INX — Audit Report / Information 2018

Dec 27, 2018

INNOLUX CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS

DECEMBER 31, 2018 AND 2017

-----------------------------------------------------------------------------------------------------------------------------------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 Corporation:

Opinion

We have audited the accompanying parent company only balance sheets of Innolux Corporation (the “Company”) as at December 31, 2018 and 2017, 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, 2018 and 2017, 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.

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The key audit matters in relation to the financial statements for the year ended December 31, 2018 are outlined as follows:

Inventory valuation

Description

The industry is characterised 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.

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 Notes 6(8) and 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 utilised, 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.

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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.

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.

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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.

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.

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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 14, 2019

------------------------------------------------------------------------------------------------------------------------------------------------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.

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INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 7 7 6(6) 6(2) 6(3) 12(4) 6(7) 6(8), 7 and 8 6(9) 6(10) and 8 6(25) 6(8) and 8	December 31, 2018 $ 23,269,922 160,172 49,779,150 39,176,537 8,447,974 595,079 393,518 26,805,645 706,270 2,426 149,336,693 1,198,417 1,111,388 - 83,002,481 176,216,141 551,970 17,599,664 7,166,754 2,074,099 288,920,914 $ 438,257,607	December 31, 2017
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - 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 1510 Financial assets at fair value through profit or loss - non- current 1517 Financial assets at fair value through other comprehensive income - non-current 1523 Available-for-sale financial assets - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			$ 53,532,826 106,634 - 39,078,322 9,483,133 636,591 28,791 25,381,254 1,050,467 887
			129,298,905
			- - 1,308,207 81,614,542 191,778,224 562,697 17,681,078 6,227,042 1,460,605
			300,632,395
			$ 429,931,300

(Continued)

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INNOLUX CORPORATION

	INNOLUX	INNOLUX	CORPORATION	CORPORATION	CORPORATION
	PARENT COMPANY		ONLY BALANCE SHEETS
		DECEMBER	31,	2018 AND 2017
		(Expressed in thousands		of New Taiwan dollars)
	Liabilities and Equity	Notes		December	31, 2018		December 31, 2017
	Current liabilities
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current			$	19,899	$	52,500
2170	Accounts payable				26,777,128		29,023,773
2180	Accounts payable - related parties	7			62,465,508		44,859,800
2200	Other payables	6(11) and 7			28,693,227		55,797,132
2230	Current income tax liabilities	6(25)			2,634,659		-
2250	Provisions - current	6(14) and 9			6,782,914		5,460,862
2320	Long-term liabilities, current	6(12)
	portion				16,194,486		10,951,114
2399	Other current liabilities				3,183,671		955,648
21XX	Total current liabilities				146,751,492		147,100,829
	Non-current liabilities
2540	Long-term borrowings	6(12)			35,142,090		17,287,788
2570	Deferred income tax liabilities	6(25)			880,013		734,423
2670	Other non-current liabilities	6(13)			493,307		483,212
25XX	Total non-current liabilities				36,515,410		18,505,423
2XXX	Total liabilities				183,266,902		165,606,252
	Equity
3110	Share capital - common stock	6(15)			99,520,720		99,520,720
3200	Capital surplus	6(16)			99,648,115		99,646,919
	Retained earnings	6(17)
3310	Legal reserve				7,648,437		3,945,576
3320	Special reserve				1,090,721		3,418,804
3350	Unappropriated retained earnings				51,746,175		58,883,750
3400	Other equity interest	6(18)	(		4,663,463) (		1,090,721)
3XXX	Total equity				254,990,705		264,325,048
3X2X	Total liabilities and equity			$	438,257,607	$	429,931,300

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

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INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

Items

Notes 2018 2017 6(19) and 7 $ 278,407,555 $ 323,687,952 6(6)(23) and 7 ( 260,401,853) ( 266,236,118) 18,005,702 57,451,834 6(23) and 7 ( 1,654,671) ( 980,494) ( 4,700,630) ( 3,635,529) ( 11,294,086) ( 12,202,018) ( 17,649,387) ( 16,818,041) 356,315 40,633,793 6(20) 2,232,724 2,410,518 6(21) ( 752,123) ( 1,236,027) 6(22) ( 565,881) ( 730,497) 2,957,675 3,997,806 3,872,395 4,441,800 4,228,710 45,075,593 6(25) ( 2,005,948) ( 8,046,984) $ 2,222,762 $ 37,028,609 6(13) ( $ 29,878) ( $ 49,571) 6(18) ( 229,701) - 6(18) ( 2,599,115) - 6(25) 5,976 8,427 ( 2,852,718) ( 41,144) 6(18) ( 828,563) ( 1,643,264) 6(18) - 2,855,347 6(18) 84,637 1,433,110 6(25) - ( 317,110) ( 743,926) 2,328,083 ( $ 3,596,644) $ 2,286,939 ( $ 1,373,882) $ 39,315,548 6(26) $ 0.22 $ 3.72 $ 0.22 $ 3.63

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 that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8316 Unrealized losses on financial assets at fair value through other comprehensive income 8330 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for under equity method 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive (loss) income 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 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 (loss) income that will be reclassified to profit or loss 8300 Other comprehensive (loss) income for the year, net of tax 8500 Total comprehensive (loss) income 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.

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INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

2017 Balance at January 1 Profit for the year Other comprehensive income for the year Total comprehensive income Appropriation of 2016 earnings: 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 Balance at December 31 2018 Balance at January 1 Effect of modified retrospective approach under IFRS 9 Balance at January 1 after adjustments Profit for the year Other comprehensive loss for the year Total comprehensive income Appropriation of 2017 earnings: Legal reserve Special reserve Cash dividends Recognition of change in equity of associates in proportion to the Company's ownership Balance at December 31	Notes		Common stock		Capital surplus				Retained Earnings	Retained Earnings			Other Equity Interest				Total
							Legal reserve		Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations	Total Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income		Unrealized gain (loss) on available-for-sale financial assets
	6(18) 6(17) 6(16) 6(18) 6(18) 6(17) 6(16)	$ 99,521,488 - - - - - - ( 768 ) - $ 99,520,720 $ 99,520,720 - 99,520,720 - - - - - - - $ 99,520,720		$ 99,647,810 - - - - - - 768 ( 1,659 ) $ 99,646,919 $ 99,646,919 - 99,646,919 - - - - - - 1,196 $ 99,648,115			$ 3,758,507 - - - 187,069 - - - - $ 3,945,576 $ 3,945,576 - 3,945,576 - - - 3,702,861 - - - $ 7,648,437	$ - - - - - 3,418,804 - - - $ 3,418,804 $ 3,418,804 - 3,418,804 - - - - ( 2,328,083 ) - - $ 1,090,721		$ 26,497,362 37,028,609 ( 41,144 ) 36,987,465 ( 187,069 ) ( 3,418,804 ) ( 995,204 ) - - $ 58,883,750 $ 58,883,750 - 58,883,750 2,222,762 ( 23,902 ) 2,198,860 ( 3,702,861 ) 2,328,083 ( 7,961,657 ) - $ 51,746,175		($ 4,040,408 ) - ( 1,676,815 ) ( 1,676,815 ) - - - - - ($ 5,717,223 ) ($ 5,717,223 ) - ( 5,717,223 ) - ( 743,926 ) ( 743,926 ) - - - - ($ 6,461,149 )	$ - - - - - - - - - $ - $ - 4,626,502 4,626,502 - ( 2,828,816 ) ( 2,828,816 ) - - - - $ 1,797,686	$ 621,604 - 4,004,898 4,004,898 - - - - - $ 4,626,502 $ 4,626,502 ( 4,626,502 ) - - - - - - - - $ -		$ 226,006,363 37,028,609 2,286,939 39,315,548 - - ( 995,204 ) - ( 1,659 ) $ 264,325,048 $ 264,325,048 - 264,325,048 2,222,762 ( 3,596,644 ) ( 1,373,882 ) - - ( 7,961,657 ) 1,196 $ 254,990,705

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

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INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation and amortization Net loss on financial assets or liabilities at fair value through profit or loss Expected credit loss Share of profit of subsidiaries and associates accounted for under equity method Loss on disposal of investments Loss on disposal of property, plant and equipment Impairment loss Interest income Dividend income Interest expense Unrealized foreign exchange loss (gain) Changes in operating assets and liabilities Changes in operating assets Financial assets /liabilities at fair value through profit or loss - current 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 2018 2017 $ 4,228,710 $ 45,075,593 6(23) 31,969,539 29,669,396 109,790 - 100,000 - ( 2,957,675 ) ( 3,997,806 ) 6(21) 10,533 - 6(21) 18,641 32,859 6(21) - 3,049,547 6(20) ( 775,096 ) ( 301,764 ) 6(20) ( 5,838 ) ( 22,678 ) 6(22) 565,881 730,497 149,778 ( 4,725 ) ( 86,139 ) ( 724,808 ) 2,128,692 11,615,189 1,038,736 715,881 124,760 554,181 ( 1,424,391 ) ( 6,483,338 ) 344,197 ( 171,957 ) ( 1,539 ) 34,910 ( 2,246,645 ) ( 226,252 ) 17,605,708 ( 5,460,614 ) ( 1,751,921 ) 6,665,654 1,322,052 1,695,628 ( 301,082 ) ( 169,330 ) ( 83,503 ) 28,840 50,083,188 82,304,903 ( 159,435 ) ( 536,988 ) 49,923,753 81,767,915

(Continued)

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INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

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

Notes 2018 2017 ($ 364,727 ) $ 3,625 ( 1,341,089 ) - ( 49,945,950 ) - - 145,575 ( 2,188,258 ) - 96,421 1,790,881 ( 350,449 ) 30 6(27) ( 41,713,067 ) ( 22,321,235 ) 34,691 293,308 6(10) ( 28,240 ) ( 106,781 ) ( 177 ) ( 319 ) 692,581 295,245 315,020 339,710 ( 94,793,244 ) ( 19,559,961 ) - ( 11,579,025 ) 34,000,000 - ( 10,960,000 ) ( 16,440,000 ) 6(17) ( 7,961,657 ) ( 995,204 ) ( 471,756 ) ( 588,508 ) 14,606,587 ( 29,602,737 ) ( 30,262,904 ) 32,605,217 53,532,826 20,927,609 $ 23,269,922 $ 53,532,826

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

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INNOLUX CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(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 14, 2019.

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 2018 are as follows:

New Standards,Interpretations andAmendments

Effective Date by International Accounting StandardsBoard

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 unrealized 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’

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

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New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
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, 2017 January 1, 2018

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. A. IFRS 9, ‘Financial instruments’

• (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 assets at fair value through profit or loss, financial assets measured at fair value through other comprehensive income or financial assets measured at amortized cost. Equity instruments would be classified as financial assets 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.

• (d) The Company has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. The significant effect of applying the new standards as of January 1, 2018 are summarized as below:

• In accordance with IFRS 9, the Company reclassified 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 was no effect on retained earnings and other equity interest.

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• B. IFRS 15, ‘Revenue from contracts with customers’ and amendments

• (a) 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.

  • 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.

• (b) The Company has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 15. The significant effects of applying the new standards as of January 1, 2018 are summarized as below:

  • Presentation of assets and liabilities in relation to contracts with customers

  • In line with IFRS 15 requirements, the Company changed 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 refund liabilities, but were previously presented as accounts receivableallowance for sales returns and discounts in the balance sheet. As of January 1, 2018, the balance amounted to $2,330,484.

• C. 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.

(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 endorsed by the FSC effective from 2019 are as follows:

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New Standards,Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ 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 January 1, 2019 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 Company’s assessment. 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. The Company expects to recognize the lease contract of lessees in line with IFRS 16. However, the Company intends not to restate the financial statements of prior period (collectively referred herein as the “ modified retrospective approach ” ). On January 1, 2019, it is expected that right-of-use asset and lease liability will be increased by $6,140,546 and $6,140,546, and retained earnings stay the same.

(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:

endorsed by the FSC are as follows:
New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

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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.

  • (b) Financial assets at fair value through other comprehensive income/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.

• C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply modified retrospective approach. There was no cumulative impact of the adoption on retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 was not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.

(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.

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• 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;

  • 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.

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(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.

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.

• 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. At initial recognition, the Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

• D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

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

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income.

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• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value:

• The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (8) Financial assets at amortized cost

• A. Financial assets at amortized cost are those that meet all of the following criteria:

• (a) The objective of the Company’s business model is achieved by collecting contractual cash flows.

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

• D. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• (9) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• C. The Company’s operating pattern of accounts receivable that are expected to be factored is for the purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently measured at fair value, with any changes in fair value recognized in other comprehensive income.

• (10) Impairment of financial assets

• For accounts receivable that have a significant financing component, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs.

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(11) 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.

(12) 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.

• (13) 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 progress comprises raw materials, direct labour, 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.

• (14) 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 unrealized 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

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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.

• 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.

• (15) 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

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Machinery and equipment 5~9 years

Other equipment 2~6 years

(16) 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.

(17) 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.

(18) 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.

(19) Borrowings

• A. Borrowings comprise long-term and short-term bank borrowings. 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. In this case, the

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fee is deferred until the draw-down occurs. 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 prepayment for liquidity services and amortized over the period of the facility to which it relates.

• (20) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (21) Financial liabilities at fair value through profit or loss

• A. 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. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

• C. If the credit risk results in fair value changes in financial liabilities designated as at fair value through profit or loss, they are recognized in other comprehensive income in the circumstances other than avoiding accounting mismatch or recognizing in profit or loss for loan commitments or financial guarantee contracts.

• (22) 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.

• (23) 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.

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

• (24) Employee share based payment 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”.

• (25) 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 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 tax is

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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 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.

• (26) Revenue recognition

• A. The Company is primarily engaged in manufacture and sale of TFT-LCD panel products. The Company recognizes revenue when the right of control is transferred to the customer when the products are delivered to customer and the Company has no unperformed obligation that could affect customer acceptance of the product. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• B. Sales revenue is calculated based on the contract price, net of volume discounts and sales returns and discounts. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts/ sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts, sales discounts and allowances, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognized for expected volume discounts, sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made, which is consistent with market practice.

• C. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

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1. 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 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 utilized 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.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand, demand deposits and checking accounts Time deposits	December31,2018 9,219,672 $ 14,050,250 23,269,922 $	December31,2017
		35,676,826 $ 17,856,000
		53,532,826 $

• 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.

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

Financial assets and liabilities at fair value through profit or loss
Assets Current items Financial assets mandatorily measured at fair value through profit or loss Forward foreign exchange contracts Non-current items Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts Forward exchange swap contracts	December31,2018
	160,172 $
	1,104,136 $ 94,281
	1,198,417 $
	$ 12,764 7,135
	$ 19,899

• A. The non-hedging derivative financial assets and liabilities transaction information are as follows:

			December31,2018	December31,2018
	Contract Amount
	(Notional Principal)
Derivative financial assets and liabilities	(in	thousands)		ContractPeriod
Current items
Forward foreign exchange contracts	USD (sell)	$	398,000	2018/10~2019/3
	JPY (buy)		44,416,685	2018/10~2019/3
Forward foreign exchange contracts	EUR (sell)		35,000	2018/11~2019/2
	HKD (buy)		312,329	2018/11~2019/2
Forward foreign exchange contracts	EUR (sell)		10,000	2018/11~2019/2
	JPY (buy)		1,288,425	2018/11~2019/2
Forward foreign swap contracts	USD (sell)		225,000	2018/12~2019/1
	TWD (buy)		6,905,790	2018/12~2019/1

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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.

• B. Information on financial assets and liabilities at fair value through profit or loss as of December 31, 2017 is provided in Note 12(4).

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

December 31, 2018

Non-current items

Equity instruments Unlisted stocks $ 1,111,388

• A. The Company has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income.

• B. For information about that the Company recognized other comprehensive income for fair value change for the year ended December 31, 2018, Please refer to Note 6(18) “Other equity”.

• C. Information on available-for-sale financial assets as of December 31, 2017 is provided in Note 12(4).

(4) Financial assets at amortized cost

December 31, 2018

Current items

Time deposits with maturity over three months $ 49,779,150

The Company recognized $ 198,475 of interest income arising from the financial assets at amortized cost for the year ended December 31, 2018.

(5) Notes receivable and accounts receivable

cost for the year ended December 31, 2018. Notes receivable and accounts receivable
		December31,2018		December31,2017
Accounts receivable	$		39,385,910	$	41,514,602
Less: Allowance for sales returns and discounts			-	(	2,326,907)
Allowance for uncollectible accounts	(		209,373)	(	109,373)
	$		39,176,537	$	39,078,322
A. The aging analysis of accounts receivable and	notes receivable is as follows:
	December31,2018			December31,2017
Not past due			38,424,398		38,055,483
Up to 60 days			908,075		3,279,209
61 to 180 days			51,005		178,662
Over 181 days			2,432		1,248
	$		39,385,910	$	41,514,602

The above aging analysis was based on past due date.

• B. Information relating to credit risk of accounts receivable is provided in Note 12(2).

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(6) Inventories

Inventories
Raw materials and supplies Work in progress Finished goods	December31,2018 3,340,352 $ 13,624,800 9,840,493 26,805,645 $	December31,2017
		2,538,870 $ 11,006,624 11,835,760 25,381,254 $

For the years ended December 31, 2018 and 2017, the Company recognized cost of goods sold for inventories that have been sold at $260,305,200 and $266,366,821 and recognized net inventory loss (gain) at $96,653 and ($130,703) due to write down (reversal) of cost of scrap inventories to net realizable value, respectively.

(7) Investments accounted for under the equity method

realizable value, respectively. 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. Leadtek Global Group Limited InnoJoy Investment Corporation Yuan Chi Investment Co., Ltd. Innolux Singapore Holding Pte. Ltd. Others Associates: Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. Others	December31,2018 44,597,800 $ 17,885,878 6,506,291 5,641,266 2,004,888 1,535,750 1,303,578 874,787 740,729 109,365 956,577 655,827 189,745 83,002,481 $	December31,2017
		44,160,820 $ 20,423,738 6,476,884 3,797,279 1,496,157 999,166 1,381,380 843,311 - 545,511 853,016 525,926 111,354 81,614,542 $

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, 2018.

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 in summarized below:	all individually immaterial associates are	all individually immaterial associates are
Profit for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	Years ended December31,
	2018 446,169 $ 82,523 ( 528,692 $	2017
		361,688 $ 31,085) 330,603 $

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(8) Property, plant and equipment

Property, plant and equipment	ent
AtJanuary1 Additions Disposals Transfer At December31 Cost: Land 3,852,792 $ - $ - $ - $ 3,852,792 $ Buildings 171,007,237 339,202 7,671) ( 3,145,196 174,483,964 Machinery and equipment 450,919,643 1,497,909 2,570,973) ( 13,289,607 463,136,186 Other equipment 33,667,082 9,745 1,759,594) ( 4,797,694 36,714,927 659,446,754 1,846,856 4,338,238) ( 21,232,497 678,187,869 Accumulated depreciation and impairment: Buildings 101,952,303) ( 7,587,008) ( 7,229 195,450) ( 109,727,532) ( Machinery and equipment 352,625,651) ( 20,209,374) ( 2,518,922 1,034,592) ( 371,350,695) ( Other equipment 28,402,910) ( 3,863,463) ( 1,758,756 899,083) ( 31,406,700) ( 482,980,864) ( 31,659,845) ( 4,284,907 2,129,125) ( 512,484,927) ( Unfinished construction and equipment under acceptance 15,312,334 14,676,410 - 19,475,545) ( 10,513,199 191,778,224 $ 176,216,141 $ 2018 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 $ 2017			2018
					At December31

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

the interest rates for such capitalization are as follows:
Capitalised amount Range of the interest rates for capitalisation	Years ended December31,2017
	203,902 $ 2.15%~2.41%

• B. For the year ended December 31, 2018, the Company has no amount of borrowing costs capitalized.

• C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

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• D. As of December 31, 2018 and 2017, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $1,559,446 and $1,376,587, respectively.

• E. Information on impairment assessments is provided in Note 6 (10).

(9) Investment property

nvestment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings ( Cost: Land Buildings Accumulated depreciation and impairment: Buildings (			2018	At December31 188,247 $ 439,228 627,475 75,505) 551,970 $ At December31 188,247 $ 439,228 627,475 64,778) 562,697 $
	AtJanuary1 188,247 $ 439,228 627,475 64,778) 562,697 $		Additions - $ - - 10,727) ( 2017
		(
	AtJanuary1 188,247 $ 439,228 627,475 54,050) 573,425 $		Additions - $ - - 10,728) (
		(

The fair value of the investment property held by the Company as at December 31, 2018 and 2017 was $1,660,504 and $1,423,964, 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 amortization and impairment: Patents and royalty Others				2018
	AtJanuary1 Additions 8,154,685 $ - $ 17,096,628 - 4,279,750 28,240 ( 29,531,063 28,240 ( 8,143,080) ( 4,285) ( 3,706,905) ( 294,682) ( 11,849,985) ( 298,967) ( 17,681,078 $			Disposals - $ - 18,852) 18,852) - 18,852 18,852	Transfer At December31 - $ 8,154,685 $ - 17,096,628 182,810 4,471,948 182,810 29,723,261 - 8,147,365) ( 6,503 3,976,232) ( 6,503 12,123,597) ( 17,599,664 $

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Cost: Patents and royalty Goodwill Others Accumulated amortization 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	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

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

Operating costs Operating expenses	Years ended December31,	Years ended December31,
	2018 176,122 $ 122,845 298,967 $	2017
		807,530 $ 117,791
		925,321 $

• 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 9.08% for the year ended December 31, 2018, 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 year ended December 31, 2018.

• (11) Other payables

year ended December 31, 2018. Other payables
Other personnel expenses Payable on machinery and equipment Repairs and maintenance expense payable Processing fee payable Utilities expense payable Other payables	December31,2018 8,996,357 6,897,044 $ 2,230,301 1,763,585 1,040,452 7,765,488 28,693,227 $	December31,2017
		11,217,517 32,086,845 $ 2,274,668 1,498,772 1,018,773 7,700,557 55,797,132 $

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- (12) 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 December31,2018 December31,2017 2015/3/12 ~2021/12/6 51,440,000 $ 28,400,000 $ 103,424) ( 161,098) ( 16,194,486) ( 10,951,114) ( 35,142,090 $ 17,287,788 $ 1.74%~1.96% 1.75%~2.06%

Range of interest rates

• 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 consolidated financial statements audited by independent auditors. The Company’s financial ratios on the consolidated financial statements for the years ended December 31, 2018 and 2017 are in compliance with the covenants on the syndicated loan agreement.

• D. For repayment of borrowings from financial institutions and financing mid-term working capital fund, the Board of Directors approved the signing of a syndicated loan with financial institution in the amount of NT$43.75 billion on June 20, 2018.

• (13) 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 6 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

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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	December31,2018 2,000,113 $ 1,686,545) ( 313,568 $	December31,2017 1,902,852 $ 1,548,769) 354,083 $

• (c) Movements in net defined benefit liabilities are as follows:

Year ended December 31, 2018 Balance at January 1 Current service cost Interest expense/income Remeasurements: Experience adjustments Benefits paid ( Contribution for the year Balance at December 31 Year ended December 31, 2017 Balance at January 1 Current service cost Interest expense/income Remeasurements: Experience adjustments Benefits paid ( Balance at December 31	Present value of defined benefit Fair value of obligation planassets 1,902,852 $ 1,548,769 $ 5,749 - 28,468 23,157 34,217 23,157 69,773 39,895 6,729) 6,729) ( 63,044 33,166 - 81,453 ( 2,000,113 $ 1,686,545 $ Present value of defined benefit Fair value of obligation planassets 1,827,687 $ 1,534,864 $ 6,711 - 31,071 26,093 37,782 26,093 49,488 83) ( 12,105) 12,105) ( 37,383 12,188) ( 1,902,852 $ 1,548,769 $	Net defined benefitliability
		354,083 $ 5,749 5,311 11,060 29,878 - 29,878 81,453) 313,568 $ Net defined benefitliability 292,823 $ 6,711 4,978 11,689 49,571 - 49,571 354,083 $

(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 utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private

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placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization 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, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

Discount rate Future salary increases	Years endedDecember31,	Years endedDecember31,
	2018 1.25% 1.50%	2017
		1.50%
		1.50%

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:

December 31, 2018 Effect on present value of defined benefit obligation December 31, 2017 Effect on present value of defined benefit obligation	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%
	(	74,882) $		78,699 $		78,501 $	(	75,063) $

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) As of December 31, 2018, the weighted average duration of that retirement plan is 15 years.

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• 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, 2018 and 2017 were $965,174 and $979,319, respectively.

• (14) Provisions-current

At January 1, 2018 Additions during the year Used during the year ( At December 31, 2018	Warranty 2,691,162 $ 2,156,000 1,073,948) 3,773,214 $	Litigation and others 2,769,700 $ 240,000 - ( 3,009,700 $	Total 5,460,862 $ 2,396,000 1,073,948) 6,782,914 $

• 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).

• (15) Share capital

As of December 31, 2018, 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.

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	2018 Number of ordinary shares (inthousands) 9,952,072 - ( 9,952,072	2017 Number of ordinary shares (inthousands) 9,952,149 77) 9,952,072

• A. The Board of Directors of the Company resolved to increase capital for cash by issuing the GDR which 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

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the Board of Directors on July 26, 2017. As of December 31, 2018, the Company has no unit of GDR outstanding.

• 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 (in dollars) 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. For the years ended December 31, 2018 and 2017, the Company has retired 0 and 77 thousand shares of unvested restricted stocks to employees, respectively, and decreased capital in accordance with related regulation.

• (16) 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.

reserve can be used to cover the	accumulated deficit.
At January 1 Recognition of change in equity of associates in proportion to the Company's ownership At December 31		2018
	Sharepremium 99,614,690 $ - 99,614,690 $	Share of profit (loss) of associates accounted for under equitymethod 32,229 $ 1,196 33,425 $ 2017	Total
			99,646,919 $ 1,196 99,648,115 $

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	Sharepremium 99,614,516 $ - 174 - 99,614,690 $	Share of profit (loss) of associates Restricted accounted for stock to under equitymethod employees 33,888 $ 594) ($ - 768 - 174) ( 1,659) ( - 32,229 $ - $	Total
			99,647,810 $ 768 - 1,659) ( 99,646,919 $

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(17) 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 2017 and 2016 net income which was approved at the stockholders’ meeting in June 2018 and 2017, respectively, are as follows:

Years ended December 31,

Dividends per Amount share(in dollars) Legal reserve 3,702,861 $ (Reversal) Provision of special reserve 2,328,083) ( Cash dividends 7,961,657 0.80 $ 9,336,435 $ 2017	2016	2016
	Amount 187,069 $ 3,418,804 995,204 4,601,077 $	Dividends per share(in dollars)
		0.10 $

• D. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(24).

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(18) Other equity items

(18) Other equity items	(18) Other equity items	(18) Other equity items
(19) Operating income Financial assets at fair value Available- through other Currency for-sale comprehensive translation investments income Total At January 1 5,717,223) ($ 4,626,502 $ - $ 1,090,721) ($ Effect of modified retrospective approach under IFRS 9 - 4,626,502) ( 4,626,502 - Balance after retropective adjustment 5,717,223) ( - 4,626,502 1,090,721) ( Revaluation - gross - - 229,701) ( 229,701) ( Currency translation differences 828,563) ( - - 828,563) ( Share of other comprehensive loss of subsidiaries and associates 84,637 - 2,599,115) ( 2,514,478) ( At December 31 6,461,149) ($ - $ 1,797,686 $ 4,663,463) ($ 2018 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 2018 2017 TFT-LCD products 278,407,555 $ 323,687,952 $ Years ended December31,
	2018 278,407,555 $	2017
		323,687,952 $

The Company derives revenue from the transfer of goods at a point in time.

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(20) Other income

Other income
Interest income Interest income from bank deposits Interest income from financial assets at amortized cost Rental revenue Dividend income Service income Other income	Years endedDecember31,
	2018 576,621 $ 198,475 775,096 151,140 5,838 281,066 1,019,584 2,232,724 $	2017
		301,764 $ - 301,764 124,405 22,678 635,100 1,326,571 2,410,518 $

(21) Other gains and losses

Other gains and losses Dividend income Service income Other income	$	5,838 281,066 1,019,584 2,232,724	22,678 635,100 1,326,571 2,410,518 $	22,678 635,100 1,326,571 2,410,518 $
		Years ended	December31,
		2018		2017
Net (loss) gain on financial assets and liabilities at
fair value through profit or loss	($	652,845)	$	86,192
Net currency exchange loss	(	81,620)	(	1,019,872)
Loss on disposal of property, plant and equipment	(	18,641)	(	32,859)
Loss on disposal of investments	(	10,533)		-
Impairment loss		-	(	3,049,547)
Net disaster gain		-		2,051,579
Others		11,516		728,480
	($	752,123)	($	1,236,027)

(22) Finance costs

Finance costs
Interest expense: Bank borrowings Others	Years ended December31,
	2018 564,740 $ 1,141 565,881 $	2017
		730,468 $ 29 730,497 $

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(23) Expenses by nature

Expenses by nature
Employee benefit expense: Salaries and other short-term employee benefits Post-employment benefits Depreciation Amortization	Years endedDecember31,
	2018 26,364,308 $ 976,234 31,670,572 298,967 59,310,081 $	2017
		33,307,647 $ 991,008 28,744,075 925,321
		63,968,051 $

(24) 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, 2018 and 2017, employees’ compensation was accrued at $294,289 and $3,136,952, respectively; while directors’ remuneration was accrued at $4,528 and $48,261, respectively. The aforementioned amounts were recognized in expenses.

• The expenses recognized for 2018 were accrued based on the earnings of current year. The employees’ compensation and directors’ remuneration were $294,289 and $4,528 in the form of cash, respectively, as resolved by the Board of Directors on February 14, 2019. The accrued amounts were in agreement with the amount of recorded expense for the year ended December 31, 2018.

• The employees’ compensation and directors’ remuneration for the year ended December 31, 2017 were $3,136,952 and $48,261, respectively, and were estimated based on the profit of current year. The employees’ compensation will be distributed in the form of cash. The Board of Directors resolved to distribute employees’ compensation and directors’ remuneration in the amount of $3,136,952 and $48,261, respectively, in the form of cash. The actual distributed amount were in consistent with the amounts recognized 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.

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(25) Income tax

A. Income tax expense

(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
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 Impact of change in tax rate Income tax expense	2018 2017 89,783 $ - $ 2,704,311 - - 40,266) ( 2,794,094 40,266) ( 181,140 8,087,250 969,286) ( - 2,005,948 $ 8,046,984 $ Years endedDecember31,
	2018 89,783 $ 2,704,311 - 2,794,094 181,140 969,286) ( 2,005,948 $

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

follows:
Fair value of available-for-sale financial assets Remeasurement of defined benefit obligation ( (	2018 2017 - $ 317,110 $ 5,976) 8,427) ( 5,976) $ 308,683 $ Years ended December31,
	2018 - $ 5,976) ( 5,976) $

B. Reconciliation between income tax expense and accounting profit:

		Years ended	December31,	December31,
		2018		2017
Tax calculated based on profit before tax and
statutory tax rate	$	845,742	$	7,662,851
Effects from items disallowed by tax regulation	(	439,559)	(	500,004)
Prior year income tax (overestimation)
underestimation		-	(	40,266)
Impact of change in tax rate	(	969,286)		-
Additional 10% tax on undistributed earnings		2,704,311		-
Separate taxation		89,783		-
Change in assessment of realization of deferred
tax assets	(	225,043)		924,403
Tax expense	$	2,005,948	$	8,046,984

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

carryforward are as follows:
				2018
						Recognized
						in other
				Recognized in		comprehensive
		January1		profit or loss		income			December31
Temporary differences:
-Deferred tax assets:
Sales returns and discount provisions	$	429,340	$	46,385	$	-		$	475,725
Accrued royalties and
warranty provisions		1,095,009		444,298		-			1,539,307
Unrealized exchange loss		-		162,222		-			162,222
Unrealized loss on
financial instruments		430,539		80,707		-			511,246
Loss carryforward		3,634,812		138,818		-			3,773,630
Others		637,342		61,306		5,976			704,624
	$	6,227,042	$	933,736	$	5,976		$	7,166,754
-Deferred tax liabilities:
Unrealized exchange (gain) loss	($	41,713)	$	41,713	$	-		$	-
Amortization charges on goodwill	(	641,795)	(	210,163)		-	(		851,958)
Others	(	50,915)		22,860		-	(		28,055)
	($	734,423)	($	145,590)	$	-	($		880,013)
	$	5,492,619	$	788,146	$	5,976		$	6,286,741
				2017
						Recognized
						in other
				Recognized 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) loss	($	113,545)	$	71,832	$	-	($		41,713)
Amortization 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

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

are as follows:
		December31,2018
Year incurred 2011 2012 2016	Amount filed / assessed Assessed Assessed Assessed	Unused amount 23,793,756 $ 42,430,348 1,051,680 67,275,784 $ December31,2017	Unrecognized deferred taxassets 17,120,565 $ 30,530,343 756,727 48,407,635 $	Usable untilyear
				2021 2022 2026
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 $	Unrecognized deferred taxassets 18,427,518 $ 29,508,856 892,052 48,828,426 $	Usable untilyear
				2021 2022 2026

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

Deductible temporary differences

December31,2018 51,258,623 $	December31,2017
	51,793,034 $

• F. The Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2017, the amounts of temporary differences unrecognized as deferred tax liabilities were $30,554,931 and $31,293,045, respectively.

• G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

• H. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

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(26) Earnings per share

Earnings per share
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)	Years ended December31,
	2018 2,222,762 $ 9,952,072 0.22 $ 2,222,762 $ 9,952,072 65,645 - 10,017,717 0.22 $	2017
		37,028,609 $ 9,952,051 3.72 $ 37,028,609 $ 9,952,051 259,625 22 10,211,698 3.63 $

(27) Supplemental cash flow information

Investing activities with partial cash payments:

Supplemental cash flow information Investing activities with partial cash payments:
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	Years ended December31,
	2018 16,523,266 $ 32,086,845 6,897,044) ( 41,713,067 $	2017
		51,299,182 $ 3,108,898 32,086,845) 22,321,235 $

(28) Changes in liabilities from financing activities

For the year ended December 31, 2018, all changes in liabilities from financing activities are changes in cash flow from financing activities. Please refer to consolidated statements of cash flows.

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7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

Names of related parties Relationship with the Company Hon Hai Precision Industry Co., Ltd. and its subsidiaries Other related party Chi Lin Optoelectronics Co., Ltd. and its subsidiaries Other related party FI Medical Device Manufacturing Co., Ltd. Associate GIO Optoelectronics Corp. Associate Leadtek Global Group Limited The Company’s subsidiary Lakers Trading Ltd. The Company’s subsidiary Innolux Hong Kong Limited The Company’s subsidiary Foshan Innolux Optoelectronics Ltd. The Company’s subsidiary Fu Lian Net International (Hong Kong) Limited Other related party

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, 2018.

(2) Significant related party transactions

A. Operating revenue

gnificant related party transactions Operating revenue
Sales of goods: Other related parties Subsidiaries Associates	Years endedDecember31,
	2018 16,937,496 $ 16,678,133 23,687 33,639,316 $	2017
		34,304,366 $ 19,877,722 37,115
		54,219,203 $

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
Purchases of goods: Other related parties Associates Subsidiaries	Years endedDecember31,
	2018 1,058,325 $ 1,574,337 47,861 2,680,523 $	2017
		6,465,106 $ 1,337,016 101,332
		7,903,454 $

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	Years endedDecember31,
	2018 43,150,307 $ 41,963,501 85,113,808 $	2017
		33,657,805 $ 40,954,669
		74,612,474 $

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

Payables to related parties: Subsidiaries Other related parties	December31,2018 1,744,458 $ - 1,744,458 $	December31,2017
		1,476,966 $ 8 1,476,974 $

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”)
Service expense (Shown as“manufacturing costs and Service revenue: Subsidiaries - Foshan Innolux Optoelectronics Ltd. Associates	Years endedDecember31,
	operating expenses”) 2018 2017 226,349 $ 585,639 $ 54,717 49,461 281,066 $ 635,100 $ Years endedDecember31,	2017
Service expense: Subsidiaries
	2018 1,176,802 $	2017
		165,350 $

E. Service expense (Shown as “manufacturing costs and operating expenses”)

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F. Receivables from related parties:

Receivables from related parties:
		December31,2018			December31,2017
Accounts receivable:
Other related parties	$		4,570,504	$		8,128,274
Subsidiaries			4,199,450			1,343,412
Associates			47,881			25,552
			8,817,835			9,497,238
Less: Transfer to other receivables	(		369,861)	(		10,528)
Allowance for sales returns and discounts			-	(		3,577)
	$		8,447,974	$		9,483,133

• (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.

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

G. Other receivables from related parties

Other receivables from related parties
Payables to related parties: Other receivables: Accounts receivables transferred to other receivables Other related parties - Fu Lian Net International (Hong Kong) Limited - Others Subsidiaries Other receivables Other related parties Subsidiaries Associates Accounts payable: Subsidiaries - Leadtek Global Group Limited - Lakers Trading Ltd. - Innolux Hong Kong Limited - Others Other related parties Associates	December31,2018 369,837 $ 24 8,252 7,585 7,820 393,518 $ December31,2018 24,587,830 $ 26,199,180 10,521,167 4,128 885,099 268,104 62,465,508 $	December31,2017
		- $ 2,418 8,110 9,038 6,678 2,547 28,791 $ December31,2017
		21,080,569 $ 13,089,589 9,158,742 3,439 1,334,266 193,195 44,859,800 $

H. Payables to related parties:

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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.

I. Property transactions

Purchase of property

(a) Acquisition of property, plant and equipment:

		Years ended	December31,	December31,
		2018		2017
Subsidiaries	$	17,062	$	38,536
Other related parties
- Hon Hai Precision Industry Co., Ltd.		469		31,456,795
- Others		16,493		20,360
Associates		2,458		-
	$	36,482	$	31,515,691
Period-end balances arising from purchases of property		(shown as “Other payables”):
	December31,2018		December31,2017
Subsidiaries	$	10,811	$	28,246
Other related parties
- Hon Hai Precision Industry Co., Ltd.		2,225,585		26,609,511
- Others		378		113
	$	2,236,774	$	26,637,870

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

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits	Years ended December31,
	2018 252,050 $ 789 252,839 $	2017
		130,223 $ 432 130,655 $

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 - Refundable deposits	Book	December31,2017 Purpose 70,966,784 $ Long-term loans 7,446 Long-term loans 722 Guarantee for contract and performance bond - Guarantee for litigation 70,974,952 $ value	Purpose
	December31,2018 111,162,901 $ 1,122 - 368,194 111,532,217 $

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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.

The company’s subsidiary in U.S. received a civil complaint from the government of Puerto Rico in September 2018, claiming that the company, together with other defendants of Taiwan, Japan and South Korea panel factories, had unjustified enrichment from the TFT-LCD pricing collaborations in 2006 and requested monetary compensation. The U.S. subsidiary of the company has appointed a lawyer to handle the lawsuit.

• 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. 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. On March 5, 2018, the court made first instance judgement and the Company had appealled. 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. On July 10, 2018, Vista Peak Ventures, LLC filed four complaints against the Company in the United States District Court for the Eastern District of Texas, alleging the infringement of several of its patents. Currently no court date has been set. The Company has engaged outside legal counsels to handle this lawsuit. Since the final results of the litigation are dependent on future litigation progress and are uncertain, the Company does not expect that the lawsuit will have a material adverse effect on its financial position or results of operations in the short term.

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• D. 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:

Property, plant and equipment

December31,2018 22,970,896 $	December31,2017
	18,878,215 $

B. Operating lease commitments

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	December31,2018 562,476 $ 1,613,610 991,604 3,167,690 $	December31,2017
		549,625 $ 1,854,909 529,173
		2,933,707 $

• 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	December31,2018 445,458 $	December31,2017
		45,687 $

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 had 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.

(2) Financial instruments

A. Financial instruments by category

For information of the Company’s financial assets (financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, available-for-sale financial assets, financial assets at amortized cost, cash and cash equivalents, accounts receivable (including related parties) and other receivables) and financial liability (financial liabilities at fair value through profit or loss, accounts payable (including related parties), other payables and long-

~51~

term borrowings (including current portion)), please refer to Note 6 and parent company only balance sheets.

• 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’s 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 the transactions of the company used in various functional currency, 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 $79,359 and $131,606 for the years ended December 31, 2018 and 2017, 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:

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Foreign Currency Exchange Amount Rate Book Value (In Thousands) (Note) (NTD) Financial asstes Monetary items USD 3,062,192 $ 30.72 94,070,538 $ JPY 522,141 0.28 146,199 EUR 8,814 35.20 310,253 Non-monetary items USD 2,576,131 $ 30.72 79,138,744 $ HKD 180,600 3.92 707,952 JPY 13,237,769 0.28 3,706,575 Monetary items USD 2,457,126 $ 30.72 75,482,911 $ JPY 38,470,287 0.28 10,771,680 EUR 9,561 35.20 336,547 December31,2018 Financial liabilities	December31,2017	December31,2017
	Foreign Currency Exchange Amount Rate (In Thousands) (Note) 2,652,560 $ 29.76 291,999 0.26 52,375 35.57 2,595,104 $ 29.76 184,669 3.81 5,662,973 0.26 1,978,955 $ 29.76 33,272,514 0.26 4,889 35.57	Book Value (NTD)
		78,940,186 $ 75,920 1,862,979 77,230,295 $ 703,589 1,472,373 58,893,701 $ 8,650,854 173,902

• 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, 2018 and 2017 amounted to $81,620 and $1,019,872, respectively.

Price risk

• a) The Company is exposed to equity securities price risk because of investments held by the Company and classified on t the parent company only balance sheet as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits 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, post-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $239,683 and $0, respectively; other comprehensive gains and losses would have increased/decreased by $222,278 and $261,641, respectively.

Cash flow and fair value interest rate risk

• a) The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company’ to cash flow interest rate risk. During the years ended December 31, 2018 and 2017, 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) If the borrowing interest rate of NTD had increased/decreased by 0.25% with all other variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017 would have decreased/increased by $128,600 and $71,000, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

• (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. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows.

• b) 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. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the managements. The utilization of credit limits is regularly monitored.

• c) The Company adopts following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments are past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• d) The Company adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

• e) The Company classifies customer’s accounts receivable in accordance with credit rating of customer, credit risk on trade and customer types. The Company applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

• f) The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

  • (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

  • (ii) Default or delinquency in interest or principal repayments;

  • (iii) Adverse changes in national or regional economic conditions that are expected to cause a default.

• g) The Company uses the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable.

  • According to abovementioned consideration and information, the Company does not expect any significant default possibility of accounts receivable.

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• h) Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

allowance for accounts receivable are as follows:
At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision At December 31 At January 1 (As December 31)	2018
	Accountsreceivable
	109,373 $ -
	109,373 100,000
	209,373 $
	2017
	Accountsreceivable
	109,373 $

• i) The Company did not recognize significant impairment provision in accordance with 12 months expected credit losses, because the Company’s financial assets/loans to others and receivables at amortized cost all with low credit risk.

• j) Credit risk information of 2017 is provided in Note 12(4).

• (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’s 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.

• c) The table below analyzes the Company’s non-derivative financial liabilities and netsettled 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 non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

December31,2018 Long-term borrowings (including current portion) December31,2017 Long-term borrowings (including current portion)	Less than 1year 16,210,000 $ Less than 1year 10,960,000 $	Between 1 and3 years 35,230,000 $ Between 1 and3 years 16,890,000 $	Between 3 and5 years - $ Between 3 and5 years 550,000 $	Total
				51,440,000 $ Total
				28,400,000 $

Except for the above, the non-derivative and derivative financial liabilities of the Company are all due within one year.

(3) Fair value estimation

• A. 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.

• 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.

• B. Fair value information of investment property at cost is provided in Note 6(9).

• C. Financial instruments not measured at fair value

• The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, financial assets at amortized cost, accounts payable, other payables and long-term borrowings (including current portion) are approximate to their fair values.

• D. 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, 2018 and 2017 is as follows:

• (a) The related information of natures of the assets and liabilities is as follows:

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December31,2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Financial assets at fair value through other comprehensive income Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Forward exchange swap contracts 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	Level 1 1,104,136 $ - - 1,104,136 $ - $ - - $ Level 1 - $ - 1,154,959 1,154,959 $ - $	Level 2 - $ 160,172 - 160,172 $ 12,764 $ 7,135 19,899 $ Level 2 29,744 $ 76,890 - 106,634 $ 52,500 $	Level 3 94,281 $ - 1,111,388 1,205,669 $ - $ - - $ Level3 - $ - 153,248 153,248 $ - $	Total
				1,198,417 $ 160,172 1,111,388
				2,469,977 $
				12,764 $ 7,135
				19,899 $
				Total
				29,744 $ 76,890 1,308,207
				1,414,841 $
				52,500 $

• (b) The methods and assumptions the Company used to measure fair value are as follows:

• i. 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

• ii. 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

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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.

• iii. 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.

• iv. 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.

• v. 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.

• vi. 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, 2018 and 2017, 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, 2018 and 2017:

		Equity securities	Equity securities
		2018		2017
At January 1	$	153,248	$	209,174
Gains and losses recognized in profit or loss	(	58,967)	(	420,832)
Gains and losses recognized in other
comprehensive income	(	229,701)		510,481
Acquired in the period		1,341,089		-
Proceeds from capital reduction		-	(	145,575)
At December 31	$	1,205,669	$	153,248

• G. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3.

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• 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 31,2018 technique unobservable input 1,205,669 $ Market comparable companies price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability 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	Range (Weighted Relationship of average) inputs to fairvalue 0.58~1.46 (0.62) The higher the multiple, the higher the fair value 30%~50% (19%) The higher the discount for lack of marketability, the lower the fair value 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	Relationship of inputs to fairvalue

• J. The Company has carefully assessed the valuation models and assumptions used to measure fair value. 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

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financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

Financial assets Equity instrument Financial assets Equity instrument	Input 1,205,669 $ Input 153,248 $	Change ± 1% Change ± 1%	Favourable Unfavourable Favourable Unfavourable change change change change 943 $ 943) ($ 11,114 $ 11,114) ($ Favourable Unfavourable Favourable Unfavourable change change change change - $ - $ 1,532 $ 1,532) ($ Recognized in other December31,2018 December31,2017 comprehensive income Recognized inprofit or loss
			Favourable Unfavourable change change - $ - $

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

• A. Summary of significant accounting policies adopted in 2017:

• (a) Financial assets at fair value through profit or loss

• i. They 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:

• (i) Hybrid (combined) contracts; or

• (ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• (iii) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

• ii. 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.

• iii. 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.

• (b) Available-for-sale financial assets

• i. Available-for-sale financial assets are non-derivatives that are designated in this category.

• ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.

• iii. 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.

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• (c) 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 without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (d) Impairment of financial assets

• i. 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 (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

• ii. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:

• (i) Significant financial difficulty of the issuer or debtor;

• (ii) A breach of contract, such as a default or delinquency in interest or principal payments;

• (iii) 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

• (iv) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• iii. 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:

• (i) 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.

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• (ii) 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.

• B. For details of the reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, please refer to Note 3(1).

• C. As of December 31, 2017 and for the year ended December 31, 2017, the details of significant accounting items are as follows:

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

ounting items are as follows: 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 $

• (i) For the year ended December 31, 2017, the Company recognized net gain of $89,192 in the abovementioned financial instruments.

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• (ii) The non-hedging derivative financial assets and liabilities transaction information are as follows:

follows:
		December31,	2017
	Contract Amount
	(Notional Principal)
Derivative financial assets and liabilities	(inthousands)		ContractPeriod
Current items
Forward foreign exchange contracts	USD (sell)	400,000 $	2017/10~2018/3
	JPY (buy)	44,934,619	2017/10~2018/3
Forward foreign exchange contracts	EUR (sell)	15,800	2017/10~2018/2
	USD (buy)	18,841	2017/10~2018/2
Forward foreign exchange contracts	EUR (sell)	34,200	2017/10~2018/3
	JPY (buy)	4,554,765	2017/10~2018/3
Forward foreign swap contracts	USD (sell)	410,000	2017/12~2018/1
	TWD (buy)	12,289,569	2017/12~2018/1

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.

(b) Available-for-sale financial assets

using 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 $

  - (i) The Company recognized comprehensive income for fair value change and reclassified from equity to profit or loss for year ended December 31, 2017. Please refer to Note 6(18).

  - (ii) For the year ended December 31, 2017, the Company assessed that investment value of certain investee companies was impaired and recognized impairment loss of $3,049,547 which was listed as ‘other gains and losses’.

• D. Information on credit risk as of December 31, 2017 and for the year ended December 31, 2017 is as follows:

• (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

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credit limits is regularly monitored. Major credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, 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) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• (c) On December 31, 2017, the aging analysis of accounts receivable that were past due but not impaired is as follows:

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 $

• C. Movement analysis of accounts receivable that were impaired is as follows:

• (a) As of December 31, 2017, the Company’s accounts receivable that were impaired and recognized $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 $

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017

• A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below.

• 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.

• B. There is no effect on single account of the statement of comprehensive income, if the Company continues applying abovementioned accounting policy in the 2018. Under IFRS 15, refund liabilities are presented as accounts receivable-allowance for sales return and discounts in the previous reporting period. As of December 31, 2018, the effect from changes in accounting policy was $2,081,707.

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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.

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Innolux Corporation

Table 1

Loans to others

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2018	Balance as at December 31, 2018	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for uncollectible accounts	Collateral	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
1 1 1 1 1 2 3 4 4 5 6 7	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 USA Inc. Innolux Europe B.V. Innolux Europe B.V. Innolux Japan Co., Ltd. Warriors Technology Investments Ltd. Bright Information Holding 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. Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	Other receivables 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 Related parties	$3,071,500 2,461,415 1,745,367 1,790,120 3,580,240 223,765 307,150 1,336,960 45,760 2,142,140 3,308,023 98,884	$3,071,500 2,058,638 1,745,367 1,342,590 2,864,192 - 307,150 1,336,960 45,760 2,142,140 3,308,023 -	$3,071,500 2,058,638 1,745,367 1,342,590 2,864,192 - 307,150 119,744 45,760 2,142,140 3,308,023 -	2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 1.81% ~2.76% 1.818% ~1.822% 1.818% ~1.822% 1.00% 0.00% 0.00%	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 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 Operating support	$ - - - - - - - - - - - -	- - - - - - - - - - - -	$ - - - - - - - - - - - -	254,990,705 $ 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705	254,990,705 $ 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705 254,990,705	A A A 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 1

Innolux Corporation

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

December 31, 2018

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 December31,2018	As of December31,2018		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation Ningbo Innolux Optoelectronics Ltd. Warriors Technology Investments Ltd. Warriors Technology Investments Ltd.	Common stock (Note) AvanStrate Inc. TPV Technology Limited Chi Lin Optoelectronics Co., Ltd. Epistar Corporation Cheng Mei Materials Technology Corporation Allied Material Technology Corp. VIZIO. Inc. Trillion Science, Inc. Advanced Optoelectronic Technology, Inc. eChem solutions Corp. EPILEDS Co., Ltd. Fitipower Integrated Technology Inc. 上海辰岱投資中心(有限合夥) OED Holding Ltd. Obsidian Sensors, Inc.	None None Other related party None None None None None None None None None None None None	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	900,000 150,500,000 17,792,552 89,072 44,741,305 1,209 927,452 1,439,180 6,964,222 2,750,000 7,347,144 10,000,000 - 16,000,000 414,136	$ 29,034 708,133 65,247 2,280 393,723 - 1,111,388 - 116,999 61,913 114,615 369,000 137,932 3,984 80,892	1 6 19 - 7 - 4 2 5 5 7 6 - 6 13	$ 29,034 708,133 65,247 2,280 393,723 - 1,111,388 - 116,999 61,913 114,615 369,000 137,932 3,984 80,892

Table 2, Page 1

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2018	As of December31,2018		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Warriors Technology Investments Ltd. Warriors Technology Investments Ltd. Nets trading Ltd.	General Interface Solution (GIS) Holding Limited Kymeta Corporation’s convertible bonds PilotTech Global Fund	None None None	Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	24,194,000 - 90	$ 2,177,460 35,559 26,086	7 - -	$ 2,177,460 35,559 26,086

Note: Except as otherwise indicated, marketable securities in the table are all stocks.

Table 2, Page 2

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, 2018

Table 3 Investor	Marketable securities （Note 1）	General ledger account	Counterparty （Note 2）	Relationship with the investor （Note 2）	Balance as at January 1, 2018 (Note 4)	Balance as at January 1, 2018 (Note 4)	Addition(Note 3)	Addition(Note 3)		Disposal(Note 3)	Disposal(Note 3)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31, 2018 (Note 4)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31, 2018 (Note 4)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at December 31, 2018 (Note 4)
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
Innolux Corporation	VIZIO, Inc. (Stocks)	Financial assets at fair value through other comprehensive income	Not applicable	Not applicable	-	$ -	927,452	$ 1,341,089	-	$ -	$ -	$ -	927,452	$ 1,111,388

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 leave 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: Including the amount of unrealized gain or loss on financial assets at fair value through other comprehensive income.

Table 3, Page 1

Table 4

Innolux Corporation

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, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith 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. Hongfujin Precision Industry (Yantai) Co., Ltd. Hongfutai Precision Electrons (Yantai) Co., Ltd. Innolux Japan Co., Ltd. Innolux Hong Kong Limited Hongfujin Precision Electronics (Chongqing) Co., Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Innolux USA Inc. Competition Team Technology (India) Private Limited Ningbo Innolux Display Ltd. Shenzhen Fugui Precision Industrial Co., LTD	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. A subsidiary of the Company 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 An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	8,410,840 $ 6,742,174 2,348,341 2,286,215 2,231,812 1,620,352 1,221,312 646,017 4,861,172 348,712 168,298 392,174	3 2 1 1 1 1 - - 2 - - -	60-90 days 60 days 60 days 90 days 45-60 days 60 days 45 days 60 days 45-60 days 90 days 90 days 60 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	2,296,588 $ - 35,660 856,109 442,839 - 303,950 176,485 3,490,227 114,381 18,574) ( 34,189	5 - - 2 1 - 1 - 7 - - -

Table 4, Page 1

Purchaser/seller	Counterparty	Relationshipwith 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	COMPETITION TEAM IRELAND LIMITED Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Europe B.V. FI Medical Device Manufacturing Co., Ltd. Hon Hai Precision Industry Co., Ltd. Gio Optoelectronics Corp. Lakers Trading Ltd. Innolux Hong Kong Limited Leadtek Global Group Limited	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 An indirect wholly-owned subsidiary Investee accounted for under the equity method Same major stockholder Investee accounted for under the equity method An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company	Sales Sales Sales Sales Sales Sales Sales Purchases Purchases Purchases Processing expense Processing expense Processing expense	367,430 $ 136,745 521,628 212,122 436,610 181,822 141,156 1,440,291 1,049,275 134,045 43,150,307 21,811,648 20,151,853	- - - - - - - 1 - - 17 8 8	45 days 90 days 90 days 90 days 60 days 90 days 30-60 days 30 days after acceptance 60-90 days after acceptance 60 days after acceptance 60-90 days 60-90 days 60-90 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 Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Cost plus Cost plus Cost plus	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	100,589 $ - - 39,062 156,008 261,048 21,575 243,324) ( 879,733) ( 24,780) ( 26,199,180) ( 10,521,167) ( 24,587,830) (	- - - - - 1 - - 1 - 29 12 28

Table 4, Page 2

Purchaser/seller	Counterparty	Relationshipwith 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. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Foshan Innolux Optoelectronics Ltd. Lakers Trading Ltd. Nanjng Innolux Technology Ltd. Innocom Technology (Shenzhen) Co., LTD	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. Nanjing Innolux Technology Ltd. Premier Image Technology (China) Ltd. Ningbo Innolux Electronics Ltd. Shanghai Innolux Optoelectronics Ltd. Lakers Trading Ltd.	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 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	Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue Sales Sales Sales Sales Sales Sales Processing revenue	24,608,412 $ 18,803,923 18,671,622 14,877,452 6,495,391 1,566,904 4,741,622 1,209,099 190,862 243,173 172,068 249,759	76 80 100 100 91 2 11 4 - 1 12 100	60 days 60 days 60 days 60 days 60 days 90 days 60 days 60 days 90 days 60 days 60 days 60 days	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	15,620,380 $ 19,693,660 4,853,362 7,830,730 2,111,630 153,374 830,326 201,279 11,261 39,275 183,339 897,132	90 96 100 100 83 1 3 2 - - 51 100

Table 4, Page 3

Purchaser/seller	Counterparty	Relationshipwith 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 Europe B.V. Innolux Japan Co.,Ltd. Innolux Japan Co., Ltd. Innolux USA Inc. Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	Innolux Corporation Innolux Hong Kong Limited Innolux Corporation Innolux Corporation Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Premier Image Technology (China) Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Service revenue Service revenue Service revenue Service revenue Purchases Purchases Purchases Purchases Purchases Purchases	899,754 $ 159,406 115,099 104,731 1,723,501 825,348 559,327 825,188 144,326 152,347	86 6 4 2 7 2 1 1 1 -	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 60 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	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	232,063 $ - 68,077 28,507 571,058) ( 274,881) ( 185,942) ( 392,531) ( 16,865) ( 22,786) (	94 - 12 1 9 2 2 2 - -

Table 4, Page 4

Innolux Corporation

Receivables from related parties reaching $100 million or 20% of paid-in capital or more December 31, 2018

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2018	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 Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd.	Hon Hai Precision Industry Co., Ltd. HongFuTai Precision Electronics (YanTai) Co., Ltd. Foshan Innolux Optoelectronics Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Innolux Japan Co.,Ltd. Innolux USA Inc. Futaijing Precision Electronics (Beijing) Co., Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Competition Team Technology (India) Private Limited COMPETITION TEAM IRELAND LIMITED Fu Lian Net International (Hong Kong) Limited Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd.	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. A subsidiary of the Company 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 of Hon Hai Precision Industry Co., Ltd. A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 2,296,588 856,109 261,048 303,950 442,839 3,490,227 156,008 176,485 114,381 100,589 369,837 (Shown as other receivables) (Note) 19,693,660 15,620,380 7,830,730 4,853,362	2.78 2.16 0.34 3.27 6.73 2.75 5.60 1.47 3.11 2.35 - 1.03 2.68 2.05 4.51	$ 42,546 - - 107,879 13,820 2,425,136 - 6,723 - 29,544 369,837 12,300,671 3,473,514 - 9,688,600	Subsequent collection - - Subsequent collection Subsequent collection Subsequent collection - Subsequent collection - Subsequent collection Subsequent collection Subsequent collection Subsequent collection - Subsequent collection	$ 509,593 176,066 - 27,402 - 1,202,953 77,350 72,786 26,514 24,708 - 4,308,217 5,682,569 1,823,997 2,170,332	$ - - - - - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2018	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., LTD Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Europe B.V. Nanjing Innolux Technology Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	NANJING HONGFUSHARP PRECISION ELECTRONICS CO., LTD. Chongqing Fuyusheng Electronics Technology Co., Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Innolux Corporation Shanghai Innolux Optoelectronics Ltd. Panxian FuguiKang Precision electronic 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 An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 153,374 178,663 (Shown as other receivables) (Note) 136,555 (Shown as other receivables) (Note) 2,111,630 897,132 830,326 201,279 232,063 183,339	0.40 - - 3.08 0.28 5.65 4.68 6.54 1.88	$ 126,187 178,663 136,555 621,844 846,832 - - - -	Subsequent collection Subsequent collection Subsequent collection Subsequent collection Subsequent collection - - - -	$ - 80,555 - 1,044,476 - 432,176 113,994 216,190 88	$ - - - - - - - - -

Note: Overdue receivables transferred to other receivables.

Table 5, Page 2

Expressed in thousands of NTD (Except as otherwise indicated)

Table 6

Innolux Corporation For the year ended December 31, 2018

Significant inter-company transactions during the reporting period

Transaction (Note D)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)	General ledger account	Amount	Transaction terms (NoteC)	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 1 1 2 2 3 3 4 4 5 5	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. Shanghai Innolux Optoelectronics Ltd. Shanghai 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 Optoelectronics Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux USA Inc. Innolux USA Inc. Innolux Europe B.V. 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 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 3 3 3 3 3 3 3 3 3 3	Sales Processing expense Accrued expenses Sales Accounts receivable Sales Processing expense Accrued expenses Sales Sales Processing expense Accrued expenses Sales Accounts receivable Sales Sales Accounts receivable Sales Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	6,742,174 $ 43,150,307 26,199,180) ( 2,231,812 442,839 1,620,352 21,811,648 10,521,167) ( 168,298 521,628 20,151,853 24,587,830) ( 181,822 261,048 136,745 4,861,172 3,490,227 141,156 24,608,412 15,620,380 18,803,923 19,693,660 18,671,622 4,853,362 14,877,452 7,830,730 6,495,391 2,111,630	- - - - - - - - - - - - - - - - - - - - - - - - - - - -	2 15 6 1 - 1 8 3 - - 7 6 - - - 2 1 - 9 4 7 5 7 1 5 2 2 1

Table 6, Page 1

Transaction (Note D)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)	General ledger account	Amount	Transaction terms (NoteC)	Percentage of consolidated total operating revenues or total assets
6 6 7 7 8 8 9 9 10 10 11 12 13 14	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 Europe B.V. Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Innolux Japan Co.,Ltd. Innolux Japan Co., Ltd. Innolux USA Inc.	Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Corporation Innolux Corporation Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Electronics Ltd. Innolux Hong Kong Limited Innolux Corporation Innolux Corporation	3 3 3 3 3 3 3 3 3 3 3 3 3 3	Sales Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Service revenue Accounts receivable Sales Account receivables Sales Service revenue Service revenue Service revenue	4,741,622 $ 830,326 1,209,099 201,279 249,759 897,132 899,754 232,063 172,068 183,339 243,173 159,406 115,099 104,731	- - - - - - - - - - - - - -	2 - - - - - - - - - - -

Note A: The information of transactions between the Company and the consolidated subsidiaries should be noted in “Number” column.

• (1) Number 0 represents the parent company.

• (2) The subsidiaries are numbered in order from number 1.

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

• 3 refers to the subsidiary to the subsidiary.

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

Table 6, Page 2

Innolux Corporation

Information on investees

Expressed in thousands of NTD (Except as otherwise indicated)

Table 7

For the year ended December 31, 2018

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2018	as at December31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December31,2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
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 Innolux Singapore Holding Pte. Ltd. Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Japan Co., Ltd. Innolux Corporation Innolux Technology USA Inc. iZ3D, Inc. Chi Mei Lighting Technology Corporation	Hong Kong BVI Samoa Samoa Samoa BVI Hong Kong Singapore BVI Taiwan Taiwan Japan USA USA USA Taiwan	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Distributor company Investment company Investment company 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	$ - 119,106 6,192,679 62,197 33,438,542 3,674,115 3,231,275 754,943 - 1,217,235 1,674,054 1,682,571 - - - 819,312	$ 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	4,910,000 40,250 180,568,185 1,656,410 709,450,000 146,847,000 1,158,844,000 25,400,000 50,000,000 - 167,405,392 98 - - 4,333 78,195,856	100 100 100 100 100 100 100 100 100 100 100 54 - - 35 33	- $ 27,255 17,885,878 82,110 44,597,800 6,506,291 5,641,266 740,729 1,535,750 874,787 1,303,578 2,004,888 - - - -	484 $ 6,180) ( 182,225 4,611 1,156,390 143,267 576,248 21,324) ( 495,227 29,317 123,535) ( 2,095 312) ( 1,847 - -	484 $ 6,180) ( 182,225 4,611 1,222,763 143,296 581,946 21,324) ( 495,227 29,317 123,535) ( 1,141 312) ( 1,847 - -

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2018	as at December31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December31,2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation 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 Japan Co.,Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Suns Holding Ltd. Innolux Europe B.V. Innolux Singapore Holding Pte. Ltd. Innolux Singapore Holding Pte. Ltd.	Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp. eLux, Inc. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Limited Innolux Hong Kong Limited Innolux Europe B.V. Innolux Japan Co.,Ltd. Innolux USA, Inc. Stanford Developments Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Innolux Optoelectronics India Private Limited Innolux Optoelectronics Philippines Corp.	Cayman Taiwan Taiwan USA Samoa Samoa Samoa Cayman Hong Kong Hong Kong Netherlands Japan USA Samoa Samoa Samoa Germany India Philippines	Investment holdings Production and selling of the absorption for medical element Sales and manufacture of TFT-LCD parts and components R&D of MicroLED technology Investment holdings Investment holdings Distributor company Investment holdings Investment holdings Distributor company Holding, R&D testing and Distributor company Holdings, R&D, manufacturing and Distributor company Selling of electronic equipment and computer monitors Investment holdings Investment company Investment company Testing and maintenance company Distributor company Manufacturer and distributor	$ 1,717,714 73,500 800,892 91,155 5,222,180 555,422 - 3,650,192 - - 1,994,102 1,815,603 369,092 5,391,125 27,477 555,422 33,735 176,997 28,733	$ 1,717,714 73,500 800,892 - 5,222,180 555,422 - 3,650,192 - - 3,209,158 1,815,603 2,400 5,391,125 27,477 555,422 33,735 - -	14,062,500 7,350,000 10,494,001 300,000 160,504,550 18,177,052 1 146,817,000 162,897,802 35,000,000 375,810 82 12,842 164,000,000 900,001 18,177,052 100,000 39,500,000 5,000,000	50 49 24 38 100 100 100 100 100 100 100 46 100 100 100 100 100 100 100	956,577 $ 655,827 115,610 74,135 11,755,619 5,896,175 234,005 6,505,932 1,557,546 504,440 683,992 1,677,860 666,022 11,727,222 28,260 5,896,173 72,080 152,400 28,398	40,934 $ 891,803 23,782 80,583) ( 27,224 155,001 - 143,267 190,912 292,656 84,949 2,095 19,772 28,751 1,528) ( 155,001 10,767 21,429) ( 767) (	20,467 $ 436,983 5,674 16,955) ( 27,224 155,001 - 143,296 190,912 292,656 84,949 954 19,772 28,751 1,528) ( 155,001 10,767 21,429) ( 767) (

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2018	as at December31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December31,2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Innolux Singapore Holding Pte. Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	Innolux Optoelectronics Malaysia SDN. BHD. Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp.	Malaysia Taiwan Taiwan	Manufacturer and distributor Manufacturing of electronic equipment and lighting equipment Manufacturing and selling of components of TFT-LCD	$ 121,179 263,812 6,881	- 263,812 6,881	16,000,000 19,673,402 77,235	100 8 -	118,660 $ - 851	424 $ - 23,782	424 $ - 18

Table 7, Page 3

Information on investments in Mainland China

Table 8

Innolux Corporation

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (Note C)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2018	Net income of investee for the year ended December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2018(Note B)	Book value of investments in Mainland China as of December 31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31,2018	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. Nanjing Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Logistics Ltd. Amlink (Shanghai) 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 Warehousing services Manufacturing and selling of power supply, modem, ADSL, and other IT equipments	$ 5,037,260 287,802 9,521,650 11,763,845 4,914,400 64,502 4,484,390 645,015 46,073 245,720	2 2 2 2 2 2 2 2 2 2	$ 3,898,094 61,430 226,218 11,763,845 4,914,400 64,502 4,424,053 - 46,073 307,150	$ - - - - - - - - - -	$ - - - - - - - - - -	$ 3,898,094 61,430 226,218 11,763,845 4,914,400 64,502 4,424,053 - 46,073 307,150	$ 28,751 ( 66,219) 910,710 ( 174,637) 417,960 3,384 139,883 190,912 4,589 -	100 4 100 100 100 100 100 100 100 50	$ 28,751 - 910,710 ( 172,283) 417,960 3,384 139,883 190,912 4,589 -	$ 11,727,170 6,920 19,900,861 20,192,533 4,503,247 551,074 5,954,837 1,557,546 77,267 191,778	$ 1,139,166 - 5,302,482 - - - - - - -	2.1 2.2 2.3 2.3 2.3 2.4 2.4 2.8 2.5 2.6 2.7

Table 8, Page 1

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (Note C)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2018	Net income of investee for the year ended December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2018(Note B)	Book value of investments in Mainland China as of December 31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31,2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Interface Optoelectronics (Shenzhen) Co., Ltd. Ningbo Innolux Electronics Ltd. Foshan Innolux Flnet Electronics Ltd. Ningbo Innolux Flnet Electronics Ltd. Shenzhen PixinLED Technology Co., Ltd. Innolux Automations and Intelligence Systems (ShenZhen) Co., Ltd.	Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after- sales service R&D, Manufacturing and selling of LCD backend module and related components Commodity agency Commodity agency Development and selling of MINI LED Development and selling of software	$ 2,954,783 134,259 4,475 4,475 44,753 4,475	2 3 3 3 3 3	$ 414,653 - - - - -	$ - - - - - -	$ - - - - - -	$ 414,653 - - - - -	$ 490,966 97,411 263 1,630 ( 1,879) ( 4,730)	7 100 100 100 100 49	$ - 97,411 263 1,630 ( 1,879) ( 2,318)	$ 2,177,460 460,838 5,997 9,025 42,910 ( 80)	$ - - - - - -	2.2 3.1 3.2 3.2 3.3 3.3

Table 8, Page 2

Ceiling on investments in Mainland China:

Investment amount approved Ceiling on investments in Accumulated amount of remittance by the Investment Mainland China imposed by the from Taiwan to Mainland China as Commission of the Ministry Investment Commission of Company name of December 31, 2018 of Economic Affairs (MOEA) MOEA Innolux Corporation $ 27,620,564 $ 36,825,118 (Note D)

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 recognized for the year ended December 31, 2018 was audited by independent accountants.

Note C: The investment methods are as follows:

1. Directly investing in Mainland China.

2. Through investing in companies in the third area, which then invested in the investee in Mainland China.

3. 2.1. Through investing in Stanford Developments Ltd. in the third area, which then invested in the investee in Mainland China.

4. 2.2. Through investing in Warriors Technology Investments Ltd. in the third area, which then invested in the investee in Mainland China.

5. 2.3. Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.

6. 2.4. Through investing in Toppoly Optoelectronics (Cayman) Ltd. in the third area, which then invested in the investee in Mainland China.

7. 2.5. Through investing in Innolux Optoelectronics Hong Kong Holding Limited in the third area, which then invested in the investee in Mainland China.

8. 2.6. Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.

9. 2.7. Through investing in Ampower Holding Ltd. in the third area, which then invested in the investee in Mainland China.

10. 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.

11. Others.

12. 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.

13. 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.

14. 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.

15. 3.3.The company invested via Innocom Technology (Shenzhen) Co., LTD, which are the company investment entities in Mainland China to invest in Shenzhen PixinLED Technology Co.,Ltd., Innolux Automations

16. and Intelligence Systems (ShenZhen) Co., 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.

17. Note D: In accordance with “Rules Governing Applications for Investment or Technical Cooperation in Mainland China”, the Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau of the Ministry of Economic Affairs, the ceiling amount of the investment in Mainland China is not applicable to the Company.

18. I. The amount approved by the Investment Commission of Ministry of Economic Affairs (MOEA) is USD 10,300 thousand, Vap Optoelectronics (NanJing) Corp. has finished liquidation in October 2018 but not apply the cancellation of investment with Investment Commission of MOEA yet.

Table 8, Page 3

INNOLUX CORPORATION SUMMARY OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 1

Items Petty cash Cash in banks Demand deposits Foreign deposits Time deposits	Abstract Amount $ 165 702,605 USD 273,106In thousands Exchange rate 30.715 8,388,464 JPY 359,986In thousands Exchange rate 0.278 100,148 EUR 739In thousands Exchange rate 35.100 26,022 HKD 36In thousands Exchange rate 3.921 139 KRW 77,408In thousands Exchange rate 0.028 2,129 TWD 3,300,000In thousands Exchange rate - 3,300,000 USD 600,000In thousands Exchange rate 30.715 10,750,250 $ 23,269,922	Amount
		$ 23,269,922

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Summary 1, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS RECEIVABLE DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 2

Items	Abstract	Amount	Remark
		$ 3,976,652 3,851,205 3,135,102 2,983,190 25,439,761	Balance of individual customers is under 5% of this account’s balance.
		39,385,910 ( 209,373)
		$ 39,176,537

Summary 2, Page 1

INNOLUX CORPORATION SUMMARY OF INVENTORY

DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 3

Items	Abstract	Cost	Market price $ 3,484,816 18,092,907 15,183,959
Raw materials Work in process Finished goods		$ 3,340,352 13,624,800 9,840,493
		$ 26,805,645	$ 36,761,682

Summary 3, Page 1

INNOLUX CORPORATION

MOVEMENT SUMMARY OF INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 4

Company name Landmark International Ltd. Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Japan Co., Ltd. Leadtek Global Group Limited InnoJoy Investment Corporation Yuan Chi Investment Co., Ltd. Innolux Singapore Holding Pte. Ltd. Ampower Holding Ltd. FI Medical Device Manufactiurng Co., Ltd. Others	As of January 1, 2018	As of January 1, 2018	Additions In thousand shares Amount	Additions In thousand shares Amount	Deductions	Deductions	As of December 31, 2018	As of December 31, 2018
	In thousand shares Amount 709,450 $ 44,160,820 180,568 20,423,738 146,847 6,476,884 1,158,844 3,797,279 - 1,496,157 50,000 999,166 167,405 1,381,380 - 843,311 - - 14,063 853,016 7,350 525,926 - 656,865 $ 81,614,542	Amount		Amount	In thousand shares	Amount In thousand shares Ownership (%) ($ 785,783) 709,450 100% ( 2,720,085) 180,568 100% ( 113,890) 146,847 100% ( 169,708) 1,158,844 100% ( 89,589) - 54% - 50,000 100% ( 123,535) 167,405 100% ( 14) - 100% ( 21,323) 25,400 100% - 14,063 50% ( 307,083) 7,350 49% ( 488,246) - - ($ 4,819,256)	In thousand shares Ownership (%)	Amount
			- - - - - - - - 25,400 - - -	$ 1,222,763 182,225 143,297 2,013,695 598,320 536,584 45,733 31,490 762,052 103,561 436,984 130,491	- - - - - - - - - - - -
				$6,207,195

Note 1: Additions include gains on investment accounted for using equity method, change in investee’s net equity value, cumulative translation adjustment, recognition of unrealised gain on investees’ financial instruments and increase in investment. Note 2: Deductions include losses on investment accounted for using equity method, change in investee’s net equity value, cumulative translation adjustment, cash dividend received, recognition of unrealised loss on investees’ financial instruments and proceeds from capital reduction of investment.

Summary 4, Page 1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS PAYABLE

DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 5 Items Abstract Amount Third parties Company A $ 2,563,891 Company B 1,459,062 Others 22,754,175 $ 26,777,128 (Remainder of page intentionally left blank)	Amount $ 2,563,891 1,459,062 22,754,175	Remark Balance of individual suppliers is under 5% of this account’s balance.
	$ 26,777,128

Summary 5, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 6

Items TFT-LCD products	Quantity (in thousands) 398,374	Amount $ 278,407,555

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Summary 6, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 7 Items Beginning raw materials Incoming inventory Less: Ending raw materials 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 Operating costs

Amount $ 2,717,580 83,240,601 ( 3,583,309) ( 17,462) ( 1,038,186) 81,319,224 11,875,949 153,107,471 246,302,644 11,967,334 4,161,130 ( 14,420,816) ( 105,400) 247,904,892 12,672,229 9,441,094 ( 10,751,201) 259,267,014 1,038,186 122,862 ( 26,209) $ 260,401,853

Summary 7, Page 1

INNOLUX CORPORATION SUMMARY OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 8

Items Processing fee Depreciation and amortization Utilities expense Repairs and maintenance expense Wages and salaries Others	Amount $ 87,577,878 28,991,820 11,713,954 8,883,303 7,876,185 8,064,331 $ 153,107,471	Remark
		Balance of individual accounts is under 5% of this account’s balance.

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Summary 8, Page 1

INNOLUX CORPORATION SUMMARY OF OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 9

Items Wages and salaries Depreciation expenses Royalty expenses Indirect materials Professional service expenses Others	Selling expenses $ 268,178 20 - 1,287 165,822 1,219,364 $ 1,654,671	General and administrative expenses $ 1,266,791 281,558 - 16 1,284,481 1,867,784 $ 4,700,630	Research and development expenses $ 4,014,448 2,286,305 1,862,977 1,206,121 148,727 1,775,508 $ 11,294,086	Total $ 5,549,417 2,567,883 1,862,977 1,207,424 1,599,030 4,862,656 $ 17,649,387	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, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 10

By nature Employee benefits expenses (Note) Wages and salaries Labor and health insurance Pension Director's compensation Others Depreciation Amortization		YearendedDecember 31,2018	YearendedDecember 31,2018	Total $ 23,052,711 1,968,615 976,234 11,198 1,331,784 $ 27,340,542 $ 31,670,572 $ 298,967		YearendedDecember 31,2017	YearendedDecember 31,2017
	Classified as Operating Costs $ 17,503,294 1,503,330 715,078 - 1,016,197 $ 20,737,899 $ 28,815,698 $ 176,122	Classified as Operating Expenses $ 5,549,417 465,285 261,156 11,198 315,587 $ 6,602,643 $ 2,567,883 $ 122,845	Classified as Non-operating Expenses $- - - - - $- $ 286,991 $-		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 57,302 249,531 $ 7,576,060 $ 2,353,059 $ 117,791	Classified as Non-operating Expenses $- - - - - $- $ 476,351 $-	Total
								$ 29,884,496 2,006,861 991,008 57,302 1,358,988
								$ 34,298,655
								$ 28,744,075
								$ 925,321

Note ： As of December 31, 2018 and 2017, the Company had 30,421 and 32,586 employees, respectively. There were 4 and 5 non-employee directors, respectively.

Summary 10, Page 1