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 NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 2019 and 2018, and the related consolidated statements of comprehensive income for the three-month and nine-month periods ended September 30, 2019 and 2018, changes in equity and cash flows for the nine-month periods ended September 30, 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.

The basis of 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$2,879,120 thousand and NT$2,629,291 thousand, constituting 38.97% and 37.07% of the consolidated total assets, and total liabilities of NT$346,206 thousand and NT$327,836 thousand, constituting 14.52% and 14.97% of the consolidated total liabilities as of September 30, 2019 and 2018, respectively; and total comprehensive income of NT$(4,142) thousand, NT$88,006 thousand, NT$7,248 thousand ,and NT$139,044 thousand constituting (2.71)%, 184.70%, 1.86%, and 61.75% of the consolidated total comprehensive income for the three-month period and nine-month periods ended September 30, 2019 and 2018, respectively. As explained in Note (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$80,183 thousand and NT$84,746 thousand as of September 30, 2019 and 2018, respectively. The related shares of profits from the associate under the equity method amounted to NT$(1,273) thousand, NT$(2,800) thousand, NT$(5,480) thousand, and NT$(11,046) thousand , and the related shares of other comprehensive income from the associate under the equity method amounted to NT$(195) thousand, NT$75 thousand, NT$172 thousand, and NT$775 thousand for the three-month period and nine-month periods ended September 30, 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 September 30, 2019 and 2018, their consolidated financial performance, for the threemonth and nine-month periods ended September 30, 2019 and 2018 and cash flows for the nine-month periods ended September 30, 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 October 29, 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

September 30, 2019, December 31, 2018 and September 30, 2018 (September 30, 2019 and 2018 are unaudited) (Expressed in thousands of New Taiwan Dollars)

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As of
Assets Note
September 30, 2019 December 31, 2018 September 30, 2018
Current assets
Cash and cash equivalents 6.(1) $ 2,264,796 $ 2,387,534 $ 2,340,711
Financial assets at fair value through profit or loss, current 6.(2) 24,126 25,525 27,496
Contract assets, current 6.(13), 6.(14), 7 436,456 367,258 388,636
Notes receivable, net 6.(14) 1,521 1,558 649
Accounts receivable, net 6.(4), 6.(14) 1,044,262 766,844 759,244
Accounts receivable from related parties, net 6.(4), 6.(14), 7 107,735 114,694 76,824
Other receivables, net 67,823 45,640 65,310
Inventories, net 6.(5) 741,839 596,017 680,653
Other current assets 7 155,445 88,653 83,731
Total current assets 4,844,003 4,393,723 4,423,254
Non-current assets
Financial assets at fair value through profit or loss, noncurrent 6.(2) - 29,265 29,265
Financial assets at fair value through other comprehensive income, noncurrent 6.(3) 1,045,888 967,922 1,185,148
Financial assets measured at amortized cost, noncurrent 8 16,816 16,772 16,763
Investments accounted for using equity method 6.(6) 80,183 85,490 84,746
Property, plant and equipment 6.(7) 589,216 575,858 553,085
Right-of-use assets 4, 6.(15) 264,921 - -
Intangible assets 6.(8), 7 499,613 691,470 748,733
Deferred tax assets 4 40,651 47,344 44,228
Refundable deposits 7,660 6,875 6,652
Total non-current assets 2,544,948 2,420,996 2,668,620
Total assets $ 7,388,951 $ 6,814,719 $ 7,091,874
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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

September 30, 2019, December 31, 2018 and September 30, 2018 (September 30, 2019 and 2018 are unaudited) (Expressed in thousands of New Taiwan Dollars)

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As of
Liabilities and Equity Note
September 30, 2019 December 31, 2018 September 30, 2018
Current liabilities
Contract liabilities, current 6.(13), 7 $ 297,156 $ 300,408 $ 415,683
Notes payable 163 4 4
Accounts payable 912,446 695,160 675,315
Accounts payable - related parties 7 189,476 114,097 246,492
Payables on equipment 12,679 1,607 -
Other payables 6.(10) 515,985 561,437 495,150
Current tax liabilities 77,860 63,974 46,725
Lease liabilities-current 4, 6.(15) 33,359 - -
Other current liabilities 11,795 29,491 37,001
Total current liabilities 2,050,919 1,766,178 1,916,370
Non-current liabilities
Deferred tax liabilities 4 2,829 2,390 4,229
Lease liabilities-noncurrent 4, 6.(15) 238,045 - -
Long-term payables 6.(10) 69,533 211,859 244,740
Long-term deferred revenue 5,311 7,031 8,486
Defined benefit liabilities, non-current 4 17,050 15,900 16,408
Total non-current liabilities 332,768 237,180 273,863
Total liabilities 2,383,687 2,003,358 2,190,233
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) 629,053 626,596 604,953
Retained earnings 6.(12)
Legal reserve 1,473,678 1,596,485 1,596,485
Special reserve 512,210 860 860
Unappropriated earnings 331,315 599,145 520,489
Other components of equity (435,398) (512,210) (306,649)
Equity attributable to the parent company 6.(12) 4,996,361 4,796,379 4,901,641
Non-controlling interests 6.(12) 8,903 14,982 -
Total equity 5,005,264 4,811,361 4,901,641
Total liabilities and equity $ 7,388,951 $ 6,814,719 $ 7,091,874
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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-month and nine-month periods ended September 30, 2019 and 2018

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

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For the three-month periods ended For the nine-month periods ended
September 30, September 30,
Note 2019 2018 2019 2018
Net sales 6.(13), 7 $ 1,591,800 $ 1,406,021 $ 3,904,081 $ 3,552,962
Operating costs 6.(5), 6.(16), 7 (789,528) (681,108) (1,801,346) (1,660,274)
Gross profit 802,272 724,913 2,102,735 1,892,688
Operating expenses 6.(8), 6.(16), 7
Selling expenses (65,551) (56,473) (175,362) (174,324)
Administrative expenses (71,913) (72,597) (215,525) (208,203)
Research and development expenses (484,456) (477,650) (1,412,397) (1,275,903)
Expected credit gains (losses) 6.(14) 19,886 (8,219) 41,999 (36,987)
Total operating expenses (602,034) (614,939) (1,761,285) (1,695,417)
Operating income 200,238 109,974 341,450 197,271
Non-operating income and expenses
Other income 6.(17) 20,481 9,261 65,157 37,845
Other gains and losses 6.(17) (39,672) (15,887) (33,331) (6,784)
Finance costs 6.(17) (1,768) - (5,487) -
Share of profit or loss of associates and joint ventures 6.(6) (1,273) (2,800) (5,480) (11,046)
Total non-operating income and expenses (22,232) (9,426) 20,859 20,015
Income from continuing operations before income tax 178,006 100,548 362,309 217,286
Income tax expense 4, 6.(19) (34,909) (13,410) (69,998) (32,638)
Net income from continuing operations 143,097 87,138 292,311 184,648
Other comprehensive income 6.(18)
Item that will not be reclassified subsequently to profit or loss:
Unrealized gains or losses from equity instruments investments
25,632 (30,991) 106,518 37,537
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 (15,937) (8,575) (9,286) 2,215
Share of the other comprehensive income
of associates and joint ventures accounted for using equity (195) 75 172 775
method
Other comprehensive income (net of income tax) 9,500 (39,491) 97,404 40,527
Total comprehensive income $ 152,597 $ 47,647 $ 389,715 $ 225,175
Net income attributable to:
Stockholders of the parent 6.(20) $ 146,219 $ 87,138 $ 298,736 $ 184,648
Non-controlling interests 6.(12) (3,122) - (6,425) -
$ 143,097 $ 87,138 $ 292,311 $ 184,648
Comprehensive income (loss) attributable to:
Stockholders of the parent $ 156,126 $ 47,647 $ 396,365 $ 225,175
Non-controlling interests (3,529) - (6,650) -
$ 152,597 $ 47,647 $ 389,715 $ 225,175
Earnings per share (NTD) 6.(20)
Earnings per share-basic $ 0.59 $ 0.35 $ 1.20 $ 0.74
Earnings per share-diluted $ 0.59 $ 0.35 $ 1.20 $ 0.74
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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 nine-month periods ended September 30, 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
Exchange Financial Assets Unrealized Gain
Differences on or Loss on
Measured at Fair
Translation of Available-for-
Foreign Value throughOther sale Financial
Operations Assets
Common Additional Paid- Legal Special Unappropriated ComprehensiveIncome Non-Controlling
Stock in Capital Reserve Reserve Earnings 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
Appropriation and distribution of 2017 retained earnings
Legal reserve - - 83,591 - (83,591) - - - - - -
Special reserve - - - 860 (860) - - - - - -
Cash dividends - - - - (671,086) - - - (671,086) - (671,086)
Net income for the nine-month ended September 30, 2018 - - - - 184,648 - - - 184,648 - 184,648
Other comprehensive income for the nine-month endedSeptember 30, 2018 - - - - - 2,990 37,537 - 40,527 - 40,527
Total comprehensive income for the nine-month endedSeptember 30, 2018 - - - - 184,648 2,990 37,537 - 225,175 - 225,175
Change in subsidiaries' ownership - 6,074 - - - - - - 6,074 - 6,074
Disposal of equity instrument measured at - - - - 23,329 - (23,329) - - - -
fair value through other comprehensive income
Balance as of September 30, 2018 $ 2,485,503 $ 604,953 $ 1,596,485 $ 860 $ 520,489 $ (64,620) $ (242,029) $ - $ 4,901,641 $ - $ 4,901,641
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
Appropriation and distribution of 2018 retained earnings
Legal reserve - - 26,323 - (26,323) - - - - - -
Special reserve - - - 511,350 (511,350) - - - - - -
Cash dividends - - (149,130) - (49,710) - - - (198,840) - (198,840)
Net income for the nine-month ended September 30, 2019 - - - - 298,736 - - - 298,736 (6,425) 292,311
Other comprehensive income for the nine-month ended - - - - - (8,889) 106,518 - 97,629 (225) 97,404
September 30, 2019
Total comprehensive income for the nine-month ended - - - - 298,736 (8,889) 106,518 - 396,365 (6,650) 389,715
September 30, 2019
Change in subsidiaries' ownership - 2,457 - - - - - - 2,457 571 3,028
Disposal of equity instrument measured at - - - - 20,817 - (20,817) - - - -
fair value through other comprehensive income
Balance as of September 30, 2019 $ 2,485,503 $ 629,053 $ 1,473,678 $ 512,210 $ 331,315 $ (61,844) $ (373,554) $ - $ 4,996,361 $ 8,903 $ 5,005,264
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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 nine-month periods ended September 30, 2019 and 2018 (Expressed in thousands of New Taiwan Dollars)

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For the nine-month periods ended For the nine-month periods ended
September 30, September 30,
Description 2019 2018 Description 2019 2018
Cash flows from operating activities: Cash flows from investing activities:
Net income before tax $ 362,309 $ 217,286 Acquisition of financial asset measured at fair value through other comprehensive income $ - $ (30,000)
Adjustments for non-cash gain or loss: Disposal of financial asset measured at fair value through other comprehensive income 28,552 31,064
Depreciation 70,901 35,616 Acquisition of financial asset measured at fair value through profit or loss - (58,465)
Amortization 254,192 280,950 Disposal of financial asset measured at fair value through profit or loss - 36,508
Expected credit (gains) losses (41,999) 36,987 Acquisition of property, plant and equipment (48,152) (55,973)
Loss on financial assets and liabilities at fair value through profit or loss 30,747 7,236 Refundable deposits (785) (99)
Interest expense 5,487 - Acquisition of intangible assets (225,930) (316,591)
Interest income (10,512) (9,161) Other investing activities (44) (67)
Share-based payment expenses 3,028 6,074 Net cash used in investing activities (246,359) (393,623)
Share of loss of associates and joint ventures accounted for using equity method 5,480 11,046
Others (17) (18,779) Cash flows form financing activities:
Changes in operating assets and liabilities: Cash payments for the principal portion of the lease liability (23,594) -
Contract assets (69,198) (388,636) Cash dividends paid (198,840) (671,086)
Notes receivable 37 4,421 Net cash used in financing activities (222,434) (671,086)
Accounts receivable (235,419) (189,471) Effect of exchange rate changes on cash and cash equivalents (13,155) 9,534
Accounts receivable from related parties 6,959 12,241
Other receivables (21,912) 2,101 Net decrease in cash and cash equivalents (122,738) (819,011)
Inventories (145,822) (246,490) Cash and cash equivalents at beginning of period 2,387,534 3,159,722
Other current assets (69,029) 19,172 Cash and cash equivalents at end of period $ 2,264,796 $ 2,340,711
Contract liabilities (3,252) 354,881
Notes payables 159 (96)
Accounts payable 217,286 216,510
Accounts payable - related parties 75,379 162,271
Other payables (14,839) (164,526)
Other current liabilities (19,416) 1,420
Defined benefit liabilities 1,150 (2,430)
Cash generated from operations 401,699 348,623
Interest received 10,241 9,532
Interest paid (5,487) -
Income tax paid (47,243) (121,991)
Net cash provided by operating activities $ 359,210 $ 236,164
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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 ninemonth periods ended September 30, 2019 and 2018 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on October 29, 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 liabilitycurrent by NT$266,109 thousand, other current assets decreased by NT$500 thousand and other payables decreased NT$5,617 thousand.

In accordance with the transition provision in IFRS 16, the Group’s 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
	$78,322 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

$78,322
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 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	Definition of a Business - Amendments to IFRS 3	January 1, 2020
b	Definition of Material - Amendments to IAS 1 and 8	January 1, 2020

a. Definition of a Business - Amendments to IFRS 3

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

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

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

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

The above-mentioned standards and interpretations issued by IASB have not yet been recognized by FSC at the date of issuance of the Company’s financial statements, the local effective dates are to be determined by FSC. The above-mentioned standards and interpretations have no material impact on 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)
(3) 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.

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Items New, Revised or Amended Standards and Interpretations Effective Date
issued by IASB
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
b IFRS 17 Insurance Contracts January 1, 2021
c Interest Rate Benchmark Reform - Amendments to IFRS 9, January 1, 2020
IAS 39 and IFRS 7
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(a) IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The effective date of the amendments has been postponed indefinitely, but early adoption is allowed.

(b) IFRS 17 Insurance Contracts
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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)

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.

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

The amendments include:

(1) highly probable requirement

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

(2) prospective assessments

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

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) IAS 39 retrospective assessment

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

(4) separately identifiable risk components

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

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

The above-mentioned standards and interpretations issued by IASB have not yet endorsed 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 nine-month periods ended September 30, 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.

(3) Basis of consolidation
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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)

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.

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;
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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) 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:

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Percentage of ownership (%)
As of
Investor Subsidiary Main businesses September 30, 2019 December 31, 2018 September 30, 2018
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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	Faraday Technology Vietnam Company	IC designing service	100.00%	-	-
	Limited (Note 2)
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 IC designing
Chih-Hung	Innopower Technology Corporation	Silicon Intellectual Property	100.00%	100.00%	100.00%
	(Innopower)	designing
Chih-Hung	FaradayTek Solutions India Private	IC designing service
			1.00%	-	-
	Limited (Note 3)
Sheng Bang	Grain Media Inc.	IC designing, marketing and	80.58%	80.58%	80.58%
		customer service
Sheng Bang	FaradayTek Solutions India Private Limited	IC designing service	99.00%	-	-
	(Note 4)
Innopower	Bright Capital Group Limited (BCGL)	General investing	100.00%	100.00%	100.00%
BCGL	Faraday Technology Corporation (Suzhou)	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%
	`－`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 (Samoa)	General investing	100.00%	100.00%	100.00%
B.V.I.	Artery Technology Corporation(Cayman)	General investing	81.13%	81.13%	100.00%
	(Note 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)

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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) Co.,	IC designing, marketing and	100.00%	100.00%	100.00%
	Ltd.(Note 6)	customer service
Cayman	Artery Technology Company(Note 7)	IC designing, marketing and	100.00%	-	-
		customer service
United	United Creative Solution Corporation	IC designing, marketing and	100.00%	-	-
Business	(Note 8)	customer service
Service
Corporation
United	Innopower Technology Corporation	IC designing, marketing and	100.00%	-	-
Business	(Chongqing)	customer service
Service	(Note 9)
Corporation

We did not review the financial statements of certain subsidiaries, whose statements reflect total assets of NT$2,879,120 thousand and NT$2,629,291 thousand as of September 30, 2019 and September 30, 2018, respectively, and total liabilities of NT$346,206 thousand and NT$327,836 thousand as of September 30, 2019 and 2018, respectively, and total comprehensive income of NT$(4,142) thousand and NT$88,006 thousand for the three-month periods ended September 30, 2019 and 2018, respectively, and total comprehensive income of NT$7,248 thousand and NT$139,044 thousand for the nine-month periods ended September 30, 2019 and 2018.

Notes:

－
(1) Faraday Technology B.V. has been liquidated and capital was remitted during the year ended December 31, 2018.
(2) Faraday Technology invested in the establishment of Faraday Technology Vietnam Company Limited in May 2019.
(3) Chih-Hung Investment Corporation invested in the establishment of FaradayTek Solutions India Private Limited in April 2019.
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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) Sheng Bang Investment Corporation invested in the establishment of FaradayTek Solutions India Private Limited in April 2019.
(5) 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%.
(6) Grain Media Technology (Shenzhen) Co., Ltd. filed for liquidation in February 2018. The liquidation procedures is still in progress as of the report date.
(7) Artery Technology Corporation (Cayman) invested in Artery Technology Company in July 2019 and acquired 100% ownership.
(8) United Business Service Corporation invested in the establishment of United Creative Solution Corporation in August 2019.
(9) United Business Service Corporation invested in the establishment of Innopower Technology Corporation (Chongqing) in July 2019.
(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 nine-month period ended September 30, 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.
(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 1 January 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.

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 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.

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.
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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)

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.

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.

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 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 follows:

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.
(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 Judgements, Estimates and Assumptions

The same significant accounting judgments, estimates and assumptions have been followed in the consolidated financial statements for the nine-month periods ended September 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.

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. Contents of Significant Accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash Cash on hand Checking and savings Time deposits Cash equivalents-Commercial paper with repurchase agreements Total		As of
	September 30, 2019	December 31, 2018 $362 914,894 1,472,278 - $2,387,534	September 30, 2018
	$319 1,235,466 1,029,011 - $2,264,796		$300 1,482,161 708,255 149,995 $2,340,711

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

	As of
September 30, 2019 $1,342 - 22,784 $24,126 $24,126 - $24,126	December 31, 2018	September 30, 2018 $835 29,265 26,661 $56,761 $27,496 29,265 $56,761
	$330 29,265 25,195
	$54,790
	$25,525 29,265
	$54,790

Financial assets at fair value through profit or loss 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)

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

Equity instrument investments measured at fair value through other comprehensive income – Non-current: Listed companies stocks Unlisted companies stocks Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$- 1,045,888 $1,045,888	$19,031 948,891 $967,922	$23,516 1,161,632 $1,185,148

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

In consideration of the Group’s investment strategy, the Group disposed the listed stock of Andes Technology Corporation during nine-month period ended September 30, 2019 and 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$28,552 thousand and NT$55,929 thousand, and the cumulative disposal gain of NT$20,817 thousand and 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
September 30, 2019	December 31, 2018	September 30, 2018
$1,131,626	$905,346	$860,939
1,131,626 (87,364)	905,346 (138,502)	860,939 (101,695)
1,044,262 107,735	766,844 114,694	759,244 76,824
107,735 $1,151,997	114,694 $881,538	76,824 $836,068

Accounts receivable 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)

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$1,239,361 thousand, NT$1,020,040 thousand, and NT$937,763 thousand for September 30, 2019, December 31, 2018, and September 30, 2018, respectively. Please refer to Note 6(14) for more details on impairment of account receivable, and Note 12 for more details on credit risk.

(5) Inventories

nventories
Work in process Finished goods Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018 $235,688 444,965 $680,653
	$204,290 537,549 $741,839	$153,158 442,859 $596,017

The cost of inventories recognized in expenses amounted to NT$789,528 thousand and NT$681,108 thousand for the three-month periods ended Septemberem 30, 2019 and 2018, respectively, including the loss of NT$3,308 thousand and NT$3,705 thousand for the three-month periods ended Septemper 30, 2019 and 2018, respectively, and loss on scrap of inventories of NT$0 thousand and NT$0 thousand, respectively.

The cost of inventories recognized in expenses amounted to NT$1,801,346 thousand and NT$1,660,274 thousand for the nine-month periods ended Septemberem 30, 2019 and 2018, respectively, including the loss of NT$7,187 thousand and loss on scrap of inventories of NT$0 thousand, and the reversal gain of NT$8,977 thousand and loss on scrap of inventories of NT$18,930 thousand for the nine months ended Septemper 30, 2019 and 2018, respectively. The gain from reversal of allowance for decline in market value and obsolescence was recognized due to the sales of the Company’s previously written-down inventories for the nine-month period ended September 30, 2018.

No inventories were pledged.

(6) Investments accounted for using equity method

			As of	As of
	September 30,2019		December 31,2018		September 30,2018
Investee company		Percentage of		Percentage of	Amount	Percentage of
		Ownership or		Ownership or		Ownership or
	Amount	VotingRights	Amount	VotingRights		Voting Rights
Associate`：` Fresco Logic Inc.					$84,746
	$80,183	22.61%	$85,490	22.61%		22.61%

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 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$80,183 thousand, NT$85,490 thousand, and NT$84,746 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 (net of income tax) Total comprehensive income	Three-month period ended September 30	Three-month period ended September 30	Nine-month period ended September 30	Nine-month period ended September 30
	2019	2018	2019	2018
	$(1,273) - $(1,273)	$(2,800) - $(2,800)	$(5,480) - $(5,480)	$(11,046) - $(11,046)

There were no contingent liabilities or capital commitments for the above-mentioned associate, and the investment was not pledged as of September 30, 2019, December 31, 2018, and September 30, 2018.

The carrying amount of investments accounted for under the equity method in investees whose financial statements were unreviewed amounts to NT$80,183 thousand and NT$84,746 thousand, as of September 30, 2019 and September 30, 2018, respectively. The share of the profit or loss of these associates and joint ventures accounted for using the equity method amount to NT$(1,273) thousand and NT$(2,800) thousand for the three months ended September 30, 2019 and 2018, respectively, and the share of the profit or loss of these associates and joint ventures accounted for using the equity method amount to NT$(5,480) thousand and NT$(11,046) thousand for the nine months ended September 30, 2019 and 2018, respectively. The share of other comprehensive income of these associates and joint ventures accounted for using the equity method amount to NT$(195) thousand and NT$75 thousand for the three months ended September 30, 2019 and 2018, respectively, and The share of the profit or loss of these associates and joint ventures accounted for using the equity method amount to NT$172 thousand and NT$775 thousand for the nine months ended September 30, 2019 and 2018, respectively. These amounts were based on unreviewed financial statements of the investees.

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

Property, plant and equipment for own-use		As of
	September 30, 2019 $589,216	December 31, 2018 (Note)	September 30, 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.

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

Land	Buildings and facilities	Machinery	Computer equipment	Office furniture and fixtures	Miscellaneous equipment	Total
$33,576 - -	$603,753 595 (131)	$41,243 3,768 -	$143,208 53,867 (16))	$25,134 889 39)	$857 105 9)	$847,771 59,224 (99))
$33,576	$604,217	$45,011	$197,059	$26,062	$971	$906,896
$- - -	$183,215 11,106 27	$11,401 5,199 -	$59,341 27,464 10	$17,353 2,026 (139))	$603 68 6	$271,913 45,863 (96)
$-	$194,348	$16,600	$86,815	$19,240	$677	$317,680
$33,576	$409,869	$28,411	$110,244	$6,822	$294	$589,216

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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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 - - 23,055 28,046 2,786 57 1,612 55,556
Disposals - - - - (1,787) - - (1,787)
Transfers and - 10,754 - - - - (10,754) -
reclassifications
Exchange effect - (315) - 101 (241) 22 50 (383)
As of September 30, 2018 $33,576 $603,257 $44,507 $142,265 $24,307 $947 $- $848,859
Depreciation and
impairment:
As of January 1, 2018 $- $167,749 $9,955 $67,587 $16,040 $571 $- $261,902
Additions - 11,675 2,954 18,503 2,387 97 - 35,616
Disposals - - - - (1,787) - - (1,787)
Exchange effect - 30 - 137 (139) 15 - 43
As of September 30, 2018 $- $179,454 $12,909 $86,227 $16,501 $683 $- $295,774
Office
Buildings Computer furniture and Miscellaneous Construction
Land and facilities Machinery equipment fixtures equipment in process Total
Net carrying amount as of:
December 31, 2018 $33,576 $420,538 $29,842 $83,867 $7,781 $254 $- $575,858
September 30, 2018 $33,576 $423,803 $31,598 $56,038 $7,806 $264 $- $553,085
----- 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.

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

Software

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: September 30, 2019 December 31, 2018 September 30, 2018	Nine-month period ended September 30, 2019	Nine-month period ended September 30, 2018
	$1,065,829 58,608 (5,120) 3,707	$1,193,296 602,924 (632,239) (7,087)
	$1,123,024	$1,156,894
	$374,359 254,192 (5,120) (20))	$758,480 280,950 (632,239) 970)
	$623,411	$408,161
	$499,613
	$691,470 $748,733

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 amortization expenses of intangible assets are as follows:

Administrative expenses Research and development expenses Total	Three-month periods ended September 30	Three-month periods ended September 30	Nine-month periods ended September 30	Nine-month periods ended September 30
	2019	2018	2019 $75 254,117 $254,192	2018
	$24 85,718 $85,742	$25 97,182 $97,207		$69 280,881 $280,950

(9) Short-term loans

The Group’s credit limit from short-term loans was NT$1,375,250 thousand, NT$907,200 thousand and NT$705,300 thousand as of September 30, 2019, December 31, 2018, and September 30, 2018, respectively, and all of which was unused.

- (10) Long term payables

The payables were primarily attributable to several agreements which the Group entered into for certain software license. As of September 30, 2019, December 31, 2018, and September 30, 2018, future payments for other long-term payables were as follows ：

==> picture [468 x 173] intentionally omitted <==

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

As of
Year of payment September 30, 2019 December 31, 2018 September 30, 2018
2018 $- $- $89,781
2019 140,786 145,704 143,918
2020 91,616 143,968 142,407
2021 46,321 67,891 66,353
2022 420 - -
Subtotal 279,143 357,563 442,459
Less: Current portion (Recorded as
other payables) (209,610) (145,704) (197,719)
Total $69,533 $211,859 $244,740
----- End of picture text -----

(11) Post-employment benefits
32-

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)

Defined contribution plan

Expenses under the defined contribution plan for the three months ended Septemberem 30, 2019 and 2018 are NT$12,086 thousand and NT$10,497 thousand, respectively, and expenses under the defined contribution plan for the nine months ended Septemberem 30, 2019 and 2018 are NT$35,204 thousand and NT$30,395 thousand, respectively.

Defined benefit plan

Expenses under the defined benefit plan for the three months ended September 30, 2019 and 2018 are NT$1,428 thousand and NT$137 thousand, respectively, and expenses under the defined contribution plan for the nine months ended September 30, 2019 and 2018 are NT$4,284 thousand and NT$409 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 September 30, 2019, December 31, 2018, and September 30, 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 September 30, 2019, related registration processes have not been completed.

The Company’s issued capital was NT$2,485,503 thousand, divided into 248,550 thousand shares, as of September 30, 2019, December 31, 2018, and September 30, 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
	September 30, 2019	December 31, 2018	September 30, 2018
	$594,782 30,174 1,531 2,566 $629,053	$594,782 27,717 1,531 2,566 $626,596	$594,782 6,074 1,531 2,566 $604,953

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)

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.

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.

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)

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 resolved by the shareholders’ meeting on June 13, 2019 and June 15, 2018, respectively, are as follows:

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

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

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

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

Non-controlling interests
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	Nine-monthpreriod ended September 30
	2019 $14,982 (6,425) (225) 571 $8,903	2018
		$- - - - $-

(13) Sales revenue

Sale of goods Rendering of services Silicon intellectual property license Total	Three-month periods ended September 30	Three-month periods ended September 30	Nine-month periods ended September 30 2019 2018 $2,295,025 $1,964,321 1,316,214 1,319,244 292,842 269,397 $3,904,081 $3,552,962	Nine-month periods ended September 30 2019 2018 $2,295,025 $1,964,321 1,316,214 1,319,244 292,842 269,397 $3,904,081 $3,552,962
	2019	2018		2018 $1,964,321 1,319,244 269,397 $3,552,962
	$945,349 541,796 104,655 $1,591,800	$840,137 474,160 91,724 $1,406,021

Analysis of revenue from contracts with customers for the nine months ended September 30, 2019 and 2018 is as follows:

(1) Disaggregation of revenue

Three-month periods ended September 30	Three-month periods ended September 30	Nine-month periods ended September 30	Nine-month periods ended September 30
2019	2018	2019	2018
$945,349 541,796 104,655	$840,137 474,160 91,724	$2,295,025 1,316,214 292,842	$1,964,321 1,319,244 269,397
$1,591,800	$1,406,021	$3,904,081	$3,552,962
$1,035,193 556,607 $1,591,800	$917,390 488,631 $1,406,021	$2,543,650 1,360,431 $3,904,081	$2,191,371 1,361,591 $3,552,962

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) Contract balances

A. Contract assets – current

Contract assets – current
Rendering of services		As	of
	September 30, 2019 $436,456	December 31, 2018 $367,258	September 30, 2018 $388,636	January 1, 2018 $16,159

The significant changes in the Group’s balances of contract assets for the nine months ended September 30, 2019 and 2018 are as follows:

The opening balance transferred to accounts receivable Change in the progress of completion Impairment	Nine months ended September 30	Nine months ended September 30
	2019	2018
	$137,863 216,200 (9,139)	$12,319 384,796 -

B. Contract liabilities – current

Sales of goods Rendering of services Silicon intellectual property license Total		As	of
	September 30, 2019	December 31, 2018	September 30, 2018	January 1, 2018
	$140,910 141,178 15,068 $297,156	$109,141 191,023 244 $300,408	$142,859 258,109 14,715 $415,683	$43,084 17,626 92 $60,802

The significant changes in the Group’s balances of contract liabilities for the nine months ended September 30, 2019 and 2018 are as follows:

Nine-month periods ended September 30

-37- 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)	2019	2018 $47,505 402,386
	$100,717 97,465

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. Transaction price allocated to unsatisfied performance obligations

As of September 30, 2019, there is no need to provide relevant information of the unsatisfied performance obligations as the contract terms with customers about the sales of goods are all shorter than one year. Besides, the summarized amounts of transaction price allocated to unsatisfied performance obligations about rendering of services and silicon intellectual property license is NT$1,120,917 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.

(14) Expected credit (gains) losses

Operating expenses – Expected credit losses (gains) Contract Assets Account receivables Total	Three-month periods ended September 30	Three-month periods ended September 30	Nine-month periods ended September 30	Nine-month periods ended September 30
	2019	2018	2019	2018
	$6,151 (26,037) $(19,886)	$- 8,219 $8,219	$9,139 (51,138) $(41,999)	$- 36,987 $36,987

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 September 30, 2019, December 31, 2018, and September 30, 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:
38-

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)

Gross carrying amount Expected credit loss rates Loss allowance Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$445,595 0%~100% 9,139 $436,456	$367,258 0% - $367,258	$388,636 0% - $388,636

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:

2019.09.30

==> picture [480 x 421] intentionally omitted <==

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

Not yet Overdue
due
31-60 61-90 91-120
(note) <=30 days days days days >=121 days Total
Gross carrying
amount $749,748 $182,933 $152,277 $59,324 $31,862 $64,738 $1,240,882
Expected credit
loss rates -% -% 0~2% 0%~10% 2%~50% 10%~100%
Lifetime
expected
credit losses - - 3,043 3,633 15,950 64,738 87,364
Subtotal $749,748 $182,933 $149,234 $55,691 $15,912 $- $1,153,518
2018.12.31
Not yet Overdue
due
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)

2018.09.30

2018.09.30
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
	$439,712 -%	$182,958 -%	$128,763 2%	$85,195 10%	$22,368 50%	$79,416 100%	$938,412 101,695 $836,717
	- $439,712	- $182,958	2,575 $126,188	8,520 $76,675	11,184 $11,184	79,416 $-

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

The movement in the provision for impairment of accounts receivables for the nine months ended September 30, 2019 and 2018 is as follows:

As of January 1, 2019 Increase (reversal) for the current period As of September 30, 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 September 30, 2018	Contract Assets	Accounts receivables
	$- 9,139	$138,502 (51,138)
	$9,139	$87,364
	$- -	$64,708 -
	- - $-	64,708 36,987 $101,695

(15) Leases

A. The Group as lessee (applicable to 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)

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.

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
	September 30, 2019	December 31, 2018(Note)	September 30, 2018(Note)
	$198,178 64,443 2,041 259 $264,921

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 nine months ended September 30, 2019, the additions to right-of-use assets of the Group amounted to NT$722 thousand.

(b) Lease liability

	As of
September 30, 2019	December 31, 2018(Note)	September 30, 2018(Note)
$271,404
$33,359 238,045 $271,404

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)

Please refer to Note 6 (17) for the interest on lease liability recognized during the nine months ended September 30, 2019 and refer to Note 12 (5) for the maturity analysis for lease liabilities as of September 30, 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.

b. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land Buildings and facilities Transportation equipment Office equipment Total	Three-month period ended September 30	Three-month period ended September 30	Nine-month period ended September 30 2019 2018 (Note) $3,990 20,090 875 83 $25,038	Nine-month period ended September 30 2019 2018 (Note) $3,990 20,090 875 83 $25,038
	2019	2018 (Note)		2018 (Note)
	$1,330 6,705 292 27 $8,354

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

The expense relating to short-term leases	Three-mo ended Se	nth period ptember 30	Nine-month period ended September 30 2019 2018 (Note) $975	Nine-month period ended September 30 2019 2018 (Note) $975
	2019	2018(Note)		2018 (Note)
	$785

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 nine months ended September 30, 2019, the Group’s total cash outflow for leases amounted to NT$29,081 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, 2019 and September 30, 2018 are as follows:

Not later than one year Later than one year and not later than five years Later than five years Total Operating lease expenses recognized is as follows: Three-month period ended September 30, 2019 Minimum lease payment $9,493	As
	December 31, 2019

Operating lease expenses recognized 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)

(16) Summary statement of employee benefits, depreciation and amortization expenses by function during the nine-month periods ended September 30, 2019 and 2018:

==> picture [448 x 184] intentionally omitted <==

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

Three months ended September 30,2019
2019 2018
Operating Operating Operating Operating
Total Total
costs expenses costs expenses
Employee benefits expense
Salaries $12,411 $371,155 $383,566 $11,342 $315,428 $326,770
Labor and health insurance 837 27,824 28,661 781 25,407 26,188
Pension 599 12,915 13,514 490 10,144 10,634
Others 267 5,803 6,070 253 5,606 5,859
Depreciation 225 23,962 24,187 158 12,184 12,342
Amortization - 85,742 85,742 - 97,207 97,207
----- End of picture text -----

==> picture [448 x 185] intentionally omitted <==

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

Nine months ended September 30,2019
2019 2018
Operating Operating Operating Operating
Total Total
costs expenses costs expenses
Employee benefits expense
Salaries $35,481 $1,045,883 $1,081,364 $30,947 $879,478 $910,425
Labor and health insurance 2,481 81,583 84,064 2,214 74,095 76,309
Pension 1,756 37,732 39,488 1,357 29,447 30,804
Others 767 16,844 17,611 714 16,161 16,875
Depreciation 694 70,207 70,901 481 35,135 35,616
Amortization - 254,192 254,192 - 280,950 280,950
----- 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.

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)

Based on profit of the nine months ended September 30, 2019, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$43,561 thousand and NT$0 thousand, respectively, which were recognized as payroll expenses. The Company recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$22,260 thousand and NT$0 thousand for the three-month period ended September 30, 2019, respectively, the Company recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$43,561 thousand and NT$0 thousand for the nine-month period ended September 30, 2019, respectively. Based on profit of the nine months ended September 30, 2018, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$29,607 thousand and NT$0 thousand, respectively, which were recognized as payroll expenses. The Company recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$15,046 thousand and NT$0 thousand for the three-month period ended September 30, 2018, respectively, the Company recognized the amounts of the employees’ compensation and remuneration to directors and supervisors to be NT$29,607 thousand and NT$0 thousand for the nine-month period ended September 30, 2018, respectively.

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-month periods ended September 30		Nine-month periods ended September 30
	2019 $3,864 16,617 $20,481	2018	2019	2018
		$2,647 6,614 $9,261	$10,512 54,645 $65,157	$9,161 28,684 $37,845

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. Other gains and losses

B. Other gains and losses
Foreign exchange gains Losses on financial assets at fair value through profit or loss Others Total	Three-month periods ended September 30		Nine-month periods ended September 30 2019 2018 $3,778 $13,050 (30,747) (7,235) (6,362) (12,599) $(33,331) $6,784
	2019 $(3,995) (30,317) (5,360) $(39,672)	2018 $(14,359) 6,180 (7,708) $(15,887)		2018
				$13,050 (7,235) (12,599) $6,784

C. Finance costs

Interest expenses on lease liabilities	Three-month period ended September 30 2019 2018 $1,768 (Note)	Nine-month period ended September 30	Nine-month period ended September 30
	2019 $1,768	2019 $5,487	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.

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 September 30, 2019

Items that will not to breclassified 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
	$25,632 (15,937) (195) $9,500	$- - - $-	$25,632 (15,937) (195) $9,500	$- - - $-)	$25,632 (15,937) (195) $9,500

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 September 30, 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 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
	$(30,991) (8,575) 75 $(39,491)	$- - - $-	$(30,991) (8,575) 75 $(39,491)	$- - - $-)	$(30,991) (8,575) 75 $(39,491)

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 nine months ended September 30, 2019

Items that will not to breclassified 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
	$106,518 (9,286) 172 $97,404	$- - - $-	$106,518 (9,286) 172 $97,404	$- - - $-	$106,518 (9,286) 172 $97,404

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 nine months ended September 30, 2018

Items that will not to breclassified 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
	$37,537 2,215 775 $40,527	$- - - $-	$37,537 2,215 775 $40,527	$- - - $-	$37,537 2,215 775 $40,527

(19) Income tax

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

The major components of income tax expense are as follows:

Income tax expense (income) recognized in 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)

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 Deferred tax income relating to changes in tax rate or the imposition of new taxes Total income tax expense	Three-month period ended September 30	Three-month period ended September 30	Nine-month period ended September 30	Nine-month period ended September 30
	2019	2018	2019	2018
	$34,453 (4,123) 4,579 - $34,909	$36,539 (114) (15,632) (7,383) $13,410	$ 66,013 (3,147) 7,132 - $69,998	$62,323 (17,028) (7,884) (4,773) $32,638

The assessment of income tax returns

As of September 30, 2019, the assessment of the income tax returns of the Company and its subsidiaries is as follows:

The Company Chih Hung Investment Co. Sheng Bang Investment Co. Grain Media Inc. Innopower Technology Corporation Artery Technology Corporation, Ltd	The assessment of income tax returns Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2017 Assessed and approved up to 2017

(20)Earnings per share

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

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

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 (NT$ in thousand) Weighted-average number of ordinary shares outstanding for basic earnings per share ( in thousands ) Basic earnings per share (NT$)	Three-month periods ended September 30 2019 2018 $146,219 $87,138 248,550 248,550 $0.59 $0.35 Three-month periods ended September 30 2019 2018 $146,219 $87,138 248,550 248,550 754 543 249,304 249,093 $0.59 $0.35	Nine-month periods ended September 30	Nine-month periods ended September 30
		2019 2018 $298,736 $184,648 248,550 248,550 $1.20 $0.74 Nine-month periods ended September 30	2018
			$184,648
			248,550
			$0.74
	2019 $146,219 248,550 754 249,304 $0.59	2019 $298,736 248,550 1,083 249,633 $1.20	2018
(b) Diluted earnings per share Profit attributable to ordinary equity owners of the parent ( NT$ in thousand) 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 (NT$)			$184,648
			248,550 1,269
			249,819 $0.74

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.

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)

(21)Deconsolidation of subsidiary

Faraday Technology Corporation—B.V. filed for liquidation through the decision at their 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.

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

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 Liabilities Net assets of the deconsolidated	As of September 30, 2018
	$22,896 350 46 257 8
	23,557
	- $23,557

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

onsideration 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.

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) 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 December 31, 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:

Name and nature of relationship of the related parties

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Nature
Name of the related parties of relationship of the related parties
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Name of the related parties	Nature 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

United Microelectronics Corporation Associates Other related parties Total	Three-month period ended September 30	Three-month period ended September 30	Nine-month period ended September 30	Nine-month period ended September 30
	2019	2018	2019	2018
	$150,700 11,158 7,498 $169,356	$83,382 24,208 9,223 $116,813	$431,244 43,254 20,958 $495,456	$315,558 50,066 26,903 $392,527

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.

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) Purchases

Purchases
United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd. Other related parties Total	Three-month periods ended September 30		Nine-month periods ended September 30
	2019	2018	2019	2018
	$235,362 242,020 69,900 $547,282	$385,156 134,021 16,593 $535,770	$736,825 424,759 90,177 $1,251,761	$660,399 204,527 40,621 $905,547

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

(3) Research expense

Research expense
United Microelectronics Corporation	Three-month periods ended September 30 2019 2018 $20,518 $-		Nine-month periods ended September 30
		2018 $-	2019 $20,518	2018 $-

(4) Contract assets-current

Contract assets-current
United Microelectronics Corporation		As of
	September 30, 2019 $10,466	December 31, 2018 $-	September 30, 2018 $-

(5) Accounts receivable from related parties, net

United Microelectronics Corporation Fresco Logic Inc. Other related parties Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$97,759 9,550 426 $107,735	$93,292 21,402 - $114,694	$55,155 19,141 2,528 $76,824

(6) Other current assets

Other current assets
An individual with joint control or significant influence over the Company Other related parties Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$578 309 $887	$- 314 $314	$- 416 $416

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) Intangible assets

An individual with joint control or significant influence over the Company Contract liabilities, current United Microelectronics Corporation		As of
	September 30, 2019 $1,446	December 31, 2018 $- As of	September 30, 2018 $-
	September 30, 2019 $14,427	December 31, 2018 $-	September 30, 2018 $-

(8) Contract liabilities, current

(9) 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
	September 30, 2019	December 31, 2018	September 30, 2018
	$81,716 75,922 31,838 - $189,476	$69,177 38,484 3,702 2,734 $114,097	$162,759 80,953 2,780 - $246,492

(10) Key management personnel compensation

Short-term employee benefits Post-employment benefits Total	Three-month periods ended September 30 2019 2018 $12,445 $30,686 325 324 $12,770 $31,010	Nine-month periods ended September 30	Nine-month periods ended September 30
	2019	2019	2018
	$12,445 325 $12,770	$58,418 958 $59,376	$62,498 964 $63,462

8. Assets Pledged as Collateral

The Group’s assets pledged as collateral were 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 pledged for security	Carrying amount	Carrying amount	Carrying amount	Secured liabilities
	2019.09.30	2018.12.31	2018.09.30
Financial assets measured at amortized cost Financial assets measured at amortized cost	$15,265 1,551 $16,816	$15,236 1,536 $16,772	$15,236 1,527 $16,763	Custom clearance deposit Office rental deposit

9. Commitments and contingencies

None.

10. Losses due to major disasters

None.

11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

Financial assets

Financial assets at fair value through profit or loss: Mandatorily measured at Fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost (Note 1) Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$24,126 1,045,888 3,510,294 $4,580,308	$54,790 967,922 3,339,555 $4,362,267	$56,761 1,185,148 3,265,853 $4,507,762

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)

Financial liabilities

Financial liabilities
Financial liabilities at amortized cost: Payables (including related parties) Other payables Long-term payables Lease liabilities Total		As of
	September 30, 2019	December 31, 2018	September 30, 2018
	$1,114,764 515,985 69,533 271,404 $1,971,686	$810,868 561,437 211,859 (Note 2) $1,584,164	$921,811 495,150 244,740 (Note 2) $1,661,701

Note 1: Including cash and cash equivalents (exclude cash on hand), notes receivable, accounts receivable, other receivable, refundable deposit and financial assets measured at amortized cost, non-current.
Note 2: The 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.

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)

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.

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 nine-month periods ended September 30, 2019 and 2018 would decrease / increase by NT$78 thousand and NT$25,866 thousand, respectively.

When NTD strengthens/weakens against RMB by 10%, the profit for the nine-month period ended September 30, 2019 would decrease / increase by NT$89,513 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.

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 nine months ended September 30, 2019 and September 30, 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$0 thousand and NT$235 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.

(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 September 30, 2019, December 31, 2018 and, September 30, 2018, accounts receivable from top ten customers represented 55%, 58% and 56% 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.

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 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

September 30,	December 31,	September 30,
2019	2018	2018
$1,686,477	$1,388,856	$1,327,048

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

(5) Liquidity risk management

The 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.

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)

Non-derivative financial instruments

Less than 1 year As of September 30, 2019 Payables (including related parties) $1,114,764 Other payables 515,985 Long-term payables - Lease Liability 35,899 As of December 31, 2018 Payables (including related parties) $810,868 Other payables 561,437 Long-term payables - As of September 30, 2018 Payables (including related parties) $921,811 Other payables 495,150 Long-term payables - Derivative financial instruments Less than 1 year As of September 30, 2019 Inflows $66,505 Outflows (65,163) Net $1,342	Less than 1 year	2 to 3 years	4 to 5 years	> 5 years	Total
		$- - 69,533 49,330 $- - 211,859 $- - 244,740 2 to 3 years	$- - - 26,366 $- - - $- - - 4 to 5 years	$- - - 256,532 $- - - $- - - > 5 years	$1,114,764 515,985 69,533 368,127 $810,868 561,437 211,859 $921,811 495,150 244,740 Total
As of September 30, 2019 Inflows Outflows Net
	$66,505 (65,163)	$- -	$- -	$- -	$66,505 (65,163)
	$1,342	$-	$-	$-	$1,342

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)

Less than 1

	Less than 1
As of December 31, 2018 Inflows Outflows Net As of September 30, 2018 Inflows Outflows Net	year	2 to 3 years	4 to 5 years	> 5 years	Total
	$330 -	$- -	$- -	$- -	$330 -
	$330	$-	$-	$-	$330
	$835 - $835	$- - $-	$- - $-	$- - $-	$835 - $835

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 nine months ended September 30, 2019:

As of January 1, 2019 Cash flows Foreign exchange movement Revision of lease contracts As of September 30, 2019	Lease Liability
	$294,614 (23,594) (321) 705 $271,404

Reconciliation of liabilities for nine months ended September 30, 2018:

None.

(7) Fair values of financial instruments
a. the methods and assumptions applied in determining the fair value of financial instruments:
63-

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)

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.
i. 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.

(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 September 30, 2019, December 31, 2018, and September 30, 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:

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)

Items (by contract) Notional Amount Contract Period As of September 30, 2019 Forward currency Sell foreign currency USD 6,000 From 2019.09.03 to contract thousand 2019.10.28 Forward currency Sell foreign currency RMB 15,000 From 2019.09.06 to contract thousand 2019.10.09 As of December 31, 2018 Forward currency Sell foreign currency USD 6,000 From 2018.12.19 to contract thousand 2019.01.09 As of September 30, 2018 Forward currency Sell foreign currency USD 6,000 From 2018.09.25 to contract thousand 2018.10.22

(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

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:

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 September 30, 2019`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Funds Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income As of December 31, 2018`：` Financial assets at fair value: Financial assets at fair value through profit or loss Forward currency contract Stocks Funds Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income As of September 30, 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
	$- - - Level 1	$1,342 - - Level 2	$- 22,784 1,045,888 Level 3	$1,342 22,784 1,045,888 Total
	$- - - 19,031 $- - - 23,516	$330 - - - $835 - - -	$- 29,265 25,195 948,891 $- 29,265 26,661 1,161,632	$330 29,265 25,195 967,922 $835 29,265 26,661 1,185,148

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)

Transfers between Level 1 and Level 2 during the period

During the nine months ended September 30, 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:

Assets	Assets	Assets	Total
At fair value through profit or loss		At fair value through other comprehensive income
Stocks	Funds	Stocks
$29,265 (29,265) - $-	$25,195 (2,411) - $22,784	$948,891 - 96,997 $1,045,888	$1,003,351 (31,676) 96,997 $1,068,672

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	Assets	Assets	Total
At fair value through profit or loss		At fair value through other comprehensive income
Stocks	Funds	Stocks
$- - - 29,265 $29,265	$- (2,539) - 29,200 $26,661	$1,066,406 - 65,226 30,000 $1,161,632	$1,066,406 (2,539) 65,226 88,465 $1,217,558

Recognized as profit (loss) above, the loss from financial assets still held by the Group as of September 30, 2019 and September 30, 2018 was NT$31,676 thousand and NT$2,539 thousand, respectively.

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:

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 September 30, 2019

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

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

	techniques	unobservable inputs	information	and fair value	value
Financial assets:
At fair value
through other
comprehensive
income
Stocks	Market approach	Discount for lack of	15%	The higher the	10% increase (decrease) in
		marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	Group’s equity by NT$2,666
					thousand
Preferred Stocks	Option pricing	Discount for lack of	11%~18%	The higher the	10% increase (decrease) in
	model	marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/
				value of the stocks	increase in the Group’s equity
					by NT$1,823 thousand
Stocks and others	Asset approach	Discount for lack of	10%	The higher the	10% increase (decrease) in
		marketability and		discount for lack	the discount for lack of
		non-controlling		of marketability,	marketability and non-
		interest		the lower the fair	controlling interest would
				value of the stocks	result in decrease/ increase in
					the Group’s equity by
					NT$87,394 thousand
Preferred Stocks	Market approach	Discount for lack of	21%	The higher the	10% increase (decrease) in
		marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	Group’s equity by
					NT$12,705 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

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	techniques	unobservable inputs	information	and fair value	value
Financial assets:
At fair value
through other
comprehensive
income
Stocks	Market approach	Discount for lack of	15%	The higher the	10% increase (decrease) in
		marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	Group’s equity by NT$2,869
					thousand
Preferred Stocks	Option pricing	Discount for lack of	11%~18%	The higher the	10% increase (decrease) in
	model	marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	Group’s equity by NT$1,290
					thousand
Stocks and others	Asset approach	Discount for lack of	10%	The higher the	10% increase (decrease) in
		marketability and		discount for lack	the discount for lack of
		non-controlling		of marketability,	marketability and non-
		interest		the lower the fair	controlling interest would
				value of the stocks	result in decrease/ increase in
					the Group’s equity by
					NT$79,351 thousand
Preferred Stocks	Market approach	Discount for lack of	21%	The higher the	10% increase (decrease) in
		marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	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 September 30, 2018

==> picture [477 x 46] intentionally omitted <==

	techniques	unobservable inputs	information	and fair value	value
Financial assets:
At fair value
through other
comprehensive
income
Stocks	Market approach	Price-Book ratio of	10~46	The higher the	10% increase (decrease) in
		similar entities		Price-Book ratio	the discount for lack of
				of similar entities,	marketability would result in
				the higher the fair	increase/ decrease in the
				value of the stocks	Group’s equity by NT$2,974
					thousand
Preferred Stocks	Option pricing	Discount for lack of	12%~19%	The higher the	10% increase (decrease) in
	model	marketability		discount for lack	the discount for lack of
				of marketability,	marketability would result in
				the lower the fair	decrease/ increase in the
				value of the stocks	Group’s equity by NT$1,282
					thousand
Stocks and others	Asset approach	Discount for lack of	10%	The higher the	10% increase (decrease) in
		marketability and		discount for lack	the discount for lack of
		non-controlling		of marketability,	marketability and non-
		interest		the lower the fair	controlling interest would
				value of the stocks	result in decrease/ increase in
					the Group’s equity by
					NT$100,422 thousand
Preferred Stocks	Recent price of	Not applicable	Not	Not applicable	Not applicable
	capital increase		applicable

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)

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.

(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

September 30, 2019

None.

December 31, 2018

None.

September 30, 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 September 30, 2019
Foreign currencies Foreign exchange rate NTD
----- End of picture text -----

Financial assets
Monetary items:
USD	$29,962	31.01	$929,109
RMB	210,114	4.359	915,885
Non-monetary items:
USD	838	31.01	25,982
Financial liabilities
Monetary items:
USD	29,987	31.01	929,893
RMB	4,762	4.359	20,756

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
Monetary items: USD Non-monetary items: USD Financial liabilities
Monetary items: USD Financialassets
	Foreign currencies	Foreign exchange rate	NTD
	$35,762 1,001 27,290	30.53 30.53 30.53	$1,091,828 30,552 833,166
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 loss was NT$3,995 thousand and NT$14,359 thousand for the three months ended September 30, 2019 and 2018, respectively, and the foreign exchange gain was NT$3,778 thousand and NT$13,050 thousand for the nine months ended September 30, 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

i. Information related to significant transactions

Additional disclosures for information of the Group for the nine months ended September 30, 2019:

Financing provided to others for the nine months ended September 30, 2019: None.
Endorsement/Guarantee provided to others for the nine months ended September 30, 2019: None.
Securities held as of September 30, 2019: Please refer to Attachment 1.
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 nine months ended September 30, 2019: None.
Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock the nine months ended September 30, 2019: None.
Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock the nine months ended September 30, 2019: None.
Related party transactions for purchases and sales amounts exceeding the lower of NT$300 million or 20 percent of the capital stock the nine months ended September 30, 2019: Please refer to Attachment 2.
74-

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)
Receivables from related parties with amount exceeding the lower of NT$100 million or 20 percent of the capital stock the nine months ended September 30, 2019: None.
Financial instruments and derivative transactions: Please refer to Note 12.
Other: Significant intercompany transactions between consolidated entities: Please refer to Attachment 3.
ii. Information on investees

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

iii. Information on investments in Mainland China
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.
Significant transaction to investee Company in Mainland China for the nine months ended September 30, 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.
75-

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)
vi. Other transactions with significant influence on current period income or financial position: Please refer to Attachment 3.

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 Septemper 30, 2019) (Excluding subsidiaries and associates)

Faraday Technology Corporation

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

As of Septemper 30, 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 $718,498 12.12% $718,498 -
comprehensive income, noncurrent
Common Stock Unitech Capital Inc. - Financial assets at fair value through other 2,500,000 64,900 5.00% 64,900 -
comprehensive income, noncurrent
----- End of picture text -----

Chih-Hung Investment Corporation

Type of securities Preferred 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. 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 profit or loss, noncurrent	Units/shares 14,600,000 1,714,285 59,167 12,600 2,115,000 3,000,000 1,200,000 44,312,575 1,818 3,000,000	Percentage of ownership (%) - 0.70% - 0.13% - 8.01% 26,661 9.53% 18,234 9.95% - 7.76% 127,049 9.74% 62,905 15.00% Carrying amount (thousand) 12.60% - As of Septemper 30, 2019	- - - 26,661 18,234 - 127,049 62,905 - Fair value/ Net assets value	Note - - - - - - - - -

Sheng Bang Investment Corporation

Type of securities Fund Common Stock Common Stock Common Stock Capital	Name of securities IB FUND SPC -RCM Auto Parts Industry Fund Segregated Portfolio Storm Semiconductors, Inc. Sifotonics Technology Co., Ltd. Ascent Venture Capital Jian Rui Venture Capital (translated from Chinese)	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 other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent	Units/shares 10,000 641,000 800,000 3,000,000 -	Percentage of ownership (%) $22,784 - - 2.43% - 1.52% 12,063 19.67% 15,578 8.50% As of Septemper 30, 2019 Carrying amount (thousand)	$22,784 - - 12,063 15,578 Fair value/ Net assets value	Note - - - - -

-77 -

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 year ended Septemper 30, 2019)

Faraday Technology Corporation

United Microelectronics Corporation United Microelectronics Corporation HeJian Technology (Suzhou) Co., Ltd., Counter-party	Entity with joint control or significant influence over the Company Entity with joint control or significant influence over the Company Other related parties Relationship	Purchases Sales Purchases Purchases (Sales)	$756,134 430,436 417,686 Amount	56.42% Month-end 60 days 11.03% Month-end 60 days 31.17% Month-end 60 days Percentage of total purchases (sales) Term Transactions	- - - Details of non-arm's length transaction	$75,861 6.88% 97,573 8.46% 76,264 6.92% Percentage of total receivables (payable) Notes and accounts receivable (payable) Balance	- - - Note

-78 -

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 nine months ended Septemper 30, 2019

Transactions

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

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)
----- End of picture text -----

	Related Pa	rty	Counterparty	(Note 2)	Account	Amount	Term	(Note 3)
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Sales	$334,780	Note 4	8.58%
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Research expense	37,152	According to the contract	0.95%
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Accounts receivable	84,074	Month-end 60 days	1.14%
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Other receivables	22,157	Month-end 60 days	0.30%
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Contract Assets	4,994	According to the contract	0.07%
Faraday	Technology	Corporation	Faraday Technology Corporation (USA)	1	Other payables	4,145	Month-end 60 days	0.06%
Faraday	Technology	Corporation	Faraday Technology Japan Corporation	1	Sales	435,655	Note 4	11.16%
Faraday	Technology	Corporation	Faraday Technology Japan Corporation	1	Contract Assets	24,560	According to the contract	0.33%
Faraday	Technology	Corporation	Faraday Technology Japan Corporation	1	Accounts receivable	97,994	Month-end 60 days	1.33%
Faraday	Technology	Corporation	GrainTech Electronics Limited	1	Sales	4,602	Note 5	0.12%
Faraday	Technology	Corporation	Grain Media Inc.	1	Rent Revenue	114	According to the contract	-
Faraday	Technology	Corporation	Innopower Technology Corporation	1	Sales	139,618	Note 5	3.58%
Faraday	Technology	Corporation	Artery Technology Corporation, Ltd.	1	Sales	33,943	Note 5	0.87%
Faraday	Technology	Corporation	Artery Technology Corporation, Ltd.	1	Accounts receivable	11,203	Month-end 60 days	0.15%
Faraday	Technology	Corporation	Artery Technology Corporation, Ltd.	1	Other receivable	5,268	Month-end 60 days	0.07%
Faraday	Technology	Corporation	United Business Service Corporation	1	Sales	1,494	Note 5	0.04%

-79 -

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 nine months ended Septemper 30, 2019

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

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
0 Faraday Technology Corporation 1 Sales 549,797 Note 5 14.08%
----- End of picture text -----

0	Faraday	Technology	Corporation	Faraday Technology China	1	Sales	549,797	Note 5	14.08%
				Corporation
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Contract Assets	279,445	According to the contract	3.78%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Contract liabilities	25,433	According to the contract	0.34%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Accounts receivable	187,401	Month-end 60 days	2.54%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Other receivables	59,997	Month-end 60 days	0.81%
0	Faraday	Technology	Corporation	Faraday Technology China Corporation	1	Accounts payables	116	Month-end 60 days	-
0	Faraday	Technology	Corporation	Faraday Technology Corporation (Suzhou)	1	Sales	27,120	Note 5	0.69%
0	Faraday	Technology	Corporation	Faraday Technology Corporation (Suzhou)	1	Contract Assets	7,031	According to the contract	0.10%
0	Faraday	Technology	Corporation	Faraday Technology Corporation (Suzhou)	1	Other receivables	2,232	Month-end 60 days	0.03%
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	39,529	Month-end 60 days	0.53%
0	Faraday	Technology	Corporation	Innopower Technology Corporation	1	Other receivables	35,249	Month-end 60 days	0.48%
0	Faraday	Technology	Corporation	Innopower Technology Corporation	1	Other payables	302	Month-end 60 days	-
0	Faraday	Technology	Corporation	Artery Technology Company	1	Sales	318	Note 5	-
0	Faraday	Technology	Corporation	Artery Technology Company	1	Research expense	5,050	According to the contract	0.13%
0	Faraday	Technology	Corporation	Artery Technology Company	1	Accounts receivable	334	Month-end 60 days	-

-80 -

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 nine months ended Septemper 30, 2019

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(Note 1)	Related Party	Counterparty	(Note 2)	Account	Amount	Month-end 60 Terms	(Note 3)
0	Faraday Technology Corporation	Artery Technology Company	1	Other receivable	154	days	-
0	Faraday Technology Corporation	Artery Technology Company	1	Accounts payables	2,600	Month-end 60 days	0.04%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Sales	88,674	Note 5	2.27%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Accounts receivable	64,865	Month-end 60 days	0.88%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology China Corporation	3	Contract liabilities	5,365	According to the contract	0.07%
1	Faraday Technology Corporation (Suzhou)	FaradayTek Solutions India Private Limited	3	Research expense	12,603	According to the contract	0.32%
1	Faraday Technology Corporation (Suzhou)	Faraday Technology Vietnam Company Limited	3	Research expense	5,961	According to the contract	0.15%
1	Faraday Technology Corporation (Suzhou)	United Business Service Corporation	3	Sales	20,766	Note 5	0.53%
1	Faraday Technology Corporation (Suzhou)	United Business Service Corporation	3	Accounts receivable	20,223	Month-end 60 days	0.27%
2	United Business Service Corporation	Faraday Technology China Corporation	3	Sales	21,477	Note 5	0.55%
2	United Business Service Corporation	Faraday Technology Corporation	3	Accounts receivable	44,242	Month-end 60 days	0.60%

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.

-81 -

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

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.

-82 -

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 Septemper 30, 2019)

Faraday Technology Corporation

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Initial Investment Investment as of Septemper 30, 2019
Percentage of Net income (loss) of Investment income
ownership Carrying investee company (loss) recognized
Investee company Address Main businesses and products Septemper 30, 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 $444,380 $7,900 $8,714
(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% 274,082 (5,087) (4,271)
Faraday Technology JapanCorporation Japan Tokyo Sales representive in Japan 29,320 29,320 Common stock 2 thousandshares 99.95% 79,704 15,201 15,670
Common stock 91,000
Chih-Hung Investment Corporation Taiwan General Investing 910,000 910,000 thousand shares 100.00% 683,361 (32,983) (31,729)
Common stock 22,202
Sheng Bang Investment Corporation Taiwan General Investing 222,020 222,020 thousand shares 100.00% 192,153 (1,195) (1,176)
Faraday Technology Vietnam Vietnam IC designing 9,287 - - 100.00% 11,782 2,254 2,223
Company Limited
Chih-Hung Investment Corporation
Initial Investment Investment as of Septemper 30, 2019
Percentage of Net income (loss) of Investment income
ownership Carrying investee company (loss) recognized
Investee company Address Main businesses and products Septemper 30, 2019 December 31, 2018 Number of shares (thousand) (%) amount (Note) (Note) (Note)
Grain Media Inc. Taiwan IC designing, marketing andcustomer service $1,456 $1,456 Common stock 146 thousandshares 19.42% $1,159 ($476) ($91)
Innopower Technology Corporation Taiwan Silicon Intellectual Propertydesigning 80,000 80,000 Common stock 8,000thousand shares 100.00% 172,466 1,574 1,574
Preferred stock 5,528
Fresco Logic Inc. USA IC designing 281,853 281,853 thousand shares 22.61% 80,183 (27,920) (5,480)
FaradayTek Solutions India PrivateLimited India IC designing service 45 - Common stock 10 thousandshares 1.00% 63 1,998 20
Sheng Bang Investment Corporation
Initial Investment Investment as of Septemper 30, 2019 Net income (loss) of Investment income
Percentage of Carrying investee company (loss) recognized
Investee company Address Main businesses and products Septemper 30, 2019 December 31, 2018 Number of shares (thousand) ownership amount (Note) (Note) (Note)
Grain Media Inc. Taiwan IC designing, marketing andcustomer service $6,044 $6,044 Common stock 604 thousandshares 80.58% $4,808 ($467) ($376)
FaradayTek Solutions India PrivateLimited India IC designing service $4,462 - Common stock 990 thousandshares 99.00% $6,268 1,998 1,978
Innopower Technology Corporation
Initial Investment Investment as of Septemper 30, 2019 Net income (loss) of Investment income
Percentage of Carrying investee company (loss) recognized
Investee company Address Main businesses and products Septemper 30, 2019 December 31, 2018 Number of shares (thousand) ownership amount (Note) (Note) (Note)
Common stock 2,301
Bright Capital Group Limited Samoa General investing $68,593 $68,593 thousand shares 100.00% $185,462 $3,934 $3,934
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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 Septemper 30, 2019)

Faraday Technology - B.V.I

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Initial Investment Investment as of Septemper 30, 2019 Net income (loss) of Investment income
Percentage of Carrying investee company (loss) recognized
Investee company Address Main businesses and products Septemper 30, 2019 December 31, 2018 Number of shares (thousand) ownership amount (Note) (Note) (Note)
Faraday Technology Corporation-Mauritius Mauritius General investing USD $12,859,205 USD $12,859,205 Common stock 12,804thousand shares 100.00% $100,787 $9,102 $9,102
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Faraday Technology Corporation- Mauritius	Mauritius	General investing	USD	$12,859,205	USD	$12,859,205	Common stock 12,804 thousand shares	100.00%	$100,787	$9,102	$9,102
GrainTech Electronics Limited	Hong Kong	IC designing, marketing and customer service	USD	100,000	USD	100,000	Common stock 100 thousand shares	100.00%	5,864	213	213
Faraday Technology Corporation- Samoa	Samoa	General investing	USD	4,715,067	USD	4,715,067	Common stock 4,715 thousand shares	100.00%	127,098	13,182	13,182
Artery Technology Corporation- Cayman	Cayman	General investing	USD	4,460,000	USD	4,460,000	Common stock 4,300 thousand shares	81.13%	38,279	(34,049)	(27,624)
Artery Technology Company	Taiwan	IC designing, marketing and customer service		60		-	Common stock 10 thousand shares	81.13% (Note2)	72	21	17

Note 1: USD are expressed in dollars.

Note 2:The Company owns 100% of Faraday Technology-B.V.I. and Faraday Technology-B.V.I. owns 81.13% in Artery Technology Corporation-Cayman.The Artery Technology Corporation-Cayman owns 100% of Artery Technology Corporation; therefore, the Group's share of profit or loss of Innopower (Chongqing) Technology Corporation is 81.13%.

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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 Septemper 30, 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 United Creative Solution Corporation Innopower Technology Corporation (Chongqing)	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 IC designing, marketing and customer service IC designing, marketing and customer service	$186,060 (USD 6,000,000) $179,858 (USD 5,800,000) $124,065 (USD 4,000,814) $130,770 (RMB 30,000,000) (USD 5,660,000) $4,359 (RMB 1,000,000) $4,359 (RMB 1,000,000) $175,517 Total Amount of Paid-in Capital	Note 1 Note 3 Note 1 Note 5 Note 1 Note 6 Note 1 Note 7 Note 10 Note 8 Note 8 Method of Investment Note 4	$186,060 (USD 6,000,000) $179,858 (USD 5,800,000) $124,065 (USD 4,000,814) $130,770 (RMB 30,000,000) (USD 4,460,000) $138,305 $- $- Accumulated Outflow of Investment from Taiwan as of January 1, 2019	$- $- $- $- Investment F $- Outflow $- $-	Inflow $- $- $- $- $- lows $- $-	$186,060 (USD 6,000,000) $179,858 (USD 5,800,000) $124,065 (USD 4,000,814) $130,770 (RMB 30,000,000) (USD 4,460,000) $138,305 $- $- Accumulated Outflow of Investment from Taiwan as of Septemper 30, 2019	($31,050) $9,075 $3,934 - $13,182 Net income (loss) of investee company ($90) ($3)	$9,075 $3,934 $13,182 100.00% ($25,191) 81.13% - 100.00% 100.00% 100.00% Percentage of Ownership Investment income (loss) recognized 100.00% 100.00% ($3) ($90)	$451 $127,097 $98,069 $185,462 $38,238 Carrying Value as of Septemper 30, 2019 $4,356 $4,269	$- $- $- $- $- Accumulated inward remittance of earnings as of June 30, 2019 Unit:New Taiwan Dollars in thousands, USD and RMB in dollars $- $-

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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 Septemper 30, 2019)

Accumulated investment in Mainland China as of Septemper 30, 2019	Investment amounts authorized by Investment Commission, MOEA	Upper limit on investment
$774,502 (Note 2) (USD 24,975,881)	$871,748 (Note 2) (USD 28,111,835)	$2,997,816

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 Septemper 30, 2019.
Note 3: As of Septemper 30, 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 Septemper 30, 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 Septemper 30, 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 Septemper 30, 2019, Investment Commission, MOEA approved the total investment amount USD 5,500 thousand , and the Company had remitted USD 4,460 thousand for the investment.
Note 8: United Business Service Corporation invested in the establishment of United Creative Solution Corporation in August 2019.
Note 9: United Business Service Corporation invested in the establishment of Innopower Technology Corporation (Chongqing) in July 2019.
Note 10: The Company owns 100% of Faraday Technology-B.V.I. and Faraday Technology-B.V.I. owns 81.13% in Artery Technology Corporation-Cayman.The Artery Technology Corporation-Cayman owns 100% of Artery Technology Corporation; therefore, the Group's share of profit or loss of Innopower (Chongqing) Technology Corporation is 81.13%.

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AI assistant

Faraday — Interim / Quarterly Report 2019

52268_rns_2019-12-31_7054c03f-304e-4517-8c4f-42b9d7dceec2.pdf

AND SUBSIDIARIES

Notice to Readers

Review Report of Independent Accountants

Introduction

Scope of Review

The basis of 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

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

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

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 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

4. Summary of Significant Accounting Policies

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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

The accounting policy from January 1, 2019 as follow:

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)

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 follows:

Group as a lessee

5. Significant Accounting Judgements, 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 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)

(5) Inventories

(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)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

(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)

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

Software

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)

(9) Short-term loans

- (10) Long term payables

English Translation of Consolidated Financial Statements Originally Issued in Chinese

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)

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

D. Non-controlling interests

(13) Sales revenue

(1) Disaggregation of revenue

English Translation of Consolidated Financial Statements Originally Issued in Chinese

FARADAY TECHNOLOGY CORPORATION AND SUBSIDIARIES

(2) Contract balances

B. Contract liabilities – current

Faraday Interim / Quarterly Report 2019