Primax - Interim / Quarterly Report 2017

Stock Code:4915

(English Translation of Consolidated Interim Financial Statements and Report Originally Issued in Chinese) PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2017 and 2016 (With Independent Auditors’ Review Report Thereon)

Address: No. 669, Ruey Kuang Road, Neihu, Taipei Telephone: (02)2798-9008

The auditors’review report and the accompanying consolidated interim financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ review report and consolidated interim financial statements, the Chinese version shall prevail.

		Contents	Page
1.	Cover Page		1
2.	Table of Contents		2
3.	Independent Auditors’ Review Report		3
4.	Consolidated Balance Sheets		4
5.	Consolidated Statements of Comprehensive Income		5
6.	Consolidated Statements of Changes in Equity		6
7.	Consolidated Statements of Cash Flows		7
8.	Notes to the Consolidated Interim Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	8`～`13
	(4)	Summary of significant accounting policies	13`～`18
	(5)	Significant accounting assumptions and judgments, and major sources	18
		of estimation uncertainty
	(6)	Explanation of significant accounts	18`～`52
	(7)	Related-party transactions	52`～`53
	(8)	Pledged assets	53
	(9)	Significant commitments and contingencies	53`～`54
	(10)	Losses due to major disasters	54
	(11)	Subsequent events	54
	(12)	Other	54`～`55
	(13)	Other disclosures
		(a) Information on significant transactions	56`～`60
		(b) Information on investments	60`～`61
		(c) Information on investment in mainland China	61`～`62
	(14)	Segment information	62`～`63

Independent Auditors’ Review Report

To the Board of Directors PRIMAX ELECTRONICS LTD.:

We have reviewed the accompanying consolidated balance sheets of PRIMAX ELECTRONICS LTD. and its subsidiaries (the “Group”) as of June 30, 2017 and 2016, and the consolidated statements of comprehensive income, changes in equity and cash flows for the three months and for the six months ended June 30, 2017 and 2016. These consolidated interim financial statements are the responsibility of the Group’s management. Our responsibility is to issue a report on these consolidated interim financial statements based on our reviews. We have not reviewed the financial statements of Tymphany Worldwide Enterprises Ltd. with total assets of NT$5,472,464 thousand and NT$3,261,724 thousand, constituting 16.5% and 9.0% of the related consolidated total assets, as of June 30, 2017 and 2016, respectively. Its operating revenue amounted to NT$3,375,116 thousand and NT$1,650,384 thousand, constituting 24.4% and 11.1%, of the consolidated operating revenue for the three months ended June 30, 2017 and 2016, respectively. Also, Its operating revenue amounted to NT$6,190,089 thousand and NT$3,498,843 thousand, constituting 23.2% and 12.4% of the consolidated operating revenue for the six months ended June 30, 2017 and 2016, respectively. Those financial statements were reviewed by other auditors, whose reports have been furnished to us, and our review, insofar as it relates to the amounts included for those companies, is based solely on the reports of the other auditors.

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

Also included in the accompanying consolidated interim financial statements are the financial statements of certain consolidated subsidiaries, which were not reviewed by independent auditors. These consolidated subsidiaries had the total assets of NT$3,238,979 thousand and NT$4,784,678 thousand, constituting 9.8% and 13.1% of the Group’s consolidated total assets as of June 30, 2017 and 2016, respectively; the total liabilities of NT$2,541,923 thousand and NT$3,083,010 thousand, constituting 12.0% and 13.0% of the Group’ s consolidated total liabilities as of June 30, 2017 and 2016, respectively; as well as the comprehensive income of NT$38,094 thousand and NT$73,967 thousand, constituting 5.0% and 26.4% of the Group’ s consolidated comprehensive income for the three months ended June 30, 2017 and 2016, respectively. Also, the comprehensive income amounted to a loss of NT$50,717 thousand and a gain of NT$60,260 thousand, constituting 6.6% and 9.7% of the Group’s consolidated comprehensive income for the six months ended June 30, 2017 and 2016, respectively.

3-1

Based on our reviews and the reports of the other auditors, except for the effects of the adjustments, if any, that might have emerged had the financial statements of the said consolidated subsidiaries been reviewed by independent auditors, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to in the first paragraph in order for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

KPMG

Taipei, Taiwan (Republic of China) August 10, 2017

Notes to Readers

The accompanying consolidated interim financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated interim financial statements are those generally accepted and applied in the Republic of China.

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2017, December 31, and June 30, 2016 (Expressed in Thousands of New Taiwan Dollars)

December 31, 2016	December 31, 2016	June 30, 2016
Amount	%	Amount % 1,808,016 5 12,581,552 34 59,635 - 3,959,590 11 648,571 2 271,002 1 715,556 2 1,442,251 4 21,486,173 59 326,667 1 1,548,688 4 408,032 1 2,283,387 6 23,769,560 65 4,419,028 12 - - 786,087 2 788,634 2 97,300 - 3,694,312 11 323,429 1 2,538,017 7 12,646,807 35 36,416,367 100
- 16,892,918 150,430 3,878,606 1,146,183 350,860 382,222 -	- 46 - 10 3 1 1 - 61 1 4 1 6 67 12 - 2 2 - 13 - 4 33 100
22,801,219
218,889 1,408,138 449,345
2,076,372
24,877,591
4,421,343 3,024 791,466 788,634 97,300 4,779,419 118,538 1,244,734
12,244,458
37,122,049

See accompanying notes to consolidated Interim Financial Statements.

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and for the six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

For the three months ended June	For the three months ended June	For the three months ended June	For the six months ended June 30 2017 2016 Amount % Amount % 26,716,372 100 28,305,581 100 23,318,006 87 25,336,860 90 3,398,366 13 2,968,721 10 632,820 3 694,125 2 609,755 2 474,428 2 1,030,225 4 979,591 3 2,272,800 9 2,148,144 7 1,125,566 4 820,577 3 81,840 - 73,906 - 79,688 - 351,197 1 (17,115) - (50,790) - 144,413 - 374,313 1 1,269,979 4 1,194,890 4 321,069 1 368,078 1 948,910 3 826,812 3 - - 95,873 - 948,910 3 922,685 3 (270,017) - (344,008) (1) 92,067 - 44,225 - - - - - (177,950) - (299,783) (1) (177,950) - (299,783) (1) 770,960 3 622,902 2 880,211 3 847,623 3 68,699 - 75,062 - 948,910 3 922,685 3 719,216 3 571,607 2 51,744 - 51,295 - 770,960 3 622,902 2 2.00 1.87 - 0.06 2.00 1.93 1.98 1.85 - 0.06 1.98 1.91	For the six months ended June 30 2017 2016 Amount % Amount % 26,716,372 100 28,305,581 100 23,318,006 87 25,336,860 90 3,398,366 13 2,968,721 10 632,820 3 694,125 2 609,755 2 474,428 2 1,030,225 4 979,591 3 2,272,800 9 2,148,144 7 1,125,566 4 820,577 3 81,840 - 73,906 - 79,688 - 351,197 1 (17,115) - (50,790) - 144,413 - 374,313 1 1,269,979 4 1,194,890 4 321,069 1 368,078 1 948,910 3 826,812 3 - - 95,873 - 948,910 3 922,685 3 (270,017) - (344,008) (1) 92,067 - 44,225 - - - - - (177,950) - (299,783) (1) (177,950) - (299,783) (1) 770,960 3 622,902 2 880,211 3 847,623 3 68,699 - 75,062 - 948,910 3 922,685 3 719,216 3 571,607 2 51,744 - 51,295 - 770,960 3 622,902 2 2.00 1.87 - 0.06 2.00 1.93 1.98 1.85 - 0.06 1.98 1.91
2017	% 100 87 13 3 2 4 9 4 - - - - 4 1 3 - 3 1 1 - 2 2 5 3 - 3 5 - 5 1.05 1.05 1.04 1.04	2016	2017	% 100 87 13 3 2 4 9 4 - - - - 4 1 3 - 3 - - - - - 3 3 - 3 3 - 3 2.00 2.00 1.98 1.98
Amount $ 13,835,188 12,052,117 1,783,071 328,587 303,441 559,086 1,191,114 591,957 31,115 62,781 (5,881) 88,015 679,972 183,334 496,638 - 496,638 176,047 90,443 - 266,490 266,490 $ 763,128 $ 461,775 34,863 $ 496,638 $ 717,108 46,020 $ 763,128 $ - $ $ - $		Amount 14,900,466 13,339,884 1,560,582 366,816 250,043 520,654 1,137,513 423,069 34,453 181,587 (39,737) 176,303 599,372 167,065 432,307 50,304 482,611 (195,275) (7,383) - (202,658) (202,658) 279,953 446,908 35,703 482,611 260,265 19,688 279,953	Amount 26,716,372 23,318,006 3,398,366 632,820 609,755 1,030,225 2,272,800 1,125,566 81,840 79,688 (17,115) 144,413 1,269,979 321,069 948,910 - 948,910 (270,017) 92,067 - (177,950) (177,950) 770,960 880,211 68,699 948,910 719,216 51,744 770,960 -

			-

See accompanying notes to consolidated Interim Financial Statements.

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Changes in Equity For the six months ended June 30, 2017 and 2016 (Expressed in Thousands of New Taiwan Dollars)

			Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent						Non- controlling interests Total equity
Share capital		Capital surplus	Retained earnings				Exchange differences on translation of operation’s financial statements	Unrealized gains (losses) on available-for- sale financial assets		Unearned employee compensation		Total equity attributable to owners of parent
Ordinary shares	capital collected in advance		Legal reserve	Special reserve	Unappropriated retained earnings
$ 4,411,877 - - - - - - (2,300) - - 9,451 $ 4,419,028 $ 4,421,343 - - - - - - - - 24,500 - 1,950 $ 4,447,793	15,174 - -	777,368 - -	611,322 - -	97,300 - -		3,951,934 847,623 -	351,045 - (320,241) (320,241) - - - - - - - 30,804 (259,911) - (253,062) (253,062) - - - - - - - - (512,973)		294,760 - 44,225		(80,399) - - - - - 27,193 6,846 - - - (46,360) (27,017) - - - - - 31,664 3,361 - (112,210) - - (104,202)	10,430,381 847,623 (276,016) 571,607 - (927,933) 27,193 - 1,209 6,333 - 10,108,790 10,999,724 880,211 (160,995) 719,216 - (1,111,886) 31,664 - 1,312 - 1,890 - 10,641,920	2,486,204 12,916,585 75,062 922,685 (23,767) (299,783) 51,295 622,902 - - - (927,933) - 27,193 - - 518 1,727 - 6,333 - - 2,538,017 12,646,807 1,244,734 12,244,458 68,699 948,910 (16,955) (177,950) 51,744 770,960 - - - (1,111,886) - 31,664 - - 561 1,873 - - - 1,890 - - 1,297,039 11,938,959
	-	-	-	-		847,623			44,225
			177,312 - - - - - -	- - - - - - -					- - - - - - -
			788,634	97,300					338,985
			788,634 - -	97,300 - -					405,466 - 92,067
			-	-					92,067
			193,407 - - - - - - -	- - - - - - - -					- - - - - - - -
			982,041	97,300					497,533

See accompanying notes to consolidated Interim Financial Statements.

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit from continuing operations before tax
Profit from discontinued operations before tax
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization
Losses related to inventories
Provision (reversal of provision) for bad debt expense and sales returns and discounts
Gain on disposal of available-for-sale financial assets
Interest expense
Interest income
Compensation cost of share-based payments
Other
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Financial assets at fair value through profit or loss－current
Notes and accounts receivable
Accounts receivable from related parties
Other receivable－current and non-current
Inventories
Other current assets
Other operating assets
Changes in operating assets
Notes and accounts payable
Salary payable
Other payables
Other current liabilities
Financial liabilities at fair value through profit or loss-current
Other operating liabilities
Changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from operations
Interest received
Interest paid
Income taxes paid
Net cash from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of subsidiary (minus cash aquired)
Acquisition of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Cash from non-current assets held for sale
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of unamortized expense
Other investing activities
Net cash flows used in investing activities
Cash flows from (used in) financing activities:
Increase in short-term borrowings
Decrease in long-term borrowings
Increase in guarantee deposits
Decrease in other payables to related parties
Exercise of employee share options
Net cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period For the six months ended June 30,
2017
2016
$ 1,269,979
1,194,890
-
135,017
1,269,979
1,329,907
741,470
839,490
144,777
558,192
(83,282)
30,127
-
(140,969)
16,689
57,683
(76,944)
(70,117)
33,537
28,920
1,757
577
778,004
1,303,903
66,763
(185,210)
2,743,931
2,253,841
28,888
(4,169)
192,714
145,300
928,844
401,073
(12,605)
14,459
8,979
17,893
3,957,514
2,643,187
(4,569,264)
(5,691,311)
(432,212)
(578,536)
(295,380)
(858,834)
(34,155)
25,970
(85,875)
-
(378)
(629)
(5,417,264)
(7,103,340)
(1,459,750)
(4,460,153)
(681,746)
(3,156,250)
588,233
(1,826,343)
76,944
70,117
(16,655)
(57,650)
(233,618)
(338,550)
414,904
(2,152,426)
(605,949)
-
(21,045)
-
-
220,270
-
(322,855)
(670,210)
(136,142)
12,378
46,325
(25,198)
(23,568)
(5,324)
23,450
(1,315,348)
(192,520)
547,848
724,205
(274,444)
(338,035)
32,935
17,818
-
(63,994)
1,890
6,333
308,229
346,327
(108,409)
(113,451)
(700,624)
(2,112,070)
6,359,916
7,623,380
$
5,659,292
5,511,310

See accompanying notes to consolidated Interim Financial Statements.

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

PRIMAX ELECTRONICS LTD. (“the Company”), formerly known as Hong Chuan Investments Ltd., was incorporated on March 20, 2006, and registered under the Ministry of Economic Affairs, ROC. The Company changed its name to Hong Chuan Electronics Ltd. and Primax Electronics Ltd. in October 2007 and February 2008, respectively. The address of the Company’s registered office is No. 669, Ruey Kuang Road, Neihu, Taipei.

Primax Electronics Holdings, Ltd. (Primax Holdings, formerly known as Apple Holdings Ltd.) acquired all shares of the Company from YWAN PANG Management Limited on April 2, 2007. The investment was approved by the Investment Commission, Ministry of Economic Affairs. However, all shares of the Company were sold by Primax Holdings to its shareholders in October 2009.

Based on the resolution approved by the Company’ s board of directors on November 5, 2007, the Company resolved to acquire and merge with Primax Electronics Ltd. (“Primax”, a listed company) on December 28, 2007. The Company is the surviving company, and Primax was dissolved upon completion of the merger.

The consolidated interim financial statements of the Company as at and for the years ended June 30, 2017, comprised the Company and subsidiaries (together referred to as “ the Group” ). The major business activities of the Group were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, track pads, mobile phone accessories, consumer electronics products, shredders, amplifiers, speakers, audio systems and industrial automation parts. Please refer to note 14 for further information.

The Company’ s common shares were registered with the Financial Supervisory Commission, ROC (“FSC”) on June 22, 2012, and listed on the Taiwan Stock Exchange (“TWSE”) on October 5, 2012.

(2) Approval date and procedures of the consolidated financial statements:

The consolidated interim financial statements were authorized for issuance by the board of directors on August 10, 2017.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2017:

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying	January 1, 2016
the Consolidation Exception”
Amendments to IFRS 11 “Accounting for Acquisitions of Interests in Joint	January 1, 2016
Operations”
IFRS 14 “Regulatory Deferral Accounts”	January 1, 2016
Amendment to IAS 1 “Presentation of Financial Statements-Disclosure	January 1, 2016
Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of	January 1, 2016
Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”	January 1, 2016
Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”	July 1, 2014
Amendment to IAS 27 “Equity Method in Separate Financial Statements”	January 1, 2016
Amendments to IAS 36 “ Impairment of Non-Financial assets- Recoverable	January 1, 2014
Amount Disclosures for Non Financial Assets”
Amendments to IAS 39 “ Financial Instruments-Novation of Derivatives and	January 1, 2014
Continuation of Hedge Accounting”
Annual Improvements to IFRSs 2010-2012 Cycle and 2011-2013 Cycle	July 1, 2014
Annual Improvements to IFRSs 2012-2014 Cycle	January 1, 2016
IFRIC 21 “Levies”	January 1, 2014

The Group assesed that the initial application of the above IFRSs would not have any material impact on the consolidated interim financial statements.

(b) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2018 in accordance with Ruling No. 1060025773 issued by the FSC on July 14, 2017:

1060025773 issued by the FSC on July 14, 2017:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendment to IFRS 2 “Classification and Measurement of Share based	January 1, 2018
Payment Transactions”
Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4	January 1, 2018
Insurance Contracts”
IFRS 9 “Financial Instruments”	January 1, 2018
IFRS 15 “Revenue from Contracts with Customers”	January 1, 2018
Amendment to IAS 7 “Statement of Cash Flows -Disclosure Initiative”	January 1, 2017

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendment to IAS 12 “Income Taxes- Recognition of Deferred Tax Assets for	January 1, 2017
Unrealized Losses”
Amendments to IAS 40 “Transfers of Investment Property”	January 1, 2018
Annual Improvements to IFRS Standards 2014–2016 Cycle:
Amendments to IFRS 12	January 1, 2017
Amendments to IFRS 1 and Amendments to IAS 28	January 1, 2018
IFRIC 22 “Foreign Currency Transactions and Advance Consideration”	January 1, 2018

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated interim financial statements. The extent and impact of signification changes are as follows:

(i) IFRS 9 “Financial Instruments”

IFRS 9 replaces IAS 39 “ Financial Instruments: Recognition and Measurement” which contains classification and measurement of financial instruments, impairment and hedge accounting. The actual impact of adopting IFRS 9 on the Group’ s consolidated financial statements in 2018 can only be determined and reliably estimated depending on the financial instruments that the Group holds and economic conditions at that time, as well as the accounting elections and judgments that it will make in the future. The new standard will require the Group to revise its accounting processes and internal controls related to reporting financial instruments. However, the Group has performed a preliminary assessment of the potential impact of the adoption of IFRS 9 based on its positions at June 30, 2017 and hedging relationships designated under during the first half of 2017 under IAS 39.

1) Classification- Financial assets

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI ) and fair value through profit or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale. Under IFRS 9, derivatives embedded in contracts where the host is a financial assets in the scope of the standard are never bifurcated. Instead, the hybrid financial instrument as a whole is assessed for classification.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

In addition, IAS 39 has an exception to the measurement requirements for investments in unquoted equity instruments that do not have a quoted market price in an active market (and derivatives on such an instrument) and for which fair value cannot therefore be measured reliable. Such financial instruments are measured at cost. IFRS 9 removes this exception, requiring all equity investments (and derivatives on them) to be measured at fair value.

At June 30, 2017, the Group had equity investments classified as available-for-sale with a fair value of $1,000,913 that are held for long-term strategic purposes. If these investments continue to be held for the same purpose at initial application of IFRS 9, the Group may elect then to classify them as FVOCI or FVTPL. The Group has not yet made a decision in this regard. In the former case, all fair value gains and losses would be reported in other comprehensive income, no impairment losses would be recognized in profit or loss and no gains or losses would be reclassified to profit or loss on disposal. In the latter case, all fair value gains and losses would be recognized in profit or loss as they arise, increasing volatility in the Group’s profits.

2) Impairment-Financial assets and contact assets

IFRS 9 replaces the “incurred loss” model in IAS 39 with a forward-looking “expected credit loss” (ECL) model. This will require considerable judgment as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis. The new impairment model will apply to financial assets measured at amortized cost or FVOCI, except for investments in equity instruments, and to contract assets.

Under IFRS 9, loss allowances will be measured on either of the following bases:

12-month ECLs. These are ECLs that result from possible default events within the 12 months after the reporting date; and
lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument.

Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement always applies for trade receivables and contract assets without a significant financing component; an entity may choose to apply this policy also for trade receivables and contract assets with a significant financing component.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

3) Disclosures

IFRS 9 will require extensive new disclosures, in particular about hedge accounting, credit risk and expected credit losses. The Group’s preliminary assessment included an analysis to identify data gaps against current processes and the Group plans to implement the system and controls changes that it believes will be necessary to capture the required data.

(ii) IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 “Revenue” and IAS 11 “Construction Contracts”.

For the sale of products, revenue is currently recognized when the goods are delivered to the customers’ premises, which is taken to be the point in time at which the customer accepts the goods and the related risks and rewards of ownership transfer. Revenue is recognized at this point provided that the revenue and costs can be measured reliably, the recovery of the consideration is probable and there is no continuing management involvement with the goods. Under IFRS 15, revenue will be recognized when a customer obtains control of the goods. The Group has performed an initial assessment, indicating the timing of the related risks and rewards transferred is similar to the timing of control transferred. Therefore, the Group believes that there would not be any material impact on its consolidated financial statements.

As of the date the following IFRSs that have been issued by the IASB, but not yet endorsed by the FSC:

As of the date the following IFRSs that have been issued by the IASB, but not FSC:	yet endorsed by th
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between	Effective date to
an Investor and Its Associate or Joint Venture”	be determined
	by IASB
IFRS 16 “Leases”	January 1, 2019
IFRS 17 “Insurance Contracts”	January 1, 2021
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Those which may be relevant to the Group are set out below:

Issuance / Release Dates January 13, 2016	Standards or Interpretations Content of amendment IFRS 16 “Leases” The new standard of accounting for lease is amended as follows:

‧ For a contract that is, or contains, a lease, the lessee shall recognize a right of use asset and a lease liability in the balance sheet. In the statement of profit or loss and other comprehensive income, a lessee shall present interest expense on the lease liability separately from the depreciation charge for the right of-use asset during the lease term.
‧ A lessor classifies a lease as either a finance lease or an operating lease, and therefore, the accounting remains similar to IAS 17.

The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

(4) Summary of significant accounting policies:

(a) Statement of compliance

These consolidated interim financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“ the Regulations”) and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed by FSC and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter referred to IFRS endorsed by the FSC) for full annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated interim financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2016. For the related information, please refer to note 4 of the consolidated financial statements for the year ended December 31, 2016.

(b) Basis of consolidation

(i) Except as described in the following paragraph, the principles of preparation of the consolidated interim financial statements are the same as those of the consolidated financial statements for the year ended December 31, 2016. For the related information, please refer to note 4(c) of the consolidated financial statements for the year ended December 31, 2016.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) List of subsidiaries in the consolidated interim financial statements

The consolidated interim financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

The details of the subsidiaries included in the consolidated interim financial statements are as follows:

Name of investor	Name of subsidiary	Principal activities Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service Manufacture and sale of sophisticated machinery components, automotive parts, industrial automation parts, communication parts and aerospace components Holding company and customer service Holding company Manufacture of sophisticated machinery components and automotive parts Holding company Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Manufacture of computer, peripherals and keyboards	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % - % 30.00 (note 1) % 100.00 % 100.00 % 100.00 % 70.00 % 70.00 % 70.00 % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % - % 30.00 (note 1) % 100.00 % 100.00 % 100.00 % 70.00 % 70.00 % 70.00 % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			June 30, 2017	December 31, 2016 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00 % 70.00 % - % - % 100.00 % 100.00
The Company The Company The Company The Company The Company The Company The Company Primax Cayman Diamond Global TEK Global TEK Primax HK and Primax Tech. Primax HK	Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI.) Primax Destiny Co., Ltd. (Destiny Japan) Diamond (Cayman) Holdings Ltd. (Diamond) Gratus Technology Corp. (Gratus Tech.) Global TEK Fabrication Co., Ltd. (Global TEK) Primax Industries (Hong Kong) Ltd. (Primax HK) Tymphany Worldwide Enterprises Ltd. (TWEL) Global TEK Co., Ltd. (GT) Global TEK Fabrication Co., Ltd. (Samoa) (GTF-S) Dongguan Primax Electronic & Telecommunication Products Ltd. (PCH2) Primax Electronics (KS) Corp., Ltd. (PKS1)		% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % 100.00 % 70.00 % - % - % 100.00 % 100.00

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Name of investor	Name of subsidiary	Principal activities Manufacture of computer peripherals and keyboards Sale of multi-function printers and computer peripheral devices Research and development of computer peripheral devices and software Sale of audio accessories, amplifiers and their components Market development and customer service of amplifiers and their components Manufacture, research and development, design, and sale of audio accessories, amplifiers and their components Sale of audio accessories, amplifiers and their components Manufacture, research and development, design, and sale of audio accessories, amplifiers and their components Research and Development , design, and sale of audio accessories, ampliers and their components Research and Development , design, and sale of audio accessories, ampliers and their components and holdings Research and Development , design of audio accessories, ampliers and their components Manufacture, install and repair of audio accessories and their components	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - TYDC was incorporated in October 2016 % 100.00 % - % - (note 2) % 100.00 % - % - (note 2) % 100.00 % - % - (note 3)	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - TYDC was incorporated in October 2016 % 100.00 % - % - (note 2) % 100.00 % - % - (note 2) % 100.00 % - % - (note 3)
			June 30, 2017	December 31, 2016 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % - % - % -
Primax HK Primax Electronics (Chongqing) Corp., Ltd. (PCQ1) Primax Tech. Polaris Electronics Inc. (Polaris) Destiny BVI. Destiny Electronic Corp. (Destiny Beijing) TWEL Tymphany HK Ltd. (TYM HK) TWEL TYP Enterprises, Inc. (TYP) TYM HK Premium Loudspeakers (Hui Zhou) Co., Ltd. (Premium Hui Zhou) TYM HK TYMPHANY LOGISITCS, INC. (TYML) TYM HK Dongguan Tymphany Acoustic Technology Co., Ltd. (Tymphany Dongguan) Tymphann Dongguan Dong Guan Dong Cheng Tymphany Acoustic Technology Co., Ltd. (TYDC) Premium Hui ZhouTymphany Acoustic Technology HK Ltd. (TYM Acoustic HK ) TYM Acoustic HKTYMPHANY ACOUSTIC TECHNOLOGY (UK) LIMITED (TYM UK ) TYM Acoustic HKTymphany Acoustic Technology Europe, s.r.o. (TYM Acoustic Europe)			% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Name of investor	Name of subsidiary	Principal activities Sale of automotive parts, industrial automation parts, communication parts and aerospace components Holding company Holding company Manufacture of sophisticated machinery components Manufacture of industrial automation parts, communication parts and aerospace components Manufacture of sophisticated machinery components and automotive parts	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1)	Percentage of shareholding June 30, 2017 December 31, 2016 June 30, 2016 Description % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1) % - % - % 100.00 (note 1)
			June 30, 2017	December 31, 2016 % - % - % - % - % - % -
GT GTF-S GTF-S GTF-HK GTS GTS and WUXI GLOBAL TEK	GP Tech, Inc. (GP) Global TEK Fabrication Co., Ltd. (HK) (GTF-HK) Global TEK Co., Ltd. (Samoa) (GTS) WUXI GLOBAL TEK FABRICATION CO., LTD. (WUXI GLOBAL TEK) GLOBAL TEK (XI’ AN) CO., LTD. (GLOBAL TEK XI’ AN) GLOBAL TEK CO. (WUXI), LTD. (GLOBAL TEK WUXI)		% - % - % - % - % - % -

Note 1: The Board resolved to dispose 20% of the shares of Global TEK on June 21 and September 21, 2016. The disposal transaction has been settled on October 3, 2016, and the Company lost control over Global TEK on the same date.

Note 2: The Company was incorporated in January 2017.

Note 3: TYM Acoustic HK acquired all shares of Bang & Olufsen s.r.o. (renamed as Tymphany Acoustic Technology Europe, s.r.o. after merger) by cash on June 1, 2017.

(c) Business combination

Goodwill is measured as the aggregation of the consideration transferred (which generally is measured at fair value at the acquisition date) and the amount of any non-controlling interest in the acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value).

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, provisional amounts for the items for which the accounting is incomplete are reported in the Group’s financial statements. During the measurement period, the provisional amounts recognized are retrospectively adjusted at the acquisition date, or additional assets or liabilities are recognized to reflect the new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date.

All the transaction costs incurred for the business combination are recognized immediately as the Group’s expenses when incurred, except for the issuance of debt or equity instruments.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(d) Non-current assets held for sale and discontinued operations
(i) Non-current assets held for sale

Non-current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily through sale or distribution rather than through continuing use are reclassified as held for sale or held for distribution to owners. Non-current assets or disposal group under this classification must be available for instant sale, which is highly probable within a year, under current condition. The assets or components of a disposal group are remeasured in accordance with the Group’s accounting policies before classifying them as held for sale or held for distribution to owners. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount and fair value, less, costs to sell. Any impairment loss on a disposal group will first be allocated to goodwill, and then the remaining assets and liabilities will be apportioned on a pro rata basis, except that no loss is allocated to assets not within the scope of IAS 36 – Impairment of Assets. Such assets will continue to be measured in accordance with the Group’s accounting policies. Impairment losses on assets initially classified as held for sale or held for distribution to owners and any subsequent gains or losses on re-measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.

When the assets classified as held for sale or held for distribution to owners are intangible assets or property, plant and equipment, they are no longer amortized or depreciated, and any equity-accounted investee is no longer equity accounted.

(ii) Discontinued operations

A discontinued operation is a component, which is a single operating line or area, disposed or available for sale of the Group or a subsidiary acquired for resale. An operation will be classified as a discontinued operation upon disposal or when the operation meets the criteria to be classified as held for sale or held for distribution to owners, whichever comes first.

(e) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34 “Interim Financial Reporting”.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(f) Employee benefits

The pension cost in the consolidated interim financial statements was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated interim financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 “ Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2016. For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31, 2016.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2016. Please refer to Note 6 of the 2016 annual consolidated financial statements.

(a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits Repurchase agreement	June 30, 2017	December 31, 2016 June 30, 2016 2,946 3,084 1,761,981 1,380,129 4,594,989 4,128,097 - - 6,359,916 5,511,310
	$ 3,349 3,797,115 1,608,828 250,000 $ 5,659,292

Please refer to note 6(x) for the currency risk and the interest rate risk of the Group’s cash and cash equivalents.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(b) Financial assets and liabilities at fair value through profit or loss
(i) The fair value of financial instruments was as follows:

Financial assets at fair value through profit or loss – current: Non-derivative financial assets: Mutual funds Derivative financial assets: Forward exchange contracts Foreign exchange swap contracts Financial liabilities at fair value through profit or loss – current: Derivative financial liabilities: Forward exchange contracts Foreign exchange swap contracts	June 30, 2017

(ii) The Group held the following derivative financial instruments not designated as hedging instruments presented as held-for-trading financial assets as of June 30, 2017, and December 31 and June 2016:

June 30, 2017

	June 30, 2017
Derivative financial instruments	Nominal amount	Maturity date Predetermined rate July 10, 2017~ September 22, 2017 29.865~30.377 July 10, 2017~ December 28, 2017 29.904~30.468 October 3, 2017~ December 28, 2017 30.062~30.436 August 25, 2017~ September 1, 2017 29.973~29.999
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts `－`swap in USD / swap out TWD Foreign exchange swap contracts `－`swap in TWD / swap out USD	USD 218,800 thousand USD 274,800 thousand USD 70,000 thousand USD 14,000 thousand

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

	December 31, 2016	Maturity date Predetermined rate January 5, 2017~ March 27, 2017 31.157~32.015 January 5, 2017~ March 27, 2017 31.765~32.290 January 5, 2017~ January 19, 2017 31.245~31.920 Maturity date Predetermined rate July 8, 2016~ September 2, 2016 32.069~32.532 July 8, 2016~ September 29, 2016 32.111~32.822 August 23, 2016~ September 29, 2016 32.354~32.753
Derivative financial instruments	Nominal amount
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts `－`swap in TWD / swap out USD	USD 252,000 thousand USD 189,500 thousand USD 81,000 thousand June 30, 2016
Derivative financial instruments	Nominal amount
Forward exchange contracts `－`buy USD / sell TWD Forward exchange contracts `－`buy TWD / sell USD Foreign exchange swap contracts`－` swap in USD / swap out TWD	USD 180,000 thousand USD 321,000 thousand USD 141,000 thousand

(iii) Please refer to note 6(x) for the liquidity risk of the Group’s financial instruments.

(iv) The Group did not provide any of the aforementioned financial assets at fair value through profit or loss – current as collateral.

Stocks listed in domestic markets Stocks unlisted in domestic markets Stocks unlisted in foreign markets	June 30, 2017	December 31, 2016 June 30, 2016 586,404 519,919 287,517 12,017 13,880 13,883 887,801 545,819
	$ 591,404 382,117 27,392 $ 1,000,913

(i) In the second quarter of 2016, the Group sold 841 thousand shares of Nien Made Enterprise Co., Ltd. for $220,270. The gain on disposal which was recognized as other gains and losses, amounted to $140,969, deducting the cost of $79,301.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) The unrealized gains and losses were recognized as unrealized gains and losses on availablefor-sale financial assets. Details were as follows:

Unrealized gains (losses)		For the three months ended June 30 For the six months ended June 30 2017 2016 2017 2016 90,443 (7,383) 92,067 44,225	For the three months ended June 30 For the six months ended June 30 2017 2016 2017 2016 90,443 (7,383) 92,067 44,225
	$	2017 90,443

(iii) The Group did not provide any of the aforementioned available-for-sale financial assets as collateral.
(d) Notes and accounts receivable, and other receivables (including related parties)

Notes receivable Accounts receivable Accounts receivable – related parties Other receivables Less: allowance for doubtful accounts allowance for sales returns and discounts Total	June 30, 2017

(i) The Group did not provide any of the aforementioned notes and accounts receivable, and other receivables (including related parties) as collateral.
(ii) Please refer to note 6(x) for the movements in the allowance for doubtful accounts and the credit risk and currency.
(iii) The Company entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Company does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Company receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Company shall pay handling charges based on a fixed rate. As of June 30, 2017, and December 31 and June 30, 2016, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

			June 30, 2017
Buyer Mega International Commercial Bank HSBC Bank	Amount sold NT$ $ - - $ -	Credit facilities US$ (expressed in thousand) 15,000 64,400 79,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands - US$ 3,750 - US$ 58,000 - December 31, 2016	Amount derecognized NT$ Amount not received NT$ - - - - - -
Buyer Mega International Commercial Bank HSBC Bank Bank of Taiwan		Credit facilities US$ (expressed in thousand) 20,000 64,400 26,000 110,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands 336,651 % 1.75 US$ 5,000 533,157 % 1.42 US$ 58,000 404,146 % 2.10 NT$ 772,200 1,273,954 June 30, 2016	Amount derecognized NT$ Amount not received NT$ 336,651 37,406 533,157 59,240 404,146 44,905 1,273,954 141,551
Buyer Mega International Commercial Bank HSBC Bank Bank of Taiwan		Credit facilities US$ (expressed in thousand) 20,000 64,400 26,000 110,400	Cash received in advance NT$ Interest rate Guarantee (promissory note) expressed in thousands - US$ 5,000 - US$ 58,000 - NT$ 772,200 -	Amount derecognized NT$ Amount not received NT$ - - - - - - - -

(iv) Please refer to note 9 for guarantee notes provided by the Company to sell its accounts receivable.

(e) Inventories

Raw materials Semi-finished goods and work in process Finished goods and merchandise	June 30, 2017	December 31, 2016 June 30, 2016 1,618,227 1,481,433 1,485,837 1,521,554 3,566,483 2,964,213 6,670,547 5,967,200
	$ 1,938,216 1,396,465 2,674,487 $ 6,009,168

The Group did not provide any of the aforementioned inventories as collateral.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The Group recognized the following items as cost of goods sold from continuing operations:

Gains (losses) on inventory valuation Unallocated manufacturing overhead resulting from the actual production being lower than the normal capacity Loss on disposal of inventories Gain on physical inventories	For the three months ended June 30, 2017 2016 $ 28,987 (178,286) (8,494) (49,052) (67,422) (19,591) 3,837 1,473 $ (43,092) (245,456)	For the six months ended June 30, 2017 2016 (19,079) (459,215) (44,400) (81,076) (86,967) (19,737) 5,669 1,836 (144,777) (558,192)
	2017 $ 28,987 (8,494) (67,422) 3,837 $ (43,092)

(f) Non-current assets held for sale

The Group resolved to dispose parts of the shares of Global TEK in the directors’ meeting held on June 21, 2016, and started the selling progress. It is estimated to be sold on October 3, 2016, therefore, Global TEK and its subsidiaries were recognized as non-current assets held for sale. Details of assets and liabilities held for sale as of June 30, 2016 were as follows:

Current assets: Cash and cash equivalents Financial assets at fair value through profit or loss – current Notes and accounts receivable, net Other receivables Inventories, net Other current assets Non-current assets: Property, plant and equipment Intangible assets Deferred tax assets Other non-current assets Reclassified as assets held for sale	June 30, 2016
	$ 322,855 994 653,881 50,898 424,144 103,279 1,556,051 $ 1,171,081 515,368 28,366 101,669 1,816,484 $ 3,372,535

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Current liabilities: Short-term borrowings Notes and accounts payable Other payables Other current liabilities Current portion of long-term borrowings Non-current liabilities: Long-term borrowings Deferred tax liabilities Other non-current liabilities Reclassified as liabilities held for sale	June 30, 2016
	$ 266,758 451,067 277,520 19,106 70,510 1,084,961 226,719 124,013 6,558 357,290 $ 1,442,251

Please refer to note 12(b) for the operating results and cash flows from discontinued operations.

(g) Acquisition of subsidiaries

Based on the resolution approved during the board of directors’ meeting of TWEL, one of the main subsidiaries of the Company, held on March 13, 2017, acquired all shares of Bang & Olufsen s.r.o. (renamed as TYM Acoustic Europe after merger) amounting to EUR18,000 through TYM Acoustic HK. Through this transaction, the Company will establish the market for its audio products in Europe, strengthen the cooperation with its clients and expand its technique, manufacturing process and global market. The purchase agreement was settled on June 1, 2017.

(i) Consideration transferred

According to the share purchase agreement, the consideration transferred was EUR18,000. As of June 30, 2017, TYM Acoustic HK deposited EUR1,500 in Escrow Account based on the share purchase agreement.

(ii) Obtaining control

The Company indirectly holds 70% of TYM Acoustic Europe’s shares through TWEL. The Company has included TYM Acoustic Europe in its consolidated financial statements since the settlement date.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) According to IFRSs, the fair value of net assets acquired should be measured on the acquisition date. Therefore, the Company evaluated the fair value and useful lives of intangible assets at the time of acquisition. As of the reporting date, the share purchase agreement was in accordance with the preliminary purchase price allocation, which is subject to change in the future. The Company engaged experts to evaluate its identifiable net assets, and the preliminary information was as follows:

future. The Company engaged experts to evaluate its identifiable preliminary information was as follows:	net assets, and the
Items Consideration transferred Less: fair value of identifiable net assets Goodwill	Amount
	$ 613,107 475,000 $ 138,107

(iv) The cost of acquisition

The consulting fees and on-site examination expenses of $19,004 due to the acquisition transaction were recognized as administrative expenses in the statement of comprehensive income.

(v) Simulated operating results

Operating results of Bang & Olufsen s.r.o. were merged into the Company’ s consolidated comprehensive income statement since the acquisition date, which had contributed to the operating revenue and the net income of $161,823 and $2,203, respectively. If the acquisition had occurred on January 1, 2017, the simulated operating revenue and income before tax would have been $27,701,621 and $1,273,617, respectively.

(h) Material non-controlling interests of subsidiaries

The Material non-controlling interests of subsidiaries were as follows:

Name of subsidiaries	Main operation place Business/Registered Country	Proportion of Ownership and Voting Rights Held by Non-controlling Interests June 30, 2017 December 31, 2016 June 30, 2016 % 30 % 30 % 30 % - % - % 70
		June 30, 2017

The following information of the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Group as at the acquisition date. Intra-group transactions were not eliminated in this information.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) TWEL and its subsidiaries:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Operating revenue Profit Other comprehensive income Comprehensive income Profit attributable to non-controlling interests Comprehensive income attributable to non-controlling interests Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of foreign currency exchange translation Net increase (decrease) in cash and cash equivalents Dividends paid to non-controlling interests	June 30, 2017 $ 5,555,382 3,501,583 (4,508,319) (225,183) $ 4,323,463 $ 1,297,039 For the three months ended June 30 2017 2016 $ 3,402,117 1,659,225 $ 116,213 1,637 37,186 (14,967) $ 153,399 (13,330) $ 34,863 491 $ 46,020 (3,998) For the three months ended June 30 2017 2016 $ 375,106 (58,263) (899,434) (21,350) 544,769 (111) 26,376 (8,773) $ 46,817 (88,497) $ - -	June 30, 2017 $ 5,555,382 3,501,583 (4,508,319) (225,183) $ 4,323,463 $ 1,297,039 For the three months ended June 30 2017 2016 $ 3,402,117 1,659,225 $ 116,213 1,637 37,186 (14,967) $ 153,399 (13,330) $ 34,863 491 $ 46,020 (3,998) For the three months ended June 30 2017 2016 $ 375,106 (58,263) (899,434) (21,350) 544,769 (111) 26,376 (8,773) $ 46,817 (88,497) $ - -	December 31, 2016 June 30, 2016 4,510,885 2,929,749 3,377,729 3,061,838 (3,496,113) (1,803,001) (243,387) (232,527) 4,149,114 3,956,059 1,244,734 1,186,818 For the six months ended June 30 2017 2016 6,279,166 3,516,153 228,998 26,503 (56,522) (42,144) 172,476 (15,641) 68,699 7,951 51,744 (4,692) For the six months ended June 30 2017 2016 775,431 (698,674) (962,728) (74,646) 544,078 (308) (39,117) (30,775) 317,664 (804,403) - -
		(58,263) (21,350) (111) (8,773) (88,497) -

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Global TEK and its subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Operating revenue Net income Other comprehensive income Comprehensive income Net income attributable to non- controlling interests Comprehensive income attributable to non-controlling interests Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of foreign currency exchange translation Net increase in cash and cash equivalents Dividends paid to non-controlling interests	June 30, 2017 $ - - - - $ - $ - For the three months ended June 30 2017 2016 $ - 657,393 $ - 50,304 - (16,466) $ - 33,838 $ - 35,212 $ - 23,686 For the three months ended June 30 2017 2016 $ - 198,018 - (110,094) - 2,195 - (10,836) $ - 79,283 $ - -	June 30, 2017 $ - - - - $ - $ - For the three months ended June 30 2017 2016 $ - 657,393 $ - 50,304 - (16,466) $ - 33,838 $ - 35,212 $ - 23,686 For the three months ended June 30 2017 2016 $ - 198,018 - (110,094) - 2,195 - (10,836) $ - 79,283 $ - -	June 30, 2017 $ - - - - $ - $ - For the three months ended June 30 2017 2016 $ - 657,393 $ - 50,304 - (16,466) $ - 33,838 $ - 35,212 $ - 23,686 For the three months ended June 30 2017 2016 $ - 198,018 - (110,094) - 2,195 - (10,836) $ - 79,283 $ - -	June 30, 2017 $ - - - - $ - $ - For the three months ended June 30 2017 2016 $ - 657,393 $ - 50,304 - (16,466) $ - 33,838 $ - 35,212 $ - 23,686 For the three months ended June 30 2017 2016 $ - 198,018 - (110,094) - 2,195 - (10,836) $ - 79,283 $ - -	December 31, 2016 June 30, 2016 - 1,556,051 - 1,816,484 - (1,084,961) - (357,290) - 1,930,284 - 1,351,199 For the six months ended June 30 2017 2016 - 1,264,841 - 95,873 - (15,891) - 79,982 - 67,111 - 55,987 For the six months ended June 30 2017 2016 - 210,335 - (118,657) - (26,884) - (20,501) - 44,293 - -
		2017
	$ - - - - $ - $ -			198,018 (110,094) 2,195 (10,836) 79,283 -

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) Property, plant and equipment

The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for the six months ended June 30, 2017 and 2016, were as follows:

Cost or deemed cost: Balance on January 1, 2017 Additions Disposals Acquisition from business combination Reclassifications Effect of movements in exchange rates Balance on June 30, 2017 Balance on January 1, 2016 Additions Disposals Acquisition from business combination Reclassifications Effect of movements in exchange rates Balance on June 30, 2016 Depreciation and impairments loss: Balance on January 1, 2017 Depreciation Disposals Reclassifications Effect of movements in exchange rates Balance on June 30, 2017 Balance on January 1, 2016 Depreciation Disposals Reclassifications Effect of movements in exchange rates Balance on June 30, 2016	Land	Buildings, leasehold improvement, and additional equipment		Machinery and equipment 5,672,304 214,527 (127,254) - 213,185 (194,823) 5,777,939 6,578,407 194,230 (381,802) 340,425 (728,549) (272,048) 5,730,663 3,632,382 508,068 (113,301) (931) (124,588) 3,901,630 3,718,475 573,366 (340,359) (313,558) (28,039) (170,899) 3,438,986	Office and other equipment	Construction in progress and testing equipment 347,678 246,329 - 59 (317,482) (11,058) 265,526 503,242 607,520 - (602,063) (128,330) (18,220) 362,149 - - - - - - - - - - - - -	Government grants Total (16,286) 10,451,612 - 523,219 - (176,372) - 38,939 - (27,641) 561 (341,262) (15,725) 10,468,495 (12,731) 12,179,667 - 857,264 - (457,297) - 148,545 - (1,702,887) 558 (480,751) (12,173) 10,544,541 (13,237) 5,734,190 (2,238) 645,731 - (162,237) - (991) 441 (191,803) (15,034) 6,024,890 (9,579) 5,895,644 (1,452) 733,868 - (410,414) - (531,806) - 11,932 463 (262,171) (10,568) 5,437,053
					510,457 24,153 (7,335) 12,883 4,361 (16,437) 528,082 680,211 23,999 (19,967) (17,002) (159,034) (24,968) 483,239 383,934 26,629 (7,325) (60) (13,091) 390,087 449,371 41,087 (16,857) (103,094) (12,105) (19,169) 339,233

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Land	Buildings, leasehold improvement, and additional equipment	Office and other equipment
$ 134,701 $ 134,701 $ 284,973 $ 134,699	2,071,64	126,523 137,995 230,840 144,006
	2,029,76
	2,408,18
	2,176,56

(i) The unamortized deferred revenue of equipment subsidy amounted to $1,147,177, $1,310,945 and $1,445,919 as of June 30, 2017, and December 31 and June 30, 2016, respectively.
(ii) The Group did not provide any of the aforementioned property, plant and equipment as collateral.
(j) Investment property

Carrying amounts: Balance at January 1, 2017 Balance at June 30, 2017 Balance at January 1, 2016 Balance at June 30, 2016	Land $ 16,249 $ 16,249 $ 128,071 $ 16,249	Buildings and other equipment Total 19,428 35,677 19,196 35,445 130,638 258,709 19,659 35,908

(i) The Group reclassified $220,053 as property, plant and equipment from investment property due to the change of the use of such property in the first quarter of 2016.
(ii) Except for the above paragraph, there was no significant additions, disposals, or recognition and reversal of impairment losses of the investment property for the six months ended June 30, 2017 and 2016. Please refer to note 6(j) of the consolidated financial statements for the year ended December 31, 2016 for further information.
(iii) The fair value of the investment property has no significant change from note 6(j) of the consolidated financial statements for the year ended December 31, 2016.
(iv) The Group did not provide any of the aforementioned investment property as collateral.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(k) Intangible assets

The carrying amounts of the intangible assets of the Group as of June 30, 2017 and 2016, were as follows:

follows:
Carrying amounts: Balance at January 1, 2017 Balance at June 30, 2017 Balance at January 1, 2016 Balance at June 30, 2016	Goodwill $ 1,850,383 $ 1,988,490 $ 2,191,382 $ 1,850,383	Customer Relationships 504,899 468,959 676,241 540,840	Technology	Trademarks, Patents and Copyrights Total 23,864 2,673,670 21,468 2,752,476 30,614 3,322,191 26,266 2,732,978
			294,524 273,559 423,954 315,489

(i) For the intangible assets identified from the acquisition of TYM Acoustic Europe on June 1, 2017, please refer to note 6(g).
(ii) Intangible assets were transferred out due to the resolution to dispose parts of shares of Global TEK approved by the board of directors’ meeting held on June 21, 2016. Please refer to note 6(f) for further detail.
(iii) Except for above paragraph, there was no significant change on intangible assets for the six months ended June 30, 2017 and 2016. Please refer to note 6(k) of the consolidated financial statements for the year ended December 31, 2016.
(iv) The Group did not provide any of the aforementioned intangible assets as collateral.
(l) Short-term borrowings

The details were as follows:

The details were as follows:
Short-term borrowings Unused credit lines Annual interest rates	June 30, 2017 D $ 547,848 $ 14,315,809 1.09%~1.93%	ecember 31, 2016 June 30, 2016
		- 1,808,016 13,301,651 9,507,328 0.93%~1.27% 0.96%~1.19%

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(m) Long-term borrowings

June 30, 2017

		June
Unsecured bank loans Less: current portion Total Unused credit lines Unsecured bank loans Less: current portion Total Unused credit lines Unsecured bank loans Less: current portion Total Unused credit lines	Currency	Annual interest rate
	TWD
	Currency	Annual interest rate
	TWD	0.95~1.56% June
	Currency	Annual interest rate
	TWD	0.95%~1.56%

(i) Pursuant to the loan agreements with The Export-Import Bank of the ROC and CTBC Bank, the Company has to maintain the following financial ratios calculated based on the Company’s semi-annual audited (reviewed) consolidated financial statements. As of June 30, 2017, the Company had not violated the financial covenants. The financial covenants include (1) a current ratio of not less than 100%; (2) a financial debt ratio of not greater than 75%; (3) an interest coverage ratio of not less than 400%; and (4) shareholders’ equity of not less than $4,000,000. If the Company violates the financial covenants, the banks have the right to charge a default penalty or to require the Company to improve its financial ratios.
(ii) Please refer to note 9 for the details of the outstanding guarantee notes.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(n) Operating lease

(i) Lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year Between one and five years More than five years	June 30, 2017	December 31, 2016 June 30, 2016 234,469 228,438 327,873 380,114 12,989 - 575,331 608,552
	$ 256,140 451,784 467,602 $ 1,175,526

The Group leases a number of offices and warehouses and pieces of equipment under operating leases. The lease terms are between 1 and 20 years.

(o) Employee benefits from continuing operations

(i) Defined benefit plans

There was no material volatility of the market, no material reimbursement and settlement or other material one-time events since prior fiscal year. As a result, the pension cost in the accompanying interim consolidated financial statements was measured and disclosed according to the actuarial report as of December 31, 2016 and 2015.

(ii) Defined contribution plans

The Company contribute the pension cost on the defined contribution plans to the labor pension personal account at the Bureau of Labor Insurance. Subsidiaries other than the Company set up their defined contribution plans in accordance with the regulations of their respective countries.

(iii) The Group recognized its pension costs from continuing operations and recorded them as operating expenses and operating cost in the statement of comprehensive income.

Defined benefit plans Defined contribution plans Total	For the three months ended June 30 2017 2016 $ 501 619 79,960 90,269 $ 80,461 90,888	For the six months ended June 30
	2017 $ 501 79,960 $ 80,461	2017 2016 1,002 1,238 163,666 182,956 164,668 184,194

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(p) Income taxes from continuing operations
(i) Income tax expense for the period is best estimated by multiplying the profit before tax of the reporting period by the effective annual tax rate as forecasted by the management.
(ii) The details of the Group’s income tax expenses from continuing operations were as follows:

Income tax expense	For the three months ended June 30 2017 2016 $ 183,334 167,065	For the six months ended June 30
	2017 $ 183,334	2017 2016 321,069 368,078

(iii) There were no income tax recognized in equity or other comprehensive income.
(iv) The Company’s income tax returns have been examined by the tax authority through the years up to 2013. However, the Company disagreed with the examination of the income tax return for 2008 and requested an administrative remedy. The tax effect of the administrative remedy has been recognized by the Company.
(v) Information related to the unappropriated earnings and tax deduction ratio is summarized below:

Unappropriated earnings of 1998 and after Balance of imputation credit account Creditable ratio for earnings distribution to ROC residents	June 30, 2017 December 31, 2016 June 30, 2016 $ 4,354,337 4,779,419 3,694,312 $ 693,155 508,028 541,139 2016 (actual) 2015 (actual) 14.50 % 13.69 %

The above stated information was prepared in accordance with information letter No. 10204562810 issued by the Ministry of Finance of the ROC, on October 17, 2013.

(q) Capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity for the six months ended June 30, 2017 and 2016. For the related information, please refer to note 6(q) of the consolidated financial statements for the year ended December 31, 2016.

(i) Ordinary shares

As of June 30, 2017 and December 31 and June 30, 2016, the nominal ordinary shares amounted to $5,000,000. Par value of each share is $10 (dollars), which means in total there were 500,000 thousand authorized common shares, of which 444,779, 442,134 and 441,903 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Reconciliation of shares outstanding was as follows:

Balance on January 1 Exercise of employee stock options Issuance of restricted stock Retirement of restricted stock Balance on June 30		Ordinary shares (in thousands of shares)
		For the six months ended June 30 2017 2016 442,134 441,188 195 945 2,450 - - (230) 444,779 441,903

(ii) Capital surplus

The balances of capital surplus were as follows:

Additional paid-in capital Employee stock options Restricted employee stock options	June 30, 2017	December 31, 2016 June 30, 2016 508,583 478,455 229,175 231,089 53,708 76,543 791,466 786,087
	$ 522,947 228,826 128,318 $ 880,091

(iii) Retained earnings

According to the articles of the Company, when allocating the earnings for each year, the Company shall first offset its losses in previous year and set aside a legal capital reserve at 10% of the earing left over, until the accumulated legal capital reserve has equaled the total capital of the Company; then set aside a special capital reserve in accordance with relevant laws, the balance of the earnings shall combined into an aggregate amount of undistributed earnings, which shall become the aggregate distributable earnings to be distributed by the directors’ distribution proposals according to the resolution adopted at the shareholders’ meeting.

The Company is at the growth stage and considers its future cash demand, long-term financial plans, benefits to shareholders, and balanced dividends. Earnings distribution is made by stock dividend and cash dividend. The cash dividend shall not be less than 10 percent of the total dividends and could be adjusted depending on the Company’s operating condition.

1) Legal reserve

In accordance with the Company Act, 10 percent of the net income after tax should be set aside as legal reserve, until it is equal to share capital. If the Company experiences profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the shareholders’ meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25 percent of the paid-in capital.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

2) Special reserve

By choosing to apply exemptions granted under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the International Financial Reporting Standards endorsed by the FSC, retained earnings increased by $97,300 by recognizing the cumulative translation adjustments (gains) on the adoption date as deemed cost. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special reserve, and when the relevant asset is used, disposed of, or reclassified, this special reserve, shall be reversed as distributable earnings proportionately. The carrying amount of special reserve amounted to $97,300 on June 30, 2017.

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders’ equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

3) Earnings distribution

On May 25, 2017 and on June 20, 2016, the shareholders’ meeting resolved to distribute the 2016 and 2015 earnings, respectively. The distributions were NT$2.5 and 2.1 (dollars) per share, which amounted to $1,111,886 and $927,933, respectively.

(r) Share-based payment

Except for the following disclosure, there were no significant changes for share-based payment for the six months ended June 30, 2017 and 2016. Please refer to note 6(r) of the consolidated financial statements for the year ended December 31, 2016 for further information.

After the shareholders’ meeting on June 20, 2016, the Company decided to issue 3,000 thousand shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,450 thousand shares on January 23, 2017.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) Employee stock options and share-based payment
1) As of June 30, 2017, outstanding employee stock options of the Company for equitysettled share-based payment were as follows:

Modification and grant date Exercise price Granted units (thousand) Service period (from the grant date of the original stock options) Vesting period (from the grant date of the original stock options)	Plan 1 (note) December 30, 2008/ November 12, 2009 11.42 30,828 5 years (May 23, 2005~ November 11, 2014) 2 ~ 3 years	Plan 2 (note) December 30, 2008/ November 12, 2009 11.42 7,224 6~8 years (January 2, 2008~November11, 2017) 3 ~ 5 years	Plan 3 (note)
			Issued in November 2011 Issued in October 2012 November 24, 2011 October 22, 2012 16.20 24.10 1,500 3,500 5 years (November 24, 2011~November 23, 2016) 5 years (October 22, 2012~ October 21, 2017) 2 ~ 3 years 2 ~ 3 years

Note: Stock options under Plan 1 included those granted by Primax in May 2005, June and December 2006, and February and March 2007; those granted by Primax Holdings in January, May and November 2008; and those granted by the Company in November 2009.

Stock options under Plan 2 included those granted by Primax Holdings in January and May 2008, and those granted by the Company in November 2009.

Stock options under Plan 3 included those granted by the Company in November 2011 and October 2012.

The Company applied the Black-Scholes Option pricing model to measure the fair value of employee stock options.

The related information on compensatory employee stock option plans was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at June 30 Exercisable at June 30	For the six months ended June 30 2017 2016 Weighted- average exercise price Stock options (in thousands) Weighted- average exercise price Stock options (in thousands) 22.16 957 24.66 1,728 - - - - 24.10 (15) - - 25.20 (75) 26.50 (239) - - - - 21.01 867 24.36 1,489 21.01 867 24.36 1,489
	2017 Weighted- average exercise price Stock options (in thousands) 22.16 957 - - 24.10 (15) 25.20 (75) - - 21.01 867 21.01 867
	Weighted- average exercise price 22.16 - 24.10 25.20 - 21.01 21.01

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

As of June 30, 2017, and December 31 and June 30, 2016, the information on the employee stock option plans outstanding was as follows:

Employee stock option plan 1 Employee stock option plan 2 Employee stock option plan 3 -Issued in November 2011 Employee stock option plan 3 -Issued in October 2012 Outstanding at end of year		June 30, 2017	December 31, 2016 June 30, 2016 - - 211 211 - - 746 1,278 957 1,489
		- 211 - 656
		867

2) As of June 30, 2017, the outstanding employee stock options of TWEL for equity-settled share-based payment were as follows:

Grant date Exercise price Granted units (thousand) Service period Vesting period	November 2014 July 2015 November 18, 2014 July 1, 2015 $15.74 $18.82 700 2,750 5 years 5 years 3 ~4 years 3 ~5 years

TWEL applied the Black-Scholes option pricing model to measure the fair value of employee stock options.

The related information on compensatory employee stock option plans of TWEL was as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at June 30 Exercisable at June 30	For the six months ended June 30 2017 2016 Weighted- average exercise price Stock options (in thousands) Weighted- average exercise price Stock options (in thousands) 18.27 3,308 18.20 3,450 - - - - - - - - - - - - - - 15.74 (107) 18.27 3,308 18.27 3,343 - - - -
	2017 Weighted- average exercise price Stock options (in thousands) 18.27 3,308 - - - - - - - - 18.27 3,308 - -
	Weighted- average exercise price 18.27 - - - - 18.27 -

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Restricted stock

1) As of June 30, 2017, the outstanding restricted stock of the Company was as follows:

Grant date Fair value on grant date (per share) Exercise price Granted units (thousand shares) Vesting period	Plan 1 (note 1) October 1, 2013 November 20, 2013 February 10, 2014 July 17, 2014 22.80 25.15 27.30 52.00 Free grants Free grants Free grants Free grants 1,450 186 135 220 1~3 years (notes 2 and 3) 1~2 years (notes 3 and 4) 1~2 years (notes 3 and 4) 1~2 years (note 3)	Plan 2 (note 1) Plan 3 (note 1) February 24, 2015 August 18, 2015 February 13, 2017 43.70 38.40 45.80 Free grants Free grants Free grants 1,225 1,775 2,450 1~3years (note 2 and 3) 1~3 years (note 2) 1~3 years (note 2)

Note 1: Plan 1 –After the shareholders’ meeting on June 25, 2013, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,450 thousand shares, 186 thousand shares, 135 thousand shares, and 220 thousand shares on August 13 and November 12, 2013, and January 22 and June 27, 2014, respectively.
Plan 2 –After the shareholders’ meeting on June 24, 2014, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,225 thousand shares and 1,775 thousand shares on January 28 and August 13, 2015, respectively.
Plan 3 –After the shareholders’ meeting on June 20, 2016, the Company decided to issue shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,450 thousand shares on January 23 2017.
Note 2: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 30% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 30% and 40% shall be vested in year 2 and year 3, respectively, after the grant date.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Note 3: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 50% of the restricted stock shall be vested in year 1 after the grant date, and the remaining 50% shall be vested in year 2 after the grant date.
Note 4: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, the restricted stock shall be vested in year 1 after the grant date.

The related information on restricted stock of the Company was as follows:

(Thousand shares) Outstanding at January 1 Granted during the year Forfeited during the year Vesting during the year Expired during the year Outstanding at June 30		For the six months ended June 30 2017 2016 1,771 3,270 2,450 - - - (289) (389) (82) (170) 3,850 2,711

(iii) Expenses and liabilities attributable to share-based payment were as follows:

		For the three months	For the three months	For the three months	For the six	months
		ended June 30			ended June 30
		2017	2016		2017	2016
Expenses attributable to employee stock	$		936	863	1,873		1,727
options
Restricted stock		19,482		10,411	31,664	27,193
Total	$	20,418		11,274	33,537	28,920
			June	30,	December 31,	June	30,
			2017		2016	2016
Salary payable:
Current			$	1,938	1,938		1,938

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(s) Earnings per share

The calculation of basic earnings and diluted earnings per shares was as follows:

(i) Basic earnings per share

Profit attributable to owners of parent Continuing operations Discontinued operations Total Weighted-average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars) Continuing operations Discontinued operations Total	For the three months ended June 30 2017 2016 $ 461,775 431,817 - 15,091 $ 461,775 446,908 440,830 438,992 $ 1.05 0.98 - 0.04 $ 1.05 1.02	For the six months ended June 30
	2017 $ 461,775 - $ 461,775 440,830 $ 1.05 - $ 1.05	2017 2016 880,211 818,861 - 28,762 880,211 847,623 440,665 438,595 2.00 1.87 - 0.06 2.00 1.93

(ii) Diluted earnings per share

Profit attributable to owners of parent Continuing operations Discontinued operations Total Weighted-average number of ordinary shares (diluted) (thousand shares) Diluted earnings per share Continuing operations Discontinued operations Total	For the three months ended June 30 2017 2016 $ 461,775 431,817 - 15,091 $ 461,775 446,908 443,485 441,644 $ 1.04 0.98 - 0.03 $ 1.04 1.01	For the six months ended June 30
	2017 $ 461,775 - $ 461,775 443,485 $ 1.04 - $ 1.04	2017 2016 880,211 818,861 - 28,762 880,211 847,623 443,976 442,804 1.98 1.85 - 0.06 1.98 1.91

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Weighted-average number of ordinary shares at June 30 (basic) Effect of employee stock options Effect of employee stock bonuses Effect of restricted stock Weighted-average number of ordinary shares at June 30 (diluted)		For the three months ended June 30 2017 2016 440,830 438,992 552 603 262 535 1,841 1,514 443,485 441,644	For the six months ended June 30
		2017 440,830 552 262 1,841 443,485	2017 2016 440,665 438,595 544 719 1,045 1,976 1,722 1,514 443,976 442,804

(t) Operating revenue

The operating revenue was as follows:

Goods sold Services rendered Continuing operations Discontinued operations Total	For the three months ended June 30 2017 2016 $ 13,487,642 14,522,664 347,546 377,802 13,835,188 14,900,466 - 657,393 $ 13,835,188 15,557,859	For the six months ended June 30
	2017 $ 13,487,642 347,546 13,835,188 - $ 13,835,188	2017 2016 26,077,177 27,453,034 639,195 852,547 26,716,372 28,305,581 - 1,264,841 26,716,372 29,570,422

Please refer to note 12(b) for profit and loss, and cash flows from discontinued operations.

(u) Employee and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Company should contribute 2 to 10 percent of the profit as employee remuneration and less than 2 percent as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

Details of remuneration to employees and directors were as follows:

Employee remuneration Directors’ remuneration	For the three months ended June 30 2017 2016 $ 16,337 22,506 8,168 9,002 $ 24,505 31,508	For the six months ended June 30
	2017 $ 16,337 8,168 $ 24,505	2017 2016 33,552 41,395 16,779 16,558 50,331 57,953

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during each period. The differences between the amounts distributed and those accrued in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the distribution year.

The differences between the amounts approved in the directors’ meeting and those recognized in the financial statements for the distributions of earnings for 2016 and 2015 were as follows:

Employee remuneration Stock Cash Directors’ remuneration Employee remuneration Stock Cash Directors’ remuneration	2016 Actual earnings Distributed Accrued in the financial statement Difference $ - - - 74,000 74,000 - 36,800 36,803 3 2015 Actual earnings Distributed Accrued in the financial statement Difference $ - - - 78,500 78,269 (231) 32,000 31,907 (93)

The differences were accounted for as changes in accounting estimates and recognized as profit or loss in the year 2017 and 2016. Information about the remuneration to employee and directors approved in the board of directors’ meetings can be accessed in the Market Observation Post System website.

(v) Other income

The other income from continuing operations was as follows:

Interest revenue of cash in banks Rent revenue Other	For the three months ended June 30 2017 2016 $ 28,485 30,644 2,319 1,368 311 2,441 $ 31,115 34,453	For the six months ended June 30
	2017 $ 28,485 2,319 311 $ 31,115	2017 2016 76,944 69,621 4,069 1,260 827 3,025 81,840 73,906

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(w) Other gains and losses

The other gains and losses from continuing operations were as follows:

Gains on disposal of held-for-trading financial assets Gains on disposal of available-for-sale financial assets Net gains(losses) on disposal of property, plant and equipment Net gains(losses) on financial assets/liabilities measured at fair value through profit or loss Foreign currency exchange gains(loss), net Other	For the three months ended June 30 2017 2016 $ 9,239 345 - 140,969 (442) 882 (10,151) (21,381) 22,567 39,735 41,568 21,037 $ 62,781 181,587	For the six months ended June 30 2017 2016 14,127 631 - 140,969 (1,757) (577) 9,997 23,159 (3,233) 154,119 60,554 32,896 79,688 351,197
	2017 $ 9,239 - (442) (10,151) 22,567 41,568 $ 62,781

(x) Financial instruments

Except for the following paragraph, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. Please refer to note 6(y) of the consolidated financial statements for the year ended December 31, 2016 for further information.

(i) Credit risk

The aging analysis of notes, accounts, and other receivables (including related parties) that were past due but not impaired was as follows:

Past due 0-30 days Past due 31-90 days Past due 91-180 days Past due 181-360 days Past due over a year	June 30, 2017	December 31, 2016 June 30, 2016 763,565 537,210 213,509 33,563 17,593 69,844 13,247 5,410 - - 1,007,914 646,027
	$ 501,673 104,319 501 133,928 - $ 740,421

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The Group assesses the uncollectible amount of notes, accounts, and other receivables (including related parties) based on the aging analysis, the collection history, the customers’ current financial status and the insurance status, and recognizes an allowance for doubtful debts accordingly. After the Group’ s assessment, there is no significant change in the customers’ credit quality and the collectability of related receivables, and relevant receivables are able to be collected through insurance.

The movements in the allowance for the six months ended June 30, 2017 and 2016 were as follows:

Balance on January 1, 2017 Reversal gains recognized Amounts written off Exchange differences on translation of foreign currency Balance on June 30, 2017 Balance on January 1, 2016 Impairment loss recognized Amounts written off Reclassification to assets held for sale Exchange differences on translation of foreign currency Balance on June 30, 2016	Individually assessed impairment $ - - - - $ - Individually assessed impairment $ - - - - - $ -	Collectively assessed impairment Total 99,936 99,936 (3,843) (3,843) - - (5,572) (5,572) 90,521 90,521 Collectively assessed impairment Total 29,247 29,247 32,545 32,545 (865) (865) (2,450) (2,450) (424) (424) 58,053 58,053

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities:

June 30, 2017 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow December 31, 2016 Non-derivative financial liabilities: Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow June 30, 2016 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 547,848 12,637,118 2,471,936 326,667 176,172 64,555 - - $ 16,224,296 $ 16,892,918 2,713,494 601,111 143,237 150,430 - - $ 20,501,190 $ 1,808,016 12,581,552 1,854,410 1,042,223 136,459 59,635 - - $ 17,482,295	Contractual cash flows 547,848 12,637,118 2,471,936 331,894 176,172 - 2,631,095 (2,565,486) 16,230,577 16,892,918 2,713,494 609,653 143,237 - 2,766,941 (2,615,359) 20,510,884 1,808,016 12,581,552 1,854,410 1,058,353 136,459 - 9,390,046 (9,442,051) 17,386,785	Within 6 months 547,848 12,637,118 2,471,936 110,102 - - 2,631,095 (2,565,486) 15,832,613 16,892,918 2,713,494 277,546 - - 2,766,941 (2,615,359) 20,035,540 1,808,016 12,581,552 1,854,410 114,436 - - 9,390,046 (9,442,051) 16,306,409	6~12 months - - - 108,721 - - - - 108,721 - - 110,096 - - - - 110,096 - - - 611,052 - - - - 611,052	1~2 years - - - 57,051 - - - - 57,051 - - 137,431 - - - - 137,431 - - - 219,171 - - - - 219,171	2~5 years Over 5 years - - - - - - 56,020 - - 176,172 - - - - - - 56,020 176,172 - - - - 84,580 - - 143,237 - - - - - - 84,580 143,237 - - - - - - 113,694 - - 136,459 - - - - - - 113,694 136,459

The Group does not expect that the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) Currency risk

1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

F	J	une 30, 2017	De	cember 31, 201		June 30, 2016
	Foreign currency $ 307,915 101,736 319,673 304,219 102,822 302,461	Exchange rate 6.7744 7.8055 30.4360 6.7744 7.8055 30.4360	Foreign currency 385,629 101,376 428,216 366,735 94,552 377,974	Exchange rate 6.937 7.755 32.279 6.937 7.755 32.279	Foreign currency 302,528 168,861 320,877 302,448 168,767 259,847	Exchange rate TWD 6.6312 9,767,419 7.7588 5,451,842 32.286 10,359,832 6.6312 9,764,829 7.7588 5,448,804 32.286 8,389,412
F

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, notes and accounts receivable, other receivables, loans and borrowings, notes and accounts payable, and other payables that are denominated in foreign currency. A weakening (strengthening) of 5% of the TWD, CNY and HKD against the USD as of June 30, 2017 and 2016, would have increased or decreased the net profit before tax by $30,166 and $98,802, respectively. The analysis is performed on the same basis for both periods.

As the Group deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months ended June 30, 2017 and 2016, the foreign exchange gains (losses), including both realized and unrealized, amounted to $22,567 and $39,735, respectively. For the six months ended June 30, 2017 and 2016, the foreign exchange gains (losses), including both realized and unrealized, amounted to $(3,233) and $154,119, respectively.

2) Interest rate analysis

Please refer to the notes on liquidity risk management and interest rate exposure of the Group’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Group management’s assessment of the reasonably possible interest rate change.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

If the interest rate had increased or decreased by 0.25%, the net profit before tax would have increased or decreased by $918 and $1,597 for the six months ended June 30, 2017 and 2016, respectively, mainly as a result of bank savings and borrowings with variable interest rates.

3) Other price risk:

For the six months ended June 30, 2017 and 2016, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the other comprehensive income before tax as illustrated below:

Prices of securities at the reporting date	For the six months ended June 30 2017 2016 Other comprehensive income before tax Other comprehensive income before tax $ 59,140 51,992 $ (59,140) (51,992)
Increasing 10% Decreasing 10%

(iv) Fair value
1) Kinds of financial instruments and fair value

The carrying amount and fair value of the Group’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total		June 30, 2017	June 30, 2017	June 30, 2017
	Carrying amounts $ 74,554 $ 1,000,913 $ 5,659,292 11,419,292 308,282 49,719 $ 17,436,585		Fair Value
		Level 1 - 591,404	Level 2 - -	Level 3 Total 74,554 74,554 409,509 1,000,913

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost Borrowings Notes and accounts payable Other payables Guarantee deposits Total		June 30, 2017	June 30, 2017	June 30, 2017
	Carrying amounts $ 64,555 $ 874,515 12,637,118 2,471,936 176,172 $ 16,159,741		Fair Value
		Level 1 -	Level 2 -	Level 3 Total 64,555 64,555

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost: Borrowings Notes and accounts payable Other payables Guarantee deposits Total		December 31, 2016	December 31, 2016	December 31, 2016
	Carrying amounts $ 141,317 $ 887,801 $ 6,359,916 13,706,714 495,392 44,429 $ 20,606,451 $ 150,430 $ 601,111 16,892,918 2,713,494 143,237 $ 20,350,760		Fair Value
		Level 1 - 586,404 -	Level 2 - - -	Level 3 Total 141,317 141,317 301,397 887,801 150,430 150,430

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Financial assets at fair value through profit or loss – current Available-for-sale financial assets – non-current Loans and receivables Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at fair value through profit or loss – current Financial liabilities carried at amortized cost Borrowings Notes and accounts payable Other payables Guarantee deposits Total		June 30, 2016	June 30, 2016	June 30, 2016
	Carrying amounts $ 272,933 $ 545,819 $ 5,511,310 11,545,938 266,058 43,539 $ 17,366,845 $ 59,635 $ 2,850,239 12,581,552 1,854,410 136,459 $ 17,422,660		Fair Value
		Level 1 190,169 519,919 -	Level 2 - - -	Level 3 Total 82,764 272,933 25,900 545,819 59,635 59,635

2) Valuation techniques for financial instruments measured at fair value

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. The quoted price of a financial instrument obtained from major exchanges and over-the counter markets are the basis used to determine the fair value of a listed company’s stock and the quoted prices in an active market.

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. If these conditions can not be reached, then the market is non-active. In general, a market with low trading volume or high bid-ask spreads is an indication of a non-active market.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

The Group uses the following methods in determining the fair value of its financial instruments without a quoted price in an active market:

a) The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated on the basis of the contract’s spot exchange rate and swap point.
b) Available-for-sale financial assets – non-current are investments in domestic or foreign non-listed stock. If the price of capital increase by cash is reliable, the fair value will be estimated on the issuance price of ordinary shares, while others will be based on market approach of comparable business. For stocks in the emerging market, the estimated fair value is adjusted for the lack of liquidity. When prices listed in the emerging market are unavailable, the fair value is estimated on the basis of unadjusted prior trade prices.
3) The is no transferring of fair value hierarchy for the six months ended June 30, 2017 and 2016.
4) Changes in Level 3

For the six months ended June 30

	2017
Fair value through profit or loss	Available for sale	Fair value through profit or loss
	301,397 - 87,067 21,045
	409,509

5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s financial instruments that use Level 3 inputs to measure fair value include “financial assets and liabilities at fair value through profit or loss”, “derivative financial instruments” and “available-for-sale financial assets – equity investments”. Quantified information of significant unobservable inputs was as follows:

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Inter-relationships between significant Valuation Significant unobservable inputs and Item technique unobservable inputs fair value measurement Available-for-sale Guideline Public Lack-of-Marketability The Higher the Lack-offinancial assets – Company method Discount (90% on Marketability Discount equity securities June 30, 2017) is, the lower the fair listed on emerging value will be stock market Available-for-sale (note 1) (note 1) (note 1) financial assets – equity securities not listed on emerging stock market Financial assets and (note 2) (note 2) (note 2) liabilities at fair value through profit or loss

note 1: The fair value is based on unadjusted prior trade prices, therefore there is no need to show the sensitivity analysis of unobservable inputs.
note 2: The fair value is based on the quotation of a third party, therefore there is no need to show the sensitivity analysis of unobservable inputs.
6) Sensitivity analysis for fair values of financial instrument using Level 3 Inputs

The Group’s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters changed, the impact on net income or loss and other comprehensive income or loss are as follows:

June 30, 2017	Input Discount of lock Marketability	Variation	Other comprehensive income
			Advantageous change Disadvantageous change
Available-for-sale financial assets – equity securities listed on emerging stock market		±10`％`	$ 38,356 38,356

(y) Financial risk management

The Group’s objectives and policies on financial risk management are consistent with note 6(z) of the consolidated financial statements for the year ended December 31, 2016.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(z) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2016. Also, management believes that there were no significant changes in the Group’s capital management information as disclosed for the year ended December 31, 2016. Please refer to Note 6(aa) of the consolidated financial statements for the year ended December 31, 2016 for further details.

(7) Related-party transactions:

(a) Names and relationship of the related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated interim financial statements.

Name Relationship Specialty Technologies, LLC (Specialty) Real related party Key management personnel Key management personnel of the Group

(b) Other related-party transactions
(i) Sales

The amounts of sales by the Group to related parties and the outstanding balances were as follows:

	Sal	es	Notes an	d accounts receivable
For the thr ended J	ee months une 30 2016 45,480	For the six ended J	June 30, 2017 73,953	December 31, June 30, 2016 2016 102,841 59,165
2017		2017 116,538
$ 63,327

There were no significant differences in the selling prices and trading terms between the related parties and other customers.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Key management personnel compensation from continuing operations:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	For the three months ended June 30 2017 2016 $ 35,587 45,583 - 286 - - - - 11,035 4,541 $ 46,622 50,410	For the six months ended June 30
	2017 $ 35,587 - - - 11,035 $ 46,622	2017 2016 84,648 84,253 - 572 - - - - 22,069 9,087 106,717 93,912

Please refer to note 6(r) for information related to share-based payments.

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets Other non-current assets – restricted assets	Pledged to secure	June 30, 2017	December 31, 2016 June 30, 2016 1,163 1,217
	Loan collateral and guarantee letters issued by bank	$ 1,123

(9) Significant commitments and contingencies:

(a) The Group’s guarantee of purchasing materials and borrowings, please refer to note 13.
(b) The following are savings accounts provided by the Group to the bank in order for the bank to issue a guarantee letter to customs as guarantee deposits. Please refer to note 8.

Guarantee letters	June 30, 2017	December 31, 2016 June 30, 2016 198,121 61,532
	$ 186,107

(c) Guarantee notes provided as part of agreements with banks to sell accounts receivables, to acquire long-term borrowings, and to purchase materials were as follows:

Sales of accounts receivable Long-term borrowings	June 30, 2017	December 31, 2016 June 30, 2016 2,805,777 2,806,218 2,160,000 2,160,000
	$ 1,879,423 $ 880,000

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(d) The aggregate unpaid amounts of contracts pertaining to the purchase of equipment were as follows:

June 30, 2017 Property, plant and equipment $ 78,609	June 30, 2017	December 31, 2016 June 30, 2016 42,286 96,756

(e) The Group entered into lease agreements for its offices and warehouses. Please refer to note 6(n) for future rent payables.

(10) Losses due to major disasters:None

(11) Subsequent events:None

(12) Other:

(a) Employee benefit, depreciation, and amortization expenses are summarized by function from continuing operations are below:

By function By item	For the three months ended June 30, 2017	For the three months ended June 30, 2017	For the three months ended June 30, 2017	For the three months ended June 30, 2016	For the three months ended June 30, 2016	For the three months ended June 30, 2016
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Others Depreciation Amortization	781,435 24,246 53,796 13,345 297,318 4,275	648,343 28,887 26,665 34,150 25,649 43,583	1,429,778 53,133 80,461 47,495 322,967 47,858	966,467 24,761 66,266 11,750 319,246 4,712	561,251 23,412 24,622 38,076 28,749 40,555	1,527,718 48,173 90,888 49,826 347,995 45,267

By function By item	For the six months ended June 30, 2017			For the six months ended June 30, 2016
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Others Depreciation Amortization	1,461,879 48,134 109,722 27,756 594,029 8,774	1,206,129 63,920 54,946 69,961 51,702 86,733	2,668,008 112,054 164,668 97,717 645,731 95,507	1,767,978 53,669 134,509 25,735 635,417 9,998	1,079,207 55,833 49,685 69,832 58,599 80,196	2,847,185 109,502 184,194 95,567 694,016 90,194

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(b) Discontinued operations

The Group resolved to dispose parts of the shares of Global TEK in the directors’ meeting held on June 21, 2016. Profit and loss, and cash flows from discontinued operations are summarized as follows:

Operating revenue
Operating cost
Gross profit
Operating expenses
Net operating income
Non-operating income (expenses)
Income before income taxes
Income tax expense
Net income from discontinued operations
Net income attributable to:
Stockholders of parent
Non-controlling interests
Cash flows from discontinued operations:
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Effect of foreign currency exchange translation
Net increase in cash and cash in equivalents

For the three
months ended
June 30, 2016
For the six
months ended
June 30, 2016
$ 657,393
1,264,841
(494,760)
(958,250)
162,633
306,591
(92,329)
(171,252)
70,304
135,339
1,019
(322)
71,323
135,017
(21,019)
(39,144)
$
50,304
95,873
15,091
28,762
35,213
67,111
$
50,304
95,873
198,018
210,335
(110,094)
(118,657)
2,195
(26,884)
(10,836)
(20,501)
$
79,283
44,293

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the Regulations for the Group:

(i) Loans to other parties:

No.	Name of lender	Name of borrowe	r Account name	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Coll	ateral	Individual funding loan limits	Maximum limit of fund financing
												Item	Value
1 2 3	PKS1 Tymphany Dongguan TYM HK	The Company TYDC TYM Acoustic HK	Other accounts receivable Other accounts receivable Other accounts receivable	781,263 38,341 639,156	736,656 - 639,156	736,656 - 639,156	- 2% 2%	Necessary to loan to other parties `〃` `〃`	- - -	Operating capital `〃` Investing capital	- - -		- - -	857,911 89,824 1,783,656	857,911 89,824 1,783,656

Note 1: After approval by the Board of directors, PKS1, Tymphany Dongguan and TYM HK can lend the individual and total amount shall not exceed its net worth in the latest financial statements to parent company and subsidiaries whose voting shares are 100% owned, directly or indirectly.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsemen ts to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 1 `〃`	The Company PCH2 `〃`	PCH2 T s P P PCQ1 T p c PKS1	he ubsidiary of HK1 and TH2 he same arent ompany `〃`	3,192,576 1,361,553 1,361,553	338,930 193,674 167,398	319,578 133,918 167,398	- 16,659 54,722	- - -	% 3.00 % 2.95 % 3.69	8,513,536 3,630,808 3,630,808	Y - -	- - -	Y Y Y

Note 1: The amount of the guarantee to a company shall not exceed 30% of the Company’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the Company’s net worth in the latest financial statements.

Note 2: The amount of the guarantee to a company shall not exceed 30% of the PCH2’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the PCH2’s net worth in the latest financial statements.

Note 3: The above counter-parties of guarantee and endorsement are subsidiaries included in the consolidated interim financial statements.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(iii) Information regarding securities held at the reporting date (subsidiaries, associates and joint ventures not included):

Name of holder	Category and name of security	Relationship with company	Account title		Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company Primax Tech.	Shares: Green Rich Technology Co., Ltd. WK Technology Fund IV LTD. Changing Information Technology Inc. Formosoft International Inc. Syntronix Corp. Ricavision International Inc. Nien Made Enterprise Co., Ltd. Global TEK Grove Ventures, L.P. Shares: Echo. Bahn. WK Global Investment III Ltd.	- - - - - - - - - - -	Available-for-sale financial asset-non- current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Available-for-sale financial asset-non- current `〃`	359 512 179 53 6 917 1,764 5,510 - 400 630	4,000 3,820 2,802 246 749 - 591,404 370,500 16,740 990,261 - 10,652 10,652	3.59 0.38 1.62 0.76 0.02 2.04 0.60 9.18 5.74 11.90 1.32	4,000 3,820 2,802 246 749 - 591,404 370,500 16,740 - 10,652

(iv) Information regarding purchase or sale of securities for the period exceeding 300 million or 20% of the Company’s paid-in capital:

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sa	Sa	les		Ending Balance	Ending Balance
					Shares (thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) on disposal	Shares (thousands)	Amount
TYM Acoustic HK PCH2 PCH2 PCQ1	Shares: TYM Acoustic Europe Financial instruments of floating income and capital guaranteed Money market fund of RMB Money market fund of RMB	Investment accounted for using equity method Held-for- trading financial assets `〃` `〃`	Inital offerings Initial offerings `〃` `〃`	Subsidiary None `〃` `〃`	- - - -	- - - -	- - - -	613,107 1,450,402 5,300,169 1,365,830	- - - -	- 1,455,108 5,293,800 1,366,903	- 1,450,402 5,282,457 1,364,358	32,758 (note 1) 4,706 (note 2) (6,369) (note 2) 1,073 (note 2)	- - - -	645,865 - - -

Note 1: The adjustment of valuation based on equity method. Also, the investment has been eliminated during preparing the consolidated interim financial statements. Note 2: Gains of disposal include valuation and exchange differences on translation.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(v) Information on acquisition of real estate with purchase amount exceeding 300 million or 20% of the Company’s paid-in capital: None
(vi) Information regarding receivables from disposal of real estate exceeding 300 million or 20% of the Company’s paid-in capital: None
(vii) Information regarding related-parties purchases and/or sales exceeding 100 million or 20% of the Company’s paid-in capital:

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company `〃` `〃` `〃` `〃` PCH2 PKS1 PCQ1 Polaris TYM HK `〃` `〃` `〃` Premium Hui Zhou Tymphany Dongguan TYDC TYM Acoustic Europe TYM Acoustic HK	PCH2 PKS1 PCQ1 Polaris TYM HK The Company The Company The Company The Company Premium Hui Zhou The Company Tymphany Dongguan TYDC TYM HK TYM HK TYM HK TYM Acoustic HK TYM Acoustic Europe	The subsidiary of Primax HK The subsidiary of Primax HK The subsidiary of Primax HK The subsidiary of Primax Tech The subsidiary of TWEL The parent of Primax Cayman The parent of Primax Cayman The parent of Primax Cayman The parent of Primax Tech Subsidiary The parent of Diamond Subsidiary Subsidiary Parent Parent Parent Parent Subsidiary	Purchase Purchase Purchase (Sale) (Sale) (Sale) (Sale) (Sale) Purchase Purchase Purchase Purchase Purchase (Sale) (Sale) (Sale) (Sale) Purchase	12,693,982 502,072 2,533,963 (1,541,208) (123,816) (12,693,982) (502,072) (2,533,963) 1,541,208 1,721,486 123,816 2,723,486 379,736 (1,721,486) (2,723,486) (379,736) (157,554) 157,554	% 80 % 3 % 16 % (9) % (1) % (81) % (100) % (92) % 100 % 31 % 2 % 49 % 7 % (94) % (94) % (100) % (91) % 100	60 days `〃` `〃` 90 days 60 days `〃` `〃` `〃` 90 days 60 days `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	Price agreed by both side `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	The same as general purchasing `〃` `〃` The same as general selling `〃` `〃` `〃` `〃` The same as general purchasing `〃` `〃` `〃` `〃` The same as general selling `〃` `〃` `〃` The same as general purchasing	(5,145,167) (342,989) (1,033,094) 119,927 7,193 5,145,167 342,989 1,033,094 (119,927) (848,968) (7,193) (917,590) (99,761) 848,968 917,590 99,761 157,342 (157,342)	(73)% (5)% (15)% 2% -% 73% 32% 90% (100)% (42)% -% (45)% (5)% 98% 88% 100% 38% (99)%

Note 1: Accounts receivables over payment terms has been classified as other payables-non-current.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(viii) Information regarding receivables from related-parties exceeding 100 million or 20% of the Company’s paid-in capital:

Name of company	Counter-party	Nature of relationship	Ending balance (note 2)	Turnover rate	Overdue	Overdue	Amounts received in subsequent period (note 1)	Allowance for bad debts
					Amount	Action taken
The Company PCH2 PKS1 PCQ1 Premium Hui Zhou Tymphany Dongguan TYM Acoustic Europe	Polaris The Company The Company The Company TYM HK TYM HK TYM Acoustic HK	The Subsidiary of Primax Tech The Parent of Primax Cayman The Parent of Primax Cayman The Parent of Primax Cayman Parent Parent Subsidiary	119,927 5,145,167 1,079,645 1,033,094 848,968 917,590 157,342	17.82 4.19 2.67 3.43 3.75 5.16 4.01	- - 736,656 - - - -	Reclassify to Long-term payable, and enhance the control of receivables	119,927 2,139,468 89,174 658,731 438,292 423,956 103,234	- - - - - - -

Note 1: The above information ended Aug 10, 2017.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(ix) Information regarding trading in derivative financial instruments: Please refer to note 6(b).
(x) Significant transactions and business relationship between the parent company and its subsidiaries:

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	The Company `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃`	PCH2 `〃` PKS1 `〃` PCQ1 `〃` Polaris `〃` TYM HK	The subsidiary of Primax HK `〃` `〃` `〃` `〃` `〃` The subsidiary of Primax Tech `〃` The subsidiary of TWEL	Purchase Accounts payable Purchase Accounts payable purchase Accounts payable Sale Accounts receivable Sale	12,693,982 5,145,167 502,072 342,989 2,533,963 1,033,094 1,541,208 119,927 123,816	Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side 90 days Price agreed by both side	47.51% 15.52% 1.88% 1.03% 9.48% 3.12% 5.77% 0.36% 0.46%

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017	Intercompany transactions for the three months ended, 2017
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
1 `〃` `〃` `〃` `〃` 2 `〃`	TYM HK `〃` `〃` `〃` `〃` TYM Acoustic Europe `〃`	Premium Hui Zhou `〃` Tymphany Dongguan `〃` TYDC TYM Acoustic HK `〃`	Subsidiary `〃` Subsidiary `〃` Subsidiary Subsidiary `〃`	Purchase Accounts payable Purchase Accounts payable Purchase Sale Accounts receivable	1,721,486 848,968 2,723,486 917,590 379,736 157,554 157,342	Price agreed by both side 60 days Price agreed by both side 60 days Price agreed by both side Price agreed by both side 60 days	6.44% 2.56% 10.19% 2.77% 1.42% 0.59% 0.47%

Note 1: Disclosure of the amounts exceeding the lower of NT$100 million. Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(b) Information on investments:

The following are the information on investees for the six months ended June 30, 2017 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount		Balance as of June 30, 2017		Net income (losses) of investee	Share of profits/losses of investee
				June 30, 2017	December 31, 2016	Shares (thousands)	Percentage of ownership	Carrying value
The Company `〃` `〃` `〃` `〃` `〃`	Primax Cayman Primax Tech. Destiny BVI. Destiny Japan Diamond Gratus Tech. Total	Cayman Islands Cayman Islands Virgin Island Japan Cayman Islands USA	Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service	2,540,588 897,421 30,939 7,032 2,517,298 9,330 6,002,608	2,540,588 897,421 30,939 7,032 2,517,298 9,330 6,002,608	8,147,636 285,067 1,050 0.50 84,050 300	100.00 100.00 100.00 100.00 100.00 100.00	4,538,732 1,934,528 25,269 16,976 3,124,936 9,513	174,353 75,714 80 7 155,931 203 406,288	220,516 85,731 80 7 155,931 203 462,468
								9,649,954
Primax Cayman	Primax HK	Hong Kong	Holding company and customer service	2,375,164	2,375,164	602,817	100.00	4,593,972	177,864	177,864
Primax Tech.	Polaris	USA	Sale of multi-function printers and computer peripheral devices	52,680	52,680	1,600	100.00	377,365	5,525	5,525
Diamond	TWEL	Cayman Islands	Holding company	2,515,800	2,515,800	38,501	70.00	3,026,425	283,178	160,298
TWEL `〃`	TYM HK TYP	Hong Kong USA	Holding company and sale of audio accessories, amplifiers and their components Market development and customer service of amplifiers and their components	76,280 (note 1) 15 (note 1)	76,280 (note 1) 15 (note 1)	144,395 0.50	100.00 100.00	1,755,300 6,746	264,795 2,149	264,795 2,149
TYM HK	TYML	USA	Sales of audio accessories, amplifiers and their components	6,628	6,628	200	100.00	(562)	243	9,763

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

==> picture [449 x 161] intentionally omitted <==

----- Start of picture text -----

Original investment amount Balance as of
Main June 30, 2017 Net income Share of
Name of Name of businesses June 30, 2017 December 31, Shares Percentage Carrying (losses) profits/losses
investor investee Location and products 2016 (thousands) of ownership value of investee of investee Note
Premium TYM Hong Kong Research and 19,497 - 5,000 100.00 48,508 (2,198) (2,198)
Hui Zhou Acoustic HK development, design,
and sale of audio
accessories, ampliers
and their components
TYM TYM UK United Research and 3,960 - 100 100.00 4,113 142 142
Acoustic Kingdom development and design
HK of audio accessories,
ampliers and their
components
〃 TYM Czech Republic Manufacture, install and 613,107 - 187,800 100.00 645,865 1,559 1,559
Acoustic repair of aduio
Europe accessories and their
components
----- End of picture text -----

Note 1: The amount is the initial investment costs from the original shareholders prior to the acquisition of the Company through Diamond.

Note 2: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(c) Information on investment in Mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

	information:
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2017	Investm	ent flows	Accumulated outflow of investment from Taiwan as of June 30, 2017	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
PCH2 Destiny Bejing PKS1 PCQ1 Premium Hui Zhou Tymphany Dongguan TYDC	Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Research and development of computer peripheral devices and software Manufacture of computer, peripherals and keyboards Manufacture of computer, peripherals and keyboards Research and development, design, and sale of audio accessories, amplifiers and their components `〃` `〃`	2,003,515 39,688 877,273 563,048 141,260 (note 3) 15,218 89,856	Indirect investment through Primax Cayman and Primax Tech. Indirect investment through Destiny BVI. Indirect investment through Primax Cayman Indirect investment through Primax Cayman Indirect investment through Diamond `〃` `〃`	1,773,902 (note 2) 33,893 (note 2) 710,138 (note 2) 645,580 (note 2) 2,711,436 16,140 -	- - - - - - -	- - - - - - -	1,669,540 (note 2) 31,958 (note 2) 669,592 (note 2) 608,720 (note 2) 2,556,624 15,218 - (Note 2)	227,647 80 (30,918) 64,179 28,057 42,199 3,803	100% 100% 100% 100% 70% 70% 70%	227,647 80 (30,918) 64,179 19,640 34,234 2,662	4,538,507 25,265 857,911 947,667 432,758 62,877 65,960	- - - - - - -

Note 1: The above information on the exchange rate is as follows: HKD:TWD $3.8993; USD:TWD 30.436; RMB:TWD 4.4928.

Note 2: The difference between accumulated out flow of investments and paid-in capital derived was from the currency exchange on translation, capital increase from retained earning and working capital.

Note 3: The amount is the initial investment costs from the original shareholders prior to the acquisition of the Company through Diamond.

Note 4: Related transactions have been eliminated during preparing the consolidated interim financial statements.

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Upper limit on investment in Mainland China:

Name of Company	Accumulated Investment in Mainland China as of June 30, 2017	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	5,636,121	6,406,709	None(Note)

Note: The Company has received the Certificate issued by the Industrial Development Bureau, Ministry of Economic Affairs, allowing it to start the operating of its headquarters.

The above investment income (losses) in Mainland China, except for PCH2, was reviewed by the Company’s auditors, Premium Hui Zhou, Tymphany Dongguan and TYDC were reviewed by other auditors, and other information related to subsidiaries came from financial reports prepared by the investees, not reviewed by auditors.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated interim financial statements for the six months ended June 30, 2017, are disclosed in “ Information on significant transactions” and “ Significant transactions and business relationship between the parent company and its subsidiaries.”

(14) Segment information:

For the six months ended June 30, 2017 and 2016, the Group’s segment information has no significant change. Please refer to note 14 of the consolidated financial statements for the year ended December 31, 2016 for further information.

Revenue External revenue Intra-group revenue Elimination from discontinued operations Total segment revenue Profit from segments reported Elimination from discontinued operations Total profit	For the three months ended June 30, 2017	For the three months ended June 30, 2017	For the three months ended June 30, 2017
	Computer Peripherals		Non-computer Peripherals Total 8,520,552 13,835,188 - - - - 8,520,552 13,835,188 363,249 679,972 - - 363,249 679,972
	$ 5,314,636 - - $ 5,314,636 $ 316,723 - $ 316,723

(Continued)

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

Revenue External revenue Intra-group revenue Elimination from discontinued operations Total segment revenue Profit from segments reported Elimination from discontinued operations Total profit Revenue External revenue Elimination from discontinued operations Total profit Profit from segments reported Elimination from discontinued operations Total profit Revenue External revenue Intra-group revenue Elimination from discontinued operations Total segment revenue Profit from segments reported Elimination from discontinued operations Total profit	For the three months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 6,291,550 9,266,309 15,557,859 - - - - (657,393) (657,393) $ 6,291,550 8,608,916 14,900,466 $ 438,078 232,617 670,695 - (71,323) (71,323) $ 438,078 161,294 599,372 For the six months ended June 30, 2017 Computer Peripherals Non-computer Peripherals Total $ 10,072,437 16,643,935 26,716,372 - - - $ 10,072,437 16,643,935 26,716,372 $ 548,435 721,544 1,269,979 - - - $ 548,435 721,544 1,269,979 For the six months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 13,041,600 16,528,842 29,570,442 - - - - (1,264,861) (1,264,861) $ 13,041,600 15,263,981 28,305,581 $ 779,252 550,655 1,329,907 - (135,017) (135,017) $ 779,252 415,638 1,194,890	For the three months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 6,291,550 9,266,309 15,557,859 - - - - (657,393) (657,393) $ 6,291,550 8,608,916 14,900,466 $ 438,078 232,617 670,695 - (71,323) (71,323) $ 438,078 161,294 599,372 For the six months ended June 30, 2017 Computer Peripherals Non-computer Peripherals Total $ 10,072,437 16,643,935 26,716,372 - - - $ 10,072,437 16,643,935 26,716,372 $ 548,435 721,544 1,269,979 - - - $ 548,435 721,544 1,269,979 For the six months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 13,041,600 16,528,842 29,570,442 - - - - (1,264,861) (1,264,861) $ 13,041,600 15,263,981 28,305,581 $ 779,252 550,655 1,329,907 - (135,017) (135,017) $ 779,252 415,638 1,194,890	For the three months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 6,291,550 9,266,309 15,557,859 - - - - (657,393) (657,393) $ 6,291,550 8,608,916 14,900,466 $ 438,078 232,617 670,695 - (71,323) (71,323) $ 438,078 161,294 599,372 For the six months ended June 30, 2017 Computer Peripherals Non-computer Peripherals Total $ 10,072,437 16,643,935 26,716,372 - - - $ 10,072,437 16,643,935 26,716,372 $ 548,435 721,544 1,269,979 - - - $ 548,435 721,544 1,269,979 For the six months ended June 30, 2016 Computer Peripherals Non-computer Peripherals Total $ 13,041,600 16,528,842 29,570,442 - - - - (1,264,861) (1,264,861) $ 13,041,600 15,263,981 28,305,581 $ 779,252 550,655 1,329,907 - (135,017) (135,017) $ 779,252 415,638 1,194,890
		Computer Peripherals
	$ 13,041,600 - - $ 13,041,600 $ 779,252 - $ 779,252

AI assistant

Primax — Interim / Quarterly Report 2017

52436_rns_2017-11-14_cd1a75dc-4342-45df-8f65-56aefbda13ab.pdf

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Table of contents

Independent Auditors’ Review Report

To the Board of Directors PRIMAX ELECTRONICS LTD.:

KPMG

Notes to Readers

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Balance Sheets

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and for the six months ended June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2017 and 2016

(English Translation of Consolidated interim Financial Statements and Report Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2017 and 2016

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES

Notes to the Consolidated Interim Financial Statements

June 30, 2017 and 2016

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

(2) Approval date and procedures of the consolidated financial statements:

(3) New standards, amendments and interpretations adopted:

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) IFRS 9 “Financial Instruments”

1) Classification- Financial assets

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

3) Disclosures

(ii) IFRS 15 Revenue from Contracts with Customers

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

(b) Basis of consolidation

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(c) Business combination

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Discontinued operations

(e) Income taxes

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(f) Employee benefits

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

(6) Explanation of significant accounts:

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(g) Acquisition of subsidiaries

(i) Consideration transferred

(ii) Obtaining control

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(v) Simulated operating results

(h) Material non-controlling interests of subsidiaries

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) TWEL and its subsidiaries:

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(ii) Global TEK and its subsidiaries

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(i) Property, plant and equipment

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(k) Intangible assets

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(m) Long-term borrowings

PRIMAX ELECTRONICS LTD. AND ITS SUBSIDIARIES Notes to the Consolidated Interim Financial Statements

(n) Operating lease

(i) Lessee

(o) Employee benefits from continuing operations

Primax Interim / Quarterly Report 2017