INX - AGM Information 2018 | FinancialReports.eu

INNOLUX CORPORATION Minutes of 2018 Annual General Shareholders Meeting

Time & Date：9:00 a.m. on June 20 2018

Location：3F, No.36 Ke Yan Rd., Zhunan Township, Miaoli County

(The assembly hall of the Administrative Service Center of Zhunan Park, Hsinchu

Science Park)

Total shares represented by shareholders present in person or by proxy: 5,217,341,239 shares (Including 3,129,674,776 shares casted electronically),Percentage of shares held by shareholders present in person or by proxy: 52.42%

Attendees: Wang, Jyh-Chau, Chairman of the Board of Directors

Te-Tsai Huang, Director

Chin-Lung Ting, Director

Hsieh, Chi-Chia, Independent Director

Bo-Bo Wnag, Independent Director

Stanley Yuk Lun Yim, Independent Director

Shiao, Chih-Hung, President

Wang, Wei-Fan, Attorney

Wu, Han-Chi, Certified Public Accountant of PWC Taiwan

Chair: Wang, Jyh-Chau, Chairman of the Board of Directors Recorder: Joyce Chen

Commencement (The aggregate shareholding of the shareholders present in person or by proxy constitutes a quorum. The Chair called the meeting to order.)

Chairperson Remarks(omitted)

Reporting Items

Operating Report of the year of 2017. Review is respectfully requested. Explanation: 2017 Operating Report See Attachment 1
Audit Committee’s Review Report. Review is respectfully requested.
Explanation: Audit Committee’s Review Report See Attachment 2
Report in relation to the compensation distributed to the employees and directors of year 2017. Explanation: The meeting of board of directors of the Company dated February 9, 2018 has resolved to distribute compensation at the amount of NTD

3,136,952,398 to employees and NTD 48,260,806 to directors in cash.
Report the issuance of securities in private placement. Explanation:
(1) It has been approved by the Annual General Shareholders’ Meeting held on 20 June, 2017 to authorize the Board of Directors, within the limit of 950,000,000 common shares, depending on the market conditions and the Company’s capital needs, to choose appropriate timing and one or more fund raising instruments to process capital increase in cash to conduct private placement of ordinary shares/preferred shares or private placement of foreign or domestic convertible corporate bonds in accordance with the applicable laws and regulations.
(2) For private placements of securities conducted pursuant to Securities and Exchange Act, the private placement may be carried out by installments within one year of the date of the resolution of the shareholders meeting.
(3) In consideration of the capital market situation, the Company will not continue with the above private placement.

Adopting Items

(Proposed by the Board of Directors)

Proposal 1 ： 2017 Operating Report and the Financial Statement of the Company. Adoption is respectfully requested.
Explanation ： 1. 2017 financial statements of the Company had been duly audited by CPA Wu, Han-Chi and CPA Sheng-Chung Hsu of Pricewaterhousecoopers.
The Operating report and finance statements are attached hereto as Attachment 1&3.
Voting Results ： 5,217,341,239 shares were represented at the time of voting. (Including3,129,674,776

shares casted electronically)

Voting Condition	Voting rights	% of the total represented at the time of voting
Votes in favor	4,340,827,127	83.20%
Votes against	9,130,077	0.17%
Votes invalid	0	0.00%
Votes abstained	867,384,035	16.63%

Resolution ： That the above proposal be and hereby was accepted as proposed.

(Proposed by the Board of Directors)

Proposal 2 ： Distribution of 2017 Profits. Adoption is respectfully requested.
Explanation ： 1. The profit distribution table of 2017 is attached hereto as Attachment 4 .
Proposed cash dividend distributed to shareholders is NT$ 7,961,657,582 (NT$0.8 per share). In the event that, before the distribution record date, the cash dividend shall be calculated according to the distribution proportion under NT$ 1, for amount less than NT$ 1 shall be truncated. For the total addup amount of distributed amount for less than NT$ 1, it is proposed that the Chairman be authorized to conduct adjustment.
The proposed dividend distribution ratio is affected and is required to be adjusted due to capital variations affecting the number of outstanding shares, it is proposed that the Chairman be fully authorized to handle such distribution.
Upon the approval of the shareholders’ meeting, it is proposed that the Chairman be authorized to resolve the distribution record date and other relevant matters.

Shareholder speech ：Shareholder Account No. 159094

Voting Results ： 5,217,341,239 shares were represented at the time of voting. (Including3,129,674,776

shares casted electronically)

Voting Condition	Voting rights	% of the total represented at the time of voting
Votes in favor	4,380,354,929	83.96%
Votes against	28,335,587	0.54%
Votes invalid	0	0.00%
Votes abstained	808,650,723	15.50%

Resolution ： That the above proposal be and hereby was accepted as proposed. Discussion Items

(Proposed by the Board of Directors)

Proposal 1 ： Amendment to the Articles of Incorporations of the Company. Review and discussion is respectfully requested.
Explanation ： 1. In order to accompany in reference to the operation plan of the Company, it is proposed to amend part of the clauses of Articles of Incorporations of the Company.
The revised comparative table are attached hereto as Attachment 5
Voting Results ： 5,217,341,239 shares were represented at the time of voting. (Including3,129,674,776 shares casted electronically)

Voting Condition	Voting rights	% of the total represented at the time of voting
Votes in favor	4,392,798,435	84.20%
Votes against	14,743,411	0.28%
Votes invalid	0	0.00%
Votes abstained	809,799,393	15.52%

Resolution ： That the above proposal be and hereby was accepted as proposed.

(Proposed by the Board of Directors)

Proposal 2： Proposal to process domestic capital increase by cash to issue common shares, to issue new shares as a result of cash capital increase for sponsoring issuance of GDR. Approval is respectfully requested.

Explanation： To respond to the change of whole operation environment in the future, to enrich working capital, to repay bank loans, to intensify the Company’s financial structure, to purchase material overseas, and to satisfy the Company’s capital requirements for the long-term development, the Company proposes to conduct the fund-raising proposal within the limit of 0.95 billion (950,000,000) new shares through domestic capital increase by cash, offering of new shares by way of capital increase by cash for sponsoring issuance of GDR or by way of next proposal of capital increase by cash through private placement of ordinary shares/preferred shares or private placement of foreign or domestic convertible corporate bonds (the number of shares shall be calculated from beginning conversion price). It is proposed that the board of directors be authorized by the shareholders’ meeting to conduct the forgoing fundraising at suitable time by selection of one or collocation of two or more projects, and in one or in several installments according to market situations and capital requirement status of the Company, and in accordance with Articles of Incorporation, the related laws & regulations and the handling principles set forth as below. The main contents are described as follows:
The offering price: The offering price of domestic capital increase by cash through public fund raising will be decided according to the “Autonomy Rules Governing Underwriter Members for Guidance of Offering and Issuance of Securities by Issuing Company” of Taiwan Securities Association, and shall authorize the Chairman to decide with the underwriter together according to the market condition at the time of issuance. The offering price shall be submitted to the authority for records before issuance. The offering price shall be set by no less than the closing price of the Company’s ordinary shares on Taiwan Stock Exchange Corporation on price determination date, 90% of the simple average closing price of the ordinary shares of the Company for either the one, three, or five business days before price determination date, after adjustment for any distribution of stock dividends and cash dividends. However, due to stock price fluctuation and security market change causing the actual price of each share lower than the face value, in order to raise fund smoothly and to improve long-term steady growth of the Company, it is necessary to decide such price. If the price of each share is lower than the face value, it is anticipated to cause the reduction of the capital reserve of the book or retain earning of the Company and will be made up according to actual operation situation in the future. Also, the offering price will be set according to the rules of the authority, after the effect of

capital increase appears, the financial structure of the Company will be improved effectively and will benefit the Company’s long-term development, and there shall be no unfavorable impact to the shareholders’ interest.

Subscription ratio of employees and original shareholders: Except for 10% ~ 15% of new shares issued after capital increase reserved for subscription by employees of the Company based on the offering price in accordance with Article 267 the of Company Act, it is proposed that the shareholders’ meeting to agree that the original shareholders will forfeit their right to subscription to the remaining new shares in accordance with Article 28-1 of Securities and Exchange Act, and all of the remaining new shares will be made public offering (domestic capital increase by cash) or/and to be offered to the public as the original securities for sponsoring issuance of GDR. The portion which employees had forfeited their rights to subscription or the portion left unsubscribed is proposed to authorize the Chairperson to negotiate with specific person(s) to subscribe or to be included in the original securities for sponsoring issuance of GDR based on market requirements.
The sales method of the public offering of domestic capital increase by cash: it is proposed to authorize the board of directors to select by either method of book-building or public subscription.
Impact to the interest of the original shareholders: In relation to this domestic capital increase by cash and issuance of new shares by means of capital increase by cash for sponsoring issuance of GDR, the price determination method shall be conducted according to the relevant laws and regulations within the country and issuance market practice, therefore, the price determination method shall be deemed reasonable and will not cause major impact to the interest of the original shareholders. For common shares to be issued, if calculated under the limit of 0.95 billion shares, it is estimated that the new shares will be 9.55% of the common shares already issued by the Company and will not cause major dilution to the original shareholders’ interest.
The reason and reasonability of issuing the share lower than par value due to the change of market rather than adopting other methods to raise the funds: In consideration of the steady operation and the safety of the financial structure of the Company, it is more appropriate to use the fundraising vehicle in relation to share rather than pure debt. By raising fund through domestic capital increase by cash, offering of new shares by way of capital increase by cash for sponsoring issuance of GDR, not only there will be no expense on interest, it also may reduce the financial risk, improve the financial structure, increase the flexibility of the Company’s financial deploy, and benefits the long-term development of the Company. Also, there should be no adverse effect to the interest of the shareholders. Therefore, such fundraising vehicle in relation to shares should have its reasonability.
The funds raised from capital increase by cash is proposed to be used enrich working capital, to repay bank loans, to intensify the Company’s financial structure, to purchase material overseas, and to satisfy the Company’s capital requirements for the long-term development, in one or several purposes for replenishing the operational funds and repayment of bank loans, and it is expected to be performed completely within three years after the accomplishment of the fund-raising, the implementation of this plan can intensify the competitiveness of the Company, promote the operation efficiency, and then will have positive support to shareholders’ equity.
It is proposed that shareholders’ meeting to authorize the board of directors to adjust, make and deal with the major contents of plans in relation to the capital increase by cash, including actual number of issued shares, actual subscription proportion reserved for the employees, actual offering price, record date, offering conditions, plan items, amount of fund-raising, fund usage and scheduled progress, the anticipated and possible efficiency accrued and other matters related to offering procedures. In future if it is necessary to make change due to change of laws and regulations, requirement to revision from the

competent authority, operation assessment or objective environment, the chairperson will be granted the full authorization to dispose of such matters.
Other than the above scope of authorization, it is proposed that the shareholders’ meeting authorize the Chairperson or his designated person to approve and represent the Company to execute, negotiate, and change any and all related matters in relation to the issuance of securities.

Voting Results：5,217,341,239 shares were represented at the time of voting. (Including3,129,674,776

shares casted electronically)

Voting Condition	Voting rights	% of the total represented at the time of voting
Votes in favor	4,185,294,510	80.22%
Votes against	164,477,435	3.15%
Votes invalid	0	0.00%
Votes abstained	867,569,294	16.63%

Resolution：That the above proposal be and hereby was accepted as proposed.

(Proposed by the Board of Directors)

Proposal 3： Proposal to process capital increase in cash to conduct private placement of ordinary shares/preferred shares or private placement of foreign or domestic convertible corporate bonds. Approval is respectfully requested.
Explanation： To respond to the change of whole operation environment in the future, to enrich working capital, to repay bank loans, to intensify the Company’s financial structure, to purchase material overseas, and to satisfy the Company’s capital requirements for the long-term development, the Company proposes to conduct the fund-raising proposal within the limit of 0.95 billion (950,000,000) new shares through private placement of ordinary share/preferred share capital increase by cash or private placement of foreign or domestic convertible corporate bonds(the number of shares shall be calculated from beginning conversion price) or by way of previors proposal of capital increase by cash through domestic capital increase by cash, offering of new shares by way of capital increase by cash for sponsoring issuance of GDR. It is proposed that the board of directors be authorized by the shareholders’ meeting to conduct the forgoing fundraising at suitable time by selection of one or collocation of two or more projects, and in one or in several installments according to market situations and capital requirement status of the Company, and in accordance with Articles of Incorporation, the related laws & regulations and the handling principles set forth as below. The main contents are described as follows:
The ground and reasonableness for setting the private placement price
- (1) The price per share fixed for privately placed ordinary shares issued this time shall not be lower than 80 percent of the reference price. The issuance price fixed for privately placed preferred shares, foreign or domestic convertible corporate bonds may not be lower than 80 percent of the theoretical price.
- (2) The reference price of this private placement of ordinary share or private placement of foreign or domestic convertible corporate bonds used in calculation and actual convert price shall be the simple average closing price of the common shares of the Company

for either the 1, 3, or 5 business days before the price determination date or the simple average closing price of the common shares of the Company for the 30 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction, whichever is higher. The price set for this private placement of convertible corporate price shall not lower than 80% of the reference price. The actual price is proposed that the shareholders’ meeting to authorize the board of director to prescribe according to relevant laws and regulations.

(3) Within the scope of actual price determination date and actual private placement price not lower than percentage resolved by the shareholders’ meeting, the board of directors shall be authorized to decide according to the above price decision principle and depend on the situation of subscription by specific person or persons through negotiation and market situation.
(4) The private placement pricing method is based on the rules prescribed under “Directions for Public Companies Conducting Private Placements of Securities”, and under the consideration of company’s future development and strict limitation on transfer timing, object, amount, cannot be public listed within 3 years, poor liquidity, and other reasons, the pricing of this private placement is reasonable and shall not cause major effect to shareholders’ right. However, due to stock price fluctuation and security market change causing the actual price of each share lower than the face value, in order to raise fund smoothly and to improve long-term steady growth of the Company, it is necessary to decide such price. If the price of each share is lower than the face value, it is anticipated to cause the reduction of the capital reserve of the book or retain earning of the Company and will be made up according to actual operation situation in the future. Also, the offering price will be set according to the rules of the authority, after the effect of capital increase appears, the financial structure of the Company will be improved effectively and will benefit the Company’s long-term development, and there shall be no unfavorable impact to the shareholders’ interest.
Methods for selecting specific person for private placement
(1) The private placement shall be conducted according to related rules set forth under Article 43-6 of the Securities and Exchange Act and shall be limited only to strategic investors.
(2) The placee will be strategic investors
- A.Method and purpose of choosing placee: For the needs of long term operation and business development of the Company, we will choose strategic investor who is able to assist our company in expanding business and product market, strengthening customer relationship, or promoting product development integration efficiency, or promoting our technology.
- B.Necessity: Strategic investors may promote our company’s long term competitiveness and operation effectiveness, therefore, the necessity exists.
- C.Expected effectiveness: Through strategic investors’ experience, product technology, knowledge, brand reputation, marketing channel and other advantages, via strategic cooperation, product co-development, market integration, or business development cooperation and other methods, it is estimated to assist our company in reducing cost, enhancing products skills, enlarging sales market, and to promote our company’s future operation and benefit.
(3) Currently, we have not contact and negotiate with any specific place.
Reasons necessary to conduct private placement:

(1) Reasons for not to adopt public fund raising: Considering the condition of capital market, issuing cost, timeliness and feasibility of fund raising through private placement, private placed securities shall not be transferred within 3 years, and other factors, it may ensure and strengthen a tighter long term cooperation relationship between strategic partners, therefore, it is necessary to adopt private placement for the capital increase this time.
(2) Use of funds and estimated purpose of conducting private placement: This private placement of securities shall be conducted in three times separately within one year from the date of the resolution of the shareholders’ meeting, the use of funds and estimated purpose of conducting private placement of each separate private placement are stated as below:

Anticipated number of closings	Shares (Thousand)	Use of the funds	Anticipated benefits
1st	318,000	Established good corporate and strategic partnership with domestic / foreign partner and replenish operating capital for longterm operation requirement	To reduce operational risk, enhance financial structures and improve operational performance
2nd	316,000
3rd	316,000
Within the limit of 950,000,000 new shares cash offering by private placement in one or in several installments.

There was no major change to management right within one year before the Board of Directors’ resolved to conduct this private placement. Also, if the amount of private placement of ordinary shares/preferred shares or private placement of foreign or domestic convertible corporate bonds (the number of shares shall be calculated from beginning conversion price) is within the limit of 0.95 billion (950,000,000) new shares, it is estimated that the new shares will be 9.55% of the ordinary shares already issued by the Company, and the place is limited to only strategic investors, it will positively assist our company’s business development and will not cause major change to our company’s management right.
Other items to be stated:
(1) For this private placement of securities, the board of directors shall be authorized, upon 3 years after the delivery date of private placement, to apply to TWSE for the issuance of consent letter conforming to the listing criteria, and continue to report to the authority for retroactive handling of public issuance and to apply for public listing and transaction.
(2) For the issuance condition of the private placement preferred shares, please refer to the Articles of Incorporation of the Company.
(3) For the Regulations related to Issuance and Conversion of Private Placement of Foreign or Domestic Corporate Bonds (Prescribed Temporarily), please refer to attachment 6 of this handbook (page 40-41)
(4) It is proposed that shareholders’ meeting to authorize the board of directors to adjust, make and deal with the major contents of plans in relation to this private placement, including actual number of issued shares of private placement, selection of placees, record date, offering conditions, plan items, amount of fund-raising, fund usage and scheduled progress, the anticipated and possible efficiency accrued and other matters related to offering procedures. In future if it is necessary to make change due to change of laws and regulations, requirement to revision from the competent authority, operation assessment or objective environment, the board of directors will be granted the full authorization to dispose of such matters.

(5) Other than the above scope of authorization, it is proposed that the shareholders’ meeting authorize the Chairperson or his designated person to approve and represent the Company to execute, negotiate, and change any and all related matters in relation to the issuance of securities of this private placement.

Shareholder speech ：Shareholder Account No. 700002、656133、926252、128104、644825、858589

Voting Results：5,217,341,239 shares were represented at the time of voting. (Including3,129,674,776

shares casted electronically)

Voting Condition	Voting rights	% of the total represented at the time of voting
Votes in favor	3,933,897,792	75.40%
Votes against	408,880,452	7.84%
Votes invalid	0	0.00%
Votes abstained	847,562,995	16.76%

Resolution：That the above proposal be and hereby was accepted as proposed.

Extemporary Motion

Shareholder speech ：Shareholder Account No. 159094、926252、656133、870146

Adjourn Meeting: The meeting was adjourned at a.m. 10:14.

Attachment 1

INNOLUX CORPORATION

2017 Operating Report

1. 2017 Operating Report

2017 was a year in which the panel industry underwent drastic changes. In the first half of the year, the production cuts by Korean manufacturers and panels in short supply led to prosperity in terms of panel supply exceeding demand and rising prices. In the second half of the year, with the information of new production capacities emerging in Mainland China, the market anticipated an increase in panel supply as well as market price drops, resulting in a reversal of the upward price trend in the second half of the year and pressure from customers’ price adjustments.

The company managed to achieve a fruitful operating performance in 2017 nonetheless, with annual consolidated sales revenue amounting to NT$329.2 billion, an annual increase of 15% and the after-tax net profit amounting to NT$37.029 billion, hitting a record high on company profits at NT$3.72 EPS.

With the new panel production capacity in China, the supply and demand of the panel market is expected to remain balanced in the short term, not likely causing significant impacts. However, impacts on the economic situation in the long run are inevitable. Therefore, the company has actively adjusted its business strategy towards new technology and new application fields, developing highend technological products, expanding new markets, and finding a blue ocean through qualitative and quantitative technological improvements, which are in the best interest of the company and its shareholders.

In view of the future, our operation team and all of our employees will continue to endeavor, to concentrate, and to innovate for the best interest of our shareholders.

2. Result of Business Plan

In 2017 our consolidated revenue was NT$ 329,174,401 thousands, which increased NT$42,085,124 thousands or 15% by compared with the 2016 yearly revenue of NT$

287,089,277 thousands. In 2017 our annual profit after tax which belonged to mother company was NT$37,028,609 thousands, and the annual earnings per share is NT$3.72.

3. Budget Implementation

No financial forecast disclosed for 2017, therefore not applicable to disclose budget implementation.

4. Financial Analysis from 2016 to 2017

	Item	2016	2017
Finacial structure analysis (%)	Debt to Asset Ratio (%)	39.16	36.29
	Long-term Capital to property, plant and equipment (%)	126.79	128.12
Debt-paying ability	Current Ratio (%)	109.32	120.19
	Quick Ratio (%)	87.84	96.12
	Times Interest Earned (Times)	4.90	53.16
Profitability	Return on Assets (%)	0.68	9.57
	Return on Shareholders’ equity(%)	0.82	15.10
	Operating Income to Paid-in Capital Ratio (%)	6.44	47.25
	Pre-tax Income to Paid-in Capital Ratio (%)	5.02	49.18
	Net Margin (%)	0.65	11.25
	Basic after-tax EPS (NT$)	0.19	3.72

5. Research and development

Our R&D in display technology will continue to help our clients improve competitiveness, meet market demand, and be friendly to the environment. We believe the developing directions, including eco-friendly materials, low power consumption, high pixel, high saturation, ultra thin, narrow border, good dynamic performances, touch, wide viewing angle and service integration in all aspects, will achieve remarkable results.

To enhance our overall competitiveness, we proactively developed new technique and new products such as high flexible IGZO AMOLED panel, Mini LED, MicroLED, touch point integration technique; wide color gamut monitor, middle-and-large-sized touch panel and we’ve obtained substantial results. This helps us to stand out and keep our leading position in the keen competitive industry environment.

Among the large-size TFT-LCD products, LCD TVs continue to be oriented towards larger sizes, energy saving, high image quality (4K, 8K), and narrow borders. The main appeal of LCD monitors lies in flexibility, gaming, and narrow borders, while laptop products are oriented towards the development trends of low power consumption, IGZO, narrow borders, and ultrathin technology, which are intended to urge consumers to upgrade their existing products. As for medium and small sizes, manufacturers have engaged in the research and development of AMOLED, flexible panels, and other next-generation technologies due to flourishing developments of smartphone applications and increasingly mature touch technology, making panels the product category with the greatest diversity of products and the fastest growing. Looking ahead to 2018, 18:9, flexible and special-shaped cutting will become the development trend of small and medium sized panels.

President: Manager： Chief Accountant：

Attachment 2

Audit Committee Review Report

The Board of Directors has duly submitted the 2017 operating report, financial statements, and table of profit distribution. The financial statements has been duly reviewed and approved by CPAs of PwC Taiwan with the issuance of Auditor’s Report.

The Audit Committee of the Company, have completed the audit and review, and had found nothing inconsistent with any of the above operating report, financial statements, and table of profit distribution. Therefore, I issue this audit report for acknowledgment in accordance with the Securities and Exchange Act and the Company Act.

General Shareholders Meeting of the Company in 2018

Chairman of the Audit Committee

Chi-Chia Hsieh

Date: May 7, 2018

Attachment 3

REPORT OF INDEPENDENT ACCOUNTANTS

To The Board of Directors and Shareholders of INNOLUX CORPORATION AND SUBSIDIARIES

Opinion

We have audited the accompanying consolidated balance sheets of Innolux Corporation (the “Company”) and its subsidiaries as at December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as at December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

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

The key audit matters in relation to the financial statements for the year ended December 31, 2017 are outlined as follows:

Inventory valuation

Description

The industry is characterized in its significant fluctuations closely in connection with the economic

environment. As the technology evolves rapidly, the Group’s existing products may become obsolete when the customers demand for new products or the Group fails to compete with the evolutionary production

approach. The abovementioned factors thus affect the sales amount ultimately. The Group has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and the cost has been written down to the net realizable value. For details of inventory, please refer to Note 6(6). As the amounts of inventories are material, the types of inventories vary, and the estimation of net realizable value for individually obsolete or damaged inventories is dependent upon significant management judgement, we consider inventory valuation a key audit matter.

How our audit addressed the matter

We assessed whether the accounting policies on the provision for the loss on decline in value and obsoleteness of inventory are reasonable and in accordance with the accounting principles, as well as whether they are applied consistently. We examined inventory aging report and assessed the reasonableness of provision for the loss on slow-moving inventory. We also assessed the reasonableness of net realizable value and the appropriateness of valuation basis.

Additions to property, plant and equipment

Description

The Group’s capital expenditures increased with its operational growth. For details of property, plant and equipment, please refer to Notes 6(8) and (28). As the amount of property, plant and equipment is material, we identified the additions to property, plant and equipment a key audit matter.

How our audit addressed the matter

We assessed and tested the effectiveness of internal controls related to additions to property, plant and equipment, including sampling and checking purchase orders and invoices as to whether the transactions have been approved appropriately and the correctness of the recorded amounts. We also checked the related receipts or acceptance documents to ensure that additions are recognized in appropriate period. In addition, through sampling method, we conducted physical observation of certain assets to confirm that the purchased items exist.

Valuation and impairment of goodwill and property, plant and equipment

Description

For details of the impairment valuation of goodwill and property, plant and equipment, please refer to Note 6(10).

Innolux Corporation estimates future cash flows based on appropriate discount rates. In determining whether goodwill and property, plant and equipment may be impaired, the recoverable amount of the cash generating unit is measured based on how assets are utilized, duration years of assets and projected income and expenses in the future. The estimate involves several assumptions such as determination of discount rates, expected growth rate and future financial projections. As these estimates are dependent upon significant management judgement, we consider management’s assessment of impairment of goodwill and property, plant and equipment a key audit matter.

How our audit addressed the matter

We assessed the key assumptions used by management in estimating expected future cash flows, including the reasonableness of expected operating revenue, gross profit, changes in expenses, and the basic assumptions applied in expected future cash flows. We also examined the parameters of discount rates, including the risk-free rate of return on equity capital, the risk factor of the industry and the rate of return

on similar investments in the market.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Innolux Co., Ltd. as at and for the years ended December 31, 2017 and 2016.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

PricewaterhouseCoopers, Taiwan February 9, 2018

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

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

Assets	Notes December 31, 2017 6(1) $ 65,988,955 6(2) 405,060 6(4)(5) 41,322,705 7 17,727,082 7 1,212,164 6(6) 30,259,021 1,487,832 6(1) and 8 127,136 158,529,955 6(2) 257,676 6(3) 6,555,189 6(7) 1,491,139 6(8), 7 and 8 220,864,627 6(9) 562,697 6(10) and 8 17,910,908 6(26) 6,348,761 6(8) and 8 2,337,806 256,328,803 $ 414,858,758 (Continued)	December 31, 2016
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1479 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non- current 1523 Available-for-sale financial assets - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets		$ 35,384,839 64,241 52,855,632 11,599,359 2,034,427 23,401,728 1,552,373 105,532
		126,998,131
		250,101 5,840,929 1,517,418 201,360,858 573,425 18,446,321 14,698,143 1,794,222
		244,481,417
		$ 371,479,548

		INNOLUX CORPORATION AND SUBSIDIARIES	INNOLUX CORPORATION AND SUBSIDIARIES	INNOLUX CORPORATION AND SUBSIDIARIES
		CONSOLIDATED BALANCE SHEETS
		DECEMBER 31, 2017 AND 2016
		(Expressed in thousands of New Taiwan dollars)
	Liabilities and Equity	Notes	December	31, 2017		December 31, 2016
	Current Liabilities
2100	Short-term borrowings	6(11)	$	-	$	11,583,750
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current			52,500		1,190,148
2170	Accounts payable			50,876,500		51,875,305
2180	Accounts payable - related parties	7		2,565,010		5,120,235
2200	Other payables	6(12) and 7		58,897,804		22,916,097
2230	Current income tax liabilities			1,891,188		1,912,797
2250	Provisions - current	6(16) and 9		5,460,862		3,765,234
2320	Long-term liabilities, current	6(13)
	portion			10,951,114		16,381,686
2399	Other current liabilities			1,199,194		1,420,652
21XX	Total current liabilities			131,894,172		116,165,904
	Non-current liabilities
2540	Long-term borrowings	6(13)		17,287,788		28,128,467
2570	Deferred income tax liabilities	6(26)		734,423		672,971
2600	Other non-current liabilities	6(14)		617,327		505,843
25XX	Total non-current liabilities			18,639,538		29,307,281
2XXX	Total liabilities			150,533,710		145,473,185
	Equity attributable to owners of
	the parent
3110	Share capital - common stock	6(17)		99,520,720		99,521,488
3200	Capital surplus	6(18)		99,646,919		99,647,810
	Retained earnings	6(19)
3310	Legal reserve			3,945,576		3,758,507
3320	Special reserve			3,418,804		-
3350	Unappropriated retained
	earnings			58,883,750		26,497,362
3400	Other equity interest	6(20)	(	1,090,721) (		3,418,804)
3XXX	Total equity			264,325,048		226,006,363
3X2X	Total liabilities and equity		$	414,858,758	$	371,479,548

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

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

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

Items	Notes 2017 2016 7 $ 329,174,401 $ 287,089,277 6(6)(24) and 7 ( 260,435,724) ( 261,000,786) 68,738,677 26,088,491 6(24) ( 1,942,594) ( 2,301,561) ( 6,857,153) ( 6,241,602) ( 12,916,721) ( 11,132,079) ( 21,716,468) ( 19,675,242) 47,022,209 6,413,249 6(21) 2,528,814 2,388,895 6(22) ( 154,188) ( 3,103,952) 6(23) ( 730,500) ( 893,526) 6(7) 274,854 187,454 1,918,980 ( 1,421,129) 48,941,189 4,992,120 6(26) ( 11,912,580) ( 3,121,433) $ 37,028,609 $ 1,870,687 ( $ 49,571) $ 44,027 8,427 ( 7,485) ( 41,144) 36,542 6(20) ( 1,643,264) ( 5,708,026) 4,322,008 ( 339,384) ( 33,551) ( 27,676) 6(26) ( 317,110) ( 113,457) 2,328,083 ( 6,188,543) $ 2,286,939 ($ 6,152,001) $ 39,315,548 ($ 4,281,314) $ 37,028,609 $ 1,870,687 $ 39,315,548 ($ 4,281,314) 6(27) $ 3.72 $ 0.19 $ 3.63 $ 0.19
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit/(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period Other comprehensive (loss) income (net) Components of other comprehensive (loss) income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8349 Income tax relating to the components of other comprehensive income that will not be reclassified 8310 Components of other comprehensive (loss) income that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealized gain (loss) on valuation of available-for-sale financial assets 8370 Share of other comprehensive loss of associates and joint ventures accounted for under equity method 8399 Income tax relating to the components of other comprehensive loss that will be reclassified 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year, net of tax 8500 Total comprehensive income (loss) for the year Profit attributable to: 8610 Owners of the parent Other comprehensive income (loss) attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

Items

Notes
2017
2016
7
$ 329,174,401
$ 287,089,277
6(6)(24) and 7
(
260,435,724)
(
261,000,786)
68,738,677
26,088,491
6(24)
(
1,942,594)
(
2,301,561)
(
6,857,153)
(
6,241,602)
(
12,916,721)
(
11,132,079)
(
21,716,468)
(
19,675,242)
47,022,209
6,413,249
6(21)
2,528,814
2,388,895
6(22)
(
154,188)
(
3,103,952)
6(23)
(
730,500)
(
893,526)
6(7)
274,854
187,454
1,918,980
(
1,421,129)
48,941,189
4,992,120
6(26)
(
11,912,580)
(
3,121,433)
$ 37,028,609
$ 1,870,687
( $ 49,571)
$ 44,027
8,427
(
7,485)
(
41,144)
36,542
6(20)
(
1,643,264)
(
5,708,026)
4,322,008
(
339,384)
(
33,551)
(
27,676)
6(26)
(
317,110)
(
113,457)
2,328,083
(
6,188,543)
$ 2,286,939
($ 6,152,001)
$ 39,315,548
($ 4,281,314)
$ 37,028,609
$ 1,870,687
$ 39,315,548
($ 4,281,314)
6(27)
$ 3.72
$ 0.19
$ 3.63
$ 0.19

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit/(loss) of associates and
joint ventures accounted for under equity
method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the period
Other comprehensive (loss) income (net)
Components of other comprehensive (loss)
income that will not be reclassified to profit
or loss
8311
Remeasurement of defined benefit
obligations
8349
Income tax relating to the components of
other comprehensive income that will not
be reclassified
8310
Components of other comprehensive
(loss) income that will not be
reclassified to profit or loss
Components of other comprehensive
income (loss) that will be reclassified to
profit or loss
8361
Financial statements translation
differences of foreign operations
8362
Unrealized gain (loss) on valuation of
available-for-sale financial assets
8370
Share of other comprehensive loss of
associates and joint ventures accounted
for under equity method
8399
Income tax relating to the components of
other comprehensive loss that will be
reclassified
8360
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8300
Other comprehensive income (loss) for the
year, net of tax
8500
Total comprehensive income (loss) for the
year
Profit attributable to:
8610
Owners of the parent
Other comprehensive income (loss)
attributable to:
8710
Owners of the parent
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

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

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

Notes			Equity attributableto ow	Equity attributableto ow	ners of the parent						Total
	Common stock	Capital surplus		RetainedEarnings			Oth	er EquityIntere	st
			Legal reserve	Special reserve	Unappropriate d earnings	Financial statements translation differences of foreign operations		Unrealized gain (loss) on available-for- sale financial assets		Employee unearned compensation
6(19) 6(15) 6(18) 6(20) 6(19) 6(18) 6(20)	$ 99,532,372 - - ( 10,884 ) - - - - - $99,521,488 $ 99,521,488 - - - ( 768 ) - - - $99,520,720	$ 99,643,564 - - 10,884 ( 4,068 ) - ( 2,570 ) - - $99,647,810 $ 99,647,810 - - - 768 ( 1,659 ) - - $99,646,919	$ 2,676,947 1,081,560 - - - - - - - $3,758,507 $ 3,758,507 187,069 - - - - - - $3,945,576	$ - - - - - - - - - $ - $ - - 3,418,804 - - - - - $ 3,418,804	$ 27,661,503 ( 1,081,560 ) ( 1,989,810 ) - - - - 1,870,687 36,542 $26,497,362 $ 26,497,362 ( 187,069 ) ( 3,418,804 ) ( 995,204 ) - - 37,028,609 ( 41,144 ) $58,883,750	$ 1,695,294 - - - - - - - ( 5,735,702 ) ($4,040,408 ) ($ 4,040,408 ) - - - - - - ( 1,676,815 ) ($5,717,223 )		$ 1,074,445 - - - - - - - ( 452,841 ) $ 621,604 $ 621,604 - - - - - - 4,004,898 $4,626,502		($ 19,402 ) - - - 4,142 15,260 - - - $ - $ - - - - - - - - $ -	$ 232,264,723 - ( 1,989,810 ) - 74 15,260 ( 2,570 ) 1,870,687 ( 6,152,001 ) $226,006,363 $ 226,006,363 - - ( 995,204 ) - ( 1,659 ) 37,028,609 2,286,939 $264,325,048

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

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year
Adjustments
Adjustments to reconcile profit (loss)
Depreciation and amortization
Compensation related to share-based payment
Share of loss of associates and joint ventures
accounted for under equity method
(Gain) loss from disposal of investments
Loss on disposal of property, plant and equipment
Impairment loss
Interest expense
Interest income
Dividend income
Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value through
profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities

Notes
2017
2016
$ 48,941,189
$ 4,992,120
6(24)
33,564,048
41,418,534
6(24)
-
15,260
6(7)
(
274,854 )
(
187,454 )
6(22)
(
2,483,645 )
23,258
6(22)
597,261
163,659
6(22)
3,120,824
502,857
6(23)
730,500
874,879
6(21)
(
472,331 )
(
291,240 )
6(21)
(
151,677 )
(
177,880 )
(
4,725 )
4,725
(
1,486,042 )
1,012,239
11,532,927
(
4,665,841 )
(
6,127,723 )
(
8,966,506 )
845,803
1,648,507
(
6,857,293 )
5,864,361
64,541
(
444,504 )
23,807
(
7,263 )
(
998,805 )
(
5,194,646 )
(
2,555,225 )
1,760,302
6,975,259
(
1,636,830 )
1,695,628
(
1,786,525 )
(
221,458 )
289,323
16,688
(
12,343 )
86,474,697
35,198,992
(
3,832,038 )
(
1,799,745 )
82,642,659
33,399,247

(Continued)

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial
assets
Proceeds from capital reduction of available-for-sale
financial assets
Proceeds from capital reduction and return of
investments accounted for under equity method
(Increase) decrease in other financial assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Interest received
Dividends received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Increase in long-term borrowings
Payment of long-term borrowings
Repurchase from issuance of restricted stock to
employees
Interest paid
Cash dividends paid
Net cash flows used in financing activities
Effect of changes in foreign currency exchange
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2017
2016
( $ 122,755 )
$ -
2,907,052
222,372
145,575
159,335
-
23,680
(
45,381 )
2,091,694
6(28)
(
25,016,706 )
(
44,152,843 )
263,357
42,268
(
327,760 )
(
22,251 )
(
2,404 )
38,230
448,903
326,610
418,010
404,576
(
21,332,109 )
(
40,866,329 )
(
11,579,025 )
11,579,025
-
822,702
(
16,440,000 )
(
16,440,000 )
-
(
1,372 )
(
588,511 )
(
747,143 )
6(19)
(
995,204 )
(
1,989,810 )
(
29,602,740 )
(
6,776,598 )
(
1,103,694 )
(
2,894,271 )
30,604,116
(
17,137,951 )
35,384,839
52,522,790
$ 65,988,955
$ 35,384,839

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

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Innolux Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Innolux Corporation (the “Company”) as at December 31, 2017 and 2016, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2017 and 2016, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

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

The key audit matters in relation to the financial statements for the year ended December 31, 2017 are outlined as follows:

Inventory valuation

Description

The industry is characterized in its significant fluctuations closely in connection with the economic

environment. As the technology evolves rapidly, the Company’s existing products may become obsolete when the customers demand for new products or the Company fails to compete with the evolutionary production approach. The abovementioned factors thus affect the sales amount ultimately. The Company has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and the cost has been written down to the net realizable value. For details of inventory, please refer to Note 6(6). As the amounts of inventories are material, the types of inventories vary, and the estimation of net realizable value for individually obsolete or damaged inventories is dependent upon significant management judgement, we consider inventory valuation a key audit matter.

How our audit addressed the matter

Additions to property, plant and equipment

Description

The company’s capital expenditures increased with its operational growth. For details of property, plant and equipment, please refer to Notes 6(8) and (28). As the amount of property, plant and equipment is material, we identified the additions to property, plant and equipment a key audit matter.

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

Description

For details of the impairment valuation of goodwill and property, plant and equipment, please refer to Note 6(10).

How our audit addressed the matter

Responsibilities of management and those charged with governance for the parent company only financial statements

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

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

A. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

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

PricewaterhouseCoopers, Taiwan

February 9, 2018

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

Assets	INNOLUX CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2017 AND 2016 (Expressed in thousands of New Taiwan dollars) Notes December 31, 2017 6(1) $ 53,532,826 6(2) 106,634 6(4)(5) 39,078,322 7 9,483,133 636,591 7 28,791 6(6) 25,381,254 1,050,467 887 129,298,905 6(3) 1,308,207 6(7) 81,614,542 6(8), 7 and 8 191,778,224 6(9) 562,697 6(10) and 8 17,681,078 6(26) 6,227,042 6(8) and 8 1,460,605 300,632,395 $ 429,931,300 (Continued)	December 31, 2016
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1410 Prepayments 1479 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets		$ 20,927,609 64,241 50,693,511 10,199,014 1,184,141 123,091 18,897,916 878,510 35,797
		103,003,830
		1,647,983 79,845,787 170,150,592 573,425 18,375,538 14,561,523 935,611
		286,090,459
		$ 389,094,289

			INNOLUX CORPORATION	INNOLUX CORPORATION
		PARENT COMPANY		ONLY BALANCE SHEETS
			DECEMBER 31, 2017 AND 2016
		(Expressed in thousands of New Taiwan dollars)
	Liabilities and Equity		Notes	December 31, 2017			December 31, 2016
	Current liabilities
2100	Short-term borrowings	6(11)		$	-	$	11,583,750
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current				52,500		734,915
2170	Accounts payable				29,023,773		29,250,025
2180	Accounts payable - related parties	7			44,859,800		50,320,414
2200	Other payables	6(12)	and 7		55,797,132		20,188,656
2230	Current income tax liabilities	6(26)			-		577,254
2250	Provisions - current	6(16)	and 9		5,460,862		3,765,234
2320	Long-term liabilities, current	6(13)
	portion				10,951,114		16,381,686
2399	Other current liabilities				955,648		1,124,978
21XX	Total current liabilities				147,100,829		133,926,912
	Non-current liabilities
2540	Long-term borrowings	6(13)			17,287,788		28,128,467
2570	Deferred income tax liabilities	6(26)			734,423		672,971
2670	Other non-current liabilities	6(14)			483,212		359,576
25XX	Total non-current liabilities				18,505,423		29,161,014
2XXX	Total liabilities				165,606,252		163,087,926
	Equity
3110	Share capital - common stock	6(17)			99,520,720		99,521,488
3200	Capital surplus	6(18)			99,646,919		99,647,810
	Retained earnings	6(19)
3310	Legal reserve				3,945,576		3,758,507
3320	Special reserve				3,418,804		-
3350	Unappropriated retained
	earnings				58,883,750		26,497,362
3400	Other equity interest	6(20)		(	1,090,721) (		3,418,804)
3XXX	Total equity				264,325,048		226,006,363
3X2X	Total liabilities and equity			$	429,931,300	$	389,094,289

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

				INNOLUX CORPORATION	INNOLUX CORPORATION
	PARENT COMPANY			ONLY STATEMENTS OF COMPREHENSIVE INCOME
			FOR THE YEARS ENDED DECEMBER 31, 2017			AND 2016
	(Expressed in	thousands of New Taiwan dollars, except for earnings per share					amount)
	Items		Notes		2017				2016
4000	Sales revenue	7			$	323,687,952		$		285,695,113
5000	Operating costs	6(6)(24) and 7		(		266,236,118)	(			270,841,149)
5900	Net operating margin					57,451,834				14,853,964
	Operating expenses	6(24)
6100	Selling expenses			(		980,494)	(			943,819)
6200	General and administrative expenses			(		3,635,529)	(			3,052,097)
6300	Research and development
	expenses			(		12,202,018)	(			10,344,969)
6000	Total operating expenses			(		16,818,041)	(			14,340,885)
6900	Operating profit					40,633,793				513,079
	Non-operating income and expenses
7010	Other income	6(21)				2,410,518				1,905,334
7020	Other gains and losses	6(22)		(		1,236,027)	(			3,078,900)
7050	Finance costs	6(23)		(		730,497)	(			850,007)
7070	Share of profit of subsidiaries,
	associates and joint ventures
	accounted for under equity method					3,997,806				5,171,418
7000	Total non-operating income and
	expenses					4,441,800				3,147,845
7900	Profit before income tax					45,075,593				3,660,924
7950	Income tax expense	6(26)		(		8,046,984)	(			1,790,237)
8200	Profit for the year				$	37,028,609		$		1,870,687
	Other comprehensive (loss) income
	(net)
	Components of other comprehensive
	(loss) income that will not be
	reclassified to profit or loss
8311	Remeasurement of defined benefit	6(14)
	obligations			($		49,571)		$		44,027
8349	Income tax relating to the	6(26)
	components of other
	comprehensive income (loss) that
	will not be reclassified to profit or
	loss					8,427	(			7,485)
8310	Components of other
	comprehensive (loss) income that
	will not be reclassified to profit or
	loss			(		41,144)				36,542
	Components of other comprehensive
	income (loss) that will be reclassified
	to profit or loss
8361	Financial statements translation	6(20)
	differences of foreign operations			(		1,643,264)	(			5,708,026)
8362	Unrealized gain on valuation of
	available-for-sale financial assets					2,855,347				355,619
8380	Share of other comprehensive
	income (loss) of subsidiaries,
	associates and joint ventures
	accounted for under equity method					1,433,110	(			722,679)
8399	Income tax relating to the	6(26)
	components of other
	comprehensive loss that will be
	reclassified			(		317,110)	(			113,457)
8360	Components of other
	comprehensive income (loss) that
	will be reclassified to profit or
	loss					2,328,083	(			6,188,543)
8300	Other comprehensive income (loss) for
	the year, net of tax				$	2,286,939	($			6,152,001)
8500	Total comprehensive income (loss) for
	the year				$	39,315,548	($			4,281,314)
	Earnings per share (in dollars)	6(27)
9750	Basic earnings per share				$	3.72		$		0.19
9850	Diluted earnings per share				$	3.63		$		0.19

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

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

2016 Balance at January 1 Appropriations of 2015 earnings (Note 1): Legal reserve Cash dividends Cancellation of restricted stock to employees Changes in restricted stock to employees Compensation related to share-based payment Recognition of change in equity of associates in proportion to the Company's ownership Profit for the year Other comprehensive loss for the year Balance at December 31 2017 Balance at January 1 Appropriations of 2016 earnings (Note 2): Legal reserve Special reserve Cash dividends Cancellation of restricted stock to employees Recognition of change in equity of associates in proportion to the Company's ownership Profit for the year Other comprehensive income for the year Balance at December 31	Notes		Common stock		Capital surplus				RetainedEarnings	RetainedEarnings	RetainedEarnings				Other EquityInterest			Total
							Legal reserve		Special reserve		Unappropriated earnings		Financial statements translation differences of foreign operations		Unrealized gain on available-for-sale financial assets		Employee unearned compensation
	6(19) 6(15) 6(20) 6(19) 6(20)		$ 99,532,372 - - ( 10,884 ) - - - - - $ 99,521,488 $ 99,521,488 - - - ( 768 ) - - - $ 99,520,720		$ 99,643,564 - - 10,884 ( 4,068 ) - ( 2,570 ) - - $ 99,647,810 $ 99,647,810 - - - 768 ( 1,659 ) - - $ 99,646,919		$ 2,676,947 1,081,560 - - - - - - - $3,758,507 $ 3,758,507 187,069 - - - - - - $3,945,576		$ - - - - - - - - - $ - $ - - 3,418,804 - - - - - $3,418,804		$ 27,661,503 ( 1,081,560 ) ( 1,989,810 ) - - - - 1,870,687 36,542 $ 26,497,362 $ 26,497,362 ( 187,069 ) ( 3,418,804 ) ( 995,204 ) - - 37,028,609 ( 41,144 ) $ 58,883,750		$ 1,695,294 - - - - - - - ( 5,735,702 ) ($ 4,040,408 ) ($ 4,040,408 ) - - - - - - ( 1,676,815 ) ($ 5,717,223 )		$ 1,074,445 - - - - - - - ( 452,841 ) $ 621,604 $ 621,604 - - - - - - 4,004,898 $ 4,626,502		($ 19,402 ) - - - 4,142 15,260 - - - $ - $ - - - - - - - - $ -	$ 232,264,723 - ( 1,989,810 ) - 74 15,260 ( 2,570 ) 1,870,687 ( 6,152,001 ) $ 226,006,363 $ 226,006,363 - - ( 995,204 ) - ( 1,659 ) 37,028,609 2,286,939 $ 264,325,048

Note 1: Employee's compensation and directors' and supervisors' remuneration accrued at $734,524 and $5,000 had been deducted from the statement of comprehensive income for the year ended December 31, 2015, respectively. Note 2: Employee's compensation and directors' remuneration accrued at $192,788 and $1,928 had been deducted from the statement of comprehensive income for the year ended December 31, 2016, respectively.

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

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax for the year
Adjustments
Adjustments to reconcile profit (loss)
Depreciation and amortization
Compensation related to share-based payment
Share of profit of subsidiaries and associates
accounted for under equity method
Loss on disposal of property, plant and equipment
Impairment loss
Interest income
Dividend income
Interest expense
Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value through
profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities

Notes
2017
2016
$ 45,075,593
$ 3,660,924
6(24)
29,669,396
37,605,732
6(24)
-
15,260
(
3,997,806 )
(
5,171,418 )
6(22)
32,859
35,222
6(22)
3,049,547
500,000
6(21)
(
301,764 )
(
131,151 )
6(21)
(
22,678 )
(
28,593 )
6(23)
730,497
831,360
(
4,725 )
4,725
(
724,808 )
698,611
11,615,189
(
4,938,382 )
715,881
(
7,294,261 )
554,181
1,378,266
(
6,483,338 )
4,715,867
(
171,957 )
(
173,054 )
34,910
(
32,796 )
(
226,252 )
1,518,990
(
5,460,614 )
4,886,552
6,665,654
(
3,435,134 )
1,695,628
(
1,786,525 )
(
169,330 )
289,172
28,840
(
5,678 )
82,304,903
33,143,689
(
536,988 )
(
915,890 )
81,767,915
32,227,799

(Continued)

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in other receivables - related parties
Proceeds from capital reduction of available-for-sale
financial assets
Acquisition of investment accounted for under equity
method
Proceeds from capital reduction of investments accounted
for under equity method
Decrease in other financial assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Interest received
Dividends received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Increase in long-term borrowings
Payment of long-term borrowings
Cash dividends paid
Repurchase from issuance of restricted stock to
employees
Interest paid
Net cash flows used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2017
2016
$ 3,625
$ 254,273
145,575
159,335
-
(
77,808 )
1,790,881
23,680
30
1,519,807
6(28)
(
22,321,235 )
(
42,155,612 )
293,308
7,778
(
106,781 )
-
(
319 )
31,437
295,245
135,099
339,710
255,289
(
19,559,961 )
(
39,846,722 )
(
11,579,025 )
11,579,025
-
822,702
(
16,440,000 )
(
16,440,000 )
6(19)
(
995,204 )
(
1,989,810 )
-
(
1,372 )
(
588,508 )
(
703,623 )
(
29,602,737 )
(
6,733,078 )
32,605,217
(
14,352,001 )
20,927,609
35,279,610
$ 53,532,826
$ 20,927,609

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

Attachment 4

INNOLUX CORPORATION

2017 Profit Distribution Table

Unit: NT$

		Unit: NT
Item	Amount	Explanation
Accumulated retained earning at the start of the year Adjusted retained earnings of year 2017 Adjusted undistributed retained earnings Profit after tax of Year 2017 Minus Legal reserve (10%) Special reserve Profit distributable Distribution Item Cash dividends to shareholders Subtotal of dividends to shareholders Unappropriated retained earnings to date	21,896,285,132 (41,143,704) 21,855,141,428 37,028,609,250 (3,702,860,925) 2,328,083,389 57,508,973,142 7,961,657,582 7,961,657,582 49,547,315,560	Note 1 Note 2 Note 3 To distribute NT$ 0.8 per share

Note 1: The number of adjusted retained earnings of year 2017 is the defined retirement benefit plan actuarial loss.

Note 2: The minus item of shareholder equity, a certain proportion of its earnings as special reserve.

Note 3: According to the company’s articles and resolutions of the shareholders’ meeting to distribution annual surpluses of 2017.

Chairman: General Manager: Accountant:

Attachment 5

Comparative table for Amendments to Articles of Incorporation

Article No.	The current Article	The Amended Article	Reasons for Amendm ent
Article 2	The scope of business of the Company shall be as follows: (1) CC01080 Electronic Parts and Components Manufacturing (2) F401010 International Trade (3) CC01010Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing (4) CC01090 Batteries Manufacturing (5) IG03010 Energy Technical Services (6) CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing (7) I501010 Product Designing (8) F401021 Restrained Telecom Radio Frequency Equipments and Materials Import 【1.Wireless launch manager. 2. Wireless Transmitter-Receive. 3. Wireless Receiver. 4. Industrial, scientific and medical irradiation machines. 5 other machines can be used for the manufacture of wireless radiant energy.】 (9) CF01011 Medical Materials and Equipment Manufacturing (10) C901020 Glass and glass made products manufacturing (11) C801100 Synthetic Resin & Plastic Manufacturing (12) C805070 Strengthened Plastic Products Manufacturing (13) C801990 Other Chemical Materials Manufacturing	The scope of business of the Company shall be as follows: (1) CC01080 Electronic Parts and Components Manufacturing (2) F401010 International Trade (3) CC01010Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing (4) CC01090 Batteries Manufacturing (5) IG03010 Energy Technical Services (6) CC01030 Electric Appliance and Audiovisual Electric Products Manufacturing (7) I501010 Product Designing (8) F401021 Restrained Telecom Radio Frequency Equipments and Materials Import 【1.Wireless launch manager. 2. Wireless Transmitter-Receive. 3. Wireless Receiver. 4. Industrial, scientific and medical irradiation machines. 5 other machines can be used for the manufacture of wireless radiant energy.】 (9) CF01011 Medical Materials and Equipment Manufacturing (10) CB01010 Machinery and Equipment Manufacturing (11)CE01030 Photographic and Optical Equipment Manufacturing (12)CQ01010 Die Manufacturing (13)E603050 Cybernation Equipments Construction (14)E604010 Machinery Installation	Coordinate d with company operation and revised the wording.
		Construction (15)I301010 Software Design Services

Article No.	The current Article	The Amended Article	Reasons for Amendm ent
Article 2	(14) ZZ99999 The Company may conduct business other than those specified ones, as long as such business is not prohibited or restricted by laws or regulations. (No 9 to 13 are limited to done within the Science Park) 【To research, develop, design, manufacture and sell the products as follows: 1. TFT-LCD panel 2. LCD module 3. LTPS TFT-LCD panel and module 4. OLED panel and module 5. Touch panel and its parts 6. LED backlight source 7. Thin Film Solar Cells, module and system 8. Wafers, cells and module of Silicon Wafers Solar Cells 9. Liquid Crystal Display and its system 10.Mobile Display Module 11.Color Filter 12.Low temperature poly-silicon -Si Thin Film Transistors: LTPS TFT LCD 13.Amorphous silicon: a-Si TFT LCD and system 14.The import and export trade business in relation to the above- mentioned products.】	(16) C901020 Glass and glass made products manufacturing (17) C801100 Synthetic Resin & Plastic Manufacturing (18) C805070 Strengthened Plastic Products Manufacturing (19) C801990 Other Chemical Materials Manufacturing (20) ZZ99999 The Company may conduct business other than those specified ones, as long as such business is not prohibited or restricted by laws or regulations. (No16 to 20 are limited to done within the Science Park) 【To research, develop, design, manufacture and sell the products as follows: 1. TFT-LCD panel 2. LCD module 3. LTPS TFT-LCD panel and module 4. OLED panel and module 5. Touch panel and its parts 6. LED backlight source 7. Thin Film Solar Cells, module and system 8. Wafers, cells and module of Silicon Wafers Solar Cells 9. Liquid Crystal Display and its system 10.Mobile Display Module 11.Color Filter 12.Low temperature poly-silicon -Si Thin Film Transistors: LTPS TFT LCD 13.Amorphous silicon: a-Si TFT LCD and system 14.TFT Liquid crystal module automatic assembly equipment 15. The import and export trade business in relation to the above- mentionedproducts.】

Article No.	The current Article	The Amended Article	Reasons for Amendm ent
Article 13	The board of directors is organized by directors, having their duties and powers as follows: 1. To compile operating plans 2. To submit the surplus earning distribution or loss off-setting proposals 3. To submit capital increase or decrease proposal 4. To compile the important by- laws and organization rules of the Company 5. The appointment or discharge of general manager~~and managerial~~ ~~personnel.~~ 6. To approve the execution of the important contracts 7. To check and ratify the purchase and disposal of the important assets of the Company 8. To establish or dissolve branches 9. To compile the budget and final accounting 10. Other authorities under the Company Act or resolutions of shareholders’ meeting. The Company may purchase liability insurance for its directors within the term and the for the compensation liability incurred from and within he/her business scope	The board of directors is organized by directors, having their duties and powers as follows: 1. To compile operating plans 2. To submit the surplus earning distribution or loss off-setting proposals 3. To submit capital increase or decrease proposal 4. To compile the important by- laws and organization rules of the Company 5. The appointment or discharge of general manager. 6. To approve the execution of the important contracts 7. To check and ratify the purchase and disposal of the important assets of the Company 8. To establish or dissolve branches 9. To compile the budget and final accounting 10. Other authorities under the Company Act or resolutions of shareholders’ meeting. The Company may purchase liability insurance for its directors within the term and the for the compensation liability incurred from and within he/her business scope
Article 26	This Articles of Incorporation was made by all promoters on November 21, 2002. The first amendment was made on March 21, 2003…. (omitted) The fifteenth amendment is on June 8, 2015. The sixteenth amendment is on June 24, 2016. The seventeenth amendment is on June 20, 2017.	This Articles of Incorporation was made by all promoters on November 21, 2002. The first amendment was made on March 21, 2003…. (omitted) The fifteenth amendment is on June 8, 2015. The sixteenth amendment is on June 24, 2016. The seventeenth amendment is on June 20, 2017. The enighteenth amendment is on June 20, 2018.	To explain the amendme nt history of Articles of Incorporati on

Attachment 6

Regulations related to Issuance and Conversion of Private Placement of Foreign or Domestic Corporate Bonds （ Prescribed Temporarily ）

1. Issuing Company:

Innolux Corporation (hereinafter refers to as the “Company” or “Innolux”).

2. Issued Total Amount:

To authorize the board of directors, within the limit of 0.95 billion (950,000,000) ordinary shares, by selection of one or collocation of two or more projects of domestic capital increase by cash, issuing ordinary shares by means of capital increase by cash for sponsoring issuance of GDR, private placement of ordinary shares/preferred shares by means of capital increase by cash or private placement of foreign or domestic convertible corporate bonds. When conducting foreign or domestic convertible corporate bonds (these corporate bonds”) through private placement method, the converting value shall be calculated according to the convertible price within the above 0.95 billion limit at the time of private placement.

3. Issuing Date:

The issuance shall be conducted at one time or several times within one year after resolved by general shareholders meeting of year 2018.

4. Issuing Methods:

This corporate bond will be issued according to Article 43-6 of Securities and Exchange Act the local regulations of issuing place.

The object of this private placement shall be conducted according to Article 43-6 of Securities and Exchange Act and shall be limited to only strategic investor. Also, in order to meet the need of long term operation and business development of the Company, we will prefer to choose strategic investor who will help the Company to enlarge the business and product market, to strengthen customer relationship, promote product development and integration benefit, or to level up technology. Strategic investors may promote the Company’s long-term competitiveness and operation benefit. Through strategic investors’ experience, product technology, knowledge, brand reputation, marketing channel and other advantages, via strategic cooperation, product co-development, market integration, or business development cooperation and other methods, it is estimated to assist the Company in reducing cost, enhancing products skills, enlarging sales market, and to promote the Company’s future operation and benefit.

5. Issuing Price, Face Value, and Types of Corporate Bonds:

This corporate bond are registered convertible corporate bonds; the face value is USD 10,000 or its integral multiples, or NTD 100,000 or its integral multiples. The issuance price shall not be lower than 80% of the theoretical price.

6. Coupon Rate and Interest Payment Method of Corporate Bonds:

To authorize the board of directors to decide such coupon rate and payment methods.

7. Issuing Term:

No more than 7 years since the issuing date.

8. Redemption Methods:

Unless the corporate bonds has been converted, sold back, redeemed, or bought back, or bought back and canceled, this corporate bonds shall be redeemed by cash according to the face value or adding the interest compensation when the times due.

9. Subject of Conversion:

Ordinary shares or sponsoring issuance of GDR which is issued by Innolux.

10. Conversion:

1、The conversion term of this corporate bonds:

Unless earlier redeemed, repurchase, canceled, exercising of conversion right, or during the nonconvertible duration prescribed under the issuance agreement, the creditors of this corporate

bonds may from time to time, during the duration from certain period after issuance to the due date of this corporate bonds, request our company to convert to ordinary shares or sponsoring issuance of GDR of our company according to related regulations and issuance agreement.

2、Conversion procedure of the corporate bonds:

When the creditors request for conversion, they shall prepare “Conversion Notification Letter” together with the bonds and documents or proofs request according to the laws and regulations of the Republic of China so as to apply for conversion to our company.

3、Adjustment and decision of the conversion price of this corporate bonds:
The conversion price shall be no lower than the simple average closing price of the common shares of the 1, 3, or 5 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends or capital reduction; or the 80% of simple average closing price of the common shares of the Company for the 30 business days before the price determination date, after adjustment for any distribution of stock dividends, cash dividends, or capital reduction. The actual price shall be proposed by the shareholders’ meeting to authorize the board of director to decide according to relevant laws and regulations.
4、Year of Conversion relating to the ownership of share dividend:

The corporate bonds owners shall not be entitled to stock dividend or stock benefit before conversion; after conversion, the corporate bonds owner shall have the right to be distributed stock dividend or benefit of the issued company’s ordinary stocks just like the other ordinary share’s shareholder of the Company.

5、Right and Obligation after Conversion：

For this corporate bonds, other than the restriction that it is not allowed to be transferred within 3 years after delivery set forth under Article 43-8 of Securities and Exchange Act, the ordinary shares converted from this corporate bonds owns the same right and obligation as the original ordinary shares.

11. Terms of Early Redemption by the Issuing Company:

To authorized the board of directors to prescribe such term.

12.Repurchase Term of the Corporate Bonds Owners ：

The Company may choose not to provide put right or the corporate bonds owner may, within a certain term after issuance, request the issuing company to redeem all or part of this corporate bonds according to the price calculated from certain rate of return rate of each year.

13. Other important terms:

For the issuing terms and other matters not stated herein, the board of directors shall be authorized to make necessary adjustment and handling at its own discretion.

AI assistant

INX — AGM Information 2018

52330_rns_2018-07-02_d5ac37a7-8729-43ca-b90d-e69cf9973b55.pdf

INNOLUX CORPORATION Minutes of 2018 Annual General Shareholders Meeting

Commencement (The aggregate shareholding of the shareholders present in person or by proxy constitutes a quorum. The Chair called the meeting to order.)

Reporting Items

Adopting Items

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

(Proposed by the Board of Directors)

shares casted electronically)

(Proposed by the Board of Directors)

Extemporary Motion

Adjourn Meeting: The meeting was adjourned at a.m. 10:14.

Attachment 1

INNOLUX CORPORATION

1. 2017 Operating Report

2. Result of Business Plan

3. Budget Implementation

4. Financial Analysis from 2016 to 2017

5. Research and development

Attachment 2

Audit Committee Review Report

Attachment 3

REPORT OF INDEPENDENT ACCOUNTANTS

Opinion

Basis for opinion

Key audit matters

Inventory valuation

Description

How our audit addressed the matter

Additions to property, plant and equipment

Description

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

How our audit addressed the matter

Other matter – Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

PricewaterhouseCoopers, Taiwan February 9, 2018

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

REPORT OF INDEPENDENT ACCOUNTANTS

Opinion

Basis for opinion

Key audit matters

Inventory valuation

Description

How our audit addressed the matter

Additions to property, plant and equipment

Description

How our audit addressed the matter

Valuation and impairment of goodwill and property, plant and equipment

How our audit addressed the matter

Responsibilities of management and those charged with governance for the parent company only financial statements

Auditor’s responsibilities for the audit of the parent company only financial statements

PricewaterhouseCoopers, Taiwan

February 9, 2018

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION

2017 Profit Distribution Table

Attachment 5

Comparative table for Amendments to Articles of Incorporation

Attachment 6

Regulations related to Issuance and Conversion of Private Placement of Foreign or Domestic Corporate Bonds （ Prescribed Temporarily ）

1. Issuing Company:

2. Issued Total Amount:

3. Issuing Date:

INX AGM Information 2018