INX - Interim / Quarterly Report 2018

INNOLUX CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2018 AND 2017

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Innolux Corporation:

Introduction

We have reviewed the accompanying consolidated balance sheets of Innolux Corporation and subsidiaries (the “Group”) as at September 30, 2018 and 2017, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the nine-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34,“Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2018 and 2017, and of its consolidated financial performance for the three-month and nine-month periods then ended and its consolidated cash flows for the nine-

~1~

month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

PricewaterhouseCoopers, Taiwan

October 31, 2018

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

~2~

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2018, DECEMBER 31, 2017 AND SEPTEMBER 30, 2017

(Expressed in thousands of New Taiwan dollars) (The consolidated balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)

Assets	Notes	September 30, 2017
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventory 1410 Prepayments 1479 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income- non-current 1523 Available-for-sale financial assets - non- current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(4) 6(5) 7 7 6(6) 8 6(2) 6(3) 6(7) 6(8), 7 and 8 6(9) 6(10) and 8 6(8) and 8	`$` `55,769,747` `183,790` `-` `48,119,910` `12,319,712` `1,470,001` `32,244,641` `1,607,642` `150,578`
		`151,866,021`
		`242,355` `-` `9,512,077` `1,315,877` `192,924,285` `565,379` `17,872,401` `7,256,210` `1,208,914`
		`230,897,498`
		`$` `382,763,519`

(Continued)

~3~

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2018, DECEMBER 31, 2017 AND SEPTEMBER 30, 2017 (Expressed in thousands of New Taiwan dollars) (The consolidated balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)

	Liabilities and Equity	Notes			September 30, 2018	December 31, 2017		September 30, 2017
	Current Liabilities
2120	Financial liabilities at fair	6(2)
	value through profit or
	loss - current			`$`	`346,577 $`	`52,500`	`$`	`367,897`
2170	Accounts payable				`51,320,183`	`50,876,500`		`50,880,750`
2180	Accounts payable - related	7
	parties				`2,574,729`	`2,565,010`		`2,316,499`
2200	Other payables	6(11) and 7			`37,064,789`	`58,897,804`		`32,000,491`
2230	Current income tax
	liabilities				`5,508,591`	`1,891,188`		`1,111,284`
2250	Provisions - current	6(15) and 9			`6,337,829`	`5,460,862`		`5,072,166`
2320	Long-term liabilities,	6(12)
	current portion				`10,960,000`	`10,951,114`		`10,937,785`
2399	Other current liabilities				`2,974,679`	`1,199,194`		`1,056,141`
21XX	Total current liabilities				`117,087,377`	`131,894,172`		`103,743,013`
	Non-current liabilities
2540	Long-term borrowings	6(12)			`14,867,711`	`17,287,788`		`17,258,929`
2570	Deferred income tax
	liabilities				`661,380`	`734,423`		`659,777`
2600	Other non-current	6(13)
	liabilities				`691,787`	`617,327`		`554,938`
25XX	Total non-current
	liabilities				`16,220,878`	`18,639,538`		`18,473,644`
2XXX	Total liabilities				`133,308,255`	`150,533,710`		`122,216,657`
	Equity attributable to
	owners of the parent
3110	Share capital - common	6(16)
	stock				`99,520,720`	`99,520,720`		`99,520,720`
3200	Capital surplus	6(17)			`99,646,960`	`99,646,919`		`99,646,905`
	Retained earnings	6(18)
3310	Legal reserve				`7,648,437`	`3,945,576`		`3,945,576`
3320	Special reserve				`1,090,721`	`3,418,804`		`3,418,804`
3350	Unappropriated retained
	earnings				`52,467,065`	`58,883,750`		`54,629,939`
3400	Other equity interest	6(19)	`(`		`4,047,245 )(`	`1,090,721) (`		`615,082)`
3XXX	Total equity				`256,326,658`	`264,325,048`		`260,546,862`
3X2X	Total liabilities and
	equity			`$`	`389,634,913 $`	`414,858,758`	`$`	`382,763,519`

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

~4~

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

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

(Reviewed, not audited)

					Three months ended September 30	Three months ended September 30	Three months ended September 30			Nine months ended September 30	Nine months ended September 30
	Items	Notes			2018		2017			2018		2017
4000	Sales revenue	6(20) and 7		`$`	`73,907,131`	`$`	`79,507,678`		`$`	`207,132,750`	`$`	`250,042,399`
5000	Operating costs	6(6)(24) and 7	`(`		`66,474,938 ) (`		`63,342,544)`	`(`		`184,786,697 ) (`		`192,487,132 )`
5900	Net operating margin				`7,432,193`		`16,165,134`			`22,346,053`		`57,555,267`
	Operating expenses	6(24)
6100	Selling expenses		`(`		`809,766 ) (`		`504,411)`	`(`		`2,007,849 ) (`		`1,444,920 )`
6200	General and administrative expenses		`(`		`1,678,813 ) (`		`1,716,114)`	`(`		`4,986,577 ) (`		`5,052,263 )`
6300	Research and development expenses		`(`		`3,153,355 ) (`		`3,049,288)`	`(`		`9,085,754 ) (`		`9,707,501 )`
6000	Total operating expenses		`(`		`5,641,934 ) (`		`5,269,813)`	`(`		`16,080,180 ) (`		`16,204,684 )`
6900	Operating profit				`1,790,259`		`10,895,321`			`6,265,873`		`41,350,583`
	Non-operating income and expenses
7010	Other income	6(21)			`822,015`		`590,298`			`2,012,692`		`1,702,669`
7020	Other gains and losses	6(22)	`(`		`42,524 )`		`404,829`	`(`		`701,927 )`		`613,066`
7050	Finance costs	6(23)	`(`		`111,980 ) (`		`279,557)`	`(`		`369,035 ) (`		`562,033 )`
7060	Share of profit/(loss) of associates and joint ventures accounted	6(7)
	for under equity method				`107,947`		`65,533`			`291,145`		`110,298`
7000	Total non-operating income and expenses				`775,458`		`781,103`			`1,232,875`		`1,864,000`
7900	Profit before income tax				`2,565,717`		`11,676,424`			`7,498,748`		`43,214,583`
7950	Income tax expense	6(26)	`(`		`652,769 ) (`		`2,919,106)`	`(`		`4,578,998 ) (`		`10,480,929 )`
8200	Profit for the period			`$`	`1,912,948`	`$`	`8,757,318`		`$`	`2,919,750`	`$`	`32,733,654`
	Other comprehensive (loss) income (net)
	Components of other comprehensive loss that will not be	6(19)
	reclassified to profit or loss
8316	Unrealized gains (losses) on financial assets at fair value through
	other comprehensive income		`(`	`$`	`1,670,324 )`	`$`	`-`	`(`	`$`	`1,610,671 )`	`$`	`-`
8310	Components of other comprehensive loss that will not be
	reclassified to profit or loss		`(`		`1,670,324 )`		`-`	`(`		`1,610,671 )`		`-`
	Components of other comprehensive (loss) income that will be	6(19)
	reclassified to profit or loss
8361	Financial statements translation differences of foreign operations		`(`		`2,410,807 )`		`1,018,476`	`(`		`1,460,938 ) (`		`1,428,349 )`
8362	Unrealized gain on valuation of available-for-sale financial assets				`-`		`1,703,528`			`-`		`4,273,605`
8370	Share of other comprehensive income (loss) of associates and
	joint ventures accounted for under equity method				`1,004`		`1,844`			`115,085 (`		`44,243 )`
8399	Income tax relating to the components of other comprehensive	6(26)
	income that will be reclassified to profit or loss				`-`		`34,809`			`-`		`2,709`
8360	Components of other comprehensive (loss) income that will
	be reclassified to profit or loss		`(`		`2,409,803 )`		`2,758,657`	`(`		`1,345,853 )`		`2,803,722`
8300	Other comprehensive (loss) income for the period, net of tax		`(`	`$`	`4,080,127 )`	`$`	`2,758,657`	`(`	`$`	`2,956,524 )`	`$`	`2,803,722`
8500	Total comprehensive (loss) income for the period		`(`	`$`	`2,167,179 )`	`$`	`11,515,975`	`(`	`$`	`36,774 )`	`$`	`35,537,376`
	Profit attributable to:
8610	Owners of the parent			`$`	`1,912,948`	`$`	`8,757,318`		`$`	`2,919,750`	`$`	`32,733,654`
	Other comprehensive (loss) income attributable to:
8710	Owners of the parent		`(`	`$`	`2,167,179 )`	`$`	`11,515,975`	`(`	`$`	`36,774 )`	`$`	`35,537,376`
	Earnings per share (in dollars)	6(27)
9750	Basic earnings per share			`$`	`0.19`	`$`	`0.88`		`$`	`0.29`	`$`	`3.29`
9850	Diluted earnings per share			`$`	`0.19`	`$`	`0.87`		`$`	`0.29`	`$`	`3.24`

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

~5~

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (Reviewed, not audited)

Notes					Equityattributable to	Equityattributable to	Equityattributable to	o	wners of theparent	wners of theparent
		Common stock		Capital surplus			Retained Earnings				O	ther Equity Intere	st
					Legal reserve		Special reserve		Unappropriated earnings	Financial statements translation differences of foreign operations	a	Total Unrealized gains (losses) from financial ssets measured at fair value through other comprehensive income		Unrealized gain (loss) on available-for-sale financial assets
6(19) 6(18) 6(17) 6(19) 6(19) 6(18) 6(17)	`$ 99,521,488` `-` `-` `-` `-` `-` `-` `(` `768` `)` `-` `$ 99,520,720` `$ 99,520,720` `-` `99,520,720` `-` `-` `-` `-` `-` `-` `-` `$ 99,520,720`		`$ 99,647,810` `-` `-` `-` `-` `-` `-` `768` `(` `1,673` `)` `$ 99,646,905` `$ 99,646,919` `-` `99,646,919` `-` `-` `-` `-` `-` `-` `41` `$ 99,646,960`		`$ 3,758,507` `-` `-` `-` `187,069` `-` `-` `-` `-` `$ 3,945,576` `$ 3,945,576` `-` `3,945,576` `-` `-` `-` `3,702,861` `-` `-` `-` `$ 7,648,437`	`$` `-` `-` `-` `-` `-` `3,418,804` `-` `-` `-` `$ 3,418,804` `$ 3,418,804` `-` `3,418,804` `-` `-` `-` `-` `(` `2,328,083 )` `-` `-` `$ 1,090,721`		`$ 26,497,362` `32,733,654` `-` `32,733,654` `(` `187,069 )` `(` `3,418,804 )` `(` `995,204 )` `-` `-` `$ 54,629,939` `$ 58,883,750` `-` `58,883,750` `2,919,750` `-` `2,919,750` `(` `3,702,861 )` `2,328,083` `(` `7,961,657 )` `-` `$ 52,467,065`		`($ 4,040,408` `)` `-` `(` `1,472,592` `)` `(` `1,472,592` `)` `-` `-` `-` `-` `-` `($ 5,513,000` `)` `($ 5,717,223` `)` `-` `(` `5,717,223` `)` `-` `(` `1,345,853` `)` `(` `1,345,853` `)` `-` `-` `-` `-` `($ 7,063,076` `)`	`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `4,626,502` `4,626,502` `-` `(` `1,610,671 )` `(` `1,610,671 )` `-` `-` `-` `-` `$ 3,015,831`		`$` `621,604` `-` `4,276,314` `4,276,314` `-` `-` `-` `-` `-` `$ 4,897,918` `$ 4,626,502` `(` `4,626,502 )` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`		`$ 226,006,363` `32,733,654` `2,803,722` `35,537,376` `-` `-` `(` `995,204` `)` `-` `(` `1,673` `)` `$ 260,546,862` `$ 264,325,048` `-` `264,325,048` `2,919,750` `(` `2,956,524` `)` `(` `36,774` `)` `-` `-` `(` `7,961,657` `)` `41` `$ 256,326,658`

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

~6~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

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

Net loss on financial assets or liabilities at fair value
through profit or loss
Share of loss of associates and joint ventures accounted
for under equity method

Gain from disposal of investments

Loss on disposal of property, plant and equipment

Impairment loss

Interest expense

Interest income

Dividend revenue

Unrealized foreign exchange loss (gain)
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value through profit
or loss - current
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Provisions - current
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash paid for income tax
Net cash flows from operating activities Notes
2018
2017
$
7,498,748 $
43,214,583
6(24)
27,210,068
24,992,670
503,769
-
6(7)
(
291,145 ) (
110,298 )
6(22)
(
1,087 ) (
2,492,927 )
6(22)
205,497
238,860
6(22)
-
120,000
6(23)
369,035
562,033
6(21)
(
656,009 ) (
306,021 )
6(21)
(
234,902 ) (
152,087 )
68,255 (
4,725 )
645,492 (
934,054 )
(
2,681,429 )
4,735,722
13,537,760 (
720,353 )
(
218,227 )
579,762
(
2,674,005 ) (
8,842,913 )
(
666,956 ) (
55,269 )
3,852 (
50,150 )
443,683 (
994,555 )
9,719 (
2,803,736 )
(
3,558,603 )
8,293,282
876,967
1,306,932
(
750,258 ) (
364,511 )
11,108
49,095
39,651,332
66,261,340
(
1,195,323 ) (
3,850,994 )
38,456,009
62,410,346

(Continued)

~7~

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

(Reviewed, not audited)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets or liabilities at fair value
through profit or loss - non-current
Acquisition of investments in equity instruments measured
at fair value through other comprehensive income
Acquisition of financial assets at amortized cost
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial
assets
Proceeds from capital reduction of available-for-sale
financial assets
Increase in investment accounted for under equity method
Proceeds from disposal of investments accounted for under
equity method
(Increase) decrease in other financial assets
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets

Decrease in other non-current assets
Interest received
Dividends received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Increase in long-term borrowings
Payment of long-term borrowings
Interest paid
Cash dividends paid

Net cash flows used in financing activities
Effect of changes in foreign currency exchange
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Notes
2018
2017
($
141,600 ) $
-
(
1,568,983 )
-
(
18,971,750 )
-
- (
122,755 )
-
2,916,892
-
145,575

(
93,443 )
-
28,928
-
(
298,701 )
5,134
6(28)
(
34,915,398 ) (
15,257,169 )
24,627
256,423
6(10)
(
63,512 ) (
217,192 )
(
12,624 ) (
1,477 )
643,778
290,685
234,902
418,010
(
55,133,776 ) (
11,565,874 )
- (
11,579,025 )
8,500,000
-
(
10,960,000 ) (
16,440,000 )
(
324,484 ) (
463,595 )
6(18)
(
7,961,657 ) (
995,204 )
(
10,746,141 ) (
29,477,824 )
(
675,462 ) (
981,740 )
(
28,099,370 )
20,384,908
65,988,955
35,384,839
$
37,889,585 $
55,769,747

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

~8~

INNOLUX CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

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

(Reviewed, not audited)

1. HISTORY AND ORGANIZATION

(1) Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in 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 AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were reported to the Board of Directors on October 31, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

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

New Standards,Interpretations andAmendments

Effective Date by
International Accounting
StandardsBoard

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

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

~9~

New Standards,Interpretations andAmendments	Effective Date by International Accounting StandardsBoard
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’	January 1, 2017 January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance 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 assets at fair value through profit or loss, financial assets measured at fair value through other comprehensive income or financial assets measured at amortized cost. Equity instruments would be classified as financial assets at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely with an entity’s risk management strategy. Risk components of non-financial items and a group of items can be designated as hedged items. The standard relaxes the requirements for hedge effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’; while its risk management objective remains unchanged, an entity shall rebalance the hedged item or the hedging instrument for the purpose of maintaining the hedge ratio.
(d) The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. The significant effect of applying the new standards as of January 1, 2018 are summarized as below:
i. In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the amount of $5,086,506, and made an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose, by increasing financial assets at fair

~10~

value through other comprehensive income in the amount of $5,086,506. There was no effect on retained earnings and other equity interest.

  - ii. In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the amount of $1,468,683 by increasing financial assets at fair value through profit or loss in the amount of $1,468,683. There was no effect on retained earnings and other equity interest.

B. IFRS 15, ‘Revenue from contracts with customers’ and amendments
(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’, IAS 18, ‘Revenue’, and relevant interpretations and SICs. According to IFRS 15, revenue is recognized when a customer obtains control of goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.
- The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer.
- Step 2: Identify performance obligations in the contract(s).
- Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

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

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

(b) The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 15. The significant effects of applying the new standards as of January 1, 2018 are summarized as below:
- Presentation of assets and liabilities in relation to contracts with customers
- In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in the balance sheet as follows:
- Under IFRS 15, liabilities in relation to expected volume discounts and refunds to customers are recognized as refund liabilities, but were previously presented as accounts receivableallowance for sales returns and discounts in the balance sheet. As of January 1, 2018, the balance amounted to $2,327,123.
C. Amendments to IAS 7, ‘Disclosure initiative’

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

~11~

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

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognize a ‘right-of-use asset’ and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors. In the first quarter of 2018, the Group reported the impact of IFRS 16 to the Board of Directors. The Group expects to recognize the lease contract of lessees in line with IFRS 16. However, the Group intends not to restate the financial statements of prior period (collectively referred herein as the “ modified retrospective approach ” ), and the effects will be adjusted on January 1, 2019.

(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
Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

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

~12~

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, 2017.
(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) Financial assets at fair value through other comprehensive income/available-for-sale financial assets measured at fair value.
- (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its 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.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified retrospective approach. There was no cumulative impact of the adoption on retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 was not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.

(3) 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, 2017.

~13~

B. Subsidiaries included in the consolidated financial statements:

Main
Business
Name of Investor
Name ofSubsidiary
Activities
Innolux Corporation Bright Information
Holding Ltd.
Investment
holdings
Golden Achiever
International Limited
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
InnoJoy Investment
Corporation
Investment
company
Innolux Optoelectronics
Europe B.V.
Investment and
distribution
company
Innolux Japan Co., Ltd.
(Formerly name:
Innolux Optoelectronics
Japan Co., Ltd.)
Investment,
R&D.
manufacturing
and distribution
company
Innolux Corporation
Distribution
company
Innolux Technology
USA Inc.
Distribution
company
Innolux Singapore
Holding Pte. Ltd.
Investment
holdings
Golden Achiever
International
Limited
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

September 30, December 31, September 30,
2018
2017
2017
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
100
-
-
-
100
(c)
54
49
100
(b) and (g)
-
100
-
(d) and (g)
-
100
-
(d) and (g)
100
100
-
(e)
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
-
-
100
(d)
Ownership (%)

~14~

Main
Business
Name of Investor
Name ofSubsidiary
Activities
Keyway Investment
Management
Limited
Foshan Innolux
Logistics Ltd.
Warehousing
company
Landmark
International Ltd.
Ningbo Innolux
Optoelectronics 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 Europe B.V.
(Formerly name:
Innolux Technology
Europe B.V.)
Investment,
distribution,
and R&D
company
Innolux Technology
Japan Co., Ltd.
R&D company
Innolux Technology
USA Inc.
Distribution
company
Innolux Japan Co., Ltd.
(Formerly name:
Innolux Optoelectronics
Japan Co., Ltd.)
Investment,
R&D.
manufacturing
and distribution
company
Innolux
Optoelectronics
Europe B.V.
Innolux Optoelectronics
Germany GmbH
After sales
service
company
Innolux Japan Co.,
Ltd. (Formerly
name: Innolux
Optoelectronics
Japan Co., Ltd.)
Innolux USA, Inc.
(Formerly name:
Innolux Optoelectronics
USA, Inc.)
Distribution
company
Innolux Singapore
Holding Pte. Ltd.
Innolux Optoelectronics
India Private Limited
Distribution
company
Innolux Optoelectronics
Philippines Corp.
Manufacturing
and distribution
company
Innolux Optoelectronics
Malaysia SDN. BHD.
Manufacturing
and distribution
company

September 30, December 31, September 30,
2018
2017
2017
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
(c)
-
-
100
(b)
-
-
100
(d)
46
51
-
(b)
-
-
100
(c)
100
100
100
(g)
100
-
-
(f)
100
-
-
(f)
100
-
-
(f)
Ownership (%)

~15~

Main
Business
Name of Investor
Name ofSubsidiary
Activities
Rockets Holding
Ltd.
Stanford Developments
Ltd.
Investment
holdings
Nets Trading Ltd.
Investment
company
Suns Holding Ltd.
Warriors Technology
Investments Ltd.
Investment
company
Toppoly
Optoelectronics
(Cayman) Ltd.
Nanjing Innolux
Technology Ltd.
Distribution
company
Nanjing Innolux
Optoelectronics Ltd.
Processing
company
Kunpal Optoelectronics
Ltd.
Processing
company
Innolux
Optoelectronics
Hong Kong Holding
Limited
Shanghai Innolux
Optoelectronics Ltd.
Processing
company
Innolux Europe B.V.
(Formerly named:
Innolux Technology
Europe B.V.)
Innolux Technology
Germany GmbH
Testing and
maintenance
company
Innolux Optoelectronics
Germany GmbH
After sales
service
company
Stanford
Developments Ltd.
Innocom Technology
(Shenzhen) Co., Ltd.
Processing
company
Ningbo Innolux
Display Ltd.
Ningbo Innolux
Electornics Ltd.
Distribution
company
Ningbo Innolux
Optoelectronics Ltd.
Ningbo Innolux Flent
Electornics Ltd.
Distribution
company
Foshan Innolux
Optoelectronics Ltd.
Foshan Innolux Flent
Electornics Ltd.
Distribution
company
Innocom
Technology
(Shenzhen) Co.,
LTD.
Shenzhen PixinLED
Technology Co., LTD.
R&D and
distribution
company

September 30, December 31, September 30,
2018
2017
2017
Description
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
(a)
-
-
100
(a)
100
100
100
-
100
100
100
-
-
100
-
(c)
100
100
100
-
100
100
100
-
100
100
100
-
100
100
100
-
100
-
-
(h)
Ownership (%)

(a) The Company conducted a merger of its subsidiaries, Nanjing Innolux Optoelectronics Ltd. and Kunpal Optoelectronics Ltd., which were wholly owned by the Company with the effective date of October 23, 2017. Nanjing Innolux Optoelectronics Ltd. was the surviving company while Kunpal Optoelectronics Ltd. was dissolved after the merger. Said transaction was accounted as reorganization transaction.
(b) A subsidiary, Innolux Optoelectronics Japan Co., Ltd., which has 100% of shares directly owned by the Company, issued new shares to another subsidiary, Innolux Hong Kong Holding Limited, which also has 100% of shares directly owned by the Company, to obtain equity shares of and combined with Innolux Technology Japan Co., Ltd., which was reinvested by the Company. The surviving company was Innolux Optoelectronics Japan Co., Ltd. and the

~16~

effective date was December 18, 2017. The transaction was accounted as reorganization transaction. And Innolux Optoelectronics Japan Co., Ltd. was renamed Innolux Japan Co., Ltd. on December 2017.

  - (c) The Company's indirect 100% owned subsidiary, Innolux Technology Europe B.V., merged with a direct 100% owned subsidiary, Innolux Optoelectronics Europe B.V. The surviving company was Innolux Technology Europe B.V. which directly held a subsidiary that was reinvested by the Company, Innolux Optoelectronics Germany GmbH. The effective date was December 18, 2017, and the transaction was accounted as reorganization transaction. In the third quarter of 2018, Innolux Optoelectronics Germany Gmbh had completed liquidation and dissolution. And Innolux Technology Europe B.V. was renamed Innolux Europe B.V. on December 2017.

  - (d) The Company directly and wholly-owned the 100% held reinvestment subsidiaries, Innolux Technology USA Inc. and Innolux Corporation, because of reorganization in the fourth quarter of 2017. The transaction was accounted as reorganization transaction.

  - (e) Innolux Singapore Holding Pte. Ltd. was established in the fourth quarter of 2017 and was included in the consolidated financial statements since the date of establishment.

  - (f) Innolux Optoelectronics India Private Limited, Innolux Optoelectronics Philippines Corp. and Innolux Optoelectronics Malaysia SDN. BHD was established in the first quarter of 2018 and was included in the consolidated financial statements since the date of establishment.

  - (g) The Company’s wholly-owned subsidiary, Innolux Japan Co., Ltd., issued new shares to obtain the equity share of Innolux Corporation and Innolux Technology USA Inc. which also are wholly owned by the Company. Innolux Optoelectronics USA, Inc., the directly wholly-owned subsidiary of Innolux Japan Co., Ltd., issued new share to Innolux Japan Co., Ltd. and obtained the equity share of Innolux Corporation and Innolux Technology USA Inc., and merged with these companies. Innolux Optoelectronics USA, Inc. was the surviving company. The effective date was February 28, 2018, and was accounted as reorganization. Innolux Optoelectronics USA, Inc. was renamed Innolux USA, Inc on March 2018.

  - (h) Shenzhen PixinLED Technology Co., Ltd. was established in the first quarter of 2018 and was included in the consolidated financial statement since the date of establishment.

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) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

~17~

D. The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(5) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
- The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(6) Financial assets at amortized cost
A. Financial assets at amortized cost are those that meet all of the following criteria:
- (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
- (b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(7) Accounts and notes receivable
A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
C. The Group’s operating pattern of accounts receivable that are expected to be factored is for the purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently measured at fair value, with any changes in fair value recognized in other comprehensive income.

(8) Impairment of financial assets

For accounts receivable that have a significant financing component, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a

~18~

significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

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

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.
C. If the credit risk results in fair value changes in financial liabilities designated as at fair value through profit or loss, they are recognized in other comprehensive income in the circumstances other than avoiding accounting mismatch or recognizing in profit or loss for loan commitments or financial guarantee contracts.

(10) 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 2017 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. And, the related information is disclosed accordingly.

(11) 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 2017 consolidated financial statements.

A. The interim period income tax expense is calculated according to pretax income times, effective income tax rate, and the related information is disclosed accordingly.
B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognizes the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.
(12) Revenue recognition
A. The Group is primarily engaged in manufacture and sale of TFT-LCD panel products. The Group recognizes revenue when the right of control is transferred to the customer when the products are delivered to customer and the Group has no unperformed obligation that could affect customer acceptance of the product. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

~19~

B. Sales revenue is calculated based on the contract price, net of volume discounts and sales returns and discounts. Revenue from these sales is recognized based on the price specified in the contract , net of the estimated volume discounts/ sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts, sales discounts and allowances, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognized for expected volume discounts, sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made, which is consistent with market practice.
C. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
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, 2017.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand, checking accounts and demand deposits Time deposits Cash equivalents - repurchase bonds	September30,2018 `18,837,790` `$` `18,181,795` `37,019,585` `870,000` `37,889,585` `$`	December31,2017 `37,758,696` `$` `27,562,983` `65,321,679` `667,276` `65,988,955` `$`	September30,2017
			`38,634,973` `$` `16,467,936` `55,102,909` `666,838` `55,769,747` `$`

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.

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

changes in their values are remote. Financial assets and liabilities at fair value through profit or loss
Assets Current items Financial assets mandatorily measured at fair value through profit or loss Forward foreign exchange contracts Forward exchange swap contracts	September 30,2018
	`8,108` `$` `45,537`
	`53,645` `$`

~20~

September 30, 2018

Assets

Assets	September 30,2018
Non-current items Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Liabilities Current items Financial liabilities held for trading Forward foreign exchange contracts	`991,908` `$` `372,302`
	`1,364,210` `$`
	September 30,2018
	`346,577` `$`

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

Derivative financial assets and liabilities Current items Forward foreign exchange contracts Forward foreign exchange contracts Forward foreign exchange contracts Forward foreign exchange contracts Forward exchange swap contracts	September30,2018	September30,2018
	Contract Amount (Notional Principal) (in thousands)	Contract Period
	USD (sell) `392,000` `$` JPY (buy) `43,586,415` EUR (sell) `10,000` JPY (buy) `1,262,925` HKD (sell) `364,400` EUR (buy) `40,000` USD (sell) `900,000` RMB (buy) `6,177,972` USD (sell) `225,000` TWD (buy) `6,910,950`	2018/7-2018/12 2018/7-2018/12 2018/8-2018/11 2018/8-2018/11 2018/8-2018/10 2018/8-2018/10 2018/7-2018/12 2018/7-2018/12 2018/9-2018/10 2018/9-2018/10

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.

B. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).
C. Information on financial assets at fair value through profit or loss as of December 31, 2017 and September 30, 2017 is provided in Note 12(4).

~21~

September 30, 2018

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

Non-current items Equity instruments Listed stocks Emerging stocks and unlisted stocks	`3,258,050` `$` `1,792,938` `5,050,988` `$`

A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income.
B. For information about that the Group recognized other comprehensive income for fair value change for the nine-month period ended September 30, 2018, Please refer to Note 6(19) “Other equity”.
C. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).
D. Information on available-for-sale financial assets as of December 31, 2017 and September 30, 2017 is provided in Note 12(4).

(4) Financial assets at amortized cost

Current items

Time deposits with maturity over three months

	September30,2018
	`18,888,750` `$`

The Group recognized $38,191 of interest income arising from the financial assets at amortized cost for the nine-month period ended September 30, 2018.

(5) Notes receivable and accounts receivable

Notes receivable Accounts receivable Less: Allowance for sales returns and discounts Allowance for uncollectible accounts `(`	September30,2018 December31,2017 September30,2017 `31,827` `$` `27,641` `$` `24,851` `$` `46,408,587` `43,731,467` `49,784,589` `46,440,414` `43,759,108` `49,809,440` `-` `2,326,907)` `(` `1,580,033)` `(` `109,373)` `109,496)` `(` `109,497)` `(` `46,331,041` `$` `41,322,705` `$` `48,119,910` `$`	September30,2017

A. The aging analysis of accounts receivable and notes receivable is as follows:

Not past due Up to 60 days 61 to 180 days Over 180 days	September30,2018 `45,572,904` `$` `845,379` `12,277` `9,854` `46,440,414` `$`	December31,2017 `40,242,878` `$` `3,321,622` `193,350` `1,258` `43,759,108` `$`	September30,2017
			`46,820,180` `$` `2,986,772` `1,274` `1,214` `49,809,440` `$`

The above aging analysis was based on past due date.

~22~

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

(6) Inventories

nventories
Raw materials and supplies Work in progress Finished goods	September30,2018 `5,365,264` `$` `16,377,450` `11,190,312` `32,933,026` `$`	December31,2017 `3,921,134` `$` `13,754,503` `12,583,384` `30,259,021` `$`	September30,2017
			`3,992,571` `$` `15,217,110` `13,034,960` `32,244,641` `$`

For the three-month and nine-month periods ended September 30, 2018 and 2017, the Company and Subsidiaries recognized cost of goods sold for inventories that have been sold at $66,510,623, $63,312,098, $184,916,618 and $192,437,555 and recognized net inventory gain (loss) at $35,685, ($30,446), $129,921 and ($49,577) due to write down (reversal) of cost of scrap inventories to net realizable value, respectively.

(7) Investments accounted for under the equity method

Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. Others	September30,2018 `967,550` `$` `817,967` `201,055` `1,986,572` `$`	December31,2017 `853,016` `$` `525,926` `112,197` `1,491,139` `$`	September30,2017
			`836,356` `$` `370,999` `108,522`
			`1,315,877` `$`

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

below:
Profit for the period from continuing operations Other comprehensive income (loss) - net of tax Total comprehensive income	2018 2017 `107,947` `$` `65,533` `$` `1,004` `1,844` `108,951` `$` `67,377` `$` For the three-month periods ended September30,	For the nine-month periods ended September30,
	2018 `107,947` `$` `1,004` `108,951` `$`	2018 `291,145` `$` `115,085` `(` `406,230` `$`	2017
			`110,298` `$` `44,243)` `66,055` `$`

~23~

(8) Property, plant and equipment

2018

									2018
										Transfer, net
											exchange
											differences
		AtJanuary1				Additions			Disposals		and others	AtSeptember30
Cost:
Land		`3,852,792` `$`			`$`	`-`		`$`	`-`	`$`	`-`	`$`	`3,852,792`
Buildings			`196,417,863`			`255,757`	`(`		`11,524)`		`2,307,940`		`198,970,036`
Machinery and equipment			`496,794,502`			`1,148,626`	`(`		`3,466,477)`		`13,275,765`		`507,752,416`
Other equipment			`39,761,461`			`43,126`	`(`		`1,791,348)`		`4,228,122`		`42,241,361`
			`736,826,618`			`1,447,509`	`(`		`5,269,349)`		`19,811,827`		`752,816,605`
Accumulated depreciation
and impairment:
Buildings	`(`		`114,356,774)`	`(`		`6,637,998)`			`11,066`		`146,503`	`(`	`120,837,203)`
Machinery and equipment	`(`		`384,279,016)`	`(`		`16,743,187)`			`3,262,843`	`(`	`249,677)`	`(`	`398,009,037)`
Other equipment	`(`		`33,205,003)`	`(`		`3,402,655)`			`1,765,315`	`(`	`701,365)`	`(`	`35,543,708)`
	`(`		`531,840,793)`	`(`		`26,783,840)`			`5,039,224`	`(`	`804,539)`	`(`	`554,389,948)`
Unfinished construction and
equipment under acceptance			`15,878,802`			`15,396,357`			`-`	`(`	`20,194,046)`		`11,081,113`
		`$`	`220,864,627`									`$`	`209,507,770`
									2017
										Transfer, net
											exchange
											differences
		AtJanuary1				Additions			Disposals		and others	AtSeptember30
Cost:
Land		`3,852,792` `$`			`$`	`-`		`$`	`-`	`$`	`-`	`$`	`3,852,792`
Buildings			`193,290,765`			`3,039`	`(`		`97,759)`		`1,806,955`		`195,003,000`
Machinery and equipment			`438,234,703`			`50,950`	`(`		`4,062,990)`		`29,409,362`		`463,632,025`
Other equipment			`36,511,450`			`22,307`	`(`		`737,332)`		`2,755,339`		`38,551,764`
			`671,889,710`			`76,296`	`(`		`4,898,081)`		`33,971,656`		`701,039,581`
Accumulated depreciation
and impairment:
Buildings	`(`		`105,693,860)`	`(`		`6,871,526)`			`56,798`		`204,763`	`(`	`112,303,825)`
Machinery and equipment	`(`		`371,358,748)`	`(`		`13,996,478)`			`3,738,247`		`802,956`	`(`	`380,814,023)`
Other equipment	`(`		`29,890,362)`	`(`		`3,100,406)`			`704,712`	`(`	`111,682)`	`(`	`32,397,738)`
	`(`		`506,942,970)`	`(`		`23,968,410)`			`4,499,757`		`896,037`	`(`	`525,515,586)`
Unfinished construction and
equipment under acceptance			`36,414,118`			`16,000,108`	`(`		`105,943)`	`(`	`34,907,993)`		`17,400,290`
		`$`	`201,360,858`									`$`	`192,924,285`

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:

Capitalized amount Range of the interest rates for capitalization	For the three-month period ended September 30,2017 `-` `$` `-`	For the nine-month period ended September 30,2017 `203,902` `$` `2.15%~2.41%`

~24~

B. For the nine-month period ended September 30, 2018, the Group has no amount of borrowing costs capitalized.
C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.
D. As of September 30, 2018, December 31, 2017 and September 30, 2017, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $1,678,508, $1,423,391 and $290,616, respectively.

(9) Investment property

nvestment property
Cost: Land Buildings Accumulated depreciation: Buildings `(` Cost: Land Buildings Accumulated depreciation: Buildings `(`		2018	At September30 `188,247` `$` `439,228` `627,475` `72,824)` `554,651` `$` At September30 `188,247` `$` `439,228` `627,475` `62,096)` `565,379` `$`
	At January1 `188,247` `$` `439,228` `627,475` `64,778)` `(` `562,697` `$` `(`	Additions `-` `$` `-` `-` `8,046)` `(` `8,046)` `$` 2017
	At January1 `188,247` `$` `439,228` `627,475` `54,050)` `(` `573,425` `$` `(`	Additions `-` `$` `-` `-` `8,046)` `(` `8,046)` `$`

The fair value of the investment property held by the Group as at September 30, 2018, December 31, 2017, and September 30, 2017 was $1,580,155, $1,423,964 and $977,231, 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.

~25~

(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 `5,005,156` `63,512` `(` `30,256,469` `63,512` `(` Accumulated amortization and impairment: Patents and royalty `8,143,082)` `(` `3,235)` `(` Others `4,202,479)` `(` `414,947)` `(` `12,345,561)` `(` `418,182)` `(` `17,910,908` `$` `354,670)` `($` AtJanuary1 Additions Cost: Patents and royalty `8,154,685` `$` `-` `$` Goodwill `17,096,628` `-` Others `4,417,732` `217,192` `(` `29,669,045` `217,192` `(` Accumulated amortization and impairment: Patents and royalty `7,528,072)` `(` `613,875)` `(` Others `3,694,652)` `(` `402,339)` `(` `11,222,724)` `(` `1,016,214)` `(` `18,446,321` `$` `799,022)` `($`			2018
			Disposals `-` `$` `-` `18,852)` `18,852)` `-` `18,852` `18,852` `-` `$` 2017
			Disposals `-` `$` `-` `47,369)` `47,369)` `-` `47,369` `47,369` `-` `$`

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

Details of amortization	of intangible assets are as follows:
Operating costs Operating expenses	2018 2017 `89,995` `$` `316,829` `$` `35,823` `35,939` `125,818` `$` `352,768` `$` For the three-month periods ended September 30,	For the nine-month periods ended September 30,
	2018 `89,995` `$` `35,823` `125,818` `$`	2018 `320,572` `$` `97,610` `418,182` `$`	2017
			`904,102` `$` `112,112` `1,016,214` `$`

C. The Group performed impairment assessment on the recoverable amount of goodwill on the reporting date, and calculated based on the value in use. The computation of value in use was based on the cash flow of financial forecast in the next 5 years. The periodical assessment did not include the impairment loss of goodwill.

~26~

(11) Other payables

		September30,2018	September30,2018	December31,2017	December31,2017	December31,2017	September30,2017	September30,2017
Payable on machinery and		`$`	`14,309,806`	`$`		`32,381,338`	`$`	`4,158,999`
equipment
Other personnel expenses			`9,733,331`			`13,116,498`		`11,338,726`
Repairs and maintenance
expense payable			`2,370,849`			`2,568,063`		`2,283,366`
Utilities expense payable			`1,268,227`			`1,070,308`		`1,296,814`
Other payables			`9,382,576`			`9,761,597`		`12,922,586`
		`$`	`37,064,789`	`$`		`58,897,804`	`$`	`32,000,491`
Long-term borrowings
Type of loans	Period	September30,2018		December31,2017			September30,2017
Syndicated bank	2015/3/12	`$`	`25,940,000`		`$`	`28,400,000`	`$`	`28,400,000`
loans	~2021/12/6
Less:
Administrative
expenses
charged by
syndicated banks		`(`	`112,289)`	`(`		`161,098)`	`(`	`203,286)`
Current portion
(includes
administrative
expenses)		`(`	`10,960,000)`	`(`		`10,951,114)`	`(`	`10,937,785)`
		`$`	`14,867,711`		`$`	`17,287,788`	`$`	`17,258,929`
Range of interest rates			`1.74%~1.96%`			`1.75%~2.06%`		`1.75%~2.06%`

- (12) Long term borrowings

A. Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.
B. In the third quarter of 2017, the Company applied to extend the expiry date for 2 years pursuant to the NT$68.5 billion syndicated loan agreement. On August 2, 2017, the Company was informed of the banks’ unanimous consent.
C. The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, based on the Company’s annual consolidated financial statements audited by independent auditors. The Company’s financial ratios on the consolidated financial statements for the year ended December 31, 2017 are in compliance with the covenants on the syndicated loan agreement.
D. For repayment of borrowings from financial institutions and financing mid-term working capital fund, the Board of Directors approved the signing of a syndicated loan with financial institution in the amount of NT$43.75 billion on June 20, 2018.

(13) Pensions

A. Defined benefit pension plan

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

~27~

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. 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 three-month and nine-month periods ended September 30, 2018 and 2017 were $507,878, $486,225, $1,506,152 and $1,448,714, respectively.
(14) Share-based payment

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, 2017.

(15) Provisions-current

At January 1, 2018 Additions during the period Used during the period `(` At September 30, 2018	Warranty `2,691,162` `$` `1,676,600` `799,633)` `3,568,129` `$`	Litigation and others `2,769,700` `$` `-` `-` `(` `2,769,700` `$`	Total `5,460,862` `$` `1,676,600` `799,633)` `6,337,829` `$`

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).

(16) Share capital

As of September 30, 2018, the Company’s authorized and outstanding capital were $105,000,000 and $99,520,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from shares issued have been collected.

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

At January 1 Cancellation of restricted stock to employees At September 30	2018 Number of ordinary shares (inthousands) `9,952,072` `-` `(` `9,952,072`	2017 Number of ordinary shares (inthousands) `9,952,149` `77)` `9,952,072`

~28~

A. The Board of Directors of the Company resolved to increase capital for cash by issuing the GDR which had been completed in January 2013. The Company issued 1,125,000 thousand shares of common stock for cash, with a unit of GDR representing 10 shares of common stock at the Luxembourg Stock Exchange which raised a total of $14,519,051, net of issuance cost. The Company has terminated the contracts in relation to the circulation of GDR and its account of the depositary bank in order to lower administrative costs in accordance with the resolution by the Board of Directors on July 26, 2017. As of September 30, 2018, the Company has no unit of GDR outstanding.
B. The Company adopted a resolution in 2013 to issue restricted shares to employees, consisting of 36,263 thousand shares without consideration and 36,263 thousand shares with consideration (the price for subscription is $5 (in dollars) per share). Until the vesting conditions are met by employees, those shares are restricted with regard to transfer of voting rights, dividend and other rights. For the nine-month periods ended September 30, 2018 and 2017, the Company has retired 0 and 77 thousand shares of unvested restricted stocks to employees, respectively, and decreased capital in accordance with related regulation.
(17) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

	2018
Sharepremium `99,614,690` `$` `-` `99,614,690` `$`	Share of profit (loss) of associates accounted for under equitymethod `32,229` `$` `41` `32,270` `$`	Total
		`99,646,919` `$` `41`
		`99,646,960` `$`

~29~

2017

At January 1 Cancellation of restricted stock to employees Vested restricted stock to employees Recognition of change in equity of associates in proportion to the Group's ownership At September 30	Share of profit (loss) of associates Restricted accounted for under stock to Sharepremium equitymethod employees `99,614,516` `$` `33,888` `$` `594)` `($` `-` `-` `768` `167` `-` `167)` `(` `-` `1,673)` `(` `-` `99,614,683` `$` `32,215` `$` `7` `$`	Total `99,647,810` `$` `768` `-` `1,673)` `(` `99,646,905` `$`

(18) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed after setting aside or reversing a special reserve according to related regulations. The appropriation of the remaining amount along with the unappropriated earnings from previous years shall be proposed by the Board of Directors and resolved by the shareholders. The Company is in an emerging industry which is growing rapidly, and has a capital intensive business. The Company is at the stage of stable growth. In line with the Company’s long-term financial plan in the future, investment environment and business competition situation, the appropriation of dividends shall be proposed by the Board of Directors and resolved by the shareholders, taking into account the future capital expenditure budget and capital requirement of the Company. However, the stock dividends distributed to shareholders shall not exceed twothirds of distributable dividends in current period.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
C. The details of the appropriation of 2017 and 2016 net income which was approved at the stockholders’ meeting in June 2018 and 2017, respectively, are as follows:

Years ended December 31,

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

~30~

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

(19) Other equity items

D. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(25). Other equity items	D. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(25). Other equity items	D. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(25). Other equity items
Operating income The Group derives revenue from the transfer of goods at a point in time. Financial assets at fair value Available- through other Currency for-sale comprehensive translation investments income Total At January 1 `5,717,223)` `($` `4,626,502` `$` `-` `$` `1,090,721)` `($` Effect of modified retrospective approach under IFRS 9 `-` `4,626,502)` `(` `4,626,502` `-` Balance after retropective adjustment `5,717,223)` `(` `-` `4,626,502` `1,090,721)` `(` Revaluation - gross `-` `-` `1,610,671)` `(` `1,610,671)` `(` Currency translation differences `1,460,938)` `(` `-` `-` `1,460,938)` `(` Share of other comprehensive income of associates `115,085` `-` `-` `115,085` At September 30 `7,063,076)` `($` `-` `$` `3,015,831` `$` `4,047,245)` `($` 2018 Available- Currency for-sale translation investments Total At January 1 `4,040,408)` `($` `621,604` `$` `3,418,804)` `($` Revaluation of available-for-sale investments - gross `-` `6,637,038` `6,637,038` Revaluation transfer of available-for- sale investment - gross `-` `2,363,433)` `(` `2,363,433)` `(` Currency translation differences `1,428,349)` `(` `-` `1,428,349)` `(` Share of other comprehensive loss of associates `44,243)` `(` `-` `44,243)` `(` Effect of income tax `-` `2,709` `2,709` At September 30 `5,513,000)` `($` `4,897,918` `$` `615,082)` `($` 2017 2018 2017 TFT-LCD products `207,132,750` `$` `250,042,399` `$` For the nine-monthperiods ended September 30,
	a point in time. 2018 `207,132,750`	2017
		`250,042,399` `$`

(20) Operating income

~31~

(21) Other income

Other income
Interest income Interest income from bank deposits Interest income from financial assets at amortized cost Dividends revenue Rental revenue Other income	2018 2017 `187,700` `$` `110,352` `$` `38,191` `-` `225,891` `110,352` `17,986` `12,679` `37,568` `39,760` `540,570` `427,507` `822,015` `$` `590,298` `$` For the three-month periods ended September 30,	2018 2017 `617,818` `$` `306,021` `$` `38,191` `-` `656,009` `306,021` `234,902` `152,087` `126,094` `104,464` `995,687` `1,140,097` `2,012,692` `$` `1,702,669` `$` For the nine-month periods ended September 30,
	2018 `187,700` `$` `38,191` `225,891` `17,986` `37,568` `540,570` `822,015` `$`		2017
			`306,021` `$` `-` `306,021` `152,087` `104,464` `1,140,097` `1,702,669` `$`

(22) Other gains and losses

(22)	Other gains and losses Dividends revenue `17,986` `12,679` `234,902` `152,087` Rental revenue `37,568` `39,760` `126,094` `104,464` Other income `540,570` `427,507` `995,687` `1,140,097` `822,015` `$` `590,298` `$` `2,012,692` `$` `1,702,669` `$`	`234,902` `152,087` `126,094` `104,464` `995,687` `1,140,097` `2,012,692` `$` `1,702,669` `$`	`234,902` `152,087` `126,094` `104,464` `995,687` `1,140,097` `2,012,692` `$` `1,702,669` `$`
(23)	Finance costs 2018 2017 2018 2017 Net (loss) gain on financial assets and liabilities at fair value through profit or loss `1,251,965)` `($` `336,231` `$` `2,150,099)` `($` `1,521,531` `$` Net currency exchange gain (loss) `1,339,262` `377,601)` `(` `1,716,431` `1,652,661)` `(` (Loss) gain on disposal of investments `15,141)` `(` `168,083` `1,087` `2,492,927` Loss on disposal of property, plant and equipment `51,864)` `(` `104,836)` `(` `205,497)` `(` `238,860)` `(` Impairment loss `-` `-` `-` `120,000)` `(` Other (losses) gains `62,816)` `(` `382,952` `63,849)` `(` `1,389,871)` `(` `42,524)` `($` `404,829` `$` `701,927)` `($` `613,066` `$` For the three-month periods For the nine-month periods ended September 30, ended September 30, 2018 2017 2018 2017 Interest expense: Bank borrowings `111,978` `$` `279,544` `$` `368,822` `$` `562,011` `$` Others `2` `13` `213` `22` `111,980` `$` `279,557` `$` `369,035` `$` `562,033` `$` For the three-month periods For the nine-month periods ended September 30, ended September 30,	For the nine-month periods ended September 30,
			2017
		2018 `368,822` `$` `213` `369,035` `$`	2017
			`562,011` `$` `22` `562,033` `$`

~32~

(24) Expenses by nature

Expenses by nature
Employee benefit expense: Salaries and other short- term employee benefits Post-employment benefits Depreciation Amortization	2018 2017 `9,549,775` `$` `10,445,947` `$` `507,878` `486,225` `8,767,429` `7,980,355` `125,818` `352,768` `18,950,900` `$` `19,265,295` `$` For the three-month periods ended September30,	For the nine-month periods ended September30,
	2018 `9,549,775` `$` `507,878` `8,767,429` `125,818` `18,950,900` `$`	2018 `28,426,826` `$` `1,506,152` `26,791,886` `418,182` `57,143,046` `$`	2017
			`34,574,521` `$` `1,448,714` `23,976,456` `1,016,214`
			`61,015,905` `$`

(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 nine-month periods ended September 30, 2018 and 2017, the amount of employees’ compensation was accrued as $113,750, $559,168, $284,619 and $2,111,036, respectively. For the nine-month periods ended September 30, 2018 and 2017, the Group did not recognize directors’ remuneration, aforementioned amounts were accounted as expenses. For the nine-month period ended September 30, 2018, the employees’ compensation and directors’ remuneration were estimated and accrued based on distributable profit of current year as of the end of reporting period.
- The employees’ compensation and directors’ remuneration for the year ended December 31, 2017 were $3,136,952 and $48,261, respectively, and were estimated based on the profit of current year. The employees’ compensation will be distributed in the form of cash. The Board of Directors resolved to distribute employees’ compensation and directors’ remuneration in the amount of $3,136,952 and $48,261, respectively, in the form of cash. The actual distributed amount were in consistent with the amounts recognized as expense in 2017.
- Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

~33~

(26) Income tax

A. Income tax expense

(a) Components of income tax expense:

		For the three-month periods	For the three-month periods	For the three-month periods	For the three-month periods	For the nine-month periods	For the nine-month periods	For the nine-month periods	For the nine-month periods
			ended September 30,				ended September 30,
			2018		2017		2018		2017
Current tax:
Current tax on profit for	`$`		`507,158`	`$`	`1,082,115`	`$`	`2,008,296`	`$`	`3,126,145`
the period
Tax on undistributed
surplus earnings			`-`		`-`		`2,704,311`		`-`
Prior year income tax
(over) under estimation	`(`		`894)`	`(`	`34,610)`		`100,119`	`(`	`76,662)`
Total current tax			`506,264`		`1,047,505`		`4,812,726`		`3,049,483`
Deferred tax:
Origination and reversal of
temporary differences			`146,505`		`1,871,601`		`735,558`		`7,431,446`
Impact of change in tax
rate			`-`		`-`	`(`	`969,286)`		`-`
Income tax expense	`$`		`652,769`	`$`	`2,919,106`	`$`	`4,578,998`	`10,480,929` `$`
The income tax (charge)/credit			relating to components of other				comprehensive income is as
follows:
		For the three-month periods					For the nine-month periods
			ended September30,				ended September30,
			2018		2017		2018		2017
Fair value of
available-for-sale
financial assets	`$`		`-`	`($`	`34,809)`	`$`	`-`	`($`	`2,709)`

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:
B. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.
C. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

~34~

(27) Earnings per share

) Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Basic earnings per share (in dollars) Diluted earnings per share Profit attributable to ordinary shareholders of the parent Weighted average number of ordinary shares outstanding (shares in thousands) Assumed conversion of all dilutive potential ordinary shares: -Employees’ compensation -Restricted stocks Diluted earnings per share (in dollars)	2018 2017 `1,912,948` `$` `8,757,318` `$` `9,952,072` `9,952,068` `0.19` `$` `0.88` `$` `1,912,948` `$` `8,757,318` `$` `9,952,072` `9,952,068` `26,851` `149,190` `-` `4` `9,978,923` `10,101,262` `0.19` `$` `0.87` `$` For the three-month periods endedSeptember30,	For the nine-month periods endedSeptember30,
	2018 `1,912,948` `$` `9,952,072` `0.19` `$` `1,912,948` `$` `9,952,072` `26,851` `-` `9,978,923` `0.19` `$`	2018 `2,919,750` `$` `9,952,072` `0.29` `$` `2,919,750` `$` `9,952,072` `70,212` `-` `10,022,284` `0.29` `$`	2017
			`32,733,654` `$` `9,952,045` `3.29` `$` `32,733,654` `$` `9,952,045` `156,975` `28` `10,109,048` `3.24` `$`

(28) Supplemental cash flow information Investing activities with partial cash payments:

) Supplemental cash flow information Investing activities with partial cash payments:
Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment `(` Cash paid during the period	For the nine-month periods ended September 30,
	2018 `16,843,866` `$` `32,381,338` `14,309,806)` `34,915,398` `$`	2017
		`16,076,404` `$` `3,339,764` `4,158,999)` `(` `15,257,169` `$`

(29) Changes in liabilities from financing activities

For the nine-month period ended September 30, 2018, all changes in liabilities from financing activities are changes in cash flow from financing activities. Please refer to consolidated statements of cash flows.

~35~

7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

LATED PARTY TRANSACTIONS Names and relationship of related parties
Names of relatedparties	Relationship with theGroup
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.	Other related party Other related party Associate Associate

(2) Significant related party transactions

A. Operating revenue

Operating revenue
Sales of goods: Other related parties Associates	2018 2017 `3,042,279` `$` `11,518,588` `$` `-` `-` `3,042,279` `$` `11,518,588` `$` For the three-month periods ended September 30,	For the nine-month periods ended September 30,
	2018 `3,042,279` `$` `-` `3,042,279` `$`	2018 `16,097,784` `$` `21,418` `16,119,202` `$`	2017
			`34,104,697` `$` `36,545` `34,141,242` `$`

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

B. Purchases of goods

Purchases of goods
Purchases of goods: Other related parties Associates	2018 2017 `1,576,112` `$` `1,362,892` `$` `387,133` `316,965` `1,963,245` `$` `1,679,857` `$` For the three-month periods ended September 30,	For the nine-month periods ended September 30,
	2018 `1,576,112` `$` `387,133` `1,963,245` `$`	2018 `3,825,875` `$` `1,078,374` `4,904,249` `$`	2017
			`11,033,008` `$` `928,973` `11,961,981` `$`

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.

~36~

C. Receivables from related parties

Accounts receivable: Other related parties - Nanjing Hongfusharp Precision Electronics Co., Ltd. - Others Associates	September30,2018 `148,433` `$` `4,004,952` `36,152` `4,189,537` `$`	December31,2017 `7,617,857` `$` `10,083,762` `25,463` `17,727,082` `$`	September30,2017
			`-` `$` `12,287,184` `32,528` `12,319,712` `$`

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

Payables to related parties
Accounts payable: Other related parties Associates	September30,2018 `2,373,530` `$` `201,199` `2,574,729` `$`	December31,2017 `2,371,033` `$` `193,977` `2,565,010` `$`	September30,2017
			`2,135,460` `$` `181,039` `2,316,499` `$`

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:

Period-end balances arising Other related parties Associates Other related parties - Hon Hai Precision Industry Co., Ltd. - Others	from purchases of property (shown as “Other payables”): 2018 2017 2018 2017 `11,510` `$` `5,296` `$` `47,783` `$` `55,775` `$` `-` `-` `2,458` `-` `11,510` `$` `5,296` `$` `50,241` `$` `55,775` `$` For the three-month periods For the nine-month periods ended September 30, ended September 30, September 30,2018 December 31,2017 September 30,2017 `9,053,325` `$` `26,609,511` `$` `-` `$` `5,939` `1,974` `5,034` `9,059,264` `$` `26,611,485` `$` `5,034` `$`	For the nine-month periods ended September 30,	For the nine-month periods ended September 30,	For the nine-month periods ended September 30,
				2017
			`-` `$` `5,034`
			`5,034` `$`

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

~37~

Sale of property

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

Disposal Gain on proceeds disposal `537` `$` `48` `$` Disposal Gain on proceeds disposal `537` `$` `48` `$` For the nine-month period endedSeptember30,2018 For the three-month period ended September30,2018	For the three-month period ended September30,2017	For the three-month period ended September30,2017
	Disposal Gain on proceeds disposal `-` `$` `-` `$` For the nine-month period endedSeptember30,2017	Gain on disposal
		`-` `$`
Disposal proceeds `537` `$`	Disposal proceeds `716` `$`	Gain on disposal
		`34` `$`

(b) Period-end balances arising from sale of property (shown as ‘other receivables’)

Other related parties

September30,2018 `534` `$`	December31,2017 `-` `$`	September30,2017
		`-` `$`

(3) Key management compensation

(b) Period-end balances arising from sale of property (shown as ‘other receivables’) (3) Key management compensation September30,2018 December31,2017 September30,2017 Other related parties `534` `$` `-` `$` `-` `$`	(b) Period-end balances arising from sale of property (shown as ‘other receivables’) (3) Key management compensation September30,2018 December31,2017 September30,2017 Other related parties `534` `$` `-` `$` `-` `$`	(b) Period-end balances arising from sale of property (shown as ‘other receivables’) (3) Key management compensation September30,2018 December31,2017 September30,2017 Other related parties `534` `$` `-` `$` `-` `$`	‘other receivables’) 31,2017 September30,2017 `-` `-` `$`	‘other receivables’) 31,2017 September30,2017 `-` `-` `$`
PLEDGED ASSETS The Group’s assets pledged as collateral are as follows: 2018 2017 2018 2017 Salaries and other short-term employee benefits `138,185` `$` `73,408` `$` `241,761` `$` `117,505` `$` Post-employment benefit `197` `108` `591` `324` `138,382` `$` `73,516` `$` `242,352` `$` `117,829` `$` For the three-month periods For the nine-month periods endedSeptember30, endedSeptember30, Pledged asset September30,2018 December31,2017 September30,2017 Purpose Other current assets -Time deposits `444` `$` `1,594` `$` `1,620` `$` Tariff and credit card guarantee Property, plant and equipment `63,383,215` `70,966,784` `73,346,775` Long-term loans Intangible assets `2,439` `7,446` `9,348` Long-term loans Other non-current assets -Time deposits `-` `722` `722` -Refundable deposits `365,916` `-` `-` Guarantee for contract and performance bond `63,752,014` `$` `70,976,546` `$` `73,358,465` `$` Bookvalue			For the nine-month periods endedSeptember30,
				2017
				`117,505` `$` `324` `117,829` `$` Purpose
The Group’s assets Pledged asset Other current assets -Time deposits Property, plant and equipment Intangible assets Other non-current assets -Time deposits -Refundable deposits
	September30,2018 `444` `$` `63,383,215` `2,439` `-` `365,916` `63,752,014` `$`	December31,2017 `1,594` `$` `70,966,784` `7,446` `722` `-` `70,976,546` `$`

8. PLEDGED ASSETS

~38~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

`－` (1) Contingencies Significant Litigations

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

In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In March 2015, the CAFC overruled the decision rendered by the district court and ordered a retrial. In June 2017, the jury determined that some products of the Company and American subsidiaries constituted direct infringement of patent and ordered an infringement compensation for Eidos. On March 5, 2018, the court made first instance judgement, the Company continued the appeal. However, the results of the litigation are uncertain and are dependent on the future litigation progress. The Company does not expect that the lawsuit would have a material adverse effect on the Company’s financial position or results of operations in the short-term.

C. On July 10, 2018, Vista Peak Ventures, LLC filed four complaints against the Company in the United States District Court for the Eastern District of Texas, alleging the infringement of several of its patents. Litigation proceedings for this case have not yet commenced, and currently no court date has been set. The Company plans to seek assistance from external attorneys for this lawsuit. Since the final results of the litigation are dependent on future litigation progress and are uncertain, the Company does not expect that the lawsuit will have a material adverse effect on its financial position or results of operations in the short term.
D. The Company had assessed and recognized related losses and liabilities as shown in ‘provisionscurrent’ for the aforementioned investigation relating to anti-trust laws and patent litigation.

~39~

(2) Commitments

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

September 30, 2018 December 31, 2017 September 30, 2017 Property, plant and equipment $ 23,209,615 $ 18,794,836 $ 17,870,704

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. There was no newly significant operating leases agreement of the Group in the reporting period. Please refer to Note 9(2) in the consolidated financial statements for the year ended December 31, 2017.

C. Outstanding letters of credit

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

September 30, 2018 December 31, 2017 September 30, 2017 Outstanding letters of credit $ 298,634 $ 45,687 $ 209,648

10. SIGNIFICANT DISASTER LOSS

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

11. 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, 2017.

(2) Financial instruments

A. Financial instruments by category

For information of the Group’s financial assets (financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, available-for-sale financial assets, Financial assets at amortized cost, cash and cash equivalents, accounts receivable (including related parties) and other receivables) and financial liability (financial liabilities at fair value through profit or loss, accounts payable (including related parties), other payables and longterm borrowings (including current portion)), please refer to Note 6 and consolidated balance sheets.

B. Risk management policies

There was no significant change in the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2017.

~40~

C. Significant financial risks and degrees of financial risks
Except for the following, there was no significant change in the period. Please refer to Note 12. (a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
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 profit of a 1% exchange rate fluctuation would be an increase of $340,699 and $232,050 for the nine-month periods ended September 30, 2018 and 2017, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

		September 30,	September 30,	2018	2018		December 31,	December 31,	2017	2017
		Foreign					Foreign
		Currency	Exchange				Currency	Exchange
		Amount	Rate		Book Value		Amount	Rate		Book Value
	(In Thousands)		(Note)		(NTD)	(In Thousands)		(Note)		(NTD)
Financial assets
Monetary items
USD	`$`	`5,653,543`	`30.53`	`$`	`172,602,668`	`$`	`5,323,715`	`29.76`	`$`	`158,433,758`
JPY		`8,017,434`	`0.27`		`2,164,707`		`8,017,851`	`0.26`		`2,084,641`
EUR		`12,797`	`35.48`		`454,038`		`53,720`	`35.57`		`1,910,820`
Non-monetary items
USD	`$`	`2,551,723`	`30.53`	`$`	`77,904,103`	`$`	`2,595,104`	`29.76`	`$`	`77,230,295`
HKD		`103,845`	`3.90`		`404,996`		`184,669`	`3.81`		`703,589`
JPY	`13,313,597`		`0.27`		`3,594,671`		`5,662,973`	`0.26`		`1,472,373`
Financial liabilities
Monetary items
USD	`$`	`4,167,525`	`30.53`	`$`	`127,234,538`	`$`	`4,108,667`	`29.76`	`$`	`122,273,930`
JPY	`45,281,881`		`0.27`		`12,226,108`	`41,168,652`		`0.26`		`10,703,850`
EUR		`47,656`	`35.48`		`1,690,835`		`45,980`	`35.57`		`1,635,509`

~41~

Financial assets Monetary items USD JPY EUR Non-monetary items USD HKD JPY EUR USD JPY EUR Financial liabilities Monetary items	September30,2017	September30,2017
	Foreign Currency Exchange Amount Rate (In Thousands) (Note) `5,114,741` `$` `30.26` `8,063,015` `0.27` `64,671` `35.75` `2,613,281` `$` `30.26` `234,320` `3.87` `5,647,329` `0.27` `3,829` `35.75` `4,039,725` `$` `30.26` `40,111,281` `0.27` `83,468` `35.75`	Book Value (NTD)
		`154,772,063` `$` `2,177,014` `2,311,988` `79,077,883` `$` `906,818` `1,524,779` `136,887` `122,242,079` `$` `10,830,046` `2,983,981`

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

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 nine-month periods ended September 30, 2018 and 2017 amounted to $1,339,262, ($377,601), $1,716,431 and ($1,652,661), 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 nine-month periods ended September 30, 2018 and 2017 would have increased/decreased by $272,842 and $48,471, respectively; other comprehensive gains and losses would have increased/decreased by $1,010,198 and $1,902,415, respectively.

Cash flow and fair value interest rate risk

i. The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During the nine-month periods ended September 30, 2018 and 2017, the Group’s borrowings at variable rate were denominated in the NTD.
ii. If the borrowing interest rate of NTD had increased/decreased by 0.25% with all other variables held constant, profit, net of tax for the nine-month periods ended September 30, 2018 and 2017 would have decreased/increased by $64,850 and $71,000, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

~42~

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows.
ii. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the managements. The utilisation of credit limits is regularly monitored.
iii. The Group adopts following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments are past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.
v. The Group classifies customer’s accounts receivable in accordance with credit rating of customer, credit risk on trade and customer types. The Group applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis.
vi. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii) Default or delinquency in interest or principal repayments;
(iii) Adverse changes in national or regional economic conditions that are expected to cause a default.
vii. The Group uses the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. According to abovementioned consideration and information, the Group does not expect any significant default possibility of accounts receivable.

~43~

viii. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

		2018
		Accounts receivable
At January 1_IAS 39	`$`	`109,496`
Adjustments under new standards		`-`
At January 1_IFRS 9		`109,496`
Write-offs	`(`	`123)`
Effect of exchange rate changes		`-`
At September 30	`$`	`109,373`
		2017
		Accounts receivable
At January 1	`$`	`109,501`
Effect of exchange rate changes	`(`	`4)`
At September 30	`$`	`109,497`

ix. The Group did not recognize significant impairment provision in accordance with 12 months expected credit losses, because the Group’s financial assets/loans to others and receivables at amortized cost all with low credit risk.
x. Credit risk information of 2017 is provided in Note 12(4).

(c) Liquidity risk

i. 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 nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities

September30,2018 Long-term borrowings (including current portion) December 31,2017 Long-term borrowings (including current portion) September 30,2017 Long-term borrowings (including current portion)	Less than 1year `10,960,000` `$` Less than 1year `10,960,000` `$` Less than 1year `10,960,000` `$`	Between 1 and3 years `11,180,000` `$` Between 1 and 3years `16,890,000` `$` Between 1 and 3years `16,740,000` `$`	Between 3 and5 years `3,800,000` `$` Between 3 and 5years `550,000` `$` Between 3 and 5years `700,000` `$`	Total
				`25,940,000` `$` Total
				`28,400,000` `$` Total
				`28,400,000` `$`

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

~44~

(3) Fair value estimation

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks 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.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value
The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, accounts payable, other payables and long-term borrowings (including current portion) are approximate to their fair values.
D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:
(a) The related information of natures of the assets and liabilities is as follows:

September30,2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Forward exchange swap contract Financial assets at fair value through other comprehensive income Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts	Level 1 `991,908` `$` `-` `-` `-` `3,704,850` `4,696,758` `$` `-` `$`	Level 2 `-` `$` `8,108` `45,537` `-` `-` `53,645` `$` `346,577` `$`	Level3 `372,302` `$` `-` `-` `-` `1,346,138` `1,718,440` `$` `-` `$`	Total
				`1,364,210` `$` `8,108` `45,537` `-` `5,050,988`
				`6,468,843` `$`
				`346,577` `$`

~45~

December31,2017 Assets Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Forward exchange swap contract Available-for-sale financial assets Equity securities Liabilities Financial liabilities at fair value through profit or loss Forward exchange contracts Recurring fair value measurements Recurring fair value measurements September30,2017 Assets Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Available-for-sale financial assets Equity securities Liabilities Financial liabilities at fair value through profit or loss Forward exchange contracts Forward exchange swap contract Recurring fair value measurements Recurring fair value measurements	Level 1 `257,676` `$` `-` `-` `6,241,465` `6,499,141` `$` `-` `$` Level 1 `242,355` `$` `-` `9,206,941` `9,449,296` `$` `-` `$` `-` `-` `$`	Level 2 `-` `$` `328,170` `76,890` `-` `405,060` `$` `52,500` `$` Level 2 `-` `$` `183,790` `-` `183,790` `$` `315,948` `$` `51,949` `367,897` `$`	Level3 `-` `$` `-` `-` `313,724` `313,724` `$` `-` `$` Level3 `-` `$` `-` `305,136` `305,136` `$` `-` `$` `-` `-` `$`	Total
				`257,676` `$` `328,170` `76,890` `6,555,189`
				`7,217,925` `$`
				`52,500` `$`
				Total
				`242,355` `$` `183,790` `9,512,077`
				`9,938,222` `$`
				`315,948` `$` `51,949`
				`367,897` `$`

(b) The methods and assumptions the Group used to measure fair value are as follows:
i. 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

ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty

~46~

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.

iii. When assessing non-standard and low-complexity financial instruments, for example, foreign exchange swap contracts, 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.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts and foreign exchange swap contracts are usually valued based on the current forward exchange rate.
v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the 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 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.
vi. 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 nine-month periods ended September 30, 2018 and 2017, there was no transfer between Level 1 and Level 2.
F. The following table presents the changes in level 3 instruments as at September 30, 2018 and 2017:

2017:
At January 1 Gains and losses recognized in profit or loss Gains and losses recognized in other comprehensive income Acquired in the period Effect on exchange rate changes At September 30	2018 2017 `313,724` `$` `242,351` `$` `83,042)` `(` `120,000)` `(` `44,951)` `(` `205,605` `1,532,689` `122,755` `20` `145,575)` `(` `1,718,440` `$` `305,136` `$` Equity securities
	2018 `313,724` `$` `83,042)` `(` `44,951)` `(` `1,532,689` `20` `(` `1,718,440` `$`

~47~

G. For the nine-month periods ended September 30, 2018 and 2017, there was no transfer into or out from Level 3.
H. Investment management segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
Investment management segment set up valuation policies, valuation processes, and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity instrument: Unlisted shares Venture capital shares Private equity fund investment	Fair value at September 30,2018	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	`1,692,515` `$` `25,925`	Market comparable companies Net asset value	Price to earnings ratio multiple, price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability Not applicable	`0.68~43.54` `(5.1)` `30%~70%` `(33%)` Not applicable	The higher the multiple, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable

~48~

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 December 31,2017	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	`286,940` `$` `26,784` Fair value at September 30,2017	Market comparable companies Net asset value Valuation technique	Price to earnings ratio multiple, price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability Not applicable Significant unobservable input	`1.26~61.93` `(26.49)` `30%~70%` `(51%)` Not applicable Range (weighted average)	The higher the multiple, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable Relationship of inputs to fairvalue
	`279,217` `$` `25,919`	Market comparable companies Net asset value	Price to earnings ratio multiple, price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability Not applicable	`1.05~64.25` `(27.82)` `30%~70%` `(37%)` Not applicable	The higher the multiple, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Not applicable

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

have changed:
Financialassets	Period	Input	Change	Recognized in other comprehensive income
				Favourable change	Unfavourable change
Equity instrument Equity instrument Equity instrument	2018/9/30 2017/12/31 2017/9/30	`$ 1,718,440` `313,724` `305,136`	`± 1%` `± 1%` `± 1%`	`$ 17,184` `3,137` `3,051`	`($ 17,184)` `( 3,137)` `( 3,051)`

~49~

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

A. For details of the significant accounting policies in the reporting period, please refer to Note 4 in the consolidated financial statements for the year ended December 31, 2017.
B. For details of the reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, IFRS 9, please refer to Note 3(1).
C. As of December 31, 2017, September 30, 2017 and for the nine-month period ended September 30, 2017, the details of significant accounting items are as follows:
(a) Financial assets at fair value through profit or loss

Assets Current items Financial assets held for trading Forward exchange contracts Exchange rate swap Non-current items Financial assets held for trading Stock-Advanced Optoelectronic Technology Inc. Valuation adjustment Liabilities Current items Financial liabilities held for trading Forward exchange contracts Exchange rate swap	December31,2017 `328,170` `$` `76,890` `405,060` `$` `48,040` `$` `209,636` `257,676` `$` December31,2017 `52,500` `$` `-` `52,500` `$`	September30,2017
		`-` `$` `183,790`
		`183,790` `$`
		`48,040` `$` `194,315`
		`242,355` `$`
		September30,2017
		`315,948` `$` `51,949`
		`367,897` `$`

i. For the three-month and nine-month periods ended September 30, 2017, the Group recognized net profit of $336,231 and $1,521,531 in the abovementioned financial instruments, respectively.

~50~

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

December31,2017
Derivative financial assets andliabilities Current items Forward foreign USD (sell) `400,000` `$` exchange contracts JPY (buy) `44,934,619` Forward foreign EUR (sell) `15,800` exchange contracts USD (buy) `18,841` Forward foreign EUR (sell) `34,200` exchange contracts JPY (buy) `4,554,765` Forward foreign HKD (sell) `371,732` exchange contracts EUR (buy) `40,000` Forward foreign USD (sell) `430,000` exchange contracts RMB (buy) `2,870,455` Forward foreign USD (sell) `410,000` swap contracts TWD (buy) `12,289,569` Contract amount (Notionalprincipal) (inthousands) September30,2017	Contract period
	2017/10-2018/3 2017/10-2018/3 2017/10-2018/2 2017/10-2018/2 2017/10-2018/3 2017/10-2018/3 2017/12-2018/2 2017/12-2018/2 2017/7-2018/2 2017/7-2018/2 2017/12-2018/1 2017/12-2018/1
Derivative financial assets andliabilities Current items Forward foreign USD (sell) `414,000` `$` exchange contracts JPY (buy) `45,556,986` Forward foreign EUR (sell) `36,100` exchange contracts USD (buy) `42,440` Forward foreign EUR (sell) `25,000` exchange contracts JPY (buy) `3,298,950` Forward foreign HKD (sell) `364,760` exchange contracts EUR (buy) `40,000` Forward foreign USD (sell) `430,000` exchange contracts RMB (buy) `2,889,557` Foreign exchange USD (sell) `410,000` swap contracts TWD (buy) `12,362,900` Contract amount (Notionalprincipal) (inthousands)	Contract period
	2017/7-2017/12 2017/7-2017/12 2017/7-2017/12 2017/7-2017/12 2017/8-2017/12 2017/8-2017/12 2017/7-2017/10 2017/7-2017/10 2017/6-2018/2 2017/6-2018/2 2017/9-2017/10 2017/9-2017/10

The Group entered into the forward foreign exchange contracts to hedge exchange rate risk of price and foreign currency amount position of import and export. However, these forward foreign exchange contracts are used to satisfy capital needs and are not accounted for under hedge accounting.

~51~

(b) Available-for-sale financial assets

Available-for-sale financial assets
Non-current items Listed stocks Emerging and unlisted stocks	December31,2017 `5,969,565` `$` `585,624` `6,555,189` `$`	September30,2017
		`8,906,141` `$` `605,936` `9,512,077` `$`

  - i. The Group recognized comprehensive income for fair value change and reclassified from equity to profit or loss for the three-month and nine-month periods ended September 30, 2017. Please refer to Note 6(19).

  - ii. For the nine-month period ended September 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 listed as ‘other gains and losses’.

D. Credit risk information of 2017 is provided in Note 12 of 2017 consolidated financial statements.
(a) On December 31, 2017 and September 30, 2017, the aging analysis of accounts receivable that were past due but not impaired is as follows:

that were past due but not impaired is as follows:
Up to 60 days 61 to 180 days Over 181 days	December31,2017 `3,321,622` `$` `193,350` `1,258` `3,516,230` `$`	September30,2017
		`2,986,772` `$` `1,274` `1,214` `2,989,260` `$`

(b) Movement analysis of accounts receivable that were impaired is as follows:
i. As of December 31, 2017 and September 30, 2017, the Group accrued accounts receivable that were impaired and recognized $109,496 and $109,497, respectively.
ii. Movement on allowance for bad debts for impairment loss on individual provision is as follows:

follows:
At January 1 Net exchange differences At September 30	2017
	`109,501` `$` `4)` `(` `109,497` `$`

(5) Effects of initial application of IFRS 15

A. For the significant accounting policy applied on revenue recognition for the year ended December 31, 2017, please refer to Note 4 in the consolidated financial statements for the year ended December 31, 2017.
B. There is no effect on single account of the statement of comprehensive income, if the Group continues applying abovementioned accounting policy in the third quarter of 2018. Under IFRS 15, refund liabilities are presented as accounts receivable-allowance for sales return and discounts in the previous reporting period. As of September 30, 2018, the effect from changes in accounting policy was $1,688,600.

~52~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

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

~53~

(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 Depreciation and amortization Capital expenditure- property, plant and equipment	2018 2017 TFT LCD TFT LCD `73,907,131` `$` `79,507,678` `$` `2,565,717` `$` `11,676,424` `$` `8,893,247` `$` `8,333,123` `$` `12,017,347` `$` `5,097,808` `$` For the three-month periods ended September30,	For the nine-month periods ended September30,
	2018 TFT LCD `73,907,131` `$` `2,565,717` `$` `8,893,247` `$` `12,017,347` `$`	2018 TFT LCD `207,132,750` `$` `7,498,748` `$` `27,210,068` `$` `34,915,398` `$`	2017
			TFT LCD
			`250,042,399` `$`
			`43,214,583` `$`
			`24,992,670` `$`
			`15,257,169` `$`

(3) Reconciliation for segment income

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

~54~

Innolux Corporation and Subsidiaries

Table 1

Loans to others

For the nine-month period ended September 30, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the nine-month period ended September 30, 2018	Balance as at September 30,2018	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 4 4 5 6 7	Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Nanjng Innolux Technology Ltd. Innolux USA Inc. Innolux Europe B.V. Innolux Europe B.V. Innolux Japan Co., Ltd. Warriors Technology Investments Ltd. Bright Information Holding Ltd.	Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Shanghai Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	$3,052,500 2,440,515 1,730,547 1,774,920 3,549,840 221,865 305,250 1,347,595 46,124 2,072,840 3,287,560 98,272	$3,052,500 2,041,158 1,730,547 1,331,190 2,839,872 - 305,250 1,347,595 46,124 2,072,840 3,287,560 -	$3,052,500 2,041,158 1,730,547 1,331,190 2,839,872 - 305,250 1,347,595 46,124 2,072,840 3,287,560 -	2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 1.81% ~2.51% 1.818% ~1.821% 1.818% ~1.821% 1.00% 0.00% 0.00%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	$ - - - - - - - - - - - -	- - - - - - - - - - - -	$ - - - - - - - - - - - -	256,326,658 $ 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658	256,326,658 $ 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658 256,326,658	A A A A A A A A A A A A

Note A: The Company - Innolux Corporation

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

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

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

Table 1, Page 1

Expressed in thousands of NTD

Innolux Corporation and Subsidiaries

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

September 30, 2018

Table 2

(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As ofSeptember30,2018	As ofSeptember30,2018		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation Ningbo Innolux Optoelectronics Ltd. Warriors Technology Investments Ltd. Warriors Technology Investments Ltd.	Common stock AvanStrate Inc. TPV Technology Ltd. Chi Lin Optoelectronics Co., Ltd. Epistar Corporation Cheng Mei Materials Technology Corporation Allied Material Technology Corp. VIZIO. Inc. Trillion Science, Inc. Advanced Optoelectronic Technology, Inc. eChem solutions Corp. EPILEDS Co., Ltd. Fitipower Integrated Technology Inc. `上海辰岱投資中心`(`有限合夥`) OED Holding Ltd. Obsidian Sensors, Inc.	None None None None None None None None None None None None None None None	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	900,000 150,500,000 17,792,552 89,072 44,741,305 1,209 927,452 1,439,180 6,964,222 2,500,000 7,347,144 10,000,000 - 16,000,000 414,136	$ 20,630 405,099 80,679 3,091 440,255 - 1,280,402 - 143,463 65,736 137,024 446,800 143,414 4,061 97,593	1 6 19 - 7 - 4 2 5 5 7 7 - 6 13	$ 20,630 405,099 80,679 3,091 440,255 - 1,280,402 - 143,463 65,736 137,024 446,800 143,414 4,061 97,593

Table 2, Page 1

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As ofSeptember30,2018	As ofSeptember30,2018		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
Warriors Technology Investments Ltd. Nets trading Ltd.	General Interface Solution (GIS) Holding Limited PilotTech Global Fund	None None	Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	24,194,000 90	$ 3,121,026 25,925	7 -	$ 3,121,026 25,925

Table 2, Page 2

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 nine-month period ended September 30, 2018

Table 3 Investor	Marketable securities `（`Note 1`）`	General ledger account	Counterparty `（`Note 2`）`	Relationship with the investor `（`Note 2`）`	Balance as at January 1, 2018 (Note 4)	Balance as at January 1, 2018 (Note 4)	Addition(Note 3)	Addition(Note 3)		Disposal(Note 3)	Disposal(Note 3)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at September 30, 2018 (Note 4)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at September 30, 2018 (Note 4)	Expressed in thousands of NTD (Except as otherwise indicated) Balance as at September 30, 2018 (Note 4)
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
Innolux Corporation	VIZIO, Inc. (Stocks)	Financial assets at fair value through other comprehensive income	Not applicable	Not applicable	-	$ -	927,452	$ 1,341,089	-	$ -	$ -	$ -	927,452	$ 1,280,402

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

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

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

Note 4: Including the amount of unrealized gain or loss on financial assets at fair value through other comprehensive income.

Table 3, Page 1

Table 4

Innolux Corporation 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 nine-month period ended September 30, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Hon Hai Precision Industry Co., Ltd. Lakers Trading Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. Hongfutai Precision Electrons (Yantai) Co., Ltd. Innolux Japan Co., Ltd. Innolux Hong Kong Limited Hongfujin Precision Electronics (Chongqing) Co., Ltd. Guizhou Fuzhikang Electronic Co., Ltd. Innolux USA Inc. Competition Team Technology (India) Private Limited Ningbo Innolux Display Ltd. Shenzhen Fugui Precision Industrial Co., LTD	Same major stockholder An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	7,209,137 $ 5,478,648 2,348,145 1,581,899 1,566,530 996,228 909,705 462,418 845,070 251,173 186,108 274,849	3 3 1 1 1 - - - - - - -	60-90 days 60 days 60 days 90 days 45-60 days 60 days 45 days 60 days 45-60 days 90 days 90 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	1,676,508 $ - 266,800 721,921 206,690 - 325,433 3,426 483,178 82,754 - 41,376	3 - 1 1 - - 1 - 1 - - -

Table 4, Page 1

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd.	COMPETITION TEAM IRELAND LIMITED Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Hongfujin Precision Industry (Wuhan) Co., Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Foshan Innolux Optoelectronics Ltd. FI Medical Device Manufacturing Co., Ltd. Hon Hai Precision Industry Co., Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Leadtek Global Group Limited Lakers Trading 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 Investee accounted for under the equity method Same major stockholder An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary	Sales Sales Sales Sales Sales Sales Purchases Purchases Processing expense Processing expense Processing expense Processing revenue	266,399 $ 171,818 403,814 172,781 239,528 130,135 976,105 668,972 29,807,774 15,712,565 14,966,499 15,840,341	- - - - - - 1 - 16 8 8 71	45-90 days 90 days 90 days 90 days 60 days 90 days 30 days after acceptance 60-90 days after acceptance 60-90 days 60-90 days 60-90 days 60 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Single purchases target, no basis for comparison Single purchases target, no basis for comparison Cost plus Cost plus Cost plus 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	91,817 $ 5,266 244,647 48,083 169,196 284,341 177,177) ( 803,081) ( 24,260,406) ( 9,106,204) ( 23,313,911) ( 13,191,750	- - - - - 1 - 1 28 11 27 91

Table 4, Page 2

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Foshan Innolux Optoelectronics Ltd. Lakers Trading Ltd. Innocom Technology (Shenzhen) Co., LTD Innolux Europe B.V.	Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited NANJING HONGFUSHARP PRECISION ELECTRONICS CO., LTD. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Premier Image Technology (China) Ltd. Ningbo Innolux Electronics Ltd. Lakers Trading Ltd. Innolux Corporation	A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	Processing revenue Processing revenue Processing revenue Processing revenue Sales Sales Sales Sales Sales Processing revenue Service revenue	13,451,537 $ 13,683,976 10,407,358 4,915,700 2,097,486 3,498,870 930,917 190,102 193,049 180,700 638,899	79 99 100 95 4 11 4 - - 100 86	60 days 60 days 60 days 60 days 90 days 60 days 60 days 90 days 60 days 60 days 60 days	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	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	17,929,101 $ 4,625,018 6,223,738 2,112,985 140,157 911,036 138,714 65,031 50,294 1,109,074 183,963	95 100 100 94 1 4 1 - - 100 98

Table 4, Page 3

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Japan Co.,Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd.	Innolux Hong Kong Limited Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hongfujin Precision Industry (Shenzhen) Co., Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Premier Image Technology (China) Ltd.	An indirect wholly-owned subsidiary Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder Same major stockholder An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Service revenue Purchases Purchases Purchases Purchases Purchases Purchases	159,289 $ 1,228,816 589,717 410,147 560,617 129,433 139,704	8 7 2 1 1 1 -	60 days 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 60 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference	- $ 546,402) ( 257,927) ( 196,234) ( 379,750) ( 26,871) ( 121,232) (	- 9 2 2 2 1 1

Table 4, Page 4

Innolux Corporation and Subsidiaries

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

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

September 30, 2018

Creditor	Counterparty	Relationship with the counterparty	Balance as at September30,2018	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Foshan Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd.	Hon Hai Precision Industry Co., Ltd. Hongfujin Precision Industry (Yantai) Co., Ltd. HongFuTai Precision Electronics (YanTai) Co., Ltd. Foshan Innolux Optoelectronics Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Innolux Japan Co.,Ltd. Innolux USA Inc. Ningbo Innolux Optoelectronics Ltd. Futaijing Precision Electronics (Beijing) Co., Ltd. Leadtek Global Group Limited Lakers Trading Ltd. Innolux Hong Kong Limited Lakers Trading Ltd. NANJING HONGFUSHARP PRECISION ELECTRONICS CO., LTD. Innolux Hong Kong Limited	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 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. A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary	$ 1,676,508 266,800 721,921 284,341 325,433 206,690 483,178 244,647 169,196 17,929,101 13,191,750 6,223,738 4,625,018 140,157 2,112,985	3.53 6.77 2.13 0.32 3.16 9.79 4.28 4.40 3.78 1.03 2.65 2.15 4.53 0.72 3.10	$ 54,846 - - - 127,597 - - - - 10,874,615 2,034,692 2,955,563 184,239 - 773,814	Subsequent collection - - - Subsequent collection - - - - Subsequent collection Subsequent collection Subsequent collection Subsequent collection - Subsequent collection	$ 368,028 274,410 243,288 - 70,118 - 28,740 87,114 77,985 2,508,934 4,578,989 822,818 2,164,299 - 522,561	$ - - - - - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationship with the counterparty	Balance as at September30,2018	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Innocom Technology (Shenzhen) Co., LTD Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Europe B.V.	Lakers Trading Ltd. Ningbo Innolux Display Ltd. Panxian FuguiKang Precision electronic Ltd. Chongqing Fuyusheng Electronics Technology Co., Ltd. Nanjing Innolux Technology Ltd. Innolux Corporation	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	$ 1,109,074 911,036 323,998 135,562 138,714 183,963	0.24 5.31 - - 5.47 7.51	$ 1,041,095 - 323,998 135,562 - -	Subsequent collection - Subsequent collection Subsequent collection - -	$ - 498,962 - - 65,438 90,849	$ - - - - - -

Table 5, Page 2

Innolux Corporation and Subsidiaries Significant inter-company transactions during the reporting period For the nine-month period ended September 30, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Table 6

Transaction (Note D)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)	General ledger account	Amount	Transaction terms (NoteC)	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 2 3 3 4 4 5 5	Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd.	Lakers Trading Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Japan Co.,Ltd. Innolux Japan Co.,Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux USA Inc. Innolux USA Inc. Lakers Trading Ltd. Lakers Trading Ltd. Leadtek Global Group Limited Leadtek Global Group Limited Lakers Trading Ltd. Lakers Trading Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3	Sales Processing expense Accrued expenses Sales Accounts receivable Sales Processing expense Accrued expenses Sales Sales Accounts receivable Processing expense Accrued expenses Sales Accounts receivable Sales Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable Processing revenue Accounts receivable	5,478,648 $ 29,807,774 24,260,406) ( 1,566,530 206,690 996,228 15,712,565 9,106,204) ( 186,108 403,814 244,647 14,966,499 23,313,911) ( 130,135 284,341 171,818 845,070 483,178 15,840,341 13,191,750 13,451,537 17,929,101 13,683,976 4,625,018 10,407,358 6,223,738 4,915,700 2,112,985	- - - - - - - - - - - - - - - - - - - - - - - - - - - -	3 14 6 1 - - 8 2 - - - 7 6 - - - - - 8 3 6 5 7 1 5 2 2 1

Table 6, Page 1

Transaction (Note D)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)	General ledger account	Amount	Transaction terms (NoteC)	Percentage of consolidated total operating revenues or total assets
6 6 7 7 8 8 9 9 10 11	Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Innocom Technology (Shenzhen) Co., LTD Innocom Technology (Shenzhen) Co., LTD Innolux Europe B.V. Innolux Europe B.V. Lakers Trading Ltd. Innolux Japan Co.,Ltd.	Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Lakers Trading Ltd. Lakers Trading Ltd. Innolux Corporation Innolux Corporation Ningbo Innolux Electronics Ltd. Innolux Hong Kong Limited	3 3 3 3 3 3 3 3 3 3	Sales Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Service revenue Accounts receivable Sales Service revenue	3,498,870 $ 911,036 930,917 138,714 180,700 1,109,074 638,899 183,963 193,049 159,289	- - - - - - - - - -	2 - - - - - - - - -

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

(1) Number 0 represents the parent company.
(2) The subsidiaries are numbered in order from number 1.
Note B: 1 refers to the parent company to the subsidiary.
3 refers to the subsidiary to the subsidiary.

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

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

Table 6, Page 2

Innolux Corporation and Subsidiaries

Table 7

Information on investees

For the nine-month period ended September 30, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held a	s atSeptember30,2018	s atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30, 2018	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Bright Information Holding Ltd. Golden Achiever International Limited Innolux Holding Limited Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Singapore Holding Pte. Ltd. Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation Innolux Japan Co., Ltd. Innolux Corporation Innolux Technology USA Inc. iZ3D, Inc. Chi Mei Lighting Technology Corporation	Hong Kong BVI Samoa Samoa Samoa BVI Hong Kong Singapore BVI Taiwan Taiwan Japan USA USA USA Taiwan	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Distributor company Investment company Investment company Holdings, R&D, manufacturing and Distributor company Distributor company Distributor company Research and development and sale of 3D flat monitor Manufacturing of electronic equipment and lighting equipment	$ - 119,106 6,192,679 62,197 33,438,542 3,674,115 1,889,115 754,943 - 1,217,235 1,674,054 1,682,571 - - - 819,312	$ 119,724 119,106 6,192,679 62,197 33,438,542 3,674,115 1,889,115 - - 1,217,235 1,674,054 1,335,486 90,845 354,262 - 819,312	4,910,000 40,250 180,568,185 1,656,410 709,450,000 146,847,000 1,158,844,000 25,400,000 50,000,000 - 167,405,392 98 - - 4,333 78,195,856	100 100 100 100 100 100 100 100 100 100 100 54 - - 35 33	- $ 26,933 18,976,796 79,112 43,582,876 6,475,264 4,088,677 747,750 1,515,440 873,985 1,433,779 1,951,141 - - - -	484 $ 6,282) ( 458,770 2,229 510,915 167,804 386,538 2,940) ( 480,793 28,512 97,366) ( 5,331 312) ( 1,847 - -	484 $ 6,282) ( 458,770 2,229 560,922 167,694 391,092 2,940) ( 480,793 28,512 97,366) ( 2,902 312) ( 1,847 - -

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held a	s atSeptember30,2018	s atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30, 2018	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Japan Co.,Ltd. Rockets Holding Ltd. Rockets Holding Ltd. Suns Holding Ltd. Innolux Europe B.V. Innolux Singapore Holding Pte. Ltd. Innolux Singapore Holding Pte. Ltd.	Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp. eLux, Inc. Rockets Holding Ltd. Suns Holding Ltd. Lakers Trading Ltd. Toppoly Optoelectronics (Cayman) Ltd. Innolux Optoelectronics Hong Kong Holding Limited Innolux Hong Kong Limited Innolux Europe B.V. Innolux Japan Co.,Ltd. Innolux USA, Inc. Stanford Developments Ltd. Nets Trading Ltd. Warriors Technology Investments Ltd. Innolux Technology Germany GmbH Innolux Optoelectronics India Private Limited Innolux Optoelectronics Philippines Corp.	Cayman Taiwan Taiwan USA Samoa Samoa Samoa Cayman Hong Kong Hong Kong Netherlands Japan USA Samoa Samoa Samoa Germany India Philippines	Investment holdings Production and selling of the absorption for medical element Sales and manufacture of TFT-LCD parts and components R&D of MicroLED technology Investment holdings Investment holdings Distributor company Investment holdings Investment holdings Distributor company Holding, R&D testing and Distributor company Holdings, R&D, manufacturing and Distributor company Selling of electronic equipment and computer monitors Investment holdings Investment company Investment company Testing and maintenance company Distributor company Manufacturer and distributor	$ 1,717,714 73,500 800,892 91,155 5,222,180 555,422 - 3,650,192 - - 3,209,158 1,815,603 369,092 5,391,125 27,477 555,422 33,735 176,997 28,733	$ 1,717,714 73,500 800,892 - 5,222,180 555,422 - 3,650,192 - - 3,209,158 1,815,603 2,400 5,391,125 27,477 555,422 33,735 - -	14,062,500 7,350,000 10,494,001 300,000 160,504,550 18,177,052 1 146,817,000 162,897,802 35,000,000 375,810 82 12,842 164,000,000 900,001 18,177,052 100,000 39,500,000 5,000,000	50 49 24 38 100 100 100 100 100 100 100 46 100 100 100 100 100 100 100	967,550 $ 817,967 113,148 86,187 11,915,730 6,828,430 232,557 6,475,048 1,474,274 910,532) ( 1,893,199 1,632,880 651,412 11,887,510 28,084 6,828,429 70,205 164,193 27,334	1,380 $ 596,001 19,172 55,703) ( 293,512 165,258 - 167,804 119,325 202,597 62,187 5,331 9,339 295,029 1,517) ( 165,258 8,341 2,374) ( 762) (	690 $ 292,040 4,559 4,821) ( 293,512 165,258 - 167,694 119,325 202,597 62,187 2,429 9,339 295,029 1,517) ( 165,258 8,341 2,374) ( 762) (

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held a	s atSeptember30,2018	s atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30, 2018	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Innolux Singapore Holding Pte. Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd.	Innolux Optoelectronics Malaysia SDN. BHD. Chi Mei Lighting Technology Corporation GIO Optoelectronics Corp.	Malaysia Taiwan Taiwan	Manufacturer and distributor Manufacturing of electronic equipment and lighting equipment Manufacturing and selling of components of TFT-LCD	$ 121,179 263,812 6,881	- 263,812 6,881	16,000,000 19,673,402 77,235	100 8 -	118,267 $ - 856	323 $ - 19,172	323 $ - 35

Table 7, Page 3

Innolux Corporation and Subsidiaries Information on investments in Mainland China

Table 8

For the nine-month period ended September 30, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Investment method (Note C)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30,2018	Net income of investee for the nine-month period ended September 30, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018(Note B)	Book value of investments in Mainland China as of September 30,2018	Accumulated amount of investment income remitted back to Taiwan as of September 30,2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Innocom Technology (Shenzhen) Co., LTD OED Company Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. VAP Optoelectronics (NanJing) Corp. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Logistics Ltd. Amlink (Shanghai) Ltd.	Manufacturing and selling of LCD backend module and related components Manufacturing and selling of electronic paper Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Purchases and sales of monitor- related components company Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Warehousing services Manufacturing and selling of power supply, modem, ADSL, and other IT equipments	$ 5,006,100 285,359 9,462,750 11,691,075 4,884,000 64,103 308,303 4,456,650 641,025 45,788 244,200	2 2 2 2 2 2 2 2 2 2 2	$ 3,873,981 61,050 224,818 11,691,075 4,884,000 64,103 115,995 4,396,686 - 45,788 305,250	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 3,873,981 61,050 224,818 11,691,075 4,884,000 64,103 115,995 4,396,686 - 45,788 305,250	$ 295,029 ( 61,730) 784,550 ( 461,334) 185,951 5,100 8,859 162,704 119,325 2,225 -	100 4 100 100 100 100 100 100 100 100 50	$ 295,029 - 784,550 ( 459,587) 185,951 5,100 8,859 162,704 119,325 2,225 -	$ 11,887,458 6,999 19,608,820 19,750,002 4,239,270 548,170 - 5,926,856 1,474,274 74,318 190,150	$ 1,132,119 - 5,269,682 - - - - - - - -	2.1 2.2 2.3 2.3 2.3 2.4 2.5 2.4 2.9 2.6 2.7 2.8

Table 8, Page 1

Investee in Mainland China	Main business activities	Paid-in capital (Note A)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30,2018	Net income of investee for the nine-month period ended September 30, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018(Note B)	Book value of investments in Mainland China as of September 30,2018	Accumulated amount of investment income remitted back to Taiwan as of September 30,2018	Footnote
				Remitted to Mainland China	Remitted back to Taiwan
Interface Optoelectronics (Shenzhen) Co., Ltd. Ningbo Innolux Electronics Ltd. Foshan Innolux Flnet Electronics Ltd. Ningbo Innolux Flnet Electronics Ltd. Shenzhen PixinLED Technology Co., Ltd. Innolux Automations and Intelligence Systems (ShenZhen) Co., Ltd. Ceiling on investments in Companyname	Development of new type of flat panel display, monitor and peripherals, production and management, and offer of after- sales service R&D, Manufacturing and selling of LCD backend module and related components Commodity agency Commodity agency Development and selling of MINI LED Development and selling of software Mainland China: Accumulated amount of remittance from Taiwan to Mainland China as of September 30,2018	$ 2,936,505 2 133,119 3 4,437 3 4,437 3 44,373 3 4,437 3 Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	$ 412,088 $ - - - - - - - - - - - Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA		$ - - - - - -	$ 412,088 - - - - -	$ 29,781 67,599 947 1,291 ( 765) ( 2,771)	7 100 100 100 100 49	$ - 67,599 947 1,291 ( 765) ( 1,358)	$ 3,121,026 427,579 6,606 8,612 43,645 864	$ - - - - - -	2.2 3.1 3.2 3.2 3.3 3.3
Innolux Corporation	27,449,706 $	36,597,322 $	(Note D)

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate. Note B: Profit or loss recognized for the nine-month period ended September 30, 2018 was reviewed by independent accountants. 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 Stanford Developments Ltd. in the third area, which then invested in the investee in Mainland China.
2.2. Through investing in Warriors Technology Investments Ltd. in the third area, which then invested in the investee in Mainland China.
2.3. Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.
2.4. Through investing in Toppoly Optoelectronics (Cayman) Ltd. in the third area, which then invested in the investee in Mainland China.
2.5. Through investing in Golden Achiever International Ltd. in the third area, which then invested in the investee in Mainland China.
2.6. Through investing in Innolux Optoelectronics Hong Kong Holding Limited in the third area, which then invested in the investee in Mainland China.
2.7. Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.

Table 8, Page 2

2.8. Through investing in Ampower Holding Ltd. in the third area, which then invested in the investee in Mainland China.
2.9. Nanjing Innoloux Optoelectornics Ltd. acquired Kunpal Optoelectronics Ltd. by merger, which was approved by the Investment Commission of the Ministry of Economic Affairs in November 2017. 3. 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. 3.3.The company invested via Innocom Technology (Shenzhen) Co., LTD, which are the company investment entities in Mainland China to invest in Shenzhen PixinLED Technology Co.,Ltd., Innolux Automations
and Intelligence Systems (ShenZhen) Co., Ltd. Except for the investment via the holding companies in Mainland China, other investments shall be not approved by Investment Commission of the Ministry of Economic Affairs.
Note D: In accordance with “Rules Governing Applications for Investment or Technical Cooperation in Mainland China”, the Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau of the Ministry of Economic Affairs, the ceiling amount of the investment in Mainland China is not applicable to the Company.

Table 8, Page 3

AI assistant

INX — Interim / Quarterly Report 2018

52330_rns_2018-12-27_e00e6040-e4a1-47c3-9588-df8606f8b3d4.pdf

INNOLUX CORPORATION AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

Introduction

Scope of Review

Conclusion

PricewaterhouseCoopers, Taiwan

October 31, 2018

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2018, DECEMBER 31, 2017 AND SEPTEMBER 30, 2017

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

INNOLUX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

INNOLUX CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

1. HISTORY AND ORGANIZATION

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(3) Basis of consolidation

B. Subsidiaries included in the consolidated financial statements:

(8) Impairment of financial assets

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

(10) Employee benefits

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

(4) Financial assets at amortized cost

Current items

Time deposits with maturity over three months

(5) Notes receivable and accounts receivable

A. The aging analysis of accounts receivable and notes receivable is as follows:

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

(7) Investments accounted for under the equity method

(8) Property, plant and equipment

2018

(9) Investment property

(10) Intangible assets

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

(11) Other payables

- (12) Long term borrowings

(13) Pensions

A. Warranty

(16) Share capital

(18) Retained earnings

(19) Other equity items

(21) Other income

(24) Expenses by nature

(26) Income tax

A. Income tax expense

(a) Components of income tax expense:

(27) Earnings per share

7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

(2) Significant related party transactions

A. Operating revenue

C. Receivables from related parties

Purchase of property

(a) Acquisition of property, plant and equipment:

Sale of property

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

(3) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

－ (1) Contingencies Significant Litigations

INX Interim / Quarterly Report 2018

`－` (1) Contingencies Significant Litigations