INX - Interim / Quarterly Report 2017

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

JUNE 30, 2017 AND 2016

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Innolux Corporation:

We have reviewed the accompanying consolidated balance sheets of Innolux Corporation and subsidiaries as of June 30, 2017 and 2016, and the related consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2017 and 2016, and the consolidated statements of changes in equity and of cash flows for the six-month periods ended June 30, 2017 and 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express a conclusion on these financial statements based on our reviews.

We conducted our reviews in accordance with the Statement on Auditing Standards No. 36, “Review of Financial Statements” in the Republic of China. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications or adjustments that should be made to the consolidated financial statements referred to above for them to be in conformity with the “Regulations Governing the Preparation of the Financial Reports by Securities Issuers” and IAS 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

PricewaterhouseCoopers, Taiwan July 26, 2017

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

~1~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2017, DECEMBER 31, 2016 AND JUNE 30, 2016

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2017 and 2016 are reviewed, not audited)

Assets	Notes	June30,2016
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1479 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1523 Available-for-sale financial assets - non- current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(4)(5) 7 7 6(6) 6(1) and 8 6(2) 6(3) 6(7) 6(8), 7 and 8 6(9) 6(10) and 8 6(8) and 8	`$` `39,627,002` `722,839` `37,111,667` `2,871,116` `3,677,834` `25,393,832` `968,221` `111,327`
		`110,483,838`
		`255,684` `5,516,095` `1,665,937` `190,044,389` `578,787` `18,832,779` `16,434,849` `5,476,013`
		`238,804,533`
		`$` `349,288,371`

(Continued)

~2~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2017, DECEMBER 31, 2016 AND JUNE 30, 2016

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2017 and 2016 are reviewed, not audited)

	Liabilities and Equity	Notes			June30,2017	December31,2016		June30,2016
	Current Liabilities
2100	Short-term borrowings	6(11)		`$`	`- $`	`11,583,750`	`$`	`5,242,223`
2120	Financial liabilities at fair	6(2)
	value through profit or
	loss - current				`409,031`	`1,190,148`		`227,657`
2170	Accounts payable				`50,962,890`	`51,875,305`		`45,369,287`
2180	Accounts payable - related	7
	parties				`6,595,989`	`5,120,235`		`2,292,417`
2200	Other payables	6(12) and 7			`31,070,332`	`22,916,097`		`23,123,342`
2230	Current income tax
	liabilities				`1,066,274`	`1,912,797`		`1,602,540`
2250	Provisions - current	6(16) and 9			`4,852,194`	`3,765,234`		`2,377,656`
2320	Long-term liabilities,	6(13)
	current portion				`35,531,140`	`16,381,686`		`16,369,848`
2399	Other current liabilities				`1,255,144`	`1,420,652`		`1,267,852`
21XX	Total current liabilities				`131,742,994`	`116,165,904`		`97,872,822`
	Non-current liabilities
2540	Long-term borrowings	6(13)			`843,387`	`28,128,467`		`35,468,003`
2570	Deferred income tax
	liabilities				`940,360`	`672,971`		`682,535`
2600	Other non-current	6(14)
	liabilities				`525,424`	`505,843`		`579,565`
25XX	Total non-current
	liabilities				`2,309,171`	`29,307,281`		`36,730,103`
2XXX	Total liabilities				`134,052,165`	`145,473,185`		`134,602,925`
	Equity attributable to
	owners of the parent
3110	Share capital - common	6(17)
	stock				`99,520,720`	`99,521,488`		`99,523,512`
3200	Capital surplus	6(18)			`99,646,905`	`99,647,810`		`99,645,958`
	Retained earnings	6(19)
3310	Legal reserve				`3,945,576`	`3,758,507`		`3,758,507`
3320	Special reserve				`3,418,804`	`-`		`-`
3350	Unappropriated retained
	earnings				`45,872,621`	`26,497,362`		`12,533,097`
3400	Other equity interest	6(20)	`(`		`3,373,739 )(`	`3,418,804) (`		`775,628)`
31XX	Equity attributable to
	owners of the parent				`249,030,887`	`226,006,363`		`214,685,446`
3XXX	Total equity				`249,030,887`	`226,006,363`		`214,685,446`
3X2X	Total liabilities and
	equity			`$`	`383,083,052 $`	`371,479,548`	`$`	`349,288,371`

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

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INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars, except for earnings (loss) per share amounts) (Reviewed, not audited)

					Three months ended June 30	Three months ended June 30				Six months ended June 30	Six months ended June 30	Six months ended June 30
	Items	Notes			2017		2016		2017				2016
4000	Sales revenue	7		`$`	`84,508,950`	`$`	`66,805,188`	`$`		`170,534,721`		`$`	`123,222,308`
5000	Operating costs	6(6)(24) and 7	`(`		`63,463,838 ) (`		`65,250,163) (`			`129,144,588) (`			`125,704,743)`
5900	Net operating margin				`21,045,112`		`1,555,025`			`41,390,133`	`(`		`2,482,435)`
	Operating expenses	6(24)
6100	Selling expenses		`(`		`468,089 ) (`		`647,425) (`			`940,509) (`			`1,224,451)`
6200	General and administrative expenses		`(`		`1,743,304 ) (`		`1,557,812) (`			`3,336,149) (`			`3,086,644)`
6300	Research and development expenses		`(`		`3,010,493 ) (`		`2,387,718) (`			`6,658,213) (`			`4,646,687)`
6000	Total operating expenses		`(`		`5,221,886 ) (`		`4,592,955) (`			`10,934,871) (`			`8,957,782)`
6900	Operating profit (loss)				`15,823,226(`		`3,037,930)`			`30,455,262`	`(`		`11,440,217)`
	Non-operating income and expenses
7010	Other income	6(21)			`665,098`		`1,096,404`			`1,112,371`			`2,199,162`
7020	Other gains and losses	6(22)	`(`		`182,652 ) (`		`685,667)`			`208,237`	`(`		`1,699,329)`
7050	Finance costs	6(23)	`(`		`168,396 ) (`		`291,802) (`			`282,476) (`			`598,561)`
7060	Share of profit/(loss) of associates and joint ventures accounted	6(7)
	for under equity method				`46,694`		`48,888`			`44,765`			`135,258`
7000	Total non-operating income and expenses				`360,744`		`167,823`			`1,082,897`			`36,530`
7900	Profit (loss) before income tax				`16,183,970 (`		`2,870,107)`			`31,538,159`	`(`		`11,403,687)`
7950	Income tax expense	6(26)	`(`		`4,065,753 ) (`		`605,421) (`			`7,561,823) (`			`653,349)`
8200	Profit (loss) for the period			`$`	`12,118,217(`	`$`	`3,475,528)`	`$`		`23,976,336`	`(`	`$`	`12,057,036)`
	Other comprehensive income (loss) (net)
	Components of other comprehensive income (loss) that will be	6(20)
	reclassified to profit or loss
8361	Financial statements translation differences of foreign operations			`$`	`1,478,885 (`	`$`	`1,336,497) (`	`$`		`2,446,825) (`		`$`	`2,169,230)`
8362	Unrealized gain (loss) on valuation of available-for-sale financial
	assets				`888,997 (`		`1,273,581)`			`2,570,077`	`(`		`1,311,341)`
8370	Share of other comprehensive loss of associates and joint ventures
	accounted for under equity method		`(`		`42,829 ) (`		`213) (`			`46,087) (`			`16,140)`
8399	Income tax relating to the components of other comprehensive	6(26)
	income				`37,528 (`		`48,617) (`			`32,100) (`			`45,191)`
8360	Components of other comprehensive income (loss) that will
	be reclassified to profit or loss				`2,362,581(`		`2,658,908)`			`45,065`	`(`		`3,541,902)`
8300	Other comprehensive income (loss) for the period, net of tax			`$`	`2,362,581 (`	`$`	`2,658,908)`	`$`		`45,065`	`(`	`$`	`3,541,902)`
8500	Total comprehensive income (loss) for the period			`$`	`14,480,798(`	`$`	`6,134,436)`	`$`		`24,021,401`	`(`	`$`	`15,598,938)`
	Profit (loss) attributable to:
8610	Owners of the parent			`$`	`12,118,217(`	`$`	`3,475,528)`	`$`		`23,976,336`	`(`	`$`	`12,057,036)`
	Other comprehensive income (loss) attributable to:
8710	Owners of the parent			`$`	`14,480,798(`	`$`	`6,134,436)`	`$`		`24,021,401`	`(`	`$`	`15,598,938)`
	Earnings (loss) per share (in dollars)	6(27)
9750	Basic earnings (loss) per share			`$`	`1.22(`	`$`	`0.35)`	`$`		`2.41`	`(`	`$`	`1.21)`
9850	Diluted earnings (loss) per share			`$`	`1.20 (`	`$`	`0.35)`	`$`		`2.38`	`(`	`$`	`1.21)`

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

~4~

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

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

(Reviewed, not audited)

Notes			Equityattributable to owners of theparent	Equityattributable to owners of theparent	Equityattributable to owners of theparent				Total
	Common stock	Capital surplus		Retained Earnings		Other Equity Interest
			Legal reserve	Special reserve	Unappropriated earnings	Financial statements translation differences of foreign operations	Unrealized gain (loss) on available-for- sale financial assets	Employee unearned compensation
6(19) 6(15) 6(18) 6(20) 6(19) 6(18) 6(20)	`$ 99,532,372` `-` `-` `(` `8,860` `)` `-` `-` `-` `-` `-` `$ 99,523,512` `$ 99,521,488` `-` `-` `-` `(` `768` `)` `-` `-` `-` `$ 99,520,720`	`$ 99,643,564` `-` `-` `8,860` `(` `3,916 )` `-` `(` `2,550 )` `-` `-` `$ 99,645,958` `$ 99,647,810` `-` `-` `-` `768` `(` `1,673 )` `-` `-` `$ 99,646,905`	`$ 2,676,947` `1,081,560` `-` `-` `-` `-` `-` `-` `-` `$ 3,758,507` `$ 3,758,507` `187,069` `-` `-` `-` `-` `-` `-` `$ 3,945,576`	`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `3,418,804` `-` `-` `-` `-` `-` `$ 3,418,804`	`$ 27,661,503` `(` `1,081,560 )` `(` `1,989,810 )` `-` `-` `-` `-` `(` `12,057,036 )` `-` `$ 12,533,097` `$ 26,497,362` `(` `187,069 )` `(` `3,418,804 )` `(` `995,204 )` `-` `-` `23,976,336` `-` `$ 45,872,621`	`$ 1,695,294` `-` `-` `-` `-` `-` `-` `-` `( 2,185,370 )` `($ 490,076 )` `($ 4,040,408 )` `-` `-` `-` `-` `-` `-` `( 2,492,912 )` `($ 6,533,320 )`	`$ 1,074,445` `-` `-` `-` `-` `-` `-` `-` `( 1,356,532 )` `($ 282,087 )` `$ 621,604` `-` `-` `-` `-` `-` `-` `2,537,977` `$ 3,159,581`	`($` `19,402 )` `-` `-` `-` `3,977` `11,960` `-` `-` `-` `($` `3,465 )` `$` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 232,264,723` `-` `(` `1,989,810` `)` `-` `61` `11,960` `(` `2,550` `)` `(` `12,057,036` `)` `(` `3,541,902` `)` `$ 214,685,446` `$ 226,006,363` `-` `-` `(` `995,204` `)` `-` `(` `1,673` `)` `23,976,336` `45,065` `$ 249,030,887`

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

~5~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit (loss) before tax for the period
Adjustments
Adjustments to reconcile profit (loss)
Depreciation and amortization

Compensation related to share-based payment

Share of loss of associates and joint ventures accounted
for under equity method

(Gain) loss from disposal of investments

Loss on disposal of property, plant, and equipment

Impairment loss

Interest expense

Interest income

Dividend income

Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value through profit
or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities Notes
2017
2016
$
31,538,159 ($
11,403,687 )
6(24)
16,659,547
21,894,214
6(24)
-
11,960
6(7)
(
44,765 ) (
135,258 )
6(22)
(
2,324,844 )
70,990
6(22)
134,024
35,937
6(22)
120,000
-
6(23)
282,467
594,850
6(21)
(
195,669 ) (
172,024 )
6(21)
(
139,408 ) (
127,723 )
(
4,725 )
19,057
(
938,016 ) (
614,433 )
8,888,946
11,078,124
(
2,879,251 ) (
238,263 )
1,037,697
134,072
(
6,259,197 )
3,876,016
(
1,001,057 )
139,648
(
33,184 ) (
13,188 )
(
912,415 ) (
11,700,664 )
1,475,754 (
1,067,516 )
6,074,234 (
4,738,015 )
1,086,960 (
3,174,103 )
(
165,508 )
136,523
19,581
17,297
52,419,330
4,623,814
(
2,848,501 ) (
1,293,309 )
49,570,829
3,330,505

(Continued)

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INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

(Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial
assets
Proceeds from capital reduction of investments accounted
for under equity method
Decrease in other financial assets
Acquisition of property, plant, and equipment

Proceeds from disposal of property, plant, and equipment
Acquisition of intangible assets
Decrease (increase) in other non-current assets
Interest received
Dividends received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Payment of long-term borrowings
Repurchase from issuance of restricted stock to employees
Interest paid
Net cash flows used in financing activities
Effect of changes in foreign currency exchange
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Notes
2017
2016
($
122,755 ) $
-
2,690,318
222,372
-
23,680
298
2,091,824
6(28)
(
10,159,361 ) (
14,317,389 )
204,152
13,093
(
229,889 ) (
4,624 )
174 (
13,090 )
182,049
206,200
-
37,537
(
7,435,014 ) (
11,740,397 )
(
11,579,025 )
5,223,166
(
8,220,000 ) (
8,220,000 )

- (
1,082 )
(
214,795 ) (
534,896 )
(
20,013,820 ) (
3,532,812 )
(
1,286,919 ) (
953,084 )
20,835,076 (
12,895,788 )
35,384,839
52,522,790
$
56,219,915 $
39,627,002

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

~7~

INNOLUX CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

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

(Reviewed, not audited)

1. HISTORY AND ORGANISATION

(1) Innolux Corporation (the “Company”) was organised on January 14, 2003 under the Act for Establishment and Administration of Science Parks in 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 and its subsidiaries (the “Group”) engage 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 AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on July 26, 2017.

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 as endorsed by FSC effective from 2017 are as follows:

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

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

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

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

~8~

New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014	January 1, 2014 July 1, 2014 July 1, 2014 January 1, 2016

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

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

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

the Group

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

the Group
New standards, interpretations, and amendments as endorsed by the FSC
follows:

effective from 2018 are a

New Standards,Interpretations andAmendments

Effective date by
International Accounting
StandardsBoard

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

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

~9~

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating results based on the Group’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 asset at fair value through profit or loss, financial asset at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to recognize the equity instrument not held for trading at fair value in other comprehensive income.
(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 recognise 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). T he 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 makes the accounting practices consistent with an entity’s risk management strategy. The components and the grouping of non-financial items can be loosened as hedged items. The 80~125% threshold of highly efficient hedge is removed, and that the hedge items and the hedged percentages of the hedge instruments that can be rebalance under the unchanged business objectives of risk management is increased.
B. IFRS 15, ‘Revenue from contracts with customers’
IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’, IAS 18, ‘Revenue’, and relevant interpretations and SICs. According to IFRS 15, revenue is recognized when a customer obtains control of goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of 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 recognises 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 to the performance obligations in the contract(s)
Step 5: Recognise 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.

~10~

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

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

(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
Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28) IFRS 16, ‘Leases’ IFRS 17, 'Insurance contracts' IFRIC 23, ‘Uncertainty over income tax treatments’	To be determined by International Accounting Standards Board January 1, 2019 January 1, 2021 January 1, 2019

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a ‘right-of-use asset’ and a lease liability (except for those leases with terms of less than 12 months and leases of low-value assets). Lessor accounting still uses the dual classification approach: operating leases and finance leases, and only increases the related disclosures.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, “Interim financial reporting” as endorsed by the FSC.
B. These financial statements should be read with the consolidated financial statements for the year ended December 31, 2016.

~11~

(2) Basis of preparation

A. Except for the following items, these consolidated 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) 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 judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements
The basis applied in these consolidated financial statements is consistent with that applied in the consolidated financial statements for the year ended December 31, 2016.
B. Subsidiaries included in the consolidated financial statements:

Main
business
Name of investor
Name of subsidiary
activities
Innolux Corporation
Bright Information
Holding Ltd.
Investment
holdings
Golden Achiever
International Ltd.
Investment
holdings
Innolux Holding Limited
Investment
holdings
Keyway Investment
Management Limited
Investment
holdings
Landmark International
Ltd.
Investment
holdings
Toppoly Optoelectronics
(B.V.I.) Ltd.
Investment
holdings
Innolux Hong Kong
Holding Limited
Investment
holdings
Leadtek Global Group
Limited
Distribution
company
Yuan Chi Investment Co.,
Ltd.
Investment
company

June
December
June
30,2017
31,2016
30,2016
Description
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
Ownership (%)

~12~

Main
business
Name of investor
Name of subsidiary
activities
Innolux Corporation
InnoJoy Investment
Corporation
Investment
company
Innolux Optoelectronics
Europe B.V.
Investment and
distribution
company
Innolux Optoelectronics
Japan Co., Ltd.
Investment and
distribution
company
Bright Information
Holding Ltd.
Kunpal Optoelectronics
Ltd.
Processing
company
Golden Achiever
International Ltd.
VAP Optoelectronics
(Nanjing) Corp.
Processing
company
Innolux Holding
Limited
Rockets Holding Ltd.
Investment
holdings
Suns Holding Ltd.
Investment
holdings
Lakers Trading Ltd.
Distribution
company
Innolux Corporation
Distribution
company
Ningbo Innolux Logistics
Ltd.
Warehousing
company
Foshan Innolux Logistics
Ltd.
Warehousing
company
Landmark
International Ltd.
Ningbo Innolux
Optoelectronics Ltd.
Processing
company
Ningbo Innolux
Technology Ltd.
Processing
company
Foshan Innolux
Optoelectronics Ltd.
Processing
company
Ningbo Innolux Display
Ltd.
Processing
company
Toppoly
Optoelectronics
(B.V.I.) Ltd.
Toppoly Optoelectronics
(Cayman) Ltd.
Investment
holdings
Innolux Hong Kong
Holding Limited
Innolux Optoelectronics
Hong Kong Holding
Limited
Investment
holdings
Innolux Hong Kong
Limited
Distribution
company
Innolux Technology
Europe B.V.
Investment and
R&D company
Innolux Technology Japan
Co., Ltd.
R&D company
Innolux Technology USA
Inc.
Distribution
company
Innolux
Optoelectronics
Europe B.V.
Innolux Optoelectronics
Germany GmbH
After sales
service
company
Keyway Investment
Management Limited

June
December
June
30,2017
31,2016
30,2016
Description
100
100
100
-
100
100
100
-
100
100
100
-
-
-
100
(a)
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
-
100
100
(e)
100
100
100
-
100
100
100
-
-
-
100
(d)
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
Ownership (%)

~13~

Main
business
Name of investor
Name of subsidiary
activities
Innolux
Optoelectronics
Japan Co., Ltd.
Innolux Optoelectronics
USA, Inc.
Distribution
company
Rockets Holding Ltd. Best China Investments
Ltd.
Investment
holdings
Mega Chance Investments
Ltd.
Investment
holdings
Magic Sun Ltd.
Investment
holdings
Stanford Developments
Ltd.
Investment
holdings
Nets Trading Ltd.
Investment
company
Suns Holding Ltd.
Warriors Technology
Investments Ltd.
Investment
company
Toppoly
Optoelectronics
Nanjing Innolux
Technology Ltd.
Distribution
company
(Cayman) Ltd.
Nanjing Innolux
Optoelectronics Ltd.
Processing
company
Kunpal Optoelectronics
Ltd.
Processing
company
Innolux
Optoelectronics Hong
Kong Holding
Limited
Shanghai Innolux
Optoelectronics Ltd.
Processing
company
Innolux Technology
Europe B.V.
Innolux Technology
Germany GmbH
Testing and
maintenance
company
Best China
Investments Ltd.
Asiaward Investment Ltd.
Investment
holdings
Mega Chance
Investments Ltd.
Main Dynasty Investment
Ltd.
Investment
holdings
Magic Sun Ltd.
Sun Dynasty Development
Ltd.
Investment
holdings
Stanford
Developments
Ltd.
Innocom Technology
(Shenzhen) Co., Ltd.
Processing
company
Ningbo Innolux
Display Ltd.
Ningbo Innolux
Electronics Ltd.
Distribution
company
Ningbo Innolux
Optoelectronics Ltd.
Ningbo Innolux Flnet
Electronics Ltd.
Distribution
company
Foshan Innolux
Optoelectronics Ltd.
Foshan Innolux Flnet
Electronics Ltd.
Distribution
company

June
December
June
30,2017
31,2016
30,2016
Description
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
-
(a)
100
100
100
-
100
100
100
-
-
100
100
(e)
-
100
100
(e)
-
100
100
(e)
100
100
100
-
100
100
100
-
100
100
-
(b)
100
100
-
(c)
Ownership (%)

(a) Kunpal Optoelectronics Ltd. was previously a wholly-owned subsidiary of Bright Information Holding Ltd. However, after reorganization in July 2016, Kunpal Optoelectronics Ltd. became a wholly-owned subsidiary of Toppoly Optoelectronics (Cayman) Ltd.

~14~

(b) Ningbo Innolux Flnet Electronics Ltd. was established in October 2016 and was included in the consolidated financial statements since the date of establishment.
(c) Foshan Innolux Flnet Electronics Ltd. was established in October 2016 and was included in the consolidated financial statements since the date of establishment.
(d) In October 2016, the Board of Directors of the Group resolved to merge Ningbo Innolux Technology Ltd., which was wholly owned by the Group, with Ningbo Innolux Display Ltd., and Ningbo Innolux Display Ltd. was the surviving company. The effective date was set on December 1, 2016, and was accounted as a reorganisation.
(e) In the first quarter of 2017, the subsidiary had completed liquidation and dissolution.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. The restrictions on fund remittance from subsidiaries to the parent company: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Employee benefits

Except for the following additional accounting policies, the accounting policies on employee benefits are the same as those described in Note 4 of the 2016 consolidated financial statements. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

(5) Income tax

Except for the following additional accounting policies, the accounting policies on income tax are the same as those described in Note 4 of the 2016 consolidated financial statements.

The interim period income tax expense is calculated according to pretax income times, effective income tax rate, and the related information is disclosed accordingly.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

For more information, please refer to Note 5 of the consolidated financial statements for the year ended December 31, 2016.

~15~

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand, demand deposits and checking accounts Time deposits Cash equivalents - Repurchase bonds	June 30,2017 `15,985,386` `$` `39,568,226` `55,553,612` `666,303` `56,219,915` `$`	December31,2016 `8,392,955` `$` `26,326,649` `34,719,604` `665,235` `35,384,839` `$`	June 30,2016
			`19,517,407` `$` `19,445,255`
			`38,962,662` `664,340`
			`39,627,002` `$`

A. The Group 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 and bonds with repurchase agreement expire in 3 months and risks of changes in their values are remote. The remaining unpledged time deposits which did not meet the definition of cash equivalents were $4,827, $4,998 and $1,727 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively, and were classfied as ‘other current assets’.

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

Assets Current items Financial assets held for trading Forward foreign exchange contracts Non-current items Financial assets held for trading Stock-Advanced Optoelectronic Technology Inc. Valuation adjustment Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts Foreign exchange swap contracts	June 30,2017 `234,109` `$` `48,040` `$` `189,092` `237,132` `$` `179,492` `$` `229,539` `409,031` `$`	December31,2016 `64,241` `$` `77,019` `$` `173,082` `250,101` `$` `1,190,148` `$` `-` `1,190,148` `$`	June 30,2016
			`722,839` `$`
			`77,019` `$` `178,665`
			`255,684` `$`
			`227,657` `$` `-`
			`227,657` `$`

A. The Group recognized net gain of $118,845, $564,252, $1,185,300 and $1,147,170 on the financial instruments for the three-month and six-month periods ended June 30, 2017 and 2016, respectively.

~16~

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

			June30,2017	June30,2017		December31,	December31,	2016
	Contract		amount		Contract		amount
Derivative financial	(Notional principal)				(Notional principal)
assets and liabilities	(in thousands)			Contractperiod	(in thousands)			Contractperiod
Current items
Forward foreign	USD (sell)	`$`	`392,500`	2017/04-2017/09	USD (sell)	`$`	`360,000`	2016/10-2017/03
exchange contracts	JPY (buy)		`43,490,265`	2017/04-2017/09	JPY (buy)		`39,597,920`	2016/10-2017/03
Forward foreign	EUR (sell)		`51,300`	2017/04-2017/09	TWD (sell)		`621,240`	2016/09-2017/02
exchange contracts	USD (buy)		`56,773`	2017/04-2017/09	USD (buy)		`20,000`	2016/09-2017/02
Forward foreign	EUR (sell)		`1,200`	2017/05-2017/08	EUR (sell)		`19,000`	2016/10-2017/01
exchange contracts	JPY (buy)		`150,514`	2017/05-2017/08	USD (buy)		`20,706`	2016/10-2017/01
Forward foreign	HKD (sell)		`332,475`	2017/04-2017/07	EUR (sell)		`55,000`	2016/09-2017/04
exchange contracts	EUR (buy)		`39,000`	2017/04-2017/07	JPY (buy)		`6,516,335`	2016/09-2017/04
Forward foreign	USD (sell)		`417,000`	2017/04-2017/12	EUR (sell)		`8,960`	2016/12-2017/01
exchange contracts	RMB (buy)		`2,873,169`	2017/04-2017/12	TWD (buy)		`302,364`	2016/12-2017/01
Foreign exchange	USD (sell)		`775,000`	2017/04-2017/08	USD (sell)		`715,000`	2016/09-2017/02
swap contracts	TWD (buy)		`23,344,973`	2017/04-2017/08	RMB (buy)		`4,948,754`	2016/09-2017/02
					HKD (sell)		`330,712`	2016/10-2017/01
					EUR (buy)		`39,000`	2016/10-2017/01
							June30,2016
					Contract		amount
Derivative financial					(Notional principal)
assets and liabilities					(in thousands)			Contractperiod
Current items
Forward foreign					TWD (sell)	`$`	`13,269,530`	2016/04-2016/10
exchange contracts					USD (buy)		`410,000`	2016/04-2016/10
Forward foreign					USD (sell)		`42,000`	2016/04-2016/09
exchange contracts					JPY (buy)		`44,883,829`	2016/04-2016/09
Forward foreign					EUR (sell)		`12,000`	2016/04-2016/09
exchange contracts					USD (buy)		`13,802`	2016/04-2016/09
Forward foreign					EUR (sell)		`10,000`	2016/06-2016/08
exchange contracts					TWD (buy)		`363,916`	2016/06-2016/08
Forward foreign					EUR (sell)		`49,000`	2016/03-2016/10
exchange contracts					JPY (buy)		`6,018,480`	2016/03-2016/10
Forward foreign					HKD (sell)		`342,560`	2016/04-2016/07
exchange contracts					EUR (buy)		`39,000`	2016/04-2016/07
Forward foreign					USD (sell)		`550,000`	2016/05-2016/09
exchange contracts					RMB (buy)		`3,631,528`	2016/05-2106/09

The Group 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.

~17~

(3) Available-for-sale financial assets

Available-for-sale financial assets
Items Non-current items Listed stocks Emerging and unlisted stocks	June30,2017 `7,328,146` `$` `684,892` `8,013,038` `$`	December31,2016 `5,295,578` `$` `545,351` `5,840,929` `$`	June30,2016
			`4,909,108` `$` `606,987`
			`5,516,095` `$`

A. The Group recognized net gain (loss) in other comprehensive income for fair value change and reclassified from equity to profit or loss for the three-month and six-month periods ended June 30, 2017 and 2016. Please refer to Note 6(20).
B. The counterparties of the Group’s debt instrument investments have good credit quality.
C. For the six-month period ended June 30, 2017, the Company and its subsidiary assessed that investment value of certain investee companies was impaired and recognized impairment loss of $120,000 which was shown as ‘other gains and losses’.

(4) Notes receivable and accounts receivable

		June 30,2017	December31,2016	December31,2016		June 30,2016
Notes receivable	`$`	`30,275`	`$`	`-`	`$`	`100`
Accounts receivable		`45,387,596`		`53,798,678`		`38,343,386`
Total		`45,417,871`		`53,798,678`		`38,343,486`
Less: Allowance for sales returns
and discounts	`(`	`1,341,686)`	`(`	`833,545)`	`(`	`1,113,299)`
Allowance for bad debts	`(`	`109,499)`	`(`	`109,501)`	`(`	`118,520)`
	`$`	`43,966,686`	`$`	`52,855,632`	`$`	`37,111,667`

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

is as follows:
Up to 60 days 61 to 180 days Over 181 days	June 30,2017 `415,324` `$` `18,285` `467` `434,076` `$`	December31,2016 `391,369` `$` `8,364` `-` `399,733` `$`	June 30,2016
			`$ 324,442` `17,895` `3,768` `346,105` `$`

C. Movement analysis of accounts receivable and notes receivable that were impaired is as follows:
(a) As of June 30, 2017, December 31, 2016 and June 30, 2016, the Group’s accounts receivable that were impaired were $109,499, $109,501, and $118,520, respectively.
(b) Movement on allowance for bad debts for impairment loss on individual provision is as follows:

At January 1 Net exchange difference `(` At June 30	2017 `109,501` `$` `2)` `109,499` `$`	2016
		`118,516` `$` `4`
		`118,520` `$`

~18~

(5) Transfer of financial assets

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

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

As of June 30, 2017, all the accounts receivable sold were collected and the Company entered into factoring agreements with CTBC Bank, Taipei Fubon Commercial Bank, and Bank of Taiwan in the amount of $18,860,400, $6,084,000, and $1,216,800, respectively.

As of June 30, 2016, the related information on accounts receivable that were transferred but not expired is as follows. Partial amounts that were not advanced were recorded in other receivables:

June 30, 2016

			June 30,2016
Inventories Accounts Purchaser receivable of accounts transferred that receivable hasnot expired CTBC Bank `1,745,651` `$` Taipei Fubon Commercial Bank `402,241` `2,147,892` `$` Raw materials and supplies Work in process Finished goods	Accounts receivable transferred that hasnot expired		Amount derecognised `1,745,651` `$` `402,241` `2,147,892` `$` June30,2017 `3,693,546` `16,740,851` `9,226,528` `29,660,925`	Facilities `20,978,750` `$` `6,455,000` `27,433,750` `$` December31,2016 `3,352,916` `$` `12,345,964` `7,702,848` `23,401,728` `$`	Amount advanced `1,571,086` `$` `362,017` `1,933,103` `$` June30,2016
		`$`			`3,354,479` `$` `14,129,905` `7,909,448` `25,393,832` `$`
		`$`

(6) Inventories

A. For the three-month and six-month periods ended June 30, 2017 and 2016, the Company and subsidiaries recognized cost of goods sold for inventories that have been sold at $63,470,051, $65,505,343, $129,125,457 and $125,818,625, and recognized net inventory gain (loss) at $6,213, $255,180, ($19,131) and $113,882 due to write down (reversal) of cost of scrap inventories to net realizable value, respectively.
B. Due to the earthquake which occurred in Kaohsiung, Taiwan on February 6, 2016, certain inventories were destroyed. Please refer to Note 10 for details.

~19~

(7) Investments accounted for under the equity method

Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. TOA Optronics Corporation Others	June30,2017 `828,477` `$` `569,936` `9,865` `106,145` `1,514,423` `$`	December31,2016 `870,941` `$` `451,943` `89,366` `105,168` `1,517,418` `$`	June30,2016
			`875,912` `$` `435,596` `256,478` `97,951`
			`1,665,937` `$`

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

2017 2016 `46,694` `$` `48,888` `$` `42,829)` `(` `213)` `(` `3,865` `$` `48,675` `$` endedJune30, For the three-month period 2017	2017 2016 `46,694` `$` `48,888` `$` `42,829)` `(` `213)` `(` `3,865` `$` `48,675` `$` endedJune30, For the three-month period 2017	2017 2016 `46,694` `$` `48,888` `$` `42,829)` `(` `213)` `(` `3,865` `$` `48,675` `$` endedJune30, For the three-month period 2017		2017 2016 `44,765` `135,258` `$` `46,087)` `16,140)` `(` `1,322)` `119,118` `$` endedJune30, For the six-month period	2017 2016 `44,765` `135,258` `$` `46,087)` `16,140)` `(` `1,322)` `119,118` `$` endedJune30, For the six-month period	2017 2016 `44,765` `135,258` `$` `46,087)` `16,140)` `(` `1,322)` `119,118` `$` endedJune30, For the six-month period
2017 `46,694` `$` `42,829)` `(` `(` `3,865` `$`				2017 `44,765` `46,087)` `(` `1,322)`
	`$`		`$` `(`		`$`
`$`	`$`		`($`		`$`

		Disposals		Transfer, net exchange differences and others		AtJune30
				`-` `$` `482,881` `24,617,223` `1,374,819`
				`26,474,923`
				`387,296` `1,182,440` `109,753`
				`1,679,489`

(8) Property, plant and equipment

~20~

2016

AtJanuary1 Additions Disposals Cost: Land `3,852,792` `$` `-` `$` `-` `$` Buildings `185,696,326` `52,414` `1,066,461)` `(` Machinery and equipment `432,460,229` `172,973` `2,712,281)` `(` Other equipment `33,632,482` `32,773` `294,840)` `(` `655,641,829` `258,160` `4,073,582)` `(` Accumulated depreciation and impairment: Buildings `95,892,428)` `(` `5,798,028)` `(` `602,088` Machinery and equipment `352,326,878)` `(` `13,394,518)` `(` `2,612,171` Other equipment `26,880,493)` `(` `2,093,980)` `(` `329,668` `475,099,799)` `(` `21,286,526)` `(` `3,543,927` Unfinished construction and equipment under acceptance `18,940,710` `14,743,704` `2,220)` `(` `(` `199,482,740` `$`	Transfer, net exchange differences and others AtJune30 `-` `$` `3,852,792` `$` `138,513` `184,820,792` `4,797,790` `434,718,711` `1,665,849` `35,036,264` `6,602,152` `658,428,559` `406,791` `100,681,577)` `(` `329,879` `362,779,346)` `(` `9,980` `28,634,825)` `(` `746,650` `492,095,748)` `(` `9,970,616)` `23,711,578` `190,044,389` `$`	AtJune30

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:
For the three-month period endedJune30,2017 Capitalized amount 52,151 $ Range of the interest rates for capitalization 2.15%~2.41%	For the six-month period endedJune30,2017
	203,902 $ 2.15%~2.41%

B. Information about the property, plant, and equipment that were pledged to others as collateral is provided in Note 8.
C. As of June 30, 2017, December 31, 2016, and June 30, 2016, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $319,158, $896,996, and $4,467,643, respectively.
D. Due to the earthquake in Kaohsiung, Taiwan on February 6, 2016, a portion of property, plant, and equipment were damaged. Please refer to Note 10 for details.

~21~

(9) Investment property

Investment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings `(` Cost: Land Buildings Accumulated depreciation and impairment: Buildings `(`		2017		AtJune30 `188,247` `$` `439,228` `627,475` `59,414)` `568,061` `$` At June 30 `188,247` `$` `439,228` `627,475` `48,688)` `578,787` `$`
	AtJanuary1 `188,247` `$` `439,228` `627,475` `54,050)` `(` `573,425` `$` `(`	Additions Transfers `-` `$` `-` `$` `-` `-` `-` `-` `5,364)` `-` `(` `5,364)` `$` `-` `$` 2016
	At January1 `188,247` `$` `564,109` `752,356` `71,853)` `(` `680,503` `$` `(`	Additions `-` `$` `-` `(` `-` `(` `5,770)` `5,770)` `$` `(`	Disposals `-` `$` `124,881)` `124,881)` `28,935` `(` `95,946)` `$`

The fair value of the investment property held by the Group as at June 30, 2017, December 31, 2016, and June 30, 2016 was $1,109,891, $1,109,891, and $1,077,466, 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.

AtJanuary1 Additions Cost: Patents and royalty `8,154,685` `$` `-` `$` Goodwill `17,096,628` `-` Others `4,417,732` `229,889` `(` `29,669,045` `229,889` `(` Accumulated amortization and impairment: Patents and royalty `7,528,072)` `(` `409,732)` `(` Others `3,694,652)` `(` `253,714)` `(` `11,222,724)` `(` `663,446)` `(` `18,446,321` `$` `433,557)` `($`			2017
			Disposals `-` `$` `-` `47,149)` `(` `47,149)` `(` `-` `47,149` `47,149` `-` `$` `(`

~22~

2016

AtJanuary1 Additions Cost: Patents and royalty `8,152,685` `$` `-` `$` Goodwill `17,096,628` `-` Others `4,215,500` `4,624` `(` `29,464,813` `4,624` `(` Accumulated amortization and impairment: Patents and royalty `6,668,709)` `(` `439,170)` `(` Others `3,453,248)` `(` `162,748)` `(` `10,121,957)` `(` `601,918)` `(` `19,342,856` `$` `597,294)` `($`	Disposals `-` `$` `-` `41,517)` `41,517)` `-` `41,517` `41,517` `-` `$`	Transfer, net exchange differences and others AtJune30 `2,000` `$` `8,154,685` `$` `-` `17,096,628` `78,983` `4,257,590` `80,983` `29,508,903` `-` `7,107,879)` `(` `6,234` `3,568,245)` `(` `6,234` `10,676,124)` `(` `87,217` `$` `18,832,779` `$`	AtJune30

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

2017 2016 301,126 $ 249,990 $ 37,337 48,524 338,463 $ 298,514 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 301,126 $ 37,337 338,463 $	2017 587,273 $ 76,173 663,446 $	2016
		502,976 $ 98,942
		601,918 $

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. Based on the periodic evaluation, the Company did not recognize impairment loss on goodwill.

(11) Short-term borrowings

Type ofborrowings Bank loans Credit loans Range of interest rates	December31,2016 `11,583,750` `$` `0.83%~1.59%`	June 30,2016 `5,242,223` `$` `0.84%~1.62%`	Collateral
			None

As of June 30, 2017, the Group has no short-term borrowings.

~23~

(12) Other payables

Other payables
Wages and salaries payable and bonus Payable on machinery and equipment Repairs and maintenance expense payable Utilities expense payable Dividends payable Other payables	June 30,2017 `10,636,310` `$` `4,441,265` `2,180,766` `1,304,592` `995,204` `11,512,195` `31,070,332` `$`	December31,2016 `6,566,523` `$` `3,339,764` `1,974,059` `1,064,275` `-` `9,971,476` `22,916,097` `$`	June 30,2016
			`4,618,692` `$` `4,658,627` `2,231,228` `1,198,881` `1,989,810` `8,426,104`
			`23,123,342` `$`

- (13) Long term borrowings

Long-term borrowings
Type of loans	Period		June 30,2017		December31,2016			June 30,2016
Syndicated bank	2015/3/12
loans	~2021/12/6	`$`		`36,620,000`	`$`	`44,840,000`	`$`		`52,060,000`
Less:
Administrative
expenses
charged by
syndicated
banks		`(`		`245,473)`	`(`	`329,847)`	`(`		`222,149)`
Current portion (includes
administrative expenses)		`(`		`35,531,140)`	`(`	`16,381,686)`	`(`		`16,369,848)`
		`$`		`843,387`	`$`	`28,128,467`	`$`		`35,468,003`
Range of interest rates			`1.85%~2.06%`			`1.77%~2.06%`		`1.77%~1.98%`

A. Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.
B. 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 year ended December 31, 2016 are in compliance with the covenants on the syndicated loan agreement.

(14) Pensions

A. Defined benefit pension plan
(a) The Company and its domestic subsidiaries have 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.
(b) The Company suspended its contributions to the pension reserve as agreed by the Science Park Administration in June 2013.

~24~

B. Defined contribution pension plan
- (a) Effective July 1, 2005, the Company and its domestic subsidiaries have 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.
- (b) The subsidiaries in Mainland China have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentages of employees’ monthly salaries and wages.
- (c) The pension costs under the defined contribution pension plans of the Group for the threemonth and six-month periods ended June 30, 2017 and 2016 were $488,435, $510,694, $962,489 and $1,026,123, respectively.
(15) Share-based payment
A. The information on the Company’s share-based payment compensation plan negotiated with employees is provided in Note 6(15) of the consolidated financial statements for the year ended December 31, 2016.
B. The details of the employee stock option plan for the six-month periods ended June 30, 2016 is as follows:

A. The information on the Company’s share-based payment compensation plan negotiated with employees is provided in Note 6(15) of the consolidated financial statements for the year ended December 31, 2016. B. The details of the employee stock option plan for the six-month periods ended June 30, 2016 is as follows:	ompany’s share-based payment compensation plan negotiated with ote 6(15) of the consolidated financial statements for the year ended e stock option plan for the six-month periods ended June 30, 2016 is	ompany’s share-based payment compensation plan negotiated with ote 6(15) of the consolidated financial statements for the year ended e stock option plan for the six-month periods ended June 30, 2016 is	ompany’s share-based payment compensation plan negotiated with ote 6(15) of the consolidated financial statements for the year ended e stock option plan for the six-month periods ended June 30, 2016 is	ompany’s share-based payment compensation plan negotiated with ote 6(15) of the consolidated financial statements for the year ended e stock option plan for the six-month periods ended June 30, 2016 is	ompany’s share-based payment compensation plan negotiated with ote 6(15) of the consolidated financial statements for the year ended e stock option plan for the six-month periods ended June 30, 2016 is
Weighted Weighted Weighted average average Range of average stock price of Quantity (in exercise exercise remaining stock options thousand price price vesting at exercise StockOptions units) (indollars) (indollars) period date (indollars) Outstanding options at the beginning of the period `50,000` `22.85` `$` Options exercised `-` `-` `9.99` `$` Options expired `50,000)` `(` `21.87` Outstanding options at the end of the period `-` `-` `-` `$` - Exercisable options at the end of the period `-` `-` Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016
		Weighted average exercise price (indollars) `22.85` `$` `-` `21.87` `-` `-`	Range of exercise price (indollars) `-` `$`	Weighted average remaining vesting period -	Weighted average stock price of stock options at exercise date (indollars)
					`9.99` `$`

There was no employee stock option plan for the six-month period ended June 30, 2017.

C. For the three-month and six-month periods ended June 30, 2016, the expenses incurred from share-based payment arrangements were $1,950 and $11,960, respectively.

(16) Provisions-current

Provisions-current
At January 1, 2017 Additions during the period Used during the period `(` At June 30, 2017	Warranty `1,634,234` `$` `1,010,000` `561,740)` `2,082,494` `$`	Litigation and others `2,131,000` `$` `638,700` `-` `(` `2,769,700` `$`	Total
			`3,765,234` `$` `1,648,700` `561,740)` `4,852,194` `$`

~25~

A. Warranty

The Group 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 provisions for the Group are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

(17) Share capital

As of June 30, 2017, the Company’s authorized and outstanding capital were $105,000,000 and $99,520,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from shares issued have been collected.

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

At January 1 Cancellation of restricted stock to employees `(` At June 30	2017 Number of ordinary shares (inthousands) `9,952,149` `77)` `(` `9,952,072`	2016 Number of ordinary shares (inthousands) `9,953,237` `886)` `9,952,351`

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. As of June 30, 2017, there were 213 thousand units outstanding, representing 2,134 thousand shares of common stocks.
B. The Company adopted a resolution in 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 per share). Until the vesting conditions are met by employees, those shares are restricted with regard to transfer of voting rights, dividend, and other rights. As of June 30, 2017 and 2016, the Company has retired 77 thousand and 886 thousand shares of unvested restricted stocks to employees, respectively, and decreased capital in accordance with related regulation.

(18) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

~26~

2017

		2017
At January 1 Cancellation of restricted stock to employees Vested in restricted stock to employees Changes in equity of associates accounted for using equity method At June 30 At January 1 Cancellation of restricted stock to employees Vested in restricted stock to employees Changes in restricted stock to employees Expiration of employee stock options Changes in equity of associates accounted for using equity method At June 30	Sharepremium `99,614,516` `$` `-` `167` `-` `(` `99,614,683` `$`	Share of profit (loss) of associates accounted for Restricted under equity stock to method employees `33,888` `$` `594)` `($` `-` `768` `-` `167)` `(` `1,673)` `-` `(` `33,888` `$` `7` `$` 2016	Total `99,647,810` `$` `768` `-` `1,673)` `99,646,905` `$`

	Share of profit (loss) of associates accounted for Restricted under equity Employee stock to Sharepremium method stock options employees `99,101,649` `$` `36,458` `$` `393,500` `$` `111,957` `$` `-` `-` `-` `8,860` `117,288` `-` `-` `117,288)` `(` `-` `-` `-` `3,916)` `(` `393,500` `-` `393,500)` `(` `-` `-` `2,550)` `(` `-` `-` `99,612,437` `$` `33,908` `$` `-` `$` `387)` `($`		Total `99,643,564` `$` `8,860` `-` `3,916)` `(` `-` `2,550)` `(` `99,645,958` `$`

(19) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed after setting aside or reversing a special reserve according to related regulations. The appropriation of the remaining amount along with the unappropriated earnings from previous years shall be proposed by the Board of Directors and resolved by the shareholders. The Company is in an emerging industry which is growing rapidly, and has a capital intensive business. The Company is at the stage of stable growth. In line with the Company’s long-term financial plan in the future, investment environment and business competition situation, the appropriation of dividends shall be proposed by the Board of Directors and resolved by the

~27~

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 appropriation of 2016 and 2015 net income which was approved at the stockholders’ meeting in June 2017 and 2016, respectively, are as follows:

Years endedDecember31,	Years endedDecember31,	Years endedDecember31,
Dividends per Amount share(in dollars) `187,069` `$` `3,418,804` `995,204` `0.10` `$` `4,601,077` `$` 2016	2015
Amount `187,069` `$` `3,418,804` `995,204` `4,601,077` `$`	Amount `1,081,560` `$` `-` `1,989,810` `3,071,370` `$`	Dividends per share(in dollars)
		`0.20` `$`

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

(20) Other equity items

refer to Note 6(25). Other equity items
Available- Currency for-sale translation investments Total At January 1 `4,040,408)` `($` `621,604` `$` `3,418,804)` `($` Revaluation of available-for-sale investments - gross `-` `4,765,385` `4,765,385` Revaluation transfer of available-for-sale investment - gross `-` `2,195,308)` `(` `2,195,308)` `(` Currency translation differences `2,446,825)` `(` `-` `2,446,825)` `(` Share of other comprehensive loss of associates `46,087)` `(` `-` `46,087)` `(` Effect of income tax `-` `32,100)` `(` `32,100)` `(` At June 30 `6,533,320)` `($` `3,159,581` `$` `3,373,739)` `($` 2017		2017
			Total

~28~

Available- Employee Currency for-sale unearned translation investments compensation Total At January 1 `1,695,294` `$` `1,074,445` `$` `19,402)` `($` `2,750,337` `$` Revaluation of available-for-sale investments - gross `-` `1,382,357)` `(` `-` `1,382,357)` `(` Revaluation transfer of available-for-sale investment - gross `-` `71,016` `-` `71,016` Currency translation differences `2,169,230)` `(` `-` `-` `2,169,230)` `(` Changes in restricted stocks to employees `-` `-` `3,977` `3,977` Compensation related to share-based payment `-` `-` `11,960` `11,960` Share of other comprehensive loss of associates `16,140)` `(` `-` `-` `16,140)` `(` Effect of income tax `-` `45,191)` `(` `-` `45,191)` `(` At June 30 `490,076)` `($` `282,087)` `($` `3,465)` `($` `775,628)` `($` 2016		2016
			Total
			`775,628)` `$`

(21) Other income

Other income
Rental revenue Interest income Dividend income Payables reclassified to other income Other income	2017 2016 32,083 $ 38,476 $ 126,678 79,001 139,408 127,723 - 447,329 366,929 403,875 665,098 $ 1,096,404 $ For the three-month period endedJune30,	2017 2016 64,704 $ 82,795 $ 195,669 172,024 139,408 127,723 - 834,969 712,590 981,651 1,112,371 $ 2,199,162 $ For the six-month period endedJune30,
	2017 32,083 $ 126,678 139,408 - 366,929 665,098 $	2017 64,704 $ 195,669 139,408 - 712,590 1,112,371 $
			2,199,162 $

(22) Other gains and losses

Other gains and losses
		For the three-month period				For the six-month period
		endedJune30,				endedJune30,
		2017		2016		2017		2016
Net gain on financial assets and
liabilities at fair value through
profit or loss	$	118,845	$	564,252	$	1,185,300	$	1,147,170
Net currency exchange loss	(	185,509)	(	563,327)	(	1,275,060)	(	1,201,162)
Gain (loss) on disposal of
investments		1,320,327		40		2,324,844	(	70,990)
Loss on disposal of property,
plant and equipment	(	83,530)	(	33,259)	(	134,024)	(	35,937)
Impairment loss		-		-	(	120,000)		-
Litigation loss and others	(	1,352,785)	(	653,373)	(	1,772,823)	(	1,538,410)
	($	182,652)	($	685,667)	$	208,237	($	1,699,329)

~29~

(23) Finance costs

Finance costs
Interest expense: Bank borrowings Others Factoring expense of accounts receivable	2017 2016 168,393 $ 288,685 $ 3 222 - 2,895 168,396 $ 291,802 $ endedJune30, For the three-month period	endedJune30, For the six-month period
	2017 168,393 $ 3 - 168,396 $	2017 282,467 $ 9 - 282,476 $	2016
			594,405 $ 445 3,711
			598,561 $

(24) Expenses by nature

2017 2016 11,206,208 $ 9,222,583 $ - 1,950 488,435 510,694 7,844,620 10,147,681 338,463 298,514 19,877,726 $ 20,181,422 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 11,206,208 $ - 488,435 7,844,620 338,463 19,877,726 $	2017 24,128,574 $ - 962,489 15,996,101 663,446 41,750,610 $	2016
		18,608,267 $ 11,960 1,026,123 21,292,296 601,918
		41,540,564 $

(25) Employees’ compensation and directors’ remuneration

A. According to the Articles of Incorporation of the Company, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation and shall not be higher than 0.1% for directors’ remuneration.
B. For the three-month and six-month periods ended June 30, 2017, employees’ compensation was accrued at $602,828 and $1,551,868, respectively; while no directors’ remuneration was accrued. For the six-month period ended June 30, 2016, no employees’ compensation was accrued. The aforementioned amounts were recognized in expenses.
The expense recognized for the six-month period ended June 30, 2017 was accrued based on the earnings of current year.
Employees’ compensation and directors’ remuneration were accrued at $192,788 and $1,928, respectively, based on the earnings of current year distributable for the year ended December 31, 2016 and the employees’ compensation will be distributed in the form of cash. Employees’ compensation and directors’ remuneration for 2016 as resolved by the Board of Directors were $231,338 and $3,856, respectively. The difference of $40,478 between employees’ compensation (directors’ remuneration) as resolved by the Board of Directors and the amount recognized in the 2016 financial statements was caused by a different accrual ratio and had been recorded as

~30~

expense in 2017. As of June 30, 2017, the compensation and remuneration have not yet been paid.

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

(26) Income tax

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

Current tax: Current tax on profits for the period Tax on undistributed surplus earnings Prior year income tax (overestimate) underestimate ( Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	2017 2016 1,919,047 $ 269,582) ($ - 590,712 37,650) 3,883 ( 1,881,397 $ 325,013 $ 2,184,356 $ 280,408 $ 4,065,753 $ 605,421 $ For the three-month period endedJune30,	2017 2016 2,044,030 $ 712,413 $ - 590,712 42,052) 4,441 2,001,978 $ 1,307,566 $ 5,559,845 $ 654,217) ($ 7,561,823 $ 653,349 $ For the six-month period endedJune30,
		2017 2,044,030 $ - 42,052) 2,001,978 $ 5,559,845 $ ( 7,561,823 $

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

follows:
Fair value gains/losses on available- for-sale financial assets	2017 2016 37,528) ($ 48,617 $ For the three-month period endedJune30,	2017 2016 32,100 $ 45,191 $ For the six-month period endedJune30,
			2016 45,191 $

B. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority.
C. Unappropriated retained earnings recorded by the Company pertain to retained earnings after 1998.
D. The details of imputation system are as follows:

(a) Balance of tax credit account (b) Estimated (actual) creditable tax rate	June 30,2017 `1,979,382` `$`	December31,2016 `1,420,948` `$` 2017(Estimated) `4.31%`	June 30,2016
			`1,579,547` `$`
			2016 (Actual)
			`7.47%`

~31~

(27) Earnings per share

2017 2016 12,118,217 $ 3,475,528) ($ 9,952,047 9,949,064 1.22 $ 0.35) ($ 12,118,217 $ 9,952,047 110,553 25 10,062,625 1.20 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 12,118,217 $ 9,952,047 1.22 $ 12,118,217 $ 9,952,047 110,553 25 10,062,625 1.20 $	2017 23,976,336 $ 9,952,033 2.41 $ 23,976,336 $ 9,952,033 111,348 40 10,063,421 2.38 $	2016
		12,057,036) ($
		9,945,454
		1.21) ($

As employee stock options had anti-dilutive effect for the six-month period ended June 30, 2016, they were not included in the calculation of diluted earnings per share.

(28) Supplemental cash flow information

Investing activities with partial cash payments:

For the six-month period ended June 30,

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment `(` Cash paid during the period	2017 `11,260,862` `$` `3,339,764` `4,441,265)` `(` `10,159,361` `$`	2016 `15,001,864` `$` `3,974,152` `4,658,627)` `14,317,389` `$`

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7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

Names and relationship of related parties
Names of related parties	Relationship withthe Group
Hon Hai Precision Industry Co., Ltd. and its subsidiaries Chi Lin Optoelectronics Co., Ltd. and its subsidiaries FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp.	The related party is owned by the same major shareholder of the Company The related party’s director is the Company Associate Associate

(2) Significant related party transactions

A. Operating revenue

2017 2016 11,519,955 $ 2,093,232 $ 11,466 16,552 11,531,421 $ 2,109,784 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 11,519,955 $ 11,466 11,531,421 $	2017 22,581,671 $ 40,983 22,622,654 $	2016
		3,750,506 $ 83,910
		3,834,416 $

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

2017 2016 4,529,020 $ 1,686,555 $ 251,600 239,882 4,780,620 $ 1,926,437 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 4,529,020 $ 251,600 4,780,620 $	2017 9,670,116 $ 612,008 10,282,124 $	2016
		3,360,541 $ 615,989
		3,976,530 $

The payment term was 30~120 days to related parties after delivery, and 30~180 days to nonrelated 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. Receivables from related parties:

Receivables from related parties:
Accounts receivable Others `-`Hon Hai Precision Industry Co., Ltd. `-`Others Associates	June 30,2017 `4,208,819` `$` `10,224,473` `45,318` `14,478,610` `$`	December31,2016 `7,605,574` `$` `3,946,042` `47,743` `11,599,359` `$`	June 30,2016
			`1,120,090` `$` `1,725,410` `25,616` `2,871,116` `$`

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.

D. Payables to related parties:

Accounts payable Others `-`Hon Hai Precision Industry Co., Ltd. `-`Others Associates	June 30,2017 `6,233,210` `$` `233,537` `129,242` `6,595,989` `$`	December31,2016 `4,152,828` `$` `737,598` `229,809` `5,120,235` `$`	June 30,2016
			`1,393,768` `$` `766,532` `132,117` `2,292,417` `$`

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

E. Property transactions

Purchase of property

(a) Acquisition of property, plant, and equipment:

		For the three-month period		For the six-month period	For the six-month period
		endedJune30,		endedJune30,
		2017 2016		2017 2016
Others	$	13,155 245 $	$	50,479 $	3,393
Period-end	balances arising	from purchases of property (shown		as “Other payables”):
		June 30,2017 December		31,2016 June 30,	2016
Others		`11,234` `$` `$`		`27,031` `$`	`1,525`

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

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Sale of property

(a) Proceeds from sale of property and gain on disposal:

Others	Disposal Gain on proceeds disposal `-` `$` `-` `$` endedJune30,2017 For the three-month period	endedJune30,2017 For the six-month period	endedJune30,2017 For the six-month period
	Disposal proceeds `-` `$`	Disposal proceeds `716` `$`	Gain on disposal
			`34` `$`

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

Others	June 30,2017 `-` `$`	December31,2016 `1,570` `$`	June 30,2016
			`-` `$`

(3) Key management compensation

2017 2016 10,995 $ 12,571 $ - 13 108 130 11,103 $ 12,714 $ endedJune30, For the three-month period	endedJune30, For the six-month period	endedJune30, For the six-month period
2017 10,995 $ - 108 11,103 $	2017 44,097 $ - 216 44,313 $	2016
		78,861 $ 665 242
		79,768 $

8. PLEDGED ASSETS

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

Book value

Pledged asset Other current assets Time deposits Property, plant and equipment Intangible assets Other non-current assets Time deposits	June 30,2017 `1,628` `$` `75,960,734` `11,282` `722` `75,974,366` `$`	December31,2016 `1,726` `$` `80,828,544` `15,551` `752` `80,846,573` `$`	June 30,2016 Purpose `4,867` `$` Tariff, land lease, and credit card guarantee `53,873,710` Long-term loans and performance guarantee for lease payable `-` Long-term loans and performance guarantee for lease payable `752` Guarantee for contract and performance bond `53,879,329` `$`	Purpose

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRAC T 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 Department of Justice of the U.S. and paid off the fines. Later Brazil government initiated an investigation case against the Company. The investigation is still ongoing and the Company has been cooperative with the investigation. As for civil lawsuits filed by some state governments in the U.S., downstream panel makers, and customers, the Company had reached settlement agreement individually.
B. Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and American subsidiaries with the United States District Court for the District of East Texas on April 25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in February 2014.

In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In March 2015, the CAFC overruled the decision rendered by the district court and ordered a retrial. In June 2017, the jury determined that some products of the Company and American subsidiaries constituted direct infringement of patent and ordered an infringement compensation for Eidos. The Company plans to continue the legal fight by filing a post-trial motion in July 2017. However, the results of the litigation are uncertain and are dependent on the future litigation progress. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term.

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

(2) Commitments

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

Property, plant and equipment	June 30,2017 `17,633,929` `$`	December31,2016 `17,531,784` `$`	June 30,2016
			`43,002,418` `$`

B. Operating lease commitments

The Group 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 Group has no significant additional operating lease agreement for the period. Please refer to Note 9(2) of the consolidated financial statements for the year ended December 31, 2016 for the related information.

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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	June30,2017 `44,796` `$`	December31,2016 `245,565` `$`	June30,2016
			`8,434,099` `$`

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. However, the Company has full earthquake insurance and business interruption insurance to cover the operating costs of inventories and building during the repair period. The Company is actively processing the insurance claims. According to the initial assessment, the Company has no other unrecognized material loss on property after taking the insurance claims into account as of June 30, 2017.

11. SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

No significant changes during the period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2016.

(2) Financial instruments

A. Fair value information of financial instruments

The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets-current, short-term loans, accounts payable, other payables and long-term loans) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3).

B. Financial risk management policies

No significant changes during the period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2016.

C. Significant financial risks and degrees of financial risks

Except for the following description, there are no significant changes during the period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2016. (a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
ii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: RMB). Based on the simulations performed, the impact on post-tax

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profit of a 1% exchange rate fluctuation would be an increase of $383,923 and $470,158 for the six-month periods ended June 30, 2017 and 2016, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December31,2016	December31,2016	December31,2016
Foreign currency Exchange amount rate Book value (In thousands) (Note) (NTD) `7,224,538` `$` `32.25` `232,991,351` `$` `8,114,141` `0.28` `2,271,959` `85,344` `33.90` `2,893,162` `2,337,217` `$` `32.25` `75,375,248` `$` `223,521` `4.16` `929,847` `5,619,277` `0.28` `1,573,398` `3,703` `33.90` `125,532` `4,947,745` `$` `32.25` `159,564,776` `$` `35,248,180` `0.28` `9,869,490` `42,379` `33.90` `1,436,648` June30,2016		Book value (NTD)
Foreign currency amount (In thousands) `6,091,977` `$` `8,519,616` `57,251` `2,346,310` `$` `245,572` `5,269,689` `3,615` `4,488,989` `$` `30,050,628` `3,030`	Exchange rate (Note) `32.28` `0.31` `35.89` `32.28` `4.16` `0.31` `35.89` `32.28` `0.31` `35.89`	Book value (NTD)
		`196,649,018` `$` `2,641,081` `2,054,738` `75,738,887` `$` `1,021,580` `1,633,604` `129,742` `144,904,565` `$` `9,315,695` `108,747`

Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged.

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iii. Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and six-month periods ended June 30, 2017 and 2016 amounted to $185,509, $563,327, $1,275,060, and $1,201,162, respectively.

Price risk

The Group’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 six-month periods ended June 30, 2017 and 2016 would have increased/decreased by $47,426 and $51,137, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss; other components of equity would have increased/decreased by $1,602,608 and $1,103,219, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

Interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the six-month periods ended June 30, 2017 and 2016, the Group’s borrowings at variable rate were denominated in the NTD.
ii. Based on the simulations performed, the impact on post-tax profit of a 0.25% shift would be a maximum increase of $91,550 or decrease of $130,150 in the latest year for the sixmonth periods ended June 30, 2017 and 2016, respectively. The simulation is done on a quarterly basis to verify that the maximum loss potential is within the limit given by the management.
(b) Credit risk

No significant changes during the period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2016.

(c) Liquidity risk
The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for 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.

Non-derivative financial liabilities

June 30, 2017 Accounts payable Other payables Long-term borrowings (including current portion)	Less than 1year `57,558,879` `$` `31,070,332` `35,620,000`	Between 1 and3 years `-` `$` `-` `300,000`	Between 3 and5 years `-` `$` `-` `700,000`	Total
				`57,558,879` `$` `31,070,332` `36,620,000`

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Non-derivative financial liabilities

Non-derivative financial liabilities
Less than December 31, 2016 1year Short-term borrowings `11,583,750` `$` Accounts payable `56,995,540` Other payables `22,916,097` Long-term borrowings (including current portion) `16,440,000` Less than June 30, 2016 1year Short-term borrowings `5,242,223` `$` Accounts payable `47,661,704` Other payables `23,123,342` Long-term borrowings (including current portion) `16,440,000` Derivative financial liabilities June 30,2017 Forward exchange contracts Foreign exchange swap contracts December31,2016 Forward exchange contracts June 30,2016 Forward exchange contracts	Between 1 Between 3 and3 years and5 years `-` `$` `-` `$` `-` `-` `-` `-` `27,550,000` `850,000` Between 1 Between 3 and3 years and5 years `-` `$` `-` `$` `-` `-` `-` `-` `35,620,000` `-` Less than 1year `179,492` `$` `$` `229,539` Less than 1year `1,190,148` `$` `$` Less than 1year `227,657` `$` `$`		Total
			`11,583,750` `$` `56,995,540` `22,916,097` `44,840,000` Total
			`5,242,223` `$` `47,661,704` `23,123,342` `52,060,000` Total
		`$`	`179,492` `229,539` Total
		`$`	`1,190,148` Total
		`$`	`227,657`

(3) Fair value estimation

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(9).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’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 Group’s investment in derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

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C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics, and risks of the assets and liabilities for the six-month periods ended June 30, 2017 and 2016 is as follows:

June 30, 2017 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Foreign exchange swap contracts December31,2016 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts	Level 1 `237,132` `$` `-` `7,617,146` `7,854,278` `$` `-` `$` `-` `-` `$` Level 1 `250,101` `$` `-` `5,598,578` `5,848,679` `$` `-` `$`	Level 2 `-` `$` `234,109` `-` `234,109` `$` `179,492` `$` `229,539` `409,031` `$` Level 2 `-` `$` `64,241` `-` `64,241` `$` `1,190,148` `$`	Level 3 `-` `$` `-` `395,892` `395,892` `$` `-` `$` `-` `-` `$` Level3 `-` `$` `-` `242,351` `242,351` `$` `-` `$`	Total
				`237,132` `$` `234,109` `8,013,038`
				`8,484,279` `$`
				`179,492` `$` `229,539`
				`409,031` `$`
				Total
				`250,101` `$` `64,241` `5,840,929`
				`6,155,271` `$`
				`1,190,148` `$`

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June 30,2016 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts	Level 1 `255,684` `$` `-` `4,909,108` `5,164,792` `$` `-` `$`	Level 2 `-` `$` `722,839` `-` `722,839` `$` `227,657` `$`	Level3 `-` `$` `-` `606,987` `606,987` `$` `-` `$`	Total
				`255,684` `$` `722,839` `5,516,095`
				`6,494,618` `$`
				`227,657` `$`

D. The methods and assumptions the Group used to measure fair value are as follows:
(a)The instruments the Group 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

(b)Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.
(c)When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
(d)The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts and foreign exchange swap contracts are usually valued based on the current forward exchange rate.
(e)The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’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

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Group’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 consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

(f)The Group 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 Group’s credit quality.
E. For the six-month periods ended June 30, 2017 and 2016, there was no transfer between Level 1 and Level 2.
F. The following table presents the changes in Level 3 instruments as at June 30, 2017 and 2016:

			Equity securities	Equity securities
			2017		2016
At January 1		`$`	`242,351`	`$`	`719,585`
Gains and losses recognized in profit or loss	`(`		`120,000)`		`-`
Gains and losses recognized in other comprehensive
income			`150,786`	`(`	`112,598)`
Acquired in the period			`122,755`		`-`
At June 30		`$`	`395,892`	`$`	`606,987`

G. The Group holds private equity shares issued by Fitipower Integrated Technology Inc. The required procedures for becoming publicly traded were completed and its shares started to be traded as emerging stock in the Taipei Exchange from October 2016. The Group has transferred the fair value from Level 3 into Level 1 at the end of month when the event occurred.
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.

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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 Venture capital shares Private equity fund investment Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at June 30, 2017	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	`369,776` `$` `26,116` Fair value at December 31,2016	Market comparable companies Net asset value Valuation technique	Price to earnings ratio multiple, price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability Not applicable Significant unobservable input	`0.88~64.5` `(21.01)` `30%~70%` `(40%)` Not applicable Range (weighted average)	The higher the multiple, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable Relationship of inputs to fairvalue
	`214,665` `$` `27,686`	Market comparable companies Net asset value	Price to earnings ratio multiple, price to book ratio multiple, control premium Discount for lack of marketability Not applicable	`0.68~1.55` `(0.88)` `30%~70%` `(31%)` `308` `(308)`	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable

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Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment Private placement shares (emerging companies)	Fair value at June 30, 2016	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	`369,790` `$` `27,897` `209,300`	Market comparable companies Net asset value Market price method	Price to earnings ratio multiple, price to book ratio multiple, control premium Discount for lack of marketability Not applicable Discount for lack of marketability	`0.64~1.3` `(0.74)` `30%~70%` `(31%)` `310` `(310)` `30%` `(30%)`	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable The higher the discount for lack of marketability, the lower the fair value

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

Financial assets	Period	Input	Change	Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable change	Unfavourable change
Equity instrument Equity instrument Equity instrument	2017/6/30 2016/12/31 2016/6/30	`$ 395,892` `242,351` `606,987`	`± 1%` `± 1%` `± 1%`	`$ 3,959` `2,424` `6,070`	`($ 3,959)` `( 2,424)` `( 6,070)`

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.

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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 Note 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

(1) General information

The Group is primarily engaged in research, development, manufacture, and sale of TFT LCD. The chief operating decision-maker considered the business from a perspective of product size of TFT LCD. TFT LCD products are currently classified into big size and small-medium size. Because the Group met the criteria for combining the segment information of big size and small-medium size TFT LCD departments, the Group disclosed only one reportable operating segment for all TFT LCD products.

The Group’s operating segment information was prepared in accordance with the Group’s accounting policies. The chief operating decision-maker allocated resources and assesses performance of the operating segments primarily based on the operating revenue and profit (loss) before tax and discontinued operations of individual operating segment.

(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

is as follows:
Segment revenue Segment income (loss) Depreciation and amortization Capital expenditure-property, plant and equipment	2017 2016 TFT LCD TFT LCD 84,508,950 $ 66,805,188 $ 16,183,970 $ 2,870,107) ($ 8,183,083 $ 10,446,195 $ 4,354,982 $ 6,857,982 $ For the three-month period endedJune30,	2017 2016 TFT LCD TFT LCD 170,534,721 $ 123,222,308 $ 31,538,159 $ 11,403,687) ($ 16,659,547 $ 21,894,214 $ 10,159,361 $ 14,317,389 $ For the six-month period endedJune30,
	2017 TFT LCD 84,508,950 $ 16,183,970 $ 8,183,083 $ 4,354,982 $	2017 TFT LCD 170,534,721 $ 31,538,159 $ 16,659,547 $ 10,159,361 $
			11,403,687) ($
			21,894,214 $
			14,317,389 $

(3) Reconciliation for segment income (loss)

In current period, the revenue and income or loss before tax of reportable operating segment are consistent with those of continuing operations.

~46~

Innolux Corporation and Subsidiaries

Loans to others

For the six-month period ended June 30, 2017

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the six-month period ended June 30,2017	Balance as at June 30,2017	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
1 1 1 1 1 2 3 3 4	Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Nanjng Innolux Technology Ltd. Innolux Technology USA Inc. Innolux Technology USA Inc. Innolux Technology Europe B.V.	Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Shanghai Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Innolux Hong Kong Limited	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	7,431,120 $ 3,367,800 1,885,968 449,040 3,547,416 359,232 182,520 182,520 1,346,298	7,431,120 $ 2,469,720 1,661,448 449,040 2,200,296 - - 182,520 1,318,729	$ 4,389,120 2,469,720 1,661,448 449,040 2,200,296 - - 182,520 1,318,729	2.00% 1.50%~ 2.00% 1.50%~ 2.00% 2.00% 1.50%~ 2.00% 0% 0% 1.01%~ 1.18% 0.626%~ 0.629%	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	$ - - - - - - - - -	- - - - - - - - -	$ - - - - - - - - -	249,030,887 $ 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887	249,030,887 $ 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887	A A A A A A A A A

Table 1, Page 1

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the six-month period ended June 30,2017	Balance as at June 30,2017	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
5 6 7 8 9 10 11 12 13 14 15 16	Innolux Technology Japan Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Asiaward Investment Ltd. Best China Investments Ltd. Main Dynasty Investment Ltd. Mega Chance Investments Ltd. Sun Dynasty Development Limited Magic Sun Limited Warriors Technology Investments Ltd. Innolux Optoelectronics USA, Inc. Innolux Optoelectronics Europe B.V. Bright Information Holding Ltd.	Leadtek Global Group Limited Leadtek Global Group Limited Best China Investments Ltd. Lakers Trading Ltd. Mega Chance Investments Ltd. Lakers Trading Ltd. Magic Sun Limited Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. 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	1,412,320 $ 679,000 246,837 246,837 406,497 406,497 1,013,162 1,013,162 1,980,105 121,680 45,136 97,934	1,412,320 $ 679,000 - - - - - - 1,980,105 121,680 45,136 97,934	1,412,320 $ 679,000 - - - - - - 1,980,105 121,680 45,136 97,934	1.00% 1.00% 0% 0% 0% 0% 0% 0% 0% 1.04% 1.60% 0%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing 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	$ - - - - - - - - - - - -	- - - - - - - - - - - -	$ - - - - - - - - - - - -	$ 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887	$ 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887 249,030,887	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 2

Innolux Corporation and Subsidiaries

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

June 30, 2017

			June 30, 2017
Securities held by Table 2	Marketable securities	Relationship with the securities issuer	General ledger account		As of June 30,2017		Fair value Footnote Expressed in thousands of NTD (Except as otherwise indicated)
				Number of shares	Book value	Ownership (%)	Fair value
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation Ningbo Innolux Optoelectronics Ltd. Warriors Technology Investments Ltd. Warriors Technology Investments Ltd. Nets trading Ltd.	Common stock AvanStrate Inc. TPV Technology Ltd. Chi Lin Optoelectronics Co., Ltd. Epistar Corporation Chimei Materials Technology Corp. Allied Material Technology Corp. Trillion Science, Inc. China Electric Mfg. Corp. Advanced Optoelectronic Technology, Inc. Fitipower Integrated Technology Inc. `上海辰岱投資中心`(`有限合伙`) OED Holding Ltd. General Interface Solution (GIS) Holding Limited PilotTech Global Fund	None None None None None None None None None None None None None None	Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Financial assets at fair value through profit or loss Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current Available-for-sale financial assets - non- current	900,000 150,500,000 32,350,095 89,072 44,741,305 1,209 1,439,180 5,550,000 6,964,222 10,000,000 - 16,000,000 25,005,000 90	$ 59,645 1,008,778 189,019 2,498 646,512 - 403 44,234 237,132 289,000 116,129 4,579 5,626,125 26,116	1 6 19 - 9 - 2 1 5 7 46 6 7 -	$ 59,645 1,008,778 189,019 2,498 646,512 - 403 44,234 237,132 289,000 116,129 4,579 5,626,125 26,116

Table 2, Page 1

Innolux Corporation and Subsidiaries

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 six-month period ended June 30, 2017

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Relationship Balance as at January 1, 2017 Balance as at June 30, 2017 Marketable General with the (Note 5) Addition (Note 3) Disposal (Note 3) (Note 5) securities ledger Counterparty investor Number Number Number Selling Book Gain on Number Investor (Note 1) account (Note 2) (Note 2) of shares Amount of shares Amount of shares price value disposal of shares Amount Warriors General Available-forNot Not 40,500,000 $ 3,705,750 - $ - 15,495,000 $ 2,582,394 $ 158,453 $2,423,941 25,005,000 $ 5,626,125 Technology Interface sale financial applicable applicable Investments Solution (GIS) assets - nonLtd. Holding Limited current (Stock)

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

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

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 5: It includes unrealized gains (losses) on available-for-sale financial assets.

Table 3, Page 1

Table 4

Innolux Corporation and Subsidiaries Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the six-month period ended June 30, 2017

Expressed in thousands of NTD (Except as otherwise indicated)

Differences in transaction terms

							Differences in transaction terms	Differences in transaction terms
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			compared to third party transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Hon Hai Precision Industry Co., Ltd. Lakers Trading Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Innolux Optoelectronics Japan Co., Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. Innolux Hong Kong Limited FIH (Hong Kong) Limited Hongfutai Precision Electrons (Yantai) Co., Ltd. Ningbo Innolux Display Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. eCMMS Precision Singapore Pte. Ltd. Innolux Optoelectronics USA, Inc.	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 of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	$ 11,490,188 4,909,755 1,305,551 984,306 946,384 908,164 804,967 478,611 392,276 306,311 298,607 298,066 255,018	7 3 1 1 1 1 - - - - - - -	90 days 60 days 60 days 45 days 45-90 days 60-90 days 60 days 60 days 90 days 90 days 90 days 90 days 45 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 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 No material difference	$ 4,208,819 - 1,209,245 541,238 171,615 375,115 - 185,403 239,798 303,301 223,765 237,265 74,300	8 - 2 1 - 1 - - - 1 - - -

Table 4, Page 1

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd.	Chi Lin Optoelectronics Co., Ltd. Competition Team Technology (India) Private Limited Innolux Technology USA Inc. COMPETITION TEAM IRELAND LIMITED Hon Hai Precision Industry Co., Ltd. FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp. Chi Lin Optoelectronics Co., Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Leadtek Global Group Limited Lakers Trading Ltd. Leadtek Global Group Limited Lakers Trading Ltd.	The company is a corporate director of Chi Lin Optoelectronics 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. Same major stockholder Investee accounted for under the equity method Investee accounted for under the equity method The company is a corporate director of Chi Lin Optoelectronics An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary	Sales Sales Sales Sales Purchases Purchases Purchases Purchases Processing expense Processing expense Processing expense Processing revenue Processing revenue Processing revenue	$ 209,195 189,341 182,227 108,551 5,196,417 498,340 111,623 102,611 18,247,385 9,719,840 8,340,262 9,495,244 8,217,182 8,591,133	- - - - 4 - - - 14 8 6 53 78 99	45 days 90 days 60 days 90 days 60-90 days after acceptance 30 days after acceptance 60 days after acceptance 120 days after acceptance 60-90 days 60-90 days 60-90 days 60 days 60 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Cost plus Cost plus Cost plus Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	$ 51,370 191,790 47,017 94,492 ( 4,638,575) ( 83,656) ( 44,117) ( 62,892) ( 14,888,300) ( 7,008,704) ( 19,568,455) 6,579,286 15,587,141 3,111,120	- - - - 6 - - - 20 9 26 45 95 99

Table 4, Page 2

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology Europe B.V. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd.	Innolux Hong Kong Limited Innolux Hong Kong Limited Foxconn Precision Electronics (YanTai) Co., Ltd. Ningbo Innolux Display Ltd. Premier Image Technology (China) Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Hon Hai Precision Industry Co., Ltd. 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 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 Same major stockholder Same major stockholder	Processing revenue Processing revenue Sales Sales Sales Sales Sales Processing revenue Service revenue Purchases Purchases	$ 4,775,704 4,436,975 3,743,228 2,355,657 1,063,820 991,465 799,992 120,050 311,141 3,184,722 541,605	100 100 9 11 3 2 5 100 100 8 5	60 days 60 days 90 days 60 days 90 days 90 days 60 days 60 days 60 days 90 days after goods are shipped 90 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	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	$ 5,005,556 1,633,878 4,405,395 871,230 1,252,006 1,166,852 254,185 762,673 53,208 ( 1,026,893) ( 350,282)	100 100 14 4 4 4 3 100 77 4 6

Table 4, Page 3

Differences in transaction terms

compared to third party

							Differences in transaction terms compared to third party	Differences in transaction terms compared to third party
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Technology Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd.	Innolux Hong Kong Limited Hon Hai Precision Industry Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd.	An indirect wholly-owned subsidiary Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Service revenue Purchases Purchases	$ 135,916 260,762 226,325	92 1 1	60 days 90 days after goods are shipped 90 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference	$ 44,832 ( 170,475) ( 142,016)	93 2 1

Table 4, Page 4

Innolux Corporation and Subsidiaries

Receivables from related parties reaching $100 million or 20% of paid-in capital or more June 30, 2017

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at June 30, 2017	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Hon Hai Precision Industry Co., Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Hongfutai Precision Electrons (Yantai) Co., Ltd. eCMMS Precision Singapore Pte. Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. Competition Team Technology (India) Private Limited FIH (Hong Kong) Limited Innolux Optoelectronics Japan Co., Ltd.	Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. A subsidiary of the Company	$ 4,208,819 1,209,245 541,238 375,115 303,301 265,413 239,798 237,265 223,765 191,790 185,403 171,615	3.89 4.31 3.56 4.89 4.02 0.08 2.29 3.35 3.70 1.49 9.43 11.70	$ 95,898 18,278 144,590 - - 5,054 - - - - - -	Subsequent collection Subsequent collection Subsequent collection - - Subsequent collection - - - - - -	$ 905,711 176,403 52,383 94,970 86,455 - 55,522 - 4,381 52,526 - -	$ - - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationship with the counterparty	Balance as at June 30, 2017	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. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Hong Kong Limited	Lakers Trading Ltd. Leadtek Global Group Limited Innolux Hong Kong Limited Lakers Trading Ltd. Foxconn Precision Electronics (YanTai) Co., Ltd. Innolux Hong Kong Limited Premier Image Technology (China) Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Ningbo Innolux Display Ltd. Lakers Trading Ltd. Nanjing Innolux Technology 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 of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 6,579,286 15,587,141 5,005,556 3,111,120 4,405,395 1,633,878 1,252,006 1,166,852 871,230 762,673 254,185	1.88 1.05 1.83 5.28 2.66 5.23 2.86 2.54 4.14 0.33 5.41	$ - 8,937,050 1,686,922 - - - 38 - - 690,845 -	- Subsequent collection Subsequent collection - - - Subsequent collection - - Subsequent collection -	$ 5,049,723 2,920,330 1,446,080 1,937,558 1,202,912 863,006 483,552 402,194 401,685 - 135,124	$ - - - - - - - - - - -

Table 5, Page 2

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Innolux Corporation and Subsidiaries

Significant inter-company transactions during the reporting period For the six-month period ended June 30, 2017

Transaction (Note C)

Number	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 3 3 4 4 5 5 6 6	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. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd.	Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Optoelectronics Japan Co.,Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Innolux Optoelectronics USA, Inc. Innolux Technology USA Inc. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd.	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 3 3	Sales Processing expense Accrued expenses Sales Accounts receivable Sales Processing expense Accrued expenses Sales Accounts receivable Sales Sales Processing expense Accrued expenses Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Sales Accounts receivable	$ 4,909,755 18,247,385 ( 14,888,300) 946,384 171,615 804,967 9,719,840 ( 7,008,704) 306,311 303,301 255,018 182,227 8,340,262 ( 19,568,455) 265,413 9,495,244 6,579,286 8,217,182 15,587,141 8,591,133 3,111,120 4,775,704 5,005,556 4,436,975 1,633,878 2,355,657 871,230	- - - - - - - - - - - - - - - - - - - - - - - - - - -	3 11 4 1 - - 6 2 - - - - 5 5 - 6 2 5 4 5 1 3 1 3 - 1 -

Table 6, Page 1

Transaction (Note C)

Number	Companyname	Counterparty	Relationship (Note A)	General ledger account	Amount	Transaction terms (Note B)	Percentage of consolidated total operating revenues or total assets
7 7 8 8 9 9	Innolux Hong Kong Limited Innolux Hong Kong Limited Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Technology Europe B.V. Innolux Technology Japan Co., Ltd.	Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited	3 3 3 3 3 3	Sales Accounts receivable Processing revenue Accounts receivable Service revenue Service revenue	$ 799,992 254,185 120,050 762,673 311,141 135,916	- - - - - -	- - - - - -

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

3 refers to the subsidiary to the subsidiary.

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

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

Table 6, Page 2

Innolux Corporation and Subsidiaries Information on investees

For the six-month period ended June 30, 2017

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial inves	tment amount	Shar	esheld as at June 30,	2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six- month period ended June 30,2017	Footnote
				Balance as at June 30,2017	Balance as at December31,2016	Numberofshares	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 Innolux Corporation Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Optoelectronics Europe B.V.	Bright Information Holding Ltd. Golden Achiever International Ltd. Innolux Holding Limited Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Optoelectronics Europe B.V. Innolux Optoelectronics Japan Co., Ltd. Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. iZ3D, Inc. Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Innolux Corporation Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Limited Innolux Hong Kong Limited Innolux Technology Europe B.V. Innolux Technology Japan Co., Ltd. Innolux Technology USA Inc. Innolux Optoelectronics Germany GmbH	Hong Kong BVI Samoa Samoa Samoa BVI Hong Kong BVI Taiwan Taiwan Netherlands Japan Cayman Taiwan USA Taiwan Taiwan Samoa Samoa Samoa USA Cayman Hong Kong Hong Kong Netherlands Japan USA Germany	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Distributor company Investment company Investment company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT-LCD monitors Researching, manufacturing and selling of the film transistor liquid crystal display Investment holdings Production and selling of the absorption for medical element Research and development and sale of 3D flat monitor Manufacturing of electronic equipment and lighting equipment Manufacturing and selling of components of TFT-LCD Investment holdings Investment holdings Distributor company Distributor company Investment holdings Investment holdings Distributor company Holding company and R&D testing company R&D testing company Distributor company Importing, exporting, buying, selling and logistics services of electronic equipment and TFT-LCD monitors	119,724 $ 119,106 7,858,300 62,179 33,438,542 3,674,115 2,107,291 - 1,217,235 1,674,054 121,941 1,335,486 1,717,714 73,500 - 819,312 800,892 5,222,180 555,422 - 6,348 3,650,192 - - 3,073,072 1,815,603 263,685 10,324	119,724 $ 119,106 7,858,300 197,554 33,438,542 3,674,115 2,107,291 - 1,217,235 1,674,054 121,941 1,335,486 1,717,714 73,500 - 819,312 800,892 7,296,530 555,422 - 6,348 3,650,192 - - 3,073,072 1,815,603 263,685 10,324	4,910,000 40,250 246,768,185 1,656,410 709,450,000 146,847,000 1,158,844,000 50,000,000 - 167,405,392 180 80 14,062,500 7,350,000 4,333 78,195,856 14,812,705 160,504,550 18,177,052 1 2,000 146,817,000 162,897,802 35,000,000 375,810 201 1,000 250	100 100 100 100 100 100 100 100 100 100 100 100 50 49 35 33 24 100 100 100 100 100 100 100 100 100 100 100	97,831 $ 45,655 22,556,586 76,022 42,881,733 6,013,259 3,514,081 601,923 850,105 1,362,574 130,027 1,515,511 828,477 569,936 - - 105,350 11,792,720 8,952,020 231,757 88,088) ( 6,015,295 1,275,747 1,453,289) ( 2,269,677 1,690,525 354,295 13,749	960 $ 13,558) ( 2,546,985 11,371 1,342,831) ( 467,701) ( 124,677 914,265 78,858) ( 29,303 1,395 1,364 13,939 240,803 - - 14,064 4,987) ( 2,552,615 - 643) ( 467,701) ( 65,000 35,026 25,769 6,878) ( 5,188 621	960 $ 13,558) ( 2,546,985 11,371 1,412,441) ( 469,373) ( 129,440 914,265 78,858) ( 29,303 1,395 1,364 440 117,994 - - 3,344 4,987) ( 2,552,615 - 643) ( 467,701) ( 65,000 35,026 25,769 6,878) ( 5,188 621

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial inves	tment amount	Shar	esheld as at June 30,	2017	Net profit (loss) of the investee for the six-month period ended June 30,2017	Investment income (loss) recognised by the Company for the six- month period ended June 30,2017	Footnote
				Balance as at June 30,2017	Balance as at December31,2016	Numberofshares	Ownership (%)	Bookvalue
Innolux Optoelectronics Japan Co., Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Suns Holding Ltd. Innolux Technology Europe B.V. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	Innolux Optoelectronics USA, Inc. Best China Investments Ltd. Mega Chance Investments Ltd. Magic Sun Ltd. Stanford Developments Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp. TOA Optronics Corporation	USA Samoa Samoa Samoa Samoa Samoa Samoa Germany Taiwan Taiwan Taiwan	Selling of electronic equipment and computer monitors Investment holdings Investment holdings Investment holdings Investment holdings Investment company Investment company Testing and maintenance company Trading business, manufacturing of electronic equipment and lighting equipment Manufacturing and selling of components of TFT-LCD Selling of electronic materials, trading business, manufacturing of electronic equipment and lighting equipments	2,400 $ - - - 5,391,125 27,477 555,422 33,735 263,812 6,881 423,606	2,400 $ 314,740 573,940 1,146,370 5,391,125 27,477 555,422 33,735 263,812 6,881 423,606	1,000 1 1 1 164,000,000 900,001 18,177,052 100,000 19,673,402 109,021 58,007,000	100 100 100 100 100 100 100 100 8 - 40	273,037 $ - - - 11,764,317 28,267 8,952,018 58,305 - 797 9,863	4,446 $ 238 392 976 6,617) ( - 2,552,615 572 - 14,064 92,663) (	4,446 $ 238 392 976 6,617) ( - 2,552,615 572 - 25 77,038) (

Table 7, Page 2

Innolux Corporation and Subsidiaries

Information on investments in Mainland China

For the six-month period ended June 30, 2017

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (NoteC)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June30,2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June30,2017	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2017	Net income of investee for the six-month period ended June30,2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30, 2017(Note B)	Book value of investments in Mainland China as of June30,2017	Accumulated amount of investment income remitted back to Taiwan as of June30,2017	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Innocom Technology (Shenzhen) Co., Ltd. OED Company Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjng Innolux Technology Ltd. Kunpal Optoelectronics Ltd. VAP Optoelectronics (Nanjing) Corp. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd.	Manufacturing and selling of LCD backend module and related components Manufacturing and selling of electronic paper Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Purchases and sales of monitor-related components company Glass thinning processing service Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components	$ 4,988,880 288,776 9,430,200 11,650,860 4,867,200 63,882 121,680 307,242 4,319,640 638,820	2 2 2 2 2 2 2 2 2 2	$ 3,860,655 60,840 224,045 11,650,860 4,867,200 63,882 115,044 115,596 4,319,640 -	$ - - - - - - - - - -	$ - - - - - - - - - -	$ 3,860,655 60,840 224,045 11,650,860 4,867,200 63,882 115,044 115,596 4,319,640 -	($ 6,617) ( 53,432) ( 2,435,604) 832,425 259,161 9,837 ( 2,132) ( 13,558) ( 475,405) 65,000	100 4 100 100 100 100 100 100 100 100	($ 6,617) - ( 2,435,604) 833,613 259,161 9,837 ( 2,132) ( 13,558) ( 475,405) 65,000	$ 11,764,305 8,188 18,597,294 20,334,997 4,053,938 539,914 59,772 45,274 5,415,588 1,275,747	$ 1,128,225 - 5,251,555 - - - - - - -	2.1 2.1 2.2 2.2 2.2 2.3 2.3 2.4 2.3 2.5

Table 8, Page 1

Investee in Mainland China	Main business activities	Investment method (NoteC)	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June30,2017	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six-month period ended June30,2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30, 2017(Note B)	Book value of investments in Mainland China as of June30,2017	Accumulated amount of investment income remitted back to Taiwan as of June30,2017	Footnote
			Remitted to Mainland China	Remitted back to Taiwan
Foshan Innolux Logistics Ltd. Warehousing services $ 45,630 Amlink (Shanghai) Ltd. Manufacturing and selling of power supply, modem, ADSL, and other IT equipments 243,360 Interface Optoelectronics (Shenzhen) Co., Ltd. Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after-sales service 2,926,404 Ningbo Innolux Electronics Ltd. Manufacturing and selling of LCD backend module and related components 134,712 Foshan Innolux Flnet Electronics Ltd. Commodity agency 4,490 Ningbo Innolux Flnet Electronics Ltd. Commodity agency 4,490 Ceiling on investments in Mainland China: Companyname Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2017		2 $ 45,630 $ - 2 304,200 - 2 410,670 - 3 - - 3 - - 3 - - Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)		$ - $ 45,630 $ 2,940 - 304,200 - - 410,670 930,740 - - 78,486 - - 664 - - 144 Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA	100 50 7 100 100 100	$ 2,940 - - 78,486 664 144	$ 71,248 192,427 5,626,125 315,460 5,157 4,347	$ - - - - - -	2.6 2.7 2.1 3.1 3.2 3.2
Innolux Corporation	27,408,405 $	36,722,285 $		149,418,532 $

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate. Note B: Profit or loss recognised for the six-month period ended June 30, 2017 was reviewed by independent accountants.

Table 8, Page 2

Note C: The investment methods are as follows:

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

Table 8, Page 3

AI assistant

INX — Interim / Quarterly Report 2017

52330_rns_2017-12-08_cb935295-75a0-4e9f-963b-708f916ed28b.pdf

INNOLUX CORPORATION AND SUBSIDIARIES

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2017, DECEMBER 31, 2016 AND JUNE 30, 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2017, DECEMBER 31, 2016 AND JUNE 30, 2016

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

INNOLUX CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2017 AND 2016

1. HISTORY AND ORGANISATION

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

(4) Employee benefits

(5) Income tax

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

(3) Available-for-sale financial assets

(4) Notes receivable and accounts receivable

(5) Transfer of financial assets

(6) Inventories

(7) Investments accounted for under the equity method

(8) Property, plant and equipment

(9) Investment property

(10) Intangible assets

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

(11) Short-term borrowings

(12) Other payables

- (13) Long term borrowings

(14) Pensions

(16) Provisions-current

A. Warranty

B. Litigation and others

(17) Share capital

(18) Capital surplus

(19) Retained earnings

(20) Other equity items

(21) Other income

(22) Other gains and losses

(23) Finance costs

(24) Expenses by nature

(25) Employees’ compensation and directors’ remuneration

(26) Income tax

(27) Earnings per share

(28) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

(2) Significant related party transactions

A. Operating revenue

B. Purchases of goods

C. Receivables from related parties:

D. Payables to related parties:

E. Property transactions

Purchase of property

(a) Acquisition of property, plant, and equipment:

Sale of property

(a) Proceeds from sale of property and gain on disposal:

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

(3) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRAC T COMMITMENTS

－ (1) Contingencies Significant Litigations

(2) Commitments

C. Outstanding letters of credit

INX Interim / Quarterly Report 2017

`－` (1) Contingencies Significant Litigations