Altek - Interim / Quarterly Report 2019

ALTEK CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

JUNE 30, 2019 AND 2018

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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR19000038 (In Thousands of New Taiwan Dollars)

To Altek Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Altek Corporation and subsidiaries as of June 30, 2019 and 2018, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended, and notes to the consolidated financial statements, including the summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Report by Securities Issuers” and International Accounting Standard 34 “Interim Financial Reporting” as endorsed by Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as discussed in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Note 4(3), the financial statements of certain insignificant consolidated subsidiaries were not reviewed by independent accountants. Those statements reflect total assets of $2,797,984 and $5,390,149, constituting 19% and 32% of the consolidated total assets, and total liabilities of $317,334 and $267,761, constituting 7% and 4% of the consolidated total liabilities as of June 30, 2019 and 2018, respectively, and total comprehensive income of $24,211, $9,665, $134,527 and $99,347, constituting

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10%, 1%, 34% and 25% of the absolute values of the consolidated total comprehensive income for the three-month and six-month periods then ended, respectively.

As described in Note 6(7) to the consolidated financial statements, the financial statements of

investments accounted for under the equity method were not reviewed by independent accountants.

Equity method investments in these investee companies had book values both amounting to $0 as of

June 30, 2019 and 2018, and the related investment income both amounted to $0 for the three-month

and six-month periods then ended. These amounts were based solely on their unreviewed financial statements.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and equity method investees been reviewed by independent accountants, that we might have become aware of had

it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2019 and 2018, and of its consolidated financial performance for the three-month and six-month periods then ended and its consolidated cash flows for the six-month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Li, Tien-Yi[Tsang, Kwok-Wah ] For and on behalf of PricewaterhouseCoopers, Taiwan

August 12, 2019

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of June 30, 2019 and 2018 are reviewed, not audited)

Assets	Notes	December31,2018 AMOUNT % `$` `6,495,017` `40` `-` `-` `261,228` `2` `-` `-` `1,387,222` `8` `2,414,775` `15` `31,712` `-` `683` `-` `999,212` `6` `89,451` `1` `6,141` `-` `11,685,441` `72` `23,683` `-` `114,508` `1` `-` `-` `26,768` `-` `3,376,345` `21` `-` `-` `770,551` `4` `100,142` `1` `102,696` `1` `70,336` `-` `4,585,029` `28` `$` `16,270,470` `100`	June 30,2018	June 30,2018
		AMOUNT `$` `6,495,017` `-` `261,228` `-` `1,387,222` `2,414,775` `31,712` `683` `999,212` `89,451` `6,141` `11,685,441` `23,683` `114,508` `-` `26,768` `3,376,345` `-` `770,551` `100,142` `102,696` `70,336` `4,585,029` `$` `16,270,470`	AMOUNT `$` `5,794,436` `968,641` `-` `4,943` `690,401` `3,421,311` `32,646` `869` `1,059,224` `163,395` `19,362` `12,155,228` `10,601` `126,700` `-` `-` `3,553,601` `-` `773,959` `111,521` `92,136` `71,644` `4,740,162` `$` `16,895,390`	%
Current assets 1100 Cash and cash equivalents 1110 Current financial assets at fair value through profit or loss 1136 Current financial assets at amortised cost, net 1140 Current contract assets 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Current Assets Non-current assets 1510 Non-current financial assets at fair value through profit or loss 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets, net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets	6(1) 6(2) 6(4) 6(23) 6(5) 6(5) 6(6) 6(2) 6(3) 6(4) 6(7) 6(8) 6(9) 6(11) 6(12)			`35` `6` `-` `-` `4` `20` `-` `-` `6` `1` `-`
				`72`
				`-` `1` `-` `-` `21` `-` `5` `1` `-` `-`
				`28`
				`100`

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of June 30, 2019 and 2018 are reviewed, not audited)

					June 30,2019				December31,2018	December31,2018			June 30,2018
	Liabilities and Equity	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(13)		`$`	`1,760,000`	`12`		`$`	`1,760,000`	`11`		`$`	`2,150,000`	`13`
2110	Short-term notes and bills	6(14)
	payable				`-`		`-`		`-`		`-`		`199,945`		`1`
2150	Notes payable				`1,786`		`-`		`1,049,446`		`6`		`775,783`		`5`
2170	Accounts payable				`962,735`		`7`		`1,878,509`	`12`			`2,730,499`	`16`
2200	Other payables				`491,116`		`3`		`415,658`		`3`		`515,323`		`3`
2230	Current income tax liabilities				`35,967`		`-`		`58,625`		`-`		`43,691`		`-`
2250	Provisions for liabilities -	6(18)
	current				`36,486`		`-`		`35,378`		`-`		`40,415`		`-`
2280	Current lease liabilities				`6,659`		`-`		`-`		`-`		`-`		`-`
2300	Other current liabilities				`206,828`		`2`		`223,054`		`1`		`255,771`		`2`
21XX	Current Liabilities				`3,501,577`	`24`			`5,420,670`	`33`			`6,711,427`	`40`
	Non-current liabilities
2540	Long-term borrowings	6(15)			`600,000`		`4`		`600,000`		`4`		`-`		`-`
2550	Provisions for liabilities -	6(18)
	noncurrent				`126,314`		`1`		`113,115`		`1`		`101,924`		`1`
2570	Deferred income tax liabilities				`462,581`		`3`		`447,061`		`3`		`426,435`		`2`
2580	Non-current lease liabilities				`97,071`		`1`		`-`		`-`		`-`		`-`
2600	Other non-current liabilities				`28,402`		`-`		`28,043`		`-`		`29,949`		`-`
25XX	Non-current liabilities				`1,314,368`		`9`		`1,188,219`		`8`		`558,308`		`3`
2XXX	Total Liabilities				`4,815,945`	`33`			`6,608,889`	`41`			`7,269,735`	`43`
	Equity attributable to owners of
	parent
	Share capital	6(19)
3110	Common stock				`2,740,113`	`19`			`2,740,113`	`17`			`2,738,288`	`16`
3140	Advance receipts for share
	capital				`-`		`-`		`-`		`-`		`3,070`		`-`
	Capital surplus	6(20)
3200	Capital surplus				`2,262,397`	`16`			`2,262,397`	`14`			`2,259,169`	`13`
	Retained earnings	6(21)
3310	Legal reserve				`1,394,151`	`10`			`1,381,094`		`8`		`1,381,094`		`8`
3320	Special reserve				`435,679`		`3`		`425,580`		`3`		`425,580`		`3`
3350	Unappropriated retained
	earnings				`2,356,604`	`16`			`2,471,973`	`15`			`2,369,912`	`14`
	Other equity interest	6(22)
3400	Other equity interest		`(`		`218,226 ) (`		`2) (`		`294,938) (`		`2) (`		`197,292) (`		`1)`
3500	Treasury stocks	6(19)			`-`		`-`		`-`		`- (`		`52,304)`		`-`
31XX	Equity attributable to
	owners of the parent				`8,970,718`	`62`			`8,986,219`	`55`			`8,927,517`	`53`
36XX	Non-controlling interest				`643,315`		`5`		`675,362`		`4`		`698,138`		`4`
3XXX	Total equity				`9,614,033`	`67`			`9,661,581`	`59`			`9,625,655`	`57`
	Significant contingent liabilities	9
	and unrecognised contract
	commitments
3X2X	Total liabilities and equity			`$`	`14,429,978`	`100`		`$`	`16,270,470`	`100`		`$`	`16,895,390`	`100`

The accompanying notes are an integral part of these consolidated financial statements.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	(Expressed in thousands of New Taiwan dollars, except earnings	per share	per share	amount)
				(UNAUDITED)
				Three-monthperiods ended June 30						Six-month	periods ended June 30
				2019			2018			2019			2018
	Items	Notes		AMOUNT	%	AMOUNT		%		AMOUNT	%		AMOUNT	%
4000	Sales revenue	6(23)	`$`	`1,496,836`	`100`	`$`	`3,455,233`	`100`	`$`	`3,220,789`	`100`	`$`	`5,791,546`	`100`
5000	Operating costs	6(6)(27)(28)	`(`	`1,234,017) (`	`82) (`		`3,097,483) (`	`90) (`		`2,708,106) (`	`84) (`		`5,134,953) (`	`89 )`
5900	Net operating margin			`262,819`	`18`		`357,750`	`10`		`512,683`	`16`		`656,593`	`11`
	Operating expenses	6(27)(28)
6100	Selling expenses		`(`	`13,971) (`	`1) (`		`17,597)`	`- (`		`28,989) (`	`1) (`		`32,729)`		`-`
6200	General and administrative
	expenses		`(`	`76,636) (`	`5) (`		`92,095) (`	`3) (`		`154,820) (`	`5) (`		`164,170) (`		`3 )`
6300	Research and development
	expenses		`(`	`204,050) (`	`14) (`		`194,678) (`	`6) (`		`396,217) (`	`12) (`		`390,369) (`		`7 )`
6450	Expected credit gains (losses)	12(2)	`(`	`1,341)`	`- (`		`1,919)`	`-`		`9,202`	`- (`		`1,786)`		`-`
6000	Total operating expenses		`(`	`295,998) (`	`20) (`		`306,289) (`	`9) (`		`570,824) (`	`18) (`		`589,054) (`	`10 )`
6900	Operating profit (loss)		`(`	`33,179) (`	`2)`		`51,461`	`1 (`		`58,141) (`	`2)`		`67,539`		`1`
	Non-operating income and
	expenses
7010	Other income	6(24)		`45,373`	`3`		`54,873`	`2`		`88,174`	`3`		`90,762`		`2`
7020	Other gains and losses	6(25)		`6,078`	`-`		`3,166`	`-`		`8,277`	`- (`		`29,836) (`		`1 )`
7050	Finance costs	6(26)	`(`	`6,617)`	`- (`		`6,282)`	`- (`		`13,110)`	`- (`		`12,341)`		`-`
7000	Total non-operating
	income and expenses			`44,834`	`3`		`51,757`	`2`		`83,341`	`3`		`48,585`		`1`
7900	Profit before income tax			`11,655`	`1`		`103,218`	`3`		`25,200`	`1`		`116,124`		`2`
7950	Income tax expense	6(29)	`(`	`5,802) (`	`1) (`		`19,620) (`	`1) (`		`18,305) (`	`1) (`		`28,944)`		`-`
8200	Profit for the period		`$`	`5,853`	`-`	`$`	`83,598`	`2`	`$`	`6,895`	`-`	`$`	`87,180`		`2`

(Continued)

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amount) (UNAUDITED)

					Three-monthperiods	Three-monthperiods	Three-monthperiods	ended June 30			Six-monthperiods ended June 30	Six-monthperiods ended June 30	Six-monthperiods ended June 30	Six-monthperiods ended June 30
					2019			2018			2019			2018
	Items	Notes			AMOUNT	%		AMOUNT	%		AMOUNT	%		AMOUNT	%
	Other comprehensive income
	Components of other
	comprehensive income that will
	not be reclassified to profit or
	loss
8316	Unrealised gains (losses) from
	financial assets measured at
	fair value through other
	comprehensive income		`($`		`907)`	`- ($`		`5,340)`	`-`	`$`	`2,736`	`- ($`		`1,260)`	`-`
8349	Income tax related to	6(29)
	components of other
	comprehensive income that
	will not be reclassified to
	profit or loss				`147`	`-`		`-`	`-`		`232`	`- (`		`119)`	`-`
8310	Components of other
	comprehensive income that
	will not be reclassified to
	profit or loss		`(`		`760)`	`- (`		`5,340)`	`-`		`2,968`	`- (`		`1,379)`	`-`
	Components of other
	comprehensive income that will
	be reclassified to profit or loss
8361	Currency translation
	differences of foreign
	operations		`(`		`39,916) (`	`3)`		`150,271`	`5`		`95,886`	`3`		`146,631`	`2`
8399	Income tax relating to the	6(29)
	components of other
	comprehensive income				`8,553`	`1 (`		`25,946) (`	`1) (`		`18,007)`	`- (`		`17,009)`	`-`
8360	Components of other
	comprehensive income
	(loss) that will be
	reclassified to profit or loss		`(`		`31,363) (`	`2)`		`124,325`	`4`		`77,879`	`3`		`129,622`	`2`
8300	Total other comprehensive
	income (loss) for the period		`($`		`32,123) (`	`2)`	`$`	`118,985`	`4`	`$`	`80,847`	`3`	`$`	`128,243`	`2`
8500	Total comprehensive income
	(loss) for the period		`($`		`26,270) (`	`2)`	`$`	`202,583`	`6`	`$`	`87,742`	`3`	`$`	`215,423`	`4`
	Profit (loss), attributable to:
8610	Owners of the parent			`$`	`18,599`	`1`	`$`	`56,200`	`1`	`$`	`44,792`	`1`	`$`	`29,047`	`1`
8620	Non-controlling interest		`(`		`12,746) (`	`1)`		`27,398`	`1 (`		`37,897) (`	`1)`		`58,133`	`1`
	Profit (loss) for the period			`$`	`5,853`	`-`	`$`	`83,598`	`2`	`$`	`6,895`	`-`	`$`	`87,180`	`2`
	Comprehensive (loss) income
	attributable to:
8710	Owners of the parent		`($`		`16,372) (`	`1)`	`$`	`154,646`	`5`	`$`	`119,789`	`4`	`$`	`146,871`	`3`
8720	Non-controlling interest		`(`		`9,898) (`	`1)`		`47,937`	`1 (`		`32,047) (`	`1)`		`68,552`	`1`
	Total comprehensive income
	(loss) for the period		`($`		`26,270) (`	`2)`	`$`	`202,583`	`6`	`$`	`87,742`	`3`	`$`	`215,423`	`4`
		6(30)
9750	Basic earnings per share			`$`		`0.07`	`$`		`0.21`	`$`		`0.16`	`$`		`0.11`
		6(30)
9850	Diluted earnings per share			`$`		`0.07`	`$`		`0.21`	`$`		`0.16`	`$`		`0.11`

The accompanying notes are an integral part of these consolidated financial statements.

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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

Notes				E	quityattributableto o	wners of the parent			Total	Non-controlling interest	Total equity
	Share c	apital Advance receipts for share capital	Additional paid-in capital		RetainedEarnings	Unappropriated retained earnings	Otherequityinterest Currency translation differences of foreign operations Total Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income `($` `283,124) ($` `19,215)` `-` `(` `23,600)` `(` `283,124) (` `42,815)` `-` `-` `119,203` `(` `1,260)` `119,203` `(` `1,260)` `-` `-` `-` `-` `-` `-` `-` `8,292` `-` `-` `-` `2,412` `($` `163,921) ($` `33,371)` `($` `256,833) ($` `38,105)` `-` `-` `72,029` `2,968` `72,029` `2,968` `-` `-` `-` `-` `-` `-` `-` `1,715` `($` `184,804) ($` `33,422)`	Treasurystocks
	Common stock `$ 2,738,188` `-` `2,738,188` `-` `-` `-` `-` `-` `-` `1,000` `-` `(` `900)` `$ 2,738,288` `$ 2,740,113` `-` `-` `-` `-` `-` `-` `-` `$ 2,740,113`			Legal reserve	Special reserve		Currency translation differences of foreign operations
6(22) 6(22) 6(21) 6(17)(19)(20)(22) 6(19)(20) 6(17)(19)(20)(22) 6(22) 6(21) 6(17)(22)		`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `3,070` `-` `-` `$` `3,070` `$` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 2,256,692` `-` `2,256,692` `-` `-` `-` `-` `-` `-` `2,070` `1,919` `(` `1,512)` `$ 2,259,169` `$ 2,262,397` `-` `-` `-` `-` `-` `-` `-` `$ 2,262,397`	`$ 1,379,754` `-` `1,379,754` `-` `-` `-` `1,340` `-` `-` `-` `-` `-` `$ 1,381,094` `$ 1,381,094` `-` `-` `-` `13,057` `-` `-` `-` `$ 1,394,151`	`$` `142,456` `-` `142,456` `-` `-` `-` `-` `283,124` `-` `-` `-` `-` `$` `425,580` `$` `425,580` `-` `-` `-` `-` `10,099` `-` `-` `$` `435,679`	`$` `2,737,026` `23,600` `2,760,626` `29,047` `(` `119)` `28,928` `(` `1,340)` `(` `283,124)` `(` `135,178)` `-` `-` `-` `$` `2,369,912` `$` `2,471,973` `44,792` `-` `44,792` `(` `13,057)` `(` `10,099)` `(` `137,005)` `-` `$` `2,356,604`	`($` `283,124)` `-` `(` `283,124)` `-` `119,203` `119,203` `-` `-` `-` `-` `-` `-` `($` `163,921)` `($` `256,833)` `-` `72,029` `72,029` `-` `-` `-` `-` `($` `184,804)`	`($` `96,138)` `-` `(` `96,138)` `-` `-` `-` `-` `-` `-` `-` `43,834` `-` `($` `52,304)` `$` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 8,855,639` `-` `8,855,639` `29,047` `117,824` `146,871` `-` `-` `(` `135,178` `)` `14,432` `45,753` `-` `$ 8,927,517` `$ 8,986,219` `44,792` `74,997` `119,789` `-` `-` `(` `137,005` `)` `1,715` `$ 8,970,718`	`$` `629,586` `-` `629,586` `58,133` `10,419` `68,552` `-` `-` `-` `-` `-` `-` `$` `698,138` `$` `675,362` `(` `37,897)` `5,850` `(` `32,047)` `-` `-` `-` `-` `$` `643,315`	`$ 9,485,225` `-` `9,485,225` `87,180` `128,243` `215,423` `-` `-` `(` `135,178` `)` `14,432` `45,753` `-` `$ 9,625,655` `$ 9,661,581` `6,895` `80,847` `87,742` `-` `-` `(` `137,005` `)` `1,715` `$ 9,614,033`

The accompanying notes are an integral part of these consolidated financial statements.

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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortisation

Expected credit losses (gains)

Net gain on financial assets at fair value through
profit or loss
Interest expense

Interest income

Share-based payment compensation cost

Reversal of impairment loss on investments
accounted for under the equity method

(Gain) loss on disposal of property, plant and
equipment

Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit
or loss
Contract assets
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Notes payable
Accounts payable
Other payables
Provisions for liabilities
Other current liabilities
Other non-current liabilities
Cash inflow (outflow) generated from
operations
Interest received
Interest paid
Income tax paid
Net cash flows from (used in) operating
activities Six-month periods ended June 30
Notes
2019
2018
$
25,200 $
116,124
6(8)(9)(11)(27)
102,617
114,831
6(12)(27)
11,887
15,105
12(2)
(
9,202 )
1,786
(
6,118 ) (
1,355 )
6(26)
13,110
12,341
6(24)
(
73,472 ) (
56,876 )
6(17)(28)
1,715
11,073
6(25)
(
651 )
-
6(25)
(
22 )
6,529
- (
382,488 )
- (
5,820 )
1,370,890 (
664,689 )
1,151,211 (
1,081,042 )
(
7,155 ) (
10,757 )
134,876
120,668
(
3,726 )
14,709
3,653 (
3,153 )
(
1,067,646 )
750,712
(
943,503 )
615,921
(
61,935 ) (
29,605 )
14,116
18,420
(
16,363 )
73,578
76
90
639,558 (
363,898 )
55,460
54,102
(
12,568 ) (
11,563 )
(
39,369 ) (
40,217 )
643,081 (
361,576 )

(Continued)

~9~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost
Proceeds from capital reduction of investments
accounted for under the equity method
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Increase in intangible assets

Acquisition of investment property
Increase in deposits-out
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Proceeds from issuance of short-term notes and bills
payable

Repayment of short-term notes and bills payable

Decrease (increase) in deposits-in

Lease liabilities principal repayment

Employee stock options exercised
Treasury shares sold to employees
Net cash flows (used in) from financing
activities
Effect of exchange rate
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period Six-month periods ended June 30
Notes
2019
2018
($
474,538 ) $
-
27,529
-
6(32)
(
5,591 ) (
17,693 )
32
11,253
6(32)
(
3,999 ) (
220 )
- (
6,520 )
(
2,610 ) (
4,373 )
(
459,177 ) (
17,553 )
6(33)
-
129,000
6(33)
-
399,314
6(33)
- (
400,000 )
6(33)
151 (
2,444 )
6(33)
(
4,063 )
-
-
6,140
-
42,972
(
3,912 )
174,982
70,054
123,601
250,046 (
80,546 )
6(1)
6,495,017
5,874,982
6(1)
$
6,745,063 $
5,794,436

The accompanying notes are an integral part of these consolidated financial statements.

~10~

ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (Unaudited)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, and related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the TaiTz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on August 12, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

~11~

IFRS 16, ‘Leases’

A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased both ‘right-of-use asset’ and ‘lease liability’ by $107,196 on January 1, 2019.
C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
(a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
(b) The accounting for operating leases whose period will end before December 31, 2019 are treated as short-term leases and accordingly, rent expense of $4,470 was recognised in the second quarter of 2019.
(c) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.
(d) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate range from 1.1% to 1.25%.
E. The Group recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

follows:
Operating lease commitments disclosed by applying IAS 17 as at
December 31, 2018	$	44,230
Less: Short-term leases	(	425)
Add: Adjustments as a result of a different treatment of
extension and termination options		83,294
Total lease contracts amount recognised as lease liabilities by applying
IFRS 16 on January 1, 2019		127,099
Incremental borrowing interest rate at the date of
initial application		1.1%~1.25%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	$	107,196

~12~

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of January 1, 2020 Material’ Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020 Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2018, except for the compliance statement, basis of preparations, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and IAS 34, ‘Interim Financial Reporting’ as endorsed by the FSC.
B. The consolidated financial statements should be read together with the 2018 consolidated financial statements.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b) Financial assets at fair value through other comprehensive income.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

~13~

B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- Basis for preparation of consolidated financial statements is consistent with the 2018 consolidated financial statements.

(Blank below)

~14~

B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name ofSubsidiaries	Main Business Activities		Ownership (%)		Note
			June30,2019	December31,2018	June30,2018
Altek Corporation " " " Altek International Investment Co., Ltd. " " Note 1 Note 1 Note 1 Note 1 Note 2 Altek Semiconductor (Cayman) Co., Ltd. " Note 1	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek International Holding (BVI) Co.,Ltd. Altek Lab Inc. Altek Optical (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek (Kunshan) Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Precision (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited Altek Biotechnology Corporation Altek Semiconductor Corporation Altek Semiconductor (Shanghai) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd.	Investments Sales of optical instruments Investments Investments Design service Investments Investments Manufacture and sales of digital still camera and its accessories Manufacture and sales of related engineering services Manufacture and sales of digital camera parts Wholesale, import and export of related electronic and their associated accessories Research and development, manufacture and sales of medical electronic equipments Research design and sales of ASIC Research design and sales of imaging technologies, electronic software and hardware Manufacture and sales of related electronic services and its accessories and optical components	100 100 - 100 100 100 50 100 100 100 100 100 100 100 100	100 100 100 100 100 100 50 100 100 100 100 100 100 100 100	100 100 100 100 100 100 50 100 100 100 100 100 100 100 100	- Note 4 Note 3`、`Note 4 Note 4 Note 4 Note 4 - - Note 4 Note 4 Note 4 Note 4 Note 5 Note 4 Note 4

Note 1: Invested by Leading Tech. Co., Ltd., Toptek Investment Cayman Co., Ltd., Altek Imaging Technology (Cayman) Co., Ltd., Altek Trading (Cayman) Co., Ltd., Altek Optical Technology (Cayman) Co., Ltd., which are wholly owned by Altek International Investment Co., Ltd.

Note 2: Invested by Altek Biotechnology Holding (Cayman) Co., Ltd., which is wholly owned by Altek International Holding (BVI) Co., Ltd.

Note 3: The dissolution and liquidation of Altek Investment Co., Ltd. was resolved by the Board of Directors on December 17, 2018. Moreover, the liquidation was completed as approved by the court on April 25, 2019. Note 4: As the subsidiaries did not meet the definition of significant subsdiaries, the financial statements as of June 30,2019 and 2018 were not reviewed by independent accountants.

Note 5: As the subsidiaries met the definition of significant subsdiaries in 2018, the financial statements as of June 30,2018 were reviewed by independent accountants.

~15~

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.
－
(4) Leasing arrangements (lessor) lease receivables/ operating leases
Lease income from an operating lease net of any incentives given to the lessee is recognised in profit or loss on a straight-line basis over the lease term.

(5) Leasing arrangements (lessee) `－` right-of-use assets/ lease liabilities

Effective 2019

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate.
Lease payments are comprised of the fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability; and
(b) Any initial direct costs incurred by the lessee.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(6) Operating leases (lessee)

Prior to 2019

Payments made under an operating lease net of any incentives received from the lessor are recognised in profit or loss on a straight-line basis over the lease term.

(7) Employee benefits

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

~16~

(8) Income tax

A. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.
B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

There have been no significant changes as of June 30, 2019. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2018.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

ETAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
0 Cash on hand Checking accounts and demand deposits Time deposits Total	June 30,2019 December 31,2018 893 $ 1,070 $ 538,988 933,058 6,205,182 5,560,889 6,745,063 $ 6,495,017 $	June 30,2018
		938 $ 251,672 5,541,826
		5,794,436 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

Items Current items: Beneficiary certificates Valuation adjustment Total Non-current items: Unlisted stocks Valuation adjustment Total	June 30,2019 December 31,2018 June 30,2018 - $ - $ 964,232 $ - - 4,409 - $ - $ 968,641 $ 12,731 $ 12,731 $ 16,647 $ 17,070 10,952 6,046) ( 29,801 $ 23,683 $ 10,601 $	June 30,2018
		964,232 $ 4,409
		968,641 $
		10,601 $

~17~

A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

loss are listed below:
Equity instruments Beneficiary certificates Total Equity instruments Beneficiary certificates Total	For the three-month period ended June 30,2019 2,464 $ - 2,464 $ For the six-month period ended June 30,2019 6,118 $ - 6,118 $	For the three-month period ended June 30,2018
		- $ 871
		871 $
		For the six-month period ended June 30,2018
		- $ 1,642
		1,642 $

B. As of June 30, 2019, December 31, 2018, and June 30, 2018, no financial assets measured at cost held by the Group were pledge to others.
C. Information relating to credit risk is provided in Note 12(2).

(3) Financial assets at fair value through other comprehensive income

Items		June 30,2019	December 31,2018	December 31,2018		June 30,2018
Non-current items`：`
Equity instruments
Unlisted stocks	$	150,602	$	150,124	$	151,560
Valuation adjustment	(	32,880)	(	35,616)	(	24,860)
	$	117,722	$	114,508	$	126,700

A. The Group has elected to classify strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $117,722, $114,508, and $126,700, respectively, as at June 30, 2019, December 31, 2018, and June 30, 2018.
B. The Group recognized fair value change in other comprehensive income (loss) of ($907) and ($5,340) for the three-month periods ended June 30, 2019 and 2018, respectively, and of $2,736 and ($1,260) for the six-month periods ended June 30, 2019 and 2018, respectively.
C. As at June 30, 2019, December 31, 2018 and June 30, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group was $117,722, $114,508 and $126,700, respectively.
D. As at June 30, 2019, December 31, 2018 and June 30, 2018, no non-current financial assets at fair value through other comprehensive income held by the Group were pledged to others.
E. Information relating to credit risk is provided in Note 12(2).

~18~

(4) Financial assets at amortised cost

Financial assets at amortised cost
Items Current items: Time deposits with maturity over three months Non-current items: Time deposits with maturity over three months	June 30,2019 345,252 $ 384,031 $	December 31,2018 261,228 $ - $	June 30,2018
			- $
			- $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

below:
Interest income Interest income	For the three-month period ended June 30,2019 6,666 $ For the six-month period ended June 30,2019 8,015 $	For the three-month period ended June 30,2018
		- $
		For the six-month period ended June 30,2018
		- $

B. The Group has no financial assets at amortised cost pledged to others.
(5) Notes and accounts receivable

Notes and accounts receivable
項	目		June 30,2019	December 31,2018			June 30,2018
Notes receivable		$	42,912	$	1,387,222	$	690,401
Accounts receivable		$	1,301,359	$	2,430,654	$	3,430,984
Less: Allowance for uncollectible
accounts		(	5,950)	(	15,879)	(	9,673)
		$	1,295,409	$	2,414,775	$	3,421,311

A. The ageing analysis of accounts and notes receivable that were past due but not impaired is as follows:

follows:
Not overdue Up to 30 days 31 to 90 days 91 to 180 days Over 181 days	Notes Accounts receivable receivable 42,912 $ 1,115,105 $ - 14,211 - 39,896 - 125,679 - 6,468 42,912 $ 1,301,359 $ June 30,2019	December	Accounts receivable 2,146,832 $ 67,351 174,273 29,761 12,437 2,430,654 $ 31,2018	June 30,2018
	Notes receivable 42,912 $ - - - - 42,912 $	Notes receivable 1,387,222 $ - - - - 1,387,222 $		Notes receivable 690,401 $ - - - - 690,401 $	Accounts receivable
					3,341,654 $ - - 83,166 6,164
					3,430,984 $

The above ageing analysis was based on past due date.

~19~

B. As at June 30, 2019, December 31, 2018 and June 30, 2018, the balances of receivables (including notes receivable) from contracts with customers amounted to $1,338,321, $3,801,997, and $4,111,712, respectively.
C. The Group does not hold any collateral as security.
D. As at June 30, 2019, December 31, 2018 and June 30, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $42,912, $1,387,222 and $690,401, respectively. The maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable were $1,295,409, $2,414,775 and $3,421,311, respectively.
E. Information relating to credit risk of notes receivables and accounts receivables is provided in Note 12(2).

(6) Inventories

12(2). Inventories
Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total Raw materials Work-in-process Finished goods Total		June 30,2019
	Allowance for Cost valuation loss 690,677 $ 35,106) ($ 96,555 9,841) ( 152,573 19,918) ( 939,805 $ 64,865) ($ December 31,2018		Book value
			655,571 $ 86,714 132,655
			874,940 $

	Allowance for Cost valuation loss 688,388 $ 34,641) ($ 95,968 7,558) ( 268,788 11,733) ( 1,053,144 $ 53,932) ($ June 30,2018		Book value
			653,747 $ 88,410 257,055
			999,212 $

	Allowance for Cost valuation loss 738,169 $ 37,049) ($ 112,323 5,526) ( 260,854 9,547) ( 1,111,346 $ 52,122) ($		Book value
			701,120 $ 106,797 251,307
			1,059,224 $

~20~

The cost of inventories recognized as expense for the periods:

		For the three-month		For the three-month
		period ended		period ended
		June 30,2019		June 30,2018
Cost of goods sold	$	1,237,904	$	3,097,641
Gain on reversal of decline in market value	(	3,887)	(	158)
Total	$	1,234,017	$	3,097,483
		For the six-month		For the six-month
		period ended		period ended
		June 30,2019		June 30,2018
Cost of goods sold	$	2,697,173	$	5,146,412
Loss on (gain on reversal of ) decline in market
value		10,933	(	11,459)
Total	$	2,708,106	$	5,134,953

For the three-month periods ended June 30, 2019 and for the three-month and six-month periods ended June 30 2018, the Group reversed from a previous inventory write-down and accounted for as reduction of operating cost because inventory that has been appropriated as loss on decline in market value was partially sold.

(7) Investments accounted for under the equity method

		June 30,2019	December	31,2018		June 30,2018
JinJing Optical Technology Co., Ltd.	$	17,109	$	44,524	$	44,028
Less: Accumulated impairment loss	(	17,109)	(	17,756)	(	44,028)
	$	-	$	26,768	$	-

The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

As of June 30, 2019, December 31, 2018 and June 30, 2018, the carrying amount of the Group’s individually immaterial associates amounted to $0, $26,768 and $0, respectively.

Income (loss) for the period from continuing operations Other comprehensive loss - net of tax Total comprehensive income (loss)	For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 51 $ 23,135) ($ - 204) ( 51 $ 23,339) ($

~21~

(8) Property, plant and equipment

At January 1 Cost Accumulated depreciation Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At June 30 Cost Accumulated depreciation					2019
		Construction in progress and Buildings and prepayment for Land structures Machinery Test equipment equipment Others Total 468,684 $ 3,316,999 $ 1,089,739 $ 157,605 $ 10,459 $ 461,630 $ 5,505,116 $ - 765,750) ( 768,358) ( 151,959) ( - 442,704) ( 2,128,771) ( 468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $ 468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $ - 1,956 - 170 2,513 1,062 5,701 - - - - - 10) ( 10) ( - 9,094 - - 9,484) ( 390 - - 44,266) ( 41,878) ( 1,966) ( - 6,893) ( 95,003) ( - 16,170 3,532 34 - 160 19,896 468,684 $ 2,534,203 $ 283,035 $ 3,884 $ 3,488 $ 13,635 $ 3,306,929 $ 468,684 $ 3,348,577 $ 1,100,332 $ 158,663 $ 3,488 $ 432,689 $ 5,512,433 $ - 814,374) ( 817,297) ( 154,779) ( - 419,054) ( 2,205,504) ( 468,684 $ 2,534,203 $ 283,035 $ 3,884 $ 3,488 $ 13,635 $ 3,306,929 $

~22~

2018

At January 1 Cost Accumulated depreciation Opening net book amount Additions Disposals Reclassifications Depreciation charge Net exchange differences Closing net book amount At June 30 Cost Accumulated depreciation	Buildings and Land structures Machinery Test equipment 468,684 $ 3,353,156 $ 1,366,032 $ 170,311 $ - 685,644) ( 903,610) ( 158,744) ( 468,684 $ 2,667,512 $ 462,422 $ 11,567 $ 468,684 $ 2,667,512 $ 462,422 $ 11,567 $ - 810 - 1,458 - - 17,583) ( - - - - - - 44,783) ( 50,000) ( 3,581) ( - 18,986 5,486 65 468,684 $ 2,642,525 $ 400,325 $ 9,509 $ 468,684 $ 3,377,560 $ 1,244,045 $ 172,542 $ - 735,035) ( 843,720) ( 163,033) ( 468,684 $ 2,642,525 $ 400,325 $ 9,509 $	Construction in progress and prepayment for equipment Others Total - $ 533,260 $ 5,891,443 $ - 494,657) ( 2,242,655) ( - $ 38,603 $ 3,648,788 $ - $ 38,603 $ 3,648,788 $ 4,494 2,597 9,359 - 199) ( 17,782) ( - 282) ( 282) ( - 13,058) ( 111,422) ( - 403 24,940 4,494 $ 28,064 $ 3,553,601 $ 4,494 $ 527,035 $ 5,794,360 $ - 498,971) ( 2,240,759) ( 4,494 $ 28,064 $ 3,553,601 $

A. For the six-month periods ended June 30, 2019 and 2018, there was no capitalisation of borrowing interests attributable to the property, plant and equipment.
B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

~23~

`－` (9) Leasing arrangements lessee

Effective 2019

A. The Group leases various assets including land, buildings, and business vehicles. Rental contracts are typically made for periods of 1 to 49 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

The carrying amount of right-of-use assets and the	depreciation charge are	as follows:
Land Buildings Transportation equipment (Business vehicles) Land Buildings Transportation equipment (Business vehicles)	For the three-month period ended June 30,2019 Depreciation charge 1,015 $ 437 530 1,982 $	June 30,2019
		Carryingamount
		127,428 $ 3,922 3,771
		135,121 $
		For the six-month period ended June 30,2019
		Depreciation charge
		2,029 $ 874 1,302
		4,205 $

C. For the three-month and six-month periods ended June 30, 2019, the additions to right-of-use assets was $37 and $37, respectively.
D. The information on income and expense accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	For the three-month period ended June 30,2019 292 $ 2,193 23 2,508 $	For the six-month period ended June 30,2019
		585 $ 4,470 60
		5,115 $

E. For the six-month period ended June 30, 2019, the Group’s total cash outflow for leases amounted to $8,593.

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F. Extension and termination options

In determining the lease term, the Group takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

(10) Leasing arrangements – lessor
Effective 2019
A. The Group leases various assets including land and buildings. Rental contracts are typically made for periods of 1 and 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
B. For the three-month and six-month periods ended June 30, 2019, the Group recognised rent income in the amounts of $6,528 and $13,070, respectively, based on the operating lease agreement, which does not include variable lease payments.
C. The maturity analysis of the lease payments under the operating leases is as follows:

agreement, which does not include variable lease payments. The maturity analysis of the lease payments under the operating leases is	as follows:
2019 2020 Total	June 30,2019
	$ 14,461 9,640
	24,101 $

(11) Investment property

At January 1 Cost Accumulated depreciation Opening net book amount Depreciation charge Closing net book amount At June 30 Cost Accumulated depreciation		2019

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At January 1 Cost Accumulated depreciation Opening net book amount Depreciation charge Closing net book amount At June 30 Cost Accumulated depreciation		2018

A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

property are shown below:
Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Direct operating expenses arising from the investment property that did not generate rental income during the period Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Direct operating expenses arising from the investment property that did not generate rental income during the period	For the three-month period ended June 30,2019 6,528 $ 2,063 $ - $ For the six-month period ended June 30,2019 13,070 $ 4,139 $ - $	For the three-month period ended June 30,2018
		6,528 $
		2,013 $
		- $
		For the six-month period ended June 30,2018
		13,070 $
		4,109 $
		- $

~26~

B. As at June 30, 2019, December 31, 2018 and June 30, 2018, the fair value of investment property held by the Group all amounted to $870,022, $870,022 and $886,343, respectively. The fair value was valuated by independent valuers. Valuations were made using the comparative approach and income approach of direct capitalization method.
C. There was no capitalisation of borrowing interests attributable to investment property.
D. Information about the investment property that was pledged to others as collaterals is provided in Note 8.

(12) Intangible assets

			2019			2018
At January 1
Cost	$		168,707	$		165,921
Accumulated amortisation	(		68,565)	(		44,383)
	$		100,142	$		121,538
Opening net book amount	$		100,142	$		121,538
Additions			2,765			3,035
Amortisation charge	(		11,887)	(		14,635)
Net exchange differences			762			1,583
Closing net book amount	$		91,782	$		111,521
At June 30
Cost	$		169,964	$		167,680
Accumulated amortisation	(		78,182)	(		56,159)
	$		91,782	$		111,521
A. Details of amortisation on intangible assets are		as follows:
		For the three-month			For the three-month
			period ended			period ended
			June 30,2019			June 30,2018
Operating costs		$	43		$	1,041
Operating expense			5,826			6,632
		$	5,869		$	7,673
			For the six-month			For the six-month
			period ended			period ended
			June 30,2019			June 30,2018
Operating costs		$	87		$	2,233
Operating expense			11,800			12,402
		$	11,887		$	14,635

B. The Group has no intangible assets pledged to others.

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(13) Short-term borrowings

(13)	Short-term borrowings	Short-term borrowings	Short-term borrowings
(14) (15)	Short-term notes and bills payable Long-term borrowings Type of borrowings June 30,2019 Interest rate range Collateral Bank borrowings Unsecured borrowings 1,760,000 $ 0.9% ~1.04% None Type of borrowings December 31,2018 Interest rate range Collateral Bank borrowings Unsecured borrowings 1,760,000 $ 1% ~1.0758% None Type of borrowings June 30,2018 Interest rate range Collateral Bank borrowings Unsecured borrowings 2,150,000 $ 1% ~1.13% None June 30,2019 December 31,2018 June 30,2018 Commercial paper payable - $ - $ 200,000 $ Less: Discount on short-term notes and bills payable - - 55) ( - $ - $ 199,945 $ Interest rate ranges - - 0.84% Type of borrowings Borrowing period and repayment term Interest rate range Collateral June 30,2019 Secured borrowings Borrowing period is from August 24, 2018 to May 8, 2021. Revolving credit facility. 1.1%~1.25% Yes (Note) 600,000 $ Less: Current portion - 600,000 $ Type of borrowings Borrowing period and repayment term Interest rate range Collateral December 31,2018 Secured borrowings Borrowing period is from August 24, 2018 to May 8, 2021. Revolving credit facility. 1.1%~1.25% Yes (Note) 600,000 $ Less: Current portion - 600,000 $
	Type of borrowings Secured borrowings Less: Current portion Type of borrowings Secured borrowings Less: Current portion
		Borrowing period is from August 24, 2018 to May 8, 2021. Revolving credit facility. Borrowing period and repayment term
		Borrowing period is from August 24, 2018 to May 8, 2021. Revolving credit facility.	600,000 $ -
			600,000 $

June 30, 2018 `：` None.

During the terms of the unsecured borrowing, in accordance with the unsecured borrowing agreements contracted with bank, the Group is required to maintain the consolidated net value over

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$8 billion and the debt ratio under 100% based on the annual consolidated financial statements and the semi-annual consolidated financial statements.

Note: Information about collateral for long-term borrowings is provided in Note 8.

(16) Pensions

A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.
(b) For the aforementioned pension plan, the Group did not recognize any pension costs for the three-month periods ended June 30, 2019 and 2018, and of $88 and $96 for the six-month periods ended June 30, 2019 and 2018, respectively.
(c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 amounts to $12.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. For the three-month periods ended June 30, 2019 and 2018, the Group had recognized pension costs of $7,210 and $7,059, and for the six-month periods ended June 30, 2019 and 2018, the Group had recognized pension costs of $14,522 and $14,330 respectively, under the above pension scheme.
(b) The subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognized pension costs of $5,124 and $7,996 for the three-month periods ended June 30, 2019 and 2018, respectively, and of $10,897 and $14,423 for the six-month periods ended June 30, 2019 and 2018, respectively.

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(17) Share-based payment

A. As of June 30, 2019 and 2018, the Company’s share-based payment arrangements were as follows:

follows:
Type of arrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Employee stock options " First time issuance of restricted shares to employees " " Treasury stock transferred to employees	October 28, 2011 March 21, 2012 November 13, 2015 March 18, 2016 May 5, 2016 March 23, 2018	3,000 3,000 2,440 1,190 370 3,433	9.2 years 8.9 years 3 years 3 years 3 years -	Note 1 Note 1 Note 2, Note 3 Note 2, Note 3 Note 2, Note 3 Vested immediately

Note 1: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.
Note 2: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 2 years and 3 years and who achieved the performance requirement. The vested ratio is 50% and 50%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.
Note 3: The stocks and dividends distributed to employees during the vesting period shall be given by the Company at no consideration. Employees are not required to return the stocks and dividends if they resign during the vesting period.
B. Details of the share-based payment arrangements are as follows:
(a) For the six-month periods ended June 30, 2019 and 2018, the information on the share options and the weighted number of average exercise price of compensation plan employee stock options are as follows:

options are as follows:
Options outstanding at beginning of the period Option expired Options exercised Options outstanding at end of the period Options exercisable at end of the period Approved and not yet issued options at the end of the period	Weighted-average Weighted-average exercise price exercise price No. of options (in dollars)(Note) No. of options (in dollars)(Note) 1,941 30.61 $ 2,453 30.62 $ - - 132) ( - - - 200) ( 30.70 1,941 30.61 2,121 30.62 1,941 30.61 2,121 30.62 - - ended June 30,2019 ended June 30,2018 For the six-month period For the six-month period	ended June 30,2018 For the six-month period
	No. of options 1,941 - - 1,941 1,941 -		Weighted-average exercise price (in dollars)(Note)
			30.62 $ - 30.70 30.62 30.62

~30~

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

(b) No stock options were exercised during the three-month and six-month periods ended June 30, 2019. The weighted-average stock price of stock options at exercise dates for the threemonth and six-month periods ended June 30, 2018 was $34.43 and $33, respectively.
(c) The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue date approved	Expirydate	Exercise price No. of shares (in dollars) (in thousands) (Note) 1,100 $ 30.7 841 30.5 June 30,2019	December	Exercise price (in dollars) (Note) $ 30.7 30.5 31,2018	June 30,2018
		No. of shares (in thousands) 1,100 841	No. of shares (in thousands) 1,100 841		No. of shares (in thousands) 1,220 901	Exercise price (in dollars) (Note)
October 28, 2011 March 21, 2012	December 31, 2020 December 31, 2020					$ 30.7 30.5

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.
(d) The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price (in dollars)	Exercise price (Note) (in dollars)	Expected price volatility	Expected option life	Expected dividends	Risk- free interest rate	Fair value per unit (in dollars)
Employee stock options "	October 28, 2011 March 21, 2012	30.65 27.85	30.7 30.5	30.27% 33.54%	5 years 4.9 years	1.4% 1.4%	1.18% 1.08%	7.42 7.35

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

C. Restricted shares to employees:

The information on restricted shares to employees is as follows:

		For the six-month		For the six-month
		period ended		period ended
		June 30, 2019		June 30, 2018
		(share in thousands)		(share in thousands)
Shares ungranted beginning balance		715		3,435
Shares granted	(	715)	(	1,718)
Restricted shares forfeited - retired		-	(	90)
Shares ungranted ending balance		-		1,627

D. The weighted average exercise price was $27.64 of treasury stock transferred to employees for the six-month period ended June 30, 2018.

~31~

E. Expenses incurred on share-based payment transactions are shown below:

Provisions Equity-settled Equity-settled At January 1, 2019 Additional provisions Reversed during the period Exchange differences At June 30, 2019 Current Non-current	For the three-month period ended For the three-month period ended June 30,2019 June 30,2018 95 $ 5,221 $ For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 1,715 $ 11,073 $ Warranty 148,493 $ 16,311 2,195) ( 191 162,800 $ June 30,2019 December 31,2018 June 30,2018 36,486 $ 35,378 $ 40,415 $ 126,314 $ 113,115 $ 101,924 $

(18) Provisions

The Group gives warranties on digital image technology application products sold. Provision for warranty is estimated based on historical warranty data of digital image technology application products.

(19) Share capital

As of June 30, 2019, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,740,113 with a par value of $10 (in dollars) per share.

A. Movements in the number of the Company’s ordinary shares outstanding are as follows:

(Expressed in thousands of shares)

At January 1 Employee stock options exercised Treasury stock sold to employees Retired restricted shares to employees that did not meet the vesting conditions At June 30	2019 2018 274,011 270,386 - 100 - 1,565 - 90) ( 274,011 271,961

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B. Treasury shares

(a) The reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

June 30, 2019 and December 31, 2018 ： None

Shares held by	Reason for reacquisition To be reissued to employees	June 30, 2018 (Expressed in thousands of shares)	June 30, 2018 (Expressed in thousands of shares)
		Number of shares 1,868	Book value
Altek Corporation			52,304 $

(b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.
(c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.
(d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(20) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1, 2019 Employee restricted share granted At June 30, 2019	Share Employee stock premium options 1,802,659 $ 49,102 $ 11,873 - 1,814,532 $ 49,102 $	Difference between consideration and carrying amount of subsidiaries acquired or disposed 1,534 $ - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ - 395,774 $	Proceeds from sales of treasury Restricted shares to shares employees 1,455 $ 11,873 $ - 11,873) ( 1,455 $ - $	Total
					2,262,397 $ -
					2,262,397 $

~33~

Difference between consideration and

At January 1, 2018 Employee stock options exercised Treasury stock sold to employees Employee restricted share granted Retirement of employee restricted shares At June 30, 2018	Share Employee stock premium options 1,750,223 $ 51,476 $ 2,812 742) ( - - 28,738 - - - 1,781,773 $ 50,734 $	carrying amount of subsidiaries acquired or disposed 1,534 $ - - - - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ - - - - 395,774 $	Proceeds from sales of treasury Restricted shares to shares employees Total 209 $ 57,476 $ 2,256,692 $ - - 2,070 1,919 - 1,919 - 28,738) ( - - 1,512) ( 1,512) ( 2,128 $ 27,226 $ 2,259,169 $

(21) Retained earnings

A. According to the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Act, and distributing the remaining amount as common stockholders’ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders’ meeting.
B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders’ meeting.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

~34~

(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
E. The appropriation of 2018 and 2019 earnings had been resolved at the stockholders’ meeting on June 13, 2019, and June 15, 2018, respectively. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Amount (in NT dollars) 13,057 $ 10,099 137,005 0.5 $ 160,161 $ 2018	2017	2017
	Amount 13,057 $ 10,099 137,005 160,161 $	Amount 1,340 $ 283,124 135,178 419,642 $	Dividends per share (in NT dollars)
			0.5 $

The appropriation of 2018 and 2017 earnings were the same as that approved by the Board of Directors on March 15, 2019 and March 23, 2018, respectively.

F. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(28).

(22) Other equity items

Other equity items
	Foreign currency			Unrealized
		translation		losses on		Unearned
		adjustment		valuation	compensation			Total
At January 1, 2019	($	256,833)	($	36,390)	($	1,715)	($	294,938)
Valuation adjustment		-		2,968		-		2,968
Currency translation differences:
-Group		72,029		-		-		72,029
Share-based payment transactions		-		-		1,715		1,715
At June 30, 2019	($	184,804)	($	33,422)	$	-	($	218,226)

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	Foreign currency	Foreign currency		Unrealized
		translation		losses on		Unearned
		adjustment		valuation	compensation			Total
At January 1, 2018	($	283,124)	$	-	($	19,215)	($	302,339)
Effects of retrospective
application		-	(	23,600)		-	(	23,600)
After adjustment	($	283,124)	($	23,600)	($	19,215)	($	325,939)
Valuation adjustment		-	(	1,260)		-	(	1,260)
Currency translation differences:
-Group		119,203		-		-		119,203
Retirement of restricted shares		-		-		2,412		2,412
to employees
Share-based payment transactions		-		-		8,292		8,292
At June 30, 2018	($	163,921)	($	24,860)	($	8,511)	($	197,292)

(23) Operating revenue

Operating revenue
Revenue from contracts with customers Revenue from contracts with customers	For the three-month period ended June 30,2019 1,496,836 $ For the six-month period ended June 30,2019 3,220,789 $	For the three-month period ended June 30,2018
		3,455,233 $
		For the six-month period ended June 30,2018
		5,791,546 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions:

For the three-month

For the three-month
period ended June 30,2019 Revenue from external customer contracts Timing of revenue recognition At a point in time Over time Total	Asia 856,035 $ 809,149 $ 46,886 856,035 $	Europe 315,816 $ 315,816 $ - 315,816 $	America 323,526 $ 323,526 $ - 323,526 $	Taiwan 1,459 $ 1,459 $ - 1,459 $	Total
					1,496,836 $
					1,449,950 $ 46,886
					1,496,836 $

~36~

For the three-month period ended June 30,2018 Revenue from external customer contracts Timing of revenue recognition At a point in time For the six-month period ended June 30,2019 Revenue from external customer contracts Timing of revenue recognition At a point in time Over time Total For the six-month period ended June 30,2018 Revenue from external customer contracts Timing of revenue recognition At a point in time Over time Total	Asia 3,006,836 $ 3,006,836 $ Asia 1,872,420 $ 1,825,534 $ 46,886 1,872,420 $ Asia 4,940,532 $ 4,932,837 $ 7,695 4,940,532 $	Europe 339,159 $ 339,159 $ Europe 754,276 $ 754,276 $ - 754,276 $ Europe 636,288 $ 636,288 $ - 636,288 $	America 92,130 $ 92,130 $ America 553,431 $ 553,431 $ - 553,431 $ America 178,033 $ 178,033 $ - 178,033 $	Taiwan 17,108 $ 17,108 $ Taiwan 40,662 $ 40,662 $ - 40,662 $ Taiwan 36,693 $ 36,693 $ - 36,693 $	Total
					3,455,233 $
					3,455,233 $
					Total
					3,220,789 $
					3,173,903 $ 46,886
					3,220,789 $
					Total
					5,791,546 $
					5,783,851 $ 7,695
					5,791,546 $

B. Contract assets

The Group has recognized the following revenue-related contract assets:

Technical license contract Allowance for uncollectible account Total	June 30,2019 December 31,2018 June 30,2018 - $ - $ 5,820 $ - - 877) ( - $ - $ 4,943 $	June 30,2018
		4,943 $

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(24) Other income

Other gains and losses Interest income: Interest income from bank deposits Interest income from financial assets at amortised cost Others Rental revenue Other income - others Total Interest income: Interest income from bank deposits Interest income from financial assets at amortised cost Others Rental revenue Other income - others Total Losses on disposal of property, plant and equipment Net currency exchange gains Net gains on financial assets at fair value through profit Reversal of impairment loss of investments accounted for under equity method Other expenses Total	For the three-month period ended For the three-month period ended June 30,2019 June 30,2018 32,281 $ 30,940 $ 6,666 - 6 6 3,809 15,545 2,611 8,382 45,373 $ 54,873 $ For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 65,442 $ 56,866 $ 8,015 - 15 10 10,386 19,991 4,316 13,895 88,174 $ 90,762 $ For the three-month period ended For the three-month period ended June 30,2019 June 30,2018 - $ 6,529) ($ 3,610 12,783 2,464 871 4 - - 3,959) ( 6,078 $ 3,166 $	For the three-month period ended June 30,2018
		30,940 $ - 6 15,545 8,382
		54,873 $
		For the six-month period ended June 30,2018
		56,866 $ - 10 19,991 13,895
		90,762 $

(25) Other gains and losses

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(26) (27)	Finance costs Expenses by nature Gains (losses) on disposal of property, plant and equipment Net currency exchange gains (losses) Net gains on financial assets at fair value through profit Reversal of impairment loss of investments accounted for under equity method Other expenses Total Interest expense Interest expense Employee benefit expenses Depreciation charges on property, plant and equipment Depreciation charges on investment property Depreciation charges on right-of-use assets Amortisation charges on intangible assets Total	For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 22 $ 6,529) ($ 1,486 20,913) ( 6,118 1,642 651 - - 4,036) ( 8,277 $ 29,836) ($ For the three-month period ended For the three-month period ended June 30,2019 June 30,2018 6,617 $ 6,282 $ For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 13,110 $ 12,341 $ For the three-month period ended For the three-month period ended June 30,2019 June 30,2018 272,356 $ 333,503 $ 47,064 55,157 1,704 1,705 1,982 - 5,869 7,673 328,975 $ 398,038 $

~39~

		For the six-month		For the six-month
		period ended		period ended
		June 30,2019		June 30,2018
Employee benefit expenses	$	562,314	$	656,674
Depreciation charges on property, plant and
equipment		95,003		111,422
Depreciation charges on investment property		3,409		3,409
Depreciation charges on right-of-use assets		4,205		-
Amortisation charges on intangible assets		11,887		14,635
Total	$	676,818	$	786,140

(28) Employee benefit expenses

Employee benefit expenses
Wages and salaries Employee stock options Labour and health insurance fees Pension costs Other personnel expenses Total Wages and salaries Employee stock options Labour and health insurance fees Pension costs Other personnel expenses Total	For the three-month period ended June 30,2019 239,229 $ 95 12,901 12,334 7,797 272,356 $ For the six-month period ended June 30,2019 491,715 $ 1,715 27,128 25,507 16,249 562,314 $	For the three-month period ended June 30,2018
		288,710 $ 5,221 13,417 15,055 11,100
		333,503 $
		For the six-month period ended June 30,2018
		566,599 $ 11,073 28,320 28,849 21,833
		656,674 $

A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute compensation to the employees and pay remuneration to the directors that account for 10% to 20% and no higher than 2%, respectively, of distributable profit of the current period. If a company has accumulated deficit, earnings should be channeled to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Employees of subsidiaries that the Company holds more than 50% shareholding are entitled to receive aforementioned stock or cash.

Abovementioned distributable profit of the current period refers to the pre-tax profit before deduction of employees’ compensation and directors’ remuneration. A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed as employees’ compensation and directors’ remuneration; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

~40~

B. For the three-month and six-month periods ended June 30, 2019 and 2018, employees’ compensation was accrued at $3,850, $5,606, $9,215 and $5,606, respectively; directors’ and supervisors’ remuneration was accrued at $514, $747, $1,229 and $747, respectively. The aforementioned amounts were recognized in salary expenses.
C. Employees’ compensation and directors’ and supervisors’ remuneration for 2018 amounting to $29,710 and $3,961, respectively, as resolved at the meeting of Board of Directors were in agreement with those amounts recognized in the 2018 financial statements. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(29) Income tax

A. Income tax expense
(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
		For the three-month			For the three-month
			period ended			period ended
			June 30,2019			June 30,2018
Current tax:
Current tax on profits for the period	$		10,150	$		26,358
Tax paid outside of the territory of
the Republic of China			696			-
Adjustments in respect of prior years	(		120)	(		16,847)
Total current tax			10,726			9,511
Deferred tax:
Origination and reversal of
temporary differences	(		4,924)			10,109
Impact of change in tax rate			-			-
Total deferred tax	(		4,924)			10,109
Income tax expense	$		5,802	$		19,620

~41~

			For the six-month			For the six-month
			period ended			period ended
			June 30,2019			June 30,2018
Current tax:
Current tax on profits for the period	$		24,597	$		41,081
Tax paid outside of the territory of
the Republic of China			1,634			-
Adjustments in respect of prior years	(		10,955)	(		16,784)
Total current tax			15,276			24,297
Deferred tax:
Origination and reversal of
temporary differences			3,029	(		58,254)
Impact of change in tax rate			-			62,901
Total deferred tax			3,029			4,647
Income tax expense	$		18,305	$		28,944
(b) The income tax charged to other comprehensive income is as follows:
		For the three-month			For the three-month
			period ended			period ended
			June 30,2019			June 30,2018
Changes in fair value of financial assets at
fair value through other comprehensive
income	($		147)		$	-
Translation differences of foreign operations	(		8,553)			25,946
Impact of change in tax rate			-			-
	($		8,700)		$	25,946
			For the six-month			For the six-month
			period ended			period ended
			June 30,2019			June 30,2018
Changes in fair value of financial assets at
fair value through other comprehensive
income	($		232)		$	-
Translation differences of foreign operations			18,007			17,009
Impact of change in tax rate			-			119
		$	17,775		$	17,128

B. As of June 30, 2019, the Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

C. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

~42~

(30) Earnings per share

For the three-monthperiod ended June 30,2019	For the three-monthperiod ended June 30,2019	For the three-monthperiod ended June 30,2019
Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (share in thousands) (in dollars) 18,599 $ 273,954 0.07 $ 18,599 $ 58 361 18,599 $ 274,373 0.07 $ For the three-monthperiod ended June 30,2018		Earnings per share (in dollars)
		0.07 $
		0.07 $
Amount after tax 56,200 $ 56,200 $ 56,200 $	Weighted average number of ordinary shares outstanding (share in thousands) 268,666 1,423 136 290 141 270,656	Earnings per share (in dollars)
		0.21 $
		0.21 $

~43~

For the	six-monthperiod ended June 30,2019	six-monthperiod ended June 30,2019
Amount after tax 44,792 $ 44,792 $ 44,792 $ For the	Weighted average number of ordinary shares outstanding Earnings per share (share in thousands) (in dollars) 273,661 0.16 $ 104 806 274,571 0.16 $ six-monthperiod ended June 30,2018	Earnings per share (in dollars)
		0.16 $
		0.16 $
Amount after tax 29,047 $ 29,047 $ 29,047 $	Weighted average number of ordinary shares outstanding (share in thousands) 268,333 1,662 69 237 191 270,492	Earnings per share (in dollars)
		0.11 $
		0.11 $

~44~

(31) Operating leases

Prior to 2019

The Group leased part of the Taipei office building with operating leases. Contingent rents of $6,528 and $13,070 were recognized for these leases in profit or loss for three-month and six-month periods ended June 30, 2018, respectively. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

non-cancellable operating leases are as follows:
Not more than 1 year More than 1 year but not more than 5 years	December 31,2018 28,921 $ 9,640 38,561 $	June 30,2018
		28,921 $ 24,101
		53,022 $

The Group leases land, office buildings and company cars for operational needs under noncancellable operating lease agreements. These lease terms are between 2018 and 2027. Most of the lease agreements are renewable at the market price at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

Not more than 1 year More than 1 year but not more than 5 years Over 5 years	December 31,2018 8,333 $ 20,810 15,087 44,230 $	June 30,2018
		3,772 $ 15,087 16,973
		35,832 $

(32) Supplemental cash flow information

A. Investing activities with partial cash payments

		For the six-month		For the six-month
		period ended		period ended
		June 30,2019		June 30,2018
Acquisitions of property, plant, and
equipment	$	5,701	$	9,359
Add: Property and equipment and
construction billings payable at
beginning of year		1,229		12,340
Less: Property and equipment and
construction billings payable at end
of year	(	1,339)	(	4,006)
Cash paid	$	5,591	$	17,693

~45~

(33)	B. Financing activities with no cash flow effects Changes in liabilities from financing activities Acquisitions of intangible assets Add: Payable at beginning of year Less: Payable at end of year Cash paid Declaration of cash dividends	For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 2,765 $ 3,035 $ 1,234 4,763 - 7,578) ( 3,999 $ 220 $ For the six-month period ended For the six-month period ended June 30,2019 June 30,2018 137,005 $ 135,178 $	For the six-month period ended June 30,2018
			220 $
			For the six-month period ended June 30,2018
			135,178 $

Short-term borrowings	Long-term borrowings	Long-term borrowings	Guarantee deposits received	Lease liabilities	Total
	$				2,487,666 $ 3,912) ( 188 542 2,484,484 $ Total 2,244,720 125,870 207 834 2,371,631
	$

2,021,000 $ 129,000 - - 2,150,000 $		199,797 $ 686) ( - 834 199,945 $	23,923 $ 2,444) ( 207 - 21,686 $	$
				$

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship: None.

(2) Significant transactions and balances with related parties:

No significant related party transactions.

~46~

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total	For the three-month period ended June 30,2019 7,965 $ 199 - 8,164 $ For the six-month period ended June 30,2019 20,435 $ 382 884 21,701 $	For the three-month period ended June 30,2018
		9,213 $ 183 1,351
		10,747 $
		For the six-month period ended June 30,2018
		17,816 $ 312 3,676
		21,804 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset	Book value
	June 30,2019 December 31,2018 751,252 $ 746,621 $ 767,142 770,551 1,518,394 $ 1,517,172 $	June 30,2018
Land, buildings and structures Investment acquisition		- $ -
		- $

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

Contingencies

On December 22, 2015, the Company filed a civil complaint against HTC Corporation with the Taiwan Taipei District Court, alleging HTC Corporation’s default in relation to the agreed upon Manufacturing and Supply Agreement and claiming damage of USD 11,126 thousand against HTC Corporation. As of August 12, 2019, the case is still under trial.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

~47~

12. OTHERS

(1) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

A. Financial instruments by category

ucture. nancial instruments Financial instruments by category
Financial assets Financial assets measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost/ Loans and receivables Cash and cash equivalents Current financial assets at amortised cost Current contract assets Notes receivable Accounts receivable Other accounts receivable Guarantee deposit paid Financial liabilities Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other accounts payable Lease liabilities Long-term borrowings (including current portion) Guarantee deposits received	June30,2019 29,801 $ 117,722 6,745,063 729,283 - 42,912 1,295,409 56,960 41,241 9,058,391 $ 1,760,000 $ - 1,786 962,735 491,116 103,730 600,000 20,754 3,940,121 $	December31,2018 23,683 $ 114,508 6,495,017 261,288 - 1,387,222 2,414,775 31,712 38,525 10,766,730 $ 1,760,000 $ - 1,049,446 1,878,509 415,658 - 600,000 20,470 5,724,083 $	June30,2018
			979,242 $ 126,700 5,794,436 - 4,943 690,401 3,421,311 32,646 38,456
			11,088,135 $
			2,150,000 $ 199,945 775,783 2,730,499 515,323 - - 21,686
			6,393,236 $

~48~

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimize any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are used to hedge certain exchange rate risk, and interest rate swaps are used to fix variable future cash flows. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Exchange rate risk arises from future commercial transactions and recognized assets and liabilities.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and RMB expenditures. Forward foreign exchange contracts are adopted to minimize the volatility of the exchange rate affecting cost of forecast inventory purchases.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

~49~

iv. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

June 30, 2019

		June 30,2019	June 30,2019	2019	2019
(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Financial liabilities Monetary items USD:NTD USD:RMB (Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount (In thousands) 105,836 USD 30,567 USD 104,949 USD 23,573 USD	Effect on Effect on Other Exchange Book Value Extent of Profit or Comprehensive Rate (NTD) Variation (Loss) Income(Loss) 31.060 3,287,266 $ 1% 32,873 $ - $ 6.8747 949,411 1% 9,494 - 31.060 3,259,716 $ 1% 32,597) ($ - $ 6.8747 732,177 1% 7,322) ( - SensitivityAnalysis December 31,2018		SensitivityAnalysis
					Effect on Other Comprehensive Income(Loss)
					- $ - - $ -
	Foreign Currency Amount (In thousands) 62,373 USD 41,445 USD 872 USD 61,532 USD 32,014 USD	Exchange Rate 30.715 6.8632 30.715 30.715 6.8632	Book Value (NTD) 1,915,787 $ 1,272,983 26,768 $ 1,889,955 $ 983,310	SensitivityAnalysis
				Effect on Extent of Profit or Variation (Loss) 1% 19,158 $ 1% 12,730 1% - $ 1% 18,900) ($ 1% 9,833) (	Effect on Other Comprehensive Income(Loss)
					- $ - 268 $ - $ -

~50~

June 30, 2018

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount (In thousands) 56,667 USD 37,147 USD 55,466 USD 31,706 USD	Exchange Rate 30.460 6.6166 30.460 6.6166	Book Value (NTD) 1,726,077 $ 1,131,498 1,689,494 $ 965,765	SensitivityAnalysis	SensitivityAnalysis
				Effect on Extent of Profit or Variation (Loss) 1% 17,261 $ 1% 11,315 1% 16,895) ($ 1% 9,658) (	Effect on Other Comprehensive Income(Loss)
					- $ - - $ -

v. Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and six-month periods ended June 30, 2019 and 2018 amounted to $3,610, $12,783, $1,486 and ($20,913), respectively.

Price risk

The Group is exposed to price risk because of investments held by the Group. The Group sets limits to control the transaction volume and stop-loss amount to reduce its market risk.

Cash flow and fair value interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

The Group raised short-term and long-term borrowings at fixed rates during the six-month periods ended June 30, 2019 and 2018, and thus had no significant cash flow interest rate risk.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience

~51~

and other factors. Individual risk limits are set based on internal or external ratings. The utilisation of credit limits is regularly monitored.

iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.
iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments;
(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
vi. The Group classifies customers’ accounts receivable, contract assets and rents receivable in accordance with customer types. The Group applies the simplified approach using loss rate methodology to estimate expected credit loss under the provision matrix basis.
vii. The Group used the forecastability to adjust historical and timely information to access the default possibility of accounts receivable, contract assets and notes receivable. On June 30, 2019, December 31, 2018 and June 30, 2018, the loss rate methodology is as follows:

Up to 90 days past due At June 30,2019 Expected loss rate 0% Total book value 1,212,124 $ Loss allowance - $ Up to 90 days past due At December 31,2018 Expected loss rate 0% Total book value 3,775,678 $ Loss allowance - $	Up to 90 days past due	91~180 days past due	181 to 360 days past due	Upto 361 days	Total
	0% 1,212,124 $ - $ Up to 90 days past due	20% 125,679 $ 647 $ 91~180 days past due	50% 1,963 $ 798 $ 181 to 360 days past due	100% 4,505 $ 4,505 $ Upto 361 days	1,344,271 $ 5,950 $ Total
		20% 29,761 $ 4,375 $	50% 6,222 $ 5,289 $	100% 6,215 $ 6,215 $	3,817,876 $ 15,879 $

~52~

At June 30,2018 Expected loss rate Total book value Loss allowance	Up to 90 days past due	91~180 days past due	181 to 360 days past due	Upto 361 days	Total
	0% 4,037,875 $ 877 $	20% 83,166 $ 3,509 $	50% - $ - $	100% 6,164 $ 6,164 $	4,127,205 $ 10,550 $

viii. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable, contract assets and notes receivable are as follows:

		2019	Notes receivable
	Accounts receivable	Contract assets
15,879 $ 9,202) ( 835) ( 108 5,950 $ Accounts receivable		- $ - - - - $ 2018	- $ - - - - $ Notes receivable
	Accounts receivable	Contract assets
8,747 $ - 909 33) ( 50 9,673 $		- $ - 877 - - 877 $	- $ - - - - - $

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, and compliance with internal balance sheet ratio targets.

~53~

ii. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
iii. The Group has following undrawn borrowing facilities:

0 Fixed rate: Expiring within one year Expiring beyond one year	June30,2019 3,733,600 $ 600,000 4,333,600 $	December31,2018 3,425,060 $ 600,000 4,025,060 $	June30,2018
			1,956,420 $ -
			1,956,420 $

iv. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities: June 30, 2019 Short-term borrowings Notes payable Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) Guarantee deposits received Non-derivative financial liabilities: December 31, 2018 Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings (including current portion) Guarantee deposits received	Less than 1year 1,760,000 $ 1,786 962,735 491,116 6,659 - - Less than 1year 1,760,000 $ 1,049,446 1,878,509 415,658 - -	Over 1year
		- $ - - - 97,071 600,000 20,754 Over 1year
		- $ - - - 600,000 20,470

~54~

Non-derivative financial liabilities: June 30, 2018 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Guarantee deposits received	Less than 1year 2,150,000 $ 199,945 775,783 2,730,499 515,323 -	Over 1year
		- $ - - - - 21,686

(3) Fair value estimation

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed beneficiary certificates, on-the-run derivative instruments with quoted market prices is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(11).
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

June 30, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks	Level 1 - $ - - $	Level 2 - $ 64,412 64,412 $	Level 3 29,801 $ 53,310 83,111 $	Total
				29,801 $ 117,722
				147,523 $

~55~

December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks June 30, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Beneficiary certificates Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks	Level 1 - $ - - $ Level 1 968,641 $ - - 968,641 $	Level 2 - $ 60,515 60,515 $ Level 2 - $ - 75,140 75,140 $	Level 3 23,683 $ 53,993 77,676 $ Level 3 - $ 10,601 51,560 62,161 $	Total
				23,683 $ 114,508
				138,191 $
				Total
				968,641 $ 10,601 126,700
				1,105,942 $

D. The methods and assumptions the Group used to measure fair value are as follows:
(a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Open-end fund Market quoted price Net asset value

(b) The fair value of Level 2 financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

~56~

E. Accounting Department segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value. Investment property is valuated regularly by the Group’s Accounting Department segment based on the valuation methods and assumptions announced by the Financial Supervisory Commission, Securities and Futures Bureau or through outsourced appraisal performed by the external valuer.
F. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Financial assets at fair value through profit or loss Unlisted shares Financial assets at fair value through comprehensive income Unlisted shares Financial assets at fair value through profit or loss Unlisted shares Financial assets at fair value through comprehensive income Unlisted shares	Fair value at June 30,2019	Valuation technique	Significant unobservable input	Relationship of inputs to fair value
	29,801 $ 53,310 Fair value at December 31, 2018	Net asset value Net asset value Valuation technique	Not applicable Not applicable Significant unobservable input	Not applicable Not applicable Relationship of inputs to fair value
	23,683 $ 53,993	Net asset value Net asset value	Not applicable Not applicable	Not applicable Not applicable

~57~

Financial assets at fair value through profit or loss Unlisted shares Financial assets at fair value through comprehensive income Unlisted shares	Fair value at June 30,2018	Valuation technique	Significant unobservable input	Relationship of inputs to fair value
	10,601 $ 51,560	Net asset value Net asset value	Not applicable Not applicable	Not applicable Not applicable

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) : Please refer to table 1.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 2.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.
I. Trading in derivative financial instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

A. The related information of investments in Mainland China: Please refer to table 6.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area:

For the significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please refer to tables 2 and 4.

~58~

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The Chief Operating Decision-Maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

The Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

(3) Information about segment profit or loss, assets and liabilities

None.

(Blank below)

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Altek Corporation and subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

June 30, 2019

Table 1

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of June	30,2019
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Altek Corporation " " Altek (Kunshan) Co., Ltd. "	Gianta Co., Ltd. - Common stock Yung Li Investments Inc. - Common stock Hua-chuang Automobile Information Technical Center Co., Ltd. - Common stock Guangdong Kingding Optical Technology Co., Ltd. CPEC Huachuang Private Equity (Kunshan) Enterprise (Limited Partnership)	Director None None None None	Financial assets at fair value through profit or loss - non-current " Financial assets measured at fair value through other comprehensive income - non-current " "	762,876 241,935 5,660,000 1,200,000 N/A	29,801 $ - 64,412 6,786 46,524	14.55% 4.84% 1.72% 6.45% (Note)	29,801 $ - 64,412 6,786 46,524

Note : 1% of CPEC Huachuang Private Equity (Kunshan) Enterprise (Limited Partnership)’s capital contribution.

Table 1, Page 1

Altek Corporation and subsidiaries

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the six-month period ended June 30, 2019

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Altek Corporation Altek International Investment Co., Ltd. Altek Biotechnology Corporation Altek Semiconductor (Shanghai) CO., Ltd.	Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd. Altek International Investment Co., Ltd. Altek (Kunshan) Co., Ltd.	Parent and affiliated company " The same ultimate parent company "	Purchases Purchases Purchases Purchases	1,558,856 $ 2,281,821 683,038 136,665	95% 100% 100% 100%	Net 120 days Net 75 days " "	Approximately the same price with third parties " " "	Note " " "	2,786,587) ($ 793,637) ( 389,158) ( 247,709) (	99% 99% 100% 100%

Note: The payment term with third parties was net 60~120 days.

Table 2, Page 1

Altek Corporation and subsidiaries

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

June 30, 2019

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at June 30,2019	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Altek International Investment Co., Ltd. " Altek (Kunshan) Co., Ltd. "	Altek Corporation Altek Biotechnology Corporation Alteck International Investment Co., Ltd. Altek Semiconductor (Shanghai) Co., Ltd.	Parent company The same ultimate parent company Parent company The same ultimate parent company	2,786,587 $ 389,158 793,637 247,709	2.00 3.08 5.52 0.98	- $ - - -	N/A N/A N/A N/A	594,373 $ 180,079 434,729 133,142	- $ - - -

Table 3, Page 1

Altek Corporation and subsidiaries

Expressed in thousands of NTD

Significant inter-company transactions during the reporting periods

For the six-month period ended June 30, 2019

Table 4

(Except as otherwise indicated)

Transaction

					Transaction
Companyname	Counterparty	Relationship (Note 1)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 2)
Altek Corporation " Altek International Investment Co., Ltd. " Altek Semiconductor Corporation " " Altek Biotechnology Corporation " Altek (Kunshan) Co., Ltd. Altek Trading (Shanghai) Limited " Altek Semiconductor (Shanghai) Co., Ltd. "	Altek International Investment Co., Ltd. " Altek (Kunshan) Co., Ltd. " Altek International Investment Co., Ltd. " Altek Semiconductor (Shanghai) Co., Ltd. Altek International Investment Co., Ltd. " " Altek (Kunshan) Co., Ltd. " " "	(1) (1) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3)	Purchases Accounts payable Purchases Accounts payable Sales Accounts receivable Royalty income Purchases Accounts payable Purchases Purchases Accounts payable Purchases Notes/accounts payable	1,558,856 $ 2,786,587 2,281,821 793,637 19,023 8,486 10,181 683,038 389,158 81,216 60,884 45,512 136,665 247,709	Net 120 days " Net 75 days " " " " " " " " " " "	48% 19% 71% 5% 1% 0% 0% 21% 3% 3% 2% 0% 4% 2%

Note 1: Relationship between transaction and counterparty is classified into the following categories:

(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary.

Note 2: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 3: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Table 4, Page 1

Altek Corporation and subsidiaries

Information on investees

For the six-month period ended June 30, 2019

Table 5


Table 5 Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shares	held as at June 30,2019		Net profit (loss) of the investee for the six-month period ended June 30,2019	Investment income(loss) recognised by the Company for the six-month period ended June 30,2019 Expressed in thousands of NTD (Except as otherwise indicated)
				Balance as at June 30,2019	Balance as at December 31, 2018	Number of shares	Ownership (%)	Book value
Altek Corporation " " " Altek International Investment Co., Ltd. " " Altek Semiconductor (Cayman) Co., Ltd. Altek Biotechnology Holding (Cayman) Co., Ltd.	Altek International Investment Co., Ltd. Altek Japan Corporation Altek Investment Co., Ltd. Altek International Holding (BVI) Co, Ltd. Altek Lab Inc. JinJing Optical Technology Co., ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor Corporation Altek Biotechnology Corporation	British Virgin Islands Japan Republic of China British Virgin Islands U.S.A. Samoa Cayman Islands Republic of China Republic of China	Investment Sale of optical optical instruments Investment Investment Design service Investment and general business operations Investment Research design and sales of ASIC Research and development, manufacture and sales of medical electronic equipments	2,882,512 $ 2,869 - 415,376 114,293 80,989 190,933 200,000 415,376	2,910,046 $ 2,869 50,000 415,376 114,293 108,710 190,933 200,000 415,376	87,769,559 1,000 - 12,865,921 11,311,875 2,607,500 20,000,000 20,000,000 40,100,000	100% 100% - 100% 100% 23.33% 50% 100% 100%	8,982,300 $ 11,881 - 706,174 65,296 - 641,521 214,000 634,223	32,753) ($ 43) ( 1) ( 117,569 2,498 51 75,793) ( 82,558) ( 117,899	32,753) ($ 49) ( 1) ( 117,569 2,498 - 37,896) ( 41,279) ( 117,899

Note : The dissolution and liquidation of Altek Investment Co., Ltd. was resolved by the Board of Directors on December 17, 2018. Moreover, the liquidation was completed as approved by the court on April 25, 2019.

Table 5, Page 1

Information on investments in Mainland China For the six-month period ended June 30, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Altek Corporation and subsidiaries

Table 6

Investee in Mainland China	Main business activities	Paid-in capital	Investment method `（`Note 1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2019	Amount remitte Mainland C remitted back the six-mont June 3	d from Taiwan to hina/Amount to Taiwan for h period ended 0,2019	Accumulated amount of remittance from Taiwan toMainland China as of June 30,2019	Net profit (loss) of investee for the six-month period ended June 30,2019	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30,2019	Book value of investments in Mainland China as of June 30,2019	Accumulated amount of investment income remitted back to Taiwan as of June 30, 2019
					Remitted to Mainland China	Remitted back to Taiwan
Altek (Kunshan) Co., Ltd. (Note 2) Altek EMS (Kunshan) Co., Ltd. (Note 3) Altek Trading (Shanghai) Limited Altek Precision (Kunshan) Co., Ltd. Altek Optical Technology (Kunshan) Co., Ltd. Altek Semiconductor (Shanghai) Co., Ltd. Note 1: Investment metho (1)Directly invest (2)Through invest (3)Others.	Manufacture and sale of digital still cameras and its accessories Manufacture and sale of related engineering services Wholesale, import and export of digital cameras, digital video cameras and their associated accessories Design, manufacture and sales of digital camera parts Manufacture and sales of digital camera and its accessories and optical components Research design and sales of imaging technologies, electronic software and hardware ds are classified into the following in a company in Mainland China. ing in an existing company in the t	1,540,576 $ 155,300 264,010 428,628 347,872 46,590 three categories; fil hird area,which then	2 2 2 2 2 2 l in the numbe investeed in t	1,397,700 $ 282,118 264,010 428,628 347,872 - r of category each case belongs to he investee in Mainland China.	- $ - - - - - :	- $ - - - - -	1,397,700 $ 282,118 264,010 428,628 347,872 -	1,595) ($ 9,176 7,592 1,314 ( 1,765) 3,712) (	100% 100% 100% 100% 100% 50%	1,595) ($ 9,176 7,592 1,314 ( 1,765) 1,856) (	4,063,663 $ 785,790 308,258 152,989 6,281 121,666	- $ - - - - -

Note 2: Including retained earnings capitalized of US$4,600 (In thousand of US dollars). Note 3: Including retained earnings capitalized of US$3,600 (In thousand of US dollars).

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of June 30,2019	Investment amount approved by the Investment Commission of the Ministryof Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed bythe Investment Commission of MOEA
Altek Corporation	2,720,328 $	3,003,347 $	- $

Note:According to “REGULATIONS GOVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL IN MAINLAND CHINA”on August 29, 2008, Altek Corporation obtained the approval

from the Industrial Development Bureau of Ministry of Economics Affairs issued to Headquarters, so there is no need to compute the ceiling amount of the Company.

Table 6, Page 1

AI assistant

Altek — Interim / Quarterly Report 2019

52290_rns_2019-11-14_07898745-c600-47e2-85e7-6cebf7e0ff40.pdf

ALTEK CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

August 12, 2019

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

1. HISTORY AND ORGANIZATION

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

the Group

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

B. Subsidiaries included in the consolidated financial statements:

(5) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

Effective 2019

(6) Operating leases (lessee)

Prior to 2019

(7) Employee benefits

(8) Income tax

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

(2) Financial assets at fair value through profit or loss

(3) Financial assets at fair value through other comprehensive income

(4) Financial assets at amortised cost

(6) Inventories

(7) Investments accounted for under the equity method

(8) Property, plant and equipment

－ (9) Leasing arrangements lessee

Effective 2019

F. Extension and termination options

(11) Investment property

(12) Intangible assets

(13) Short-term borrowings

June 30, 2018 ： None.

(16) Pensions

(17) Share-based payment

E. Expenses incurred on share-based payment transactions are shown below:

(18) Provisions

(19) Share capital

A. Movements in the number of the Company’s ordinary shares outstanding are as follows:

B. Treasury shares

(20) Capital surplus

Difference between consideration and

(21) Retained earnings

(22) Other equity items

(23) Operating revenue

A. Disaggregation of revenue from contracts with customers

For the three-month

B. Contract assets

(24) Other income

(29) Income tax

(30) Earnings per share

(31) Operating leases

Prior to 2019

(32) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

(3) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

Contingencies

10. SIGNIFICANT DISASTER LOSS

Altek Interim / Quarterly Report 2019

(5) Leasing arrangements (lessee) `－` right-of-use assets/ lease liabilities

`－` (9) Leasing arrangements lessee

June 30, 2018 `：` None.