Faraday - Audit Report / Information 2019

English Translation of a Report and Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION PARENT COMPANY ONLY FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS FOR THE YEARS THEN ENDED DECEMBER 31, 2019 AND 2018

Address: No. 5 Li-Hsin Road III, Hsinchu Science Park, Hsinchu City, Taiwan, R.O.C. Telephone: 886-3-578-7888

Notice to Readers

The reader is advised that these parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Independent Auditors’ Report Originally Issued in Chinese

To Faraday Technology Corporation

Opinion

We have audited the accompanying parent company only balance sheets of Faraday Technology Corporation (the “Company”) as of December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2019 and 2018, and notes to the parent company only financial statements, including the summary of significant accounting policies (together “the parent company only financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and cash flows for the years ended December 31, 2019 and 2018, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2019 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue Recognition

Net sales recognized by the Company amounted to NT$4,646,362 thousand for the year ended December 31, 2019, including sale of goods, rendering of services and silicon intellectual property license in the amount of NT$2,880,774 thousand, NT$1,383,791 thousand and NT$381,797 thousand, 、 constituting 62% 29.78% and 8.22% of net sales, respectively. Revenue is the main operating activity of the Company. The sales includes application-specific integrated circuit (ASIC) products, and the services include non-recurring engineering (NRE) and silicon intellectual property license (IP). Revenue includes different sources such as sale of goods and services provided and judgement is exercised to determine the performance obligations and when those were satisfied. As a result, we determined the matter to be a key audit matter.

Our audit procedures included (but not limited to), assessing the appropriateness of the accounting policies of revenue recognition for sales of goods, rendering of services and silicon intellectual property license, testing the operating effectiveness of internal controls established by management for sale of goods, rendering of services and silicon intellectual property license, performing analytical procedures of gross margin by product, selecting samples to perform test of details of transactions including identification of performance obligations in contracts and verification of when performance obligations were satisfied, reviewing significant service agreements for terms of contracts, project milestones and relevant communication information with the Company’s customers for service provided, and inspect evidence of client acceptance for deliverables and inspect shipping documents and invoices to verify proper cut-off of revenue, etc.. We also assessed the adequacy of accounting policy and disclosures of operating revenues. Please refer to Note 4 (16) and Note 6 (13).

Inventories

As of December 31, 2019, the Company’s net inventories amounted to NT$617,595 thousand, constituting 8.52% of total assets, which is significant for the Company. The production of application-specific integrated circuit (ASIC) products are outsourced by professional wafer foundry and assembly and testing house. ASIC inventories are stored in several vendors and the complexity of inventory management increases. As a result, we determined the matter to be a key audit matter.

Our audit procedures included (but not limited to), understanding the internal control over inventory quantities, evaluating the management’s stock taking plan, selecting samples to perform physical inventory observation considering the inventory balances by location and selecting samples to perform external confirmation procedures for the inventories which we did not observe, and agreed the items of physical inventory observations or confirmations to sub-ledger. We also assessed the adequacy of accounting policy and disclosures of inventories. Please refer to Note 4 (10) and Note 6 (5).

Other Matter – Making Reference to the Audits of Component Auditors

We did not audit the financial statements of certain subsidiaries, associates and joint ventures accounted for under the equity method. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. These subsidiaries, associates and joint ventures under equity method amounted to NT$521,789 thousand and NT$494,724 thousand, representing 7.20% and 7.61% of total assets as of December 31, 2019 and 2018, respectively. The related shares of profits from the subsidiaries, associates and joint ventures under the equity method amounted to NT$39,281 thousand and NT$34,889 thousand, represented 10.06% and 12.50% of the net income before tax for the years ended December 31, 2019 and 2018, respectively, and the related shares of other comprehensive income from the subsidiaries, associates and joint ventures under the equity method amounted to NT$(12,216) thousand and NT$11,410 thousand, representing (7.63)% and (6.92)% of the other comprehensive income, for the years ended December 31, 2019 and 2018, respectively.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company.

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2019 parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

/s/Chiu, Wan-Ju

/s/Kuo, Shao-Pin

Ernst & Young, Taiwan February 13, 2020

Notice to Readers

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

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

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION PARENT COMPANY ONLY BALANCE SHEETS As of December 31, 2019 and December 31, 2018 (Expressed in thousands of New Taiwan Dollars)

Assets	Note	As	of	Liabilities and Equity	Note	As	of
		December 31, 2019	December 31, 2018			December 31, 2019	December 31, 2018
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss, current Contract assets, current Notes receivable, net Accounts receivable, net Accounts receivable from related parties, net Other receivables, net Inventories, net Other current assets Total current assets Non-current assets Financial assets at fair value through other comprehensive income, noncurrent Financial assets measured at amortized cost, noncurrent Investments accounted for using the equity method Property, plant and equipment Right-of-use assets Intangible assets Deferred tax assets Refundable deposits Total non-current assets Total assets	4, 6(1) 4, 6(2) 4, 6(13), 6(14), 7 6(14) 4, 6(4), 6(14) 4, 6(4), 6(17), 7 7 4, 6(5) 4, 6(3) 8 4, 6(6) 4, 6(7) 4, 6(15) 4, 6(8) 4, 5, 6(19)	1,216,369 $ 204 421,034 1,746 281,516 454,404 117,481 617,595 109,529 3,219,878 895,710 30,265 1,781,336 561,903 203,420 518,209 34,389 1,640 4,026,872 7,246,750 $	1,304,481 $ 330 313,150 1,558 303,772 220,326 72,987 587,697 26,191	Current liabilities Contract liabilities, current Accounts payable Accounts payable - related parties Payables on equipment Other payables Current tax liabilities Lease liabilities-current Other current liabilities Total current liabilities Non-current liabilities Deferred tax liabilities Lease liabilities-noncurrent Long-term payables Defined benefit liabilities, non-current Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Additional paid-in capital Retained earnings Legal reserve Special reserve Unappropriated earnings Other components of equity Equity attributable to the parent company Total liabilities and equity	4, 6(13), 7 7 6(10), 7 4, 5, 6(19) 4, 6(15), 12 4, 5, 6(19) 4, 6(15), 12 6(10) 4, 5, 6(11) 6(12) 6(12) 6(12)	107,956 $ 817,405 214,514 3,565 512,312 50,497 6,572 7,010 1,719,831 5,173 199,510 96,901 21,619 323,203 2,043,034 2,485,503 724,895 1,473,678 512,210 377,139 (369,709) 5,203,716 7,246,750 $	108,209 $ 684,042 114,190 1,607 516,101 41,294 - 6,491 1,471,934 1,924 - 211,859 15,900 229,683 1,701,617 2,485,503 626,596 1,596,485 860 599,145 (512,210) 4,796,379 6,497,996 $
			2,830,492
			705,397 15,236 1,664,661 556,836 - 682,681 41,580 1,113
			3,667,504
			6,497,996 $

The accompanying notes are an integral part of the parent company only financial statements.

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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2019 and 2018

(Expressed in thousands of New Taiwan Dollars, except for earnings per share)

	Note	For theyears ended December 31,	For theyears ended December 31,
		2019	2018
Net sales Operating costs Gross profit Unrealized gross profit on sales Gross profit, net Operating expenses Selling expenses Administrative expenses Research and development expenses Expected credit gain (loss) Total operating expenses Operating income Non-operating income and expenses Other income Other gains and losses Finance costs Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method Total non-operating income and expenses Income from continuing operations before income tax Income tax expense Net income Other comprehensive income Item that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Unrealized gain from equity investment measured at fair value through other comprehensive income Income tax relating to items that will not be reclassified to profit or loss Item that may be reclassified subsequently to profit or loss: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method which may be reclassified to profit or loss Other comprehensive income (net of income tax) Total comprehensive income Earnings per share (NTD) Earnings per share-basic Earnings per share-basic Earnings per share-diluted Earnings per share-diluted	4, 6(13), 7 6(5), 6(16), 7 6(8), 6(16), 7 6(14) 6(17) 6(3), 6(17) 6(17) 6(6) 4, 5, 6(19) 4, 5, 6(18) 6(20)	4,646,362 $ (2,411,107) 2,235,255 (96,069) (231,688) 160,001 347,877 $ 42,464 36,084 1.40 $ 4,925 (31,920) (4,146) 829 390,280 (42,403) (4,779) (5,119) 16,278 347,816 (1,886,828) 81,606 (611) 2,234,644 190,313 507,878 $ 1.40 $ (1,640,677)	178,664 4,323,744 $ (2,280,489) 2,043,255 (106,609) (226,255) - (499) 2,042,756 1.06 $ 1.05 $ (386) (114,030) 462 13,694 (64,698) (164,958) 98,270 $ (1,535,567) (73,794) (1,942,225) 100,531 160,421 32,941 (14,698) 279,195 (15,967) 263,228 $

The accompanying notes are an integral part of the parent company only financial statements.

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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2019 and 2018

(Expressed in thousands of New Taiwan Dollars)

	Common Stock	Additional Paid-in Capital	R	etained Earnings	etained Earnings		Other Equity		Total Equity
			Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange Differences on Translation of Foreign Operations	Unrealized Gain or Loss on Financial Assets Measured at Fair Value through Other Comprehensive Income	Unrealized Gain or Loss on Available- for-sale Financial Assets
Balance as of January 1, 2018 Impact of retrospective application and restatement Restated balance as of January 1, 2018 Appropriation and distribution of 2017 retained earnings Legal reserve Special reserve Cash dividends Net income in 2018 Other comprehensive income (loss) in 2018 Total comprehensive income (loss) in 2018 Change in subsidiaries' ownership Disposal of equity instrument measured at fair value through other comprehensive income Balance as of December 31, 2018 Balance as of January 1, 2019 Appropriation and distribution of 2018 retained earnings Legal reserve Special reserve Cash dividends Net income in 2019 Other comprehensive income (loss) in 2019 Total comprehensive income (loss) in 2019 Change in subsidiaries' ownership Disposal of equity instrument measured at fair value through other comprehensive income Balance as of December 31, 2019	2,485,503 $ - 2,485,503 - - - - - - - - 2,485,503 $ 2,485,503 $ - - - - - - - - 2,485,503 $	598,879 $ - 598,879 - - - - - - 27,717 - 626,596 $ 626,596 $ - - - - - - 98,299 - 724,895 $	1,512,894 $ - 1,512,894 83,591 - - - - - - - 1,596,485 $ 1,596,485 $ 26,323 - (149,130) - - - - - 1,473,678 $	- $ - - - 860 - - - - - - 860 $ 860 $ - 511,350 - - - - - - 512,210 $	933,774 $ 134,275 1,068,049 (83,591) (860) (671,086) 263,228 76 263,304 - 23,329 599,145 $ 599,145 $ (26,323) (511,350) (49,710) 347,877 (3,317) 344,560 - 20,817 377,139 $	(67,610) $ - (67,610) - - - - 14,655 14,655 - - (52,955) $ (52,955) $ - - - - (32,582) (32,582) - - (85,537) $	- $ (256,237) (256,237) - - - - (179,689) (179,689) - (23,329) (459,255) $ (459,255) $ - - - - 195,900 195,900 - (20,817) (284,172) $	66,750 $ (66,750) - - - - - - - - - - $ - $ - - - - - - - - - $	5,530,190 (188,712)
									5,341,478 - - (671,086) 263,228 (164,958)
									98,270
									27,717 -
									4,796,379 $
									4,796,379 $ - - (198,840) 347,877 160,001
									507,878
									98,299 -
									5,203,716 $

The accompanying notes are an integral part of the parent company only financial statements.

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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan Dollars)

Description	For the years end	ed December 31,	Description	For the years end	ed December 31,
	2019	2018		2019	2018
Cash flows from operating activities: Net Income before tax Adjustments for non-cash gain or loss: Depreciation Amortization Expected credit (gain) loss Loss on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Share of gain of subsidiaries, associates and joint ventures accounted for using equity method Loss on disposal of investments Changes in operating assets and liabilities: Contract assets Notes receivable Accounts receivable Accounts receivable from related parties Other receivables Inventories Other current assets Contract liabilities Accounts payable Accounts payable - related parties Other payables Other current liabilities Defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash provided by operating activities	390,280 $ 64,154 331,695 (81,606) 126 4,779 (6,109) (36,084) - (107,884) (188) 103,862 (234,078) (43,861) (29,898) (83,338) (253) 133,363 100,324 (13,631) 519 2,402	279,195 $ 43,797 360,664 73,794 4,535 (7,776) (160,421) 7,251 (313,150) 3,512 (41,582) 37,493 66,357 (153,534) 959 59,513 229,783 29,714 (147,248) (1,739) (2,862)	Cash flows from investing activities: Acquisition of financial assets measured at amortized cost Acquisition of investments accounted for using equity method Proceeds from disposal of subsidiary Acquisition of property, plant and equipment Refundable deposits Acquisition of intangible assets Other investing activities Net cash used in investing activities Cash flows form financing activities: Cash payments for the principal portion of the lease liability Cash dividends paid Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	(15,029) $ (9,287) - (59,494) (527) (268,076) -	- $ (29,300) 23,350 (85,418) (49) (339,994) (29)
				(352,413)	(431,440)
				(5,107) (198,840)	- (671,086)
				(203,947)	(671,086)
				(4,263)	7,830
				(88,112) 1,304,481	(817,071) 2,121,552
				1,216,369 $	1,304,481 $

	494,574 5,476 (4,779) (22,760)	368,255 8,174 - (98,804)
	472,511 $	277,625 $

The accompanying notes are an integral part of the parent company only financial statements.

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English Translation of Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. History and Organization

Faraday Technology Corporation (the "Company") was incorporated on June 10, 1993. The Company is a leading fabless ASIC vendor and silicon intellectual property and system platform provider, with products and services of ASIC/SoC Design Services, ASIC/SoC Production Turnkey Services, and ASIC EDA tools.

The Company’s shares are listed on the Taiwan Stock Exchange. The address of its registered office and principal place of business is No. 5, Li-Hsin III Road, Hsinchu Science Park, Taiwan.

2. Date and Procedures of Authorization of Financial Statements for Issue

The parent company only financial statements for the years ended December 31, 2019 and 2018 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on February 13, 2020.

3. Newly Issued or Revised Standards and Interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2019. The nature and the impact of each new standard and amendment that has a material effect on the Company is described below:

A. IFRS 16“Leases”

IFRS 16 “Leases” replaces 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 Company followed the transition provision in IFRS 16 and the date of initial application was January 1, 2019. The impacts arising from the adoption of IFRS 16 are summarized as follows:

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
a. Please refer to Note 4 for the accounting policies before or after January 1, 2019.
b. For the definition of a lease, the Company elected not to reassess whether a contract was, or contained, a lease on January 1, 2019. The Company was permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4. That is, for contracts entered into (or changed) on or after January 1, 2019, the Company need to assess whether contacts are, or contain, leases applying IFRS 16. In comparing to IAS 17, IFRS 16 provides that 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. The Company assessed most of the contracts are, or contain, leases and has no significant impact arised.
c. The Company is a lessee and elects not to restate comparative information in accordance with the transition provision in IFRS 16. Instead, the Company recognized the cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the date of initial application.
(a) Leases previously classified as operating leases

For leases that were previously classified as operating leases applying IAS 17, the Company measured and recognized those leases as lease liability on January 1, 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. In addition, the Company chose, on a lease-by-lease basis, to measure the right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before January 1, 2019.

On January 1, 2019, the Company’s right-of-use asset increased by NT$211,189 thousand, lease liability-current increased by NT$5,780 thousand, and lease liability-noncurrent increased by NT$205,409 thousand.

In accordance with the transition provision in IFRS 16, the Company’s used the following practical expedients on a lease-by-lease basis to leases previously classified as operating leases:

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  - i. Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.

  - ii. Relied on its assessment of whether leases are onerous immediately before January 1, 2019 as an alternative to performing an impairment review.

  - iii. Elected to account in the same way as short-term leases to leases for which the lease term ends within 12 months of January 1, 2019.

  - iv. Excluded initial direct costs from the measurement of the right-of-use asset on January 1, 2019.

  - v. Used hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.

(b) Please refer to Note 4, Note 5 and Note 6(15) for additional disclosure of lessee and lessor which required by IFRS 16.
(c) As of January 1, 2019, the impacts arising from the adoption of IFRS 16 are summarized as follows:
i. The weighted-average lessee’s incremental borrowing rate applied to lease liabilities recognized in the balance sheet on January 1, 2019 was 2.154%.
ii. The explanation for the difference of NT$191,722 thousand between: 1) operating lease commitments disclosed applying IAS 17 as of December 31, 2018, discounted using the incremental borrowing rate on January 1, 2019; and
```
 - 2) lease liabilities recognized in the balance sheet as of January 1, 2019 is summarized as follows:
```

Operating lease commitments disclosed applying IAS 17 as of December 31, 2018 Discounted using the incremental borrowing rate on January 1, 2019 Add: adjustments to the options to extend the lease that is reasonably certain to exercise The carrying value of lease liabilities recognized as of January 1, 2019	$37,494
	$19,467 191,722
	$211,189

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.
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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

		Effective Date
Items	New,Revised or Amended Standards and Interpretations	issued byIASB
a	Definition of a Business - Amendments to IFRS 3	January 1, 2020
b	Definition of Material - Amendments to IAS 1 and 8	January 1, 2020
c	Interest Rate Benchmark Reform - Amendments to IFRS 9,	January 1, 2020
	IAS 39 and IFRS 7

a. Definition of a Business - Amendments to IFRS 3

The amendments clarify the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments clarify the minimum requirements for a business; add guidance to help entities assess whether an acquired process is substantive; and narrow the definitions of a business and of outputs; etc.

b. Definition of a Material - Amendments to IAS 1 and 8

The main amendment is to clarify new definition of material. It states that “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.

c. Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7

The amendments include a number of exceptions, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is directly affected if the interest rate benchmark reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. Hence, the entity shall apply the exceptions to all hedging relationships directly affected by the interest rate benchmark reform.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The amendments include:

(1) highly probable requirement

When determining whether a forecast transaction is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows are based is not altered as a result of the interest rate benchmark reform.

(2) prospective assessments

When performing prospective assessments, an entity shall assume that the interest rate benchmark on which the hedged item, hedged risk and/or hedging instrument are based is not altered as a result of the interest rate benchmark reform.

(3) IAS 39 retrospective assessment

An entity is not required to undertake the IAS 39 retrospective assessment (i.e. the actual results of the hedge are within a range of 80–125%) for hedging relationships directly affected by the interest rate benchmark reform.

(4) separately identifiable risk components

For hedges of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the separately identifiable requirement only at the inception of such hedging relationships.

The amendments also include the end of application of the exceptions requirements and the related disclosures requirements of the amendments.

The above-mentioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2020. The above-mentioned standards and interpretations have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 Insurance Contracts	January1,2021
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2022

(a) IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full. IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The effective date of the amendments has been postponed indefinitely, but early adoption is allowed.

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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(b) IFRS 17 Insurance Contracts

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(1) estimates of future cash flows;
(2) Discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
(3) a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or noncurrent.

The above-mentioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, and the local effective dates are to be determined by FSC. The above-mentioned standards and interpretations have no material impact on the Company.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

4. Summary of Significant Accounting Policies

(1) Statement of Compliance

The parent company only financial statements of the Company for the years ended December 31, 2019 and 2018 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of Preparation

According to article 21 of the Regulations, the profit or loss and other comprehensive income presented in the parent company only financial reports will be the same as the allocations of profit or loss and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports will be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. Therefore, the investments in subsidiaries will be disclosed under “Investments accounted for using the equity method” in the parent company only financial report and change in value will be adjusted.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent company only financial statements are presented in New Taiwan Dollars (NTD).

Transactions in foreign currencies are initially recorded by the Company at its functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as of the dates of the initial transactions.

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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of financial statements in foreign currency

Each foreign operation of the Company determines its function currency upon its primary economic environment and items included in the financial statements of each operation are measured using that functional currency. The assets and liabilities of foreign operations are translated into New Taiwan Dollars at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. On the partial disposal of foreign operations that result in a loss of control, loss of significant influence or joint control but retain partial equity is considering as disposal.

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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint venture that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(5) Current and non-current distinction

An asset is classified as current when:

(a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Company holds the asset primarily for the purpose of trading
(c) The Company expects to realize the asset within twelve months after the reporting period
(d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

(a) The Company expects to settle the liability in its normal operating cycle
(b) The Company holds the liability primarily for the purpose of trading
(c) The liability is due to be settled within twelve months after the reporting period
(d) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(6) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including time deposits with original maturities of six months or less).

(7) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

(1) the Company’s business model for managing the financial assets and
(2) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

(1) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(2) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(1) purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(2) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(1) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
(2) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(1) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
(2) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(3) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(i) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
(ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company measures expected credit losses of a financial instrument in a way that reflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follow:

(a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
(d) For lease receivables arising from transactions within the scope of IFRS 16 (before January 1, 2019: IAS 17), the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

i. The rights to receive cash flows from the asset have expired
ii. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred
iii. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

A financial liability is classified as held for trading if:

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
ii. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
iii. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

i. it eliminates or significantly reduces a measurement or recognition inconsistency; or
ii. a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Derivative financial instrument

The Company uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as financial assets or liabilities at fair value through profit or loss (held for trading) except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges and hedges of net investments in foreign operations, which is recognized in equity.

(9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials — Actual purchase cost on weighted-average cost basis.

Finished goods and work in progress — Cost of direct materials and manufacturing overheads on weighted-average cost basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of service is accounted in accordance with IFRS15 and not within the scope of inventories.

(11) Investments accounted for using equity method

According to article 21 of the Regulations, the investments in subsidiaries will be disclosed under “Investments accounted for using the equity method” and change in value will be adjusted to comply. The profit or loss and other comprehensive income presented in parent company only financial reports will be the same as the allocations of profit or loss and other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports will be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. The difference of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under “investments accounted for using the equity method,” “share of profit of subsidiaries and associates accounted for using the equity method” and “share of other comprehensive income of subsidiaries and associates accounted for using the equity method.”

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company’s investment in associates is accounted for using equity method. An associate is an equity over which the Company has significant influence.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a prorata basis.

When the associate or joint venture issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in Additional Paid in Capital and Investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a prorata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 “Impairment of Assets”. In determining the value in use of the investment, the Company estimates:

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(1) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(2) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately “ ” by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 “Property, plant and equipment”. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings and facilities	6 - 51	Years (including buildings 51 years, facilities 6-16 years)
Machinery	6	Years
Computer equipment	4	Years
Office furniture and fixtures	6	Years
Miscellaneous equipment	4	Years

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

After initial recognition, an item of property, plant and equipment and any significant component is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and such changes are treated as changes in accounting estimates.

(13) Leases

The accounting policy from January 1, 2019 is as follows:

For contracts entered on or after January 1, 2019, the Company assesses whether the 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 for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

The Company elected not to reassess whether a contract is, or contains, a lease on January 1, 2019. The Company is permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the nonlease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
33-

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset 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.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of lowvalue assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

The accounting policy before January 1, 2019 is as follows:

Company as a lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

(14) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Company’s intangible assets is as follows:

Computer software Useful lives 2 ～ 3years Amortization method used Amortized on a straight-line basis over the estimated useful life Internally generated or acquired Acquired

(15) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 “Impairment of Assets” may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods, rendering of services and silicon intellectual property license. The accounting policies are explained as follow:

Sale of goods

The Company outsource its manufacturing and sells goods. Sales are recognized when the goods are delivered to the customers and control of the goods is transferred to the customer. The main product of the Company is Application Specific Integrated Circuit (ASIC) and revenue is recognized based on the consideration stated in the contract.

The credit period for the Company’s sale of goods is from 30 to 60 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly; therefore, there is no significant financing component to the contract. For some of the contracts, part of the consideration was received from customers before transferring a promised good to a customer, and the Company has the obligation to transfer the goods subsequently. Accordingly, the Company recognized the consideration received in advance from customers under contract liabilities.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Rendering of services

The Company provides design services, and recognized by reference to the stage of completion in accordance with contracts with customers.

Most of the contractual considerations of the Company are collected throughout the contract periods. When the Company has performed the services to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. The Company measures the loss allowance of its contract assets at an amount equal to lifetime expected credit losses according to IFRS9. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Company has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component is arised.

Silicon intellectual property license

Revenue from silicon intellectual property license is recognized by reference to its nature. When the nature of silicon intellectual property license provides a right to access the Company’s intellectual property as it exist throughout the license period, the Company uses straight-line method to recognize revenue during the license period. If the nature of license is not abovementioned, the license provides a right to use the Company’s intellectual property as it existed at a point in time at which the license was granted. Accordingly, the Company recognizes revenue when the license is granted.

Some royalties are determined based on sales of goods. Because the license is a necessary part of goods, the license and goods are combined as a performance obligation. Since the license is the predominant item to which the royalty relates, revenue is recognized when sales of goods occur.

For some silicon intellectual property license contracts, part of the consideration is received from customers upon signing the contract, and the Company has the obligation to provide the services to access or use the Company’s intellectual property subsequently. Accordingly, the Company recognizes payments received in advance as contract liabilities.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(17) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore fund assets are not included in the Company’s financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The surtax on undistributed retained earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

i. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Company’s parent company only financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

A. Inventories

Estimates of net realisable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 (5) for more details.

B. Post-employment benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, and expected rate of salary increases. Please refer to Note 6 (11) for more details.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

C. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective entity’s domicile within the Company.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 (19) for disclosure on unrecognized deferred tax assets of the Company as of December 31, 2019.

6. Contents of Significant Accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash Cash on hand Checking and savings Time deposits Cash equivalents-Commercial paper with repurchase Total	As of
	December 31,2019	December 31,2018
	$200 182,420 973,749 60,000	$200 193,137 1,111,144 -
	$1,216,369	$1,304,481

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Mandatorily measured at fair value through profit or loss: Derivatives not designated as hedging instruments Current	As of	As of
	December 31,2019 $204 $204	December 31,2018
		$330
		$330

Financial assets at fair value through profit or loss were not pledged.

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

Equity instrument investments measured at fair value through other comprehensive income – Non-current: Unlisted companies stocks	As of	As of
	December 31,2019 $895,710	December 31,2018
		$705,397

The Company classified certain of its financial assets as financial assets at fair value through other comprehensive income which were not pledged.

The Company's investment in equity instrument investments measured at fair value. The dividend income recognized during 2018 was NT$7,717 thousand, which was related to the investments held on the balance sheet date.

(4) Accounts receivable, net and accounts receivable from related parties, net

Accounts receivable Subtotal (gross carrying amount) Less`：`Allowance for doubtful accounts Subtotal Accounts receivable from related parties, net Subtotal (gross carrying amount) Total	As of December 31,2019 December 31,2018 $318,526 $344,265 318,526 344,265 (37,010) (40,493) 281,516 303,772 454,404 220,326 454,404 220,326 $735,920 $524,098	As of December 31,2019 December 31,2018 $318,526 $344,265 318,526 344,265 (37,010) (40,493) 281,516 303,772 454,404 220,326 454,404 220,326 $735,920 $524,098
		December 31,2018
		$344,265
		344,265 (40,493)
		303,772 220,326
		220,326
		$524,098

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accounts receivable were not pledged.

Accounts receivable are generally on 30- 60 day terms from the date of monthly closing. The Company’s carrying amount of accounts receivable was amounted to NT$772,930 thousand, and NT$564,591 thousand as of December 31, 2019 and 2018, respectively. Please refer to Note 6(14) for more details on impairment of account receivable, and Note 12 for more details on credit risk.

(5) Inventories

nventories
Work in process Finished goods Total	As of
	December 31,2019	December 31,2018
	$163,460 454,135	$153,158 434,539
	$617,595	$587,697

The cost of inventories recognized in expenses amounted to NT$2,411,107 thousand and NT$2,280,489 thousand for the years ended December 31, 2019 and 2018, respectively, including the loss of NT$3,686 thousand and loss on scrap of inventories of NT$7,564 thousand, and gain of NT$7,167 thousand and loss on scrap of inventories of NT$18,930 thousand for the years ended December 31, 2019 and 2018, respectively. The gain from reversal of allowance for decline in market value and obsolescence was recognized due to the sales of the Company’s previously written-down inventories during the year of 2018.

No inventories were pledged.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(6) Investments accounted for using the equity method

	As of	As of	As of	As of
	December 31,2019		December 31,2018
Investee company		Percentage of		Percentage of
		Ownership or		Ownership or
	Amount	VotingRights	Amount	VotingRights
Faraday Technology Corporation (USA)	$426,414	100.00%	$432,596	100.00%

Faraday Technology`－`B.V.I.	365,263	100.00%	283,413	100.00%
Faraday Technology Japan Corporation	82,067	99.95%	62,128	99.95%

Chih-Hung Investment Corporation	713,257	100.00%	675,248	100.00%
Sheng Bang Investment Corporation	186,545	100.00%	211,276	100.00%
Faraday Technology Vietnam CompanyLimited	7,790	100.00%	-	-

Total	$1,781,336		$1,664,661

The investments in subsidiaries are presented as investments accounted for using the equity method in the parent company only financial report with necessary adjustments.
－
1. Faraday Technology B.V. has been liquidated and capital was remitted during the year ended December 31, 2018. Please refer to Note 6 (21).
－
1. The Company increased its investment in Technology B.V.I. by acquiring 960 thousand shares with NT$29,299 thousand during the year ended December 31, 2018.
The Company increased its investment in Faraday Technology Vietnam Company Limited by acquiring its capital with NT$9,287 thousand during the year ended December 31, 2019.
The Company used equity method to recognize its investment gains and losses for the years ended December 31, 2019 and 2018. The Company recognized share of profit of Faraday Technology Corporation (USA) and Faraday Technology Japan Corporation amounted to NT$39,281 thousand and NT$34,889 thousand, and share of other comprehensive income of Faraday Technology Corporation (USA) and Faraday Technology Japan Corporation amounted to NT$(12,216) thousand and NT$11,410 thousand, respectively, which were audited by other auditors.
44-

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Property, plant and equipment

Property, plant and equipment for own use	As of	As of
	December 31,2019	December 31,2018
	$561,903	(Note)

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

A. Property, plant and equipment for own-use (after the application of IFRS 16)

Land	Buildings and facilities	Machinery	Computer equipment	Office furniture and fixtures	Miscellaneous equipment	Total
$33,576 - -	$588,866 595 (26,911)	$41,243 3,768 (4,153)	$132,320 56,153 (22,995)	$1,620 261 (1,620)	$- 675 -	$797,625 61,452 (55,679)
$33,576	$562,550	$40,858	$165,478	$261	$675	$803,398
$- - -	$177,915 12,252 (26,911)	$11,401 6,939 (4,153)	$49,853 37,151 (22,995)	$1,620 15 (1,620)	$- 28 -	$240,789 56,385 (55,679)
$-	$163,256	$14,187	$64,009	$15	$28	$241,495
$33,576	$399,294	$26,671	$101,469	$246	$647	$561,903

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. Property, plant and equipment (prior to the application of IFRS 16)

Land	Buildings and facilities	Machinery	Computer equipment	Office furniture and fixtures	Miscellaneous equipment	Total
$33,576 - -	$588,586 760 (480)	$21,452 23,055 (3,264)	$103,721 62,793 (34,194)	$1,620 - -	$95 - (95)	$749,050 86,608 (38,033)
$33,576	$588,866	$41,243	$132,320	$1,620	$-	$797,625
$- - -	$164,297 14,098 (480)	$9,955 4,710 (3,264)	$59,338 24,709 (34,194)	$1,350 270 -	$85 10 (95)	$235,025 43,797 (38,033)
$-	$177,915	$11,401	$49,853	$1,620	$-	$240,789
$33,576	$410,951	$29,842	$82,467	$-	$-	$556,836

Note:

(1) Significant components of buildings are main building structure, air conditioning units and elevators, which are depreciated based on their useful lives over 51 years, 8 years, and 6~16 years, respectively.

(2) Property, plant and equipment were not pledged.

(8) Intangible assets

ntangible assets
Cost Beginning balance Addition`－`acquired separately Decrease`－`derecognition Exchange differences Ending balance	Software
	For the year ended December31,2019	For the year ended December31,2018
	$987,287 162,960 (122,505) 4,263	$1,118,231 630,332 (753,439) (7,837)
	$1,032,005	$987,287

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accumulated Amortization Beginning balance Amortization Decrease`－`derecognition Ending balance Net carrying amount as of: December 31, 2019 December 31, 2018	Software	Software
	For the year ended December31,2019	For the year ended December31,2018
	$304,606 331,695 (122,505)	$697,381 360,664 (753,439)
	$513,796	$304,606
	$518,209
	$682,681

The amortization expenses of intangible assets are as follows:

Research and development expenses	For theyears ended December 31,	For theyears ended December 31,
	2019	2018
	$331,695	$360,664

(9) Short-term payables

The Company’s credit limit from short-term loans was NT$1,350,750 thousand and NT$907,200 thousand as of December 31, 2019 and 2018, respectively, and all of which was unused.

- (10) Long term payables

The payables were primarily attributable to several agreements which the Company entered into for certain software license. As of December 31, 2019 and 2018, payments for future years are as follows ：

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Year ofpayment	As of	As of
	December 31,2019	December 31,2018
2019 2020 2021 2022 Subtotal Less: Current portion (recognized as other payables) Total	$- 111,886 70,687 26,214	$145,704 143,968 67,891 -
	208,787 (111,886)	357,563 (145,704)
	$96,901	$211,859

(11) Post-employment benefits

Defined contribution plan

The Company adopted a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company would make monthly contributions to the employees’ individual pension accounts at the amounts not less than 6% of the employees’ monthly wages. The Company have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Expenses under the defined contribution plan for the years ended December 31, 2019 and 2018 were NT$44,689 thousand and NT$39,819 thousand, respectively.

Defined benefit plan

The Company adopted a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assess the balance in the designated labor pension fund. If the amount is insufficient to cover pension benefit calculated for employees eligible to retire in the next year, the Company would make up the difference in one appropriation before the end of March the following year.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$4,034 thousand to its defined benefit plan during the 12 months beginning after December 31, 2019.

The average duration of the defined benefits plan obligation as of December 31, 2019 and 2018, are 14 years and 15 years, respectively.

The summarization of defined benefit plan reflected in profit or loss is as follows:

Current period service costs Net interest expense Total	For theyears ended December 31,	For theyears ended December 31,
	2019	2018
	$5,654 58	$310 235
	$5,712	$545

Changes in the defined benefit obligation and fair value of plan assets are as follows:

	As of
December 31, 2019	December 31, 2018	January 1, 2018
$143,847 (122,228)	$128,922 (113,022)	$123,734 (104,896)
$21,619	$15,900	$18,838

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Reconciliation of liability (asset) of the defined benefit plan is as follows:

Defined benefit obligation	Fair value of plan assets	Benefit liability (asset)
$123,734 310 1,516	$ (104,896) - (1,281)	$18,838 310 235
125,560 (1,065) 4,427) -	(106,177) - - (2,976)	19,383 (1,065) 4,427 (2,976)
3,362)	(2,976)	386
-	(3,869)	(3,869)
$128,922 5,654 1,300	$(113,022) - (1,242)	$15,900 5,654 58
135,876 6,335 1,636) -)	(114,264) - - (3,825)	21,612 6,335 1,636 (3,825)
7,971	(3,825)	4,146
-	(4,139)	(4,139)
$143,847	$(122,228)	$21,619

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

defined benefit obligation:
Discount rate Expected rate of salary increases	As of
	December 31, 2019	December 31, 2018
	0.7234% 2.75%	1.0085% 2.75%

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A sensitivity analysis for significant assumption as of December 31, 2019 and 2018 is as shown below:

below:
Discount rate increase by 0.5% Discount rate decrease by 0.5% Expected rate of salary increase by 0.5% Expected rate of salary decrease by 0.5%	Effect onthe defined benefit obligation
	2019 Increase defined benefit obligation Decrease defined benefit obligation $- $9,724 10,637 - 10,244 - - 9,475	2018
	Increase defined benefit obligation $- 10,637 10,244 -	Increase defined benefit obligation $- 9,714 9,381 -	Decrease defined benefit obligation
			$8,878 - - 8,671

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(12) Equity

A. Capital stock

The Company’s authorized capital was NT$5,000,000 thousand, divided into 500,000 thousand shares (including 55,000 thousand shares reserved for exercise of employee stock options) as of December 31, 2019 and 2018, each at a par value of NT$10. Following the resolution of the shareholders’ meeting on June 12, 2012, the Company decided to increase its authorized common shares to NT$6,000,000 thousand, divided into 600,000 thousand shares. As of December 31, 2019, related registration processes have not been completed.

The Company’s issued capital was NT$2,485,503 thousand, divided into 248,550 thousand shares, as of December 31, 2019 and 2018. Each share has one voting right and a right to receive dividends.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. Additional paid-in capital

Additional paid-in capital
Premiums in excess of par Change in subsidiaries’ ownership Share of changes in net assets of associates and joint ventures accounted for using equity method Employee stock option and others Total	As	of
	December 31, 2019 $594,782 126,016 1,531 2,566 $724,895	December 31, 2018
		$594,782 27,717 1,531 2,566
		$626,596

According to the Company Act, the additional paid-in capital shall not be used except for offsetting deficit of the company. When a company does not have deficit, it may distribute the additional paid-in capital derived from the issuance of new shares at premiums in excess of par or income from endowments received by the Company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

C. Retained earnings and dividend policies

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

a. Reserve for tax payments;
b. Offset accumulated losses in previous years, if any;
c. Legal reserve, which is 10% of leftover profits.
d. Allocation or reverse of special reserves as required by law or government authorities;
e. The remaining net profits and the retained earnings from previous years will be allocated as shareholders’ dividend. The Board of Directors will prepare a distribution proposal and submit the same to the shareholders’ meeting for review and approval by a resolution.
52-

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting. The Company is in the growth stage, in order to plan for future funding requirement and long-term financial planning, and to satisfy shareholders’ need for cash dividend, cash dividends shall not be less than 10% of total dividends for distribution.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to offset the deficit of the Company. When the Company does not have deficit, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

When distributing distributable earnings, the Company has to set aside special reserve, for other net deductions from shareholders’ equity of the period. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

Following the adoption of TIFRS, the FSC issued Order No. Financial-Supervisory-SecuritiesCorporate-1010012865 on April 6, 2012, which set out the following provisions for compliance: On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal year”, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed. The Order had no influence on the Company.

Details of the 2018 and 2017 earnings distribution and dividends per share as approved by the shareholders’ meeting on June 13, 2019 and June 15, 2018, respectively, are as follows:

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Legal reserve Increase in special reserve Common stock-cash dividend	Appropriationofearnings	Appropriationofearnings	Dividend pershare (NT$)	Dividend pershare (NT$)
	2018	2017	2018	2017
	$26,323 511,350 49,710	$83,591 860 671,086	$- - 0.2	$- - 2.7

Legal reserve distribution to dividends per share NT$0.6 and dividend per share NT$0.2 were resolved by the shareholders’ meeting on June 13, 2019. Total dividend per share was NT$0.8.

Please refer to Note 6(16) for more details on employees’ compensations and the remunerations to directors and supervisors.

(13) Sales revenue

Analysis of revenue from contracts with customers for the years ended December 31, 2019 and 2018 is as follows:

(1) Disaggregation of revenue

(1) Disaggregation of revenue
Sale of goods Rendering of services Silicon intellectual property license Total Revenue recognition point: At a point in time Over time Total	Forthe years endedDecember31,
	2019	2018
	$2,880,774 1,383,791 381,797	$2,682,722 1,281,642 359,380
	$4,646,362	$4,323,744
	$3,203,542 1,442,820	$2,985,284 1,338,460
	$4,646,362	$4,323,744

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(2) Contract balances
A. Contract assets – current

Contract assets – current
Rendering of services		As of
	December 31, 2019	December 31, 2018	January 1, 2018
	$421,034	$313,150	$9,721

The significant changes in the Company’s balances of contract assets for the years ended December 31, 2019 and 2018 are as follows:

The opening balance transferred to accounts receivable Change in the progress of completion Impairment	For the years ended December 31,	For the years ended December 31,
	2019	2018
	$32,905 149,928 (9,139)	$9,721 313,150 -

B. Contract liabilities – current

Contract liabilities – current
December 31, 2019 Sales of goods $107,608 Rendering of services 86 Silicon intellectual property license 262 Total $107,956		As of
	December 31, 2019	December 31, 2018	January 1, 2018
		$107,965 - 244	$38,125 10,479 92
	$107,956	$108,209	$48,696

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The significant changes in the Company’s balances of contract liabilities for the years ended December 31, 2019 and 2018 are as follows:

ember 31, 2019 and 2018 are as follows:
The opening balance transferred to revenue Increase in receipts in advance during the period (deducting the amount incurred and transferred to revenue during the period)	For the years ended December31,
	2019	2018
	$23,990 23,737	$46,959 106,472

C. Transaction price allocated to unsatisfied performance obligations

As of December 31, 2019, there is no need to provide relevant information of the unsatisfied performance obligations as the contract terms with customers about the sales of goods are all shorter than one year. Besides, the summarized amounts of transaction price allocated to unsatisfied performance obligations about rendering of services and silicon intellectual property license are NT$1,105,026 thousand. The Company will recognize revenue based on the stage of completion of the contracts. Those contracts are expected to complete within the next 1 to 1.5 years.

D. Assets recognized from costs to fulfil a contract

None.

(14) Expected credit (gain) losses

xpected credit (gain) losses
Operating expenses – Expected credit (gain) losses Contract Assets Account receivables Other receivables from related parties Total	For the years ended December 31,
	2019	2018
	$9,139 (35,464) (55,281)	$- 7,767 66,027
	$(81,606)	$73,794

Please refer to Note 12 for more details on credit risk.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company measures the loss allowance of its contract assets and trade receivables (including note receivables and account receivables) at an amount equal to lifetime expected credit losses. The assessments of the Company’s loss allowance as of December 31, 2019 and 2018 are as follows:

i. the loss allowance of contract assets is measured at an amount equal to lifetime expected credit losses, details are as follow:

losses, details are as follow:
Gross carrying amount Expected credit loss rates Loss allowance Total	Forthe years endedDecember31,
	2019	2018
	$430,173 0%~100% (9,139)	$313,150 0% -
	$421,034	$313,150

ii. the Company considers the grouping of trade receivables by counterparties’ credit rating, by geographical region and by industry sector, and its loss allowance is measured by using a provision matrix, details are as follow:

2019.12.31

2019.12.31
Gross carrying amount Expected credit loss rates Lifetime expected credit losses Subtotal	Not yet due (note) $649,776 -% - $649,776			Overdue		>=121days $30,971 10%~100% 30,971 $-	Total
		<=30 days $34,325 -% - $34,325	31-60 days $32,435 0~2% 473 $31,962	61-90 days $20,047 0%~10% 2,005 $18,042	91-120 days $7,122 2%~50% 3,561 $3,561
							$774,676 37,010
							$737,666

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

2018.12.31

2018.12.31
Gross carrying amount Expected credit loss rates Lifetime expected credit losses Subtotal	Not yet due (note) $466,980 -% - $466,980			Overdue		>=121 days $24,925 10%~100% 24,680 $245	Total
		<=30 days $24,109 -% - $24,109	31-60 days $8,146 0~2% 826 $7,320	61-90 days $16,366 0%~10% 2,027 $14,339	91-120 days $25,623 2%~50% 12,960 $12,663
							$566,149 40,493
							$525,656

Note: All of the Company’s note receivables are not yet due.

iii. The gross carrying amount of other receivables - related parties are NT$149,353 thousand and NT$151,741 thousand as of December 31, 2019 and 2018, respectively. The amount of allowance for doubtful accounts are NT$44,423 thousand and NT$98,009 thousand as of December 31, 2019 and 2018, respectively, by considering counterparties’ credit rating, geographical region and industry, etc.

The movements in the provision for impairment of account receivables during the years ended December 31, 2019 and 2018 are as follows:

As of January 1, 2019 Increase (reversal) for the current period As of December 31, 2019 As of January 1, 2018 (in accordance with IAS 39) Beginning adjusted retained earnings As of January 1, 2018 (in accordance with IFRS 9) Addition for the current period As of December 31, 2018	Contract Assets	Account receivables and Other Account receivables from related
	$- 9,139	$138,502 (90,745)
	$9,139	$47,757
	$- -	$64,708 -
	- -	64,708 73,794
	$-	$138,502

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(15) Leases

A. The Company as lessee (applicable to IFRS 16)

The Company leases various properties, including real estate (land and buildings), transportation equipment and office equipment. These leases have terms between 2 and 38 years.

The effect that leases have on the financial position, financial performance and cash flows of the Company are as follows:

a. Amounts recognized in the balance sheet

(a) Right-of-use asset

The carrying amount of right-of-use assets

Land Buildings and facilities Transportation equipment Office equipment Total	As of	As of
	December 31, 2019	December 31, 2018
	$196,848 4,591 1,749 232	(Note)
	$203,420

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

(b) Lease liability

Lease liability Lease liability-current Lease liability-noncurrent Total	As of	As of
	December31,2019	December31,2018
	$206,082	(Note)
	$6,572 199,510
	$206,082

Please refer to Note 6 (17) for the interest on lease liability recognized during the year ended December 31, 2019 and refer to Note 12 (5) for the maturity analysis for lease liabilities.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

b. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Buildings and facilities Transportation equipment Office equipment Total	For theyears ended December 31	For theyears ended December 31
	2019	2018
	$5,320 1,172 1,166 111	(Note)
	$7,769

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

c. Cash outflow relating to leasing activities

During the year ended December 31, 2019, the Company’s total cash outflow for leases amounted to NT$9,810 thousand.

d. Other information relating to leasing activities

Extension option

Some of the Company’s property rental agreement contain extension options. In determining the lease terms, the non-cancellable period for which the Company has the right to use an underlying asset, together with period covered by an option to extend the lease if the Company is reasonably certain to exercise that option. The options are used to maximize operational flexibility in terms of managing contracts. The majority of extension options held are exercisable only by the Company. After the commencement date, the Company reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
B. Operating lease commitments - The Company as lessee (applicable to IAS 17)

The Company has entered into commercial leases on land and office. Future minimum rentals payable as of December 31, 2018 is as follows:

payable as of December 31, 2018 is as follows:
Not later than one year Later than one year and not later than five years Total		As of
		December 31, 2018
		$10,484 27,010
		$37,494

Operating lease expenses recognized is as follows:

Minimum lease payment	For the year ended December31,2018
	$9,380

(16) Summary statement of employee benefits, depreciation and amortization expenses by function during the years ended December 31, 2019 and 2018:

		Forthe years endedDecember31	Forthe years endedDecember31	Forthe years endedDecember31	Forthe years endedDecember31
		2019			2018
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$46,500	$1,072,746	$1,119,246	$42,141	$946,224	$988,365
Laborandhealth insurance	3,309	65,650	68,959	3,037	60,231	63,268
Pension	2,335	48,066	50,401	1,880	38,484	40,364
Remunerationto directors	-	5,806	5,806	-	6,127	6,127
Others	1,026	22,172	23,198	973	20,803	21,776
Depreciation	916	63,238	64,154	637	43,160	43,797
Amortization	-	331,695	331,695	-	360,664	360,664

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(1) The average number of employees of the Company was 638 and 593 for the years ended December 31, 2019 and 2018, respectively, including 4 non-employee directors for both years.
(2) Listed companies need to disclose the following additional information:
A. The average employee benefits expense for the current year was NT$1,990 thousand, and the average employee benefits expense for the previous year was NT$1,891 thousand.
B. The average employee salaries for the current year was NT$1,765 thousand, and the average employee salaries for the previous year was NT$1,678 thousand.
C. The Company’s average salary expense adjustment increased by 5.2%.

According to the Company’s Article of Incorporation, no less than 10% of profit of the current year is distributable as employees’ compensation and no more than 2% of profit of the current year is distributable as remuneration to directors and supervisors. However, before distributing employees’ compensation and remuneration to directors and supervisors, the Company’s profit should offset its accumulated losses, if any. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on profit of the year ended December 31, 2019, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$51,662 thousand and NT$216 thousand, respectively, which were recognized as payroll expenses. The Company recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$51,662 thousand and NT$216 thousand for the year ended December 31, 2019.

Actual employees’ compensation and renumeration to directors for the year ended December 31, 2018 was NT$39,345 thousand and NT$250 thousand, respectively, and there were no material differences between the aforementioned amounts and the amounts charged against earnings in 2018.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(17) Non-operating income and expenses

A. Other income

Other income
Interest income Financial assets measured at amortized cost Rental income Dividend income Others Total	For the years ended December 31,
	2019	2018
	$6,109 1,057 - 9,112	$7,776 1,543 7,717 15,905
	$16,278	$32,941

B. Other gains and losses

Other gains and losses
Losses on disposal of investments Foreign exchange gains Losses on financial assets at fair value through profit or loss Others Total	For the years ended December 31,
	2019	2018
	$- 5,576 (126) (10,569)	$(7,251) 28,329 (4,535) (31,241)
	$(5,119)	$(14,698)

C. Finance costs

Finance costs
Losses on disposal of investments Others Total	For the years ended December31,
	2019	2018
	$4,703 76)	(Note)
	$4,779)

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(18) Components of other comprehensive income

For the year ended December 31, 2019

Items that will not to be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Unrealized gains or losses from valuation on equity instruments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method Total of other comprehensive income	Arising during the period	Reclassification adjustments during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
	$(4,146) 190,313 (31,920) 4,925	$- - - -	$(4,146) 190,313 (31,920) 4,925	$829 - - -	$(3,317) 190,313 (31,920) 4,925
	$159,172	$-	$159,172	$829)	$160,001

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended December 31, 2018

For the year ended December	31, 2018
Items that will not to be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans Unrealized gains or losses from valuation on equity instruments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences resulting from translating the financial statements of a foreign operation Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method Total of other comprehensive income	Arising during the period	Reclassification adjustments during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
	$(386) (114,030) 13,694 (64,698)	$- - - -	$(386) (114,030) 13,694 (64,698)	$462 - - -	$76 (114,030) 13,694) (64,698))
	$(165,420)	$-	$(165,420)	$462)	$(164,958)

(19) Income tax

Based on the amendments to the Income Tax Act announced on February 7, 2018, starting from the year ended December 31, 2018, the Company’s applicable corporate income tax rate changed from 17% to 20%. The corporate income surtax on undistributed retained earnings changed from 10% to 5%.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The major components of income tax expense are as follows:

Income tax expense (income) recognized in profit or loss

Income tax expense (income) recognized in profit or loss
Current income tax expense: Current income tax payable Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred income tax income related to origination and reversal of temporary differences Deferred tax income relating to changes in tax rate or the imposition of new taxes Total income tax expense Income tax relating to components of other comprehensive income Deferred tax (income) expense: Remeasurements of defined benefit plans	For the years ended December 31
	2019	2018
	$35,173 (4,039) 11,269 -	$47,822 (14,850) (13,089) (3,916)
	$42,403	$15,967
	2019	2018
	$(829)	$(462)

Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

tax rates is as follows:
Accounting profit before tax from continuing operations Tax at the statutory rates applicable to profits in the perspective tax jurisdictions Tax effect of revenues exempted from taxation Tax effect of deferred tax assets/liabilities 10% surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Deferred tax income relating to changes in tax rate or the imposition of new taxes Tax credits Others Total income tax expense recognized in profit or loss	For the years ended December 31
	2019	2018
	$390,280	$279,195
	$78,056 (3,262) (11,589) - (4,039) - (14,053) (2,710)	$55,839 (18,080) (12,092) 9,017 (14,850) (3,916) - 49
	$42,403	$15,967

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2019

For the year ended December 31,	2019
Temporary differences Unrealized exchange loss Unrealized exchange gain Unrealized allowance for inventory valuation and obsolescence losses Revaluations of financial assets (liabilities) at fair value through profit or loss Defined benefit liabilities , non- current Unrealized losses on Impairment of Assets Unrealized loss from sales Unrealized bad debt expense Deferred tax expense Net deferred tax assets/(liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance as of January 1, 2019 $532 (1,858) 9,093 (66) 3,180 2,970 100 25,705 $39,656 $41,580 $1,924)	Deferred tax income (expense) recognized in profit or loss $2,094) (3,274) 737) 25) 315) -) 22) (11,188) $(11,269)	Deferred tax income (expense) recognized in other comprehensive income	Exchange differences $- - - - - - - - $-	Ending balance as of December 31, 2019
			$- - - - 829 - - -		$2,626 (5,132) 9,830 (41) 4,324 2,970 122 14,517
			$829		$29,216

					$34,389
					$5,173)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended December 31, 2018

For the year ended December 31,	2018
Temporary differences Unrealized exchange loss Unrealized exchange gain Unrealized allowance for inventory valuation and obsolescence losses Revaluations of financial assets (liabilities) at fair value through profit or loss Defined benefit liabilities , non- current Unrealized losses on Impairment of Assets Unrealized loss from sales Unrealized bad debt expense Others Deferred tax expense Net deferred tax assets/(liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Beginning balance as of January 1, 2018 $1,454 (209) 8,947) (827) 3,202 - - 9,621 1 $22,189 $23,225 $1,036	Deferred tax income (expense) recognized in profit or loss $ (922) (1,649) 146 761 (484) 2,970 100 16,084 (1) $17,005	Deferred tax income (expense) recognized in other comprehensive income	Exchange differences $- - - - - - - - - $-	Ending balance as of December 31, 2018
			$- - - - 462 - - - -		$532 (1,858) 9,093 (66) 3,180 2,970 100 25,705 -
			$462		$39,656

					$41,580
					$1,924)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Unrecognized deferred tax assets

As of December 31, 2019 and 2018 deferred tax assets that were not recognized amounted to NT$70,704 thousand and NT$79,678 thousand, respectively.

Unrecognized deferred tax liabilities relating to the investment in subsidiaries

The Company did not recognize any deferred tax liability for taxes that would be payable on the unremitted earnings of the Company’s overseas subsidiaries, as the Company has determined that undistributed profits of its subsidiaries will not be distributed in the foreseeable future. As of December 31, 2019 and 2018, the taxable temporary differences associated with investment in subsidiaries, for which deferred tax liabilities have not been recognized, aggregated to NT$53,702 thousand and NT$32,808 thousand, respectively.

As of December 31, 2019, the assessment of the income tax of the Company is assessed and approved up to 2017.

(20)Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted-average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted-average number of ordinary shares outstanding during the year plus the weighted-average number of ordinary shares that would be issued assuming all the dilutive potential ordinary shares were converted into ordinary shares.

(a) Basic earnings per share Net income (in thousand NT$) Weighted-average number of ordinary shares outstanding for basic earnings per share (in thousands) Basic earnings per share	Forthe years endedDecember31	Forthe years endedDecember31
	2019	2018
	$347,877	$263,228
	248,550	248,550
	$1.40	$1.06

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Diluted earnings per share Net income (in thousand NT$) Weighted-average number of ordinary shares outstanding for basic earnings per share (in thousands) Effect of dilution: Employee compensation (in thousands) Weighted-average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share	Forthe years endedDecember31	Forthe years endedDecember31
	2019	2018
	$347,877	$263,228
	248,550 493	248,550 1,473
	249,043	250,023
	$1.40	$1.05

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

(21)Deconsolidation of subsidiary

Faraday Technology Corporation—B.V. filed for liquidation through the decision at its shareholders’ meeting in 2018. The Company received the capital remittance in the year ended December 31, 2018, and derecognized the related assets and liabilities of the entity.

(1) The amount of assets and liabilities of Faraday Technology Corporation—B.V. over which the Company lost control are as follow ：

the Company lost control are as follow`：`
Assets: Cash and cash equivalents Account receivables-related parties Other receivables Other current assets Property, plant and equipment Total Liabilities Net assets of the subsidiary deconsolidated	As of September 30, 2018
	$22,896 350 46 257 8
	23,557 -
	$23,557

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Consideration received and gain recognized from the transaction ：

	For the year ended
	December31,2018
Cash received	$23,350
Net assets of the subsidiary deconsolidated	(23,557)
Effect of exchange rate change	(7,044)
Loss on disposal	$(7,251)

Loss on disposal was included in other gains and losses in statements of comprehensive income for the year ended December 31, 2018.

(3) Analysis of net cash flow arising from deconsolidation of the subsidiary ：

Cash received Net cash of subsidiary derecognized Net cash flow from deconsolidation	For the year ended December31,2018
	$23,350 (22,896)
	$454

7. Related Party Transactions

Information of the related parties that had transactions with the Company during the financial reporting years is as follows:

Name and nature of relationship of the related parties

Name oftherelated parties United Microelectronics Corporation Fresco Logic Inc. HeJian Technology (Suzhou) Co., Ltd., Wavetek Microelectronics Corporation United Semiconductor (Xiamen) Co., Ltd. Faraday Technology Corporation (USA) Faraday Technology Japan Corporation FaradayTek Solutions India Private Limited GrainTech Electronics Limited	Nature of relationship oftherelated parties
	Entity with joint control or significant influence over the Company Subsidiaries’ associates Other related parties Other related parties Other related parties Subsidiaries Subsidiaries Subsidiaries Subsidiaries

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Name and nature of relationship of the related parties

Name oftherelated parties Faraday Technology China Corporation Grain Media Inc. Innopower Technology Corporation (Innopower) Faraday Technology Corporation (Suzhou) Artery Technology Corporation, Ltd. United Business Service Corporation Artery Technology Company	Nature of relationship oftherelated parties
	Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries

(1) Sales

Sales
United Microelectronics Corporation Faraday Technology Japan Corporation Faraday Technology Corporation (USA) Faraday Technology China Corporation Subsidiaries Subsidiaries’ associates Other related parties Total	For the years ended December31
	2019	2018
	$588,512 581,418 413,032 700,381 302,764 54,925 30,381	$442,802 486,927 444,765 675,210 207,614 79,375 34,002
	$2,671,413	$2,370,695

The Company’s sales terms were 30~60 days from the date of monthly closing for non-related parties, while 60 days for related-parties. Selling prices for related parties were different from each other and a direct comparison was impractical since the products or services were customized based on each order.

(2) Purchases

Purchases
United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd., Other related parties Total	For the years ended December 31
	2019	2018
	$1,048,948 554,695 39,826	$843,269 292,238 121,782
	$1,643,469	$1,257,289

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The purchase price to the related parties above was determined through mutual agreement based on the market rates. The payment terms from the related party suppliers are 45~60 days.

(3) Expense and Revenue

Expense and Revenue
Subsidiaries United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd., Subsidiaries Total	Items Research and development expenses Testing expenses Testing expenses Rental income	For the years ended December 31
		2019	2018
		$61,110 622 677 (114)	$43,994 - - (286)
		$62,295	$43,708

(4) Contract assets-current

Contract assets-current
Faraday Technology China Corporation Subsidiaries Total Accounts receivables from related parties, net United Microelectronics Corporation Faraday Technology Japan Corporation Faraday Technology China Corporation Innopower Subsidiaries Subsidiaries’ associates Total	As	of December 31, 2018 $270,602 - $270,602 of
	December 31, 2019 $272,676 10,189 $282,865 As December 31, 2019 $158,554 83,015 72,899 34,044 93,832 12,060 $454,404
		December 31, 2018 $93,035 57,784 6,638 38,824 9,281 14,764 $220,326

(5) Accounts receivables from related parties, net

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(6) Other receivables

As of

Faraday Technology China Corporation Innopower Artery Technology Corporation, Ltd. Subsidiaries Total	December 31, 2019 $27,347 30,649 15,777 42 $73,815	December 31, 2018 $7,015 45,911 - 806 $53,732

(7) Contract liabilities-current

Contract liabilities-current
Subsidiaries Accounts payable to related parties, net United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd., Subsidiaries Other related parties Total Other payables Subsidiaries	As	of December 31, 2018 $5,283 of
	December 31, 2019 $113 As December 31, 2019 $78,655 122,613 6,483 6,763 $214,514
		December 31, 2018 $69,177 38,484 93 6,436 $114,190
	As	of December 31, 2018 $7,299
	December 31, 2019 $438

(8) Accounts payable to related parties, net

(9) Other payables

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Key management personnel compensation

Key management personnel compensation
Short-term employee benefits Post-employment benefits Total	For the years ended December31
	2019	2018
	$88,012 1,290	$82,806 1,288
	$89,302	$84,094

8. Assets Pledged As Collateral

The Company’s assets pledged as collateral were as follows:

Assets pledgedforsecurity	Carrying amount	Carrying amount	Securedliabilities
	2019.12.31	2018.12.31
Financial assets measured at amortized cost	$30,265	$15,236	Custom clearance deposit

9. Commitments and contingencies

None.

10. Losses due to major disasters

None.

11. Significant subsequent events

None.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

12. Others

(1) Categories of financial instruments

Financial assets

Financial assets
Financial assets at fair value through profit or loss: Mandatorily measured at Fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost (Note 1) Total Financial liabilities Financial liabilities at amortized cost: Payables (including related parties) Other payables Long-term payables Lease liabilities Total	As of
	December 31, 2019	December 31, 2018
	$204 895,710 2,103,221	$330 705,397 1,919,273
	$2,999,135	$2,625,000
	December 31, 2019	December 31, 2018
	$1,035,484 512,312 96,901 206,082	$799,839 516,101 211,859 (Note 2)
	$1,850,779	$1,527,799

Note 1: Including cash and cash equivalents (exclude cash on hand), notes receivable, accounts receivable, other receivable, refundable deposit and financial assets measured at amortized cost, non-current.

Note 2: The Company adopted IFRS 16 since January 1, 2019. The Company elected not to restate prior periods in accordance with the transition provision in IFRS 16.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies measures and manages the aforementioned risks based on the Company’s policy and risk exposures.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity instruments).

In practice, it is rarely the case that a single risk variable will change independently from other risk variables; there are usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company has certain foreign currency receivables denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is achieved. The Company also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analysis is as follows:

When NTD strengthens/weakens against USD by 10%, the profit for the years ended December 31, 2019 and 2018 would decrease / increase by NT$3,297 thousand and NT$74,892 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s short-term deposits at variable interest rates. Therefore, interest rate risk is low.

Equity price risk and other investment risk

The Company’s unlisted equity securities and other investments are susceptible to market price risk arising from uncertainties about future values of the investment objectives. The Company’s unlisted equity securities and other investment are classified under financial assets measured at fair value through other comprehensive income. The Company manages the equity price risk through diversification. Reports on the equity portfolio are submitted to the Company’s top management for reviews and approvals on a regular basis.

Please refer to Note 12(9) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for contract assets, accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all trading partners based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria and etc. Certain trading partners’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of December 31, 2019 and 2018, accounts receivable from top ten customers represented 71% and 73% of the total accounts receivables of the Company, respectively. The credit concentration risk of other accounts receivable is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counter parties.

The Company adopted IFRS 9 to assess the expected credit losses. The measurement indicators of the Company are described as follows:

Level of credit risk	Indicator	Measurement method for expected credit losses		Carryingamount	Carryingamount
				As of
			Loss rate
				December 31,	December 31,
				2019	2018
Simplified method (Note)	(Note)	Lifetime expected credit losses	0%~100%	$1,204,849	$879,299

Note: The Company adopted simplified method (lifetime expected credit loss) to measure credit risk. It includes contract asset, notes receivables and account receivables.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, and bank borrowings. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amounts include the contractual interest.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Non-derivative financial instruments

As of December 31, 2019 Payables (including related parties) Other payables Long-term payables Lease Liability As of December 31, 2018 Payables (including related parties) Other payables Long-term payables	Less than 1year	2 to 3years	4 to 5years	> 5years	Total
	$1,035,484 512,312 - 10,484 $799,839 516,101 -	$- - 96,901 19,074 $- - 211,859	$- - - 17,030 $- - -	$- - - 254,544 $- - -	$1,035,484 512,312 96,901 301,132 $799,839 516,101 211,859

Derivative financial instruments

Less than 1year	2 to 3years	4 to 5years	> 5years	Total
$108,183 (107,979)	$- -	$- -	$- -	$108,183 (107,979)
$204	$-	$-	$-	$204
$330 -	$- -	$- -	$- -	$330 -
$330	$-	$-	$-	$330

The table above contains the undiscounted net cash flows of derivative financial instruments.

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for year ended December 31, 2019:

Reconciliation of liabilities for year ended December 31, 2019:
As of January 1, 2019 Cash flows As of December 31, 2019	Lease Liability
	$211,189 (5,107)
	$206,082

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Reconciliation of liabilities for year ended December 31, 2018:

None.

(7) Fair values of financial instruments
(a) the methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

i. The carrying amount of cash and cash equivalents, notes receivables and accounts receivables, other receivables, payables and other payables approximate their fair value due to their short maturities.
ii. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities and funds) at the reporting date.
iii.Fair value of equity instruments (including unlisted equity securities) without active market and market quotations cannot be reliably measured. Its amount is measured by cost net of impairment loss.
iv. The long-term payables are determined by discounted cash flow analysis. The Company estimates the fair value based on book value due to the insignificant difference between the fair value from discounted cash flow analysis and carrying amount.
v. The fair value of derivative financial instrument is based on market quotations. For unquoted derivatives that are not options, the fair value is determined based on discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using the option pricing model.
(b) Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for fair value measurement hierarchy for financial instruments of the Company.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(8) Derivative financial instruments

The Company’s derivative financial instruments include forward currency contracts. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of December 31, 2019 and 2018 is as follows:

Forward currency contracts

The Company entered into forward currency contracts to manage its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to forward currency contracts:

Items(bycontract)	Notional Amount	Contract Period
As of December 31, 2019 Forward currency contract Forward currency contract As of December 31, 2018 Forward currency contract	Sell foreign currency USD 6,000 thousand Sell foreign currency RMB 25,000 thousand Sell foreign currency USD 6,000 thousand	From 2019.12.23 to 2020.01.09 From 2019.12.25 to 2020.01.17 From 2018.12.19 to 2019.01.09

(9) Fair values measurement hierarchy
(a) Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(b) Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31, 2019`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income As of December 31, 2018`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income	Level 1	Level 2	Level3	Total
	$- - Level 1	$204 - Level 2	$- 895,710 Level3	$204 895,710 Total
	$- -	$330 -	$- 705,397	$330 705,397

Transfers between Level 1 and Level 2 during the period

During the years ended December 31, 2019 and 2018, there were no transfers between Level 1 and Level 2 fair value measurements.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Movements of fair value measurement in level 3 on recurring basis

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the year is as follows:

Beginning balances as at January 1, 2019 Total gains and losses recognized for the year ended December 31, 2019: Amount recognized in other comprehensive income (“Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of December 31, 2019 Beginning balances as at January 1, 2018 Total gains and losses recognized for the year ended December 31, 2018: Amount recognized in other comprehensive income (“Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) Ending balances as of December 31, 2018	Assets	Assets
	At fair value through other comprehensiveincome	Total
	Stocks
	$705,397 190,313	$705,397 190,313
	$895,710	$895,710
	Assets
	At fair value through other comprehensiveincome	Total
	Stocks
	$819,427 (114,030)	$819,427 (114,030)
	$705,397	$705,397

Recognized as profit (loss) above, the loss from financial assets still held by the Company as of December 31, 2019 and 2018 was both NT$0 thousand.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2019

Stocks and others	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
	Asset approach	Discount for lack of marketability and non-controlling interest	10%	The higher the discount for lack of marketability, the lower the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability and non- controlling interest would result in decrease/ increase in the Company’s equity by NT$89,571 thousand

As of December 31, 2018

Stocks and others	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
	Asset approach	Discount for lack of marketability and non-controlling interest	10%	The higher the discount for lack of marketability, the lower the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability and non- controlling interest would result in decrease/ increase in the Company’s equity by NT$70,540 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Company’s Financial Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Company analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company’s accounting policies at each reporting date.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) Fair value measurement hierarchy of the Company’s assets and liabilities not measured at fair value but for which the fair value is disclosed

As of December 31, 2019:

None

As of December 31, 2018:

None

(10) Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

w:
Financialassets	As of December31,2019
	Foreign currencies	Foreign exchange rate	NTD
Monetary items: USD Non-monetary items: USD Financial liabilities
Monetary items: USD Financial assets
	Foreigncurrencies	Foreignexchangerate	NTD
	$28,421 14,082 4,042	30.72 30.72 30.72	$873,080 432,596 124,158
Monetary items: USD Non-monetary items: USD Financial liabilities
Monetary items: USD

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Because there are several types of functional currencies within the Company, it is not practical to disclose the exchange gains and losses of monetary financial assets and liabilities by each significant asset and liability denominated in foreign currencies. The foreign exchange gain was NT$5,576 thousand and NT$28,329 thousand for the years ended December 31, 2019 and 2018, respectively.

(11) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. Other disclosure

(1) Information related to significant transactions

Additional disclosures for information of the Company for the year ended December 31, 2019:

(a) Financing provided to others for the year ended December 31, 2019: None.
(b) Endorsement/Guarantee provided to others for the year ended December 31, 2019: None.
(c) Securities held as of December 31, 2019: Please refer to Attachment 1.
(d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019: None.
(e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019: None.
(f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019: None.
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FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(g) Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2019: Please refer to Attachment 2.
(h) Receivables from related parties with amount exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2019: Please refer to Attachment 3.
(i) Financial instruments and derivative transactions: Please refer to Note 12.
(j) Other: Significant intercompany transactions between consolidated entities: Please refer to Attachment 4.
(2) Information on investees

Information on investees which significant influenced or controlled by the Company: Please refer to Attachment 5.

(3) Information on investments in Mainland China
(a) Investee company name, main business and products, total amount of capital, method of investment, accumulated inflow and outflow of investments from Taiwan, percentage of ownership, investment income (loss), carrying amount of investments, cumulated inward remittance of earnings and limits on investment in Mainland China: Please refer to Attachment 6.
(b) Significant transaction to investee Company in Mainland China for the year ended December 31, 2019:
- i. Purchases amount and percentage, and related ending balance and percentage of payables: None.
- ii. Sales amount and percentage, and related ending balance and related ending balance and percentage of receivables: Please refer to Attachment 4.

iii. Property transaction amount and occurred gain (loss): None.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
iv. Ending balance and purpose of endorsement/guarantee provided for notes or collateral: None.
v. Highest balance, ending balance, interest rate interval and total interest amount in current period of financing: None.
vi. Other transactions with significant influence on current period income or financial position: Please refer to Attachment 4.
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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 1 (Securities held as of December 31, 2019) (Excluding subsidiaries and associates)

Faraday Technology Corporation

Type of securities	Name of securities	Relationship	Financial statement account		As of Decemb	er 31, 2019	Note
				Units/shares	Carrying amount (thousand)	Percentage of ownership (%) Fair value/ Net assets value
Common Stock Common Stock	SHIEH YONG Investment Co., Ltd. Unitech Capital Inc.	- -	Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent	92,496,000 2,500,000	$826,854 68,856	12.12% $826,854 5.00% 68,856	- -

Chih-Hung Investment Corporation

Type of securities	Name of securities	Relationship	Financial statement account		As of Decemb	er 31, 2019	Note
				Units/shares	Carrying amount (thousand)	Percentage of ownership (%) Fair value/ Net assets value
Preferred stock Common Stock Common Stock Common Stock Common Stock Common Stock Preferred stock Preferred stock Preferred stock Common Stock	Innostor Technology Corporation apm Communication, Inc. Storm Semiconductors, Inc. SanJet Technology Corporation Gear Radio Limited NeuroSky Floadia Hsun Chieh Capital Corp. Aviacomm Ltd.	- - - - - - - - -	Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through profit or loss, noncurrent	14,600,000 1,714,285 59,167 12,600 2,115,000 3,000,000 1,200,000 44,312,575 1,818 3,000,000	- - - 23,931 15,856 - 122,313 53,583 $-	0.70% - 0.13% - 8.01% - 9.53% 23,931 9.95% 15,856 7.76% - 9.74% 122,313 15.00% 53,583 12.60% $-	- - - - - - - - -

Sheng Bang Investment Corporation

Type of securities	Name of securities	Relationship	Financial statement account		As of Decemb	er 31, 2019	Note
				Units/shares	Carrying amount (thousand)	Percentage of ownership (%) Fair value/ Net assets value
Fund Common Stock Common Stock Common Stock Capital	IB FUND SPC -RCM Auto Parts Industry Fund Segregated Portfolio Storm Semiconductors, Inc. Sifotonics Technology Co., Ltd. Ascent Venture Capital Jian Rui Venture Capital (translated from Chinese)	- - - - -	Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent	10,000 641,000 800,000 3,000,000 -	$21,812 - - 12,538 11,339	- $21,812 2.43% - 1.52% - 19.67% 12,538 8.50% 11,339	- - - - -

Note : Fair value of equity instruments without active market and market quotation cannot be reliably measured.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 2 ( Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of capital stock for the year ended December 31, 2019)

Faraday Technology Corporation

Counter-party	Subsidiary Subsidiary Subsidiary Subsidiary Entity with joint control or significant influence over the Company Entity with joint control or significant influence over the Company Other related parties Relationship		Transactions	Transactions		Details of non-arm's length transaction	Notes and accounts receivable(payable)	Notes and accounts receivable(payable)	Note
		Purchases (Sales)	Amount	Percentage of total purchases (sales)	Term	Unit Price Payment Term	Balance	Percentage of total receivables (payable)
Faraday Technology Corporation (USA) Faraday Technology China Corporation Faraday Technology Japan Corporation Innopower Technology Corporation (Innopower) United Microelectronics Corporation United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd.,		Sales Sales Sales Sales Purchases Sales Purchases	$413,032 700,381 581,418 172,738 1,048,948 588,512 554,695	8.89% 15.07% 12.51% 3.72% 53.46% 12.67% 28.27%	Month-end 60 days Month-end 60 days Month-end 60 days Month-end 60 days Month-end 60 days Month-end 60 days Month-end 60 days	Note 1 Note3 Note 1 Note3 Note 1 Note3 Note 2 Note 2 Note 4 Note 4 Note 2 Note 2 Note 4 Note 4	$35,855 72,899 83,015 34,044 78,655 158,554 122,613	4.86% 9.88% 11.25% 4.62% 7.62% 21.49% 11.88%	- - - - - - -

Note 1: The sales price to the above related parties was determined through mutual agreement in reference to resale price. Note 2: Selling prices for related parties were different from each other and a direct comparison was impractical since the products or services were customized based on each order. Note 3: The Company’s sales terms were 30~60 days from the date of monthly closing for non-related parties, while 60 days for related-parties. Note 4: The purchase price to the related parties above was determined through mutual agreement based on the market rates. The payment terms from the related party suppliers are 60 days.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 3 ( Related party transactions for receivables of NT$100 million or 20 percent of capital stock for the year ended December 31, 2019)

Faraday Technology Corporation

Counter-party	Entity with joint control or significant influence over the Company Relationship	Ending Balance of Notes/Trade Receivables from Related Party (Note1)	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period	Allowance for Doubtful Debts
				Amount	Action Taken
United Microelectronics Corporation		$158,554	4.68	$-	$-	$103,074	$-

Note 1: Please fill in accounts receivable from related parties, notes receivable, other receivables, respectively. Note 2: The capital stock is the parent's capital stock.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 4 (Significant intercompany transactions between consolidated entities)

For the year ended December 31, 2019

Transactions

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 No. (Note 1)	Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Related Party	Faraday Technology Corporation (USA) Faraday Technology Corporation (USA) Faraday Technology Corporation (USA) Faraday Technology Corporation (USA) Faraday Technology Japan Corporation Faraday Technology Japan Corporation GrainTech Electronics Limited GrainTech Electronics Limited Innopower Technology Corporation (Innopower) Innopower Technology Corporation (Innopower) Innopower Technology Corporation (Innopower) Innopower Technology Corporation (Innopower) Artery Technology Corporation, Ltd. Artery Technology Corporation, Ltd. Artery Technology Corporation, Ltd. Faraday Technology China Corporation Counterparty	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Relationship with the Company (Note 2)	Sales Research expense Accounts receivable Accounts payables Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Other receivables Other payables Sales Accounts receivable Other receivables Sales Account	$413,032 52,077 35,855 6,345 581,418 83,015 6,230 1,604 172,738 34,044 30,649 302 63,772 29,328 15,777 700,381 Amount	Term	Percentage of consolidated operating revenues or consolidated total assets (Note 3)
						Note 4 According to the contract Month-end 60 days Month-end 60 days Note 4 Month-end 60 days Note 5 Month-end 60 days Note 5 Month-end 60 days Month-end 60 days Month-end 60 days Note 5 Month-end 60 days Month-end 60 days Note 5	7.78% 0.98% 0.47% 0.08% 10.96% 1.08% 0.12% 0.02% 3.26% 0.44% 0.40% - 1.20% 0.38% 0.20% 13.20%

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English Translation of Parent Company Only Financial Statements Originally Issued in Chinese (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 4 (Significant intercompany transactions between consolidated entities)

For the year ended December 31, 2019

Transactions

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 No. (Note 1)	Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Faraday Technology Corporation Related Party	Faraday Technology China Corporation Faraday Technology China Corporation Faraday Technology China Corporation Faraday Technology China Corporation Faraday Technology China Corporation Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) United Business Service Corporation United Business Service Corporation Grain Media Inc. FaradayTek Solutions India Private Limited FaradayTek Solutions India Private Limited Artery Technology Company Artery Technology Company Artery Technology Company Counterparty	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Relationship with the Company (Note 2)	Contract Assets Contract liabilities Accounts receivable Other receivables Accounts payable Sales Contract Assets Accounts payable Sales Accounts receivable Rent Revenue Other payable Research expense Sales Research expense Accounts receivable Account	272,676 113 72,899 27,347 133 30,278 10,189 5 28,728 27,027 114 136 4,583 1,018 4,450 18 Amount	Terms	Percentage of consolidated operating revenues or consolidated total assets (Note 3)
						According to the contract According to the contract Month-end 60 days Month-end 60 days Month-end 60 days Note 5 According to the contract Month-end 60 days Note 5 Month-end 60 days According to the contract Month-end 60 days According to the contract Note 5 According to the contract Month-end 60 days	3.54% - 0.95% 0.75% - 0.57% 0.13% - 0.54% 0.35% - - 0.09% 0.02% 0.08% -

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 4 (Significant intercompany transactions between consolidated entities)

For the year ended December 31, 2019

0 1 1 1 1 1 1 1 2 2 No. (Note 1)	Faraday Technology Corporation Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) Faraday Technology Corporation (Suzhou) United Business Service Corporation United Business Service Corporation Related Party	Artery Technology Company Faraday Technology China Corporation Faraday Technology China Corporation Faraday Technology China Corporation FaradayTek Solutions India Private Limited Faraday Technology Vietnam Company Limited United Business Service Corporation United Business Service Corporation Faraday Technology China Corporation Faraday Technology China Corporation Counterparty	1 3 3 3 3 3 3 3 3 3 Relationship with the Company (Note 2)			Transactions	Transactions
				Other receivables Sales Accounts receivable Contract liabilities Research expense Research expense Sales Accounts receivable Sales Accounts receivable Account	42 130,218 77,963 5,365 12,620 5,961 20,766 5,546 49,903 52,397 Amount	Terms	Percentage of consolidated operating revenues or consolidated total assets (Note 3)
						Month-end 60 days Note 5 Month-end 60 days According to the contract According to the contract According to the contract Note 5 Month-end 60 days Note 5 Month-end 60 days	- 2.45% 1.01% 0.07% 0.24% 0.11% 0.39% 0.07% 0.94% 0.68%

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 4 (Significant intercompany transactions between consolidated entities)

Note 1: Faraday Technology Corporation and its subsidiaries are coded as follows:

Faraday Technology Corporation is coded "0".
The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: Transactions are categorized as follows:

The holding company to subsidiary.
Subsidiary to holding company.
Subsidiary to subsidiary.
Note 3: The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item's balance at period-end.

For profit or loss items, cumulative balances are used as basis.

Note 4: The sales price to the above related parties was determined through mutual agreement in reference to resale price.

Note 5: As the sale of product or service is individually designed based on requirement of customers, they could not be compared directly.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 5 (Related information of investee companies as of December 31, 2019)

Faraday Technology Corporation

Faraday Technology Corporation
Investee company	Address	Main businesses andproducts	Initial Inv	estment	Investment as	of December 31, 2019	Net income (loss) of investee company (Note)	Investment income (loss) recognized (Note)
			December 31, 2019	December 31, 2018	Number of shares	Carrying amount(Note) Percentage of ownership (%)
Faraday Technology Corporation (USA) Faraday Technology - B.V.I Faraday Technology Japan Corporation Chih-Hung Investment Corporation Sheng Bang Investment Corporation Faraday Technology Vietnam Company Limited Chih-Hung Investment Corporation	USA British Virgin Islands Japan Tokyo Taiwan Taiwan Vietnam	Sales representive in America Trading and general investing Sales representive in Japan General Investing General Investing IC design services	$436,907 706,792 29,320 910,000 222,020 9,287	$436,907 706,792 29,320 910,000 222,020 -	Common stock 118,580 thousand shares and preferred stock 2,000 thousand shares Common stock 22,140 thousand shares Common stock 2 thousand shares Common stock 91,000 thousand shares Common stock 22,202 thousand shares -	Common stock owned 100.00% and preferred stock owned 100.00% $426,414 100.00% 365,263 99.95% 82,067 100.00% 713,257 100.00% 186,545 100.00% 7,790	$4,130 (7,025) 20,600 18,519 (2,823) (1,302)	$5,373 (5,868) 20,600 20,123 (2,811) (1,333)

Investee company	Address	Main businesses andproducts	Initial Inv	estment	Investment as	of December 31, 2019	Net income (loss) of investee company (Note)	Investment income (loss) recognized (Note)
			December 31, 2019	December 31, 2018	Number of shares(thousand)	Percentage of ownership (%) Carrying amount(Note)
Grain Media Inc. Innopower Technology Corporation Fresco Logic Inc. FaradayTek Solutions India Private Limited	Taiwan Taiwan USA India	IC designing, marketing and customer service Silicon Intellectual Property designing IC designing IC design services	$1,456 80,000 281,853 45	$1,456 80,000 281,853 -	Common stock 146 thousand shares Common stock 8,000 thousand shares Preferred stock 5,528 thousand shares Common stock 10 thousand shares	19.42% $1,157 100.00% 220,328 22.61% 81,183 1.00% 55	$(476) 51,040 (24,933) 1,346	$(92) 51,040 (3,646) 13

Sheng Bang Investment Corporation

Investee company	Address	Main businesses andproducts	Initial Inv	estment	Investment as	of December 31, 2019	Net income (loss) of investee company (Note)	Investment income (loss) recognized (Note)
			December 31, 2019	December 31, 2018	Number of shares(thousand)	Percentage of ownership (%) Carrying amount(Note)
Grain Media Inc. FaradayTek Solutions India Private Limited	Taiwan India	IC designing, marketing and customer service IC design services	$6,044 $4,462	$6,044 -	Common stock 604 thousand shares Common stock 990 thousand shares	80.58% $4,801 99.00% 5,407	$(476) 1,346	$(384) 1,333

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 5 (Related information of investee companies as of December 31, 2019)

Innopower Technology Corporation

Investee company	Address	Main businesses andproducts	Initial Inv	estment	Investment as	of December 31, 2019		Net income (loss) of investee company (Note)	Investment income (loss) recognized (Note)
			December 31, 2019	December 31, 2018	Number of shares(thousand)	Percentage of ownership (%)	Carrying amount(Note)
Bright Capital Group Limited Investee company Faraday Technology- B.V.I	Samoa Address	General investing Main businesses andproducts	$68,593 Initial Inv	$68,593 estment	Common stock 2,301 thousand shares Investment as	100.00% of December 31, 2019	$234,736	$54,813 Net income (loss) of investee company (Note)	$54,813 Investment income (loss) recognized (Note)
			December 31, 2019	December 31, 2018	Number of shares(thousand)	Percentage of ownership (%)	Carrying amount(Note)
		General investing IC designing, marketing and customer service General investing General investing IC designing, marketing and customer service Main businesses andproducts	USD $12,859,205 USD 100,000 USD 4,715,067 USD 4,460,000 60 Initial Inv	USD $12,859,205 USD 100,000 USD 4,715,067 USD 4,460,000 - estment	Common stock 12,804 thousand shares Common stock 100 thousand shares Common stock 4,715 thousand shares Common stock 4,300 thousand shares Common stock 10 thousand shares Investment as	100.00% 100.00% 100.00% 67.20% 67.20% (Note2) of December 31, 2019	$87,776 5,604 148,954 120,927 10,912	$(3,066) (47) 36,187 (51,720) (9,697) Net income (loss) of investee company (Note)	$(3,066) (47) 36,187 (40,087) (6,855) Investment income (loss) recognized (Note)
Investee company
			December 31, 2019	December 31, 2018	Number of shares(thousand)	Percentage of ownership (%)	Carrying amount(Note)
Artery Technology Company	Taiwan	IC designing, marketing and customer service	60	-	Common stock 10 thousand shares	67.20% (Note2)	10,912	(9,697)	(6,855)

Note 1: USD are expressed in dollars.

Note 2:The Company owns 100% of Faraday Technology-B.V.I. and Faraday Technology-B.V.I. 67.20% in Artery Technology Corporation-Cayman.The Artery Technology Corporation-Cayman owns 100% of Artery Technology Corporation, The Group's share of profit or loss of Innopower (Chongqing) Technology Corporation is 67.20%.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 6 (Investment in Mainland China as of December 31, 2019)

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January1, 2019	Investment F	lows	Accumulated Outflow of Investment from Taiwan as of December 31, 2019	Net income (loss) of investee company	Percentage of Ownership Investment income (loss) recognized	Carrying Value as of December 31, 2019	Unit:New Taiwan Dollars in thousands, USD and RMB in dollars
					Outflow	Inflow					Accumulated inward remittance of earnings as of December 31, 2019
Artery Technology Corporation, Ltd. Grain Media Technology (Shenzhen) Co., Ltd. Innopower Technology Corporation (Chongqing) United Creative Solution Corporation Faraday Technology China Corporation Faraday Technology Corporation (Suzhou) United Business Service Corporation	IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service	$180,180 (USD 6,000,000) $174,174 (USD 5,800,000) $120,144 (USD 4,000,814) $129,630 (RMB $30,000,000 (USD 9,660,000) $4,321 (RMB 1,000,000) $4,321 (RMB 1,000,000) $290,090	Note 1 Note 3 Note 1 Note 5 Note 1 Note 6 Note 1 Note 7 Note 10 Note 4 Note 8 Note 9	$180,180 (USD 6,000,000) $174,174 (USD 5,800,000) $120,144 (USD 4,000,814) $129,630 (RMB 3,0000,000) (USD 4,460,000) $- $- $133,934	$- $- $- $- $- $- $- $-	$- $- $- $- $- $- $-	$180,180 (USD 6,000,000) $174,174 (USD 5,800,000) $120,144 (USD 4,000,814) $129,630 (RMB 3,0000,000) (USD 4,460,000) $- $133,934 $-	$(5) $(375) $(3,026) $54,813 - $36,187 $(37,146)	100.00% $(375) $(5) 100.00% 67.20% $(28,699) 100.00% 100.00% 100.00% $(3,026) $54,813 $36,187 - 100.00%	$3,947 $4,315 $108,606 $85,129 $234,736 $448 $148,952	$- $- $- $- $- $- $-

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ATTACHMENT 6 (Investment in Mainland China as of December 31, 2019)

Accumulated investment in Mainland China as of December 31, 2019	Investment amounts authorized by Investment Commission, MOEA	Upper limit on investment
$750,026 (Note 2) (USD 24,975,881)	$844,198 (Note 2) (USD 28,111,835)	$3,122,230

Note 1: Indirectly investment in Mainland China through subsidiaries of Faraday Technology-B.V.I. (registered in a third region) such as Faraday Technology CorporationMauritius, Faraday Technology Corporation- Samoa, and Artery Technology Corporation-Cayman.
Note 2: Amounts denominated in foreign currency is translated into New Taiwan Dollars by using exchange rate on December 31, 2019.
Note 3: As of December 31, 2019, Investment Commission, MOEA approved the total investment amount USD 6,000 thousand. The Company had remitted investment amounted to USD 5,500 thousand, and Faraday Technology Corporation-Mauritius had remitted investment amounted to USD 500 thousand from its owned capital.
Note 4: On May 19, 2010, Investment Commission, MOEA approved Innopower Technology Corporation acquired the 100% of ownership of AiceStar Technology Corporation (Mainland China company owned by Faraday Technology Corporation- Mauritius, which owned by Faraday Technology- B.V.I.) with USD 602,182 through Brigtht Capital Group Capital Limited. Before the transaction, Investment Commission, MOEA had approved the total investment amount USD 5,800 thousand , and USD 5,800 thousand had been remitted.
Note 5: As of December 31, 2019, Investment Commission, MOEA approved the total investment amount USD 4,112 thousand , and the Company had remitted USD 4,001 thousand for the investment.
Note 6: As of December 31, 2019, Investment Commission, MOEA approved the total investment amount RMB 30,000 thousand , and the Company had remitted RMB 30,000 thousand for the investment.
Note 7: As of December 31, 2019, Investment Commission, MOEA approved the total investment amount USD 5,500 thousand , and the Company had remitted USD 4,460 thousand for the investment.
Note 8: United Business Service Corporation invested in the establishment of United Creative Solution Corporation in August 2019.

Note 9: United Business Service Corporation invested in the establishment of Innopower Technology Corporation (Chongqing) in July 2019.

Note 10: The Company owns 100% of Faraday Technology-B.V.I. and Faraday Technology-B.V.I. 67.20% in Artery Technology Corporation-Cayman.The Artery Technology Corporation-Cayman owns 100% of Artery Technology Corporation, The Group's share of profit or loss of Innopower (Chongqing) Technology Corporation is 67.20%.
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FARADAY TECHNOLOGY CORPORATION

1. STATEMENT OF CASH AND CASH EQUIVALENTS

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars and dollars of Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and dollars of Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and dollars of Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and dollars of Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and dollars of Foreign Currencies)
Item	Description		Amount	Note
Cash on hand Saving NT Dollars Foreign currency Checking deposits Foreign currency Time Deposits NT Dollars Foreign currency Commercial Paper Total	USD 1,061,451.63 CNY 15,898,345.65 USD 121,767.00 USD 6,645,000.00		200 $ 78,191 31,875 68,697 3,657 774,200 199,549 60,000 1,216,369 $	1. Cash and cash equivalents were not pledged. 2. Foreign exchange rate as of December 31, 2019 USD1=NTD30.03 CNY1=NTD4.321

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FARADAY TECHNOLOGY CORPORATION

2. STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
Financial Instruments	Contract Amount	Contract Period	Fair Value	Note
Forward currency contract Forward currency contract	USD 6,000,000 CNY 25,000,000	2019/12/23-2020/01/09 2019/12/25-2020/01/17	779 $ (575) 204 $

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FARADAY TECHNOLOGY CORPORATION

3. STATEMENT OF ACCOUNTS RECEIVABLES

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Client	Description		Amount	Note
Trade receivables Client A Client B Client C Client D Client E Others Total Less: Allowance for doubtful accounts Net amount	The amount of individual client in others does not exceed 5% of the account balance.		124,340 $ 29,951 26,541 23,715 17,331 96,648 318,526 (37,010) 281,516 $	The accounts receivables were all derived from daily operations.

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FARADAY TECHNOLOGY CORPORATION

4. STATEMENT OF INVENTORIES

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Description		Amount	Amount	Amount	Note
			Cost		Fair Value
Work in process Finished goods Total Less`：`Allowance for inventory valuation losses Net Amount			200,321 $ 466,426 666,747 (49,152) 617,595 $		388,762 $ 521,957 910,719 $	1. Inventories were not pledged. 2. Inventories are valued at lower of cost and net realizable value item by item. In addition, allowance of inventory obsolescence is reserved for slow moving item.

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FARADAY TECHNOLOGY CORPORATION

5. STATEMENT OF OTHER CURRENT ASSETS

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Description		Amount	Note
Other prepaid expenses Payment on behalf of others Total			108,263 $ 1,266 109,529 $

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FARADAY TECHNOLOGY CORPORATION

6. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

For the year ended December 31, 2019

													(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Investee Company	Kind	BeginningBalance		Acquisition		Disposal		Investment Income (Loss)	Exchange Differences on Translation of Foreign Operations	Others	EndingBalanc		e	Net Assets Value	Collateral	Note
		Shares (Thousands)	Amount	Shares (Thousands)	Amount	Shares (Thousands)	Amount				Shares (Thousands)	%	Amount	Unit (dollars)
Faraday Technology Corporation (USA) Faraday Technology`－`B.V.I. Faraday Technology Japan Corporation Chih-Hung Investment Corporation Sheng Bang Investment Corporation Faraday Technology Vietnam Company Limited The total of investments accounted for using the equity method	Common stock Preferred stock Common stock Common stock Common stock Common stock Capital	118,580 2,000 22,140 2 91,000 22,202 -	432,596 $ - 283,413 62,128 675,248 211,276 -	- - - - - - -	- $ - - - - - 9,287	- - - - - - -	- $ - - - - - - $	5,373 $ - (5,868) 20,600 20,123 (2,811) (1,333) 36,084 $	(11,555) $ - (10,581) (661) (9,221) (400) (164) (32,582) $	- $ - 98,299 - 27,107 (21,520) -	118,580 2,000 22,140 2 91,000 22,202 -	100% 100% 100% 99.95% 100% 100% -	426,414 $ - 365,263 82,067 713,257 186,545 7,790	3.54 $ - 16.50 41,033.50 7.84 8.40 -	None None None None None None None	Note(1) Note(2) Note(3) Note(4)
			1,664,661 $		9,287 $					103,886 $			1,781,336 $

Note 1: Others are additional paid-in auounted to NT$98,299 thousand.

Note 2: Others inclued unrealized gain on financial assets measured at fair value through other comprehensive income amounted to NT$6,290 thousand, and transfer to retained earnings amounted to NT$20,817 thousand due to disposal. Note 3: Others inclued unrealized loss on financial assets measured at fair value through other comprehensive income amounted to NT$21,520 thousand.

Note 4: The Company invested in the establishment of Faraday Technology Vietnam Company Limited in May 2019.

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FARADAY TECHNOLOGY CORPORATION

7. STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT

For the year ended December 31, 2019

							(Amountsin Thousands ofNewTaiwan Dollars)	(Amountsin Thousands ofNewTaiwan Dollars)	(Amountsin Thousands ofNewTaiwan Dollars)	(Amountsin Thousands ofNewTaiwan Dollars)	(Amountsin Thousands ofNewTaiwan Dollars)
Item	BeginningBalance		Acquisition		Disposal		Financial aeests at fair value through profit or loss	EndingBalance		Collateral	Note
	Shares	Fair Value	Shares	Amount	Shares	Amount		Shares	Fair Value
SHIEH YONG Investment Co., Ltd. Unitech Capital Inc. Total	92,496,000 2,500,000	644,439 $ 60,958 705,397 $	- -	- $ - - $	- -	- $ - - $	182,415 $ 7,898 190,313 $	92,496,000 2,500,000	826,854 $ 68,856 895,710 $	None None	Note Note

8. Statement of property, plant and equipment

Please refer to Note6 (7)

Statement of depreciation of property, plant and equipment

Please refer to Note6 (7)

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FARADAY TECHNOLOGY CORPORATION 10. STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Supplier	BeginningBalance	BeginningBalance		Acquisition		Disposal		EndingBalance	Note
Cost Land Buildings and facilities Transportation equipment Office equipment Total Accumulated Depreciation Land Buildings and facilities Transportation equipment Office equipment Total		202,168 $ 5,763 2,915 343 211,189 $ - $ - - - - $		- $ - - - - $ 5,320 $ 1,172 1,166 111 7,769 $		- $ - - - - $ - $ - - - - $		202,168 $ 5,763 2,915 343 211,189 $ 5,320 $ 1,172 1,166 111 7,769 $

Statement of Intangible assets Please refer to Note6 (8)
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FARADAY TECHNOLOGY CORPORATION

12. STATEMENT OF ACCOUNTS PAYABLES

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Supplier	Description		Amount	Note
Accounts payables Shenzhen Semidux Technology Limited Texas Instruments Co., Ltd. Net Fordward Corp. Vango Technologies, Co., Ltd. Others Total	The amount of individual vendor in others does not exceed 5% of the account balance.		152,597 $ 110,721 50,751 43,919 459,417 817,405 $	The accounts payable was all derived from daily operations.

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FARADAY TECHNOLOGY CORPORATION

13. STATEMENT OF OTHER PAYABLES

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Item	Description		Amount	Note
Research expense payables Accrued salaries Others Total	The amount of individual item in others does not exceed 5% of the account balance. Include EDA Tool and Authorization fee		244,448 $ 152,776 115,088 512,312 $

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FARADAY TECHNOLOGY CORPORATION 14. STATEMENT OF LEASE LIABILITIES

As of December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Lease Term	Discount rate (year)		Ending Balance	Note
Land Buildings and facilities Transportation equipment Office equipment Total	2003/08/01~2056/12/31 2017/12/01~2023/11/30 2018/06/27~2021/06/26 2014/02/01~2022/01/31	2.277% 1.707% 1.707% 1.707%		199,445 $ 4,630 1,764 243 206,082 $

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FARADAY TECHNOLOGY CORPORATION

15. STATEMENT OF NET SALES

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Item	Description		Amount	Note
Sales of goods Rendering of services Silicon intellectual property license Net operating revenues			2,880,774 $ 1,383,791 381,797 4,646,362 $

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FARADAY TECHNOLOGY CORPORATION

16. STATEMENT OF OPERATING COSTS

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Description		Amount	Note
Direct material Beginning of year Add: Raw material purchased Less: Raw material, end of year Direct material uesd Direct labor Manufacturing Expenses Manufacturing Costs Add: Work in process, beginning of year Returns for rework Less: Work in process, end of year Scrap Cost of Finished Goods Add: Finished goods, beginning of year Others Less: Finished goods, ending of year Sample Picking for rework Scrap Revenue from sales of scrap Add: Employee compensation Add: Loss on inventory valuation Add: Loss on scrap of inventories Add: Royalty Less: Purchase Discount Total Operating Costs			- $ 1,718,375 - 1,718,375 - 690,582 2,408,957 187,399 20,306 (200,321) (6,683) 2,409,658 445,764 27,526 (466,426) (1,411) (20,306) (881) (1,591) 2,126 3,686 7,564 38,696 (33,298) 2,411,107 $

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FARADAY TECHNOLOGY CORPORATION

17. STATEMENT OF MANUFACTURING EXPENSES

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Description		Amount	Note
Variable manufacturing expenses C/P ASSY F/T Subtotal Fixed manufacturing expenses Wages and salaries Grinding expense Insurance expense Others Subtotal Total	The amount of individual item in others does not exceed 5% of the account balance.		47,844 $ 501,511 78,357 627,712 46,709 6,221 3,392 6,548 62,870 690,582 $

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FARADAY TECHNOLOGY CORPORATION

18. STATEMENT OF SELLING EXPENSES

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

Item	Description		Amount	Note
Wages and salaries Royalty Commissions expense Other expense Total	The amount of individual item in others does not exceed 5% of the account balance.		58,681 $ 9,802 7,752 19,834 96,069 $

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FARADAY TECHNOLOGY CORPORATION

19. STATEMENT OF ADMINISTRATIVE EXPENSES

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Item	Description		Amount	Note
Wages and salaries Other expense Total	The amount of individual item in others does not exceed 5% of the account balance.		142,347 $ 89,341 231,688 $

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FARADAY TECHNOLOGY CORPORATION

20. STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES

For the year ended December 31, 2019

(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Item	Summary		Amount	Note
Wages and salaries Amortization Research expense Other expense Total	The amount of individual item in others does not exceed 5% of the account balance.		924,920 $ 331,695 150,004 234,058 $1,640,677

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AI assistant

Faraday — Audit Report / Information 2019

52268_rns_2019-12-31_8ace8d4c-5f70-4759-bfce-a2d9804d650e.pdf

Notice to Readers

Independent Auditors’ Report Originally Issued in Chinese

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Inventories

Other Matter – Making Reference to the Audits of Component Auditors

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION PARENT COMPANY ONLY BALANCE SHEETS As of December 31, 2019 and December 31, 2018 (Expressed in thousands of New Taiwan Dollars)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

1. History and Organization

2. Date and Procedures of Authorization of Financial Statements for Issue

3. Newly Issued or Revised Standards and Interpretations

A. IFRS 16“Leases”

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

b. Definition of a Material - Amendments to IAS 1 and 8

c. Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

FARADAY TECHNOLOGY

4. Summary of Significant Accounting Policies

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

FARADAY TECHNOLOGY

Financial assets measured at amortized cost

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

Financial asset measured at fair value through other comprehensive income

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

Financial asset measured at fair value through profit or loss

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

FARADAY TECHNOLOGY

Classification between liabilities or equity

Equity instruments

Financial liabilities

Financial liabilities at fair value through profit or loss

FARADAY TECHNOLOGY

Financial liabilities at amortized cost

Derecognition of financial liabilities

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

(9) Fair value measurement

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

(10) Inventories

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

FARADAY TECHNOLOGY

(12) Property, plant and equipment

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

The accounting policy from January 1, 2019 is as follows:

FARADAY TECHNOLOGY

Company as a lessee

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY

The accounting policy before January 1, 2019 is as follows:

Company as a lessee

(14) Intangible assets

Faraday Audit Report / Information 2019