INX - Audit Report / Information 2017

INNOLUX CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

DECEMBER 31, 2017 AND 2016

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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.

~1~

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

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 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

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.

~2~

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.

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.

~3~

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.

~4~

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 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.

~5~

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

Assets	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`

~6~

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
6(11)
$
-
$
11,583,750
6(2)
52,500
734,915
29,023,773
29,250,025
7
44,859,800
50,320,414
6(12) and 7
55,797,132
20,188,656
6(26)
-
577,254
6(16) and 9
5,460,862
3,765,234
6(13)
10,951,114
16,381,686
955,648
1,124,978
147,100,829
133,926,912
6(13)
17,287,788
28,128,467
6(26)
734,423
672,971
6(14)
483,212
359,576
18,505,423
29,161,014
165,606,252
163,087,926
6(17)
99,520,720
99,521,488
6(18)
99,646,919
99,647,810
6(19)
3,945,576
3,758,507
3,418,804
-
58,883,750
26,497,362
6(20)
(
1,090,721) (
3,418,804)
264,325,048
226,006,363
$
429,931,300
$
389,094,289

Current liabilities
2100
Short-term borrowings
2120
Financial liabilities at fair value
through profit or loss - current
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2230
Current income tax liabilities
2250
Provisions - current
2320
Long-term liabilities, current
portion
2399
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred income tax liabilities
2670
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
3110
Share capital - common stock
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
3400
Other equity interest
3XXX
Total equity
3X2X
Total liabilities and equity

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

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

~7~

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
7
$
323,687,952
$
285,695,113
6(6)(24) and 7
(
266,236,118) (
270,841,149)
57,451,834
14,853,964
6(24)
(
980,494) (
943,819)
(
3,635,529) (
3,052,097)
(
12,202,018) (
10,344,969)
(
16,818,041) (
14,340,885)
40,633,793
513,079
6(21)
2,410,518
1,905,334
6(22)
(
1,236,027) (
3,078,900)
6(23)
(
730,497) (
850,007)
3,997,806
5,171,418
4,441,800
3,147,845
45,075,593
3,660,924
6(26)
(
8,046,984) (
1,790,237)
$
37,028,609
$
1,870,687
6(14)
($
49,571) $
44,027
6(26)
8,427
(
7,485)
(
41,144)
36,542
6(20)
(
1,643,264) (
5,708,026)
2,855,347
355,619
1,433,110
(
722,679)
6(26)
(
317,110) (
113,457)
2,328,083
(
6,188,543)
$
2,286,939
($
6,152,001)
$
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
7070
Share of profit of subsidiaries,
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 year
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 (loss) that will not be
reclassified to profit or loss
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 on valuation of
available-for-sale financial assets
8380
Share of other comprehensive
income (loss) of subsidiaries,
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
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

Items	Notes 2017 2016 7 `$` `323,687,952` `$` `285,695,113` 6(6)(24) and 7 `(` `266,236,118) (` `270,841,149)` `57,451,834` `14,853,964` 6(24) `(` `980,494) (` `943,819)` `(` `3,635,529) (` `3,052,097)` `(` `12,202,018) (` `10,344,969)` `(` `16,818,041) (` `14,340,885)` `40,633,793` `513,079` 6(21) `2,410,518` `1,905,334` 6(22) `(` `1,236,027) (` `3,078,900)` 6(23) `(` `730,497) (` `850,007)` `3,997,806` `5,171,418` `4,441,800` `3,147,845` `45,075,593` `3,660,924` 6(26) `(` `8,046,984) (` `1,790,237)` `$` `37,028,609` `$` `1,870,687` 6(14) `($` `49,571) $` `44,027` 6(26) `8,427` `(` `7,485)` `(` `41,144)` `36,542` 6(20) `(` `1,643,264) (` `5,708,026)` `2,855,347` `355,619` `1,433,110` `(` `722,679)` 6(26) `(` `317,110) (` `113,457)` `2,328,083` `(` `6,188,543)` `$` `2,286,939` `($` `6,152,001)` `$` `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 7070 Share of profit of subsidiaries, 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 year 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 (loss) that will not be reclassified to profit or loss 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 on valuation of available-for-sale financial assets 8380 Share of other comprehensive income (loss) of subsidiaries, 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 Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

~8~

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				Retained Earnings	Retained Earnings				Other Equity Interest		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.

~9~

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)

~10~

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.

~11~

INNOLUX CORPORATION

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

(1) Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in the Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity.
(2) The Company engages in the research, development, design, manufacture, and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on February 9, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations, and amendments endorsed by FSC effective from 2017 are as follows:

New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Amendments to IFRS 10, IFRS 12 and IAS 28, ‘Investment entities: applying the consolidation exception’ Amendments to IFRS 11, ‘Accounting for acquisition of interests in joint operations’ IFRS 14,‘Regulatory deferral accounts’ Amendments to IAS 1, ‘Disclosure initiative’ Amendments to IAS 16 and IAS 38, ‘Clarification of acceptable methods of depreciation and amortisation’ Amendments to IAS 16 and IAS 41, ‘Agriculture: bearer plants’ Amendments to IAS 19, ‘Defined benefit plans: employee contributions’ Amendments to IAS 27, ‘Equity method in separate financial statements’ Amendments to IAS 36, ‘Recoverable amount disclosures for non- financial assets’ Amendments to IAS 39, ‘Novation of derivatives and continuation of hedge accounting’ IFRIC 21, ‘Levies’	January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2016 January 1, 2014 January 1, 2014 January 1, 2014

New Standards,Interpretations andAmendments

Effective Date by
International Accounting
StandardsBoard

Amendments to IFRS 10, IFRS 12 and IAS 28, ‘Investment entities:
applying the consolidation exception’
Amendments to IFRS 11, ‘Accounting for acquisition of interests in joint
operations’
IFRS 14,‘Regulatory deferral accounts’
Amendments to IAS 1, ‘Disclosure initiative’
Amendments to IAS 16 and IAS 38, ‘Clarification of acceptable methods
of depreciation and amortisation’
Amendments to IAS 16 and IAS 41, ‘Agriculture: bearer plants’
Amendments to IAS 19, ‘Defined benefit plans: employee contributions’
Amendments to IAS 27, ‘Equity method in separate financial statements’
Amendments to IAS 36, ‘Recoverable amount disclosures for non-
financial assets’
Amendments to IAS 39, ‘Novation of derivatives and continuation of
hedge accounting’
IFRIC 21, ‘Levies’

January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014

~12~

New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Annual improvements to IFRSs 2010-2012 cycle Annual improvements to IFRSs 2011-2013 cycle Annual improvements to IFRSs 2012-2014 cycle	July 1, 2014 July 1, 2014 January 1, 2016

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. Annual improvements to IFRSs 2010-2012 cycle ─ IFRS 8, ‘Operating segments’

The standard is amended to require disclosure of judgments made by management in aggregating operating segments. This amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets is required only when segment asset is provided to chief operating decision maker regularly.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Company

New standards, interpretations, and amendments as endorsed by FSC effective from 2018 are as follows:

New Standards,Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share-based payment transactions’ Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

New Standards,Interpretations and Amendments

Effective Date by
International Accounting
Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-based
payment transactions’
Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with
IFRS 4 Insurance contracts’
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from
contracts with customers’
Amendments to IAS 7, ‘Disclosure initiative’
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealised losses’
Amendments to IAS 40, ‘Transfers of investment property’
IFRIC 22, ‘Foreign currency transactions and advance consideration’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
1, ‘First-time adoption of International Financial Reporting Standards’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS
28, ‘Investments in associates and joint ventures’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2018

~13~

(a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely with an entity’s risk management strategy. Risk components of non-financial items and a group of items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’; while its risk management objective remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.
B. IFRS 15, ‘Revenue from contracts with customers’
IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18, ‘Revenue’, and relevant interpretations and SICs. According to IFRS 15, revenue is recognized when a customer obtains control of goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer.

~14~

Step 2: Identify performance obligations in the contract(s).

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

Step 5: Recognize revenue when the performance obligation is satisfied.

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

C. Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts with customers’ The amendments clarify how to identify a performance obligation (the promise to transfer goods or services to a customer) in a contract; determine whether a company is a principal (the provider of goods or services) or an agent (responsible for arranging for the goods or services to be provided); and determine whether the revenue from granting a license should be recognized at a point in time or over time. In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies the new Standard.
D. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The Company expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

When adopting the new standards endorsed by the FSC effective from 2018, the Company will apply the new rules under IFRS 9 and IFRS15 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. The significant effects of applying the new standards as of January 1, 2018 are summarised below:

A. In accordance with IFRS 9, the Company expects to reclassify available-for-sale financial assets in the amount of $1,308,207 by increasing financial assets at fair value through profit or loss in the amount of $1,308,207. There will be no effect on retained earnings and other equity interest.
B. Presentation of contract assets and contract liabilities

In line with IFRS 15 requirements, the Company expects to change the presentation of certain accounts in the balance sheet as follows:

Under IFRS 15, liabilities in relation to expected volume discounts and refunds to customers are recognized as contract liabilities, but were previously presented as accounts receivable - allowance for sales returns and discounts in the balance sheet. As of January 1, 2018, the balance would amount to $2,330,484.

~15~

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations, and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 16, ‘Leases’ IFRS 17, ‘Insurance contracts’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 To be determined by International Accounting Standards Board January 1, 2019 January 1, 2021 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

New Standards,Interpretations andAmendments

Effective Date by
International Accounting
StandardsBoard

Amendments to IFRS 9, ‘Prepayment features with negative
compensation’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 16, ‘Leases’
IFRS 17, ‘Insurance contracts’
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’
Amendments to IAS 28, ‘Long-term interests in associates and joint
ventures’
IFRIC 23, ‘Uncertainty over income tax treatments’
Annual improvements to IFRSs 2015-2017 cycle

January 1, 2019
To be determined by
International Accounting
Standards Board
January 1, 2019
January 1, 2021
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete. IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

These parent company only financial statements are prepared by the Company in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers.

(2) Basis of preparation

A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

~16~

  - (b) Available-for-sale financial assets measured at fair value.

  - (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.

B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.
(3) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in NTD, which is the Company’s functional and presentation currency.

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise, except when deferred in other comprehensive income as qualifying cash flow hedges.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income under “other gains and losses”.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the spot exchange rate at the date of that balance sheet;

~17~

ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
iii. All resulting exchange differences are recognized in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even with the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(4) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realized within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(5) Cash equivalents

Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

~18~

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

A. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.

(7) Available-for-sale financial assets

A. Available-for-sale financial assets are non-derivatives that are designated in this category.
B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.

(8) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable which are non-interest bearing are subsequently measured at initial invoice amount as the effect of discounting is insignificant.

(9) Impairment of financial assets

A. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

~19~

B. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:
(a) Significant financial difficulty of the issuer or debtor;
(b) A breach of contract, such as a default or delinquency in interest or principal payments;
(c) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or
(d) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(a) Financial assets measured at amortized cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(b) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from “other comprehensive income” to “profit or loss”. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(10) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

~20~

(11) Operating leases (lessor)

Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term.

(12) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for under the equity method / subsidiaries / associates

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company's share of its subsidiaries' post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize losses proportionate to its ownership.
D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
F. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes all the change in equity in “capital surplus” in proportion to its ownership.

~21~

G. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
H. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.

(14) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss when incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:
Buildings and structures 3~51years

Machinery and equipment 5~9 years

Other equipment 2~6 years

(15) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25 ~ 50 years.

~22~

(16) Intangible assets

A. Goodwill arises in a business combination accounted for by applying the acquisition method.
B. Patent, royalties and other intangible assets are amortized on a straight-line basis over their estimated useful lives of 2 ~ 10 years.
(17) Impairment of non-financial assets
A. The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.
B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(18) Borrowings

A. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

(19) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Financial liabilities at fair value through profit or loss

A. Financial liabilities at fair value through profit or loss are financial liabilities held for trading.

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Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.

B. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
(21) Provisions

Provisions (including warranties, litigations, etc.) are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(22) Employee benefits
A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
- ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
C. Employees’ compensation and directors’ remuneration
Employees’ compensation and directors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those

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amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(23) Employee share based payment
A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B. Restricted stocks:
- (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period.
- (b) For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Company and the Company must refund their payments on the stocks. The Company recognizes the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognizes the payments from the employees who are expected to be eventually vested with the stocks in “capital surplus – others”.
(24) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.
E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from

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research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

(25) Revenue recognition

The Company manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates, and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities.

(26) Business combinations

A. The Company uses the acquisition method to account for business combinations. For each business combination, the Company measures at the acquisition date components of noncontrolling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition date fair value.
B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognized and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognized directly in profit or loss on the acquisition date.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. For the information of critical accounting judgements, estimates and key sources of assumption uncertainty is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

Financial assets - impairment of equity investments

The Company follows the guidance of IAS 39 to determine whether a financial asset-equity investment is impaired. This determination requires significant judgement. In making this judgement, the Company evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, being the transfer of the accumulated fair value adjustments recognized in other comprehensive income on the impaired available-for-sale financial assets to profit or loss.

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(2) Critical accounting estimates and assumptions

The Company makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

  - A. Impairment assessment of goodwill

     - The impairment assessment of goodwill relies on the Company’s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(10) for the information on goodwill impairment.

  - B. Impairment assessment of tangible and intangible assets (excluding goodwill) The Company assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Company strategy might cause material impairment on assets in the future.

  - C. Evaluation of inventories

     - As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand, demand deposits and checking account Time deposits	December31,2017 `35,676,826` `$` `17,856,000` `53,532,826` `$`	December31,2016
		`6,245,543` `$` `14,682,066`
		`20,927,609` `$`

A. The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The above time deposits expire in 3 months and risks of changes in their values are remote.

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

Assets Current items Financial assets held for trading Forward foreign exchange contracts Forward exchange swap contracts Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts	December31,2017 `29,744` `$` `76,890` `106,634` `$` December31,2017 `52,500` `$`	December31,2016
		`64,241` `$` `-` `64,241` `$` December31,2016
		`734,915` `$`

A. The Company recognized net gain of $89,192 and $87,140 on financial assets held for trading for the years ended December 31, 2017 and 2016, respectively.
B. The non-hedging derivative financial assets and liabilities transaction information are as follows:

		December 31,	2017		December 31,	December 31,	2016
	Contract Amount			Contract Amount
Derivative financial	(Notional	Principal)		(Notional	Principal)
assets and liabilities	(in thousands)		Contract Period	(in thousands)			Contract Period
Current items
Forward foreign	USD (sell)	`400,000` `$`	2017/10~2018/3	USD (sell)	`$`	`360,000`	2016/10~2017/3
exchange contracts	JPY (buy)	`44,934,619`	2017/10~2018/3	JPY (buy)	`39,597,920`		2016/10~2017/3
Forward foreign	EUR (sell)	`15,800`	2017/10~2018/2	TWD (sell)		`621,240`	2016/9~2017/2
exchange contracts	USD (buy)	`18,841`	2017/10~2018/2	USD (buy)		`20,000`	2016/9~2017/2
Forward foreign	EUR (sell)	`34,200`	2017/10~2018/3	EUR (sell)		`19,000`	2016/10~2017/1
exchange contracts	JPY (buy)	`4,554,765`	2017/10~2018/3	USD (buy)		`20,706`	2016/10~2017/1
Forward foreign	USD (sell)	`410,000`	2017/12~2018/1	EUR (sell)		`55,000`	2016/9~2017/4
swap contracts	TWD (buy)	`12,289,569`	2017/12~2018/1	JPY (buy)		`6,516,335`	2016/9~2017/4
				EUR(sell)		`8,960`	2016/12~2017/1
				TWD(buy)		`302,364`	2016/12~2017/1

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds in foreign currency. However, these forward foreign exchange contracts are primarily for the requirement of capital management and not accounted for using hedge accounting.

(3) Available-for-sale financial assets

hedge accounting. Available-for-sale financial assets
Items Non-current items Listed stocks Emerging and unlisted stocks	December31,2017 `1,154,959` `$` `153,248` `1,308,207` `$`	December31,2016
		`1,438,809` `$` `209,174` `1,647,983` `$`

A. The Company recognized net gain (loss) in other comprehensive income for fair value change and reclassified from equity to profit or loss for the years ended December 31, 2017 and 2016. Please refer to Note 6(20).

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B. The Company has assessed the impairment of certain investment items and recognized loss of $3,049,547 and $500,000 which has been reclassified from equity to current period profit or loss (shown as ‘other gains and losses’) for the years ended December 31, 2017 and 2016, respectively.
(4) Accounts receivable

Accounts receivable
	December31,2017		December31,2016
Accounts receivable	`$`	`41,514,602`	`$`	`51,636,429`
Less: Allowance for sales returns and discounts	`(`	`2,326,907)`	`(`	`833,545)`
Allowance for bad debts	`(`	`109,373)`	`(`	`109,373)`
	`$`	`39,078,322`	`$`	`50,693,511`

A. The Company’s accounts receivable that were neither past due nor impaired meet the credit ranking rule based on the counterparties’ industrial characteristics scale of business and profitability.
B. The aging analysis of accounts receivable that were past due but not impaired is as follows:

Up to 60 days 61 to 180 days Over 181 days	December31,2017 `3,279,209` `$` `178,662` `1,248` `3,459,119` `$`	December31,2016
		`237,149` `$` `8,553` `-` `245,702` `$`

The above ageing analysis was based on past due date.

C. Movement analysis of accounts receivable that were impaired is as follows:
(a) As of December 31, 2017 and 2016, the Company’s accounts receivable that were impaired were both $109,373.
(b) Movement on allowance for bad debts for impairment loss based on individual provision is as follows:

as follows:
At January 1 Allowance for bad debts - write-offs At December 31	2017 `109,373` `$` `-` `(` `109,373` `$`	2016
		`117,499` `$` `8,126)` `109,373` `$`

(5) Transfer of financial assets

The Company entered into a factoring agreement with financial institutions to sell its accounts receivable. Under the agreement, the Company is not obligated to bear the default risk of the transferred accounts receivable and this is without right of recourse. However, the Company is liable for the losses incurred on any business dispute.

The Company does not provide collateral, and has no continuous involvement in the transferred accounts receivable. As a result, the Company derecognized transferred accounts receivable.

As of December 31, 2017 and 2016, all the accounts receivable sold were collected and the Company entered into factoring agreements with CTBC bank, Taipei Fubon Commercial Bank and Bank of Taiwan in the amount of $18,451,200, $5,952,000, and $1,190,400; and $19,995,000, $6,450,000, and $0, respectively.

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(6) Inventories

Inventories
Raw materials and supplies Work in progress Finished goods	December31,2017 `2,538,870` `$` `11,006,624` `11,835,760` `25,381,254` `$`	December31,2016
		`2,164,341` `$` `9,608,843` `7,124,732`
		`18,897,916` `$`

A. For the years ended December 31, 2017 and 2016, the Company recognized cost of goods sold for inventories that have been sold at $266,366,821 and $269,927,841, and recognized net inventory (gain) loss at ($130,703) and $913,308 due to write down (reversal) of cost of scrap inventories to net realizable value, respectively.
B. Due to the earthquake which occurred in Kaohsiung, Taiwan on February 6, 2016, certain inventories were destroyed. Please refer to Note 10 for details.

(7) Investments accounted for under the equity method

Subsidiaries: Landmark International Ltd. Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Japan Co., Ltd. InnoJoy Investment Corporation Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. Others Associates: Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. Others	December31,2017 December31,2016 `44,160,820` `$` `45,894,168` `$` `20,423,738` `18,523,142` `6,476,884` `6,717,191` `3,797,279` `3,341,269` `1,496,157` `1,548,673` `1,381,380` `1,246,809` `999,166` `322,973)` `(` `843,311` `922,529` `545,511` `547,717` `853,016` `870,941` `525,926` `451,943` `111,354` `104,378` `81,614,542` `$` `79,845,787` `$`

A. The Company’s subsidiaries

Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2017.

B. The Company’s associates

The operating results of the Company’s share in all individually immaterial associates are summarized below:

The Company’s associates The operating results of the Company’s share summarized below:	in all individually immaterial associates are
Profit for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	2017 2016 `361,688` `$` `408,382` `$` `31,085)` `(` `27,958)` `(` `330,603` `$` `380,424` `$` Years ended December31,
	2017 `361,688` `$` `31,085)` `(` `(` `330,603` `$`

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(8) Property, plant and equipment

							2017
	AtJanuary1				Additions		Disposals		Transfer	At December31
Cost:
Land	$	3,852,792	$		-	$	-	$	-	$	3,852,792
Buildings		167,383,261			558,932	(	268,401)		3,333,445		171,007,237
Machinery and equipment		389,370,558			29,241,530	(	3,496,686)		35,804,241		450,919,643
Other equipment		30,215,454			454,839	(	745,518)		3,742,307		33,667,082
		590,822,065			30,255,301	(	4,510,605)		42,879,993		659,446,754
Accumulated depreciation
and impairment:
Buildings	(	94,176,798)	(		7,966,324)		246,887	(	56,068)	(	101,952,303)
Machinery and equipment	(	337,036,893)	(		17,269,387)		3,183,935	(	1,503,306)	(	352,625,651)
Other equipment	(	25,243,481)	(		3,497,636)		745,251	(	407,044)	(	28,402,910)
	(	456,457,172)	(		28,733,347)		4,176,073	(	1,966,418)	(	482,980,864)
Unfinished construction
and equipment under
acceptance		35,785,699			21,043,881		-	(	41,517,246)		15,312,334
	$	170,150,592								$	191,778,224
							2016
	AtJanuary1				Additions		Disposals		Transfer	At December31
Cost:
Land	`$`	`3,852,792`	`$`		`-`	`$`	`-`	`$`	`-`	`$`	`3,852,792`
Buildings		`157,662,050`			`25,463`	`(`	`1,048,411)`		`10,744,159`		`167,383,261`
Machinery and equipment		`380,337,787`			`17,229`	`(`	`3,302,869)`		`12,318,411`		`389,370,558`
Other equipment		`26,624,640`			`-`	`(`	`880,686)`		`4,471,500`		`30,215,454`
		`568,477,269`			`42,692`	`(`	`5,231,966)`		`27,534,070`		`590,822,065`
Accumulated depreciation
and impairment:
Buildings	`(`	`84,570,136)`	`(`	`10,122,036)`			`576,527`	`(`	`61,153)`	`(`	`94,176,798)`
Machinery and equipment	`(`	`315,914,090)`	`(`	`22,724,600)`			`3,255,968`	`(`	`1,654,171)`	`(`	`337,036,893)`
Other equipment	`(`	`22,131,167)`	`(`		`3,582,386)`		`879,748`	`(`	`409,676)`	`(`	`25,243,481)`
	`(`	`422,615,393)`	`(`	`36,429,022)`			`4,712,243`	`(`	`2,125,000)`	`(`	`456,457,172)`
Unfinished construction
and equipment under
acceptance		`18,059,821`		`41,102,393`			`-`	`(`	`23,376,515)`		`35,785,699`
	`$`	`163,921,697`								`$`	`170,150,592`

A. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

Capitalised amount Range of the interest rates for capitalisation	Years endedDecember31,	Years endedDecember31,
	2017 `203,902` `$` `2.15%~2.41%`	2016
		`323,503` `$` `2.00%~2.26%`

B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.
C. As of December 31, 2017 and 2016, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $1,376,587 and $896,996, respectively.

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D. Due to the earthquake in Kaohsiung, Taiwan on February 6, 2016, a portion of property, plant and equipment were damaged. Please refer to Note 10 for details.

(9) Investment property

nvestment property
At January1 Cost: Land 188,247 $ Buildings 439,228 627,475 Accumulated depreciation and impairment: Buildings 54,050) ( 573,425 $	At At Additions Transfer December31 January1 - $ - $ 188,247 $ 188,247 $ - - 439,228 564,109 - - 627,475 752,356 10,728) ( - 64,778) ( 71,853) ( 562,697 $ 680,503 $ 2017	At Additions Disposals December31 - $ - $ 188,247 $ - 124,881) ( 439,228 - 124,881) ( 627,475 11,132) ( 28,935 54,050) ( 573,425 $ 2016
	Additions	Additions
	- $ - - 10,728) (	- $ - - 11,132) (

The fair value of the investment property held by the Company as at December 31, 2017 and 2016 was $1,423,964 and $1,109,891, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information categorized within Level 3 in the fair value hierarchy.

(10) Intangible assets

A. Intangible assets are goodwill, payments for TFT-LCD related technology and royalty.

Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others Cost: Patents and royalty Goodwill Others Accumulated amortisation and impairment: Patents and royalty Others				2017
	AtJanuary1 Additions `8,154,685` `$` `-` `$` `17,096,628` `-` `4,104,226` `106,781` `(` `29,355,539` `106,781` `(` `7,528,070)` `(` `615,010)` `(` `3,451,931)` `(` `310,311)` `(` `10,980,001)` `(` `925,321)` `(` `18,375,538` `$`			Disposals `-` `$` `-` `55,337)` `55,337)` `-` `55,337` `55,337` 2016	Transfer At December31 `-` `$` `8,154,685` `$` `-` `17,096,628` `124,080` `4,279,750` `124,080` `29,531,063` `-` `8,143,080)` `(` `-` `3,706,905)` `(` `-` `11,849,985)` `(` `17,681,078` `$`	At December31
	AtJanuary1 Additions `8,152,685` `$` `-` `$` `17,096,628` `-` `3,900,053` `-` `(` `29,149,366` `-` `(` `6,668,707)` `(` `859,363)` `(` `3,216,634)` `(` `306,215)` `(` `9,885,341)` `(` `1,165,578)` `(` `19,264,025` `$`			Disposals `-` `$` `-` `70,918)` `70,918)` `-` `70,918` `70,918`	Transfer At December31 `2,000` `$` `8,154,685` `$` `-` `17,096,628` `275,091` `4,104,226` `277,091` `29,355,539` `-` `7,528,070)` `(` `-` `3,451,931)` `(` `-` `10,980,001)` `(` `18,375,538` `$`	At December31

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B. Details of amortization on intangible assets are as follows:

Operating costs Operating expenses	Years ended December31,	Years ended December31,
	2017 `807,530` `$` `117,791` `925,321` `$`	2016
		`997,181` `$` `168,397` `1,165,578` `$`

C. The Company performed impairment analysis for recoverable amount of the goodwill at each reporting date and used the value in use as the basis for calculation of the recoverable amount. The value in use was calculated based on the estimated present value of future cash flows for five years, which was discounted at the discount rate of 6.32% and 5.86% for the years ended December 31, 2017 and 2016, respectively, to reflect the specific risks of the related cash generating units. The future cash flows were estimated based on the future revenue, gross profit, and other operating costs each year. Based on the evaluation above, the Company did not recognize impairment loss on goodwill for the years ended December 31, 2017 and 2016.
(11) Short-term borrowings

Short-term borrowings
Type ofborrowings Bank borrowings Unsecured borrowings Range of interest rates	December31,2016 `11,583,750` `$` `0.83%~1.59%`	Collateral
		None

As of December 31, 2017, the Company has no short-term borrowings.

(12) Other payables

Other payables
Payable on machinery and equipment Wages and salaries and bonus payable Repairs and maintenance expense payable Processing fee payable Utilities expense payable Other payables	December31,2017 `32,086,845` `$` `11,217,517` `2,274,668` `1,498,772` `1,018,773` `7,700,557` `55,797,132` `$`	December31,2016
		`3,108,898` `$` `5,034,291` `1,761,707` `1,202,227` `1,009,126` `8,072,407`
		`20,188,656` `$`

- (13) Long term borrowings

Type ofborrowings Syndicated bank loans Less: Administrative expenses charged by syndicated banks Current portion (includes administrative expenses) Range of interest rates	Period December31,2017 December31,2016 2015/3/12 ~2021/12/6 `28,400,000` `$` `44,840,000` `$` `161,098)` `(` `329,847)` `(` `10,951,114)` `(` `16,381,686)` `(` `17,287,788` `$` `28,128,467` `$` `1.75%~2.06%` `1.77%~2.06%`	December31,2016

~33~

A. Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.
B. In the third quarter of 2017, the Company applied to extend the expiry date for 2 years pursuant to the NT$68.5 billion syndicated loan agreement. On August 2, 2017, the Company was informed of the banks’ unanimous consent.
C. The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, based on the Company’s annual parent company only financial statements audited by independent auditors. The Company’s financial ratios on the parent company only financial statements for the years ended December 31, 2017 and 2016 are in compliance with the covenants on the syndicated loan agreement.
(14) Pensions
A. Defined benefit pension plan
- (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005, and service years thereafter of employees who choose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last six months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.
- (b) The amounts recognized in the balance sheet are as follows:

Present value of defined benefit obligation Fair value of plan assets `(` Net defined benefit liability	December31,2017 `1,902,852` `$` `1,548,769)` `(` `354,083` `$`	December31,2016 `1,827,687` `$` `1,534,864)` `292,823` `$`

~34~

	Present value of	Present value of	Present value of
		defined benefit			Fair value of			Net defined
			obligation			planassets	benefitliability
Year ended December 31, 2017
Balance at January 1		`$`	`1,827,687`	`$`		`1,534,864`	`$`		`292,823`
Current service cost			`6,711`			`-`			`6,711`
Interest expense/income			`31,071`			`26,093`			`4,978`
			`37,782`			`26,093`			`11,689`
Remeasurements:
Experience adjustments			`49,488`	`(`		`83)`			`49,571`
Benefits paid	`(`		`12,105)`	`(`		`12,105)`			`-`
			`37,383`	`(`		`12,188)`			`49,571`
Balance at December 31		`$`	`1,902,852`	`$`		`1,548,769`	`$`		`354,083`
	Present value of
		defined benefit			Fair value of			Net defined
			obligation			planassets	benefitliability
Year ended December 31, 2016
Balance at January 1		`$`	`1,852,905`	`$`		`1,529,124`	`$`		`323,781`
Current service cost			`7,565`			`-`			`7,565`
Interest expense/income			`31,499`			`25,995`			`5,504`
			`39,064`			`25,995`			`13,069`
Remeasurements:
Experience adjustments	`(`		`55,619)`	`(`		`11,592)`	`(`		`44,027)`
Benefits paid	`(`		`8,663)`	`(`		`8,663)`			`-`
	`(`		`64,282)`	`(`		`20,255)`	`(`		`44,027)`
Balance at December 31		`$`	`1,827,687`	`$`		`1,534,864`	`$`		`292,823`

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2017 and 2016 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

~35~

(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years endedDecember31,	Years endedDecember31,
	2017 `1.50%` `1.50%`	2016
		`1.70%` `3.00%`

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

Discount rate	Discount rate	Discount rate	Discount rate	Future salaryincreases	Future salaryincreases	Future salaryincreases	Future salaryincreases
Increase 0.25%		Decrease 0.25%		Increase 0.25%		Decrease 0.25%
`(`
Increase 0.25%		Decrease 0.25%		Increase 0.25%		Decrease 0.25%
`(`	`75,371)` `$`		`79,187` `$`		`73,355` `$`	`(`	`70,354)` `$`

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(f) The Company suspended its contributions to the pension reserve as agreed by the Science Park Administration in February 2017.
(g) As of December 31, 2017, the weighted average duration of that retirement plan is 16 years.
B. Defined contribution pension plan
(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2017 and 2016 were $979,319 and $978,325, respectively.

~36~

(15) Share-based payment

A. As of December 31, 2017, the Company’s share-based payment transactions are set forth below:

Type of arrangement Employee stock options Restricted stocks to employees -shares without consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration -shares without consideration -shares subscribed with consideration	Quantity granted Contract period Grant date (in thousand units) (inyears) `2011.05.19` `50,000` `5` `2013.01.30` `31,151` `3` `2013.01.30` `31,151` `3` `2013.03.29` `844` `3` `2013.03.29` `844` `3` `2013.12.12` `4,268` `3` `2013.12.12` `4,268` `3`	Vestingconditions
		Note (a), (b) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d) Note (c), (d)

(a) The employees may exercise the stock options by stage based on 30%, 30% and 40% of total options granted on completion of the specified year(s) of service (one to four years) from the grant date.
(b) The employee stock options had already expired.
(c) The employees may exercise the stock options by stage based on 20%, 40% and 40% of total options granted on completion of the specified year(s) of service (one to three years) from the grant date.
(d) The restricted stocks issued by the Company cannot be transferred. Voting right and dividend right are restricted on these stocks before vested.
(e) The fair value of stock options granted from 2011 to 2013 is measured using the BlackScholes option-pricing model. Relevant information is as follows:

Exercise Type of Price price arrangement Grant date (in dollars) (in dollars) Restricted stocks to employees -shares without consideration `2013.12.12` `10.65` `$` `$ -` - shares subscribed with consideration `2013.12.12` `10.65` `5.00` -shares without consideration `2013.03.29` `18.40` `-` - shares subscribed with consideration `2013.03.29` `18.40` `5.00` -shares without consideration `2013.01.30` `15.35` `-` - shares subscribed with consideration `2013.01.30` `15.35` `5.00` Employee stock options `2011.05.19` `26.70` `26.70`	Expected volatility (%) `-` `-` `-` `-` `-` `-` `35.67`	Expected duration (month) `-` `-` `-` `-` `-` `-` `48.60`	Risk Expected free Fair value dividend interest per unit yield(%) rate(%) (in dollars) `-` `-` `10.65` `$` `-` `-` `5.65` `-` `-` `18.40` `-` `-` `13.40` `-` `-` `15.35` `-` `-` `10.35` `0.00` `1.00` `7.31` `~8.32`

~37~

B. The details of the employee stock option plan for the year ended December 31, 2016 are as follows:

follows:
Quantity (in thousand StockOptions units) Options outstanding at the beginning of the year `50,000` Options exercised `-` Options expired `50,000)` `(` Options outstanding at the end of the year `-` Options exercisable at the end of the year `-`		Weighted Weighted Weighted average average Range of average stock price of exercise exercise remaining stock options price price vesting at exercise (indollars) (indollars) period date (indollars) `$ 22.85` `-` `$ 9.99` `21.87` `-` `$ -` `-` `-` Year ended December31,2016
		Weighted average exercise price (indollars) `$ 22.85` `-` `21.87` `-` `-`	Range of exercise price (indollars) `$ -`

There was no employee stock option plan for the year ended December 31, 2017.

C. For the years ended December 31, 2017 and 2016, the expenses incurred from share-based payment arrangements were $0 and $15,260, respectively.

(16) Provisions-current

Provisions-current
At January 1, 2017 Additions during the year Used during the year `(` At December 31, 2017	Warranty `1,634,234` `$` `2,320,000` `1,263,072)` `2,691,162` `$`	Litigation and others `2,131,000` `$` `638,700` `-` `(` `2,769,700` `$`	Total
			`3,765,234` `$` `2,958,700` `1,263,072)` `5,460,862` `$`

A. Warranty

The Company provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products.

B. Litigation and others

Litigation and other provision for the Company are related to patents of TFT-LCD panel products

and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

(17) Share capital

As of December 31, 2017, the Company’s authorized and outstanding capital were $105,000,000 and $99,520,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from shares issued have been collected.

~38~

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Cancellation of restricted stock to employees `(` At December 31	2017 Number of ordinary shares (inthousands) `9,952,149` `77)` `(` `9,952,072`	2016
		Number of ordinary shares (inthousands)
		`9,953,237` `1,088)` `9,952,149`

A. The Board of Directors of the Company resolved to increase capital for cash by issuing the GDR and had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange which raised a total of $14,519,051, net of issuance cost. The Company has terminated the contracts in relation to the circulation of GDR and its account of the depositary bank in order to lower administrative costs in accordance with the resolution by the Board of Directors on July 26, 2017.
B. The Company adopted a resolution in 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). Until the vesting conditions are met by employees, those shares are restricted with regard to transfer of voting rights, dividend and other rights. As of December 31, 2017 and 2016, the Company has retired 77 thousand and 1,088 thousand shares of unvested restricted stocks to employees, respectively, and decreased capital in accordance with related regulation.
(18) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

At January 1 Cancellation of restricted stock to employees Vested restricted stock to employees Recognition of change in equity of associates in proportion to the Company's ownership At December 31		2017	Total `99,647,810` `$` `768` `-` `1,659)` `99,646,919` `$`
	Sharepremium `99,614,516` `$` `-` `174` `-` `99,614,690` `$`	Share of profit (loss) of associates accounted for Restricted under equity stock to method employees `33,888` `$` `594)` `($` `-` `768` `-` `174)` `(` `1,659)` `(` `-` `(` `32,229` `$` `-` `$`

~39~

2016

At January 1
Cancellation of restricted stock to
employees
Vested restricted stock to employees
Changes in restricted stock to
employees
Expiration of employee stock options
Recognition of change in equity of
associates in proportion to the
Company's ownership
At December 31 Share of profit
(loss) of
associates
accounted for
Restricted
under equity
Employee
stock to
Sharepremium
method
stock options
employees
Total
99,101,649
$
36,458
$
393,500
$
111,957
$
99,643,564
$
-
-
-
10,884
10,884
119,367
-
-
119,367)
(
-
-
-
-
4,068)
(
4,068)
(
393,500
-
393,500)
(
-
-
-
2,570)
(
-
-
2,570)
(
99,614,516
$
33,888
$
-
$
594)
($
99,647,810
$

(19) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed after setting aside or reversing a special reserve according to related regulations. The appropriation of the remaining amount along with the unappropriated earnings from previous years shall be proposed by the Board of Directors and resolved by the shareholders. The Company is in an emerging industry which is growing rapidly, and has a capital intensive business. The Company is at the stage of stable growth. In line with the Company’s long-term financial plan in the future, investment environment and business competition situation, the appropriation of dividends shall be proposed by the Board of Directors and resolved by the shareholders, taking into account the future capital expenditure budget and capital requirement of the Company. However, the stock dividends distributed to shareholders shall not exceed twothirds of distributable dividends in current period.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
C. The details of the appropriations of 2016 and 2015 net income which was approved at the stockholders’ meeting in June 2017 and 2016, respectively, are as follows:

Years ended December31,	Years ended December31,	Years ended December31,
Dividends per Amount share(in dollars) `187,069` `$` `3,418,804` `995,204` `0.10` `$` `4,601,077` `$` 2016	2015
Amount `187,069` `$` `3,418,804` `995,204` `4,601,077` `$`	Amount `1,081,560` `$` `-` `1,989,810` `3,071,370` `$`	Dividends per share(in dollars)
		`0.20` `$`

~40~

The Company’s appropriations of earnings for 2017 are to be authorized by the Board of Directors and presented for approval in the Company’s stockholders’ meeting in 2018.

D. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(25).

(20) Other equity items

Available- Currency for-sale translation investments Total At January 1 `4,040,408)` `($` `621,604` `$` `3,418,804)` `($` Revaluation of available-for-sale investments - gross `-` `194,200)` `(` `194,200)` `(` Revaluation transfer of available-for-sale investment - gross `-` `3,049,547` `3,049,547` Currency translation differences `1,643,264)` `(` `-` `1,643,264)` `(` Share of other comprehensive loss of subsidiaries and associates `33,551)` `(` `1,466,661` `1,433,110` Effect of income tax `-` `317,110)` `(` `317,110)` `(` At December 31 `5,717,223)` `($` `4,626,502` `$` `1,090,721)` `($` 2017 Available- Employee Currency for-sale unearned translation investments compensation Total At January 1 `1,695,294` `$` `1,074,445` `$` `19,402)` `($` `2,750,337` `$` Revaluation of available-for-sale investments - gross `-` `144,381)` `(` `-` `144,381)` `(` Revaluation transfer of available-for-sale investment - gross `-` `500,000` `-` `500,000` Currency translation differences `5,708,026)` `(` `-` `-` `5,708,026)` `(` Changes in restricted stocks to employees `-` `-` `4,142` `4,142` Compensation related to share-based payment `-` `-` `15,260` `15,260` Share of other comprehensive loss of subsidiaries and associates `27,686)` `(` `695,003)` `(` `-` `722,689)` `(` Effect of income tax `-` `113,457)` `(` `-` `113,457)` `(` At December 31 `4,040,418)` `($` `621,604` `$` `-` `$` `3,418,814)` `($` 2016		2017		Total `3,418,804)` `194,200)` `3,049,547` `1,643,264)` `1,433,110` `317,110)` `1,090,721)`

			`$`

				Total

~41~

(21) Other income

Other income
Rental revenue Interest income Dividend income Service income Other income	Years endedDecember31,
	2017 `124,405` `$` `301,764` `22,678` `635,100` `1,326,571` `2,410,518` `$`	2016
		`139,315` `$` `131,151` `28,593` `250,240` `1,356,035`
		`1,905,334` `$`

(22) Other gains and losses

Other gains and losses
		Years ended	December31,
		2017		2016
Net gain on financial assets and liabilities at fair
value through profit or loss	`$`	`86,192`	`$`	`87,140`
Net currency exchange loss	`(`	`1,019,872)`	`(`	`306,238)`
Loss on disposal of property, plant and equipment	`(`	`32,859)`	`(`	`35,222)`
Impairment loss	`(`	`3,049,547)`	`(`	`500,000)`
Net disaster gain (loss)		`2,051,579`	`(`	`1,296,166)`
Others		`728,480`	`(`	`1,028,414)`
	`($`	`1,236,027)`	`($`	`3,078,900)`

(23) Finance costs

Finance costs
Expenses by nature Interest expense: Bank borrowings Others Factoring expense of accounts receivable Employee benefit expense: Salaries and other short-term employee benefits Share-based payments Post-employment benefits Depreciation Amortization	2017 2016 `730,468` `$` `831,360` `$` `29` `-` `-` `18,647` `730,497` `$` `850,007` `$` Years endedDecember31, Years endedDecember31,
	2017 `33,307,647` `$` `-` `991,008` `28,744,075` `925,321` `63,968,051` `$`	2016
		`26,461,969` `$` `15,260` `991,394` `36,440,154` `1,165,578` `65,074,355` `$`

(24) Expenses by nature

~42~

(25) Employees’ compensation and directors’ remuneration

A. According to the Articles of Incorporation, of the Company, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees' compensation and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation and shall not be higher than 0.1% for directors’ remuneration.
B. For the years ended December 31, 2017 and 2016, employees’ compensation was accrued at $3,136,952 and $192,788, respectively; while directors’ remuneration was accrued at $48,261 and $1,928, respectively. The aforementioned amounts were recognized in expenses. The expenses recognized for 2017 were accrued based on the earnings of current year. The employees’ compensation and directors’ remuneration were $3,136,952 and $48,261 in the form of cash, respectively, as resolved by the Board of Directors on February 9, 2018. The accrued amounts were in agreement with the amount of recorded expense for the year ended December 31, 2017.
Employees’ compensation and directors’ remuneration were accrued at $192,788 and $1,928, respectively, based on the earnings of current year distributable for the year ended December 31, 2016 and the employees’ compensation will be distributed in the form of cash. Employees’ compensation and directors’ remuneration for 2016 as resolved by the Board of Directors were $231,338 and $3,856, respectively. The difference of $40,478 between employees’ compensation (directors’ remuneration) as resolved by the Board of Directors and the amount recognized in the 2016 financial statements was caused by a different accrual ratio and had been recorded as expense in 2017.

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(26) Income tax

A. Income tax expense
(a) Components of income tax expense:

olved by the Board of Directors will be posted website of the Taiwan Stock Exchange. e tax ome tax expense Components of income tax expense:	in the “Market Observation Post System” at	in the “Market Observation Post System” at
Current tax: Current tax on profit for the year Tax on undistributed surplus earnings Prior year income tax (overestimation) underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	Years endedDecember31,
	2017 `-` `$` `-` `40,266)` `(` `40,266)` `(` `8,087,250` `8,046,984` `$`	2016
		`-` `$` `590,712` `299`
		`591,011`
		`1,199,226`
		`1,790,237` `$`

~43~

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
Fair value gains/losses on available-for-sale financial assets Remeasurement of defined benefit obligation `(`	2017 2016 `317,110` `$` `113,457` `$` `8,427)` `7,485` `308,683` `$` `120,942` `$` Years ended December31,
	2017 `317,110` `$` `8,427)` `308,683` `$`

B. Reconciliation between income tax expense and accounting profit:

			Years ended	December31,	December31,
			2017		2016
Tax calculated based on profit before tax and
statutory tax rate		`$`	`7,662,851`	`$`	`622,357`
Effects from items disallowed by tax regulation	`(`		`500,004)`	`(`	`816,199)`
Prior year income tax (overestimation)
underestimation	`(`		`40,266)`		`299`
Additional 10% tax on undistributed earnings			`-`		`590,712`
Change in assessment of realization of deferred
tax assets			`924,403`		`1,393,068`
Tax expense		`$`	`8,046,984`	`$`	`1,790,237`

C. Amounts of deferred tax assets or liabilities as a result of temporary differences and loss carryforward are as follows:

carryforward are as follows:
Recognised in other Recognised in comprehensive January1 profit or loss income December31 Temporary differences: -Deferred tax assets: Sales returns and discount provisions 270,483 $ 158,857 $ - $ 429,340 $ Accrued royalties and warranty provisions 731,844 363,165 - 1,095,009 Unrealized loss (gain) on financial instruments 470,394 277,255 317,110) ( 430,539 Loss carryforward 12,486,251 8,851,439) ( - 3,634,812 Others 602,551 26,364 8,427 637,342 14,561,523 $ 8,025,798) ($ 308,683) ($ 6,227,042 $ -Deferred tax liabilities: Unrealized exchange gain 113,545) ($ 71,832 $ - $ 41,713) ($ Amortisation charges on goodwill 559,426) ( 82,369) ( - 641,795) ( Others - 50,915) ( - 50,915) ( 672,971) ($ 61,452) ($ - $ 734,423) ($ 13,888,552 $ 8,087,250) ($ 308,683) ($ 5,492,619 $ Year ended December31,2017	Year ended December31,2017
		December31
		429,340 $ 1,095,009 430,539 3,634,812 637,342
		6,227,042 $

~44~

Year ended December 31, 2016

						Recognised
						in other
				Recognised in		comprehensive
		January1		profit or loss		income		December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount
provisions	$	243,526	$	26,957	$	-	$	270,483
Accrued royalties and
warranty provisions		654,557		77,287		-		731,844
Unrealized exchange loss
(gain)		119,217	(	119,217)		-		-
Unrealized loss (gain) on
financial instruments		926,234	(	342,383)	(	113,457)		470,394
Loss carryforward		13,463,164	(	976,913)		-		12,486,251
Others		316,116		293,920	(	7,485)		602,551
	$	15,722,814	($	1,040,349)	($	120,942)	$	14,561,523
-Deferred tax liabilities:
Unrealized exchange gain	$	-	($	113,545)	$	-	($	113,545)
Amortisation charges on
goodwill	(	477,056)	(	82,370)		-	(	559,426)
Others	(	37,038)		37,038		-		-
	($	514,094)	($	158,877)	$	-	($	672,971)
	$	15,208,720	($	1,199,226)	($	120,942)	$	13,888,552

D. Expiration dates of unused loss carryforward and amounts of unrecognized deferred tax assets are as follows:

December 31, 2017

are as follows:		December31,2017
Year incurred `2011` `2012` `2016`	Amount filed /assessed Assessed Assessed Filed	Unused amount `26,496,656` `$` `42,430,348` `1,282,669` `70,209,673` `$`	Unrecognised deferred tax assets `18,427,518` `$` `29,508,856` `892,052` `48,828,426` `$`	Usable untilyear
				`2021` `2022` `2026`

December 31, 2016

		December31,2016
Year incurred `2010` `2011` `2012` `2016`	Amount filed / assessed Assessed Assessed Assessed Filed	Unused amount `9,392,452` `$` `63,808,943` `42,430,348` `3,047,240` `118,678,983` `$`	Unrecognised deferred taxassets `3,579,613` `$` `24,318,605` `16,170,882` `1,161,351` `45,230,451` `$`	Usable untilyear
				`2020` `2021` `2022` `2026`

E. The amounts of deductible temporary differences that were not recognized as deferred tax assets are as follows:

Deductible temporary differences

December31,2017 `51,793,034` `$`	December31,2016
	`48,198,766` `$`

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F. The Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2017 and 2016, the amounts of temporary differences unrecognized as deferred tax liabilities were $31,293,045 and $28,052,581, respectively.
G. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority.
H. Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.
I. The details of imputation system are as follows:

	Authority. H. Unappropriated retained earnings recorded by the 1998. I. The details of imputation system are as follows:	Company pertain to retained earnings after
(27) (28)	Earnings per share Supplemental cash flow information Investing activities with partial cash payments: (a) Balance of tax credit account (b) Estimated (Actual) creditable tax rate Basic earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Basic earnings per share (in dollar) Diluted earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Assumed conversion of all dilutive potential ordinary shares: -Employees’ compensation -Restricted stocks Diluted earnings per share (in dollar) Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment `(` Cash paid during the year	December31,2017 December31,2016 `2,043,097` `$` `1,420,948` `$` 2017(Estimated) 2016 (Actual) `3.47%` `7.47%` 2017 2016 `37,028,609` `$` `1,870,687` `$` `9,952,051` `9,947,293` `3.72` `$` `0.19` `$` `37,028,609` `$` `1,870,687` `$` `9,952,051` `9,947,293` `259,625` `54,316` `22` `4,052` `10,211,698` `10,005,661` `3.63` `$` `0.19` `$` Years ended December31, 2017 2016 `51,299,182` `$` `41,145,085` `$` `3,108,898` `4,119,425` `32,086,845)` `3,108,898)` `(` `22,321,235` `$` `42,155,612` `$` Years ended December31,
		2017 `51,299,182` `$` `3,108,898` `32,086,845)` `(` `22,321,235` `$`

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties Relationship with the Company Hon Hai Precision Industry Co., Ltd. and its The related party is owned by the same subsidiaries major shareholder of the Company Chi Lin Optoelectronics Co., Ltd. and its subsidiaries The related party’s director is the Company FI Medical Device Manufacturing Co., Ltd. Associate GIO Optoelectronics Corp. Associate Leadtek Global Group Limited The Company’s subsidiary Lakers Trading Ltd. Indirect investee of the Company Innolux Hong Kong Limited Indirect investee of the Company Foshan Innolux Optoelectronics Ltd. Indirect investee of the Company

For the more information about the Company and other subsidiaries, please refer to Note 4(3) of the consolidated financial report for the year ended December 31, 2017.

(2) Significant related party transactions

A. Operating revenue

nificant related party transactions Operating revenue
Sales of goods: Others Subsidiaries Associates	Years endedDecember31,
	2017 `34,304,366` `$` `19,877,722` `37,115` `54,219,203` `$`	2016
		`14,619,410` `$` `11,788,496` `113,916`
		`26,521,822` `$`

The collection period was 30~120 days upon delivery or on a monthly-closing basis to related parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related parties above were not significantly different from those of sales to third parties. B. Purchases of goods

Purchases of goods
Others Associates Subsidiaries Purchases of goods:	Years endedDecember31,
	2017 `6,465,106` `$` `1,337,016` `101,332` `7,903,454` `$`	2016
		`3,014,178` `$` `1,363,067` `223,037`
		`4,600,282` `$`

The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-related parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms from related parties above were not materially different from those of purchases from third parties.

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C. Consigned processing

(a) Consigned processing

nsigned processing Consigned processing
Processing expense: Subsidiaries - Lakers Trading Ltd. - Others Others	Years endedDecember31,
	2017 `33,657,805` `$` `40,954,669` `-` `74,612,474` `$`	2016
		`53,116,567` `$` `36,723,606` `40,737` `89,880,910` `$`

(b) Balance of consigned processing at the end of year (shown as “Other payables”)

Payables to related parties: Subsidiaries Others	December31,2017 `1,476,966` `$` `8` `1,476,974` `$`	December31,2016 `1,188,143` `$` `-` `1,188,143` `$`

The Company subcontracted the processing of products of associates in Mainland China. The processing fees were mainly charged based on cost plus method. D. Service revenue (Shown as “other revenue”)

Service revenue (Shown as“other revenue”)
			Years ended	December		31,
			2017			2016
Service revenue:
Subsidiaries
- Foshan Innolux Optoelectronics Ltd.		`$`	`585,639`	`$`		`207,244`
Associates			`49,461`			`42,996`
		`$`	`635,100`	`$`		`250,240`
Receivables from related parties:
		December31,2017			December31,2016
Accounts receivable:
Others
- Hon Hai Precision Industry Co., Ltd.		`$`	`3,764,389`	`$`		`7,605,574`
- Others			`4,363,885`			`2,012,832`
Subsidiaries			`1,343,412`			`655,047`
Associates			`25,552`			`47,743`
			`9,497,238`			`10,321,196`
Less: Transfer to other receivables	`(`		`10,528)`	`(`		`105,539)`
Allowance for sales returns and discounts	`(`		`3,577)`	`(`		`16,643)`
		`$`	`9,483,133`	`$`		`10,199,014`

E. Receivables from related parties:

(a) The receivables from related parties arise mainly from sales transactions. The receivables are due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no interest.

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(b) The above receivables from related parties that exceed normal granting periods were transferred to ‘other receivables – related parties’.

F. Other receivables from related parties

Other receivables from related parties
Transfer from accounts receivable Other receivables	December31,2017 `10,528` `$` `18,263` `28,791` `$`	December31,2016
		`105,539` `$` `17,552`
		`123,091` `$`

G. Payables to related parties:

Payables to related parties:
Accounts payable: Subsidiaries - Leadtek Global Group Limited - Lakers Trading Ltd. - Innolux Hong Kong Limited - Others Others Associates	December31,2017 `21,080,569` `$` `13,089,589` `9,158,742` `3,439` `1,334,266` `193,195` `44,859,800` `$`	December31,2016
		`19,136,288` `$` `21,652,362` `7,545,137` `35,737` `1,727,306` `223,584` `50,320,414` `$`

The payables to related parties arise mainly from purchase and consigned processing transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

H. Property transactions

Purchase of property

(a) Acquisition of property, plant and equipment:

perty transactions chase of property Acquisition of property, plant and equipment:
Period-end balances arising from purchases of Subsidiaries Others - Hon Hai Precision Industry Co., Ltd. - Others Subsidiaries Others - Hon Hai Precision Industry Co., Ltd. - Others	Years endedDecember31,
	property (shown as “Other payables”): 2017 2016 `38,536` `$` `83,144` `$` `31,456,795` `-` `20,360` `17,324` `31,515,691` `$` `100,468` `$` December31,2017 December31,2016 `28,246` `$` `6,528` `$` `26,609,511` `-` `113` `16,917` `26,637,870` `$` `23,445` `$`	2016
		`6,528` `$` `-` `16,917` `23,445` `$`

(b) Period-end balances arising from purchases of property (shown as “Other payables”):

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(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Share-based payments Post-employment benefits	Years endedDecember31,
	2017 `130,223` `$` `-` `432` `130,655` `$`	2016
		`138,669` `$` `665` `458`
		`139,792` `$`

8. PLEDGED ASSETS

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

Pledged asset Property, plant and equipment Intangible assets Other non-current assets Time deposits	Book	December31,2016 Purpose `80,828,544` `$` Long-term loans `15,551` Long-term loans `752` Guarantee for contract and performance bond `80,844,847` `$` value	Purpose
	December31,2017 `70,966,784` `$` `7,446` `722` `70,974,952` `$`

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

`－` (1) Contingencies Significant Litigations

A. Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc. were investigated by the United States (the “U.S.”) Department of Justice in December 2006 for alleged violation of the anti-trust laws. In December 2009, the Company reached a plea agreement with the Department of Justice of the U.S. and paid off the fines. Later, Brazil government initiated an investigation case against the Company. The investigation is still ongoing and the Company has been cooperative with the investigation. As for civil lawsuits filed by some state governments in the U.S., downstream panel makers, and customers, the Company had reached settlement agreement individually.
B. Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and American subsidiaries with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014.

In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In March 2015, the CAFC overruled the decision rendered by the district court and ordered a retrial.

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In June 2017, the jury determined that some products of the Company and American subsidiaries constituted direct infringement of patent and ordered an infringement compensation for Eidos. The Company continued the legal fight by filing a post-trial motion in July 2017. However, the results of the litigation are uncertain and are dependent on the future litigation progress. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term.

C. The Company had assessed and recognized related losses and liabilities as shown in ‘provisionscurrent’ for the aforementioned investigation relating to anti-trust laws and patent litigation.

(2) Commitments

A. Capital expenditure contracted for at the balance sheet date but not yet incurred are as follows:

B. Operating lease commitments Property, plant and equipment	December31,2017 `18,878,215` `$`	December31,2016
		`17,663,033` `$`

The Company leases plant, land and warehouses under non-cancellable operating lease agreements. The majority of lease agreements are renewable at the end of the lease period at market rate. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than one year Later than one year but not later than five years Later than five years	December31,2017 `549,625` `$` `1,854,909` `529,173` `2,933,707` `$`	December31,2016
		`527,419` `$` `1,861,776` `880,359`
		`3,269,554` `$`

C. Outstanding letters of credit

The outstanding letters of credit for the purchase of property, plant and equipment are as follows:

Outstanding letters of credit	December31,2017 `45,687` `$`	December31,2016
		`245,565` `$`

10. SIGNIFICANT DISASTER LOSS

The Company’s partial inventories and buildings were damaged due to the earthquake which occurred in Kaohsiung, Taiwan on February 6, 2016. The Company has conducted a disaster assessment and a conservative estimation on insurance claim to assess possible disaster loss. The insurance claim has been paid as of September 30, 2017. The Company accrued gain of $755,413 after offsetting the loss with insurance claim.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Company’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity.

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(2) Financial instruments

A. Fair value information of financial instruments
The carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, accounts payable, other payables and long-term loans) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).
B. Financial risk management policies
(a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2)).
(b) Risk management is carried out by the treasury department under policies approved by the board of directors. The Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

a) The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
b) Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via the Company’s treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Company use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.
c) The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). Based on the simulations performed, the impact on post-tax profit of a 1% exchange rate fluctuation would be an increase of $130,606 and

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$35,439 for the years ended December 31, 2017 and 2016, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

Foreign Currency Exchange Amount Rate Book Value (In Thousands) (Note) (NTD) Financial asstes Monetary items USD `2,652,560` `$` `29.76` `78,940,186` `$` JPY `291,999` `0.26` `75,920` EUR `52,375` `35.57` `1,862,979` Non-monetary items USD `2,595,104` `$` `29.76` `77,230,295` `$` HKD `184,669` `3.81` `703,589` JPY `5,662,973` `0.26` `1,472,373` EUR `-` `35.57` `-` Monetary items USD `1,978,955` `$` `29.76` `58,893,701` `$` JPY `33,272,514` `0.26` `8,650,854` EUR `4,889` `35.57` `173,902` December31,2017 Financial liabilities	December31,2016	December31,2016
	Foreign Currency Exchange Amount Rate (In Thousands) (Note) `2,348,586` `$` `32.25` `388,289` `0.28` `80,977` `33.90` `2,337,217` `$` `32.25` `223,521` `4.16` `5,619,277` `0.28` `3,703` `33.90` `2,088,145` `$` `32.25` `27,233,384` `0.28` `2,471` `33.90`	Book Value (NTD)
		`75,741,899` `$` `108,721` `2,745,120` `75,375,248` `$` `929,847` `1,573,398` `125,532` `67,342,676` `$` `7,625,348` `83,767`

Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged.
d) Total exchange loss including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2017 and 2016 amounted to $1,019,872 and $306,238, respectively.

Price risk

a) The Company is exposed to equity securities price risk because of investments held by the Company that are classified on the parent company only balance sheet either as availablefor-sale or at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio in accordance with the policy set by the Company.
b) The Company’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, other components of equity for the years ended December 31, 2017 and 2016 would have increased/decreased by $261,641 and $329,597, respectively, as a result of gains/losses on equity securities classified as available-for-sale.
Interest rate risk
a) The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During the years ended December 31, 2017 and 2016, the Company’s borrowings at variable rate were denominated in the NTD.

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b) The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.
c) Based on the simulations performed, the impact on post-tax profit of a 0.25% shift would be a maximum increase or decrease of $71,000 and $112,100 for the years ended December 31, 2017 and 2016, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.
(b) Credit risk
a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Customer credit quality is assessed via internal risk control, considering customer financial position, past experience and other factors. Individual risk limits are set by the board of directors based on internal or external ratings. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. Because the Company's counterparties and executor are banks with good credit standing and financial institutions and government with investment grade or above, there is no significant default. Therefore, there is no significant credit risk.
b) No credit limits were exceeded during the reporting periods. Management does not expect any significant losses from non-performance by these counterparties.
c) The individual analysis of financial assets that had been impaired is provided in Note 6.
(c) Liquidity risk
a) Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.
b) Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing savings accounts, time deposits, money market deposits and marketable securities. The Company chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk.

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c) The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December31,2017 Accounts payable Other payables Long-term borrowings (including current portion) December31,2016 Short-term borrowings Accounts payable Other payables Long-term borrowings (including current portion)	Less than 1year `73,883,573` `$` `55,797,132` `10,960,000` Less than 1year `11,583,750` `$` `79,570,439` `20,188,656` `16,440,000`	Between 1 and3 years `-` `$` `-` `16,890,000` Between 1 and3 years `-` `$` `-` `-` `27,550,000`	Between 3 and5 years `-` `$` `-` `550,000` Between 3 and5 years `-` `$` `-` `-` `850,000`	Total
				`73,883,573` `$` `55,797,132` `28,400,000` Total
				`11,583,750` `$` `79,570,439` `20,188,656` `44,840,000`

Derivative financial liabilities:

Derivative financial liabilities:
December31,2017 Forward exchange contracts December31,2016 Forward exchange contracts	Less than 1year `$ 52,500` Less than 1year `$ 734,915`	Total
		`$ 52,500` Total
		`$ 734,915`

d) The Company does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value estimation

A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Company’s investment property measured at cost are provided in Note 6(9).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
- entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks and on-the-run bonds is included in Level 1.

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Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2017 and 2016 is as follows:

2017 and 2016 is as follows:
December31,2017 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Forward exchange contracts Forward exchange swap contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts December31,2016 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts	`Level 1` `-` `$` `-` `1,154,959` `1,154,959` `$` `-` `$` Level 1 `-` `$` `1,438,809` `1,438,809` `$` `-` `$`	`Level 2` `29,744` `$` `76,890` `-` `106,634` `$` `52,500` `$` Level 2 `64,241` `$` `-` `64,241` `$` `734,915` `$`	`Level 3` `-` `$` `-` `153,248` `153,248` `$` `-` `$` Level 3 `-` `$` `209,174` `209,174` `$` `-` `$`	`Total`
				`29,744` `$` `76,890` `1,308,207`
				`1,414,841` `$`
				`52,500` `$`
				Total
				`64,241` `$` `1,647,983`
				`1,712,224` `$`
				`734,915` `$`

D. The methods and assumptions the Company used to measure fair value are as follows:
(a) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Emerging stocks Corporate bond

Market quoted price Closing price Last transaction price Weighted average quoted price

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(b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the parent company only balance sheet date.
(c) When assessing non-standard and low-complexity financial instruments, for example, foreign exchange swap contracts, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
(d) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts and foreign exchange swap contracts are usually valued based on the current forward exchange rate.
(e) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the parent company only balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
(f) The Company takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.
E. For the years ended December 31, 2017 and 2016, there was no transfer between Level 1 and Level 2.
F. The following table presents the changes in level 3 instruments as at December 31, 2017 and 2016:

		Equity securities	Equity securities	Equity securities
		2017		2016
At January 1	`$`	`209,174`	`$`	`382,046`
Gains and losses recognized in profit or loss	`(`	`420,832)`		`-`
Gains and losses recognized in other comprehensive
income		`510,481`	`(`	`13,537)`
Proceeds from capital reduction	`(`	`145,575)`	`(`	`159,335)`
At December 31	`$`	`153,248`	`$`	`209,174`

~57~

G. For the years ended December 31, 2017 and 2016, there was no transfer into or out from Level 3.
H. Investment management segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
Investment management segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity instrument: Unlisted shares Non-derivative equity instrument: Unlisted shares	Fair value at December Valuation Significant 31,2017 technique unobservable input `153,248` `$` Market comparable companies Price to earnings ratio multiple, price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability Fair value at December Valuation Significant 31,2016 technique unobservable input `209,174` `$` Market comparable companies Price to earnings ratio multiple, price to book ratio multiple, control premium Discount for lack of marketability	Range (Weighted Relationship of average) inputs to fairvalue `1.26~1.64` `(0.78)` The higher the multiple, the higher the fair value `30%~50%` `(24%)` The higher the discount for lack of marketability, the lower the fair value Range (Weighted Relationship of average) inputs to fairvalue `0.68~1.55` `(0.88)` The higher the multiple and control premium, the higher the fair value `30%` `(29%)` The higher the discount for lack of marketability, the lower the fair value	Relationship of inputs to fairvalue

~58~

J. The Company has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

Financialassets Equity instrument Equity instrument	Period `2017/12/31` `2016/12/31`	Input `153,248` `$` `209,174`	Change `± 1%` `± 1%`	Favourable Unfavourable change change `1,532` `$` `1,532)` `($` `2,092` `2,092)` `(` Recognised in other comprehensiveincome

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 3.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2).
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Table 1, 4, 5 and 6.

14. SEGMENT INFORMATION

None.

~59~

Table 1

Innolux Corporation Loans to others

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum

					Maximum
No.	Creditor	Borrower	General ledger account	Is a related party	outstanding balance during the year ended December 31, 2017	Balance as at December 31, 2017	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral		Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
1 1 1 1 1 2 3 3 4 5 6	Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Nanjng Innolux Technology Ltd. Innolux Technology USA Inc. Innolux Technology USA Inc. Innolux Europe B.V. Innolux Europe B.V. Innolux Japan Co., Ltd.	Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Shanghai Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Leadtek Global Group Limited	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	7,318,350 $ 3,415,875 1,912,890 1,047,535 3,598,055 364,360 178,560 178,560 1,379,257 46,241 2,034,340	2,976,000 $ 2,504,975 1,776,255 1,047,535 2,823,790 227,725 - 178,560 1,351,013 46,241 2,034,340	2,976,000 $ 2,504,975 1,776,255 1,047,535 2,823,790 227,725 - 178,560 1,351,013 46,241 2,034,340	2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 0% 1.01% ~1.52% 0.626% ~0.633% 1.60% 1.00%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	- $ - - - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ - - - - - - - - - - -	264,325,048 $ 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048	264,325,048 $ 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048	A A A A A A A A A A A

Table 1, Page 1

Maximum

					Maximum
No.	Creditor	Borrower	General ledger account	Is a related party	outstanding balance during the year ended December 31, 2017	Balance as at December 31, 2017	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral		Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
7 8 9 10 11 12 13 14 15	Asiaward Investment Ltd. Best China Investments Ltd. Main Dynasty Investment Ltd. Mega Chance Investments Ltd. Sun Dynasty Development Limited Magic Sun Limited Warriors Technology Investments Ltd. Innolux Optoelectronics USA, Inc. Bright Information Holding Ltd.	Best China Investments Ltd. Lakers Trading Ltd. Mega Chance Investments Ltd. Lakers Trading Ltd. Magic Sun Limited Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	241,481 $ 241,481 397,677 397,677 991,180 991,180 3,205,169 119,040 95,809	$ - - - - - - 3,205,169 119,040 95,809	$ - - - - - - 3,205,169 119,040 95,809	0% 0% 0% 0% 0% 0% 0% 1.04% 0%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	$ - - - - - - - - -	$ - - - - - - - - -	$ - - - - - - - - -	$ 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048	$ 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048 264,325,048	A A A A A A A A A

Note A: The Company - Innolux Corporation

1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the company’s net equity, based on the most recent audited financial statements of the company.

2.The financial limit on loans granted shall not exceed 40% of the company’s net equity. If it is for short-term capital needs, the limit shall not exceed 30% of the company’s net equity.

3.The policy for loans granted to direct or indirect wholly-owned overseas subsidiaries is as follows: for short-term capital needs, financial limit shall not be below the 40% requirement, but should not exceed 100% of the company’s net equity.

Table 1, Page 2

Innolux Corporation

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

December 31, 2017

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December 31,2017	As of December 31,2017		Footnote
				Number of shares	Book value	Ownership (%)	Fair value
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation Ningbo Innolux Optoelectronics Ltd. Warriors Technology Investments Ltd. Warriors Technology Investments Ltd. Nets trading Ltd.	Common stock AvanStrate Inc. TPV Technology Ltd. Chi Lin Optoelectronics Co., Ltd. Epistar Corporation Chimei Materials Technology Corp. Allied Material Technology Corp. Trillion Science, Inc. Advanced Optoelectronic Technology, Inc. Fitipower Integrated Technology Inc. `上海辰岱投資中心`(`有限合夥`) OED Holding Ltd. General Interface Solution (GIS) Holding Limited PilotTech Global Fund	None None None None None None None None None None None None None	Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Financial assets at fair value through profit or loss Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current	900,000 150,500,000 17,792,552 89,072 44,741,305 1,209 1,439,180 6,964,222 10,000,000 - 16,000,000 24,194,000 90	$ 50,910 607,330 102,338 4,022 543,607 - 148 257,676 271,900 127,492 6,052 4,814,606 26,784	1 6 19 - 7 - 2 5 7 - 6 7 -	$ 50,910 607,330 102,338 4,022 543,607 - 148 257,676 271,900 127,492 6,052 4,814,606 26,784

Table 2, Page 1

Innolux Corporation

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital For the year ended December 31, 2017

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Marketable securities (Note 1)	General ledger account	Counterparty (Note 2)	Relationship with the investor (Note 2)	Balance as at January 1, 2017(Note 4)	Balance as at January 1, 2017(Note 4)	Addition(Note 3)	Addition(Note 3)		Disposal(Note3)	Disposal(Note3)		Balance as at December 31, 2017(Note 4)	Balance as at December 31, 2017(Note 4)
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain on disposal	Number of shares	Amount
Warriors Technology Investments Ltd.	General Interface Solution (GIS) Holding Limited (Stock)	Available-for- sale financial assets - non- current	Not applicable	Not applicable	40,500,000	$ 3,705,750	-	$ -	16,306,000	$ 2,752,692	$ 165,409	$2,587,283	24,194,000	$ 4,814,606

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leaves the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.

Note 4: It includes unrealized gains (losses) on available-for-sale financial assets.

Table 3, Page 1

Innolux Corporation

Table 4

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Hon Hai Precision Industry Co., Ltd. Lakers Trading Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. Hongfutai Precision Electrons (Yantai) Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Innolux Japan Co., Ltd. Innolux Hong Kong Limited eCMMS Precision Singapore Pte. Ltd. FIH (Hong Kong) Limited Hongfujin Precision Industry (Wuhan) Co., Ltd. Fu Lian Net International (Hong Kong) Limited	Same major stockholder An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	18,987,653 $ 14,194,308 3,564,306 3,134,709 2,045,050 2,002,799 1,919,552 1,703,414 892,785 812,756 628,521 588,640	6 4 1 1 1 1 1 1 - - - -	90 days 60 days 60 days 60-90 days 90 days 45 days 45-90 days 60 days 90 days 60 days 90 days 90 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	3,764,389 $ - 702,843 658,025 1,261,004 442,533 218,925 - - 237,634 70,209 579,927	8 - 1 1 3 1 - - - - - 1

Table 4, Page 1

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Ningbo Innolux Display Ltd. Competition Team Technology (India) Private Limited Innolux Optoelectronics USA, Inc. COMPETITION TEAM IRELAND LIMITED Chi Lin Optoelectronics Co., Ltd. Innolux Technology USA Inc. Foshan Innolux Optoelectronics Ltd. Innolux Optoelectronics Europe B.V. NANJING HONGFUSHARP PRECISION ELECTRONICS CO., LTD. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Hon Hai Precision Industry Co., Ltd. FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp. Chi Lin Optoelectronics Co., Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. The company is a corporate director of Chi Lin Optoelectronics A subsidiary of the Company An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Same major stockholder Investee accounted for under the equity method Investee accounted for under the equity method The company is a corporate director of Chi Lin Optoelectronics	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Purchases Purchases Purchases Purchases	579,412 $ 454,858 432,561 416,110 386,335 298,945 225,318 221,279 164,896 164,262 109,310 6,302,886 1,129,036 207,980 152,040	- - - - - - - - - - - 2 - - -	90 days 90 days 45 days 45-90 days 45 days 60 days 90 days 30-60 days 90 days 90 days 90 days 60-90 days after acceptance 30 days after acceptance 60 days after acceptance 120 days after acceptance	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	140,002 $ 109,636 43,910 212,617 4 23,717 796,728 46,259 23,965 55,401 - 1,331,325) ( 160,373) ( 32,821) ( 1,863) (	- - - - - - 2 - - - - 2 - - -

Table 4, Page 2

Differences in transaction terms

							Differences in transaction terms	Differences in transaction terms
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			compared to third party transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Foshan Innolux Optoelectronics Ltd.	Lakers Trading Ltd. Innolux Hong Kong Limited Leadtek Global Group Limited Lakers Trading Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited NANJING HONGFUSHARP PRECISION ELECTRONICS CO.,LTD. Ningbo Innolux Display Ltd. Foxconn Precision Electronics (YanTai) Co., Ltd. Premier Image Technology (China) Ltd. Nanjing Innolux Technology Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Processing expense Processing expense Processing expense Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Sales Sales Sales Sales Sales Sales	33,657,805 $ 22,426,873 18,527,796 15,471,977 18,372,503 17,786,185 12,749,197 8,536,865 6,720,061 4,706,550 3,784,185 1,866,254 1,698,493 1,082,429	13 8 7 44 80 99 100 100 8 11 5 2 5 1	60-90 days 60-90 days 60-90 days 60 days 60 days 60 days 60 days 60 days 90 days 60 days 90 days 90 days 60 days 90 days	Cost plus Cost plus Cost plus Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	($ 13,089,589) 9,158,742) ( 21,080,569) ( 2,767,180 16,946,551 3,423,930 6,673,314 2,106,625 7,593,892 846,815 - 720,839 315,142 55,085	18 12 29 21 95 98 100 100 22 4 - 2 3 -

Table 4, Page 3

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Foshan Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Lakers Trading Ltd. Ningbo Innolux Display Ltd. Innolux Europe B.V. Innolux Technology Japan Co., Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd.	Panxian FuguiKang Precision electronic Ltd. Lakers Trading Ltd. Chongqing Fuyusheng Electronics Technology Co.,Ltd. Beijing Fusharp Electronic Commerce Ltd. Ningbo Innolux Electronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd. Hon Hai Precision Industry Co., Ltd.	An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Same major stockholder Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder	Sales Processing revenue Sales Sales Sales Sales Service revenue Service revenue Purchases Purchases Purchases Purchases Purchases	513,953 $ 258,405 236,753 226,610 171,488 162,765 659,699 270,068 3,385,353 1,229,206 606,150 467,721 138,628	1 100 - - 1 1 100 93 4 5 1 1 1	90 days 60 days 90 days 90 days 60 days 60 days 60 days 60 days 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	607,499 $ 890,068 279,845 267,856 32,642 70,839 63,124 46,676 111,114) ( 424,958) ( 177,967) ( 156,344) ( 34,312) (	2 100 1 1 - 2 61 92 - 8 2 2 1

Table 4, Page 4

Innolux Corporation

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2017

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31,2017	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Hon Hai Precision Industry Co., Ltd. Hongfutai Precision Electrons (Yantai) Co., Ltd. Foshan Innolux Optoelectronics Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. Fu Lian Net International (Hong Kong) Limited Honfujin Precision Electronics (Chongqing) Co., Ltd. FIH (Hong Kong) Limited Innolux Japan Co.,Ltd. COMPETITION TEAM IRELAND LIMITED Ningbo Innolux Display Ltd. Competition Team Technology (India) Private Limited	Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	$ 3,764,389 1,261,004 796,728 702,843 658,025 579,927 442,533 237,634 218,925 212,617 140,002 109,636	3.34 2.40 0.44 10.11 6.12 2.03 3.98 6.37 10.35 3.76 8.18 2.13	$ - 49 - - - - 173,027 - - 20,957 - -	- Subsequent collection - - - - Subsequent collection - - Subsequent collection - -	$ 1,019,373 96,383 21,848 242,084 285,937 - 107,152 87,730 - 76,339 - 33,789	$ - - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31,2017	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., LTD Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	Leadtek Global Group Limited NANJING HONGFUSHARP PRECISION ELECTRONICS CO., LTD. Innolux Hong Kong Limited Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Ningbo Innolux Display Ltd. Premier Image Technology (China) Ltd. Panxian FuguiKang Precision electronic Ltd. Nanjing Innolux Technology Ltd. Chongqing Fuyusheng Electronics Technology Co.,Ltd. Beijing Fusharp Electronic Commerce Ltd.	A subsidiary of the Company An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	$ 16,946,551 7,593,892 6,673,314 3,423,930 2,767,180 2,106,625 890,068 846,815 720,839 607,499 315,142 279,845 267,856	1.12 1.77 2.11 5.22 1.89 4.42 0.33 4.18 3.91 1.69 5.20 1.69 1.69	$ 9,908,141 - 3,178,558 - - 508,631 846,013 - - - - - -	Subsequent collection - Subsequent collection - - Subsequent collection Subsequent collection - - - - - -	$ 4,188,141 1,559,705 1,767,763 1,803,967 4,646,874 405,283 - 476,386 215,908 - 150,313 - -	$ - - - - - - - - - - - - -

Table 5, Page 2

Innolux Corporation

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Significant inter-company transactions during the reporting period

For the year ended December 31, 2017

Transaction (Note C)

Number (Note 1)	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 3 3 4 4	Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd.	Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Japan Co.,Ltd. Innolux Japan Co.,Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Innolux Optoelectronics USA, Inc. Innolux Technology USA Inc. Innolux Optoelectronics Europe B.V. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3	Sales Processing expense Accrued expenses Sales Accounts receivable Sales Processing expense Accrued expenses Sales Accounts receivable Sales Sales Sales Sales Sales Processing expense Accrued expenses Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	14,194,308 $ 33,657,805 13,089,589) ( 1,919,552 218,925 1,703,414 22,426,873 9,158,742) ( 579,412 140,002 432,561 298,945 221,279 109,310 164,262 18,527,796 21,080,569) ( 225,318 796,728 15,471,977 2,767,180 18,372,503 16,946,551 17,786,185 3,423,930 12,749,197 6,673,314	- - - - - - - - - - - - - - - - - - - - - - - - - - -	4 10 3 1 - 1 7 2 - - - - - - - 6 5 - - 5 1 6 4 5 1 4 2

Table 6, Page 1

Transaction (Note C)

Percentage of consolidated

							Percentage of consolidated
Number (Note 1)	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	total operating revenues or total assets
5 5 6 6 7 7 8 8 9 9 10 11	Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Europe B.V. Innolux Technology Japan Co.,Ltd. Lakers Trading Ltd. Ningbo Innolux Display Ltd.	Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Electronics Ltd. Ningbo Innolux Optoelectronics Ltd.	3 3 3 3 3 3 3 3 3 3 3 3	Processing revenue Accounts receivable Sales Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Service revenue Service revenue Sales Sales	8,536,865 $ 2,106,625 4,706,550 846,815 1,698,493 315,142 258,405 890,068 659,699 270,068 171,488 162,765	- - - - - - - - - - - -	3 1 1 - 1 - - - - - - -

Note A: 1 refers to the parent company to the subsidiary.

3 refers to the subsidiary to the subsidiary.

Note B: Except for no comparable transactions from related parties, sales prices were similar to non-related parties transactions and the collection period was 30~120 days; the purchases from related parties were at market prices and payment term was 30~120 days upon receipt of goods.

Note C: Amount disclosure standard: purchases, sales and receivables from related parties in excess of $100 million or 20% of capital.

Table 6, Page 2

Information on investees

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Innolux Corporation

For the year ended December 31, 2017

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2017	as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31, 2017	Balance as at December 31, 2016	Number of shares	Ownership (%)	Book value
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Bright Information Holding Ltd. Golden Achiever International Limited Innolux Holding Limited Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Europe B.V. Innolux Japan Co., Ltd. Innolux Corporation Innolux Technology USA Inc. iZ3D, Inc. Chi Mei Lighting Technology Corporation Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd.	Hong Kong BVI Samoa Samoa Samoa BVI Hong Kong BVI Taiwan Taiwan Netherlands Japan USA USA USA Taiwan Cayman Taiwan	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Distributor company Investment company Investment company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT-LCD monitors Holdings, R&D, manufacturing and Distributor company Distributor company Distributor company Research and development and sale of 3D flat monitor Manufacturing of electronic equipment and lighting equipment Investment holdings Production and selling of the absorption for medical element	$ 119,724 119,106 6,192,679 62,197 33,438,542 3,674,115 1,889,115 - 1,217,235 1,674,054 - 1,335,486 90,845 354,262 - 819,312 1,717,714 73,500	$ 119,724 119,106 7,858,300 187,457 33,438,542 3,674,115 2,107,291 - 1,217,235 1,674,054 121,941 1,335,486 - - - 819,312 1,717,714 73,500	4,910,000 40,250 180,568,185 1,656,410 709,450,000 146,847,000 1,158,844,000 50,000,000 - 167,405,392 - 80 32,000 1,000 4,333 78,195,856 14,062,500 7,350,000	100 100 100 100 100 100 100 100 100 100 - 49 100 100 35 33 50 49	$ 95,703 18,669 20,423,738 78,709 44,160,820 6,476,884 3,797,279 999,166 843,311 1,381,380 - 1,496,157 2,500 349,930 - - 853,016 525,926	$ 1,084 ( 41,026) 2,635,650 13,100 ( 741,423) ( 99,582) 596,156 1,326,504 ( 108,668) 65,209 6,965 22,299 ( 1,335) 8,543 - - 25,735 685,633	$ 1,084 ( 41,026) 2,635,650 13,100 ( 771,767) ( 98,893) 586,392 1,326,504 ( 108,668) 65,209 5,944 22,299 ( 203) 493 - - 12,867 339,907

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2017	as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31, 2017	Balance as at December 31, 2016	Number of shares	Ownership (%)	Book value
Innolux Corporation Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Europe B.V. Innolux Japan Co.,Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Suns Holding Ltd. Innolux Europe B.V. Yuan Chi Investment Co., Ltd.	GIO Optoelectronics Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Limited Innolux Hong Kong Limited Innolux Europe B.V. Innolux Japan Co.,Ltd. Innolux Technology USA Inc. Innolux Optoelectronics Germany GmbH Innolux Optoelectronics USA, Inc. Stanford Developments Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Chi Mei Lighting Technology Corporation	Taiwan Samoa Samoa Samoa USA Cayman Hong Kong Hong Kong Netherlands Japan USA Germany USA Samoa Samoa Samoa Germany Taiwan	Sales and manufacture of TFT-LCD parts and components Investment holdings Investment holdings Distributor company Distributor company Investment holdings Investment holdings Distributor company Holding company and R&D testing company Holdings, R&D, manufacturing and Distributor company Distributor company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT-LCD monitors Selling of electronic equipment and computer monitors Investment holdings Investment company Investment company Testing and maintenance company Manufacturing of electronic equipment and lighting equipment	$ 800,892 5,222,180 555,422 - - 3,650,192 - - 3,209,158 1,815,603 - 10,324 2,400 5,391,125 27,477 555,422 33,735 263,812	$ 800,892 7,296,530 555,422 - 6,348 3,650,192 - - 3,073,072 1,815,603 263,685 10,324 2,400 5,391,125 27,477 555,422 33,735 263,812	10,494,001 160,504,550 18,177,052 1 - 146,817,000 162,897,802 35,000,000 375,810 82 - 250 1,000 164,000,000 900,001 18,177,052 100,000 19,673,402	24 100 100 100 - 100 100 100 100 51 - 100 100 100 100 100 100 8	$ 111,354 11,932,235 8,264,697 226,729 - 6,476,566 1,394,290 ( 1,089,257) 2,341,954 1,661,840 - 14,077 271,811 11,903,213 28,889 8,264,696 62,081 -	$ 37,487 ( 31,714) 2,668,427 - ( 1,335) ( 99,582) 165,169 374,757 42,943 1,351 8,543 634 9,214 ( 33,332) 1 2,668,427 2,864 -	$ 8,914 ( 31,714) 2,668,427 - ( 1,132) ( 99,582) 165,169 374,757 42,943 1,351 8,050 634 9,214 ( 33,332) 1 2,668,427 2,864 -

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2017	as at December 31,2017	Net profit (loss) of the investee for the year ended December 31,2017	Investment income (loss) recognised by the Company for the year ended December 31,2017	Footnote
				Balance as at December 31, 2017	Balance as at December 31, 2016	Number of shares	Ownership (%)	Book value
Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	GIO Optoelectronics Corp. TOA Optronics Corporation	Taiwan Taiwan	Manufacturing and selling of components of TFT-LCD Selling of electronic materials, trading business, manufacturing of electronic equipment and lighting equipments	$ 6,881 423,606	$ 6,881 423,606	77,235 58,007,000	- 40	$ 843 -	$ 37,487 ( 272,602)	$ 67 ( 86,901)

Table 7, Page 3

Innolux Corporation

Table 8

Information on investments in Mainland China

For the year ended December 31, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (NoteC)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2017	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Net income of investee for the year ended December 31, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2017(Note B)	Book value of investments in Mainland China as of December 31, 2017	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2017	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Innocom Technology (Shenzhen) Co., Ltd. OED Company Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjng Innolux Technology Ltd. VAP Optoelectronics (Nanjing) Corp. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd.	Manufacturing and selling of LCD backend module and related components Manufacturing and selling of electronic paper Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Purchases and sales of monitor-related components company Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components	$ 4,880,640 292,896 9,225,600 11,398,080 4,761,600 62,496 300,576 4,344,960 624,960	2 2 2 2 2 2 2 2 2	$ 3,776,893 59,520 219,184 11,398,080 4,761,600 62,496 113,088 4,286,499 -	$ - - - - - - - - -	$ - - - - - - - - -	$ 3,776,893 59,520 219,184 11,398,080 4,761,600 62,496 113,088 4,286,499 -	($ 33,371) ( 96,503) ( 1,993,452) 934,684 314,967 19,625 ( 41,027) ( 116,971) 165,169	100 4 100 100 100 100 100 100 100	($ 33,371) - ( 1,993,452) 937,060 314,967 19,625 ( 41,027) ( 116,971) 165,169	$ 11,903,163 6,752 19,339,733 20,721,423 4,164,917 557,316 18,295 5,919,229 1,394,290	$ 1,103,747 - 5,137,616 - - - - - -	2.1 2.1 2.2 2.2 2.2 2.3 2.4 2.3 2.8 2.5

Table 8, Page 1

Investee in Mainland China	Main business activities	Investment method (NoteC)	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2017(Note B)	Book value of investments in Mainland China as of December 31, 2017	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2017	Footnote
			Remitted to Mainland China	Remitted back to Taiwan
Foshan Innolux Logistics Ltd. Warehousing services $ 44,640 Amlink (Shanghai) Ltd. Manufacturing and selling of power supply, modem, ADSL, and other IT equipments 238,080 Interface Optoelectronics (Shenzhen) Co., Ltd. Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after-sales service 2,862,912 Ningbo Innolux Electronics Ltd. Manufacturing and selling of LCD backend module and related components 136,635 Foshan Innolux Flnet Electronics Ltd. Commodity agency 4,555 Ningbo Innolux Flnet Electronics Ltd. Commodity agency 4,555 Ceiling on investments in Mainland China: Companyname Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017		2 $ 44,640 $ - 2 297,600 - 2 401,760 - 3 - - 3 - - 3 - - Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)		$ - $ 44,640 $ 4,737 - 297,600 - - 401,760 1,821,286 - - 130,536 - - 1,274 - - 3,261 Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA	100 50 7 100 100 100	$ 4,737 - - 130,536 1,274 3,261	$ 74,038 192,427 4,814,606 371,711 5,840 7,556	$ - - - - - -	2.6 2.7 2.1 3.1 3.2 3.2
Innolux Corporation	26,761,777 $	35,873,581 $		158,595,029 $

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate. Note B: Profit or loss recognised for the year ended December 31, 2017 was audited by independent accountants.

Table 8, Page 2

Note C: The investment methods are as follows:

Directly investing in Mainland China.
Through investing in companies in the third area, which then invested in the investee in Mainland China.
2.1. Through investing in Innolux Holding Limited in the third area, which then invested in the investee in Mainland China.
2.2. Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.
2.3. Through investing in Toppoly Optoelectronics (B.V.I) Ltd. in the third area, which then invested in the investee in Mainland China.
2.4. Through investing in Golden Achiever International Ltd. in the third area, which then invested in the investee in Mainland China.
2.5. Through investing in Innolux Hong Kong Holding Ltd in the third area, which then invested in the investee in Mainland China.
2.6. Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.
2.7. Through investing in Ampower Holding Ltd. in the third area, which then invested in the investee in Mainland China.
2.8. Nanjing Innoloux Optoelectornics Ltd. acquired Kunpal Optoelectronics Ltd. by merger, which was approved by the Investment Commission of the Ministry of Economic Affairs in November 2017.
Others.
3.1. The company invested in the company via investee company in Mainland China, Ningbo Innolux Display Ltd. Except for the investment via the holding companies in Mainland China, other investments shall be not approved by Investment Commission of the Ministry of Economic Affairs.
3.2 The company invested via Foshan Innolux Optoelectronics Ltd. and Ningbo Innolux Optoelectronics Ltd. which are the company investment entities in Mainland China to invest in Foshan Innolux Flnet Electronics Ltd. and Ningbo Innolux Flnet Electronics Ltd. Except for the investment via the holding companies in Mainland China, other investments shall be not approved by Investment Commission of the Ministry of Economic Affairs.

Table 8, Page 3

INNOLUX CORPORATION SUMMARY OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 1

Items Petty cash Cash in banks Demand deposits Foreign deposits Time deposits	Abstract Amount `$ 165` `21,091,146` USD `488,342`In thousands Exchange rate 29.760 `14,533,065` JPY `177,469`In thousands Exchange rate 0.264 `46,887` EUR `86`In thousands Exchange rate 35.570 `3,053` HKD `144`In thousands Exchange rate 3.807 `550` KRW `70,251`In thousands Exchange rate 0.028 `1,960` USD `600,000`In thousands Exchange rate 29.760 `17,856,000` `$ 53,532,826`	Amount
		`$ 53,532,826`

(Remainder of page intentionally left blank)

Summary 1, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS RECEIVABLE DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 2

Items	Amount	Remark
Third parties Company A Company B Company C Company D Company E Others Less: Allowance for bad debts Allowance for returns and discount	`$ 8,100,794` `4,183,494` `3,482,980` `2,804,462` `2,168,069` `20,774,803`	Balance of individual customers is under 5% of this account’s balance.
	`41,514,602` `( 109,373)` `( 2,326,907)`
	`$ 39,078,322`

(Remainder of page intentionally left blank)

Summary 2, Page 1

INNOLUX CORPORATION SUMMARY OF INVENTORY

DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 3

Items	Abstract	Cost	Market price `$ 2,631,340` `19,392,477` `17,669,129`
Raw materials Work in process Finished goods		`$ 2,538,870` `11,006,624` `11,835,760`
		`$ 25,381,254`	`$ 39,692,946`

Summary 3, Page 1

INNOLUX CORPORATION

MOVEMENT SUMMARY OF INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 4

As of January 1, 2017	As of January 1, 2017	Additions In thousand shares Amount	Additions In thousand shares Amount	Deductions	Deductions	As of December 31, 2017	As of December 31, 2017
In thousand shares Amount `709,450 $ 45,894,168` `246,768 18,523,142` `146,847 6,717,191` `1,158,844 3,341,269` `167,405 1,246,809` `- 1,548,673` `50,000 (322,973)` `- 922,529` `14,063 870,941` `7,350 451,943` `- 652,095` `$ 79,845,787`	Amount		Amount	In thousand shares	Amount In thousand shares Ownership (%) `($ 1,733,348) 709,450` `100%` `( 1,665,791) 180,568` `100%` `( 240,307) 146,847` `100%` `( 354,262) 1,158,844` `100%` `- 167,405` `100%` `( 74,815) -` `49%` `( 4,365) 50,000` `100%` `( 111,147) -` `100%` `( 30,792) 14,063` `50%` `( 265,923) 7,350` `49%` `( 474,484)` `-` `-` `($ 4,955,234)`	In thousand shares Ownership (%)	Amount
		`-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-`	`$ -` `3,566,387` `-` `810,272` `134,571` `22,299` `1,326,504` `31,929` `12,867` `339,906` `479,254`	`-` `( 66,200)` `-` `-` `-` `-` `-` `-` `-` `-` `-`
	`$ 79,845,787`		`$6,723,989`

Note 1: Additions include gains on investment accounted for using equity method, cumulative translation adjustment and recognition of unrealised gain on investees’ financial instruments.

Note 2: Deductions include disposal costs, losses on investment accounted for using equity method, cumulative translation adjustment, cash dividend received, and recognition of unrealised loss on investees’ financial instruments.

Summary 4, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS PAYABLE

DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 5

Items Abstract Amount Third parties Company A `$ 1,652,960` Company B `1,590,891` Others `25,779,922` `$ 29,023,773` (Remainder of page intentionally left blank)	Amount `$ 1,652,960` `1,590,891` `25,779,922`	Remark Balance of individual suppliers is under 5% of this account’s balance.
	`$ 29,023,773`

Summary 5, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 6

Items TFT-LCD products	Quantity (in thousands) `385,992`	Amount `$ 323,687,952`

(Remainder of page intentionally left blank)

Summary 6, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 7
Items
Beginning raw materials
Incoming inventory
Less: Ending raw materials
Gain on physical inventory
Scrapping materials
Sale of materials
Material consumption
Direct labor
Manufacturing expenses
Manufacturing costs
Add: Beginning work in process
Incoming inventory
Less: Ending work in process
Scrapping work in process
Cost of finished goods
Add: Beginning finished goods
Acquisition of finished goods
Less: Ending finished goods
Cost of goods manufactured
Add: Cost of sales of materials
Loss on scrapping inventory
Less: Gain on reversal of decline in inventory valuation
Gain on physical inventory
Operating costs Amount
$ 2,265,970
91,644,745
( 2,717,580)
6,539
( 22,866)
( 1,170,323)
90,006,485
13,076,118
144,375,583
247,458,186
11,141,154
20,749,824
( 11,967,334)
( 41,566)
267,340,264
7,655,279
2,873,184
( 12,672,229)
265,196,498
1,170,323
64,432
( 188,596)
( 6,593)
$ 266,236,118

Summary 7, Page 1

INNOLUX CORPORATION SUMMARY OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 8

Items Processing fee Depreciation and amortization Wages and salaries Utilities expense Repairs and maintenance expense Other expenses	Amount `$ 76,857,178` `26,722,195` `12,743,035` `11,379,102` `8,671,581` `8,002,492` `$ 144,375,583`	Remark
		Balance of individual accounts is under 5% of this account’s balance.

(Remainder of page intentionally left blank)

Summary 8, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 9

Items Wages and salaries Depreciation expenses Royalty expenses Indirect materials Other expenses	Selling expenses `$ 305,772` `-` `-` `6,067` `668,655` `$ 980,494`	General and administrative expenses `$ 1,510,232` `294,536` `-` `-` `1,830,761` `$ 3,635,529`	Research and development expenses `$ 4,774,965` `2,058,523` `2,446,294` `1,132,153` `1,790,083` `$ 12,202,018`	Total `$ 6,590,969` `2,353,059` `2,446,294` `1,138,220` `4,289,499` `$ 16,818,041`	Remark
					Balance of individual accounts is under 5% of this account’s balance.

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Summary 9, Page 1

INNOLUX CORPORATION

SUMMARY OF EMPLOYEE BENEFITS EXPENSES, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 10

	Year ended December 31,2017	Year ended December 31,2017		Year ended December 31,2016	Year ended December 31,2016
Classified as Operating Costs `$ 23,293,527` `1,577,407` `742,204` `1,109,457` `$ 26,722,595` `$ 25,914,665` `$ 807,530`	Classified as Operating Expenses `$ 6,590,969` `429,454` `248,804` `306,833` `$ 7,576,060` `$ 2,353,059` `$ 117,791`	Classified as Non-operating Expenses `$-` `-` `-` `-` `$-` `$ 476,351` `$-`	Classified as Operating Costs `$ 17,617,750` `1,501,065` `733,882` `1,159,679` `$ 21,012,376` `$ 33,615,436` `$ 997,181`	Classified as Operating Expenses `$ 5,489,814` `423,482` `257,512` `285,439` `$ 6,456,247` `$ 2,263,664` `$ 168,397`	Classified as Non-operating Expenses `$-` `-` `-` `-` `$-` `$ 561,054` `$-`	Total
						`$ 23,107,564` `1,924,547` `991,394` `1,445,118`
						`$ 27,468,623`
						`$ 36,440,154`
						`$ 1,165,578`

Note ： As of December 31, 2017 and 2016, the Company had 32,586 and 34,435 employees, respectively.

Summary 10, Page 1

AI assistant

INX — Audit Report / Information 2017

52330_rns_2017-12-08_e58a759d-0861-4787-9431-1882525b7fd5.pdf

INNOLUX CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

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

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2017 AND 2016

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

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

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

1. HISTORY AND ORGANIZATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(3) IFRSs issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(4) Classification of current and non-current items

(5) Cash equivalents

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

(7) Available-for-sale financial assets

(8) Loans and receivables

(9) Impairment of financial assets

(10) Derecognition of financial assets

(11) Operating leases (lessor)

(13) Investments accounted for under the equity method / subsidiaries / associates

(14) Property, plant and equipment

(15) Investment property

(16) Intangible assets

(18) Borrowings

(19) Notes and accounts payable

(20) Financial liabilities at fair value through profit or loss

(25) Revenue recognition

(26) Business combinations

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

(3) Available-for-sale financial assets

(5) Transfer of financial assets

(6) Inventories

(7) Investments accounted for under the equity method

A. The Company’s subsidiaries

(8) Property, plant and equipment

(9) Investment property

(10) Intangible assets

- (13) Long term borrowings

(15) Share-based payment

(16) Provisions-current

A. Warranty

(17) Share capital

(19) Retained earnings

(20) Other equity items

(21) Other income

(22) Other gains and losses

(23) Finance costs

(24) Expenses by nature

(26) Income tax

INX Audit Report / Information 2017

`－` (1) Contingencies Significant Litigations