses in Taiwan and around the world.

HannStar plans to begin actively auditing our water footprint in 2011 by convening a supplier conference to explain our planning and supplier requirements. We expect third-party verification on the water footprint of our 10.1” tablet touch panel product in October, 2011. We hope that the product carbon/water footprint audits will provide us with accurate data for future water/energy saving and carbon reduction efforts. HannStar will then be better equipped to fulfill our commitment to “Green Production” and do our best for the environment.

There has been no regulatory action or protests due to environmental pollution as of the end of 2010.

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Employment

Year 2009 2010

Total Employees 2,368 2,517

- Management 232 263

- R&D 1,149 1,163

- Operators 987 1,091

Taiwanese Employees 100% 100%

Handicapped Employees 10 9

Average Age 32 33

Average Length of Service 3.90 4.10

Employee Turnover

Year 2009 2010

Gender Men Women Men Women

Under 30 122 (28.18%) 128 (29.56%) 176 (25.11%) 145 (20.68%)

30~50 28 (6.47%) 152 (35.10%) 56 (7.99%) 319 (45.51%)

Over 50 0 (0%) 3 (0.69%) 0 (0%) 5 (0.71%)

TOTAL 433 701

People are one of the most important advantages a company can have in a competitive environment. HannStar has always recruited the cream of the technology sector and we also invest significant resources into employee training & development, work environment and employee benefits to ensure that our people can focus completely on their work. Our goal is to provide a work environment that is as comfortable as being at home. Employees can then deliver their best performance at all times and maximize their competitiveness as a team.

Social Responsibility

18.93%

2009

81.07%

Ratio of Men and Women in Management

MaleFemale

2010

19.53%

80.47%

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Comprehensive Remuneration

• Offer competitive remuneration. • Profit-sharing and employee shareholding scheme.

Shuttle Bus• Wugu Office: Shuttle bus service between the plant and Taipei or Taoyuan• Tainan Plant: Shuttle bus between the plant and Kaohsiung, Tainan or Chiayi.

PensionHannStar has retirement regulations for full-time employees. Employee pensions are managed in accordance with the “Labor Standards Act” and “Labor Pension Act”. The pension fund is overseen by the Pension Fund Supervisory Committee.

Employee Vacation

• “Special 1st Year Annual Leave” available immediately upon arrival: Special leave, menstruation leave, paternity leave and parental leave. • One day of paid parental leave is provided to foster family bonding and better work-family balance.

Corporate Employee Benefits Network

We are a member of the Payeasy corporate employee benefits network. Employees receive credit bonuses during annual festivals/birthdays for purchasing online shopping vouchers.

Other

• Gift vouchers distributed for the four major holidays: Lunar New Year, Labor Day, Dragonboat Festival and Mid-Autumn Festival. • Birthday bonus, wedding/funeral subsidies. • Annual company vacation. • Free group insurance and medical insurance for dependents.

2010 Improvements

• Nanjing employee cafeteria refurnished• Nanjing employee dormitories refurnished• Brightbridge cafeteria refurnished• Adjustments to Nanjing/Guangqiao food budget

Employee SecurityHarmonious labor relations are important for successfully management. Local economic changes in recent years means the industry is faced with structural changes that reinforce the importance of employee and employer consensus on business issues. HannStar has always attached high importance to employee welfare and growth. Apart from introducing an employee share-holding scheme, we also emphasize training and development. No serious labor disputes have occurred to date.

Several labor relations organizations including the “Employee Welfare Committee”, the “Pension Fund Supervisory Committee” and the “Labor Safety & Health Committee”. Employees can use the Recruit Orientation Seminar or labor relations meetings to convey their opinions or suggestions to the company. We also encourage the convening of employee information conferences, monthly executive meetings, monthly departmental meetings and regular labor relations meetings. Resolutions passed by these meetings must be carried out by the specified deadline. Employees are encouraged to communicate with the relevant personnel through public and transparent methods at any time as well to improve communication between the employer and employees.

Employee Welfare

HannStar provides employees with a supportive work environment and user-friendly services. The scheduling of shuttle buses, themed restaurants, café/bar and reading room all make comfort their highest priority. By providing a creative and relaxed work environment we ensure that all employees can stay on top of their work at all times. The design of the remuneration scheme is based on employee incentives and people-centric management. We offer competitive salaries and benefits to attract the best talent.

People-centric Management and Service

•Respect for employees and flextime system means no need to punch time cards.

•Ensure employee safety at work – Provision of medical clinic, dormitories and free shuttle buses.

•Creating a friendly work environment – Prevent gender discrimination and sexual harassment.

•Set up a women & children corner – Set up nursing room.

•Provide a happy workplace as well as a comfortable, well-equipped office environment.

•Provide annual health checkups resident doctor consultations, health workshops and activities.

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Occupational Safety and Health Management

Proactive InspectionWe are now actively promoting proactive inspection of elevators, boilers, forklifts, automatic guided vehicles, fixed cranes, high/low-voltage equipment, pressure vessels, high-pressure gas equipment, special/chemical equipment, local ventilation facilities as well as checkpoints for hazardous operations. We hope proactive inspection can help identify potential hazards, effectively prevent the occurrence of workplace accidents and ensure the safety & health at HannStar and all employees.

Environmental Safety and Health TrainingTraining courses are held every year on occupational safety & health and environmental protection. The courses aim to reduce workplace accidents by improving employee awareness on safety, health and environmental issues.

Related courses include:• Recruit Training: Basic occupational safety & health and environmental protection training• Hazardous Substances Course: Introduction to the characteristics and usage • guidelines of hazardous substances used by HannStar. • Special Operator Training: Training for special/general operators, hazardous • mechanical equipment and managers. • Specialist Training: Training of environmental protection specialists• Emergency Response Training: Includes training and drills

Workplace Environment MonitoringEnvironmental monitoring is carried out every 6 months on organic solvents, special chemicals, dust, carbon dioxide, lead, lighting and noise. Monitoring results are then published on the notice board. Test results have all be normal to date.

Hazardous Substance ManagementHannStar’s hazardous substance management focuses on four areas:

Labeling: All chemicals and storage areas must be labeled in Chinese. Material Safety Data Sheet (MSDS): Suppliers are required to provide a Chinese version of the MSDS. The MSDS is placed in the ERT cabinet at the site or on the notice board that employees can check at any time. Substances List: Any change in chemical products used is updated to the materials list. A database of all chemicals used on-site has also been compiled. Chemical storage/usage safety: Rules on the storage and use of chemicals have been defined. A census of all chemical products on-site is taken each year along with unscheduled on-site inspections.

Emergency Response Planning• Regular ERT training is carried out 6 times a year. • Regular ERT refresher training is carried out twice a month. • Regular fire, chemical and gas leak drills are carried out 12 times a year. • Regular advanced firefighting training is carried out 2 times a year. • Unscheduled emergencies and evacuation drill. • Regular plant alarm training and on-site audit twice a year. • Organize ERT competitions once a year.

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Employee Health

HannStar regularly organizes employee health checkups and safety & health work-shops. Health consultations are also provided to check and monitor employee health.

We added the full range of metabolic syndrome indicators and malignant tumor screening (for colon cancer, cervix cancer and breast cancer) to employee heath checks in 2010. We are also planning to introduce a health management program in the second half of 2011 to realize comprehensive employee healthcare in accordance with our philosophy of sustainable development. In February, 2010 we received the “Excellence in Healthy Workplace Self-management Certification” awarded by the Environmental and Occupational Medicine Association of R.O.C.

Employee health related activities in 2010

• Flu vaccine injection • Blood donation (3 times a year)• Pap smear/Mammogram• Annual health exam/ Anomaly analysis/ Preventive medicine• Employee health awareness education• “Excellence in Healthy Workplace Self-management Certification”, Environmental and Occupational Medicine Association of R.O.C.• Additional health exams for employees: Complete range of metabolic syndrome indicators and malignant tumor screening (for colon cancer, cervix cancer and breast cancer)

Employee Recreation

In 2010 we invited dependents to join our company vacation. We also organized a variety of competitive activities. External recreational activities included appreciation activities for supplier executives. 2011 will mark the start of a new era in employee relations management. The 2010 activities will be carried over and internal events will be combined with arts & culture, performances, sports and charity-related activities to help employees care for their families and contribute to society. • Dependents will be invited to attend departmental end of year banquets for free • Departmental travel/club activities• Appreciation luncheon with supplier executives • BBQ for Nanjing plant employees• Singing competition at the Brightbridge plant in Wujiang

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Company vision/Strategy/Goals

Human resourcesdevelopment strategy

Improve organizational/individual performance

Training & development goals/Strategy

Educational training system

Professional talentdevelopment

Plan → Design → Do → Review → Outcome

Learning and DevelopmentPersonnel development at HannStar follows three main axes:

Internal Instructor System

An internal instructor system combined with management leadership training, profes-sional knowledge manage-ment and corporate culture inheritance effectively con-verts external knowledge and skills for internal instruction.

e-Learning

The HannStar Academy System combines IT platform with e-learning courses.

Performance Management

Performance management and development is used to continuously improve employee quality and help employees realize their career development plan.

HannStar Academy“HannStar Academy” has built a comprehensive training system for helping employees improve their management and professional skills. Traditional classroom teaching and e-learning courses are used to help employee realize self-growth. HannStar believes that having access to a variety of learning channels gives individual the motivation to further their careers.

Training courses are announced at the start of each month. With the exception of compulsory cores, employee may choose other courses they are interested in to enhance their professional skills. The types of training include new recruit orientation, management training, skills-based training, in-service training and self-development training.

Performance EvaluationWith the exception of new employees that arrived less than 3 months ago, all employees must undergo a total performance evaluation every 6 months. The supervisor and the employee review the results together and draw up a future development plan. The purpose of the performance management system is to ensure a win-win outcome for the company and the employee where the company can meet its business targets and employees can continue to develop. HannStar also draws up a performance improvement plan for under-performing employees. It is the company’s responsibility to ensure that we can work together with employees to improve performance and meet the set goals.

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Apart from the compulsory courses, external training resources will also be used to compensate for deficiencies in internal training. Examples include QA seminars on new technology R&D, official certification courses, inspection tours and in-service education. We are also collaborating with the College of Foreign Languages at the Fu Jen Catholic University to help ambitious employees improve their international management skills, foreign language business communication skills and cultural understanding.

Education & Training

Classes Duration (Length) Participants Average Training

Hours per Person

2009 131 988 4,250 13

2010 202 1,142 6,948 18.3

YearItem

Leadership TrainingManagement Training: Organize strategic planning workshops for high-level executives, management certification courses for low-level managers and management courses for mid-level managers. The Chairman hosts an executive consensus-building camp each year. All managers above the grade of department head must attend. Set up an internship for Nanjing cadre in Taiwan. Approximately 180 cadre will be rotated through the internship program to cultivate future leaders.

Lifelong Learning CourseAll employees are assigned compulsory courses and departmental OJT training each year tailored to their personal needs. Employee welfare committee’s club activities including the swimming club and baseball club.In-service education

1

1

2

2

3

Comprehensive Training System

Management TrainingProvide the management, mid-level managers and on-site managers with different levels of incubation training as well as individual management training courses.

Professional TrainingEmploy internal and external experts to plan and conduct professional training courses for production, quality assurance, marketing, human resources, R&D, finance, IT, legal affairs, and environmental safety & health.

Recruit TrainingOnce a new employee reports for duty, provide orientation training and introduce them to the basic concepts and skills required for their work. Help employees shorten their adapta-tion time so they put their skills to use properly.

Instructor Incubation

Provide a comprehensive system and funding incentives for formally employing internal instructors for the HannStar College. The instructors use internal company experience to develop teaching examples and use them in class. Continue to cultivate internal instruc-tors’ professional expertise and teaching skills. Also cultivate expert employees to become first-class internal instructors so they can apply what they learn.

Self-Development

Apart from the enriching of professional knowledge and skills described above, continue to subsidize employee education in English, Japanese, computer skills and in-service academic credits. Host club, health and spiritual growth seminars at different times and also provide an online document management system, technical library as well as online professional social networks so that employees can continue to learn.

Personnel Strategy Description

Passive →ProactiveRecruitment will switch from passively waiting for applicants to proactively competing for talented personnel through a variety of different channels.

Urgent →Incubate

Train and incubate personnel to avoid manpower shortages. Take the high ground and appreciate the fact that “it’s people that generate sales”. Assign high importance to multi-skilled personnel and select key personnel for internal incubation. Strategic talent should also be introduced from the outside in advance to benefit from their experience.

Buy →Build

In the past, corporate development depended on acquiring outside personnel en masse. This will change to using outside personnel at appropriate times in order to internalize their experience (knowledge management). At the same time, actively cultivate exceptional internal personnel and set up a formal, comprehensive and organized career roadmap to provide internal talent with a development platform. Set up a positive feedback cycle in personnel em-ployment and avoid the vicious cycle of personnel turnover.

Local →Global

The strategic development of the organization means personnel’s views must expand from Taiwan to include China and the rest of the world. Personnel mobility then becomes the most powerful too for quickly meeting customer requirements. Systemic development strategic rotation will expand personnel’s thinking, horizons, knowledge and skills.

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Customer Satisfaction

HannStar has established the HANNS Service e-Platform to provide our customers with the fastest access to technical support and related information. The platform includes product information, distributor information, online product registration, product updates, FAQ information, global presence and customer service hotline. We also set up global service centers to protect the customer interests. Customers’ opinion of our products and corporate services are very important to us. Questionnaires are therefore sent out every quarter to carry out customer satisfaction analysis. The questionnaire is targeted at customers’ purchasing, RD and SQE QA personnel. The content of the survey included Product Quality (including HSF quality), customer service, technology service, sales service and benchmark with competitor.

The results of the customer satisfaction survey provide a very important guide for improvement action. The results for each quarter are compared to the preceding quarter. If a customer’s satisfaction rating does not meet the target or their satisfaction rating has decreased, analyze the problem propose corrective action and verify the effectiveness of the proposal. The questionnaire survey process is as follows.

Customer Customer Quality Service Unit Other Competent Units

Fill out and return “Customer Satisfaction Survey”

Submit report on corrective action along with explanation

NG

OK

Confirm order acceptance

Process “Customer Satisfaction Survey” responsesCompile “Customer Satisfaction Survey Statistics”Sort through the reasons for customer dissatisfaction

Send out “Customer

Satisfaction Survey”

every quarter

Submit for management review

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Customer Service and Communication

When a customer experiences a product malfunction, HannStar customer support will verify the defect report within 24 hours then process it with all speed. HannStar began focusing on medium and large-sized LCD products in 2010. In the beginning, most of customers were located the Huadong and Huanan regions of China. First-tier personnel provided customers with the most direct support and troubleshooting, ensuring that our customers receive the most complete, effective and immediate service.

Once a product has been confirmed as defective requiring replacement or repair, customers can make use of the product return, replacement and repair services provided by HannStar’s global branded product service centers. HannStar currently provides customers with complete support through our 7 service centers in the Americas, Europe and Asia.

USAInternash Ohio

A&D California

CustomerServiceSystem

Provide a platform to customers and contract ASPs for sharing

customer support information

• Exchange and integrate information with external customers and

vendors

• Compile and analyze global maintenance records and history

• Track after-sales support management information to improve

repair speed and management efficiency

• Track after-sales support management performance indicators

Integration of repair material orders

• Electronic management of repair material orders

• Tracking of material orders and shipping orders

Analyze the product quality of outside suppliers

• Reduce quality cost

• Respond to quality issues in a timely manner

• Reference information for supplier assessment

Full product resume

• Record product and key component serial numbers for tracking

product quality after shipping

• Identify quality issues for tracking and improvement to ensure the

quality of after-sales service

Set up communication platform with contract ASP

• Instant notification and sharing of technical

product documentation

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EMEATeleplan Poland

ASIA PACIFIC

CHINAGoldWell SuzhouSequel Shanghei

Taiwan GOC, TaoyuanSunrise, Taipei

Global RMA process management for key components

• Effective management of global RMA process

• Accelerate the inventory turnover of key components and

reduce global inventory costs

• Compile repair resume for key components

Set up global ASP invoice review platform

• Automatically check invoices to make sure they are correct and reasonable

• Review and confirmation mechanism for invoices payable

• Cost analysis of repair invoices

Refinedglobalmaterialsmanagement

• Global repair component inventory management system platform

• Track global inventory levels in real time and provide a mechanism for

inventory reconciliation

• Confirm actual consumption by repairs to avoid unnecessary loss

Retailer return process management

• List of returns

• Profit-loss analysis for returns

• Set up mechanism for reconciling accounts

with channels and ASPs

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Local Community Support and Participation

HannStar has always embraced a philosophy of supporting the local community and giving back to society. As our operations have expanded, we have taken an active interest in the local community and worked with employees to make a contribution outside of the workplace.

Nanjing Plant: 1st HannStar/ HANNspree Charity Climb

“Zijin Mountain is Nanjing’s mother and also the lungs of the city.” HannStar’s president often goes mountain climbing on the weekends but after seeing many other mountain climbers leave rubbish behind when they leave, he decided to recruit employees for the 1st charity climb.

“We not only asked employees to not leave behind any rubbish during the climb but also issued everyone with gloves and rubbish bags. By picking up the rubbish as we came down the mountain, Zijin Mountain could finally breathe again!”

Over 2000 employees and their families took part in the event. The event not only introduced employees to the beauty of Zijin Mountain and enriching their outdoor lifestyle, it also helped to build up friendships between people and their sense of social responsibility.

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WuguOffice: Charity Bread Sale for Ci Yu Sheltered Workshop

One of our neighbors near the Wugu Office is the Ci Yu Sheltered Workshop where fresh bread is baked with patience and love. For the past year, we have invited the sheltered workshop to sell their products at the office. Apart from providing employees with a convenient selection of delicious and health foods, we also hope that repeated exposure to the general public will gradually help the workshop workers develop a sense of independence and confidence in their work.

Caring begins with the local community. Giving a loving hand by buying bread.

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STSP Plant: Donation of Flu Vaccine to Tzu Chi

We donated 147 does of flu vaccine to the Dalin Tzu Chi Hospital’s community health service. The vaccination of low-income families was carried out at Huwei Town Office in Yunlin County towards the end of 2010.

STSP Plant: Tree Planting Event

All HannStar plants are constructed in national science-based industrial parks and away from ecologically diverse regions. Nevertheless, we try to turn unused areas into green spaces as a way of achieving ecological balance.

As part of the 2010 Tree Planting Festival for example, we planted 580 Zelkova and 420 Paper Bark trees near the car park on the east side of the STSP plant. A creative green space adoption program has also been launched at each plant to encourage employees to join in beautifying the plant environment and increase their opportunities to enjoy Mother Nature.

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STSP Plant: STSP Student River Patrol

Patrol Area: Waterways around the Southern Taiwan Science-based Industrial Park. Participants: The student river patrol camp is hosted every season to promote environmental awareness.

River pollution is not only caused by a lack of sewage infrastructure but more important, the apathy of the general public and selfish businesses. We believe that this environmental vandalism can only be fought through basic environmental education, participation in waterway conservation and promoting environmental education for the waterways.

To this end, we started out with senior students from local elementary schools near the science park. The first year consisted of four six-grade classes from the Affiliated Elementary School of the Nanke Experimental Junior High School (2009/12 ~ 2010/11). A children’s river patrol camp is organized every season to promote environmental awareness and carry out basic environmental education. The camp proved very popular with the schools so an additional camp was held. By the end of 2010, a total of 5 camps have been held with over 250 students taking part.

GRI G3.1 IndexDisclosure Items Page

Profile disclosure

Strategy and Analysis 1.1 CEO Statement P4-6

1.2 Key impacts, risks, and opportunities. P14

Organizational Profile 2.1 Name of the organization. P2

2.2 Primary brands, products, and/or services. P9

2.3 Operational structure P13

2.4 Location of organization's headquarters. P7

2.5 Number of countries in operation. P7,11

2.6 Nature of ownership and legal form. P13

2.7 Markets served P11

2.8 Scale of the reporting organization. P7,10

2.9 Significant organizational changes No major change

2.10 Awards received in the reporting period. P11

Report Parameters 3.1 Reporting period P2

3.2 Date of most recent previous report P2

3.3 Reporting cycle P2

3.4 Contact point for questions regarding the report or its contents. P2

3.5 Process for defining report content. P14-15

3.6 Boundary of the report P2

3.7 Limitations on the scope or boundary of the report P2

3.8 joint ventures, subsidiaries, outsourced operations P2

3.9 Data measurement techniques and the bases of calculationsPlease see the notes in

each charter

3.10 Effect of any re-statements of informationPlease see the notes in

each charter

3.11 Significant changes from previous reporting No major change

3.12 Standard Disclosures P41-44

3.13 External assurance for the report. None

Governance, Commitments, and Engagement

4.1 Governance structure P13

4.2 Indicate whether the Chairman is also an executive officer. P12

4.3 Independent and/or non-executive members P12

4.4 Mechanisms for shareholders and employees to provide recommendations to the board. P15

4.5 Linkage between executive compensation and performance P12

4.6 Processes to ensure conflicts of interest are avoided at the board P12

4.7 Process for determine board expertise on sustainabilityPlease see the 2010

financial report

4.8 Mission and values statements P8

4.9 Procedures for board governance on management of economic, environmental, and social performance Please see the 2010

financial report

4.10 Processes for evaluation of the board’s CSR performancePlease see the 2010

financial report

4.11 Precautionary approach or principle is addressed by the organization. P24-26

4.12 Externally developed CSR principles, or other initiatives P22-23

4.13 Memberships in associations P22-23

4.14 List of stakeholder groups engaged by the organization. P15

4.15 Identification and selection of stakeholders P15

4.16 Approaches to stakeholder engagement P15

4.17 Topics and concerns that have been raised through stakeholder engagement P15

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Disclosure Items Page

Economic

Economic performance EC1 Direct economic value generated and distributed P13

EC2 Financial implications due to climate change P14

EC3 Benefit plan P29

EC4 Significant financial assistance received from government. None

Market presence EC5 Entry level wage compared to local minimum wage

EC6 Locally-based suppliers at significant locations of operation. P11

EC7 Local recruitment

Indirect economic impacts

EC8 infrastructure investments and services for public benefit P38-39

EC9 Understanding and describing significant indirect economic impacts

Disclosure Items Page

Environmental

Material EN1 Materials used by weight or volume.

EN2 Percentage of materials used that are recycled input materials.

Energy EN3 Direct energy consumption by primary energy source. P19

EN4 Indirect energy consumption by primary source. P19

EN5 Energy saved due to conservation and efficiency improvements. P18

EN6 Initiatives for energy-efficient or renewable energy P24

EN7 Initiatives to reduce indirect energy consumption

Water EN8 Total water withdrawal by source. P27

EN9 Water sources significantly affected by withdrawal of water. None

EN10 Percentage and total volume of water recycled and reused.

Biodiversity EN11 Land assets in the areas of high biodiversity value P40

EN12 Significant impacts of activities, products, and services on biodiversity P40

EN13 Habitats protected or restored. None

EN14 Managing impacts on biodiversity. P40

EN15 Endangered species affected by operations None

Emissions, effluents and waste

EN16 Total direct and indirect greenhouse gas emissions by weight.

EN17 Other relevant indirect greenhouse gas emissions by weight.

EN18 Initiatives to reduce greenhouse gas emissions P18-26

EN19 Emissions of ozone-depleting substances by weight. P16

EN20 NOx, SOx, and other significant air emissions

EN21 Total water discharge by quality and destination.

EN22 Total weight of waste by type and disposal method.

EN23 Total number and volume of significant spills. None

EN24 Hazardous waste and percentage of transported waste shipped internationally. None

EN25 Habitats affected by discharges of water and runoff.

Products and services EN26 Initiatives to mitigate environmental impacts P26

EN27 Percentage of products sold and their packaging materials

Compliance EN28 Fines and non-monetary sanctions for non-compliance with environmental laws P17

Transport EN29 Environmental impacts of transporting P21

Overall EN30 Total environmental protection expenditures and investments by type.

Disclosure Items Page

Social:Labor Practices and Decent Work

Employment LA1 Breakdown of total workforce P28

LA2 Total number and rate of new employee hires and employee turnover P28

LA3 Benefits provided to full-time employees P29

Labor/management relations

LA4 Percentage of employees covered by collective bargaining agreements.

LA5 Minimum notice period(s) regarding significant operational changes

42

Occupational health and safety

LA6 Workforce represented in joint management-worker health and safety committees

LA7 Occupational diseases, lost days, absenteeism and number of work-related fatalities

LA8 Education, counseling programs in place regarding serious diseases. P31

LA9 Health and safety topics covered in formal agreements with trade unions.

Training and education LA10 Average hours of training per year per employee P33

LA11 Programs for lifelong learning P32-33

LA12 Employees receiving regular performance and career development reviews

Diversity and equal opportunity

LA13 Composition of governance bodies P28

LA14 Gender pay disparity by employee category and location of operation P29

LA15 Return to work and retention rates after parental leave

Disclosure Items Page

Social: Human Rights

Investment and procurement practices

HR1 Investment agreements that include clauses incorporating human rights concerns

HR2 Significant suppliers that have undergone human rights screening

HR3 Total hours of employee training on human rights

Non-discrimination HR4 Total number of incidents of discrimination and actions taken. None

Freedom of association and collective bargaining

HR5 Freedom of association and collective bargaining None

Child labor HR6 Measures taken to contribute to the effective abolition of child labor

Forced and compulsory labor

HR7 Measures to contribute to the elimination of all forms of forced or compulsory labor. None

Security practices HR8 Security personnel trained concerning aspects of human rights 100%

Indigenous rights HR9 Violations of rights of indigenous people and actions taken. None

HR10 Operations that have been subject to human rights reviews and/or impact assessments.

HR11 Formal grievance mechanisms.

Disclosure Items Page

Social: Society

Community SO1 Percentage of operations with impact assessments on communities

Corruption SO2 Business units analyzed for risks related to corruption. 100%

SO3 Anti-corruption policies and procedures. 100%

SO4 Actions taken in response to incidents of corruption. None

Public policy SO5 Public policy positions and participation in public policy development and lobbying.

SO6 Total value of financial and in-kind contributions to political parties

Anti-competitive behavior

SO7 Anti-competitive behavior and their outcomes. P13

Compliance SO8 Fines and non-monetary sanctions for non-compliance with laws None

SO9 Operations with potential negative impacts on local communities.

SO10 Prevention measures implemented in operations with potential negative impacts on local communities. P40

Disclosure Items Page

Social: Product Responsibility

Customer health and safety

PR1 Health and safety impacts along product and service life cycle P26

PR2 Non-compliance with regulations concerning health and safety impacts of products None

Product and service labeling

PR3 Type of product and service information required by procedures P17

PR4 Non-compliance with regulations concerning product and service information and labeling None

PR5 Practices related to customer satisfaction P34

Marketing communications

PR6 Programs for adherence to laws related to marketing communications

PR7 Non-compliance with regulations concerning marketing communications None

Customer privacy PR8 Complaints regarding breaches of customer privacy None

Compliance PR9 Fines for non-compliance with laws concerning the provision and use of products and services. P13

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