Faraday - Interim / Quarterly Report 2019

English Translation of a Report and Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS FOR THE THREE MONTHS ENDED MARCH 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 consolidated 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.

Review Report of Independent Accountants

To Faraday Technology Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Faraday Technology Corporation and its subsidiaries (“the Group”) as of March 31, 2019 and 2018, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods ended March 31, 2019 and 2018, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”). Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard No. 34, “Interim Financial Reporting” as endorsed and became effective by Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

As explained in Note 4(3), the financial statements of certain insignificant subsidiaries were not reviewed by independent accountants. Those statements reflect total assets of NT$2,472,647 thousand and NT$2,227,275 thousand, constituting 34.36% and 31.79% of the consolidated total assets, and total liabilities of NT$366,445 thousand and NT$198,226 thousand, constituting 16.34% and 12.88% of the consolidated total liabilities as of March 31, 2019 and 2018, respectively; and total comprehensive income of NT$61,483 thousand and NT$159,934 thousand, constituting 43.38% and 127.13% of the consolidated total comprehensive income for the three-month periods ended March 31, 2019 and 2018, respectively. As explained in Note 6(6), the financial statements of the associate accounted for under the equity method were not reviewed by independent accountants. The associate under equity method amounted to NT$83,805 thousand and NT$89,056 thousand as of March 31, 2019 and 2018, respectively. The related shares of profits from the associate under the equity method amounted to NT$(1,818) thousand and NT$(5,045) thousand, and the related shares of other comprehensive income from the associate under the equity method amounted to NT$133 thousand and NT$(914) thousand for the three-month periods ended March 31, 2019 and 2018, respectively. The information related to above subsidiaries, and the associate accounted for under the equity method disclosed in Note 13 was also not reviewed by independent accountants.

Conclusion

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain insignificant subsidiaries, and the associate accounted for using equity method and the information disclosed in the footnotes been reviewed by independent accountants described in the preceding paragraph, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Faraday Technology Corporation and its subsidiaries as of March 31, 2019 and 2018, their consolidated financial performance and cash flows for the three-month periods ended March 31, 2019 and 2018, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard No. 34, “Interim Financial Reporting” as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

/s/Chiu, Wan-Ju

/s/Kuo, Shao-Pin

Ernst & Young, Taiwan April 23, 2019

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 consolidated 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 consolidated financial statements are those generally accepted and applied in the Republic of China.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

March 31, 2019, December 31, 2018 and March 31, 2018 (March 31, 2019 and 2018 are unaudited) (Expressed in thousands of New Taiwan Dollars)

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As of
Assets Note
March 31, 2019 December 31, 2018 March 31, 2018
Current assets
Cash and cash equivalents 4, 6(1) $ 2,459,957 $ 2,387,534 $ 3,308,681
Financial assets at fair value through profit or loss, current 4, 6(2) 24,499 25,525 30,979
Contract assets, current 4, 6(13), 6(14), 7 399,258 367,258 125,080
Notes receivable, net 4, 6(14) 1,840 1,558 1,783
Accounts receivable, net 4, 6(4), 6(14) 631,788 766,844 392,486
Accounts receivable from related parties, net 4, 6(4), 6(14), 7 92,641 114,694 62,648
Other receivables, net 57,814 45,640 77,153
Inventories, net 4, 6(5) 537,119 596,017 594,923
Other current assets 7 82,542 88,653 100,730
Total current assets 4,287,458 4,393,723 4,694,463
Non-current assets
Financial assets at fair value through profit or loss, noncurrent 4, 6(2) 29,265 29,265 29,265
Financial assets at fair value through other comprehensive income, noncurren6(3) 1,005,867 967,922 1,239,583
Financial assets measured at amortized cost, noncurrent 8 16,806 16,772 16,692
Investments accounted for using equity method 6(6) 83,805 85,490 89,056
Property, plant and equipment 6(7) 569,764 575,858 543,108
Right-of-use assets 4, 6(15) 282,573 - -
Intangible assets 6(8) 874,150 691,470 350,485
Deferred tax assets 4 40,105 47,344 37,195
Refundable deposits 7,155 6,875 6,730
Total non-current assets 2,909,490 2,420,996 2,312,114
Total assets $ 7,196,948 $ 6,814,719 $ 7,006,577
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The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2019, December 31, 2018 and March 31, 2018 (March 31, 2019 and 2018 are unaudited) (Expressed in thousands of New Taiwan Dollars)

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As of
Liabilities and Equity Note
March 31, 2019 December 31, 2018 March 31, 2018
Current liabilities
Financial liabilities at fair value through profit or loss, current 6(2) $ 96 $ - $ -
Contract liabilities, current 4, 6(13) 319,295 300,408 187,471
Notes payable 373 4 47
Accounts payable 684,665 695,160 709,903
Accounts payable - related parties 7 74,314 114,097 87,596
Payables on equipment 279 1,607 11,088
Other payables 6(10) 500,539 561,437 359,919
Current tax liabilities 58,637 63,974 118,705
Lease liabilities-current 4, 6(15) 29,224 - -
Other current liabilities 31,067 29,491 25,326
Total current liabilities 1,698,489 1,766,178 1,500,055
Non-current liabilities
Deferred tax liabilities 4 1,995 2,390 5,594
Lease liabilities-noncurrent 4, 6(15) 254,488 - -
Long-term payables 6(10) 264,923 211,859 15,525
Long-term deferred revenue 6,660 7,031 -
Defined benefit liabilities, non-current 4 16,286 15,900 18,126
Total non-current liabilities 544,352 237,180 39,245
Total liabilities 2,242,841 2,003,358 1,539,300
Equity attributable to the parent company
Capital 6(12)
Common stock 2,485,503 2,485,503 2,485,503
Additional paid-in capital 6(12) 627,408 626,596 598,879
Retained earnings 6(12)
Legal reserve 1,596,485 1,596,485 1,512,894
Special reserve 860 860 -
Unappropriated earnings 695,200 599,145 1,137,038
Other components of equity (465,784) (512,210) (267,037)
Equity attributable to the parent company 6(12) 4,939,672 4,796,379 5,467,277
Non-controlling interests 6(12) 14,435 14,982 -
Total equity 4,954,107 4,811,361 5,467,277
Total liabilities and equity $ 7,196,948 $ 6,814,719 $ 7,006,577
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The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three-months ended March 31, 2019 and 2018

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

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For the three-months ended
March 31,
Note 2019 2018
Net sales 4, 6(13), 7 $ 1,097,379 $ 1,042,940
Operating costs 6(5), 6(16), 7 (460,881) (479,424)
Gross profit 636,498 563,516
Operating expenses 6(8), 6(16)
Selling expenses (52,220) (40,760)
Administrative expenses (72,035) (100,252)
Research and development expenses (472,696) (360,558)
Expected credit gains (losses) 6(14) 46,239 (13,028)
Total operating expenses (550,712) (514,598)
Operating income 85,786 48,918
Non-operating income and expenses
Other income 4, 6(17) 30,760 11,777
Other gains and losses 4, 6(17) 1,878 16,936
Finance costs 4, 6(17) (1,941) -
Share of profit or loss of associates and joint ventures 4, 6(6) (1,818) (5,045)
Total non-operating income and expenses 28,879 23,668
Income from continuing operations before income tax 114,665 72,586
Income tax expense 4, 6(19) (19,692) (3,597)
Net income from continuing operations 94,973 68,989
Other comprehensive income 4, 6(18)
Item that will not be reclassified subsequently to profit or loss:
Unrealized gains or losses from equity instruments investments
37,945 60,908
measured at fair value through other comprehensive income
Item that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 8,694 (3,184)
Share of the other comprehensive income
133 (914)
of associates and joint ventures accounted for using equity method
Other comprehensive income (net of income tax) 46,772 56,810
Total comprehensive income $ 141,745 $ 125,799
Net income attributable to:
Stockholders of the parent 6(20) $ 96,055 $ 68,989
Non-controlling interests 6(12) (1,082) -
$ 94,973 $ 68,989
Comprehensive income (loss) attributable to:
Stockholders of the parent $ 142,481 $ 125,799
Non-controlling interests (736) -
$ 141,745 $ 125,799
Earnings per share (NTD) 6(20)
Earnings per share-basic $ 0.39 $ 0.28
Earnings per share-diluted $ 0.39 $ 0.28
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The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the three-months ended March 31, 2019 and 2018

(Expressed in thousands of New Taiwan Dollars)

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Equity Attributable to the Parent Company
Retained Earnings Other Components of Equity
Unrealized Gain
or Loss on Unrealized
Exchange Financial Assets Gain or Loss
Differences on
Measured at Fair on Available-
Translation of
Value through for-sale
Foreign Other Financial Non-
Common Additional Legal Special Unappropriated Operations Comprehensive Assets Controlling
Stock Paid-in Capital Reserve Reserve Earnings Income Total Interests Total Equity
Balance as of January 1, 2018 $ 2,485,503 $ 598,879 $ 1,512,894 $ - $ 933,774 $ (67,610) $ - $ 66,750 $ 5,530,190 $ - $ 5,530,190
Impact of retroactive application and restatement - - - - 134,275 - (256,237) (66,750) (188,712) - (188,712)
Restated balance as of January 1, 2018 2,485,503 598,879 1,512,894 - 1,068,049 (67,610) (256,237) - 5,341,478 - 5,341,478
Net income for the three-month ended March 31, 2018 - - - - 68,989 - - - 68,989 - 68,989
Other comprehensive income for the three-month ended - - - - - (4,098) 60,908 - 56,810 - 56,810
March 31, 2018
Total comprehensive income for the three-month ended - - - - 68,989 (4,098) 60,908 - 125,799 - 125,799
March 31, 2018
Balance as of March 31, 2018 $ 2,485,503 $ 598,879 $ 1,512,894 $ - $ 1,137,038 $ (71,708) $ (195,329) $ - $ 5,467,277 $ - $ 5,467,277
Balance as of January 1, 2019 $ 2,485,503 $ 626,596 $ 1,596,485 $ 860 $ 599,145 $ (52,955) $ (459,255) $ - $ 4,796,379 $ 14,982 $ 4,811,361
Net income for the three-month ended March 31, 2019 - - - - 96,055 - - - 96,055 (1,082) 94,973
Other comprehensive income for the three-month ended - - - - - 8,481 37,945 - 46,426 346 46,772
March 31, 2019
Total comprehensive income for the three-month ended - - - - 96,055 8,481 37,945 - 142,481 (736) 141,745
March 31, 2019
Change in subsidiaries' ownership - 812 - - - - - - 812 189 1,001
Balance as of March 31, 2019 $ 2,485,503 $ 627,408 $ 1,596,485 $ 860 $ 695,200 $ (44,474) $ (421,310) $ - $ 4,939,672 $ 14,435 $ 4,954,107
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The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three-months ended March 31, 2019 and 2018 (Expressed in thousands of New Taiwan Dollars)

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For the three-months ended For the three-months ended
March 31, March 31,
Description 2019 2018 Description 2019 2018
Cash flows from operating activities: Cash flows from investing activities:
Net income before tax $ 114,665 $ 72,586 Acquisition of financial asset measured at fair value through other comprehensive income $ - $ (30,000)
Adjustments for non-cash gain or loss: Acquisition of financial asset measured at fair value through profit or loss - (58,465)
Depreciation 23,372 11,214 Disposal of financial asset measured at fair value through profit or loss - 36,508
Amortization 84,487 89,534 Acquisition of property, plant and equipment (9,814) (9,827)
Expected credit (gain) loss (46,239) 13,028 Refundable deposits (280) (177)
Loss on financial assets and liabilities at fair value through profit or loss 1,155 2,591 Acquisition of intangible assets (147,727) (79,927)
Interest expense 1,941 Other investing activities- (34) 4
Interest income (2,925) (3,136) Net cash used in investing activities (157,855) (141,884)
Share-based payment expenses 1,001 -
Share of loss of associates and joint ventures accounted for using equity method 1,818 5,045 Cash flows form financing activities:
Others - (18,779) Cash payments for the principal portion of the lease liability (12,329) -
Changes in operating assets and liabilities: Net cash used in financing activities (12,329) -
Contract assets (32,000) (125,080) Effect of exchange rate changes on cash and cash equivalents 6,035 2,026
Notes receivable (282) 3,287
Accounts receivable 181,295 201,246 Net increase in cash and cash equivalents 72,423 148,959
Accounts receivable from related parties 22,053 26,417 Cash and cash equivalents at beginning of period 2,387,534 3,159,722
Other receivables (11,982) (9,186) Cash and cash equivalents at end of period $ 2,459,957 $ 3,308,681
Inventories 58,898 (160,760)
Other current assets 3,607 (1,559)
Contract liabilities 18,887 -
Notes payables 369 (53)
Accounts payable (10,495) 251,098
Accounts payable - related parties (39,783) 3,375
Other payables (119,472) (173,378)
Other current liabilities 1,205 107,928
Defined benefit liabilities 386 (712)
Cash generated from operations 251,961 294,706
Interest received 2,733 2,951
Interest paid (1,941) -
Income tax paid (16,181) (8,840)
Net cash provided by operating activities $ 236,572 $ 288,817
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The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED 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 consolidated financial statements of the Company and its subsidiaries (the “Group”) for the threemonth periods ended March 31, 2019 and 2018 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on April 23, 2019.

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 Group 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 Group 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 Group 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:

10-
English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED 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 Group elected not to reassess whether a contract was, or contained, a lease on January 1, 2019. The Group 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 Group 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 Group assessed most of the contracts are, or contain, leases and has no significant impact arised.
c. The Group is a lessee and elects not to restate comparative information in accordance with the transition provision in IFRS 16. Instead, the Group 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 Group 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 Group chooses, 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 Group’s right-of-use asset increased by NT$289,497 thousand, lease liability-current increased by NT$28,505 thousand, lease liabilitynoncurrent increased by NT$266,109 thousand, other current assets decreased by NT$500 thousand and other payables decreased by NT$5,617 thousand.

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

i. Apply a single discount rate to a portfolio of leases with reasonably similar characteristics.
ii. Rely on its assessment of whether leases are onerous immediately before January 1, 2019 as an alternative to performing an impairment review.
iii. Elect 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. Exclude initial direct costs from the measurement of the right-of-use asset on January 1, 2019.
v. Use 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 2.899%.
ii. The explanation for the difference of NT$ 193,338 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: the carrying value of lease payables as of December 31, 2018 Less: prepaid rent as of December 31, 2018 Less: adjustment to leases that meet and elect to account in the same way as short-term leases Add/(less): 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	$101,276
	$(22,954) 5,617 (500) (429) 211,604 $294,614

Operating lease commitments disclosed applying IAS 17 as of
December 31, 2018
Discounted using the incremental borrowing rate on
January 1, 2019
Add: the carrying value of lease payables as of December 31, 2018
Less: prepaid rent as of December 31, 2018
Less: adjustment to leases that meet and elect to account in the
same way as short-term leases
Add/(less): 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

$101,276

$(22,954)
5,617
(500)
(429)
211,604
$294,614

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below:

		Effective Date
Items	New,Revised or Amended Standards and Interpretations	issued byIASB
a	IFRS 10`“`Consolidated Financial Statements” and IAS 28`“`	To be
	Investments in Associates and Joint Ventures” - Sale or	determined by
	Contribution of Assets between an Investor and its Associate	IASB
	or Joint Ventures (Amendment)
b	IFRS 17`“`Insurance Contracts”	January 1, 2021
c	Definition of a Business - Amendments to IFRS 3	January 1, 2020
d	Definition of Material - Amendments to IAS 1 and 8	January 1, 2020

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 (Amendment)

The amendments address the inconsistency between the requirements in IFRS 10 “Consolidated Financial Statements” (IFRS 10) and IAS 28 “Investments in Associates and Joint Ventures” (IAS 28), 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 venture. IFRS 10 requires full profit or loss recognition on the loss of control of a 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 “Business Combinations” (IFRS 3) between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gain 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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED 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.

c. 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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
d. 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.

The above-mentioned standards and interpretations issued by IASB have not yet been recognized by FSC at the date when the Group’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 Group.

4. Summary of Significant Accounting Policies

(1) Statement of Compliance

The consolidated financial statements of the Group for the three months ended March 31, 2019 and 2018 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and IAS 34 Interim Financial Reporting as endorsed and became effective by the FSC.

(2) Basis of Preparation

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(3) Basis of consolidation

Preparation principle of consolidated financial statements

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
(b) exposure, or rights, to variable returns from its involvement with the investee, and
(c) the ability to use its power over the investee to affect its returns

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(a) the contractual arrangement with the other vote holders of the investee
(b) rights arising from other contractual arrangements
(c) the Company voting rights and potential voting rights

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

If the Company loses control of a subsidiary, it:

(a) derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) derecognizes the carrying amount of any non-controlling interest;
(c) recognizes the fair value of the consideration received;
(d) recognizes the fair value of any investment retained;
(e) recognizes any surplus or deficit in profit or loss; and
(f) reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

The consolidated entities are listed as follows:

==> picture [537 x 48] intentionally omitted <==

----- Start of picture text -----

Percentage of ownership (%)
As of
Investor Subsidiary Main businesses March 31, 2019 December 31, 2018 March 31, 2018
----- End of picture text -----

The Company	Faraday Technology Corporation (USA)	Sales representative in America	100.00%	100.00%	100.00%
The Company	Faraday Technology Japan Corporation	Sales representative in Japan	99.95%	99.95%	99.95%
The Company	Faraday Technology`－`B.V. (Note 1)	Sales representative in Europe	-	-	100.00%
The Company	Faraday Technology`－`B.V.I. (B.V.I.)	Trading and general investing	100.00%	100.00%	100.00%
The Company	Chih-Hung Investment Corporation	General investing
			100.00%	100.00%	100.00%
	(Chih-Hung)
The Company	Sheng Bang Investment Corporation	General investing
			100.00%	100.00%	100.00%
	(Sheng Bang)
Chih-Hung	Grain Media Inc.	IC designing, marketing and	19.42%	19.42%	19.42%
		customer service
Chih-Hung	Innopower Technology Corporation	Silicon Intellectual Property
			100.00%	100.00%	100.00%
	(Innopower)	designing
Sheng Bang	Grain Media Inc.	IC designing, marketing and	80.58%	80.58%	80.58%
		customer service
Innopower	Bright Capital Group Limited (BCGL)	General investing	100.00%	100.00%	100.00%
BCGL	Faraday Technology Corporation	IC designing, marketing and
			100.00%	100.00%	100.00%
	(Suzhou)	customer service
B.V.I.	Faraday Technology Corporation	General investing	100.00%	100.00%	100.00%
	`－`Mauritius (Mauritius)
B.V.I.	GrainTech Electronics Limited	IC designing, marketing and	100.00%	100.00%	100.00%
		customer service
B.V.I.	Faraday Technology Corporation	General investing	100.00%	100.00%	100.00%
	(Samoa)
B.V.I.	Artery Technology Corporation (Cayman)	General investing	81.13%	81.13%	100.00%
	(Note 2)

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

==> picture [537 x 47] intentionally omitted <==

----- Start of picture text -----

Percentage of ownership (%)
As of
Investor Subsidiary Main businesses March 31, 2019 December 31, 2018 March 31, 2018
----- End of picture text -----

Samoa	United Business Service Corporation	IC designing, marketing and	100.00%	100.00%	100.00%
		customer service
Cayman	Artery Technology Corporation, Ltd.	IC designing, marketing and	100.00%	100.00%	100.00%
		customer service
Mauritius	Faraday Technology China Corporation	IC designing, marketing and	100.00%	100.00%	100.00%
		customer service
Mauritius	Grain Media Technology (Shenzhen)	IC designing, marketing and	100.00%	100.00%	100.00%
	Co., Ltd. (Note 3)	customer service

We did not review the financial statements of certain subsidiaries, whose statements reflect total assets of NT$2,472,647 thousand and NT$2,227,275 thousand as of March 31, 2019 and March 31, 2018, respectively, and total liabilities of NT$366,445 thousand and NT$198,226 thousand as of March 31, 2019 and 2018, respectively, and total comprehensive income of NT$61,483 thousand and NT$159,943 thousand for the three months ended March 31, 2019 and 2018, respectively.

Notes:

－
(1) Faraday Technology B.V. has been liquidated and capital was remitted during the year ended December 31, 2018.
(2) Artery Technology Corporation (Cayman) has a capital increase by cash during the year ended December 31, 2018. The Group did not participate the capital increase and, accordingly, ownership percentage was reduced to 81.13%.
(3) Grain Media Technology (Shenzhen) Co., Ltd. filed for liquidation in February 2018. The liquidation procedure is still in progress as of the report date.
(4) Except for the accounting policies listed under Note 4(5) ~ (7), the same accounting policies have been followed in the consolidated financial statements for the three months ended March 31, 2019 as were applied in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2018. For the summary of other significant accounting policies, please refer to the consolidated financial statements for the year ended December 31, 2018.
18-

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(5) Leases

The accounting policy from January 1, 2019 as follow:

For contracts entered on or after January 1, 2019, the Group 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 Group 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 Group elected not to reassess whether a contract is, or contains, a lease on January 1, 2019. The Group 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 Group 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 Group 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 non-lease 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 Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.

Group as a lessee

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

At the commencement date, the Group 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 Group 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 Group 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 Group 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 Group 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.
20-

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group 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 Group 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 Group accounted for as short-term leases or leases of low-value assets, the Group 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 Group 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 as follow:

Group as a lessee

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

(6) Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted and disclosed for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.
21-

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. The average annual effective income tax rate is estimated by current income tax expenses only. Deferred income tax is recognized and measured according to IAS 12 “Income Tax” and follows the same accounting policies of the Company’s annual consolidated financial statements. When income tax rate changes occur in interim period, the effect on deferred income tax is recognized in profit or loss, other comprehensive income or equity at once.

5. Significant Accounting Judgments, Estimates and Assumptions

The same significant accounting judgments, estimates and assumptions have been followed in the consolidated financial statements for the three months ended March 31, 2019 and 2018 as were applied in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2018. Please refer to the consolidated financial statements for the year ended December 31, 2018.

6. Contents of Significant Accounts

(1) Cash and cash equivalents

Cash Cash on hand Checking and savings Time deposits Cash equivalents-Commercial paper with repurchase agreements Total		As of
	March 31, 2019	December 31, 2018	March 31, 2018
	$299 1,062,200 1,367,436 30,022 $2,459,957	$362 914,894 1,472,278 - $2,387,534	$357 1,671,776 1,586,548 50,000 $3,308,681

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

As of March 31, 2019 December 31, 2018 Mandatorily measured at fair value through profit or loss: Derivatives not designated as hedging instruments $- $330 Funds 24,499 25,195 Stocks 29,265 29,265 Total $53,764 $54,790 Current $24,499 $25,525 Non-Current 29,265 29,265 Total $53,764 $54,790 Mandatorily measured at fair value through profit or loss: Derivatives not designated as hedging instruments $(96) $- Current $(96) $- Financial assets at fair value through profit or loss were not pledged. Financial assets at fair value through other comprehensive income As of March 31, 2019 December 31, 2018 Equity instrument investments measured at fair value through other comprehensive income – Non-current: Listed companies stocks $28,365 $19,031 Unlisted companies stocks 977,502 948,891 Total $1,005,867 $967,922		As of	March 31, 2018 $1,869 29,110 29,265 $60,244 $30,979 29,265 $60,244 $- $-
	March 31, 2019	December 31, 2018
	$- 24,499 29,265	$330 25,195 29,265
	$53,764	$54,790
	$24,499 29,265	$25,525 29,265
	$53,764	$54,790
Equity instrument investments measured at fair value through other comprehensive income – Non-current: Listed companies stocks Unlisted companies stocks Total
	March 31, 2019	December 31, 2018	March 31, 2018
	$28,365 977,502 $1,005,867	$19,031 948,891 $967,922	$88,893 1,150,690 $1,239,583

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

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

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

In consideration of the Group’s investment strategy, the Group disposed the listed stock of Andes Technology Corporation during the year ended December 31, 2018, which were reported under equity instrument investments measured at fair value through other comprehensive income. Upon derecognition, the fair value of the investments was NT$55,929 thousand, and the cumulative disposal gain of NT$23,329 thousand was reclassified from other components of equity to retained earnings.

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

	As of
March 31, 2019	December 31, 2018	March 31, 2018
$724,051	$905,346	$470,222
724,051 (92,263)	905,346 (138,502)	470,222 (77,736)
631,788 92,641	766,844 114,694	392,486 62,648
92,641 $724,429	114,694 $881,538	62,648 $455,134

Accounts receivable were not pledged.

Accounts receivable are generally on 30- 60 day terms from the date of monthly closing. The gross carrying amount of accounts receivable is amounted to NT$816,692 thousand, NT$1,020,040 thousand, and NT$532,870 thousand for March 31, 2019, December 31, 2018, and March 31, 2018, respectively. Please refer to Note 6(14) for more details on impairment of account receivable, and Note 12 for credit risk disclosure.

(5) Inventories

nventories
Work in process Finished goods Total		As of
	March 31, 2019	December 31, 2018	March 31, 2018
	$128,216 408,903 $537,119	$153,158 442,859 $596,017	$102,460 492,463 $594,923

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The cost of inventories recognized in expenses amounted to NT$460,881 thousand and NT$479,424 thousand for the three months ended March 31, 2019 and 2018, respectively, including the (loss) reversal gain of NT$(2,949) thousand and NT$2,021 thousand for the three months ended March 31, 2019 and 2018, respectively, and loss on scrap of inventories of NT$0 thousand and NT$0 thousand, 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 three months of 2018.

No inventories were pledged.

(6) Investments accounted for using equity method


			As of
	March 31, 2019		December 31, 2018		March 31, 2018
Investee company		Percentage of		Percentage of		Percentage of
		Ownership or		Ownership or		Ownership or
	Amount	VotingRights	Amount	VotingRights	Amount	Voting Rights
Associate`：` Fresco Logic Inc.
	$83,805	22.61%	$85,490	22.61%	$89,056	22.61%

The Group’s investment in Fresco Logic Inc. was not individually material. The aggregate carrying amount of the Group’s interest in Fresco Logic Inc. is NT$83,805 thousand, NT$85,490 thousand, and NT$89,056 thousand, respectively. The aggregated financial information based on Group’s share of Fresco Logic Inc. is as follows:

Net loss from continuing operations Other comprehensive income (post-tax) Total comprehensive income	Threemonths endedMarch31	Threemonths endedMarch31
	2019	2018 $(5,045) - $(5,045)
	$(1,818) - $(1,818)

There were no contingent liabilities or capital commitments for the above-mentioned associate, and the investment was not pledged as of March 31, 2019, December 31, 2018, and March 31, 2018.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The carrying amount of investments accounted for under the equity method in investees whose financial statements were unreviewed amounts to NT$83,805 thousand and NT$89,056 thousand, as of March 31, 2019 and March 31, 2018, respectively. The share of the profit or loss of these associates and joint ventures accounted for using the equity method amount to NT$(1,818) thousand and NT$(5,045) thousand for the three-months ended March 31, 2019 and 2018, respectively. The share of other comprehensive income of these associates and joint ventures accounted for using the equity method amount to NT$133 thousand and NT$(914) thousand for the three-months ended March 31, 2019 and 2018, respectively. These amounts were based on unreviewed financial statements of the investees.

(7) Property, plant and equipment

Property, plant and equipment
Property, plant and equipment for own-use		As of
	March 31, 2019 $569,764	December 31, 2018 (Note)	March 31, 2018 (Note)

Note: The Group adopted IFRS 16 since January 1, 2019. The Group 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	Construction in process	Total
$33,576 - -	$603,753 470 259	$41,243 985 -	$143,208 6,603 164)	$25,134 428 393)	$857 - 108)	$- - -	$847,771 8,486 924)
$33,576	$604,482	$42,228	$149,975	$25,955	$965	$-	$857,181
$- - -	$183,215 3,989 39	$11,401 1,744 -	$59,341 8,719 65)	$17,353 681 245)	$603 20 2)	$- - -	$271,913 15,153 351)
$-	$187,243	$13,145	$68,125	$18,279	$625	$-	$287,417
$33,576	$417,239	$29,083	$81,850	$7,676	$340	$-	$569,764

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED 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)

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----- Start of picture text -----

Office
Buildings Computer furniture and Miscellaneous Construction
Land and facilities Machinery equipment fixtures equipment in process Total
As of January 1, 2018 $33,576 $592,818 $21,452 $114,118 $23,549 $868 $9,092 $795,473
Additions - - - 20,015 449 28 6 20,498
Disposals - - - - (1,787) - - (1,787)
Exchange effect - 147) - (130) 417 (17) 143 560
As of March 31, 2018 $33,576 $592,965 $21,452 $134,003 $22,628 $879 $9,241 $814,744
Depreciation and
impairment:
As of January 1, 2018 $- $167,749 $9,955 $67,587 $16,040 $571 $- $261,902
Additions - 3,602 894 5,819 842 57 - 11,214
Disposals - - - - (1,787) - - (1,787)
Exchange effect - 127) - (147) 338 (11) - 307
As of March 31, 2018 $- $171,478 $10,849 $73,259 $15,433 $617 $- $271,636
Net carrying amount as of:
December 31, 2018 $33,576 $420,538 $29,842 $83,867 $7,781 $254 $- $575,858
March 31, 2018 $33,576 $421,487 $10,603 $60,744 $7,195 $262 $9,241 $543,108
----- End of picture text -----

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.
27-

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(8) Intangible assets

ntangible assets
Cost Beginning balance Addition`－`acquired separately Decrease`－`derecognition Exchange differences Ending balance Accumulated Amortization Beginning balance Amortization Decrease`－`derecognition Exchange differences Ending balance Net carrying amount as of: March 31, 2019 December 31, 2018 March 31, 2018	Software
	Three months ended March 31, 2019	Three months ended March 31, 2018
	$1,065,829 264,982 (1,370) 2,681	$1,193,296 10,666 (91,095) (6,524)
	$1,332,122	$1,106,343
	$374,359 84,487 (1,370) 496)	$758,480 89,534 (91,095) (1,061))
	$457,972	$755,858
	$874,150
	$691,470 $350,485

The amortization expenses of intangible assets are as follows:

Administrative expenses Research and development expenses Total	Three months ended March 31	Three months ended March 31
	2019	2018
	$25 84,462 $84,487	$20 89,514 $89,534

(9) Short-term loans

The Group’s credit limit from short-term loans was NT$1,370,250 thousand, NT$907,200 thousand and NT$341,100 thousand as of March 31, 2019, December 31, 2018, and March 31, 2018, respectively, and all of which was unused.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

- (10) Long term payables

The payables were primarily attributable to several agreements which the Group entered into for certain software license. As of March 31, 2019, December 31, 2018, and March 31, 2018, future payments for other long-term payables were as follows ：

==> picture [468 x 157] intentionally omitted <==

----- Start of picture text -----

As of
Year of payment March 31, 2019 December 31, 2018 March 31, 2018
2018 $- $- $66,531
2019 252,478 145,704 16,763
2020 184,704 143,968 3,543
2021 126,538 67,891 29
Subtotal 563,720 357,563 86,866
Less: Current portion (Recorded as
other payables) (298,797) (145,704) (71,341)
Total $264,923 $211,859 $15,525
----- End of picture text -----

(11) Post-employment benefits

Defined contribution plan

Expenses under the defined contribution plan for the three months ended March 31, 2019 and 2018 are NT$11,384 thousand and NT$9,938 thousand, respectively.

Defined benefit plan

Expenses under the defined benefit plan for the three months ended March 31, 2019 and 2018 are NT$1,428 thousand and NT$136 thousand, respectively.

(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 March 31, 2019, December 31, 2018, and March 31, 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 March 31, 2019, related registration processes have not been completed.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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
	March 31, 2019	December 31, 2018	March 31, 2018
	$594,782 28,529 1,531 2,566 $627,408	$594,782 27,717 1,531 2,566 $626,596	$594,782 - 1,531 2,566 $598,879

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.
30-

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED 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 and resolved by the board of directors’ meeting and shareholders’ meeting on April 23, 2019 and June 15, 2018, respectively, are as follows:

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED 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 approved by the board of directors’ meeting on April 23, 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.

D. Non-controlling interests

(13)	Beginning balance Gains attributable to non-controlling interests Other comprehensive income (losses) attributable to non-controlling interests, net of tax: Exchange differences on translation of foreign operations Change in subsidiaries’ ownership Ending balance Sales revenue Sale of goods Rendering of services Silicon intellectual property license Total		Three months ended March 31	Three months ended March 31
			2019 2018 $14,982 $- (1,082) - 346 - 189 - $14,435 $- Three months ended March 31	2018

			2019 $574,776 427,078 95,525 $1,097,379	2018
				$573,890 373,331 95,719 $1,042,940

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Analysis of revenue from contracts with customers for the three months ended March 31, 2019 and 2018 is as follows:

(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	Threemonths endedMarch31	Threemonths endedMarch31
	2019	2018
	$574,776 427,078 95,525	$573,890 373,331 95,719
	$1,097,379	$1,042,940
	$655,605 441,774 $1,097,379	$669,609 373,331 $1,042,940

(2) Contract balances

A. Contract assets – current

Contract assets – current
Rendering of services		As	of
	March 31, 2019 $399,258	December 31, 2018 $367,258	March 31, 2018 $125,080	January 1, 2018 $16,159

The significant changes in the Group’s balances of contract assets for the three months ended March 31, 2019 and 2018 are as follows:

ended March 31, 2019 and 2018 are as follows:
The opening balance transferred to accounts receivable Change in the progress of completion	Threemonths endedMarch31
	2019	2018
	$102,137 134,137	$2,598 111,519

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. Contract liabilities – current

Sales of goods Rendering of services Silicon intellectual property license Total		As	of
	March 31, 2019	December 31, 2018	March 31, 2018	January 1, 2018
	$111,477 193,494 14,324 $319,295	$109,141 191,023 244 $300,408	$40,009 133,762 13,700 $187,471	$43,084 17,626 92 $60,802

The significant changes in the Group’s balances of contract liabilities for the three months ended March 31, 2019 and 2018 are as follows:

ended March 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)	Threemonths endedMarch31
	2019	2018
	$76,467 95,354	$38,602 165,271

C. Transaction price allocated to unsatisfied performance obligations

As of March 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 amount of transaction price allocated to unsatisfied performance obligations about rendering of services and silicon intellectual property license is NT$1,068,167 thousand. The Group 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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(14) Expected credit losses

Operating expenses – Expected credit (gains) losses Account receivables	Three months ended March 31	Three months ended March 31
	2019	2018
	$(46,239)	$13,028

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

The Group 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 assessment of the Group’s loss allowance as of March 31, 2019, December 31, 2018, and March 31, 2018 is as follows:

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

Gross carrying amount Expected credit loss rates Loss allowance Total		As of
	March 31, 2019	December 31, 2018	March 31, 2018
	$399,258 0% - $399,258	$367,258 0% - $367,258	$125,080 0% - $125,080

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
ii. the Group 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:

2019.03.31

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----- Start of picture text -----

Not yet due Overdue
31-60 61-90 91-120
(note) <=30 days days days days >=121 days Total
Gross carrying
amount $482,197 $54,478 $93,338 $94,681 $2,177 $91,661 $818,532
Expected credit
loss rates -% -% 0~2% 0%~10% 2%~50% 10%~100%
Lifetime
expected
credit losses - - 1,871 6,879 1,089 82,424 92,263
Subtotal $482,197 $54,478 $91,467 $87,802 $1,088 $9,237 $726,269
2018.12.31
Not yet due Overdue
31-60 61-90 91-120
(note) <=30 days days days days >=121 days Total
Gross carrying
amount $540,501 $79,242 $139,348 $68,868 $96,555 $97,084 $1,021,598
Expected credit
loss rates -% -% 0~2% 0%~10% 2%~50% 10%~100%
Lifetime
expected
credit losses - - 2,788 5,039 48,277 82,398 138,502
Subtotal $540,501 $79,242 $136,560 $63,829 $48,278 $14,686 $883,096
----- End of picture text -----

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

2018.03.31

2018.03.31
Gross carrying amount Expected credit loss rates Lifetime expected credit losses Subtotal	Not yet due (note)			Overdue			Total
		<=30 days	31-60 days	61-90 days	91-120 days	>=121 days
	$329,605 -%	$54,070 -%	$62,373 2%	$4,111 10%	$16,835 50%	$67,659 100%	$534,653 77,736 $456,917
	- $329,605	- $54,070	1,248 $61,125	411 $3,700	8,418 $8,417	67,659 $-

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

The movement in the provision for impairment of accounts receivables for the three months ended

March 31, 2019 and 2018 is as follows:

March 31, 2019 and 2018 is as follows:
As of January 1, 2019 Reversal for the current period As of March 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 March 31, 2018	Accounts receivables
	$138,502 (46,239)
	$92,263
	$64,708 -
	64,708 13,028 $77,736

(15) Leases

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

The Group leases various properties, including real estate such as land and buildings, transportation equipment and office equipment. These leases have terms between 2 and 38 years.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The effect that leases have on the financial position, financial performance and cash flows of the Group 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
	March 31, 2019	December 31, 2018(Note)	March 31, 2018(Note)
	$200,838 78,797 2,623 315 $282,573

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

During the three months ended March 31, 2019, the additions to right-of-use assets of the Group amounted to NT$0 thousand.

(b) Lease liability

Lease liability
Lease liability Lease liability-current Lease liability-noncurrent Total		As of
	March 31, 2019	December 31, 2018(Note)	March 31, 2018(Note)
	$283,712
	$29,224 254,488 $283,712

Please refer to Note 6 (17) for the interest on lease liability recognized during the three months ended March 31, 2019 and refer to Note 12 (5) for the maturity analysis for lease liabilities as of March 31, 2019.

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
b. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Depreciation charge for right-of-use assets
Land Buildings and facilities Transportation equipment Office equipment Total	Threemonths endedMarch31
	2019	2018
	$1,330 6,570 291 28 $8,219

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 16.
c. Income and costs relating to leasing activities

Income and costs relating to leasing activities
The expense relating to short-term leases	Threemonths endedMarch31
	2019 $126	2018 (Note)

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

d. Cash outflow relating to leasing activities

During the three months ended March 31, 2019, the Group’s total cash outflow for leases amounted to NT$14,270 thousand.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

e. Other information relating to leasing activities

Extension option

Some of the Group’s property rental agreement contain extension options. In determining the lease terms, the non-cancellable period for which the Group has the right to use an underlying asset, together with period covered by an option to extend the lease if the Group 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 Group. After the commencement date, the Group 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 Group 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.

B. Operating lease commitments - The Group as lessee (applicable to IAS 17)

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

Not later than one year Later than one year and not later than five years Later than five years Total	As	of
	December 31, 2018	March 31, 2018
	$34,192 64,236 2,848 $101,276	$23,849 74,907 5,758 $104,514

Operating lease expense recognized is as follows:

Operating lease expense recognized is as follows:
Minimum lease payment	Three months ended March 31
	2018 $6,726

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

==> picture [448 x 195] intentionally omitted <==

----- Start of picture text -----

Three months ended March 31
2019 2018
Operating Operating Operating Operating
Total Total
costs expenses costs expenses
Employee benefits expense
Salaries $12,097 $345,653 $357,750 $9,943 $284,922 $294,865
Labor and health insurance 820 26,417 27,237 716 24,826 25,542
Pension 582 12,230 12,812 435 9,639 10,074
Others 247 5,401 5,648 229 5,250 5,479
Depreciation 245 23,127 23,372 163 11,051 11,214
Amortization - 84,487 84,487 - 89,534 89,534
----- End of picture text -----

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 three months ended March 31, 2019, the Company estimated and recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$13,418 thousand and NT$0 thousand, respectively, which were recognized as payroll expenses. Based on profit of the three months ended March 31, 2018, the Company estimated and recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$10,302 thousand and NT$0 thousand, respectively, which were recognized as payroll expenses.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A resolution was approved in a meeting of the Board of Directors held on April 23, 2019 to distribute NT$39,345 thousand and NT$250 thousand in cash as employees’ compensation and remuneration to directors, respectively. There were no material differences between the aforementioned approved amounts and the amounts charged against earnings in 2018.

A resolution was approved in a meeting of the Board of Directors held on April 20, 2018 to distribute NT$125,016 thousand and NT$1,274 thousand in cash as employees’ compensation and remuneration to directors, respectively. There were no material differences between the aforementioned approved amounts and the amounts charged against earnings in 2017.

(17) Non-operating income and expenses

A. Other income

Other income
Financial assets measured at amortized cost Other income-other Total	Three months ended March 31
	2019	2018
	$2,925 27,835 $30,760	$3,136 8,641 $11,777

B. Other gains and losses

Other gains and losses
Foreign exchange gains Losses on financial assets at fair value through profit or loss Others Total Finance costs Interest expenses on lease liabilities	Three months ended March 31 2019 2018 $4,169 $7,879 (1,155) (2,591) (1,136) 11,648 $1,878 $16,936 Three months ended March 31 2019 2018 $1,941 (Note)	Three months ended March 31
		2019	2018
	2019 $1,941

C. Finance costs

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(18) Components of other comprehensive income

For the three months ended March 31, 2019

Items that will not to be reclassified subsequently to profit or loss: 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 associates and joint ventures accounted for using 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
	$37,945 8,694) 133 $46,772	$- - - $-	$37,945 8,694) 133 $46,772	$- - - $-)	$37,945 8,694) 133 $46,772

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the three months ended March 31, 2018

Items that will not to be reclassified subsequently to profit or loss: 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 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
	$60,908 (3,184) (914) $56,810	$- - - $-	$60,908 (3,184) (914) $56,810	$- - - $-	$60,908 (3,184) (914) $56,810

(19) Income tax

Based on the amendments to the Income Tax Act announced on February 7, 2019, starting from the year ended December 31, 2018, the Company’s applicable corporate income tax rate has changed from 17% to 20%. The corporate income surtax on undistributed retained earnings has changed from 10% to 5%.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED 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 tax expense relating to origination and reversal of temporary differences Total income tax expense	Three months ended March 31
	2019	2018
	$11,019 - 8,673 $19,692	$7,810 46 (4,259) $3,597

The assessment of income tax returns

As of March 31, 2019, the assessment of the income tax returns of the Company and its subsidiaries is as follows:

s as follows:
The Company Chih Hung Investment Co. Sheng Bang Investment Co. Grain Media Inc. Innopower Technology Corporation	The assessment of income tax returns
	Assessed and approved up to 2016 Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2016

(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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Basic earnings per share Profit attributable to ordinary equity owners of the parent (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Basic earnings per share (NT$) (b) Diluted earnings per share Profit attributable to ordinary equity owners of the parent (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	Three months ended March 31	Three months ended March 31
	2019	2018
	$96,055	$68,989
	248,550	248,550
	$0.39	$0.28
	$96,055	$68,989
	248,550 301	248,550 149
	248,851 $0.39	248,699 $0.28

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 Group received the capital remittance in the year ended December 31, 2018 and derecognized the related assets and liabilities of the entity.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(1) The amount of assets and liabilities of Faraday Technology Corporation—B.V. over which the Group lost control are as follow ：

Assets: Cash and cash equivalents Account receivables-related parties Other receivables Other current assets Property, plant and equipment Total	As of September 30, 2018 $22,896 350 46 257 8 23,557

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

Cash received Net assets of the subsidiary deconsolidated Effect of exchange rate change Loss on disposal	For the year ended December 31, 2018 $23,350 (23,557) (7,044) $(7,251)

Loss on disposal is 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 ：

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 Group during the financial reporting years is as follows:

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Name and nature of relationship of the related parties

Nature

Name of the related parties of relationship of the related parties United Microelectronics Corporation Entity with joint control or significant influence over the Company Fresco Logic Inc. Associates HeJian Technology (Suzhou) Co., Ltd., Other related parties Wavetek Microelectronics Corporation Other related parties United Semiconductor (Xiamen) Co., Ltd. Other related parties

(1) Sales

Sales
United Microelectronics Corporation Associates Other related parties Total	Threemonths endedMarch31
	2019	2018
	$132,119 20,748 7,435 $160,302	$85,183 12,685 12,995 $110,863

The Group’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 Other related parties Total	Threemonths endedMarch31
	2019	2018
	$162,541 56,066 $218,607	$122,304 27,851 $150,155

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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Contract assets, current

Contract assets, current
United Microelectronics Corporation		As of
	March 31, 2019 $31,195	December 31, 2018 $-	March 31, 2018 $-

(4) Accounts receivable from related parties, net

United Microelectronics Corporation Fresco Logic Inc. United Semiconductor (Xiamen) Co., Ltd. Total		As of
	March 31, 2019	December 31, 2018	March 31, 2018
	$81,568 11,073 - $92,641	$93,292 21,402 - $114,694	$45,197 8,280 9,171 $62,648

(5) Other current assets

Other current assets
Other related parties		As of
	March 31, 2019 $322	December 31, 2018 $314	March 31, 2018 $528

(6) Accounts payable from related parties, net

United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd., United Semiconductor (Xiamen) Co., Ltd. Other related parties Total		As of
	March 31, 2019	December 31, 2018	March 31, 2018
	$43,337 25,053 3,073 2,851 $74,314	$69,177 38,484 3,702 2,734 $114,097	$67,542 14,416 - 5,638 $87,596

(7) Key management personnel compensation

ey management personnel compensation
Short-term employee benefits Post-employment benefits Total	Threemonths endedMarch31
	2019	2018
	$32,526 324 $32,850	$20,656 323 $20,979

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

8. Assets Pledged as Collateral

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

Assets pledged for security	Carrying amount	Carrying amount	Carrying amount	Secured liabilities
	2019.03.31	2018.12.31	2018.03.31
Financial assets measured at amortized cost Financial assets measured at amortized cost	$15,265 1,541 $16,806	$15,236 1,536 $16,772	$15,265 1,541 $16,806	Custom clearance deposit Office rental deposit

9. Commitments and contingencies

None.

10. Losses due to major disasters

None.

11. Significant subsequent events

None.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

12. Others

(1) Categories of financial instruments

	As of
March 31, 2019	December 31, 2018	March 31, 2018
$53,764 1,005,867 3,267,702 $4,327,333	$54,790 967,922 3,339,555 $4,362,267 As of	$60,244 1,239,583 3,990,896 $5,290,723
March 31, 2019	December 31, 2018	March 31, 2018
$96 759,631 500,539 264,923 283,712 $1,808,901	$- 810,868 561,437 211,859 (Note 2) $1,584,164	$- 808,634 359,919 15,525 (Note 2) $1,184,078

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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

(2) Financial risk management objectives and policies

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

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

The Group has certain foreign currency receivables denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is achieved. The Group 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 Group.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED 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 Group’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB. The information of the sensitivity analysis is as follows:

When NTD strengthens/weakens against USD by 10%, the profit for the months ended March 31, 2019 and 2018 would decrease / increase by NT$36,712 thousand and NT$71,410 thousand, respectively.

When NTD strengthens/weakens against RMB by 10%, the profit for the months ended March 31, 2019 would decrease / increase by NT$68,843 thousand.

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 Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s short-term deposits at variable interest rates. Therefore, interest rate risk is low.

Equity price risk and other investment risk

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

For the three months ended March 31, 2019 and March 31, 2018, a change of 1% in the price of the listed companies stocks classified as equity instruments investments measured at fair value through other comprehensive income could have an impact of NT$284 thousand and NT$889 thousand, respectively, on the equity attributable to the Group.

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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(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 Group 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.

Credit risk is managed by each business unit subject to the Group’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 Group’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 March 31, 2019, December 31, 2018 and, March 31, 2018, accounts receivable from top ten customers represented 33%, 58% and 38% of the total accounts receivables of the Group, 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 Group’s treasury in accordance with the Group’s policy. The Group 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 Group adopted IFRS 9 to assess the expected credit losses. The measurement indicators of the Group are described as follows:

Carryingamount	Carryingamount	Carryingamount
	As of
March 31,	December 31,	March 31,
2019	2018	2018
$1,217,790	$1,388,856	$659,733

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(5) Liquidity risk management

The Group’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 Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amounts include the contractual interest.

Non-derivative financial instruments

==> picture [433 x 30] intentionally omitted <==

----- Start of picture text -----

Less than
1 year 2 to 3 years 4 to 5 years > 5 years Total
----- End of picture text -----

As of March 31, 2019
Payables (including
related parties)	$759,631	$-	$-	$-	$759,631
Other payables	500,539	-	-	-	500,539
Long-term payables	-	264,923	-	-	264,923
Lease Liability	36,893	60,516	29,657	262,314	389,380
As of December 31,
2018
Payables (including
related parties)	$810,868	$-	$-	$-	$810,868
Other payables	561,437	-	-	-	561,437
Long-term payables	-	211,859	-	-	211,859
As of March 31, 2018
Payables (including
related parties)	$808,634	$-	$-	$-	$808,634
Other payables	359,919	-	-	-	359,919
Long-term payables	-	15,525	-	-	15,525

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Derivative financial instruments

Less than 1 year	2 to 3 years	4 to 5 years	> 5 years	Total
$- (96)	$- -	$- -	$- -	$- (96)
$(96)	$-	$-	$-	$(96)
$330 -	$- -	$- -	$- -	$330 -
$330	$-	$-	$-	$330
$1,869 - $1,869	$- - $-	$- - $-	$- - $-	$1,869 - $1,869

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 three months ended March 31, 2019:

As of January 1, 2019 Cash flows Foreign exchange movement As of March 31, 2019	Lease liabilities
	$294,614 (12,329) 1,427 $283,712

Reconciliation of liabilities for three months ended March 31, 2018:

None

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(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 Group 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 Group 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 Group.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(8) Derivative financial instruments

The Group’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 March 31, 2019, December 31, 2018, and March 31, 2018 is as follows:

Forward currency contracts

The Group 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:

==> picture [436 x 15] intentionally omitted <==

----- Start of picture text -----

Items (by contract) Notional Amount Contract Period
----- End of picture text -----

Items (by contract)	Notional Amount	Contract Period
As of March 31, 2019
Forward currency contract	Sell foreign currency USD 6,000 thousand	From 2019.03.25 to 2019.04.08
As of December 31, 2018
Forward currency contract	Sell foreign currency USD 6,000 thousand	From 2018.12.19 to 2019.01.09
As of March 31, 2018
Forward currency contract	Sell foreign currency USD 21,000 thousand	From 2018.03.20 to 2018.04.20

(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 Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED 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 Group determines whether transfers have occurred between Levels in the hierarchy by reassessing categorization at the end of each reporting period.

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

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

As of March 31, 2019`：` Financial assets at fair value: Financial assets at fair value through profit or loss Stocks Funds Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Financial liabilities at fair value: Financial liabilities at fair value through profit or loss Forward currency contract As of December 31, 2018`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Stocks Funds Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income	Level 1	Level 2	Level 3	Total
	$- - 28,365 - Level 1	$- - - 96 Level 2	$29,265 24,499 977,502 - Level 3	$29,265 24,499 1,005,867 96 Total
	$- - - 19,031	$330 - - -	$- 29,265 25,195 948,891	$330 29,265 25,195 967,922

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of March 31, 2018`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Stocks Funds Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income	Level 1	Level 2	Level 3	Total
	$- - - 88,893	$1,869 - - -	$- 29,265 29,110 1,150,690	$1,869 29,265 29,110 1,239,583

Transfers between Level 1 and Level 2 during the period

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

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 period is as follows:

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Assets

As of January 1, 2019 Total gains and losses recognized for the month ended March 31, 2019: Amount recognized in profit or loss (“other profit or loss”) Amount recognized in other comprehensive income (“Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) As of March 31, 2019	At fair value through profit or loss	At fair value through profit or loss	At fair value through other comprehensive income	Total
	Stocks	Funds	Stocks
	$29,265 - - $29,265	$25,195 (696) - $24,499	$948,891 - 28,611 $977,502	$1,003,351 (696) 28,611 $1,031,266

		Assets	Total
At fair value through profit or loss		At fair value through other comprehensive income
Stocks	Funds	Stocks
$- - - 29,265 $29,265	$- (90) - 29,200 $29,110	$1,066,406 - 54,284 30,000 $1,150,690	$1,066,406 (90) 54,284 88,465 $1,209,065

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Recognized as profit (loss) above, the loss from financial assets still held by the Group as of March 31, 2019 and March 31, 2018 was NT$696 thousand and NT$90 thousand.

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 March 31, 2019

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----- Start of picture text -----

Valuation Significant Quantitative Relationship between inputs and Sensitivity of the input to
techniques unobservable inputs information fair value fair value
----- End of picture text -----

	techniques	unobservable inputs	information	fair value	fair value
Financial assets:
At fair value through
other
comprehensive
income
Stocks	Market	Discount for lack of	15%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$3,335 thousand
Preferred Stocks	Option pricing	Discount for lack of	11%~18%	The higher the discount for lack	10% increase (decrease) in the
	model	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$1,368 thousand
Stocks and others	Asset	Discount for lack of	10%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability and		of marketability, the lower the	discount for lack of marketability
		non-controlling		fair value of the stocks	and non-controlling interest
		interest			would result in decrease/increase
					in the Group’s equity by
					NT$84,073 thousand
Preferred Stocks	Market	Discount for lack of	21%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$8,975 thousand

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of December 31, 2018

==> picture [497 x 28] intentionally omitted <==

	techniques	unobservable inputs	information	fair value	fair value
Financial assets:
At fair value through
other
comprehensive
income
Stocks	Market	Discount for lack of	15%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$2,869 thousand
Preferred Stocks	Option pricing	Discount for lack of	11%~18%	The higher the discount for lack	10% increase (decrease) in the
	model	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$1,290 thousand
Stocks and others	Asset	Discount for lack of	10%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability and		of marketability, the lower the	discount for lack of marketability
		non-controlling		fair value of the stocks	and non-controlling interest
		interest			would result in decrease/increase
					in the Group’s equity by
					NT$79,351 thousand
Preferred Stocks	Market	Discount for lack of	21%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$8,380 thousand

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of March 31, 2018

==> picture [497 x 28] intentionally omitted <==

	techniques	unobservable inputs	information	fair value	fair value
Financial assets:
At fair value through
other
comprehensive
income
Stocks	Market	Price-Book ratio of	10%~46%	The higher the Price-Book ratio	10% increase (decrease) in Price-
	approach	similar entities		of similar entities, the higher the	Book ratio of similar entities
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$1,974 thousand
Preferred Stocks	Option pricing	Discount for lack of	15%~21%	The higher the discount for lack	10% increase (decrease) in the
	model	marketability		of marketability, the lower the	discount for lack of marketability
				fair value of the stocks	would result in decrease/increase
					in the Group’s equity by
					NT$1,362 thousand
Stocks and others	Asset	Discount for lack of	10%	The higher the discount for lack	10% increase (decrease) in the
	approach	marketability and		of marketability, the lower the	discount for lack of marketability
		non-controlling		fair value of the stocks	and non-controlling interest
		interest			would result in decrease/increase
					in the Group’s equity by
					NT$97,760 thousand
Preferred Stocks	Recent price	Not applicable	Not applicable	Not applicable	Not applicable
	of capital
	increase

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

The Group’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 Group analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies at each reporting date.

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

March 31, 2019 Lease liability December 31, 2018	Level 1	Level 2	Level 3	Total
	$-	$-	$283,712	$283,712

None.

March 31, 2018

None.

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

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----- Start of picture text -----

As of March 31, 2019
Foreign currencies Foreign exchange rate NTD
----- End of picture text -----

Financial assets
Monetary items:
USD	$32,119	30.81	$989,582
RMB	156,255	4.579	715,490
Non-monetary items:
USD	961	30.81	29,605
Financial liabilities
Monetary items:
USD	20,203	30.81	622,458
RMB	5,910	4.579	27,060

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financialassets	As of December 31, 2018	As of December 31, 2018	As of December 31, 2018
	Foreign currencies	Foreign exchange rate	NTD
	$42,033 1,019 4,101	30.72 30.72 30.72 As of March31,2018	$1,291,268 31,296 125,990
Monetary items: USD Non-monetary items: USD Financial liabilities
Monetary items: USD Financialassets
	Foreign currencies	Foreign exchange rate	NTD
	$47,551 1,197 23,020	29.11 29.11 29.11	$1,384,220 34,855 670,124
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).

Because there are several types of functional currencies within the Group, 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$4,169 thousand and NT$7,879 thousand for the three months ended March 31, 2019 and 2018, respectively.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(11) Capital management

The primary objective of the Group’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 Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group 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 Group for the three months ended March 31, 2019:

(a) Financing provided to others for the three months ended March 31, 2019: None.
(b) Endorsement/Guarantee provided to others for the three months ended March 31, 2019: None.
(c) Securities held as of March 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 three months ended March 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 three months ended March 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 three months ended March 31, 2019: None.
(g) Related party transactions for purchases and sales amounts exceeding the lower of NT$300 million or 20 percent of the capital stock for the three months ended March 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 three months ended March 31, 2019: None.
67-

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)
(i) Financial instruments and derivative transactions: Please refer to Note 12.
(j) Other: Significant intercompany transactions between consolidated entities: Please refer to Attachment 3.
(2) Information on investees

Information on investees which significant influenced or controlled by the Group: Please refer to Attachment 4.

(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 5.
(b) Significant transaction to investee Company in Mainland China for the three months ended March 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 3.
iii. Property transaction amount and occurred gain (loss): None.
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 3.
68-

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

14. Segment information

General Information

The products of the Company and its subsidiaries are all related to integrated circuit design products and the chief operating decision maker reviews the Group’s operating results as a whole to make decisions about resources to be allocated and assess its performance; therefore, the Group is considered a single segment. The preparation basis of the segment is the same with the preparation of this financial statements, and the policies are the same with those mentioned in Note 4, Summary of Significant Accounting Policies.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

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

Faraday Technology Corporation

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As of March 31, 2019
Carrying amount Percentage of Fair value/
Type of securities Name of securities Relationship Financial statement account Units/shares (thousand) ownership (%) Net assets value Note
Common Stock SHIEH YONG Investment Co., Ltd. - Financial assets at fair value through other 92,496,000 $674,281 12.12% $674,281 -
comprehensive income, noncurrent
Common Stock Unitech Capital Inc. - Financial assets at fair value through other 2,500,000 64,439 5.00% 64,439 -
comprehensive income, noncurrent
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Chih-Hung Investment Corporation

Type of securities Preferred stock Common Stock Common Stock Common Stock Common Stock Common Stock Common Stock Preferred stock Preferred stock Preferred stock Common Stock	Name of securities Innostor Technology Corporation apm Communication, Inc. Storm Semiconductors, Inc. Andes Technology Corporation SanJet Technology Corporation Gear Radio Limited NeuroSky Floadia Hsun Chieh Capital Corp. Aviacomm Ltd.	Relationship - - - - - - - - - -	Financial statement account 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 other comprehensive income, noncurrent Financial assets at fair value through profit or loss, noncurrent	Units/shares 14,600,000 1,714,285 59,167 12,600 2,115,000 242,435 3,000,000 1,200,000 44,312,575 1,818 3,000,000	Percentage of ownership (%) - 0.70% - 0.13% - 8.01% 28,365 0.57% 33,347 9.53% 13,680 9.95% - 7.76% 89,750 9.74% 69,800 15.00% $29,265 12.60% As of March 31, 2019 Carrying amount (thousand)	- - - 28,365 33,347 13,680 - 89,750 69,800 $29,265 Fair value/ Net assets value	Note - - - - - - - - - -

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

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

Sheng Bang Investment Corporation

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Fund	IB FUND SPC -RCM Auto Parts Id Fd Sd Pfli	-	Financial assets at fair value through profit or l	10,000	$24,499	-	$24,499	-
	nustry un egregate ortoo		oss, noncurrent
Common Stock	Storm Semiconductors, Inc.	-	Financial assets at fair value through profit or loss, noncurrent	641,000	-	2.43%	-	-
Common Stock	Sifotonics Technology Co., Ltd.	-	Financial assets at fair value through other comprehensive income, noncurrent	800,000	-	1.52%	-	-
Common Stock	Ascent Venture Capital	-	Financial assets at fair value through other comprehensive income, noncurrent	3,000,000	11,560	19.67%	11,560	-
Capital	Jian Rui Venture Capital (translated from Chinese)	-	Financial assets at fair value through other comprehensive income, noncurrent	-	20,645	8.50%	20,645	-

English Translation of Consolidated Financial Statements Originally Issued in Chinese

(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 three months ended March 31, 2019)

Faraday Technology Corporation

United Microelectronics Corporation United Microelectronics Corporation Counter-party	Entity with joint control or significant influence over the Company Entity with joint control or significant influence over the Company Relationship	Purchases Sales Purchases (Sales)	$162,541 131,797 Amount	84.51% Month-end 60 days 12.01% Month-end 60 days Percentage of total purchases (sales) Term Transactions	- - Details of non-arm's length transaction	$43,337 5.71% 81,245 11.19% Percentage of total receivables (payable) Notes and accounts receivable (payable) Balance	- - Note

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 3 (Significant intercompany transactions between consolidated entities)

For the three months ended March 31, 2019

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Transactions
Relationship with Percentage of consolidated operating
No. the Company revenues or consolidated total assets
(Note 1) Related Party Counterparty (Note 2) Account Amount Term (Note 3)
Faraday Technology
0 Faraday Technology Corporation 1 Sales $117,427 Note 4 10.70%
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0 (Note 1)	Faraday	Technology Related Pa	Corporation rty	Faraday Technology i Counterparty	1 (Note 2)	Sales Account	$117,427 Amount	Note 4 Term	10.70% (Note 3)
				Corporaton (USA)
0	Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Research expense	13,494	According to the contract	1.23%
0	Faraday	Technology	Corporation	Faraday Technology Japan Corporation	1	Sales	139,941	Note 4	12.75%
0	Faraday	Technology	Corporation	GrainTech Electronics Limited	1	Sales	2,620	Note 5	0.24%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Sales	31,152	Note 5	2.84%
0	Faraday	Technology	Corporation	Innopower Technology Corporation	1	Sales	72,007	Note 5	6.56%
0	Faraday	Technology	Corporation	Artery Technology Corporation, Ltd.	1	Sales	9,187	Note 5	0.84%
0	Faraday	Technology	Corporation	Grain Media Inc.	1	Rent Revenue	114	According to the contract	0.01%
0	Faraday	Technology	Corporation	Grain Media Inc.	1	Other receivable	120	Month-end 60 days	-
0	Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Accounts receivable	34,502	Month-end 60 days	0.48%
0	Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Other receivable	364	Month-end 60 days	0.01%
0	Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Other payables	13,494	Month-end 60 days	0.19%
0	Faraday	Technology	Corporation	Faraday Technology Japan Corporation	1	Accounts receivable	108,948	Month-end 60 days	1.51%
0	Faraday	Technology	Corporation	GrainTech Electronics Limited	1	Accounts receivable	2,622	Month-end 60 days	0.04%
0	Faraday	Technology	Corporation	Artery Technology Corporation, Ltd.	1	Accounts receivable	6,611	Month-end 60 days	0.09%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Contract Assets	269,031	According to the contract	3.74%

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 3 (Significant intercompany transactions between consolidated entities)

For the three months ended March 31, 2019

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Transactions
Relationship with Percentage of consolidated operating
No. the Company revenues or consolidated total assets
(Note 1) Related Party Counterparty (Note 2) Account Amount Terms (Note 3)
Faraday Technology China Month-end 60
0 Faraday Technology Corporation 1 Accounts receivable 2,965 0.04%
Corporation days
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0 (Note 1)	Faraday Technology Corporation Related Party	Faraday Technology China Corporation Counterparty	1 (Note 2)	Accounts receivable Account	2,965 Amount	Month-end 60 days Terms	0.04% (Note 3)
0	Faraday Technology Corporation	Faraday Technology China Corporation	1	Other receivables	63,945	Month-end 60 days	0.89%
0	Faraday Technology Corporation	Faraday Technology China Corporation	1	Accounts payables	112	Month-end 60 days	-
0	Faraday Technology Corporation	Faraday Technology Corporation (Suzhou)	1	Sales	13,478	Note 5	1.23%
0	Faraday Technology Corporation	Faraday Technology Corporation (Suzhou)	1	Contract Assets	6,655	According to the contract	0.09%
0	Faraday Technology Corporation	Faraday Technology Corporation (Suzhou)	1	Other receivables	748	Month-end 60 days	0.01%
0	Faraday Technology Corporation	Faraday Technology Corporation (Suzhou)	1	Accounts payables	5	Month-end 60 days	-
0	Faraday Technology Corporation	Innopower Technology Corporation	1	Accounts receivable	75,758	Month-end 60 days	1.05%
0	Faraday Technology Corporation	Innopower Technology Corporation	1	Other receivables	54,729	Month-end 60 days	0.76%
0	Faraday Technology Corporation	Innopower Technology Corporation	1	Other payables	302	Month-end 60 days	-
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Sales	62,629	Note 5	5.71%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Accounts receivable	116,553	Month-end 60 days	1.62%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Contract liabilities	5,365	According to the contract	0.07%
2	United Business Service Corporation	Faraday Technology China Corporation	3	Sales	19,725	Note 5	1.80%
2	United Business Service Corporation	Faraday Technology China Corporation	3	Accounts receivable	43,872	Month-end 60 days	0.61%
2	United Business Service Corporation	Faraday Technology Corporation (Suzhou)	3	Sales	20,955	Note 5	1.91%

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 3 (Significant intercompany transactions between consolidated entities)

For the three months ended March 31, 2019

2 No. (Note 1)	United Business Service Corporation Related Party	Faraday Technology Corporation (Suzhou) Counterparty	3 Relationship with the Company (Note 2)	Accounts receivable Account	20,955 Amount	Month-end 60 days 0.29% Transactions Terms Percentage of consolidated operating revenues or consolidated total assets (Note 3)

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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 4 (Related information of investee companies as of March 31, 2019)

Faraday Technology Corporation

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Initial Investment Investment as of March 31, 2019
Percentage of Net income (loss) of Investment income
ownership Carrying investee company (loss) recognized
Investee company Address Main businesses and products March 31, 2019 December 31, 2018 Number of shares (%) amount (Note) (Note) (Note)
Common stock
Common stock 118,580
Faraday Technology Corporation USA Sales representive in America $436,907 $436,907 thousand shares and preferred owned 100.00% and $429,838 ($4,028) ($2,452)
(USA) preferred stock
stock 2,000 thousand shares
owned 100.00%
Common stock 22,140
Faraday Technology - B.V.I British Virgin Islands Trading and general investing 706,792 706,792 thousand shares 100.00% 305,872 14,934 16,762
Faraday Technology JapanCorporation Japan Tokyo Sales representive in Japan 29,320 29,320 Common stock 2 thousandshares 99.95% 67,699 5,553 5,544
Common stock 91,000
Chih-Hung Investment Corporation Taiwan General Investing 910,000 910,000 thousand shares 100.00% 730,507 33,688 33,571
Common stock 22,202
Sheng Bang Investment Corporation Taiwan General Investing 222,020 222,020 thousand shares 100.00% 197,496 (588) (588)
Chih-Hung Investment Corporation
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Grain Media Inc. Innopower Technology Corporation Fresco Logic Inc. Grain Media Inc. Bright Capital Group Limited Investee company Sheng Bang Investment Corporation Investee company Innopower Technology Corporation Investee company	Taiwan Taiwan USA Taiwan Samoa Address Address Address	IC designing, marketing and customer service Silicon Intellectual Property designing IC designing IC designing, marketing and customer service General investing Main businesses and products Main businesses and products Main businesses and products	$1,456 80,000 281,853 $6,044 $68,593 Initial Inv March 31, 2019 Initial Inv March 31, 2019 Initial Inv March 31, 2019	$1,456 80,000 281,853 $6,044 $68,593 estment December 31, 2018 estment December 31, 2018 estment December 31, 2018	Common stock 146 thousand shares Common stock 8,000 thousand shares Preferred stock 5,528 thousand shares Common stock 604 thousand shares Common stock 2,301 thousand shares Number of shares (thousand) Investment Investment Number of shares (thousand) Investment Number of shares (thousand)	19.42% $1,231 100.00% 215,401 22.61% 83,805 80.58% $5,107 100.00% $228,037 Percentage of ownership (%) Carrying amount (Note) as of March 31, 2019 Carrying amount (Note) as of March 31, 2019 Percentage of ownership Carrying amount (Note) as of March 31, 2019 Percentage of ownership	($97) 35,537 (10,174) ($97) $37,537 Net income (loss) of investee company (Note) Net income (loss) of investee company (Note) Net income (loss) of investee company (Note)	($19) 35,537 (1,818) ($78) $37,537 Investment income (loss) recognized (Note) Investment income (loss) recognized (Note) Investment income (loss) recognized (Note)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 4 (Related information of investee companies as of March 31, 2019)

Faraday Technology Corporation- Mauritius GrainTech Electronics Limited Faraday Technology Corporation- Samoa Artery Technology Corporation- Cayman Faraday Technology- B.V.I Investee company	Mauritius Hong Kong Samoa Cayman Address	General investing IC designing, marketing and customer service General investing General investing Main businesses and products	USD $12,859,205 USD 100,000 USD 4,715,067 USD 4,460,000 Initial Inv March 31, 2019	USD $12,859,205 USD 100,000 USD 4,715,067 USD 4,460,000 estment December 31, 2018	Common stock 12,804 thousand shares Common stock 100 thousand shares Common stock 4,715 thousand shares Common stock 4,300 thousand shares Investment Number of shares (thousand)	100.00% $94,284 100.00% 5,768 100.00% 141,736 81.13% 62,064 as of March 31, 2019 Percentage of ownership Carrying amount (Note)	($1,902) 117 21,362 (5,732) Net income (loss) of investee company (Note)	($1,902) 117 21,362 (4,650) Investment income (loss) recognized (Note)

Note 1: USD are expressed in dollars.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 5 (Investment in Mainland China as of March 31, 2019)

Faraday Technology China Corporation Faraday Technology Corporation (Suzhou) Grain Media Technology (Shenzhen) Co., Ltd. United Business Service Corporation Artery Technology Corporation, Ltd. Investee company	IC designing, marketing and customer service IC designing, marketing and customer service IC designing, marketing and customer service Main Businesses and Products IC designing, marketing and customer service IC designing, marketing and customer service	$184,860 (USD 6,000,000) $178,698 (USD 5,800,000) $123,265 (USD 4,000,814) $137,370 (RMB 30,000,000) $174,385 (USD 5,660,000) Total Amount of Paid-in Capital	Note 1 Note 3 Note 1 Note 5 Note 1 Note 6 Note 1 Note 7 Method of Investment Note 4	$184,860 (USD 6,000,000) $178,698 (USD 5,800,000) $123,265 (USD 4,000,814) $137,370 (RMB 30,000,000) $137,413 (USD 4,460,000) Accumulated Outflow of Investment from Taiwan as of January 1, 2019	$- $- $- Investment F $- Outflow $-	Inflow $- $- $- $- $- lows	$184,860 (USD 6,000,000) $178,698 (USD 5,800,000) $123,265 (USD 4,000,814) $137,370 (RMB 30,000,000) $137,413 (USD 4,460,000) Accumulated Outflow of Investment from Taiwan as of March 31, 2019	($4,730) ($1,908) $37,537 - $21,362 Net income (loss) of investee company	($1,908) $37,537 $21,362 100.00% ($3,838) 81.13% - 100.00% 100.00% 100.00% Percentage of Ownership Investment income (loss) recognized	$474 $141,735 $91,563 $228,036 $62,047 Carrying Value as of March 31, 2019	$- $- $- $- $- Accumulated inward remittance of earnings as of March 31, 2019 Unit:New Taiwan Dollars in thousands, USD and RMB in dollars

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

ATTACHMENT 5 (Investment in Mainland China as of March 31, 2019)

Accumulated investment in Mainland China as of March 31, 2019	Investment amounts authorized by Investment Commission, MOEA	Upper limit on investment
$769,507 (Note 2) (USD 24,975,881)	$866,126 (Note 2) (USD 28,111,835)	$2,963,803

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 March 31, 2019.
Note 3: As of March 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 March 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 March 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 March 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.

AI assistant

Faraday — Interim / Quarterly Report 2019

52268_rns_2019-12-31_ab3b4a43-97cb-42f6-b61d-6c8d7d134363.pdf

AND SUBSIDIARIES

Notice to Readers

Review Report of Independent Accountants

Introduction

Scope of Review

Basis for Qualified Conclusion

Conclusion

Notice to Readers

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three-months ended March 31, 2019 and 2018 (Expressed in thousands of New Taiwan Dollars)

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”

(a) Leases previously classified as operating leases

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

c. Definition of a Business - Amendments to IFRS 3

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

4. Summary of Significant Accounting Policies

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

Preparation principle of consolidated financial statements

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The accounting policy from January 1, 2019 as follow:

Group as a lessee

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The accounting policy before January 1, 2019 as follow:

Group as a lessee

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

5. Significant Accounting Judgments, Estimates and Assumptions

6. Contents of Significant Accounts

(1) Cash and cash equivalents

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

(5) Inventories

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(6) Investments accounted for using equity method

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Property, plant and equipment

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(8) Intangible assets

(9) Short-term loans

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

- (10) Long term payables

Defined contribution plan

Defined benefit plan

(12) Equity

A. Capital stock

B. Additional paid-in capital

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

D. Non-controlling interests

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

(1) Disaggregation of revenue

(2) Contract balances

A. Contract assets – current

English Translation of Consolidated Financial Statements Originally Issued in Chinese FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. Contract liabilities – current

Faraday Interim / Quarterly Report 2019