Compal - Interim / Quarterly Report 2019

Stock Code:2324

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Three Months Ended March 31, 2019 and 2018

Address: No.581 & 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan Telephone: (02)8797-8588

		Contents	Page
1.	Cover Page		1
2.	Table of Contents		2
3.	Independent Auditors’ Review Report		3
4.	Consolidated Balance Sheets		4
5.	Consolidated Statements of Comprehensive Income		5
6.	Consolidated Statements of Changes in Equity		6
7.	Consolidated Statements of Cash Flows		7
8.	Notes to the Consolidated Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	8`～`11
	(4)	Summary of significant accounting policies	11`～`21
	(5)	Significant accounting assumptions and judgments, and major sources	21
		of estimation uncertainty
	(6)	Explanation of significant accounts	21`～`58
	(7)	Related-party transactions	59`～`61
	(8)	Pledged assets	61
	(9)	Commitments and contingencies	61`～`62
	(10)	Losses due to major disasters	62
	(11)	Subsequent events	62
	(12)	Other	62
	(13)	Other disclosures
		(a) Information on significant transactions	62`～`75
		(b) Information on investees	63,76`～`80
		(c) Information on investment in Mainland China	63,81`～`83
	(14)	Segment information	63

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Independent Auditors ’ Review Report

To COMPAL ELECTRONICS, INC.:

Introduction

We have reviewed the accompanying consolidated balance sheets of COMPAL ELECTRONICS, INC. and its subsidiaries as of March 31, 2019 and 2018, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2019 and 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with Statement of Auditing Standard 65, “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the 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 the generally accepted auditing standards 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 stated in Note 4(b), the consolidated financial statements included the financial statements of certain non-significant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect total assets amounting to $20,423,715 thousand and $24,532,469 thousand, constituting 5.2% and 7.1% of consolidated total assets as of March 31, 2019 and 2018, respectively, total liabilities amounting to $4,898,000 thousand and $4,250,807 thousand, constituting 1.8% and 1.8% of consolidated total liabilities as of March 31, 2019 and 2018, respectively, and the absolute value of total comprehensive income amounting to $(67,800) thousand and $181,255 thousand, constituting 2.8% and 121.9% of consolidated total comprehensive income (loss) for the three months ended March 31, 2019 and 2018, respectively.

3-1

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, 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 COMPAL ELECTRONICS, INC. and its subsidiaries as of March 31, 2019 and 2018, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Szu-Chuan Chien and Yiu-Kwan Au.

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KPMG

Taipei, Taiwan (Republic of China) May 13, 2019

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

Reviewed only, not audited in accordance with the generally accepted auditing standards as of March 31, 2019 and 2018

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2019, December 31, 2018, and March 31, 2018

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note (6)(a)) 1110 Current financial assets at fair value through profit or loss (note (6)(b)) 1135 Current derivative financial assets for hedging (note (6)(d)) 1136 Current financial assets at amortized cost (note (6)(e)) 1170 Notes and accounts receivable, net (note (6)(f)) 1180 Notes and accounts receivable due from related parties, net (notes (6)(f) and 7) 1200 Other receivables, net (notes (6)(f) and 7) 1310 Inventories (note (6)(g)) 1460 Non-current assets classified as held for sale, net (note (6)(h)) 1470 Other current assets (note 8) Non-current assets: 1550 Investments accounted for using equity method (note (6)(h)) 1510 Non-current financial assets at fair value through profit or loss (note (6)(b)) 1517 Non-current financial assets at fair value through other comprehensive income (note (6)(c)) 1535 Non-current financial assets at amortized cost (notes (6)(e)) 1600 Property, plant and equipment (notes (6)(k) and 8) 1755 Right-of-use assets (note (6)(l)) 1780 Intangible assets 1840 Deferred tax assets 1985 Long-term prepaid rents 1990 Other non-current assets (note 8) Total assets	March 31, 2019 Amount % $ 65,617,467 16.8 4,044,240 1.0 227 - 350,000 0.1 182,776,607 46.9 23,207 - 2,684,835 0.7 92,043,682 23.6 - - 3,056,916 0.8 350,597,181 89.9 7,509,300 1.9 91,419 - 5,487,217 1.4 - - 20,405,435 5.2 2,848,983 0.7 1,695,903 0.4 1,025,119 0.3 - - 609,221 0.2 39,672,597 10.1 $ 390,269,778 100.0	December 31, 2018 Amount % 70,296,545 17.6 4,611,134 1.1 - - 350,000 0.1 203,715,965 51.0 58,106 - 1,665,249 0.4 79,148,922 19.8 - - 2,899,329 0.7 362,745,250 90.7 7,364,485 1.9 69,390 - 5,172,295 1.3 - - 20,418,228 5.1 - - 1,516,253 0.4 1,023,948 0.3 891,147 0.2 593,827 0.1 37,049,573 9.3 399,794,823 100.0	March 31, 2018 Amount % 72,194,587 21.0 1,686,201 0.5 - - 350,000 0.1 156,104,217 45.4 108,404 - 1,642,296 0.5 67,945,186 19.8 4,711,834 1.4 3,580,154 1.0 308,322,879 89.7 7,159,420 2.1 44,068 - 6,451,845 1.8 350,000 0.1 17,527,775 5.1 - - 1,339,493 0.4 1,551,670 0.5 555,676 0.2 376,233 0.1 35,356,180 10.3 343,679,059 100.0 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note (6)(m)) 2120 Current financial liabilities at fair value through profit or loss (note (6)(b)) 2125 Current derivative financial liabilities for hedging (note (6)(d)) 2130 Current contract liabilities (note (6)(x)) 2170 Notes and accounts payable 2180 Notes and accounts payable to related parties (note 7) 2200 Other payables (note 7) 2230 Current tax liabilities 2250 Current provisions (note (6)(p)) 2280 Current lease liabilities (note (6)(o)) 2300 Other current liabilities 2365 Current refund liabilities (note (6)(q)) 2322 Long-term borrowings, current portion (note (6)(n)) Non-Current liabilities: 2540 Long-term borrowings (note (6)(n)) 2570 Deferred tax liabilities 2580 Non-current lease liabilities (note (6)(o)) 2640 Non-current net defined benefit liability 2670 Non-current liabilities, others Total liabilities Equity: Equity attributable to owners of parent: 3110 Ordinary share (note (6)(u)) 3200 Capital surplus (note (6)(u)) 3300 Retained earnings (note (6)(u)) 3400 Other equity interest (note (6)(u)) 3500 Treasury shares (note (6)(u)) 36XX Non-controlling interests Total equity Total liabilities and equity	March 31, 2019		December 31, 2018	December 31, 2018		March 31, 2018 Amount % 61,916,911 18.0 18,634 - 37,787 - 1,608,760 0.5 116,709,368 34.0 1,348,271 0.4 16,210,930 4.7 4,664,070 1.4 405,731 0.1 - - 3,237,318 0.9 711,043 0.2 7,048,125 2.1 213,916,948 62.3 19,506,769 5.7 669,560 0.2 - - 702,406 0.2 243,410 0.1 21,122,145 6.2 235,039,093 68.5 44,071,466 12.8 10,787,337 3.1 58,508,748 17.0 (10,751,644) (3.1) (881,247) (0.3) 101,734,660 29.5 6,905,306 2.0 108,639,966 31.5 343,679,059 100.0
						Amount 72,350,197 26,913 - 1,476,304 152,300,093 1,976,620 19,558,007 3,722,191 426,981 - 3,255,135 1,579,832 17,535,625	%
						274,207,898
						10,998,438 478,169 - 710,146 238,324
						12,425,077
						286,632,975

See accompanying notes to consolidated financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards COMPAL ELECTRONICS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share)

4000 Net sales revenue (notes (6)(x) and 7) 5000 Cost of sales (notes (6)(g), 7 and 12) Gross profit Operating expenses: (notes (6)(r), (6)(s) and 12) 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses Net operating income Non-operating income and expenses: 7020 Other gains and losses, net (notes (6)(d), (6)(z) and (6)(ab)) 7050 Finance costs 7190 Other income (notes (6)(r) and (6)(z)) 7590 Miscellaneous disbursements 7770 Share of profit (loss) of associates and joint ventures accounted for using equity method (note (6)(h)) Total non-operating income and expenses 7900 Profit (loss) from continuing operations before tax 7950 Less: Income tax expenses (note (6)(t)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (note (6)(t)) Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8368 Gains (losses) on hedging instrument 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss (note (6)(t)) Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income Profit, attributable to: 8610 Profit, attributable to owners of parent 8620 Profit, attributable to non-controlling interests Comprehensive income attributable to: 8710 Comprehensive income (loss), attributable to owners of parent 8720 Comprehensive income (loss), attributable to non-controlling interests Earnings per share (note 6(w)) 9750 Basic earnings per share 9850 Diluted earnings per share	For the three months ended March 31 2019 2018 Amount % Amount % $210,600,553 100.0 196,111,962 100.0 202,938,374 96.4 189,488,759 96.6 7,662,179 3.6 6,623,203 3.4 1,059,264 0.5 884,355 0.5 939,683 0.4 999,250 0.5 3,241,734 1.5 2,685,529 1.4 5,240,681 2.4 4,569,134 2.4 2,421,498 1.2 2,054,069 1.0 61,820 - (75,887) - (739,401) (0.4) (442,800) (0.2) 428,564 0.2 344,011 0.2 (598) - (1,059) - (62,083) - 43,677 - (311,698) (0.2) (132,058) - 2,109,800 1.0 1,922,011 1.0 450,099 0.2 339,215 0.2 1,659,701 0.8 1,582,796 0.8 315,189 0.1 (267,432) - 37,119 - - - 15,695 - (34,438) - 336,613 0.1 (232,994) - 248,015 0.1 (1,293,465) (0.7) (1,990) - (37,787) - 164,782 0.1 126,544 - 873 - (3,573) - 409,934 0.2 (1,201,135) (0.7) 746,547 0.3 (1,434,129) (0.7) $ 2,406,248 1.1 148,667 0.1 1,350,258 0.7 1,393,302 0.8 309,443 0.1 189,494 - $ 1,659,701 0.8 1,582,796 0.8 2,095,773 1.0 (5,035) - 310,475 0.1 153,702 0.1 $ 2,406,248 1.1 148,667 0.1 $ 0.31 0.32 $ 0.31 0.32	For the three months ended March 31 2019 2018 Amount % Amount % $210,600,553 100.0 196,111,962 100.0 202,938,374 96.4 189,488,759 96.6 7,662,179 3.6 6,623,203 3.4 1,059,264 0.5 884,355 0.5 939,683 0.4 999,250 0.5 3,241,734 1.5 2,685,529 1.4 5,240,681 2.4 4,569,134 2.4 2,421,498 1.2 2,054,069 1.0 61,820 - (75,887) - (739,401) (0.4) (442,800) (0.2) 428,564 0.2 344,011 0.2 (598) - (1,059) - (62,083) - 43,677 - (311,698) (0.2) (132,058) - 2,109,800 1.0 1,922,011 1.0 450,099 0.2 339,215 0.2 1,659,701 0.8 1,582,796 0.8 315,189 0.1 (267,432) - 37,119 - - - 15,695 - (34,438) - 336,613 0.1 (232,994) - 248,015 0.1 (1,293,465) (0.7) (1,990) - (37,787) - 164,782 0.1 126,544 - 873 - (3,573) - 409,934 0.2 (1,201,135) (0.7) 746,547 0.3 (1,434,129) (0.7) $ 2,406,248 1.1 148,667 0.1 1,350,258 0.7 1,393,302 0.8 309,443 0.1 189,494 - $ 1,659,701 0.8 1,582,796 0.8 2,095,773 1.0 (5,035) - 310,475 0.1 153,702 0.1 $ 2,406,248 1.1 148,667 0.1 $ 0.31 0.32 $ 0.31 0.32
	2019	% 100.0 96.4 3.6 0.5 0.4 1.5 2.4 1.2 - (0.4) 0.2 - - (0.2) 1.0 0.2 0.8 0.1 - - 0.1 0.1 - 0.1 - 0.2 0.3 1.1 0.7 0.1 0.8 1.0 0.1 1.1 0.31 0.31
	Amount $210,600,553 202,938,374 7,662,179 1,059,264 939,683 3,241,734 5,240,681 2,421,498 61,820 (739,401) 428,564 (598) (62,083) (311,698) 2,109,800 450,099 1,659,701 315,189 37,119 15,695 336,613 248,015 (1,990) 164,782 873 409,934 746,547 $ 2,406,248 1,350,258 309,443 $ 1,659,701 2,095,773 310,475 $ 2,406,248 $ $

See accompanying notes to consolidated financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards COMPAL ELECTRONICS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the three months ended March 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Ordinary shares	Capital surplus		Retained	earnings	earnings				Total	Total	other equity interest	other equity interest	other equity interest		Treasury shares	Total equity attributable to owners of parent	Non- controlling interests Total equity
		Legal reserve	Special reserve	Unappropriated retained earnings		Total retained earnings	Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income		Unrealized gains (losses) on available- for-sale financial assets		Unearned employee benefit and others	Total other equity interest
$ 44,191,916 - 44,191,916 - - - - - (120,450) - $ 44,071,466 $ 44,071,466 - - - - - - $ 44,071,466	10,938,773 -	18,252,861 -	4,339,549 -		33,964,736 494,051 34,458,787 1,393,302 28,108 1,421,410 - - 36,141 - 35,916,338 32,401,419 1,350,258 451 1,350,709 - (14,209) - 33,737,919	56,557,146 494,051		(3,477,376) - (3,477,376) - (1,141,883) (1,141,883) - - - - (4,619,259) (1,852,952) - 409,477 409,477 - - - (1,443,475)		- (5,847,823) (5,847,823) - (270,943) (270,943) - - - - (6,118,766) (5,606,436) - 336,288 336,288 - 14,209 - (5,255,939)		(5,353,772) 5,353,772 - - - - - - - - - - - - - - - - -	(79,856) - (79,856) - (13,619) (13,619) - - 79,856 - (13,619) - - (701) (701) - - - (701)	(8,911,004) (494,051) (9,405,055) - (1,426,445) (1,426,445) - - 79,856 - (10,751,644) (7,459,388) - 745,064 745,064 - 14,209 - (6,700,115)	(881,247) - (881,247) - - - - - - - (881,247) (881,247) - - - - - - (881,247)	101,895,584 -	6,752,388 108,647,972 - - 6,752,388 108,647,972 189,494 1,582,796 (35,792) (1,434,129) 153,702 148,667 - 160 - 170 - (156,219) (784) (784) 6,905,306 108,639,966 7,438,202 113,161,848 309,443 1,659,701 1,032 746,547 310,475 2,406,248 - 580 - - 24,890 24,890 7,773,567 115,593,566
	10,938,773	18,252,861	4,339,549			57,051,197										101,895,584
	- -	- -	- -			1,393,302 28,108
	-	-	-			1,421,410
		- - - -	- - - -			- - 36,141 -
		18,252,861	4,339,549			58,508,748
		18,827,814	8,831,148			60,060,381
		- -	- -			1,350,258 451
		-	-			1,350,709
		- - -	- - -
		18,827,814	8,831,148

See accompanying notes to consolidated financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Increase (decrease) in expected credit loss
Net loss (gain) on financial assets or liabilities at fair value through profit or loss
Finance cost
Interest income
Compensation cost of share-based payments
Share of profit of associates and joint ventures accounted for using equity method
Loss (gain) on disposal of property, plant and equipment
Long-term prepaid rents
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in financial assets at fair value through profit or loss
Decrease (increase) in notes and accounts receivable
Decrease (increase) in other receivable
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in other non-current assets
Total changes in operating assets
Changes in operating liabilities:
Increase (decrease) in financial liabilities at fair value through profit or loss
Increase (decrease) in notes and accounts payable
Increase (decrease) in other payable
Increase (decrease) in refund liabilities
Increase (decrease) in provisions
Increase (decrease) in contract liabilities
Increase (decrease) in other current liabilities
Others
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of investments accounted for using equity method and financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive income
Acquisition of financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Acquisition of right-of-use assets
Others
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Payment of lease liabilities
Acquisition of non-controlling interests
Change in non-controlling interests
Others
Net cash flows from (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

For the three months ended
March 31
2019
2018
$ 2,109,800
1,922,011
1,499,139
1,169,368
9,339
(60,188)
(62,021)
(189,702)
739,401
442,800
(379,750)
(260,820)
25,112
(157,426)
62,083
(43,677)
(969)
(40,722)
-
3,367
1,892,334
863,000
311,420
(384,485)
20,960,308
21,312,140
(1,050,630)
(643,828)
(12,894,760)
1,511,901
(157,587)
(129,218)
(21,532)
(83,340)
7,147,219
21,583,170
(25,924)
(5,829)
(977,030)
(23,960,185)
(1,651,874)
36,349
(1,628)
(808,263)
36,181
18,584
(12,669)
(56,561)
(481,560)
213,775
(3,455)
27,603
(3,117,959)
(24,534,527)
4,029,260
(2,951,357)
5,921,594
(2,088,357)
8,031,394
(166,346)
412,870
250,360
(883,025)
(432,053)
(175,827)
(85,879)
7,385,412
(433,918)
(6,524)
(87,525)
791
-
(25,000)
-
326,137
-
(1,037,784)
(1,093,681)
3,891
82,148
(286,942)
(116,547)
(78,910)
-
6,138
27,496
(1,098,203)
(1,188,109)
(4,587,076)
5,401,386
5,601,675
1,718,150
(11,810,269)
(2,616,144)
(191,259)
-
-
(485)
1,259
1,068
(43,851)
63,203
(11,029,521)
4,567,178
63,234
(813,277)
(4,679,078)
2,131,874
70,296,545
70,062,713
$
65,617,467
72,194,587

See accompanying notes to consolidated financial statements.

Reviewed only, not audited in accordance with generally accepted auditing standards COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

March 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Compal Electronics, Inc. (the "Company") was incorporated in June 1984 as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company's registered office is No.581 and No.581-1 Ruiguang Rd., Neihu Dist., Taipei City, Taiwan. In accordance with Article 19 of the Business Mergers and Acquisitions Act, the Company merged its subsidiary, Compal Communications, Inc. ("CCI") (the "Merger"), pursuant to the resolutions of the Board of Directors in November, 2013. The Company was the surviving company and CCI was the dissolved company. The effective date of the Merger was February 27, 2014. The Company and its subsidiaries (together referred to as the "Group" and individually as the "Group entities") primarily are involved in the manufacture and sale of notebook personal computers ("notebook PCs"), monitors, LCD TVs, mobile phones and various components and peripherals.

(2) Approval date and procedures of the consolidated financial statements:

These consolidated financial statements for the three months ended March 31, 2019 and 2018 were authorized for issuance by the Board of Directors and issued on May 13, 2019.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(i) IFRS 16“Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below,

1) Definition of a lease

Previously, the Group determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Group assesses whether a contract is or contains a lease based on the definition of a lease, as explained in note (4)(c).

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

The Group decided to apply recognition exemptions to short-term leases of machinery and leases of office equipment.

Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other lease.

In addition, the Group used the following practical expedients when applying IFRS 16 to leases.

－ Applied a single discount rate to a portfolio of leases with similar characteristics.
－ Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

－ Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
－ Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
Leases previously classified as finance leases

For leases that were classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at January 1, 2019 are determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

3) As a lessor

The Group is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor. The Group accounted for its leases in accordance with IFRS 16 from the date of initial application.

4) Impacts on financial statements

On transition to IFRS 16, the Group recognized additional $2,981,097 thousands of rightof-use assets and $2,089,950 thousands of lease liabilities, derecognized $891,147 thousands of long-term prepaid rents. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 2.78%.

The explanation of differences between operating lease commitments disclosed at the end of the annual reporting period immediately preceding the date of initial application, and lease liabilities recognized in the statement of financial position at the date of initial application disclosed as follows:

Operating lease commitment at December 31, 2018 as disclosed in
the Group’s
consolidated financial statements
Recognition exemption for:
short-term leases
leases of low-value assets
Variable lease payment based on an index or a rate
Discounted using the incremental borrowing rate at January 1, 2019
Finance lease liabilities recognized as at December 31, 2018
Lease liabilities recognized at January 1, 2019

January 1, 2019
$ 2,280,672
(56,654)
(176)
(28,660)
$
2,195,182
$ 2,089,950
-
$
2,089,950

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(b) The impact of IFRS issued by IASB but not yet endorsed by the FSC

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Effective date New, Revised or Amended Standards and Interpretations per IASB Amendments to IFRS 3 “Definition of a Business” January 1, 2020 Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between Effective date to an Investor and Its Associate or Joint Venture” be determined by IASB IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020

Those which may be relevant to the Group are set out below:

Issuance / Release Standards or Dates Interpretations Content of amendment October 31, 2018 Amendments to IAS 1 and IAS The amendments clarify the definition of 8 “Definition of Material” material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards.

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

(4) Summary of significant accounting policies:

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations) and the guidelines of IAS 34 Interim Financial Reporting which are endorsed and issued into effect by the FSC. These consolidated financial statements do not include all of the information required by the Regulations and International Financial Reporting Standards, the International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to as the IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Except as described in the following paragraph, the significant accounting policies adopted in the consolidated financial statements are consistent with the consolidated financial statements for the year ended December 31, 2018. For related information, please refer to note (4) of the consolidated financial statements for the year ended December 31, 2018.

(b) Basis of consolidation

Principles of preparation of the consolidated financial statements are consistent with the consolidated financial statements for the year ended December 31, 2018. For related information, please refer to note (4)(c) of the consolidated financial statements for the year ended December 31, 2018.

List of subsidiaries in the consolidated financial statements

				Percentage of
				ownership
			March 31,	December	March 31,
Investor	Name of Subsidiary	Nature of Operation	2019	31, 2018	2018	Description
The Company	Panpal Technology Corp.	Investment	100%	100%	100%	Panpal held 31,648
	(“Panpal”)					thousand shares of the
						Company as of March 31,
						2019, which represented
						0.7% of the Company’s
						outstanding shares.
						(notes 1 and 2)
`〞`	Gempal Technology Corp.	`〃`	100%	100%	100%	Gempal held 18,369
	(“Gempal”)					thousand shares of the
						Company as of March 31,
						2019, which represented
						0.4% of the Company’s
						outstanding shares.
						(notes 1 and 2)
`〃`	Hong Ji Capital Co., Ltd.	`〃`	100%	100%	100%
	(“Hong Ji”)
`〃`	Hong Jin Investment Co.,	`〃`	100%	100%	100%
	Ltd. (“Hong Jin”)
`〃`	Zhaopal Investment Co.,	`〃`	100%	100%	100%	Zhaopal was dissolved on
	Ltd. (“Zhaopal”)					November 30, 2017
`〃`	Yongpal Investment Co.,	`〃`	100%	100%	100%	Yongpal was dissolved on
	Ltd. (“Yongpal”)					November 30, 2017
`〃`	Kaipal Investment Co., Ltd.	`〃`	100%	100%	100%	Kaipal was dissolved on
	(“Kaipal”)					November 30, 2017
The Company,	Accesstek, Inc. (“ATK”)	Design, manufacturing	38%	38%	38%	The Group had the ability to
Panpal, et al.		and sales of optical disk				control ATK. ATK was
		drives and components				dissolved on June 30, 2009.
`〃`	Arcadyan Technology	R&D, manufacturing and	35%	35%	36%	The Group had the ability to
	Corp. (“Arcadyan”)	sales of wireless network,				control Arcadyan.
		integrated household
		electronics, and mobile
		office products
The Company	Rayonnant Technology	Manufacturing and sales	100%	100%	100%
	Co., Ltd. (“Rayonnant	of PCs, computer
	Technology”)	periphery devices, and
		electronic components
`〃`	HengHao Technology Co.,	`〃`	100%	100%	100%
	Ltd. (“HengHao”)
`〃`	Ripal Optoelectronics Co.,	Manufacturing of electric	100%	100%	100%
	Ltd. (“Ripal”)	appliance and audiovisual
		electric products

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

				Percentage of
				ownership
			March 31,	December	March 31,
Investor	Name of Subsidiary	Nature of Operation	2019	31, 2018	2018	Description
The Company	Mactech Co., Ltd	Manufacturing of	53%	53%	53%
	(“Mactech”)	equipment and lighting,
		retailing of equipment and
		international trading
`〃`	General Life Biotechnology	Manufacturing and sales	50%	50%	50%
	Co., Ltd. (“GLB”)	of medical equipment
`〃`	Unicore BioMedical Co.,	Management consulting	100%	100%	100%
	Ltd. (“Unicore”)	services, rental and
		leasing business,
		wholesale and retail sale
		of medical equipment.
`〃`	Hippo Screen Neurotech	Management consulting	70%	-	-	Hippo Screen was
	Co., Ltd. (“Hippo	services, rental and				established in January 2019.
	Screen”)	leasing business,
		wholesale and retail sale
		of precision instruments
		and international trading
`〃`	Shennona Taiwan Co., Ltd.	Management consulting	100%	-	-	Shennona TW was
	(“Shennona TW”)	services, rental and				established in March 2019.
		leasing business,
		wholesale and retail sale
		of precision instruments
		and international trading
`〃`	Shennona Corporation	Medical care IOT	100%	100%	100%
	(“Shennona”)	business
`〃`	Auscom Engineering Inc.	R&D of notebook PC	100%	100%	100%
	(“Auscom”)	related products and
		components
`〃`	Just International Ltd.	Manufacturing, sales and	100%	100%	100%
	(“Just”)	maintenance of monitors
		and LCD TVs, and
		investment
`〃`	Compal International	Sales and manufacturing	100%	100%	100%
	Holding Co., Ltd.	of notebook PCs and
	(“CIH”)	investments
`〃`	Compal Electronics	Investment	100%	100%	100%
	(Holding) Ltd. (“CEH”)
`〃`	Bizcom Electronics, Inc.	Warranty services and	100%	100%	100%	(notes 1 and 2)
	(“Bizcom”)	marketing of monitors
		and notebook PCs
`〃`	Flight Global Holding Inc.	Investment	100%	100%	100%	(notes 1 and 2)
	(“FGH”)
`〃`	High Shine Industrial Corp.	`〃`	100%	100%	100%
	(“HSI”)
`〃`	Compal Europe (Poland)	Maintenance and	100%	100%	100%
	Sp. z o.o. (“CEP”)	warranty services of
		notebook PCs
`〃`	Big Chance International	Investment	100%	100%	100%
	Co., Ltd. (“BCI”)
`〃`	Compal Rayonnant	`〃`	100%	100%	100%
	Holdings Limited
	(“CRH”)
`〃`	Core Profit Holdings	`〃`	100%	100%	100%	(note 2)
	Limited (“CORE”)
`〃`	Compalead Electronics	`〃`	100%	100%	100%
	B.V. (“CPE”)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

				Percentage of
				ownership
			March 31,	December	March 31,
Investor	Name of Subsidiary	Nature of Operation	2019	31, 2018	2018	Description
Panpal and	Compalead Eletronica do	Manufacturing of	100%	100%	100%	(notes 1 and 2)
Gempal	Brasil Industria e	notebook PCs
	Comercio Ltda.
	(“CEB”)
`〃`	Compal Electronics India	Manufacturing and	100%	100%	100%
	Private Limited	warranty service of
	(“CEIN”)	mobile phones
Just	Compal Display Holding	Investment	100%	100%	100%
	(HK) Limited
	(“CDH (HK)”)
`〃`	Compal Electronics	`〃`	100%	100%	100%
	International Ltd.
	(“CII”)
`〃`	Compal International Ltd.	Sales of monitors, LCD	100%	100%	100%	(notes 1 and 2)
	(“CPI”)	TVs and related
		components
CDH (HK)	Compal Electronics	Manufacturing and sales	100%	100%	100%
	(China) Co., Ltd.	of monitors
	(“CPC”)
`〃`	Compal Optoelectronics	Manufacturing and sales	100%	100%	100%
	(Kunshan) Co., Ltd.	of LCD TVs
	(“CPO”)
`〃`	Compal System Trading	International trade and	100%	100%	100%
	(Kunshan) Co., Ltd.	distribution of computers
	(“CST”)	and electronic
		components
CPC	Compal Smart Device	Research, manufacture	100%	100%	100%
	(Chongqing) Co., Ltd.	and sales of
	(“CSD”)	communication devices,
		mobile phones, electronic
		computer, smart watch,
		and provide related
		technical service.
CII	Smart International	Sales of electronic	100%	100%	100%
	Trading Ltd. (“Smart”)	products and related
		components
`〃`	Amexcom Electronics Inc.	Sales and maintenance of	100%	100%	100%
	(“AEI”)	LCD TVs
`〃`	Mexcom Electronics, LLC	Investment	100%	100%	100%
	(“MEL”)
`〃`	Mexcom Technologies,	`〃`	100%	100%	100%
	LLC (“MTL”)
MEL and MTL	CENA Electromex S.A. de	Manufacturing, sales, and	100%	100%	100%
	C.V. (“CMX”)	maintenance of LCD TVs
CIH	Compal International	Investment	100%	100%	100%
	Holding (HK) Limited
	(“CIH (HK)”)
`〃`	Jenpal International Ltd.	`〃`	100%	100%	100%
	(“Jenpal”)
`〃`	Prospect Fortune Group	Sales of notebook PCs	100%	100%	100%	(notes 1 and 2)
	Ltd. (“PFG”)	and related components
`〃`	Fortune Way Technology	Investment	100%	100%	100%
	Corp. (“FWT”)
CIH (HK)	Compal Electronics	Manufacturing of	100%	100%	100%
	Technology (Kunshan)	notebook PCs
	Co., Ltd. (“CET”)
`〃`	Compal Information	`〃`	100%	100%	100%
	(Kunshan) Co., Ltd.
	(“CIC”)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Investor	Name of Subsidiary	Nature of Operation	Percentage of ownership March 31, 2019 December 31, 2018 March 31, 2018 Description 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
			March 31, 2019
CIH (HK) `〃` `〃` `〃` BT CDH (HK) and CIH (HK) CIJ The Company and Webtek The Company `〃` `〃` `〃` Etrade `〃` `〃` Forever `〃` ATK `〃` `〃`			100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

				Percentage of
				ownership
			March 31,	December	March 31,
Investor	Name of Subsidiary	Nature of Operation	2019	31, 2018	2018	Description
Arcadyan	Arcadyan Technology N.A.	Sales of wireless network	100%	100%	100%	(notes 1 and 2)
	Corp. (“Arcadyan	products
	USA”)
`〃`	Arcadyan Germany	Technical support of	100%	100%	100%	(notes 1 and 2)
	Technology GmbH	wireless network products
	(“Arcadyan Germany”)
`〃`	Arcadyan Technology	Sales of wireless network	100%	100%	100%	(notes 1 and 2)
	Corporation Korea	products
	(“Arcadyan Korea”)
`〃`	Arcadyan Holding (BVI)	Investment	100%	100%	100%
	Corp. (“Arcadyan
	Holding”)
`〃`	Arcadyan Technology	Technical support of	100%	100%	100%	(notes 1 and 2)
	Limited (“Arcadyan	wireless network products
	UK”)
`〃`	Arcadyan Technology	Sales of wireless network	100%	100%	100%	(notes 1 and 2)
	Australia Pty Ltd.	products
	("Arcadyan AU")
Arcadyan and	Arcadyan do Brasil Ltda.	Sales of wireless network	100%	100%	100%	(notes 1 and 2)
Zhi-pal	(“Arcadyan Brasil”)	products
Arcadyan	Zhi-pal Technology Inc.	Investment	100%	100%	100%	(notes 1 and 2)
	(“Zhi-pal”)
`〃`	Tatung Technology Inc.	R&D and sales of	61%	61%	61%
	(“TTI”)	household digital
		electronic products
`〃`	AcBel Telecom Inc.	Investment	51%	51%	51%	(notes 1 and 2)
	(“AcBel Telecom”)
The Company,	Compal Broadband	R&D and sales of cable	64%	64%	72%
Arcadyan, and	Network Inc. (“CBN”)	modem, digital set-up
its subsidiaries		box, and other
		communication products
CBN	Speedlink Tradings	Import and export	100%	100%	100%
	Limited (“Speedlink”)	business
`〃`	Compal Broadband	Import and export	100%	100%	100%
	Networks Belgium	business, technical
	BVBA ("CBNB")	support and consulting
		service of broadband
		networks
Arcadyan	Sinoprime Global Inc.	Investment	100%	100%	100%
Holding	(“Sinoprime”)
`〃`	Arcadyan Technology	R&D and sales of wireless	100%	100%	100%
	(Shanghai) Corp. (“SVA	network products
	Arcadyan”)
`〃`	Arch Holding (BVI) Corp.	Investment	100%	100%	100%
	(“Arch Holding”)
Arch Holding	Compal Networking	Manufacturing of wireless	100%	100%	100%
	(Kunshan) Co., Ltd.	network products
	(“CNC”)
Sinoprime	Arcadyan Technology	Manufacturing of wireless	100%	-	-	Arcadyan Vietnam was
	(Vietnam) Co., Ltd.	network products				established in March 2019.
	(“Arcadyan Vietnam”)					(note 1)
AcBel Telecom	Leading Images Ltd.	Investment	100%	100%	100%	(notes 1 and 2)
	(“Leading Images”)
`〃`	Great Arch Group Ltd.	Sales of wireless network	-	-	100%	The liquidation procedure
	(“Great Arch”)	products				had been completed in
						April, 2018. (note 2)
Leading Images	Astoria Networks GmbH	`〃`	100%	100%	100%	(notes 1 and 2)
	(“Astoria GmbH”)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

				Percentage of
				ownership
			March 31,	December	March 31,
Investor	Name of Subsidiary	Nature of Operation	2019	31, 2018	2018	Description
TTI	Quest International Group	Investment	100%	100%	100%
	Co., Ltd. (“Quest”)
`〃`	Tatung Technology of	Sales of household digital	100%	100%	100%
	Japan Co., Ltd.	electronic products
	(“TTJC”)
Quest	Exquisite Electronic Co.,	Investment	100%	100%	100%
	Ltd. (“Exquisite”)
Exquisite	Tatung Home Appliances	Manufacturing of	100%	100%	100%
	(Wujiang) Co., Ltd.	household digital
	(“THAC”)	electronic products
HSI	Intelligent Universal	Investment	100%	100%	100%
	Enterprise Ltd. (“IUE”)
`〃`	Goal Reach Enterprises	`〃`	100%	100%	100%
	Ltd. (“Goal”)
IUE	Compal (Vietnam) Co.,	R&D, manufacturing,	100%	100%	100%
	Ltd. (“CVC”)	sales, and maintenance of
		notebook PCs, computer
		monitors, LCD TVs and
		electronic components
Goal	Compal Development &	Construction of and	100%	100%	100%
	Management (“Vietnam”)	investment in
	Co., Ltd. (“CDM”)	infrastructure in Ba-Thien
		industrial district of
		Vietnam
Rayonnant	Allied Power Holding	Investment	100%	100%	100%
Technology	Corp. (“APH”)
and CRH
APH	Primetek Enterprises	`〃`	100%	100%	100%
	Limited (“PEL”)
`〃`	Rayonnant Technology	`〃`	100%	100%	100%
	(HK) Co., Ltd.
	(“Rayonnant
	Technology (HK)”)
Rayonnant	Rayonnant Technology	Manufacturing and sales	100%	100%	100%
Technology	(Taicang) Co., Ltd.	of aluminum alloy and
(HK)	(“Rayonnant	magnesium alloy products
	Technology (Taicang)”)
HengHao	HengHao Holdings A Co.,	Investment	100%	100%	100%
	Ltd. (“HHA”)
HHA	HengHao Holdings B Co.,	`〃`	100%	100%	100%
	Ltd. (“HHB”)
HHB	HengHao Trading Co., Ltd.	Marketing and	100%	100%	100%
		international trade
`〃`	HengHao Optoelectronics	Production of touch	100%	100%	100%
	Technology (Kunshan)	panels and related
	Co., Ltd. (“HengHao	components
	Kunshan”)
`〃`	Lucom Display Technology	Manufacturing of touch	100%	100%	100%
	(Kunshan) Limited	panels and LCD TVs
	(“Lucom”)
BCI	Center Mind International	Investment	100%	100%	100%
	Co., Ltd. (“CMI”)
`〃`	Prisco International Co.,	`〃`	100%	100%	100%
	Ltd. (“PRI”)
CMI	Compal Investment	Outward investment and	100%	100%	100%
	(Sichuan) Co., Ltd. (“CIS”)	consulting services
PRI	Compal Electronics	R&D, manufacturing and	100%	100%	100%
	(Chongqing) Co., Ltd.	sales of notebook PCs,
	(“CEQ”)	related components,
		related maintenance and
		warranty services

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Investor	Name of Subsidiary	Nature of Operation	Percentage of ownership March 31, 2019 December 31, 2018 March 31, 2018 Description 100% 100% 100% 100% 100% 100% 100% 100% 100% (note 2) 100% 100% 100% 51% 51% 51%
			March 31, 2019
CIS `〃` CORE GLB Unicore	Compal Electronics (Chengdu) Co., Ltd. (“CEC”) Compal Management (Chengdu) Co., Ltd. (“CMC”) Billion Sea Holdings Limited (“BSH”) Rapha Bio Ltd. (“RBL”) Raycore Biotech Co., Ltd. (“Raycore”)	R&D and manufacturing of notebook PCs, tablet PCs, digital products, network switches, wireless AP, and automobile electronic products Corporate management consulting, training and education, business information consulting, financial and tax consulting, investment consulting, and investment management services Investment Detector and feature Animal medication retail and wholesale	100% 100% 100% 100% 51%

Note 1: The financial statements of the subsidiary as of March 31, 2019, have not been reviewed by CPA. Note 2: The financial statements of the subsidiary as of March 31, 2018, have not been reviewed by CPA.

(c) Leases (applicable from January 1, 2019)
(i) Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
2) the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Group has the right to direct the use of the asset when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of an asset if either:
－ the Group has the right to operate the asset; or
－ the Group designed the asset in a way that predetermines how and for what purpose it will be used.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

(ii) As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－ fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
－
there is any lease modifications

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery and office equipment that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

(d) Income taxes

Tax expense in the consolidated financial statements is measured and disclosed according to paragraph B12 of IAS 34 "Interim Financial Reporting".

Income tax expense for the period is best estimated by multiplying pretax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

For a change in tax rate that is substantively enacted in an interim period, the effect of the change should immediately be recognized in the interim period in which the change occurs.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the effective tax rate at the time of realization or liquidation and recognized directly in equity or other comprehensive income as tax expense.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(e) Employee benefits

Under defined benefit plans, pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate 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.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with Regulations and IFRSs (in accordance with IAS 34 endorsed by the FSC) requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

In the preparation of the consolidated financial statements, the major sources of significant accounting assumptions, judgments and estimation uncertainty are consistent with note (5) of the annual consolidated financial statements for the year ended December 31, 2018.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference compared with the consolidated financial statement for the year ended December 31, 2018. Please refer to the note (6) of the consolidated financial statements for the year ended December 31, 2018 and for other related information.

(a) Cash and cash equivalents

March 31, 2019 Cash on hand $ 19,705 Checking accounts and demand deposits 6,359,755 Time deposits 59,138,607 Bonds purchased under resale agreements 99,400 $ 65,617,467	March 31, 2019	December 31, 2018 March 31, 2018 10,834 11,714 12,389,146 7,889,642 57,033,555 63,999,404 863,010 293,827 70,296,545 72,194,587

Please refer to note (6)(ab) for the disclosure of the exchange rate risk, the interest rate risk and the fair value sensitivity analysis of the financial assets and liabilities of the Group.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(b) Financial assets and liabilities at fair value through profit or loss

March 31, 2019 Mandatorily measured at fair value through profit or loss: Non-derivative financial assets Structured deposits $ 3,549,103 Stock listed in domestic markets 378,385 Unlisted fund in domestic or foreign markets 91,419 Derivative instruments not used for hedging Foreign exchange contracts 116,752 Swap contracts - Total $ 4,135,659 Current $ 4,044,240 Non-current 91,419 $ 4,135,659 March 31, 2019 Financial liabilities held-for-trading: Derivative instruments not used for hedging Foreign exchange contracts $ - Swap contracts 989 Total $ 989	March 31, 2019	December 31, 2018 March 31, 2018 3,965,062 390,233 633,859 1,261,010 69,390 44,068 10,168 34,146 2,045 812 4,680,524 1,730,269 4,611,134 1,686,201 69,390 44,068 4,680,524 1,730,269 December 31, 2018 March 31, 2018 26,913 12,469 - 6,165 26,913 18,634

	March 31, 2019

The Group uses derivative instruments to hedge foreign currency risk the Group is exposed to arising from its operating activities. The following derivative instruments not applied hedge accounting were classified as mandatorily measured at fair value through profit or loss and held-fortrading financial liabilities (foreign currencies were expressed in thousands):

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Derivative financial assets: Foreign exchange contracts: Forward exchange sold Forward exchange sold Forward exchange purchased Forward exchange purchased Derivative financial liabilities: Swap contracts: Currency swap Derivative financial assets: Foreign exchange contracts: Forward exchange sold Swap contracts: Currency swap Derivative financial liabilities: Foreign exchange contracts: Forward exchange sold Forward exchange sold Forward exchange sold Forward exchange purchased Derivative financial assets: Foreign exchange contracts: Forward exchange purchased Forward exchange sold Swap contracts: Currency swap		March 31, 2019
	Contract amount (in thousand) USD 63,500 EUR 2,039 EUR 5,265 USD136,500 USD 10,000	Currency Maturity date EUR to USD April 10~July 5, 2019 USD to JPY June 6, 2019 USD to MXN May 14~May 30, 2019 USD to BRL April 1~August 6, 2019 USD to TWD April 12, 2019 December 31, 2018 Currency Maturity date EUR to USD January 14~March 28, 2019 USD to TWD February 14, 2019 EUR to USD February 26~March 28, 2019 EUR to USD January 10~February 11, 2019 EUR to TWD March 25, 2019 USD to BRL January 3~April 16, 2019 March 31, 2018
	Contract amount (in thousand) EUR 30,200 USD 27,300 EUR 16,000 EUR 5,000 EUR 1,000 USD 136,900
	Contract amount (in thousand) USD 76,500 EUR 21,000 USD 9,000	Currency Maturity date USD to BRL April 4~June 26, 2018 EUR to USD April 12~June 28, 2018 USD to TWD April 13~May 10, 2018

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Derivative financial liabilities: Foreign exchange contracts: Forward exchange sold Swap contracts: Currency swap		March 31, 2018
	Contract amount (in thousand) EUR 14,000 USD 13,600	Currency Maturity date EUR to USD April 10~May 14, 2018 USD to TWD April 2~April 25, 2018

The market risk related to the financial instruments please refer to note (6)(ab).

As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide any aforementioned financial assets as collaterals for its loans.

Equity investments at fair value through other comprehensive income: Stock listed in domestic markets Stock listed in foreign markets Stock unlisted in domestic markets Stock unlisted in foreign markets Total	March 31, 2019 $ 2,969,920 414,561 2,050,888 51,848 $ 5,487,217	December 31, 2018 March 31, 2018 2,730,648 3,626,382 400,184 457,695 1,990,100 2,260,178 51,363 107,590 5,172,295 6,451,845

The purpose that the Group invests in the above-mentioned equity securities is for long-term strategies, but rather for trading purpose. Therefore, these equity securities are designated as at FVOCI.

During the first quarter of 2019, the Group had sold all of its shareholdings in PrimeSensor Technology Inc., which were measured at fair value through other comprehensive income. The fair value of the shares was $791 when disposed and the cumulative losses amounted to $14,209, which had been transferred to retained earnings from other comprehensive income.

During the first quarter of 2018, the Group did not sold any of its financial assets measured at fair value through other comprehensive income. During the period, no cumulative profits and losses had been transferred to retained earnings from other comprehensive income.

If there is an increase (decrease) in the market price by 5% on the reporting date of the equity securities hold by the Group, the increase (decrease) in other comprehensive income (pre-tax) for the three months ended March 31, 2019 and 2018, will be $274,361 and $322,592. These analyses are performed on the same basis for the period and assume that all other variables remain the same.

The Group’s information of market risk please refer to note (6)(ab).

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide any financial assets at fair value through other comprehensive income as collaterals for its loans.

(d) Financial instruments used for hedging
(i) Financial instruments used for hedging were as follows:

March 31, 2019 Cash flow hedge: Financial assets used for hedging: Forward exchange contracts $ 227 Financial liabilities used for hedging: Forward exchange contracts $ 2,217	March 31, 2019	December 31, 2018 March 31, 2018 - - - 37,787

(ii) Cash flow hedge

The Group’ s strategy is to use forward exchange contracts to hedge its foreign currency exposure in respect of forecasted future sales.

As of December 31, 2018, the Group did not enter into any hedge contract. As of March 31, 2019 and 2018, the amount related to the items designated as hedge instruments were as follows:

	March 31, 2019
Contract amount (in thousands) EUR 1,602 USD 15,666	Currency Maturity period USD to MXN June 28, 2019 USD to MXN April 30~May 31, 2019 March 31, 2018	Average strike price
		19.53 19.57
Contract amount (in thousands) USD 30,827	Currency Maturity period USD to MXN April 27~August 30, 2018	Average strike price
		19.21

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) For the three months ended March 31, 2019 and 2018, the profits (losses) of changes in fair value of derivative financial instruments used for hedging reclassified from other equity to profit or loss is recognized as revenue in the statement of comprehensive income. Please refer to note (6)(aa).
(iv) For the three months ended March 31, 2019 and 2018, the ineffective portion of cash flow hedge recognized in loss amounted of $367 and $0, respectively, recorded as "other gains and losses, net".
(e) Current financial assets measured at amortized costs

March 31, 2019 Common bonds – Taiwan Star Telecom Corporation Limited (“Taiwan Star”) $ 350,000 Current $ 350,000 Non-current - $ 350,000	December 31, 2018 March 31, 2018 350,000 700,000 350,000 350,000 - 350,000 350,000 700,000

The Group has assessed that these financial assets are held to maturity to collect contractual cash flows, which consist solely of payments of principal and interest on the principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide the aforementioned financial assets as collaterals for its loans.

(f) Notes and accounts receivable

March 31,
2019
Notes receivables from operating activities
$ 43,264
Accounts receivables – measured at amortized cost
166,583,879
Accounts receivables – fair value through other
comprehensive income
20,121,316
186,748,459
Less: allowance for uncollectible accounts
(3,948,645)
$ 182,799,814
Notes and accounts receivable
$ 182,776,607
Notes and accounts receivable – related parties
$
23,207

December
31, 2018
March 31,
2018
102,775
179,182
184,671,402
131,324,763
23,020,497
28,751,490
207,794,674
160,255,435
(4,020,603)
(4,042,814)
203,774,071
156,212,621
203,715,965
156,104,217
58,106
108,404

The Group has assessed a portion of its trade receivables that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such trade receivables were measured at fair value through other comprehensive income.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information.

(i) The loss allowance provision of IT product segment of the Group was determined as follows:

March 31, 2019

March 31, 2019	March 31, 2019
Credit rating Carrying amount of accounts receivable Weighted- average ECL rate Level A $ 165,644,786 0% Level B 9,577,753 0.695% Level C 3,830,424 100% $ 179,052,963 December 31, 2018		Lifetime ECLs Credit- impaired - No 66,569 No 3,830,424 Yes 3,896,993
Credit rating Carrying amount of accounts receivable Weighted- average ECL rate Level A $ 186,203,302 0% Level B 11,907,279 1.208% Level C 3,830,424 100% $ 201,941,005 March 31, 2018		Lifetime ECLs Credit- impaired - No 143,862 No 3,830,424 Yes 3,974,286
Credit rating Carrying amount of accounts receivable Level A $ 142,860,075 Level B 8,825,099 Level C 3,865,313 $ 155,550,487	Weighted- average ECL rate 0% 1.581% 100%	Lifetime ECLs Credit- impaired - No 139,528 No 3,865,313 Yes 4,004,841

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) The loss allowance provision of strategically integrated product segment of the Group was determined as follows:

	March 31, 2019
Credit rating Carrying amount of accounts receivable Weighted- average ECL rate Level A $ 2,798,180 0% Level B 3,986,200 0.11% Level C 880,573 1.91% Level D~E - - Level F 30,543 100% $ 7,695,496 December 31, 2018		Lifetime ECLs Credit- impaired - No 4,277 No 16,832 No - - 30,543 Yes 51,652
Credit rating Carrying amount of accounts receivable Weighted- average ECL rate Level A $ 1,550,848 0.01% Level B 3,024,709 0.11% Level C 1,247,546 1.00% Level D~E - - Level F 30,566 100% $ 5,853,669 March 31, 2018		Lifetime ECLs Credit- impaired 82 No 3,194 No 12,475 No - - 30,566 Yes 46,317
Credit rating Carrying amount of accounts receivable Level A $ 1,458,243 Level B 3,008,145 Level C 206,453 Level D~E - Level F 32,107 $ 4,704,948	Weighted- average ECL rate 0% 0.12% 1.08% - 100%	Lifetime ECLs Credit- impaired - No 3,633 No 2,233 No - - 32,107 Yes 37,973

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The aging analysis of accounts receivable, which were past due but not impaired, were determined as follows:

determined as follows:
March 31, 2019 Overdue 1 to 180 days $ 1,293,726 Overdue 181 to 365 days 8,965 Overdue 365 days and over 40,629 $ 1,343,320	March 31, 2019	December 31, 2018 March 31, 2018 2,919,586 1,139,886 15,809 - 25,555 - 2,960,950 1,139,886

The movement in the allowance for notes and accounts receivable was as follows:

Balance at January 1 Impairment losses recognized Amounts written off Effect of movements in exchange rates Balance at March 31	For the three months ended March 31,
	2019 2018 $ 4,020,603 4,021,894 10,504 19,752 (85,907) - 3,445 1,168 $ 3,948,645 4,042,814

Allowance for uncollectible account is the balance of accounts receivable which are uncollectable. Except for evaluating the situation of the customers’ payment records and widely analyzing the credit rating of customers, the Group also takes all the necessary procedures for collection. The Group believes that there is no doubt for the recovery of the due but unimpaired accounts receivable, therefore, no allowance recognized.

The Group entered into accounts receivable factoring agreements with banks. As of March 31, 2019 and December 31 and March 31, 2018, except for the amount used under the actual sales amount in accordance with certain agreements, the factoring amount granted by the banks was USD 950,000 thousands and EUR 33,000 thousands, and USD 950,000 thousands and EUR 20,000 thousands, USD 950,000 thousands and EUR 20,000 thousands, respectively. Based on the agreements, the Group is not responsible for guaranteeing the ability of the account receivable obligor to make payment when it is affected by credit risk. Thus, this is a non-recourse accounts receivable factoring. After the transfer of the accounts receivable, the Group can request partial advanced amount, while the interest calculated at an agreed rate is paid to the bank in the period during the time of receiving advance and the accounts receivable is collected. The remaining amounts with no advance are received when the accounts receivable are settled by the customers. As of December 31 and March 31, 2018, accounts receivable factored was recovered and derecognized since the conditions of derecognition were met. As of March 31, 2019, the factored account receivable with no advance amounting to $85,778, is accounted for as other receivables.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company, customers, and banks signed the three-party contracts in which the banks purchase accounts receivable from the Company. The total amount of the accounts receivable should not exceed the facility limit provided by the banks to the Company’s customers. Based on the contracts, the banks have no right to request the Company to repurchase the accounts receivable. Thus, this is a non-recourse accounts receivable transfer. As of March 31, 2019 and December 31 and March 31, 2018, account receivable factored were recovered and derecognized since the conditions of derecognition were met.

As of March 31, 2019 and December 31 and March 31, 2018, the details of the factored accounts receivable were as follows:

		March 31, 2019	March 31, 2019
Purchaser Accounts receivable factored (gross) Financial Institution $ 16,190,360		Advanced amount Collateral Amount derecognized Interest rate 16,104,582 - 16,190,360 3.03%~3.50% December 31, 2018	Collateral Amount derecognized Interest rate
Purchaser Accounts receivable factored (gross) Financial Institution $ 32,098,074		Advanced amount Collateral Amount derecognized Interest rate 32,098,074 - 32,098,074 3.02%~3.52% March 31, 2018	Collateral Amount derecognized Interest rate
Purchaser Accounts receivable factored (gross) Financial Institution $ 12,035,899	Accounts receivable factored (gross)	Advanced amount 12,035,899	Collateral Amount derecognized Interest rate
			- 12,035,899 0.85%~2.88%

As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide any aforementioned notes and accounts receivable as collaterals.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(g) Inventories

March 31, 2019 Finished goods $ 35,689,096 Work in progress 9,531,752 Raw materials 42,639,944 Raw materials in transit 4,182,890 $ 92,043,682	March 31, 2019	December 31, 2018 March 31, 2018 33,463,627 20,074,522 6,830,625 5,927,541 38,526,674 40,851,370 327,996 1,091,753 79,148,922 67,945,186

(i) During the three months ended March 31, 2019 and 2018, inventory cost recognized as cost of sales amounted to $202,938,374 and $189,488,759, respectively.
(ii) The write-down of inventories to net realizable value amounted to $216,762 and $233,914, respectively, in the three month ended March 31, 2019 and 2018.
(iii) As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide any inventories as collaterals for its loans.
(h) Investments accounted for using equity method

A summary of the Group’s financial information for equity-accounted investees at the reporting date is as follows:

		March 31,	December 31,	March 31,
		2019	2018	2018
Associates	$	7,618,179	7,469,153	7,247,300
Joint venture		12,370	16,180	26,818
		7,630,549	7,485,333	7,274,118
Less: unrealized profits or losses		(121,249)	(120,848)	(114,698)
	$	7,509,300	7,364,485	7,159,420

(i) Associates
1) The fair value of the shares of listed company based on the closing price was as follow:

March 31, 2019 Allied Circuit Co., Ltd. (“Allied Circuit”) $ 1,153,474 Avalue Technology Inc. (“Avalue”) 739,905 $ 1,893,379	March 31, 2019	December 31, 2018 March 31, 2018 1,061,543 2,237,567 586,743 710,187 1,648,286 2,947,754

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

2) The Group’s share of the net gain (loss) of associates was as follows:

The Group’s share of the net gain (loss) of associates was	as follows:
The Group’s share of the gain (loss) of associates	Three months ended March 31, 2019 Three months ended March 31, 2018
	$ (59,112) 45,107

3) The Group’s financial information for investments accounted for using the equity method that are individually immaterial was as follows:

		March 31,		December	March 31,
		2019		31, 2018	2018
Carrying amount of individually
immaterial associates	$	7,618,179		7,469,153	7,247,300
				Three months	Three months
				ended March	ended March
				31, 2019	31, 2018
The Group’s share of the net income (loss)		of associates:
Profit (loss) from continuing operations			$	(59,112)	45,107
Other comprehensive income				201,901	126,544
Total comprehensive income			$	142,789	171,651

4) In the first quarter of 2018, in accordance with the investment agreement with Lenovo Group Ltd. (“Lenovo Group”), the Group has the right and expects to sell all the shares of the investee company, LC Future Center Co., Ltd. (“LCFC”), which is accounted for using the equity method to Lenovo Group. Since the investment in the first quarter of 2018 has met the criteria of non-current assets held for sale according to IFRS 5 “Noncurrent assets held for sale and discontinued operations” , the Group reclassified the carrying amount of the equity investment of LCFC to non-current assets held for sale, amounting to $4,711,834, and stopped using the equity method in the first quarter of 2018. In August 2018, the transaction has been completed and the price has been fully recovered.
(ii) Joint venture

In April 2010, the Group and another company established a jointly controlled entity, Compal Connector Manufacture Ltd. ("CCM"), and obtained an ownership interest of 51%. CCM’s actual paid-in capital amounted to USD10,000 thousands. Moreover, in May 2014, the Group and another company established a jointly controlled entity, Zheng Ying Electronics (Chongqing) Co., Ltd., ("Zheng Ying"), and obtained an ownership interest of 51%. Zheng Ying’s actual paid-in capital amounted to USD2,500 thousands.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Group’s financial information for investment accounted for using the equity method that are individually immaterial was as follows:

March 31, 2019 The carrying amount of the Group’s interests in all individually immaterial joint ventures $ 12,370 The Group’s share of the net income (loss) of joint ventures: Losses from continuing operations (also the total comprehensive losses)	December 31, 2018 March 31, 2018 16,180 26,818 Three months ended March 31, 2019 Three months ended March 31, 2018 $ (2,971) (1,430)

(iii) As of March 31, 2019 and December 31 and March 31, 2018, the Group did not provide any investments accounted for using equity method as collaterals for its loans.

(i) Changes in subsidiaries’ equity

There were no significant transactions for the three months ended March 31, 2019 and 2018. Please refer to note (6)(l) of the consolidated financial statement for the year ended December 31, 2018.

(j) Material non-controlling interests of subsidiaries

There were no significant transactions for the three months ended March 31, 2019 and 2018. Please refer to note (6)(m) of the consolidated financial statement for the year ended December 31, 2018.

(k) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group for the three months ended March 31, 2019 and 2018, were as follows:

Cost or deemed cost: Balance on January 1, 2019 Additions Disposals and derecognitions Reclassifications Effect of movements in exchange rates Balance on March 31, 2019	Land	Buildings and building improvement	Machinery	Other equipment	Under construction and prepayment for purchase of equipment Total
	$ 1,772,214 - - - 316 $ 1,772,530	17,020,270 288,559 (15,947) 13,817 273,116 17,579,815	26,201,597 267,520 (83,251) 29,421 96,534 26,511,821	10,642,904 319,118 (393,870) 42,689 181,763 10,792,604	1,003,490 56,640,475 175,517 1,050,714 - (493,068) (85,927) - 70,475 622,204 1,163,555 57,820,325

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Balance on January 1, 2018 Additions Disposals and derecognitions Reclassifications Effect of movements in exchange rates Balance on March 31, 2018 Depreciation and impairments loss: Balance on January 1, 2019 Depreciation for the period Disposals and derecognitions Effect of movements in exchange rates Balance on March 31, 2019 Balance on January 1, 2018 Depreciation for the period Disposals and derecognitions Effect of movements in exchange rates Balance on March 31, 2018 Carrying amounts: Balance on January 1, 2019 Balance on March 31, 2019 Balance on January 1, 2018 Balance on March 31, 2018	Land	Buildings and building improvement	Machinery	Other equipment	Under construction and prepayment for purchase of equipment Total
	$ 1,769,326 - - - (1,981) $ 1,767,345 $ - - - - $ - $ - - - - $ - $ 1,772,214 $ 1,772,530 $ 1,769,326 $ 1,767,345	15,100,906 16,024 (29) 1,296 (153,943) 14,964,254 10,105,653 194,121 (15,947) 215,160 10,498,987 9,239,452 182,585 (179) (118,740) 9,303,118 6,914,617 7,080,828 5,861,454 5,661,136	23,268,462 603,925 (84,778) 70,716 (823,582) 23,034,743 18,441,703 667,227 (80,940) 245,655 19,273,645 17,548,800 533,418 (43,339) (341,076) 17,697,803 7,759,894 7,238,176 5,719,662 5,336,940	9,759,017 243,800 (20,701) 26,603 (149,045) 9,859,674 7,674,891 347,113 (393,259) 13,513 7,642,258 6,066,960 390,162 (20,564) (247,774) 6,188,784 2,968,013 3,150,346 3,692,057 3,670,890	1,136,868 51,034,579 75,170 938,919 - (105,508) (98,615) - (21,959) (1,150,510) 1,091,464 50,717,480 - 36,222,247 - 1,208,461 - (490,146) - 474,328 - 37,414,890 - 32,855,212 - 1,106,165 - (64,082) - (707,590) - 33,189,705 1,003,490 20,418,228 1,163,555 20,405,435 1,136,868 18,179,367 1,091,464 17,527,775

As of March 31, 2019 and December 31 and March 31, 2018, part of the Group’s property, plant and equipment were provided as collateral for long-term borrowings. Please refer to note (8).

(l) Right-of-use assets

The Group leases many assets including land and buildings, machinery, vehicles and others. Information about leases for which the Group as a lessee is presented below:

Cost or deemed cost: Balance on January 1, 2019 Effects of retrospective application of IFRS 16 Balance on January 1, 2019 per IFRS 16 Additions Effect of movements in exchange rates Balance on March 31, 2019	Land $ - 891,147 891,147 75,445 3,023 $ 969,615	Buildings - 1,934,899 1,934,899 - (19,133) 1,915,766	Machinery - 87,482 87,482 - (114) 87,368	Vehicles and others Total - - 67,569 2,981,097 67,569 2,981,097 3,465 78,910 174 (16,050) 71,208 3,043,957

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Depreciation and impairment loss: Balance on January 1, 2019 Effects of retrospective application of IFRS 16 Balance on January 1, 2019 per IFRS 16 Depreciation for the period Effect of movements in exchange rates Balance on March 31, 2019 Carrying amount: Balance on January 1, 2019 Balance on March 31, 2019	Land $ - - - 10,594 148 $ 10,742 $ 891,147 $ 958,873	Buildings - - - 172,918 (8) 172,910 1,934,899 1,742,856	Machinery - - - 3,057 8 3,065 87,482 84,303	Vehicles and others Total - - - - - - 8,253 194,822 4 152 8,257 194,974 67,569 2,981,097 62,951 2,848,983

The Group leases land, offices, warehouses and factory facilities under an operating lease for the three months ended March 31, 2018, please refer to note 6(r).

(m) Short-term borrowings

The details of short-term borrowings were as following:

March 31, 2019 Unsecured bank loans $ 67,763,121 Unused credit line for short-term borrowings $ 90,770,000 Range of interest rates 0.69%~5.11%	December 31, 2018 March 31, 2018 72,350,197 61,916,911 83,720,000 66,462,000 0.45%~5.87% 0.65%~4.70%

For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(ab).

(n) Long-term borrowings

The details of long-term borrowings were as follows:

Unsecured bank loans Secured bank loans Less: current portion Total Unused credit line for long-term borrowings Range of interest rates	March 31, 2019 $ 22,197,500 127,969 (10,086,875) $ 12,238,594 $ 14,452,000 0.98%~1.67%	December 31, 2018 March 31, 2018 28,396,250 26,296,300 137,813 258,594 (17,535,625) (7,048,125) 10,998,438 19,506,769 5,443,000 3,843,000 0.79%~1.67% 0.78%~2.28%

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

For information on the Group's interest risk, foreign currency risk and liquidity risk, please refer to note (6)(ab).

The Group pledges property, plant and equipment as collateral for its partial long-term borrowings. Please refer to note (8).

(o) Lease liabilities

The details of lease liabilities were as follows:

Less than one year Between one and five years More than five years Current Non-current financial assets			March 31, 2019
	Future minimum lease payments $ 669,432 1,095,802 260,425 $ 2,025,659 $ 669,432 $ 1,356,227		Interest Present value of minimum lease payments 39,312 630,120 68,627 1,027,175 19,029 241,396 126,968 1,898,691 39,312 630,120 87,656 1,268,571

There were no significant issues, repurchases and repayments of lease liabilities for the three months ended March 31, 2019.

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses relating to short-term leases or leases of low-value assets	For the three months ended March 31, 2019
	$ 9,465 $ 4,217 $ 30,105

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases	For the three months ended March 31, 2019
	$ 235,046

(i) Real estate leases

As of March 31, 2019, the Group acquired land leasehold rights and leases buildings for its office and plant space. The leases of office space typically run for a period of 1 ~19 years, and of land leasehold rights for 50 years.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Other leases

The Group leases equipment and vehicles, with lease terms of 1~5 years.

The Group also leases some equipment and vehicles with contract terms of 1~3 years. These leases are short-term or leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(p) Provisions

There were no significant change of provisions for the three months ended March 31, 2019 and 2018. Please refer to note (6)(q) of the consolidated financial statements for the year ended December 31, 2018 for related information.

(q) Refund liabilities

There were no significant changes of refund liabilities for the three months ended March 31, 2019 and 2018. Please refer to note (6)(r) of the consolidated financial statements for the year ended December 31, 2018 for related information.

(r) Operating lease

There were no significant changes in operating lease for the three months ended March 31, 2018. Please refer to note (6)(s) of the consolidated financial statements for the year ended December 31, 2018 for related information.

(s) Employee benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material one--time events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2018 and 2017.

The expenses recognized in profit or loss for the Group were as follows:

		For the three months ended	For the three months ended
		March 31,
		2019	2018
Operating cost	$	291	352
Selling expenses		210	268
Administrative expenses		925	1,004
Research and development expenses		2,583	2,850
Total	$	4,009	4,474

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Defined contribution plans

The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group allocates the labor pension at a specific percentage to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The Company and all subsidiaries in domestic recognized the pension costs under the defined contribution method amounting to $102,308 and $93,321 for the three months ended March 31, 2019 and 2018, respectively. Payment was made to the Bureau of Labor Insurance.

Other subsidiaries recognized the pension expenses, basic endowment insurance expenses, and social welfare expenses amounting to $304,152 and $289,047 for the three months ended March 31, 2019 and 2018, respectively.

(t) Income taxes

(i) The Group entities are subject to income tax rates according to the profit before tax of interim reporting period multiply by the best estimated measurement of the expected effective tax rate by the management in all the year. The amount of income tax was as follows:

	Three months	Three months	Three months	Three months
	ended March		ended	March
		31, 2019	31, 2018
Current tax expense	$	450,099	339,215
The amount of income tax recognized in other comprehensive	income were as		follows:
	Three months		Three	months
		ended March	ended	March
		31, 2019	31,	2018
Items that will not be reclassified subsequently to profit or
loss:
Remeasurement of the defined benefit liability	$	-		(28,108)
Unrealized gains (losses) on equity instruments at fair value
through other comprehensive income		15,695		(6,330)
	$	15,695		(34,438)
Items that will be reclassified subsequently to profit or
loss:
Foreign currency translation differences of foreign
operations	$	873		(3,573)
	$	873		(3,573)

(ii) The amount of income tax recognized in other comprehensive income were as follows:

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) Examination and approval

The Company’s tax returns for the year through 2016 were assessed by the Taipei National Tax Administration. The Company disagreed with the assessment and filed formal tax appeals for 2012. In accordance with the conservatism, the total amounts of the assessed additional income tax were recognized in the statements of income. Any differences will be reflected as an adjustment after the tax is resolved.

The ROC tax authorities have assessed the income tax returns of Panpal, Gempal, Hong Ji, Hong Jin, Zhaopal, Yongpal, Palcom, Kaipal, Acbel Telecom, Zhipal, Rayonnant Technology and Ripal through 2017, of UCGI, TTI, CBN, GLB, RBL, HengHao and Mactech Through 2016, of Arcadyan through 2015, of ATK through June 2009.

(u) Capital and other equities

Except for the following disclosure, there was no significant change for capital and other equity for the periods from January 1 to March 31, 2019 and 2018. Please refer to note (6)(v) of the consolidated financial statement for the year ended December 31, 2018.

(i) Capital surplus

The balances of capital surplus were as follows:

March 31, 2019 Additional paid-in capital $ 7,183,919 Treasury share transactions 2,421,864 Difference arising from subsidiary's share price and its carrying value 36,766 Recognition of changes in ownership interests in subsidiaries 16,222 Changes in equity of associates and joint ventures accounted for using equity method 274,243 $ 9,933,014	March 31, 2019	December 31, 2018 March 31, 2018 7,183,919 8,065,348 2,421,864 2,361,843 36,766 36,766 15,642 48,508 274,243 274,872 9,932,434 10,787,337

The Company’ s Board of Directors meeting held on March 22, 2019 and shareholders’ meeting held on June 22, 2018, approved to distribute the cash dividend of $881,429 (representing 0.2 New Taiwan dollars per share, yet to be approved in shareholders’meeting), and $881,429 (representing 0.2 New Taiwan dollars per share), respectively, by using the additional paid-in-capital.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Retained earnings

Based on the Company’s articles of incorporation, if there is any profit after closing of books in a given year, the Company shall first defray tax due, cover accumulated losses and set aside ten percent of it as legal reserve and then set aside or reverse a special reserve in accordance with laws and regulations. The balance of earnings available for distribution is composed of the remainder of the said profit and the unappropriated retained earnings of previous years. The earnings appropriation proposal to distribute dividend and bonus shall be proposed by the Board of Directors and approved by the General Shareholders Meeting. The rest of the unappropriated retained earnings shall be reserved.

The lifecycle of the industry of the Company is in the growing stage. To meet the need of the Company for the future capital and the need of shareholders for cash flow, if there is any profit after close of books, the cash dividend allocated by the Company each year shall not be lower than ten percent of the total dividend (including cash and share dividend) for such year.

According to the law, when there is a deduction from stockholders' equity (excluding treasury stock and unearned employee benefit) during the year, an amount equal to the deduction item is set aside as a special reserve before the earnings are appropriated. A special reserve is made available for earning distribution only after the deduction of the related shareholders’ equity has been reversed.

Distribution for the earnings of 2018 was approved by the Board of Directors meeting held on March 22, 2019, and 2017 was approved by the shareholders during their annual meeting held on June 22, 2018. The relevant information was as follows:

Cash dividends distributed to common shareholders	2018	2018	2018	2017
	Amount per share		Total amount	Amount per share Total amount 1.0 4,407,147
	$ 1.0		4,407,147

The earnings distribution for the 2018 has not yet been approved by the shareholders. The related information can be accessed through the Market Observation Post System website after the shareholders’ meeting.

(iii) Treasury stock

The subsidiaries of the Company did not sell the ordinary shares of the Company in the three months ended March 31, 2019 and 2018. As of March 31, 2019, Panpal and Gempal, subsidiaries of the Company, held 50,017 thousand shares of ordinary shares of the Company, recorded as the Company’s treasury stock, with a book value of 17.6 New Taiwan dollars per share. The total cost was $881,247. The fair value of the ordinary shares of the Company was 19.15, 17.45 and 19.95 New Taiwan dollars per share as of March 31, 2019 and December 31 and March 31, 2018, respectively.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Pursuant to the Securities and Exchange Act, the number of treasury shares purchased cannot exceed 10% of the number of shares issued. The total purchase cost cannot exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus. The shares purchased for the purpose of transferring to employees shall be transferred within three years from the date of share repurchase. Those not transferred within the said limit shall be deemed as not issued by the Company and it should be cancelled. Furthermore, treasury stock cannot be pledged for debts, and treasury stock does not carry any shareholder rights until it is transferred.

(iv) Other equity interests (net-of-taxes)

Balance on January 1, 2019 The Group Associates Balance on March 31, 2019 Balance on January 1, 2018 Effect of retrospective application Adjusted balance on January 1, 2018 The Company Associates Balance on March 31, 2018	Exchange differences on transaction of foreign operation financial statements	Unrealized gain (loss) from financial assets at fair value through other comprehensive income	Unrealized gain (loss) on available-for-sale financial assets	Unearned compensation for restricted employee shares and others Total
	$ (1,852,952) 244,695 164,782 $ (1,443,475) $ (3,477,376) - (3,477,376) (1,278,267) 136,384 $ (4,619,259)	(5,606,436) 313,829 36,668 (5,255,939) - (5,847,823) (5,847,823) (261,103) (9,840) (6,118,766)	- - - - (5,353,772) 5,353,772 - - - -	- (7,459,388) (701) 557,823 - 201,450 (701) (6,700,115) (79,856) (8,911,004) - (494,051) (79,856) (9,405,055) 66,237 (1,473,133) - 126,544 (13,619) (10,751,644)

(v) Share-based payment

Except for those described below, there were no significant changes in share-based payment during the three months ended March 31, 2019 and 2018. Please refer to note (6)(w) of the consolidated financial statements for the year ended December 31, 2018 for related information.

For the three months ended March 31, 2018, due to the failure in meeting the vested requirements of the employee restricted shares, the Company reversed compensation cost amounted to $156,219 and capital surplus employee amounted to $318,209.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(w) Earnings per share

The Group’s basic and diluted earnings per share are calculated as follows:

			Three months	Three months
			ended March 31,	ended March 31,
			2019	2018
Basic earnings per share:
Profit attributable to ordinary shareholders of the Company $			1,350,258	1,393,302
Weighted-average number of outstanding ordinary	shares (in
thousands)			4,357,130	4,354,403
Diluted earnings per share:
Profit attributable to ordinary shareholders of the Company (after
adjustment of potential diluted ordinary shares)		$	1,350,258	1,393,302
Weighted-average number of outstanding ordinary	shares of
potential diluted ordinary shares
Weighted-average number of outstanding ordinary	shares (in
thousands)			4,357,130	4,354,403
Effect of potential diluted common stock
Employee compensation (in thousands)			51,564	42,424
Employee restricted shares (in thousands)			-	2,727
Weighted-average number of ordinary shares (after adjustment of
potential diluted ordinary shares) (in thousands)			4,408,694	4,399,554

Revenue from contracts with customers
(i) Disaggregation of revenue
		For the three	months ended March 31, 2019
			Strategically
			Integrated
		IT Product	Product
		Segment	Segment	Total
Primary geographical markets:
United states	$	72,390,379	307,196	72,697,575
Netherlands		25,245,836	168,498	25,414,334
China		23,163,002	119,877	23,282,879
United Kingdom		10,671,978	882,247	11,554,225
Germany		7,209,760	3,209,906	10,419,666
Others		62,911,745	4,320,129	67,231,874
	$	201,592,700	9,007,853	210,600,553
Major products`：`
5C related electronic products	$	200,933,661	8,913,313	209,846,974
Others		659,039	94,540	753,579
	$	201,592,700	9,007,853	210,600,553

(x) Revenue from contracts with customers

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

United states China Netherlands United Kingdom Germany Others Major products: 5C related electronic products Others (ii) Contract balances Notes and accounts receivable (including related parties) Less: allowance for impairment Total Contract liabilities		For the three months ended March 31, 2018 IT Product Segment Strategically Integrated Product Segment Total 66,132,566 463,330 66,595,896 24,983,794 106,232 25,090,026 24,788,891 84,168 24,873,059 8,822,840 389,772 9,212,612 7,192,300 1,308,918 8,501,218 59,403,675 2,435,476 61,839,151 191,324,066 4,787,896 196,111,962 190,681,192 4,625,025 195,306,217 642,874 162,871 805,745 191,324,066 4,787,896 196,111,962 March 31, 2019 December 31, 2018 March 31, 2018 $ 186,748,459 207,794,674 160,255,435 (3,948,645) (4,020,603) (4,042,814) $ 182,799,814 203,774,071 156,212,621 $ 1,463,635 1,476,304 1,608,760	For the three months ended March 31, 2018 IT Product Segment Strategically Integrated Product Segment Total 66,132,566 463,330 66,595,896 24,983,794 106,232 25,090,026 24,788,891 84,168 24,873,059 8,822,840 389,772 9,212,612 7,192,300 1,308,918 8,501,218 59,403,675 2,435,476 61,839,151 191,324,066 4,787,896 196,111,962 190,681,192 4,625,025 195,306,217 642,874 162,871 805,745 191,324,066 4,787,896 196,111,962 March 31, 2019 December 31, 2018 March 31, 2018 $ 186,748,459 207,794,674 160,255,435 (3,948,645) (4,020,603) (4,042,814) $ 182,799,814 203,774,071 156,212,621 $ 1,463,635 1,476,304 1,608,760
		IT Product Segment 66,132,566 24,983,794 24,788,891 8,822,840 7,192,300 59,403,675 191,324,066 190,681,192 642,874 191,324,066 March 31, 2019
	$ $ $ $

For the details on accounts receivable and allowance for impairment, please refer to note (6)(f).

The amount of revenue recognized for the three months ended March 31, 2019 and 2018 that were included in the contract liability balance at the beginning of the period was $328,210 and $371,594, respectively.

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(y) Employees’ and directors’ compensations

Based on the Company’ s articles of incorporation, if there is any profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees and directors, shall be distributed to employees as compensations in an amount of not less than two percent (2%) thereof and to directors as compensations in an amount of not more than two percent (2%) of such profits. In the event that the Company has accumulated losses, the Company shall reserve an amount to offset accumulated losses. The compensations to employees as mentioned above may be distributed in the form of stock or cash. Employees entitled to receive the said stock or cash may include the employees of the Company’s subordinate companies pursuant to the Company Act.

The Company accrued and recognized its employee compensation of $140,047 and $141,640, and directors’ compensation of $7,406 and $7,490 for the three months ended March 31, 2019 and 2018, respectively. The estimated amounts mentioned above are based on the net profit before tax without the compensations to employees and directors of each respective ending period, multiplied by the percentage of the compensation to employees and directors, which was approved by the management. The estimations are recorded under operating expenses and cost. The differences between the amounts estimated and recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the distribution year. If the Board of Directors approves to distribute employee compensation in the form of stock, the number of the shares of the employee compensation is based on the closing price of the day before the Board of Directors' meeting.

The Company accrued and recognized its employee compensation of $930,857 and $624,296, and directors’ compensation of $49,223 and $33,012 for the years ended December 31, 2018 and 2017, respectively. There is no difference between the amount approved in the Board of Directors’ meeting and those recognized in the financial statements, the related information can be accessed through the Market Observation Post System website.

(z) Non-operating income and expenses

(i) Other income

The other income for the three months ended March 31, 2019 and 2018, were as follows:

Interest income Financial assets at amortized cost Bank deposits and others Overdue payable reversed as other income Other revenue	Three months ended March 31, 2019 Three months ended March 31, 2018
	$ 1,726 3,452 378,024 257,368 - 26,367 48,814 56,824 $ 428,564 344,011

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Other gains and losses

The other gains and losses for the three months ended March 31, 2019 and 2018, were as follows:

Gains (losses) on financial assets and liabilities at fair value through profit or loss, net Foreign currency exchange gains (losses), net Gains (losses) on disposal of property, plant, and equipment	Three months ended March 31, 2019 Three months ended March 31, 2018
	$ 174,891 127,093 (114,040) (243,702) 969 40,722 $ 61,820 (75,887)

(aa) Reclassification of the components of other comprehensive income

The details of reclassification of the components of other comprehensive income for the three months ended March 31, 2019 and 2018, were as follows:

Cash flow hedge: Profit (loss) recognized Less: reclassified to profit or loss Profit (loss) recognized in other comprehensive income	Three months ended March 31, 2019 Three months ended March 31, 2018
	$ (9,857) (37,787) (7,867) - $ (1,990) (37,787)

(ab) Financial instruments

Except for those described below, there were no significant changes on fair value, credit risk, liquidity risk and market risk of financial instruments. Please refer to note (6)(ad) of the consolidated financial statements for the year ended December 31, 2018 for related information.

(i) Credit risk

Information of exposure to credit risk of notes and accounts receivable, please refer to note (6)(f).

Other financial assets at amortized cost include other receivables, investments in corporate bonds and time deposits. These financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. (Regarding how the financial instruments are considered to have low credit risk, please refer to note (4)(g) of the consolidated financial statements for the year ended December 31, 2018). Due to the counter parties and the performing parties of the Group’s time deposits are financial institutions with investment grade and above, these time deposits are considered to have low credit risk.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The movement in the allowance for the three months ended March 31, 2019 and 2018 was as follows:

Balance on January 1, 2019 Impairment losses reversed Balance on March 31, 2019 Balance on January 1, 2018 Impairment losses reversed Effect of changes in exchange rates Balance on March 31, 2018	Other receivables $ 3,577 (1,165) $ 2,412 $ 82,014 (79,940) (2) $ 2,072

(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, excluding estimated interest payments.

Carrying Amount March 31, 2019 Non-derivative financial liabilities Secured borrowings $ 127,969 Unsecured borrowings 89,960,621 Lease liabilities`－`current and non-current 1,898,691 Notes and accounts payable 153,299,683 Other payables 14,279,422 Derivative financial liabilities Currency swap contracts: 989 Outflow Inflow Forward exchange contracts used for hedging: 2,217 Outflow Inflow $259,569,592 December 31, 2018 Non-derivative financial liabilities Secured borrowings $ 137,813 Unsecured borrowings 100,746,447 Notes and accounts payable 154,276,713 Other payables 14,790,757 Derivative financial liabilities Forward exchange contracts: 26,913 Outflow Inflow $269,978,643	Contractual cash flows (127,969) (89,960,621) (2,025,659) (153,299,683) (14,279,422) (308,200) 307,070 (487,848) 482,838 (259,699,494) (137,813) (100,746,447) (154,276,713) (14,790,757) (5,016,249) 4,978,708 (269,989,271)	Within 1 year (39,375) (77,810,621) (669,432) (153,299,683) (14,279,422) (308,200) 307,070 (487,848) 482,838 (246,104,673) (39,375) (89,846,447) (154,276,713) (14,790,757) (5,016,249) 4,978,708 (258,990,833)	1~ 2 years Over 2 years (39,375) (49,219) (7,050,000) (5,100,000) (604,880) (751,347) - - - - - - - - - - - - (7,694,255) (5,900,566) (39,375) (59,063) (8,600,000) (2,300,000) - - - - - - - - (8,639,375) (2,359,063)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Carrying Amount March 31, 2018 Non-derivative financial liabilities Secured borrowings $ 258,594 Unsecured borrowings 88,213,211 Notes and accounts payable 118,057,639 Other payables 13,436,297 Derivative financial liabilities Forward exchange contracts: 12,469 Outflow Inflow Currency swap contracts: 6,165 Outflow Inflow Forward exchange for hedging: 37,787 Outflow Inflow $220,022,162	Contractual cash flows (258,594) (88,213,211) (118,057,639) (13,436,297) (618,600) 606,732 (285,312) 279,408 (947,709) 897,209 (220,034,013)	Within 1 year (130,625) (68,834,411) (118,057,639) (13,436,297) (618,600) 606,732 (285,312) 279,408 (947,709) 897,209 (200,527,244)	1~ 2 years Over 2 years (39,375) (88,594) (13,828,800) (5,550,000) - - - - - - - - - - - - - - - - (13,868,175) (5,638,594)

The Group is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD to TWD USD to CNY EUR to TWD CNY to USD Non-monetary items THB to TWD Financial liabilities Monetary items USD to TWD USD to CNY USD to BRL EUR to TWD CNY to USD	M	arch 31, 2019		De Foreign Currency 7,189,719 3,986 95,397 1,726,768 423,027 7,145,553 5,451 140,772 31,186 2,778,232	cember 31, 20	18	M Foreign currency 6,238,026 5,293 73,543 1,915,330 489,356 5,949,525 8,313 189,127 22,588 2,133,980	arch 31, 2018
	Foreign currency $ 5,963,757 2,397 122,251 2,725,492 427,471 6,425,655 6,334 140,332 37,489 2,759,261	Exchange rate 30.82 6.7221 34.61 0.1488 0.9698 30.82 6.7221 3.8967 34.61 0.1488	TWD		Exchange rate 30.715 6.8672 35.2 0.1456 0.9460 30.715 6.8672 3.8720 35.2 0.1456	TWD		Exchange rate TWD 29.105 181,557,747 6.2755 154,053 35.87 2,637,987 0.1593 8,880,287 0.9353 457,695 29.105 173,160,925 6.2755 241,950 3.3019 5,504,541 35.87 810,232 0.1593 9,894,041
			183,802,991 73,876 4,231,107 12,499,150 414,561 198,038,687 195,214 4,325,032 1,297,494 12,654,015			220,832,219 122,430 3,357,974 7,722,286 400,184 219,475,660 167,427 4,323,812 1,097,747 12,424,542

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable, and other payables that are denominated in foreign currency. Assuming all other variable factors remain constant, a strengthening (weakening) 5% of appreciation (depreciation) of the each major foreign currency against Group entities’ functional currency as of March 31, 2019 and 2018,

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

would have increased (decreased) the net profit before tax as follows. The analysis is performed on the same basis for both periods.

	performed on the same basis for both periods.
		March	31, 2019	March 31, 2018
	USD (against the TWD)
	Strengthening 5%	$	(711,785)	419,841
	Weakening 5%		711,785	(419,841)
	USD (against the CNY)
	Strengthening 5%		(6,067)	(4,395)
Weakening 5%			6,067	4,395
	USD (against the BRL)
Strengthening 5%			(216,252)	(275,227)
Weakening 5%			216,252	275,227
	EUR (against the TWD)
	Strengthening 5%		146,681	91,388
	Weakening 5%		(146,681)	(91,388)
	CNY (against the USD)
	Strengthening 5%		(7,743)	(50,688)
Weakening 5%			7,743	50,688
3)	Exchange gains and losses of monetary items

As the Group deals with diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months ended March 31, 2019 and 2018, the foreign exchange losses, including both realized and unrealized, amounted to $114,040 and $243,702, respectively.

(iv) Interest rate analysis

The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management.

The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the assets and liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of assets and liabilities outstanding at the reporting date were outstanding throughout the year. The rate of change is expressed as the interest rate increase or decrease by 0.25%, when reporting to management internally, which also represents the assessment of the Group’s management for the reasonably possible interval of interest rate change.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Assuming all other variable factors remaining constant, if the interest rate had increased or decreased by 0.25%, the impact to the net profit before tax would be as follows for the three months ended March 31, 2019 and 2018, which would be mainly resulted from the bank savings and borrowings with variable interest rates.

Interest increased by 0.25% Interest decreased by 0.25%	Three months ended March 31, 2019 Three months ended March 31, 2018 $ (5,997) (9,222) 5,997 9,222

(v) Fair value information
1) The categories and fair value of financial instruments

The Group’s financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income were measured at fair value on a recurring basis. The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It shall not include fair value information of the financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value and investments in equity instruments which do not have any quoted price in an active market in which the fair value cannot be reasonably measured.

		March 31, 2019	March 31, 2019	March 31, 2019
Book value			Fair Value
		Level 1 - 378,385 - 2,969,920 414,561 - - -	Level 2 116,752 3,549,103 227 - - - - -	Level 3 Total - 116,752 91,419 4,018,907 - 227 - 2,969,920 - 414,561 2,050,888 2,050,888 51,848 51,848 - -
	25,608,533

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

		March 31, 2019	March 31, 2019	March 31, 2019
	Book value		Fair Value
		Level 1 - - - - - - - - - - - - - - -	Level 2 - - - - - - 989 2,217 - - - - - - -	Level 3 Total - - - - - - - - - - - - - 989 - 2,217 - - - - - - - - - - - - - -
65,617,467 350,000 162,655,291 23,207 2,684,835 394,686 231,725,486 $ 261,469,905 $ 989 2,217 67,763,121 151,741,350 1,558,333 14,279,422 1,898,691 10,086,875 12,238,594 259,566,386 $ 259,567,375	65,617,467 350,000 162,655,291 23,207 2,684,835 394,686
	231,725,486

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Book value Financial assets at fair value through profit or loss–current and non-current Derivative financial assets for non-hedging $ 12,213 Non-derivative financial assets mandatorily measured at fair value through profit or loss 4,668,311 Subtotal 4,680,524 Financial assets at fair value through other comprehensive income Stocks listed on domestic markets 2,730,648 Stocks listed on foreign markets 400,184 Stocks unlisted on domestic markets 1,990,100 Stocks unlisted on foreign markets 51,363 Accounts receivable 23,020,497 Subtotal 28,192,792 Financial assets measured at amortized cost Cash and cash equivalents 70,296,545 Corporate bonds`－`current 350,000 Notes and accounts receivable, net 180,695,468 Notes and accounts receivable due from related parties, net 58,106 Other receivables 1,665,249 Guarantee deposits 401,753 Subtotal 253,467,121 Total $ 286,340,437 Financial liabilities at fair value through profit or loss Derivative financial liabilities for non- hedging $ 26,913 Financial liabilities measured at amortized cost Short-term borrowings 72,350,197 Notes and accounts payable 152,300,093 Notes and accounts payable to related parties 1,976,620 Other payables 14,790,757 Long-term borrowings current portion 17,535,625 Long-term borrowings 10,998,438 Subtotal 269,951,730 Total $ 269,978,643			December 31, 2018	December 31, 2018	December 31, 2018
	Book value			Fair Value
			Level 1 - 633,859 2,730,648 400,184 - - - - - - - - - - - - - - - -	Level 2 12,213 3,965,062 - - - - 23,020,497 - - - - - - 26,913 - - - - - -	Level 3 Total - 12,213 69,390 4,668,311 - 2,730,648 - 400,184 1,990,100 1,990,100 51,363 51,363 - 23,020,497 - - - - - - - - - - - - - 26,913 - - - - - - - - - - - -

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Book value Financial assets at fair value through profit or loss`－`current and non-current Derivative financial asset for non-hedging $ 34,958 Non-derivative financial assets mandatorily measured at fair value through profit or loss 1,695,311 Subtotal 1,730,269 Financial assets at fair value through other comprehensive income Stocks listed on domestic markets 3,626,382 Stocks listed on foreign markets 457,695 Stocks unlisted on domestic markets 2,260,178 Stocks unlisted on foreign markets 107,590 Accounts receivable 28,751,490 Subtotal 35,203,335 Financial assets measured at amortized cost Cash and cash equivalents 72,194,587 Corporate bonds–current and non- current 700,000 Notes and accounts receivable, net 127,352,727 Notes and accounts receivable due from related parties, net 108,404 Other receivables 1,642,296 Guarantee deposits 216,152 Subtotal 202,214,166 Total $ 239,147,770 Financial liabilities at fair value through profit or loss Derivative financial liabilities for non- hedging $ 18,634 Financial liabilities for hedging 37,787 Financial liabilities measured at amortized cost Short-term borrowings 61,916,911 Notes and accounts payable 116,709,368 Notes and accounts payable to related parties 1,348,271 Other payable 13,436,297 Long-term borrowings current portion 7,048,125 Long-term borrowings 19,506,769 Subtotal 219,965,741 Total $ 220,022,162			March 31, 2018 Fair Value	March 31, 2018 Fair Value	March 31, 2018 Fair Value
	Book value
			Level 1 - 1,261,010 3,626,382 457,695 - - - - - - - - - - - - - - - - -	Level 2 34,958 390,233 - - - - 28,751,490 - - - - - - 18,634 37,787 - - - - - -	Level 3 Total - 34,958 44,068 1,695,311 - 3,626,382 - 457,695 2,260,178 2,260,178 107,590 107,590 - 28,751,490 - - - - - - - - - - - - - 18,634 - 37,787 - - - - - - - - - - - -

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

2) Fair value valuation technique of financial instruments not measured at fair value

The Group estimates financial instruments that not measured at fair value by methods and assumption as follows:

a) Financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

3) Fair value valuation technique of financial instruments measured at fair value
a) Non-derivative financial instruments

Financial instruments trade in active markets is based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-therun bonds from Taipei Exchange can be used as a base to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market.

If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active market.

The fair value of the listed company is determined by reference to the market quotation.

The measurements on fair value of the financial instruments without an active market are determined using the valuation technique or the quoted market price of its competitors. Fair value measured using the valuation technique can be extrapolated from similar financial instruments, discounted cash flow method, or other valuation techniques which include the model used in calculating the observable market data at the consolidated balance sheet date.

The measurement of fair value of a non-active market financial instruments held by the Group which do not have quoted market prices are based on the comparable market approach, with the use of key assumptions of price-book ratio multiple or earnings multiple of comparable listed companies as its basic measurement. These assumptions have been adjusted for the effect of discount without the marketability of the equity securities.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques that are generally accepted by the market participants. For instance, discount method or option pricing models. Fair value of forward currency exchange is usually determined by using the forward currency rate.

4) Transfer from one level to another

There was no transfer from one level to another in the three months ended March 31, 2019 and 2018.

5) Changes in level 3

The change in level 3 at fair value in the three months ended March 31, 2019 and 2018, were as follow:

Balance on January 1, 2019 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Disposal Balance on March 31, 2019 Balance on January 1, 2018 Effects of retrospective application Adjusted balance on January 1, 2018 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Balance on March 31, 2018	Financial assets at fair value through profit or loss $ 69,390 (2,971) - 25,000 - $ 91,419 $ - 48,709 48,709 (4,641) - - $ 44,068	Financial assets at fair value through other comprehensive income Total 2,041,463 2,110,853 - (2,971) 61,540 61,540 524 25,524 (791) (791) 2,102,736 2,194,155 2,421,909 2,421,909 5,273 53,982 2,427,182 2,475,891 - (4,641) (146,939) (146,939) 87,525 87,525 2,367,768 2,411,836

For the three months ended March 31, 2019 and 2018, total gains and losses that were included in “other gains and losses, net” and “other comprehensive income, before tax, equity instruments at fair value through other comprehensive income” were as follows:

Total gains and losses recognized: In profit or loss before tax (as “other gains and losses, net”) In other comprehensive income (as “other comprehensive income, before tax, equity instruments at fair value through other comprehensive income”)	Three months ended March 31, 2019 Three months ended March 31, 2018 $ (2,971) (4,641) $ 61,540 (146,939) (Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

6) The quantified information for significant unobservable inputs (level 3) used in fair value measurement

The Group’s financial instruments that use level 3 input to measure fair values include － financial assets at fair value through other comprehensive income equity instruments, － financial assets at fair value through profit or loss equity securities investment.

Most of fair value measurements of the Group which are categorized as equity investment into level 3 have several significant unobservable inputs. Significant unobservable inputs of equity investments without quoted price are independent of each other.

The quantified information for significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income`－`equity investment without an active market Financial assets at fair	Valuation technique Comparable market approach (Price-Book ratio method and Earnings multiplier method) Net asset value	Significant unobservable inputs Inter-relationships between significant unobservable inputs and fair value Price-Book ratio multiples (1.13~5.91, 1.33~5.86 and 2.06~88.16 respectively, on March 31, 2019 and December 31, and March 31, 2018) Multiples of earnings (2.34~15.31, 2.32~14.97 and 2.95~19.8 respectively, on March 31, 2019 and December 31 and March 31, 2018) Lack-of-Marketability discount rate (40%~85%, 40%~82% and 40%~85% respectively, on March 31, 2019 and December 31, and March 31, 2018) The higher the multiple is, the higher the fair value will be. The higher the multiple is, the higher the fair value will be. The higher the Lack- of-Marketability discount rate is, the lower the fair value will be. Net asset value Inapplicable

Financial assets at fair Net asset value value through other method comprehensive income

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Inter-relationships between significant Valuation Significant unobservable inputs technique unobservable inputs and fair value Net asset value Inapplicable

Item

Financial assets at fair Net asset value value through profit method or loss – investment in private placement

7) Sensitivity analysis for fair value of financial instruments using level 3 inputs

The Group’s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters changed, the impact on other comprehensive income or loss are as follows:

March 31, 2019 Financial assets at fair value through other comprehensive income December 31, 2018 Financial assets at fair value through other comprehensive income March 31, 2018 Financial assets at fair value through other comprehensive income	Input Move up or down Price-Book ratio multiples 5% Multiples of earnings 5% Lack-of-Marketability discount rate 5% Price-Book ratio multiples 5% Multiples of earnings 5% Lack-of-Marketability discount rate 5% Price-Book ratio multiples 5% Multiples of earnings 5% Lack-of-Marketability discount rate 5%	Other comprehensive income
		Favorable change Unfavorable change $ 27,000 26,975 $ 27,857 28,888 $ 919 939 $ 28,137 28,119 $ 28,210 27,202 $ 2,093 2,053 $ 21,690 21,668 $ 18,130 18,088 $ 32,118 32,054

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The favorable and unfavorable changes reflect the movement of the fair value, in which the fair value is calculated by using the different unobservable inputs in the valuation technique. The table above shows the effects of one unobservable input, without considering the inter-relationships with another unobservable input for financial instrument, if there are one or more unobservable inputs.

8) Offsetting financial assets and financial liabilities

The Group has financial instruments transactions applicable to the International Financial Reporting Standards NO. 32 Sections 42 endorsed by the FSC which requested for offsetting. Financial assets and liabilities relating to those transactions are recognized in the net amount of the balance sheets.

The following tables present the aforesaid offsetting financial assets and financial liabilities.

Unit: thousands of New Taiwan Dollars / thousands of US Dollars

March 31, 2019 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -
Other current assets	Gross amounts Gross amounts of financial liabilities offset of recognized financial assets (a) in the balance sheet (b) $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 )	Net amount of financial assets presented in the balance sheet (c)=(a)-(b) -
			Financial instruments -
	$ (USD

March 31, 2019 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -	March 31, 2019 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 ) - - - -
Short-term borrowings	Gross amounts of recognized Gross amounts of financial assets offset in financial liabilities (a) the balance sheet (b) $ 26,192,562 (USD 849,856 ) 26,192,562 (USD 849,856 )		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b) -
				Financial instruments -
	$ (USD
		(USD

December 31, 2018 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts Gross amounts of financial liabilities offset Net amount of financial assets presented in Amounts not offset in the balance sheet (d) of recognized financial assets (a) in the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Other current assets $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -
Other current assets	Gross amounts Gross amounts of financial liabilities offset of recognized financial assets (a) in the balance sheet (b) $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 )	Net amount of financial assets presented in the balance sheet (c)=(a)-(b) -
			Financial instruments -
	$ (USD

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

December 31, 2018 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -	December 31, 2018 Financial liabilities that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized Gross amounts of financial assets offset in Net amount of financial liabilities presented in Amounts not offset in the balance sheet (d) financial liabilities (a) the balance sheet (b) the balance sheet (c)=(a)-(b) Financial instruments Cash collateral received Net amount (e)=(c)-(d) Short-term borrowings $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 ) - - - -
Short-term borrowings	Gross amounts of recognized Gross amounts of financial assets offset in financial liabilities (a) the balance sheet (b) $ 306,259 (USD 9,971 ) 306,259 (USD 9,971 )		Net amount of financial liabilities presented in the balance sheet (c)=(a)-(b) -
				Financial instruments -
	$ (USD
		(USD

(ac) Financial risk management

The Group's objectives and policies for managing the financial risk are consistent with those disclosed in the note (6)(ae) of the consolidated financial statements for the year ended December 31, 2018.

(ad) Capital management

The Group's objectives, policies and processes of capital management are the same as those disclosed in the consolidated financial statements for the year ended December 31, 2018. There were no significant changes of quantitative data of capital management compared to the consolidated financial statements for the year ended December 31, 2018. Please refer to note (6)(af) of the consolidated financial statements for the year ended December 31, 2018.

(ae) Investing and financing activities not affecting current cash flow

The Group's investing and financing activities which did not affect the current cash flow in the three months ended March 31, 2019, were the acquisition of right-of-use assets by leasing, please refer to note (6)(l). There were no investing and financing activities which did not affect the current cash flow in the three months ended March 31, 2018.

Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Long-term borrowings Lease liabilities Guarantee deposits and others Total liabilities from financing activities Short-term borrowings Long-term borrowings Guarantee deposits and others Total liabilities from financing activities	January 1, 2019 $ 72,350,197 28,534,063 2,089,950 238,324 $ 103,212,534 January 1, 2018 $ 56,515,525 27,452,888 180,207 $ 84,148,620	Cash flows March 31, 2019 (4,587,076) 67,763,121 (6,208,594) 22,325,469 (191,259) 1,898,691 (43,851) 194,473 (11,030,780) 92,181,754 Cash flows March 31, 2019 5,401,386 61,916,911 (897,994) 26,554,894 63,203 243,410 4,566,595 88,715,215

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(7) Related-party transactions:

(a) Name and relationship with related parties

The followings are the entities that have had transactions with related party during the periods covered in the consolidated financial statement.

Name of related party Relationship with the Group Compal Precision Module (Jiangsu) Co., Ltd. An associate Changbao Electronic Technology (Chongqing) Co., An associate Ltd. LCFC (Note 1) An associate Avalue Technology Inc. (“Avalue”) An associate Crownpo Technology Inc. (“Crownpo”) An associate Allied Circuit Co., Ltd. (“Allied Circuit”) An associate Kinpo Group Management Consultant Company An associate (“Kinpo Group Management”) LIZ Electronics (Kunshan) Co., Ltd. An associate Compal Connector Manufacture Ltd. (“CCM”) A joint venture company AcBel Polytech Inc. (“AcBel”) and its subsidiaries The same chairman of the board with the Company

Note 1: In August 2018, the Group has sold all its shares of LCFC and no longer has significant influence over it. Therefore LCFC is not a related-party of the Group from September 2018.

(b) Transactions with key management personnel

Key management personnel remunerations comprised:

		Three months	Three months
		ended March	ended March
		31, 2019	31, 2018
Short-term employee benefits	$	148,371	142,379
Post-employment benefits		2,066	2,020
Share-based payments		7,569	(91,660)
	$	158,006	52,739

There are no termination benefits and other long-term benefits. Please refer to note (6)(v) for explanations related to share-based payments.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(c) Significant related-party transactions

(i) Sale of goods to related parties

The amounts of significant sales transactions between the Group and related parties were as follows:

follows:
		Three	months	Three	months
		ended	March	ended	March
		31,	2019	31,	2018
Associates	$		44,589		83,147

Sales prices for related parties were similar to those of the third-party customers. The collection period was 60~120 days for related parties.

(ii) Purchase of goods from related parties

The amounts of significant purchase transactions between the Group and related parties were as follows:

		Three months	Three months
		ended March	ended March
		31, 2019	31, 2018
Associates	$	768,068	822,831
Other related parties		282,344	119,684
Joint venture		17,839	26,923
	$	1,068,251	969,438

Purchase prices and payment period from related parties were similar to those from third-party suppliers. The payment period was 60~165 days for related parties.

(iii) Receivables due from relate parties

The receivables arising from the transactions mentioned above and others on behalf of related parties were as follows:

Account	Related party categories March 31, 2019 Associates $ 23,057 Other related parties 150 Joint venture 300 $ 23,507	March 31, 2019	December 31, 2018 March 31, 2018 56,701 108,404 1,405 - 120 355 58,226 108,759
Notes and accounts receivable Notes and accounts receivable Other receivables

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iv) Payables to related parties

The payables arising from the transactions mentioned above and rendering of services from other related parties were as follows:

Account Notes and accounts payable Notes and accounts payable Notes and accounts payable Other payables	Related party categories March 31, 2019 Associates $ 982,016 Other related parties 554,355 Joint venture 21,962 Associates 895 $ 1,559,228	March 31, 2019	December 31, 2018 March 31, 2018 1,245,574 1,081,290 705,761 216,918 25,285 50,063 1,019 305 1,977,639 1,348,576

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged Assets Other current assets Property, plant and equipment Other non-current assets	Subject March 31, 2019 Bail for court mandatory execution $ 41,090 Long-term borrowings (including current portion) (note) 710,848 Guarantee of post-release duty payment to the customs and guarantee of the customs 500 $ 752,438	March 31, 2019	December 31, 2018 March 31, 2018 41,090 26,510 715,913 1,105,326 500 14,274 757,503 1,146,110

－ Note: Part of long-term borrowings had been settled, but the assets of property land still were pledged as collaterals.

(9) Commitments and contingencies:

The details of commitments and contingencies were as follows:

(a) On May 17, 2017, Qualcomm Inc. filed a lawsuit to the Southern District Court of California, USA against the Group for not paying the royalties of the patent license agreement. The Group has filed counterclaims against Qualcomm Inc. based on the antitrust law in the same court on July 19, 2017. The lawsuits have been settled on April 16, 2019. The Group and Qualcomm Inc. had agreed to withdraw the lawsuit against the other party.
(b) The Group entered into various patent license agreements with third parties, and was required to make royalty payments of a predetermined amount periodically.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(c) As of March 31, 2019 and December 31 and March 31, 2018, the Group's signed commitments to purchase property, plant and equipment amounted to $180,904, $187,872 and $383,345, respectively.

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Other:

(a) The employee benefits, depreciation and amortization expenses by categorized function are summarized as follows:

By function By item	Three months ended March 31, 2019	Three months ended March 31, 2019	Three months ended March 31, 2019	Three months ended March 31, 2018	Three months ended March 31, 2018	Three months ended March 31, 2018
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Others Depreciation Amortization	4,295,590 204,196 282,885 631,899 1,161,111 9,265	2,824,292 204,448 127,584 148,907 242,172 86,591	7,119,882 408,644 410,469 780,806 1,403,283 95,856	3,971,663 187,955 270,078 437,824 993,455 20,280	2,562,288 185,931 116,764 133,175 112,710 42,923	6,533,951 373,886 386,842 570,999 1,106,165 63,203

(b) Seasonality of operations

The Group's operations were not affected by seasonality or cyclicality factors.

(13) Other disclosures:

(a) Information on significant transactions:

The following were the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the three month ended March 31, 2019:

(i) Loans to other parties: Please refer to Table 1
(ii) Guarantees and endorsements for other parties: Please refer to Table 2
(iii) Securities held as of March 31, 2019 (excluding investment in subsidiaries, associates and joint ventures): Please refer to Table 3
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: Please refer to Table 4
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(vi) Disposals of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 5
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 6
(ix) Trading in derivative instruments: Please refer to notes (6)(b) and (6)(d)
(x) Business relationships and significant intercompany transactions: Please refer to Table 7
(b) Information on investees: Please refer to Table 8
(c) Information on investment in Mainland China: Please refer to Table 9

(14) Segment information:

Segment information:
Revenue Revenue from external customers Revenue from segments Total revenue Reportable segment profit Revenue Revenue from external customers Revenue from segments Total revenue Reportable segment profit	Three months ended March 31, 2019
	Information technology product segment
		Information technology product segment	Strategically integrated product segment Total 4,787,896 196,111,962 - - 4,787,896 196,111,962 286,424 1,922,011
	$ 191,324,066 - $ 191,324,066 $ 1,635,587

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 1 Loans to other parties:

(March 31, 2019)

Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)	Table 1 Loans to other parties: (March 31, 2019)
													(In Thousands of New Taiwan Dollars)
No.	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short- term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing	Note
													Item	Value
0 0 1 2 3 4 4 5 6 7 8 8 8 8	The Company The Company CIH CPI CPC CIT CIT PFG CPO CET Arcadyan Arcadyan Arcadyan Arcadyan Holding	UCGI HengHao CEP CVC CDE CCI Nanjing Rayonnant (Taicang) CEB HengHao Kunshan BT Acradyan Brasil Arcadyan AU Arcadyan Vietnam CNC	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Y Y Y Y Y Y Y Y Y Y Y Y Y Y	250,000 200,300 107,870 308,200 1,380,900 2,157,400 69,045 308,200 644,420 274,800 246,560 123,280 277,380 523,940	250,000 200,300 107,870 308,200 1,374,000 2,157,400 68,700 308,200 641,200 274,800 92,460 123,280 277,380 523,940	220,000 200,300 44,689 246,560 1,374,000 2,157,400 68,700 308,200 - - 33,902 - - -	1.20% 2.82% 3.50% 3.20% 2.20% 2.76% 4.35% 2.50% 4.35% 2.20% 1.00% 1.00% 1.00% 1.00%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Transaction for business between two parties Transaction for business between two parties Transaction for business between two parties Short-term financing	- - - - - - - - - - 154,100 1,541,000 616,400 -	Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating financing Operating demand Operating demand - - - Operating financing	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -	21,563,999 21,563,999 34,926,977 900,177 2,040,377 20,445,466 20,445,466 421,799 2,796,968 4,824,445 246,560 1,232,800 493,120 1,377,956	43,127,999 43,127,999 34,926,977 900,177 2,040,377 20,445,466 20,445,466 421,799 2,796,968 4,824,445 3,785,671 3,785,671 3,785,671 1,377,956	(Note 1) (Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 5) (Note 6) (Note 7) (Note 8) (Note 9) (Note 9) (Note 9) (Note 10)

Note 1: According to the Company’ s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of the Company. When a short-term financing facility with the Company is necessary, the total amount for lending to any company shall not exceed 80% of the borrower’s net worth, nor shall it be more than 50% of the Company’s lendable amount limit, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, the total amount lendable to 100% directly or indirectly owned subsidiaries by the Company is unrestricted by the aforesaid restriction of 80%, but the maximum amount shall not exceed 50% of the Company’s lendable limit, and shall be combined with the company’s amount of loans to others when calculating.
Note 2: According to CIH’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CIH. When a shortterm financing facility with CIH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CIH’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CIH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 3: According to CPI’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CPI. When a shortterm financing facility with CPI is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CPI’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CPI, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 4: According to CPC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPC. When a shortterm financing facility with CPC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CPC’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CPC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 5: According to CIT’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIT. When a shortterm financing facility with CIT is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CIT’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CIT, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 6: According to PFG’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of PFG. When a shortterm financing facility with PFG is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of PFG’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of PFG, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 7: According to CPO’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPO. When a shortterm financing facility with CPO is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CPO’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CPO, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Note 8: According to CET’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CET. When a shortterm financing facility with CET is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CET’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CET, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating.
Note 9: According to Arcadyan’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Arcadyan. To borrowers having business relationship with Arcadyan, the total amount for lending the borrower shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount for the current year, nor shall it exceed 20% of the net worth of Arcadyan. Also, the amount shall be combined with the Arcadyan’ s endorsements/guarantees for the borrower when calculating. When a short-term financing facility is necessary, the borrower should be Arcadyan’s investee. The total amount for lending the borrower shall not exceed 80% of the net worth of the borrower, nor shall it exceed 20% of the net worth of Arcadyan, and shall be combined with the Arcadyan’s endorsements/guarantees for the borrower when calculating.

Note 10: According to Arcadyan Holding’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed the net worth of Arcadyan Holding. When a short-term financing facility is necessary, the borrower should be Arcadyan Holding’s investee. The total amount for lending the borrower shall not exceed the net worth of Arcadyan Holding, and shall be combined with the Arcadyan Holding’s endorsements/ guarantees for the borrower when calculating. Note 11: The transactions had been eliminated in the consolidated financial statements.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 2 Guarantees and endorsements for other parties:

(March 31, 2019)

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements (Note 1)and(Note 4)	Parent company endorsements /guarantees to third parties on behalf of subsidiary	Subsidiary endorsements /guarantees to third parties on behalf of parent company	Endorsements / guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 0 1	The Company The Company Arcadyan	CEB CEP Arcadyan Brasil	(Note 3) (Note 2) (Note 5)	26,954,999 26,954,999 1,261,890	61,640 260,766 246,560	61,640 247,915 -	61,640 247,915 -	- - -	0.06% 0.23% -	53,909,999 53,909,999 3,785,671	Y Y Y	- - -	- - -

Note 1: According to the Company’s Procedures for Endorsement and Guarantee, the total amount of endorsements/ guarantees the Company or the Group is permitted to make shall not exceed 50% of the Company’s net worth. Endorsements/ guarantees the Company and the Group are permitted to make for a single company shall not exceed 25% of the Company’s net worth. For entities having business relationship with the Company, the amount of endorsements/ guarantees for a single company shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount of the current year, and shall be combined with the amount lend to others when calculating. The amount of endorsements/ guarantees permitted to make between subsidiaries whose over 90% of its voting shares are owned, directly or indirectly, by the Company shall be no more than 10% of the net worth of the Company. The amount of endorsements/ guarantees permitted to make between directly or indirectly wholly owned subsidiaries is not limited by the aforementioned restriction, only the maximum amount shall be no more than 25% of the net worth of the Company.

Note 2: Subsidiary whose over 50% common stock is directly owned.

Note 3: Subsidiary whose over 50% common stock is indirectly owned.

Note 4: According to Arcadyan's Procedures for Endorsement and Guarantee, the total amount shall not exceed 40% of the net worth for latest financial statements audited or reviewed by Certified Public Accountants, and the amount for a single company shall not exceed 1/3 of the total amount.

Note 5: Subsidiary whose 100% common stock is directly owned by Arcadyan.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 3 Securities held as of March 31, 2019 (excluding investment in subsidiaries, associates and joint ventures): (March 31, 2019)

(March 31, 2019)	(March 31, 2019)	(March 31, 2019)	(March 31, 2019)
					(In Thousands of shares/ units)
Name of holder	Category and name of security	Relationship with security issuer	Account name		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Holding percentage (%)	Fair value
The Company Panpal	Common bond－Taiwan Star Taiwan Star Kinpo Electronics, Inc. (“Kinpo”) Cal-Comp Electronics (Thailand) Public Co., Ltd. Innolux Corporation (“Innolux”) HWA VI Venture Capital Corp. HWA Chi Venture Capital Corp. mProbe Ltd. Global BioPharma, Inc. Chen Feng Optoelectronics PrimeSensor Technology Inc. Macroblock, Inc. IIH Biomedical Venture Fund Others Total Compal Electronics, Inc. Kinpo CDIB Partners Investment Holding Corp. AcBel Chipbond Technology Corp. (“Chipbond”) Taiwan Biotech Co., Ltd. Others Total	‑ ‑ The same chairman of the Company The same chairman of the Company ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ The parent company The same chairman of the Company ‑ The same chairman of the Company ‑ ‑ ‑	Financial assets at amortized cost-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non current Financial assets at fair value through profit or loss and other comprehensive income Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current	‑ 98,046 124,044 239,631 109,227 290 1,053 4,000 2,000 5,829 1,357 749 2,500 31,648 23,172 54,000 5,677 5,251 4,897	350,000 726,524 1,407,897 414,561 1,092,273 24,528 26,411 50,520 42,200 16,555 12,629 79,732 25,000 67,537 __ 3,986,367 606,061 263,008 886,140 118,359 372,819 92,900 88,426 __ 2,427,713	‑ 3% 9% 5% 1% 10% 11% 3% 3% 13% 3% 2% 7% 1% 2% 5% 1% 1% 3%	- 726,524 1,407,897 414,561 1,092,273 24,528 26,411 50,520 42,200 16,555 12,629 79,732 25,000 606,061 263,008 886,140 118,359 372,819 92,900	(Note 1)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 3 Securities held as of March 31, 2019 (excluding investment in subsidiaries, associates and joint ventures): (March 31, 2019)

(March 31, 2019)	(March 31, 2019)	(March 31, 2019)	(March 31, 2019)
					(In Thousands of shares/ units)
Name of holder	Category and name of security	Relationship with security issuer	Account name		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Holding percentage (%)	Fair value
Gempal Arcadyan Mactech HHB CPC CPO CIC CET Hong Ji Hong Jin	Compal Electronics, Inc. Lian Hong Art. Co., Ltd. Global BioPharma, Inc. Others Total SUYIN Optronics Co., Ltd. (“SUYIN Optronics”) SUYIN Optronics GeoThings Inc. AirHop Communication Inc. Adant Technologies Inc. IOT EYE, Inc. TIEF FUND L.P. RichWare Technology Corp. Total Taichung International Golf Country Club HWALLAR OPTRONICS (Fuzhou) CO., LTD. Structured deposits–SPD Bank Yield Plus Structured Deposit Structured deposits–The RMB "Open On Schedule " Financial Product Structured deposits–SPD Bank Yield Plus Structured Deposit Structured deposits–Bank of Communications Yun Tong Cai Fu, Structured Deposit Structured deposits–The RMB "Open On Schedule " Financial Product Total Structured deposits–Agricultural Bank of China "HuiLiFeng" customization RMB Structured Deposit	The parent company ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current	18,369 2,140 2,000 380 332 200 1,152 349 60 ‑ 110 ‑ ‑ ‑ ‑ ‑ ‑ ‑	351,773 45,064 42,200 2,790 __ 441,827 182 160 ‑ ‑ ‑ ‑ 45,330 5,566 __ 50,896 7,710 -	- 8% 3% 1% 1% 9% 7% 6% 6% 7% ‑ ‑ 19% ‑ ‑ ‑ ‑ ‑ ‑	351,773 45,064 42,200 182 160 - - - - 45,330 5,566 7,710 - 416,538 459,775 183,905 694,447 231,153 462,457	(Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)
					416,538 459,775 183,905 694,447 231,153 462,457 _____ 1,388,057

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 3 Securities held as of March 31, 2019 (excluding investment in subsidiaries, associates and joint ventures): (March 31, 2019)

(March 31, 2019)	(March 31, 2019)	(March 31, 2019)	(March 31, 2019)
					(In Thousands of shares/ units)
Name of holder	Category and name of security	Relationship with security issuer	Account name		Ending balance			Note
				Shares/Units (thousands)	Carrying value	Holding percentage (%)	Fair value
CEC CEQ	Structured deposits–Bank of Communications Yun Tong Cai Fu, Structured Deposit Structured deposits–Bank of Communications Yun Tong Cai Fu, Structured Deposit Total Structured deposits–Industrial Bank Structured Deposit	‑ ‑ ‑	Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current	‑ ‑ ‑	595,649 238,936 266,243 _____ 505,179	‑ ‑ ‑	595,649 238,936 266,243

Note 1:The transaction had been eliminated in the consolidated financial statements.

Note 2:The carrying value is the remaining amount after deducting accumulated impairment.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 4 Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(For the three-month ended March 31, 2019)

(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)
					(In Thousands of New Taiwan Dollars)
Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance		Purchases		Sales				Others		Ending Balance
					Shares/ Units (thousands)	Amount	Shares/ Units (thousands)	Amount	Shares/ Units (thousands)	Price	Cost	Gain (loss) on disposal	Shares/ Units (thousands)	Amount	Shares/ Units (thousands)	Amount
CET CET CET CIC CPO CPO CPO CEQ CEQ CEC The Company CPC	Structured deposits- The RMB "Open on schedule" Financial Product Structured deposits- Agricultural Bank of China "HuiLiFeng" customization RMB structured deposit Structured deposits- Bank of Communications Yun Tong Cai Fu. Structured Deposit Structured deposits– SPD Bank Yield Plus Structured Deposit Structured deposits- The RMB "Open on schedule" Financial Product Structured deposits– SPD Bank Yield Plus Structured Deposit Structured deposits- Bank of Communications Yun Tong Cai Fu. Structured Deposit Industrial Bank Structured Deposits Structured deposits- Bank of Communications Yun Tong Cai Fu. Structured Deposit Structured deposits- Bank of Communications Yun Tong Cai Fu. Structured Deposit Structured deposits– SPD Bank Yield Plus Structured Deposit Chipbond	Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current	Bank of China Agricultural Bank of China Bank of Communications Shanghai Pudong Development Bank Bank of China Shanghai Pudong Development Bank Bank of Communications Industrial Bank Co.,Ltd Bank of Communications Bank of Communications Shanghai Pudong Development Bank -	- - - - - - - - - - - -	4,593 - - - - - - - - - - -	284,768 179,963 576,466 260,029 259,705 448,948 480,285 - 179,699 225,651 676,881 451,154	- - - - - - - - - - - -	- 412,639 591,449 238,414 265,923 - 458,488 183,395 687,732 458,488 229,244	4,593 - - - - - - - - - - -	307,207 184,570 590,638 267,631 267,532 461,305 492,515 - 184,573 230,653 692,045 461,256	307,207 182,701 584,642 264,916 264,916 456,752 488,724 - 182,701 228,376 685,127 456,751	- 1,869 (Note 2) 5,996 (Note 2) 2,715 (Note 2) 2,616 (Note 2) 4,553 (Note 2) 3,791 (Note 2) - 1,873 (Note 2) 2,278 (Note 2) 6,918 (Note 2) 4,505 (Note 2)	- - - - - - - - - - - -	22,439 (Note 1) 8,506 (Note 1) 18,372 (Note 1) 8,124 (Note 1) 8,147 (Note 1) 12,357 (Note 1) 12,230 (Note 1) 1,287 (Note 1) 5,385 (Note 1) 11,718 (Note 1) 19,133 (Note 1) 12,011 (Note 1)	- - - - - - - - - - - -	- 416,538 595,649 238,936 266,243 - - 459,775 183,905 694,447 462,457 231,153

Note 1:Others were valuation gains and losses and foreign exchange gains and losses. Note 2:These were gains and losses on disposal and foreign exchange gains and losses.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 5 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the three-month ended March 31, 2019)

(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)
			(In Thousands of New Taiwan Dollars)
Company Name	Counter party	Nature of relationship	Transaction details				Transactions with terms different from others		Notes/Accounts receivable (payable)		Note
			Purchase/ (Sale)	Amount	Percentage of total purchases/ (sales)	Payment terms	Unitprice	Payment Terms	Ending Balance	Percentage of total notes/accounts receivable (payable)
Just and its subsidiaries CIH and its subsidiaries CBN BCI and its subsidiaries Webtek CEB Etrade and its subsidiaries Forever The Company	CBN CIH and its subsidiaries BCI and its subsidiaries Webtek Forever Webtek Forever Compal Electronic, Inc. Forever BCI and its subsidiaries Compal Electronic, Inc. Compal Electronic, Inc. CIH and its subsidiaries CEB Compal Electronic, Inc. Etrade and its subsidiaries JUST and its subsidiaries BCI and its subsidiaries Webtek Compal Electronic, Inc. CIH and its subsidiaries JUST and its subsidiaries	The Company's subsidiaries Subsidiaries wholly owned by the Company Subsidiaries wholly owned by the Company Subsidiaries wholly owned by the Company Subsidiaries wholly owned by the Company With the same ultimate parent company With the same ultimate parent company Parent company With the same ultimate parent company With the same ultimate parent company Parent company Parent company With the same ultimate parent company With the same ultimate parent company Parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent With the same ultimate parent company Parent company With the same ultimate parent company With the same ultimate parent company	Sale Purchase Purchase Purchase Purchase Sale Sale Sale Sale Purchase Purchase Sale Sale Sale Sale Purchase Purchase Purchase Sale Sale Purchase Purchase	(196,366) 32,058,971 489,589 23,791,364 12,491,712 (16,545,545) (5,062,511) (32,104,960) (6,175,989) 6,223,144 191,088 (489,133) (6,223,144) (505,951) (23,791,364) 7,242,596 16,545,545 508,065 (7,242,596) (12,491,712) 6,175,989 5,062,511	(0.1)% 16.0% 0.2% 11.9% 6.2% (76.6)% (23.4)% (58.2)% (20.1)% 20.3% 57.0% (6.8)% (86.2)% (7.0)% (100.0)% 30.0% 70.0% 17.7% (100.0)% (87.0)% 43.0% 35.0%	90 days 120 days 120 days Net 60 days from purchase Net 60 days from purchase Net 60 days from delivery Net 60 days from delivery 120 days Net 60 days from delivery 120 days Net 90 days from delivery 120 days 120 days 120 days Net 60 days from delivery Net 60 days from purchase Net 60 days from purchase 120 days Net 60 days from delivery Net 60 days from delivery Net 60 days from purchase Net 60 days from purchase	Similar to non- related parties Similar to non- related parties Markup based on BCI and its subsidiaries's cost Markup based on Webtek's cost Markup based on Forever's cost According to markup pricing Similar to non- related parties Similar to non- related parties According to markup pricing Similar to non- related parties - Markup based on BCI and its subsidiaries's cost According to markup pricing According to markup pricing According to markup pricing According to markup pricing According to markup pricing Similar to non- related parties According to markup pricing According to markup pricing Similar to non- related parties Similar to non- related parties	There is no significant difference There is no significant difference, and adjustments will be made based on demand for funding if necessary There is no significant difference, and adjustments will be made based on demand for funding if necessary There is no significant difference, and adjustments will be made based on demand for funding if necessary There is no significant difference, and adjustments will be made based on demand for funding if necessary Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding There is no significant difference, and adjustments will be made based on demand for funding if necessary Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding There is no significant difference Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding There is no significant difference Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding There is no significant difference Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding Adjustments will be made based on demand for funding	487,186 (35,946,565) (539,099) (3,839,629) (10,824,683) 8,956,631 3,669,892 35,946,565 7,749,658 (9,246,169) (487,149) 539,099 9,246,169 752,953 3,839,629 (3,259,677) (8,956,631) (770,888) 3,259,677 10,824,683 (7,749,658) (3,669,892)	0.3% (25.8)% (0.4)% (2.8)% (7.8)% 68.5% 28.1% 43.9% 24.0% (21.8)% (80.0)% 4.5% 77.9% 4.7% 100.0% (27.0)% (73.0)% (42.8)% 100.0% 86.3% (34.0)% (25.0)%	(Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 5 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the three-month ended March 31, 2019)

(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)
			(In Thousands of New Taiwan Dollars)
Company Name	Counter party	Nature of relationship	Transaction details				Transactions with terms different from others		Notes/Accounts receivable (payable)		Note
			Purchase/ (Sale)	Amount	Percentage of total purchases/ (sales)	Payment terms	Unitprice	Payment Terms	Ending Balance	Percentage of total notes/accounts receivable (payable)
Arcadyan CNC Acradyan Germany Acradyan AU	Acradyan Germany Acradyan AU CNC Arcadyan Arcadyan Arcadyan	Arcadyan's subsidiary Arcadyan's subsidiary Arcadyan's subsidiary The Company's subsidiary The Company's subsidiary The Company's subsidiary	Sale Sale Purchase Sale Purchase Purchase	(486,243) (384,445) 2,942,080 (2,942,080) 486,242 384,445	(7.0)% (6.0)% 32.0% (99.0)% 100.0% 100.0%	Net 120 days from delivery Net 45 days from the end of the month of delivery Net 45 days from the end of the month of delivery Net 45 days from the end of the month of delivery Net 120 days from delivery Net 45 days from the end of the month of delivery	- - According to markup pricing According to markup pricing - -	- - - - - -	610,927 247,382 (2,872,574) 2,872,574 (610,297) (247,382)	10.0% 4.0% (34.0)% 98.0% (100.0)% (100.0)%	(Note 2) (Note 2) (Note 1、2) (Note 1、2) (Note 2) (Note 2)

Note 1: The remaining balance is the net value of commissioned processing and sales of raw material.

Note 2: The transactions had been eliminated in the consolidated financial statements.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 6 Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (March 31, 2019)

(March 31, 2019)	(March 31, 2019)	(March 31, 2019)	(March 31, 2019)	(March 31, 2019)
					(In Thousands of New Taiwan Dollars)
Name of Company	Counter-party	Nature of relationship	Ending Balance	Turnover rate	Overdue		Amounts received in subsequentperiod		Allowance for bad debts
					Amount	Action taken
Just and its subsidiaries Just and its subsidiaries Just and its subsidiaries CIH and its subsidiaries CIH and its subsidiaries BCI and its subsidiaries BCI and its subsidiaries BCI and its subsidiaries Forever Webtek Etrade and its subsidiaries Arcadyan Arcadyan Arcadyan CNC CBN Speedlink The Company	CBN Forever Webtek Compal Electronic, Inc. Compal Electronic, Inc. Forever Compal Electronic, Inc. CIH and its subsidiaries CEB Compal Electronic, Inc. Compal Electronic, Inc. Webtek Arcadyan Germany Arcadyan AU TTI Arcadyan Speedlink Just and its subsidiaries	The Company's subsidiary With the same ultimate parent company With the same ultimate parent company Parent company Parent company With the same ultimate parent company Parent company With the same ultimate parent company With the same ultimate parent company Parent company Parent company With the same ultimate parent company Arcadyan's subsidiary Arcadyan's subsidiary Arcadyan's subsidiary Arcadyan's subsidiary With the same ultimate parent company With the same ultimate parent company	487,186 3,669,892 8,956,631 453,451 35,946,565 7,749,658 539,099 9,246,169 752,953 10,824,683 3,839,629 3,259,677 610,927 247,382 227,588 (Note4) 2,872,574 (Note5) 117,394 (Note5) 117,394 (Note5)	1.28 3.99 4.54 - 3.02 2.96 3.02 2.61 3.01 3.16 17.44 7.48 2.75 3.15 0.10 1.87 - -	- - - - - - - - - - - - - - - - 5,181 5,181	- - - - - - - - - - - - - - - - - Enhanced the collection	176,313 2,147,260 8,956,631 - 5,795,786 4,506,161 19,185 2,521,403 162,913 6,653,452 3,839,626 3,259,677 - 80,371 96,064 1,525,294 14,009 14,009	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 3) (Note 3)	- - - - - - - - - - - - - - - - - -

Note 1:Balance as of May 3, 2019. Note 2:Balance as of April 19, 2019.

Note 3:Balance as of May 9, 2019.

Note 4:Other receivables due to purchasing on behalf of THAC.

Note 5:Other receivables due to processing and sales of raw material.

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 7 Business relationships and significant intercompany transactions: (For the three-month ended March 31, 2019)

(In Thousands of New Taiwan Dollars)

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No. (Note 1)	Company name	Counterparty	Relationship (Note 2)	Intercompany transactions
				Accounts name	Amount	Terms	Percentage of the consolidated net revenue or total assets
0 1 1 2 2 3 3 3 4 5 6	The Company JUST and its subsidiaries JUST and its subsidiaries CIH and its subsidiaries CIH and its subsidiaries BCI and its subsidiaries BCI and its subsidiaries BCI and its subsidiaries Webteck Etrade and its subsidiaries Forever	CBN Webtek Forever The Company Forever The Company CIH and its subsidiaries CEB The Company Webtek The Company	1 3 3 2 3 2 3 3 2 3 2	Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable Sale Revenue Accounts Receivable	196,366 487,186 16,545,545 8,956,631 5,062,511 3,669,892 32,104,960 35,946,565 6,175,989 7,749,658 489,133 539,099 6,223,144 9,246,169 505,951 752,953 23,791,364 3,839,629 7,242,596 3,259,677 12,491,712 10,824,683	There is no significant difference of price to non-related parties. The credit period is net 90 days. `〃` The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 120 days, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 120 days, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 120 days, and will be adjusted if necessary. `〃` There is no significant difference of price to non-related parties. The credit period is net 120 days. `〃` The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃` The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃` The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. `〃`	0.1% 0.1% 7.9% 2.3% 2.4% 0.9% 15.2% 9.2% 2.9% 2.0% 0.2% 0.1% 3.0% 2.4% 0.2% 0.2% 11.3% 1.0% 3.4% 0.8% 5.9% 2.8%

(Continued)

COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Table 7 Business relationships and significant intercompany transactions:

(For the three-month ended March 31, 2019)

(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)	(For the three-month ended March 31, 2019)
				(In Thousands of New Taiwan Dollars)
No. (Note 1)	Company name	Counterparty	Relationship (Note 2)	Intercompany transactions
				Accounts name	Amount	Terms	Percentage of the consolidated net revenue or total assets
7 7 7 8 9 10 11	Arcadyan Arcadyan Arcadyan CNC TTI THAC CBN	Arcadyan Germany TTI Arcadyan AU Arcadyan THAC TTI Speedlink	3 3 3 3 3 3 3	Sale Revenue Accounts Receivable Other Receivable Sale Revenue Accounts Receivable Processing Revenue Accounts Receivable Other Receivable Processing Revenue Contract Liabilities Other Receivable	486,243 610,927 227,588 384,445 247,382 2,942,080 2,872,574 17,057 72,411 32,655 117,394	There is no significant difference of price to non-related parties. The credit period is net 120 days from delivery. `〃` The price is based on the operating cost. The credit period is net 90 days from the end of month of delivery. There is no significant difference of price to non-related parties. The credit period is net 45 days from delivery. `〃` The price is based on the operating cost. The credit period is net 45 days from the end of the month of delivery and depended on funding demand. `〃` The credit period is net 90 days from the end of the month of delivery and depended on funding demand. The price is based on the operating cost. The credit period is net 60 days from the end of the month of delivery and depended on funding demand. `〃` The credit period is net 60 days fromthe end ofthemonth.	0.2% 0.2% 0.1% 0.2% 0.1% 1.4% 0.7% - - - -

Note 1: The numbers filled in as follows:

1.0 represents the Company.

Subsidiaries are sorted in a numerical order starting from 1.

Note 2: Transactions labeled as follows:

represents transactions between the parent company and its subsidiaries.
represents transactions between the subsidiaries and the parent company.
represents transactions between subsidiaries.

(Continued)