Qisda - Annual Report 2018 | FinancialReports.eu

TSE: 2352

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QISDA 2018 ANNUAL REPORT

Printed on April 23, 2019

Qisda Annual report is available at https://www.qisda.com/home.aspx

Letter to Shareholders ................................................................................................................................................ 1 Company Profile ........................................................................................................................................................... 3 Corporate Governance. ............................................................................................................................................. 5 Capital and Shares ...................................................................................................................................................... 38 Overview of Operations ............................................................................................................................................. 46 Financial Highlights ....................................................................................................................................................... 57 Review and Analysis of Financial Position and Financial Performance, and Risk Management ..................... 62 Special Notes ................................................................................................................................................................ 71 Appendix 1 Consolidated Financial Statements with Independent Auditors' Report for the most recent years ........................... 83 Appendix 2 Parent Company Only Financial Statements with Independent Auditors' Report for the most recent years .............. 229

Contact Information

QISDA CORPORATION

Headquarters 157 Shan-Ying Road, Gueishan, Taoyuan 333, Taiwan, R.O.C. Phone: 886-3-359-8800 Taipei office 18 Jihu Road, Neihu, Taipei, Taiwan, R.O.C. Phone: 886-2-2799-8800

INDEPENDENT ACCOUNTANTS Tang, Tzu Chieh & Shih, Wei-Ming CPA KPMG Peat Marwick 68Fl, Taipei 101 Tower No. 7, Sec.5, Xinyi Road, Taipei 11049, Taiwan, R.O.C. Phone: 886-2-8101-6666 http://www.kpmg.com.tw

INVESTOR RELATIONS CONTACTS

Spokesperson David Wang Senior Vice President and CFO Phone: 886-3-359-8800 [email protected] Deputy Spokesperson Jasmin Hung Associate Vice President Phone: 886-3-359-8800 [email protected]

OVERSEAS SECURITY EXCHANGE LISTING

For further information, visit Qisda worldwide website and Login at Investor Relations Qisda Global Depositary Shares Luxemburg Stock Exchange Website: Qisda.com -Investor Relations

QISDA ON THE INTERNET Qisda’s Investor Relations home page on the worldwide website offers a wealth of corporate information, including the latest annual report and financial results. Website: Qisda.com

Letter to Shareholders

Greetings to all of our Valued Shareholders,

Qisda’s consolidated sales revenues for 2018 were NT$155.78 billion. The consolidated operating profit was NT$4.5 billion. The consolidated earnings after tax was NT$4.45 billion. The consolidated net income attributed to stockholders of the Company was NT$4.035 billion. The earnings per share after tax was NT$2.05. Qisda continuously promotes the strategy of grant fleet, concentrating the smaller hidden champions among industries and integrating the Group’s resources for fast growth. Qisda has outperformed its significant growth with its consolidated sales revenue hitting new record highs following the uncertain factors such as fast changes of industries, slower demand in displays and projectors and rise in global trade war. It proves that the efficiencies are gradually visible. In 2018, we built partnership following with the four major operating policies to enlarge Qisda’s wide-ranging businesses.

(i) Optimization on current business operations: The two major products, such as flat panel displays and projectors, continuously gains stable results and leading position. The performance of displays is better than entire industries and is now second in the world rankings. In addition to continuous development towards high-end, high unit price, professional and medical displays, Qisda has also invested in Data Image Corporation for its market deployment in nautical displays. Qisda not only keeps its global leading position in OEM projectors, but the only domestic manufacturer with two main technologies used for projection including DLP and LCD.
(ii) Fast enlargement for medical businesses: Qisda has approached the size of its total consolidated sales revenues in medical fields for 2018 nearly NT$10 billion. The revenues of two hospitals in Suzhou and Nanjing keep growing under normal operation. Regarding medical appliances and channel expansion, by investing in K2 International Medical Inc., a dialysis channel, to access in cross-strait dialysis and medical cosmetic channel, BenQ Dialysis Technology Corp. has acquired the TFDA and KFDA certifications and successfully turned into an export success in Korean market; self-design and self-manufacturing tablets and handheld ultrasound keep the expansion on bedside care market; the market expansion in Digital Dentistry and engagement on hearing channels will satisfy the demands for global ageing and long-term care.
(iii) Acceleration on solution development: Qisda has combined the partners such as DFI Inc. and Partner Tech Corp. for the perfection on hardware and distribution channel. The purpose is to develop towards provider integration based on full software and hardware service system. The consolidated sales revenues of smart solutions for 2018 were NT$11 billion. Qisda continuously satisfying the six main intelligence vertical markets. The smart energy service has covered from manufacturing and expanded to service industry. The program of the innovative energy storage has been introduced in chain stores; Qisda has also cooperated with National Cheng Kung University to build a smart campus; the smart factory has also entered in the fields such as semiconductor and automotive industries.
(iv) Market deployment on key components: The investment in Yudi Optics and Alpha Networks Inc. is the preceding market deployment on future AIoT solutions such as Internet of Vehicles (IoV) and 5G.

Prospecting in 2019, Qisda will continue to focus on four major operating directions. We are expecting further advances to create long-term value for the Company. The plans are listed as follows:

(i) Optimization on current business operations: We will continuously develop towards high-end, high-resolution and large-sized display products for professional applications, such as e-Sports, illustrations / designs, medical grade applications. We will expand its proportion and shipment to enhance more profit; we will keep consolidating the projector products in a global leading position and strengthen the market deployment on high-end models with 4K resolution and high brightness.
(ii) Fast enlargement for medical businesses: We will prioritize the distribution channel, especially in China and newly countries. Meanwhile, we will develop the special products and technologies such as ultrasound and hemodialyzer. The Group’s resources will be integrated to develop surgery devices, disposables, integration system of Digital Dentistry and smart operating room information system. We will also expand
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the medical industry alliance via win-win merge & acquisition or strategic cooperation model.

(iii) Acceleration on solution development: The horizontal integration on internal technology and channels of business will continue to meet different vertical market demands. We’ve aggressively accelerated the investment for exploiting synergies among DFI Inc., Partner Tech Corp. and Aplex Technology Inc. in recent years. We’ve also seeked for cooperation with the first well-known international experts, such as ABB (the leading supplier of industrial robots) and SAP (the leader in Enterprise Resource Planning), to provide the best smart solution for customers.
(iv) Market deployment on key components: We will continue scanning and searching for cooperation opportunities based on current demand and a compass-based future applications.

Qisda achieves its sustainable competitive advantages through innovation and technical development. Each year, we make effort on product innovation and development, averagely occupying around 2%-3% of sales revenue. We’ve accumulated nearly 1,140 patent counts by country until now.

Qisda has dedicated to the corporate sustainable operation. The sustainable development indicators on economy, environment and society in 2018 still maintained high information transparency. Qisda not only ranked among the Top 50 of “Taiwan Corporate Sustainability Reports” and among the Top 50 of “Comprehensive Performance Award” from “2018 Taiwan corporate sustainability Awards (TCSA)” running by Taiwan Institute for Sustainability Foundation (TAISE) by achieving a record of receiving a Gold Award for the third year, but also received recognition for the Top 100 Global Technology Leaders running by Thomson Reuters. It shows that Qisda has implemented lavishly on sustainable development of economy, environment and society.

At last, we offer our sincerest thanks for your long-term full support and concern. Our management team and all employees will continue striving and seeking for the best interest of the Company and Shareholders.

Finally, we wish everyone good health, good luck and fortune.

Sincerely,

Chairman: Peter Chen

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President: Peter Chen

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Company Profile

I. Date of Founding: April 21. 1984

II. Company History:

April, 1984	Company established with a registered capital at NT$140,000,000 (currency for the following monetaryamount would all be NT$ except specificallyspecified), thepaid in capital was 35,000,000.
April, 1993	The Subsidiary“BenQ” established in Suzhou of mainland China.
November, 1993	The Headquarter and Production Base of the Companyestablished in Guishan of Taoyuan.
July, 1996	Officiallylisted at TWSE.
November, 1996	First issuance of foreign currencyconvertible bonds with a total value of US$110,000,000.
January, 1998	Initiation of construction of BenQSuzhou Science and TechnologyPark.
December, 1998	First issuance of domestic debenture with a total value of NT$2,000,000.
June, 2000	First issuance of domestic unsecured convertible bonds with a total value of NT$4,000,000,000.
February, 2001	Second issuance of foreign currencyconvertible bonds with a total value of US$175,000,000.
January, 2002	The Private Brand “BenQ” created and the English name of the Company changed to “BenQ Corporation”.
May, 2002	The Board of Directors collectivelyelected Mr. K.Y. Lee as the Chairman.
June, 2002	The Shuang-shingPlant in Guishan of Taoyuan activated forproduction.
February, 2003	Established thejoint venture with Royal Philips Electronic.
January, 2004	The Susidaiary Da-zhou Communication System Co., Ltd. (whose 100% of shares were held by the VCompany)merged and acquired bythe Company.
June, 2005	First issuance of domestic debenture with a total value of NT$4,000,000,000.
	Inititaliton of construction of BenQMedical Center in Nanjing.
October, 2005	BenQbecame the fourth most valuable out of the TopTen “BrandingTaiwan” brands .
	M&A with mobile departments of Simens became officially effective and the operation of BenQ Mobile GmbH & Co OHG started.
December, 2005	Issuance of overseas depositaryreceipt with total volume of 150,000,000 shares.
January, 2006	The first crossover edition of mobilephoneproduct byBenQ-Siemens hit the market.
April, 2006	Production intergration of optical storageproducts with Lite-On IT Corporation.
	The Board of Directors determined to terminate capital increase to BenQMobile.
November, 2006	BenQ included into the TOP 10 Leading Brands of Chinese Consumer Electronic Industry, becoming
	one of the most influential Chinese brands.
January, 2007	First issuance of unsecured exchangeable bonds with a total amount of NT$4,500,000,000.
June, 2007 July, 2007 September, 2007	The Shareholders’ Meeting approved proposals of brand segmentation, capital reduction for cover accumulated deficits and change of corporate name. The corporate name was changed from BenQ Corporation to Qisda Corporation. Capital reduction initiated. The listed companyname at TWSE changed toQisda(2352).
April, 2008	Capital increase by privateplacement of common stock at the amount of NT$5,000,000,000.
May, 2008	Operation of BenQMedical Center in Nanjinginitiated.
June, 2008	The Shareholders’ Meeting approved the proposals of establishing positions of Independnet Directors and the Audit Committee.
July, 2009	Initiation of construction of BenQMedical Center in Suzhou.
August, 2011	The Board of Directors approved theproposal of establishingthe Remuneration Committee.
October, 2011	BenQ won the prize of Best Chinese Enterprise in Human Resources Management for three years in
	a row and also won theprize of Best Remuneration and Performance Management.
	BenQ Medical Center in Nanjing rated by the Health Department of Jiangsu Province as the Level 3 Hospital.
September, 2012	Selected byIDB of MOEA as the model enterprise for OutstandingCSR Reports of 2012.

November, 2012	Won the Bronze Medal of ManufacturingIndustryof 2012 Taiwan Corporate SustainabilityAwards.
May, 2013	Operation of BenQMedical Center in Suzhou initiated.
October, 2013	BenQ Medical Center was rated the 7thl of the top 100 most competitibve Chinese private-owned hospitals.
November, 2013	Won the Taiwan Top 50 Corporate Sustainability Report Award and the Climate Leadership Award of 2013 Taiwan Corporate SustainabilityAwards
December, 2013	Selected byIDB of MOEA as the model enterprise forQualityCSR Reports of 2013.
November, 2014	Won the Silver Medal of “Large Enterprises, Electronics Industry II” of Taiwan Top 50 Corporate SustainabilityReport Awards.
April, 2015	Rated as the top5% by2015 Corporate Governance Appraisal System of TWSE.
May, 2015	Won the first prize of Eco-friendly Enterprise of 2015 Global Views Monthly Corporate Sustainability Awards.
May, 2016	Won the prize of Model Enterprise of Electronic Technology Group of 2016 Global Views Monthly Corporate SustainabilityAwards.
November, 2016	Won the Gold Medal “Electronic and IT Manufacturinf Industry” and the“Climate Leadership Award” of Taiwan Top 50 Corporate Sustainability Report Award of 2016 Taiwan Corporate Sustainability Awards.
April, 2017	Completed thepublic tender offer of 42.06% of shares of Partner Tech Corp.
May, 2017	“Best Business ContinuityApproach of the Year” of StrategicRISK.
November, 2017	“Top 50 Corporate Sustaninability Report Awards” and “Top 50 Corporate Sustaninability Awards” of 2017 Taiwan Corporate SustainabilityAwards of TAISE.
November, 2017	Completed thepublic tender offer of 36.28% of shares of DFI.
January, 2018	Recognized byThomson Reuters as one of the entityof the Top100 Global TechnologyLeaders.
March, 2018	Recognized as one of the 30 model Taiwanese enterprises byCSRone Reporting.
March, 2018	Participated in the subscription of common stocks from private placement by Alpha Networks Inc. for capital increase bycash with a shareholdingratio of the Companyat approximately18.38%.
August, 2018	Participated in the subscription of common stocks of K2 International Medical Inc. or capital increase bycash with a shareholdingratio of the Companyat approximately29.85%.
November, 2018	Participated in the subscription of common stocks from private placement by Dataimage for capital increase bycash with a shareholdingratio of the Companyat approximately28.82%.

Note: Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its company history.

Corporate Governance

I. Organization

(I) Organizational Structure

Date: April 23, 2019

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Shareholders’
Meeting
Audit Committee
Board of Directors Internal Audit
Compensation
Committee Chairman
President CSR & RM Office
Information
Manufacturing Product & Finance &
Technology Product
Operation Marketing Administration
Group
Strategy Center
Supply Chain
Commercial & Information
Management Industrial Products Innovation Technology Service
Group Development
Center
Corporate Quality
Management Business Solution
Product Group
Lifestyle Design
Center Medical Device
Product Group
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(II)Business Scope for Main Department

Departments and Units	Functions and Responsibilities
IT Products Group Commercial and Industrial Products Business Group Smart Solution Business Group Medical Equipment Business Group	1. Development and promotion of domestic and foreign market business 2. Formulation of marketing plans 3. ODM/EMS product development assessment 4. Product development and introduction and improvement of new technologies 5. Planningofproductqualityassurance system andpreparation ofqualitymanagementplans
Manufacturing Headquarter	1.Responsible for the manufacturing of various products 2. Control and management of yields, capacity planning, and efficiency of production processes 3. Coordination of manufacturing resources and completion of required volumes to ve shipped 4. Implementqualitymanagement system to ensureproductqualityand meet customer needs
Supply Chains Management	1. Global operations planning and management 2. Strategic procurement planning and management 3.Overallplanningand execution of vertical integration of supplychains
Quality Management	1.Promote products quality management supervision and quality strategy planning and implementation 2. Promote sustainable business, environmental-friendly and green energy, and continuous improvement activities 3. Provide R&D unit measurement with analysis and safety certification application 4. Provide customers with after-sales service
Digital Fashion Design Center	1. Product shapes and functions design 2. HMI design 3.Visual communication design 4. Trend analysis of user research and design
Products and Marketing Strategy Center	1.Analysis and planning of syndicate strategy 2. Assist each business group in formulating business competition strategies and commercial design 3. Assist each business group in STP planning and product portfolio formulation 4. Assistingeach businessgroupin introduction of design thinking
Creativity Development Center	1.Collect the latest technical information regarding materials, technologies, and products for the Company's product development 2. Integrate the Company's new technology and enhance the product development capability 3.Seek internal and external resources to resolve major technicalproblems within the Company
Finance and Administration Management (Finance/Human Resources/Legal/Patent Engineering)	1. Accounting system, accounting taxation processing analysis and planning 2. Matters related to the acquisition, operation and dispatching of financial funds 3. Utilize various financial statement data to provide fuidance for business operation directions 4. Stock issuance, stock affairs, taxation and other related businesses 5.Establishment and management of personnel systems such as manpower planning, staff recruitment, appointment, assessment, and promotion 6. Planning, design and management of remuneration system, business travel and expatriate, insurance, and welfare 7. Planning, establishment and implementation of system of education training and talent cultivation 8. Planning and promotion of corporate culture and employee interactions 9.Comprehensive development, review and provision of legal advisory services related to business affairs 10.Intellectual property business such as patent copyright trademarks and technology licenses at domestic and abroad 11.Comprehensive administration for legal affairs
Information Technology Service	1.MIS system management 2.Application and maintenance of OA equipment 3.Establishement of automatic monitoringsystem
CSR & RM Office	1. Corporate Sustainability Development Planning and Implementation 2. Environment, Safety and Health Planning and Implementation 3. Enterprise Risk Management Planning and Implementation 4. GroupCompanies Insurance Planningand Implementation
Internal Audit	To assist inspecting and reviewing defects in the internal control systems as well as measuring operational effectiveness and efficiency.

II. Documents of directors, president, vice presidents, associate vice presidents, and managers of each departments and divisions

(I) Director Information

											April 23, 2019; Unit of shares: unit	April 23, 2019; Unit of shares: unit	April 23, 2019; Unit of shares: unit	April 23, 2019; Unit of shares: unit	April 23, 2019; Unit of shares: unit	April 23, 2019; Unit of shares: unit
													Shareholding in
	Nationality														Selected Education, Past Positions &	Selected Current Positions at Qisda
						Date	Shareholding When				Spouse & Minor		the names of
Title	or Place of	Name	Gender	Date					Current Shareholding						Current Positions at Non-profit	and Other Companies
					Term	First	Elected				Shareholding		otherpersons
	Registration			Elected		Elected									Organizations	(Note2)
							Shares	%	Shares	%	Shares	%	Shares	%

Honorary Chairman	Republic of China	K.Y. Lee	Male	2017. 06.22	3	1993. 02.16	9,719,540	0.49%	9,719,540	0.49%	0	0.00%	Note 1	Note1	MBA, Switzerland IMD B.S., Electrical Engineering, National Taiwan University VP, Acer PC Product Marketing	Chairman: BenQ Foundation Director: AU Optronics Corp. Darfon Electronics Corp. Konly Venture Corp. RonlyVenture Corp.
Chairman	Republic of China	Peter Chen	Male	2017. 06.22	3	2014. 01.01	309,919	0.02%	309,919	0.02%	0	0.00%	0	0.00%	M.S., International Business Management, Thunderbird School of Global Management B.S., Electrical Engineering, National Cheng Kung University Technology Product Center EVP, BenQ Corp.	President: Qisda Corp. Director: AU Optronics Corp. Darfon Electronics Corp. Alpha Networks Inc. BenQ Foundation
Director	Republic of China	AU Optronics Corp.	-	2017. 06.22	3	2005. 05.18	186,363,510	9.48%	335,230,510	17.04%	0	0.00%	0	0.00%	MBA, Heriot-Watt University Chief Executive Officer, AU Optronics Corp. Qisda Director.	Chairman and Chief Executive Officer: AU Optronics Corp. Chairman: Konly Venture Corp. Ronly Venture Corp. AU Optronics (Xiamen) Corp. AU Optronics (Suzhou) Corp., Ltd. AU Optronics Manufacturing (Shanghai) Corp., AU Optronics (Kunshan) Corp. Ltd. Director: Qisda Corp. Darwin Precisions Corp. AU Optronics (L) Corp. AU Optronics Singapore Pte. Ltd. BenQFoundation
	Republic of China	Representative Paul Peng	Male	2017. 06.22	3	2010. 06.18	0	0.00%	9,164	0.00%	65,032	0.00%	0	0.00%
Director	Republic of China	BenQ Foundation	-	2017. 06.22	3	2011. 06.24	608,083	0.03%	608,083	0.03%	0	0.00%	0	0.00%	EMBA, Tsing Hua University in Beijing MBA, Greenwich University GM of Global Supply Chain General Manager,Qisda COO, BenQ China VP of Global Manufacturing,BenQ	Note 2
	Republic of China	Representative Joe Huang	Male	2017. 06.22	3	2017. 06.22	0	0.00%	240,952	0.01%	686	0.00%	0	0.00%

													Shareholding in	Shareholding in
	Nationality														Selected Education, Past Positions &	Selected Current Positions at Qisda
						Date	Shareholding When				Spouse & Minor		the names of
Title	or Place of	Name	Gender	Date					Current Shareholding						Current Positions at Non-profit	and Other Companies
					Term	First	Elected				Shareholding		otherpersons
	Registration			Elected		Elected									Organizations	(Note2)
							Shares	%	Shares	%	Shares	%	Shares	%

Independent Director	Republic of China	Kane K. Wang	Male	2017. 06.22	3	2008. 06.13	0	0.00%	0	0.00%	0	0.00%	0	0.00%	Ph.D., The Structure of Technology, Demand, and ,Market of US Automobile Industry, MIT M.S., Transportation Planning and B.S., Civil Engineering, National Taiwan University Director and Professor, Graduate Institution of Industrial Economics, National Central University Ministryof eduction certifiedprofessor	Chair Professor: China University of Technology Independent Director: Formosa Taffeta Co., Ltd, Supervisor: Platinum Optics Technology Inc.
Independent Director	Republic of China	Allen Fan	Male	2017. 06.22	3	2011. 06.24	0	0.00%	0	0.00%	0	0.00%	0	0.00%	B.S., Electrical Engineering, National Taiwan University General Manager, WKTechnology Fund President, Microsoft Taiwan VP, Twinhead International Corp. VP,HP Taiwan	Chairman: Yu Xuan Corp. Director: Belden International Inc. Independent Director: Wistron Information Technology and Services Corporation
Independent Director	Republic of China	Jeffrey Y.C. Shen	Male	2017. 06.22	3	2011. 06.24	0	0.00%	0	0.00%	0	0.00%	0	0.00%	EMBA certificate, University of Michigan B.S., Mechanical Engineering, National Cheng Kung University President, Changan Ford Mazda Automobile Company President, Ford Lio Ho Motor Company President of Asia-Pacific, Eagle Ottawa,LLC	None.
AnyExecutive,Director,or supervisor who is a spouse or relative within the sec							ond degree of kinship: None
Note 1: According to the Judgment No. 61 of the major lawsuit in 2009 of Taiwan High Court, Mr. KY Lee held total 2,323,225 share in 2000, 2003, and 2004. According to the investigate No. 11642 indictment in 2012 the Prosecutor of Taiwan Taoyuan Distr company consulted Mr. K.Y. Lee about his holding shares in the name of others as of the date of April 23, 2019, Mr. K.Y. Lee information, investors are required to make discretionary judgments to protect their rights and interests. Note 2: Please refer to the section “Directors, supervisors and presidents of affiliates” in annual report.											s in the name of others when shares acquired as an Employee's Bonus (including the subsequent stock dividends) ict Court, Mr. K.Y. Lee held 400,000 shares and 300,000 shares in the name of others in 2003 and 2004. After the replied this is not confirmed yet due to this case is a long time ago and not being handled by him. For the above

Substantial shareholders of the corporate shareholder

	Substantial shareholders of the corporate shareholders	Substantial shareholders of the corporate shareholders
Name of corporate shareholders
		Shareholding
(Note 1)	Name
		Percentage (%)

AU Optronics Corp (Note2)	Qisda Corporation	6.90%
	ADR of AU Optronics Corp.	4.63%
	Quanta Computer Inc.	4.61%
	Fubon Life Insurance Co., Ltd	3.82%
	Trust Holding for Employees for AU Optronics Corp.	3.10%
	Tong Hwei Enterprise Co., Ltd.	1.34%
	Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International EquityIndex Funds	0.97%
	JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds	0.96%
	Min Hwei Enterprise Co. Ltd.	0.94%
	Acadian Emerging Markets Equity II Fund, LLC	0.69%
BenQ Foundation	Not applicable	-

Note 1: For directors acting as the representatives of institutional shareholders Note 2: Source of information for AUO is recorded as of the book closure date of AUO on July 20, 2018.

Substantial shareholders of corporate shareholders who are the substantial shareholders of the Company’s corporate shareholders.

	Substantial shareholders of the corporate shareholders	Substantial shareholders of the corporate shareholders
Name of institutionalshareholders		Shareholding
	Name
		Percentage(%)
Quanta Computer Inc. (Note1)	Qianyu Investment Co., Ltd.	14.82%
	BarryLin	10.76%
	CathayLife Insurance Co., Ltd.	4.27%
	Government of Singapore	3.47%
	Ho, Sha Trust Property.	2.07%
	Fubon Life Insurance Co., Ltd.	1.96%
	Nan Shan Life Insurance Co., Ltd.	1.93%
	Yijiaxin Investment Co., Ltd.	1.75%
	Xinmin Investment Co., Ltd.	1.67%
	LiangTzu Chen	1.62%
Tong Hwei Enterprise Co., Ltd. (Note2)	Tsai TsungHsiang	78.93%
	Tsai MingHsien	1.91%
	Tsai TsungYu	17.25%
	Tsai Lin Su Chin	1.91%
Fubon Life Insurance Co., Ltd.(Note2)	Fubon Financial Holdings Co., Ltd.	100%
Min Hwei Enterprise Co. Ltd. (Note2)	TongHwei Enterprise Co., Ltd.	88.02%
	ChangChia Yung	7.95%

Note 1: Source of information for Quanta Computer Inc. is recorded as of the book closure date of Quanta Computer Inc. on April 17, 2018. Note 2: Source of information for Department of Commerce, MOEA

Professional qualifications and independence analysis of directors

Condition Name	Has more than 5 years of work experience and the following professional qualifications	Has more than 5 years of work experience and the following professional qualifications	Has more than 5 years of work experience and the following professional qualifications	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Meet conditions of independence (Note 1)	Number of other public companies where the Director concurrently serves as an Independent Director
	An Instructor or higher position in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the Company	A judge, prosecutor, lawyer, CPA or other specialist or technical professional who is necessary for the Company's business and who has been certified by national examinations and licensed by the competent authorities	Work experience necessary for business administration, legal affairs, finance, accounting, or business sector of the Company	1	2	3	4	5	6	7	8	9	10
K.Y. Lee	-	-	V				V		V	V	V	V	V	0
Peter Chen	-	-	V			V	V		V	V	V	V	V	0
AU Optronics Corp. Representative: Paul Peng	-	-	V	V	V		V		V	V	V	V		0
BenQ Foundation Representative: Joe Huang	-	-	V			V	V		V	V	V	V		0
Kane K. Wang	V	-	V	V	V	V	V	V	V	V	V	V	V	1
Allen Fan	-	-	V	V	V	V	V	V	V	V	V	V	V	1
Jeffrey Y.C. Shen	-	-	V	V	V	V	V	V	V	V	V	V	V	0

Note : Please add ""in the field under each criteria number if the director meets the criteria two years prior to being elected and during his/her term of service. (1) Not an employee of the company or any of its affiliates.

(2) Not a director or supervisor of the company’s affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.

(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company or of a corporate shareholder that ranks among the top five in shareholdings.

(6) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.

(7) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse. However, members of the Remuneration Committee fulfilling their duties in accordance with Article 7 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter are not limited to these terms. (8) Not a spouse or a relative within the second degree of kinship to any director.

(9) Not been involved in any of situations defined in Article 30 of the Company Act. (10) Not elected on behalf of a government agency or corporate or as a representative of these organizations as defined in Article 27 of the Company Act.,

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(II) Documents of president, vice president, associate vice president and managers of each department and division

										April 23,2019
Title	Nationality or Place of Registration	Name	Gender	Date Appointed	Number o	f shares held	Shares held by spouse or underage children		Primary work or academic experiences	Position concurrently held in other companies (Note 2)
					Number of shares	Shareholding Percentage (%)	Number of shares	Shareholding Percentage (%)
Chairman and President	Republic of China	Peter Chen	Male	2017.06.22	309,919	0.02%	0	0.00%	M.S., International Business Management, Thunderbird School of Global Management B.S., Electrical Engineering, National Cheng Kung University Technology Product Center EVP, BenQ Corp.	Director: AU Optronics Corp., Darfon Electronics Corp., Alpha Networks Inc. BenQ Foundation
Senior Vice President	Republic of China	Joe Huang	Male	2012.12.01	240,952	0.01%	686	0.00%	EMBA, Tsing Hua University in Beijing	Note 2
Senior Vice President	Republic of China	Mark Hsiao	Male	2007.09.01	122,400	0.01%	0	0.00%	B.S., Chemical Engineering, Tamkang University	Note 2
Senior Vice President	Republic of China	David Wang	Male	2011.03.01	163,200	0.01%	2,000	0.00%	EMBA, National Taiwan University	Director: Darfon Electronics Corp., Alpha Networks Inc. QS control corp.
Vice President	Republic of China	April Huang	Female	2009.10.15	490,361	0.02%	0	0.00%	EMBA, National Taiwan University	None
Vice President	Republic of China	Harry Yang	Male	2017.03.09	32,258	0.00%	0	0.00%	M.S., Computer Science, University of Florida	Note 2
Vice President	Republic of China	CY Ho	Male	2014.03.20	418,626	0.02%	0	0.00%	EMBA,National Taiwan University	Note 2
Vice President	Republic of China	S.C. Chao	Female	2014.08.08	642,519	0.03%	8,723	0.00%	M.S., Electrical Engineering, Utah State University	None
Associate vice president	Republic of China	Daniel Hsueh	Male	2007.03.01	303,440	0.02%	0	0.00%	M.S.,Business Management National Sun Yat-sen University	Note 2
Associate vice president	Republic of China	Daven Wu	Male	2008.10.01	403,565	0.02%	0	0.00%	M.S., College of Management, Yuan Ze University	None
Associate vice president	Malaysia	Nick Niek	Male	2011.04.01	0	0.00%	27,772	0.00%	B.S., Electrical FuJen Catholic University	None
Associate vice president	Republic of China	Jack Wang	Male	2010.04.01	41,047	0.00%	0	0.00%	M.S., Business Administration National Central University	None
Associate vice president	Republic of China	Tony Chao	Male	2010.10.01	151,524	0.01%	0	0.00%	M.S., Mechanical Universityof Michigan	None
Associate vice president	Republic of China	Alex Wu	Male	2014.10.01	171,837	0.01%	0	0.00%	National Taipei University of Technology	None
Associate vice president	Republic of China	Aaron Ho	Male	2014.04.01	32,282	0.00%	2,006	0.00%	M.S., College of Management, Yuan Ze University	None
Associate vice president	Republic of China	T.S. Wu	Male	2007.03.01	199,341	0.01%	0	0.00%	M.S., Institute of Electrical and Control Engineering National Chiao Tung University	None
Associate vice president	Republic of China	Tony Lin	Male	2013.10.01	0	0.00%	0	0.00%	M.S., Mechanical Engineering at National Taiwan University	None
Associate vice president	Republic of China	Chris Liang	Male	2014.08.18	0	0.00%	27,730	0.00%	MBA, University of Southern California	None
Associate vice president	Republic of China	Eric Lee	Male	2009.04.01	220,824	0.01%	6,000	0.00%	MBA, Pacific Western University	None
Associate vice president	Republic of China	Rex Wu	Male	2009.04.01	150,000	0.01%	0	0.00%	EMBA, Pacific Western University	None
Associate vice president	Republic of China	T.H. Lee	Male	2010.04.01	10,616	0.00%	0	0.00%	Electrical Engineering, Cheng Shiu University	None

Title	Nationality or Place of Registration	Name	Gender	Date Appointed	Number of shares held	Number of shares held	Shares held by spouse or underage children	Shares held by spouse or underage children	Primary work or academic experiences	Position concurrently held in other companies (Note 2)
					Number of shares	Shareholding Percentage (%)	Number of shares	Shareholding Percentage (%)
Associate vice president	Republic of China	Y.S. Cheng	Male	2014.01.01	242	0.00%	0	0.00%	M.S., Mechanical Engineering at National Taiwan University	None
Associate vice president	Republic of China	Ray Huang	Male	2011.04.01	193,800	0.01%	0	0.00%	EMBA, National Central University	None
Associate vice president	Republic of China	Robert Chang	Male	2014.01.01	82,432	0.00%	0	0.00%	EMBA, TIM, National Chengchi University	None
Associate vice president	Republic of China	Joe Lee	Male	2014.04.01	200,907	0.01%	0	0.00%	EMBA, National Central University	None
Associate vice president	Republic of China	Calvin Jeng	Male	2013.10.01	121,356	0.01%	0	0.00%	M.S., Shanghai Jiao Tong University	None
Associate vice president	Republic of China	Danny Lin	Male	2012.10.01	0	0.00%	10,000	0.00%	Ph.D., National Kaohsiung University of Science and Technology	None
Associate vice president	Republic of China	Jasmin Hung	Female	2007.02.01	406,865	0.02%	0	0.00%	MBA, California State University, Fullerton	Director of Visco Vision Inc.
The Company's shares held by managers in the name of other persons: None. Anyspouse or relative within the second degree of kinshipof anymanager who serves as t					he Company's executive: None.

Remarks:

Source of information for Number of shares held is recorded as of the book closure date on April 23. 2019
Please refer to the section “Directors, supervisors and presidents of affiliates” in annual report.

(III) Compensation of Directors, Supervisors, President, and Vice President

1. Compensation to Directors

												De	De	De	De	De	De	De	De	cember 31,2018 Uni	cember 31,2018 Uni	t: NT$1,000
Title	Name	Director’s compensation								Ratio of sum of items A, B, C and D to profit (%) (Note 5)		Remuneration received by directors who is an employee of the Company								Ratio of sum of items A, B, C, D, E, F and G to Profit (%) (Note 5)		Compensation from investees other than Qisda Corp.’s subsidiaries (Note 8)
		Compensation (A) (Note 1)		Pension upon Retirement (B) (Note 2)		Director's Remuneration( C) (Note 3)		Business execution Expenses (D) (Note 4)				Salary, bonuses, and special expenses (E) (Note 6)		Pension upon retirement (F) (Note 2)		Employee’s remuneration (G) (Note 7)
		The company	Qisda Corp. and its subsidiaries (Note 9)	The company	Qisda Corp. and its subsidiaries (Note 9)	The company	Qisda Corp. and its subsidiaries (Note 9)	The company	Qisda Corp. and its subsidiaries (Note 9)	The company	Qisda Corp. and its subsidiaries (Note 9)	The company	Qisda Corp. and its Subsidiaries (Note 9)	The company	Qisda Corp. and its subsidiaries (Note 9)	The company		Qisda Corp. and its Subsidiaries (Note 9)		The company	Qisda Corp. and its subsidiaries (Note 9)
																Cash	Stock	Cash	Stock
Honorary Chairman	K.Y. Lee	12,200	13,200	0	0	35,112	35,418	7,284	9,079	1.35%	1.43%	20,329	20,757	108	108	6,600	0	6,600	0	2.02%	2.11%	86,441
Chairman	Peter Chen
Director	AU Optronics Corp.
Corporate Director Representative	AU Optronics Corp. -Paul Peng
Director	BenQ Foundation
Corporate Director Representative	BenQ Foundation -Joe Huang
Independent Director	Kane K. Wang
Independent Director	Allen Fan
Independent Director	Jeffrey Y.C. Shen

In addition to the information disclosed in the table above, has any Director of the Company provided services to any of the companies included in the Financial Statements and received compensation for such services (e.g provided consultation services in a non-employee capacity): None.

Table of compensation ranges

	Names of Director	Names of Director	Names of Director	Names of Director
	Sum of the first 4 items(A+B+C+D)		Sum of the first 7 items(A+B+C+D+E+F+G)
Compensation range for each Director
		Qisda Corp. and its		Qisda Corp. and its subsidiaries
	The Company		The Company
		subsidiaries(Note 9)		and investees(Note 10)

Less than NT 2,000,000	Paul Peng, Joe Huang	Paul Peng, Joe Huang	Paul Peng
NT$2,000,000 (included)~5,000,000(excluded)
NT$5,000,000 (included)~10,000,000 (excluded)	Peter Chen AU Optronics Corp. BenQ Foundation Kane K. Wang Allen Fan JeffreyY.C. Shen	AU Optronics Corp. BenQ Foundation Kane K. Wang Allen Fan Jeffrey Y.C. Shen	AU Optronics Corp. BenQ Foundation Kane K. Wang Allen Fan Jeffrey Y.C. Shen	AU Optronics Corp. Kane K. Wang Allen Fan Jeffrey Y.C. Shen
NT$10,000,000(included)~15,000,000(excluded)		Peter Chen	Joe Huang	BenQFoundation, Joe Huang
NT$15,000,000(included)~30,000,000(excluded)	K.Y. Lee	K.Y. Lee	K.Y. Lee,Peter Chen	K.Y. Lee,Peter Chen
NT$30,000,000(included)~50,000,000(excluded)
NT$50,000,000(included)~100,000,000(excluded)				Paul Peng
More than NT$100,000,000
Total	9 Persons (including 2 Corporate Directors)	9 Persons (including2 Corporate Directors)	9 Persons (including2 Corporate Directors)	9 Persons (including2 Corporate Directors)

Note 1: Refers to compensation for Directors in 2018 (including salaries, job allowance, severance pay, bonuses, and performance fees).
Note 2: Refers to pension either allocated or paid out per legal requirements in 2018.
Note 3: Refers to Directors' remunerations in 2018.
Note 4: Refers to Directors' business execution expenses in 2018 (including provisions of compensation, transport fees, special expenses, various subsidies, accommodations, or company vehicles and other physical items for those serving as representatives of Corporate Directors or supervisors designated by Qisda Corp. and its subsidiaries)
Note 5: Profit refers to the profit for the year in the 2018 parent company only financial statements of Qisda Corp.
Note 6: Refers to compensation for Directors who also served as President, Vice President, other managers or employees in 2018 including salaries, job remuneration, severance pay, bonuses, performance fees, transport fees, special expenses, various subsidies, accommodation, company vehicles, and other physical items, etc. Any salary expenses recognized under IFRS 2 Share-Based Payment, including employee stock option plan, employee restricted stock and cash capital increase by stock subscription shall also be included in compensation.
Note 7: Refers to employee’s remuneration (including stock and cash) paid to Directors who also served as President, Vice President, other managers, or employees in 2018, according to the company’s board of directors’ meeting has approved the distributions of employees’ compensation amount on March 21, 2019.
Note 8: Refers to compensation, remunerations (including remunerations for employees, Directors, and supervisors), business execution expenses, and other related payments received by Directors who served as Director, supervisor, or manager in investees other than Qisda Corp.’s subsidiaries in 2018.
Note 9: All consolidated entities in the consolidated financial statements (including the company)
Note 10: Total compensation paid to Qisda Corp.’s Directors.

2. Remuneration of Supervisors:

Since June 13, 2008, the Audit Committee has been responsible for the implementation of the Supervisors authority as required by the relevant laws and regulations.

3. Compensation for President and Vice Presidents

Title	Name	Salary(A) （Note 1）	Salary(A) （Note 1）	Pension upon retirement (B) （Note 2）	Pension upon retirement (B) （Note 2）	Bonuses and special expenses etc (C)（Note 3）	Bonuses and special expenses etc (C)（Note 3）	Employee’s remuneration (D) （Note 4）	Employee’s remuneration (D) （Note 4）	Employee’s remuneration (D) （Note 4）	Employee’s remuneration (D) （Note 4）	Ratio of sum of items A, B, C and D to profit (%) （Note 5）	Ratio of sum of items A, B, C and D to profit (%) （Note 5）	Compensation from investees other than Qisda Corp.’s subsidiaries （Note 6）
		The company	Qisda Corp. and its subsidiaries (Note 7)	The company	Qisda Corp. and its subsidiaries (Note 7)	The company	Qisda Corp. and its subsidiaries (Note 7)	The company		Qisda Corp. and its subsidiaries(Note 7)		The company	Qisda Corp. and its subsidiaries (Note 7)
								Cash	Stock	Cash	Stock
President	Peter Chen	29,951	31,140	756	756	39,764	42,004	16,200	0	16,200	0	2.15%	2.23%	219
Senior Vice President	Joe Huang
Senior Vice President	Mark Hsiao
Senior Vice President	David Wang
Vice President	April Huang
Vice President	CY Ho
Vice President	S.C. Chao
Vice President	Harry Yang

Table of compensation ranges

	Name of President and Vice President	Name of President and Vice President
Compensation range for each President and Vice President
	The Company	Qisda Corp. and its subsidiaries and investees（Note 8）

Less than NT 2,000,000
NT$2,000,000 (included)~5,000,000(excluded)
NT$5,000,000(included)~10,000,000(excluded)	April Huang,HarryYang , S.C. Chao,CY Ho	April Huang,HarryYang , S.C. Chao,CY Ho
NT$10,000,000(included)~15,000,000(excluded)	David Wang, Joe Huang,Mark Hsiao	David Wang, Joe Huang,Mark Hsiao
NT$15,000,000(included)~30,000,000(excluded)	Peter Chen	Peter Chen
NT$30,000,000(included)~50,000,000(excluded)
NT$50,000,000(included)~100,000,000(excluded)
More than NT$100,000,000
Total	8 Persons	8 Persons

Note 1: Refers to compensation for president and vice president in 2018, including salaries, job allowance and severance pay. Note 2: Refers to pension either allocated or paid out per legal requirements in 2018.

Note 3: Refers to compensation for president and vice president in 2018, including bonuses, performance fees, transport fees, special expenses, various subsidies, accommodation, company vehicles, and other physical items, etc. Any salary expenses recognized under IFRS 2 Share-Based Payment, including employee stock option plan, employee restricted stock and cash capital increase by stock subscription shall also be included in compensation. Note 4: Refers to remunerations for employee in 2018.

Note 5: Profit refers to the profit for the year in the 2018 parent company only financial statements of Qisda Corp. Note 6: Refers to compensation including compensation, remuneration (including remunerations for employees, Directors, and supervisors), business execution expenses, and other related payments received by president and vice president who served as Director, supervisor, or manager in investees other than Qisda Corp.’s subsidiaries in 2018.

Note 7: All consolidated entities in the consolidated financial statements (including the company)

Note 8: Total compensation paid to managers such as Vice Presidents or above.

Names of managers provided with employee's remunerations and state of payments

Unit: NT$ thousands

					Ratio of total amount to the
Title	Name	Stock	Cash
				Total	net income after taxes
(Note1)	(Note1)	(Note 2)	(Note2)
					(%)(Note 3)

Chairman and President	Peter Chen	0	40,707	40,707	1.01%
Senior Vice President	Joe Huang
Senior Vice President	Mark Hsiao
Senior Vice President	David Wang
Vice President	April Huang
Vice President	CY Ho
Vice President	S.C. Chao
Vice President	HarryYang
Associate Vice President	Daniel Hsueh
Associate Vice President	Daven Wu
Associate Vice President	Nick Niek
Associate Vice President	Jack Wang
Associate Vice President	TonyChao
Associate Vice President	Alex Wu
Associate Vice President	Aaron Ho
Associate Vice President	T.S. Wu
Associate Vice President	TonyLin
Associate Vice President	Chris Liang
Associate Vice President	Eric Lee
Associate Vice President	Rex Wu
Associate Vice President	T.H. Lee
Associate Vice President	Y.S. Cheng
Associate Vice President	RayHuang
Associate Vice President	Robert Chang
Associate Vice President	Joe Lee
Associate Vice President	CalvinJeng
Associate Vice President	DannyLin
Associate Vice President	Jasmin Hung

Note 1: Current Company managers as of the end of 2018. Information on titles of managers are accurate as of the publication date of the Annual Report. Note 2: Refers to remunerations for employees in 2018. Note 3: Net income after taxes refers to the net income after taxes on the 2018 parent company only financial statements.

(IV) Compare and analyze the total compensation as a percentage of net income after taxes stated in the parent company only or individual financial statements, paid by the Company and by all companies listed in the consolidated financial statement in the most recent two years to the Company's Directors, supervisors, president and vice president. Describe the policies, standards, and packages for payment of compensation, the procedures for determining compensation, and its linkage to business performance and future risk exposure
The total compensation as a percentage of net income after taxes stated in the parent company only financial statement, paid by the Company and by all companies listed in the consolidated financial statement in the most recent two years to the Company's Directors, supervisors, President and Vice President are as the following:

statement, paid by the Company and by all companies listed in the consolidated financial statement in the two years to the Company's Directors, supervisors, President and Vice President are as the following:	statement, paid by the Company and by all companies listed in the consolidated financial statement in the two years to the Company's Directors, supervisors, President and Vice President are as the following:	most recent
		NT$1,000
Year	2018	2017
Item
Net income after taxes on the Company's Parent Company Only Financial Statements	4,035,064	5,291,387
Ratio of compensation for Directors paid by the Company	1.35%	1.20%
Ratio of compensation for Directors paid by all companies listed in the Consolidated Financial Statements	1.43%	1.26%
Ratio of compensation for Managers such as Vice President or above paid by the Company	2.15%	2.34%
Ratio of compensation for Managers such as Vice President or above paid by all companies listed in the Consolidated Financial Statements	2.23%	2.44%

Policies, standards, and packages for payment of compensation, as well as the procedures followed for determining the compensation, and their linkages to business performance and future risk exposure.
(1) Compensation for Company Directors have been authorized for distribution by the Board of Directors pursuant to the Company's Articles of Association, based on individual Director's level of participation and contributions to Company operations, and have been paid pursuant to the "Compensation Policy to the Directors and Functional Committee Members" which is in reference to domestic and overseas industry standards. When earnings are present, the Board of Directors will resolve on the amount of Directors' remunerations based on the Company's Articles of Association.
(2) Compensation for the Company's Directors and managerial officer are handled in accordance with Company's Articles of Association and compensation (salary) related policies also the Remuneration Committee will Review the compensations and submit to the Board's approval.
16 -

III. Implementation of Corporate Governance

Being committed to creating profits for our Shareholders and contributing to the society has always been the basic belief of Qisda. The Company supports and promotes the transparency of operation and the fairness of information transmission, which would allow the Shareholders, customers and stakeholders of the Company may have a unified channel to immediately obtain the business and financial related information of the Company.

The Board of Directors of the Company takes the interests of the Company and its all Shareholders as the top priority when conducting business assessment and major resolutions. The CPAs and Independent Directors also act as roles of supervision and take a cautious attitude to examine the business implementation by the Company and the Board.

Based on relevant regulations, the Company has set up positions of Independent Directors, the Audit Committee and Remuneration Committee to maintain a more robust decision-making and execution organization to continuously improve the Company's operational efficiency and implement corporate governance with practical actions.

(I) Operations of the Board of Directors

The Company had convened 5 Board of Directors meetings in 2018 with the following attendance:

		Number of actual	Number of proxy	Actual attendance
Title	Name				Remark
		attendance(B)	attendance	rate(%) (Ｂ/Ａ)

Honorary Chairman	K.Y. Lee	5	0	100%
Chairman	Peter Chen	5	0	100%
Director	AU Optronics Corp. Representative: Paul Peng	5	0	100%
Director	BenQ Foundation Representative:Joe Huang	5	0	100%
Independent Director	Kane K. Wang	4	1	80%
Independent Director	Allen Fan	5	0	100%
Independent Director J	effrey Y.C. Shen	5	0	100%

Other items that shall be recorded:

(I) When one of the following matters occurs during the operation of the Board of Directors, the dates, terms, contents of proposals of the meetings, the opinions of all Independent Directors and the reponses by the Company shall be clealy described:
Items specified in Article 14-3 of Securities and Exchange Act:

Dates	Terms of 2018	Discussions	Opinions by Independent Directors and Treatment by the Company
Mar. 7, 2018	First	Approved the proposal of particating to subscription of common stocks from private placement byAlphaNetworksInc.forcapital increase by cash	1. All Independent Directors and Directors presented at the meeting agreed without objection. 2. Treatment to opinions by Independent Directors: None.
Mar. 16, 2018	Second	Proposal of 2017 Statement of Internal Control System and Report on the Results of Self-appraisal
		Approved the proposal of issuance of common stocks for capital increase by cash to participate the issuance of overseas depositary receipt and/or issuance of common stocks for capital increase by cash and/or private placement of common stocks for capital increase by cash and/or private placement ofoverseas or domestic convertible bonds
		Approved theproposal of subsidiaryobtainingof common shares of Alpha Networks Inc.
		Approved Donation to BenQFoundation NTD 5 million
		2018 Professional fee for service of CPAs
May 9, 2018	Third	To announce the termination of private security offering approvedby2017 shareholders' meeting
		Proposal fo making guarantee forQisda(L)Corp. with the amount of US$60 million
Aug. 9, 2018	Fourth	Approved theproposal of SusidiaryBenQCorporation sellingcommon stocks of DARFON
		Approved theproposal of investment common stock of K2 International Medical Inc.
		Proposal fo making guarantee forQisda(L)Corp. with the amount of US$16 million
Nov. 7, 2018	Fifth	Approved theproposal of 2019 internal auditplan
		Approved the proposal of Subsidiary,Qisda Electronics (Suzhou) Co. Ltd., announces obtaining ofcommonshares ofJIANGSUYUDIOPTICALCO.,LTD
		Approved theproposal of investment common stock of DATA IMAGE CORPORATION
		Proposal for making guarantee forQisda Labuan with the amount of US$30 million
		Proposal of 2019 appointment of CPAs bythe Company

In addition to the aforementioned matters, any other resolutions from the Board of Directors where an Independent Director expressed a dissenting or qualified opinion that has been recorded or stated by writing: None.
17 -
(II) When Directors abstain themselves for being astakeholder in certain proposals, the name of the Directors, the content of the proposal, reasons for abstentions and the results of voting counts should be stated.
During the Board of Directors discussing the proposal of making a donation of NT$5 million to BenQ Foundation on March 16, 2018, the Honorary Chairman of the Board of Directors K.Y. Lee, the Chairman Peter Chen and Paul Peng, the representative of the corporate director AU Optronics Corp., are acting as the directors of BenQ Foundation, and Director Joe Huang is the representative of the BenQ Foundation. This four personnel did not participate in the discussion and voting of such proposal according to Article 206 and178 of the Company Act. Excluding their participation, all the other Directors presented at the meeting approved such a proposal without objection.
During the Board of Directors discussing the proposal of making guarantee for Qisda (L) Corp. with the amount of US$ 60 million, US$16million and US$ 30 million on May 9, 2018, August 9, 2018 and November 7, 2018, the Chairman Peter Chen did not participate in the discussion and voting of such proposal according to Article 206 and178 of the Company Act due to Peter Chen is the Representative of Qisda (L). Excluding their participation, all the other Directors presented at the meeting approved such a proposal without objection.
During the Board of Directors discussing the proposal of Subsidiary BenQ Corporation selling common stocks of DARFON on August 9, 2018, Director K.Y. Lee and Chairman Peter Chen did not participate in the discussion and voting of such proposal according to Article 206 and178 of the Company Act due to both of them are the Directors of DARFON. Excluding their participation, all the other Directors presented at the meeting approved such a proposal without objection.
(III) Targets for strengthening the functions of the Board of Directors in the current and the most recent year (e.g., setting up an Audit Committee and enhancing information transparency) and evaluation of target implementation:
The Company had established positions of Independent Directors and the Audit Committees in 2008 to exercise the functions required by the Securities and Exchange Act, the Company Act and other legal regulations. In 2011, the Remuneration Committee was established to enhance corporate governance and improve the remuneration and compensation system for Directors and Managers of the company.
Based on Paragraph 8 of Article 26-3 of the Securities and Exchange Act, Qisda has promulgated the “Rules Governing the Procedures of Meetings of the Board of Directors” which stipulated requirements to contents of meetings of the Board, the operating procedures, the matters to be recorded in the proceedings, the announcements and any other matters. Meetings of Qisda Board shall be convened at least once per quarter. All members of the Board shall exercise the due care of a good administrator and bear fiduciary duty to manage exercise their powers with a high degree of self-discipline and prudence under the guidance of optimization of Shareholders’ interest.
The Board of Directors approved the “The Rules for Performance Assessment of the Board of Directors” on November 7, 2018, which stipulated the requirements of commencing performance appraisal to the Board at least once per annual period. The Company had completed the performance appraisal to the Board by the end of 2018 and reported at the Board meeting in March of 2019 the achievement rate is over 90% indicating the efficient and good operation by the Board.
18 -

(II) Operations of the Audit Committee

The Company had convened 5 Audit Committee meetings in 2018 with the following attendance:

			Number of times
Title	Name	Attendance in Person(B)		Attendance rate (Ｂ/Ａ)	Remark
			attended by proxy

Independent Director	Kane K. Wang	4	1	80%
Independent Director	Allen Fan	5	0	100%
Independent Director	JeffreyY.C. Shen	5	0	100%

Other items that shall be recorded:

(1) If any of the following matters occurs during the operation of the Audit Committee, the dates, terms, contents of the proposal of the Board meetings, the opinions of all Independent Directors and the responses by the Company shall be cleanly described:

Items specified in Article 14-5 of Securities and Exchange Act:

Dates	Terms of 2018	Discussions	Opinions by Independent Directors and Treatment bythe Company
Mar. 7, 2018	First	Approved the proposal of patriating to subscription of common stocks from private placement byAlpha Networks Inc. for capital increase bycash	1. All Audit Committee Members presented at the meeting agreed without objection. 2. Treatment to opinions by Audit Committee Members: None.
Mar.16, 2018	Second	Proposal of 2017 Statement of Internal Control System and Report on the Results of Self-appraisal
		ApprovedQisda's consolidated financial results of 2017.
		Approved the proposal of issuance of common stocks for capital increase by cash to participate the issuance of overseas depositary receipt and/or issuance of common stocks for capital increase by cash and/or private placement of common stocks for capital increase by cash and/orprivateplacement of overseas or domestic convertible bonds
		Approved theproposal of subsidiaryobtainingof common shares of Alpha Networks Inc.
		2018 Professional fee for service of CPAs
May 9, 2018	Third	To announce the termination of private security offering approved by 2017 shareholders' meeting
		Proposal fo making guarantee forQisda(L)Corp. with the amount of US$60 million
Aug. 9, 2018	Fourth	ApprovedQisda's consolidated financial results ofQ2 2018.
		Approved theproposal of SubsidiaryBenQCorporation sellingcommon stocks of DARFON
		Approved theproposal of investment common stock of K2 International Medical Inc.
		Proposal fo making guarantee forQisda Labuan with the amount of US$16 million
Nov. 7, 2018	Fifth	Approved theproposal of 2019 internal auditplan
		Approved the proposal of Subsidiary,Qisda Electronics (Suzhou) Co. Ltd., announces obtainingof common shares ofJIANGSU YUDI OPTICAL CO.,LTD
		Approved theproposal of investment common stock of DATA IMAGE CORPORATION
		Proposal for making guarantee forQisda Labuan with the amount of US$30 million
		Proposal of 2019 appointment of CPAs bythe Company

Other matters except the preceding ones, which are not approved by the Audit Committee but approved by two-thirds or more of the Directors: None.

(II) For the implemtnation of Directors’ avoidance due to conflicts of interest of Directors, please clearly specify the names of Directors, the content of the proposals, the reasons of avoidance due to conflicts of interest and the participation in the voting amd resolution: None.

(III) Communication between Independent Directors, the Internal Audit Director and CPAs (the major issues, methods and results of the Company's financial and business conditions shall be descripted in details):

The Audit Committee of the Company would regularly convene inernal meetings and invite CPAs, internal auditors, legal affairs staff, financial accounting staff and other units on a quarterly basis to discuss or discuss the information of discoveries during the examination of financial statements of the most recent period (including the accountant's duties and independence, scope and methos for examination or verification, examination or verification results of Q2 or annual financial report, analysis of key financial ratios, major accounting treatment, major regulatory updates and other related issues), internal audit verification results (including report of verification of current audit, the follow-up report and the important audit regulatory updates after the implementation), major lawsuits, and financial business profiles, etc.. All Independent Directors had communicated well and efficiently with the Internal Audit Director and CPAs. In order to make the members of the Audit Committee more aware of the relevant laws and regulations and the actual operation of the Company, the Company, on a random basis, also organized meetings for other special reports such as risk management, so that the Audit Committee memebers can assist investors to ensure the credibility and reliability of the Company's corporate governance and information transparency, further ensuring the interests of shareholders.

19 -

(III) Implementation of Corporate Governance, and Differences with Contents of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and Reasons:

	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate
				Governance Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/TPEx
				Listed Companies
				and Reasons
1. Does the Company disclose its established corporate governance best practice based on “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”?	V		The Borad of Directors of the Company had established the “Corporate Governance Best Practice” on May 5, 2015 and disclosed it on the official site.	No major differences
2. Corporate Ownership Structure and Equities (1) Does the Company establish and implement internal procedure to handle shareholders suggestions, doubts, disputes and litigations? (2) Does the Company have the list of major shareholders who control the Company operations and those who have superiority to those shareholders? (3) Does the Company establish and implement mechanism of risks management and firewalls among its interactions with affiliates? (4) Does the Company establish and implement internal regulations to prohibit its staff from purchasing/selling securities based on private information?	V V V V		1. The Company has hired the responsible personnel, the investor mailbox (email) and webpages for communication with investors to gather suggestions and handle disputes from the Shareholders. 2. The Company regularly discloses its announcements at the website of Mops on a monthly basis based on the submission of changes of corporate ownership structure changes of Directors, managers and equities of Shareholders with shareholding of 10% or more of the total shares. 3. The Company's affiliations have their specific financial, business departments, and factory buildings, and the data is independently backup offsite. The management duties are clearly specified. The Company also regularly handles the comprehensive risks assessment to the affiliations and their major correspondent banks, clients and suppliers to reduce credit risk. 4. The Company has established and implemented “Guidelines for Process of Internal Major Information and Insider Trading Prevention Management”.	No major differences
3. Board of Directors Organization and Duties (1) Does the Company establish and implement diversified programs for the member formation of the Board of Directors? (2) Does the Company voluntarily establish committee organization with similar functions as those of Remuneration	V V		1. The Company had formulated diversification program based on Chapter 3 “Enhancement of the Board Functions” of “Corporate Governance Best Practice” approved by the Board of Directors on May 5, 2015. The nomination and election of the Board members shall be conducted with the approach of candidate nomination system specified in the Articles of Incorporation, where in addition to assessing the eligibility of each candidate's education and working experience, opinions of stakeholders shall also be considered adequately to ensure the diversity and independence of Board members required by "Guidelines Governing Directors Election Porcedures” and Corporate Governance Best Practice”.Among the Company’s Board members, Directors K.Y. Lee, and Peter Chen had expertise in fields of leadership, operationa and decision-making, operation management, and crisis management. Directors Joe Huang had contribution in charity activities. Independent Directors Kane K. Wang, Allen Fan and Jeffrey Y.C. Shen are specialized in industrial knowledge and international market trends. In addition, Director Paul Peng had sufficient experience during his service at AU Optronics Corporation, which benefited the Company’s business operation. The diversification program for members of the Board is disclosed at the website of Mops and the official site by the Board of Directors. 2. The Company has established the Risk Management Committee whose operation status is detailed in the Chapter of risk management (P64) of the Annual Report. In addition, though the Company has not established the Nomination Committee, the elections of Directors (including independent directors) adopt candidate nomination system. The list of candidates for seats of Directors (including Independent Directors) is proposed by the Shareholders with shareholding of 1% or more of the total shares or the Board of Directors, and submitted for election duringthe	No major differences

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	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate
				Governance Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/TPEx
				Listed Companies
				and Reasons
(3) Does the Company establish the guidelines and methods for evaluation of performances of the Board of Directors, and conduct regular performance assessment annually? (4) Does the Company evaluate the independence of independent auditors on a regular basis?	V V		annual shareholders’ meeting after being reviewed by the Board of Directors. 3. The Board of Directors of the Company had passed the “Guidelines Governing Board Performance Appraisal” on November 7, 2018, which stipulated the requirements of commencing performance appraisal to the Board at least once per annual period. The internal appraisal of the Board shall be completed by the end of each annual period, when the annual Board performance shall be conducted simultaneously. The Company had completed the performance appraisal to the Board by the end of 2018 and reported the results at the Board meeting in March of 2019. The measurement items for appraisal of the Board performance include the following five aspects: (1) The degree of participation in the Company's business operations. (2) Improvement to the decision-making quality of the Board of Directors. (3) Members composition and structure of the Board of Directors. (4) Election and continuing education of Directors. (5) Internal control. This appraisal was conducted with the approach of internal questionnaire, which required Directors to evaluate the “performance of” and “participation to” the Board. The results showed that more than 90% achievement rate in 2018, indicating the efficient and good operation by the Board. 4. The Audit Committee and the Board of Directors of the Company regularly appoints CPAs (including theose for independent appraisal) on an annual basis. The Company would require CPAs to provide an independence statements and their resume prior to appointment meeting, confirm the accounting firm (the CPAsand ithe audit team members) did not violate any independence requirement, and there was no financial interest shared or business relation between the Company and CPAs except the professional audit fee for certifications of financial statements for investment of the Company. The relevant documents of the preceding independent statements and resume were submitted to the Audit Committee and the Board of Directors for assessment of CPAs’ independence and competency.
4. Does the Company, if categorized as a TWSE/TPEx Listed Company, have the personnel (full-time or part-time) who is in charge of required for implementation of relevant affairs of corporate governance (including but not limited to preparation of documents required by Directors or Supervisors, conducting relevant affairs of meetings of the Board of Directors and shareholders, assisting registration and changes of registration of the Company and preparing minutes for meetings of the Board of Directors and shareholders, etc.)?	V		Mr. David Wang was appointed as the corporate governance personnel based on resolutions of the Board meeting on November 7, 2018 with an aim to ensure shareholders’ interest and enhancement to Board functions. CFO Wang has the experience of more than three years working in management fields such as financial. The major duties corporate governance personnel are as follows: 1. Handle company registration and registration change. 2. Handle matters related to the meetings of the Board of Directors and the Shareholders' Meeting in accordance with the laws, and assist the Company to comply with the relevant laws and regulations of the Board of Drectors and the Shareholders' Meeting. 3. Preparation of minutes of meetings of meetings of the Board of Directors and Shareholders. 4. Provide Directors and auditors with the information required to carry out their business operation and the latest regulatory developments related to the company operation to assist the Directors and auditors in complying with the laws and regulations. 5. Handle matters related to relations with investors.	No major differences

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	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate
				Governance Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/TPEx
				Listed Companies
				and Reasons
			6. Handle other matters as stipulated in the Company's Articles of Incorporation or contracts. Implemetation of business operation by the corporate governance personnel in 2018 are as following: 1. Assist Independent Directors and Directors in performing their duties, provide required information and arrange continuing education for Directors. 2. Regularly notify Board memebers about the revision of the Company's business areas and the latest laws and regulations related to corporate governance. 3. Review relevant information confidentiality level and provide company information required by the directors to maintain communication and communication between the directors and business executives. 4. Assist Independent Directors and Directors in formulating their training and education programs of 2019 based on the industrial characteristics and the education/working background and experience of Directors. 5. Examine and verify the release of major information of important resolutions made by the Board of Directors after meetings to ensure the legality and correctness of the contents of the major information and transparency of investor's transaction information. 6. Maintain investor relations: Arrange for Directors to communicate and communicate with major shareholders, institutional investors or general shareholders if necessary, so that investors can obtain sufficient information to evaluate the reasonable capital market value of the Company and to maintain shareholders' rights properly. 7. Formulate the agenda of the Board meetings and notify Directors 7 days prior to the convening, call for meetings and provide the meeting materials. Advance reminder is required if the issues of discussion involve conflict of interests. Complete minutes for meetings within 20 days after the meeting.
5. Does the Company provide the communication channel for stakeholders (including but not limited to shareholders, employees, clients and suppliers, etc.), have webpages for stakeholder engagement, and properly respond to the issues regarding major CSR concerned bythe stakeholders?	V		The Company has established the stakeholder mailbox atthe official site as a communication channel to respond appropriately to important corporate social responsibility issues of concern, and regularly posts financial and business information at the site of Mops and the official site. The major message will be issued in a timely manner in response to events that mayaffect the stakeholders.	No major differences
6. Does the Company appoint the stock service agency toprocess affairs of shareholders meeting?	V		The Company has appointed the Transfer Agency of Taishin International Bank to conduct relevant activities.	No major differences
7. Information Disclosure (1) Does the Company construct the official website, and disclose the financial and corporate governance information on it? (2) Does the Company conduct information disclosure in other manners (for example, provide English version official site, have specific personnel in charge of collection and disclosure of Company information, good implementation of spokesman and provide minutes of investor conferences at the official site)?	V V		1. The Company has disclosed relevant information regarding its financial business and corporate governance at the official Chinese/English ver. Sites (Qisda.com). 2. The Company has establsihed the English version official site and position of responsible personnel who discloses and collects Company information, implements the spokesperson system, organizes conference calls on a regular or irregular basis, uploads briefing materials to the Company's official site, and sets up investor's mailbox for immediate respond to investors' questions.	No major differences
8. Does the Company offer any other important information regarding corporate governance (including but not limited to employee benefits, employment caring, investor relationships, suppliers relationships, stakeholder rights, advanced studies of Directors and Supervisors, implementation of standards for assessment of risks and risks managementpolicies, implementation of customer	V		1. On a random basis, the Company informs the Directors and Supervisors of the Company and related subsidiaries to attend relevant professional knowledge education and training such as "Risk Management and Corporate Social Responsibility (CSR)" and “Analysis and Case Study of Company Act" organized by Taiwan Corporate Governance Association in August and November of 2018, respectively. 2.Both the Companyand its subsidiaries havepurchased liability	No major differences

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Implementation Differences from
Contents of
Corporate
Governance Best
Assessment Items
Y N Summary Practice Principles
for TWSE/TPEx
Listed Companies
and Reasons
policies, and purchasing of liability insurances for insurance for Directors and Supervisors to predently perform
Directors and Supervisors by the Company)? their duties with consideration investor's rights and without
unnecessary worries.
3. The Company provides multiple channels to enable shareholders,
stakeholders and customers to keep abreast of the operating
conditions and financial status of the Company and its subsidiaries.
Since 2003, the Company has made donations to BenQ Foundation
to promote social culture and education, enhance the relationship
between the individual and collective groups, improve the quality of
life, and care for the underpriviledged. Please refer to the Chapter
of social responsibility (P24) for the status of fulfillment of our
social responsibility.
4. The Company has established the Risk Management Committee
whose operation status is detailed in the Chapter of risk
management (P64).
9. Please elaborate the improvement made based on most recent annual evaluation on corporate governance conducted by the TWSE Corporate Governance
Center, and those which have not been improved and categorized as priority.
The results of appraisal of corporate governance to the Company in 2016, 2017 and 2018 were ranking at the top 6%-20%, top 21%-35% and top 6%-20%,
respectively. The company has created webpages at the official site for responding to important corporate social responsibility issues of concerned by
stakeholders, and is continuing to ensure shareholders’ rights, treating shareholders equally, enhancing the structure and operations of the Board of Directors,
enhancing information transparency, and fulfilling corporate social responsibility.
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(IV) Composition, duties, and operations of the Company's Remuneration Committee:
Information on the members of the Remuneration Committee

Position	Criteria Name	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Independence Criteria (Note 1)	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director	Remark
		An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8
Independent Director	Kane K. Wang	V	-	V	V	V	V	V	V	V	V	V	1	None
Independent Director	Allen Fan	-	-	V	V	V	V	V	V	V	V	V	1
Independent Director	Jeffrey Y.C. Shen	-	-	V	V	V	V	V	V	V	V	V	0
Note 1: Please	add "v" in the fi	eld under each criteria numbe	r if the director meets the criteri	a two years prior to being elected and during his/her term of s									ervice.

(1) Not an employee of the company or any of its affiliates.
(2) Not a director or supervisor of the company’s affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company or of a corporate shareholder that ranks among the top five in shareholdings.
(6) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
(7) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse. However, members of the Remuneration Committee fulfilling their duties in accordance with Article 7 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter are not limited to these terms.
(8) Not been involved in any of situations defined in Article 30 of the Company Act.
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2. Responsibilities of the Remuneration Committee:

Establish a performance-based compensation system for the Company through an independent standpoint, fulfill functional authority given by the Board of Directors, and regularly submit proposals or recommendations on the compensation system to be discussed at Board meetings.
Operation of Remuneration Committee:
(1) The Company has a Remuneration Committee composed of three members.
(2) Term of the current Committee: From June 22, 2017 to June 21, 2020.

The Company had convened third (A) Remuneration Committee meetings in 2018 with the following attendance:

Position	Name	Attendance in Person (B)	Attended by Proxy	Attendance Rate (%) (B/A) (Note)
Convener	Kane K. Wang	2	1	67%
Committee Member	Allen Fan	3	0	100%
Committee Member	Jeffrey Y.C. Shen	3	0	100%

(3) Discussion from the Remuneration Committee, resolutions, and ways the Company handled opinions from committee members:

members:
Remuneration Committee meeting First March 16th2018	Item	Resolutions	The Company handled opinions from committee members
	1. Proposed the 2018 compensation distributions to senior managerial officers. 2. Approved the 2017 distribution of employees and directors’ remuneration.	Convener of the Remuneration Committee consulted the opinion of all attending remuneration committee members.	The proposal was approved without dissent and submitted for resolution at the Board meeting.

Other items that shall be recorded:

If the Board of Directors chooses not to adopt or revise recommendations proposed by the Remuneration Committee, the date of the Directors’ Meeting, session, contents of proposals, results of meeting resolutions, and the Company’s disposition of opinions provided by the Remuneration Committee shall be described in detail (also, where the salary and compensation approved by the Directors’ Meeting is better than that recommended by the Remuneration Committee, the differences and the reason for the approval shall be described in detail): None.
For the decisions made by the Remuneration Committee, if there are members who hold objection or reservation to a resolution and such objection or reservation is on record or raised through a written statement, the date, session, contents of proposals, all members’ opinions, and ways in handling these opinions should be elaborated: None
(V) Fulfillemt of Social Resonsibilities: Approach Adopted and Implemetation of Social Responsibilities such as Environmental Protetion, Participation to the Community, Social Contributions, Social Services, Social Welfare, Consumer Rights, Human Rights, and Safety and Health, etc.

			Implementation	Differences from
				Contents of
				Corporate Social
Assessment Items				Responsibility Best
	Y	N	Summary	Practice Principles
				for TWSE/GTSM
				Listed Companie s
				and Reasons
1. Implementation of Corporate Governance (1) Does the Company formulate policies and systems regarding CSR?	V		(1) The Company's corporate sustainable development is centered on and expanded from the Company's visions and missions: 1. Our visions and missions: (a) Visions: Aim to be the innovator in the design and manufacture of electronic products for enhancing the quality of life of human being and to protecting the natural environment. (b) Missions: Treat customers, suppliers, creditors, shareholders, employees, and the public with integrity. Produce green products that enhance the quality of human life. Cooperate with suppliers and customers to reach the product cycle carbon balance. Provide employees with a healthy and friendly working environment. Create healthy corporate profits and benefit shareholders, employees and the general public. 2. The Company's sustainable development is based on the three pillars of sustainable development: ：Based on the pillars of “economic”, “social” and “environmental”. The factor“environment”is developed into "green products", "green operations" and"green supply chains". With the social	No major differences

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			Implementation	Differences from
				Contents of
				Corporate Social
				Responsibility Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/GTSM
				Listed Companie s
				and Reasons
(2) Does the Company organize education training of social responsibilities fulfillment on a regular basis? (3) Does the Company set up a full-time (part-time) position that promotes corporate social responsibility, and is authorized by the Board of Directors to handle management of senior managerial levels and is required to report the implementation to the Board of Directors? (4) Does the Company estiblish the reasonable remuneration policies, and combine the employee performance appraisal system with the corporate social responsibility policies, and establish a transparent and effective incentive and disciplinary system?	V V V		responsibilities of the factor "social" and "financial performance" of the factor “economic”, these five aspects would promote the indicators, strategies and plans for the sustainable development of the Company. We have set long-term goals for each aspect as a guideline for the development of various projects: (a) Economic:: Committed to improving corporate governance and continuously improving operations and profitability to meet the interests of stakeholders. (b) Social: Internalize corporate citizen DNA and exert beneficial social influence. (c) Environmental: Green products: Enhance the sustainable value of products; Green operation: Continuous improvement, and root the green operation corporate culture; Green supply chain: Enhancement of self-management capability of suppliers' corporate social responsibilities. (2) To emphasize the Company's emphasis on social responsibilities, we not only organized courses related to green products, but also included RBA (formerly known as EICC), SA 8000, IECQ QC 080000, ESH and other courses as the madatory courses which all staff shall take. (3) The Company had officially established the “Enterprise Sustainable Development Committee” in 2010 with the General Manager as the Committee Chairman, and integrated relevant departments to formulate the five major aspects of green products, green operations, green supply chains, social responsibilities and financial performance to promote our business targets and KPI. The report progress and effectiveness of implementation are reviewed on a quarterly basis. The management platform would integrate all information to master the achievement of KPI and report the results to the Board of Directors on an annual basis. (4) The employee performance appraisal system is handled in accordance with the Company's Guidelines Governing Performance Management Operations and Disciplinary Management.
2. Development of Sustainable Environment (1) Does the Company make effort to improve the utilization efficiency of various resources and use recycled materials with low environmental impact? (2) Does the company establish the suitable environmental management system based on its industrial characteristics? (3) Does the Company have any awareness of the impact of climate change on operational activities, and implement	V V V		(1) The Company is committed to improving the utilization efficiency of various resources, actively implementing resource recycling classification at source management, significantly reducing waste production and increasing resource recovery. The proportion of recyclable and reusable waste reached 91% in 2018. For water resources management, no wastewater is produced in the manufacturing process, and only the domestic sewage is produced at each manufacturing plant. The sewage recycling ystems have been set at all the Company’s manufacturing plants around the globe. The recycled domestic sewage is mostly used for watering botancial plants. For products, the R&D, design and manufacturing of products of private brands are all based on the concepts of green products, which consider the extension of product life cycle, energy efficiency, easy recycling, low toxicity and environmental impact mitigation. (2) The Company has acquired ISO 14001 environmental management system certification since 1997, and the internal and external auditing/inspection are carried out regularly in each manufacturing area around the globe to ensure the operation of various environmental management regulations. In addition, the Company also acquired ISO 50001 energy management system certification in 2012 and continued to to acquire such certification as of 2018, which improve energy efficiency and further reduce greenhouse gas emissions. (3) The greenhouse gas inspection has been carried out at each manufacturing plant around the globe and all of them have acquired the third party ISO 14064-1	No major differences

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	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate Social
				Responsibility Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/GTSM
				Listed Companie s
				and Reasons
greenhouse gases inspection, formulate corporate policies regarding energy saving, carbon reduction and greenhouse gas reduction?			greenhouse gases inspection every year since 200. The Company also formulated the greenhouse gases reduction related program, which includes: 1. Engineering improvement (a) Lighting energy efficiency a. Factory lighting fixtures are energy-efficient lamps b. The emergency exit lights are LEDs c Lighting for parking areas is automatic sensing lighting (b) Energy efficiency of air-conditioning a. Improve and enhance the efficiency of water chiller unit equipment b. Inverters installed in AHU (c) Other facilities a. Solar power system installed b. Timing management control to air exhaustion facilities at dormitories and underground parking areas 2. Adminstrative management (a) Personnel a. Office energy saving activities and promotion (b) Equipment a.Operation management to air compressors and water chiller units b. Improve process efficiency c. Manage and deactivate electrical equipment according to consumption volume (c) Methods a. Special air conditioning demand management for independent areas b. Nightime energy management c. Concentration of production arrangements to reduce overtime working d. Air conditioning units cooperates with production activation and deactivition In terms of greenhouse gases reduction, by comparing the average per person per hour emissions is compared, the global carbon emissions per person per hour are 2.15 kg CO2e in 2018, which is 25% lower than the 2.86 kg CO2e ivolume n 2009.
3. Maintenance of Social Wlfare (1) Does the Company formulate relevant management policies and procedures in accordance with relevant laws and regulations and international human rights conventions? (2) Does the Company establish the employee appeal system and channel which handle it properly?	V V		(1) The Company has acquired the occupational safety and health management system OHSAS 18001 certification since 2001, and the social responsibility management system SA 8000 certification in 2006, indicating that the Company had gained international recognition in the management of employee safety and health and labor working conditions. In addition, according to the employment principles of the Company, the recruitment procedures are organized based on the actual business needs and only the most adequate talent, regardless of race, ethnicity, social class, color, age, gender, sexual orientation, gender identity and expression, nationality or region of origin, physical condition, pregnancy, ideological beliefs, political stance, group background, family status, military services, genetic information or marital status and other laws and regulations, will be recruited and hired. No unfair treatmet during the recruitment, and neither the employment of child labor and forced labor, shall be conducted. (2) For internal appeal by employees, the Company has formulated the “Communication Management Procedures”. If the employee encounters any sexual harassment or improper treatment, he/she may directly file appeal to the mailbox of the Company according to the “Guidelines Governing Management of Reporting and Appealing”. The Company shall ensure the confidentiality of the identity of the whistleblower. If the external stakeholders have any doubts about this issue, they can appeal through the CSR mailbox announced by the company's official website, and the company's CSR window will respond.	No major differences

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	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate Social
				Responsibility Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/GTSM
				Listed Companie s
				and Reasons
(3) Does the company provide a safe and healthy working environment, and regularly implement safety and health education for employees? (4) Does the Company establish the system for regular employee communication and notify the employees of the business changes that may have a significant impact on them in a reasonable manner? (5) Does the Company establish the effective career development training program for employees? (6) Does the Company formulate relevant consumer protection policies and complaint procedures for R&D, procurement, production, operations and service processes? (7) Does the Company comply with relevant regulations and international standards for marketing and labeling of products and services? (8) Does the Company assess whether the suppliershave anyrecordofenvironmental	V V V V V V		(3) The Company has introducied the RBA (Responsible Business Alliance) into its management system since 2007, making the management system more comprehensive in terms of labor, environmental protection, safety and health, and ethics. In addition, the Company has established sports fileds and equipment for employees to exercise within the factory areas, and arranged industrial doctors on-site. There is also regular implementation of employee health check and random health promotion activities annually to maintain the physical and mental health of employees. (4) To maintain good labor relations between the Company and its employees. The Company has established clear communication channels, such as business briefings, welfare committee meetings, labor-management meetings, etc., so that staff can understand the Company's information instantly and face-to-face, and encourage all employee to make suggestions on the overall operation and development of the Company for the reference of the decision-making levels. (5) The Company attaches great importance to the training and development of employees. In order to provide a clear map for career development, the Company has invested sufficient resources to integrate its entities and online learning platforms for employees to conduct diversified course seminar and introduce internal/external resources to establish Qisda Academy to train employees; the semi-annual performance communication operations regularly assist employees to review their personal development plans and communicate with their supervisors about the assistance they require. Meanwhile, the talent inventory is carried out annually to confirm the current situation of the organization talents to discover potential talented employees to accelerate the shift or promotion, or assist employees to enhance the required development. Through the above methods, we can effectively provide assistance in the planning and development of employees' careers. (6) The Company spares no effort to protect the rights and interests of clients and general consumers, and provides products maintenance bases, product warranty terms and service contact methods, online maintenance services, product manuals and customer privacy protection services, unbiased and clear customers service hotline, product repair line, and service manager mailbox service for Tiwanses consumers to file complaint regarding product issues. (7) The marketing and labeling contents of the products and services of the Company are divided into two categories: Hazardous substances and product waste, as follows: a. Control of Hazardous Substances: According to international regulations and customer requirements, the “Hazardous Chemical Substances Control List” is formulated. Through the strict control of the parts and materials and the inspection of the finished products, the part recognition application system management mechanism ensures that the products can meet the requirements of international regulations and customers. Since 2008, the Company has acquired the IECQ QC 080000 Hazardous Substance Management System Certificate. b. Product Waste Disposal and Recycling: At the design phase, R&D engineers are required to consider the recovery rate and difficulties of disassembly of the product. During the middle phase of design, the internal WEEE disassembly analysis and evaluation platform is used to calculate the recovery rate of the product to ensure the achievement of required recovery rate by WEEE and whether the product requires the WEEE recycling label and marked location. The next deisgn phase can only be procedded when the aforesaid procedures are adequately conducted and completed. (8) The Company reviews and evaluates its suppliers via the supplier recruitment process, which includes company

27 -

	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate Social
				Responsibility Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/GTSM
				Listed Companie s
				and Reasons
and social impact prior to interacting with such suppliers? (9) Do the contracts signed between the Company and its major suppliers include suppliers include any terms allowing immediate contract termnation if the suppliers violate their corporate social responsibility policies and have significant environmental and social impacts?	V		information, product information, major customers and financial status, related contracts with Qisda procurement and other hazardous/non-hazardous substances control documents of suppliers. In addition, in 2015, the Company updated its online system based on “Qisda Supplier Recruitment Review Procedures” to add threefactors of environmental, human rights ethics and labor rights to the supplier background survey: 1. Environmental inspection: Review of whether the supplier is possessing ISO 14001 certification. 2. Larvor rights and social impacts inspection: (a)Labor rights: Confirm whether the supplier has acquired the SA 8000; and the supplier can provide the SA 8000 certificate as proof. (b)Social impact: Confirm whether the supplier has policies of anti-corruption/corruption- and bribery-free; and the supplier can provide written evidence of anti-corruption or bribery-free company policies. (c)Social impact: Confirm whether the supplier has been subject to government action for violation of labor or environmental protection regulations in the past year; and the report submitted by the supplier or relevant information available onlinewill. (9) The Company has specified requirements of fulfillment of social responsibilities in the procurement contract, and stated that if the supplier violates the procurement contract requirements, the Company may notify the termination of the contract if no significant improvement is made after the issuance of the written notice.
4. Enhancemment of Information Disclosure (1) Does the Company disclose any relevant information on CSR with relevance and reliability on its official site and Mops?	V		Since 2009, the Company has been committed to ensuring the quality of the report and to improving the conformity of the three factors of GRI and AA1000AS (Account Ability 1000 Assurance Standard) - inclusiveness, materiality (significance) and responsiveness. The independent third party was appointed to verify the quality of the Company’s reports. Since 2009, the reports have been verified by Bureau Veritas Certification (Taiwan) Co., Ltd. (BVC).	No major differences
5. Please describe in details the difference between the actual implementation and the specified regulations of the Company’s Corporate Social Responsibility Best Practice Principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” (if any): Since 2010, the Company has established the "Corporate Sustainable Development Committee" to promote the sustainable development and social responsibility related activities of enterprises. Since 2007, the Company has published the "Corporate Social Responsibility Report", please refer to P24. -P29 for details. The Company has established the "Company’s Corporate Social Responsibility Best Practice Principles" in 2015. There has been no significant different between the actual implementation and the specified regulations of the Company’s“Corporate Social Responsibility Best Practice Principles".
6. Other important information beneficial for understanding the fulfillment of corporate social responsibilities: As described above. For details of the Company's corporate sustainability, corporate social responsibilitycontents and the environmental report and corporate responsibility report published each year, please refer to the“CSR”page at the Company's official site (Qisda.com).
7. Plese describe in details about verification standards of the certifications of relevant verification bodies granted to the Company and recorded in the CSR report: a. Since 2009, the Company has ensured the conformity of GRI standards (G3, G3.1, G4, standards) and AA1000AS (Account Ability 1000 Assurance Standard) to ensure the quality of the "Qisda Corporate Social Responsibility Report"., which appointed independent third parties to verify the cCmpany's Report. Reports from 2009 have been verified by GRI G3&G3.1 A +&G4 Core & G4 & Standards and AA 1000AS standards. Reports from 2009 were issued by Taiwan Weiser International Quality Assurance Co., Ltd. (BVC) (2017 report The book was published in June 2018, and the 2018 report is expected to be published in June 2019.) b. To satisfy customer's demands, the Company’s 24-inch LCD screen (EW2430) products acquired the Chinese Carbon Labelling, and the projector (MP772ST) products acquired EPD and the Carbon Labelling of Environmental Protection Administration, Executive Yuan certifications in 2011. In 2013, the Company’s products of monitors, projectors, smart phones, scanners all acquired ISO 14006 (Incorporating Ecodesign) and IEC 62430 (Environmentally Conscious Design for electrical and electronic products and systems) certifications. Also in 2013, our lighting products (Be-Light) also won the prize of the 3rd green model award. In 2015, the Company won the first prize of Environmental Friendlyof Corporate Sustainability Award of Global Views Monthly. c. The company is committed to planting and greening in the factory areas, and was selected as the enterprise with the best “Industrial Area Greening Performance” by the IDB of the Ministry of Economic Affairs in 2011. d. In 2011, the Company was awarded the Corporate Gold Award by the Ministry of Internal Affairs, Executive Yuan based on domestic performance of Happy Marriage Index, which was the best prize among the competitors, indicating that the Company’s effort of continuing to promote and establish a friendly and healthy workpace has been officially recognized. The Company further won the 2012 Happiness Business Award from the Taipei City Government and “Work-Life Balance Award”from the Ministry of Labor in 2016. e. The Company won the Bronze Medal of Manufacturing Industry of 2012 Taiwan Corporate Sustainability Awards for its 2011 CSR report, and won the Taiwan Top 50 Corporate Sustainability Report Award and the Climate Leadership Award of 2013 Taiwan Corporate Sustainability Awards for its excellent performance of climate change management and strategies. f. The Company was selected by IDB of MOEA as the model enterprise for Quality CSR Reports in 2012 amd 2013, and .the Company’s CSR reports were included in IDB’s “Dedication to Implementing Lower Carbon Emission and Wider Green Expansion”. g.The Company wonthe Silver Medalof “LargeEnterprises,ElectronicsIndustryII”of Taiwan Top 50 Corporate SustainabilityReport

Other important information beneficial for understanding the fulfillment of corporate social responsibilities:
report and corporate responsibility report published each year, please refer to the As described above. For details of the Company's corporate sustainability, corporate social responsibilitycontents and the environmental “CSR” page at the Company's official site (Qisda.com).
1. Plese describe in details about verification standards of the certifications of relevant verification bodies granted to the Company and recorded in the CSR report:
a. Since 2009, the Company has ensured the conformity of GRI standards (G3, G3.1, G4, standards) and AA1000AS (Account Ability 1000 Assurance Standard) to ensure the quality of the "Qisda Corporate Social Responsibility Report"., which appointed independent third parties to verify the cCmpany's Report. Reports from 2009 have been verified by GRI G3&G3.1 A +&G4 Core & G4 & Standards and AA 1000AS standards. Reports from 2009 were issued by Taiwan Weiser International Quality Assurance Co., Ltd. (BVC) (2017 report The book was published in June 2018, and the 2018 report is expected to be published in June 2019.)
b. To satisfy customer's demands, the Company’s 24-inch LCD screen (EW2430) products acquired the Chinese Carbon Labelling, and the projector (MP772ST) products acquired EPD and the Carbon Labelling of Environmental Protection Administration, Executive Yuan certifications in 2011. In 2013, the Company’s products of monitors, projectors, smart phones, scanners all acquired ISO 14006 (Incorporating Ecodesign) and IEC 62430 (Environmentally Conscious Design for electrical and electronic products and systems) certifications. Also in 2013, our lighting products (Be-Light) also won the prize of the 3rd green model award. In 2015, the Company won the first prize of Environmental Friendlyof Corporate Sustainability Award of Global Views Monthly.
c. The company is committed to planting and greening in the factory areas, and was selected as the enterprise with the best “Industrial Area Greening Performance” by the IDB of the Ministry of Economic Affairs in 2011.
d. In 2011, the Company was awarded the Corporate Gold Award by the Ministry of Internal Affairs, Executive Yuan based on domestic performance of Happy Marriage Index, which was the best prize among the competitors, indicating that the Company’s effort of continuing to promote and establish a friendly and healthy workpace has been officially recognized. The Company further won the 2012 Happiness Business Award from the Taipei City Government and “Work-Life Balance Award”from the Ministry of Labor in 2016.
e. The Company won the Bronze Medal of Manufacturing Industry of 2012 Taiwan Corporate Sustainability Awards for its 2011 CSR report, and won the Taiwan Top 50 Corporate Sustainability Report Award and the Climate Leadership Award of 2013 Taiwan Corporate Sustainability Awards for its excellent performance of climate change management and strategies.
f. The Company was selected by IDB of MOEA as the model enterprise for Quality CSR Reports in 2012 amd 2013, and .the Company’s CSR reports were included in IDB’s “Dedication to Implementing Lower Carbon Emission and Wider Green Expansion”.
g. The Company won the Silver Medal of “Large Enterprises, Electronics Industry II” of Taiwan Top 50 Corporate Sustainability Report
28 -

	Implementation	Implementation	Implementation	Differences from
				Contents of
				Corporate Social
				Responsibility Best
Assessment Items
	Y	N	Summary	Practice Principles

				for TWSE/GTSM
				Listed Companie s
				and Reasons
Awards in 2014 for its 2013 CSR report. The Company won the Gold Medal of“Electronic and IT Manufacturinf Industry” and the“Climate Leadership Award” of Taiwan Top 50 Corporate Sustainability Report Award of 2016 Taiwan Corporate Sustainability Awards in 2016. The Company won the prize of “Top 50 Corporate Sustaninability Report Awards” and “Top 50 Corporate Sustaninability Awards” of 2017 Taiwan Corporate Sustainability Awards of TAISE in 2017 and the Gold Medal of “Top 50 Corporate Sustaninability Report Awards” and “Top 50 Corporate Sustaninability Awards” in 2018. All the above prizes are indicating the widley reconotion of the quallity and transparency of the Company’s reports. h.In 2015, the Company was ranked at 12 of Channel NewsAisa Sustainability Ranking Index for its fulfillment of CSR, and such ranking was improved and ranked as 5 in 2016. i. The Company's 2015 Carbon Disclosure Project (CDP) was selected for the 2015 Hong Kong and South East Asia Climate Exposure Leadership Index (HK-SE CDLI), and has been two consecutive since 2016. Received a leadership grade A-year. j. The Company ws the winner of “Best Business Continuity Approach of the Year” of StrategicRISK in 2017, and was recognized by Thomson Reuters as the one of the Top 100 Global Technology Leaders. k. The Company was recognized as one of the 30 model Taiwanese enterprises by CSRone Reporting. and included as one of constituent stocks of TWSI in 2018, l. In 2018, the Company's "Integrated Design Management System" was widley introduced by "Sustainable Industrial Development Journal " and was included in the column of "Sustainable Innovation" of the "Enterprise Sustainability Story Collection" both published by the IDBureau of the Ministry of Economic Affairs, indicating the relentless effort of the Company in green product management, and applications.

h.In 2015, the Company was ranked at 12 of Channel NewsAisa Sustainability Ranking Index for its fulfillment of CSR, and such ranking was improved and ranked as 5 in 2016.
l. In 2018, the Company's "Integrated Design Management System" was widley introduced by "Sustainable Industrial Development Journal " and was included in the column of "Sustainable Innovation" of the "Enterprise Sustainability Story Collection" both published by the IDBureau of the Ministry of Economic Affairs, indicating the relentless effort of the Company in green product management, and applications.
Note: Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its fulfillment of social responsibilities.

(VI) Implementation of Ethical Management and Implemented Measures:

	Implementation	Implementation	Implementation	Differences
				from Ethical
				Corporate
				Management
Assessment Items				Best Practice
	Y	N	Summary	Principles for
				TWSE/GTSM
				Listed
				Companies
				and Reasons
1. Establishing Ethical Corporate Management Best Practice Policies and Programs (1) Does the Company demonstrate its commitment to ethical management policies and practices in its regulations and external documents, as well as the commitment of the Board of Directors and management level to actively implement such business policies? (2) Does the Company establish programs to prevent dishonesty, and specify operating procedures, behavior guidelines, disciplinary and grievance systems for violations in each program and implement them? (3) Does the Company adopt preventive measures for the business activities or other business activities with high risk of dishonesty specified in Paragraph 2 of Article 7 of “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”?	V V V		(1)The idea of "treating customers, suppliers, creditors, shareholders, employees and the general public with integrity" is one of the Company's corporate missions and the responsibility of all our staff. The Company strictly prohibits any acts of corruption, bribery and extortion, and requires all staff to take the initiative to actively clarify and improve our daily actions to enhance our integrity. The Company has established the "Integrity Handbook" and "Regulations Govering Integroty Operation by Qisda", which has clealyr specifies rules of conduct for the policies or practices of integrity management. (2)The Integrity Handbook serves as the highest code of conduct for all employees of the Company to conduct business activities. The Company applies education training to remind all employees to obey when each newly-recrui joins us, and actively promotes the norm as “do not accept any gifts from anyone with unlawful purposes" during important tranditional festivals. All employees of the Company are required to abide by the Integrity Handbook. If any of the staff of the Company has any corruption, cheating, illegally utilization of the Company’s funds, accepts any bribery, concurrently operate any business other than the Company’s one and illegally copies or uses signatures or seals of supervisors shall be handled by the Company in accordance with "Regulations Governing Management of Discipline", whihc the most severe punishment shall be dismissal. (3)The Company has stipulated the Integrity Hnadbook which has clear behavioral norms for "conflict of interests", "regulatory compliance", "business secrets and company assets". If there is an event of breach of integrity, it will be reported to the higher level of the unit. The Disciplinary Committee composed of supervisors shall conduct a review. If there is a major breach of the principles of good faith, the Company shall report such situation to the Audit Committee or the Board of Directors in accordance with relevant regulations and procedures. Based on the risk assessment, the Office of Risk Management and Auditing shall conduct sampling evaluation to relevant processes and operations to avoid the potential risk of dishonest behavior. In November 2015, the “Regulations Governing Prevention of Severe Misconduct and Management Measures” was formulated to enhance corporate governance and address serious misconduct, such as conflicts of interests and improper acceptance of bribery, improve the management system from three aspects as “prevention”, “detection” and “response”. The human resources management department issues notification to remind the stff of “Regulations Governing Treatment to Gifts from Non-corporate Personnel”.	No major differences

29 -

	Implementation	Implementation	Implementation	Differences
				from Ethical
				Corporate
				Management
Assessment Items				Best Practice
	Y	N	Summary	Principles for
				TWSE/GTSM
				Listed
				Companies
				and Reasons
2. Implementation of Ethical Management (1) Does the Company assess the integrity records of the individuals or entities of transactions and specify the terms of integrity in the contract signed them? (2) Does the Company establish full-time (part-time) unit that promotes the ethical management of the Company under the organizational management by the Board of Directors, and regularly report implementation to the Board of Directors? (3) Does the Company establish policies to prevent conflicts of interest, provide proper statement channels, and implement them? (4) Has the Company established efficient accounting, internal control and internal auditing systems for the implementation of ethical management, which are regularly reviewed by internal units the appointed accountants? (5) Does the Company regularly hold the internal or offer external education training ofethnical management practices?	V V V V V		(1) The Company has established the principle of integrity and good faith in the procurement contracts. If there is any violation, the Company may terminate the contracts or permanently cease cooperate with such supplier. (2)The documentation, promotion, establishment of ppeal channel and assessment of relevant risk of culture of integrity shall be the responsibility of the following units: a. The development of the integrity management regulations and education promotion shall be the responsibility of the human resources management department: the Company issued the Integrity Handbook for the emphasis of the culture of integrity management, written regulations such as “Guidelines Governing Management of Reporting and Appealing” are issued for governing appeal management, and the regulations of disciplinary management fol various disciplinary incidents, which the implementation status shall all be submitted to the Board of Directors on a regular basis. b. Appeal channel: there is an integrity mailbox for external submission, and there is a General Manager mailbox and a HR mailbox for internl submission of appeal. c. The audit of integrity risks is conducted by auditors and submitted to the Board of Directors. Through the enhancement of various operational procedures, the division of authority and responsibility is implemented and the institutionalized system is used to assist in reducing the potential risk of fraud and cheating. (3)For issues of conflicts of interest, the Company has issued "Integrity Handbook", "Director and Manager Ethical Conduct Guidelines", "Directions for Integrity Business Operation", “Guidelines Governing Management of Reporting and Appealing”, "Regulations Governing Prevention and Management of Severe Misconduct”, and "Regulations Governing Management of Investigation to Severe Misconduct" are implemented from the aspects of behavioral norms, misconduct prevention, prosecution and investigation. (4)The Company complies with the requirements of legal regulationsto continuously revise the internal control system, and checks and evaluates its effectiveness. The audit department includes all items required by legal regulations as the annual audited items, and reports the relevant audit results and improvement to the Audit Committee and the Board of Directors on a quarterly basis. The Company's accounting system is subject to the requirements ofrelevant legal regulations. The CPAs also reviews and audits the financial statements of the Company on a quarterly basis and issues reports to report the review results to the Auditing Committee. (5)The Company offers online courses once annual for all staff to disucss the content of the Integrity Handbook.	No major differences
3. Implementation of Whistle-blowing System of the Company: (1) Does the Company establish clear and unbiased whistle-blowing and rewarding system, convenient reporting channels and assign proper personnel to process the reported cases? (2) Does the Company establish standard procedures for receiving and reviewing reporting? (3) Does the Company apply any measurement to prevent the whistleblower from improper treatment?	V V V		(1) The Company's Integrity Handbook clearly states that any illegal incidents discovered shall be reported to senior levels immediately; the reporting channels includes but not limited to the General Manager mailbox, integrity mailbox, and HR mailbox. In November 2015, the Company issued the “Guidelines Governing Management of Reporting and Appealing”which clearly state that the internal and external reporting and appeal channels include the General Manager mailbox, integrity mailbox and HR mailbox. (2) Handling of Reporting Matters The Company has established the “Guidelines Governing Management of Reporting and Appealing” to institutionalize the operating procedures and related confidentiality mechanisms for appeal and reporting. (3) The Company's Integrity Handbook and related regulations clearly state that for any staff who makes report and appeal, the Company shall be dedicated to keeping the confidentiality of the contents and results of the investigation, and ensuring that the rights and interests of the relevant personnelwill not beharmed.	No major differences
4. Enhancement of Information Disclosure (1) Does the Company disclose the contents and efficiency of implementation of its Ethical Corporate Management Best Practice Principles at the official site and Market Observation Post System?	V		The Company has created the webpage of "Corporate Social Responsibility" at its official site to disclose information about the Company's self-governance and ethical management in an honest, clear and openmanner. The Company also has actively posted reminders on te homepage of inranet of employee website available in Chinese and English for daily improvement of ethical operation to enhance overall integrity, and the measures for anti-corruption are also provided to suppliers by the Company. In addition, the "InvestorSection" also provides information on corporate governance, important Board resolutions and operational briefings. People can acuire the contents of Company’s Ethical Corporate Management Best Practice Principles and the implementation status in the annual reports	No major differences

30 -

	Implementation	Implementation	Implementation	Differences
				from Ethical
				Corporate
				Management
Assessment Items				Best Practice
	Y	N	Summary	Principles for
				TWSE/GTSM
				Listed
				Companies
				and Reasons
			uploadedto the website of Mops.
5. The Company shall specify the differences between the established Best Practice Principles and its implementation practices if such Best Practice Principles is established based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”: There are no differences bwtween the established Best Practice Principles set upbythe Companyin May,2015 and its implementationpractices
6. Other important information for better understanding the ethical corporate management best practice of the Company (such as reviewing and amendment of its Ethical Corporate Management Best Practice Principles): 1. The Company has established anti-corruption channels for suppliers. Suppliers may file appeal to the integrity mailbox ([email protected]) in the event of any Company staff violating the "integrity" ethics regulations. The Company shall immediately deal with the appeal and strictly keep the content and results of the investigation confidential to ensure the rights and interests of the relevant personnel from being harmed. 2. The human resources department (HR) regularly implements the Company's "Integrity and Anti-Corruption" online training courses on an annual basis. The course content includes: the content guide of the Integrity Handbook, key summary, practical examples, and examines the learning results of staff with quizes. . In order to implement the promotion of the Integrity Handbook, in addition to the original Traditional Chinese and English versions of the Integrity Handbook, the Company has also completed the simplified Chinese version in 2010 for overseas operations and promotion to staff. 3. For the various operating procedures of daily business activities, the Company has designed appropriate internal control mechanisms for operations with potential corruption risks to mitigate corruption behaviors and prevent problems from actually occurring. The Company's auditing units regularly evaluate the management efficiency of the internal control system and collect comments from senior executives from various departments on various potential risks (including fraud and corruption) to formulate appropriate auditing plans and perform relevant regular auditing on a regular basis. The Audit Committee and the Board of Directors shall be regularly botified of the auditing results to allow the managerial levels to understand the current status of corporate governance to fulfill relevant purposes. 4. For other information about the Company's integrity management, please refer to the Company's corporate sustainability report for the past years, or please refer to thepage of Corporate Social Responsibilityat the Company's official site(Qisda.com).

(VII) Please disclose the access to Company’s “Corporate Governance Best Practice” and relevant regulatiuons

The Company has established the Corporate Governance Best Practice Principles on May 5, 2015. For the Company's corporate governance operations, please refer to the chapter of Implementation of Corporate Governance (P14-P26) of this Annual Report and corporate governance report. Regulations such as Regulations for Procedures of Shareholders' Meetings, Organizational Rules for Audit Committees, Organizational Procedures for Remuneration Committee, Corporate Governance Best Practice, Corporate Social Responsibility Best Practice, Ethical Corporate Management Best Practie, Directors and Managers Ethical Pratice, Regulations for the Election of Directors, Regulations Governing Loaning of Funds, Regulations Governing Making of Endorsements/Guarantees, Regulations Governing the Acquisition and Disposal of Assets, Procedures for Financial Derivatives Transactions, Regulations for Disclosure of Financial Business Information, Guidelines for Management of Subsidiaroes and Process of Internal Major Information and Insider Trading Prevention Management, etc., have been issued by the Company, please visit contact Qisda.com for details of these regulations.

(VIII) Other important information for enhacing understanding of the implementation of corporate governance:

On August 27, 2009, the Company reached the resolutions of the Audit Committee and the Board of Directors for approving “Guidelines for Process of Internal Major Information and Insider Trading Prevention Management”.
On November 7, 2018, the Board of Directors made the resolution of appointing corporate governance personnel to protect shareholders' rights and enhance the functions of the Board of Directors.
3 The newly-elected Directors of the Company will be given the brochure of published by the Company, which has the content including various laws and regulations (including the major information processing and insider trading prevention procedures specified in the preceding Paragraph) and precautions to facilitate legal compliance.
31 -

(IX)The Company regularly arranges for senior executives to attend corporate governance courses. Please see the following table for corporate governance training undertaken by senior executives in 2018:

Title	Name	Date Elected	Date of continuing education	Date of continuing education	Organizer	Course Name	Length of the curriculum	Compliance with regulations
			From	To
Honorary Chairman	K.Y. Lee	2017.06.22	2018.11.21	2018.11.21	Taiwan Corporate Governance Association	Analysis of amendments to the CompanyAct	3	Yes
			2018.08.16	2018.08.16	Taiwan Corporate Governance Association	Risk Management and Corporate Social Responsibility (CSR)	3	Yes
Chairman and President	Peter Chen	2017.06.22	2018.12.18	2018.12.18	Taiwan Corporate Governance Association	Assessment of the Board of Directors'performance	3	Yes
			2018.11.21	2018.11.21	Taiwan Corporate Governance Association	Analysis of amendments to the CompanyAct	3	Yes
Director	Paul Peng	2017.06.22	2018.12.18	2018.12.18	Taiwan Corporate Governance Association	Assessment of the Board of Directors'performance	3	Yes
			2018.10.30	2018.10.30	Taiwan Corporate Governance Association	Analysis of amendments to the CompanyAct	3	Yes
Director	Joe Huang	2017.06.22	2018.11.21	2018.11.21	Taiwan Corporate Governance Association	Analysis of amendments to the CompanyAct	3	Yes
			2018.08.16	2018.08.16	Taiwan Corporate Governance Association	Risk Management and Corporate Social Responsibility (CSR)	3	Yes
			2018.07.18	2018.07.18	Taipei Exchange (TPEx)	A briefing session for the Insiders equity of listed companies	3	Yes
Independent Director	Kane K. Wang	2017.06.22	2018.11.16	2018.11.16	Securities and Futures Institute	Advantages of Social Media Marketing for Your Business	3	Yes
			2018.11.16	2018.11.16	Dharma Drum Mountain Humanities and Social Improvement Foundation.	Emphasis on corporate ethics and innovative sustainable management thinking	3	Yes
Independent Director	Allen Fan	2017.06.22	2018.11.02	2018.11.02	Taiwan Corporate Governance Association	The Impact and response in a China-US trade war on Taiwanese Enterprises and Taiwan CSR to enterprises and major shareholders	3	Yes
			2018.11.02	2018.11.02	Taiwan Corporate Governance Association	The impact of the latest company Act amendments on the companyand the directors	3	Yes
			2018.11.02	2018.11.02	Taiwan Corporate Governance Association	The Role of the Board in Mergers & Acquisitions	3	Yes
			2018.08.16	2018.08.16	Taiwan Corporate Governance Association	Risk Management and Corporate Social Responsibility (CSR)	3	Yes
Independent Director	Jeffrey Y.C. Shen	2017.06.22	2018.11.21	2018.11.21	Taiwan Corporate Governance Association	Analysis of amendments to the CompanyAct	3	Yes
			2018.07.25	2018.07.25	Taiwan Corporate Governance Association	Risk Management and Corporate Social Responsibility (CSR)	3	Yes
Senior vice president	David Wang	2011.03.01	2018.03.28	2018.03.28	Accounting Research and Development Foundation	Using consolidated financial statements to enhance managementperformance	3	Yes
			2018.04.24	2018.04.24	Accounting Research and Development Foundation	The Types, Case study and Related Legal Responsibilities of "specific breach of trust" in Economic Crimes Forum	3	Yes
			2018.08.16	2018.08.16	Taiwan Corporate Governance Association	Risk Management and Corporate Social Responsibility (CSR)	3	Yes
			2018.10.17	2018.10.17	Accounting Research and Development Foundation	Discussion on the Legal Responsibility of "Employee Fraud" and the fraud in forensics	3	Yes
			2018.11.28	2018.11.28	Accounting Research and Development Foundation	Analysis of new "Corporate Governance Blueprint (2018-2020) related specifications and response	3	Yes

32 -

(X) Status of Implementation of Internal Control System

Statement of internal control system

Qisda Corporation Statement of Internal Control System

Date: March 21, 2019

Based on the findings of a self-assessment, Qisda Corporation (Qisda) states the following with regard to its internal control system during the year 2018:

Qisda’s board of directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and Qisda takes immediate remedial actions in response to any identified deficiencies.
Qisda evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing Establishment of Internal Control Systems by Public Companies (herein below, the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) monitoring activities.
Qisda has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
Base on the findings of such evaluation, Qisda believes that, on December 31, 2018, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency , reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.
This Statement is an integral part of Qisda’s annual report for the year 2018 and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
This statement was passed by the board of directors in their meeting held on March 21, 2019, with seven attending directors all affirming the content of this Statement.

Qisda Corporation

Chairman & President Peter Chen,

Companies which CPAs to professionally review the internal control system shall disclose the review report provided by the accountants: Not applicable.
(XI) The Company and its personnel have been punished by law, the Company has undertaken disincentive measures for its personnel for breaching the internal control system, and any material deficiencies and revisions in the most recent year up to the publication date of the Annual Report: None.
33 -

(XII) Material Resolutions Approved by Board Meetings

Date	Meeting of 2018	Resolutions
Mar. 7, 2018	1st Board Meeting	1. Approved the proposal of particating to subscription of common stocks from private placement by Alpha Networks Inc.
Mar. 16, 2018	2nd Board Meeting	1. Approved the proposal of 2017 financial statements 2. Approved the proposal of 2017 distribution of surplus 3. Approved the proposal of issuance of common stocks for capital increase by cash to participate the issuance of overseas depositary receipt and/or issuance of common stocks for capital increase by cash and/or private placement of common stocks for capital increase by cash and/or private placement of overseas or domestic convertible bonds 4. Approved the proposal of the convene date of 2018 Shareholders’ Meeting and meeting agenda 5. Approved the proposal of donation of NT$ 5 million to BenQ Foundation
May 9, 2018	3rd Board Meeting	1. Approved the proposal of financial statement of Q1, 2018 2. Approved the proposal of discontinuing private placement of securities approved by the 2017 Shareholders’ Meeting 3. Proposal fo making guarantee for Qisda (L) Corp. with the amount of US$ 60 million
Jun. 21, 2018	Shareholders’ Meeting	1. Recognized the proposal of 2017 financial statements and business report Status: Proposal approved and recognized 2. Recognized the proposal of 2017 distribution of surplus Status: Proposal approved and recognized. For distribution of cash dividends, an amount of NT$ 1.35 is distributed per share and the total amount is NT$ 2,655,155,643 3. Approved the proposal of issuance of common stocks for capital increase by cash to participate the issuance of overseas depositary receipt and/or issuance of common stocks for capital increase by cash and/or private placement of common stocks for capital increase by cash and/or private placement of overseas or domestic convertible bonds Status:Proposalapprovedand recognized
Aug. 9, 2018	4th Board Meeting	1.Approvedthe proposalof financialstatement ofQ2,2018
Nov. 7, 2018	5th Board Meeting	1. Approved the proposal of financial statement of Q3, 2018 2. Approved the proposal of Susidiary Qisda BenQ (Suzhou) Limited investing in common stocks of Jiangsu Yudi Optical Instrument Co., Ltd. 3. Approved the proposal of participation in the subscription of common stocks from private placement by Dataimage
Mar. 21, 2019	1st Board Meeting	1. Approved the proposal of 2018 financial statements
		2. Approved the proposal of 2018 distribution of surplus
		3. Approved the proposal of issuance of common stocks for capital increase by cash to
		participate the issuance of overseas depositary receipt and/or issuance of common
		stocks for capital increase by cash and/or private placement of common stocks for
		capital increase by cash and/or private placement of overseas or domestic convertible
		bonds
		4. Proposal of de-regulation of non-compete clause to current Directors and the
		Representitive
		5. Approved the proposal of the convene date of 2019 Shareholders’ Meeting and
		meeting agenda
		6.Approvedthe proposalof donationof NT$ 5milliontoBenQFoundation

(XIII) Major contents of any dissenting opinions on record or stated in a written statement made by Directors or supervisors regarding material resolutions passed by the Board of Directors’ Meeting in the most recent year up to the publication date of this report: None.

(XIV) In the most recent year up to the publication date of the Annual Report, a summary of the resignation and dismissal of the Company personnel such as Chairman, President, accounting manager, financial manager, internal audit manager and R&D manager: None.

34 -

IV. Information on CPA fees

								Unit:	NT$1,000
Accounting Firm	Name of CPA	Audit Fee		N	on-audit Fee			CPAs Audit Period	Remark
			System Design	Company Registration	Human Resource	Others (Note)	Subtotal
KPMG	Tang, Tzu-Chieh Shih, Wei-Ming	8,500	0	0	0	210	210	2018.1.1~2018.12.31

Note: Fees mainly related to tax services.

Note 1. Non-audit fees paid to the CPA, accounting firm of CPA and its affiliates were more than 25% of the audit fees: None Note 2. Replacement of accounting firm and the audit fees in the replacing year is less than that in the previous year: Not applicable. Note 3. Audit fees were reduced by over 15% compared with the previous year: None

V. Information on replacement of CPAs

(I) Regarding former CPA

(I)Regardingformer CPA
Replacement date	March 22, 2019
Reason and explanation for replacement	The CPAs are changed from Tang, Tzu-Chieh and Shih, Wei-Ming to Chang, Hui-Chen to the internal adjustment from the accountingfir		Tang, Tzu-Chieh and m.
Explain why the appointor or CPA terminated or refused to accept the appointment	Partie Status	CPA	Appointor
	Appointment terminated		Not applicable
	Refused to accept(continue)appointment
Audit report opinions other than unqualified opinion over the last two years and reason	None
Did issuer have a different opinion	None
Other items requiring disclosure (disclosures for Clause 6.1.4~7,Article 10 of theseguidelines)	None

(II) Regarding the Succeeding CPA

(II)Regardingthe SucceedingCPA
Name of CPA firm	KPMG
Name of CPAs	Chang, Hui-Chen
Date of Appointment	March 22. 2019
Inquiries regarding the accounting treatment methods of specific transactions, accounting principles or opinionsprovided on financial reportprior to the appointment and results	None
Written opinion of successor CPA regarding discrepancies in opinion with the prior CPA	None

(III) Former CPA Letters Regarding Clause 5.1 and 5.2.3, Article 10 of these Guidelines: None

VI. Has any of the Company’s Chairman, President, or managers responsible for finance or accounting duties served in the Company’s CPA firm or its affiliated Company within the most recent year: None.
35 -
VII. The Situation of equity transfer or changes to equity pledge of Directors, managers or shareholders holding more than 10% of Company shares in the most recent year (or initial date of a manager's term of service) up to the publication date of this report:
(I) Changes in shares held by Directors, managers, and shareholders holding 10% or more of shares:

Title	Name	As of April 23, 2019	As of April 23, 2019	2018	2018
		Increase (decrease) of shares held	Increase (decrease) of sharespledged	Increase (decrease) of shares held	Increase (decrease) of shares pledged
Chairman	Peter Chen	0	0	0	0
Director	K.Y. Lee	0	0	0	0
Director	AU Optronics Corp.	0	0	148,867,000	0
Representative of Corporate Director	Paul Peng	0	0	0	0
Director	BenQFoundation	0	0	0	0
Representative of Corporate Director	Joe Huang	0	0	0	0
President	Peter Chen	0	0	0	0
Vice President	David Wang	0	0	0	0
Vice President	Mark Hsiao	0	0	0	0
Vice President	April Huang	0	0	0	0
Vice President	Joe Huang	0	0	0	0
Vice President	CY Ho	0	0	0	0
Vice President	S.C. Chao	0	0	0	0
Vice President	HarryYang	0	0	0	0
Associate Vice President	Jasmin Hung	0	0	0	0
Associate Vice President	Daniel Hsueh	0	0	0	0
Associate Vice President	T.S. Wu	0	0	0	0
Associate Vice President	Daven Wu	0	0	0	0
Associate Vice President	Rex Wu	0	0	0	0
Associate Vice President	Eric Lee	0	0	(10,000)	0
Associate Vice President	Jack Wang	0	0	0	0
Associate Vice President	T.H. Lee	0	0	0	0
Associate Vice President	TonyChao	0	0	0	0
Associate Vice President	RayHuang	0	0	0	0
Associate Vice President	Nick Niek	0	0	0	0
Associate Vice President	DannyLin	0	0	0	0
Associate Vice President	TonyLin	0	0	0	0
Associate Vice President	CalvinJeng	0	0	0	0
Associate Vice President	Y.S. Cheng	0	0	0	0
Associate Vice President	Rebort Chang	0	0	0	0
Associate Vice President	Aaron Ho	0	0	0	0
Associate Vice President	Joe Lee	0	0	0	0
Associate Vice President	Chris Liang	0	0	0	0
Associate Vice President	Alex Wu	0	0	0	0
Major shareholder	AU Optronics Corp.	0	0	148,867,000	0
Independent director	Kane K. Wang	0	0	0	0
Independent director	Allen Fan	0	0	0	0
Independent director	JeffreyY.C. Shen	0	0	0	0
Finance Supervisor	David Wang	0	0	0	0
AccountingSupervisor	David Wang	0	0	0	0

Note: Those who still serve in their respective positions when the Annual Report is published.

(II) Counterparty of equity pledge is a related party: None

(III) Counterparty of equity pledge is a related party: None

36 -

VIII. Information of relationships between Top 10 shareholders are related parties, spouses or relatives within the second degree of kinship Relationship

Information of relationships between Top 10 shareholders are related parties

April 23, 2019

							Familial relationships between	Familial relationships between
							top 10 shareholders who are
							either related parties, spouses,
			Shares held by spouse or		Total shar	esheld in the
	Shares held						or relatives within the second
			underage children		name of o	ther persons
							degree of kinship, his/her/its
Name (Note1)
							title (or name) and

							relationships(Note2)
		Shareholding		Shareholding		Shareholding
	Number of		Number		Number		Title
		Percentage		Percentage		Percentage		Relationships
	shares		of shares		of shares		(or Name)
		(%)		(%)		(%)

AU Optronics Corp.,	335,230,510	17.04%	0	0.00%	0	0.00%	None	None
AU Optronics Corp., Representative：Paul Peng	9,164	0.00%	65,032	0.00%	0	0.00%	None	None
ACER INCORPORATED	81,712,690	4.15%	0	0.00%	0	0.00%	None	None
ACER INCORPORATED Representative：Jason Chen	0	0.00%	0	0.00%	0	0.00%	None	None
Darfon Electronics Corp.	36,559,000	1.86%	0	0.00%	0	0.00%	None	None
Darfon Electronics Corp. Representative：AndySu	284,234	0.01%	0	0.00%	0	0.00%	None	None
Polunin DevelopingCountries Fund,LLC	26,397,762	1.34%	0	0.00%	0	0.00%	None	None
Yuanta/P-shares Taiwan Dividend Plus ETF	25,568,662	1.30%	0	0.00%	0	0.00%	None	None
JPMorgan Chase Bank N.A. Taipei Branch in custodyfor Norges Bank	24,163,059	1.23%	0	0.00%	0	0.00%	None	None
Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International Equity Index Funds	23,320,000	1.19%	0	0.00%	0	0.00%	None	None
Dimensional EmergingMarkets Value Fund	22,698,171	1.15%	0	0.00%	0	0.00%	None	None
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds	22,445,660	1.14%	0	0.00%	0	0.00%	None	None
CREO VENTURE CORP	17,095,234	0.87%	0	0.00%	0	0.00%	None	None

Note 1: Each of the top ten shareholders should be listed. Both the corporate shareholder name and representative name should be listed for corporate shareholders. Note 2: Shareholding percentage calculations are made using the individual shareholding percentages of the person, his/her spouse, minor children and use of other names.

IX. Shareholdings and Combined Joint Shareholdings of Businesses Invested in by the Company, Company Directors, Supervisors or Executive Officers or Directly or Indirectly Controlled by the Company

December 31, 2018

			Investment by Directors,	Investment by Directors,
			supervisors, managers
					Combined investment
Investment business	Investment by the Company		and directly or indirectly-controlled

(Note 1)			business (Note 2)
		Shareholding		Shareholding		Shareholding
	Number of shares		Number of shares		Number of shares
		Percentage (%)		Percentage (%)		Percentage (%)

AU Optronics Corp.,	663,598,620	6.90%	16,880,428	0.18%	680,479,048	7.08%
Darfon Electronics Corp.,	58,004,667	20.72%	23,918,384	8.54%	81,923,051	29.26%
QS CONTROL CORP.	6,000,000	20.00%	-	-	6,000,000	20.00%
VISCO VISION INC.	-	-	14,518,264	27.02%	14,518,264	27.02%
CENEFOM CORP.	-	-	2,190,000	15.48%	2,190,000	15.48%
Green Island Co., Ltd.	-	-	-	33.33%	-	33.33%
YOUPOS SYSTEMS INC.	-	-	-	27.03%	-	27.03%
TDX Medical Technology (Jiangsu)Co.,Ltd	-	-	-	40.00%	-	40.00%
Alpha Networks Inc.	100,000,000	18.40%	24,692,000	4.54%	124,692,000	22.94%
DMC Components International, LLC	-	-	300,000	30.00%	300,000	30.00%

Note 1: Invested by the Consolidated Company using the equity method Note 2: Information recorded on the shareholder roster as of the latest book closure date of each company

37 -

Capital and Shares

I. Capital and shares

(I) Source of Share Capita

April 23, 2019; Unit: NTD

		Authorized capita	Authorized capita	Paid-in capital	Paid-in capital	Note	Note	Note
									Capital
	Issued								increase
Year		Number					Capital
	price			Number					by
and		of	Amount				increase
	(par value			of	Amount	Source of capital		Certificate No.	assets	Others
month		Shares					approval
	per share)			shares					other
							date
									than

									cash
1984.04	10	14,000	140,000	3,500	35,000	Establishment			-	-
1984.11	10	14,000	140,000	7,000	70,000	Capital increase by cash35,000			-	-
1986.12	10	14,000	140,000	14,000	140,000	Capital increase by retained earnings70,000			-	-
1989.12	30	17,000	170,000	17,000	170,000	Capital increase by cash30,000	1989.12.30	Ministry of economic affairs certificate no. 135215	-	-
1992.05	10	50,000	500,000	27,200	272,000	Capital increase by capital surplus17,850 Capital increase by retained earnings84,150	1992.05.07	Ministry of economic affairs certificate no. 06307	-	-
1992.11	10	50,000	500,000	42,000	420,000	Capital increase by capital surplus17,952 Capital increase by retained earnings130,048	1992.27.11	Ministry of economic affairs certificate no. 125134	-	-
1993.02	25	60,000	600,000	60,000	600,000	Capital increase by cash180,000	1993.02.10	Ministry of economic affairs certificate no.127799	-	-
1994.03	10	110,000	1,100,000	79,500	795,000	Capital increase by retained earnings195,000	1994.03.22	Moeaic certificate no.1392	-	-
1994.09	10	150,000	1,500,000	114,350	1,143,500	Capital increase by retained earnings348,500	1994.09.22	Moeaic certificate no.5835	-	-
1995.07	10	250,000	2,500,000	190,000	1,900,000	Capital increase by retained earnings756,500	1995.07.06	Ministry of economic affairs certificate no.108683	-	-
1996.06	60	250,000	2,500,000	250,000	2,500,000	Capital increase by cash600,000	1996.06.09	Ministry of economic affairs certificate no.109348	-	-
1996.08	10	800,000	8,000,000	371,500	3,715,000	Capital increase by retained earnings1,215,000	1996.08.23	Ministry of economic affairs certificate no.113452	-	-
1997.04	10	800,000	8,000,000	376,080	3,760,806	Corporate bond conversion to common stock45,806	1997.04.11	Ministry of economic affairs certificate no.105007	-	-
1997.07	10	800,000	8,000,000	475,800	4,758,008	Capital increase by capital surplus376,081 Capital increase by retained earnings621,121	1997.07.04	Ministry of economic affairs certificate no.110892	-	-
1997.10	10	800,000	8,000,000	518,787	5,187,879	Corporate bond conversion to common stock429,871	1997.10.07	Ministry of economic affairs certificate no.119411	-	-
1998.03	10	800,000	8,000,000	520,849	5,208,499	Corporate bond conversion to common stock20,620	1998.03.20	Ministry of economic affairs certificate no.105297	-	-
1998.06	10	1,100,000	11,000,000	660,062	6,600,624	Capital increase by capital surplus520,850 Capital increase by retained earnings871,275	1998.06.15	Ministry of economic affairs certificate no.114980	-	-
1998.09	10	1,100,000	11,000,000	662,817	6,628,175	Corporate bond conversion to common stock27,551	1998.09.25	Ministry of economic affairs certificate no.130051	-	-

38 -

		Authorized capita	Authorized capita	Paid-in capital	Paid-in capital	Note	Note	Note
									Capital
	Issued								increase
Year		Number					Capital
	price			Number					by
and		of	Amount				increase
	(par value			of	Amount	Source of capital		Certificate No.	assets	Others
month		Shares					approval
	per share)			shares					other
							date
									than

									cash
1999.08	10	1,250,000	12,500,000	767,390	7.673,902	Capital increase by capital surplus331,409 Capital increase by retained earnings714,318	1999.08.11	Ministry of economic affairs certificate no.128809	-	-
1999.09	10	1,250,000	12,500,000	788,176	7,881,756	Corporate bond conversion to common stock207,854	1999.09.20	Ministry of economic affairs certificate no.134724	-	-
1999.11	55	1,250,000	12,500,000	888,176	8,881,756	Capital increase by cash1,000,000	1999.11.19	Ministry of economic affairs certificate no.142178	-	-
2000.02	10	1,250,000	12,500,000	893,943	8,939,426	Corporate bond conversion to common stock57,670	2000.02.02	Ministry of economic affairs certificate no.102895	-	-
2000.07	10	1,650,000	16,500,000	1,082,731	10,827,312	Capital increase by capital surplus446,971 Capital increase by retained earnings1,440,914	2000.07.26	Ministry of economic affairs certificate no.125422	-	-
2001.07	10	1,770,000	17,700,000	1,381,088	13,810,879	Capital increase by capital surplus541,366 Capital increase by retained earnings2,442,201	2001.07.02	Ministry of economic affairs certificate no.09001241270	-	-
2002.03	10	1,770,000	17,700,000	1,398,318	13,983,180	Corporate bond conversion to common stock172,300	2002.03.15	Ministry of economic affairs certificate no.09101087600	-	-
2002.07	10	2,150,000	21,500,000	1,655,596	16,555,963	Capital increase by capital surplus279,663 Capital increase by retained earnings1,616,568 Corporate bond conversion to common stock676,552	2002.07.22	Ministry of economic affairs certificate no.09101282840	-	-
2002.11	10	2,150,000	21,500,000	1,681,051	16,810,510	Corporate bond conversion to common stock254,547	2002.11.14	Ministry of economic affairs certificate no.09101465750	-	-
2003.07	10	3,000,000	30,000,000	2,067,161	20,671,612	Capital increase by retained earnings3,861,102	2003.07.22	Ministry of economic affairs certificate no.09201219330	-	-
2003.10	10	3,000,000	30,000,000	2,083,861	20,838,612	Corporate bond conversion to common stock167,000	2003.10.16	Ministry of economic affairs certificate no.09201291190	-	-
2004.01	10	3,000,000	30,000,000	2,085,205	20,852,048	Corporate bond conversion to common stock13,436	2004.01.20	Ministry of economic affairs certificate no.09301007380	-	-
2004.03	10	3,000,000	30,000,000	2,066,419	20,664,188	Corporate bond conversion to common stock112,140 Cancellation of treasury stocks 300,000	2004.03.22	Ministry of economic affairs certificate no. 09301046140	-	-
2004.07	10	3,000,000	30,000,000	2,314,899	23,148,990	Corporate bond conversion to common stock11,780 Capital increase by retained earnings2,517,591 Cancellation of treasury stocks 44,570	2004.07.15	Ministry of economic affairs certificate no.09301122620	-	-
2004.10	10	3,000,000	30,000,000	2,315,014	23,150,141	Corporate bond conversion to common stock1,151	2004.10.21	Ministry of economic affairs certificate no.09301198210	-	-

39 -

		Authorized capita	Authorized capita	Paid-in capital	Paid-in capital		Note	Note
									Capital
	Issued								increase
Year		Number					Capital
	price			Number					by
and		of	Amount				increase
	(par value			of	Amount	Source of capital		Certificate No.	assets	Others
month		Shares					approval
	per share)			shares					other
							date
									than

									cash
2005.04	10	3,000,000	30,000,000	2,315,509	23,155,091	Corporate bond conversion to common stock4,950	2005.04.07	Ministry of economic affairs certificate no.09401056200
2005.07	10	3,000,000	30,000,000	2,467,998	24,679,982	Capital increase by retained earnings1,513,754 Corporate bond conversion to common stock11,136	2005.07.27	Ministry of economic affairs certificate no. 09401144270	-	-
2005.11	10	3,000,000	30,000,000	2,468,672	24,686,722	Corporate bond conversion to common stock6,739	2005.11.18	Ministry of economic affairs certificate no. 09401229710	-	-
2006.01	31.36	3,000,000	30,000,000	2,618,672	26,186,722	Capital increase by cash1,500,000	2006.01.23	Ministry of economic affairs certificate no.09501011820	-	-
2006.02	10	3,000,000	30,000,000	2,619,978	26,199,785	Corporate bond conversion to common stock13,062	2006.02.15	Ministry of economic affairs certificate no.09501026750	-	-
2006.04	10	3,000,000	30,000,000	2,624,880	26,248,800	Corporate bond conversion to common stock49,015	2006.04.03	Ministry of economic affairs certificate no.09501055570	-	-
2007.04	10	5,000,000	50,000,000	2,564,880	25,648,800	Cancellation of treasury stock 600,000	2007.04.04	Ministry of economic affairs certificate no.09601065540	-	-
2007.08	10	5,000,000	50,000,000	1,538,928	15,389,280	Capital reduction for cover accumulated deficits 10,259,520	2007.08.29	Ministry of economic affairs certificate no.09601212740	-	-
2008.04	22.11	5,000,000	50,000,000	1,765,070	17,650,700	Private placement of common stock Capital increase by cash2,261,420	2008.05.07	Ministry of economic affairs certificate no. 09701101680	-	-
2008.08	10	5,000,000	50,000,000	1,928,218	19,282,176	Capital increase by retained earnings1,631,476	2008.08.07	Ministry of economic affairs certificate no. 09701190560	-	-
2011.08	10	5,000,000	50,000,000	1,966,782	19,667,820	Capital increase by retained earnings385,644	2011.08.17	Ministry of economic affairs certificate no. 10001190150	-	-

40 -

(II) Shares Type and Shares Outstanding

				April 23,2019
		Authorized Shares
				Notes
Shares Type	Outstandingshares	Un-issued shares	Total shares

Common Shares	1,966,781,958	3,033,218,042	5,000,000,000	-

(III) Shareholder structure

(III) Shareholder structure	(III) Shareholder structure
						April 23, 2019
Shareholder					Foreign institutions and foreigners
structure	Government	Financial	Other
				Individual		Subtotal
	institutions	institutions	corporations

Quantity
Number ofpersons	5	70	203	130,277	399	130,954
Number of shares held	4,694,500	53,589,250	491,332,112	984,406,053	432,760,043	1,966,781,958
ShareholdingPercentage(%)	0.24%	2.72%	24.98%	50.05%	22.00%	100.00%

(IV) Distribution of Equity Ownership

			April 23,2019
			Shareholding Percentage
Class of Shareholding	Number of shareholders	Number of shares held
			(%)

1 to 999	52,695	12,185,673	0.62%
1,000 to 5,000	50,634	115,058,128	5.85%
5,001 to 10,000	12,489	94,544,423	4.81%
10,001 to 15,000	4,633	56,686,766	2.88%
15,001 to 20,000	2,723	49,659,008	2.52%
20,001 to 30,000	2,562	64,144,823	3.26%
30,001 to 40,000	1,269	44,767,599	2.28%
40,001 to 50,000	908	41,851,645	2.13%
50,001 to 100,000	1,596	114,554,998	5.82%
100,001 to 200,000	772	108,694,317	5.53%
200,001 to 400,000	320	88,886,775	4.52%
400,001 to 600,000	106	51,528,297	2.62%
600,001 to 800,000	67	46,201,415	2.35%
800,001 to 1,000,000	29	26,944,990	1.37%
1,000,001 or more	151	1,051,073,101	53.44%
Total	130,954	1,966,781,958	100.00%

(V) List of Major Shareholders

(V) List of Major Shareholders	(V) List of Major Shareholders
		April 23,2019

	Number of shares held	Shareholding
Shareholder's Name
	(thousand shares)	Percentage (%)


AU OPTRONICS CORP.	335,230,510	17.04%
ACER INCORPORATED	81,712,690	4.15%
DARFON ELECTRONICS CORP.	36,559,000	1.86%
Polunin DevelopingCountries Fund,LLC	26,397,762	1.34%
Yuanta/P-shares Taiwan Dividend Plus ETF	25,568,662	1.30%
JPMorgan Chase Bank N.A. Taipei Branch in custodyfor Norges Bank	24,163,059	1.23%
Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard International EquityIndex Funds	23,320,000	1.19%
Dimensional EmergingMarkets Value Fund	22,698,171	1.15%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds	22,445,660	1.14%
CREO VENTURE CORP	17,095,234	0.87%

41 -

(VI) Information on Market Price, Book Value, Earnings Per Share and Dividend

Unit: NTD

	Fiscal Year	Fiscal Year
			As of March 31, 2019	2018	2017
Item

Market Price Per Share (Note 1)	Highest		20.70	23.30	25.85
	Lowest		19.40	16.95	15.05
	Average		19.96	21.12	20.96
Net Worth Per Share (Note 2)	Before Distribution		(Note 7)	16.50	15.74
	After Distribution		-	(Note 9)	14.39
Earnings Per Share (EPS)	Weighted Average Shares Number (thousan Shares)		1,966,782	1,966,782	1,966,782
	Earnings per share	Before retrospective	(Note 7)	2.05	2.69
		After retrospective	-	2.05	2.69
Dividends Per Share	Cash dividends		-	(Note 9)	1.35
	Dividends	Dividend from retained earnings (Shares)	-	(Note 9)	-
		Dividend from capital reserve	-	(Note 9)	-
	Cumulative unpaid dividend		-	-	-
Return on Investment	Price/Earnings Ratio(Note 3)		(Note 7)	10.30	7.79
	Price/Dividend Ratio(Note 4)		-	(Note 9)	15.52
	Cash Dividend Yield(Note 5)		-	(Note 9)	6.44%

Note 1: The highest and lowest of common stock. The average market value is calculated using the trading volume and price for each year. Note 2: Subject to change after shareholders’ meeting resolution.

Note 3: Price/Earnings ratio = Average market price/Earnings per share.

Note 4: Price/Dividend ratio = Average market price/Cash dividends per share. Note 5: Cash dividend yield = Cash dividends per share/ Average market price.

Note 6: The closure date on April 23, 2019 hence the closing date of its content on March 31, 2019. Note 7: Up to the publication date of this annual report, no information has been attested or approved by an independent auditor. Note 8: The financial information in this annual report was made according to IFRS. Note 9: Pending resolution at the 2019 Annual Shareholders' Meeting.

(VII) Dividend Policy and Execution Status

Article 17 of the Articles of Incorporation of the Company regulates the dividend policy as follows:
The Company is in a technology-intensive and capital-intensive technology industry at a developing stage coordinating with long-term capital planning and taking into account the shareholders’ cash flow requirement, the Company's dividend policy is to pay dividends from surplus considering factors to improve the growth and sustainable operation of the Company. Dividend distribution is to consider the expanding the scale of operations and cash flow requirements in the future, every year the cash portion of the dividend shall not be less than 10% of the total dividend in the form of cash and stock.
The dividend distribution proposal by the Shareholders’ Meeting:
On March 21, 2019, the Board of Directors has made resolutions to determine the distributable amount of the cash dividend for the shareholders as NT$1,671,764,664. However, the resolution is stillunder pending, which requires the final resolution of the Shareholders' Meeting of 2019.
Major changes expected in the dividend policy: None
(VIII) The impact of dividend distribution proposed by this shareholders' meeting on the Company’s operating performance and earnings per share:

The Company did not disclose the 2019 financial forecast information and thus does not apply.

(IX) Compensation for employees and Directors

The percentage or range of compensation for employees and Director based on the Articles of Incorporation:
(1)Regulations from the Articles of Incorporation of the Company: Articles 16
42 -

The Company, if profitable in the year, shall set aside 5~20% of the profit as compensation for the employees and no higher than 1% as remuneration for the directors. However, the Company, when accumulated losses remain on the account, shall reserve a portion of its earnings to offset the losses first. The Company may allocate employees’ remuneration prescribed in the preceding paragraph in the form of stock or cash to employees of an affiliated company meeting certain conditions. The Board or the person duly designated by the Board is authorized to decide the conditions and allocation method.

Article 16-1:

The Company's earnings of the year, if any, shall be allocated to pay taxes and offset the accumulated losses from previous years first, and then set aside 10% as legal reserve. The Company shall then appropriate or reverse a certain amount as special reserve in compliance with applicable laws or regulatory requirements. The remaining earnings, if any, may be put together with the retained earnings from previous years and the adjustment amount of the undistributed earnings of the year; the sum of the above may be appropriated as dividends and bonuses according to the distribution proposal prescribed by the Board of Directors based on the actual needs after the proposal is submitted to and approved at the shareholders' meeting.

2.Estimation basis of this annual period for the remuneration and compensation for employees and Directors, and the accounting approach for handling the differences between the calculation basis for the shares of employees' remuneration distributed by stock and the actual distributed amount and the estimated number of shares:

The estimated amount of this Annual Period for distribution of remuneration and compensation to employees and Directors is based on the amount (which shall also be listed as operating expenses for the annual period) obtained from the calculation of each pre-tax income (prior to being deducted by remuneration to employees and Directors) from such period multiplying the distribution percentage of remuneration to employees and Directors based on the Company's Articles of Incorporation. If there is any difference between the actual distributed amount and the estimated one, it shall be recognized as profit or loss of next annual period based on the change in accounting estimation.

The resolution of remuneration distribution by the Board of Directors:
(1) On March 21, 2019, the Board of Directors has made resolutions to determine the amount distributed to employees’ remuneration in cash shall be NT$ 341,480,000 and NT$ 35,112,000 for Directors’ one. No difference from the annual estimated amount of the recognized expenses.
(2)The proportion of employee remuneration paid by stocks to the total amount of the amount of individual profit (after tax) plus the amount of employee remuneration in the current period: Not applicable.
Distribtion of Remeration of Emploees and Directors of the Previous Annual Period:
(1)The amount distributed to employees’ remuneration in cash was NT$ 451,600,000 and NT$ 45,160,000 for Directors’ one.
(2)The difference between the proposed distribution amount approved by the Board of Directors and the actual amount distributed: the actual distributed amount was the same as the proposed distribution amount approved by the Board of Directors.
(X) Repurchase of the Company’s Shares by the Company:

No repurchase of the Company’s shares by the Company was conducted in the most recent two annual periods and as of the printing date of the Annual Report.

II. Corporate bond processing

(I) Information regarding Corporate Bonds: None.
(II) Information regarding the Conversion Bonds: None.
(III) Information regarding Exchange Corporate Bonds: None.
(IV) Information regarding Shelf Registration for Corporate Bonds: None.
(V) Information regarding Corporate Bonds with Attached Warrant: None.

III. Handling of preferred shares (including preferred shares outstanding and in process)

(I) Handling of preferred shares: None
(II) Information regarding preferred shares with attached warrant: None.
43 -

IV. Implementation of Overseas Depository Receipts

IV. Implementation of Overseas Depository Receipts	IV. Implementation of Overseas Depository Receipts	IV. Implementation of Overseas Depository Receipts	IV. Implementation of Overseas Depository Receipts
April 23,2019
Issue Date
	1999.07.07/2002.01.22/2002.01.30/2003.07.10/2005.12.19
Item
Issuance and trading place	LuxembourgStock Exchange
Total Issued Amount	US$1,433,094,000
Unit IssuePrice(Note 1)	US$23.22，US$6.15，US$4.68
Total number of issuedunits (units) (Note 2)	80,359,340 Units
The source of securities represented	As the Common Shareholder ofQisda
The amount of securities represented	401,796,713 shars
The rights and obligations of holders of depositary receipts	1. The holder of the depositary receipts may exercise its depositary receipts to recognize the voting rights of shares. 2. If Qisda issues stock dividends or other rights in the future, the Depositary Institution may issue the deposit certificate with the equivalent amount based on the original shareholding ratio of the holder of the depositary certificate, or increase shares of common stock regognized by each unit of the depositary receipt. 3. The holder of the depositary receipt may request the Depositary Institution to redeem and deliver the shares of Qisda's common stock recognized by the depositary receipt; or request the Depositary Institution to redeem and sell the shares of Qisda's common stock recognized by the depositaryreceipt.
Trustee	Citibank N .A.
Depository	Citibank N .A.
Custodian	Citibank N .A. Taipei Branch
Outstandingamount(Note 3)	501,090 Units
The allocation methods on the relevant costs incurred as a result of the issuance and during the effective period.	The expenses related to the issuance shall be apportioned by the Company and the selling shareholders in proportion to the actual number of shares sold. After the issuance, except for the agreement between the Company and the Depositary Institution, the expenses for the duration of all overseas depositaryreceipts shall be borne bythe Company.
Important Agreements for Depositary and CustodyContracts	None
MarketPrice Perunit (US$)	2018	Max.	US$3.81
		Min.	US$2.77
		Avg.	US$3.40
	As of April 23, 2019	Max.	US$3.36
		Min.	US$3.15
		Avg.	US$3.22

Note 1: For the number of shares of the securities recognized by each unit. In September 2000, each unit recognized 10 shares of common stock and later changed to 5 shares.

Note 2: The number of issued volumes was the sum of the vissued olume on the initial issuance date and the additional issued volume amounts after the initial issuance. On October 15, 2007, the Company reduced its capital, and the circulation balance exchange rate was reduced from 1,000 shares to 600 shares.
Note 3: As of April 23, 2019

V. Employee stock option handling status:

(I) Employee stock option handling status:

1.As of the publication date of the annual report, the processing situation and impact on shareholders' right from employee stock option that have not matured yet: Not applicable.
2.Names, acquisition, and subscription of managers who have obtained employee stock option as well as employees who rank among the top 10 in terms of the number of shares obtained via employee stock option, cumulative up to the date of publication of the annual report: Not applicable.

(II) Operations of new restricted employee shares:

1.As of the date of publication of the annual report, new restricted employee shares that have not fully met the conditions and the impact on shareholders' right: The Company has not issued new restricted employee shares, so it is not applicable.
2.Names of managers and top ten employees holding new restricted employee shares as of the publication date of the annual report and the conditions of receiving such shares: Not applicable.
44 -
VI. Issuance of new shares in connection with the merger or acquisition of other corporations
(I) In the most recent year up to the publication date of the annual report, the Company has completed merger and aquisition of other corporations to issue new shares: Not applicable.
(II) In the most recent year up to the publication date of the annual report, the Board of Directors of the Company has approved merger and aquisition of other corporations to issue new shares: Not applicable.

VII. Implementation status of fund application

(I) As of one quarter before the publication date of this annual report, plan for previous issuance or private placement of securities that have not been completed, or that have been completed but no benefits achieved within the past three years: Not applicable.
(II) As of one quarter before the publication date of this annual report, processing condition for previous issuance or private placement of securities that have not been completed, or that have been completed but no benefits achieved within the past three years: Not applicable.
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Overview of Operations

I. Operational Guidelines

(I) Sales of Major Products (Services)

		Unit: NTD1,000
Mainproducts	Revenue in 2018	%
Electronicproduct	147,208,428	94%
Others	8,574,733	6%
Totl	155,783,161	100%

(II) Production volue for the past two years

Unit: NTD1,000

Year	2018	2018		2017	2017
Main products	Production	Production	Production	Production	Production	Production
	Capacity (Note)	Quantity	Value	Capacity (Note)	Quantity	Value
Electronicproduct	-	-	119,208,098	-	-	108,594,983
Others	-	-	-	-	-	-

(III) Sales volue for the past two years

Unit: NTD1,000

	2018年	2018年	2018年	2018年	2017年	2017年	2017年	2017年
Year
	Domestic sales		Export sales		Domestic sales		Export sales
Main
	Amount (Note)	Value	Amount	Value	Amount	Value	Amount	Value
products
			(Note)		(Note)		(Note)

Electronicproduct		- 9,504,939	-	137,703,489	-	8,226,450	-	121,523,086
Others		- -	-	8,574,733	-		-	7,112,956

Note: There are many types of products in the company, and the measurement units of each product are different, so the sales volume and output are not listed.

(IV) A list of any suppliers and clients accounting for 10% or more of the company's total procurement (sales) amount in either of the 2 most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each, and an explanation of the reason for increases or decreases in the below figures.
1.Major Suppliers Information for the Last Two Calendar Years

Unit: NTD1,000

		2018	2018			2017	2017
Item			As % of Net	Relationship			As % of Net	Relationship
	Company	Amount			Company	Amount
			Procurement	withQisda			Procurement	withQisda

1	CompanyA	28,308,786	21%	-	CompanyA	26,084,091	22%	-
2	Other	108,231,399	79%	-	Other	94,445,354	78%	-
Total	Net Procurement	136,540,185	100%	-	Net Procurement	120,529,445	100%	-

Reasons for increase or decrease: There have been no major changes in the past two years.

2.Major Sales Customer Information for the Past Two Years

Unit: NTD1,000

		2018	2018			2017	2017
Item	Company		As % of	Relationship			As % of	Relationship
		Amount			Company	Amount
			Net Revenue	withQisda			Net Revenue	withQisda

1	CompanyA	38,426,210	25%	-	CompanyA	35,336,345	26%	-
2	Other	117,356,951	75%	-	Other	101,526,147	74%	-
Total	Net Revenue	155,783,161	100%	-	Net Revenue	136,862,492	100%	-

Reasons for increase or decrease: There have been no major changes in the past two years.

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(V) Business Scope

Operation Overview

(1) Business Content/

1. Business Scope

(a) Operation overview

LCD products: For design and manufacturing services (hereinafter referred to as DMS) of liquid crystal display in 2018, the global market share was the second largest. In addition to being dedicated to maintaining good customer relationships, we also actively promoted vertical integration of panel module assembly and self-manfacturing of machine components to increase added-values; and continued to develop new functions in the technical field as well as developing differentiated and special application display products. In terms of branded LCD monitors, the overall market sales growth in 2018 was approximately 2.4%. Branded LCD monitor sales had no significant difference from the one of 2017 as well as the global market share.

However, due to improvement to product portfolio, the average retail price increased by 7.6% compared with the one of 2017. We are continuing to invest in marketing in the fields of professional e-sports, high-level professional, eye-protection display; expand marketing communication, focus on major markets, improve the brand image; cooperate with experts in various fields to establish word of mouth for our professional skills, and achieve significant growth in the professional display market.

Projector products: For DMS projectors, as of 2018, we are still the world's leading projector design and manufacturing company and the only manufacturer among domestic projector manufacturers except for those of DLP, which has a large volume of mass-produced LCD projectors ready to be delivered. In terms of branded projectors, we are continuing to maintain the potion as the world's second largest projector brand and the world's largest DLP projector brand as of 2018, which had no significant difference from the one of 2017 (a market share of 11.5%). In 2019, BenQ will further enhance the operation of 4K UHD and laser new light source projection products, and continue to combine the leading global "CinematicColor[TM] exclusive color management technology" to further promote the higher gamut DCI-P3 level to satisfy demands from the film industry, while achieving higher resolution and better dynamic range imaging, which enable the leading and unique positioning in the domestic market. We will also continue to invest in high-end and professional model development and marketing and apply this technology to the development of commercial and high-end applications market.

Medical Services: BenQ Medical Center in Nanjing has made significant achievement in the cardiac discipline and was certified by the China National Chest Pain Center. In 2018, it provided service to a total of 1.02 million person-times, with 11 provincial and municipal key disciplines. Currently, it is the second largest hospital in Nanjing for delivery practice. The total number of cardiac catheterization operations is 1,200 times, ranking at the top three in Nanjing. In 2015, the provincial medical insurance network was officially implemented, which expanded market coverage, and continued to carry out special services for acute and severe medical care, care for cancer, post-natal care for privileged women and children and using existing infrastrucrures. BenQ Medical Center in Suzhou was officially opened in May of 2013. In 2018, the number of serviced personnel has reached 580,000, the Center’s focus would be the development of special needs of medical care, care for first-aid of trauma, maternal and child, cancer and health management.

(b) Product category

LCD products: Household and commercial LCD monitors (with product sizes available in 17"/18.5"/19"/19.5"/21.5"/22"/23.x"/24"/24.5"/27"/31.5"/32" / 34"/35"/37.5" /49"/55"/65"), professional high-end liquid crystal display (e-sports professional, industrial design, professional photography, professional drawing and color management), medical display, Smart display, wireless charging display, as well as the public display (size includes 42"/50"/55"/65").

Branded LCD monitor products: For eye-protection, e-sports professional, professional photography, professional drawing, Post-production, audio and video entertainment, curved screens for gaming and Medical.

Projector products: for a variety of commercial, engineering, educational, household and personal mobile projectors.

Medical services: In addition to general basic medical services, special services such as high-end health examination, medical cosmetology and post-natal care are available.

Industry overview
(a) Current status and development of the Industry

LCD products: The number of global LCD monitors in 2018, according to the survey by market survey agencies, decrased about 0.2% on an annual basis. Prospecting 2019, the overall display market is expected to remain at the same level as the 2018 due to the lack of special applications and demand to stimulate the growth coupled with consumer cycles of product replacement and replacement. Due to the stagnation of the market coupled with the increase in the possibility of oversupply of the panel products, the downward pressure on the panel price has emerged, which has put pressure on the operation of the system plant and

47 -

the growth of revenue; the Company will focus on the development of large-scale and differentiated products to enhance added value, and optimize the supply chain, enahance vertical integration, and maintain a moderate economic scale to maintain overall competitiveness.

Projector products: According to the survey by market survey agencies, the total market volume for branded projectors products in 2018 was about 7.34 million units, which maintained at the same volume of 2017. Although there were sports events in the first half of the year that led to the growth of the household products market, the second half of the year decrease in commercial product demaind due to by global economic instability. It is expected that the volume of global projector market will approximately increase from 7.2 million to 7.4 million in 2019, with the demand of high-lumen laser engineering projectors and 4K UHD high-resolution projectors as the source of growth. The educational or commercial projector market may decrease due to large-size panels but the popularity of the household projector market continues to rise, making the household product market for 1080P and 4K products continue to grow.

Medical services: With the booming economy and the increasing medical insurance coverage in mainland China, its market has been at a rapid growth phase. Meanwhile, the government is encouraging establishment of non-public medical institutes, which has increase the market share of private-owned medical institutes.

(b) Relevance of up-, middle- and down-stream of the Industry LCD products: The up-stream firms mainly focuses on LCD panel manufacturing and module assembly, including LCD panels, backlight modules and control chips, etc. The middle- and down-stream firms are mainly for system assembly and brand owners. The market is mature and highly competitive. The Company maintains long-term good relationships with ups-tream key component suppliers and down-stream brand customers.

Branded LCD monitors continue improves online marketing communication to make consumers pay more attention on branded display products, also to strengthen offline activities or direct communication between the exhibition and the target consumer groups.

Projector products: up-stream manufacturers are optoelectronic component manufacturers, such as panel wafers, lenses and special light sources, while middle- and downs-tream manufacturers are projector manufacturers and brand owners. The relationship between up- and downs-tream is intimate, and competition and cooperation among the Industry are quite complicated. .

Medical services: BenQ Medical Center in Nanjing is one of the first private-owned hospital medical institutes with standardized training bases forresident doctors in Jiangsu Province. It is able to train 50 resident doctors nnually. In 2011, it became the fourth clinical medical college of Nanjing Medical University, with 21 doctoral and master advisors. In recent years, it has established a rural clinic and cooperative referral system with Level 1 health institutions in Jianye District, Lishui District, Pukou District and Liuhe District of Nanjing, and Level 2 health institutions of neighboring areas of Nanjing (Yangzhou, and Huai'an, etc.) as well as neighboring cities of Anhui (Maanshan, Zhangzhou and Hefei). BenQ Medical Center in Suzhou was officially opened in May of 2013, and had established the cooperative referral system with Level 1 health institutions and nursing homes of Suzhou High-Tech Industrial Development Zone, Wuzhong District and Xiangcheng District.

LCD products: The LCD market has been matured and saturated. In addition to considering cost and delivery flexibility, the Industry has a variety of new features, differentiated and special applications, such as gaming, cloud links, wireless applications or high gamut, high resolution, high niche products such as HDR, which are opportunities of coopeation and development among brand customers and system assembly forms. In addition, the system assembly foirms will be vertically integrated into the panel module assembly and design fields for not only improving the added-values, but also the differentiation ability for product design.

Branded liquid crystal display products: In recent years, the liquid crystal display market has been matured and saturated. In addition to considering cost and delivery flexibility, various new functions, differentiation and special applications, such as high-resolution LCD panels, wide color gamut LCD panels, curved display panels, high refresh rate LCD panels, borderless display designs, cloud links, professional special applications or niche customized products are also areas where brand customers and system assembly plants can work together. The 2018 global e-sports production value has exceeded US$ 900 million. In the Asia-Pacific region and China, due to the wide popularity of gamING, the audience has reached a new high lvel, further driving the market demand for hardware.

Projector products: In recent years, commercial projector products have been continuously updated, and the resolution and brightness have been refined, and the volume and weight have become lighter. With the manufacturer's price reduction strategy, the market will have more preference of projector products. The global projector market is expected to continue to grow due to the high-lumen and high-resolution projection demands from large-scale conference rooms and the use of household multimedia audio-visual spaces. In addition, compared with the past, the commercial and educational prodcut markets will be the major ones. With the popularization of personal mobile devices and wireless transmission applications, it is expected that application in personal and household video and audio become more common, and engineering projector applications will also gadually grow, especially for engineering projectors with laser lighting sources.

48 -

Medical services: The government of mainland China has gradually legalized establishment of medical institutes by private-owned entitiesl (including foreign entities). In 2015, the State Council issued the “Outline of the National Medical Health Service System” and the “Guiding Opinions on the Pilot Zones of Comprehensive Reform of Urban Public Hospitals”, which stringently regulate the scale of public hospitals and encourage establishment of medical institutes by private. In addition to the Want Want, Formosa Plastics and BenQ Groups that have been invested in the medical market of mainland China before 2010, the Quanzhou Yihe Hospital, which was established by the Cross-Strait Medical Industry Fund in 2015, has also been under construction. In the future, more domestic medical institutions will seek overseas development opportunity.

3. Technology and R&D overview

(a) Successfully developed technology or products
LCD products: Super Slim, HDR, HDMI 2.0/DP 1.4 application display, Thunderbolt display, USB type C/Power Delivery, four-sided borderless, wide color gamut display and eye-protection display technology Smart Device Display, professional medical display and professional super large-scale gaming display and its peripheral equipment, professional color management display (for photography and post-image production). Branded LCD monitors: The Company continues to introduce a new generation of "AQCOLORTM" professional monitors for professional Mac designers and HDR comfort screen models using BenQ's exclusive pupil-simulted technology in 2018, which has won great praise from the market and reaffirmed BenQ's leadership in eye-protection screens. E-sports mouse: The Company has developed a new generation of S-series mouse for the demand and game characteristics of the players. Brand projector: 4K color home projector, high-light engineering projector, laser projector, and LED projector.
Projector products: high-lumen interchangeable lens projector for large-scale exhibition, high-lumen laser light source 4K UHD small theater projector, 4K UHD high-definition home entertainment projector, 4K UHD high resolution commercial projector.

Medical services: Department of Thoracic Surgery, National Key Clinical Specialist, Radiology Department of Nanjing (which also recognized as the key subject of Nanjing Medical University of the 12th Five-year Plans), Department of Neurology, Urology, Dermatology, General Surgery, Nephrology, Anesthesiology, Cardiology, Orthopaedics, and Rehabilitation Medicine. The Department of Oncology and Stroke of as the key discipline of Suzhou, and emergency and critical medical care, orthopedics, obstetrics and gynecology, rehabilitation, gastroenterology, and cardiovascular discipline, and started the JCI（Joint Commission International） certification program.

(b) Future R&D focuses
LCD products: Commercial super slim display (Super Slim), direct back-lit 1,000+ grilles HDR, quantum dot wide color gamut, 5K3K/8K4K ultra high resolution, OLED display, HDMI 2.1/DP 2.0 application display , medical display, G-sync 3/FreeSync 2 professional gaming display, ES 8.0/ErP Lot 5 low energy display, wireless charging display, full color adjustment solution and complete public display software and hardware solutions.

Projector products: Laser light source high-brightness interchangeable lens projector for large-scale exhibition, LED light source 4K UHD high-definition projector for home entertainment, laser light source ultra short-focus 4K UHD high-definition projector for home entertainment, educational market teaching interactive software and hardware integration, 4K UHD and wireless projection technology and user experience improvement.

Medical services: The concept of "patient-centered comprehensive caring" had been introduced to promote Taiwanese medical care service model, including the attending physician responsibility system, the responsible nursing care system, the outpatient consultation system, and the pharmacist medication guidance system. BenQ Medical Center in Nanjing plans to build five featured medical centers, including cancer, which are the tumor, chest, nerve rehabilitation, maternal and child, and cardiovascular centers. BenQ Medical Center in Suzhou plans to build five featured medical centers, including chest pain, emergency and critical illness, cancer, maternal and child, and health management centers; there are also planning of establishing the center of national chest pain, municipal stroke center, cardiac planning center, gallstone center, and Suzhou Famous Medical Studio under the guidance of Municipal Health Planning Commission.

4. Long- and short-term business development plans

(a) Short-term plans:

LCD products:

Maintain the leading position of existing LCD products and further upgrade product specifications.
Increase the proportion of shipments to large-size, high-end, high-priced products, such as medical, drawing, design, film post-production, professional photography, e-sports and other niche monitors.
Improve the self-manufactured proportion of metal and plastic components, and actively invest in panel
module assembly and backlight module design to increase added-values.
Through experience of interacting with professional gaming players and operation in the e-sports market, the Company will be able to understand the needs of various types of e-sports players, continue to provide display products that meet the needs of players and lead competitors, and maintain the
49 -

leading position as the top brand of e-sports display and continuing product development for new related gaming products.

In addition to continuous and close cooperation within the Group, the Company will also establish strategic partnerships with other panel and system manufactirers.
Projector products:
Maintaain the leadership position of existing projector products and further provide more service models.
In addition to the increase in market share, the Company also palns ot provide customers with complete software and hardware solutions.
Continue to develop both DLP and LCD technologies to maintain growth rate above the industry one.
Expand the application in the household market and improve the quality of wireless projection transmission and user-friendly experience.
Branded projectors continuing to develop dust-proof solutions in response to the development of educational markets in developing countries such as China and India. The Company will simultaneously develop e-commerce and professional channels, enter into the engineering machinery market and high-end projector market with laser series projectors. The Company will also enter into the new projection fields such as the screenless TV market.

Medical service:

Improve the construction of various disciplines in general hospitals, focusing on the development of special disciplines and key provincial and municipal disciplines.
- Increase the proportion of special medical caring such as high-end/uninsured service such as post-natal care homes and medical cosmetology, etc.
(b) Long-term plans:
LCD products:
Promote the joint design and manufacturing integration of the back-lit module and the display product, reduce the value chain inefficiency activities and deepen the product customization ability, provide customers with differentiated choices and increase product added value.
Expand professional display layout to industrial design, professional drawing, color management, medical applications and other markets.
Optimize private branded software and hardware services or integration solutions, and strive to provide users with a better experience, increase added-values and brand loyalty.
Expand the professional display layout to the color management, professional drawing, image post-production, medical application and other markets, and continue to operate "AQCOLORTM precision color management technolog".
Optimize private branded software and hardware services or integration solutions, and strive to provide users with a better experience, increase added-values and brand loyalty.

Projectors:

Expand and enhance the diversity of mainstream projector models.
Accelerate the development of high-end machine products and expand related channels to make the projector product line more comprehensive.
Accelerate development of solid lighting source, including projector development for lasers and LEDs.
Maintain the leading position in the household market and continue to operate exclusive CinematicColorTM color management technology.
Optimize the professional image of BenQ projector brands.
Medical service:
Enhance cooperation with schools to accelerate the cultivation of talents.
Rely on the strength of the medical technology team in the two hospitals to export management, trustship hospitals, and expand operations.

(II) Market, production and sales overview

Market analysis
(a) Major sales regions

LCD products: Global market.

Projector products: Global market.

Medical services: Nanjing and Suzhou in China.

(b) Market share (KPI)
50 -

LCD products: In 2018, the market share of DMS LCD products was about 17.4%, ranking the second largest in the world; among them, the models with 23+ inches account for 66.2% of such market share portion, which is better than the average of industry one. Branded LCD monitors had a global market share of approximately 2.2% in 2018 and a market share of 3.5% in large-size products.

Projector products: The global market share of DMS projectors in 2018 was about 15%, ranking as the second largest. For branded projectors, in 2018, the market share was 11.5% as the same of 2017, maintaining as the world's second largest projector brand and the largest DLP projector brand.

Medical Services: BenQ Medical Center in Nanjing is the only Level 3 general hospital in Jianye District, Nanjing; and BenQ Medical Center in Suzhou is they Level 3 general hospital in Suzhou High-tech Zone.

(c)The future supply/demand and growth of the market, the favorable, unfavorable and countermeasures of advantages of competitive niche and development prospects
LCD products:
A.Favorable factors：The industry is getting more matured where the large manufacturers become larger, and the demand for large-size products in the global market is increasing. Meainwhile, the demand for high-end professional displays and e-sports displays has also increased.
B.Unfavorable factors：The maturity of information products is high, and the price competition pressure is high; the production capacity of mainland China panel suppliers for the next generation is being updated, resulting in increased pressure on market oversupply.
C.Countermeasures：
(i) Provides LCD display products available at all sizes, and utilize our existing advantages to continuously promote the sales of large-size and high-end special-purpose displays. Ensure the strategic relationship of the panel supply chain.
(ii) Extend added-values in the value chain (such as panel module assembly), panel back-lit module and display design integration to improve the vertical integration of metal parts and plastic parts.
(iii) Optimizae product portfolio to promote the proportion of large/high-end professional display products with the Group's key components vertical integration and technological leadership.
(iv) Product market segmentation, in line with the advent of the multi-screen era, research and development of related display products to increase product added value, avoid price competition, increase average unit price and gross profit margin.

Projector products:

A.Favorable factors：Projector products have features of economy of scale. Coupled with the leading global technological competitive advantage, it will help the market share continue to increase. The branded projector market has a trend of concentration. The leading gap between the Company and late comers, coupled with the leading global technological competitive advantage, will help our market share continue to increase.
B.Unfavorable factors：Short product lifecircle, and there are many competitors and model types, which makes the market price difficult to be maintained. In addition, the exchange rate fluctuates and the global economic condition is poor.
C.Countermeasures：
(i) Strengthen the operational capability to achieve optimal blending of production and sales to avoid inventory loading.
(ii) Strengthen the product portfolio and increase the proportion of products with better gross margin.
(iii) In-depth understanding of consumer demands, and accelerate product development to expand the leading gap.

Medical service:

A.Favorable factors：Mainland China's total health care expenditure has grown rapidly, with a compound growth rate of 12% from 2013 to 2017. Its health care expenditure accounted for only 6% of GDP in 2016, which has a room for growth comparing with an average of more than 10% in developed countries, indicating a promising; prospect. Inaddition, the threshold for establishing general hospitals is high, and BenQ Medical Centers have accumulated years experience since the foundation, which creates a gap hard to be covered by late comers.
B.Unfavorable factors：Up to 90% of the hospitals in mainland China are state-owned, and doctors have doubts about being employed by private hospitals, making recruitment rather difficult.
C.Countermeasures：The policy of de-regulation of establishmet of private hospitals is in general inevitable. The preferential policies enjoyed by public hospitals in the future will be gradually leveled off with private hospitals. BenQ Medical Centers have become the leader in private medical institutes in mainland China because of its advanced medical management, international medical team and the advantages of up- and down-stream integration of the medical industry.
Major products’ application and production process
(a) Application:

LCD products: Display of computer data, audio and video, and public display, etc.

51 -

Projector products: For multi-personne; application and highly portable.They are especially suitable for educational training in various conferences, companies and institutions premises. They can also be applied by large-screen home theater or gaming equipment with lifelike features.

Medical service: Not applicable

(b) Production process:

LCD products: Feeding inspection → components assembly → pre-adjustment → burn-in → functional testing → visual inspection → packaging → storage → shipping.

Projector products: Confirm the quality of raw materials → optical machinery assembly → assembly of system back-end → burn-in testing → final testing → packaging → warehousing → shipping. Medical service: Not applicable

Supply of major raw materials
LCD products: In addition to cooperating with AUO within the Group to enhance the advantages of vertical integration, we also maintain close cooperation with major LCD panel suppliers in Taiwan, mainland China and Korea to ensure panel supply and cost.

Projector products: The market of DMD or LCD panel of the projector is an oligopoly market of TI, Epson and Sony. The lighting source manufacturers have formed a number of oligopolies due to the high entry barriers. The Company maintains a close partnership with key component manufacturers to ensure a stable supply of key components.

Medical service: Not applicable

II. Employee Information

		As of March 31, 2019
	Year		2018	2017
		(Note1)

Total number of employees	Direct employee	9,440	11,270	10,300
	Indirect employee	6,495	6,535	6,361
	Total	15,935	17,805	16,661
Average age(years)		34.37	32.85	27.81
Average duration of service(years)		5.18	4.63	3.99
Educational distribution ratio (%)	Director of Philosophy	0.4%	0.4%	1%
	Master's Degree	13.2%	12.1%	13%
	Bachelor's Degree	44.8%	41.4%	43%
	Senior high school	40.1%	44.7%	42%
	Seniorhigh school or below	1.5%	1.4%	1%

Note 1: As of April 23, 2019 (the Printed Date) and for the concerns of accuracy, the last date of available information is March 31, 2019.

52 -

III. Environmental Protection Expenditures

(I) Losses (including indemnity) caused by environmental pollution and the total indemnity amount involved in the most recent year up to the date this report is published; accounts of future countermeasures (including improvement actions) and possible expenditures (including loss, disposition, and an estimate of indemnity incurred by a failure to implement countermeasures; if a reasonable estimation cannot be made, the justification shall be provided):
Losses (including indemnity) caused by the environmental pollution in the most recent year up to the date this report is published, the Company is in compliance with the environmental protection acts. The Company and its subsidiaries were not fined for any other violations against the relevant regulations or requested of environmental improvement from environmental organization in the most recent year up to the publication date this report.
Future countermeasures thereof (including improvement actions) and possible expenditures: None. (The Company and its subsidiaries have always put emphasis on environmental protection works. Apart from internal pollution prevention and controls, the factory areas are being continuously improved according to the requirements of the environmental management system (ISO14001:2015), and all facilities are set up according to the relevant regulations to prevent environmental pollution losses.)
Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its environmental protection expenditures

IV. Labor-Management Relations

List of employee benefits, in-service training, internal training, retirement system, and implementation status, as well as employer-employee agreements, and protection measures for employee entitlements:

Employee welfare and implementation: The Company has always been adhered to the business philosophy as “respecting humanity” and “caring for employees”. In order to fully take care of the physical and mental health of staff and their relatives, and to establish a life support so that the staff can be dedicated to their work without unnecessary worries. The Company provides and sponsors various welfare plans, and the Welfare Committee is composed of staff thenselves. The main measures for the planning and implementation of welfare are as follows:
a. The Company offers: National Health Insurance, Labor Insurance, travel insurance, labor pension plans, fund for arrear wage debts, occupational injury insurance, outpatient center, nursery room and industrial doctors.
b. The Company additionally offers: Annual festival and performance bonuses, group insurance and health examination, employee remuneration, wedding, funeral and disease support, food stipend subsidy, breakfast lounge, employee training and education program, and staff dorms.
c. Welfare Committee plans: Club activities, various travel/social activities, various creative/sports competitions, annual gift vouchers, art activities, movie-going, life lectures, massage support, gym and fitness classes, EAP programs, internal coupons, coffee machine and other convenient services.
d. There are convenient measures within the premise of the Company, including convenience stores, cafes, fruit stands, banking and insurance services, and laundry. In addition, the festival sales events are launched from time to time to provide affordable goods our staff need daily.
Employee training

The Company attaches great importance to the training and development of our employees. In order to provide a clear career development blueprint, the Company invests sufficient resources to integrate the physical and online learning platform for employees to conduct relevant courses, and introduces internal and external resources to develop Qisda Academy to train our employees. Meanwhile, in order to convey to employees the emphasis on social responsibility, in addition to the courses related to green products, relevant courses such as EICC/QC 080000/ESH are included in the compulsory courses for all staff in the Company.

The Company's training is based on Qisda Academy and the courses are divided into four major Academies according to function and participant types, namely the Development Academy, the Leadership Management Academy, the Professional Development Academy and the Innovation and Improvement Academy, which are providing complete courses for different learning needs. In terms of the access of learning, in addition to the physical curriculum, the Company also has an internal e-learning training platform for employees to conduct relevant course study.

53 -

The four Academies cover a wide range of training courses: The Development Academy includes comprehensive new recruits training and guidance and internal lecturer training and development. Meanwhile, it cooperates with government projects on cooperation between universities and industries to provide employees with multiple choices such as self-development/professional certificates certification. The Professional Development Academy and the Innovation and Improvement Academy offer customized training map based on differences of job content, professions and positions, to enhance professional and innovative capabilities, such as R&D or marketing courses. Meanwhile, in response to the development direction of the Group, they have successively launched courses such as design thinking, innovative development tools, market analysis, brand marketing, and technology trend forums, so that all staff can better understand market and industrial trends, and enhance business sensitivity. The Leadership Management Academy is designed according to the management needs of different levels of management, it designs communication, subordinate cultivation, and strategic management courses to make the supervisors more capable and develop their own leadership skills.

Since the early 2007, the Company has introduced “Six Sigma” to develop the “Continuous Improvement Program” (CIP) to provide concepts and tools employees need for improving their works. And through a series of course design and CIP project implementation, we can help employees to apply the knowledge and skills learned in the course to the actual workflow. More than 3,200 CIP projects have been carried out worldwide, and the improvement results have been significant.

Our employees have always been a very important asset for the Company. In order to enable employees to grow with the Company, we have continued to invest sufficient resources to promote the talent training program. In the future, the Company will continue to develop Qisda Academy and increase the training access to provide more effective training and education for employees and help them apply what they have learned into actual work.

Statistics on the 2018 global employee education and training implementation, and the proportion of the number of classes in each course are as follows:

==> picture [225 x 132] intentionally omitted <==

Retirement Policy and execution
a. The Company has Retirement Policy.
b. In May of 1986, the Supervisory Committee of Workers’ Pension Preparation Fund was established and approved by Taoyuan County Government. In November of 1986, the company began to allocate pension based on 2%~15% of the total monthly wage.
c. Starting from July 2005, the 2nd-tier new labor pension plan was implemented in accordance with the law.
d. According to the provisions of International Accounting Standard (IFRS), the actuary is required to conduct evaluation on the pension reserve fund, and submit an actuarial assessment report.

4. Employee Code of Conduct

The Company issued the "Integrity Handbook" as the highest standard of employee behavior. Moreover, the company regularly conducts employees training, which covering "conflict of interest", "legal compliance", "business secrets and company assets" and "participation in political activities," etc. worldwide. All the employees of the Company shall abide by the following declaration of good faith:

We shall adhere to all ethics with the highest standards
54 -
We shall also respect official laws and Company regulations
All our languages, words and deedsshall be carried out in good faith
We are strictly prohibited from abusing privileges for illegal misconduct
We shall do our best to avoid any suspected interest transmission
We shall never engage in any ethical violations
We shall seek assistance upon any puzzling of decision-making
We shall fully cooperate in the investigation of illegal activities
We shall immediately notify the supervisors upon any discovery of illegal activities
In addition, based on the appointment and management of personnel and the compliance of the organization, the Company has a "working rules" and related regulations covering the following matters:
(1) Grade and rank system: It lists the Company’s job series, job categories, positions and titles, and regulates the grade and rank promotion rules.
(2) New recruits probation assessment: Stiplulates the assessment regulations for probation.
(3) Attendance and leave regulations: Regulations such as leave, overtime, flexible work, annual leave and commemoration days.
(4) Wage and bonus regulations: Provide guidance to the various salary-related operating procedures and approved benchmarks, the importance of various wage and bonus issues and Company confidentiality.
(5) Performance management: Assist employees and organizations in planning goal management, implementing corporate strategic goals and visions, and motivating employees' maximum potential and productivity.
(6) Personal information management: Define the Company's personal information protection and management matters and clarify individual rights and responsibilities.
Protective measures for the working environment and personal safety of employees

The Company attaches great importance to the work environment and employee safety, and expects to be able to fulfill its social responsibilities and achieve sustainability while expanding. In terms of the working environment and personal safety protection measures for employees, in addition to complying with relevant domestic laws and regulations, the Occupational Safety and Health Management System (OHSAS 18001) was promoted in the factory areas. Our relevant management methods include: formulating and implementing safety and health management plans, implementing operational environmental monitoring, safety and health inspections and audits, performing work safety analysis, implementing safety and health education training, etc. to implement safety, health and health protection for employees, improve the working environment and safety and health performance, and achieve the goal of continuous improvement. In addition to ensuring the health and safety of employees, mental health of employees is also one of the management focuses. In the future, the employee assistance program (EAP) will be utilized cto ontinue to achieve such goal.

Current important labor agreement and implementation:
The Company providesvarious of communication channels within the company, allowing employees to fully express their opinions and reflect problems. For example, regular labor meetings with employees, business briefings, employee welfare committee meetings, and food committee meetings, etc., communicate with company policies and employees. Take opinions such as employee opinion surveys, department meetings, secretarial/assistant symposiums, 2885 online real-time responses, e-newsletters, announcements, etc., and set up "General Manager Mailbox", "Integrity Mailbox", "Sexual Harassment" The 24/7 communication platform, such as the "Trading Mailbox" and "HR Mailbox", collects and understands the employees' problems. Under the mechanism of joint participation and full communication, the labor-management relationship develops harmoniously.
Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its features of employee welfare, education, training, retirement system and their implementation, as well as the agreement between labors and management and the maintenance measures of various employee rights.
55 -
(II) List of losses due to labor disputes in the most recent year up to the date this report is published, disclosure of the estimated amount, and countermeasures against current and possible future ccurrences. If the amount cannot be reasonably estimated, the reason shall be provided:
Losses caused by labor disputes in the most recent annual period and as of the printing date of the Annual Report: None.
Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its labor disputes.

VI. Material Contracts

(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:

(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:	(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:	(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:	(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:	(1) As of the date of publication of this Report, the material long-term loan agreements and technical cooperation agreements that are still ongoing or are about to expire in the most recent year, are as follows:
Apr. 23,2019
Contract Type	Party	Contract Term	Content	Restrictions
Financing	Syndicated Crediting Banks	Nov. 27, 2015 – Nov. 27, 2020	Syndicated crediting of NT$ 7.2 billion	Pledge to stock/land/factory
Finncing	Syndicated Crediting Banks	Nov. 23, 2017 – Nov. 23, 2020	Syndicated crediting of NT$ 6 billion	Pledge to stock
Licensing	Qualcomm Incorporated	Jan. 6, 2005 –Termination of auto-renewal	Licensing of specific patents for communication related	None
Licensing	Telefonaktiebolaget LM Ericsson	Based on the Contract	Licensing of specific patents for communication related	None
Licensing	Hitachi Ltd.	Based on the Contract	Licensing of specific patents for displaytechnology	None
Licensing	Positive Technologies, Inc.	Based on the Contract	Licensing of specific patents for displaytechnology	None
Servicing	Siemens Ltda.	Based on the Contract	Prodct after sale service	None
Licensing	Sony Corporation	Based on the Contract	Licencing of Sony patents to be applied to specificproducts	None
Licensing	Microsoft	Based on the Contract	Android system relatedpatents	None

Note：Note: Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its major contracts signed.

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Financial Highlights

I. Condensed Balance Sheet and Statement of Comprehensive Income for the most recent five years
(I) International Financial Reporting Standards (IFRS)

Condensed Consolidated Balance Sheet Unit: NT$ 1,000

	Year	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)
Item		2018	2017	2016	2015	2014
Current Assets		66,193,691	59,533,552	52,268,180	55,828,757	60,015,768
Property, plant and equipment		21,013,038	19,991,519	18,860,162	19,545,376	19,892,498
Intangible assets		4,994,663	5,004,450	202,892	198,299	208,428
Other Assets(Note 2)		27,605,891	24,409,895	23,980,976	24,671,399	25,403,436
Total Assets		119,807,283	108,939,416	95,312,210	100,243,831	105,520,130
Current Liabilities	Before distribution	61,335,721	56,338,130	50,629,405	52,075,388	57,101,284
	After distribution	(Note 3)	58,993,286	53,225,557	53,157,118	58,281,353
Non-current liabilities		18,611,916	15,056,800	11,737,474	16,797,720	17,384,383
Total Liabilities	Before distribution	79,947,637	71,394,930	62,366,879	68,873,108	74,485,667
	After distribution	(Note 3)	74,050,086	64,963,031	69,954,838	75,665,736
Equityattributable to shareholders ofQisda Corp.		32,447,319	30,958,910	29,510,046	27,271,882	26,287,017
Common Stock		19,667,820	19,667,820	19,667,820	19,667,820	19,667,820
Capital Surplus		2,146,076	2,173,633	2,177,332	2,179,038	1,990,292
Retained Earnings	Before distribution	10,801,845	9,501,437	6,806,202	3,545,665	2,556,556
	After distribution	(Note 3)	6,846,281	4,210,050	2,463,935	1,376,487
Other equity		(168,422)	(383,980)	858,692	1,879,359	2,072,349
Treasury stock		-	-	-	-	-
Non-controllinginterests		7,412,327	6,585,576	3,435,285	4,098,841	4,747,446
Total Equity	Before distribution	39,859,646	37,544,486	32,945,331	31,370,723	31,034,463
	After distribution	(Note 3)	34,889,330	30,349,179	30,288,993	29,854,394

~~Note 1: Since 2013, Taiwan has officially adopted the International Financial Reporting Standards approved by the Financial Supervisory~~ Commission. The financial information of the most recent five annual periods has been verified by CPAs, No financial information for 2019 that was verified by CPAs as of the printing date of this Annual Report.

Note 2: Other assets are non-current assets other than property, plant and equipment and intangible assets. Note 3: To be resolved by the 2019 Shareholders' Meeting.

Condensed Consolidated Statement of Comprehensive Income

Unit: NT$ 1,000

Year		Financial data for the most recent	Financial data for the most recent	fiveyears(Note)
Item	2018	2017	2016	2015	2014
Revenue	155,783,161	136,862,492	129,553,540	133,102,431	133,510,923
Grossprofit	19,242,976	16,333,047	16,202,907	14,639,999	15,057,645
Profit from operations	4,576,159	3,401,908	4,487,276	2,597,680	2,928,247
Non-operatingincome and expenses	1,036,952	3,017,284	356,505	263,675	759,623
Profit before income tax	5,613,111	6,419,192	4,843,781	2,861,355	3,687,870
Profit from continuingoperations for theyear	4,450,654	5,656,370	4,067,771	2,245,484	3,333,139
Losses from discontinued operations	-	-	-	-	-
Profit for theyear	4,450,654	5,656,370	4,067,771	2,245,484	3,333,139
Other comprehensive income(loss),net of taxes	151,082	(1,277,000)	(1,179,750)	(225,080)	1,118,261
Total comprehensive income(loss)for theyear	4,601,736	4,379,370	2,888,021	2,020,404	4,451,400
Profit attributable to shareholders ofQisda Corp.	4,035,064	5,291,387	4,342,267	2,169,178	2,971,068
Profit attributable to non-controllinginterests	415,590	364,983	(274,496)	76,306	362,071
Total comprehensive income (loss) attributable to shareholders ofQisda Corp	4,250,635	4,048,715	3,321,600	1,976,188	3,890,695
Total comprehensive income (loss) attributable to non-controllinginterests	351,101	330,655	(433,579)	44,216	560,705
Earningsper Share(EPS)	2.05	2.69	2.21	1.1	1.51

Note: Since 2013, Taiwan has officially adopted the International Financial Reporting Standards approved by the Financial Supervisory Commission. The financial information of the most recent five annual periods has been verified by CPAs. No financial information for 2019 that was verified by CPAs as of the printing date of this Annual Report.

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Condensed Parent Company Only Balance Sheet

Unit: NT$ 1,000

Year	Year	Financial dataforthemostrecentfive years (Note1)	Financial dataforthemostrecentfive years (Note1)	Financial dataforthemostrecentfive years (Note1)	Financial dataforthemostrecentfive years (Note1)	Financial dataforthemostrecentfive years (Note1)
Item		2018	2017	2016	2015	2014
CurrentAssets		32,671,090	30,776,890	29,263,103	29,119,054	32,930,995
Property, plant andequipment		1,481,977	1,493,157	1,501,273	1,531,870	1,574,819
Intangible assets		6,595	7,931	11,451	16,122	20,706
Other Assets (Note2)		47,123,616	43,886,421	37,178,816	37,129,933	36,512,522
Total Assets		81,283,278	76,164,399	67,954,643	67,796,979	71,039,042
Current Liabilities	Beforedistribution	37,030,310	37,519,648	32,948,424	31,012,318	35,484,340
	After-distribution	(Note 3)	40,174,804	35,544,576	32,094,048	36,664,409
Non-current	liabilities	11,805,649	7,685,841	5,496,173	9,512,779	9,267,685
Total Liabilities	Beforedistribution	48,835,959	45,205,489	38,444,597	40,525,097	44,752,025
	After-distribution	(Note 3)	47,860,645	41,040,749	41,606,827	45,932,094
Equity attributable to shareholders ofQisda Corp.		32,447,319	30,958,910	29,510,046	27,271,882	26,287,017
CommonStock		19,667,820	19,667,820	19,667,820	19,667,820	19,667,820
CapitalSurplus		2,146,076	2,173,633	2,177,332	2,179,038	1,990,292
Retained Earnings	Beforedistribution	10,801,845	9,501,437	6,806,202	3,545,665	2,556,556
	After-distribution	(Note 3)	6,846,281	4,210,050	2,463,935	1,376,487
Otherequity		(168,422)	(383,980)	858,692	1,879,359	2,072,349
Treasury stock		-	-	-	-	-
Non-controllinginterests		-	-	-	-	-
	Beforedistribution	32,447,319	30,958,910	29,510,046	27,271,882	26,287,017
Total Equity	After-distribution	(Note 3)	28,303,754	26,913,894	26,190,152	25,106,948

Note 1: Since 2013, Taiwan has officially adopted the International Financial Reporting Standards approved by the Financial Supervisory Commission. The financial information of the most recent five annual periods has been verified by CPAs., No financial information for 2019 that was verified by CPAs as of the printing date of this Annual Report.

Note 2: Other assets are non-current assets other than property, plant and equipment and intangible assets. Note 3: To be resolved by the 2019 Shareholders' Meeting.

Condensed Parent Company Only Comprehensive Income

Unit: NT$ 1,000

Year	Financial data for	Financial data for	the most recent five years (Note 1)	the most recent five years (Note 1)	the most recent five years (Note 1)
Item	2018	2017	2016	2015	2014
Revenue	99,033,057	88,869,603	83,560,114	91,996,634	92,772,579
Gross profit	4,747,704	3,853,596	6,113,825	4,628,129	4,743,778
Profitfromoperations	1,143,231	169,072	2,715,889	1,230,617	1,110,604
Non-operatingincome andexpenses	3,161,365	5,355,445	1,813,527	1,038,974	1,860,464
Profit beforeincome tax	4,304,596	5,524,517	4,529,416	2,269,591	2,971,068
Profitfromcontinuing operationsforthe year	4,035,064	5,291,387	4,342,267	2,169,178	2,971,068
Lossesfrom discontinuedoperations		-	-	-	-
Profitforthe year	4,035,064	5,291,387	4,342,267	2,169,178	2,971,068
Othercomprehensiveincome (loss),net oftaxes	215,571	(1,242,672)	(1,020,667)	(192,990)	919,627
Totalcomprehensiveincome (loss)forthe year	4,250,635	4,048,715	3,321,600	1,976,188	3,890,695
Profit attributable to shareholders ofQisda Corp.	4,035,064	5,291,387	4,342,267	2,169,178	2,971,068
Profit attributable tonon-controllinginterests	-	-	-	-	-
Total comprehensive income (loss) attributable to shareholders ofQisda Corp	4,250,635	4,048,715	3,321,600	1,976,188	3,890,695
Total comprehensive income (loss) attributable to non-controllinginterests	-	-	-	-	-
Earningsper Share(EPS)	2.05	2.69	2.21	1.10	1.51

Note: Since 2013, Taiwan has officially adopted the International Financial Reporting Standards approved by the Financial Supervisory Commission. The financial information of the most recent five annual periods has been verified by CPAs., No financial information for 2019 that was verified by CPAs as of the printing date of this Annual Report.

58 -

(II) The names of CPA and their opinions for the most recent five years.

Year	2018	2017	2016	2015	2014
CPA	Tang, Tzu-Chieh	Tang, Tzu-Chieh	Tang, Tzu-Chieh	Tang, Tzu-Chieh	Tang, Tzu-Chieh
	Shih, Wei-Ming	Shih, Wei-Ming	Shih, Wei-Ming	Chen, Mei-Yen	Chen, Mei-Yen
Opinion and content	Unmodified opinion	Unmodified opinion	Unqualified opinion	Unqualified opinion	Unqualified opinion

II. Financial analysis for the most recent five years

(I) International Financial Reporting Standards - Consolidated Financial Analysis

	Year	Financial analysis for the most recent fiveyears(Note)	Financial analysis for the most recent fiveyears(Note)	Financial analysis for the most recent fiveyears(Note)	Financial analysis for the most recent fiveyears(Note)	Financial analysis for the most recent fiveyears(Note)
Item analyzed		2018	2017	2016	2015	2014
Financial structure	Ratio of debts to assets(%)	67	66	65	69	71
	Ratio of long-term capital to property, plant and equipment (%)	278	263	237	246	243
Solvency	Current ratio(%)	108	106	103	107	105
	Quick ratio (%)	66	69	69	75	73
	Interest coverage ratio	7.61	10.72	9.02	4.64	5.21
Operating ability	Receivables turnover rate(times)	5.54	5.12	5.14	5.00	6.11
	Average collection days for receivables	66	71	71	73	60
	Inventory turnover rate (times)	6.04	6.47	6.78	6.94	7.30
	Payable turnover rate (times)	4.83	4.56	4.33	4.37	4.44
	Average days for sales	60	56	54	53	50
	Property, plant and equipment turnover rate (times)	7.60	7.05	6.75	6.75	6.66
	Total asset turnover rate (times)	1.36	1.34	1.32	1.29	1.36
Profitability	Return on assets(%)	4	6	5	3	4
	Return on equity (%)	12	16	13	7	12
	Ratio of profit from operations to paid-in capital (%)	23	17	23	13	15
	Ratio of profit before income tax to paid-in capital (%)	29	33	25	15	19
	Profit margin (%)	3	4	3	2	2
	Earnings per share (NT$)	2.05	2.69	2.21	1.10	1.51
Cash flow	Cash flow ratio(%)	15	1	16	10	(9)
	Cash flow adequacy ratio (%)	53	54	65	29	9
	Cash flow reinvestment ratio (%)	16	(6)	15	11	(17)
Leveraging	Operatingleverage	5	6	4	7	6
	Financial leverage	1	1	1	1	1
Reasons for changes in financial ratios in the most recent two yers: 1. The decrease in profitability ratio is mainly due to the decrease in profit in 2018 compared to 2017. 2. The increase in the ratio of cash flows was mainly due to the increase in net cash inflows from operating activities in 2018. 3. The decrease in operatingleverage is mainlydue to the increase inprofit from operations in 2018.

Note: The accompanying financial data has been audited and attested by CPAs. As of the date of printing of the Annual Report, the 2019 financial data has not been attested or reviewed by CPAs.

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(II) International Financial Reporting Standards– Parent Company Only Financial Analysis

	Year	Financial analysis for the most recent five years (Note)	Financial analysis for the most recent five years (Note)	Financial analysis for the most recent five years (Note)	Financial analysis for the most recent five years (Note)	Financial analysis for the most recent five years (Note)
Item analyzed		2018	2017	2016	2015	2014
Financial structure	Ratio of debts to assets (%)	60	59	57	60	63
	Ratio of long-term capital to property, plant and equipment (%)	2,986	2,588	2,332	2,401	2,258
Solvency	Current ratio (%)	88	82	89	94	93
	Quick ratio (%)	77	73	81	84	84
	Interest coverage ratio	12.87	24.53	25.67	8.90	9.77
Operating ability	Receivables turnover rate (times)	3.78	3.59	3.47	3.47	4.14
	Average collection days for receivables	96.56	102	105	105	88
	Inventory turnover rate (times)	24.58	28.51	27.4	27.8	27.87
	Payable turnover rate (times)	3.53	3.13	2.98	3.30	3.74
	Average days for sales	14.84	13	13	13	13
	Property, plant and equipment turnover rate (times)	66.57	59.36	55.10	59.22	58.04
	Total asset turnover rate (times)	1.26	1.23	1.23	1.33	1.48
Profitability	Return on assets (%)	5	8	7	3	5
	Return on equity (%)	13	18	15	8	13
	Ratio of profit from operations to paid-in capital (%)	6	1	14	6	6
	Ratio of profit before income tax to paid-in capital (%)	22	28	23	12	15
	Profit margin (%)	4	6	5	2	3
	Earnings per share (NT$)	2.05	2.69	2.21	1.1	1.51
Cash flow	Cash flow ratio (%)	1.81	(3.87)	22.71	5.84	(0.41)
	Cash flow adequacy ratio (%)	74	82	160	142	13
	Cash flow reinvestment ratio (%)	(2.30)	(11)	15	2	(4)
Leveraging	Operating leverage	4	24	1	4	4
	Financial leverage	1	-	1	1	1
Reasons for changes in financial ratios in the most recent two annual periods: 1. Although 2018operation profit increased, due to the decrease in non-operating income, the return on assets, return on equity, net profit margin and earnings per share decreased. 2. The increase in cash flow ratio and cash flow reinvestment ratio was mainly due to the increase in net cash inflows from operating activities in 2018, and the slight decrease in the Cash flow adequacy ratio was mainly due to the increase in cash dividends. 3. The decrease in operatingleverage is mainlydue to the increase inprofit from operations in 2018.
Note: The accompanying financial data has been audited and attested by CPAs. As of the date of printing of the Annual Report, the 2019 financial data has not been attested or reviewed by CPAs. Below are calculations: 1. Financial structure

(1) Ratio of debts to asset = Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities) / Net property, plant and equipment
1. Solvency
(1) Current ratio = Current assets / Current liabilities.
(2) Quick ratio = (Current assets - Inventories - Prepaid expenses) / Current liabilities
(3) Interest coverage ratio = Net income before income tax and interest expense / Interest expenses over this period.
1. Operating ability (1) Receivable (including accounts receivable and notes receivable due to business operations) turnover rate = Net sales / Balance of average accounts receivable for various periods (including accounts receivable and notes receivable due to business operations).
(2) Average collection days for receivables = 365/Receivables turnover rate. (3) Inventory turnover rate = Cost of goods sold/ Average inventory. (4) Payable (including accounts payable and notes payable due to business operations) turnover rate = Cost of goods sold / Balance of average accounts payables of various periods (including accounts payable and notes payable due to business operations).
(5) Average days for sales = 365 / Inventory turnover rate. (6) Property, plant and equipment turnover rate = Net sale/Average net property, plant and equipment.
(7) Total asset turnover rate = Net sales / Average total assets
1. Profitability

(1) Return on assets = [Net income after taxes + interest expense x (1 - tax rate)] / Average total assets

(2) Return on equity = Net income after taxes / Average total equity
(3) Profit margin = Net income after taxes / Net sales (4) Earnings per share = (Net income attributable to shareholders of the parent company - preferred stock dividend) / Weighted average number of shares outstanding
Cash flow

(1) Cash flow ratio = Net cash flow of operating activities / Current liabilities.

(2) Cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (Capital expenditures + inventory increase + cash dividend) for the most recent five years. (3) Cash flow reinvestment ratio = (Net cash flow from operating activities - cash dividends) / (Gross value of property, plant, and equipment + Long-term investments + Other non-current assets + working capital).

Leveraging

(1) Operating leverage = (Net operating revenue - variable operating cost and expenses) / Operating profit.

(2) Financial leverage = Operating profit / (Operating profit - interest expenses).

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III. The Audit Committee's Review Report

The Audit Committee's Review Report

The Board of Directors has prepared the Company's Financial Statements for the year of 2018. Tang, Tzu-Chieh and Shih, Wei-Ming Certified Public Accountants of KPMG, have audited the Financial Statements. The 2018 Financial Statements, Business Report, Independent Auditors’ Report and Earnings Distribution Proposal have been reviewed and determined to be correct and accurate by the Audit Committee of Qisda Corporation. I, as the Chair of the Audit Committee, hereby submit this report according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Qisda Corporation 2019 Annual General Shareholders’ Meeting

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Chair of the Audit Committee
王弓 Wang,Gong
March 22, 2019
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IV. Consolidated Financial Statements with Independent Auditors' Report of the most recent year: please refer to Appendix 1 (Pages 83).
V. Parent Company only Financial Statements with Independent Auditors' Report for the most recent year: Please refer to Appendix 2 (Pages 229).
VI. Any financial difficulties experienced by the Company and its affiliate businesses during the most recent year up to the publication date of this report need to be stated as well as the impact on the Company's financial position need to be outlined: None.
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Review and Analysis of Financial Position and Financial Performance, and Risk Management

I. Financial position

Financial position analysis

and Risk Management I. Financial position Financial position analysis	and Risk Management I. Financial position Financial position analysis	and Risk Management I. Financial position Financial position analysis
			Unit: NT$1,000
Year			Difference

Item	2018	2017	Amount	%

Current assets	66,193,691	59,533,552	6,660,139	11%
Investment accounted for usingequitymethod	19,382,592	16,748,411	2,634,181	16%
Property,plant and equipment	21,013,038	19,991,519	1,021,519	5%
Investmentproperty	2,834,475	2,527,582	306,893	12%
Intangible assets	4,994,663	5,004,450	(9,787)	0%
Other non-current assets:	5,388,824	5,133,902	254,922	5%
Total assets	119,807,283	108,939,416	10,867,867	10%
Current liabilities	61,335,721	56,338,130	4,997,591	9%
Long-term debt	16,234,476	13,005,122	3,229,354	25%
Other non-current liabilitie	2,377,440	2,051,678	325,762	16%
Total liabilities	79,947,637	71,394,930	8,552,707	12%
Common stock	19,667,820	19,667,820	0	0%
Capital surplus	2,146,076	2,173,633	(27,557)	-1%
Retained earnings	10,801,845	9,501,437	1,300,408	14%
Other equity	(168,422)	(383,980)	215,558	56%
Equityattributable to shareholders of Qisda Corp.	32,447,319	30,958,910	1,488,409	5%
Non-controllinginterests	7,412,327	6,585,576	826,751	13%
Total equity	39,859,646	37,544,486	2,315,160	6%
Reasons for changes in proportion in the most recent two years: 1. The increase in Long-term debt is mainly due to investment activities increase. 2. The increase in other equity is attributable to exchange gain arising from exchange rate fluctuations,leading to foreign currency translation differences from foreign operations.

II. Financial performance

Financial performance analysis

II. Financial performance Financial performance analysis	II. Financial performance Financial performance analysis	II. Financial performance Financial performance analysis	II. Financial performance Financial performance analysis	II. Financial performance Financial performance analysis
Unit: NT$1,000
Year			Increase (decrease)	Change in
	2018	2017
Item			amount	proportion

Net revenue	155,783,161	136,862,492	18,920,669	14%
Cost of sales	136,540,185	120,529,445	16,010,740	13%
Grossprofit	19,242,976	16,333,047	2,909,929	18%
Operatingexpenses	14,666,817	12,931,139	1,735,678	13%
Profit from operations	4,576,159	3,401,908	1,174,251	35%
Non-operatingincome and expenses	1,036,952	3,017,284	(1,980,332)	-66%
Profit before income tax for theyear	5,613,111	6,419,192	(806,081)	-13%
Less: income tax expense	1,162,457	762,822	399,635	52%
Profit for theyear	4,450,654	5,656,370	(1,205,716)	-21%
Reasons for changes in proportion in the most recent two years:
1. The increase in profit from operations is due to the increase in revenue and gross profit margin, which led to an increase in profit from operations over the previous period. 2. The decrease in non-operating income and expenses is due to the decrease in the share of profits of associates and joint ventures in 2018. 3. The increase in income tax expenses is due to profit from operations increased compared to the previous period. 4. The decrease inprofit for theyear is due to non-operatingincome and expenses decreased compared to thepreviousperiod.

The increase in profit from operations is due to the increase in revenue and gross profit margin, which led to an increase in profit from operations over the previous period.
The decrease in non-operating income and expenses is due to the decrease in the share of profits of associates and joint ventures in 2018.
The increase in income tax expenses is due to profit from operations increased compared to the previous period.
The decrease in profit for the year is due to non-operating income and expenses decreased compared to the previous period.
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III. Cash flow

(1) Change in consolidated cash flow in 2018

III. Cash flow (1) Change in consolidated cash flow in	2018
		Unit: NT$1,000
Cash balance at the beginning of 2018	2018 Net cash flow	Cash balance at the end of 2018
6,636,634	2,982,023	9,618,657

(II) Analysis of changes in consolidated cash flow in 2018

	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
Item	2018	2017	Increase(decrease)amount	Change inproportion
Net cash flows provided by operatingactivities	8,958,266	335,809	8,622,457	2568%
Net cash flows used in investingactivities	(4,683,709)	(6,850,796)	2,167,087	32%
Net cash flows used in financingactivities:	(1,897,789)	7,276,294	(9,174,083)	-126%

(1) The operating activities is mainly due to the decrease in the capital demand for operating activities in 2018 compared with 2017, so the net cash inflow from operating activities increased in 2018.

(2) The investment activities are mainly due to the decreased in the investment in the subsidiaries and acquisition of property, plant, and equipment compared with 2017, so the net cash outflow from investing activities decreased compared with 2017.

(3) Financing activities are mainly due to the decrease in capital demend for operating and investment activities in 2018, thus reducing borrowing expenses.

(III) Liquidity improvement plan: The Company showed no signs of liquidity deficit.

(IV) Analysis of cash liquidity in the coming year: The Company, on the premise of maintaining stable cash liquidity, will carefully plan and manage cash expenditures related to investments and operations while taking, cash balances on accounts, cash flows from operating activities and investing activities and the status of financial markets into consideration.

IV. Material expenditures of the most recent year and impact on the Company's finances and operations

The Company had no major capital expenditures in the most recent annual period. On the basis of the consolidated financial statements, the Company and subsidiaries purchased property, plant and equipment with about NT$ 2.8 billion in 2018, accounting for 2% of the net sales, which had no significant impact on the Company's financial status.

V. Investment policy for the most recent fiscal year, the main reasons for the profits/losses

generated thereby, the improvement plan, and investment plans for the coming year

The Company's investment policies are in line with business development strategies and operational needs. The annual consolidated financial statements the Share of profits of associates and joint ventures amount is NT$1,155,594,000 in 2018. For the coming annual period, we will continue to focus on relevant strategic investment in the industry and continue to prudently evaluate the investment plans.

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VI. Risk Management

The Company's risk management is focusing on corporate governance risk management systems and risk transfer planning: Strategic, financial, operational and hazard risks are managed by the Risk Management Committee. The Company's risk management vision and policies are well defined, allowing effectively management of risks exceeding the Company's risk tolerance level, and risk management tools are itilized to optimize the total cost of risk management.

(1) Vision of risk management

a. Commitment to continuously provide products and services to create long-term values for customers, shareholders, employees and the whole society.
b. Risk management requires systematic risk management procedures and organization to identify, assess process, report and monitor major risks affecting the Company's survival in a timely and effective manner, and enhance the risk awareness of all employees.
c. Risk management is not about pursuing “risk-fee”, but the best interests to optimize risk management costs while accepting such risks.

(II) Policies of risk management

a. To ensure the Company's sustainable operation, the Risk Management Committee has been established to regularly identify, assess, process, report and monitor the risks that may adversely affect the Company's operating goals.
b. Identify and control risks prior to occurrence of actual incidents, suppress losses when they actually occur, and instantly restore the supply of products and services after such incidents. And the operation continuity plan is set for simulation of major risk scenarios identified by the Risk Management Committee.
c. For risks that do not exceed risk tolerance level, risk management costs may be considered and treated with different management tools, but the following shall be exceptions.
Risks with negative impacts on the safety of employees.
Risks with negative impacts on the Company's goodwill.
Risks that may result in violation of legal regulations.

(III) Organizational chart of the Risk Management Committee

The General Manager shall be the Chairman of the Risk Management Committee.

The Executive Officer of units of risk management shall be the Director General and the chief executive officer from each unit of the Company shall be the Committee members.

Organizational Chart of the Risk Management Committee

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VII. Matters for Analysis and Assessment for Risks

(I) The impact of interest rates, exchange rates changes and inflation on the Company's profits and losses and future countermeasures
The impact of recent changes in interest rates on the Company's profits and losses and future countermeasures The bank loans to the Company and its subsidiaries are based on a floating rate basis. The measures taken by the Company and its subsidiaries in response to the risk of changes in interest rates are to regularly assess the interest rates of banks and currencies, and maintain good relationships with financial institutions in order to maintain lower financing costs and enhance the management of working capital, reduce the dependence on bank loans and diffuse the risk of changes in interest rates.

The following sensitivity analysis is based on interest rate risk. For floating rate liabilities, the analysis is based on the assumption that the balance of liabilities outstanding on the reporting date is circulating throughout the whole annual period.

If the annual interest rate increases or decreases by 1%, the net profit before tax of the Company and its subsidiaries in 2018 and 2017 will be reduced or increased by NT$ 333,615,000 and NT$ 309,714,000 respectively, with all other variables remaining unchanged. This is mainly due to the floating interest rates of loans for the Company and its subsidiaries.

The impact of exchange rate changes on the Company's profits and losses in the most recent annual period and future countermeasures

The Group utilizes foreign currency forward contracts and foreign exchange swaps to hedge its foreign currency exposure with respect to its sales and purchases. These financial instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements. The maturity dates of derivative financial instruments the Group entered into were less than six months and did not conform to the criteria for hedge accounting. The Group’ s exposure to foreign currency risk arises from cash and cash equivalents, notes and accounts receivable (including related-party transactions), notes and accounts payable (including related-party transactions), other receivables (including related-party

transactions), other payables (including related-party transactions), and loans and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. At the reporting date, the carrying amounts of the Group’s significant monetary assets and liabilities denominated in a currency other than the respective functional currencies of Group entities and their respective sensitivity analysis were as follows (including the monetary items that have been eliminated in the accompanying consolidated financial statements):

Unit: 1,000

					Unit: 1,000
Financial assets USD EUR CNY JPY Financial Liabilities			December 31,2018
	Foreign currency	Exchange rate	TWD	Change in magnitude	Effect onprofit or loss
	$ 1,376,498 70,241 843,454 2,221,002 1,250,179 28,493 1,133,890 6,672,112	30.7150 35.2610 4.4709 0.2780 30.7150 35.2610 4.4709 0.2780			422,791 24,768 37,710 6,174 383,992 10,047 50,695 18,548
USD EUR CNY JPY Financial assets USD EUR CNY JPY Financial Liabilities
	$ 1,290,022 83,152 691,040 1,611,803 1,356,242 7,629 846,375 5,092,689	29.8400 35.7480 4.5767 0.2649 29.8400 35.7480 4.5767 0.2649	38,494,256 1% 2,972,518 1% 3,162,683 1% 426,967 1% 40,470,261 1% 272,721 1% 3,873,604 1% 1,349,053 1%		384,943 29,725 31,627 4,270 404,703 2,727 38,736 13,491
USD EUR CNY JPY

As the Group deal in diverse foreign currencies, gains and losses on foreign exchange were summarized as a single amount. The aggregate of realized and unrealized foreign exchange gains (losses) for the years ended December 31, 2018 and 2017 were $(233,340) and $763,493, respectively.

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The impact of inflation on the Company's profits and losses and future countermeasures
In recent years, the market prices have risen steadily. The Company and its subsidiaries will continue to pay full attention to the inflation and appropriately adjust the product retail price and inventory to reduce the impact of inflation on the Company and its subsidiaries, and sign procurement contracts the major raw material suppliers.
(II) The main reasons for the high-risk, high-leveraged investment, capital loan, guarantee/endorsement and derivative commodity trading, and the profits or losses and future countermeasures.

The Company and its subsidiaries have always adhered to the policies of not engaging in high-risk, high-leveraged investments. Our derivatives trading is based on risk aversion and does not engage in speculative trading. The trading of the derivatives of the Company and its subsidiaries in 2018 was based on the principles of hedging and there was no relevant operational risk generated. In the future, the Company will continue to conduct derivatives transactions on the principles of hedging caused by exchange rate and interest rate fluctuations, and continue to regularly assess foreign exchange positions and risks to reduce the Company's operational risks.

The Company and its subsidiaries have engaged in forward foreign exchange contracts and FX sawp transactions mainly to hedge the risks arising from fluctuations in exchange rates of assets or liabilities denominated in foreign currencies, which are highly negatively related to the fair value changes of the derivative financial products used as hedging tools, and the assessment is regularly conducted. However, it is not subject to the hedge accounting treatment conditions and is therefore classified as a financial asset or liability measured at fair value of profits or losses.

When the Company and its subsidiaries engage in loaning funds to others, making guarantee/endorsement guarantees and conducting derivatives transactions, in addition to complying with relevant operating procedures, we shall regularly file the announcement in accordance with the regulations of the competent authority. As of the printing date of this Annual Report, the recepients of the Company's and its subsidiaries' loaned unds and guarantee/endorsement are only our subsidiaries.

(III) R&D expenses for future R&D projects and investment amount.

In 2019, the Company is planning to invest more than NT$ 3.9 billion in R&D expenditures. In the future, we will adjust our investment plans according to the global industry development trend and the actual operating conditions of the Company.

Future R&D plans of the Company

LCD products: Commercial Super Slim, HDR, quantum dot wide color gamut, 32:9 Aspect Ratio, 5K3K/8K4K ultra high resolution display, HDMI 2.1/DP 1.4 application display, medical display, G-sync 3/FreeSync 2 professional gaming display, ErP Lot 5 low energy consumption display, wireless charging display, full color adjustment solution and complete public display software and hardware solutions.
Projector products: laser lighting source high-lumen interchangeable lens projector for large-scale exhibition, LED lighting source 4K UHD high-quality projector for household entertainment, laser lighting source ultra short-focus 4K UHD high-quality projection for household entertainment equipment.
(IV) The impact of important policies and legal regulations changes at domestice and abroad on the Company's financial status and the countermeasures
Policies:

The relevant units of the Company have always paid full attention to and studied the policies and laws that may affect the Company's operations, and adjusted the internal system of the Company to ensure the smooth corporate operation. In the most recent annual period, there had been no significant impact on the Company's financial statuss due to important domestic and foreign policies changes.

Legal regulations:
a. The Company's business operation philosophy is to comply with relevant laws and regulations as the priority; therefore, the Company's management team is always aware of the changes of relevant laws and regulations, and can respond to various situations arising from regulatory changes at any time.
b. In accordance with the stipulations of the laws, the financial report will be prepared according to IFRS since 2013. From August 2009, the Company has started to submit the progress tracking report of the Board of Directors on a quarterly basis and set up a project committee and working group in September 2009. The Company has appointed an accounting firm to act as a consultant to the Company's IFRS conversion program to assist the Company and its subsidiaries in the smooth introduction of IFRS during the statutory period. As of recently, the
66 -

Company has completed all required works of the IFRS conversion plan according to legal regulations, and begun to prepare financial statements in accordance with IFRS.

c. There have been no other significant impact to the company's financial status due to legal changes in the most recent annual period.

(V) The impact of technological and industrial changes on the Company's financial business and the countermeasures

The global LCD monitor market is heading towards the plateau period and its scale continues to shrink. In addition to continuing to develop new niche products in recent years, the Company has integrated resources from its subsidiaries such as BenQ Corporation, BenQ Materials Corporation, BenQ Medical Technology, BenQ Medical Centers, Partner Tech Corp., DFI, K2 International Medical Inc. and Dataimage to provide more comprehensive products and services of medical equipment and consumables, biomedical and medical cosmetology, terminal customer service of retail, motherboard manufacturing and customer application services, and optimize existing business operations, expand medical layout efficiency and accelerate solution development. The operation of these high value-added products has laid a good foundation and layout for Qisda to meet the future growth and challenges.

(VI) The impact of corporate image changes on corporate crisis management and the countermeasures.

The Company conducts regular inspections on matters such as the external environment, the Company's business type and management system, and responds to any situation that may affect the goodwill of the Company and simulates its possible impact. The countermeasures will minimize the uncertainty; and the risk management unit will be responsible for the operation-related risks and impact analysis, and cooperate with the implementation of relevant contingency plan with the Risk Management Committee.
The Company is also actively committed to environmental protection and safety and hygiene management, and has obtained the certification of ISO14001 Environmental Management System and OHSAS 18001 Occupational Safety and Health Management System, and will pursue continuous improvement in the spirit of this certification.
(VII) Expected benefits and possible risks of M&A and the countermeasures.

There are currently no ongoing M&A so there are no benefits and risks.

(VIII) Expected benefits and possible risks of the expansion of factory and the countermeasures
Currently, the main focus of the Company and its subsidiaries in the factory and equipment is to fully utilize the existing production capacity and maximize the economy of scale. Therefore, there is no need to significantly expand the factory in the short-term.
(IX) Risk of procurement and sales concentration, and countermeasures

The Company's domestic and foreign major raw material suppliers and customers are quite diversed, and long-term stable cooperative relations have been formed, so there is no problem and risk of concentration of purchase and sales. The Company also evaluates the financial attributes of different customers and controls the risks according to different trading modes with insurance companies, bank letters of credit and collateral, and timely trackscustomer payment status to protect the Company's interests.

(X) The impact and risk of a substantial transfer or replacement of equities by Directors, Supervisors or Shareholders holding more than 10% of the toal shares

The Directors of the Company have no substantial transfer or replacement of equities.

(XI) Impact of changes in management on the Company and risks Not applicable due to the Board of Directors and the management team of the Company have not changed significantly.
(XII) Disclosure of disputed contents, amounts of the subject matters, commencement dates of the proceedings, parties involved in the proceedings of litigation or non-litigation events, major closed or ongoing lawsuits and litigation or non-litigation events invloving the Company and its Directors, Supervisors, General Managers, Substantive Persons–in Charge, major shareholders holding more than 10% of total shares and affiliates/subsidiaries with results of which may have a material impact on the shareholders' equity or the price of the securities, and the actual results as of the printing date of this Annual Report.
Major closed or ongoing lawsuits, litigation or non-litigation events or administrative litigation involving the Company in the most recent two annual periods and as of the printing date of this Annual Report with results of
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which may have a material impact on the shareholders' equity or the price of the securities:

a. Several direct and indirect consumers in the United States filed a class action lawsuit of damage loss claim in September 2010, arguing that the Company and its subsidiary BQA were suspected to have been participating in the ODD (Optical Disk Drive) product pricing agreement, which violated the US antitrust laws. The appointment of lawyers had been settled and a settlement had been reached on for the litigation of direct consumers. The final results of the remaining related cases has not yet been reached.
b. Several direct and indirect consumers in the United States filed a class action lawsuit of damage loss claim in January 2012, arguing that the Company and its subsidiary BQA were suspected to have been participating in the ODD (Optical Disk Drive) product pricing agreement, which violated the Canadian antitrust laws. The appointment of lawyers had been settled and the final results of the remaining related cases has not yet been reached.
Major closed or ongoing lawsuits, litigation or non-litigation events or administrative litigation involving the Company’s Directors, Supervisors, General Managers, Substantive Persons–in Charge, major shareholders holding more than 10% of total shares and affiliates/subsidiaries in the most recent two annual periods and as of the printing date of this Annual Report with results of which may have a material impact on the shareholders' equity or the price of the securities:
a. Litifation events of the Company’s subsidiary BenQ America Corp. (BQA):
(i) Several direct and indirect consumers in the United States filed a class action lawsuit of damage loss claim in September 2010, arguing that the Company’s subsidiary BQA was suspected to have been participating in the ODD (Optical Disk Drive) product pricing agreement, which violated the US antitrust laws. The appointment of lawyers had been settled and a settlement had been reached on for the litigation of direct consumers. The final results of the remaining related cases has not yet been reached.
(ii) Several direct and indirect consumers in the United States filed a class action lawsuit of damage loss claim in January 2012, arguing that the Company’s subsidiary BQA was suspected to have been participating in the ODD (Optical Disk Drive) product pricing agreement, which violated the Canadian antitrust laws. The appointment of lawyers had been settled and the final results of the remaining related cases have not yet been reached.
b. Litigation events of the Company’s corporate director, AU Optronics Corporation (AUO):
(i) AUO There were civil lawsuits filed against AUO, AUUS and various manufacturers in the TFTLCD industry in the United States and Canada alleging, among other things, antitrust violations. As of January 28, 2019, AUO and AUUS have reached settlement agreements with the relevant plaintiffs. In addition to the above cases in the United States and Canada, a lawsuit was filed by certain consumers in Israel against certain LCD manufacturers including AUO in the District Court of the Central District in Israel (“Israeli Court”). The defendants contested various issues including whether the lawsuit was properly served. In December 2016, the Israeli Court overturned the original decision and revoked the permission for this case to serve out of Israeli jurisdiction. The plaintiffs lodged an appeal to the Israeli Supreme Court but the Israeli Supreme Court overruled the appeal in August 2017. In January 2018, the parties reached a settlement agreement and agreed to commence the required proceedings for withdrawing the lawsuit. A lawsuit was filed in September 2018 by the Government of Puerto Rico on its own behalf and on behalf of all consumers and governmental agencies of Puerto Rico against certain LCD manufacturers including AUO and AUUS in the Superior Court of San Juan, Court of First Instance alleging unjust enrichment and claiming unspecified monetary damages. AUO has retained counsel to handle the related matter and intends to defend this lawsuit vigorously, and at this stage, the final outcome of these matters is uncertain. AUO is reviewing the merits of this lawsuit on an on-going basis.
(ii) Other litigations:

At the end of February 2017, one of AUO’s subsidiaries in the PRC, AUSZ received an administrative complaint filed by Shenzhen China Star Optoelectronics Technology Co.,Ltd. (“CSOT”) alleging that AUSZ infringes two PRC patents, and the complaint requests that AUSZ cease the alleged infringing act. Based on the Company’s preliminary assessment, it believes that its subsidiary does not infringe the two PRC patents as alleged, and further that the two PRC patents appear to be invalid. In response to such administrative complaint, AUSZ has filed a request to invalidate the two PRC patents accordingly. In April 2017, CSOT filed civil lawsuits in the Intermediate People’s Court of Shenzhen Municipality against the subsidiary claiming infringement of the same two PRC patents. In June 2017, CSOT filed civil lawsuits in the No.1 Intermediate People’s Court of Chongqing

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Municipality against the subsidiary claiming infringement of three PRC patents (including one of the above mentioned PRC patents). CSOT requested that AUSZ ceases the alleged infringing act and claimed approximate RMB49.91 million for economic loss for each of the said respective four PRC patents and compensation for reasonable fees and litigation expenses such as notarization fees and attorney fees incurred by CSOT. On September 24, 2017, the relevant parties reached a settlement agreement and agreed to withdraw relevant legal proceedings.

In July 2018, Vista Peak Ventures, LLC (“VPV”) filed three lawsuits in the United States District Court for the Eastern District of Texas against AUO, claiming infringement of certain of VPV’s patents in the United States relating to the manufacturing of TFT-LCD panels. In the complaints, VPV seeks, among other things, unspecified monetary damages for past damages and an injunction against future infringement. While AUO intends to defend the suits vigorously, the ultimate outcome of the three matters is uncertain. AUO is reviewing the merits of the lawsuits on an on-going basis.

In addition to the matters described above, the Company is also a party to other litigations or proceedings that arise during the ordinary course of business. Except as mentioned above, the Company, to its knowledge, is not involved as a defendant in any material litigation or proceeding which could be expected to have a material adverse effect on the Company’s business or results of operations.

(iii) Environmental lawsuits:

Since 2010, there have been environmental proceedings relating to the development project of the Central Taiwan Science Park in Houli, Taichung, which AUO’s second 8.5-generation fab is located at. The proceedings were initiated by six residents in Houli District, Taichung City (the “Plaintiffs”) to object the administrative dispositions of the environmental assessment and development approval issued in 2010 by the Environmental Protection Administration (“EPA”) of the Executive Yuan of Taiwan to the third phrase development area in the Central Taiwan Science Park (the “Project”). On August 8, 2014, the Plaintiffs reached a settlement with the defendants (i.e. the governmental authorities, including the EPA of the Executive Yuan of Taiwan, the Ministry of Science and Technology (former National Science Council of the ROC Executive Yuan) and the Central Taiwan Science Park Development Office) in the Taipei High Administrative Court. The second phase environmental impact assessment for the Project continues to proceed. On December 14, 2017, the EPA of the Executive Yuan of Taiwan held the third review meeting of the investigation group. The review meeting reached the conclusion of suggesting approval for the Project. On November 6, 2018, the EPA approved the Project, but on December 6, 2018, five residents in Houli District, Taichung City filed administrative appeal to

the Appeals Review Committee of the Executive Yuan requesting a withdrawal of the approval.

Currently management does not believe that this event will have a material adverse effect on the Company’s operation and will continue to monitor the development of this event.

(XIII) Other major risks and the countermeasures

Information security policies

To ensure the confidentiality, integrity, accessibility and legality of information assets (hardware, software, materials, documents and personnel related to information processing), and to avoid threats from intensional internal or external actions or accidents, our corporate information security policies are promulgated based on consideration of the Company's business needs, and reference to ISO 27001 information security international standards.

Information security control measures include:

Establishment of the information security management organization to supervise the operation of the information security management system, identify the internal and external issues of the information security management system and the information security requirements and expectations of the relevant organizations.
Evaluation and management of information security for internal processes of the company.
Enhancement of awareness of information security among the Company’s employees and division of labor.
Information security requirements to external suppliers.
Development of information security indicators.
Continuous information operations and drills.
Process and response to information security incidents.
69 -
Legal compliance.
Assessment of security and network risks

To properly protect the information assets within the Company's information security management system, we have determined and implemented relevant specifications for information assets and risk assessment procedures to confirm the risk level of information assets, and determine countermeasures via risk assessment results and internal meetings. By doing so, we can achieve effective mitigation, transfer, elimination or even acceptance of risks.

The Company has an internal scanning and monitoring system to ensure that the system operates with the latest operational updates to reduce the risk of being attacked.

We conduct annual review on various regulations and evaluate the Company's internal information security regulations to ensure compliance with legal regulations and effectiveness, and regularly publicize relevant security regulations to prevent the staff from violating internal regulations, which cause damage loss to the Company.

Each year, we review various regulations and evaluate the company's internal information security regulations to ensure compliance with regulations and effectiveness, and regularly publicize relevant security regulations to prevent the company from harming the company's violation of internal regulations.

In addition to basic information security-related training when recruiting new employees, the Company also regularly organizes e-mail social engineering exercises to educate employees on relevant information security knowledge such as e-mail sending and receiving, so as to reduce the risk of employees accidentally clicking on malicious e-mail. Through the implementation of various courses, we can not only enhancing the information security awareness of staff but also ensuring that information security concepts can be incorporated into daily operations.

Information Security Management

With the establishment of the information security management system, the Company implements information security policies to protect customer data and corporate intelligence output, enahnce information security incident response capabilities and achieve information security policy measurement indicators. We also meet the expectations of the stakeholder groups of the Company, and continue to enhance the Company's security control system through PDCA mechanism, which will assist in improving the Company's competitiveness.

Arrangement for Insurance of Information Security

Since July of 2017, the Company has insured corporate information security risk management insurance. In case of insurance claims related to expenses incurred during the security incident (such as business interruption, forensics), the insurance coverage includes consolidated subsidiaries to reduce the Company’s losses.

5.Countermearues for Severe Incidents of Information Security

The Company enhances the internal emergency response process SOPs and drills during the establishment of the information security management system, and will continue to simulate various MPA attack scenarios and arrange relevant personnel to participate in the drills to ensure that emergency procedures can be initiated when the incident occurs to effectively reduce events responding time and Company losses.

Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its analysis and assessment to other risks.

VIII. Other material matters: None.

70 -

Special Notes

I. Information about affiliates

(I) Organization chart of affiliates

											2018.12.31 100% 100% Corp./100% 00% S. de R.L. de C.V./99.97% ted enterprises: .03% BenQ Service de Mexico S.de R.L. de C.V./99.97% holding by affiliated enterprises: BenQ Latin America Corp. /0.03%	2018.12.31 100% 100% Corp./100% 00% S. de R.L. de C.V./99.97% ted enterprises: .03% BenQ Service de Mexico S.de R.L. de C.V./99.97% holding by affiliated enterprises: BenQ Latin America Corp. /0.03%
Unit: Sha	reholding	ratio (%)						Qisda Corporation


	Qisda	Americ	a Corp.	/100%				BenQ Corp./100%

					Qisda Electronics(Suzhou) Co Ltd/100% ) Co., Ltd./100% ong) Limited/100% /87.68% (Shanghai) Co., Ltd/100%			Guru Corporation/99.94% by affiliated enterprises: Venture Inc. /0.02% Guru Software Co., Ltd./100% Corporation/90.18% by affiliated enterprises: 2 Venture, Ltd. /0.02% Guru Holding Limited/37.5% by affiliated enterprises: Venture (L) Ltd. /12.5% 2 Venture, Ltd. /50% Venture, Ltd./100%
	Qisda	Japan C	o., Ltd.	/100%			Darly 2	Venture, Ltd./100%	BenQ Americ	a Corp./100%


	Qisda holding Qisda	Mexica by affilia America	na S.A. ted ente Corp. /1	De C.V. rprises: 2.32%	/87.68%		INFTY holding Darly	Corporation/90.18% by affiliated enterprises: 2 Venture, Ltd. /0.02%		BenQ Canada	Corp./100%

									BenQ Latin A	merica Corp./1	00%


	Qisda	Sdn. Bh	d./100%				BenQ holding Darly Darly	Guru Holding Limited/37.5% by affiliated enterprises: Venture (L) Ltd. /12.5% 2 Venture, Ltd. /50%		BenQ Mexico holding by affilia BenQ Corp. /0	S. de R.L. de C.V./99.97% ted enterprises: .03%


	Qisda	(L) Cor	p./100%

											BenQ Service de Mexico S.de R.L. de C.V./99.97% holding by affiliated enterprises: BenQ Latin America Corp. /0.03%
			BenQ	Medical	(Shanghai) Co., Ltd/100%
							BenQ holding Darly	Guru Corporation/99.94% by affiliated enterprises: Venture Inc. /0.02%

			Qisda	(Suzhou	) Co., Ltd./100%
										Joytech LLC/	100%

			Qisda	(Hong K	ong) Limited/100%
							BenQ	Guru Software Co., Ltd./100%		Vivitech LLC /	100%

					Qisda Electronics(Suzhou) Co Ltd/100%
					. .		BenQ holding Qisda Darly Darly	Material Corp./25.21% by affiliated enterprises: Corp. /13.61% Venture Inc. /4.74% Consulting Corporation /0.00%			MaxGen Comercio Industrial Imp E Exp Ltda./50% holding by affiliated enterprises: Joytech LLC /50%


					Qid Priin Indtr SZh C Ltd/100%				BnQ Hn	n Limitd/	100%
					sa ecso usy (uou) o.,			Medical Technology Corporation/43.43% by affiliated enterprises: Venture Inc. /7.96% 2 Venture, Ltd. /3.57%	e (og	og) e
							BenQ holding Darly Darly	Medical Technology Corporation/43.43% by affiliated enterprises: Venture Inc. /7.96% 2 Venture, Ltd. /3.57%
										BenQ Co.,Ltd	/100%

									BenQ Intellige	nt Technology	(Hongkong) Co.,Ltd./100%


	Darly	Venture	(L) Ltd	./100%						ShengCheng T	rading (Shanghai) Co.,Ltd/100%


	BenQ holding Darly BenQ Darly Darly	BM Hol by affilia Venture Corp. /8 Venture 2 Ventur	ding Ca ted ente (L) Ltd. / .16% Inc. /10. e,Ltd. /2	yman C rprises: 6.45% 21% 6.55%	orp./19.35%					BenQ Intellige	nt Technology (Shanghai) Co., Ltd./100%


										BenQ Techno	logy (Shanghai) Co., Ltd./100%

					din Cor/100%				BenQ Europe	B.V./100%
			BenQ	BM Hol	din Cor/100%
					g p.
										BenQ UK Lim	ited/100%


										BenQ Deutsc	hland GmbH/100%


										BenQ Iberica	S.L.Unipersonal/100%


										BenQ Austria	GmbH/100%


										BenQ Benelux	B.V./100%


										BenQ Italy S.R	.L./100%


										BenQ France	SAS/100%
					Nanjing Silvertown Health & Development Co., Ltd/100%

										BQ Ndi	AB/100%
	BenQ holding Darly	Dialysis by affilia Venture	Techno ted ente Inc. /0.0	logy C rprises: 1%	orp./92.85%					en orc	..

										BQ LLC/10	0%
					Corp./ 41% ted enterprises: e, Ltd. /18% ngCorporation /24% Corp./58.04% ted enterprises: Inc. / 8% e,Ltd. /2.19% % ted enterprises: Inc. /2% e, Ltd. /8.01% ing Corporation/45.11% ted enterprises: e, Ltd. /54.89%					en
	Qisda	Optroni	cs Corp	./100%
									MainteQ Euro	pe B.V./100%

	Darly	Venture	Inc./10	0%
									BenQ Asia Pa	cific Corp./100	%

			Darly holding Darly	Consult by affilia 2 Ventur	ing Corporation/45.11% ted enterprises: e, Ltd. /54.89%
										BenQ Korea C	o., Ltd./100%


			BenQ holding Darly Darly	ESCO by affilia 2 Ventur Consulti	Corp./ 41% ted enterprises: e, Ltd. /18% ngCorporation /24%					BenQ Japan C	o., Ltd./100%


										BenQ Australi	a Pty Ltd./100%

			Partne holding Darly Darly	r Tech by affilia Venture 2 Ventur	Corp./58.04% ted enterprises: Inc. / 8% e,Ltd. /2.19%
										BenQ (M.E.) F	ZE./100%


										BenQ India Pr	ivate Ltd./100%
			DFI In holding Darly Darly	c./45.08 by affilia Venture 2 Ventur	% ted enterprises: Inc. /2% e, Ltd. /8.01%

										BenQ Singapo	re Pte Ltd./100%


			Data I holding Darly	mage C by affilia 2 Ventur	orporation/28.82% ted enterprises: e, Ltd. /4.32%	New				BenQ Service	& Marketing (M) Sdn. Bhd./100%


										B Thil	d C Ltd/100%
			K2 Int holding Darly	ernatio by affilia 2 Ventur	nal Medical Inc./29.85% ted enterprises: e, Ltd. /7.71%	New				enQ (aa	) o., .

										PT. BenQ Tek holding by affilia BenQ Corp. /0	nologi Indonesia/99.69% ted enterprises: .31%	Ne

					K2 Medical(Thailand) Co.,Ltd/49%	New

71 -

(II) Basic information of affiliates

(II) Basic information of affiliates	(II) Basic information of affiliates	(II) Basic information of affiliates	(II) Basic information of affiliates	(II) Basic information of affiliates	(II) Basic information of affiliates	(II) Basic information of affiliates
December 31, 2018; NT$1,000
Name of business	abbreviation	Date of	Address	Currency	Paid-in	Main Activities
		incorporation			Capital
Qisda Sdn. Bhd.	QLPG	1989.11.15	2686Jalan Todak, Seberang Jaya 13700 Prai Penang, Malaysia	MYR	50,000	Leasingand management services
Qisda Mexicana S.A. De C.V.	QMMX	1996.09.20	Calzada Venustiano Carranza #88 Col. Plutarco Elias Calles Mexicali B.C. Mexico C.P.21376	USD	12,000	Manufacturing of computer peripheral products
Qisda America Corp.	QALA	2007.07.05	8941 Research Drive, Suite 200, Irvine, CA 92618 USA	USD	1,000	Electronicproduct trading
Qisda Japan Co., Ltd.	QJTO	2007.07.27	3-30-1, KAIGAN AKIMOTO SOKO 3A 5F. MINATO-KU, Tokyo, Japan	JPY	10,000	Electronic product trading and product repair in the local market
BenQ corporation	BenQ	2000.03.13	No. 16,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	4,086,406	Brandproduct manufacturingand sales
BENQ MATERIALS CORP.	BMC	1998.07.16	No. 29, Jianguo E. Rd., Guishan Dist., Taoyuan City 333, Taiwan	NTD	3,206,745	Development, manufacturing and sales of various functional filmproducts
BENQ DIALYSIS TECHNOLOGY CORP.	BDT	2014.10.08	No. 159-1, Shanying Rd., Guishan Dist., Taoyuan City 333, Taiwan	NTD	280,000	Manufacturing and trading of medical equipment
QISDA OPTRONICS CORP.	QTOS	2014.12.11	No. 1, Xingye St., Guishan Dist., Taoyuan City 333, Taiwan	NTD	1,000	Manufacturing of computer peripheral products
Qisda (L) Corp.	QLLB	1997.01.23	Level 15(B), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 Federal Territoryof Labuan, Malaysia	USD	114,250	Holding company
Darly Venture (L) Ltd	Darly	1997.01.23	Level 15(B), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 Federal Territoryof Labuan, Malaysia	USD	6,000	Holding company
DarlyVenture Inc.	APV	1996.05.02	No. 12,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	1,132,578	Holdingcompany
BenQ BM Holding Cayman Corp.	BBHC	2009.01.05	Floor 4, Willow House, Cricket Square, PO Box 2804, Grand Cayman KY1-1112, Cayman Islands	USD	244,945	Holding company
PARTNER TECH CORP.	PTT	1990.02.21	10F., No. 233-2, Baoqiao Rd., Xindian Dist., New Taipei City 231, Taiwan	NTD	750,856	Production and sales of electronic products and point of sale and import and export trade
DFI INC.	DFI	1981.07.14	No. 100, Huanhe St., Xizhi Dist., New Taipei City 221, Taiwan	NTD	1,146,889	Manufacturing, processing and trading of industrial computer boards and computer components
K2 INTERNATIONAL MEDICAL INC.	K2	2006.07.04	3F., No. 275, Sec. 3, NanjingE. Rd., Songshan Dist., Taipei City105, Taiwan	NTD	130,000	Tradingin medical equipment
DATA IMAGE CORPORATION	DIC	1997.11.22	2F., No. 96, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei City 221, Taiwan	NTD	693,996	Design, manufacture and sale of marine displayoptoelectronic modules
Qisda (Suzhou) Co., Ltd.	QCSZ	1993.06.25	No. 169, Zhujiang Road, Suzhou New District, , Jiangsu, China	USD	74,000	Processing of liquid crystal displays and mobile communicationproducts
Qisda(HongKong)Limited	QCHK	2008.12.04	Unit 706, Haleson Building, No 1Jubilee Street, HongKong	HKD	10	Holdingcompany

Name of business	abbreviation	Date of	Address	Currency	Paid-in	Main Activities
		incorporation			Capital
BenQ Medical (Shanghai) Co., Ltd	BDTcn	2015.07.20	Room 2, Unit C, 8th Floor, Building D, No. 207, Yuhong Road, Changning District, Shanghai, China	USD	1,360	Trading in medical equipment
Qisda(Shanghai)Co., Ltd.	QCSH	2005.12.15	No. 669, Taihua Road, PudongNew Area, Shanghai, China	USD	66,500	Processingof liquid crystal display
Qisda Electronics(Suzhou) Co. Ltd.	QCES	2000.02.23	No. 169, Zhujiang Road, Suzhou New District, , Jiangsu, China	USD	11,800	Processing of liquid crystal display modules
Qisda Optronics (Suzhou) Co., Ltd.	QCOS	2000.01.12	No. 169, Zhujiang Road, Suzhou New District, , Jiangsu, China	USD	12,460	Processing of optoelectronic products such asprojectors
Qisda Precision Industry (SuZhou) Co., Ltd	QCPS	2007.07.27	No. 169, Zhujiang Road, Suzhou New District, , Jiangsu, China	USD	5,000	Processing of plastic parts
BENQ ESCO CORP.	ESCO	2013.01.25	No. 12,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	100,000	Energytechnologyservice
BenQ (Hong Kong) Limited	BQHK	1991.10.31	Unit 705, 7/F., Saxon Tower, 7 Cheung Shun Street, Lai Chi Kok, Kowloon, HongKong	HKD	466,200	Electronic product trading in HK
BenQ Europe B.V.	BQE	1994.09.26	Meerenakkerweg1-17, 5652 AR, Eindhoven, The Netherlands	EUR	12,523	Electronicproduct tradingin Europe
BENQ ASIA PACIFIC CORP.	BQP	2007.09.28	No. 12,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	200,000	Electronicproduct tradingin Asia
BenQ America Corp.	BQA	1997.09.25	3200 Park Center Dr., Suite 150, Costa Mesa, CA 92626 USA	USD	2,000	Electronicproduct tradingin north USA
BenQ Latin America Corp.	BQL	2005.10.13	8200 NW 33rd street, Suite 301, Miami FL 33122, USA.	USD	4,350	Electronic product trading in Central and South America
MainteQ Europe B.V.	MQE	2002.04.05	EKKersrijt 4130, 5692 DC Son, The Netherlands	EUR	818	Display and projector repair service in Europe
Darly2 Venture, Ltd.	Darly2	2000.01.19	No. 12,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	1,950,000	Holdingcompany
BenQ Intelligent Technology (Hongkong)Co.,Ltd.	BQHK_HLD	2017.07.05	Unit 705, 7/F., Saxon Tower, 7 Cheung Shun Street, Lai Chi Kok, Kowloon, HongKong	USD	1,100,000	Electronic product trading in HK
INFTY Corporation	INF	1994.12.08	10F., No. 419, Sec. 2, Zhongshan Rd., Zhonghe Dist., New Taipei City 235, Taiwan	NTD	69,469	Assembly and trading of E-sport products
BenQ Guru Holding Limited	GSH	2005.12.08	Unit 705, 7/F., Saxon Tower, 7 Cheung Shun Street, Lai Chi Kok, Kowloon, HongKong	HKD	62,400	Holding company
BenQ Medical Technology Corporation	BMT	1989.03.21	7F., No. 46, Zhouzi St., Neihu Dist., Taipei City 114, Taiwan	NTD	445,660	Manufacturing and trading of medical equipment
PT. BENQ TEKNOLOGI INDONESIA	BQid	2017.11.6	Wisma 77 Tower 2 Lantai 5 Zone 1, Jalan Letjen S.Parman Kavling 77, Slipi Sub-district, Palmerah Subdistruct, WestJakarta	IDR	3,250,000	Electronic product trading
BenQ Korea Co., Ltd.	BQkr	2006.08.18	1801,288, Digital-ro, Guro-gu, Seoul, Korea	KRW	50,000	Provide various administrative and management services
BenQJapan Co., Ltd.	BQjp	1996.07.19	7Fl, Shiba-2 Bldg., 2-2-15 Shiba, Minato-ku, Tokyo 105-0014,Japan	JPY	10,000	Electronicproduct trading
BenQ Australia PtyLtd	BQau	2000.07.01	Unit 6, 2 Holker Street, Newington, NSW 2127 Australia	AUD	2,191	Electronicproduct trading
BenQ(M.E.)FZE.	BQme	2001.04.07	P. O. Box 18007,Jebel Ali Free Zone, Dubai. U.A.E.	AED	1,000	Electronicproduct trading

Name of business	abbreviation	Date of	Address	Currency	Paid-in	Main Activities
		incorporation			Capital
BenQ India Private Ltd.	BQin	2000.02.29	9B Building, 3rd Floor, DLF Cyber city Phase-3, Gurgaon-122002, Haryana, India	INR	440,296	Electronic product trading
BenQ Singapore Pte Ltd.	BQsg	2000.09.20	8 Burn Road #11-07 Trivex, Singapore 369977	SGD	500	Electronicproduct trading
BenQ Service & Marketing (M) Sdn. Bhd.	BQmy	2004.03.04	C-39-5, Block C, Jaya One, No.72A, Jalan Universiti, 46200 Petaling Jaya, Selangor, Malaysia	MYR	100	Electronic product trading
BenQ (Thailand) Co., Ltd.	BQth	2003.02.20	28th Fl., Sinn Sathorn Tower. 77/119 Krungdhonburi Road, Klongtonsai, Klongsarn, Bangkok 10600 ,Thailand	THB	60,000	Electronic product trading
BenQ Co.,Ltd	BQC	2005.05.11	1st Floor, Building D, No. 207, Yuhong Road, Changning District, Shanghai, China	USD	80,000	Real estate rental business
BenQ Technology (Shanghai) Co., Ltd.	BQls	2003.10.24	Room 2103F, 21st Floor, No. 28, Maji Road, Waigaoqiao Free Trade Zone, Shanghai, China	USD	200	Electronic product trading
ShengCheng Trading（Shanghai） Co.,LTD	BQsha_EC2	2015.10.10	Room 5, Unit C, 8th Floor, Building D, No. 207, Yuhong Road, Changning District, Shanghai, China	USD	100	Electronic product trading
BenQ Intelligent Technology (Shanghai) Co., Ltd.	BQC_RO	2017.10.13	Unit E, 8th Floor, Building D, No. 207, Yuhong Road, Changning District, Shanghai, China	USD	1,000	Trading in electronic products in China
BenQ Guru Software Co., Ltd.	GSS	1998.07.21	No.181, Zhuyuan Road, High Tech Zone, Jiangsu, Suzhou, China	USD	13,200	R&D and trading of computer information systems
BENQ GURU CORP.	GST	2003.11.25	No. 14, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan	NTD	57,600	R&D and trading of computer information systems
BenQ Canada Corp.	BQca	2003.09.29	3-1750 The Queensway, Suite 1265, Toronto, on M9C 5H5 Canada	CAD	1	Electronicproduct trading
BenQ Mexico S. de R.L. de C.V.	BQmx	2002.05.27	Boulevard Palmas Hill 1, Piso 8, Suite/Oficina 00-101 Colonia Valle de las Palmas, Huixquilucan Estado de México, C.P. 52764	MXN	3	Electronic product trading
Joytech LLC.	Joytech	2009.11.20	8200 NW 33rd street, Suite 301, Miami FL 33122, USA.	USD	1	Holding company
Vivitech LLC.	Vivitech	2010.01.04	8200 NW 33rd street, Suite 301, Miami FL 33122, USA.	USD	1	Holdingcompany
MaxGen Comercio Industrial Imp E ExpLtda.	MaxGen	2010.01.14	Rua Haddock Lobo, 585 2 andar CEP 01414-001 Sao Paulo, SP Brazil	BRL	503	Electronic product trading
BenQ Service de Mexico S. de R. L. de C.V.	BQms	2011.07.21	Boulevard Palmas Hill 1, Piso 8, Suite/Oficina 00-101 Colonia Valle de las Palmas, Huixquilucan Estado de México, C.P. 52764	MXN	3	Provide various administrative and management services
BenQ UK Limited	BQuk	1997.11.07	3 Staplehurst Office Centre, Weston-on-the-Green, OX25 3QU, Bicester Oxfordshire, United Kingdom	GBP	300	Electronic product trading
BenQ Deutschland GmbH	BQde	2000.09.07	Essener Strasse 5, 46047 Oberhausen, Germany	EUR	600	Electronicproduct trading
BenQ Inberica S.L. Unipersonal	BQib	2002.10.19	C/-Constitucion, 1-3(3rd f1),08960 SanJust Desvern, Barcelona, Spain	EUR	150	Electronicproduct trading
BenQ Austria GmbH	BQat	2001.08.07	Altmannsdorfer Strasse 89, Top6, 1120 Vienna, Austria	EUR	35	Electronicproduct trading
BenQ Benelux B.V.	BQnl	2000.10.12	Meerenakkerweg1-17, 5652 AR, Eindhoven, The Netherlands	EUR	18	Electronicproduct trading
BenQ ItalyS.R.L.	BQit	2002.02.14	Via Natale Battaglia, 12 Milano Italy	EUR	300	Electronicproduct trading

Name of business	abbreviation	Date of	Address	Currency	Paid-in	Main Activities
		incorporation			Capital
BenQ France SAS	BQfr	2004.04.08	381 Avenue du General de Gaulle, Immeuble Pentagone Plaza, 92140 Clamart, France	EUR	50	Electronic product trading
BenQ Nordic A.B.	BQse	2005.12.06	Mattbandsvagen 12, 18766 Taby, Sweden	SEK	100	Electronicproduct trading
BenQ LLC	BQru	2011.01.02	Park Place Moscow, 113/1 Leninski Prospekt B101, 117198 Moscow, Russian Federation	RUB	50	Provide various administrative and management services
BenQ BM Holding Corp.	BBM	2003.10.30	Level 15(B), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 Labuan F.T., Malaysia	USD	245,963	Holding company
DarlyConsultingCorporation.	DarlyC	2001.08.29	No. 12,Jihu Rd., Neihu Dist., Taipei City114, Taiwan	NTD	266,248	Investment management consultant
K2 MEDICAL(THAILAND)CO.,LTD	K2th	2018.10.26	77/87 Thonburi Road,Klongtan Sub-District,Klongsan District, Bangkok Metropolis/	THB	25,000	Medical equipment trading
NANJING BenQ Hospital Co., Ltd.	NMH	2003.11.11	No. 71 Hexi street,Jianye District, Nanjing, China	USD	152,015	Medical service
Suzhou BenQ Hospital Co., Ltd.	SMH	2004.07.07	No.181, Zhuyuan Road, High Tech Zone,Jiangsu, Suzhou, China	CNY	601,975	Medical service
BenQHospital Management Consulting (NanJing)Co., LTD.	NMHC	2005.11.14	No. 71 Hexi street, Jianye District, Nanjing, China	USD	1,000	Management consultant
BenQ Healthcare Consulting Corporation	BHCC	2009.02.05	No. 12, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan	NTD	22,763	Management consultant
Suzhou BenQ Investment Co., Ltd.	BIC	2015.09.16	No.181, Zhuyuan Road, High Tech Zone,Jiangsu, Suzhou, China	USD	30,000	Holdingcompany
Nanjing Silvertown Health & Development Co., Ltd	NSHD	2018.03.06	No. 71 Hexi street, Jianye District, Nanjing, China	CNY	-	Medical service

Presumed to be the same shareholder for those with relations of control and affiliation: None.
Overall business covered by the affiliates and subsidiaries, and the interaction and division of labor:

The Company's business coverage:

DMS (Design and Manufacturing Service): Engaged in the design, development, manufacturing and sales of various electronic products.

Brand Marketing: Engaged in design, development and sales of our provate brand products.

Materials Science: Engaged in research, development, manufacturing and sales of various electronic chemical film products.

Medical Services: Hospitals that provide medical services.

The Company is convinced that this division of labor system will enable the Company's overall operations to be upgraded, and will be able to fully utilize synergies in R&D, manufacturing, marketing and investment strategies to form the best competitive advantages.

(V) Directors, supervisors, and presidents of affiliates

December 31, 2018; Unit: in thousand shares; NT$ 1,000; %

			Shareholding	Shareholding
Name of
business	Title	Name or representative	Shares (Investment	I Hldi %
			Amount)	(nvestment ong )
QLPG	Director	David Wang,SS Lim,Mavis Lin	50,000,000	100%
QMMX	(Note2)	(Note2)	439,000	100%
QALA	Director General manager	Joe Huang,Daniel Hsueh,Ellin Lee Joe Huang	1,000,000	100%
QJTO	Director Supervisor	CY Ho,Chen,Pei-Tzu,Mavis Lin David Wang	Contribution amount JPY10,000,000	100%
BenQ	Director Supervisor General manager	Qisda Corp. Representative: K.Y. Lee,Peter Chen,Conway Lee,Pete Huang Qisda Corp. Representative: David Wang ConwayLee	408,640,600	100%
BMC	Director General manager	Qisda Corp. Representative: ZC.Chen,Peter Chen BenQ Corp.Representative: Conway Lee,K.Y. Lee,Yu, Ko-Yung, Yeh,Fu-Hai(Independent irector), Chen,Chiu-Ming(Independent director), Wu,Min-Ching(Independent director) RayLiu	139,689,294	43.56%
BDT	Director Supervisor	Qisda Corp. Representative: Harry Yang,Spark Huang Medica S.P.A. Representative: Marco Fecondini Darly Venture Inc. Representative: BillyLiou	26,000,000	92.86%
QTOS	Director Supervisor	Qisda Corp. Representative: Joe Huang,April Huang,Daniel Hsueh Qisda Corp. Representative: Jasmin Hung	100,000	100%
QLLB	Director	David Wang,Peter Chen,Mavis Lin	114,250,000	100%
Darly	Director	David Wang,Peter Chen,Jasmin Hung	6,000,000	100%
APV	Director Supervisor	Qisda Corp. Representative: David Wang,Peter Chen,Jasmin Hung Qisda Corp. Representative: Mavis Lin	113,257,830	100%
BBHC	Director	K.Y. Lee,Peter Chen,David Wang,Mark Hsiao,Tseng,Wen-Chi,Louise Wang,Yang,Hung-Jen Wang,Lin,Kuo,Chi-Chih	173,221,837	70.72%
PTT	Director General manager	Qisda Corp. Representative: Peter Chen,David Wang,Michael Lee,Wu,Hung-Lin Yeh,Hui-Hsin(Independent director), Kuo,Chia-Hung(Independent director), Wang,Kuo-Chiang(Independent director) Pete Wang	51,231,564	68.23%
DFI	Director	Qisda Corp. Representative: Peter Chen,David Wang,Steven Tsai Gordias Investments Limited Representative: Wei,Jen-Yu Chou,Kuang-Jen(Independent director), Chu,Chih-Hao(Independent director), Yeh,Te-Chang(Independent director)	63,079,095	55.09%
	General manager	Steven Tsai

76 -

			Shareholding	Shareholding
Name of
business	Title	Name or representative	Shares (Investment	I Hldi %
			Amount)	(nvestment ong )
K2	Director Supervisor General manager	Qisda Corp. Representative: Chen,Ming-Cheng,Harry Yang,Jasmin Hung,Scarlett Fang Chen,Hsiu-Wen,Lin,Yuan-Hao,Chen,Chung-I Darly2 Venture, Ltd. Representative: Mavis Lin Chen,Chung-I	4,882,943	37.56%
DIC	Director Supervisor General manager	Yu,Ssu-Ping,Chan,Wei-Hsiang,Yu,Hsieh-Yu,Ho, Wen-Hsien(Independent director), Ting,Fu-Kuang(Independent director) Lin,Yun-Yung,Yeh,Tsung-Hung,Hsu,Jui-Hsia Chan,Wei-Hsiang	23,000,000	33.14%
QCSZ	Director Supervisor General manager	Qisda (L)Corp. Representative: Mark Hsiao,Eric Lee,Mercer Peng Qisda (L)Corp. Representative: David Wang Mark Hsiao	Contribution amount USD74,000,000	100%
QCHK	Director	David Wang,Peter Chen,Mavis Lin	10,000	100%
BDTcn	Director Supervisor General manager	Qisda (L)Corp. Representative: Harry Yang,Frencis Xiao,Scott Yen Qisda (L)Corp. Representative: Mercer Peng Frencis Xiao	Contribution amount USD1,360,000	100%
QCSH	Director Supervisor General manager	Qisda Electronics(Suzhou) Co. Ltd. Representative： Mark Hsiao Qisda (Hong Kong)LimitedRepresentative: Eric Lee,Mercer Peng Qisda (Hong Kong)LimitedRepresentative: Jasmin Hung Mark Hsiao	Contribution amount USD66,500,000	100%
QCES	Director Supervisor General manager	Qisda (Hong Kong)Limited Representative: Mark Hsiao,Eric Lee,Mercer Peng Qisda (Hong Kong)Limited Representative: Jasmin Hung Mark Hsiao	Contribution amount USD11,800,000	100%
QCOS	Director Supervisor General manager	Qisda (Hong Kong)Limited Representative: Mark Hsiao,Eric Lee,Mercer Peng Qisda (Hong Kong)Limited Representative: Jasmin Hung Mark Hsiao	Contribution amount USD12,460,000	100%
QCPS	Director Supervisor General manager	Qisda (Hong Kong)Limited Representative: Mark Hsiao,Eric Lee,Mercer Peng Qisda (Hong Kong)Limited Representative: David Wang Mark Hsiao	Contribution amount USD5,000,000	100%
ESCO	Director Supervisor	Darly Venture Inc. Representative: Michael Lee,Elley Huang,Jasmin Hung Darly2 Venture, Ltd. Representative: BillyLiou	8,300,000	83%
BQHK	Director	David Wang,Scott Yen,DannyLin	466,200,002	100%
BQE	Director	ConwayLee,Steve Chu,Ivan Hsu	5,009,076	100%
BQP	Director Supervisor General manager	BenQ Corp.Representative: Conway Lee,Jeffrey Liang,Rackie Kuo BenQ Corp.Representative: Joy Chang JeffreyLiang	20,000,000	100%
BQA	Director	ConwayLee,Ellin Lee,Lars Yoder	200,000	100%
BQL	Director	ConwayLee,Jeff Liu,Israel Bedolla	4,350,000	100%

77 -

			Shareholding	Shareholding
Name of
business	Title	Name or representative	Shares (Investment	I Hldi %
			Amount)	(nvestment ong )
MQE	Director	ConwayLee,Peter Chen,EL Tan	81,800	100%
Darly2	Director	BenQ Corp.Representative: David Wang,Peter Chen,Jasmin Hung	Contribution amount NTD1,950,000,000	100%
BQHK_HLD	Director	Pete Huang,Tseng,Wen-Chi,Scott Yen	4,000,000	100%
INF	Director Supervisor	BenQ Corp.Representative: Conway Lee,Pete Huang,V.T. Darly2 Venture, Ltd. Representative: JoyChang	6,266,277	90.20%
GSH	Director	David Wang,Peter Chen,Scott Yen	62,400,000	100%
BMT	Director General manager	BenQ Corp.Representative: Peter Chen,David Wang,Michael Kuan,Joe Huang Li,Jen-Fang(Independent director), Chang,Chin-Tung(Independent director), Huang,Chin-Fa (Independent director) Michael Kuan	24,491,883	54.96%
BQid	Director Supervisor General manager	Jeffrey Liang,Eko Wijaya (Tjin Hok) Rackie Kuo Eko Wijaya(Tjin Hok)	6,500	100%
BQkr	Director Supervisor	Jeffrey Liang,Rackie Kuo,Peter So JoyChang	10,000	100%
BQjp	Director Supervisor	Jeffrey Liang,Rackie Kuo,Masashi Kikuchi JoyChang	200	100%
BQau	Director	JeffreyLiang,Rackie Kuo,Martin Moelle	2,191,092	100%
BQme	Director	JeffreyLiang,Rackie Kuo,Manish Bakshi	1	100%
BQin	Director	JeffreyLiang,Rackie Kuo,Rajeev.Singh	440,295,980	100%
BQsg	Director	JeffreyLiang,Rackie Kuo,Tan ZongYang,Aaron	500,000	100%
BQmy	Director	JeffreyLiang,Rackie Kuo,Brian HY Lee(Lee HingYew)	100,000	100%
BQth	Director	JeffreyLiang,Rackie Kuo,Thanyarak Nasomyon	11,999,998	100%
BQC	Director Supervisor	BenQ (Hong Kong) Limited Representative: David Wang,Scott Yen,Danny Lin BenQ (Hong Kong) Limited Representative: Jack Hsu	Contribution amount USD80,000,000	100%
BQls	Director Supervisor General manager	BenQ (Hong Kong) Limited Representative: Pete Huang,Tseng,Wen-Chi,Scott Yen BenQ (Hong Kong) Limited Representative: Joy Chang Tseng,Wen-Chi	Contribution amount USD200,000	100%
BQsha_EC2	Director Supervisor General manager	BenQ Intelligent Technology (Hongkong) Co.,Ltd. Representative: Tseng,Wen-Chi, David Huang,Scott Yen BenQ Intelligent Technology (Hongkong) Co.,Ltd. Representative: Joy Chang David Huang	Contribution amount USD100,000	100%
BQC_RO	Director Supervisor General manager	BenQ Intelligent Technology (Hongkong) Co.,Ltd. Representative: Pete Huang,Tseng,Wen-Chi,Scott Yen BenQ Intelligent Technology (Hongkong) Co.,Ltd. Representative: Joy Chang Tseng,Wen-Chi	Contribution amount USD1,000,000	100%
GSS	Director Supervisor	BenQ Guru Holding Limited Representative: Michael Lee,Joshua Tzeng,Billy Liou BenQ Guru Holding Limited Representative: Jasmin Hung	Contribution amount USD13,200,000	100%
	General manager	Huang,Chih-Kuang

78 -

			Shareholding	Shareholding
Name of
business	Title	Name or representative	Shares (Investment	I Hldi %
			Amount)	(nvestment ong )
GST	Director Supervisor	BenQ Guru Holding Limited Representative: Michael Lee,Joshua Tzeng,Billy Liou Darly Venture Inc. Representative: Jasmin Hung	5,757,428	99.96%
BQca	Director	Lars Yoder, Ellin Lee,Richard Winter	1,000	100%
BQmx	Director	Israel Bedolla,Jeff Liu,Albert Weng	3,000	100%
Joytech	Director	Israel Bedolla,Jeff Liu,Ellin Lee	500	100%
Vivitech	Director	Israel Bedolla,Jeff Liu,Ellin Lee	500	100%
MaxGen	Director	Marcelo Café	1,000	100%
BQms	Director	Israel Bedolla,Jeff Liu,Albert Weng	3,000	100%
BQuk	Director	Conway Lee,Steve Chu,Joy Chang	300	100%
BQde	Director	Steve Chu,Ivan Hsu,Oliver Barz	100	100%
BQib	Director	Conway Lee	150	100%
BQat	Director	Steve Chu,Ivan Hsu,Mihai Borze	35	100%
BQnl	Director	Conway Lee,Steve Chu,Ivan Hsu	182	100%
BQit	Director	Steve Chu,Ivan Hsu,Mihai Borze	50,000	100%
BQfr	Director	Steve Chu,Ivan Hsu,Bruno Morel	1	100%
BQse	Director	Steve Chu,Ivan Hsu,Bo Cramer	1	100%
BQru	Director	Youri Studenikin	1	100%
BBM	Director	K.Y. Lee,Peter Chen,David Wang,Mark Hsiao,Chen,Yi-Shan,Louise Wang,Yang,Hung-Jen Wang,Lin,Kuo,Chi-Chih	245,963,251	70.72%
DarlyC	Director Supervisor	Darly2 Venture, Ltd. Representative: David Wang,Peter Chen,Jasmin Hung Darly Venture Inc. Representative: Mavis Lin	26,624,804	100%
K2th	DirectorGeneral manager	Harry Yang,Henry Oyang,Yeh,Kung-Wu HenryOyang	245	18.40%
NMH	Director Supervisor General manager	BenQ BM Holding Corp. Representative: Mark Hsiao,Peter Chen,Tseng,Wen-Chi,Louise Wang,David Wang,Wang,Lin,Kuo,Chi-Chih BenQ BM Holding Corp. Representative: Jasmin Hung Mark Hsiao	Contribution amount USD 152,014,984	70.72%
SMH	Director Supervisor General manager	BenQ BM Holding Corp. Representative: Mark Hsiao,Peter Chen,Chen,Yi-Shan,Louise Wang,David Wang,Wang,Lin,Kuo,Chi-Chih BenQ BM Holding Corp. Representative: Jasmin Hung Chen,Yi-Shan	Contribution amount CNY 601,975,000	70.72%
NMHC	Director Supervisor	BenQ BM Holding Corp. Representative: Mark Hsiao,Peter Chen,Tseng,Wen-Chi,Louise Wang,David Wang,Wang,Lin,Kuo,Chi-Chih BenQ BM Holding Corp. Representative: Jasmin Hung	Contribution amount USD 1,000,000	70.72%
	General manager	Mark Hsiao

79 -

			Shareholding	Shareholding
Name of
business	Title	Name or representative	Shares (Investment	I Hldi %
			Amount)	(nvestment ong )
BHCC	Director Supervisor	BenQ BM Holding Corp. Representative: Mark Hsiao,Peter Chen,David Wang,Jasmin Hung BenQ BM Holding Corp. Representative: Mavis Lin	2,276,330	70.72%
BIC	Director Supervisor General manager	BenQ BM Holding Corp. Representative: Mark Hsiao,David Wang,Louise Wang,Ron Chiang BenQ BM Holding Corp. Representative: Jasmin Hung Mark Hsiao	Contribution amount USD30,000,000	70.72%
	Director	BenQ BM Holding Corp. Representative: Mark Hsiao,David Wang,Louise Wang	-	70.72%
NSHD	Supervisor	BenQ BM Holding Corp. Representative: Jasmin Hung

Note1: Qisad Grop combined holding shares and Shareholding ratio.

Note2: Liquidation has been approved by the Board of Directors in Augest 29[th] , 2014

Note3: Please refer to the 2018 Annual Reports of the Company’s Subsidiaries BenQ Materials Corporation, BenQ Medical Technology, Partner Tech Corp., DFI and Dataimage to respectively see its Directors, supervisors, and presidents of affiliates.

80 -

(VI) Overview of affiliates’ operations:

(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:	(VI) Overview of affiliates’ operations:
December 31,2018;Unit: NT$1,000
							Profit or loss for	Earnings per
Name of						Profit from
	Capital	Total assets	Total liabilities	Net assets	Revenue		the year (After	share (dollar;
business						operations
							income tax)	after income tax

QLPG	544,095	383,070	43,635	339,435	0	(30,210)	(46)
QMMX	66,829	4,960	19,325	(14,365)	0	(2,665)	135,152
QALA	32,800	9,391,644	9,342,703	19,594	22,547,248	12,248	14,573
QJTO	3,784	1,075,306	1,038,159	37,147	2,443,415	(9,419)	(10,254)
BenQ	4,086,406	16,264,421	8,498,564	7,765,856	17,572,083	185,201	1,485,045
BMC	3,206,745	10,343,159	6,159,144	4,184,015	12,764,172	439,628	328,579	1.02
BDT	280,000	192,890	10,631	182,259	53,855	(32,675)	(31,659)
QTOS	1,000	999	0	999	0	(1)	9
QLLB	3,460,633	35,856,813	23,420,777	12,436,036	93,353,949	(258)	687,784
Darly	165,000	291,118	230,426	60,691	0	(59)	14,318
APV	1,132,578	1,819,774	1,774	1,817,999	0	(271)	68,569
BBHC	7,405,278	3,690,663	322,544	3,368,119	0	(3,626)	159,028
PTT	750,856	2,279,070	1,250,816	1,028,254	2,311,073	(115,603)	30,144	0.40
DFI	1,146,889	4,722,148	1,505,358	3,216,790	5,211,122	781,647	605,337	5.28
K2	130,000	524,647	199,341	325,307	757,906	37,623	31,322
DIC	693,996	1,867,798	948,935	918,863	2,945,763	184,478	110,009	2.13
QCSZ	2,241,460	31,956,827	23,314,854	8,641,972	83,220,758	479,455	433,595
QCHK	0	4,126,873	0	4,126,873	0	0	297,516
BDTcn	43,776	69,232	30,507	38,725	95,591	3,469	2,374
QCSH	2,014,285	339,205	1,801,028	(1,461,823)	2,191	(27,236)	(25,911)
QCES	357,422	8,138,845	6,138,740	2,000,105	21,901,882	148,240	97,140
QCOS	377,413	8,645,634	4,769,171	3,876,463	20,967,446	253,982	192,886
QCPS	151,450	854,723	487,127	367,595	2,081,724	70,570	33,400
ESCO	100,000	154,134	126,125	28,008	147,964	(7,368)	(8,161)
BQHK	1,819,024	2,420,426	29,875	2,390,551	6,817	9,461	822,613
BQE	485,684	3,770,093	2,739,762	1,030,331	9,110,363	106,285	163,112
BQP	200,000	2,412,072	2,259,741	152,331	6,816,769	81,424	79,670
BQA	60,580	2,085,553	1,349,779	735,774	3,597,287	(98,518)	(105,668)
BQL	127,414	655,817	686,267	(30,450)	891,276	10,256	(78,687)
MQE	35,139	83,841	12,361	71,481	86,768	(60)	863
Darly2	1,950,000	2,365,059	27,214	2,337,844	0	(380)	116,664
BQHK_HLD	118,143	173,834	43,696	130,138	112,742	(16,595)	40,509
INF	69,469	107,254	27,431	79,823	290,598	8,540	7,434
GSH	242,320	189,032	672	188,360	0	(38)	29,836
BMT	445,660	1,463,334	426,593	1,036,741	606,195	36,989	66,682	1.50
BQid	6,923	8,422	1,402	7,020	0	255	224
BQkr	1,713	23,426	15,460	7,965	0	17,695	15,211
BQjp	2,582	435,602	356,237	79,365	1,274,395	15,037	7,110
BQau	65,042	227,332	172,540	54,792	644,815	9,233	6,087
BQme	8,809	364,072	379,085	(15,012)	1,077,777	780	823
BQin	225,287	827,693	817,087	10,606	961,022	36,038	(19,420)
BQsg	11,620	36,950	58,699	(21,749)	60,824	757	(1,990)
BQmy	106,550	31,366	23,723	7,642	104,660	(5,141)	(7,317)
BQth	56,030	80,584	118,779	(38,196)	210,302	1,815	480
BQC	2,766,770	3,014,765	617,120	2,397,645	1,687,806	902,379	815,239
BQls	12,703	145,111	135,809	9,302	83,334	915	3,528
BQsha_EC2	2,942	10,867	21,100	(10,233)	57,210	2,716	(5)
BQC_RO	89,643	1,442,704	1,302,554	140,150	5,307,670	156,456	53,913
GSS	495,651	185,877	74,868	111,009	174,160	4,712	9,781

81 -

							Profit or loss for	Earnings per
Name of						Profit from
	Capital	Total assets	Total liabilities	Net assets	Revenue		the year (After	share (dollar;
business						operations
							income tax)	after income tax

GST	57,600	58,424	8,973	49,451	36,322	19,767	20,105
BQca	30	135,952	117,266	18,686	719,681	814	(1,054)
BQmx	7	343,729	312,037	31,692	522,681	2,266	1,366
Joytech	4,422	(119,400)	0	(119,400)	0	0	(43,810)
Vivitech	4,422	(119,400)	0	(119,400)	0	0	(43,810)
MaxGen	8,159	254,271	493,072	(238,801)	277,187	(10,112)	(87,621)
BQms	6	14,100	11,127	2,973	0	1,442	800
BQuk	14,003	327,736	302,694	25,042	1,371,877	13,955	9,696
BQde	23,535	584,627	443,534	141,093	2,284,935	22,562	23,866
BQib	5,884	218,792	169,545	49,247	684,231	6,752	4,079
BQat	1,373	320,225	273,109	47,116	1,431,008	10,670	11,241
BQnl	714	145,737	189,866	(44,128)	447,826	4,330	3,613
BQit	11,768	172,447	144,894	27,553	339,278	4,092	3,670
BQfr	1,961	217,006	353,078	(136,072)	893,151	7,339	7,487
BQse	439	191,709	122,560	69,149	959,573	11,505	8,989
BQru	48	13,496	(166)	13,662	0	3,168	3,161
BBM	7,520,838	2,821,586	48,475	2,773,111	0	(104,237)	113,281
DarlyC	266,248	340,087	17,409	322,677	0	(888)	(2,013)
K2th	5,916	10,290	4,626	5,664	0	(252)	(266)
NMH	5,145,510	5,806,359	3,827,810	1,978,549	4,791,107	172,053	248,367
SMH	2,929,594	4,003,849	3,284,216	719,633	2,190,970	46,991	(40,007)
NMHC	38,825	25,839	207	25,632	471	(77)	179
BHCC	22,763	45,727	19,743	25,984	94,043	7,957	8,743
BIC	974,419	874,865	11,451	863,414	0	(5)	186
NSHD	-	-	-	-	-	-	-

II. Privately placed securities handling status in the most recent year up to the publication date of this Annual Report: None
III. Holding or disposition of the Company shares by subsidiaries in the most recent year up to the publication date of this Annual Report: None.
IV. Other items that must be included: None.
V. Any event that results in substantial impact on the shareholders’ equity or prices of the Company’s securities as prescribed by Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act that have occurred in the most recent year up to the publication date of this Annual Report: None.
82 -

Stock Code:2352

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements With Independent Auditors’ Report For the Years Ended December 31, 2018 and 2017

Address: No. 157, Shan-Ying road, Gueishan, Taoyuan, Taiwan Telephone: 886-3-359-8800

The independent auditors’ report and the accompanying consolidated 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 independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

83 -

Representation Letter

The entities that are required to be included in the combined financial statements of Qisda Corporation as of and for the year ended December 31, 2018 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 “ Consolidated Financial Statements” endorsed by the Financial Supervisory Commission. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Qisda Corporation and subsidiaries do not prepare a separate set of combined financial statements.

Hereby declare

Qisda Corporation Chi-Hong (Peter) Chen Chairman March 21, 2019

84 -

Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

We have audited the consolidated financial statements of Qisda Corporation (the “ Company” ) and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the paragraph on Other Matter of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards, International Accounting Standards, interpretations, as well as related guidance endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the paragraph on the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2018 are stated as follows:

Revenue recognition

Please refer to notes 4(r) and 6(x) for the accounting policy on revenue recognition and “Revenue” for the related disclosures, respectively, of the notes to the consolidated financial statements.

85 -

Description of key audit matter:

The Group has several operating segments. Each segment engages in different business activities. In addition, the Group has operations spread globally. The Group recognizes its revenue depending on the various trade terms in each individual sale transaction and service rendered, which are considered to be complex in determining the timing of revenue recognition. Therefore, revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matters above, our principal audit procedures included testing the design and operating effectiveness of the Group’s internal controls over financial reporting in the sales and collection cycle; assessing whether revenue is recognized based on the trade terms with customers through reviewing the related sales contracts or other trade documents; performing a sample test on the sales transactions that took place before and after the balance sheet date to determine whether the performance obligation has been satisfied by transferring control over the goods or services to a customer, and assessing the reasonableness of the timing of revenue recognition; reviewing and understanding the reasonableness for any identified significant sales returns and allowances that took place after the balance sheet date, as well as assessing whether the revenue and related sales returns and allowances is recognized in appropriate period.

2. Valuation of inventories

Please refer to notes 4(h), 5 and 6(g) for the inventory accounting policy, “Critical accounting judgments and key sources of estimation uncertainty” for estimation uncertainty of inventory valuation, and “Inventories” for the related disclosures, respectively, of the notes to the consolidated financial statements.

Description of key audit matter:

Inventories are measured at the lower of cost and net realizable value. Due to the rapid technological innovations and highly competitive environments in the electronic industry, the life cycle of certain products of the Group are short and their market prices fluctuate rapidly, which could possibly result in a price decline and obsolescence of inventory, wherein the inventory cost may exceed its net realizable value. Therefore, the valuation of inventories has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included reviewing the inventory of aging report and analyzing the fluctuation of inventory aging; selecting samples to verify the accuracy of the net realizable value of inventories and inventory aging report prepared by the Group; evaluating whether valuation of inventories was accounted for in accordance with the Group’s accounting policies; and assessing the historical reasonableness of management’s estimates on inventory provisions.

3. Impairment of goodwill

Please refer to notes 4(p), 5 and 6(m) for the accounting policy on impairment of non-financial assets, “Critical accounting judgments and key sources of estimation uncertainty”, for the estimation uncertainty of impairment of goodwill, and “Intangible assets”, and for the related disclosures, respectively, of the notes to the consolidated financial statements.

86 -

Description of key audit matter:

Goodwill arising from acquisition of subsidiaries are annually subject to impairment test or when there are indications that goodwill may have been impaired. The assessment of the recoverable amount of goodwill involves management’s judgment and estimation. Accordingly, the assessment of impairment of goodwill has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included obtaining the assessment of goodwill impairment provided by the management; assessing the appropriateness of the valuation model and key assumptions, including the discount rate, expected growth rate and future cash flow projections, used by the management in measuring the recoverable amount; performing a sensitivity analysis of key assumptions and results; and assessing the adequacy of the Group’s disclosures with respect to the related information.

Other Matter

We did not audit the financial statements of certain subsidiaries of the Group. Those financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those subsidiaries, is based solely on the report of other auditors. The financial statements of those subsidiaries reflect the total assets amounting to NT$6,588,263 thousand, constituting 5.50% of the consolidated total assets as of December 31, 2018, and the total operating revenues amounting to NT$5,615,233 thousand, constituting 3.60% of the consolidated total operating revenues for the year ended December 31, 2018.

The Company has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2018 and 2017, on which we have audited and issued an unmodified opinion with other matter section for the year ended December 31, 2018, and an unmodified opinion for the year ended December 31, 2017, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

87 -

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remained solely responsible for our audit opinion.

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

88 -

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Tzu-Chieh Tang and Wei-Ming Shih.

KPMG

Taipei, Taiwan (Republic of China) March 21, 2019

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and 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 audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

89 -

December 31, 2017	Amount %		16,262,262 15		67,531 -	- -	24,243,393 22	1,626,103 2	11,064,170 10	5,946 -	5,946 -	866,198 1	866,198 1	1,704,031 2	1,704,031 2	27,709 -	470,787 -	56,338,130 52	56,338,130 52					9,628 -	13,005,122 12	31,726 -	563,666 1	528,599 -	918,059 1	918,059 1	15,056,800 14	15,056,800 14	71,394,930 66	71,394,930 66			19,667,820 18	2,173,633 2	9,501,437 9	(383,980) (1)	30,958,910 28	6,585,576 6	37,544,486 34	108,939,416 100
December 31, 2018	Amount %		$ 14,786,555 12		47,114 -	876,788 1	28,443,235 24	2,260,495 2	10,025,492 8	13,394 -		2,111,070 2		2,340,508 2		20,946 -	410,124 -	61,335,721 51						96,721 -	16,234,476 14	17,068 -	620,633 -	678,632 1	964,386 1		18,611,916 16		79,947,637 67				19,667,820 16	2,146,076 2	10,801,845 9	(168,422) -	32,447,319 27	7,412,327 6	39,859,646 33	$ 119,807,283 100
	Liabilities and Equity	Current liabilities:	Short-term borrowings (notes 6(n), (ab) and (ae) and 8)	Financial liabilities at fair value through profit or loss�current (notes 6(b),	(j) and (ab))	Contract liabilities�current (notes 3(a) and 6(x))	Notes and accounts payable (note 6(ab))	Accounts payable to related parties (notes 6(ab) and 7)	Other payables (notes 3(a) and 6(z) and (ab))	Other payables to related parties (notes 6(ab) and 7)		Other current liabilities (note 3(a))		Current portion of long-term debt (notes 6(o), (ab) and (ae) and 8)		Lease obligations payable�current (notes 6(p), (ab) and (ae))	Provisions�current (note 6(q))	Total current liabilities		Non-current liabilities:		Financial liabilities at fair value through profit or loss�non-current (notes 6(b), (j) and (ab))			Long-term debt (notes 6(o), (ab) and (ae) and 8)	Lease obligations payable�non-current (notes 6(p), (ab) and (ae))	Provisions�non-current (note 6(q))	Deferred income tax liabilities (note 6(t))	Other non-current liabilities (notes 6(s) and (ab))		Total non-current liabilities		Total liabilities		Equity attributable to shareholders of the Company (note 6(u)):		Common stock	Capital surplus	Retained earnings	Other equity	Total equity attributable to shareholders of the Company	Non-controlling interests (notes 6(j) and (u))	Total equity	Total liabilities and equity
			2100	2120		2130	2170	2180	2200	2220		2300		2322		2355	2250						2503		2540	2613	2550	2570	2670								3110	3260	3300	3400		36XX
December 31, 2017	Amount %		6,636,634 6		1,043,701 1		- -	29,605 -	23,887,642 22		4,237,646 4		222,320 -		7,412 -	20,179,338 19	1,928,422 2		1,205,612 1		155,220 -			59,533,552 55		- -	637,649 1	16,748,411 15		19,991,519 18		2,527,582 2		5,004,450 5		1,676,767 2	153,818 -	218,089 -	2,447,579 2	49,405,864 45				108,939,416 100
December 31, 2018	Amount %		$ 9,618,657 8		405,914 -		30,380 -	- -	25,012,211 21		3,097,461 3		580,936 -		22,568 -	25,063,054 21	2,089,503 2		273,007 -		- -			66,193,691 55		731,246 1	- -	19,382,592 16		21,013,038 18		2,834,475 2		4,994,663 4		1,829,762 2	260,456 -	192,698 -	2,374,662 2	53,613,592 45				$ 119,807,283 100
	Assets	Current assets:	Cash and cash equivalents (notes 6(a) and (ab))	Financial assets at fair value through profit or loss�current (notes 6(b) and	(ab))	Financial assets at fair value through other comprehensive income�current	(notes 6(c) and (ab))	Available-for-sale financial assets�current (notes 6(d) and (ab))	Notes and accounts receivable, net (notes 6(e), (x) and (ab) and 8)	Notes and accounts receivable from related parties (notes 6(e), (x) and (ab)	and 7)		Other receivables (notes 6(e), (f) and (ab) and 7)		Other receivables from related parties (notes 6(f) and (ab) and 7) Inventories (notes 6(g) and 8) Other current assets (note 7)				Other financial assets�current (notes 6(a) and (ab) and 8)		Non-current assets held for sale (note 6(h))			Total current assets	Non-current assets:	Financial assets at fair value through other comprehensive income�non- current (notes 6(c) and (ab)) Available-for-sale financial assets�non-current (notes 6(d) and (ab)) Investments accounted for using equity method (notes 6(i) and 8)				Property, plant and equipment (notes 6(k) and 8)		Investment property (note 6(l))		Intangible assets (notes 6(j) and (m))		Deferred income tax assets (note 6(t)) Other non-current assets (notes 6(s) and 8) Other financial assets�non-current (notes 6(k) and (ab) and 8) Long-term prepaid rents (note 8) Total non-current assets								Total assets
			1100	1110		1120		1125	1170	1181			1200		1210	130X	1470		1476		1461					1517	1523	1550		1600		1760		1780		1840	1900	1980	1985

90 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

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

4000 Operating revenues (notes 6(r), (x) and (y), 7 and 14) 5000 Operating costs (notes 6(g), (k), (l), (m), (q), (r), (s) and (z), 7 and 12) Gross profit Operating expenses (notes 6(e), (k), (m), (q), (r), (s), (v) and (z), 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6400 Other operating expenses 6450 Expected credit loss Total operating expenses Operating income Non-operating income and loss: 7010 Other income (note 6(aa)) 7020 Other gains and losses�net (notes 6(d), (h), (i), (j), (r), (aa), (ab) and (ac) and 7) 7050 Finance costs (note 6(aa)) 7060 Share of profits (losses) of associates and joint ventures (note 6(i)) Total non-operating income and loss Income before income tax 7950 Income tax expense (note 6(t)) Net income Other comprehensive income: 8310 Items that will not be reclassified subsequently to profit or loss 8311 Remeasurements of defined benefit plans (notes 6(s) and (u)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (notes 6(u) and (ab)) 8320 Share of other comprehensive income of associates (notes 6(i) and (u)) 8349 Less: income tax related to items that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations (note 6(u)) 8362 Change in fair value of available-for-sale financial assets (notes 6(u) and (ab)) 8370 Share of other comprehensive income of associates and joint ventures (notes 6(i) and (u)) 8399 Less: income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax Total comprehensive income for the year Net income attributable to: 8610 Shareholders of the Company 8620 Non-controlling interests Total comprehensive income attributable to: 8710 Shareholders of the Company 8720 Non-controlling interests Earnings per share (in New Taiwan dollars) (note 6(w)): 9750 Basic earnings per share 9850 Diluted earnings per share	2018 Amount % $ 155,783,161 100 (136,540,185) (88) 19,242,976 12 (7,963,189) (5) (3,015,215) (2) (3,710,837) (2) 48,673 - (26,249) - (14,666,817) (9) 4,576,159 3 453,514 - 276,633 - (848,789) - 1,155,594 1 1,036,952 1 5,613,111 4 (1,162,457) (1) 4,450,654 3 (53,899) - 80,429 - (68,022) - - - (41,492) - 254,541 - - - (61,967) - - - 192,574 - 151,082 - $ 4,601,736 3 $ 4,035,064 3 415,590 - $ 4,450,654 3 $ 4,250,635 3 351,101 - $ 4,601,736 3 $ 2.05 $ 2.03	2017 Amount % 136,862,492 100 (120,529,445) (88) 16,333,047 12 (6,572,404) (5) (2,731,022) (2) (3,565,713) (3) (62,000) - - - (12,931,139) (10) 3,401,908 2 233,562 - 1,048,133 1 (660,210) - 2,395,799 2 3,017,284 3 6,419,192 5 (762,822) (1) 5,656,370 4 5,861 - - - (6,222) - - - (361) - (967,810) (1) (181,851) - (126,978) - - - (1,276,639) (1) (1,277,000) (1) 4,379,370 3 5,291,387 4 364,983 - 5,656,370 4 4,048,715 3 330,655 - 4,379,370 3 2.69 2.66

See accompanying notes to consolidated financial statements.

91 -

															Total equity	32,945,331	5,656,370	(1,277,000)	4,379,370		-	(2,596,152)		35,636			(3,500)		(35,137)	3,673	-	22,181	2,793,084	37,544,486	(80,212)	37,464,274	4,450,654	151,082	4,601,736		-	-	(2,655,156)		9,086		(439,028)	2,289	4,914			(89,398)	-	960,929	39,859,646
													Non-	controlling	interests	3,435,285	364,983	(34,328)	330,655		-	-		-			(794)		(35,137)	3,673	56,756	2,054	2,793,084	6,585,576	(699)	6,584,877	415,590	(64,489)	351,101		-	-	-		-		(439,028)	2,289	(1,072)			(46,768)	(1)	960,929	7,412,327
													Total equity	of the	Company	29,510,046	5,291,387	(1,242,672)	4,048,715		-	(2,596,152)		35,636			(2,706)		-	-	(56,756)	20,127	-	30,958,910	(79,513)	30,879,397	4,035,064	215,571	4,250,635		-	-	(2,655,156)		9,086		-	-	5,986			(42,630)	1	-	32,447,319
														Total other	equity interest	858,692	-	(1,242,672)	(1,242,672)		-	-		-			-		-	-	-	-	-	(383,980)	(13)	(383,993)	-	215,571	215,571		-	-	-		-		-	-	-			-	-	-	(168,422)
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	QISDA CORPORATION AND SUBSIDIARIES	Consolidated Statements of Changes in Equity	For the years ended December 31, 2018 and 2017	(Expressed in Thousands of New Taiwan Dollars)	Attributable to shareholders of the Company	Retained earnings Total other equity interest	Unrealized	gains	(losses) from	financial assets Unrealized	measured at gains (losses)	Foreign fair value on available-	currency through other for-sale Remeasurements	Legal Special Unappropriated Total retained translation comprehensive financial of defined benefit	reserve reserve earnings earnings differences income assets plans	459,607 - 6,346,595 6,806,202 1,018,614 - 131,797 (291,719)	- - 5,291,387 5,291,387 - - - -	- - - - (1,139,104) - (101,431) (2,137)	- - 5,291,387 5,291,387 (1,139,104) - (101,431) (2,137)		434,227 - (434,227) - - - - -	- - (2,596,152) (2,596,152) - - - -		- - - - - - - -			- - - - - - - -		- - - - - - - -	- - - - - - - -	- - - - - - - -	- - - - - - - -	- - - - - - - -	893,834 - 8,607,603 9,501,437 (120,490) - 30,366 (293,856)	- - (79,500) (79,500) - 30,353 (30,366) -	893,834 - 8,528,103 9,421,937 (120,490) 30,353 - (293,856)	- - 4,035,064 4,035,064 - - - -	- - - - 248,819 16,637 - (49,885)	- - 4,035,064 4,035,064 248,819 16,637 - (49,885)		529,139 - (529,139) - - - - -	- 383,979 (383,979) - - - - -	- - (2,655,156) (2,655,156) - - - -		- - - - - - - -		- - - - - - - -	- - - - - - - -	- - - - - - - -			- - - - - - - -	- - - - - - - -	- - - - - - - -	1,422,973 383,979 8,994,893 10,801,845 128,329 46,990 - (343,741)
														Common Capital	stock surplus	Balance at January 1, 2017 $ 19,667,820 2,177,332	Net income in 2017 - -	Other comprehensive income in 2017 - -	Total comprehensive income in 2017 - -	Appropriation of earnings:	Legal reserve - -	Cash dividends distributed to shareholders - -	Changes in equity of associates and joint	ventures accounted for using equity method - 35,636	Difference between consideration and carrying	amount arising from acquisition or disposal	of shares in subsidiaries - (2,706)	Distribution of cash dividend by subsidiaries to	non-controlling interests - -	Stock option compensation cost of subsidiary - -	Changes in ownership interests in subsidiaries - (56,756)	Capital injection from non-controlling interests - 20,127	Changes in non-controlling interests - -	Balance at December 31, 2017 19,667,820 2,173,633	Effects of retrospective application - -	Restated balance at January 1, 2018 19,667,820 2,173,633	Net income in 2018 - -	Other comprehensive income in 2018 - -	Total comprehensive income in 2018 - -	Appropriation of earnings:	Legal reserve - -	Special reserve - -	Cash dividends distributed to shareholders - -	Changes in equity of associates and joint	ventures accounted for using equity method - 9,086	Distribution of cash dividend by subsidiaries to	non-controlling interests - -	Stock option compensation cost of subsidiary - -	Capital injection from non-controlling interests - 5,986	Difference between consideration and carrying	amount arising from acquisition or disposal	of shares in subsidiaries - (42,630)	Changes in ownership interests in subsidiaries - 1	Changes in non-controlling interests - -	Balance at December 31, 2018 $ 19,667,820 2,146,076	See accompanying notes to consolidated financial statements.
																									-	92		-

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Income before income tax
Adjustments for:
Adjustments to reconcile profit or loss:
Depreciation
Amortization
Expected credit loss / Provision for bad debt expense
Interest expense
Interest income
Dividend income
Share-based compensation cost
Share of profits of associates and joint ventures
Gain on disposal of property, plant and equipment
Gain on disposal of non-current assets held for sale
Gain on disposal of investments
Impairment loss on financial assets
Gain on bargain purchase
Impairment loss on non-financial assets
Impairment loss on investments accounted for using equity method
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease in financial assets at fair value through profit or loss
Increase in notes and accounts receivable
Decrease in notes and accounts receivable from related parties
Decrease (increase) in other receivable
Decrease (increase) in other receivable from related parties
Increase in inventories
Increase in other current assets
Decrease (increase) in other non-current assets
Net changes in operating assets
Changes in operating liabilities:
Decrease in financial liabilities at fair value through profit or loss
Increase (decrease) in notes and accounts payable
Increase (decrease) in accounts payable to related parties
Increase (decrease) in other payable to related parties
Decrease in provisions
Increase in contract liabilities
Increase in other payables and other current liabilities
Decrease in other non-current liabilities
Net changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash provided by operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

2018
2017
$ 5,613,111
6,419,192
2,018,660
1,815,685
467,629
262,892
26,249
22,563
848,789
660,210
(185,434)
(84,640)
(35,321)
(93,842)
2,289
3,673
(1,155,594)
(2,395,799)
(10,404)
(182,793)
(156,703)
-
(14,727)
(597,977)
-
1,755
(253)
-
2,815
1,455
-
7,098
1,807,995
(579,720)
637,787
303,516
(274,728)
(1,958,405)
1,140,185
377,687
(254,826)
21,192
(15,156)
425
(3,945,789)
(1,948,916)
(27,761)
(272,674)
(66,632)
79,427
(2,806,920)
(3,397,748)
(23,365)
(34,480)
3,419,447
(1,548,801)
634,392
(798,153)
7,448
(15,764)
(4,696)
(41,074)
246,134
-
326,612
799,581
(88)
(12,761)
4,605,884
(1,651,452)
1,798,964
(5,049,200)
3,606,959
(5,628,920)
9,220,070
790,272
187,805
78,389
1,314,864
624,912
(841,475)
(587,669)
(922,998)
(570,095)
8,958,266
335,809

See accompanying notes to consolidated financial statements.

93 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities:
Purchase of financial assets at fair value through other comprehensive
income
Purchase of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Purchase of investments accounted for using equity method
Proceeds from disposal of non-current assets held for sale
Additions to property, plant and equipment
Proceeds from disposal of property, plant and equipment
Additions to intangible assets
Additions to investment property
Decrease (increase) in other financial assets
Acquisition of subsidiary, net of cash used
Net cash flows used in investing activities
Cash flows from financing activities:
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in long-term debt
Repayments of long-term debt
Decrease in lease obligation payable
Cash dividends distributed to shareholders
Cash dividends paid to non-controlling interests
Acquisition of subsidiary’s interests from non-controlling interests
Capital injection from non-controlling interests
Net cash provided by (used in) financing activities
Effects of foreign exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

See accompanying notes to consolidated financial statements.

94 -

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) QISDA CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2018 and 2017

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

1. Organization and business

Qisda Corporation (the “Company”) was incorporated on April 21, 1984, as a company limited by shares under the laws of the Republic of China (“ R.O.C.” ) and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’s registered office is No. 157, Shan-Ying Road, Gueishan, Taoyuan, Taiwan. The Company and subsidiaries (collectively the “Group”) are engaged in the sales, manufacturing and services of high-end monitors and opto-mechatronics products; the sales and services of smart business solution; the sales, manufacturing and services of medical equipments; as well as providing medical services.

2. Authorization of the consolidated financial statements:

These consolidated financial statements were authorized for issuance by the Board of Directors on March 21, 2019.

3. Application of New and Revised Accounting Standards and Interpretations

(a) Impact of adoption of new, revised or amended standards and interpretations endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”).

In preparing the accompanying consolidated financial statements, the Group has adopted the following International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), and Interpretations that have been issued by the International Accounting Standards Board (“ IASB” ) (collectively, “ IFRSs”) and endorsed by the FSC, with effective date from January 1, 2018.

2018.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendment to IFRS 2_Classification and Measurement of Share-based Payment_	January 1, 2018
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
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

(Continued)

95 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Except for the following items, the initial application of the above IFRSs did not have any material impact on the consolidated financial statements.

(i) IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a five-step model framework to determine the method, timing and amount of revenue recognized. This Standard replaces the existing revenue recognition guidance, including IAS 18 Revenue , IAS 11 Construction Contracts and the related interpretations. The Group applies this standard retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application. The Group elected not to restate the comparative information for the prior reporting period; but instead, continues to apply IAS 11, IAS 18, and the related Interpretations, for comparative reporting period. The Group recognizes the cumulative effect upon the initial application of this Standard as an adjustment to the opening balance of its retained earnings on January 1, 2018.

The Group uses the practical expedients for completed contracts, meaning, it need not restate those contracts that have been completed on January 1, 2018.

The following are the nature and impacts of the changes in accounting policies:

1) Sales of goods

Under IAS 18, revenue for the sale of goods is recognized when the related significant risks and rewards of ownership of the goods have been transferred to the customers, the revenue and the cost incurred, or to be incurred, can be measured reliably, the economic benefits of the transaction will probably flow to the Group, and there is neither continuing managerial involvement to the degree usually associated with ownership nor effect control over the goods sold. Under IFRS 15, revenue is recognized when a customer obtains control of the goods.

2) Rending of services

Under IAS 18, the Group’s revenue from medical services rendered was recognized by reference to the stage of completion at the reporting date. Under IFRS 15, The Group’s revenue is recognized when medical services are provided to the customers and the performance obligation is satisfied.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Impacts on consolidated financial statements

The following tables summarize the impacts of adopting IFRS 15 on the Group’ s consolidated financial statements.

Impacted line items on the consolidated balance sheet Other payable (Note 2) Other current liabilities (Note 1 and 2) Contract liabilities—current (Note 1) Impact on liabilities	December 31, 2018	December 31, 2018	January 1, 2018	January 1, 2018
	Balances prior to the adoption of IFRS 15 Impact of changes in accounting policies $ 11,849,532 (1,824,040) 1,163,818 947,252 - 876,788 $ -	Balance upon adoption of IFRS 15	Balances prior to the adoption of IFRS 15 11,064,170 866,198 -	Impact of changes in accounting policies Balance upon adoption of IFRS 15 (1,675,779) 9,388,391 1,045,125 1,911,323 630,654 630,654 -
		10,025,492 2,111,070 876,788

Note 1: For certain contracts, the Group has received a part of the considerations but does not satisfy its obligations. Under IFRS 15, contract liabilities are recognized for such situation, different from deferred revenues under other current liabilities prior to the adoption of IFRS 15.
Note 2: Prior to the adoption of IFRS 15, rebate payables were recognized as other payables. Under IFRS 15, rebate payables are recognized as refund liabilities under other current liabilities.

Impacted line items on the consolidated statement of cash flows Cash flows from operating activities: Income before income tax Adjustments: Increase in contract liabilities Increase in other payables and other current liabilities Impact on net cash flows provided by (used in) operating activities	For the year ended December 31, 2018
	Balance prior to the adoption of IFRS 15 Impact of changes in accounting polices Balance upon adoption of IFRS 15 $ 5,613,111 - 5,613,111 - 246,134 246,134 572,746 (246,134) 326,612 $ -

(ii) 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.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As a result of the adoption of IFRS 9, the Group adopted the consequential amendments to IAS 1 Presentation of Financial Statements which requires impairment of financial assets to be presented in a separate line item in the consolidated statements of comprehensive income. Previously, the Group’ s approach was to include the impairment of accounts receivable in selling expenses. Additionally, the Group adopted the consequential amendments to IFRS 7 Financial Instruments: “Disclosures” that are applied to disclosures about 2018 but generally have not been applied to comparative information.

The detail of new significant accounting policies and the nature and effect of the changes to IFRS 9 are as follows:

1) Classification of financial assets and financial liabilities

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 classification of financial assets under IFRS 9 is generally based on the business model in which financial assets are managed and their contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables, and available-for-sale. Please refer to note 4(g) for an explanation of how the Group classifies and measures its financial assets and accounts for related gains and losses under IFRS 9.

The adoption of IFRS 9 did not have any significant impact on the Group’s accounting policies on financial liabilities.

2) Impairment of financial assets

IFRS 9 replaces the “incurred loss” model in IAS 39 with a forward-looking “expected credit loss” (“ ECL” ) model. The new impairment model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39. Please refer to note 4(g) for more details.

3) Transition

The adoption of IFRS 9 have generally been applied retrospectively, except as described below:

The differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9 are recognized in retained earnings and other equity on January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9, and therefore, is not comparable to the information presented for 2018 under IFRS 9.
The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ The determination of the business model within which a financial asset is held.
－ The designation and revocation of financial assets and financial liabilities previously designated as measured at FVTPL.
－ The designation of investments in equity instruments not held for trading as measured at FVOCI.
4) Classification of financial assets on the date of initial application of IFRS 9

The following table shows the measurement categories and carrying amounts under IAS 39 and IFRS 9 for each class of the Group’s financial assets as of January 1, 2018. There were no changes in the categories and carrying amounts of financial liabilities.

Financial Assets Cash and cash equivalents Derivative instruments Open-end mutual funds Equity instruments Notes and accounts receivable and other receivables (including related parties) Other financial assets	IAS39		IFRS9
	Measurement categories Loans and receivables (Note 1) Held-for-trading Designated as measured at FVTPL Available-for-sale financial assets (Note 2) Loans and receivables (Note 1) Loans and receivables (Note1)	Carrying Amount	Measurement categories Carrying Amount Amortized cost 6,636,634 Mandatorily at FVTPL 41,680 Mandatorily at FVTPL 1,002,021 FVOCI 667,254 Amortized cost 28,274,821 Amortized cost 1,423,701
		$ 6,636,634 41,680 1,002,021 667,254 28,355,020 1,423,701

Note1: Cash and cash equivalents, notes and accounts receivable, other receivables, and other financial assets, that were previously classified as loans and receivables under IAS 39 are now classified as financial assets measured at amortized cost. In addition, an allowance for impairment of accounts receivable of $80,199 thousand was recognized in retained earnings of $79,500 thousand and noncontrolling interests of $699 thousand on January 1, 2018 upon the initial application of IFRS 9.
Note2: These equity instruments represent investments that the Group intends to hold for long-term strategic purposes. As permitted by IFRS 9, the Group has designated these investments at the date of initial application as measured at FVOCI.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following table reconciles the carrying amounts of financial assets under IAS 39 to the carrying amounts under IFRS 9 upon transition to IFRS 9 on January 1, 2018.

Financial assets at fair value through other comprehensive income: Beginning balance of available-for-sale (IAS 39) From available-for-sale to FVOCI Total Financial assets measured at amortized cost: Beginning balance of cash and cash equivalents, notes and accounts receivable, other receivables and other financial assets (IAS 39) Adjustments for allowance of impairment Total Investments accounted for using equity method (Note 1)	IAS 39 Carrying Amount as of December 31, 2017 $ 667,254 - $ 667,254 $ 36,415,355 - $ 36,415,355 $ 16,748,411	Reclassifications (667,254) 667,254	Remeasurements - - - - (80,199) (80,199) (13)	IFRS 9 Carrying Amount as of January 1, 2018 667,254 36,335,156 16,748,398	Retained earnings effect on January 1, 2018 - -	Other equity effect on January 1, 2018 Adjustment in non- controlling interests on January 1, 2018 - - - - - - - - - (699) - (699) (13) -
		-			-
		- -			- (79,500)
		-			(79,500)
		-			-

Note 1: There is a decrease of $13 thousand in investments accounted for using equity method and other equity-unrealized gains (losses) on financial assets at fair value through other comprehensive income on January 1, 2018 upon the initial application of IFRS 9.

There were no material impacts on the Group’s basic and diluted earnings per share for the year ended December 31, 2018.

(iii) Amendments to IAS 7 Disclosure Initiative

The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes.

To satisfy the new disclosure requirements, the Group presents a reconciliation between the beginning and ending balances for liabilities with changes arising from financing activities in note 6(ae).

(b) Impact of IFRSs endorsed by the FSC but not yet in effect

According to Ruling No. 1070324857 issued by the FSC on July 17, 2018, commencing from 2019, the Company is required to adopt the IFRSs that have been endorsed by the FSC with effective date from January 1, 2019. The related new, revised or amended standards and interpretations are set out below:

below:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16_Leases_	January 1, 2019
IFRIC 23_Uncertainty over Income Tax Treatments_	January 1, 2019
Amendments to IFRS 9_Prepayment features with negative compensation_	January 1, 2019
Amendments to IAS 19_Plan Amendment, Curtailment or Settlement_	January 1, 2019
Amendments to IAS 28_Long-term interests in associates and joint ventures_	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Except for the items discussed below, the Group believes that the initial adoption of the above IFRSs would not have any material impact on its consolidated financial statements.

(i) IFRS 16 Leases

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases , IFRIC 4 Determining whether an Arrangement contains a Lease , SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease .

IFRS 16 introduces a single and an on-balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. In addition, the nature of expenses related to those leases will now be changed since IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities. There are recognition exemptions for short-term leases and leases of lowvalue items. The lessor accounting remains similar to the current standard, i.e., the lessors will continue to classify leases as finance or operating leases.

1) Determining whether an arrangement contains a lease

On transition to IFRS 16, the Group can choose to apply either of the following:

‧IFRS 16 definition of lease to all its contracts; or
‧ A practical expedient that does not need any reassessment whether a contract is, or contains, a lease.

The Group plans to apply the practical expedient to grandfather the definition of lease upon transition. This means that the Group will apply IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.

2) Transition

As a lessee, the Group can apply the standard using either of the following:

‧retrospective approach; or

‧modified retrospective approach with optional practical expedients.

The Group plans to initially apply IFRS 16 using the modified retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be recognized as an adjustment in the opening balance of retained earnings at January 1, 2019, with no restatement of comparative information.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

When applying the modified retrospective approach to leases previously classified as operating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on transition. The Group chooses to elect the following practical expedients:

‧ apply a single discount rate to a portfolio of leases with similar characteristics;
‧ exclude the initial direct costs from measuring the right-of-use assets at the date of initial application; and
3) So far, the most significant impact identified is that the Group will have to recognize the right-of-use assets and lease liabilities for the operating leases of its offices, factory facilities, and warehouses. The Group estimated its right-of-use assets and lease liabilities to increase by $4,218,890 thousand and $1,963,191 thousand, respectively, as well as the long-term prepaid rent, rental payables, lease obligations payable, retained earnings, and non-controlling interests, to decrease by $2,374,662 thousand, $22,335 thousand, $38,014 thousand, $45,080 thousand, and $13,534 thousand, respectively, on January 1, 2019.

However, the actual impacts of adopting the amended standards and new interpretations may change depending on the economic conditions and events which may occur in the future.

A summary of new and amended standards issued by the IASB but not yet endorsed by the FSC is set out below:

set out below:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3_Definition of a Business_	January 1, 2020
Amendments to IFRS 10 and IAS 28_Sale or Contribution of Assets Between an_	Effective date to
Investor and Its Associate or Joint Venture	be determined
	by IASB
IFRS 17_Insurance Contracts_	January 1, 2021
Amendments to IAS 1 and IAS 8_Definition of Material_	January 1, 2020

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

Issuance / Release
Dates
October 31, 2018

Standards or
Interpretations
Content of amendment
Amendments to IAS 1 and IAS
8_Definition of Material_
The amendments clarify the definition of
material and how it should be applied by
including in the definition guidance that until
now has featured elsewhere in IFRS
Standards. In addition, the explanations
accompanying the definition have been
improved. Finally, the amendments ensure
that the definition of material is consistent
across all IFRS Standards.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

4. Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized as follows. Except for those specifically indicated, the following accounting policies were applied consistently to all periods presented in these financial statements.

(a) Statement of compliance

The Group’ s accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”) and the IFRSs, IASs, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the FSC (collectively as “Taiwan-IFRSs”).

(b) Basis of preparation

(i) Basis of measurement

The accompanying consolidated financial statements have been prepared on a historical cost basis except for the following items in the balance sheets:

1) Financial instruments measured at fair value through profit or loss (including derivative financial instruments and contingent consideration measured at fair value);
2) Financial assets measured at fair value through other comprehensive income (Availablefor-sale financial assets measured at fair value); and
3) The defined benefit liabilities (assets) are recognized as the present value of the defined benefit obligation less the fair value of the plan assets and the effect of the asset ceiling mentioned in note 4(s).
(ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The Group’s consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. Except when otherwise indicated, all financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(c) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

The accompanying consolidated financial statements incorporate the financial statements of the Company and its controlled entities (the subsidiaries) in which the Company is exposed, or has right, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant inter-company transactions, balances and resulting unrealized income and loss are eliminated on consolidation. Total comprehensive income (loss) of a subsidiary is attributed to the shareholders of the Company and the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, financial statements of subsidiaries are adjusted to align the accounting policies with those adopted by the Company.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the adjustment of the noncontrolling interests and the fair value of the consideration paid or received is recognized in equity and attributed to the shareholders of the Company.

(ii) List of subsidiaries in the consolidated financial statements

The subsidiaries included in the consolidated financial statements were as follows:

Name of Investor The Company The Company/ QALA The Company The Company The Company The Company/ BenQ/APV/ Darly C The Company/ APV The Company The Company The Company The Company	Name of Investee Qisda Sdn. Bhd. (“QLPG”) Qisda Mexicana S.A. De C.V. (“QMMX”) Qisda America Corp. (“QALA”) Qisda Japan Co., Ltd. (“QJTO”) BenQ Corp. (“BenQ”) BenQ Material Corp. (“BMC”) BenQ Dialysis Technology Corp. (“BDT”) Qisda Optronics Corp. (“QTOS”) Qisda (L) Corp. (“QLLB”) Darly Venture (L) Ltd. (“Darly”) Darly Venture Inc. (“APV”)	Main Business and Products Leasing and management services Manufacture of computer peripheral products Sales of electronic products Sales and maintenance of electronic products in Japanese market Manufacture and sales of brand-name electronic products R&D, manufacture and sales of optoelectronics film Manufacture and sales of medical consumables and equipment Manufacture of computer peripheral products Investment and holding activity Investment and holding activity Investment and holding activity	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 43.56 % 43.56 (Note 3) % 92.86 % 92.86 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 -

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor The Company/ BenQ/Darly/ APV/ Darly2 The Company/ APV/ Darly2 The Company/ APV/ Darly2 The Company/ Darly2 The Company/ Darly2 QLLB QLLB QLLB QCHK/ QCES QCHK QCHK QCHK APV/Darly 2/ Darly C BenQ BenQ BenQ BenQ	Name of Investee BenQ BM Holding Cayman Corp. (“BBHC”) Partner Tech Corp. (“PTT”) DFI Inc. (“DFI”) K2 International Medical Inc. (“K2”) Data Image Corporation (“DIC”) Qisda (Suzhou) Co., Ltd. (“QCSZ”) Qisda (Hong Kong) Limited (“QCHK”) BenQ Medical (Shanghai) Co., LTD (“BDTcn”) Qisda (Shanghai) Co., Ltd. (“QCSH”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) BenQ ESCO Corp. (“BES”) BenQ (Hong Kong) Limited (“BQHK”) BenQ Europe B.V. (“BQE”) BenQ Asia Pacific Corp. (“BQP”) BenQ America Corporation (“BQA”)	Main Business and Products Investment and holding activity Manufacture, sales and import and export of POS terminals and peripherals Manufacture and sales of industrial motherboards and component Sales of medical consumables and equipment Manufacture and sales of marine display modules Manufacture of monitors and communication devices Investment and holding activity Sales of medical consumables and equipment Manufacture of monitors Manufacture of monitors Manufacture of projectors Manufacture of plastic parts Energy service Sales of brand-name electronic products in HK markets Sales of brand-name electronic products in European markets Sales of brand-name electronic products in Asia markets Sales of brand-name electronic products in North America markets	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 70.72 % 70.76 - % 68.23 % 68.23 (Note 4) % 55.09 % 55.00 (Note 6) % 37.56 - (Notes 7 and 10) % 33.14 - (Notes 7 and 10) % 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 - % 83.00 % 83.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 -

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor BenQ BenQ BenQ BenQ BenQ/Darly 2 BenQ/Darly/ Darly 2 BenQ/APV/ Darly 2 BenQ/BQP BQP BQP BQP BQP BQP BQP BQP BQP BQHK BQHK_HLD BQHK_HLD BQHK_HLD	Name of Investee BenQ Latin America Corp. (“BQL”) Mainteq Europe B.V. (“MQE”) Darly2 Venture Co., Ltd. (“Darly 2”) BenQ Intelligent Technology (Hong Kong) Co., Ltd. (“BQHK_HLD”) Zowie Gear Corporation (“ZGC”) BenQ Guru Holding Limited (“GSH”) BenQ Medical Technology Corp. (“BMTC”) PT BenQ Teknologi Indonesia (“BQid”) BenQ Korea Co., Ltd. (“BQkr”) BenQ Japan Co., Ltd. (“BQjp”) BenQ Australia Pty Ltd. (“BQau”) BenQ (M.E.) FZE (“BQme”) BenQ India Private Ltd. (“BQin”) BenQ Singapore Pte Ltd. (“BQsg”) BenQ Service & Marketing (M) Sdn. Bhd (“BQmy”) BenQ (Thailand) Co., Ltd. (“BQth”) BenQ Co., Ltd. (“BQC”) BenQ Technology (Shanghai) Co., Ltd. (“BQls”) ShengCheng Trading (Shanghai) Co., Ltd (“BQsha_EC2”) BenQ Intelligent Technology (Shanghai) Co., Ltd (“BQC_RO”)	Main Business and Products Sales of brand-name electronic products in Latin America markets Maintenance of brand-name monitors and projectors in European markets Investment and holding activity Sales of brand-name electronic products in HK markets Assembly and sales of gaming electronic products Investment and holding activity Manufacture and sales of medical consumables and equipment Sales of brand-name electronic products Providing administration and management service to affiliates Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Lease of real estate Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand name electronic products in China markets	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 90.20 % 90.20 - % 100.00 % 100.00 - % 54.96 % 54.96 - % 100.00 - (Note 5) % 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 - (Note 5)

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor GSH GSH/APV BQA BenQ/BQL BQL BQL Joytech/ Vivitech BQmx/BQL BQE BQE BQE BQE BQE BQE BQE BQE BQE BBHC APV/Darly 2 BMTC BMTC	Name of Investee Guru Systems (Suzhou) Co., Ltd. (“GSS”) BenQ GURU Corp. (“GST”) BenQ Canada Corp. (“BQca”) BenQ Mexico S. de R.L. de C.V. (“BQmx”) Joytech LLC. (“Joytech”) Vivitech LLC. (“Vivitech”) MaxGen Comercio Industrial Imp E Exp Ltda. (“MaxGen”) BenQ Service de Mexico S. de R.L. de C.V. (“BQms”) BenQ UK Limited (“BQuk”) BenQ Deutschland GmbH (“BQde”) BenQ Iberica S.L. Unipersonal (“BQib”) BenQ Austria GmbH (“BQat”) BenQ Benelux B.V. (“BQnl”) BenQ Italy S.R.L. (“BQit”) BenQ France SAS (“BQfr”) BenQ Nordic A.B. (“BQse”) BenQ LLC. (“BQru”) BenQ BM Holding Corp. (“BBM”) Darly Consulting Corporation (“Darly C”) Highview Investments Limited (“Highview”) Asiaconnect International Company (“Asiaconnect”)	Main Business and Products R&D and sales of computer information systems R&D and sales of computer information systems Sales of brand-name electronic products Sales of brand-name electronic products Investment and holding activity Investment and holding activity Sales of brand-name electronic products Providing administration and management service to affiliates Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management service to affiliates Investment and holding activity Investment management consulting Investment and holding activity Sales of medical consumables and equipment	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 100.00 % 100.00 - % 99.96 % 99.96 - % 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 - % 100.00 % 100.00 - % 100.00 % 100.00 - % 70.72 % 70.76 - % 100.00 % 100.00 - % 54.96 % 54.96 - % 54.82 % 54.82 -

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor BMTC BMTC BMTC Highview LILY BHS BMC BMC BMLB BMLB BMLB SMS PTT PTT/PTE PTT PTT PTT	Name of Investee LILY Medical Corporation (“LILY”) BenQ AB DentCare Corporation (“BABD”) BenQ Hearing Solution Corporation (“BHS”) BenQ Medical Technology (Shanghai) Ltd. (“BMTS”) LILY Medical (Suzhou) Co., Ltd. (“ALS”) New Best Hearing International Trade Co. Ltd. (“NBHIT”) BenQ Materials (L) Co. (“BMLB”) Sigma Medical Supplies Corp. (“SMS”) BenQ Material (Suzhou) Co., Ltd. (“BMS”) Daxon Biomedical (Suzhou) Co., Ltd. (“DTB”) BenQ Materials (Wuhu) Co., Ltd. Suzhou Sigma Medical Supplies Co., Ltd. (“SMSZ”) P&J Investment Holding Co., Ltd. (B.V.I) (“P&J”) Partner Tech UK Corp., Ltd. (“PTUK”) Webest Solution Corporation (“WEBEST”) Partner Tech Middle East FZCO (“PTME”) Partner-Tech Europe GmbH (“PTE”)	Main Business and Products Sales of medical consumables and equipment Sales of medical consumables and equipment Sales of medical consumables and equipment Agency of international and entrepot trade business Sales of medical consumables and equipment Sales of medical consumables and equipment Investment and holding activity Manufacture and sales of medical consumables and equipment Manufacture of optoelectronics Sales of optoelectronics and medical consumables Manufacture and sales of optoelectronics Manufacture and sales of medical consumables and equipment Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 54.96 % 54.96 - % 48.36 % 48.36 (Note 2) % 54.96 % 54.96 - % 54.96 % 54.96 - % 54.96 % 54.96 - % 28.58 % 28.58 (Notes 2 and 6) % 43.56 % 43.56 (Note 3) % 38.79 - (Notes 3 and 7) % 43.56 % 43.56 (Note 3) % 43.56 % 43.56 (Note 3) % 43.56 % 43.56 (Note 3) % 38.79 - (Notes 3 and 7) % 68.23 % 68.23 (Note 4) % 64.34 % 64.34 (Note 4) % 68.23 % 68.23 (Note 4) % 68.23 % 34.80 (Note 6) % 34.13 % 34.13 (Notes 2 and 4)

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor PTT/WEBEST PTT PTT/P&J PTE PTE PTME P&J P&J P&S P&S PTT/WEBEST PTT PTTN DFI DFI DFI DFI DFI	Name of Investee Partner Tech North Africa (“PTNA”) Epoint Systems Pte. Ltd. (“PTSE”) Partner Tech Africa (Pty) Ltd. (“PTA”) Sloga Team D.o.o (“Sloga”) Retail Solution & System S.L. (“RSS”) E-POS International LLC (“E-POS”) P&S Investment Holding Co., Ltd. (B.V.I.) (“P&S”) Partner Trading (Shanghai) Co., Ltd. (“PTCS”) Partner Tech USA Inc. (“PTU”) Partner Tech (Shanghai) Co., Ltd. (“PTCM”) La Fresh information Co., Ltd. (“PTTN”) Corex (Pty) Ltd. (“PCX”) Xiamen Xinchuan Software Technology Co., Ltd. (“PTTNC”) DFI-ITOX, LLC DFI Co., Ltd. Yan Tong Technology Ltd. Diamond Flower Information (NL) B.V. Dual-Tech International Co., Ltd.	Main Business and Products Sales, import and export of electronic products Software development and Sales of product Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Software development and Sales of product Sales, import and export of electronic products Sales, import and export of electronic products Sales of industrial motherboards Sales of industrial motherboards Investment and holding activity Sales of industrial motherboards Manufacture of industrial motherboards	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 39.70 % 39.70 (Notes 2 and 6) % 34.18 - (Notes 2 and 7) % 68.23 - (Note 8) % 30.72 % 30.72 (Notes 2 and 4) % 23.21 % 23.21 (Notes 2 and 4) % 68.23 % 34.80 (Notes 6 and 9) % 68.23 % 68.23 (Note 4) - % 68.23 (Notes 1 and 4) % 68.23 % 68.23 (Note 4) % 68.23 % 68.23 (Note 4) % 34.55 - (Notes 2 and 7) % 68.23 - (Note 7) % 34.55 - (Notes 2 and 7) % 55.09 % 55.00 (Note 6) % 55.09 % 55.00 (Note 6) % 55.09 % 55.00 (Note 6) % 55.09 % 55.00 (Note 6) % 55.09 % 54.99 (Note 6)

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor Yan Tong Technology Ltd. Yan Tong Technology Ltd. K2 DIC DMC BBM BBM/BIC BBM BBM BBM BBM	Name of Investee Yan Tong Infotech (Dongguan) Co., Ltd. Yan Ying Hao Trading (ShenZhen) Co., Ltd K2 Medical (Thailand) Co., Ltd. (“K2TH”) Data Image (Mauritius) Corporation (“DMC”) Data Image (Suzhou) Corporation Nanjing BenQ Hospital Co., Ltd. (“NMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) BenQ Hospital Management Consulting (Nanjing) Co., Ltd. (“NMHC”) BenQ Healthcare Consulting Corporation (“BHCC”) Suzhou BenQ Investment Co., Ltd. (“BIC”) Nanjing Silvertown Health & Development Co., Ltd (“NSHD”)	Main Business and Products Manufacture and sale of industrial motherboards and component Wholesale, import and export of industrial motherboards and component Sales of medical consumables Investment and holding activity Manufacture and sales of LCD Hospital Hospital Medical management consulting Medical management consulting Investment and holding activity Medical services	Percentage of Ownership December 31, 2018 December 31, 2017 Note % 55.09 % 55.00 (Note 6) % 55.09 % 55.00 (Note 6) % 18.40 - (Notes 5 and 10) % 33.14 - (Notes 7 and 10) % 33.14 - (Note 7) % 70.72 % 70.76 - % 70.72 % 70.76 - % 70.72 % 70.76 - % 70.72 % 70.76 - % 70.72 % 70.76 - % 70.72 - (Note 5)

Note 1: PTCS was liquidated in 2018.

Note 2: The Group did not own more than half of the ownership of the entities. As the Group owns more than half of the voting rights, directly and indirectly, and has the power to control the management and operating policies of the entities, the entities have been included in the Group’s consolidated entities.
Note 3: The Group did not own more than half of the voting rights of BMC. Since the Group considered the other 56.44% ownership as dispersed and there was no evidence of joint policy-making agreement among those stockholders, it is determined that the Group has power to control BMC and its subsidiaries, BMC and its subsidiaries have been included in the Group’s consolidated entities.
Note 4: Prior to April 10, 2017, PTT were classified as associates. On April 10, 2017, the Group obtained control over PTT. Therefore, PTT and its subsidiaries have been included in the Group’s consolidated entities.
Note 5: BQid, BQC_RO, K2TH and NSHD were newly established in 2018.

Note 6: In 2017, the Group obtained control over the entities. Therefore, the entities have been included in the Group’ s consolidated entities.

Note 7: In 2018, the Group obtained control over the entities. Therefore, the entities have been included in the Group’ s consolidated entities.

Note 8: Formerly, PTA was classified as an associate. In 2018, the Group obtained control over PTA. Therefore, PTA has been included in the Group’s consolidated entities.

Note 9: PTME originally held 100% ownership of E-POS, however, because of certain legal restrictions, the 51% ownership of E-POS was registered under the name of other parties.
Note 10: Although the Group did not own more than half of the voting rights of K2 and DIC, the Group owns more than half of their total number of directors; therefore, it is determined that the Group has control over those entities. Hence, the entities have been included in the Group’s consolidated entities.

(iii) List of subsidiaries which are not included in the consolidated financial statements: None.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

(i) Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at exchange rates at the end of the period (“the reporting date”) of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss.

Non-monetary assets and liabilities denominated in foreign currencies which are measured at fair value are retranslated at the exchange rate prevailing at the date when the fair value is determined. Exchange differences arising on the translation of non-monetary items are recognized in profit or loss, except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items denominated in a foreign currency that are measured at historical cost are not retranslated.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated into the presentation currency of the Group’ s consolidated financial statements at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency of the Group’ s consolidated financial statements at the average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.

On the disposal of a foreign operation which involves a loss of control over a subsidiary or loss of significant influence over an associate that includes a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the shareholders of the Company are entirely reclassified to profit or loss. In the case of a partial disposal that does not result in the Group losing control over a subsidiary, the proportionate share of accumulated exchange differences is reclassified to non-controlling interests. For a partial disposal of the Group’s ownership interest in an associate or joint venture, the proportionate share of the accumulated exchange differences in equity is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, the monetary item is, in substance, a part of net investment in that foreign operation, and the related foreign exchange gains and losses thereon are recognized as other comprehensive income.

(e) Classification of current and non-current assets and liabilities

An asset is classified as current when one of following criteria is met; all other assets are classified as non-current assets.

(i) It is expected to be realized, or sold or consumed in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when one of following criteria is met; all other liabilities are classified as non-current liabilities:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(f) Cash and cash equivalents

Cash consists of cash on hand, checking deposits, and demand deposits. Cash equivalents consist of short-term and highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits that meet the aforesaid criteria and are not held for investing purposes are also classified as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’ s cash management are included as a component of cash and cash equivalents.

(g) Financial instruments
(i) Financial assets (applicable commencing January 1, 2018)

Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (“ FVOCI” ), and fair value through profit or loss (“FVTPL”). A regular way purchase or sale of financial assets is recognized and derecognized on a trade-date basis.

The Group shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

1) Financial assets measured at amortized cost

A financial asset is not designated as at FVTPL and is measured at amortized cost if it meets both of the following conditions:

it is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Financial assets at fair value through other comprehensive income (“FVOCI”)

A debt investment is not designated as at FVTPL and is measured at FVOCI if it meets both of the following conditions:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present the subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Foreign exchange gains and losses, interest income calculated using the effective interest method, and impairment losses deriving from debt investments, are recognized in profit or loss; whereas dividends deriving from equity investments are recognized in profit or loss, unless the dividend clearly represents a recovery of part of the cost of an investment. Other changes in the carrying amount of financial assets measured at FVOCI are recognized in other comprehensive income and accumulated in other equity as unrealized gain (loss) from financial assets measured at fair value through other comprehensive income. On derecognition, gains and losses accumulated in other equity of debt investments are reclassified to profit or loss. However, gains and losses accumulated in other equity of equity investments are reclassified to retained earnings instead of profit or loss.

Dividend income derived from equity investments is recognized on the date that the Group’s right to receive the dividends is established (usually the ex-dividend date).

3) Financial assets at fair value through profit or loss (“FVTPL”)

All financial assets not classified as measured at amortized cost, or at FVOCI described above, are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets in this category are initially recognized at fair value. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, they are measured at fair value, any changes therein, including any dividend and interest income, are recognized in profit or loss.

4) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Group’ s claim to cash flows from specified assets (e.g. nonrecourse features)
5) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables and other financial assets).

The Group measures loss allowances for accounts receivable at an amount equal to lifetime expected credit loss (“ECL”), except for the following which are measured as 12-month ECL:

bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivables are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. The information includes both quantitative and qualitative information and analysis based on the Group’ s historical experience and credit assessment, as well as forward-looking information.

ECLs are probability-weighted estimate of credit losses over the expected life of financial assets. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off, either partially or in full, to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

6) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash flows from the assets are terminated, or when the Group transfers substantially all the risks and rewards of ownership of the financial assets to other enterprises.

On derecognition of a debt instrument in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable, and any cumulative gain or loss that had been recognized in other comprehensive income and accumulated in “ other equity– unrealized gains (losses) on financial assets at fair value through other comprehensive income”, is recognized in profit or loss, and included in non-operating income and loss.

On derecognition of a debt instrument other than in its entirety, the Group allocates the previous carrying amount of the debt instrument between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized, and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income, is recognized in profit or loss, and included in non-operating income and loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Financial assets (applicable before January 1, 2018)

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, loans and receivables, and available-for-sale financial assets. Regular way purchases or sales of financial assets are recognized or derecognized on a trade-date basis.

1) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss consist of financial assets held for trading and those designated as at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorized as financial assets at fair value through profit or loss unless they are designated as hedges.

At initial recognition, financial assets carried at fair value through profit or loss are recognized at fair value. Any attributable transaction costs are recognized in profit or loss as incurred. Subsequent to the initial recognition, changes in fair value (including dividend income and interest income) are recognized in profit or loss, and included in non-operating income and loss.

2) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise accounts receivable, other receivables, and investment in debt security with no active market. At initial recognition, such assets are recognized at fair value, plus, any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables other than insignificant interest on short-term receivables are measured at amortized cost using the effective interest method, less, any impairment losses. Interest income is recognized as non-operating income in profit or loss.

3) Available-for sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other categories of financial assets. At initial recognition, available-for-sale financial assets are recognized at fair value, plus, any directly attributable transaction cost. Subsequent to initial recognition, these assets are measured at fair value, and changes therein, other than impairment losses, interest income calculated using the effective interest method, dividend income, and foreign currency differences on monetary financial assets, are recognized in other comprehensive income and presented in “unrealized gain/loss from available-for-sale financial assets” in equity. When the financial asset is derecognized, the gain or loss previously accumulated in equity is reclassified to profit or loss.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost, less, impairment loss and are reported as financial assets measured at cost.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Dividends received from equity investments are recognized as non-operating income on the date of entitlement to receive dividends (usually the ex-dividend date).

4) Impairment of financial assets

Financial assets, other than those carried at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Those financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, their estimated future cash flows have been affected.

Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, indications that the debtor or issuer will probably enter bankruptcy or other financial reorganization, and the disappearance of an active market for that financial asset because of financial difficulties. For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired.

If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, such asset is included in a group of financial assets with similar credit risk characteristics which are then collectively assessed for impairment. Objective evidence that receivables are impaired includes the Group’s collection experience in the past, an increase in delayed payments, and national or local economic conditions that correlate with overdue receivables.

An impairment loss is recognized by reducing the carrying amount of the respective financial assets with the exception of receivables, where the carrying amount is reduced through an allowance account. Changes in the amount of the allowance account are recognized in profit or loss.

An impairment loss in respect of a financial asset measured at amortized cost is measured as the excess of the asset’s carrying amount over the present value of the estimated future cash flows discounted at the financial asset’ s original effective interest rate. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed to the extent that the carrying amount of the financial assets at the date the impairment loss is reversed does not exceed what the amortized cost would have been had the impairment loss not been recognized.

An impairment loss in respect of a financial asset measured at cost is measured as the excess of the asset’s carrying amount over the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. A subsequent reversal of the impairment loss is prohibited.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

When an impairment loss is recognized for an available-for-sale asset, the cumulative gains or loss that had been recognized in other comprehensive income is reclassified from equity to profit or loss. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income, and accumulated in other equity. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

The impairment loss and the reversal gain for accounts receivable are recognized as selling expenses, and as non-operating income and loss for financial assets other than accounts receivable.

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the asset are terminated, or when the Group transfers out substantially all the risks and rewards of ownership of the financial assets to other enterprises.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and accumulated in other equity – unrealized gains or losses from available-for-sale financial assets is recognized in profit or loss, and included in the non-operating income and loss of the consolidated statement of comprehensive income.

On derecognition of part of a financial asset, the previous carrying amount of the financial asset shall be allocated between the part that continues to be recognized and the part that is derecognized, on the basis of relative fair values of those parts on the date of transfer. The difference between the carrying amount allocated to the part derecognized and the sum of the consideration received or receivable for the part of the financial asset derecognized and the cumulative gain or loss that had been recognized in other comprehensive income allocated to the part derecognized is charged to profit or loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is derecognized based on the relative fair values of those parts.

(iii) Financial liabilities and equity instruments

1) Classification of debt or equity

Debt or equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual agreement. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recognized at the amount of consideration received, less, the direct issuing cost.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financial liabilities at fair value through profit or loss

A financial liability is classified in this category if it is classified as held for trading or is designated as a financial liability at fair value through profit or loss on initial recognition and contingent consideration measured at fair value. A financial liability is classified as held for trading if it is acquired principally for the purpose of selling or repurchasing in the short term. Derivatives are also categorized as financial liabilities at fair value through profit or loss, unless, they are designated as hedges.

At initial recognition, this type of financial liability is recognized at fair value, and any attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, the financial liabilities are measured at fair value, and changes therein, which take into account any interest expense, are recognized in profit or loss and included in the non-operating income and loss of the consolidated statement of comprehensive income.

3) Financial liabilities measured at amortized cost

Financial liabilities not classified as held for trading or not designated as at fair value through profit or loss, which comprise loans and borrowings, accounts payable, and other payables, are measured at fair value, plus, any directly attributable transaction cost at initial recognition. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.

4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been fulfilled or cancelled, or has expired. The difference between the carrying amount of a financial liability derecognized and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss and included in the nonoperating income and loss of the consolidated statement of comprehensive income.

5) Offsetting of financial assets and liabilities

Financial assets and liabilities are presented on a net basis only when the Group has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(iv) Derivative financial instruments

Derivative financial instruments are held to hedge the Group’ s foreign currency exposures. Derivatives are initially measured at fair value and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss, and are included in non-operating income and loss. If the valuation of a derivative instrument is in a positive fair value, it is classified as a financial asset, otherwise, it is classified as a financial liability.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated based on the weighted-average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to the location and condition ready for sale. Fixed manufacturing overhead is allocated to finished products and work in process based on the higher of normal capacity or actual capacity; variable manufacturing overhead is allocated based on the actual capacity of machinery and equipment. Net realizable value represents the estimated selling price in the ordinary course of business, less, all estimated costs of completion and necessary selling expenses.

(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 a sale transaction, rather than through continuing use, are reclassified as non-current assets held for sale. Such non-current assets or disposal groups must be available for immediate sale in their present condition, and the sale is highly probable within one year.

Immediately before the initial classification of the non-current assets (or disposal groups) as held for sale, the carrying amount of the assets (or all the assets and liabilities in the group) is measured in accordance with the Group’s applicable accounting policies. Thereafter, the assets 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 balance of impairment loss is allocated to assets and liabilities on a pro rata basis, except for the assets within the scope of IAS 36 – Impairment of Assets, which are continue to be measured in accordance with the Group’ s accounting policies. Impairment losses on assets initially classified as held for sale and any subsequent gains or losses on re-measurement are recognized in profit or loss; nevertheless, the reversal gains are not recognized in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment are no longer amortized or depreciated when they are classified as held for sale. Besides, the equity method of accounting is discontinued from the date when equity-method investments are classified as held for sale.

(j) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or jointly control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost, plus, any transaction costs. The carrying amount of the investment in associates includes goodwill identified on acquisition, net of any accumulated impairment losses. When necessary, the entire carrying amount of the investment (including goodwill) will be tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized as other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive income of the associate, and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the change in ownership interests of its associate as “capital surplus” in proportion to its ownership.

Unrealized profits resulting from transactions between the Group and an associate are eliminated to the extent of the Group’s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired.

Adjustments are made to associates’ financial statements to conform to the accounting polices applied by the Group.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the recognition of further losses is discontinued. Additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

When an associate issues new shares and the Group does not subscribe to the new shares in proportion to its original ownership percentage, the Group’s interest in the associate’s net assets will be changed. The change in the equity interest is adjusted through the capital surplus and investment accounts. If the Group’ s capital surplus is insufficient to offset the adjustment to investment accounts, the difference is charged as a reduction of retained earnings. If the Group’s interest in an associate is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(k) Joint arrangements

A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the arrangement. Those parties are called joint venturers. Joint venturers should account the rights from the joint arrangement as an investment, and account it for using equity method according to IAS 28, unless, the entity is exempted from applying the equity method as specified in the standard.

The Group considered the infrastructure, legal form of the vehicle, provisions of the joint arrangement and other facts and situations when evaluating the classification of the joint arrangement.

(l) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both. Investment property is measured at cost on initial recognition. Subsequent to initial recognition, investment property is measured at initial acquisition cost less accumulated depreciation. The methods for depreciating and determining the useful life and residual value of investment property are the same as those adopted for property, plant and equipment.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Cost includes expenditure that is directly attributable to the acquisition of the investment property, bringing the investment property to the condition necessary for it to be available for use, and any borrowing cost that is eligible for capitalization.

An investment property is reclassified to property, plant and equipment at its carrying amount when the purpose of the investment property has been changed from investment to owner-occupied.

(m) Property, plant and equipment
(i) Recognition and measurement

Property, plant and equipment are measured at cost, less, accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset and bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and any borrowing cost that is eligible for capitalization. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

The gain or loss arising from the disposal of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying － amount of the item, and is recognized in other gains and losses net.

(ii) Subsequent costs

Subsequent costs are capitalized only when it is probable that future economic benefits associated with the costs will flow to the Group and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognized in profit or loss. All other repairs and maintenance are charged to expense as incurred.

(iii) Depreciation

Depreciation is provided for property, plant and equipment over the estimated useful lives using the straight-line method. When an item of property, plant and equipment comprises significant individual components for which different depreciation methods or useful lives are appropriate, each component is depreciated separately. Land is not depreciated. The depreciation is recognized in profit or loss.

The estimated useful lives for property, plant and equipment are as follows: buildings: 10 to 40 years; machinery and equipment: 2 to 10 years; furniture and fixtures: 3 years; and other equipment: 3 to 10 years.

Land use rights classified as “long-term prepaid rents” are amortized over the shorter of the economic life and the contract period using the straight-line method.

If there is reasonable certainty that the Group will obtain the ownership of the leased property and equipment by the end of the lease term, the depreciation of leased assets is provided over the estimated useful life of the asset; otherwise, the asset is depreciated over the shorter of the lease term and its useful life.

(Continued)

122 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Depreciation methods, useful lives, and residual values are reviewed at each financial yearend, with the effect of any changes in estimate accounted for on a prospective basis.

(iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the purpose of the property changes from owner-occupied to investment.

(n) Leases

(i) The Group as lessor

Lease income from an operating lease is recognized in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as expense over the lease term on a straight-line basis. Contingent rents are recognized as income in the period when the lease adjustments are confirmed.

(ii) The Group as lessee

Leases are classified as finance leases when the Group assumes substantially all of the risks and rewards of ownership of the leased assets. At initial recognition, the leased asset is measured at an amount equal to the lower of its fair value or the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Leases other than finance lease are classified as operating leases and are not recognized in the Group’s balance sheets.

Payments made under an operating lease (excluding insurance and maintenance expenses) are charged to expense over the lease term on a straight-line basis. Lease incentives received from the lessor are recognized as a reduction of rental expense over the lease term on a straight-line basis. Contingent rents are recognized as expense in the periods when the lease adjustments are confirmed.

(o) Intangible assets

(i) Goodwill

Goodwill arising from the acquisition of subsidiaries is accounted for as intangible assets. Please refer to note 4(v) for the description of the measurement of goodwill at initial recognition. Goodwill is not amortized but is measured at cost, less, accumulated impairment losses.

(Continued)

123 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Other intangible assets

Other separately acquired intangible assets including acquired software, trademarks, customer relationships and patents are carried at cost, less, accumulated amortization and accumulated impairment losses. Amortization is recognized in profit or loss using the straight-line method over the estimated useful lives of 1 to 10 years.

The residual value, amortization period, and amortization method are reviewed at least at each financial year-end, with the effect of any changes in estimate accounted for on a prospective basis.

(p) Impairment of non-financial assets

(i) Goodwill

Goodwill is tested for impairment annually. For the purpose of impairment testing, goodwill arising from a business combination is allocated to each of the Group’s cash-generating units (“ CGU” ) that are expected to benefit from the synergies of the combination. When the recoverable amount of a CGU is less than the carrying amount of the CGU, the impairment loss is recognized firstly by reducing the carrying amount of any goodwill allocated to the CGU and then is proportionately allocated to the other assets of the CGU on the basis of the carrying amount of each asset in the CGU. Any impairment loss is recognized immediately in profit or loss. A subsequent reversal of the impairment loss on goodwill is prohibited.

(ii) Other tangible and intangible assets

Non-financial assets other than inventories, deferred income tax assets, assets arising from employee benefits, and non-current assets held for sale are reviewed for impairment at each reporting date to determine whether there is any indication of impairment. When there exists an indication of impairment for an asset, the recoverable amount of the asset is estimated. If the recoverable amount of an individual asset cannot be determined, the Group estimates the recoverable amount of the CGU to which the asset has been allocated.

The recoverable amount for an individual asset or a CGU is the higher of its fair value, less, costs to sell or its value in use. When the recoverable amount of an asset or a CGU is less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount, and an impairment loss is immediately recognized in profit or loss.

The Group assesses at each reporting date whether there is any evidence that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If so, an impairment loss recognized in prior periods for an asset other than goodwill is reversed, and the carrying amount of the asset or CGU is increased to its revised estimate of recoverable amount. The increased carrying amount shall not exceed the carrying amount (net of amortization or depreciation) that would have been determined had no impairment loss been recognized in prior years.

(Continued)

124 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.

A provision for warranties is recognized when the underlying products or services are sold. This provision reflects the historical warranty claim rate and the weighting of all possible outcomes against their associated probabilities.

A provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or been announced publicly. Provisions are not recognized for future operating losses.

(r) Revenue recognition

(i) Revenue from contracts with customers (applicable commencing January 1, 2018)

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

1) Sale of goods

The Group recognizes revenue when control of the goods has been transferred to the customer, being when the goods are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the goods. Delivery occurs when the customer has accepted the goods in accordance with the terms of sales, the risks of obsolescence and loss have been transferred to the customer, and the Group has objective evidence that all criteria for acceptance have been satisfied. Sales discount and rebates are recognized and estimated based on historical experience and each contractual terms. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liability (presented under other current liabilities) is recognized for expected sales discounts and rebate payables to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term ranging from 30 to 120 days, which is consistent with the market practice.

The Group’ s obligation to provide a refund for faulty goods sold under the standard warranty terms is recognized as a provision for warranty; please refer to note 6(q).

A receivable is recognized when the goods are delivered, as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(Continued)

125 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Rendering of services

The Group’s revenue from providing medical services is recognized in the accounting period in which services are rendered.

3) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer, and the payment by the customer, exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(ii) Revenue recognition (applicable before January 1, 2018)

Revenue from the sale of goods or services is measured at the fair value of consideration received or receivable, net of returns, rebates, and other similar discounts. Sales returns are recognized estimated based on historical experience and other relevant factors.

1) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions have been satisfied: (a) the significant risks and rewards of ownership of the goods have been transferred to the buyer; (b) the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Group; and (e) the cost incurred or to be incurred in respect of the transaction can be measured reliably.

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement. Revenue is not recognized for the sale of key components to an original design manufacturer for manufacture or assembly as the significant risks and rewards of the ownership of materials are not transferred.

2) Services

Revenue from services rendered is recognized by reference to the stage of completion at the reporting date.

3) Rental income, interest income, and dividend income

Rental income from investment property is recognized over the lease term on a straightline basis.

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established, provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

(Continued)

126 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are expensed during the year in which employees render services.

(ii) Defined benefit plans

The liability recognized in respect of defined benefit pension plans is the present value of the defined benefit obligation at the reporting date, less, the fair value of plan assets. The discount rate for calculating the present value of the defined benefit obligation refers to the interest rate of high-quality government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the term of the related pension obligation. The defined benefit obligation is calculated annually by qualified actuaries using the projected unit credit method.

When the benefits of a plan are improved, the expense related to the increased obligations resulting from the services rendered by employees in the past years are recognized in profit or loss immediately.

The remeasurements of the net defined benefit liability (asset) comprise (i) actuarial gains and losses; (ii) return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and (iii) any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset). The remeasurements of the net defined benefit liabilities (asset) are recognized in other comprehensive income and then transferred to other equity.

The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment or settlement comprises any resulting change in the fair value of plan assets and any change in the present value of the defined benefit obligation.

(iii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed during the period in which employees render services. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to make such payments as a result of past service provided by the employees, and the obligation can be estimated reliably.

(t) Share-based payment

Share-based payment awards granted to employees are measured at fair value at the date of grant. The fair value determined at the grant date is expensed over the period that the employees become unconditionally entitled to the awards, with a corresponding increase in equity. The compensation cost is adjusted to reflect the number of awards given to employees for which the performance and non-market conditions are expected to be met, such that the amount ultimately recognized shall be based on the number of equity instruments that eventually have vested.

(Continued)

127 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

The grant date of options for employees to subscribe new shaves for a cash injection is the date when the Group informs the exercise price and the shares to which employees can subscribe.

(u) Income taxes

Income tax expenses include both current taxes and deferred taxes. Current and deferred taxes are recognized in profit or loss unless they relate to business combinations or items recognized directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxes are not recognized for:

(i) Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
(ii) Temporary differences arising from investments in subsidiaries to the extent that the Group is able to control the timing of the reversal of the temporary differences, and it is probable that the differences will not reverse in the foreseeable future; and

(iii) Temporary differences arising from initial recognition of goodwill.

Deferred tax is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same tax authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Deferred tax assets are recognized for unused tax losses, tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(Continued)

128 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Business combinations

The Group accounts for business combinations using the acquisition method. Goodwill is measured as the excess of the acquisition-date fair value of the consideration transferred (including any noncontrolling interest in the acquiree) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Group shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed and recognize any additional assets or liabilities that are identified in that review, and shall recognize a gain on the bargain purchase thereafter.

Acquisition-related costs are expensed as incurred except for the costs related to issuance of debt or equity instruments.

Non-controlling interests in an acquire that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s net identifiable assets. All other non-controlling interest is measured at its acquisitiondate fair value or other measurement basis in accordance with Taiwan-IFRSs.

In a business combination achieved in stages, the Group shall re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in profit or loss. The amount previously recognized in other comprehensive income in relation to the changes in the value of the Group’s equity interest should be reclassified to profit or loss on the same basis as would be required if the Group had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the provisional amounts for the items for which the accounting is incomplete are reported in the financial statements. During the measurement period, the provisional amounts recognized at the acquisition date are retrospectively adjusted to reflect 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.

Contingent consideration as part of the consideration transferred is measured at the acquisition date fair value. Any fluctuation of the fair value during the measurement period after acquisition date is retrospectively adjusted to the acquisition cost and goodwill. The adjustments are to reflect 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. For the fair value adjustments of the contingent consideration that occurred not during the measurement period, the accounting treatment will be based on the classification of contingent consideration. Contingent consideration classified as equity can not be re-measured and has to be adjusted under owner's equity. Other contingent consideration should be subsequently measured at fair value at the end of each reporting period, and recognized in profit or loss.

(Continued)

129 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Earnings per share (“EPS”)

The basic and diluted EPS attributable to stockholders of the Company are disclosed in the consolidated financial statements. Basic EPS is calculated by dividing net income attributable to stockholders of the Company by the weighted-average number of common shares outstanding during the year. In calculating diluted EPS, the net income attributable to stockholders of the Company and weighted-average number of common shares outstanding during the year are adjusted for the effects of dilutive potential common shares. The Group’ s dilutive potential common shares are profit sharing for employees to be settled in the form of common stock.

(x) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions on the allocation of resources to the segment and to assess its performance for which discrete financial information is available.

5. Critical accounting judgments and key sources of estimation uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and TaiwanIFRSs 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 estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and the future periods affected.

Information about judgments made in applying the accounting policies that have a significant effects on the amounts recognized in the consolidated financial statements is as follows:

(a) Judgment regarding significant influence of associates

The Group holds less than 20% of the voting rights in AU Optronics Corp. but has significant influence over the associates as the Group was elected as director and participates in the decisionmaking on the board.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included as follows:

(a) Valuation of inventory

(Continued)

130 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Impairment of goodwill

The assessment of impairment of goodwill requires the Group to make subjective judgments to identify cash-generating units, allocate the goodwill to relevant cash-generating units, and estimate the recoverable amount of relevant cash-generating units. Any changes in these estimates based on changed economic conditions or business strategies could result in significant adjustments in future years.

6. Significant account disclosures

(a) Cash and cash equivalents

Cash on hand Demand deposits and checking accounts Time deposits with original maturities less than three months	December 31, 2018 December 31, 2017 $ 14,847 71,997 5,978,268 4,260,571 3,625,542 2,304,066 $ 9,618,657 6,636,634

As of December 31, 2018 and 2017, the time deposits with original maturities of more than three months amounted to $204,383 and $1,053,525, respectively, which were classified as other financial － assets current.

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

Financial assets mandatorily measured at fair value through
profit or loss－current:
Foreign currency forward contracts
Foreign exchange swaps
Foreign exchange option
Open-end mutual funds
Financial assets held for trading－current:
Foreign currency forward contracts
Foreign exchange swaps
Open-end mutual funds
Financial liabilities at fair value through profit or loss－current:
Foreign currency forward contracts
Foreign exchange swaps
Contingent consideration arising from business combinations December 31,
2018
December 31,
2017
$ 56,164
-
7,517
-
1,213
-
341,020
-
-
22,013
-
19,667
-
1,002,021
$
405,914
1,043,701
$ (38,934)
(47,184)
(4,845)
(17,300)
(3,335)
(3,047)
$
(47,114)
(67,531)

(Continued)

131 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial liabilities at fair value through profit or loss`－`non- current: Contingent consideration arising from business combinations	December 31, 2018 December 31, 2017 $ (96,721) (9,628)

Refer to note 6(aa) for the amounts of gain (loss) recognized related to financial assets measured at fair value.

The Group entered into derivative contracts to manage foreign currency exchange risk resulting from operating and financing activities. The derivative financial instruments that did not conform to the criteria for hedge accounting. At each reporting date, the outstanding derivative contracts consisted of the following:

(i) Foreign currency forward contracts

USD Buy/ EUR Sell JPY Buy/ USD Sell USD Buy/ CAD Sell USD Buy/ INR Sell TWD Buy/ USD Sell EUR Buy/ GBP Sell USD Buy/ BRL Sell USD Buy/ JPY Sell USD Buy/ MXN Sell USD Buy/ CNY Sell USD Buy/ AUD Sell CNY Buy/ USD Sell MYR Buy/ USD Sell USD Buy/ ZAR Sell	December 31, 2018
	Contract amount (in thousands) Maturity period EUR 56,932 2019/01~2019/03 USD 46,498 2019/01~2019/03 CAD 4,000 2019/01~2019/03 USD 14,000 2019/01~2019/02 USD 7,000 2019/01 GBP 5,000 2019/03 USD 14,000 2019/01 JPY 800,000 2019/01~2019/03 USD 7,500 2019/01~2019/03 USD 31,500 2019/02~2019/03 AUD 2,000 2019/02 USD 45,260 2019/01~2019/03 MYR 21,000 2019/01 USD 2,870 2019/01

(Continued)

132 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

USD Buy/ EUR Sell JPY Buy/ USD Sell USD Buy/ CAD Sell USD Buy/ INR Sell TWD Buy/ USD Sell EUR Buy/ GBP Sell USD Buy/ BRL Sell USD Buy/ JPY Sell USD Buy/ MXN Sell USD Buy/ CNY Sell USD Buy/ AUD Sell CNY Buy/ USD Sell MYR Buy/ USD Sell Foreign exchange swaps Swap in USD/Swap out TWD Swap in USD/Swap out AUD Swap in USD/Swap out JPY Swap in TWD/Swap out USD Swap in USD/Swap out TWD Swap in USD/Swap out AUD Swap in USD/Swap out JPY Swap in TWD/Swap out USD Foreign exchange option—call option USD / ZAR	December 31, 2017
	Contract amount (in thousands) Maturity period EUR 96,769 2018/01~2018/05 USD 20,500 2018/01 CAD 6,000 2018/01~2018/03 USD 8,000 2018/01 USD 27,300 2018/01~2018/02 GBP 5,000 2018/01~2018/03 USD 12,500 2018/01 JPY 400,000 2018/01~2018/03 USD 7,500 2018/01~2018/03 USD 22,000 2018/03~2018/06 AUD 1,000 2018/01 USD 7,200 2018/01 MYR 21,000 2018/01 December 31, 2018
	Contract amount (in thousands) Maturity period USD 71,000 2019/01~2019/03 AUD 4,000 2019/01 JPY 400,000 2019/01 USD 68,000 2019/01 December 31, 2017
	Contract amount (in thousands) Maturity period USD 68,000 2018/03~2018/04 AUD 4,000 2018/01 JPY 400,000 2018/01 USD 72,000 2018/01 December 31, 2018 Contract amount (in thousands) Maturity period USD 30,000 2019/01

(ii) Foreign exchange swaps

(iii) Foreign exchange option—call option

(Continued)

133 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Equity investments measured at fair value through other comprehensive income: Domestic listed stocks Domestic emerging stocks Privately held stocks Current Non-current	December 31, 2018
	$ 140,592 433,080 187,954 $ 761,626 $ 30,380 731,246 $ 761,626

The Group designated the investments shown above as financial assets measured at fair value through other comprehensive income because these equity investments are held for long-term for strategic purposes and not for trading. These investments were classified as available-for-sale financial assets on December 31, 2017.

No strategic investments were disposed for the year ended December 31, 2018, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

(d) Available-for-sale financial assets

		December 31,
		2017
Domestic listed stocks	$	143,899
Domestic emerging stocks		345,898
Privately held stocks		177,457
	$	667,254
Current	$	29,605
Non-current		637,649
	$	667,254

(i) On March 14, 2017, Biodenta’s Board of Directors approved a capital reduction to offset its accumulated deficit. The Group determined its investment in Biodenta corporation as impaired, and recognized an impairment loss on financial assets of $1,755 in other gains and －
losses net in 2017.
(ii) Prior to November 9, 2017, the Group held 8.72% ownership of DFI Inc. (“DFI”) classified as available-for-sale financial assets. On November 9, 2017, the Group increased its investments in DFI for $3,450,127 and acquired 46.28% ownership of DFI through tender offer. After the acquisition, the Group’s ownership interest in DFI increased to 55% and obtained control over DFI. Therefore, DFI has been included in the Group’s consolidated entities. Please refer to note 6(j).

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) In 2017, the Group sold part of its investments in available-for-sale securities for $539,525, － and recognized a gain on disposal of $236,256 in other gains and losses net.

(e) Notes and accounts receivable

Notes and accounts receivable Notes and accounts receivable from related parties Less: loss allowance	December 31, 2018 December 31, 2017 $ 25,210,738 23,977,589 3,097,461 4,237,646 28,308,199 28,215,235 (198,527) (89,947 $ 28,109,672 28,125,288

(i) The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables (including related parties) on December 31, 2018. Analysis of expected credit loss on notes and accounts receivable (including related parties) as of December 31, 2018 was as follows:

Current Past due 1-90 days Past due 91-180 days Past due over 181 days	Gross carrying amount $ 26,906,123 1,204,042 107,998 90,036 $ 28,308,199	Weighted- average loss rate Loss allowance 0.11% 29,897 1.07% 12,941 60.79% 65,653 100.00% 90,036 198,527

(ii) As of December 31, 2017, the Group applied the incurred loss model to measure the loss allowance for notes and accounts receivable. The aging analysis of notes and accounts receivable (including related parties) which were past due but not impaired was as follows:

			December 31,
			2017
Past due	1-90 days	$	768,754
Pass due	91-180 days		30,664
Pass due	over 181 days		7,478
		$	806,896

The allowance for doubtful receivables is assessed by referring to the collectability of receivables based on historical payment behavior and an analysis of specific customer credit quality. Notes and accounts receivable that are past due but for which the Group has not recognized a specific allowance for doubtful receivables after the assessment are still considered recoverable.

(Continued)

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QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Movements of the loss allowance for notes and accounts receivable (including related parties) were as follows:

Balance at January 1 (per IAS 39) Adjustment on initial application of IFRS 9 Balance at January 1 (per IFRS 9) Impairment losses Write-off Effect of exchange rate changes Acquisition through business combination Balance at December 31	2018 $ 89,947 80,199 170,146 26,249 (23,424) (1,832) 27,388 $ 198,527	2017
		Individually assessed impairment Collectively assessed impairment 89,673 - 22,563 - (29,483) - (1,494) - 8,688 - 89,947 -

(iv) The Group entered into factoring contracts with financial institutions to sell its accounts receivable without recourse. According to these contracts, the Group is not responsible for any risk of uncollectible accounts receivable, but only the risk of loss due to commercial disputes. Thus, these contracts met the conditions of financial asset derecognition. Details of these contracts at each reporting date were as follows:

		December 31,	2018
Underwriting bank Factored amount Chinatrust Commercial Bank $ 2,245,817 Mega International Commercial Bank 17,161 Taishin International Bank 3,675,009 Taipei Fubon Bank - Crefo Factoring Nord GmbH 43,579 $ 5,981,566		Factoring credit limit 3,593,655 100,000 5,866,565 1,228,600 423,132 11,211,952 December 31,	Advance amount Range of interest rates Collateral 2,019,781 None - - Promissory note 100,000 3,675,009 None - - None - 36,762 None - 5,731,552 2.392%`～`3.648% 100,000 2017
Underwriting bank Factored amount Chinatrust Commercial Bank $ - Mega International Commercial Bank 13,227 Taishin International Bank 2,610,837 Taipei Fubon Bank - Crefo Factoring Nord GmbH 27,751 $ 2,651,815		Factoring credit limit 3,252,560 338,720 5,102,640 1,641,200 428,976 10,764,096	Advance amount Range of interest rates Collateral - None - - Promissory note 338,720 2,610,837 None - - Promissory note 89,520 22,978 None - 2,633,815 1.9175%`～`3.5% 428,240

The factored accounts receivable, net of the advance amount, were classified as “ other receivables” in the accompanying consolidated balance sheets.

Please refer to note 7 for the detail of factored accounts receivable from related parties which met the conditions of derecognition.

(Continued)

136 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Please refer to note 8 for a description of the Group’s notes and accounts receivable pledged as collateral to secure for the bank loans.

(f) Other receivables

Other receivables (note 6(e)) Other receivables from related parties Less: loss allowance	December 31, 2018 December 31, 2017 $ 611,589 252,098 22,568 7,412 634,157 259,510 (30,653) (29,778) $ 603,504 229,732

As of December 31, 2018, except for other receivables amounting to $30,653, wherein the loss allowance is fully provided, no loss allowance was provided for the remaining receivables after the management’s assessment.

As of December 31, 2017, except for other receivables amounting to $29,778, for which the loss allowance is fully provided, the Group expected that other receivables could be collected within one year, and no loss allowance was provided for after management’s assessment.

(g) Inventories

Raw materials Work in process Finished goods Inventories in transit	December 31, 2018 December 31, 2017 $ 4,502,471 3,880,656 1,698,504 1,284,192 12,021,590 10,229,649 6,840,489 4,784,841 $ 25,063,054 20,179,338

For the years ended December 31, 2018 and 2017, the cost of inventories sold amounted to $131,771,609 and $116,887,037, respectively.

For the years ended December 31, 2018 and 2017, the write-downs of inventories to net realizable value amounted to $254,545, and $255,531, respectively and were included in cost of sales.

Please refer to note 8 for a description of the Group’s inventories pledged as collateral to secure for the bank loans.

(Continued)

137 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Non-current assets held-for-sale

QMMX decided to dispose its plants and land. In the fourth quarter of 2017, an active programme to locate a buyer have been initiated, and the plants and land are expected to be disposed within twelve months. Therefore, on December 31, 2017, the plants and land were classified under non-current assets held for sale as follows:

Property and plant	December 31, 2018 December 31, 2017 $ - 155,220

The above non-current assets held-for-sale has been sold in the first quarter of 2018, and the gain on － disposal of non-current assets held-for-sale of $156,703 was recognized in other gains and losses net.

(i) Investments accounted for using equity method

A summary of the Group’s investments accounted for using the equity method at the reporting date is as follows:

Associates Joint ventures	December 31, 2018 December 31, 2017 $ 19,354,528 16,737,022 28,064 11,389 $ 19,382,592 16,748,411

(i) Investments in associates

Name of Associates Main Business and Relationship AU Optronics Corp. (“AU”) R & D, manufacture and sale of TFT-LCD panels, the Group’s strategic partners Darfon Electronics Corp. (“DFN”) Manufacture and sale of power devices, peripheral equipment, and integrated communication devices, the Group’s strategic partners Alpha Networks Inc. (“Alpha”) R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products, the Group’s strategic partners Others	Location Taiwan Taiwan Taiwan	December 31, 2018 Percentage of voting rights Carrying amount % 6.90 13,921,968 % 28.48 2,537,545 % 22.95 2,686,449 - 208,566 $ 19,354,528	December 31, 2018 Percentage of voting rights Carrying amount % 6.90 13,921,968 % 28.48 2,537,545 % 22.95 2,686,449 - 208,566 $ 19,354,528	December 31, 2017
		Percentage of voting rights		Percentage of voting rights Carrying amount % 6.90 14,287,092 % 28.48 2,274,759 - - - 175,171 16,737,022
		% 6.90 % 28.48 % 22.95 -

(Continued)

138 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The equity-method was used to account for investments in certain associates of which the Group holds less than 20% of the voting rights but has significant influence over the associates as the Group was elected as director and participates in the decision-making on the board.

On March 15, 2018, the Company subscribed the 100,000 thousand shares of Alpha Networks Inc. (“Alpha”) for $2,300,000 through private offering. Furthermore, from March to June 2018, the Group increased its investments in Alpha for $551,441, resulting in its increase of ownership in Alpha to 22.92%.

On April 10, 2017, the Group increased its investments in Partner Tech Corp. (“PTT”) for $1,263,098 and acquired 42.06% ownership of PTT through tender offer. After the acquisition, the Group’s ownership interest in PTT increased from 26.17% to 68.23% and obtained control over PTT. Therefore, PTT has been included in the Group’s consolidated entities. Please refer to note 6(j).

On June 13, 2017, none of the representative of the Group was elected as one of the directors of Raydium Semiconductor Corporation (“ RSC” ), therefore, it cannot participate in the decision-making for RSC. As a result, the Group lost significant influence over RSC; hence, its － investment was reclassified from an associate to available-for-sale financial assets non- － current, recognizing a loss on disposal of $10,477 in other gains and losses net.

For the years ended December 31, 2018 and 2017, the Group’s shares of profits of associates amounted to $1,156,578 and $2,400,275, respectively.

The fair value of the investment in associates which are publicly traded was as follows:

AU DFN Alpha	December 31, 2018 December 31, 2017 $ 8,162,268 8,228,628 3,129,285 2,363,906 2,063,686 -

The summarized financial information in respect of each of the Group’s material associates is set out below:

1) The summarized financial information of AU:

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to non-controlling interests of AU Equity attributable to shareholders of AU	December 31, 2018 December 31, 2017 $ 149,067,627 180,175,541 260,764,148 261,275,743 (128,937,971) (107,236,609) (63,615,116) (108,969,560) $ 217,278,688 225,245,115 $ 14,415,973 17,090,747 $ 202,862,715 208,154,368

(Continued)

139 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			2018	2017
	Net sales	$	307,634,389	341,028,267
	Net income	$	7,959,895	30,258,488
	Other comprehensive income		(1,383,775)	(960,183)
	Total comprehensive income	$	6,576,120	29,298,305
	Total comprehensive income attributable to non-
	controlling interests of AU	$	(2,509,140)	(2,456,428)
	Total comprehensive income attributable to
	shareholders of AU	$	9,085,260	31,754,733

			2018	2017
	The Group’s share of equity of associates at January 1$		14,362,651	12,505,884
	Total comprehensive income attributable to the
	Group		624,788	2,190,811
	Capital surplus attributable to the Group		5,499	37,571
	Dividend received from associates		(995,398)	(371,615)
	Cumulative effect of investment income recognized
	under treasury stock method		(75,559)	(75,559)
	Adjustment on initial application of IFRS 9		(13)	-
	The carrying amount of investments in the associates	$	13,921,968	14,287,092
2)	The summarized financial information of DFN:
		December 31,		December 31,
			2018	2017
	Current assets	$	12,741,445	10,028,855
	Non-current assets		6,353,987	5,318,722
	Current liabilities		(8,968,442)	(6,675,261)
	Non-current liabilities		(684,007)	(654,165)
	Equity	$	9,442,983	8,018,151
	Equity attributable to non-controlling interests of
	DFN	$	532,458	30,390
	Equity attributable to shareholders of DFN	$	8,910,525	7,987,761
			2018	2017
	Net sales	$	20,113,619	17,664,072
	Net income	$	1,525,848	583,044
	Other comprehensive income		(36,920)	(331,803)
	Total comprehensive income	$	1,488,928	251,241
	Total comprehensive income attributable to non-
	controlling interests of DFN	$	6,164	2,298
	Total comprehensive income attributable to
	shareholders of DFN	$	1,482,764	248,943

(Continued)

140 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		2018		2017
	The Group’s share of equity of associates at January 1$	2,274,759		2,360,089
	Total comprehensive income attributable to the
	Group	422,240		70,871
	Capital surplus attributable to the Group	-		3,253
	Dividend received from associates	(159,454)		(159,454)
	The carrying amount of investments in the associates$	2,537,545		2,274,759
3)	The summarized financial information of Alpha:
			December 31,
				2018
	Current assets		$	12,517,041
	Non-current assets			2,412,034
	Current liabilities			(4,173,154)
	Non-current liabilities			(362,170)
	Equity		$	10,393,751
	Equity attributable to non-controlling interests of Alpha		$	-
	Equity attributable to shareholders of Alpha		$	10,393,751
				2018
	Net sales		$	15,608,222
	Net loss		$	(88,009)
	Other comprehensive income			(76,053)
	Total comprehensive income		$	(164,062)
	Total comprehensive income attributable to non-controlling interests of
	Alpha		$	-
	Total comprehensive income attributable to shareholders of Alpha		$	(164,062)
				2018
	The Group’s share of equity of associates at January 1		$	-
	Purchase of investments			2,851,441
	Total comprehensive income attributable to the Group			(44,913)
	Capital surplus attributable to the Group			4,613
	Dividend received from associates			(124,692)
	The carrying amount of investments in the associates		$	2,686,449

4) Aggregate financial information of associates that were not individually material was summarized as follows. The financial information was included in the Group's consolidated financial statements.

(Continued)

141 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	December 31,	December 31,	December 31,
		2018	2017
The aggregate carrying amount of associates that were
not individually material	$	208,566	175,171
		2018	2017
Attributable to the Group:
Net income	$	36,507	2,394
Other comprehensive income		(11,040)	3,294
Total comprehensive income	$	25,467	5,688

(ii) Joint venture

Aggregate financial information of joint ventures, that is not individually material, was summarized as follows. The financial information was included in the Group’s consolidated financial statement:

The aggregate carrying amount of associates that were not individually material Attributable to the Group: Net loss Other comprehensive income Total comprehensive income	December 31, 2018 December 31, 2017 $ 28,064 11,389 2018 2017 $ (984) (4,476) (993) (295) $ (1,977) (4,771)

(iii) Pledge as collateral

Refer to note 8 for a description of the Group’s investments accounted for using the equity method pledged as collateral for long-term debt and credit facilities.

(j) Business combination

－
(i) Acquisition of subsidiaries Sigma Medical Supplies Corp. and its subsidiaries

1) The cost of acquisition

On July 24, 2018, the Group’s subsidiary, BMC, acquired 89.03% of ownership of Sigma Medical Supplies Corp. (“SMS”) at a price of $498,579, and obtained control over SMS and its subsidiaries. Therefore, SMS and its subsidiaries have been included in the Group’ s consolidated entities. SMS and its subsidiaries are engaged in selling and manufacturing of medical products. The acquisition of SMS and its subsidiaries enables the Group to expand its business in medical consumable industry through SMS’ s production line and market channel by integrating the Group’ s core researching and manufacturing capability.

(Continued)

142 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

On July 24, 2018 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Account		Amount
Cash and cash equivalents	$	119,934
Notes and accounts receivable, net		151,802
Other receivables		57,515
Inventories		180,463
Other current assets		40,612
Other financial assets`－`current		64,337
Property, plant and equipment		360,560
Intangible assets`－`computer software		295
Deferred income tax assets		28,717
Other non-current assets		27,203
Short-term borrowings		(219,193)
Notes and accounts payable		(97,187)
Other current liabilities		(46,843)
Long-term debt		(104,797)
Deferred income tax liabilities		(2,780)
Other non-current liabilities		(354)
Identifiable net assets acquired at fair value	$	560,284
Gain on bargain purchase
Gain on bargain purchase arising from the acquisition was as follows:
Consideration transferred`－`cash	$	498,579
Add: non-controlling interest (measured at non-controlling
interest’s proportionate share of the fair value of SMS’s
identifiable net assets)		61,452
Less: identifiable net assets acquired at fair value		(560,284)
Gain on bargain purchase	$	(253)

3) Gain on bargain purchase
4) Pro forma information

From the acquisition date to December 31, 2018, SMS and its subsidiaries had contributed the revenue of $274,507 and the net loss of $32,981 to the Group. If this acquisition had occurred on January 1, 2018, the management estimates that consolidated revenue would have been $156,233,399, and consolidated income after income tax would have been $4,382,172. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2018.

(Continued)

143 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ (ii) Acquisition of subsidiaries K2 International Medical Inc.

1) The cost of acquisition

On August 14, 2018, the Group invested the amount of $166,131 in K2 International Medical Inc. (“K2”), and acquired 37.56% of its ownership, wherein it owned more than half of its total number of directors. Therefore, the Group obtained control over K2. K2 has been included in the Group’s consolidated entities. K2 served as an agency, and is engaged in the sale of hemodialysis machines and related accessories and consumables of well-known brand. The acquisition of K2 enables the Group to penetrate into hemodialysis products market and expand its Asia Pacific market through K2’s market channel.

2) Identifiable net assets acquired in a business combination

On August 14, 2018 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

from the acquisition at fair value, were as follows:
Consideration transferred:
Cash			$	166,131
Add: Non-controlling interest (measured at non-controlling				212,649
interest’s proportionate share of the fair value of
K2’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	268,829
Notes and accounts receivable, net		179,170
Inventories		66,046
Other current assets		1,921
Property, plant and equipment		11,832
Intangible assets`－`customer relationships		30,745
Intangible assets`－`computer software		81
Deferred income tax assets		1,217
Other non-current financial assets		13,322
Short-term borrowings		(169,944)
Notes and accounts payable		(39,191)
Other current liabilities		(17,310)
Deferred income tax liabilities		(6,152)		340,566
Goodwill			$	38,214

The fair value of the abovementioned intangible assets has been determined as provisionally pending completion of an independent valuation.

(Continued)

144 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

If there is any information discovered within one year from the acquisition date about facts and circumstances that existed at the acquisition date which leads to an adjustment to the above provision amounts, or any additional provisions as at the acquisition date, the acquisition accounting will be revised.

3) Intangible assets

The above customer relationships are amortized on a straight-line basis over the estimated future economic useful life of 5.6 years.

Goodwill arising from the acquisition of K2 is due to its profitability in the hemodialysis products market and value of workforce, neither of which qualifies as identifiable intangible assets. None of the goodwill recognized is expected to be deductible for income tax purposes.

4) Pro forma information

From the acquisition date to December 31, 2018, K2 had contributed the revenue of $302,335 and the net income of $8,737 to the Group. If this acquisition had occurred on January 1, 2018, the management estimates that consolidated revenue would have been $156,241,294, and consolidated income after income tax would have been $4,472,445. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2018.

－
(iii) Acquisition of subsidiaries Data Image Corporation (“DIC”)
1) The cost of acquisition

On November 12, 2018, the Group invested the amount of $308,000 in Data Image Corporation (“DIC”), and acquired 33.14% of its ownership, wherein it owned more than half of its total number of directors. Therefore, the Group obtained control over DIC. DIC and its subsidiaries have been included in the Group’s consolidated entities. DIC and its subsidiaries are engaged in the manufacture and sale of marine display modules. The acquisition of DIC and its subsidiaries expects to integrate the Group’ s strong technological and manufacturing strengths, as well as DIC’s design and manufacturing capability on marine display modules to expand the related business.

(Continued)

145 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

On November 12, 2018 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:

Consideration transferred:
Cash			$	308,000
Add: Non-controlling interest (measured at non-controlling				614,390
interest’s proportionate share of the fair value of DIC's
identifiable net assets)
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	483,585
Notes and accounts receivable, net		477,682
Other receivables		48,646
Inventories		504,819
Other current assets		27,585
Property, plant and equipment		396,484
Intangible assets`－`computer software		2,162
Investments accounted for using equity method		22,973
Deferred income tax assets		16,312
Other non-current assets		22,597
Short-term borrowings		(358,699)
Notes and accounts payable		(527,353)
Other payables		(73,241)
Current portion of long-term debt		(33,200)
Other current liabilities		(59,995)
Long-term debt		(24,200)
Deferred income tax liabilities		(7,237)		918,920
Goodwill			$	3,470

The fair value of the identifiable intangible assets has been determined as provisionally pending completion of an independent valuation.

(Continued)

146 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Intangible assets

Goodwill arising from the acquisition of DIC and its subsidiaries is due to their reputation in the marine displays market, profitability and value of workforce, neither of which qualifies as identifiable intangible assets. None of the goodwill recognized is expected to be deductible for income tax purposes.

4) Pro forma information

From the acquisition date to December 31, 2018, DIC and its subsidiaries had contributed the revenue of $404,111 and the net loss of $3,911 to the Group. If this acquisition had occurred on January 1, 2018, the management estimates that consolidated revenue would have been $158,324,813, and consolidated income after income tax would have been $4,564,574. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2018.

(iv) Acquisition of subsidiaries by PTT

1) The cost of acquisition

Business combination of PTT in 2018 was as follow:

On January 1, 2018, PTT invested in Epoint Systems Pte. Ltd. (“PTSE”) for $27,449 in cash and $7,544 in contingent consideration, and acquired 50.10% ownership of PTSE.

On June 1, 2018, PTT increased its investments in Partner Tech Africa (Pty) Ltd. (“PTA”) for $22,451 in cash and $15,392 in contingent consideration, and acquired 54% ownership of PTA. After the acquisition, the Group’ s ownership interest in PTA increased from 46% to 100%.

On October 1, 2018, PTT invested in La Fresh information Co., Ltd (“ PTTN” ) for $20,510 in cash and $4,594 in contingent consideration, and acquired 50.64% ownership of PTTN.

On November 1, 2018, PTT invested in Corex (Pty) Ltd. (“PCX”) for $109,828 in cash and $62,511 in contingent consideration, and acquired 100% ownership of PCX.

(Continued)

147 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

The identifiable assets and liabilities arising from the abovementioned subsidiaries’ acquisition at fair value, were as follows:

Consideration transferred:
Cash			$	180,238
Contingent consideration at fair value				90,041
The fair value of the acquirer’s previously held equity
interest in the acquiree				28,270
Non-controlling interest (measured at non-controlling
interest’s proportionate share of the fair value of
identifiable net assets)				43,071
Identifiable net assets acquired at fair value:
Cash and cash equivalents	$	90,838
Accounts receivable, net		147,635
Inventories		186,599
Other current assets		63,202
Other financial assets`－`current		2,256
Property, plant and equipment		117,346
Intangible assets`－`trademarks		7,812
Intangible assets`－`customer relationships		9,914
Intangible assets`－`computer software		12,273
Other non-current assets		12,315
Short-term borrowings		(71,489)
Current portion of long-term debt		(5,291)
Notes and accounts payable		(116,664)
Other payables		(29,539)
Other current liabilities		(49,012)
Long-term debt		(179,125)
Deferred income tax liabilities		(2,914)		196,156
Goodwill			$	145,464

The Group’s previously held 46% ownership of PTA is remeasured to fair value at the acquisition date, and recognized a gain on disposal of $14,727 in other gains and losses － net.

(Continued)

148 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Intangible assets

The above customer relationships and trademarks are amortized on a straight-line basis over the estimated future economic useful life of 4 to 5.6 years and 10 years, respectively.

Goodwill arising from the acquisition is due to their value of workforce, which does not qualify as an identifiable intangible asset. None of the goodwill recognized is expected to be deductible for income tax purposes.

The fair value of the abovementioned intangible assets has been determined as provisionally pending completion of an independent valuation.

4) Pro forma information

From the acquisition date to December 31, 2018, the acquisition of PTT’s subsidiaries had contributed the revenue of $377,071 and the net income of $2,310 to the Group. If this acquisition had occurred on January 1, 2018, the management estimates that consolidated revenue would have been $156,699,454, and consolidated income after income tax would have been $4,374,991. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2018.

－
(v) Acquisition of subsidiaries DFI Inc. and its subsidiaries
1) The cost of acquisition

On November 9, 2017, the Group increased its investments in DFI Inc. (“ DFI” ) for $3,450,127 and acquired 46.28% of its ownership through tender offer. After the acquisition, the Group’s ownership interest in DFI increased from 8.72% to 55.00% and obtained control over DFI. Therefore, DFI and its subsidiaries have been included in the Group’s consolidated entities. DFI and its subsidiaries are engaged in the manufacture and sale of industrial motherboards and related components.

The acquisition expects to integrate the Group’s strong technological and manufacturing strengths, as well as DFI's manufacturing capability and customer service on motherboards to build the integrated business solutions.

(Continued)

149 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

On November 9, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:
Cash			$	3,450,127
Add: the fair value of the acquirer’s previously held equity				640,000
interest in the acquiree
Non-controlling interest (measured at non-controlling				2,178,468
interest’s proportionate share of the fair value of DFI’
s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	829,366
Financial assets at fair value through profit or loss`－`		971,201
current
Notes and accounts receivable, net		568,323
Notes and accounts receivable from related parties		240,945
Other receivables from related parties		300
Other receivables		14,582
Inventories		540,256
Other current assets		26,834
Other financial assets`－`current		41,950
Available-for-sale financial assets`－`non-current		23,336
Property, plant and equipment		946,360
Intangible assets`－`goodwill		187,365
Intangible assets`－`trademarks		720,664
Intangible assets`－`customer relationships		1,065,509
Intangible assets`－`computer software		11,483
Deferred income tax assets		37,122
Other non-current assets		9,824
Notes and accounts payable		(682,952)
Accounts payable to related parties		(332)
Other current liabilities		(222,406)
Provisions`－`current		(48,415)
Deferred income tax liabilities		(348,561)
Other non-current liabilities		(91,712)
Non-controlling interests		(2)		4,841,040
Goodwill			$	1,427,555

(Continued)

150 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s previously held 8.72% ownership of DFI had been remeasured to fair value at the acquisition date, resulting in a gain on disposal of $189,899 in other gains and － losses net.

3) Intangible assets

The above trademarks are amortized on a straight-line basis over the estimated future economic useful life of 10 years.

The above customer relationships are amortized on a straight-line basis over the estimated future economic useful life of 10 years.

Goodwill arising from the acquisition of DFI and its subsidiaries is due to their reputation in the industrial motherboards market, profitability and value of workforce, neither of which qualifies as identifiable intangible assets. None of the goodwill recognized is expected to be deductible for income tax purposes.

4) Pro forma information

From the acquisition date to December 31, 2017, DFI and its subsidiaries had contributed the revenue of $511,214 and the net income of $51,265 to the Group. If this acquisition had occurred on January 1, 2017, the management estimates that consolidated revenue would have been $140,068,332, and consolidated income after income tax would have been $6,023,437. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2017.

－
(vi) Acquisition of subsidiaries Partner Tech Corp. and its subsidiaries

1) The cost of acquisition

On April 10, 2017, the Group increased its investments in Partner Tech Corp. (“PTT”) for $1,263,098 and acquired 42.06% of its ownership through tender offer. After the acquisition, the Group’s ownership interest in PTT increased from 26.17% to 68.23% and obtained control over PTT. Therefore, PTT and its subsidiaries have been included in the Group’ s consolidated entities. PTT and its subsidiaries are engaged in the manufacture and sale of POS terminals and peripherals.

The acquisition expects to integrate the Group’s technological and manufacturing skills with PTT’s customer service on retail market.

(Continued)

151 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

On April 10, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:
Cash			$	1,263,098
Add: the fair value of the acquirer’s previously held equity				512,821
interest in the acquiree
Non-controlling interest (measured at non-controlling				504,050
interest’s proportionate share of the fair value of
PTT’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	332,247
Financial assets at fair value through profit or loss`－`		2,667
current
Notes and accounts receivable, net		395,797
Other receivables		14,010
Inventories		530,102
Other current assets		123,542
Property, plant and equipment		333,138
Intangible assets`－`goodwill		97,667
Intangible assets`－`trademarks		443,786
Intangible assets`－`customer relationships		147,993
Intangible assets`－`computer software		33,528
Investments accounted for using equity method		34,178
Deferred income tax assets		52,963
Other financial assets`－`non-current		708
Other non-current assets		94,100
Short-term borrowings		(130,159)
Current portion of long-term debt		(2,763)
Financial liabilities at fair value through profit or loss		(185)
`－`current
Notes and accounts payable		(426,415)
Other payables		(48,197)
Other current liabilities		(189,413)
Provisions`－`current		(18,446)
Long-term debt		(10,431)
Deferred income tax liabilities		(105,627)
Other non-current liabilities		(46,081)
Non-controlling interests		(72,115)		1,586,594
Goodwill			$	693,375

(Continued)

152 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s previously held 26.17% ownership of PTT is remeasured to fair value at the acquisition date, and recognized a gain on disposal of $104,433 in other gains and losses － net.

3) Intangible assets

The above trademarks are amortized on a straight-line basis over the estimated future economic useful life of 10 years.

The above customer relationships are amortized on a straight-line basis over the estimated future economic useful life of 5 years.

Goodwill arising from the acquisition of PTT and its subsidiaries is due to their reputation in the POS market, profitability and value of workforce, neither of which qualifies as an identifiable intangible asset. None of the goodwill recognized is expected to be deductible for income tax purposes.

4) Pro forma information

From the acquisition date to December 31, 2017, PTT and its subsidiaries had the contributed revenue of $1,903,882 and the net income of $93,433 to the Group. If this acquisition had occurred on January 1, 2017, the management estimates that consolidated revenue would have been $137,329,545, and consolidated income after income tax would have been $5,665,154. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2017.

－
(vii) Acquisition of subsidiaries Partner Tech Middle East FZCO (“PTME”) and its subsidiary
1) The cost of acquisition

On April 17, 2017, PTT increased its investments in Partner Tech Middle East FZCO (“PTME”) for $30,410 (US$ 1,000 thousand) and acquired 31% of its ownership. After the acquisition, the Group’s ownership interest in PTME increased from 20% to 51% and obtained control over PTME. Therefore, PTME and its subsidiary have been included in the Group’s consolidated entities. PTME and its subsidiary are engaged in the sale of POS terminals and peripherals. The acquisition of PTME enables the Group to access the existing customers and Middle East market channel of PTME and its subsidiaries.

(Continued)

153 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Identifiable net assets acquired in a business combination

On April 17, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:
Cash			$	30,410
Add: the fair value of the acquirer’s previously held equity				19,326
interest in the acquiree
Non-controlling interest (measured at non-controlling				42,877
interest’s proportionate share of the fair value of
PTME’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	34,601
Notes and accounts receivable, net		22,901
Inventories		83,078
Other current assets		35,637
Property, plant and equipment		50,706
Intangible assets`－`customer relationships		7,743
Intangible assets`－`computer software		1,105
Other non-current assets		2,613
Short-term borrowings		(59,796)
Notes and accounts payable		(76,864)
Other current liabilities		(14,189)		87,535
Goodwill			$	5,078

The Group’s previously held 20.00% ownership of PTME is remeasured to fair value at － the acquisition date, and recognized a loss on disposal of $5 in other gains and losses net.

3) Intangible assets

The above customer relationships are amortized on a straight-line basis over the estimated future economic useful life of 6.25 years.

The goodwill arising from the acquisition of PTME and its subsidiary is due to the value of workforce, which does not qualify as an identifiable intangible asset. None of the goodwill recognized is expected to be deductible for income tax purposes.

(Continued)

154 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Pro forma information

From the acquisition date to December 31, 2017, PTME and its subsidiary had the contributed revenue of $185,469 and the net loss of $14,857 to the Group. If this acquisition had occurred on January 1, 2017, the management estimates that consolidated revenue would have been $136,908,330, and consolidated income after income tax would have been $5,650,288. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2017.

－
(viii) Acquisition of subsidiary Partner Tech North Africa (“PTNA”)
1) The cost of acquisition

On May 8, 2017, PTT increased its investments in Partner Tech North Africa (“PTNA”) for $2,503 (MAD 800 thousand) and acquired 18.19% of its ownership. After the acquisition, the Group’s ownership interest in PTNA increased from 40.00% to 58.19% and obtained control over PTNA. Therefore, PTNA has been included in the Group’s consolidated entities. PTNA is engaged in the sale of POS terminals and peripherals.

2) Identifiable net assets acquired in a business combination

On May 8, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:
Cash
Add: the fair value of the acquirer’s previously held equity
interest in the acquiree
Non-controlling interest (measured at non-controlling
interest’s proportionate share of the fair value of
PTNA’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents
Other current assets
Property, plant and equipment
Other non-current assets
Other current liabilities
Goodwill

$ 2,503
875
1,677
4,332
225
94
208
(780)
4,079
$
976

The Group’s previously held 18.19% ownership of PTNA is remeasured to fair value at the acquisition date, and recognized a loss on disposal of $116 in other gains and losses － net.

3) Pro forma information

From the acquisition date to December 31, 2017, PTNA had contributed the revenue of $2,136 and the net loss of $2,340 to the Group. If this acquisition had occurred on January 1, 2017, the management estimates that consolidated revenue would have been $136,862,466, and consolidated net income after income tax would have been

(Continued)

155 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

$5,655,492. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2017.

－
(ix) Acquisition of subsidiary New Best Hearing International Trade Co. Ltd.

On May 26, 2017, BMTC's board of directors resolved to acquired 52% equity ownership of New Best Hearing International Trade Co. Ltd. (“NBHIT”) through BenQ Hearing Solution Corporation (“BHS”). After June 1, 2017 (the acquisition date), NBHIT has been included in the Group’s consolidated entities. NBHIT served as an agency. It also engages in the sale of hearing aid and related accessories of a well-known brand in Taiwan.

The acquisition of NBHIT enables the Group to penetrate into the hearing aid market and expand its business within senior citizens health care through NBHIT's market channel.

1) The cost of acquisition

According to the share purchase agreement on June 1, 2017, BHS acquired 52% ownership of NBHIT for $70,200.

2) Identifiable net assets acquired in a business combination

On June 1, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

the acquisition at fair value, were as follows:
Consideration transferred:
Cash			$	70,200
Add: Non-controlling interest (measured at				38,801
noncontrolling interest’s proportionate share of
the fair value of NBHIT’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	43,661
Notes and accounts receivable, net		3,797
Other receivables		1,677
Inventories		11,790
Other current assets		1,865
Property, plant and equipment		14,397
Intangible assets`－`customer relationships		35,811
Intangible assets`－`computer software		780
Other non-current assets		80
Notes and accounts payable		(20,410)
Other payables		(10,132)
Provisions		(1,100)
Other current liabilities		(1,381)
Deferred income tax liabilities		(6,087)		74,748
Goodwill			$	34,253

(Continued)

156 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Intangible assets

Goodwill arising from the acquisition of NBHIT is due to promising profit deriving from the hearing aid healthcare market and the value of workforce. None of the goodwill recognized is expected to be deductible for income tax purposes.

The above customer relationships are amortized on a straight-line basis over the estimated future economic useful life of 10 years.

4) Pro forma information

From the acquisition date to December 31, 2017, NBHIT had contributed the revenue of $102,115 and the net income of $10,099 to the Group. If this acquisition had occurred on January 1, 2017, the management estimates that consolidated revenue would have been $136,888,934, and consolidated income after income tax would have been $5,657,949. In determining these amounts, the management assumed that the acquisition occurred on January 1, 2017.

(x) Change in ownership interest in subsidiaries without losing control

From November to December 2018, DFI purchased its own common shares for $12,909 from stock market, and the Group’s ownership interest in DFI increased to 55.09%.

In 2018, PTT increased its investments in PTME for $76,352 (US$2,500 thousand), and the Group’s ownership interest in PTME increased to 68.23%.

In 2018, BMC increased its investments in SMS for $137, and the Group’s ownership interest in SMS increased to 38.79%.

In September 2018, BBHC issued new shares as a result of stock options exercised by their employees, resulting in a decrease of the Group’s ownership interest in BBHC. However, the Group still has control over BBHC.

In March 2017, Darly increased its investments in BBHC for US$10,000 thousand, and the Group’s ownership interest in BBHC increased to 70.76%.

In March 2017, BMTC increased its investments in BenQ AB DentCare Corporation (“BABD”) for $40,000, and the Group’s ownership interest in BABD increased to 48.36%.

In August 2017, APV increased its investments in BES for $3,500, and the Group’s ownership interest in BDT increased to 83%.

In 2017, BMTC and BBHC issued new shares as a result of stock options exercised by their employees, resulting in a decrease of the Group’s interest in BMTC and BBHC. However, the Group still has control over BMTC and BBHC.

(Continued)

157 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following table summarizes the effect on the equity attributable to the shareholders of the Company arising from abovementioned changes in ownership interests in subsidiaries:

Capital surplus`－`arising from changes in ownership interests in subsidiaries Capital surplus`－`difference between consideration and carrying amount arising from acquisition or disposal of shares in subsidiaries Capital surplus`－`Capital injection from non-controlling interests	2018 2017 $ 1 (56,756) (42,630) (2,706) 5,986 20,127 $ (36,643) (39,335)

(xi) Subsidiaries that have material non-controlling interest:

Subsidiaries that have material non-controlling interest were as follows:

Principal place of business Subsidiaries /Registration country BMC Taiwan BBHC Cayman Islands DFI Taiwan	The Percentage of ownership and voting rights held by non- controlling interests December 31, 2018 December 31, 2017 % 56.44 % 56.44 % 29.28 % 29.24 % 44.91 % 45.00

The summarized financial information of subsidiaries were as follows, the information was prepared in accordance with Taiwan-IFRSs. Included in these information are the fair value adjustment made during the acquisition as at the acquisition date. Intra-group transactions were not eliminated in this information:

1) The summarized financial information of BMC:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets The carrying amount of non-controlling interests	December 31, 2018 December 31, 2017 $ 4,788,590 4,916,832 5,554,570 5,293,484 (4,089,202) (4,131,643 (2,069,943) (1,947,865 $ 4,184,015 4,130,808 $ 2,386,944 2,331,583

(Continued)

158 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Net sales
Net income
Other comprehensive income
Total comprehensive income
Net income attributable to non-controlling interests
Total comprehensive income attributable to non-
controlling interests
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Effects of foreign exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash dividends paid to non-controlling interests
2)
The summarized financial information of BBHC:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
The carrying amount of non-controlling interests
Net sales
Net income
Other comprehensive income
Total comprehensive income
Net income attributable to non-controlling interests
Total comprehensive income attributable to non-
controlling interests
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Effects of foreign exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash dividends paid to non-controlling interests

2018
2017
$
12,764,171
11,132,587
$ 325,374
525,127
(44,855)
(27,168)
$
280,519
497,959
$
182,243
296,401
$
156,945
281,067
$ 2,133,784
324,804
(863,153)
(1,502,427)
(1,338,429)
1,173,641
(38,887)
7,134
$
(106,685)
3,152
$
(162,887)
-
December 31,
2018
December 31,
2017
$ 1,658,882
1,350,642
8,157,466
8,360,885
(4,183,403)
(3,876,943)
(2,264,826)
(2,586,977)
$
3,368,119
3,247,607
$
994,555
959,908
2018
2017
$
6,982,549
5,769,263
$ 159,028
78,604
(141,681)
152,401
$
17,347
231,005
$
46,502
22,022
$
33,430
(1,070)
2018
2017
$ 622,610
1,360,529
(330,411)
(403,281)
(204,244)
(882,816)
143,041
(199,543)
$
230,996
(125,111)
$
-
-

(Continued)

159 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) The summarized financial information of DFI:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
The carrying amount of non-controlling interests
Net sales
Net income
Other comprehensive income
Total comprehensive income
Net income attributable to non-controlling interests
Total comprehensive income attributable to non-
controlling interests
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Effects of foreign exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash dividends paid to non-controlling interests

December 31,
2018
December 31,
2017
$ 3,422,103
3,281,940
4,671,440
4,419,092
(1,389,652)
(967,943)
(433,657)
(434,655)
$
6,270,234
6,298,434
$
2,176,309
2,191,893
2018
November 9,
2017 to
December 31,
2017
$
5,211,122
511,214
$ 458,155
26,735
8,461
3,104
$
466,616
29,839
$
206,170
12,030
$
209,977
13,427
$ 1,100,289
483,280
(416,045)
19,622
(494,602)
(516,100)
1,895
(6,953)
$
191,537
(20,151)
$
216,762
-

(Continued)

160 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Property, plant and equipment

Land Cost: Balance at January 1, 2018 $ 3,396,367 Additions 151,247 Acquisition through business combination 135,211 Disposals - Reclassification to investment property - Other reclassification and effect of exchange rate changes 1,199 Balance at December 31, 2018 $ 3,684,024 Balance at January 1, 2017 $ 1,820,174 Additions 953,703 Acquisition through business combination 690,363 Disposals - Decrease in lease obligations payable - Reclassification of lease assets - Reclassification to non-current held for sale (note 6(h)) (68,471) Other reclassification and effect of exchange rate changes 598 Balance at December 31, 2017 $ 3,396,367 Accumulated depreciation and impairment loss: Balance at January 1, 2018 $ - Depreciation - Acquisition through business combination - Reclassification to investment property - Disposals - Other reclassification and effect of exchange rate changes - Balance at December 31, 2018 $ - Balance at January 1, 2017 $ - Depreciation - Impairment loss - Acquisition through business combination - Disposals - Reclassification to assets held for sale (note 6(h)) - Other reclassification and effect of exchange rate changes - Balance at December 31, 2017 $ - Carrying amount: Balance at December 31, 2018 $ 3,684,024 Balance at December 31, 2017 $ 3,396,367	Buildings 20,249,207 341,412 590,189 (24,295) (930,215) 107,725 20,334,023 19,726,225 233,103 555,148 (2,982) - - (210,418) (51,869) 20,249,207 8,324,861 720,171 160,545 (382,181) (17,313) 34,115 8,840,198 7,845,276 717,111 - 141,227 (2,045) (123,669) (253,039) 8,324,861 11,493,825 11,924,346	Machinery 12,352,019 1,478,360 577,084 (446,959) - 677,553 14,638,057 12,211,218 893,623 296,325 (1,289,878) - - - 240,731 12,352,019 9,615,049 868,831 305,125 - (439,153) 63,505 10,413,357 10,094,175 727,504 479 231,158 (1,172,866) - (265,401) 9,615,049 4,224,700 2,736,970	Other equipment 4,182,401 887,072 127,201 (147,774) - (970,433) 4,078,467 4,890,108 1,146,772 340,869 (73,565) (235,658) (953,703) - (932,422) 4,182,401 2,579,532 306,478 77,793 - (141,317) (20,376) 2,802,110 2,271,564 281,642 - 165,625 (92,485) - (46,814) 2,579,532 1,276,357 1,602,869	Construction in progress Total 330,967 40,510,961 90,033 2,948,124 - 1,429,685 - (619,028) - (930,215) (86,868) (270,824) 334,132 43,068,703 423,452 39,071,177 215,831 3,443,032 - 1,882,705 - (1,366,425) - (235,658) - (953,703) - (278,889) (308,316) (1,051,278) 330,967 40,510,961 - 20,519,442 - 1,895,480 - 543,463 - (382,181) - (597,783) - 77,244 - 22,055,665 - 20,211,015 - 1,726,257 - 479 - 538,010 - (1,267,396) - (123,669) - (565,254) - 20,519,442 334,132 21,013,038 330,967 19,991,519

(Continued)

161 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) The Group owned a parcel of land with a book value of $104,324. Because of certain legal restrictions, this land was registered under the name of individuals. In order to protect the Group’ s rights to this land, the Group signed a deed of trust with these individuals, under which they are obliged to surrender their rights to the Group when required.
(ii) In August 2008, BMC signed a lease contract with the Industrial Development Bureau, Ministry of Economic Affairs, for the land located in Tabeishi District in the Yunlin Technology-based Industrial Park. The lease run for 10 years and the related rent is updated every six months. According to the “ Procedures for Leasing in Tabeishi District in Yunlin Technology-based Industrial Park”, lease contracts for land must be for at least 6 years, and the longest period should not exceed 20 years. If, within the term of a lease, the lessee applies to purchase the leased land, the total amount of the rent paid previously may, without interest, be used to offset the purchase price of the leased land at the time when the lease contract was signed.

On December 30, 2015, the Group applies to purchase its leased land. In July 2017, BMC completed the purchase of the leased land.

In compliance with the lease contract, BMC paid $34,520 as a refundable deposit (classified － under other financial assets non-current), the refundable deposit has been refunded in October 2017.

(iii) Pledge as collateral

Refer to note 8 for a description of the Group’ s property, plant and equipment pledged as collateral for long-term debt.

(l) Investment property

Cost:
Balance at January 1, 2018
Reclassification from property, plant and equipment
Effect of exchange rate changes
Balance at December 31, 2018
Balance at January 1, 2017
Additions
Effect of exchange rate changes
Balance at December 31, 2017
Accumulated depreciation:
Balance at January 1, 2018
Depreciation
Reclassification from property, plant and equipment
Effect of exchange rate changes
Balance at December 31, 2018

Buildings
$ 2,901,765
930,215
(137,546)
$
3,694,434
$ 2,938,596
1,385
(38,216)
$
2,901,765
$ 374,183
123,180
382,181
(19,585)
$
859,959

(Continued)

162 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance at January 1, 2017 Depreciation Effect of exchange rate changes Balance at December 31, 2017 Carrying amount: Balance at December 31, 2018 Balance at December 31, 2017 Fair value: Balance at December 31, 2018 Balance at December 31, 2017	Buildings
	$ 286,812 89,428 (2,057 $ 374,183 $ 2,834,475 $ 2,527,582 $ 13,131,133 $ 13,828,052

Investment property comprises a number of commercial properties and factories that are leased to third parties. The fair value of the investment property (including land use rights, which are classified under “long-term prepaid rent”, amounting to $625,869 and $603,207, respectively, as of December 31, 2018 and 2017) is determined through both the income approach and the comparative approach by an independent appraisal company or referred to the market price of similar properties in same area by management. The inputs, which are used in the fair value measurement, were classified to level 3.

As of December 31, 2018 and 2017, investment property was not pledged as collateral.

(m) Intangible assets

(i) The movements of costs and accumulated amortization of intangible assets were as follows:

Costs: Balance at January 1, 2018 Addition Acquisition through business combination Disposal Reclassification and effect of exchange rate changes Balance at December 31, 2018 Balance at January 1, 2017 Addition Acquisition through business combination Disposal Reclassification and effect of exchange rate changes Balance at December 31, 2017	Goodwill $ 2,478,661 - 187,148 - (2,509) $ 2,663,300 $ 24,876 - 2,446,269 - 7,516 $ 2,478,661	Computer software 439,028 85,430 20,141 (34,433) (6,516) 503,650 299,399 61,550 46,916 (23,496) 54,659 439,028	Patents 54,291 - - - 1,454 55,745 58,297 - - - (4,006) 54,291	Trademarks 1,195,516 - 7,812 - 19 1,203,347 - - 1,164,450 - 31,066 1,195,516	Customer relationships 1,276,846 - 40,659 - (1,315) 1,316,190 - - 1,257,056 - 19,790 1,276,846	Others Total 144,114 5,588,456 36,264 121,694 - 255,760 (21,879) (56,312) 11,697 2,830 170,196 5,912,428 151,350 533,922 18,510 80,060 - 4,914,691 (2,761) (26,257) (22,985) 86,040 144,114 5,588,456

(Continued)

163 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Accumulated amortization and impairment loss: Balance at January 1, 2018 Amortization Acquisition through business combination Impairment loss Disposal Reclassification and effect of exchange rate changes Balance at December 31, 2018 Balance at January 1, 2017 Amortization Acquisition through business combination Impairment loss Disposal Reclassification and effect of exchange rate changes Balance at December 31, 2017 Carrying amount: Balance at December 31, 2018 Balance at December 31, 2017	Goodwill $ 976 - - 2,815 - - $ 3,791 $ - - - 976 - - $ 976 $ 2,659,509 $ 2,477,685	Computer software 367,175 62,510 5,330 - (34,433) 7,118 407,700 249,625 64,145 20 - (23,496) 76,881 367,175 95,950 71,853	Patents 24,203 7,747 - - - (5,626) 26,324 9,894 8,742 - - - 5,567 24,203 29,421 30,088	Trademarks 61,470 122,404 - - - 784 184,658 - 51,254 - - - 10,216 61,470 1,018,689 1,134,046	Customer relationships 46,053 156,023 - - - (16,520) 185,556 - 40,713 - - - 5,340 46,053 1,130,634 1,230,793	Others Total 84,129 584,006 45,392 394,076 - 5,330 - 2,815 (21,879) (56,312) 2,094 (12,150) 109,736 917,765 71,511 331,030 26,513 191,367 - 20 - 976 (2,761) (26,257) (11,134) 86,870 84,129 584,006 60,460 4,994,663 59,985 5,004,450

(ii) Amortization

The amortization of intangible assets is included in the following line items of the statement of comprehensive income:

Cost of sales Operating expenses	2018 2017 $ 59,537 43,419 $ 334,539 147,948

(iii) Impairment test on goodwill

The carrying amounts of goodwill arising from business combinations and the respective CGUs to which the goodwill was allocated for impairment test purpose as of December 31, 2018 and 2017 were as follows:

DFI and its subsidiaries (“DFI”) PTT and its subsidiaries (“PTT”) Other CGUs without significant goodwill	December 31, 2018 December 31, 2017 $ 1,614,920 1,614,920 943,775 791,042 100,814 71,723 $ 2,659,509 2,477,685

(Continued)

164 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Each CGU or group of CGUs to which the goodwill is allocated represents the lowest level within the group, at which the goodwill is monitored for internal management purpose. Based on the results of impairment tests conducted by the Group, the recoverable amount exceeded its carrying amount; as a result, no impairment loss was recognized. The recoverable amount of a CGU was determined based on the value in use, and the related key assumptions were as follows:

DFI`：` Revenue growth rate Discount rates PTT`：` Revenue growth rate Discount rates	December 31, 2018 December 31, 2017 10% 10%~18.9% 17.62% 16.34% December 31, 2018 December 31, 2017 6%~66% 10% 15.83% 14.91%

1) The cash flow projections were based on historical operating performance and future financial budgets, covering a period of 5 years, approved by management and estimated terminal values at the end of the 5-year period. Cash flows beyond that 5-year period have been extrapolated using 1.5% to 2% growth rate.
2) The estimation of discount rate is based on the weighted average cost of capital.

(n) Short-term borrowings

The details of short-term borrowings were as follows:

Unsecured bank loans Secured bank loans Letters of credits Unused credit facilities Interest rate	December 31, 2018 December 31, 2017 $ 14,438,009 16,217,539 180,379 38,070 168,167 6,653 $ 14,786,555 16,262,262 $ 27,483,544 32,242,736 0.4%~4.785% 0.6426%~4.35%

(Continued)

165 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Long-term debt

Unsecured bank loans Secured bank loans Less: current portion of long-term debt Long-term debt Unused credit facilities Interest rate Maturity year	December 31, 2018 December 31, 2017 $ 10,404,674 7,099,211 8,170,310 7,609,942 (2,340,508) (1,704,031) $ 16,234,476 13,005,122 $ 5,028,058 7,947,373 1.33%~4.90% 1.10%~4.90% 2018~ 2030 2018~ 2025

(i) Collateral for bank borrowings

Refer to note 8 for a description of the Group’s assets pledged as collateral to secure the bank loans.

(ii) Compliance with loan agreement

According to the syndicated loan agreement signed between the Company and its subsidiary (QLLB), and the banks, the Company and QLLB have promised to maintain certain financial ratios based on the Group’ s semi-annual reviewed consolidated financial statements and annual audited consolidated financial statements. If the Group violates any of the related financial ratios, the Group should mend it in a specific period, and then the failure to maintain the required financial ratios would not be considered a default. The Group has also pledged stock to secure the syndicated loan and has to maintain the fair value of the related pledged stock at a specific percentage of the loan.

Also, according to the syndicated loan agreement signed between BMC and the banks, BMC has promised to maintain certain financial ratios, including current ratio, debt ratio and minimum tangible net worth, based on BMC’ s annual audited consolidated financial statements. If BMC violates any of the related financial ratios, according to the syndicated loan agreement, BMC shall file an application for waiver and financial improvement plan to the managing bank. Failure to maintain the required financial ratios would not be considered a default unless a resolution is made by a majority of the banks to refuse to grant a waiver to BMC.

For the years 2018 and 2017, the Group’ s and QLLB’ s and BMC’ s financial ratio was in compliance with the syndicated loan agreement.

(Continued)

166 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Lease obligations payable

The Group’s finance lease liabilities are summarized as follows (implicit interest rate of 3.109 ％～ 6.662%):

December 31, 2018 Future minimum lease payments Interest Less than one year $ 22,192 1,246 Between one and five years 18,018 950 $ 40,210 2,196 Current portion Non-current portion	December 31, 2018	December 31, 2018	Present value of minimum lease payments 20,946 17,068 38,014	December 31, 2017
		Interest 1,246 950 2,196		Future minimum lease payments Interest Present value of minimum lease payments 30,174 2,465 27,709 33,922 2,196 31,726 64,096 4,661 59,435 December 31, 2018 December 31, 2017 $ 20,946 27,709 17,068 31,726 $ 38,014 59,435

(q) Provisions Balance at January 1, 2018 Acquisition through business combination Provisions made Amount utilized Amount reversed Effect of exchange rate changes Balance at December 31, 2018 Current Non-current Balance at January 1, 2017 Acquisition through business combination Provisions made Amount utilized Amount reversed Effect of exchange rate changes Balance at December 31, 2017 Current Non-current	Warranties $ 940,997 - 621,288 (443,286) (83,348) (5,894) $ 1,029,757 $ 409,124 $ 620,633 $ 967,090 67,961 477,936 (414,879) (153,922) (3,189) $ 940,997 $ 377,331 $ 563,666	Restructuring Total 93,456 1,034,453 1,000 1,000 2,476 623,764 (47,259) (490,545) (48,673) (132,021) - (5,894) 1,000 1,030,757 1,000 410,124 - 620,633 40,476 1,007,566 - 67,961 62,000 539,936 (9,020) (423,899) - (153,922) - (3,189) 93,456 1,034,453 93,456 470,787 - 563,666

The provision for warranties is estimated based on historical warranty data associated with similar products and services. The Group expects to settle most of the warranty liability within three years from the date of the sale of the product.

(Continued)

167 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In 2016, BMC terminated certain production lines in its Tainan Science-based Industrial Park and related lease contracts of its factory building, which resulted in a disagreement with the lessor. In the first quarter of 2018, BMC reached a settlement with the lessor. In 2018 and 2017, the Group recognized an adjustment of restructuring provision of $(48,673) and $62,000, respectively, in other operating expenses.

(r) Operating lease

(i) Lessee

Future minimum lease payments of operating leases are as follows:

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years	December 31, 2018 December 31, 2017 $ 384,040 218,935 1,136,891 556,797 575,431 692,657 $ 2,096,362 1,468,389

The Group leases offices and plants under operating leases. The leases typically run for a period of 1 to 10 years, with an option to renew.

Office and warehouse leases entered into by the Group include leases of both land and buildings where offices and warehouses are located. As the lessor has not transferred the ownership of the land to the Group, the rental payment to the lessor is increased to the market rate at regular intervals, and the Group does not participate in the residual value of the land and buildings, the Group determined that substantially all the risks and rewards of the land and buildings are with the lessor. Therefore, the office and warehouse leases are operating leases.

In 2018 and 2017, the rental expense of operating leases amounted to $339,579 and $280,821, respectively, which were recognized in profit or loss.

(ii) Lessor

The Group leased its investment property under operating leases. Please refer to note 6(l). The future minimum lease payments under operating leases are as follows:

Not later than 1 year Later than 1 year but not later than 5 years	December 31, 2018 December 31, 2017 $ 477,083 612,671 328,599 291,572 $ 805,682 904,243

(Continued)

168 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In 2018 and 2017, the rental income from investment property (classified under net sales) amounted to $661,463 and $594,029, respectively. Related operating expenses (classified under cost of sales) were as follows:

Arising from investment property that generated rental income Arising from investment property that did not generate rental income	2018 2017 $ 190,734 192,424 2,316 2,337 $ 193,050 194,761

The Group also leased its land and buildings to others under operating leases. In 2018 and 2017, the resulting rental income from land and buildings amounted to $61,764 and 100,399, － respectively, and was recognized under non-operating income and loss other gains and losses － net.

(s) Employee benefits

(i) Defined benefit plans

The reconciliation between the present value of defined benefit obligations and the net defined benefit liabilities (assets) for defined benefit plans was as follows:

Present value of defined benefit obligations Fair value of plan assets Effects of the asset ceiling Net defined benefit liabilities (reported under other non- current liabilities) Present value of defined benefit obligations Fair value of plan assets Effects of the asset ceiling Net defined benefit assets (reported under other non- current assets)	December 31, 2018 December 31, 2017 $ 933,899 929,141 (552,749) (577,403) 381,150 351,738 - - $ 381,150 351,738 December 31, 2018 December 31, 2017 $ 178,711 138,494 (235,209) (190,360) (56,498) (51,866) - - $ (56,498) (51,866)

The Company and its domestic subsidiaries make defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pension benefits for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive a payment based on years of service and average salary for the six months prior to the employee’s retirement.

(Continued)

169 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Composition of plan assets

The pension fund (the “Fund”) contributed by the Company and its domestic subsidiaries is managed and administered by the Bureau of Labor Funds of the Ministry of Labor (the Bureau of Labor Funds). According to the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, with regard to the utilization of the Fund, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

As of December 31, 2018 and 2017, the Group’s labor pension fund account balance at Bank of Taiwan amounted to $787,958 and $767,763, respectively. Refer to the website of the Bureau of Labor Funds for information on the labor pension fund assets including the asset portfolio and yield of the fund.

2) Movements in present value of defined benefit obligations

In 2018 and 2017, the movements in present value of defined benefit obligations of the Group were as follows:

Defined benefit obligations at January 1
Current service costs and interest expense
Liabilities assumed in a business combination
Remeasurement on the net defined benefit liabilities
(assets):
－Actuarial losses (gains) arising from
experience adjustments
－Actuarial losses (gains) arising from changes
in financial assumptions
Benefits paid by the plan
Benefits paid by employer
Defined benefit obligations at December 31 2018
2017
$ 1,067,635
959,095
20,635
17,983
30,272
146,693
37,244
21,764
36,638
(30,685)
(73,087)
(35,158)
(6,727)
(12,057)
$
1,112,610
1,067,635

3) Movements of fair value of plan assets

In 2018 and 2017, the movements of the fair value of plan assets of the Group were as follows:

Fair value of plan assets at January 1 Interest income Assets acquired through business combination Remeasurement on the net defined benefit liabilities (assets) `－`Actuarial gains (losses) Contributions by the employer Benefits paid by the plan Fair value of plan assets at December 31	2018 2017 $ 767,763 722,081 12,201 10,133 34,393 62,046 19,983 (3,060) 26,705 11,721 (73,087) (35,158) $ 787,958 767,763

(Continued)

170 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Changes in the effect of the asset ceiling

In 2018 and 2017, there was no effect of the asset ceiling.

5) Expenses recognized in profit or loss

In 2018 and 2017, the expenses recognized in profit or loss were as follows:

Current service costs Net interest expense on the net defined benefit liability (asset) Cost of sales Selling expenses Administrative expenses Research and development expenses	2018 2017 $ 3,361 4,072 5,073 3,778 $ 8,434 7,850 $ 1,813 1,799 1,512 746 1,197 1,706 3,912 3,599 $ 8,434 7,850

6) Remeasurement of the net defined benefit liabilities (assets) recognized in other comprehensive income

In 2018 and 2017, the remeasurement of the net defined benefit liabilities (assets) recognized in other comprehensive income were as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31	2018 2017 $ (235,073) (240,934) (53,899) 5,861 $ (288,972) (235,073)

7) Actuarial assumptions

The principal assumptions of the actuarial valuation were as follows:

Discount rate Future salary increases rate	December 31, 2018 December 31, 2017 1.125%~1.625% 1.25%~1.75% 2.00%~3.00% 2.00%~3.00%

The Group expects to make contribution of $22,062 to the defined benefit plans in the year following December 31, 2018.

The weighted average duration of the defined benefit plans is ranged from 11.4 years to 20.97 years.

(Continued)

171 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

8) Sensitivity analysis

The following table summarizes the impact of a change in the assumptions on the present value of the defined benefit obligation on December 31, 2018 and 2017.

December 31, 2018 Discount rate Future salary change December 31, 2017 Discount rate Future salary change	Increase (decrease) in present value of defined benefit obligations 0.25% Increase 0.25% Decrease (37,179) 38,575 37,503 (36,127) (36,461) 38,079 37,111 (35,728)

Each sensitivity analysis considers the change in one assumption at a time, leaving the other assumptions unchanged. This approach shows the isolated effect of changing one individual assumption but does not take into account that some assumptions are related. The method used to carry out the sensitivity analysis is the same as the calculation of the net defined benefit liabilities recognized in the balance sheets.

(ii) Defined contribution plans

The Company and its domestic subsidiaries contribute monthly an amount equal to 6% of each employee’s monthly wages to the employee’s individual pension fund account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Foreign subsidiaries make contributions in compliance with their respective local regulations.

For the years ended December 31, 2018 and 2017, the Group recognized pension expenses of $762,341 and $671,877, respectively, in relation to the defined contribution plans.

(t) Income taxes

(i) In 2018 and 2017, the components of income tax expense were as follows:

Current income tax expense Deferred income tax expense (benefit) Origination and reversal of temporary differences Adjustment in tax rate Changes in unrecognized deductible temporary differences Recognition of previously unrecognized tax losses Income tax expense	2018 2017 $ 1,138,256 676,739 507,659 609,564 (225,542) - (130,581) (64,326) (127,335) (459,155) 24,201 86,083 $ 1,162,457 762,822

(Continued)

172 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In 2018 and 2017, there was no income tax recognized directly in equity or other comprehensive income.

Reconciliation of income tax expense and income before income tax for 2018 and 2017 was as follows:

Income before income tax
Income tax using the Company’s statutory tax rate
Effect of different tax rates in foreign jurisdictions
Investment income recorded under equity method
Tax effect of expenses that are not deductible for tax
purposes
Recognition of previously unrecognized tax losses
Unrecognized tax benefits relating to current year’s tax
loss
Change in unrecognized temporary differences
10% surtax on undistributed earnings
Adjustment in tax rate
Others
Income tax expense

2018
2017
$
5,613,111
6,419,192
$ 1,122,622
1,091,263
88,873
139,762
(231,119)
(407,286)
46,118
22,686
(127,335)
(459,155)
8,842
20,902
(130,581)
(64,326)
194,181
132,258
(225,542)
-
416,398
286,718
$
1,162,457
762,822

(ii) Deferred income tax assets and liabilities

1) Unrecognized deferred income tax assets and liabilities

As the Company is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2018 and 2017, and management believes that it is probable that the temporary differences will not reverse in the foreseeable future, such temporary differences are not recognized as deferred income tax liabilities. In addition, as the Company and certain subsidiaries determined that it is not probable that future taxable profits will be available against which the temporary differences and operating loss carryforwards can be utilized, these items were not recognized as deferred income tax assets.

Unrecognized deferred income tax assets:

Aggregate deductible temporary differences associated with investments in subsidiaries Deductible temporary differences Tax losses	December 31, 2018 December 31, 2017 $ 240,682 230,774 1,673,486 1,306,111 946,608 1,026,399 $ 2,860,776 2,563,284

(Continued)

173 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Unrecognized deferred income tax liabilities:

Aggregate taxable temporary differences associated with investments in subsidiaries	December 31, 2018 December 31, 2017 $ 1,698,549 1,283,066

As of December 31, 2018, the unrecognized tax losses and the respective expiry years were as follows:

Unrecognized tax losses $ 56,137 1,205,630 1,267,067 542,134 397,001 417,045 12,334 138,140 $ 4,035,488	Tax effects of tax losses Year of expiry 14,034 2019 301,408 2020 283,468 2021 133,576 2022 99,250 2023 84,410 2024 2,467 2027 27,995 2028 946,608

2) Recognized deferred income tax assets and liabilities

Changes in the amount of deferred income tax assets and liabilities for 2018 and 2017 were as follows:

Deferred income tax assets:

Provision for inventory obsolescence Unrealized accrued expenses Unrealized inter-company profits Allowance for sales discounts Valuation loss on financial instruments Deferred revenue Warranty provision Operating loss carryforwards Others	Balance at January 1, 2018 $ 162,779 201,010 84,776 176,295 2,396 31,350 33,500 727,026 257,635 $ 1,676,767	Recognized in profit or loss 40,955 (27,518) 32,503 38,615 3,219 (6,756) 5,397 (17,858) 38,192 106,749	Acquisition through business combination Balance at December 31, 2018 1,053 204,787 - 173,492 - 117,279 - 214,910 - 5,615 - 24,594 - 38,897 21,654 730,822 23,539 319,366 46,246 1,829,762

(Continued)

174 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Provision for inventory obsolescence Unrealized accrued expenses Unrealized inter-company profits Allowance for sales discounts Valuation loss on financial instruments Deferred revenue Warranty provision Operating loss carryforwards Others Deferred income tax liabilities:	Balance at January 1, 2017 $ 131,003 133,087 92,992 130,866 9,188 27,359 24,855 910,906 265,293 $ 1,725,549	Recognized in profit or loss 31,776 67,923 (8,216) 45,429 (6,792) 3,991 8,645 (183,880) (97,743) (138,867)	Acquisition through business combination Balance at December 31, 2017 - 162,779 - 201,010 - 84,776 - 176,295 - 2,396 - 31,350 - 33,500 - 727,026 90,085 257,635 90,085 1,676,767

Unrealized foreign exchange gain Intangible assets acquired through business combination Others Unrealized foreign exchange gain Intangible assets acquired through business combination Others	Balance at January 1, 2018 $ (13,029) (400,680) (114,890) $ (528,599) Balance at January 1, 2017 $ (59,933) - (61,175) $ (121,108)	Recognized in profit or loss 1,579 44,007 (176,536) (130,950) Recognized in profit or loss 46,904 (3,297) 9,177 52,784	Acquisition through business combination Balance at December 31, 2018 - (11,450) (9,064) (365,737) (10,019) (301,445) (19,083) (678,632) Acquisition through business combination Balance at December 31, 2017 - (13,029) (397,383) (400,680) (62,892) (114,890) (460,275) (528,599)

(iii) The Company’ s income tax returns for the years through 2016 have been examined and approved by the R.O.C. income tax authorities.

(u) Capital and other equity

(i) Common stock

As of December 31, 2018 and 2017, the Company’ s authorized shares of common stock consisted of 5,000,000,000 shares, of which 1,966,781,958 shares were issued and outstanding. The par value of the Company’s common stock is $10 (dollars) per share.

As of December 31, 2018 and 2017, the Company had issued both 511 thousand units of global depository receipts (GDRs). The GDRs were listed on the Luxemburg Stock Exchange, and each GDR represents five common shares.

(Continued)

175 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Capital surplus

Changes in equity of associates accounted for using equity method Changes in ownership interests in subsidiaries Difference between consideration and carrying amount arising from acquisition or disposal of shares in subsidiaries	December 31, 2018 December 31, 2017 $ 161,325 152,239 1,826,082 1,820,095 158,669 201,299 $ 2,146,076 2,173,633

Pursuant to the Company Act, any realized capital surplus is initially used to cover an accumulated deficit, and the balance, if any, could be transferred to common stock as stock dividends based on the original shareholding ratio or distributed as cash dividends based on a resolution approved by the stockholders. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and donations from stockholders received by the Company. In accordance with the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, distribution of stock dividends from capital surplus in any one year shall not exceed 10% of paid-in capital.

(iii) Unappropriated earnings and dividend policy

The Company’s articles of incorporation stipulate that at least 10% of annual net income after deducting an accumulated deficit, if any, must be retained as a legal reserve until such retention equals the amount of paid-in capital. In addition, a special reserve should be set aside or reversed in accordance with applicable laws and regulations. The remaining balance of the annual net income, together with unappropriated earnings from previous years, if any, can be distributed as dividends after the earnings distribution plan proposed by the Board of Directors is approved during the stockholders’ meeting.

As the Company is a technology- and capital-intensive enterprise in its growing phase, the Company has adopted a remaining earnings appropriation method as its dividend policy in order to meet long-term capital needs and cash requirements of stockholders, and thereby maintain continuous development and steady growth.

The Company’s requirements for future expansion and cash flow are the primary factors that the Company considers when appropriating its earnings. The distribution ratio for cash dividends shall not be less than 10% of the total distribution.

1) Legal reserve

According to the Company Act, the Company must retain 10% of its annual income as a legal reserve until such retention equals the amount of paid-in capital. If a company has no accumulated deficit, it may, pursuant to a resolution approved by the stockholders, distribute its legal reserve to shareholders by issuing new shares or by distributing cash for the portion in excess of 25% of the paid-in capital.

(Continued)

176 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a special reserve equal to the total amount of items that were accounted for as deductions from stockholders’ equity was set aside from current and prior-year earnings. This special reserve shall revert to the retained earnings and be made available for distribution when the items that are accounted for as deductions from stockholders’ equity are reversed in subsequent periods.

3) Earnings distribution

The appropriation of 2017 and 2016 earnings were approved by the stockholders at the meetings on June 21, 2018 and June 22, 2017, respectively. The resolved appropriation of the dividend per share were as follows:

Dividends per share: Cash dividends	2017 2016 Dividends per share (in dollars) Amount Dividends per share (in dollars) Amount $ 1.35 2,655,156 1.32 2,596,152
	Dividends per share (in dollars) $ 1.35

On March 21, 2019, the Board of Directors meeting proposed the distribution of the Company’s earnings for 2018 as follows:

Dividends per share: Cash dividends	2018	2018
	Dividends per share (in dollars) $ 0.85	Amount
		1,671,765

The above earnings distributions are still subject for approval by the stockholders. Related information can be accessed on the Market Observation Post System website after the meeting of shareholders.

(Continued)

177 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Other equity items (net after tax)

1) Foreign currency translation differences:

Balance at January 1 Foreign exchange differences arising from translation of foreign operations Shares of foreign currency translation differences of associates and joint ventures Balance at December 31	2018 2017 $ (120,490) 1,018,614 310,786 (930,551) (61,967) (208,553) $ 128,329 (120,490)

2) Unrealized gains (losses) on financial assets at fair value through other comprehensive income:

		2018
$ - 30,353 30,353 80,835 (64,198) $ 46,990 2017 $ 131,797 (183,006) 81,575 $ 30,366		- 30,353
		30,353 80,835 (64,198)
		46,990
	2017 $ 131,797 (183,006) 81,575 $ 30,366

Balance at January 1 Remeasurement of the defined benefit plans Shares of remeasurement of the defined benefit plans of the associates accounted for using equity method Balance at December 31	2018 2017 $ (293,856) (291,719) (46,061) 4,085 (3,824) (6,222) $ (343,741) (293,856)

(Continued)

178 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Non-controlling interests

Balance at January 1
Effects of retrospective application
Restated balance at January 1
Equity attributable to non-controlling interests
Net income
Difference between consideration and carrying amount
arising from acquisition or disposal of shares in
subsidiaries
Stock option compensation cost of subsidiary
Remeasurements of defined benefit plans
Changes in ownership interest in subsidiaries
Foreign currency translation differences
Unrealized gains (losses) from available-for-sale
financial assets
Unrealized gain (loss) from financial assets measured at
fair value through other comprehensive income
Distribution of cash dividend by subsidiaries
Capital injection from non-controlling interests
Changes in non-controlling interests

2018
2017
$ 6,585,576
3,435,285
(699)
-
6,584,877
3,435,285
415,590
364,983
(46,768)
(794)
2,289
3,673
(7,838)
1,776
(1)
56,756
(56,245)
(37,259)
-
1,155
(406)
-
(439,028)
(35,137)
(1,072)
2,054
960,929
2,793,084
$
7,412,327
6,585,576

(v) Share-based payment

(i) As of December 31, 2018 and 2017, the Group had the following employee stock option plans (“ESOPs”):

Grant date Number of shares granted Contract term Qualified employees Vesting conditions	Equity-settled
	BMTC BBHC ESOP ESOP 2011/7/15 2013/12/30 700 units, each unit eligible to subscribe for 1,000 common shares 1,000,000 units, each unit eligible to subscribe for 1 common share 6 years 10 years Eligible employees of BMTC Eligible employees of BBHC 2~3 years of service subsequent to grant date 3~6 years of service subsequent to grant date

(Continued)

179 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Movements in the number of options outstanding:

BMTC’s ESOPs Outstanding, beginning of year Exercised Forfeited Outstanding, end of year Exercisable, end of year	2017 Weighted- average exercise price (in dollars) Number of options (in thousands) 22.13 456 22.13 (246) - (210) - - - -
	Weighted- average exercise price (in dollars) 22.13 22.13 - - -

BBHC’s ESOPs Outstanding, beginning of year Exercised Outstanding, end of year Exercisable, end of year	2018 Weighted- average exercise price (in US dollars) Number of options (in thousands) 1.00 500 1.00 (160) 1.00 340 1.00 160	2017 Weighted- average exercise price (in US dollars) Number of options (in thousands) 1.00 1,000 1.00 (500) 1.00 500 1.00 160
	Weighted- average exercise price (in US dollars) 1.00 1.00 1.00 1.00

Information on outstanding ESOPs for each reporting date was as follows:

BBHC	December 31, 2018 Weighted- average remaining contractual years Weighted- average exercise price (in dollars) 5 1(in US dollars)	December 31, 2017
	Weighted- average remaining contractual years 5	Weighted- average remaining contractual years Weighted- average exercise price (in dollars) 6 1(in US dollars)

BBHC used the Binomial Option Pricing Model to determine the fair value of the employee stock option. The valuation assumptions were as follows:

Weighted-average fair value of stock option (US$/share)	$1.16
Exercise price (US$/share)	$1.00
Expected volatility (%)	51.40%
Expected life (in years)	10 years
Expected dividend (%)	-
Risk-free interest rate (%)	4.59%

(iii) The compensation costs recognized for the ESOPs in 2018 and 2017 were $2,289 and $3,673, respectively.

(Continued)

180 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Earnings per share (“EPS”)

(i) Basic earnings per share

The basic earnings per share were calculated as the profit attributable to shareholders of the Company divided by the weighted-average number of ordinary shares outstanding as follows:

Profit attributable to shareholders of the Company
Weighted-average number of ordinary shares outstanding
(in thousands)
Basic earnings per share (in dollars)
(ii)
Diluted earnings per share
Profit attributable to shareholders of the Company
Weighted-average number of ordinary shares outstanding
(in thousands)
Effect of dilutive potential common stock:
Employee bonuses
Weighted-average number of ordinary shares outstanding
(including effect of dilutive potential common stock)
Diluted earnings per share (in dollars)

2018
2017
$
4,035,064
5,291,387
1,966,782
1,966,782
$
2.05
2.69
2018
2017
$
4,035,064
5,291,387
1,966,782
1,966,782
21,555
25,756
1,988,337
1,992,538
$
2.03
2.66

(x) Revenue from contracts with customers
(i) Disaggregation of revenue

Primary geographical markets: Asia Europe America Others Major products/services lines: Electronic products Medical services Others			2018
	DMS $ 44,008,483 25,241,657 28,347,048 761,865 $ 98,359,053 $ 97,580,459 - 778,594 $ 98,359,053	Brand 17,650,857 11,963,815 7,148,471 925,584 37,688,727 36,926,061 - 762,666 37,688,727	Material 12,733,162 8,870 14,062 103 12,756,197 12,701,908 - 54,289 12,756,197	Medical Total 6,979,184 81,371,686 - 37,214,342 - 35,509,581 - 1,687,552 6,979,184 155,783,161 - 147,208,428 6,979,184 6,979,184 - 1,595,549 6,979,184 155,783,161

For details on revenue for 2017, please refer to note 6(y).

(Continued)

181 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Contract balances

Notes and accounts receivable (including related parties) Less: loss allowance Total Contract liabilities	December 31, 2018 January 1, 2018 $ 28,308,199 28,215,235 (198,527) (168,492) $ 28,109,672 28,046,743 $ 876,788 630,654

For details on notes and accounts receivable and related loss allowance, please refer to note 6(e).

The amount of revenue recognized for the year ended December 31, 2018 that was included in the contract liability balance at the beginning of the period was $630,654.

(y) Revenue

		2017
Revenue from sale of goods	$	129,749,536
Revenue from services rendered		7,112,956
	$	136,862,492

(z) Remuneration to employees and directors

The Company’ s article of incorporation requires that earnings shall first to be offset against any deficit, then, a range from 5% to 20% will be distributed as remuneration to its employees and no more than 1% to its directors. Employees who are entitled to receive the abovementioned employee remuneration, in shares or cash, include the employees of the subsidiaries of the Company who meet certain specific requirement.

For the years ended December 31, 2018 and 2017, the Company estimated its remuneration to employees amounting to $341,480 and $451,600, respectively, and the remuneration to directors amounting to $35,112 and $45,160, respectively. The abovementioned estimated amounts are calculated based on the net profits before tax of each period (excluding the remuneration to employees and directors), multiplied by a certain percentage of the remuneration to employees and directors. The estimations are recognized as cost of sales or operating expenses. If the actual amounts differ from the estimated amounts, the differences shall be accounted as changes in accounting estimates and recognized as profit or loss in next year.

The abovementioned estimated remuneration to employees and directors is the same as the amount approved by the Board of Directors and will be paid in cash. Related information is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(Continued)

182 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(aa) Non-operating income and loss
(i) Other income

Interest income from bank deposits
Dividend income
Subsidy income
(ii)
Other gains and losses－net
Gain on disposal of property, plant and equipment
Gain on disposal of investments
Foreign currency exchange gains (losses)
Gains (losses) on financial instruments at fair value
through profit or loss
Impairment loss on financial assets
Gain on disposal of non-current assets held for sale
Impairment losses on non-financial assets
Impairment loss on investments accounted for using
equity method
Gain on bargain purchase
Others
(iii) Finance costs
Interest expense of bank loans
Interest expense of lease obligations payable 2018
2017
$ 185,434
84,640
35,321
93,842
232,759
55,080
$
453,514
233,562
2018
2017
$ 10,404
182,793
14,727
597,977
(233,340)
763,493
108,890
(700,616)
-
(1,755)
156,703
-
(2,815)
(1,455)
-
(7,098)
253
-
221,811
214,794
$
276,633
1,048,133
2018
2017
$ (846,245)
(639,396)
(2,544)
(20,814)
$
(848,789)
(660,210)

(Continued)

183 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ab) Financial instruments
(i) Categories of financial instruments
- 1) Financial assets

Financial assets at fair value through profit or loss:
Mandatorily measured at fair value through profit
or loss
Held-for-trading
Subtotal
Financial assets at fair value through other
comprehensive income
Available-for-sale financial assets (including current
and non-current)
Subtotal
Financial assets measured at amortized cost (loans
and receivables):
Cash and cash equivalents
Notes and accounts receivable and other
receivables (including related parties)
Other financial assets (including current and non-
current)
Subtotal
Total
2)
Financial liabilities
Financial liabilities at fair value through profit or
loss:
Held-for-trading
Contingent consideration arising from business
combinations
Subtotal
Financial liabilities measured at amortized cost:
Short-term borrowings
Notes and accounts payable and other payables
(including related parties)
Lease obligations payable (including current
portion)
Long-term debt (including current portion)
Other non-current liabilities－guarantee deposits
Subtotal
Total December 31,
2018
December 31,
2017
$ 405,914
-
-
1,043,701
405,914
1,043,701
761,626
-
-
667,254
761,626
667,254
9,618,657
6,636,634
28,713,176
28,355,020
465,705
1,423,701
38,797,538
36,415,355
$
39,965,078
38,126,310
December 31,
2018
December 31,
2017
$ 43,779
64,484
100,056
12,675
143,835
77,159
14,786,555
16,262,262
36,799,846
33,107,040
38,014
59,435
18,574,984
14,709,153
318,173
304,020
70,517,572
64,441,910
$
70,661,407
64,519,069

(Continued)

184 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Fair value information - financial instruments not measured at fair value

Except for those described in the table below, the Group considers that the carrying amounts of financial assets and financial liabilities measured at amortized cost approximate their fair values:

values:
Lease obligations payable (including current portion) Lease obligations payable (including current portion)		December 31, 2018
		Fair Value
	Level 1 $ -	Level 2 38,014 December	Level 3 Total - 38,014 31, 2017
		Fair Value
		Level 2 59,435	Level 3 Total - 59,435

The fair value of aforementioned lease obligations payable is estimated based on the present value of future discounted cash flows. The discounted rate adopted by the Group is the rate of interest rates of a similar long-term debts in the market.

(iii) Fair value information - Financial instruments measured at fair value

1) Fair value hierarchy

The financial department of the Group evaluates the fair value of financial instrument and utilizes the assistance of external experts or financial institutions in performing the valuation of fair value when necessary, and regularly revises the inputs and any essential adjustments on the fair value to confirm the evaluation results is reasonable.

When measuring the fair value of financial instruments, the Group usually use market observable data. The table below analyzes financial instruments that are measured at fair value subsequent to initial recognition, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The different levels have been defined as follows:

a) Level 1: quoted prices (unadjusted) in active markets for identified assets or liabilities.
b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
c) Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

(Continued)

185 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Foreign exchange option Open-end mutual funds Subtotal Financial assets measured at fair value through other comprehensive income: Domestic listed stocks Domestic emerging stock Privately held equity securities Subtotal Total Financial liabilities at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Contingent consideration arising from business combinations Total Financial assets at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Open-end mutual funds Subtotal Available-for-sale financial assets: Domestic listed stocks Domestic emerging stock Privately held equity securities Subtotal Total Financial liabilities at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Contingent consideration arising from business combinations Total			December 31, 2018 Fair Value Level 2 Level 3 Total 56,164 - 56,164 7,517 - 7,517 1,213 - 1,213 - - 341,020 64,894 - 405,914 - - 140,592 433,080 - 433,080 - 187,954 187,954 433,080 187,954 761,626 497,974 187,954 1,167,540 (38,934) - (38,934) (4,845) - (4,845) (12,814) (87,242) (100,056) (56,593) (87,242) (143,835) December 31, 2017 Fair Value Level 2 Level 3 Total 22,013 - 22,013 19,667 - 19,667 - - 1,002,021 41,680 - 1,043,701 - - 143,899 345,898 - 345,898 - 177,457 177,457 345,898 177,457 667,254 387,578 177,457 1,710,955 (47,184) - (47,184) (17,300) - (17,300) (12,675) - (12,675) (77,159) - (77,159)

	Level 1 $ - - - 341,020 341,020 140,592 - - 140,592 $ 481,612 $ - - - $ -		Level 2 56,164 7,517 1,213 - 64,894 - 433,080 - 433,080 497,974 (38,934) (4,845) (12,814) (56,593) December

			Level 2 22,013 19,667 - 41,680 - 345,898 - 345,898 387,578 (47,184) (17,300) (12,675) (77,159)

(Continued)

186 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Valuation techniques and assumptions used in fair value measurement
a) Non-derivative financial instruments

The fair value of financial instruments traded in active liquid markets is determined with reference to quoted market prices.

For listed stock and open-end mutual funds with standard terms and conditions and traded in active markets. The fair value is based on quoted market prices.

Except for the abovementioned financial instruments traded in an active market, the fair value of other financial instruments are based on the valuation techniques or the quotation from counterparty. The fair value using valuation techniques refers to the current fair value of other financial instruments with similar conditions and characteristics, or using a discounted cash flow method, or other valuation techniques which include model calculating with observable market data at the reporting date.

For the Group’s financial instruments that are not traded in active markets, the fair values are determined as follows:

The fair value of the Group’s domestic emerging stock is determined based on the average stock price on the emerging market at the reporting date.
Discounted cash flow model is used to estimated the fair value of contingent consideration arising from business combination. The main assumption takes into consideration the possibility of occurrence to estimate the present value of the consideration for payment.
The fair value of privately held stock is estimated by using the market approach and is determined by reference to valuations of similar companies, net worth and recent operating activities. The significant unobservable inputs is primarily the liquidity discounts. No quantitative information is disclosed due to that the possible changes in liquidity discounts would not cause significant potential financial impact.
b) Derivative financial instruments

The fair value of derivative financial instruments is determined using a valuation technique, with estimates and assumptions consistent with those used by market participants and that are readily available to the Group. The fair value of foreign currency forward contracts, foreign exchange swaps, and foreign exchange option is computed individually by each contract using the valuation technique.

3) Transfers between levels of the fair value hierarchy

There was no transfers among fair value hierarchies for the year ended December 31, 2018.

(Continued)

187 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ In 2017, the available-for-sale financial assets (domestic emerging stock APLEX Technology, Inc.) were transferred from Level 2 to Level 1 because APLEX Technology, Inc. became a listed company on Taipei Exchange starting from December 11, 2017.

4) Movement in financial assets included in Level 3 of fair value hierarchy

The investments were classified as financial assets at fair value through other comprehensive income on December 31, 2018, and were classified as available-for-sale financial assets on December 31, 2017.

Balance at January 1 Additions Disposal Recognized in other comprehensive income Recognized in profit or loss Balance at December 31	2018 2017 $ 177,457 144,519 11,187 43,467 - (1,027) (690) (7,747) - (1,755) $ 187,954 177,457

Financial liabilities at fair value through profit or loss were as follows:

				2018	2017
Balance at January 1			$	-	-
Acquisition through business combination				90,041	-
Recognized in profit or loss				(2,799)	-
Balance at December 31			$	87,242	-

The above-mentioned total gains or losses were included in “other gains					and losses`－`
net”, “unrealized losses from investments in equity			instruments measured		at fair value
through other comprehensive income” and “ change in				fair value of available-for-sale
financial assets”. The	gains or losses attributable to the assets and liabilities held on
December 31, 2018 and	2017	were as follows:
				2018	2017
Total gains or losses:
Recognized in profit or loss (included in other
gains and losses`－`net)			$	2,799	(1,755)
Recognized in other comprehensive income
(included in “unrealized gains (losses) from
investments in equity instruments measured at
fair value through other		comprehensive
income”				(690)	-
Recognized in other comprehensive income
(included in “change in		fair value of available-
for-sale financial assets”				-	(7,747)

－ The above-mentioned total gains or losses were included in “other gains and losses net”, “unrealized losses from investments in equity instruments measured at fair value through other comprehensive income” and “ change in fair value of available-for-sale financial assets”. The gains or losses attributable to the assets and liabilities held on December 31, 2018 and 2017 were as follows:

(Continued)

188 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ac) Financial risk management

The Group is exposed to credit risk, liquidity risk, and market risk (including currency risk, interest rate risk, and other market price risk). The Group has disclosed the information on exposure to the aforementioned risks and the Group’s policies and procedures to measure and manage those risks as well as the quantitative information below.

The Company’s Board of Directors is responsible for developing and monitoring the Group’s risk management policies. The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor adherence to the controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s operations.

The Group’s management monitors and reviews financial activities in accordance with procedures required by relevant regulations and internal controls. Internal auditors undertake both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Company’s Board of Directors.

(i) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty of a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s cash and cash equivalents, derivative instruments, receivables from customers, and other receivables. The maximum exposure to credit risk is equal to the carrying amount of the Group’s financial assets. As of December 31, 2018 and 2017, the Group’s maximum exposure to credit risk amounted to $39,965,078 and $38,126,310, respectively.

The Group maintains cash and enters into derivative transactions with various reputable financial institutions; therefore, the exposure related to potential default by those counterparties is not considered significant.

The majority of the Group’ s customers are well-known international companies with high financial transparency in the electronics industry. In order to reduce credit risk of accounts receivable, the Group has established a credit policy under which each customer is analyzed individually for creditworthiness for the purpose of setting the credit limit. Additionally, the Group continuously evaluates the credit quality of customers and utilizes insurance to minimize the credit risk.

(ii) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in settling its financial liabilities by delivering cash or other financial assets. The Group manages liquidity risk by monitoring regularly the current and mid- to long-term cash demand, maintaining adequate cash and banking facilities, and ensuring compliance with the terms of the loan agreements. As of December 31, 2018 and 2017, the Group had unused credit facilities of $32,511,602 and $40,190,109, respectively.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments, including principal and interest.

(Continued)

189 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2018 Non-derivative financial liabilities: Short-term borrowings Financial liabilities at fair value through profit or loss`－` contingent consideration (including current portion) Lease obligations payable (including current portion) Long-term debt (including current portion) Notes and accounts payable (including related parties) Other payables (including related parties) Guarantee deposits Derivative financial instruments: Foreign currency forward contracts`:` Outflow Inflow Foreign exchange swaps`:` Outflow Inflow December 31, 2017 Non-derivative financial liabilities: Short-term borrowings Financial liabilities at fair value through profit or loss`－` contingent consideration (including current portion) Lease obligations payable (including current portion) Long-term debt (including current portion) Notes and accounts payable (including related parties) Other payables (including related parties) Guarantee deposits Derivative financial instruments: Foreign currency forward contracts`:` Outflow Inflow Foreign exchange swaps`:` Outflow Inflow	Contractual cash flows $ 14,974,398 100,056 38,014 19,619,323 30,703,730 6,096,116 318,173 7,278,914 (7,296,144) 4,455,293 (4,457,965) $ 71,829,908 $ 16,305,551 12,675 59,435 15,881,453 25,869,496 7,237,544 304,020 7,197,311 (7,172,140) 4,371,025 (4,373,392) $ 65,692,978	Within 6 months 14,319,005 1,733 10,473 1,908,154 30,703,730 6,096,116 - 7,278,914 (7,296,144) 4,455,293 (4,457,965) 53,019,309 15,698,562 - 13,855 1,466,507 25,869,496 7,237,544 - 7,197,311 (7,172,140) 4,371,025 (4,373,392) 50,308,768	6-12 months 655,393 1,602 10,473 674,906 - - - - - - - 1,342,374 606,989 3,047 13,854 568,753 - - - - - - - 1,192,643	1-2 years - 7,704 17,068 7,969,600 - - - - - - - 7,994,372 - 2,794 31,726 3,789,774 - - - - - - - 3,824,294	2-5 years More than 5 years - - 89,017 - - - 8,465,486 601,177 - - - - 318,173 - - - - - - - - - 8,872,676 601,177 - - 6,834 - - - 9,150,627 905,792 - - - - 304,020 - - - - - - - - - 9,461,481 905,792

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

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’ s income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(Continued)

190 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group utilizes derivative financial instruments to manage market risk and the volatility of profit or loss. All such transactions are carried out within the guidelines set by the Company’s Board of Directors.

1) Foreign currency risk

The maturity dates of derivative financial instruments the Group entered into were less than six months and did not conform to the criteria for hedge accounting.

The Group’s exposure to foreign currency risk arises from cash and cash equivalents, notes and accounts receivable (including related-party transactions), notes and accounts payable (including related-party transactions), other receivables (including related-party transactions), other payables (including related-party transactions), and loans and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. At the reporting date, the carrying amounts of the Group’s significant monetary assets and liabilities denominated in a currency other than the respective functional currencies of Group entities and their respective sensitivity analysis were as follows (including the monetary items that have been eliminated in the accompanying consolidated financial statements):

Financial assets USD EUR CNY JPY Financial liabilities USD EUR CNY JPY		December 31, 2018	December 31, 2018
	Foreign currency (in thousands) $ 1,376,498 70,241 843,454 2,221,002 1,250,179 28,493 1,133,890 6,672,112	Exchange rate 30.7150 35.2610 4.4709 0.2780 30.7150 35.2610 4.4709 0.2780	TWD (in thousands) 42,279,136 2,476,768 3,770,998 617,439 38,399,248 1,004,692 5,069,509 1,854,847	Change in magnitude Effect on profit or loss (in thousands) % 1 422,791 % 1 24,768 % 1 37,710 % 1 6,174 % 1 383,992 % 1 10,047 % 1 50,695 % 1 18,548

(Continued)

191 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets USD EUR CNY JPY Financial liabilities USD EUR CNY JPY		December 31, 2017	December 31, 2017
	Foreign currency (in thousands) $ 1,290,022 83,152 691,040 1,611,803 1,356,242 7,629 846,375 5,092,689	Exchange rate 29.8400 35.7480 4.5767 0.2649 29.8400 35.7480 4.5767 0.2649	TWD (in thousands) 38,494,256 2,972,518 3,162,683 426,967 40,470,261 272,721 3,873,604 1,349,053	Change in magnitude Effect on profit or loss (in thousands) % 1 384,943 % 1 29,725 % 1 31,627 % 1 4,270 % 1 404,703 % 1 2,727 % 1 38,736 % 1 13,491

2)

Interest rate risk

The Group’s short-term borrowings and long-term debt carried floating interest rates. To manage the interest rate risk, the Group periodically assesses the interest rates of bank loans and maintains good relationships with financial institutions to obtain lower financing costs. The Group also strengthens the management of working capital to reduce the dependence on bank loans as well as the risk arising from fluctuation of interest rates.

The following sensitivity analysis is based on the risk exposure to floating-interest-rate liabilities on the reporting date. The sensitivity analysis assumes the liabilities recorded at the reporting date had been outstanding for the entire period.

If interest rates had been 100 basis points (1%) higher/lower, with all other variables held constant, pre-tax income for the years ended December 31, 2018 and 2017 would have been $333,615 and $309,714, respectively, lower/higher, which mainly resulted from the borrowings with floating interest rates.

3)

Other market price risk

The Group is exposed to the risk of price fluctuation in the securities market due to the investment in domestic listed stock and emerging stock. The Group supervises the equity price risk actively and manages the risk based on fair value. The Group also has strategic investments in privately held stocks, which the Group does not actively participate in trading.

(Continued)

192 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The investment target of open-end mutual funds held by the Group are mostly monetary funds or bond funds (accounted for as financial assets at fair value through profit or loss － current). The Group anticipates that there is no significant market risk related to the funds.

Assuming a hypothetical increase or decrease of 5% in equity prices of the equity investments at each reporting date, the other comprehensive income for the years ended December 31, 2018 and 2017, would have increased or decreased by $28,684 and $24,490, respectively.

(ad) Capital management

In consideration of the industry dynamics and future developments, as well as external environment factors, the Group maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital expenditures, repayment of debts, dividend payments, and other business requirements for continuing operations and to reward shareholders and take into consideration the interests of other stakeholders. The Group monitors its capital through reviewing the liability-to-equity ratio periodically.

The Group’s liability-to-equity ratio at the end of each reporting period was as follows:

Total liabilities Total equity Liability-to-equity ratio	December 31, 2018 December 31, 2017 $ 79,947,637 71,394,930 $ 39,859,646 37,544,486 % 200.57 % 190.16	December 31, 2018 December 31, 2017 $ 79,947,637 71,394,930 $ 39,859,646 37,544,486 % 200.57 % 190.16
	$ $

(ae) Changes in liabilities from financing activities

Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Long-term debt Lease obligations payable	January 1, 2018 $ 16,262,262 14,709,153 59,435 $ 31,030,850	Cash flows (2,247,146) 3,549,446 (21,421) 1,280,879	Non-cash	changes Effect of foreign exchange rate December 31, 2018 (47,886) 14,786,555 (30,228) 18,574,984 - 38,014 (78,114) 33,399,553
			Acquisition through business combination 819,325 346,613 - 1,165,938

(Continued)

193 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7. Related-party transactions:

(a) Related party name and categories

Name of related party

AU Optronics Corp. (“AU”) Darfon Electronics Corp. (“DFN”) Visco Vision Inc. (“Visco Vision”) Cenefom Corp. (“CENEFOM”) Q.S.Control Corp. TDX Medical Technology (Jiangsu) Co., Ltd Partner Tech Corp. (“PTT”) Darwin Precisions Corporation (“Darwin”) AU Optronics (L) Corp. (“AUL”) AU Optronics (Suzhou) Corp. (“AUSZ”) AU Optronics (Kunshan) Co., Ltd. (“AUKS”) a.u. Vista Inc. (“AUVI”) AU Optronics (Xiamen) Corp. (“AUXM”) AUO Care Information Tech. (Suzhou) Co., Ltd. (“A-Care”) BriView (HF) Corp. (“BVHF”) Darwin Precisions (Xiamen) Corp. (“DPXM”) Darwin Precisions (Suzhou) Corp. Fortech Electronics (Kunshan) Co., Ltd. (“FTKS”) Fortech Electronics (Suzhou) Co., Ltd. (“FTWJ”) AUO Crystal Corp. (“ACTW”) Darfon America Corp. (“DFA”) Darfon Electronics Czech s.r.o (“DFC”) Darfon Electronics (Suzhou) Co., Ltd. (“DFS”) Darfon Electronics, Shenzhen Co., Ltd. (“DFZ”) Huaian Darfon Electronics Co., Ltd. (“DFH”) Darfon Electronics (Chongqing) Co., Ltd. (“DFQ”) Darfon Precisions (Suzhou) Co., Ltd. (“DPS”) Partner Tech (Shanghai) Co., Ltd. (“PTCM”) Partner Tech Africa (Pty) Ltd. (“PTA”) Dragon Photonics Inc. (“Dragon”) Visco Technology Sdn. Bhd. (“VVM”) Visco Med Sdn. Bhd. (“VMM”) Alpha Networks Inc. (“Alpha”) DMC Components International, LLC. (“DMC”) Raydium Semiconductor Corporation (“RSC”) Dazzo Technology Corporation (“Dazzo”)

Relationship with the Group

The Group's associates The Group's associates The Group's associates The Group's associates The Group's associates The Group's joint venture (note 1) AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries AU's subsidiaries DFN's subsidiaries DFN's subsidiaries DFN's subsidiaries DFN's subsidiaries (note 2) DFN's subsidiaries DFN's subsidiaries DFN's subsidiaries PTT's subsidiaries (note 1) PTT's subsidiaries (note 3) Visco Vision's subsidiaries Visco Vision's subsidiaries Visco Vision's subsidiaries (note 4) (note 5) (note 6) RSC's subsidiaries (note 6)

(Continued)

194 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of related party	Relationship with the Group
We Can Financial Technology Co., Ltd (“Wecan”)	(note 7)
BenQ Foundation	Substantive related party

(note 1) Prior to April 2017, PTT was an associate of the Group. However, due to its acquisition by the Group, it has been included in the Group’s consolidated financial statements beginning April 2017. (note 2) DFZ was liquidated in the first quarter of 2018.

(note 3) Prior to June 2018, PTA was an associate of the Group. However, due to its acquisition by the Group, it has been included in the Group’s consolidated financial statements beginning June 2018.

(note 4) Starting March 2018, Alpha became an associate of the Group.

(note 5) Starting November 2018, DMC became an associate of the Group.

(note 6) Prior to June 2017, RSC was an associate of the Group. However, Starting June 2017, RSC was no longer a related party of the Group.

(note 7) Prior to November 2017, Wecan was an associate of the Group. Starting November 2017, Wecan was no longer related party of the Group.

(b) Significant related-party transactions

(i) Revenue

Associates: AU AUL Other associates Joint ventures	2018 2017 $ 9,810,705 8,602,196 4,562,144 5,234,370 278,245 265,684 14,651,094 14,102,250 - 3,334 $ 14,651,094 14,105,584

The sales prices for some of the abovementioned transactions were not comparable to the sales prices for third-party customers as the specifications of products were different. For the other transactions, there were no significant differences between the sales prices for related parties and those for third-party customers. The payment terms of 30~120 days showed no significant difference between related parties and third-party customers.

(ii) Purchases

Associates: AU Other associates	2018 2017 $ 12,010,909 12,446,575 624,791 469,494 $ 12,635,700 12,916,069

There were no significant differences between the purchase prices for related parties and those for third-party vendors. The payment terms of 30~120 days showed no significant difference between related parties and third-party vendors.

(Continued)

195 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Lease

The Group entered into an operating lease contract with associates (AU) for the use of factory space. Rental expenses for the years ended December 31, 2018 and 2017, amounted to $71,275 and $61,905, respectively. As of December 31, 2017, rents prepaid to associates amounted to $5,361, and was recorded as “other current assets”. There was no rents prepaid as of December 31, 2018.

The Group leased its plant and office to associates. In 2018 and 2017, the rental income were as follows:

Associates	2018 2017 $ 23,020 18,750

(iv) Service revenue

In 2018 and 2017, the Group generated service revenue from associates amounting to $0 and $2,100, respectively.

(v) Donation

In 2018 and 2017, the Group made a donation to a substantive related party (BenQ Foundation) for $9,200 and $13,000, respectively.

(vi) Acquisition and disposal of property, plant and equipment

In 2017, the Group sold its buildings to associates at a price of $15,219, resulting in a disposal gain of $8,740.

(vii) Others

1) As of December 31, 2018 and 2017, other receivables resulting from payments on behalf of associates amounted to $22,568 and $7,412, respectively.
2) As of December 31, 2018 and 2017, other payables resulting from advance payments by associates on behalf of the Group amounted to $13,394 and $5,946, respectively.

(viii) Receivables

Account Accounts receivable Other receivables	Related-party categories December 31, 2018 December 31, 2017 Associates AU $ 1,492,926 2,408,977 AUL 1,402,995 1,804,409 Other associates 201,540 24,260 3,097,461 4,237,646 Associates 22,568 7,412 $ 3,120,029 4,245,058

(Continued)

196 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group entered into factoring contracts with financial institutions to sell part of its accounts receivable from related parties without recourse. According to these contracts, the Group is not responsible for any risk of uncollectible accounts receivable, but only the risk of loss due to commercial disputes. Thus, these contracts met the condition of financial asset derecognition. At each reporting date, details of these contracts were as follows:

Underwriting bank Factored amount Maga International Commercial Bank $ 1,194,472 Chinatrust Commercial Bank 153,575 $ 1,348,047		December 31, 2018	December 31, 2018
		Factoring credit limit 2,000,000 552,870 2,552,870	Advance amount 1,075,025 138,218 1,213,243	Range of interest rates Collateral Promissory note 200,000 Promissory note 55,287 3.65%~3.90% Promissory note 255,287
					e 255,287

The factored accounts receivable, net of advance amounts, were recognized as “ other receivables” in the accompanying consolidated balance sheets. As of December 31, 2017, there are no factored accounts receivable from related parties.

(ix) Payables

Account Accounts payable Other payables	Related party categories Associates: AU Other associates Associates	December 31, 2018 December 31, 2017 $ 2,044,811 1,577,786 215,684 48,317 2,260,495 1,626,103 13,394 5,946 $ 2,273,889 1,632,049

Short-term employee benefits Post-employment benefits	2018 2017 $ 150,693 194,485 999 941 $ 151,692 195,426

(Continued)

197 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

8. Pledged assets:

The carrying amounts of the assets pledged as collateral are detailed below:

Pledged assets	Pledged to secure Credit lines of bank loans and guarantee for tax clearance certificate and performance guarantee $ Credit lines of bank loans Credit lines of bank loans Credit lines of bank loans Credit lines of bank loans Credit lines of bank loans Credit lines of bank loans $	December 31, 2018 December 31, 2017 82,146 184,889 8,834,783 10,573,568 3,043,853 2,310,680 966,759 - 511 - 110,170 - 152,404 - 13,190,626 13,069,137
Other financial assets (time deposits) Common stock of investments accounted for using equity method Land and buildings Long-term prepaid rents (land use rights) Refundable deposits Notes and accounts receivable Inventories

9. Significant commitments and contingencies:

In addition to those in notes 6(p) and (r), the Group had the following commitments and contingencies:

(a) Significant unrecognized commitments

Unused letters of credit	December 31, 2018 December 31, 2017 $ 1,336,433 953,117

(b) Significant contingent liabilities
(i) In September 2010, some direct and indirect U.S. purchasers of optical disk drive products filed class actions against the Company and BQA, among other co-defendants. In the complaints, the plaintiffs claimed monetary damages from an alleged antitrust conspiracy. The Company has retained counsel to handle the related matters and reached a settlement with direct U.S. purchasers. Currently, the lawsuit is still in progress.
(ii) In January 2012, some direct and indirect Canadian purchasers of optical disk drive products filed class actions against the Company and BQA, among other co-defendants. In the complaints, the plaintiffs claimed monetary damages from an alleged antitrust conspiracy. The Company has retained counsel to handle the related matters. Currently, the lawsuit is still in progress.

10. Significant loss from disaster: None.

(Continued)

198 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

11. Significant subsequent events:

In order to enter into the internet and information security market, on February 27, 2019, DFI’s Board of Directors approved a resolution to subscribe the 30,000 thousand shares of Aewin Technologies Co., Ltd. (“AEWIN”) through private offering at a price of $18.5 dollar per share, totaling $550,000, and acquired 51.26% ownership of AEWIN.

12. Others:

Others:
	2018			2017
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits: Salaries Insurance Pension Others Depreciation Amortization	6,280,988 551,518 474,851 1,439,341 1,554,943 70,649	6,414,987 590,392 295,924 571,688 463,717 396,980	12,695,975 1,141,910 770,775 2,011,029 2,018,660 467,629	5,294,179 486,479 419,019 1,186,028 1,368,173 59,647	5,833,533 506,985 260,708 455,288 447,512 203,245	11,127,712 993,464 679,727 1,641,316 1,815,685 262,892

13. Additional disclosures:

(a) Information on significant transactions:
(i) Financing provided to other parties: Table 1 (attached)
(ii) Guarantees and endorsements provided to other parties: Table 2 (attached)
(iii) Marketable securities held at the reporting date (excluding investments in subsidiaries, associates, and joint ventures): Table 3 (attached)
(iv) Marketable securities for which the accumulated purchase or sale amounts for the year exceed $300 million or 20% of the paid-in capital: Table 4 (attached)
(v) Acquisition of real estate which exceeds $300 million or 20% of the paid-in capital: None.
(vi) Disposal of real estate which exceeds $300 million or 20% of the paid-in capital:Table 5 (attached)
(vii) Total purchases from and sales to related parties which exceed $100 million or 20% of the paid-in capital: Table 6 (attached)
(viii) Receivables from related parties which exceed $100 million or 20% of the paid-in capital: Table 7 (attached)
(ix) Transactions about derivative instruments: Refer to note 6(b)
(x) Business relationships and significant intercompany transactions: Table 8 (attached)

(Continued)

199 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees : Table 9 (attached)
(c) Information on investments in Mainland China: Table 10 (attached)

14. Segment information:

(a) General information

The Group has four reportable segments, which are the Group’s strategic divisions. The Group’s strategic divisions provide different products and services, and are managed separately because they require different technology and marketing strategies. Operating results of the strategic divisions are quarterly reviewed by the Group’s chief operating decision maker. The four reportable segments are described as follows:

(i) DMS: Engaging in the design, research, manufacturing, and sale of electronic products.
(ii) Brand: Engaging in the design, research, marketing and sale of brand-name products.
(iii) Material: Engaging in the research, manufacturing, and sale of optoelectronics film.
(iv) Medical: Offering medical services.
(b) Reportable segments, profit or loss, segment assets, basis of measurement, and reconciliation

There was no material inconsistency between the accounting policies adopted for the operating segments and the accounting policies described in note 4. The Group uses operating profit as the measurement for segment profit and the basis of resource allocation and performance assessment.

The Group’s operating segment information and reconciliation are as follows:

External revenue Intra-group revenue Total segment revenue Segment profit (loss) External revenue Intra-group revenue Total segment revenue Segment profit (loss)				2018
	DMS $ 98,359,053 13,275,746 $ 111,634,799 $ 1,951,974	Brand 37,688,727 271,701 37,960,428 2,002,967	Material 12,756,197 7,974 12,764,171 439,629	Medical 6,979,184 3,365 6,982,549 119,056 2017	Others - - - (330)	Eliminations Total - $ 155,783,161 (13,558,786) - (13,558,786) $ 155,783,161 62,863 $ 4,576,159
		Brand 30,350,001 100,351 30,450,352 1,336,744	Material 11,126,756 5,831 11,132,587 295,990	Medical 5,765,479 3,783 5,769,262 224,615	Others - - - (1,872)	Eliminations Total - $ 136,862,492 (12,515,847) - (12,515,847) $ 136,862,492 36,699 $ 3,401,908

Revenues from external customers are detailed below:

Region Sales of electronic products Medical services Others	2018 2017 $ 147,208,428 129,749,536 6,979,184 5,765,479 1,595,549 1,347,477 $ 155,783,161 136,862,492

(Continued)

200 -

QISDA CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers, and segment assets are based on the geographical location of the assets.

Revenues from external customers are detailed below:

Region Taiwan Americas Mainland China Poland Japan Switzerland Others	2018 2017 $ 29,803,601 26,788,946 33,613,379 28,893,340 30,510,117 26,544,380 12,115,331 9,472,684 10,051,985 8,090,793 4,723,573 4,419,098 34,965,175 32,653,251 $ 155,783,161 136,862,492

Non-current assets: Region Mainland China Taiwan Others	December 31, 2018 December 31, 2017 $ 16,660,252 17,921,926 14,479,295 11,899,772 281,249 251,384 $ 31,420,796 30,073,082

Non-current assets include property, plant and equipment, investment property, intangible assets, and other assets, but do not include financial instruments, deferred income tax assets, and pension fund assets.

(e) Major customer information

Sales to individual customers accounting for more than 10% of the consolidated revenues in 2018 and 2017 were as follows:

Sales to individual customers accounting for more than 10% of and 2017 were as follows:	the consolidated
Customer A Customer A Customer B	2018
	$ 38,426,210 2017 $ 35,336,345 $ 13,811,681

201 -

Financing Company's Total Financing	Amounts Limits	12,978,928 1,347,248 1,347,248 1,347,248 1,347,248 1,347,248 1,109,244 1,347,248 1,109,244 3,106,343 3,106,343 3,106,343 4,974,415 12,978,928 4,974,415 12,978,928 12,978,928
Finanacing Limits for Each	Borrowing Company	6,489,464 1,347,248 1,347,248 1,347,248 1,347,248 1,109,244 1,347,248 1,347,248 1,109,244 1,553,171 1,553,171 1,553,171 2,487,207 6,489,464 2,487,207 6,489,464 6,489,464
Collateral	Value	- - - - - - - - - - - - - - - - -
	Item	- - - - - - - - - - - - - - - - -
Allowance	for Bad Debt	- - - - - - - - - - - - - - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - - - - - - - - - - - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Range of Interest Rates	During the Period	- - - - - - - - - - - - LIBOR+0.85% - - - -
Actual Usage	Amount During the Period	1,781,470 (USD 58,000) - 230,363 (USD 7,500) - - 307,150 (USD 10,000) 276,435 (USD 9,000) - - - 30,715 (USD 1,000) 368,580 (USD 12,000) 138,218 (USD 4,500) 307,150 (USD 10,000) - - 30,715 (USD 1,000)
	Ending Balance	1,781,470 (USD 58,000) - 230,363 (USD 7,500) - - 307,150 (USD 10,000) 276,435 (USD 9,000) - - - 30,715 (USD 1,000) 368,580 (USD 12,000) 138,218 (USD 4,500) 307,150 (USD 10,000) - - 122,860 (USD 4,000)
Highest Balance of Financing to Other	Parties During the Period	1,795,390 (USD 58,000) 1,781,470 (USD 58,000) 230,363 (USD 7,500) 233,710 (USD 7,550) 291,950 (USD 10,000) 309,550 (USD 10,000) 278,595 (USD 9,000) 291,950 (USD 10,000) 40,873 (USD 1,400) 152,300 (USD 5,000) 61,210 (USD 2,000) 371,460 (USD 12,000) 139,298 (USD 4,500) 309,550 (USD 10,000) 481,718 (USD 16,500) 296,050 (USD 10,000) 123,320 (USD 4,000)
Is a	Related Party	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Nanjing BenQ Hospital Co., Ltd.(“NMH”) Darly Venture (L) Ltd BBM Nanjing BenQ Hospital Co., Ltd.(“NMH”) Nanjing BenQ Hospital Co., Ltd.(“NMH”) Nanjing BenQ Hospital Co., Ltd.(“NMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) QMMX BenQ Co.,Ltd (“BQC”) BQL BBHC BBHC Darly Venture (L) Ltd Qisda (Shanghai) Co., Ltd. (“QCSH”) Qisda (Shanghai) Co., Ltd. (“QCSH”)
	Name of Lender	BBHC QLLB BBHC BBHC BBHC BBHC BBHC BBM BBM BenQ BenQ BenQ QLLB QLLB QLLB QLLB QLLB
	No.	4 1 4 4 4 4 4 3 3 2 2 2 1 1 1 1 1

202 -

Financing Company's Total Financing	Amounts Limits	1,550,585 1,550,585 386,512 12,340 386,512 1,955,556 345,366 345,366 12,978,928 1,550,585 12,978,928 32,447,319 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 32,447,319 1,550,585
Finanacing Limits for Each	Borrowing Company	1,550,585 1,550,585 12,340 386,512 386,512 1,173,334 345,366 345,366 6,489,464 1,550,585 6,489,464 3,244,732 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 3,244,732 1,550,585
Collateral	Value	- - - - - - - - - - - - - - - - - - -
	Item	- - - - - - - - - - - - - - - - - - -
Allowance	for Bad Debt	- - - - - - - - - - - - - - - - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - - - - - - - - - - - - - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Range of Interest Rates	During the Period	4.00% 4.28% - - 3.70% 3.20% 1.00% 4.35% - - - - - - - 2.30% 4.28% - -
Actual Usage	Amount During the Period	134,127 (CNY 30,000) - 236,958 (CNY 53,000) - - - - 223,545 (CNY 50,000) - 8,942 (CNY 2,000) 368,580 (USD 12,000) 162,631 (MYR 22,000) - 22,355 (CNY 5,000) - 822,646 (CNY 184,000) - - 2,830 (CNY 633)
	Ending Balance	134,127 (CNY 30,000) - 236,958 (CNY 53,000) - - - - 223,545 (CNY 50,000) - 8,942 (CNY 2,000) 368,580 (USD 12,000) 162,631 (MYR 22,000) - 22,355 (CNY 5,000) - 894,180 (CNY 200,000) - - 2,830 (CNY 633)
Highest Balance of Financing to Other	Parties During the Period	141,273 (CNY 30,000) 69,686 (CNY 15,000) 238,346 (CNY 53,000) 108,309 (CNY 23,000) 368,580 (USD 12,000) 299,500 (USD 10,000) 185,192 (CNY 40,000) 223,545 (CNY 50,000) 235,545 (CNY 50,000) 9,418 (CNY 2,000) 371,460 (USD 12,000) 166,192 (MYR 22,000) 165,840 (MYR 22,000) 22,486 (CNY 5,000) 23,546 (CNY 5,000) 941,820 (CNY 200,000) 29,840 (USD 1,000) 29,840 (USD 1,000) 2,830 (CNY 633)
Is a	Related Party	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) PTTNC Partner-Tech Europe GmbH Partner Tech (Shanghai) Co., Ltd.(“PTCM”) BenQ Material (WuHu) Co., Ltd.(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) QLLB QLLB Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Qisda (Shanghai) Co., Ltd. (“QCSH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Qisda Precision Industry (SuZhou) Co., Ltd (“QCPS”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13)
	Name of Lender	QCOS PTTN PTT PTT BMS BIC BIC QLPG QLPG QCOS QCOS QCOS QCOS QCOS QCOS QCOS QCOS QCOS QCOS
	No.	5 10 9 9 8 7 7 6 6 5 5 5 5 5 5 5 5 5 5

203 -

Financing Company's Total Financing	Amounts Limits	537,855 25,632 537,855 44,404 25,632
Finanacing Limits for Each	Borrowing Company	537,855 25,632 537,855 44,404 25,632
Collateral	Value	- - - - -
	Item	- - - - -
Allowance	for Bad Debt	- - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2
Range of Interest Rates	During the Period	1.00% - - - -
Actual Usage	Amount During the Period	- - 23,249 (CNY 5,200) - -
	Ending Balance	- - 23,249 (CNY 5,200) - -
Highest Balance of Financing to Other	Parties During the Period	37,673 (CNY 8,000) 24,487 (CNY 5,200) 23,249 (CNY 5,200) 61,210 (USD 2,000) 137,723 (USD 4,500)
Is a	Related Party	Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13)
	Name of Lender	QCES QCES NMHC GSS NMHC
	No.	13 13 12 11 12

204 -

Endorsements / Guarantees Provided to Subsidiaries in Mainland China	Endorsements / Guarantees Provided to Subsidiaries in Mainland China	Y - - - - Y Y - - - Y - -
Gaurantee Provided by A Subsidiary		- - - - - - - - - - - - -
Gaurantee Provided by Parent Company		Y Y Y Y Y Y Y Y Y Y - Y Y
Maximum Amounts for Guarantees and Endorsements		735,090 483,140 483,140 483,140 483,140 483,140 483,140 483,140 483,140 483,140 1,198,823 16,223,660 483,140
Ratio of Accumulated Amounts of Guarantees and Endorsements to Net Worth of the Latest Financial Statements		3.34% 3.18% - 3.18% 6.36% 3.18% - - 3.18% - - 10.03% -
Property Pledged for Guarantees and Endorsements		- - - - - - - - - - - - -
Actual Usage Amount During the Period		2,764,350 (USD 90,000) - - 30,715 (USD 1,000) - - 30,715 (USD 1,000) 61,430 (USD 2,000) - 30,715 (USD 1,000) - 30,715 (USD 1,000) 19,437
Balance of Guarantees and Endorsements as of Reporting Date		3,255,790 (USD 106,000) - - 30,715 (USD 1,000) - - 30,715 (USD 1,000) 61,430 (USD 2,000) - 30,715 (USD 1,000) - 30,715 (USD 1,000) 30,715
Highest Balance of Guarantees and Endorsements During the Period		5,555,450 (USD 182,000) 282,546 (CNY 60,000) 10,000 30,955 (USD 1,000) 59,900 (USD 2,000) 29,840 (USD 1,000) 30,955 (USD 1,000) 61,910 (USD 2,000) 61,430 (USD 2,000) 30,955 (USD 1,000) 29,840 (USD 1,000) 30,955 (USD 1,000) 30,830
Limits on Amount of Guarantees and Endorsements Provided to Each Guaranteed Party		735,090 193,256 193,256 193,256 193,256 193,256 193,256 193,256 193,256 193,256 479,529 6,489,464 193,256
Counter-party of Guarantee and Endorsement	Relationship with the Company	Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Affiliates Parent/Subsidiary Parent/Subsidiary
	Name	Data Image (Suzhou) Corporation Partner Tech Africa (Pty) Ltd. Partner-Tech Europe GmbH Partner-Tech Europe GmbH Partner Tech Middle East FZCO Partner Tech (Shanghai) Co., Ltd. Partner Tech (Shanghai) Co., Ltd. Partner Tech USA Inc. Partner Tech USA Inc. Webest Solution Corp. BenQ Intelligent Technology (Shanghai) Co., Ltd. (“BQC_RO”) QLLB Partner Tech Middle East FZCO
	Endorsements / Guarantee Provider	PTT PTT PTT PTT PTT PTT PTT PTT PTT PTT DIC BQC The Company
	No.	3 2 2 2 2 2 2 2 2 2 1 0 2

205 -

Note	Note	- - - - - - - - - - - - - - - - - - - - - -
Maximum percentage of ownership during 2018	Percentage of Ownership	4.61% 2.50% 2.50% 0.89% 6.19% 3.14% 0.06% 6.17% 3.33% 6.56% 7.13% 4.53% 2.47% 0.03% 2.51% 0.16% 3.09% 2.24% 0.53% 0.34% 7.06% 13.75%
	Shares/Units	1,250 - 225 310 619 672 31 2,000 5,000 10,000 1,932 2,940 530 132 1,633 34 1,000 1,033 285 220 1,512 1,375
December 31, 2018	Fair Value	33,750 96,614 - 30,380 2,247 31,779 143 13,248 40,003 7,673 52,162 185,852 25,064 1,398 103,210 1,608 6,624 6,634 2,326 13,922 71,502 -
	Percentage of Ownership	4.61% 2.50% 2.50% 0.89% 6.19% 3.14% 0.06% 6.17% 3.33% 6.56% 7.13% 4.53% 2.47% 0.03% 2.51% 0.16% 3.09% 2.24% 0.53% 0.34% 7.06% 13.75%
	Carrying Value	33,750 96,614 (Note) 30,380 2,247 31,779 143 13,248 40,003 7,673 52,162 185,852 25,064 1,398 103,210 1,608 6,624 6,634 2,326 13,922 71,502 (Note)
	Shares/Units	1,250 - 225 310 619 672 31 2,000 5,000 10,000 1,932 2,940 530 132 1,633 34 1,000 1,033 285 220 1,512 1,375
	Financial Statement Account	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current
Relationship with the Securities Issuer		- - - - - - - - - - - - - - - - - - - - - -
Marketable Securities Type and Name		Stock: APLEX Technology, Inc. CPEC Huachuang Private Equity Fund (Fujian) Co. Ltd. Fund Stock: Biodenta Corporation Stock: Hi-Clearance Inc. Stock: Joymaster Inc. Stock: Crystalvue Medical Corp. Stock: Gigastone Corporation Stock: Athena Capital Management Stock: CDIB Capital Innovation Advisors Corporation Preferred Stock: D8AI Holdings Coporation Stock: APLEX Technology, Inc. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: AUO Crystal Corp. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: Athena Capital Management Stock: Anqing Innovation Stock: Visco Vision Inc. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: We Can Financial Technology, Inc.
Investing Company		The Company QLLB BMC APV APV APV APV APV APV APV APV APV Darly 2 Darly 2 Darly 2 Darly C Darly C Darly C Darly C Darly C BenQ PTT
- 206 -

Note	Note	- - - - - - - - -
Maximum percentage of ownership during 2018	Percentage of Ownership	2.30% 0.50% 3.32% - - - 1.58% - 10.00%
	Shares/Units	3,500 50 900 5,809 1,900 17,436 USD 225 USD 200 100
December 31, 2018	Fair Value	10,687 - 24,300 94,641 28,234 218,145 - - 500
	Percentage of Ownership	2.30% 0.50% 3.32% - - - 1.58% - 10.00%
	Carrying Value	10,687 (Note) 24,300 94,641 28,234 218,145 (Note) (Note) 500
	Shares/Units	3,500 50 900 5,809 1,900 17,436 USD 225 USD 200 100
	Financial Statement Account	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income-non-current
Relationship with the Securities Issuer		- - - - - - - - -
Marketable Securities Type and Name		Preferred Stock: D8AI Holdings Coporation Stock: We Can Financial Technology, Inc. Stock: APLEX Technology, Inc. Fund: Nomura Taiwan Money Market Fund: Cathay No 1 REIT Fund: Allianz Global Investors Taiwan Money Market Asia Tech Taiwan Venture Fund Bond: WM 7.25% Perpetual Stock: Isotope BIOTECH.,LLC.
Investing Company		PTT WEBEST DFI DFI DFI DFI DFI DFI K2

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Ending Balance(Note)	Amount	2,166,624 473,229
	Shares	100,000 35,623
Disposal	Gain (Loss) on Disposal	- -
	Carrying Value	- -
	Amount	- -
	Shares	- -
Purchase	Amount	2,300,000 498,716
	Shares	100,000 35,623
Beginning Balance	Amount	- -
	Shares	- -
	Name of Relationship	Associate Affiliates
	Counter-Party	- -
	Financial Statement Account	Investment accounted for using equity method Investment accounted for using equity method
Marketable	Securities Type and Name	Alpha SMS
	Company Name	The Company BMC

208 -

Table 5 QISDA CORPORATION AND SUBSIDIARIES Disposal of real estate which exceeds NT$300 million or 20% of the paid-in capital For the year ended December 31, 2018 (Amounts in thousands of New Taiwan dollars, unless specified otherwise)	Notes	-
	Price Reference	According to the results of price appraisal and negotiation
	Purpose of Disposal	Liquidation of QMMX
	Relationship with the Counter Party	-
	Counter Party	Instuitive Surgical, S. DE R.L. DE C.V.
	Gains or Loss on Disposal of real estate	156,703
	Status of Payment	Fully collected
	Transaction Amount	311,923
	Book Value	155,220
	Acquisition Date	2008~2009
	Transaction Date	January 25, 2018
	Property Name	Factory and Land in Mexico
	Company Name	QMMX

209 -

	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	9 4 35 5 4 - 1 (77) 7 19 (8) (2) (31) 100 100 92 - - - (1) (6) (1) 75 - (2) 84 2 (1) -
	Ending Balance	2,548,125 1,014,294 9,325,491 1,299,838 977,137 56,239 193,393 (20,583,191) 152,988 425,857 (177,305) (40,544) (202,601) 177,305 202,601 19,655,622 29,174 17,085 6,955 (206,713) (1,347,828) (197,011) 206,713 (17,085) (95,563) 3,574,499 73,872 (41,401) (6,955)
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - (Note 1) (Note 1) - - - - - - - - - - - - - - - - - - -
Transaction Detail	Payment Terms	OA90 OA120 OA90 OA120 OA120 OA30 EOM60 OA90 OA90 OA90 OA90 OA90 OA90 OA90 OA90 OA60 OA120 OA120 OA60 OA60 EOM55 EOM60 OA60 OA60 OA120 OA60 OA120 EOM55 OA60
	% of Total Purchases/(Sales)	(5) (2) (25) (5) (3) - (1) 94 (39) (16) 39 1 5 (100) (100) (91) (1) - - 2 9 - (79) 1 1 (83) (10) 1 -
	Amount	(5,175,255) (2,432,235) (24,321,437) (4,781,283) (2,508,394) (180,014) (1,003,652) 89,901,865 (5,001,378) (2,053,749) 4,969,688 168,062 654,666 (4,969,688) (654,666) (75,842,938) (701,668) (176,820) (100,037) 1,652,875 7,732,441 124,191 (1,652,875) 176,820 283,204 (17,489,108) (2,137,293) 233,352 100,037
	Purchases/ (Sales)	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases (Sales) (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases (Sales) Purchases Purchases (Sales) (Sales) Purchases Purchases
	Nature of Relationship	Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Associate Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Other related party Other related party Parent/Subsidiary Associate Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Other related party Affiliates Affiliates Affiliates Other related party Affiliates Affiliates Other related party Affiliates
	Related Party	BenQ QJTO QALA AU AUL PTT DFI QLLB AU AUL BMLB Visco BMS BMC BMLB QLLB BQC_RO QCES QCOS QCPS AU DFI QCSZ QCSZ DARWIN QLLB BQC_RO AU QCSZ
	Company Name	The Company The Company The Company The Company The Company The Company The Company The Company BMC BMC BMC BMC BMLB BMLB BMS QCSZ QCSZ QCSZ QCSZ QCSZ QCSZ QCSZ QCPS QCES QCES QCOS QCOS QCOS QCOS

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	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(99) 100 (85) (15) (100) 17 40 6 27 - (62) (13) (100) 18 (98) (13) (5) (4) 35 62 (54) (94) (100) 17 16 7 6 1 23 (99) (96) (93) (98) (100) (96) (99)
	Ending Balance	(1,014,294) 20,583,191 (19,655,622) (3,574,499) (9,325,491) 998,043 2,381,197 334,147 1,602,899 21,240 (2,548,125) (532,512) (998,043) 95,876 (95,876) (73,872) (29,174) (21,240) 254,210 448,309 (334,147) (254,210) (448,309) 295,282 279,276 117,217 104,811 12,082 402,902 (1,602,899) (295,282) (279,276) (117,217) (104,811) (12,082) (402,902)
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Transaction Detail	Payment Terms	OA120 OA90 OA60 OA60 OA90 OA90 OA90 OA90 OA60 OA60 OA90 EOM55 OA90 OA60 OA60 OA120 OA120 OA60 OA90 OA90 OA90 OA90 OA90 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60
	% of Total Purchases/(Sales)	100 (96) 81 19 100 (16) (44) (4) (33) (1) 32 22 100 (18) 99 49 16 4 (49) (26) 94 99 97 (16) (13) (9) (3) 1 (12) 92 98 94 100 99 100 97
	Amount	2,432,235 (89,901,865) 75,842,938 17,489,108 24,321,437 (2,876,068) (7,714,886) (769,649) (5,872,651) (180,482) 5,175,255 3,590,347 2,876,068 (651,030) 651,030 2,137,293 701,668 180,482 (437,862) (227,732) 769,649 437,862 227,732 (1,119,543) (896,252) (588,194) (180,327) (102,101) (804,062) 5,872,651 1,119,543 896,252 588,194 180,327 102,101 804,062
	Purchases/ (Sales)	Purchases (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases (Sales) Purchases Purchases Purchases Purchases (Sales) (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases
	Nature of Relationship	Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Other related party Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
	Related Party	The Company The Company QCSZ QCOS The Company BQA BQE BQL BQP BQC_RO The Company AU BenQ BQCA BQA QCOS QCSZ BenQ BQmx Maxgen BenQ BQL BQL BQJP BQME BQAU BQTH BQMY BQIN BenQ BQP BQP BQP BQP BQP BQP
	Company Name	QJTO QLLB QLLB QLLB QALA BenQ BenQ BenQ BenQ BenQ BenQ BenQ BQA BQA BQCA BQC_RO BQC_RO BQC_RO BQL BQL BQL BQmx Maxgen BQP BQP BQP BQP BQP BQP BQP BQJP BQME BQAU BQTH BQMY BQIN

211 -

	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(96) 14 22 15 5 19 3 9 4 3 (98) (99) (100) (96) (100) (93) (99) (94) (97) 14 43 4 (46) 97 (88) (72) (21) 27 9 2 3 18
	Ending Balance	(2,381,197) 218,993 355,706 239,131 75,485 302,159 53,815 147,623 59,707 52,992 (218,993) (355,706) (239,131) (75,485) (302,159) (53,815) (147,623) (59,707) (52,992) 54,334 167,817 13,731 (56,239) (54,334) (167,817) (13,731) (193,393) 284,650 91,916 18,023 36,816 197,011
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - - - - - - - - (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) - - - - - -
Transaction Detail	Payment Terms	OA90 OA30 OA30 OA45 OA30 OA30 OA30 OA30 OA30 OA30 OA30 OA30 OA45 OA30 OA30 OA30 OA30 OA30 OA30 OA90 OA90 OA90 OA30 OA90 OA90 OA90 EOM60 60~90 Days 60~90 Days 60~90 Days 60~90 Days EOM60
	% of Total Purchases/(Sales)	92 (14) (23) (14) (9) (9) (7) (5) (3) (3) 100 99 100 99 100 100 100 100 100 (18) (30) (11) 22 93 69 83 22 (29) (15) (8) (2) (2)
	Amount	7,714,886 (1,239,662) (2,088,671) (1,317,555) (865,223) (791,759) (645,880) (417,788) (276,117) (300,190) 1,239,662 2,088,671 1,317,555 865,223 791,759 645,880 417,788 276,117 300,190 (190,971) (331,010) (123,851) 180,014 190,971 331,010 123,851 1,003,652 (1,383,881) (701,635) (382,212) (111,730) (124,191)
	Purchases/ (Sales)	Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales)
	Nature of Relationship	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates
	Related Party	BenQ BQUK BQDE BQAT BQSE BQFR BQIB BQNL BQCH BQIT BQE BQE BQE BQE BQE BQE BQE BQE BQE PTU PTE PTUK The Company PTT PTT PTT The Company DFI-ITOX, LLC. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Yan Ying Hao Trading (ShenZhen) Co., Ltd. QCSZ
	Company Name	BQE BQE BQE BQE BQE BQE BQE BQE BQE BQE BQUK BQDE BQAT BQSE BQFR BQIB BQNL BQCH BQIT PTT PTT PTT PTT PTU PTE PTUK DFI DFI DFI DFI DFI DFI

212 -

	Note	- - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(99) (95) (100) (97)
	Ending Balance	(284,650) (91,916) (18,023) (36,816)
Transactions with Terms Different from Others	Payment Terms	- - - -
	Unit Price	- - - -
Transaction Detail	Payment Terms	60~90 Days 60~90 Days 60~90 Days 60~90 Days
	% of Total Purchases/(Sales)	94 95 100 94
	Amount	1,383,881 701,635 382,212 111,730
	Purchases/ (Sales)	Purchases Purchases Purchases Purchases
	Nature of Relationship	Affiliates Affiliates Affiliates Affiliates
	Related Party	DFI DFI DFI DFI
	Company Name	DFI-ITOX,LLC. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Yan Ying Hao Trading (ShenZhen) Co., Ltd.

213 -

Allowance for Bad Debts	Allowance for Bad Debts	- - - - - - - - - - - - - - - - - - - - -
Amount Received in Subsequent Period		1,082,751 390,338 882,060 771,306 354,644 1,299,838 - 169,871 78,037 198,849 144,376 144,373 5,535,217 - - - 15,561,890 396,928 1,599,485 130,573 1,024,467
Overdue	Action Taken	- - - - - - - - - - - - - - - - - - - - -
	Amount	433,799 20,611 1,592,311 - 56,699 1,299,838 - - - - - - 5,535,217 - - - 15,619,696 84,965 797,369 334,147 818,519
	Turnover Rate	1.97 2.54 2.98 (Note 1) (Note 1) 3.87 2.44 6.62 7.27 3.56 28.79 3.09 4.14 9.21 4.38 (Note 1) 4.22 3.04 3.03 1.48 3.48
	Ending Balance	2,548,125 1,014,294 9,325,491 843,445 360,739 1,299,838 977,137 193,393 152,988 425,857 177,305 202,601 19,655,622 206,713 3,574,499 3,868,107 20,583,191 998,043 2,381,197 334,147 1,602,899
Nature of Relationship		Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Associate Parent/Subsidiary Other related party Other related party Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates
Related Party		BenQ QJTO QALA QCSZ QCOS AU AUL DFI AU AUL BMC BMLB QLLB QCSZ QLLB The Company The Company BQA BQE BQL BQP
Company Name		The Company The Company The Company The Company The Company The Company The Company The Company BMC BMC BMLB BMS QCSZ QCPS QCOS QCES QLLB BenQ BenQ BenQ BenQ

214 -

Allowance for Bad Debts	Allowance for Bad Debts	- - - - - - - - - - - - - - - -
Amount Received in Subsequent Period		358,673 80,107 46,329 231,998 144,598 87,246 111,201 22,416 - - - - - 49,826 245,720 174,204
Overdue	Action Taken	- - - - - - - - - - - - - - - -
	Amount	28,320 127,705 397,964 149,673 162,526 62,753 319,827 162,526 142,859 215,003 84,413 254,156 102,370 103,951 32,521 9,816
	Turnover Rate	(Note 1) 1.78 0.54 3.77 3.25 5.65 2.36 1.94 5.91 6.19 5.86 2.58 2.77 2.20 5.47 0.89
	Ending Balance	358,673 254,210 448,309 295,282 279,276 117,217 402,902 104,811 218,993 355,706 239,131 302,159 147,623 167,817 284,650 197,011
Nature of Relationship		Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
Related Party		QCSZ BQmx Maxgen BQJP BQME BQAU BQIN BQTH BQUK BQDE BQAT BQFR BQNL PTE DFI-ITOX, LLC. QCSZ
Company Name		BenQ BQL BQL BQP BQP BQP BQP BQP BQE BQE BQE BQE BQE PTT DFI DFI

215 -

Table 8 QISDA CORPORATION AND SUBSIDIARIES Business relationships and significant intercompany transactions For the year ended December 31, 2018 (Amounts in thousands of New Taiwan dollars, unless specified otherwise)	Transaction Details During 2018	Percentage of Consolidated Operating Revenue and Total Assets (Note 4)	(3%) (2%) (16%) (3%) (49%) (1%) (11%) (1%) (58%) (2%) (5%) (4%) (1%)
		Payment Terms	OA90 OA120 OA90 OA90 OA60 OA60 OA60 OA120 OA90 OA90 OA90 OA60 OA30
		Amount	(5,175,255) (2,432,235) (24,321,437) (4,969,688) (75,842,938) (1,652,875) (17,489,108) (2,137,293) (89,901,865) (2,876,068) (7,714,886) (5,872,651) (2,088,671)
		Financial Statements Account	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales)
		Name of Relationship (Note 2)	1 1 1 3 3 3 3 3 2 3 3 3 3
		Related Party	BenQ QJTO QALA BMC QLLB QCSZ QLLB BQC_RO The Company BQA BQE BQP BQDE
		Company Name	The Company The Company The Company BMLB QCSZ QCPS QCOS QCOS QLLB BenQ BenQ BenQ BQE
		Number (Note 1)	0 0 0 1 2 3 4 4 5 6 6 6 7

216 -

Transaction Details During 2018	Percentage of Consolidated Operating Revenue and Total Assets (Note 4)	2% 8% 16% 3% 3% 17% 2% 1%	(Note1) Parties to the intercompany transactions are identified and numbered as follows: 1. "0" represents the Company. 2. Subsidiaries are numbered from "1". (Note2) The relationships with counter party are as follows: No. “1” represents the transactions from the Company to subsidiary. No. “2” represents the transactions from subsidiary to the Company. No. “3” represents the transactions between subsidiaries. (Note3) Intercompany relationships and significant intercompany transactions are disclosed only for sales and accounts receivables. The corresponding purchases and accounts payables are not disclosed. (Note4) Based on the transaction amount divided by consolidated operating revenues or consolidated total assets. (Note5) The above intercompany transactions have been eliminated when preparing the consolidated financial statements.
	Payment Terms	OA90 OA90 OA60 OA60 OA60 OA90 OA90 OA60
	Amount	2,548,125 9,325,491 19,655,622 3,574,499 3,868,107 20,583,191 2,381,197 1,602,899
	Financial Statements Account	Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable
	Name of Relationship (Note 2)	1 1 3 3 2 2 3 3
	Related Party	BenQ QALA QLLB QLLB The Company The Company BQE BQP
	Company Name	The Company The Company QCSZ QCOS QCES QLLB BenQ BenQ
	Number (Note 1)	0 0 1 2 3 4 5 5

217 -

	Note	Associate Associate Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Parent/Subsidiary Associate Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Affiliates Associate Associate Affiliates Affiliates Affiliates Affiliates Affiliates
	Investment Income (Loss)	700,370 314,975 44,733 118,501 1,485,993 14,573 (10,254) (46) 590,263 68,569 14,318 30,792 (79,534) (28,305) 9 2,208 192,143 (11,946) 2,089 (1,172) - - - - - - - - - -
	Net Income (Loss) of the Investee	10,160,598 1,520,258 328,579 135,152 1,485,045 14,573 (10,254) (46) 687,784 68,569 14,318 159,028 30,144 (31,659) 9 11,037 605,337 (88,009) 9,324 (3,911) 135,152 (80,669) (101,464) 199,370 (17,543) (2,013) 328,579 66,682 159,028 (8,161)
Maximum percentage of ownership during 2018	Percentage of Ownership	6.90% 20.72% 13.61% 87.68% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 19.36% 58.04% 92.85% 100.00% 20.00% 45.08% 18.40% 29.85% 28.82% 12.32% 100.00% 89.06% 18.58% 19.64% 45.11% 4.74% 7.96% 10.21% 41.00%
	Shares	663,599 58,005 43,659 977 408,641 1,000 - 50,000 114,250 113,258 6,000 47,400 43,577 25,999 100 6,000 51,610 100,000 3,880 20,000 252 35,082 35,623 9,984 2,190 12,011 15,182 3,549 25,000 4,100
Balances as of December 31, 2018	Carrying Value	13,921,968 1,846,261 561,531 (12,595) 7,765,804 35,146 37,145 339,435 12,023,183 1,817,999 60,691 649,417 1,378,698 168,965 999 49,437 3,325,361 2,166,624 123,227 259,912 (1,770) 1,698,252 473,229 129,024 14,481 145,564 195,337 83,092 342,595 11,483
	Percentage of Ownership	6.90% 20.72% 13.61% 87.68% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 19.35% 58.04% 92.85% 100.00% 20.00% 45.08% 18.40% 29.85% 28.82% 12.32% 100.00% 89.06% 18.58% 15.48% 45.11% 4.74% 7.96% 10.21% 41.00%
	Shares	663,599 58,005 43,659 385 408,641 1,000 - 50,000 114,250 113,258 6,000 47,400 43,577 25,999 100 6,000 51,610 100,000 3,880 20,000 54 35,082 35,623 9,984 2,190 12,011 15,182 3,549 25,000 4,100
Original investment Amount	December 31, 2017	8,085,543 662,195 507,883 369,565 7,160,050 32,800 2,701 578,128 3,687,539 170,016 165,000 1,476,632 1,475,978 259,990 1,000 63,000 3,154,750 - - - 50,287 1,140,340 - 180,523 29,127 10,266 221,786 42,584 904,102 50,250
	December 31, 2018	8,085,543 662,195 507,883 79,449 7,160,050 32,800 2,701 578,128 3,687,539 170,016 165,000 1,476,632 1,475,978 259,990 1,000 63,000 3,154,750 2,300,000 121,134 260,000 10,811 1,141,340 498,716 180,523 29,127 77,933 221,786 42,584 904,102 50,250
Main Businesses and Products		R&D, manufacture and sale of TFT-LCD panels R&D, manufacture and sale of MLCC and keyboards R&D, manufacture and sale of optoelectronics film Manufacture of computer peripheral products Manufacture and sales of brand-name electronic Sales of electronic products Sales and maintenance of electronic products in Japanese market Leasing and management services Investment and holding activity Investment and holding activity Investment and holding activity Investment and holding activity Manufacture, sales, and import and export of POS terminals and peripherals Manufacture and sale of medical consumable and equipment Manufacture of computer peripheral products Manufacture and sales of medical consumables and equipments Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Sale of medical consumable and equipment Manufacture and sales of marine display modules Manufacture of computer peripheral products Investment and holding activity Manufacture and sale of medical consumable and equipment Manufacture and sale of contact lenses R&D, manufacture and sale of medical consumable and equipment Investment management consulting R&D, manufacture and sale of optoelectronics film Manufacture and sales of medical consumables and equipments Investment and holding activity Energy service
Location		Taiwan Taiwan Taiwan Mexico Taiwan USA Japan Malaysia Malaysia Taiwan Malaysia Cayman Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Mexico Malaysia Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Cayman Taiwan
Investee		AU DFN BMC QMMX BenQ QALA QJTO QLPG QLLB APV Darly BBHC PTT BDT QTOS Q.S.Control Corp. DFI Alpha K2 DIC QMMX BMLB SMS Visco Vision Inc. Cenefom Corporation Darly C BMC BMTC BBHC BES
Investor		The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company QALA BMC BMC BMC BMC APV APV APV APV APV

218 -

	Note	Affiliates Affiliates Affiliates Affiliates Associate Affiliates Associate Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
	Investment Income (Loss)	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Net Income (Loss) of the Investee	30,144 (31,659) 20,105 605,337 (88,009) (8,161) - (88,009) 29,836 159,028 (105,668) (78,687) 822,613 163,112 79,670 116,664 29,836 1,520,258 328,579 159,028 66,682 863 7,434 40,509 224 (19,420) 823 7,110 (1,990) 6,087 (7,317) 480
Maximum percentage of ownership during 2018	Percentage of Ownership	8.00% 0.01% 0.02% 2.00% 2.06% 24.00% 33.33% 2.34% 12.50% 6.45% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 37.50% 7.76% 25.21% 8.16% 43.43% 100.00% 90.18% 100.00% 0.31% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
	Shares	6,006 1 1 2,294 11,187 2,400 (Note 1) 12,710 7,800 15,798 200 4,350 466,200 5,009 20,000 (Note 1) 23,400 21,723 80,848 20,000 19,353 82 6,265 4,000 - 440,296 - - 500 2,191 100 12,000
Balances as of December 31, 2018	Carrying Value	156,923 7 10 152,563 247,787 6,722 324 257,171 23,549 216,490 (115,771) (30,450) 2,390,551 1,030,331 152,331 2,337,844 70,635 691,284 1,040,203 274,076 441,842 71,481 94,497 130,138 22 10,606 (15,013) 79,365 (21,749) 54,791 7,642 (38,195)
	Percentage of Ownership	8.00% 0.01% 0.02% 2.00% 2.06% 24.00% 33.33% 2.34% 12.50% 6.45% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 37.50% 7.76% 25.21% 8.16% 43.43% 100.00% 90.18% 100.00% 0.31% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
	Shares	6,006 1 1 2,294 11,187 2,400 (Note 1) 12,710 7,800 15,798 200 4,350 466,200 5,009 20,000 (Note 1) 23,400 21,723 80,848 20,000 19,353 82 6,265 4,000 - 440,296 - - 500 2,191 100 12,000
Original investment Amount	December 31, 2017	112,080 10 12 149,096 - 28,000 2,000 - 30,456 526,134 114,553 87,027 859,037 960,568 950,000 1,911,132 74,021 361,856 946,731 719,088 235,069 74,659 109,410 32,944 - 224,405 8,891 4,518 1,837 132,590 119,488 120,116
	December 31, 2018	112,080 10 12 149,096 262,111 28,000 2,000 273,445 30,456 526,134 114,553 203,839 859,037 960,568 950,000 2,061,132 74,021 361,856 946,731 719,088 235,069 74,659 109,410 118,282 21 224,405 8,891 4,518 1,837 132,590 119,488 120,116
Main Businesses and Products		Manufacture, sales, and import and export of POS terminals and peripherals Manufacture and sales of medical consumables and equipments R&D and sales of computer information system Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Energy service Cultural and Art Industry R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Investment and holding activity Investment and holding activity Sales of brand-name electronic products in North America markets Sales of brand-name electronic products in Latin America markets Investment and holding activity Sales of electronic products in European markets Sales of brand-name electronic products in Asia markets Investment and holding activity Investment and holding activity R&D, manufacture and sale of MLCC and keyboards R&D, manufacture and sale of optoelectronics film Investment and holding activity Assembly and sales of gaming electronic products Maintenance of brand-name electronic monitors and projectors in European markets Assembly and sales of gaming electronic products Sales of brand-name electronic products in HK markets Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products
Location		Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Cayman USA USA Hong Kong The Netherlands Taiwan Taiwan Hong Kong Taiwan Taiwan Cayman Taiwan The Netherlands Taiwan Hong Kong Indonesia India United Arab Emirates Japan Singapore Australia Malaysia Thailand
Investee		PTT BDT GST DFI Alpha BES Green Island Co., Ltd. Alpha BenQ Guru Holding Ltd. (GSH) BBHC BQA BQL BQHK BQE BQP Darly 2 BenQ Guru Holding Ltd. (GSH) DFN BMC BBHC ZGC MQE ZGC BQHK_HLD PT BenQ Teknologi Indonesia BenQ India Private Ltd. BenQ (M.E.) FZE BenQ Japan Co., Ltd. BenQ Singapore Pte Ltd. BenQ Australia Pte Ltd. BenQ Service & Marketing (M) Sdn Bhd BenQ (Thailand) Co., Ltd.
Investor		APV APV APV APV APV Darly C Darly C Darly C Darly Darly BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BQP BQP BQP BQP BQP BQP BQP
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	Note	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
	Investment Income (Loss)	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Net Income (Loss) of the Investee	15,211 224 (1,054) 1,366 (43,810) (43,810) (87,621) (87,621) 800 20,105 (2,013) 159,028 29,836 66,682 (8,161) 30,144 7,434 605,337 (88,009) 9,324 (3,911) 9,696 23,866 3,613 11,241 4,079 3,670 7,487 8,989 3,161 140 225 22,112 2,583 11,813 25,384 (5,823)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 99.69% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 100.00% 99.94% 54.89% 26.55% 50.00% 3.57% 18.00% 2.19% 0.02% 8.01% 0.15% 7.71% 4.32% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.75% 100.00% 100.00% 88.00% 100.00% 52.00% 100.00%
	Shares	10 6 1 3 1 1 - - 3 5,756 14,614 65,024 31,200 1,590 1,800 1,648 1 9,175 795 1,003 3,000 - - - - - 50 - - - 1,995 1,062 10,000 8,800 10,000 2,184 2,500
Balances as of December 31, 2018	Carrying Value	7,965 6,998 18,686 31,692 (119,400) (119,400) (119,400) (119,400) 2,973 49,421 177,114 891,220 94,180 37,227 5,042 43,059 16 610,570 14,867 45,717 48,070 25,042 183,040 (44,128) 47,116 49,247 27,553 (136,072) 69,149 13,662 26,296 8,214 245,707 55,220 112,174 80,062 18,287
	Percentage of Ownership	100.00% 99.69% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 100.00% 99.94% 54.89% 26.55% 50.00% 3.57% 18.00% 2.19% 0.02% 8.01% 0.15% 7.71% 4.32% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.75% 100.00% 100.00% 88.00% 100.00% 52.00% 100.00%
	Shares	10 6 1 3 1 1 - - 3 5,756 14,614 65,024 31,200 1,590 1,800 1,648 1 9,175 795 1,003 3,000 - - - - - 50 - - - 1,995 1,062 10,000 8,800 10,000 2,184 2,500
Original investment Amount	December 31, 2017	1,713 - 26 77,591 4,671 4,671 4,671 4,671 87 64,898 6,846 2,122,721 121,860 27,337 22,250 49,426 10 596,382 - - - 14,800 25,587 567 1,091 4,677 92,654 2,045 445 52 21,984 36,211 185,000 88,000 100,000 70,200 21,843
	December 31, 2018	1,713 6,901 26 77,591 4,671 4,671 4,671 4,671 87 64,898 89,179 2,122,721 121,860 27,337 22,250 49,426 10 596,382 15,885 44,997 48,000 14,800 25,587 567 1,091 4,677 92,654 2,045 445 52 21,984 36,211 185,000 88,000 100,000 70,200 21,843
Main Businesses and Products		Providing administration and management service to affiliates Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Investment and holding activity Investment and holding activity Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management services to affiliates R&D and sales of computer information system Investment management consulting Investment and holding activity Investment and holding activity Manufacture and sales of medical consumables and equipment Energy service Manufacture, sales, and import and export of POS terminals and peripherals Assembly and sales of gaming electronic products Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Sale of medical consumable and equipment Manufacture and sales of marine display modules Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management services to affiliates Sales of medical consumables and equipment Investment and holding activity Manufacture and sales of medical consumables and equipment Manufacture and sales of medical consumables and equipment Investment and holding activity Sales of medical consumables and equipment Sales, import and export of electronic products
Location		Korea Indonesia Canada Mexico USA USA Brazil Brazil Mexico Taiwan Taiwan Cayman Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan UK Germany The Netherlands Australia Spain Italy France Sweden Russia Taiwan Samoa Taiwan Taiwan Taiwan Taiwan Taiwan
Investee		BenQ Korea Co., Ltd. PT BenQ Teknologi Indonesia BenQ Canada Corp. BenQ Mexico S. de R.L. de C.V. Joytech LLC Vivitech LLC Maxgen Comércio Industrial imp E Exp Ltda. Maxgen Comércio Industrial imp E Exp Ltda. BenQ Service de Mexico S. de R.L. de C.V. GST Darly C BBHC BenQ Guru Holding Ltd. (GSH) BMTC BES PTT ZGC DFI Alpha K2 DIC BenQ UK Limited BenQ Deutschland GmbH BenQ Benelux B.V. BenQ Austria GmbH BenQ Iberica S.L. Unipersonal BenQ Italy S.R.L BenQ France SAS BenQ Nordic A.B. BenQ LLC. ASIACONNECT HIGHVIEW LILY BABD BHS NBHIT WEBEST
Investor		BQP BQP BQA BQL BQL BQL Joytech LLC Vivitech LLC BQmx GSH Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 BQE BQE BQE BQE BQE BQE BQE BQE BQE BMTC BMTC BMTC BMTC BMTC BHS PTT

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	Note	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate
	Investment Income (Loss)	- - - - - - - - - - - - - - - - - - - - - - - -
	Net Income (Loss) of the Investee	(26,353) 3,095 914 (7,856) (26,196) (1,242) 2,122 (5,400) (1,186) 3,095 (668) 5,582 (14,515) 488 2,122 (1,186) (26,196) (38,046) (5,400) (27,907) 26,865 4,187 44,159 9,698 450 (266) 37,062 (69)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 88.60% 100.00% 50.02% 99.00% 50.10% 50.62% 54.00% 58.18% 11.40% 90.00% 68.00% 100.00% 27.03% 0.02% 0.01% 1.00% 100.00% 46.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 49.00% 100.00% 30.00%
	Shares	7,051 886 0.216 (Note 1) 0.099 100 2,050 0.108 13 114 (Note 1) (Note 1) 0.3 500 1.0 0.001 0.001 6,060 0.092 1,091 1,209 6,000 6 12 4,500 - 20,215 300
Balances as of December 31, 2018	Carrying Value	195,677 31,168 173,360 97,956 50,578 33,320 26,070 27,942 372 4,760 (15,584) 1,625 (57,863) 2,468 10 - 438 178,249 27,752 44,014 320,890 161,400 269,752 36,427 19,432 2,775 183,672 12,832
	Percentage of Ownership	100.00% 88.60% 100.00% 50.02% 99.00% 50.10% 50.62% 54.00% 58.18% 11.40% 90.00% 68.00% 100.00% 27.03% 0.02% 0.005% 1.00% 100.00% 46.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 49.00% 100.00% 30.00%
	Shares	7,051 886 0.216 (Note 1) 0.099 100 2,050 0.108 13 114 (Note 1) (Note 1) 0.3 500 1 0.001 0.001 6,060 0.092 1,091 1,209 6,000 6 12 4,500 - 20,215 300
Original investment Amount	December 31, 2017	308,166 43,834 - 51,451 62,595 - - - 4,075 5,640 980 - 2,485 6,500 - 1 - 181,158 12,157 31,593 254,716 187,260 104,489 35,219 20,221 - 509,417 24,304
	December 31, 2018	276,492 43,834 109,828 51,451 137,387 27,449 20,500 22,451 4,075 5,640 980 - 2,485 6,500 10 1 1,560 181,158 12,157 31,593 254,716 187,260 104,489 35,219 20,223 2,884 518,381 24,304
Main Businesses and Products		Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products R&D and sales of software R&D and sales of software Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products R&D and sales of software R&D and sales of software Sales, import and export of electronic products Sales, import and export of electronic products Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales of industrial motherboards Investment and holding activity Sales of industrial motherboards Sales of industrial motherboards Manufacture of industrial motherboards Sale of medical consumable and equipment Investment and holding activity Agency
Location		British Virgin Islands UK South Africa Germany United Arab Emirates Singapore Taiwan South Africa Morocco UK Slovenia Spain United Arab Emirates Taiwan Taiwan Morocco United Arab Emirates British Virgin Islands South Africa USA USA Mauritius Japan The Netherlands Hong Kong Thailand Mauritius USA
Investee		P&J Investment Holding Co., Ltd. (B.V.I.) Partner Tech UK Corp., Ltd. Corex (Pty) Ltd. Partner-Tech Europe GmbH Partner Tech Middle East FZCO Epoint Systems Pte. Ltd. PTTN Partner Tech Africa (Pty) Ltd. Partner Tech North Africa Partner Tech UK Corp., Ltd. Sloga team D.o.o. Retail Solution & System S.L. E-POS International LLC YOUPOS PTTN Partner Tech North Africa Partner Tech Middle East FZCO P&S Investment Holding Co., Ltd. (B.V.I.) Partner Tech Africa (Pty) Ltd. Partner Tech USA Inc. DFI-ITOX, LLC. Yan Tong Technology Ltd. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Dual-Tech International Co., Ltd. K2 Medical (Thailand) Co., LTD Data Image (Mauritius) DMC Components International, LLC
Investor		PTT PTT PTT PTT PTT PTT PTT PTT PTT PTE PTE PTE PTME WEBEST WEBEST WEBEST WEBEST P&J P&J P&S DFI DFI DFI DFI DFI K2 DIC DIC

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Accumulated Inward Remittance of Earnings as of December 31, 2018	Accumulated Inward Remittance of Earnings as of December 31, 2018	- - - - - - - - - - -
Carrying Value as of December 31, 2018		367,595 9,302 2,397,645 (1,461,823) 111,009 1,399,230 508,924 8,641,972 1,344,637 3,876,463 18,127
	Investment Income (Loss)	433,595 (Note 2) 97,140 (Note 4) 192,886 (Note 4) 175,645 (Note 2) (28,293) (Note 2) 127 (Note 3) (25,911) (Note 3) 9,781 (Note 3) 815,239 (Note 2) 3,528 (Note 3) 33,400 (Note 3)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 100.00% 100.00% 100.00% 100.00% 70.76% 70.76% 100.00% 100.00% 100.00% 70.76%
	Shares	- - - - - - - - - - -
% of Ownership of Direct or Indirect Investment		100.00% 100.00% 100.00% 100.00% 100.00% 70.72% 70.72% 100.00% 70.72% 100.00% 100.00%
Net	Income (Loss) of Investee	33,400 3,528 815,239 (25,911) 9,781 179 (40,007) 248,367 192,886 97,140 433,595
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	2,180,765 (USD 71,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,834,418 (USD 157,396) 2,733,512 (USD 88,996) 30,715 (USD 1,000) 1,474,320 (USD 48,000) (Note 5) 297,936 (USD 9,700) (Note 6) 2,457,200 (USD 80,000) 6,143 (USD 200) (Note 7) 145,896 (USD 4,750)
Investment Flows	Inflow	- - - - - - - - - - -
	Outflow	- - - - - - - - - - -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	2,180,765 (USD 71,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,834,418 (USD 157,396) 2,733,512 (USD 88,996) 30,715 (USD 1,000) 1,474,320 (USD 48,000) 297,936 (USD 9,700) 2,457,200 (USD 80,000) 6,143 (USD 200) 145,896 (USD 4,750)
	Method of Investment	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)
	Total Amount of Paid-in Capital	2,272,910 (USD 74,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,669,141 (USD 152,015) 2,691,371 (CNY 601,975) 30,715 (USD 1,000) 2,042,548 (USD 66,500) 405,438 (USD 13,200) 2,457,200 (USD 80,000) 30,715 (USD 1,000) 153,575 (USD 5,000)
	Main Businesses and Products	Manufacture of plastic parts Sales of brand-name electronic products Lease of real estate R&D and sales of computer information systems Manufacture of monitors Hospital Hospital Medical management consulting Manufacture of monitors Manufacture of projectors Manufacture of monitors and communication devices
	Investee Company Name	Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) BenQ Technology (Shanghai) Co., Ltd. (“BQls”) BenQ Co., Ltd. (“BQC”) Guru Systems (Suzhou) Co., Ltd. (“GSS”) Qisda (Shanghai) Co., Ltd. (“QCSH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Nanjing BenQ Hospital Co., Ltd. (“NMH”) BenQ Hospital Management Consulting (Nanjing) Co., Ltd. (“NMHC”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Qisda (Suzhou) Co., Ltd. (“QCSZ”)

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Accumulated Inward Remittance of Earnings as of December 31, 2018	Accumulated Inward Remittance of Earnings as of December 31, 2018	- - - - -	(Note 13) Since the Company has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 14,998,196 16,522,567 (Note 13) 3. Significant transactions with investee companies in Mainland China: The transactions between parent and investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions ” and “Business relationships and significant intercompany transactions” for detail description. (USD 488,302) (USD 537,932)	(Note 13) Since the Company has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 14,998,196 16,522,567 (Note 13) 3. Significant transactions with investee companies in Mainland China: The transactions between parent and investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions ” and “Business relationships and significant intercompany transactions” for detail description. (USD 488,302) (USD 537,932)
Carrying Value as of December 31, 2018		- 140,150 (10,233) 38,725 610,606
	Investment Income (Loss)	2,374 (Note 3) (5) (Note 3) 132 (Note 3) 53,913 (Note 2) - (Note 3)
Maximum percentage of ownership during 2018	Percentage of Ownership	70.76% 100.00% 100.00% 100.00% 70.76%
	Shares	- - - - -
% of Ownership of Direct or Indirect Investment		70.72% 100.00% 100.00% 70.72% 100.00%
Net	Income (Loss) of Investee	- 186 53,913 2,374 (5)
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	- - - 92,145 (USD 3,000) (Note 11)	Upper Limit on Investment	(Note 13)
Investment Flows	Inflow	- - - - -
	Outflow	92,145 (USD 3,000) - - - -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	- - - - -	Investment Amounts Authorized by Investment Commission, MOEA	16,522,567 (USD 537,932)
	Method of Investment	(Note 1) (Note 8) (Note 1) (Note 10) (Note 9)
	Total Amount of Paid-in Capital	41,772 (USD 1,360) 3,072 (USD 100) 921,450 (USD 30,000) 92,145 (USD 3,000) 134,127 (CNY 30,000)
	Main Businesses and Products	Medical services Investment and holding activity Sales and maintenance of electronic products in China market Sales of brand-name electronic products Sale of medical consumable and equipment	Accumulated Investment in Mainland China as of December 31, 2018	14,998,196 (USD 488,302)
	Investee Company Name	Nanjing Silvertown Health & Development Co., Ltd (“NSHD”) Suzhou BenQ Investment Co., Ltd. (“BIC”) BenQ Intelligent Technology (Shanghai) Co., Ltd. (“BQC_RO”) ShengCheng Trading(Shanghai) Co.,LTD (“BQsha_EC2”) BenQ Medical (Shanghai) Co., Ltd (“BDTcn”)

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Accumulated Inward Remittance of Earnings as of December 31, 2018	Accumulated Inward Remittance of Earnings as of December 31, 2018	- - - -	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 7) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 8) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: The transactions between BMC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950)	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 7) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 8) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: The transactions between BMC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950)	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 7) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 8) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: The transactions between BMC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950)
Carrying Value as of December 31, 2018		1,955,556 (Note 6) 46,138 (Note 6) (278,170) (Note 6) 49,184 (Note 6)
	Investment Income (Loss)	45,689 (Note 2) 956 (Note 2) (157,819) (Note 2) (6,323) (Note 2)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 89.06% 100.00% 100.00%
	Shares	- - - -
% of Ownership of Direct or Indirect Investment		100.00% 89.06% 100.00% 100.00%
Net	Income (Loss) of Investee	45,689 956 (157,819) (31,727)	Upper Limit on Investment	(Note 8)	258,157
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	890,735 (USD 29,000) - 178,836 (CNY 40,000) (Note 5) 48,898 (USD1,592)
Investment Flows	Inflow	- - - -
	Outflow	- - - -	Investment Amounts Authorized by Investment Commission, MOEA	1,118,527 (USD29,000 and CNY50,950)	48,898 (USD1,592)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	890,735 (USD29,000) - 178,836 (CNY 40,000) 48,898 (USD1,592)
	Method of Investment	(Note 4) (Note 1) (Note 3) (Note 1)
	Total Amount of Paid-in Capital	890,735 (USD29,000) 49,180 (CNY11,000) 357,672 (CNY80,000) 48,898 (USD1,592)	Accumulated Investment in Mainland China as of December 31, 2018	1,069,571 (USD29,000 and CNY40,000)	48,898 (USD1,592)
	Main Businesses and Products	Manufacture and sales of optoelectronics Manufacture and sales of medical consumables and equipment Sales of optoelectronics and medical consumables Manufacture of optoelectronics
	Investee Company Name	BenQ Materials (Wuhu) Co., Ltd. Suzhou Sigma Medical Supplies Co., Ltd. (“SMSZ”) Daxon Biomedical (Suzhou) Co., Ltd. (“DTB”) BenQ Material (Suzhou) Co., Ltd. (“BMS”)	Investee Company Name	BMC	SMS

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Accumulated Inward Remittance of Earnings as of December 31, 2018	Accumulated Inward Remittance of Earnings as of December 31, 2018	- - -	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between BMTC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between BMTC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between BMTC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012
Carrying Value as of December 31, 2018		9,509 (Note 3) 3,307 (Note 3) 28,064
	Investment Income (Loss)	247 (9) (984)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 40.00% 100.00%
	Shares	(Note 4) (Note 4) (Note 4)
% of Ownership of Direct or Indirect Investment		40.00% 100.00% 100.00%
Net	Income (Loss) of Investee	(2,460) (9) 247	Upper Limit on Investment	622,045	111,012
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	30,715 ( USD 1,000) 6,450 ( USD 210) 35,766 (CNY 8,000)
Investment Flows	Inflow	- - -
	Outflow	17,883 (CNY 4,000) - -	Investment Amounts Authorized by Investment Commission, MOEA	86,831 (USD 2,827)	6,450 (USD 210)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	30,715 ( USD 1,000) 6,450 ( USD 210) 17,883 (CNY 4,000)
	Method of Investment	(Note 2) (Note 2) (Note 1)
	Total Amount of Paid-in Capital	30,715 ( USD 1,000) 6,450 ( USD 210) 89,418 (CNY 20,000)	Accumulated Investment in Mainland China as of December 31, 2018	66,481 (USD 1,000 and CNY 8,000)	6,450 (USD 210)
	Main Businesses and Products	Sales of medical consumables and equipment Sales of medical consumables and equipment Agency of international and entrepot trade business
	Investee Company Name	TDX Medical Technology (Jiangsu) Co., Ltd. LILY Medical (Suzhou) Co., Ltd. (ALS) BenQ Medical Technology (Shanghai) Ltd. (“BMTS”)	Investee Company Name	BMTC	LILY

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - -	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between PTT and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between PTT and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN	Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name 3. Significant transactions with investee companies in Mainland China: The transactions between PTT and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN
Carrying Value as of	December 31, 2018 (Note 4)	134,208 812 -
	Investment Income (Loss)	(10,139) (Note 2) 2,337 (Note 2) -
Maximum percentage of ownership during 2018	Percentage of Ownership	- - -
	Shares	- - -
% of Ownership of Direct or Indirect Investment		100.00% - 100.00%
Net	Income (Loss) of Investee	2,337 - (10,139)	Upper Limit on Investment	579,768	18,510
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	153,575 ( USD 5,000) 1,106 ( USD 36) -
Investment Flows	Inflow	30,715 (USD 1,000) - -
	Outflow	- - -	Investment Amounts Authorized by Investment Commission, MOEA	212,118 (USD 6,906)	1,106 (USD 36)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	153,575 ( USD 5,000) 30,715 (USD 1,000) 1,106 ( USD 36)
	Method of Investment	(Note 1) (Note 1) (Note 1)
	Total Amount of Paid-in Capital	153,575 ( USD 5,000) 1,106 ( USD 36) -	Accumulated Investment in Mainland China as of December 31, 2018	153,575 (USD 5,000)	1,106 (USD 36)
	Main Businesses and Products	Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products
	Investee Company Name	Xiamen Xinchuan Software Technology Co., Ltd. (“PTTNC”) Partner Trading (Shanghai) Co., Ltd.(“PTCS”) Partner Tech (Shanghai) Co., Ltd. (“PTCM”)	Investee Company Name	PTT	PTTN

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	33,306 -	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 3) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DFI. (Note 4) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715. (Note 5) The reinvestments and authorized amount of DFI's subsidiaries is excluded from DFI's accumulated investment amounts and the investment amounts authorized by Investment Commission, MOEA. (Note 6) Pursuant to “Principle of Investment or Technical Cooperation in Mainland China”, investment amounts in Mainland China shall not exceed the 60% net worth of DFI. (Note 7) (Note 8) The earnings that has been remitted to DFI by DYTI was approved by the Investment Commission of the MOEA in February 2017 and had been deducted in the investment amount. The transactions between DFI and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. 3. Significant transactions with investee companies in Mainland China: - (Note 5) 64,041(USD 2,085) (Notes 4�7 and 8) 1,930,073 (Note 6) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment The investment amount of Dongguan Ri Tong Trading Co., Ltd. that has been liquidated was approved by Investment Commission, MOEA in August 2014 and had been deducted in the investment amount.	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 3) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DFI. (Note 4) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715. (Note 5) The reinvestments and authorized amount of DFI's subsidiaries is excluded from DFI's accumulated investment amounts and the investment amounts authorized by Investment Commission, MOEA. (Note 6) Pursuant to “Principle of Investment or Technical Cooperation in Mainland China”, investment amounts in Mainland China shall not exceed the 60% net worth of DFI. (Note 7) (Note 8) The earnings that has been remitted to DFI by DYTI was approved by the Investment Commission of the MOEA in February 2017 and had been deducted in the investment amount. The transactions between DFI and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. 3. Significant transactions with investee companies in Mainland China: - (Note 5) 64,041(USD 2,085) (Notes 4�7 and 8) 1,930,073 (Note 6) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment The investment amount of Dongguan Ri Tong Trading Co., Ltd. that has been liquidated was approved by Investment Commission, MOEA in August 2014 and had been deducted in the investment amount.
Carrying Value as of	December 31, 2018 (Note 2)	56,985 13,608
Investment	Income (Loss) (Note 3)	518 (731)
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00% 100.00%
	Shares	- -
% of Ownership of Direct or Indirect Investment		100.00% 100.00%
Net	Income (Loss) of Investee	(731) 518
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	- -	Upper Limit on Investment	1,930,073 (Note 6)
Investment Flows	Inflow	- -
	Outflow	- -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	- -	Investment Amounts Authorized by Investment Commission, MOEA	64,041(USD 2,085) (Notes 4�7 and 8)
	Method of Investment	(Note 1) (Note 1)
	Total Amount of Paid-in Capital	76,788 15,358
	Main Businesses and Products	Wholesale, import and export of industrial motherboards and component Manufacture and sales of industrial motherboards and component	Accumulated Investment in Mainland China as of December 31, 2018	- (Note 5)
	Investee Company Name	Yan Ying Hao Trading (ShenZhen) Co., Ltd(“DYTH”) Yan Tong Infotech (Dongguan) Co., Ltd (“DYTI”)

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	-	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 3) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DIC. (Note 4) Investment amounts in Mainland China shall not exceed the 60% net worth of DIC according to MOEA letter No. 09704604680. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 3. Significant transactions with investee companies in Mainland China: The transactions between DIC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. USD 15,654 USD 16,952 551,317 (Note 4)	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) The above amounts have been eliminated when preparing the consolidated financial statements. (Note 3) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DIC. (Note 4) Investment amounts in Mainland China shall not exceed the 60% net worth of DIC according to MOEA letter No. 09704604680. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 3. Significant transactions with investee companies in Mainland China: The transactions between DIC and its investee companies in Mainland China have been eliminated when preparing the consolidated financial statements. Please refer to section “Information on Significant Transactions” and “Business relationships and significant intercompany transactions” for detail description. USD 15,654 USD 16,952 551,317 (Note 4)
Carrying Value as of	December 31, 2018 (Note 2)	181,420
Investment	Income (Loss) (Note 3)	37,907
Maximum percentage of ownership during 2018	Percentage of Ownership	100.00%
	Shares	-
% of Ownership of Direct or Indirect Investment		100.00%
Net	Income (Loss) of Investee	37,907 (CNY8,341)
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	511,884 (USD15,654)	Upper Limit on Investment	551,317 (Note 4)
Investment Flows	Inflow	-
	Outflow	-
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	511,884 (USD15,654)	Investment Amounts Authorized by Investment Commission, MOEA	USD 16,952
	Method of Investment	(Note 1)
	Total Amount of Paid-in Capital	534,081 (USD16,300)
	Main Businesses and Products	Manufacture and sales of LCD	Accumulated Investment in Mainland China as of December 31, 2018	USD 15,654
	Investee Company Name	Data Image (Suzhou) Corporation

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Stock Code:2352

QISDA CORPORATION

Parent-Company-Only Financial Statements With Independent Auditors’ Report For the Years Ended December 31, 2018 and 2017

Address: No. 157, Shan-Ying road, Gueishan, Taoyuan, Taiwan Telephone: 886-3-359-8800

The independent auditors’ report and the accompanying parent-company-only 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 independent auditors’ report and parent-company-only financial statements, the Chinese version shall prevail.

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Independent Auditors’ Report

The Board of Directors of Qisda Corporation:

Opinion

We have audited the parent-company-only financial statements of Qisda Corporation (the “Company”), which comprise the parent-company-only balance sheets as of December 31, 2018 and 2017, and the parent-companyonly statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent-company-only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the paragraph on Other Matter of our report), the accompanying parent-company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the paragraph on the Auditors’ Responsibilities for the Audit of the Parent-Company-Only Financial Statements of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent-company-only financial statements of the current period. These matters were addressed in the context of our audit of the parent-company-only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent-company-only financial statements for the year ended December 31, 2018 are stated as follows:

Revenue recognition

Please refer to notes 4(o) and 6(s) for the accounting policy on revenue recognition and “Revenue” for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

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Description of key audit matter:

The Company recognizes its revenue depending on the various trade terms in each individual sale transaction and service rendered, which are considered to be complex in determining the timing of revenue recognition. Therefore, revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matters above, our principal audit procedures included testing the design and operating effectiveness of the Company’s internal controls over financial reporting in the sales and collection cycle; assessing whether revenue is recognized based on the trade terms with customers through reviewing the related sales contracts or other trade documents; performing a sample test on the sales transactions that took place before and after the balance sheet date to determine whether the performance obligation has been satisfied by transferring control over the goods or services to a customer, and assessing the reasonableness of the timing of revenue recognition; reviewing and understanding the reasonableness for any identified significant sales returns and allowances that took place after the balance sheet date, as well as assessing whether the revenue and related sales returns and allowances is recognized in appropriate period.

2. Valuation of inventories

Please refer to notes 4(g), 5 and 6(g) for the inventory accounting policy, “Critical accounting judgments and key sources of estimation uncertainty” for estimation uncertainty of inventory valuation, and “Inventories” for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

Description of key audit matter:

Inventories are measured at the lower of cost and net realizable value. Due to the rapid technological innovations and highly competitive environments in the electronic industry, the life cycle of certain products of the Company are short and their market prices fluctuate rapidly, which could possibly result in a price decline and obsolescence of inventory, wherein the inventory cost may exceed its net realizable value. Therefore, the valuation of inventories has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included reviewing the inventory of aging report and analyzing the fluctuation of inventory aging; selecting samples to verify the accuracy of the net realizable value of inventories and inventory aging report prepared by the Company; evaluating whether valuation of inventories was accounted for in accordance with the Company’ s accounting policies; and assessing the historical reasonableness of management’s estimates on inventory provisions.

3. Assessment of impairment of goodwill from investments in subsidiaries

Please refer to notes 4(m), 5 and 6(h) for the accounting policy on impairment of non-financial assets, “Critical accounting judgments and key sources of estimation uncertainty”, for the estimation uncertainty of impairment of goodwill, and “ Investments accounted for using equity method,” and for the related disclosures, respectively, of the notes to the parent-company-only financial statements.

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Description of key audit matter:

Goodwill arising from acquisition of subsidiaries, which are included in the carrying amount of investments accounted for using equity method. Goodwill are annually subject to impairment test or when there are indications that goodwill may have been impaired. The assessment of the recoverable amount of goodwill involves management’s judgment and estimation. Accordingly, the assessment of impairment of goodwill has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included obtaining the assessment of goodwill impairment provided by the management; assessing the appropriateness of the valuation model and key assumptions, including the discount rate, expected growth rate and future cash flow projections, used by the management in measuring the recoverable amount; performing a sensitivity analysis of key assumptions and results; and assessing the adequacy of the Company’s disclosures with respect to the related information.

Other Matter

We did not audit the financial statements of certain investees accounted for using equity method of the Company. Those financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those investees, is based solely on the report of other auditors. Those investments accounted for using equity method amounted to NT$4,396,476 thousand, constituting 5.41% of the total assets as of December 31, 2018, and the related shares of profit of subsidiaries, associates and joint ventures amounted to NT$251,381 thousand, constituting 5.84% of the total income before income tax for the year ended December 31, 2018.

Responsibilities of Management and Those Charged with Governance for the Parent-Company-Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent-company-only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parentcompany-only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent-company-only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent-Company-Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent-company-only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent-company-only financial statements.

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Identify and assess the risks of material misstatement of the parent-company-only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent-company-only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent-company-only financial statements, including the disclosures, and whether the parent-company-only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the investees accounted for using equity method to express an opinion on the parent-company-only financial statements. We are responsible for the direction, supervision and performance of the audit. We remained solely responsible for our audit opinion.

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From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the parent-company-only financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We described these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Tzu-Chieh Tang and Wei-Ming Shih.

KPMG

Taipei, Taiwan (Republic of China) March 21, 2019

Notes to Readers

The accompanying parent-company-only financial statements are intended only to present the financial position, financial performance and 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 audit such parent-company-only financial statements are those generally accepted and applied in the Republic of China.

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					December 31, 2017	Amount %		5,827,600 8		14,850 -	- -	2,094,550 3	24,616,014 32	3,094,992 4	7,076 -	1,500,000 2	22,947 -	341,619 -	37,519,648 49			7,262,800 10	94,515 -	3,088 -	325,438 -	7,685,841 10	45,205,489 59		19,667,820 26	2,173,633 3	9,501,437 12	(383,980) -	30,958,910 41	76,164,399 100
					December 31, 2018	Amount %		$ 5,150,000 7		2,388 -	384,821 1	2,081,679 3	24,522,696 30	1,862,729 2	6,738 -	1,900,000 2	20,445 -	1,098,814 1	37,030,310 46			11,371,325 14	85,381 -	2,479 -	346,464 -	11,805,649 14	48,835,959 60		19,667,820 24	2,146,076 3	10,801,845 13	(168,422) -	32,447,319 40	$ 81,283,278 100
(English Translation of Financial Statements Originally Issued in Chinese)	QISDA CORPORATION	Parent-Company-Only Balance Sheets	December 31, 2018 and 2017	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2018 December 31, 2017	Amount % Amount % Liabilities and Equity	Current liabilities:	$ 1,127,971 1 1,794,339 2 2100 Short-term borrowings (notes 6(k) and (w))	2120 Financial liabilities at fair value through profit or loss－current (notes 6(b)	13,749 - 1,824 - and (w))	10,198,272 13 11,292,878 15 2130 Contract liabilities－current (note 6(s))	2170 Notes and accounts payable (note 6(w))	16,720,699 21 14,240,434 19 2180 Accounts payable to related parties (notes 6(w) and 7)	226,656 - 313 - 2200 Other payables (notes 6(u) and (w))	- - 1,180 - 2220 Other payables to related parties (notes 6(w) and 7)	4,283,816 5 3,381,551 4 2322 Current portion of long-term debt (notes 6(l) and (w) and 8)	99,927 - 64,371 - 2250 Provisions－current (note 6(m))	32,671,090 40 30,776,890 40 2300 Other current liabilities	Total current liabilities	33,750 - - - Non-current liabilities:		- - 35,000 - 2540 Long-term debt (notes 6(l) and (w) and 8)	46,312,026 57 42,957,769 57 2550 Provisions－non-current (note 6(m))	1,481,977 2 1,493,157 2 2570 Deferred income tax liabilities (note 6(p))	6,595 - 7,931 - 2600 Other non-current liabilities (notes 6(o) and (w))	706,171 1 830,116 1 Total non-current liabilities	29,591 - 26,572 - Total liabilities	42,078 - 36,964 - Equity(notes 6(q)):	48,612,188 60 45,387,509 60 3110 Common stock	3200 Capital surplus	3300 Retained earnings	3400 Other equity	Total equity	$ 81,283,278 100 76,164,399 100 Total liabilities and equity
						Assets	Current assets:	Cash and cash equivalents (notes 6(a) and (w)	Financial assets at fair value through profit or loss－current (notes 6(b) and	(w))	Notes and accounts receivable, net (notes 6(e), (s) and (w))	Notes and accounts receivable from related parties (notes 6(e), (s) and (w)	and 7)	Other receivables (notes 6(e), (f) and (w))	Other receivables from related parties (notes 6(f) and (w) and 7)	Inventories (note 6(g))	Other current assets	Total current assets	Non-current assets:	Financial assets at fair value through other comprehensive income—non-	current (notes 6(c) and (w))	Available-for-sale financial assets－non-current (notes 6(d) and (w))	Investments accounted for using equity method (notes 6(h) and 8)	Property, plant and equipment (notes 6(i) and 8)	Intangible assets (note 6(j))	Deferred income tax assets (note 6(p))	Other non-current assets	Other financial assets－non-current (note 6(w))	Total non-current assets					Total assets
								1100	1110		1170	1181		1200	1210	130X	1470			1520		1523	1550	1600	1780	1840	1990	1980

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(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

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

4000 Operating revenues (notes 6(s) and (t) and 7) 5000 Operating costs (notes 6(g), (i), (j), (m), (n), (o) and (u) and 7 and 12) Gross profit 5910 Unrealized (realized) profit on sales to subsidiaries, associates and joint ventures Realized gross profit Operating expenses (notes 6(e), (i), (j), (n), (o) and (u) and 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss Total operating expenses Operating income Non-operating income and loss: 7010 Other income (notes 6(n) and (v) and 7) 7020 Other gains and losses－net (notes 6(d), (h), (v) and (x)) 7050 Finance costs (note 6(v)) 7375 Share of profit of subsidiaries, associates and joint ventures (note 6(h)) Total non-operating income and loss Income before income tax 7950 Income tax expense (note 6(p)) Net income Other comprehensive income: 8310 Items that will not be reclassified subsequently to profit or loss 8311 Remeasurements of defined benefit plans (notes 6(o) and (q)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income(note (q)) 8320 Share of other comprehensive income of subsidiaries, associates and joint ventures (notes 6(q)) 8349 Less: income tax related to items that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations (note 6(q)) 8362 Change in fair value of available-for-sale financial assets (note 6(q)) 8370 Share of other comprehensive income of subsidiaries, associates and joint ventures (note 6(q)) 8399 Less: income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income for the year, net of income tax Total comprehensive income for the year Earnings per share (in New Taiwan dollars) (note 6(r)): 9750 Basic earnings per share 9850 Diluted earnings per share	2018 Amount % $ 99,033,057 100 (94,213,796) (95) 4,819,261 5 (71,557) - 4,747,704 5 (1,022,710) (1) (513,183) (1) (2,045,683) (2) (22,897) - (3,604,473) (4) 1,143,231 1 31,847 - 43,850 - (362,611) - 3,448,279 3 3,161,365 3 4,304,596 4 (269,532) - 4,035,064 4 (39,077) - (1,250) - 7,079 - - - (33,248) - 248,819 - - - - - - - 248,819 - 215,571 - $ 4,250,635 4 $ 2.05 $ 2.03	2017 Amount % 88,869,603 100 (85,094,519) (96) 3,775,084 4 78,512 - 3,853,596 4 (967,745) (1) (564,890) (1) (2,151,889) (2) - - (3,684,524) (4) 169,072 - 71,547 - 407,644 - (234,791) - 5,111,045 6 5,355,445 6 5,524,517 6 (233,130) - 5,291,387 6 7,013 - - - (9,150) - - - (2,137) - (1,139,104) (1) (61,062) - (40,369) - - - (1,240,535) (1) (1,242,672) (1) 4,048,715 5 2.69 2.66

See accompanying notes to arent-company-only financial statements.

236 -

									Total equity	29,510,046	5,291,387	(1,242,672)	4,048,715		-	(2,596,152)		(993)			(2,706)	30,958,910	(79,513)	30,879,397	4,035,064	215,571	4,250,635		-	-	(2,655,156)		15,073			(42,630)	32,447,319
								Total other	equity interest	858,692	-	(1,242,672)	(1,242,672)		-	-		-			-	(383,980)	(13)	(383,993)	-	215,571	215,571		-	-	-		-			-	(168,422)
Total other equity interest	Unrealized	gains	(losses) from	financial assets Unrealized	measured at gains (losses)	fair value on available-	through other for-sale Remeasurements	comprehensive financial of defined benefit	income assets plans	- 131,797 (291,719)	- - -	- (101,431) (2,137)	- (101,431) (2,137)		- - -	- - -		- - -			- - -	- 30,366 (293,856)	30,353 (30,366) -	30,353 - (293,856)	- - -	16,637 - (49,885)	16,637 - (49,885)		- - -	- - -	- - -		- - -			- - -	46,990 - (343,741)
						Foreign	currency	translation	differences	1,018,614	-	(1,139,104)	(1,139,104)		-	-		-			-	(120,490)	-	(120,490)	-	248,819	248,819		-	-	-		-			-	128,329
								Total retained	earnings	6,806,202	5,291,387	-	5,291,387		-	(2,596,152)		-			-	9,501,437	(79,500)	9,421,937	4,035,064	-	4,035,064		-	-	(2,655,156)		-			-	10,801,845
Retained earnings								Special Unappropriated	reserve earnings	- 6,346,595	- 5,291,387	- -	- 5,291,387		- (434,227)	- (2,596,152)		- -			- -	- 8,607,603	- (79,500)	- 8,528,103	- 4,035,064	- -	- 4,035,064		- (529,139)	383,979 (383,979)	- (2,655,156)		- -			- -	383,979 8,994,893
								Legal	reserve	459,607	-	-	-		434,227	-		-			-	893,834	-	893,834	-	-	-		529,139	-	-		-			-	1,422,973
								Capital	surplus	2,177,332	-	-	-		-	-		(993)			(2,706)	2,173,633	-	2,173,633	-	-	-		-	-	-		15,073			(42,630)	2,146,076
								Common	stock	19,667,820	-	-	-		-	-		-			-	19,667,820	-	19,667,820	-	-	-		-	-	-		-			-	19,667,820
										$																											$
										Balance at January 1, 2017	Net income in 2017	Other comprehensive income in 2017	Total comprehensive income in 2017	Appropriation of earnings:	Legal reserve	Cash dividends distributed to shareholders	Changes in equity of subsidiaries, associates and joint	ventures accounted for using equity method	Difference between consideration and carrying amount	arising from acquisition or disposal of shares in	subsidiaries	Balance at December 31, 2017	Effects of retrospective application	Restated balance at January 1, 2018	Net income in 2018	Other comprehensive income in 2018	Total comprehensive income in 2018	Appropriation of earnings:	Legal reserve	Special reserve	Cash dividends distributed to shareholders	Changes in equity of subsidiaries, associates and joint	ventures accounted for using equity method	Difference between consideration and carrying amount	arising from acquisition or disposal of shares in	subsidiaries	Balance at December 31, 2018

237 -

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows

For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

		2018	2017
Cash flows from operating activities:
Income before income tax	$	4,304,596	5,524,517
Adjustments for:
Adjustments to reconcile profit or loss:
Depreciation		77,951	76,568
Amortization		4,839	6,520
Expected credit loss / (Reversal of) bad debt expense		22,897	(776)
Interest expense		362,611	234,791
Interest income		(17,192)	(8,891)
Dividend income		(1,250)	(47,298)
Share of profits of subsidiaries, associates and joint ventures		(3,448,279)	(5,111,045)
Loss (gain) on disposal of property, plant and equipment		621	(1,580)
Gain on disposal of investments		-	(320,046)
Unrealized (realized) profit on sales to subsidiaries, associates and
joint ventures		71,557	(78,512)
Total adjustments to reconcile profit		(2,926,245)	(5,250,269)
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in financial assets at fair value through profit or loss		(11,925)	87,286
Decrease (increase) in notes and accounts receivable		1,030,601	(109,594)
Increase in notes and accounts receivable from related parties		(2,480,265)	(1,441,363)
Decrease (increase) in other receivable		(226,483)	780
Decrease (increase) in other receivable from related parties		1,180	(213)
Increase in inventories		(902,265)	(794,464)
Decrease (increase) in other current assets		(35,556)	19,851
Increase in other non-current assets		(10,227)	(10,802)
Net changes in operating assets		(2,634,940)	(2,248,519)
Changes in operating liabilities:
Increase (decrease) in financial liabilities at fair value through profit or
loss		(12,462)	14,850
Decrease in notes and accounts payable		(12,871)	(1,031,348)
Increase (decrease) in accounts payable to related parties		(93,318)	48,433
Increase (decrease) in other payable to related parties		(338)	2,037
Decrease in provisions		(11,636)	(35,718)
Increase in contract liabilities		74,975	-
Increase (decrease) in other current liabilities		(228,783)	295,390
Decrease in other non-current liabilities		(18,049)	(1,925)
Total changes in operating liabilities		(302,482)	(708,281)
Total changes in operating assets and liabilities		(2,937,422)	(2,956,800)
Total adjustments		(5,863,667)	(8,207,069)
Cash used in operations		(1,559,071)	(2,682,552)
Interest received		17,332	8,751
Dividends received		2,650,125	1,501,804
Interest paid		(345,460)	(217,126)
Income taxes paid		(92,578)	(61,416)
Net cash provided by (used in) operating activities		670,348	(1,450,539)

See accompanying notes to parent-company-only financial statements. - 238 -

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Parent-Company-Only Statements of Cash Flows (Continued)

For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities:
Proceeds from disposal of available-for-sale financial assets
Purchase of investments accounted for using equity method
Proceeds from investees' capital reduction
Additions to property, plant and equipment
Proceeds from disposal of property, plant and equipment
Additions to intangible assets
Increase in other financial assets
Net cash flows used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Increase in long-term debt
Repayments of long-term debt
Cash dividends distributed to shareholders
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

See accompanying notes to parent-company-only financial statements. - 239 -

(English Translation of Financial Statements Originally Issued in Chinese) QISDA CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2018 and 2017

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

1. Organization and business

2. Authorization of the parent-company-only financial statements:

These parent-company-only financial statements were authorized for issuance by the Board of Directors on March 21, 2019.

3. Application of New and Revised Accounting Standards and Interpretations

(a) Impact of adoption of new, revised or amended standards and interpretations endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”).

In preparing the accompanying parent-company-only financial statements, the Company has adopted the following International Financial Reporting Standards (“ IFRS” ), International Accounting Standards (“ IAS” ), and Interpretations that have been issued by the International Accounting Standards Board (“IASB”) (collectively, “IFRSs”) and endorsed by the FSC, with effective date from January 1, 2018.

from January 1, 2018.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendment to IFRS 2_Classification and Measurement of Share-based Payment_	January 1, 2018
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
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

(Continued)

240 -

QISDA CORPORATION Notes to the Financial Statements

Except for the following items, the initial application of the above IFRSs did not have any material impact on the parent-company-only financial statements.

(i) IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a five-step model framework to determine the method, timing and amount of revenue recognized. This Standard replaces the existing revenue recognition guidance, including IAS 18 Revenue , IAS 11 Construction Contracts and the related interpretations. The Company applies this standard retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application. The Company elected not to restate the comparative information for the prior reporting period; but instead, continues to apply IAS 11, IAS 18, and the related Interpretations, for comparative reporting period. The Company recognizes the cumulative effect upon the initial application of this Standard as an adjustment to the opening balance of its retained earnings on January 1, 2018.

The Company uses the practical expedients for completed contracts, meaning, it need not restate those contracts that have been completed on January 1, 2018.

The following are the nature and impacts of the changes in accounting policies:

1) Sales of goods

Under IAS 18, revenue for the sale of goods is recognized when the related significant risks and rewards of ownership of the goods have been transferred to the customers, the revenue and the cost incurred, or to be incurred, can be measured reliably, the economic benefits of the transaction will probably flow to the Company, and there is neither continuing managerial involvement to the degree usually associated with ownership nor effect control over the goods sold. Under IFRS 15, revenue is recognized when a customer obtains control of the goods.

2) Rending of services

Under IAS 18, the Company’s revenue from product design and development services rendered was recognized by reference to the stage of completion at the reporting date. Under IFRS 15, The Company’ s revenue is recognized when medical services are provided to the customers and the performance obligation is satisfied.

(Continued)

241 -

QISDA CORPORATION Notes to the Financial Statements

3) Impacts on the financial statements

The following tables summarize the impacts of adopting IFRS 15 on the Company’ s parent-company-only financial statements.

Impacted line items on the balance sheet Other payable (Note 2) Other current liabilities (Note 1 and 2) Contract liabilities—current (Note 1) Impact on liabilities	December 31, 2018	December 31, 2018	January 1, 2018 Balances prior to the adoption of IFRS 15 Impact of changes in accounting policies Balance upon adoption of IFRS 15 3,094,992 (980,181) 2,114,811 341,619 670,335 1,011,954 - 309,846 309,846 -
	Balances prior to the adoption of IFRS 15 Impact of changes in accounting policies $ 2,917,448 (1,054,719) 428,916 669,898 - 384,821 $ -	Balance upon adoption of IFRS 15	Balances prior to the adoption of IFRS 15 3,094,992 341,619 -
		1,862,729 1,098,814 384,821

Note 1: For certain contracts, the Company has received a part of the considerations but does not satisfy its obligations. Under IFRS 15, contract liabilities are recognized for such situation, different from deferred revenues under other current liabilities prior to the adoption of IFRS 15.
Note 2: Prior to the adoption of IFRS 15, rebate payables were recognized as other payables. Under IFRS 15, rebate payables are recognized as refund liabilities under other current liabilities.

Impacted line items on the statement of cash flows Cash flows from operating activities: Income before income tax Adjustments: Increase in contract liabilities Increase in other payables and other current liabilities Impact on net cash flows provided by (used in) operating activities	For the year ended December 31, 2018 Balance prior to the adoption of IFRS 15 Impact of changes in accounting polices Balance upon adoption of IFRS 15 $ 4,304,596 - 4,304,596 - 74,975 74,975 (153,808) (74,975) (228,783) $ -

(ii) 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.

(Continued)

242 -

QISDA CORPORATION Notes to the Financial Statements

As a result of the adoption of IFRS 9, the Company adopted the consequential amendments to IAS 1 Presentation of Financial Statements which requires impairment of financial assets to be presented in a separate line item in the statements of comprehensive income. Previously, the Company’s approach was to include the impairment of accounts receivable in selling expenses. Additionally, the Company adopted the consequential amendments to IFRS 7 Financial Instruments: “Disclosures” that are applied to disclosures about 2018 but generally have not been applied to comparative information.

The detail of new significant accounting policies and the nature and effect of the changes to IFRS 9 are as follows:

1) Classification of financial assets and financial liabilities

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 classification of financial assets under IFRS 9 is generally based on the business model in which financial assets are managed and their contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables, and available-for-sale. Please refer to note 4(f) for an explanation of how the Company classifies and measures its financial assets and accounts for related gains and losses under IFRS 9.

The adoption of IFRS 9 did not have any significant impact on the Company’ s accounting policies on financial liabilities.

2) Impairment of financial assets

3) Transition

The adoption of IFRS 9 have generally been applied retrospectively, except as described below:

The differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9 are recognized in retained earnings and other equity on January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9, and therefore, is not comparable to the information presented for 2018 under IFRS 9.
The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application.

(Continued)

243 -

QISDA CORPORATION Notes to the Financial Statements

－ The determination of the business model within which a financial asset is held.
－ The designation and revocation of financial assets and financial liabilities previously designated as measured at FVTPL.
－ The designation of investments in equity instruments not held-for-trading as measured at FVOCI.
4) Classification of financial assets on the date of initial application of IFRS 9

The following table shows the measurement categories and carrying amounts under IAS 39 and IFRS 9 for each class of the Company’s financial assets as of January 1, 2018. There were no changes in the categories and carrying amounts of financial liabilities.

Financial Assets Cash and cash equivalents Derivative instruments Equity instruments Notes and accounts receivable and other receivables (including related parties) Other financial assets	IAS39		IFRS9
	Measurement categories Loans and receivables (Note 1) Held-for-trading Available-for-sale financial assets (Note 2) Loans and receivables (Note 1) Loans and receivables (Note1)	Carrying Amount	Measurement categories Carrying Amount Amortized cost 1,794,339 Mandatorily at FVTPL 1,824 FVOCI 35,000 Amortized cost 25,493,699 Amortized cost 36,964
		$ 1,794,339 1,824 35,000 25,534,805 36,964

Note1: Cash and cash equivalents, notes and accounts receivable, other receivables and other financial assets, that were previously classified as loans and receivables under IAS 39 are now classified as financial assets measured at amortized cost. In addition, an allowance for impairment of accounts receivable of $41,106 thousand was recognized in retained earnings on January 1, 2018 upon the initial application of IFRS 9.
Note2: These equity instruments represent investments that the Company intends to hold for long-term strategic purposes. As permitted by IFRS 9, the Company has designated these investments at the date of initial application as measured at FVOCI.

(Continued)

244 -

QISDA CORPORATION Notes to the Financial Statements

The following table reconciles the carrying amounts of financial assets under IAS 39 to the carrying amounts under IFRS 9 upon transition to IFRS 9 on January 1, 2018.

Financial assets at fair value through other comprehensive income: Beginning balance of available-for-sale (IAS 39) From available-for-sale to FVOCI Total Financial assets measured at amortized cost: Beginning balance of cash and cash equivalents, notes and accounts receivable, other receivables and other financial assets (IAS 39) Adjustments for allowance of impairment Total Investments accounted for using equity method (Note 1)	IAS 39 Carrying Amount as of December 31, 2017 $ 35,000 - $ 35,000 $ 27,366,108 - $ 27,366,108 $ 42,957,769	Reclassifications (35,000) 35,000 - - - - -	Remeasurements - - - - (41,106) (41,106) (38,407)	IFRS 9 Carrying Amount as of January 1, 2018 - - 35,000 - - 27,325,002 42,919,362	Retained earnings effect on January 1, 2018 Other equity effect on January 1, 2018 - - - - - - - - (41,106) - (41,106) - (38,394) (13

Note 1: There is a decrease of $38,407 thousand in investments accounted for using equity method, decrease of $38,394 thousand in retained earnings, and decrease of $13 thousand in other equity— unrealized gains (losses) on financial assets at fair value through other comprehensive income on January 1, 2018 upon the initial application of IFRS 9.

There were no material impacts on the Company’s basic and diluted earnings per share for the year ended December 31, 2018.

(iii) Amendments to IAS 7 Disclosure Initiative

To satisfy the new disclosure requirements, the Company presents a reconciliation between the beginning and ending balances for liabilities with changes arising from financing activities in note 6(z).

(b) Impact of IFRSs endorsed by the FSC but not yet in effect

below:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16_Leases_	January 1, 2019
IFRIC 23_Uncertainty over Income Tax Treatments_	January 1, 2019
Amendments to IFRS 9_Prepayment features with negative compensation_	January 1, 2019
Amendments to IAS 19_Plan Amendment, Curtailment or Settlement_	January 1, 2019
Amendments to IAS 28_Long-term interests in associates and joint ventures_	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

(Continued)

245 -

QISDA CORPORATION Notes to the Financial Statements

Except for the items discussed below, the Company believes that the initial adoption of the above IFRSs would not have any material impact on its parent-company-only financial statements.

(i) IFRS 16 Leases

1) Determining whether an arrangement contains a lease

On transition to IFRS 16, the Company can choose to apply either of the following:

‧IFRS 16 definition of lease to all its contracts; or
‧ A practical expedient that does not need any reassessment whether a contract is, or contains, a lease.

The Company plans to apply the practical expedient to grandfather the definition of lease upon transition. This means that the Company will apply IFRS 16 to all contracts entered into before January 1, 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.

2) Transition

As a lessee, the Company can apply the standard using either of the following:

‧retrospective approach; or
‧modified retrospective approach with optional practical expedients.

The Company plans to initially apply IFRS 16 using the modified retrospective approach. Therefore, the cumulative effect of adopting IFRS 16 will be recognized as an adjustment in the opening balance of retained earnings at January 1, 2019, with no restatement of comparative information.

(Continued)

246 -

QISDA CORPORATION Notes to the Financial Statements

When applying the modified retrospective approach to leases previously classified as operating leases under IAS 17, the lessee can elect, on a lease-by-lease basis, whether to apply a number of practical expedients on transition. The Company chooses to elect the following practical expedients:

‧ apply a single discount rate to a portfolio of leases with similar characteristics;
‧ exclude the initial direct costs from measuring the right-of-use assets at the date of initial application; and
3) So far, the most significant impact identified is that the Company will have to recognize the right-of-use assets and lease liabilities for the operating leases of its offices and warehouses. The Company estimated its right-of-use assets and lease liabilities to increase by $1,058,558 thousand and $1,102,663 thousand, respectively, as well as the investments accounted for using equity method, rental payables, and retained earnings to decrease by $23,310 thousand, $22,335 thousand, and $45,080 thousand, respectively, on January 1, 2019.

However, the actual impacts of adopting the amended standards and new interpretations may change depending on the economic conditions and events which may occur in the future.

A summary of new and amended standards issued by the IASB but not yet endorsed by the FSC is set out below:

Effective date New, Revised or Amended Standards and Interpretations per IASB Amendments to IFRS 3 Definition of a Business January 1, 2020 Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets Between an Effective date to Investor and Its Associate or Joint Venture be determined by IASB IFRS 17 Insurance Contracts January 1, 2021 Amendments to IAS 1 and IAS 8 Definition of Material January 1, 2020

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

Issuance / Release
Dates
October 31, 2018

(Continued)

247 -

QISDA CORPORATION Notes to the Financial Statements

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

4. Summary of significant accounting policies:

The significant accounting policies presented in the financial statements are summarized as follows. Except for those specifically indicated, the following accounting policies were applied consistently to all periods presented in these financial statements.

(a) Statement of compliance

The Company’ s accompanying parent-company-only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”).

(b) Basis of preparation
(i) Basis of measurement

The accompanying parent-company-only financial statements have been prepared on a historical cost basis except for the following items in the balance sheets:

1) Financial instruments measured at fair value through profit or loss (including derivative financial instruments);
2) Financial assets measured at fair value through other comprehensive income (Availablefor-sale financial assets measured at fair value); and
3) The defined benefit liabilities (assets) are recognized as the present value of the defined benefit obligation less the fair value of the plan assets and the effect of the asset ceiling mentioned in note 4(p).

(ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The Company’s parent-company-only financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. Except when otherwise indicated, all financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(c) Foreign currency

(i) Foreign currency transactions

(Continued)

248 -

QISDA CORPORATION Notes to the Financial Statements

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising from acquisition, are translated into the presentation currency of the Company’s parentcompany-only financial statements at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency of the Company’s financial statements at the average exchange rates for the period. All resulting exchange differences are recognized in other comprehensive income.

On the disposal of a foreign operation which involves a loss of control over a subsidiary or loss of significant influence over an associate that includes a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the shareholders of the Company are entirely reclassified to profit or loss. In the case of a partial disposal that does not result in the Company losing control over a subsidiary, the proportionate share of accumulated exchange differences is reclassified to non-controlling interests. For a partial disposal of the Company’ s ownership interest in an associate or joint venture, the proportionate share of the accumulated exchange differences in equity is reclassified to profit or loss.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current when one of following criteria is met; all other assets are classified as non-current assets.

(i) It is expected to be realized, or sold or consumed in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when one of following criteria is met; all other liabilities are classified as non-current liabilities:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;

(Continued)

249 -

QISDA CORPORATION Notes to the Financial Statements

(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(e) Cash and cash equivalents

Bank overdrafts that are repayable on demand and form an integral part of the Company’ s cash management are included as a component of cash and cash equivalents.

(f) Financial instruments

(i) Financial assets (applicable commencing January 1, 2018)

The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

1) Financial assets measured at amortized cost

A financial asset is not designated as at FVTPL and is measured at amortized cost if it meets both of the following conditions:

it is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method, less, any impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(Continued)

250 -

QISDA CORPORATION Notes to the Financial Statements

2) Financial assets at fair value through other comprehensive income (“FVOCI”)

A debt investment is not designated as at FVTPL and is measured at FVOCI if it meets both of the following conditions:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present the subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Foreign exchange gains and losses, interest income calculated using the effective interest method and impairment losses deriving from debt investments, are recognized in profit or loss; whereas dividends deriving from equity investments are recognized in profit or loss, unless the dividend clearly represents a recovery of part of the cost of an investment. Other changes in the carrying amount of financial assets measured at FVOCI are recognized in other comprehensive income and accumulated in other equity as unrealized gain (loss) from financial assets measured at fair value through other comprehensive income. On derecognition, gains and losses accumulated in other equity of debt investments are reclassified to profit or loss. However, gains and losses accumulated in other equity of equity investments are reclassified to retained earnings instead of profit or loss.

Dividend income derived from equity investments is recognized on the date that the Company’s right to receive the dividends is established (usually the ex-dividend date).

3) Financial assets at fair value through profit or loss (“FVTPL”)

All financial assets not classified as measured at amortized cost, or at FVOCI described above, are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

(Continued)

251 -

QISDA CORPORATION Notes to the Financial Statements

4) Assessment whether contractual cash flows are solely payments of principal and interest

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)
5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables and other financial assets).

The Company measures loss allowances for accounts receivable at an amount equal to lifetime expected credit loss (“ECL”), except for the following which are measured as 12-month ECL:

bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivables are always measured at an amount equal to lifetime ECL.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

(Continued)

252 -

QISDA CORPORATION Notes to the Financial Statements

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. The information includes both quantitative and qualitative information and analysis based on the Company’s historical experience and credit assessment, as well as forward-looking information.

ECLs are probability-weighted estimate of credit losses over the expected life of financial assets. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off, either partially or in full, to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

6) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash flows from the assets are terminated, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets to other enterprises.

On derecognition of a debt instrument other than in its entirety, the Company allocates the previous carrying amount of the debt instrument between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized, and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income, is recognized in profit or loss, and included in non-operating income and loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

(Continued)

253 -

QISDA CORPORATION Notes to the Financial Statements

(ii) Financial assets (applicable before January 1, 2018)

1) Financial assets at fair value through profit or loss

2) Loans and receivables

3) Available-for sale financial assets

Dividends received from equity investments are recognized as non-operating income on the date of entitlement to receive dividends (usually the ex-dividend date).

(Continued)

254 -

QISDA CORPORATION Notes to the Financial Statements

4) Impairment of financial assets

If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, such asset is included in a group of financial assets with similar credit risk characteristics which are then collectively assessed for impairment. Objective evidence that receivables are impaired includes the Company’ s collection experience in the past, an increase in delayed payments, and national or local economic conditions that correlate with overdue receivables.

(Continued)

255 -

QISDA CORPORATION Notes to the Financial Statements

The impairment loss and the reversal gain for accounts receivable are recognized as selling expenses, and as non-operating income and loss for financial assets other than accounts receivable.

5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the asset are terminated, or when the Company transfers out substantially all the risks and rewards of ownership of the financial assets to other enterprises.

(iii) Financial liabilities and equity instruments

1) Classification of debt or equity

Debt or equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreement. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recognized at the amount of consideration received, less, the direct issuing cost.

(Continued)

256 -

QISDA CORPORATION Notes to the Financial Statements

2) Financial liabilities at fair value through profit or loss

3) Financial liabilities measured at amortized cost

4) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligation has been fulfilled or cancelled, or has expired. The difference between the carrying amount of a financial liability derecognized and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss and included in the nonoperating income and loss of the statement of comprehensive income.

5) Offsetting of financial assets and liabilities

Financial assets and liabilities are presented on a net basis only when the Company has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(iv) Derivative financial instruments

Derivative financial instruments are held to hedge the Company’s foreign currency exposures. Derivatives are initially measured at fair value and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss, and are included in non-operating income and loss. If the valuation of a derivative instrument is in a positive fair value, it is classified as a financial asset, otherwise, it is classified as a financial liability.

(Continued)

257 -

QISDA CORPORATION Notes to the Financial Statements

(g) Inventories

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or jointly control, over the financial and operating policies.

The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized as other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When changes in an associate’ s equity are not recognized in profit or loss or other comprehensive income of the associate, and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes the change in ownership interests of its associate as “capital surplus” in proportion to its ownership.

Unrealized profits resulting from transactions between the Company and an associate are eliminated to the extent of the Company’ s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired.

Adjustments are made to associates’ financial statements to conform to the accounting polices applied by the Company.

When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the recognition of further losses is discontinued. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(Continued)

258 -

QISDA CORPORATION Notes to the Financial Statements

When an associate issues new shares and the Company does not subscribe to the new shares in proportion to its original ownership percentage, the Company’s interest in the associate’s net assets will be changed. The change in the equity interest is adjusted through the capital surplus and investment accounts. If the Company’ s capital surplus is insufficient to offset the adjustment to investment accounts, the difference is charged as a reduction of retained earnings. If the Company’s interest in an associate is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(i) Investment in subsidiaries

When preparing the parent-company-only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under equity method, profit or loss, and other comprehensive income recognized in parent-company-only financial statement, is the same as the total comprehensive income attributable to the shareholders of the Company in the consolidated financial statements. In addition, the equity recognized in the parent-company-only financial statements is the same as the total equity attributable to the shareholders of the Company in the consolidated financial statements.

Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control as accounted for within equity.

The Company uses acquisition method for acquisitions of new subsidiaries. Goodwill is measured as the excess of the acquisition-date fair value of the consideration transferred (including any noncontrolling interest in the acquiree) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Company shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed and record any additional assets or liabilities that are identified in that review, and thereafter, shall recognize a gain on the bargain purchase.

Acquisition-related costs are expensed as incurred except for the costs related to issuance of debt or equity instruments.

In an acquisition of new subsidiary achieved in stages, the previously held equity interest in the acquiree at its acquisition date fair value is remeasured, and the resulting gain or loss, if any, is recognized in profit or loss. For all amounts recognized in other comprehensive income arising from change in equity of acquiree prior to acquisition date, the Company shall treat it on the same basis as if the Company directly dispose of the previously held equity interest. If the amounts previously recognized in other comprehensive income shall be reclassified to profit or loss as would be required while disposal of such interest, the Company shall reclassify it to profit or loss.

If the initial accounting for an acquisition is incomplete by the end of the reporting period in which the acquisition occurs, provisional amounts for the items which the accounting is incomplete are reported in the financial statements. During the measurement period, the provisional amounts recognized at the acquisition date are retrospectively adjusted to reflect 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.

(Continued)

259 -

QISDA CORPORATION Notes to the Financial Statements

(j) Property, plant and equipment

(i) Recognition and measurement

(ii) Subsequent costs

Subsequent costs are capitalized only when it is probable that future economic benefits associated with the costs will flow to the Company and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognized in profit or loss. All other repairs and maintenance are charged to expense as incurred.

(iii) Depreciation

(Continued)

260 -

QISDA CORPORATION Notes to the Financial Statements

Depreciation methods, useful lives, and residual values are reviewed at each financial yearend, with the effect of any changes in estimate accounted for on a prospective basis.

(k) Leases

(i) The Company as lessor

(ii) The Company as lessee

Payments made under an operating lease (excluding insurance and maintenance expenses) are charged to expense over the lease term on a straight-line basis.

(l) Intangible assets

Intangible assets including acquired software, and patents are carried at cost, less, accumulated amortization and accumulated impairment losses. Amortization is recognized in profit or loss using the straight-line method over the estimated useful lives of 2 to 5 years.

The residual value, amortization period, and amortization method are reviewed at least at each financial year-end, with the effect of any changes in estimate accounted for on a prospective basis.

(m) Impairment of non-financial assets

(i) Goodwill

Goodwill arising from the acquisition of the subsidiaries is included in the carrying amount of investments accounted for using equity method. Goodwill is tested for impairment annually. For the purpose of impairment testing, goodwill arising from a business combination is allocated to each of the Company’s cash-generating units (“CGU”) that are expected to benefit from the synergies of the combination. When the recoverable amount of a CGU is less than the carrying amount of the CGU, the impairment loss is recognized firstly by reducing the carrying amount of any goodwill allocated to the CGU and then is proportionately allocated to the other assets of the CGU on the basis of the carrying amount of each asset in the CGU. Any impairment loss is recognized immediately in profit or loss. A subsequent reversal of the impairment loss on goodwill is prohibited.

(ii) Other tangible and intangible assets

Non-financial assets other than inventories, deferred income tax assets, assets arising from employee benefits, and non-current assets held for sale are reviewed for impairment at each reporting date to determine whether there is any indication of impairment. When there exists an indication of impairment for an asset, the recoverable amount of the asset is estimated. If the recoverable amount of an individual asset cannot be determined, the Company estimates the recoverable amount of the CGU to which the asset has been allocated.

(Continued)

261 -

QISDA CORPORATION Notes to the Financial Statements

The Company assesses at each reporting date whether there is any evidence that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If so, an impairment loss recognized in prior periods for an asset other than goodwill is reversed, and the carrying amount of the asset or CGU is increased to its revised estimate of recoverable amount. The increased carrying amount shall not exceed the carrying amount (net of amortization or depreciation) that would have been determined had no impairment loss been recognized in prior years.

(n) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.

(o) Revenue recognition

(i) Revenue from contracts with customers (applicable commencing January 1, 2018)

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

1) Sale of goods

The Company recognizes revenue when control of the goods has been transferred to the customer, being when the goods are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the goods. Delivery occurs when the customer has accepted the goods in accordance with the terms of sales, the risks of obsolescence and loss have been transferred to the customer, and the Company has objective evidence that all criteria for acceptance have been satisfied. Sales discount and rebates are recognized and estimated based on historical experience and each contractual terms. Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liability (presented under other current liabilities) is recognized for expected sales discounts and rebate payables to customers in

(Continued)

262 -

QISDA CORPORATION Notes to the Financial Statements

relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term ranging from 30 to 120 days, which is consistent with the market practice.

The Company’s obligation to provide a refund for faulty goods sold under the standard warranty terms is recognized as a provision for warranty; please refer to note 6(m).

A receivable is recognized when the goods are delivered, as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

2) Rendering of services

The Company’ s revenue from providing product design and development services is recognized in the accounting period in which services are rendered.

3) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer, and the payment by the customer, exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(ii) Revenue recognition (applicable before January 1, 2018)

1) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions have been satisfied: (a) the significant risks and rewards of ownership of the goods have been transferred to the buyer; (b) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (c) the amount of revenue can be measured reliably; (d) it is probable that the economic benefits associated with the transaction will flow to the Company; and (e) the cost incurred or to be incurred in respect of the transaction can be measured reliably.

2) Services

Revenue from services rendered is recognized by reference to the stage of completion at the reporting date.

(Continued)

263 -

QISDA CORPORATION Notes to the Financial Statements

3) Rental income, interest income, and dividend income

Rental income from investment property is recognized over the lease term on a straightline basis.

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established, provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

(p) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are expensed during the year in which employees render services.

(ii) Defined benefit plans

The Company recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment or settlement comprises any resulting change in the fair value of plan assets and any change in the present value of the defined benefit obligation.

(Continued)

264 -

QISDA CORPORATION Notes to the Financial Statements

(iii) Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed during the period in which employees render services. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to make such payments as a result of past service provided by the employees, and the obligation can be estimated reliably.

(q) Income taxes

(i) Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
(ii) Temporary differences arising from investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences, and it is probable that the differences will not reverse in the foreseeable future; and

(iii) Temporary differences arising from initial recognition of goodwill.

(Continued)

265 -

QISDA CORPORATION Notes to the Financial Statements

(r) Earnings per share (“EPS”)

The basic and diluted EPS attributable to stockholders of the Company are disclosed in the financial statements. Basic EPS is calculated by dividing net income attributable to stockholders of the Company by the weighted-average number of common shares outstanding during the year. In calculating diluted EPS, the net income attributable to stockholders of the Company and weightedaverage number of common shares outstanding during the year are adjusted for the effects of dilutive potential common shares. The Company’s dilutive potential common shares are profit sharing for employees to be settled in the form of common stock.

(s) Operating segments

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the parent-companyonly financial statements.

5. Critical accounting judgments and key sources of estimation uncertainty

The preparation of the parent-company-only financial statements in conformity with the Regulations 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.

Information about judgments made in applying the accounting policies that have a significant effects on the amounts recognized in the financial statements is as follows:

(a) Judgment regarding significant influence of associates

The Company holds less than 20% of the voting rights in AU Optronics Corp. but has significant influence over the associates as the Company was elected as director and participates in the decisionmaking on the board.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included as follows:

(a) Valuation of inventory

Inventories are measured at the lower of cost and net realizable value. Due to the rapid technological innovations and highly competitive environments in the electronic industry, the life cycle of certain products of the Company are short and their market prices fluctuate rapidly, which could possibly result in a price decline and obsolescence of inventory, wherein the inventory cost may exceed its net realizable value.

(Continued)

266 -

QISDA CORPORATION Notes to the Financial Statements

(b) Assessment of impairment of goodwill from investments in subsidiaries

The assessment of impairment of goodwill requires the Company to make subjective judgments to identify cash-generating units, allocate the goodwill to relevant cash-generating units, and estimate the recoverable amount of relevant cash-generating units. Any changes in these estimates based on changed economic conditions or business strategies could result in significant adjustments in future years.

6. Significant account disclosures

(a) Cash and cash equivalents

Demand deposits and checking accounts
Foreign currency deposits
Time deposits with original maturities less than three months
(b)
Financial assets and liabilities at fair value through profit or loss
Financial assets mandatorily measured at fair value through
profit or loss－current:
Foreign currency forward contracts
Foreign exchange swaps
Financial assets held for trading－current:
Foreign currency forward contracts
Financial liabilities at fair value through profit or loss－current:
Financial liabilities held for trading－current:
Foreign currency forward contracts
Foreign exchange swaps December 31,
2018
December 31,
2017
$ 282,827
149,731
845,144
643,506
-
1,001,102
$
1,127,971
1,794,339
December 31,
2018
December 31,
2017
$ 12,500
-
1,249
-
-
1,824
$
13,749
1,824
$ (298)
-
(2,090)
(14,850)
$
(2,388)
(14,850)

Refer to note 6(v) for the amounts of gain (loss) recognized related to financial assets measured at fair value.

(Continued)

267 -

QISDA CORPORATION Notes to the Financial Statements

The Company entered into derivative contracts to manage foreign currency exchange risk resulting from its operating and financing activities. The outstanding derivative financial instruments that did not conform to the criteria for hedge accounting and were classified as financial assets mandatorily measured at fair value through profit or loss as of December 31, 2018, and as financial assets held for trading as of December 31, 2017, consisted of the following:

(i) Foreign currency forward contracts

MYR Buy/ USD Sell CNY Buy/ USD Sell MYR Buy/ USD Sell Foreign exchange swaps Swap in USD/Swap out TWD Swap in USD/Swap out TWD	December 31, 2018
	Contract amount (in thousands) Maturity period MYR 21,000 2019/01 USD 41,960 2019/02~2019/03 December 31, 2017
	Contract amount (in thousands) Maturity period MYR 21,000 2018/01 December 31, 2018
	Contract amount (in thousands) Maturity period USD 61,000 2019/02~2019/03 December 31, 2017
	Contract amount (in thousands) Maturity period USD 68,000 2018/03~2018/04

(ii) Foreign exchange swaps

Equity investments at fair value through other comprehensive income: Domestic listed stocks	December 31, 2018
	$ 33,750

The Company designated the investments shown above as financial assets at fair value through other comprehensive income because these equity investments are held for long-term for strategic purposes and not for trading. These investments were classified as available-for-sale financial assets on December 31, 2017.

No strategic investments were disposed for the year ended December 31, 2018, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

(Continued)

268 -

QISDA CORPORATION Notes to the Financial Statements

(d) Available-for-sale financial assets

		December 31,
		2017
Domestic listed stocks	$	35,000

Prior to November 9, 2017, the Company held 8.72% ownership of DFI Inc. (“DFI”) classified as available-for-sale financial assets. On November 9, 2017, the Company increased its investments in DFI for $2,704,649 and acquired 36.28% of its ownership through tender offer. After the acquisition, the Company and its subsidiaries’ ownership interest in DFI increased to 55% and obtained control over DFI. Therefore, the investment in DFI was reclassified from available-for-sale financial assets— non-current to investments accounted for using equity method, and recognized a gain on － disposal of $189,899 in other gains and losses net.

In 2017, the Company sold part of its investments in available-for-sale securities for $137,286 and － recognized a gain on disposal of $41,536 in other gains and losses net.

(e) Notes and accounts receivable

Notes and accounts receivable Notes and accounts receivable from related parties Less: loss allowance	December 31, 2018 December 31, 2017 $ 10,263,763 11,314,353 16,720,699 14,240,434 26,984,462 25,554,787 (65,491) (21,475) $ 26,918,971 25,533,312

(i) The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables (including related parties) on December 31, 2018. Analysis of expected credit loss on notes and accounts receivable (including related parties) as of December 31, 2018 was as follows:

Current Past due 1-90 days Past due over 91 days	Gross carrying amount $ 24,990,100 1,955,359 39,003 $ 26,984,462	Weighted- average loss rate Loss allowance provision 0.09% 22,723 0.19% 3,765 100% 39,003 65,491

(Continued)

269 -

QISDA CORPORATION Notes to the Financial Statements

(ii) As of December 31, 2017, the Company applied the incurred loss model to measure the loss allowance for notes and accounts receivable. The aging analysis of notes and accounts receivable (including related parties) which were past due but not impaired was as follows:

			December 31,
			2017
Past due	1-90 days	$	2,799,427
Pass due	91-180 days		1,557
		$	2,800,984

The allowance for doubtful receivables is assessed by referring to the collectability of receivables based on historical payment behavior and an analysis of specific customer credit quality. Notes and accounts receivable that are past due but for which the Company has not recognized a specific allowance for doubtful receivables after the assessment are still considered recoverable.

(iii) Movements of the loss allowance for notes and accounts receivable (including related parties) were as follows:

Balance at January 1 (per IAS 39) Adjustment on initial application of IFRS 9 Balance at January 1 (per IFRS 9) Impairment losses Reversal of impairment losses Write-off Balance at December 31	2018 $ 21,475 41,106 62,581 22,897 - (19,987) $ 65,491	2017
		Individually assessed impairment Collectively assessed impairment 22,251 - - - (776) - - - 21,475 -

(iv) The Company entered into factoring contracts with financial institutions to sell its accounts receivable without recourse. According to these contracts, the Company is not responsible for any risk of uncollectible accounts receivable, but only the risk of loss due to commercial disputes. Thus, these contracts met the conditions of financial asset derecognition. Details of these contracts at each reporting date were as follows:

		December 31,	2018
Underwriting bank Factored amount Chinatrust Commercial Bank $ 2,245,817 Taipei Fubon Bank - Taishin International Bank 3,675,009 $ 5,920,826		Factoring credit limit 3,593,655 1,228,600 5,528,700 10,350,955	Advance amount Range of interest rates Collateral 2,019,781 None - - None - 3,675,009 None - 5,694,790 2.392%`～`3.648% -

(Continued)

270 -

QISDA CORPORATION Notes to the Financial Statements

		December 31,	2017
Underwriting bank Factored amount Chinatrust Commercial Bank $ - Taipei Fubon Bank - Taishin International Bank 2,610,837 $ 2,610,837		Factoring credit limit 3,252,560 1,193,600 4,774,400 9,220,560	Advance amount Range of interest rates Collateral - None - - None - 2,610,837 None - 2,610,837 1.9175%`～`2.28% -

As of December 31, 2018, the factored accounts receivable, net of the advance amount, was $226,036, which was classified as “other receivables” in the accompanying balance sheets.

(f) Other receivables

Other receivables (note 6(e)) Other receivables from related parties	December 31, 2018 December 31, 2017 $ 226,656 313 - 1,180 $ 226,656 1,493

As of December 31, 2018, no loss allowance was provided for other receivables after management’s assessment.

As of December 31, 2017, the Company expected that other receivables could be collected within one year, and no loss allowance was provided for after management’s assessment.

(g) Inventories

Raw materials Work in process Finished goods Inventories in transit	December 31, 2018 December 31, 2017 $ 135,817 168,537 25,176 18,230 4,009,334 3,165,395 113,489 29,389 $ 4,283,816 3,381,551

For the years ended December 31, 2018 and 2017, the cost of inventories sold amounted to $94,001,465 and $85,091,347, respectively.

For the years ended December 31, 2018 and 2017, the write-downs of inventories to net realizable value amounted to $20,392, and $15,065, respectively and were included in cost of sales.

(Continued)

271 -

QISDA CORPORATION Notes to the Financial Statements

(h) Investments accounted for using equity method

A summary of the Company’s investments accounted for using the equity method at the reporting date is as follows:

Subsidiaries Associates	December 31, 2018 December 31, 2017 $ 28,327,736 26,968,384 17,984,290 15,989,385 $ 46,312,026 42,957,769

(i) Subsidiaries

Please refer to consolidated financial statements for the year ended December 31, 2018.

In 2017, the Company increased its investments in BBHC for $121,343, and the Company’s interest in BBHC increased from 18.10% to 19.36%.

－
(ii) Acquisition of subsidiaries Data Image Corporation (“DIC”)
1) The cost of acquisition

On November 12, 2018, the Company invested the amount of $260,000 in Data Image Corporation (“DIC”), and acquired 28.82% of its ownership. The Company’s subsidiary, D2 Venture Co, Ltd., also invested the amount of $48,000 in DIC, and acquired 4.32% of its ownership. After these investments in DIC, the Company owned more than half of DIC’ s total number of directors. Therefore, the Company obtained control over DIC, resulting in DIC and its subsidiaries to become the Company’s subsidiaries. DIC and its subsidiaries are engaged in the manufacture and sale of marine display modules. The acquisition of DIC and its subsidiaries expects to integrate the Company’ s strong technological and manufacturing strengths, as well as DIC’s design and manufacturing capability on marine display modules to expand the related business.

(Continued)

272 -

QISDA CORPORATION Notes to the Financial Statements

2) Identifiable net assets acquired in a business combination

On November 12, 2018 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:

Consideration transferred:
Cash			$	308,000
Add: Non-controlling interest (measured at non-controlling				614,390
interest’s proportionate share of the fair value of DIC's
identifiable net assets)
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	483,585
Notes and accounts receivable, net		477,682
Other receivables		48,646
Inventories		504,819
Other current assets		27,585
Property, plant and equipment		396,484
Intangible assets`－`computer software		2,162
Investments accounted for using equity method		22,973
Deferred income tax assets		16,312
Other non-current assets		22,597
Short-term borrowings		(358,699)
Notes and accounts payable		(527,353)
Other payables		(73,241)
Current portion of long-term debt		(33,200)
Other current liabilities		(59,995)
Long-term debt		(24,200)
Deferred income tax liabilities		(7,237)		918,920
Goodwill			$	3,470

The fair value of the identifiable intangible assets has been determined as provisionally pending completion of an independent valuation. Goodwill and identifiable intangible assets arising from the acquisition are included in the carrying amount of investments accounted for using equity method.

(Continued)

273 -

QISDA CORPORATION Notes to the Financial Statements

－
(iii) Acquisition of subsidiaries K2 International Medical Inc.
1) The cost of acquisition

On August 14, 2018, the Company invested the amount of $121,134 in K2 International Medical Inc. (“K2”), and acquired 29.85% of its ownership. The Company’s subsidiary,

D2 Venture Co., Ltd. also invested the amount of $44,997 in K2, and acquired 7.71% of its ownership. After these investments in K2, the Company owned more than half of K2's total number of directors. Therefore, the Company obtained control over K2, resulting in K2 to become the Company’s subsidiary. K2 served as an agency, and is engaged in the sale of hemodialysis machines and related accessories and consumables of well-known brand. The acquisition of K2 enables the Company to penetrate into hemodialysis products market and expand its Asia Pacific market through K2’s market channel.

2) Identifiable net assets acquired in a business combination

On August 14, 2018 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:

Consideration transferred:
Cash			$	166,131
Add: Non-controlling interest (measured at non-controlling				212,649
interest’s proportionate share of the fair value of
K2’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	268,829
Notes and accounts receivable, net		179,170
Inventories		66,046
Other current assets		1,921
Property, plant and equipment		11,832
Intangible assets`－`customer relationships		30,745
Intangible assets`－`computer software		81
Deferred income tax assets		1,217
Other non-current financial assets		13,322
Short-term borrowings		(169,944)
Notes and accounts payable		(39,191)
Other current liabilities		(17,310)
Deferred income tax liabilities		(6,152)		340,566
Goodwill			$	38,214

(Continued)

274 -

QISDA CORPORATION Notes to the Financial Statements

The fair value of the abovementioned intangible assets has been determined as provisionally pending completion of an independent valuation. Goodwill and identifiable intangible assets arising from the acquisition are included in the carrying amount of investments accounted for using equity method.

－
(iv) Acquisition of subsidiaries DFI Inc. and its subsidiaries
1) The cost of acquisition

On November 9, 2017, the Company increased its investments in DFI Inc. (“DFI”) for $3,450,127 and acquired 46.28% of its ownership through tender offer. After the acquisition, the Company and its subsidiaries ownership interest in DFI increased from 8.72% to 55.00% and obtained control over DFI. Therefore, DFI and its subsidiaries have become the Company’ s subsidiaries. DFI and its subsidiaries are engaged in the manufacture and sale of industrial motherboards and related components.

The acquisition expects to integrate the Company’ s strong technological and manufacturing strengths, as well as DFI's manufacturing capability and customer service on motherboards to build the integrated business solutions.

(Continued)

275 -

QISDA CORPORATION Notes to the Financial Statements

2) Identifiable net assets acquired in a business combination

On November 9, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:

Consideration transferred:
Cash			$	3,450,127
Add: the fair value of the acquirer’s previously held equity				640,000
interest in the acquiree
Non-controlling interest (measured at non-controlling				2,178,468
interest’s proportionate share of the fair value of DFI’
s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	829,366
Financial assets at fair value through profit or loss`－`		971,201
current
Notes and accounts receivable, net		568,323
Notes and accounts receivable from related parties		240,945
Other receivables from related parties		300
Other receivables		14,582
Inventories		540,256
Other current assets		26,834
Other financial assets`－`current		41,950
Available-for-sale financial assets`－`non-current		23,336
Property, plant and equipment		946,360
Intangible assets`－`goodwill		187,365
Intangible assets`－`trademarks		720,664
Intangible assets`－`customer relationships		1,065,509
Intangible assets`－`computer software		11,483
Deferred income tax assets		37,122
Other non-current assets		9,824
Notes and accounts payable		(682,952)
Accounts payable to related parties		(332)
Other current liabilities		(222,406)
Provisions`－`current		(48,415)
Deferred income tax liabilities		(348,561)
Other non-current liabilities		(91,712)
Non-controlling interests		(2)		4,841,040
Goodwill			$	1,427,555

(Continued)

276 -

QISDA CORPORATION Notes to the Financial Statements

Goodwill and identifiable intangible assets arising from the acquisition are included in the carrying amount of investments accounted for using equity method.

The Company’s previously held 8.72% ownership of DFI had been remeasured to fair value at the acquisition date, resulting in a gain on disposal of $189,899 in other gains － and losses net.

－
(v) Acquisition of subsidiaries Partner Tech Corp. and its subsidiaries
1) The cost of acquisition

On April 10, 2017, the Company increased its investments in Partner Tech Corp. (“ PTT” ) for $1,263,098 and acquired 42.06% of its ownership through tender offer. After the acquisition, the Company and its subsidiaries’ ownership interest in PTT increased from 26.17% to 68.23% and obtained control over PTT. Therefore, PTT and its subsidiaries have become the Company’ s subsidiaries. PTT and its subsidiaries are engaged in the manufacture and sale of POS terminals and peripherals.

The acquisition expects to integrate the Company’ s technological and manufacturing skills with PTT’s customer service on retail market.

(Continued)

277 -

QISDA CORPORATION Notes to the Financial Statements

2) Identifiable net assets acquired in a business combination

On April 10, 2017 (the acquisition date), the identifiable assets and liabilities arising from the acquisition at fair value, were as follows:

Consideration transferred:
Cash			$	1,263,098
Add: the fair value of the acquirer’s previously held equity				512,821
interest in the acquiree
Non-controlling interest (measured at non-controlling				504,050
interest’s proportionate share of the fair value of
PTT’s identifiable net assets):
Less: identifiable net assets acquired at fair value:
Cash and cash equivalents	$	332,247
Financial assets at fair value through profit or loss`－`		2,667
current
Notes and accounts receivable, net		395,797
Other receivables		14,010
Inventories		530,102
Other current assets		123,542
Property, plant and equipment		333,138
Intangible assets`－`goodwill		97,667
Intangible assets`－`trademarks		443,786
Intangible assets`－`customer relationships		147,993
Intangible assets`－`computer software		33,528
Investments accounted for using equity method		34,178
Deferred income tax assets		52,963
Other financial assets`－`non-current		708
Other non-current assets		94,100
Short-term borrowings		(130,159)
Current portion of long-term debt		(2,763)
Financial liabilities at fair value through profit or loss		(185)
`－`current
Notes and accounts payable		(426,415)
Other payables		(48,197)
Other current liabilities		(189,413)
Provisions`－`current		(18,446)
Long-term debt		(10,431)
Deferred income tax liabilities		(105,627)
Other non-current liabilities		(46,081)
Non-controlling interests		(72,115)		1,586,594
Goodwill			$	693,375

(Continued)

278 -

QISDA CORPORATION Notes to the Financial Statements

The Company’ s previously held ownership of PTT is remeasured to fair value at the acquisition date, and recognized a gain on disposal of $88,611 in other gains and losses － net.

Goodwill and identifiable intangible assets arising from the acquisition are included in the carrying amount of investments accounted for using equity method.

(vi) Impairment test on goodwill

DFI and its subsidiaries (“DFI”) PTT and its subsidiaries (“PTT”)	December 31, 2018 December 31, 2017 $ 1,614,920 1,614,920 $ 943,775 791,042

Each CGU or group of CGUs to which the goodwill is allocated represents the lowest level within the group, at which the goodwill is monitored for internal management purpose. Based on the results of impairment tests conducted by the Company, the recoverable amount exceeded its carrying amount; as a result, no impairment loss was recognized. The recoverable amount of a CGU was determined based on the value in use, and the related key assumptions were as follows:

DFI`：` Revenue growth rate Discount rates PTT`：` Revenue growth rate Discount rates	December 31, 2018 December 31, 2017 10% 10%~18.9% 17.62% 16.34% December 31, 2018 December 31, 2017 6%~66% 10% 15.83% 14.91%

1) The cash flow projections were based on historical operating performance and future financial budgets, covering a period of 5 years, approved by management and estimated terminal values at the end of the 5-year period. Cash flows beyond that 5-year period have been extrapolated using 1.5% to 2% growth rate.
2) The estimation of discount rate is based on the weighted average cost of capital.

(Continued)

279 -

QISDA CORPORATION

Notes to the Financial Statements

(vii) Investments in associates

Name of Associates Main Business and Relationship AU Optronics Corp. (“AU”) R & D, manufacture and sale of TFT- LCD panels, the Company’s strategic partners Darfon Electronics Corp. (“DFN”) Manufacture and sale of power devices, peripheral equipment, and integrated communication devices, the Company’s strategic partners Alpha Networks Inc. (“Alpha”) R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia product, the Company’s strategic partners Q.S.Control Corp. Manufacture and sales of medical consumables and equipment, the Company’s strategic partners	Location Taiwan Taiwan Taiwan Taiwan	December 31, 2018 Percentage of voting rights Carrying amount % 6.90 13,921,968 % 20.72 1,846,261 % 18.40 2,166,624 % 20.00 49,437 $ 17,984,290	December 31, 2018 Percentage of voting rights Carrying amount % 6.90 13,921,968 % 20.72 1,846,261 % 18.40 2,166,624 % 20.00 49,437 $ 17,984,290	December 31, 2017
		Percentage of voting rights		Percentage of voting rights Carrying amount % 6.90 14,287,092 % 20.72 1,655,064 - - % 20.00 47,229 15,989,385
		% 6.90 % 20.72 % 18.40 % 20.00

The equity-method was used to account for investments in certain associates of which the Company holds less than 20% of the voting rights but has significant influence over the associates as the Company was elected as director and participates in the decision-making on the board.

On March 15, 2018, the Company subscribed 100,000 thousand shares of Alpha Networks Inc. (“Alpha”) for $2,300,000 through private offering.

For the years ended December 31, 2018 and 2017, the Company’ s shares of profits of associates amounted to $1,005,607 and $2,354,704, respectively.

(Continued)

280 -

QISDA CORPORATION Notes to the Financial Statements

The fair value of the investment in associates which are publicly traded was as follows:

AU DFN Alpha	December 31, 2018 December 31, 2017 $ 8,162,268 8,228,628 2,276,696 1,719,848 1,655,000 -

The summarized financial information in respect of each of the Company’s material associates is set out below:

1) The summarized financial information of AU:

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Equity attributable to non-controlling interests of
AU
Equity attributable to shareholders of AU
Net sales
Net income
Other comprehensive income
Total comprehensive income
Total comprehensive income attributable to non-
controlling interests of AU
Total comprehensive income attributable to
shareholders of AU
The Company’s share of equity of associates at
January 1
Total comprehensive income attributable to the
Company
Capital surplus attributable to the Company
Dividend received from associates
Cumulative effect of investment income recognized
under treasury stock method
Adjustment on initial application of IFRS 9
The carrying amount of investments in the associates

December 31,
2018
December 31,
2017
$ 149,067,627
180,175,541
260,764,148
261,275,743
(128,937,971)
(107,236,609)
(63,615,116)
(108,969,560)
$
217,278,688
225,245,115
$
14,415,973
17,090,747
$
202,862,715
208,154,368
2018
2017
$
307,634,389
341,028,267
$ 7,959,895
30,258,488
(1,383,775)
(960,183)
$
6,576,120
29,298,305
$
(2,509,140)
(2,456,428)
$
9,085,260
31,754,733
2018
2017
$ 14,362,651
12,505,884
624,788
2,190,811
5,499
37,571
(995,398)
(371,615)
(75,559)
(75,559)
(13)
-
$
13,921,968
14,287,092

(Continued)

281 -

QISDA CORPORATION Notes to the Financial Statements

2) The summarized financial information of DFN:

		December 31,	December 31,		December 31,
			2018		2017
	Current assets	$	12,741,445		10,028,855
	Non-current assets		6,353,987		5,318,722
	Current liabilities		(8,968,442)		(6,675,261)
	Non-current liabilities		(684,007)		(654,165)
	Equity	$	9,442,983		8,018,151
	Equity attributable to non-controlling interests of
	DFN	$	532,458		30,390
	Equity attributable to shareholders of DFN	$	8,910,525		7,987,761
			2018		2017
	Net sales	$	20,113,619		17,664,072
	Net income	$	1,525,848		583,044
	Other comprehensive income		(36,920)		(331,803)
	Total comprehensive income	$	1,488,928		251,241
	Total comprehensive income attributable to non-
	controlling interests of DFN	$	6,164		2,298
	Total comprehensive income attributable to
	shareholders of DFN	$	1,482,764		248,943
			2018		2017
	The Company’s share of equity of associates at
	January 1	$	1,655,064		1,716,976
	Total comprehensive income attributable to the
	Company		307,206		51,558
	Capital surplus attributable to the Company		-		2,539
	Dividend received from associates		(116,009)		(116,009)
	The carrying amount of investments in the associates$		1,846,261		1,655,064
3)	The summarized financial information of Alpha:
				December 31,
					2018
	Current assets			$	12,517,041
	Non-current assets				2,412,034
	Current liabilities				(4,173,154)
	Non-current liabilities				(362,170)
	Equity			$	10,393,751
	Equity attributable to non-controlling interests of Alpha			$	-
	Equity attributable to shareholders of Alpha			$	10,393,751

(Continued)

282 -

QISDA CORPORATION

Notes to the Financial Statements

Net sales Net loss Other comprehensive income Total comprehensive income Total comprehensive income attributable to non-controlling interests of Alpha Total comprehensive income attributable to shareholders of Alpha The Company’s share of equity of associates at January 1 Purchase of investments Total comprehensive income attributable to the Company Capital surplus attributable to the Company Dividend received from associates The carrying amount of investments in the associates	2018	2018
	$ 15,608,222 $ (88,009) (76,053) $ (164,062) $ - $ (164,062) 2018
		2018
	$ - 2,300,000 (37,185) 3,809 (100,000) $ 2,166,624

4) Aggregate financial information of associates that were not individually material was summarized as follows. The financial information was included in the Company's parentcompany-only financial statements.

company-only financial statements.
	December 31,		December	31,
		2018	2017
The aggregate carrying amount of associates that were
not individually material	$	49,437	47,229
		2018	2017
Attributable to the Company:
Net income	$	2,208	1,873
Other comprehensive income		-		832
Total comprehensive income	$	2,208	2,705

Refer to note 8 for a description of the Company’s investments accounted for using the equity method pledged as collateral for long-term debt and credit facilities.

(Continued)

283 -

QISDA CORPORATION Notes to the Financial Statements

(i) Property, plant and equipment

The movements of cost and accumulated depreciation and impairment loss of the property, plant and equipment were as follows:

Cost: Balance at January 1, 2018 Additions Disposals Reclassification Balance at December 31, 2018 Balance at January 1, 2017 Additions Disposals Reclassification Balance at December 31, 2017 Accumulated depreciation: Balance at January 1, 2018 Depreciation Disposals Balance at December 31, 2018 Balance at January 1, 2017 Depreciation Disposals Balance at December 31, 2017 Carrying amount: Balance at December 31, 2018 Balance at December 31, 2017	Land $ 805,484 - - - $ 805,484 $ 805,484 - - - $ 805,484 $ - - - $ - $ - - - $ - $ 805,484 $ 805,484	Buildings 1,641,930 7,025 - - 1,648,955 1,639,422 2,508 - - 1,641,930 1,074,501 44,685 - 1,119,186 1,029,831 44,670 - 1,074,501 529,769 567,429	Machinery 935,279 30,881 (104,279) 3,914 865,795 898,754 29,037 (1,614) 9,102 935,279 860,933 23,156 (104,279) 779,810 837,464 25,083 (1,614) 860,933 85,985 74,346	Other equipment 161,968 18,704 (13,918) 4,014 170,768 155,070 13,657 (9,879) 3,120 161,968 138,413 10,110 (9,097) 139,426 140,632 6,815 (9,034) 138,413 31,342 23,555	Construction in progress Total 22,343 3,567,004 14,982 71,592 - (118,197) (7,928) - 29,397 3,520,399 10,470 3,509,200 24,095 69,297 - (11,493) (12,222) - 22,343 3,567,004 - 2,073,847 - 77,951 - (113,376) - 2,038,422 - 2,007,927 - 76,568 - (10,648) - 2,073,847 29,397 1,481,977 22,343 1,493,157

(i) The Company owned a parcel of land with a book value of $104,324. Because of certain legal restrictions, this land was registered under the name of individuals. In order to protect the Company’ s rights to this land, the Company signed a deed of trust with these individuals, under which they are obliged to surrender their rights to the Company when required.

(ii) Pledge as collateral

Refer to note 8 for a description of the Company’s property, plant and equipment pledged as collateral for long-term debt.

(Continued)

284 -

QISDA CORPORATION Notes to the Financial Statements

(j) Intangible assets

(i) The movements of costs and accumulated amortization of intangible assets were as follows:

Computer
software
Costs:
Balance at January 1, 2018
$ 15,467
Addition
3,503
Disposal
(7,105)
Balance at December 31, 2018
$
11,865
Balance at January 1, 2017
$ 24,664
Addition
3,000
Disposal
(12,197)
Balance at December 31, 2017
$
15,467
Accumulated amortization:
Balance at January 1, 2018
$ 11,106
Amortization
2,477
Disposal
(7,105)
Balance at December 31, 2018
$
6,478
Balance at January 1, 2017
$ 20,375
Amortization
2,928
Disposal
(12,197)
Balance at December 31, 2017
$
11,106
Carrying amount:
Balance at December 31, 2018
$
5,387
Balance at December 31, 2017
$
4,361

Others
Total
14,777
30,244
-
3,503
(4,538)
(11,643)
10,239
22,104
15,347
40,011
-
3,000
(570)
(12,767)
14,777
30,244
11,207
22,313
2,362
4,839
(4,538)
(11,643)
9,031
15,509
8,185
28,560
3,592
6,520
(570)
(12,767)
11,207
22,313
1,208
6,595
3,570
7,931

(ii) Amortization

The amortization of intangible assets is included in the following line items of the statement of comprehensive income:

Cost of sales Operating expenses	2018 2017 $ 600 1,629 $ 4,239 4,891

(Continued)

285 -

QISDA CORPORATION Notes to the Financial Statements

(k) Short-term borrowings

Unsecured bank loans Unused credit facilities Interest rate	December 31, 2018 December 31, 2017 $ 5,150,000 5,827,600 $ 7,042,349 7,536,934 0.75%~1.24% 0.6426%~1.69%

(l) Long-term debt

Unsecured bank loans Secured bank loans Less: current portion of long-term debt Unused credit facilities Interest rate Maturity year	December 31, 2018 December 31, 2017 $ 8,421,325 4,312,800 4,850,000 4,450,000 13,271,325 8,762,800 (1,900,000) (1,500,000) $ 11,371,325 7,262,800 $ 3,239,450 6,375,200 1.33%~3.758% 1.1%~2.242% 2019~ 2022 2018~ 2022

(i) Collateral for bank borrowings

Refer to note 8 for a description of the Company’s assets pledged as collateral to secure the bank loans.

(ii) Compliance with loan agreement

According to the syndicated loan agreement signed between the Company and the banks, the Company has promised to maintain certain financial ratios based on the Company’ s semiannual reviewed consolidated financial statements and annual audited consolidated financial statements. If the Company violates any of the related financial ratios, the Company should mend it in a specific period, and then the failure to maintain the required financial ratios would not be considered a default. The Company has also pledged stock to secure the syndicated loan and has to maintain the fair value of the related pledged stock at a specific percentage of the loan.

For the years 2018 and 2017, the Company’ s financial ratio was in compliance with the syndicated loan agreement.

(Continued)

286 -

QISDA CORPORATION Notes to the Financial Statements

(m) Provisions

Balance at January 1, 2018 Provisions made Amount utilized Amount reversed Balance at December 31, 2018 Current Non-current Balance at January 1, 2017 Provisions made Amount utilized Amount reversed Balance at December 31, 2017 Current Non-current	Warranties $ 117,462 55,523 (20,444) (46,715) $ 105,826 $ 20,445 $ 85,381 $ 153,180 49,348 (22,947) (62,119) $ 117,462 $ 22,947 $ 94,515

The provision for warranties is estimated based on historical warranty data associated with similar products and services. The Company expects to settle most of the warranty liability within three years from the date of the sale of the product.

(n) Operating lease

(i) Lessee

Future minimum lease payments of operating leases are as follows:

Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years	December 31, 2018 December 31, 2017 $ 142,774 144,000 532,521 554,529 516,989 692,657 $ 1,192,284 1,391,186

The Company leases offices under operating leases. The leases typically run for 10 years, with an option to renew.

One of the leased properties has been sublet by the Company. The rental income of property sublease for the years ended December 31, 2018 and 2017 amounted to $96,063 and $96,025, respectively, which were recognized as deduction of operating expense.

(Continued)

287 -

QISDA CORPORATION Notes to the Financial Statements

In 2018 and 2017, the rental expense of operating leases amounted to $43,613 and $43,651, respectively, which were recognized in profit or loss.

(ii) Lessor

The Company leased its land and buildings to others under operating leases. In 2018 and 2017, the related rental income amounted to $13,405 and $15,358, respectively, and was recognized －－ under non-operating income and loss other gains and losses net.

(o) Employee benefits

(i) Defined benefit plans

The reconciliation between the present value of defined benefit obligations and the net defined benefit liabilities for defined benefit plans was as follows:

Present value of defined benefit obligations Fair value of plan assets Effects of the asset ceiling Net defined benefit liabilities (reported under other non- current liabilities)	December 31, 2018 December 31, 2017 $ 727,372 722,547 (433,280) (451,173) 294,092 271,374 - - $ 294,092 271,374

The Company make defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pension benefits for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive a payment based on years of service and average salary for the six months prior to the employee’s retirement.

1) Composition of plan assets

The pension fund (the “Fund”) contributed by the Company is managed and administered by the Bureau of Labor Funds of the Ministry of Labor (the Bureau of Labor Funds). According to the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, with regard to the utilization of the Fund, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

As of December 31, 2018 and 2017, the Company’s labor pension fund account balance at Bank of Taiwan amounted to $433,280 and $451,173, respectively. Refer to the website of the Bureau of Labor Funds for information on the labor pension fund assets including the asset portfolio and yield of the fund.

(Continued)

288 -

QISDA CORPORATION Notes to the Financial Statements

2) Movements in present value of defined benefit obligations

In 2018 and 2017, the movements in present value of defined benefit obligations of the Company were as follows:

Defined benefit obligations at January 1 Current service costs and interest expense Remeasurement on the net defined benefit liabilities: `－`Actuarial losses (gains) arising from experience adjustments `－`Actuarial losses (gains) arising from changes in financial assumptions Benefits paid by the plan Benefits paid by employer Defined benefit obligations at December 31	2018 2017 $ 722,547 737,951 13,909 13,171 26,116 16,986 24,160 (25,886) (54,417) (19,675) (4,943) - $ 727,372 722,547

3) Movements of fair value of plan assets

In 2018 and 2017, the movements of the fair value of plan assets of the Company were as follows:

Fair value of plan assets at January 1 Interest income Remeasurement on the net defined benefit liabilities (assets) `－`Actuarial gains (losses) Contributions by the employer Benefits paid by the plan Fair value of plan assets at December 31	2018 2017 $ 451,173 462,738 7,368 6,407 11,199 (1,887) 17,957 3,590 (54,417) (19,675) $ 433,280 451,173

4) Changes in the effect of the asset ceiling

In 2018 and 2017, there was no effect of the asset ceiling.

(Continued)

289 -

QISDA CORPORATION Notes to the Financial Statements

5) Expenses recognized in profit or loss

In 2018 and 2017, the expenses recognized in profit or loss were as follows:

Current service costs Net interest expense on the net defined benefit liability Cost of sales Selling expenses Administrative expenses Research and development expenses	2018 2017 $ 2,153 2,999 4,388 3,765 $ 6,541 6,764 $ 1,014 1,317 1,191 880 862 1,429 3,474 3,138 $ 6,541 6,764

6) Remeasurement of the net defined benefit liabilities recognized in other comprehensive income

In 2018 and 2017, the remeasurement of the net defined benefit liabilities recognized in other comprehensive income were as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31

7) Actuarial assumptions

The principal assumptions of the actuarial valuation were as follows:

Discount rate Future salary increases rate	December 31, 2018 December 31, 2017 % 1.375 % 1.625 % 2.500 % 2.500

The Company expects to make contribution of $14,357 to the defined benefit plans in the year following December 31, 2018.

The weighted average duration of the defined benefit plans is 17.02 years.

(Continued)

290 -

QISDA CORPORATION Notes to the Financial Statements

8) Sensitivity analysis

The following table summarizes the impact of a change in the assumptions on the present value of the defined benefit obligation on December 31, 2018 and 2017.

December 31, 2018 Discount rate Future salary change December 31, 2017 Discount rate Future salary change	Increase (decrease) in present value of defined benefit obligations 0.25% Increase 0.25% Decrease (24,160) 25,226 24,525 (23,631) (24,800) 25,886 25,224 (24,285)

(ii) Defined contribution plans

The Company contributes monthly an amount equal to 6% of each employee’s monthly wages to the employee’ s individual pension fund account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Company has no legal or constructive obligation to pay additional amounts after contributing a fixed amount to the Bureau of Labor Insurance.

For the years ended December 31, 2018 and 2017, the Company recognized pension expenses of $88,787 and $88,947, respectively, in relation to the defined contribution plans.

(p) Income taxes

According to the amendments to the "Income Tax Act” enacted by the office of the President of the Republic of China (Taiwan) on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is applicable upon filing the corporate income tax return commencing 2018.

(Continued)

291 -

QISDA CORPORATION Notes to the Financial Statements

(i) In 2018 and 2017, the components of income tax expense were as follows:

Current income tax expense Deferred income tax expense (benefit) Origination and reversal of temporary differences Adjustment in tax rate Changes in unrecognized deductible temporary differences and tax losses Deferred income tax expense Income tax expense	2018 2017 $ 146,196 131,189 395,866 391,904 (145,946) - (126,584) (289,963) 123,336 101,941 $ 269,532 233,130

In 2018 and 2017, there was no income tax recognized directly in equity or other comprehensive income.

Reconciliation of income tax expense and income before income tax for 2018 and 2017 was as follows:

Income before income tax Income tax using the Company’s statutory tax rate Tax-exempt income from securities transactions Adjustment in tax rate Investment income recorded under equity method 10% surtax on undistributed earnings Tax-exempt dividend income Change in unrecognized temporary differences and tax losses Others Income tax expense	2018 2017 $ 4,304,596 5,524,517 $ 860,919 939,168 - (54,408) (145,946) - (538,027) (667,490) 172,311 131,189 (250) (8,041) (126,584) (289,963) 47,109 182,675 $ 269,532 233,130

(ii) Deferred income tax assets and liabilities

1) Unrecognized deferred income tax assets and liabilities

(Continued)

292 -

QISDA CORPORATION Notes to the Financial Statements

Unrecognized deferred income tax assets:

Aggregate deductible temporary differences associated with investments in subsidiaries Deductible temporary differences Tax losses	December 31, 2018 December 31, 2017 $ 240,682 230,774 1,563,341 1,339,746 133,194 23,010 $ 1,937,217 1,593,530

Unrecognized deferred income tax liabilities:

Aggregate taxable temporary differences associated with investments in subsidiaries	December 31, 2018 December 31, 2017 $ 1,698,549 1,283,066

As of December 31, 2018, the unrecognized tax losses and the respective expiry years were as follows:

Year of expiry	Unrecognized tax losses Year of expiry $ 665,970 2021
2011

2) Recognized deferred income tax assets and liabilities

Changes in the amount of deferred income tax assets and liabilities for 2018 and 2017 were as follows:

Deferred income tax assets:

Unrealized inter-company profits Deferred revenue Operating loss carryforwards Allowance for sales discounts Unrealized accrued expenses Others Unrealized inter-company profits Deferred revenue Operating loss carryforwards Allowance for sales discounts Unrealized accrued expenses Others	Balance at January 1, 2018 $ 23,056 31,350 514,555 166,631 12,741 81,783 $ 830,116 Balance at January 1, 2017 $ 36,403 27,359 652,743 118,930 8,404 100,279 $ 944,118	Recognized in profit or loss Balance at December 31, 2018 18,380 41,436 (6,756) 24,594 (196,659) 317,896 44,313 210,944 2,248 14,989 14,529 96,312 (123,945) 706,171 Recognized in profit or loss Balance at December 31, 2017 (13,347) 23,056 3,991 31,350 (138,188) 514,555 47,701 166,631 4,337 12,741 (18,496) 81,783 (114,002) 830,116

(Continued)

293 -

QISDA CORPORATION Notes to the Financial Statements

Deferred income tax liabilities:

Unrealized foreign exchange gain Unrealized foreign exchange gain	Balance at January 1, 2018 $ (3,088) Balance at January 1, 2017 $ (15,149)	Recognized in profit or loss Balance at December 31, 2018 609 (2,479) Recognized in profit or loss Balance at December 31, 2017 12,061 (3,088)

(iii) The Company’ s income tax returns for the years through 2016 have been examined and approved by the R.O.C. income tax authorities.

(q) Capital and other equity

(i) Common stock

(ii) Capital surplus

Changes in equity of associates accounted for using equity method Changes in ownership interests in subsidiaries Difference between consideration and carrying amount arising from acquisition or disposal of shares in subsidiaries	December 31, 2018 December 31, 2017 $ 161,325 152,239 1,826,082 1,820,095 158,669 201,299 $ 2,146,076 2,173,633

(Continued)

294 -

QISDA CORPORATION Notes to the Financial Statements

(iii) Unappropriated earnings and dividend policy

1) Legal reserve

2) Special reserve

3) Earnings distribution

Dividends per share: Cash dividends	2017 2016 Dividends per share (in dollars) Amount Dividends per share (in dollars) Amount $ 1.35 2,655,156 1.32 2,596,152
	Dividends per share (in dollars) $ 1.35

(Continued)

295 -

QISDA CORPORATION Notes to the Financial Statements

On March 21, 2019, the Board of Directors meeting proposed the distribution of the Company’s earnings for 2018 as follows:

Dividends per share: Cash dividends	2018	2018
	Dividends per share (in dollars) $ 0.85	Amount
		1,671,765

(iv) Other equity items (net after tax)

1) Foreign currency translation differences:

Balance at January 1 Foreign exchange differences arising from translation of foreign operations Balance at December 31	2018 2017 $ (120,490) 1,018,614 248,819 (1,139,104) $ 128,329 (120,490)

2) Unrealized gains (losses) on financial assets at fair value through other comprehensive income:

Balance at January 1 Effects of retrospective application Restated balance at January 1 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of subsidiaries and associates Balance at December 31 Unrealized gain (loss) from available-for-sale financial assets: Balance at January 1 Changes in fair value of available-for-sale financial assets Shares of unrealized gain (loss) from available-for-sale financial assets of subsidiaries and associates Balance at December 31		2018 - 30,353
		30,353 (1,250) 17,887
		46,990

3) Unrealized gain (loss) from available-for-sale financial assets:

(Continued)

296 -

QISDA CORPORATION Notes to the Financial Statements

4) Remeasurement of defined benefit plans:

Balance at January 1 Remeasurement of the defined benefit plans Shares of remeasurement of the defined benefit plans of subsidiaries and associates accounted for using equity method Balance at December 31	2018 2017 $ (293,856) (291,719) (39,077) 7,013 (10,808) (9,150) $ (343,741) (293,856)

(r) Earnings per share (“EPS”)
(i) Basic earnings per share

The basic earnings per share were calculated as the profit attributable to shareholders of the Company divided by the weighted-average number of ordinary shares outstanding as follows:

(Continued)

297 -

QISDA CORPORATION Notes to the Financial Statements

(s) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Asia Europe America Others Major products/services lines: Electronic products Other design and development service	2018
	$ 58,922,127 18,445,087 21,110,946 554,897 $ 99,033,057 $ 98,143,593 889,464 $ 99,033,057

For details on revenue for 2017, please refer to note 6(t).

(ii) Contract balances

Notes and accounts receivable (including related parties) Less: loss allowance Total Contract liabilities	December 31, 2018 January 1, 2018 $ 26,984,462 25,554,787 (65,491) (62,581) $ 26,918,971 25,492,206 $ 384,821 309,846

For details on notes and accounts receivable and related loss allowance, please refer to note 6(e).

The amount of revenue recognized for the year ended December 31, 2018 that was included in the contract liability balance at the beginning of the period was $309,846.

(t) Revenue

Revenue
		2017
Revenue from sale of goods	$	88,057,472
Revenue from services rendered		812,131
	$	88,869,603

For details on revenue for 2018, please refer to note 6(s).

(Continued)

298 -

QISDA CORPORATION Notes to the Financial Statements

(u) Remuneration to employees and directors

(v) Non-operating income and loss

(i) Other income

Interest income from bank deposits Rental income Dividend income Other gains and losses`－`net Gain (loss) on disposal of property, plant and equipment Gain on disposal of investments Foreign currency exchange gains (losses) Gains (losses) on financial assets and liabilities at fair value through profit or loss Others Finance costs Interest expense of bank loans	2018 2017 $ 17,192 8,891 13,405 15,358 1,250 47,298 $ 31,847 71,547 2018 2017 $ (621) 1,580 - 320,046 (68,624) 436,023 79,044 (328,332) 34,051 (21,673) $ 43,850 407,644 2018 2017 $ (362,611) (234,791)

－
(ii) Other gains and losses net

(iii) Finance costs

(Continued)

299 -

QISDA CORPORATION Notes to the Financial Statements

(w) Financial instruments

(i) Categories of financial instruments
1) Financial assets

Financial assets at fair value through profit or loss:
Mandatorily measured at fair value through profit
or loss
Held-for-trading
Subtotal
Financial assets at fair value through other
comprehensive income
Available-for-sale financial assets—non-current
Subtotal
Financial assets measured at amortized cost (loans
and receivables):
Cash and cash equivalents
Notes and accounts receivable and other
receivables (including related parties)
Other financial assets—non-current
Subtotal
Total
2)
Financial liabilities
Financial liabilities at fair value through profit or
loss:
Held-for-trading
Financial liabilities measured at amortized cost:
Short-term borrowings
Notes and accounts payable and other payables
(including related parties)
Long-term debt (including current portion)
Other non-current liabilities－guarantee deposits
Subtotal
Total December 31,
2018
December 31,
2017
$ 13,749
-
-
1,824
13,749
1,824
33,750
-
-
35,000
33,750
35,000
1,127,971
1,794,339
27,145,627
25,534,805
42,078
36,964
28,315,676
27,366,108
$
28,363,175
27,402,932
December 31,
2018
December 31,
2017
$ 2,388
14,850
5,150,000
5,827,600
27,312,252
28,435,085
13,271,325
8,762,800
51,650
52,993
45,785,227
43,078,478
$
45,787,615
43,093,328

(Continued)

300 -

QISDA CORPORATION Notes to the Financial Statements

(ii) Fair value information

1) Financial instruments not measured at fair value

The Company considers that the carrying amounts of its financial instruments measured at amortized cost (including cash and cash equivalents, notes and accounts receivable / payable (including related parties), other receivables/payables (including related parties), other financial assets, short-term borrowings, long-term debt and guarantee deposits) approximate their fair values.

2) Financial instruments measured at fair value

The financial department of the Company evaluates the fair value of financial instrument and utilizes the assistance of external experts or financial institutions in performing the valuation of fair value when necessary, and regularly revises the inputs and any essential adjustments on the fair value to confirm the evaluation results is reasonable.

When measuring the fair value of financial instruments, the Company usually use market observable data. The table below analyzes financial instruments that are measured at fair value subsequent to initial recognition, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The different levels have been defined as follows:

a) Level 1: quoted prices (unadjusted) in active markets for identified assets or liabilities.
b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
c) Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

Financial assets at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Subtotal Financial assets measured at fair value through other comprehensive income: Domestic listed stocks Total Financial liabilities at fair value through profit and loss: Foreign currency forward contracts Foreign exchange swaps Total		December 31, 2018	December 31, 2018
		Fair Value
	Level 1 $ - - - 33,750 $ 33,750 $ - - $ -	Level 2 12,500 1,249 13,749 - 13,749 298 2,090 2,388	Level 3 Total - 12,500 - 1,249 - 13,749 - 33,750 - 47,499 - 298 - 2,090 - 2,388

(Continued)

301 -

QISDA CORPORATION Notes to the Financial Statements

Financial assets at fair value through profit and loss: Foreign currency forward contracts Available-for-sale financial assets: Domestic listed stocks Total Financial liabilities at fair value through profit and loss: Foreign exchange swaps		December 31, 2017 Fair Value Level 2 Level 3 Total 1,824 - 1,824 - - 35,000 1,824 - 36,824 (14,850) - (14,850)

	Level 1 $ - 35,000 $ 35,000 $ -	Level 2 1,824 - 1,824 (14,850)

3) Valuation techniques and assumptions used in fair value measurement
a) Non-derivative financial instruments

The fair value of financial instruments traded in active liquid markets is determined with reference to quoted market prices.

For listed stock with standard terms and conditions and traded in active markets. The fair value is based on quoted market prices.

b) Derivative financial instruments

The fair value of derivative financial instruments is determined using a valuation technique, with estimates and assumptions consistent with those used by market participants and that are readily available to the Company. The fair value of foreign currency forward contracts and foreign exchange swaps is computed individually by each contract using the valuation technique.

4) Transfers between levels of the fair value hierarchy

There were no transfers among fair value hierarchies for the year ended December 31, 2018.

(x) Financial risk management

The Company is exposed to credit risk, liquidity risk, and market risk (including currency risk, interest rate risk, and other market price risk). The Company has disclosed the information on exposure to the aforementioned risks and the Company’s policies and procedures to measure and manage those risks as well as the quantitative information below.

(Continued)

302 -

QISDA CORPORATION Notes to the Financial Statements

The Company’s Board of Directors is responsible for developing and monitoring the Company’s risk management policies. The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor adherence to the controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s operations.

The Company’ s management monitors and reviews financial activities in accordance with procedures required by relevant regulations and internal controls. Internal auditors undertake both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Company’s Board of Directors.

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty of a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s cash and cash equivalents, derivative instruments, receivables from customers, and other receivables. The maximum exposure to credit risk is equal to the carrying amount of the Company’s financial assets. As of December 31, 2018 and 2017, the Company’s maximum exposure to credit risk amounted to $28,363,175 and $27,402,932, respectively.

The Company maintains cash and enters into derivative transactions with various reputable financial institutions; therefore, the exposure related to potential default by those counterparties is not considered significant.

The majority of the Company’s customers are well-known international companies with high financial transparency in the electronics industry. In order to reduce credit risk of accounts receivable, the Company has established a credit policy under which each customer is analyzed individually for creditworthiness for the purpose of setting the credit limit. Additionally, the Company continuously evaluates the credit quality of customers and utilizes insurance to minimize the risk.

(ii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in settling its financial liabilities by delivering cash or other financial assets. The Company manages liquidity risk by monitoring regularly the current and mid- to long-term cash demand, maintaining adequate cash and banking facilities, and ensuring compliance with the terms of the loan agreements. As of December 31, 2018 and 2017, the Company had unused credit facilities of $10,281,799 and $13,912,134, respectively.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principal and interest.

(Continued)

303 -

QISDA CORPORATION Notes to the Financial Statements

December 31, 2018 Non-derivative financial liabilities: Short-term borrowings Long-term debt (including current portion) Notes and accounts payable (including related parties) Other payables (including related parties) Guarantee deposits Derivative financial instruments: Foreign currency forward contracts`:` Outflow Inflow Foreign exchange swaps`:` Outflow Inflow December 31, 2017 Non-derivative financial liabilities: Short-term borrowings Long-term debt (including current portion) Notes and accounts payable (including related parties) Other payables (including related parties) Guarantee deposits Derivative financial instruments: Foreign currency forward contracts`:` Outflow Inflow Foreign exchange swaps`:` Outflow Inflow	Contractual cash flows $ 5,161,744 13,856,164 26,604,375 707,877 51,650 1,444,040 (1,456,242) 1,864,613 (1,863,772) $ 46,370,449 $ 5,832,660 9,195,425 26,710,564 1,724,521 52,993 152,616 (154,440) 2,033,576 (2,018,726) $ 43,529,189	Within 6 months 4,710,827 1,705,900 26,604,375 707,877 - 1,444,040 (1,456,242) 1,864,613 (1,863,772) 33,717,618 5,532,168 1,273,499 26,710,564 1,724,521 - 152,616 (154,440) 2,033,576 (2,018,726) 35,253,778	6-12 months 450,917 418,000 - - - - - - - 868,917 300,492 370,041 - - - - - - - 670,533	1-2 years - 6,905,746 - - - - - - - 6,905,746 - 2,927,493 - - - - - - - 2,927,493	2-5 years More than 5 years - - 4,826,518 - - - - - 51,650 - - - - - - - - - 4,878,168 - - - 4,624,392 - - - - - 52,993 - - - - - - - - - 4,677,385 -

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

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company utilizes derivative financial instruments to manage market risk and the volatility of profit or loss. All such transactions are carried out within the guidelines set by the Company’s Board of Directors.

(Continued)

304 -

QISDA CORPORATION Notes to the Financial Statements

1) Foreign currency risk

The Company utilizes foreign currency forward contracts and foreign exchange swaps to hedge its foreign currency exposure with respect to its sales and purchases. These financial instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements.

The maturity dates of derivative financial instruments the Company entered into were less than six months and did not conform to the criteria for hedge accounting.

The Company’s exposure to foreign currency risk arises from cash and cash equivalents, notes and accounts receivable (including related-party transactions), notes and accounts payable (including related-party transactions), other receivables (including related-party transactions), other payables (including related-party transactions), and loans and borrowings that are denominated in a currency other than the functional currency of Company. At the reporting date, the carrying amounts of the Company’ s significant monetary assets and liabilities denominated in a currency other than the functional currency of the Company and the sensitivity analysis were as follows:

December 31, 2018

Financial assets USD Financial liabilities USD Financial assets USD Financial liabilities USD	Foreign currency (in thousands) $ 910,645 917,153	Exchange rate TWD (in thousands) 30.715 27,970,461 30.715 28,170,354 December 31, 2017	Exchange rate TWD (in thousands) 30.715 27,970,461 30.715 28,170,354 December 31, 2017	Change in magnitude Effect on profit or loss (in thousands) % 1 279,705 % 1 281,704
	Foreign currency (in thousands) $ 874,908 951,384	Exchange rate 29.84 29.84	TWD (in thousands) 26,107,255 28,389,299	Change in magnitude Effect on profit or loss (in thousands) % 1 261,073 % 1 283,893

As the Company deal in diverse foreign currencies, gains and losses on foreign exchange were summarized as a single amount. The aggregate of realized and unrealized foreign exchange gains (losses) for the years ended December 31, 2018 and 2017 were $(68,624) and $436,023, respectively.

(Continued)

305 -

QISDA CORPORATION Notes to the Financial Statements

2) Interest rate risk

The Company’s short-term borrowings and long-term debt carried floating interest rates. To manage the interest rate risk, the Company periodically assesses the interest rates of bank loans and maintains good relationships with financial institutions to obtain lower financing costs. The Company also strengthens the management of working capital to reduce the dependence on bank loans as well as the risk arising from fluctuation of interest rates.

If interest rates had been 100 basis points (1%) higher/lower, with all other variables held constant, pre-tax income for the years ended December 31, 2018 and 2017 would have been $184,213 and $145,904, respectively, lower/higher, which mainly resulted from the borrowings with floating interest rates.

3) Other market price risk

The Company is exposed to the risk of price fluctuation in the securities market due to the investment in domestic listed stock. The Company supervises the equity price risk actively and manages the risk based on fair value.

(y) Capital management

In consideration of the industry dynamics and future developments, as well as external environment factors, the Company maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital expenditures, repayment of debts, dividend payments, and other business requirements for continuing operations and to reward shareholders and take into consideration the interests of other stakeholders. The Company monitors its capital through reviewing the liability-to-equity ratio periodically.

The Company’s liability-to-equity ratio at the end of each reporting period was as follows:

Total liabilities Total equity Liability-to-equity ratio	December 31, 2018 December 31, 2017 $ 48,835,959 45,205,489 $ 32,447,319 30,958,910 % 150.51 % 146.02	December 31, 2018 December 31, 2017 $ 48,835,959 45,205,489 $ 32,447,319 30,958,910 % 150.51 % 146.02
	$ $

(Continued)

306 -

QISDA CORPORATION Notes to the Financial Statements

(z) Changes in liabilities from financing activities

Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowing Long-term debts	January 1, 2018 $ 5,827,600 8,762,800 $ 14,590,400	Cash flows December 31, 2018 (677,600) 5,150,000 4,508,525 13,271,325 3,830,925 18,421,325

7. Related-party transactions:

(a) Related party name and categories

The followings are subsidiaries and other related parties that have had transactions with the Company during the reporting periods.

Name of related party Relationship with the Company Qisda Sdn. Bhd. (“QLPG”) The Company’s subsidiary Qisda Mexicana S.A. De C.V. (“QMMX”) The Company’s subsidiary Qisda America Corp. (“QALA”) The Company’s subsidiary Qisda Japan Co., Ltd. (“QJTO”) The Company’s subsidiary BenQ Corp. (“BenQ”) The Company’s subsidiary BenQ Material Corp. (“BMC”) The Company’s subsidiary BenQ Dialysis Technology Corp. (“BDT”) The Company’s subsidiary Qisda Optronics Corp. (“QTOS”) The Company’s subsidiary Qisda (L) Corp. (“QLLB”) The Company’s subsidiary Darly Venture (L) Ltd. (“Darly”) The Company’s subsidiary Darly Venture Inc. (“APV”) The Company’s subsidiary BenQ BM Holding Cayman Corp. (“BBHC”) The Company’s subsidiary Qisda (Suzhou) Co., Ltd. (“QCSZ”) The Company’s subsidiary Qisda (Hong Kong) Limited (“QCHK”) The Company’s subsidiary BenQ Medical (Shanghai) Co., LTD (“BDTcn”) The Company’s subsidiary Qisda (Shanghai) Co., Ltd. (“QCSH”) The Company’s subsidiary Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) The Company’s subsidiary Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) The Company’s subsidiary Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) The Company’s subsidiary BenQ ESCO Corp. (“BES”) The Company’s subsidiary BenQ (Hong Kong) Limited (“BQHK”) The Company’s subsidiary BenQ Europe B.V. (“BQE”) The Company’s subsidiary BenQ Asia Pacific Corp. (“BQP”) The Company’s subsidiary BenQ America Corporation (“BQA”) The Company’s subsidiary BenQ Latin America Corp. (“BQL”) The Company’s subsidiary Mainteq Europe B.V. (“MQE”) The Company’s subsidiary Darly2 Venture Co., Ltd. (“Darly 2”) The Company’s subsidiary

(Continued)

307 -

QISDA CORPORATION Notes to the Financial Statements

Name of related party Relationship with the Company BenQ Intelligent Technology (Hong Kong) Co., Ltd. (“BQHK_HLD”) The Company’s subsidiary Zowie Gear Corporation (“ZGC”) The Company’s subsidiary BenQ Guru Holding Limited (“GSH”) The Company’s subsidiary BenQ Medical Technology Corp. (“BMTC”) The Company’s subsidiary PT BenQ Teknologi Indonesia (“BQid”) The Company’s subsidiary BenQ Korea Co., Ltd. (“BQkr”) The Company’s subsidiary BenQ Japan Co., Ltd. (“BQjp”) The Company’s subsidiary BenQ Australia Pty Ltd. (“BQau”) The Company’s subsidiary BenQ (M.E.) FZE (“BQme”) The Company’s subsidiary BenQ India Private Ltd. (“BQin”) The Company’s subsidiary BenQ Singapore Pte Ltd. (“BQsg”) The Company’s subsidiary BenQ Service & Marketing (M) Sdn. Bhd (“BQmy”) The Company’s subsidiary BenQ (Thailand) Co., Ltd. (“BQth”) The Company’s subsidiary BenQ Co., Ltd. (“BQC”) The Company’s subsidiary BenQ Technology (Shanghai) Co., Ltd. (“BQls”) The Company’s subsidiary ShengCheng Trading (Shanghai) Co., Ltd (“BQsha_EC2”) The Company’s subsidiary BenQ Intelligent Technology (Shanghai) Co., Ltd (“BQC_RO”) The Company’s subsidiary Guru Systems (Suzhou) Co., Ltd. (“GSS”) The Company’s subsidiary BenQ GURU Corp. (“GST”) The Company’s subsidiary BenQ Canada Corp. “(BQca”) The Company’s subsidiary BenQ Mexico S. de R.L. de C.V. (“BQmx”) The Company’s subsidiary Joytech LLC. (“Joytech”) The Company’s subsidiary Vivitech LLC. (“Vivitech”) The Company’s subsidiary MaxGen Comercio Industrial Imp E Exp Ltda. (“MaxGen”) The Company’s subsidiary BenQ Service de Mexico S. de R.L. de C.V. (“BQms”) The Company’s subsidiary BenQ UK Limited (“BQuk”) The Company’s subsidiary BenQ Deutschland GmbH (“BQde”) The Company’s subsidiary BenQ Iberica S.L. Unipersonal (“BQib”) The Company’s subsidiary BenQ Austria GmbH “(BQat”) The Company’s subsidiary BenQ Benelux B.V. (“BQnl”) The Company’s subsidiary BenQ Italy S.R.L. (“BQit”) The Company’s subsidiary BenQ France SAS (“BQfr”) The Company’s subsidiary BenQ Nordic A.B. (“BQse”) The Company’s subsidiary BenQ LLC. (“BQru”) The Company’s subsidiary BenQ BM Holding Corp. (“BBM”) The Company’s subsidiary Darly Consulting Corporation (“Darly C”) The Company’s subsidiary Highview Investments Limited (“Highview”) The Company’s subsidiary Asiaconnect International Company (“Asiaconnect”) The Company’s subsidiary LILY Medical Corporation (“LILY”) The Company’s subsidiary BenQ AB DentCare Corporation (“BABD”) The Company’s subsidiary BenQ Hearing Solution Corporation (“BHS”) The Company’s subsidiary BenQ Medical Technology (Shanghai) Ltd. (“BMTS”) The Company’s subsidiary

(Continued)

308 -

QISDA CORPORATION Notes to the Financial Statements

Relationship with the Company The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary (note 1) The Company’s subsidiary (note 1) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 3) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 2) The Company’s subsidiary (note 1) The Company’s subsidiary (note 5) The Company’s subsidiary (note 1) The Company’s subsidiary (note 1) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 3) The Company’s subsidiary (note 1) The Company’s subsidiary (note 1)

Name of related party LILY Medical (Suzhou) Co., Ltd. (“ALS”) The Company’s subsidiary BenQ Materials (L) Co. (“BMLB”) The Company’s subsidiary Sigma Medical Supplies Corp (“SMS”) Suzhou Sigma Medical Supplies Co., Ltd. (“SMSZ”) BenQ Material (Suzhou) Co., Ltd. (“BMS”) The Company’s subsidiary Daxon Biomedical (Suzhou) Co., Ltd. (“DTB”) The Company’s subsidiary BenQ Meterials (Wuhu) Co., Ltd. The Company’s subsidiary Nanjing BenQ Hospital Co., Ltd. (“NMH”) The Company’s subsidiary Suzhou BenQ Hospital Co., Ltd. (“SMH”) The Company’s subsidiary BenQ Hospital Management Consulting (Nanjing) Co., Ltd. (“NMHC”) The Company’s subsidiary BenQ Healthcare Consulting Corporation (“BHCC”) The Company’s subsidiary Suzhou BenQ Investment Co., Ltd. (“BIC”) The Company’s subsidiary Nanjing Silvertown Health & Development Co., Ltd (“NSHD”) The Company’s subsidiary Partner Tech Corp. (“PTT”) Partner-Tech Europe GmbH (“PTE”) Partner Tech Middle East FZCO (“PTME”) Partner Tech North Africa (“PTNA”) Partner Tech UK Corp., Ltd. (“PTUK”) P&J Investment Holding Co., Ltd. (B.V.I.) P&S Investment Holding Co., Ltd. (B.V.I.) Partner Tech (Shanghai) Co., Ltd. (“PTCM”) Partner Tech USA Inc. (“PTU”) Webest Solution Corporation (“WEBEST”) Sloga Team D.o.o. (“Sloga”) Retail Solution & System S.L. (“RSS”) E-POS International LLC (“E-POS”) Partner Trading (Shanghai) Co., Ltd. (“PTCS”) Epoint Systems Pte. Ltd. (“PTSE”) Partner Tech Africa (Pty) Ltd. (“PTA”) La Fresh information Co., Ltd (“PTTN”) Corex (Pty) Ltd. (“PCX”) DFI Inc.(“DFI”) DFI ITOX, LLC DFI Co., Ltd. Yan Tong Technology Ltd. Diamond Flower Information (NL) B.V. Dual Tech International Co., Ltd. Yan Tong Infotech (Dongguan) Co., Ltd. Yan Ying Hao Trading (ShenZhen) Co., Ltd New Best Hearing International Trade Co. Ltd. (“NBHIT”) K2 International Medical Inc. (“K2”) K2 Medical (Thailand) Co., Ltd.

(Continued)

309 -

QISDA CORPORATION Notes to the Financial Statements

Name of related party	Relationship with the Company
Data Image Corporation (“DIC”)	The Company’s subsidiary (note 1)
Data Image (Mauritius) Corporation	The Company’s subsidiary(note 1)
Data Image (Suzhou) Corporation	The Company’s subsidiary (note 1)
AU Optronics Corp. (“AU”)	The Company's associate
Darfon Electronics Corp. (“DFN”)	The Company's associate
Visco Vision Inc. (“Visco Vision”)	The Company's associate
Q.S.Control Corp.	The Company's associate
Alpha Networks Inc. (“Alpha”)	The Company's associate (note 4)
TDX Medical Technology (Jiangsu) Co., Ltd	The Company's joint venture
Darwin Precisions Corporation (“Darwin”)	AU's subsidiary
AU Optronics (L) Corp. (“AUL”)	AU's subsidiary
AU Optronics (Kunshan) Co., Ltd. (“AUKS”)	AU's subsidiary
a.u. Vista Inc. (“AUVI”)	AU's subsidiary
AU Optronics (Suzhou) Corp. (“AUSZ”)	AU's subsidiary
AU Optronics (Slovakia) s.r.o. (“AUSK”)	AU's subsidiary
BenQ Foundation	Substantive related party

(note 1) Starting 2018, SMS, K2, and DIC, and their subsidiaries, have become the Company’s subsidiaries. (note 2) Prior to 2017, PTT was an associate of the Company. Starting 2017, PTT and its subsidiaries have become the Company’s subsidiaries.

(note 3) Starting 2017, PTNA, NBHIT, and DFI and its subsidiaries have become the Company’ s subsidiaries.

(note 4) Starting 2018, Alpha is the Company’s associate.

(note 5) Prior to 2018, PTA was an associate of the Company. Starting 2018, PTA has become the Company’ s subsidiary.

(b) Parent company and ultimate controlling company

The Company is both the parent company and the ultimate controlling party of the Group.

(c) Significant related-party transactions
(i) Revenue

Subsidiaries: QALA BenQ Other subsidiaries Associates	2018 2017 $ 24,321,437 21,423,279 5,175,255 5,133,513 4,099,994 2,591,307 33,596,686 29,148,099 7,322,859 6,937,198 $ 40,919,545 36,085,297

(Continued)

310 -

QISDA CORPORATION Notes to the Financial Statements

There were no significant differences between the sales prices for related parties and those for third-party customers. The payment terms of 30~120 days showed no significant difference between related parties and third-party customers.

The Company sold raw materials and work in process to its subsidiaries for reprocessing, and the related finished goods were resold back to the Company. For this reason, the Company offset the recognized revenues and costs from these transactions, which amounted to $28,182,443 and $26,074,230, for the years ended December 31, 2018 and 2017, respectively.

(ii) Purchases

Subsidiaries—QLLB Associates	2018 2017 $ 89,901,865 80,981,937 78,143 68,655 $ 89,980,008 81,050,592

(iii) Lease

The Company leased its office and plant to its related parties. In 2018 and 2017, the related rental income amounted to $108,468 and $108,383, respectively, recognized as the deduction －－ from operating expenses and the non-operating income and loss other gains and losses net. The related receivables were classified as other receivables from related parties.

(iv) Repair service

The Company’ s subsidiaries provided repair service to the Company. These subsidiaries charged the Company for their repair service based on the actual costs of services rendered. For the years ended December 31, 2018 and 2017, the repair service fees amounted to $4,738 and $8,217, respectively, recognized as operating costs. The related payables were classified as “other payables to related parties”.

(v) Donation

In 2018 and 2017, the Company made a donation to a substantive related party (BenQ Foundation) for $5,000 and $7,500, respectively.

(vi) Guarantees

For the years ended December 31, 2018 and 2017, the Company provided guarantees in order to apply for foreign exchange credit line for its subsidiaries amounting to $2,764,350 and $3,163,040, respectively.

(Continued)

311 -

QISDA CORPORATION Notes to the Financial Statements

(vii) Receivables

Account Related-party categories Accounts receivable Subsidiaries: QALA BenQ QJTO QCSZ Other subsidiaries Associates Other receivables Subsidiaries (viii) Payables Account Related party categories Accounts payable Subsidiaries: QLLB QCES Other subsidiaries Associates Other payables Subsidiaries (d) Compensation for key management personnel Short-term employee benefits Post-employment benefits	Account		Related-party categories	December 31, 2018 December 31, 2017 $ 9,325,491 6,988,538 2,548,125 2,700,442 1,014,294 899,706 843,445 1,175,292 639,170 224,348 2,350,174 2,252,108 16,720,699 14,240,434 - 1,180 $ 16,720,699 14,241,614 December 31, 2018 December 31, 2017 $ 20,583,191 22,000,740 3,868,107 2,372,476 64,464 231,327 6,934 11,471 24,522,696 24,616,014 6,738 7,076 $ 24,529,434 24,623,090 2018 2017 $ 145,575 189,529 999 941 $ 146,574 190,470

(Continued)

312 -

QISDA CORPORATION Notes to the Financial Statements

8. Pledged assets:

The carrying amounts of the assets pledged as collateral are detailed below:

Pledged assets	Pledged to secure Credit lines of bank loans $ Credit lines of bank loans $	December 31, 2018 December 31, 2017 8,834,783 10,573,568 1,230,929 1,268,020 10,065,712 11,841,588
Common stock of investments accounted for using equity method Land and buildings

9. Significant commitments and contingencies:

In addition to those in notes 6(n) and 7, the Company had the following commitments and contingencies:

(a) Significant unrecognized commitments

Unused letters of credit	December 31, 2018 December 31, 2017 $ 143,814 75,109

(b) Significant contingent liabilities
(i) In September 2010, some direct and indirect U.S. purchasers of optical disk drive products filed class actions against the Company and BQA, among other co-defendants. In the complaints, the plaintiffs claimed monetary damages from an alleged antitrust conspiracy. The Company has retained counsel to handle the related matters and reached a settlement with direct U.S. purchasers. Currently, the lawsuit is still in progress.
(ii) In January 2012, some direct and indirect Canadian purchasers of optical disk drive products filed class actions against the Company and BQA, among other co-defendants. In the complaints, the plaintiffs claimed monetary damages from an alleged antitrust conspiracy. The Company has retained counsel to handle the related matters. Currently, the lawsuit is still in progress.

10. Significant loss from disaster: None.

11. Significant subsequent events: None

(Continued)

313 -

QISDA CORPORATION Notes to the Financial Statements

12. Others:

A summary of employee benefits, depreciation, and amortization, by function, is as follows:

	2018	2018	2018	2017	2017	2017
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits: Salaries Insurance Pension Remuneration of directors Others Depreciation Amortization	391,298 26,468 14,434 - 35,130 30,711 600	2,118,086 130,930 80,894 47,652 124,768 47,240 4,239	2,509,384 157,398 95,328 47,652 159,898 77,951 4,839	469,633 27,122 15,157 - 36,270 26,654 1,629	2,280,580 132,208 80,554 57,900 100,181 49,914 4,891	2,750,213 159,330 95,711 57,900 136,451 76,568 6,520

As of December 31, 2018 and 2017, the number of the Company’ employees were 1,645 and 1,673, respectively, including 6 non-employee directors for both years.

13. Additional disclosures:

(a) Information on significant transactions:
(i) Financing provided to other parties: Table 1 (attached)
(ii) Guarantees and endorsements provided to other parties: Table 2 (attached)
(iii) Marketable securities held at the reporting date (excluding investments in subsidiaries, associates, and joint ventures): Table 3 (attached)
(iv) Marketable securities for which the accumulated purchase or sale amounts for the year exceed $300 million or 20% of the paid-in capital: Table 4 (attached)
(v) Acquisition of real estate which exceeds $300 million or 20% of the paid-in capital: None
(vi) Disposal of real estate which exceeds $300 million or 20% of the paid-in capital: Table 5 (attached)
(vii) Total purchases from and sales to related parties which exceed $100 million or 20% of the paid-in capital: Table 6 (attached)
(viii) Receivables from related parties which exceed $100 million or 20% of the paid-in capital: Table 7 (attached)
(ix) Transactions about derivative instruments: Refer to note 6(b)
(b) Information on investees : Table 8 (attached)
(c) Information on investments in Mainland China: Table 9 (attached)

(Continued)

314 -

QISDA CORPORATION Notes to the Financial Statements

14. Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2018.

315 -

Financing Company's Total Financing	Amounts Limits	12,978,928 4,974,415 12,978,928 12,978,928 3,106,343 4,974,415 3,106,343 3,106,343 1,109,244 1,109,244 1,347,248 1,347,248 1,347,248 1,347,248 12,978,928 1,347,248 1,347,248
Finanacing Limits for Each	Borrowing Company	6,489,464 2,487,207 6,489,464 6,489,464 1,553,171 2,487,207 1,553,171 1,553,171 1,109,244 1,347,248 1,109,244 1,347,248 1,347,248 1,347,248 6,489,464 1,347,248 1,347,248
Collateral	Value	- - - - - - - - - - - - - - - - -
	Item	- - - - - - - - - - - - - - - - -
Allowance	for Bad Debt	- - - - - - - - - - - - - - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - - - - - - - - - - - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Range of Interest Rates	During the Period	- - LIBOR+0.85% - - - - - - - - - - - - - -
Actual Usage	Amount During the Period	1,781,470 (USD 58,000) - 230,363 (USD 7,500) - - 307,150 (USD 10,000) 276,435 (USD 9,000) - - - 30,715 (USD 1,000) 368,580 (USD 12,000) 138,218 (USD 4,500) 307,150 (USD 10,000) - - 30,715 (USD 1,000)
	Ending Balance	1,781,470 (USD 58,000) - 230,363 (USD 7,500) - - 307,150 (USD 10,000) 276,435 (USD 9,000) - - - 30,715 (USD 1,000) 368,580 (USD 12,000) 138,218 (USD 4,500) 307,150 (USD 10,000) - - 122,860 (USD 4,000)
Highest Balance of Financing to Other	Parties During the Period	1,795,390 (USD 58,000) 1,781,470 (USD 58,000) 230,363 (USD 7,500) 233,710 (USD 7,550) 291,950 (USD 10,000) 309,550 (USD 10,000) 278,595 (USD 9,000) 291,950 (USD 10,000) 40,873 (USD 1,400) 152,300 (USD 5,000) 61,210 (USD 2,000) 371,460 (USD 12,000) 139,298 (USD 4,500) 309,550 (USD 10,000) 481,718 (USD 16,500) 296,050 (USD 10,000) 123,320 (USD 4,000)
Is a	Related Party	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Qisda (Shanghai) Co., Ltd. (“QCSH”) Qisda (Shanghai) Co., Ltd. (“QCSH”) BBHC Darly Venture (L) Ltd BQL BBHC QMMX BenQ Co.,Ltd (“BQC”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Nanjing BenQ Hospital Co., Ltd.(“NMH”) Nanjing BenQ Hospital Co., Ltd.(“NMH”) Nanjing BenQ Hospital Co., Ltd.(“NMH”) BBM Darly Venture (L) Ltd Nanjing BenQ Hospital Co., Ltd.(“NMH”)
	Name of Lender	QLLB QLLB QLLB QLLB BenQ QLLB BenQ BenQ BBM BBM BBHC BBHC BBHC BBHC BBHC QLLB BBHC
	No.	1 1 1 1 2 1 2 2 3 3 4 4 4 4 4 1 4

316 -

Financing Company's Total Financing	Amounts Limits	32,447,319 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 32,447,319 1,550,585 12,978,928 12,978,928 345,366 1,955,556 345,366 386,512 386,512 12,340 1,550,585 1,550,585
Finanacing Limits for Each	Borrowing Company	3,244,732 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 1,550,585 3,244,732 1,550,585 6,489,464 6,489,464 345,366 1,173,334 345,366 386,512 386,512 12,340 1,550,585 1,550,585
Collateral	Value	- - - - - - - - - - - - - - - - - - -
	Item	- - - - - - - - - - - - - - - - - - -
Allowance	for Bad Debt	- - - - - - - - - - - - - - - - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - - - - - - - - - - - - - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Range of Interest Rates	During the Period	4.00% 4.28% - - 3.70% 3.20% 1.00% 4.35% - - - 2.30% 4.28% - - - - - -
Actual Usage	Amount During the Period	134,127 (CNY 30,000) - 236,958 (CNY 53,000) - - - - 223,545 (CNY 50,000) - 8,942 (CNY 2,000) 368,580 (USD 12,000) 162,631 (MYR 22,000) - 22,355 (CNY 5,000) - 822,646 (CNY 184,000) - - 2,830 (CNY 633)
	Ending Balance	134,127 (CNY 30,000) - 236,958 (CNY 53,000) - - - - 223,545 (CNY 50,000) - 8,942 (CNY 2,000) 368,580 (USD 12,000) 162,631 (MYR 22,000) - 22,355 (CNY 5,000) - 894,180 (CNY 200,000) - - 2,830 (CNY 633)
Highest Balance of Financing to Other	Parties During the Period	141,273 (CNY 30,000) 69,686 (CNY 15,000) 238,346 (CNY 53,000) 108,309 (CNY 23,000) 368,580 (USD 12,000) 299,500 (USD 10,000) 185,192 (CNY 40,000) 223,545 (CNY 50,000) 235,545 (CNY 50,000) 9,418 (CNY 2,000) 371,460 (USD 12,000) 166,192 (MYR 22,000) 165,840 (MYR 22,000) 22,486 (CNY 5,000) 23,546 (CNY 5,000) 941,820 (CNY 200,000) 29,840 (USD 1,000) 29,840 (USD 1,000) 2,830 (CNY 633)
Is a	Related Party	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Qisda Precision Industry (SuZhou) Co., Ltd (“QCPS”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Qisda (Shanghai) Co., Ltd. (“QCSH”)(Note 13) QLLB Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) QLLB Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) BenQ Material (WuHu) Co., Ltd.(Note 13) Partner-Tech Europe GmbH Partner Tech (Shanghai) Co., Ltd.(“PTCM”) PTTNC Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13)
	Name of Lender	QCOS QCOS QCOS QCOS QCOS QCOS QCOS QCOS QCOS QLPG QCOS QLPG BIC BIC BMS PTT PTT PTTN QCOS
	No.	5 5 5 5 5 5 5 5 5 6 5 6 7 7 8 9 9 10 5

317 -

Financing Company's Total Financing	Amounts Limits	44,404 25,632 25,632 537,855 537,855
Finanacing Limits for Each	Borrowing Company	44,404 25,632 25,632 537,855 537,855
Collateral	Value	- - - - -
	Item	- - - - -
Allowance	for Bad Debt	- - - - -
Reasons for	Short-term Financing	Operating requirements Operating requirements Operating requirements Operating requirements Operating requirements
	Transaction Amounts	- - - - -
Purpose of Fund Financing	for the Borrower	2 2 2 2 2
Range of Interest Rates	During the Period	1.00% - - - -
Actual Usage	Amount During the Period	- - 23,249 (CNY 5,200) - -
	Ending Balance	- - 23,249 (CNY 5,200) - -
Highest Balance of Financing to Other	Parties During the Period	37,673 (CNY 8,000) 24,487 (CNY 5,200) 23,249 (CNY 5,200) 61,210 (USD 2,000) 137,723 (USD 4,500)
Is a	Related Party	Yes Yes Yes Yes Yes
Financial	Statement Account	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties
	Name of Borrower	Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Nanjing BenQ Hospital Co., Ltd.(“NMH”)(Note 13) Suzhou BenQ Hospital Co., Ltd. (“SMH”)(Note 13)
	Name of Lender	NMHC GSS NMHC QCES QCES
	No.	12 11 12 13 13

318 -

Endorsements / Guarantees Provided to Subsidiaries in Mainland China	Endorsements / Guarantees Provided to Subsidiaries in Mainland China	- Y - - - Y - - Y - - - Y
Gaurantee Provided by A Subsidiary		- - - - - - - - - - - - -
Gaurantee Provided by Parent Company		Y - Y Y Y Y Y Y Y Y Y Y Y
Maximum Amounts for Guarantees and Endorsements		483,140 1,198,823 16,223,660 483,140 483,140 483,140 483,140 483,140 483,140 483,140 483,140 483,140 735,090
Ratio of Accumulated Amounts of Guarantees and Endorsements to Net Worth of the Latest Financial Statements		- - 10.03% 3.18% - - - 6.36% 3.18% - 3.18% 3.18% 3.34%
Property Pledged for Guarantees and Endorsements		- - - - - - - - - - - - -
Actual Usage Amount During the Period		2,764,350 (USD 90,000) - - 30,715 (USD 1,000) - - 30,715 (USD 1,000) 61,430 (USD 2,000) - 30,715 (USD 1,000) - 30,715 (USD 1,000) 19,437
Balance of Guarantees and Endorsements as of Reporting Date		3,255,790 (USD 106,000) - - 30,715 (USD 1,000) - - 30,715 (USD 1,000) 61,430 (USD 2,000) - 30,715 (USD 1,000) - 30,715 (USD 1,000) 30,715
Highest Balance of Guarantees and Endorsements During the Period		5,555,450 (USD 182,000) 282,546 (CNY 60,000) 10,000 30,955 (USD 1,000) 59,900 (USD 2,000) 29,840 (USD 1,000) 30,955 (USD 1,000) 61,910 (USD 2,000) 61,430 (USD 2,000) 30,955 (USD 1,000) 29,840 (USD 1,000) 30,955 (USD 1,000) 30,830
Limits on Amount of Guarantees and Endorsements Provided to Each Guaranteed Party		193,256 479,529 6,489,464 193,256 193,256 193,256 193,256 193,256 193,256 193,256 193,256 735,090 193,256
Counter-party of Guarantee and Endorsement	Relationship with the Company	Parent/Subsidiary Affiliates Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary
	Name	Partner Tech Middle East FZCO BenQ Intelligent Technology (Shanghai) Co., Ltd. (“BQC_RO”) QLLB Partner Tech USA Inc. Webest Solution Corp. Partner Tech (Shanghai) Co., Ltd. Partner Tech USA Inc. Partner Tech Middle East FZCO Partner Tech (Shanghai) Co., Ltd. Partner-Tech Europe GmbH Partner-Tech Europe GmbH Data Image (Suzhou) Corporation Partner Tech Africa (Pty) Ltd.
	Endorsements / Guarantee Provider	PTT PTT PTT PTT PTT PTT PTT PTT PTT PTT BQC The Company DIC
	No.	2 1 0 2 2 2 2 2 2 2 2 3 2

319 -

	Note	- - - - - - - - - - - - - - - - - -
December 31, 2018	Fair Value	33,750 96,614 - 30,380 2,247 31,779 143 13,248 40,003 7,673 52,162 185,852 25,064 1,398 103,210 1,608 6,624 6,634
	Percentage of Ownership	4.61% 2.50% 2.50% 0.89% 6.19% 3.14% 0.06% 6.17% 3.33% 6.56% 7.13% 4.53% 2.47% 0.03% 2.51% 0.16% 3.09% 2.24%
	Carrying Value	33,750 96,614 (Note) 30,380 2,247 31,779 143 13,248 40,003 7,673 52,162 185,852 25,064 1,398 103,210 1,608 6,624 6,634
	Shares/Units	1,250 - 225 310 619 672 31 2,000 5,000 10,000 1,932 2,940 530 132 1,633 34 1,000 1,033
	Financial Statement Account	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current
Relationship with the Securities Issuer		- - - - - - - - - - - - - - - - - -
Marketable Securities Type and Name		Stock: APLEX Technology, Inc. CPEC Huachuang Private Equity Fund (Fujian) Co. Ltd. Fund Stock: Biodenta Corporation Stock: Hi-Clearance Inc. Stock: Joymaster Inc. Stock: Crystalvue Medical Corp. Stock: Gigastone Corporation Stock: Athena Capital Management Stock: CDIB Capital Innovation Advisors Corporation Preferred Stock: D8AI Holdings Coporation Stock: APLEX Technology, Inc. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: AUO Crystal Corp. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: Athena Capital Management Stock: Anqing Innovation
Investing Company		The Company QLLB BMC APV APV APV APV APV APV APV APV APV Darly 2 Darly 2 Darly 2 Darly C Darly C Darly C
- 320 -

	Note	- - - - - - - - - - - - -
December 31, 2018	Fair Value	2,326 13,922 71,502 - 10,687 - 24,300 94,641 28,234 218,145 - - 500
	Percentage of Ownership	0.53% 0.34% 7.06% 13.75% 2.30% 0.50% 3.32% - - - 1.58% - 10.00%
	Carrying Value	2,326 13,922 71,502 (Note) 10,687 (Note) 24,300 94,641 28,234 218,145 (Note) (Note) 500
	Shares/Units	285 220 1,512 1,375 3,500 50 900 5,809 1,900 17,436 USD 225 USD 200 100
	Financial Statement Account	Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income-non-current
Relationship with the Securities Issuer		- - - - - - - - - - - - -
Marketable Securities Type and Name		Stock: Visco Vision Inc. Stock: Raydium Semiconductor Corporation Stock: Crystalvue Medical Corp. Stock: We Can Financial Technology, Inc. Preferred Stock: D8AI Holdings Coporation Stock: We Can Financial Technology, Inc. Stock: APLEX Technology, Inc. Fund: Nomura Taiwan Money Market Fund: Cathay No 1 REIT Fund: Allianz Global Investors Taiwan Money Market Asia Tech Taiwan Venture Fund Bond: WM 7.25% Perpetual Stock: Isotope BIOTECH.,LLC.
Investing Company		Darly C Darly C BenQ PTT PTT WEBEST DFI DFI DFI DFI DFI DFI K2

Ending Balance(Note)	Amount	2,166,624 473,229
	Shares	100,000 35,623
Disposal	Gain (Loss) on Disposal	- -
	Carrying Value	- -
	Amount	- -
	Shares	- -
Purchase	Amount	2,300,000 498,716
	Shares	100,000 35,623
Beginning Balance	Amount	- -
	Shares	- -
	Name of Relationship	Associate Affiliates
	Counter-Party	- -
	Financial Statement Account	Investment accounted for using equity method Investment accounted for using equity method
Marketable	Securities Type and Name	Alpha SMS
	Company Name	The Company BMC

322 -

Table 5 Disposal of real estate which exceeds NT$300 million or 20% of the paid-in capital For the year ended December 31, 2018 (Amounts in thousands of New Taiwan dollars, unless specified otherwise)	Notes	-
	Price Reference	According to the results of price appraisal and negotiation
	Purpose of Disposal	Liquidation of QMMX
	Relationship with the Counter Party	-
	Counter Party	Instuitive Surgical, S. DE R.L. DE C.V.
	Gains or Loss on Disposal of real estate	156,703
	Status of Payment	Fully collected
	Transaction Amount	311,923
	Book Value	155,220
	Acquisition Date	2008~2009
	Transaction Date	January 25, 2018
	Property Name	Factory and Land in Mexico
	Company Name	QMMX

323 -

	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	9 4 35 5 4 - 1 (77) 7 19 (8) (2) (31) 100 100 92 - - - (1) (6) (1) 75 - (2) 84 2 (1) -
	Ending Balance	2,548,125 1,014,294 9,325,491 1,299,838 977,137 56,239 193,393 (20,583,191) 152,988 425,857 (177,305) (40,544) (202,601) 177,305 202,601 19,655,622 29,174 17,085 6,955 (206,713) (1,347,828) (197,011) 206,713 (17,085) (95,563) 3,574,499 73,872 (41,401) (6,955)
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - (Note 1) (Note 1) - - - - - - - - - - - - - - - - - - -
Transaction Detail	Payment Terms	OA90 OA120 OA90 OA120 OA120 OA30 EOM60 OA90 OA90 OA90 OA90 OA90 OA90 OA90 OA90 OA60 OA120 OA120 OA60 OA60 EOM55 EOM60 OA60 OA60 OA120 OA60 OA120 EOM55 OA60
	% of Total Purchases/(Sales)	(5) (2) (25) (5) (3) - (1) 94 (39) (16) 39 1 5 (100) (100) (91) (1) - - 2 9 - (79) 1 1 (83) (10) 1 -
	Amount	(5,175,255) (2,432,235) (24,321,437) (4,781,283) (2,508,394) (180,014) (1,003,652) 89,901,865 (5,001,378) (2,053,749) 4,969,688 168,062 654,666 (4,969,688) (654,666) (75,842,938) (701,668) (176,820) (100,037) 1,652,875 7,732,441 124,191 (1,652,875) 176,820 283,204 (17,489,108) (2,137,293) 233,352 100,037
	Purchases/ (Sales)	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases (Sales) (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases (Sales) Purchases Purchases (Sales) (Sales) Purchases Purchases
	Nature of Relationship	Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Associate Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Other related party Other related party Parent/Subsidiary Associate Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Other related party Affiliates Affiliates Affiliates Other related party Affiliates Affiliates Other related party Affiliates
	Related Party	BenQ QJTO QALA AU AUL PTT DFI QLLB AU AUL BMLB Visco BMS BMC BMLB QLLB BQC_RO QCES QCOS QCPS AU DFI QCSZ QCSZ DARWIN QLLB BQC_RO AU QCSZ
	Company Name	The Company The Company The Company The Company The Company The Company The Company The Company BMC BMC BMC BMC BMLB BMLB BMS QCSZ QCSZ QCSZ QCSZ QCSZ QCSZ QCSZ QCPS QCES QCES QCOS QCOS QCOS QCOS

324 -

	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(99) 100 (85) (15) (100) 17 40 6 27 - (62) (13) (100) 18 (98) (13) (5) (4) 35 62 (54) (94) (100) 17 16 7 6 1 23 (99) (96) (93) (98) (100) (96) (99)
	Ending Balance	(1,014,294) 20,583,191 (19,655,622) (3,574,499) (9,325,491) 998,043 2,381,197 334,147 1,602,899 21,240 (2,548,125) (532,512) (998,043) 95,876 (95,876) (73,872) (29,174) (21,240) 254,210 448,309 (334,147) (254,210) (448,309) 295,282 279,276 117,217 104,811 12,082 402,902 (1,602,899) (295,282) (279,276) (117,217) (104,811) (12,082) (402,902)
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Transaction Detail	Payment Terms	OA120 OA90 OA60 OA60 OA90 OA90 OA90 OA90 OA60 OA60 OA90 EOM55 OA90 OA60 OA60 OA120 OA120 OA60 OA90 OA90 OA90 OA90 OA90 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60 OA60
	% of Total Purchases/(Sales)	100 (96) 81 19 100 (16) (44) (4) (33) (1) 32 22 100 (18) 99 49 16 4 (49) (26) 94 99 97 (16) (13) (9) (3) 1 (12) 92 98 94 100 99 100 97
	Amount	2,432,235 (89,901,865) 75,842,938 17,489,108 24,321,437 (2,876,068) (7,714,886) (769,649) (5,872,651) (180,482) 5,175,255 3,590,347 2,876,068 (651,030) 651,030 2,137,293 701,668 180,482 (437,862) (227,732) 769,649 437,862 227,732 (1,119,543) (896,252) (588,194) (180,327) (102,101) (804,062) 5,872,651 1,119,543 896,252 588,194 180,327 102,101 804,062
	Purchases/ (Sales)	Purchases (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases (Sales) Purchases Purchases Purchases Purchases (Sales) (Sales) Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases
	Nature of Relationship	Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Other related party Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
	Related Party	The Company The Company QCSZ QCOS The Company BQA BQE BQL BQP BQC_RO The Company AU BenQ BQCA BQA QCOS QCSZ BenQ BQmx Maxgen BenQ BQL BQL BQJP BQME BQAU BQTH BQMY BQIN BenQ BQP BQP BQP BQP BQP BQP
	Company Name	QJTO QLLB QLLB QLLB QALA BenQ BenQ BenQ BenQ BenQ BenQ BenQ BQA BQA BQCA BQC_RO BQC_RO BQC_RO BQL BQL BQL BQmx Maxgen BQP BQP BQP BQP BQP BQP BQP BQJP BQME BQAU BQTH BQMY BQIN

325 -

	Note	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(96) 14 22 15 5 19 3 9 4 3 (98) (99) (100) (96) (100) (93) (99) (94) (97) 14 43 4 (46) 97 (88) (72) (21) 27 9 2 3 18
	Ending Balance	(2,381,197) 218,993 355,706 239,131 75,485 302,159 53,815 147,623 59,707 52,992 (218,993) (355,706) (239,131) (75,485) (302,159) (53,815) (147,623) (59,707) (52,992) 54,334 167,817 13,731 (56,239) (54,334) (167,817) (13,731) (193,393) 284,650 91,916 18,023 36,816 197,011
Transactions with Terms Different from Others	Payment Terms	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
	Unit Price	- - - - - - - - - - - - - - - - - - - (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) - - - - - -
Transaction Detail	Payment Terms	OA90 OA30 OA30 OA45 OA30 OA30 OA30 OA30 OA30 OA30 OA30 OA30 OA45 OA30 OA30 OA30 OA30 OA30 OA30 OA90 OA90 OA90 OA30 OA90 OA90 OA90 EOM60 60~90 Days 60~90 Days 60~90 Days 60~90 Days EOM60
	% of Total Purchases/(Sales)	92 (14) (23) (14) (9) (9) (7) (5) (3) (3) 100 99 100 99 100 100 100 100 100 (18) (30) (11) 22 93 69 83 22 (29) (15) (8) (2) (2)
	Amount	7,714,886 (1,239,662) (2,088,671) (1,317,555) (865,223) (791,759) (645,880) (417,788) (276,117) (300,190) 1,239,662 2,088,671 1,317,555 865,223 791,759 645,880 417,788 276,117 300,190 (190,971) (331,010) (123,851) 180,014 190,971 331,010 123,851 1,003,652 (1,383,881) (701,635) (382,212) (111,730) (124,191)
	Purchases/ (Sales)	Purchases (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases (Sales) (Sales) (Sales) (Sales) (Sales)
	Nature of Relationship	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates Affiliates
	Related Party	BenQ BQUK BQDE BQAT BQSE BQFR BQIB BQNL BQCH BQIT BQE BQE BQE BQE BQE BQE BQE BQE BQE PTU PTE PTUK The Company PTT PTT PTT The Company DFI-ITOX, LLC. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Yan Ying Hao Trading (ShenZhen) Co., Ltd. QCSZ
	Company Name	BQE BQE BQE BQE BQE BQE BQE BQE BQE BQE BQUK BQDE BQAT BQSE BQFR BQIB BQNL BQCH BQIT PTT PTT PTT PTT PTU PTE PTUK DFI DFI DFI DFI DFI DFI

326 -

	Note	- - - -
Notes/Accounts Receivable or (Payable)	% of Total Note/ Accounts Receivable or (Payable)	(99) (95) (100) (97)
	Ending Balance	(284,650) (91,916) (18,023) (36,816)
Transactions with Terms Different from Others	Payment Terms	- - - -
	Unit Price	- - - -
Transaction Detail	Payment Terms	60~90 Days 60~90 Days 60~90 Days 60~90 Days
	% of Total Purchases/(Sales)	94 95 100 94
	Amount	1,383,881 701,635 382,212 111,730
	Purchases/ (Sales)	Purchases Purchases Purchases Purchases
	Nature of Relationship	Affiliates Affiliates Affiliates Affiliates
	Related Party	DFI DFI DFI DFI
	Company Name	DFI-ITOX,LLC. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Yan Ying Hao Trading (ShenZhen) Co., Ltd.

327 -

Allowance for Bad Debts	Allowance for Bad Debts	- - - - - - - - - - - - - - - - - - - - -
Amount Received in Subsequent Period		1,082,751 390,338 882,060 771,306 354,644 1,299,838 - 169,871 78,037 198,849 144,376 144,373 5,535,217 - - - 15,561,890 396,928 1,599,485 130,573 1,024,467
Overdue	Action Taken	- - - - - - - - - - - - - - - - - - - - -
	Amount	433,799 20,611 1,592,311 - 56,699 1,299,838 - - - - - - 5,535,217 - - - 15,619,696 84,965 797,369 334,147 818,519
	Turnover Rate	1.97 2.54 2.98 (Note 1) (Note 1) 3.87 2.44 6.62 7.27 3.56 28.79 3.09 4.14 9.21 4.38 (Note 1) 4.22 3.04 3.03 1.48 3.48
	Ending Balance	2,548,125 1,014,294 9,325,491 843,445 360,739 1,299,838 977,137 193,393 152,988 425,857 177,305 202,601 19,655,622 206,713 3,574,499 3,868,107 20,583,191 998,043 2,381,197 334,147 1,602,899
Nature of Relationship		Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Associate Parent/Subsidiary Other related party Other related party Affiliates Affiliates Affiliates Affiliates Affiliates Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Affiliates Affiliates
Related Party		BenQ QJTO QALA QCSZ QCOS AU AUL DFI AU AUL BMC BMLB QLLB QCSZ QLLB The Company The Company BQA BQE BQL BQP
Company Name		The Company The Company The Company The Company The Company The Company The Company The Company BMC BMC BMLB BMS QCSZ QCPS QCOS QCES QLLB BenQ BenQ BenQ BenQ

328 -

Allowance for Bad Debts	Allowance for Bad Debts	- - - - - - - - - - - - - - - -
Amount Received in Subsequent Period		358,673 80,107 46,329 231,998 144,598 87,246 111,201 22,416 - - - - - 49,826 245,720 174,204
Overdue	Action Taken	- - - - - - - - - - - - - - - -
	Amount	28,320 127,705 397,964 149,673 162,526 62,753 319,827 162,526 142,859 215,003 84,413 254,156 102,370 103,951 32,521 9,816
	Turnover Rate	(Note 1) 1.78 0.54 3.77 3.25 5.65 2.36 1.94 5.91 6.19 5.86 2.58 2.77 2.20 5.47 0.89
	Ending Balance	358,673 254,210 448,309 295,282 279,276 117,217 402,902 104,811 218,993 355,706 239,131 302,159 147,623 167,817 284,650 197,011
Nature of Relationship		Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
Related Party		QCSZ BQmx Maxgen BQJP BQME BQAU BQIN BQTH BQUK BQDE BQAT BQFR BQNL PTE DFI-ITOX, LLC. QCSZ
Company Name		BenQ BQL BQL BQP BQP BQP BQP BQP BQE BQE BQE BQE BQE PTT DFI DFI

329 -

Note	Note	Associate Associate Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Parent/Subsidiary Associate Parent/Subsidiary Associate Parent/Subsidiary Parent/Subsidiary Affiliates Affiliates Affiliates Associate Associate Affiliates Affiliates
Investment Income (Loss)		700,370 314,975 44,733 118,501 1,485,993 14,573 (10,254) (46) 590,263 68,569 14,318 30,792 (79,534) (28,305) 9 2,208 192,143 (11,946) 2,089 (1,172) - - - - - - -
Net Income (Loss) of the Investee		10,160,598 1,520,258 328,579 135,152 1,485,045 14,573 (10,254) (46) 687,784 68,569 14,318 159,028 30,144 (31,659) 9 11,037 605,337 (88,009) 9,324 (3,911) 135,152 (80,669) (101,464) 199,370 (17,543) (2,013) 328,579
Balances as of December 31, 2018	Carrying Value	13,921,968 1,846,261 561,531 (12,595) 7,765,804 35,146 37,145 339,435 12,023,183 1,817,999 60,691 649,417 1,378,698 168,965 999 49,437 3,325,361 2,166,624 123,227 259,912 (1,770) 1,698,252 473,229 129,024 14,481 145,564 195,337
	Percentage of Ownership	6.90% 20.72% 13.61% 87.68% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 19.35% 58.04% 92.85% 100.00% 20.00% 45.08% 18.40% 29.85% 28.82% 12.32% 100.00% 89.06% 18.58% 15.48% 45.11% 4.74%
	Shares	663,599 58,005 43,659 385 408,641 1,000 - 50,000 114,250 113,258 6,000 47,400 43,577 25,999 100 6,000 51,610 100,000 3,880 20,000 54 35,082 35,623 9,984 2,190 12,011 15,182
Original investment Amount	December 31, 2017	8,085,543 662,195 507,883 369,565 7,160,050 32,800 2,701 578,128 3,687,539 170,016 165,000 1,476,632 1,475,978 259,990 1,000 63,000 3,154,750 - - - 50,287 1,140,340 - 180,523 29,127 10,266 221,786
	December 31, 2018	8,085,543 662,195 507,883 79,449 7,160,050 32,800 2,701 578,128 3,687,539 170,016 165,000 1,476,632 1,475,978 259,990 1,000 63,000 3,154,750 2,300,000 121,134 260,000 10,811 1,141,340 498,716 180,523 29,127 77,933 221,786
Main Businesses and Products		R&D, manufacture and sale of TFT-LCD panels R&D, manufacture and sale of MLCC and keyboards R&D, manufacture and sale of optoelectronics film Manufacture of computer peripheral products Manufacture and sales of brand-name electronic Sales of electronic products Sales and maintenance of electronic products in Japanese market Leasing and management services Investment and holding activity Investment and holding activity Investment and holding activity Investment and holding activity Manufacture, sales, and import and export of POS terminals and peripherals Manufacture and sale of medical consumable and equipment Manufacture of computer peripheral products Manufacture and sales of medical consumables and equipments Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Sale of medical consumable and equipment Manufacture and sales of marine display modules Manufacture of computer peripheral products Investment and holding activity Manufacture and sale of medical consumable and equipment Manufacture and sale of contact lenses R&D, manufacture and sale of medical consumable and equipment Investment management consulting R&D, manufacture and sale of optoelectronics film
Location		Taiwan Taiwan Taiwan Mexico Taiwan USA Japan Malaysia Malaysia Taiwan Malaysia Cayman Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Mexico Malaysia Taiwan Taiwan Taiwan Taiwan Taiwan
Investee		AU DFN BMC QMMX BenQ QALA QJTO QLPG QLLB APV Darly BBHC PTT BDT QTOS Q.S.Control Corp. DFI Alpha K2 DIC QMMX BMLB SMS Visco Vision Inc. Cenefom Corporation Darly C BMC
Investor		The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company QALA BMC BMC BMC BMC APV APV

330 -

Note	Note	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Associate Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
Investment Income (Loss)		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net Income (Loss) of the Investee		66,682 159,028 (8,161) 30,144 (31,659) 20,105 605,337 (88,009) (8,161) - (88,009) 29,836 159,028 (105,668) (78,687) 822,613 163,112 79,670 116,664 29,836 1,520,258 328,579 159,028 66,682 863 7,434 40,509 224 (19,420) 823 7,110 (1,990)
Balances as of December 31, 2018	Carrying Value	83,092 342,595 11,483 156,923 7 10 152,563 247,787 6,722 324 257,171 23,549 216,490 (115,771) (30,450) 2,390,551 1,030,331 152,331 2,337,844 70,635 691,284 1,040,203 274,076 441,842 71,481 94,497 130,138 22 10,606 (15,013) 79,365 (21,749)
	Percentage of Ownership	7.96% 10.21% 41.00% 8.00% 0.01% 0.02% 2.00% 2.06% 24.00% 33.33% 2.34% 12.50% 6.45% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 37.50% 7.76% 25.21% 8.16% 43.43% 100.00% 90.18% 100.00% 0.31% 100.00% 100.00% 100.00% 100.00%
	Shares	3,549 25,000 4,100 6,006 1 1 2,294 11,187 2,400 (Note 1) 12,710 7,800 15,798 200 4,350 466,200 5,009 20,000 (Note 1) 23,400 21,723 80,848 20,000 19,353 82 6,265 4,000 - 440,296 - - 500
Original investment Amount	December 31, 2017	42,584 904,102 50,250 112,080 10 12 149,096 - 28,000 2,000 - 30,456 526,134 114,553 87,027 859,037 960,568 950,000 1,911,132 74,021 361,856 946,731 719,088 235,069 74,659 109,410 32,944 - 224,405 8,891 4,518 1,837
	December 31, 2018	42,584 904,102 50,250 112,080 10 12 149,096 262,111 28,000 2,000 273,445 30,456 526,134 114,553 203,839 859,037 960,568 950,000 2,061,132 74,021 361,856 946,731 719,088 235,069 74,659 109,410 118,282 21 224,405 8,891 4,518 1,837
Main Businesses and Products		Manufacture and sales of medical consumables and equipments Investment and holding activity Energy service Manufacture, sales, and import and export of POS terminals and peripherals Manufacture and sales of medical consumables and equipments R&D and sales of computer information system Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Energy service Cultural and Art Industry R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Investment and holding activity Investment and holding activity Sales of brand-name electronic products in North America markets Sales of brand-name electronic products in Latin America markets Investment and holding activity Sales of electronic products in European markets Sales of brand-name electronic products in Asia Investment and holding activity Investment and holding activity R&D, manufacture and sale of MLCC and keyboards R&D, manufacture and sale of optoelectronics film Investment and holding activity Assembly and sales of gaming electronic products Maintenance of brand-name electronic monitors and projectors in European markets Assembly and sales of gaming electronic products Sales of brand-name electronic products in HK markets Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products
Location		Taiwan Cayman Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Cayman USA USA Hong Kong The Netherlands Taiwan Taiwan Hong Kong Taiwan Taiwan Cayman Taiwan The Netherlands Taiwan Hong Kong Indonesia India United Arab Emirates Japan Singapore
Investee		BMTC BBHC BES PTT BDT GST DFI Alpha BES Green Island Co., Ltd. Alpha BenQ Guru Holding Ltd. (GSH) BBHC BQA BQL BQHK BQE BQP Darly 2 BenQ Guru Holding Ltd. (GSH) DFN BMC BBHC ZGC MQE ZGC BQHK_HLD PT BenQ Teknologi Indonesia BenQ India Private Ltd. BenQ (M.E.) FZE BenQ Japan Co., Ltd. BenQ Singapore Pte Ltd.
Investor		APV APV APV APV APV APV APV APV Darly C Darly C Darly C Darly Darly BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BenQ BQP BQP BQP BQP

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Note	Note	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates
Investment Income (Loss)		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net Income (Loss) of the Investee		6,087 (7,317) 480 15,211 224 (1,054) 1,366 (43,810) (43,810) (87,621) (87,621) 800 20,105 (2,013) 159,028 29,836 66,682 (8,161) 30,144 7,434 605,337 (88,009) 9,324 (3,911) 9,696 23,866 3,613 11,241 4,079 3,670 7,487 8,989 3,161
Balances as of December 31, 2018	Carrying Value	54,791 7,642 (38,195) 7,965 6,998 18,686 31,692 (119,400) (119,400) (119,400) (119,400) 2,973 49,421 177,114 891,220 94,180 37,227 5,042 43,059 16 610,570 14,867 45,717 48,070 25,042 183,040 (44,128) 47,116 49,247 27,553 (136,072) 69,149 13,662
	Percentage of Ownership	100.00% 100.00% 100.00% 100.00% 99.69% 100.00% 100.00% 100.00% 100.00% 50.00% 50.00% 100.00% 99.94% 54.89% 26.55% 50.00% 3.57% 18.00% 2.19% 0.02% 8.01% 0.15% 7.71% 4.32% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
	Shares	2,191 100 12,000 10 6 1 3 1 1 - - 3 5,756 14,614 65,024 31,200 1,590 1,800 1,648 1 9,175 795 1,003 3,000 - - - - - 50 - - -
Original investment Amount	December 31, 2017	132,590 119,488 120,116 1,713 - 26 77,591 4,671 4,671 4,671 4,671 87 64,898 6,846 2,122,721 121,860 27,337 22,250 49,426 10 596,382 - - - 14,800 25,587 567 1,091 4,677 92,654 2,045 445 52
	December 31, 2018	132,590 119,488 120,116 1,713 6,901 26 77,591 4,671 4,671 4,671 4,671 87 64,898 89,179 2,122,721 121,860 27,337 22,250 49,426 10 596,382 15,885 44,997 48,000 14,800 25,587 567 1,091 4,677 92,654 2,045 445 52
Main Businesses and Products		Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management service to affiliates Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Investment and holding activity Investment and holding activity Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management services to affiliates R&D and sales of computer information system Investment management consulting Investment and holding activity Investment and holding activity Manufacture and sales of medical consumables and equipment Energy service Manufacture, sales, and import and export of POS terminals and peripherals Assembly and sales of gaming electronic products Manufacture and sales of industrial motherboards and components R & D, manufacture and sale of LAN/MAN, wireless, mobile & broadband, and digital multimedia products Sale of medical consumable and equipment Manufacture and sales of marine display modules Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Sales of brand-name electronic products Providing administration and management services to affiliates
Location		Australia Malaysia Thailand Korea Indonesia Canada Mexico USA USA Brazil Brazil Mexico Taiwan Taiwan Cayman Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan UK Germany The Netherlands Australia Spain Italy France Sweden Russia
Investee		BenQ Australia Pte Ltd. BenQ Service & Marketing (M) Sdn Bhd BenQ (Thailand) Co., Ltd. BenQ Korea Co., Ltd. PT BenQ Teknologi Indonesia BenQ Canada Corp. BenQ Mexico S. de R.L. de C.V. Joytech LLC Vivitech LLC Maxgen Comércio Industrial imp E Exp Ltda. Maxgen Comércio Industrial imp E Exp Ltda. BenQ Service de Mexico S. de R.L. de C.V. GST Darly C BBHC BenQ Guru Holding Ltd. (GSH) BMTC BES PTT ZGC DFI Alpha K2 DIC BenQ UK Limited BenQ Deutschland GmbH BenQ Benelux B.V. BenQ Austria GmbH BenQ Iberica S.L. Unipersonal BenQ Italy S.R.L BenQ France SAS BenQ Nordic A.B. BenQ LLC.
Investor		BQP BQP BQP BQP BQP BQA BQL BQL BQL Joytech LLC Vivitech LLC BQmx GSH Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 Darly 2 BQE BQE BQE BQE BQE BQE BQE BQE BQE

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Note	Note	Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Affiliates Associate
Investment Income (Loss)		- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net Income (Loss) of the Investee		140 225 22,112 2,583 11,813 25,384 (5,823) (26,353) 3,095 914 (7,856) (26,196) (1,242) 2,122 (5,400) (1,186) 3,095 (668) 5,582 (14,515) 488 2,122 (1,186) (26,196) (38,046) (5,400) (27,907) 26,865 4,187 44,159 9,698 450 (266) 37,062 (69)
Balances as of December 31, 2018	Carrying Value	26,296 8,214 245,707 55,220 112,174 80,062 18,287 195,677 31,168 173,360 97,956 50,578 33,320 26,070 27,942 372 4,760 (15,584) 1,625 (57,863) 2,468 10 - 438 178,249 27,752 44,014 320,890 161,400 269,752 36,427 19,432 2,775 183,672 12,832
	Percentage of Ownership	99.75% 100.00% 100.00% 88.00% 100.00% 52.00% 100.00% 100.00% 88.60% 100.00% 50.02% 99.00% 50.10% 50.62% 54.00% 58.18% 11.40% 90.00% 68.00% 100.00% 27.03% 0.02% 0.005% 1.00% 100.00% 46.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 49.00% 100.00% 30.00%
	Shares	1,995 1,062 10,000 8,800 10,000 2,184 2,500 7,051 886 0.216 (Note 1) 0.099 100 2,050 0.108 13 114 (Note 1) (Note 1) 0.3 500 1 0.001 0.001 6,060 0.092 1,091 1,209 6,000 6 12 4,500 - 20,215 300
Original investment Amount	December 31, 2017	21,984 36,211 185,000 88,000 100,000 70,200 21,843 308,166 43,834 - 51,451 62,595 - - - 4,075 5,640 980 - 2,485 6,500 - 1 - 181,158 12,157 31,593 254,716 187,260 104,489 35,219 20,221 - 509,417 24,304
	December 31, 2018	21,984 36,211 185,000 88,000 100,000 70,200 21,843 276,492 43,834 109,828 51,451 137,387 27,449 20,500 22,451 4,075 5,640 980 - 2,485 6,500 10 1 1,560 181,158 12,157 31,593 254,716 187,260 104,489 35,219 20,223 2,884 518,381 24,304
Main Businesses and Products		Sales of medical consumables and equipment Investment and holding activity Manufacture and sales of medical consumables and equipment Manufacture and sales of medical consumables and equipment Investment and holding activity Sales of medical consumables and equipment Sales, import and export of electronic products Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products R&D and sales of software R&D and sales of software Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products R&D and sales of software R&D and sales of software Sales, import and export of electronic products Sales, import and export of electronic products Investment and holding activity Sales, import and export of electronic products Sales, import and export of electronic products Sales of industrial motherboards Investment and holding activity Sales of industrial motherboards Sales of industrial motherboards Manufacture of industrial motherboards Sale of medical consumable and equipment Investment and holding activity Agency
Location		Taiwan Samoa Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands UK South Africa Germany United Arab Emirates Singapore Taiwan South Africa Morocco UK Slovenia Spain United Arab Emirates Taiwan Taiwan Morocco United Arab Emirates British Virgin Islands South Africa USA USA Mauritius Japan The Netherlands Hong Kong Thailand Mauritius USA
Investee		ASIACONNECT HIGHVIEW LILY BABD BHS NBHIT WEBEST P&J Investment Holding Co., Ltd. (B.V.I.) Partner Tech UK Corp., Ltd. Corex (Pty) Ltd. Partner-Tech Europe GmbH Partner Tech Middle East FZCO Epoint Systems Pte. Ltd. PTTN Partner Tech Africa (Pty) Ltd. Partner Tech North Africa Partner Tech UK Corp., Ltd. Sloga team D.o.o. Retail Solution & System S.L. E-POS International LLC YOUPOS PTTN Partner Tech North Africa Partner Tech Middle East FZCO P&S Investment Holding Co., Ltd. (B.V.I.) Partner Tech Africa (Pty) Ltd. Partner Tech USA Inc. DFI-ITOX, LLC. Yan Tong Technology Ltd. DFI Co., Ltd. Diamond Flower Information (NL) B.V. Dual-Tech International Co., Ltd. K2 Medical (Thailand) Co., LTD Data Image (Mauritius) DMC Components International, LLC
Investor		BMTC BMTC BMTC BMTC BMTC BHS PTT PTT PTT PTT PTT PTT PTT PTT PTT PTT PTE PTE PTE PTME WEBEST WEBEST WEBEST WEBEST P&J P&J P&S DFI DFI DFI DFI DFI K2 DIC DIC

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - - - - - - - - - -
Carrying	Value as of December 31, 2018	1,344,637 3,876,463 18,127 8,641,972 1,399,230 508,924 (1,461,823) 111,009 9,302 2,397,645 367,595
	Investment Income (Loss)	433,595 (Note 2) 97,140 (Note 4) 192,886 (Note 4) 175,645 (Note 2) (28,293) (Note 2) 127 (Note 3) (25,911) (Note 3) 9,781 (Note 3) 815,239 (Note 2) 3,528 (Note 3) 33,400 (Note 3)
% of Ownership of	Direct or Indirect Investment	70.72% 100.00% 100.00% 100.00% 70.72% 70.72% 100.00% 100.00% 100.00% 100.00% 100.00%
Net	Income (Loss) of Investee	9,781 179 (40,007) 248,367 192,886 97,140 433,595 (25,911) 815,239 3,528 33,400
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	2,180,765 (USD 71,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,834,418 (USD 157,396) 2,733,512 (USD 88,996) 30,715 (USD 1,000) 1,474,320 (USD 48,000) (Note 5) 297,936 (USD 9,700) (Note 6) 2,457,200 (USD 80,000) 6,143 (USD 200) (Note 7) 145,896 (USD 4,750)
Investment Flows	Inflow	- - - - - - - - - - -
	Outflow	- - - - - - - - - - -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	2,180,765 (USD 71,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,834,418 (USD 157,396) 2,733,512 (USD 88,996) 30,715 (USD 1,000) 1,474,320 (USD 48,000) 297,936 (USD 9,700) 2,457,200 (USD 80,000) 6,143 (USD 200) 145,896 (USD 4,750)
	Method of Investment	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)
	Total Amount of Paid-in Capital	2,272,910 (USD 74,000) 362,437 (USD 11,800) 382,709 (USD 12,460) 4,669,141 (USD 152,015) 2,691,371 (CNY 601,975) 30,715 (USD 1,000) 2,042,548 (USD 66,500) 405,438 (USD 13,200) 2,457,200 (USD 80,000) 30,715 (USD 1,000) 153,575 (USD 5,000)
	Main Businesses and Products	Manufacture of monitors and communication devices Medical management consulting Manufacture of monitors Manufacture of projectors Hospital Hospital R&D and sales of computer information systems Manufacture of monitors Lease of real estate Sales of brand-name electronic products Manufacture of plastic parts
	Investee Company Name	Qisda (Suzhou) Co., Ltd. (“QCSZ”) BenQ Hospital Management Consulting (Nanjing) Co., Ltd. (“NMHC”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Suzhou BenQ Hospital Co., Ltd. (“SMH”) Nanjing BenQ Hospital Co., Ltd. (“NMH”) Guru Systems (Suzhou) Co., Ltd. (“GSS”) Qisda (Shanghai) Co., Ltd. (“QCSH”) BenQ Co., Ltd. (“BQC”) BenQ Technology (Shanghai) Co., Ltd. (“BQls”) Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”)

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - - - -	(Note 13) Since the Company has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 14,998,196 16,522,567 (Note 13) 3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. (USD 488,302) (USD 537,932)	(Note 13) Since the Company has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment 14,998,196 16,522,567 (Note 13) 3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. (USD 488,302) (USD 537,932)
Carrying	Value as of December 31, 2018	- (10,233) 38,725 610,606 140,150
	Investment Income (Loss)	2,374 (Note 3) (5) (Note 3) 132 (Note 3) 53,913 (Note 2) - (Note 3)
% of Ownership of	Direct or Indirect Investment	100.00% 100.00% 70.72% 70.72% 100.00%
Net	Income (Loss) of Investee	2,374 (5) 186 53,913 -
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	- - - 92,145 (USD 3,000) (Note 11)	Upper Limit on Investment	(Note 13)
Investment Flows	Inflow	- - - - -
	Outflow	92,145 (USD 3,000) - - - -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	- - - - -	Investment Amounts Authorized by Investment Commission, MOEA	16,522,567 (USD 537,932)
	Method of Investment	(Note 10) (Note 9) (Note 8) (Note 1) (Note 1)
	Total Amount of Paid-in Capital	41,772 (USD 1,360) 3,072 (USD 100) 921,450 (USD 30,000) 92,145 (USD 3,000) 134,127 (CNY 30,000)
	Main Businesses and Products	Sales of brand-name electronic products Sale of medical consumable and equipment Investment and holding activity Sales and maintenance of electronic products in China market Medical services	Accumulated Investment in Mainland China as of December 31, 2018	14,998,196 (USD 488,302)
	Investee Company Name	ShengCheng Trading(Shanghai) Co.,LTD (“BQsha_EC2”) BenQ Medical (Shanghai) Co., Ltd (“BDTcn”) Suzhou BenQ Investment Co., Ltd. (“BIC”) BenQ Intelligent Technology (Shanghai) Co., Ltd. (“BQC_RO”) Nanjing Silvertown Health & Development Co., Ltd (“NSHD”)

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - - -	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 7) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 7) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of BMC. (Note 3) The reinvestments were from the distribution of dividends of BMLB. (Note 4) Direct investment in Mainland China. (Note 5) The amount of BMLB reinvestments CNY$10,950 thousand were excluded. (Note 6) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715 and CNY$1=NT$4.4709. (Note 7) Since BenQ Material Corporation has obtained the Certificate of Headquarter Operation, there is no upper limit on investment in Mainland China. Upper Limit on Investment (Note 8) SMS 48,898 (USD1,592) 48,898 (USD1,592) 258,157 3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. Investee Company Name BMC 1,069,571 (USD29,000 and CNY40,000) 1,118,527 (USD29,000 and CNY50,950) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA
Carrying	Value as of December 31, 2018	1,955,556 (Note 6) 46,138 (Note 6) (278,170) (Note 6) 49,184 (Note 6)
	Investment Income (Loss)	45,689 (Note 2) 956 (Note 2) (157,819) (Note 2) (6,323) (Note 2)
% of Ownership of	Direct or Indirect Investment	100.00% 89.06% 100.00% 100.00%
Net	Income (Loss) of Investee	45,689 956 (157,819) (31,727)	Upper Limit on Investment	(Note 8)	258,157
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	890,735 (USD 29,000) - 178,836 (CNY 40,000) (Note 5) 48,898 (USD1,592)
Investment Flows	Inflow	- - - -
	Outflow	- - - -	Investment Amounts Authorized by Investment Commission, MOEA	1,118,527 (USD29,000 and CNY50,950)	48,898 (USD1,592)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	890,735 (USD29,000) - 178,836 (CNY 40,000) 48,898 (USD1,592)
	Method of Investment	(Note 4) (Note 1) (Note 3) (Note 1)
	Total Amount of Paid-in Capital	890,735 (USD29,000) 49,180 (CNY11,000) 357,672 (CNY80,000) 48,898 (USD1,592)	Accumulated Investment in Mainland China as of December 31, 2018	1,069,571 (USD29,000 and CNY40,000)	48,898 (USD1,592)
	Main Businesses and Products	Manufacture of optoelectronics Sales of optoelectronics and medical consumables Manufacture and sales of medical consumables and equipment Manufacture and sales of optoelectronics
	Investee Company Name	BenQ Material (Suzhou) Co., Ltd. (“BMS”) Daxon Biomedical (Suzhou) Co., Ltd. (“DTB”) BenQ Materials (Wuhu) Co., Ltd. Suzhou Sigma Medical Supplies Co., Ltd. (“SMSZ”)	Investee Company Name	BMC	SMS

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - -	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012 Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012 Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. BMTC 66,481 (USD 1,000 and CNY 8,000) 86,831 (USD 2,827) 622,045 LILY 6,450 (USD 210) 6,450 (USD 210) 111,012 Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name
Carrying	Value as of December 31, 2018	9,509 (Note 3) 3,307 (Note 3) 28,064
	Investment Income (Loss)	247 (9) (984)
% of Ownership of	Direct or Indirect Investment	100.00% 100.00% 40.00%
Net	Income (Loss) of Investee	(9) 247 (2,460)	Upper Limit on Investment	622,045	111,012
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	30,715 ( USD 1,000) 6,450 ( USD 210) 35,766 (CNY 8,000)
Investment Flows	Inflow	- - -
	Outflow	17,883 (CNY 4,000) - -	Investment Amounts Authorized by Investment Commission, MOEA	86,831 (USD 2,827)	6,450 (USD 210)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	30,715 ( USD 1,000) 6,450 ( USD 210) 17,883 (CNY 4,000)
	Method of Investment	(Note 2) (Note 1) (Note 2)
	Total Amount of Paid-in Capital	30,715 ( USD 1,000) 6,450 ( USD 210) 89,418 (CNY 20,000)	Accumulated Investment in Mainland China as of December 31, 2018	66,481 (USD 1,000 and CNY 8,000)	6,450 (USD 210)
	Main Businesses and Products	Sales of medical consumables and equipment Agency of international and entrepot trade business Sales of medical consumables and equipment
	Investee Company Name	LILY Medical (Suzhou) Co., Ltd. (ALS) BenQ Medical Technology (Shanghai) Ltd. (“BMTS”) TDX Medical Technology (Jiangsu) Co., Ltd.	Investee Company Name	BMTC	LILY

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	- - -	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name	3. Significant transactions with investee companies in Mainland China: Please refer to section “Information on Significant Transactions”for detail description. 153,575 (USD 5,000) 212,118 (USD 6,906) 579,768 1,106 (USD 36) 1,106 (USD 36) 18,510 PTT PTTN Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment Investee Company Name
Carrying Value as of	December 31, 2018 (Note 4)	134,208 812 -
	Investment Income (Loss)	(10,139) (Note 2) 2,337 (Note 2) -
% of Ownership of	Direct or Indirect Investment	100.00% 100.00% -
Net	Income (Loss) of Investee	(10,139) 2,337 -	Upper Limit on Investment	579,768	18,510
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	153,575 ( USD 5,000) 1,106 ( USD 36) -
Investment Flows	Inflow	30,715 (USD 1,000) - -
	Outflow	- - -	Investment Amounts Authorized by Investment Commission, MOEA	212,118 (USD 6,906)	1,106 (USD 36)
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	153,575 ( USD 5,000) 30,715 (USD 1,000) 1,106 ( USD 36)
	Method of Investment	(Note 1) (Note 1) (Note 1)
	Total Amount of Paid-in Capital	153,575 ( USD 5,000) 1,106 ( USD 36) -	Accumulated Investment in Mainland China as of December 31, 2018	153,575 (USD 5,000)	1,106 (USD 36)
	Main Businesses and Products	Sales, import and export of electronic products Sales, import and export of electronic products Sales, import and export of electronic products
	Investee Company Name	Partner Trading (Shanghai) Co., Ltd.(“PTCS”) Partner Tech (Shanghai) Co., Ltd. (“PTCM”) Xiamen Xinchuan Software Technology Co., Ltd. (“PTTNC”)	Investee Company Name	PTT	PTTN

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	33,306 -	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DFI. (Note 3) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715. (Note 4) (Note 5) Pursuant to “Principle of Investment or Technical Cooperation in Mainland China”, investment amounts in Mainland China shall not exceed the 60% net worth of DFI. (Note 6) (Note 7) The earnings that has been remitted to DFI by DYTI was approved by the Investment Commission of the MOEA in February 2017 and had been deducted in the investment amount. Please refer to section “Information on Significant Transactions”for detail description. 3. Significant transactions with investee companies in Mainland China: - (Note 5) 64,041(USD 2,085) (Notes 4�7 and 8) 1,930,073 (Note 6) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment The investment amount of Dongguan Ri Tong Trading Co., Ltd. that has been liquidated was approved by Investment Commission, MOEA in August 2014 and had been deducted in the investment amount. The reinvestments and authorized amount of DFI's subsidiaries is excluded from DFI's accumulated investment amounts and the investment amounts authorized by Investment Commission, MOEA.	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DFI. (Note 3) The above amounts were translated into New Taiwan dollars at the exchange rate of US$1�NT$30.715. (Note 4) (Note 5) Pursuant to “Principle of Investment or Technical Cooperation in Mainland China”, investment amounts in Mainland China shall not exceed the 60% net worth of DFI. (Note 6) (Note 7) The earnings that has been remitted to DFI by DYTI was approved by the Investment Commission of the MOEA in February 2017 and had been deducted in the investment amount. Please refer to section “Information on Significant Transactions”for detail description. 3. Significant transactions with investee companies in Mainland China: - (Note 5) 64,041(USD 2,085) (Notes 4�7 and 8) 1,930,073 (Note 6) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment The investment amount of Dongguan Ri Tong Trading Co., Ltd. that has been liquidated was approved by Investment Commission, MOEA in August 2014 and had been deducted in the investment amount. The reinvestments and authorized amount of DFI's subsidiaries is excluded from DFI's accumulated investment amounts and the investment amounts authorized by Investment Commission, MOEA.
Carrying Value as of	December 31, 2018 (Note 2)	56,985 13,608
Investment	Income (Loss) (Note 3)	518 (731)
% of Ownership of	Direct or Indirect Investment	100.00% 100.00%
Net	Income (Loss) of Investee	(731) 518
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	- -	Upper Limit on Investment	1,930,073 (Note 6)
Investment Flows	Inflow	- -
	Outflow	- -
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	- -	Investment Amounts Authorized by Investment Commission, MOEA	64,041(USD 2,085) (Notes 4�7 and 8)
	Method of Investment	(Note 1) (Note 1)
	Total Amount of Paid-in Capital	76,788 15,358
	Main Businesses and Products	Wholesale, import and export of industrial motherboards and component Manufacture and sales of industrial motherboards and component	Accumulated Investment in Mainland China as of December 31, 2018	- (Note 5)
	Investee Company Name	Yan Ying Hao Trading (ShenZhen) Co., Ltd(“DYTH”) Yan Tong Infotech (Dongguan) Co., Ltd (“DYTI”)

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Accumulated Inward Remittance of	Earnings as of December 31, 2018	-	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DIC. (Note 3) Investment amounts in Mainland China shall not exceed the 60% net worth of DIC according to MOEA letter No. 09704604680. USD 15,654 USD 16,952 551,317 (Note 4) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment	(Note 1) Indirect investment in Mainland China is through a holding company established in a third country. (Note 2) Investment income or loss was recognized based on the audited financial statements issued by the auditors of DIC. (Note 3) Investment amounts in Mainland China shall not exceed the 60% net worth of DIC according to MOEA letter No. 09704604680. USD 15,654 USD 16,952 551,317 (Note 4) Accumulated Investment in Mainland China as of December 31, 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment
Carrying Value as of	December 31, 2018 (Note 2)	181,420
Investment	Income (Loss) (Note 3)	37,907
% of Ownership of	Direct or Indirect Investment	100.00%
Net	Income (Loss) of Investee	37,907 (CNY8,341)
Accumulated Outflow of	Investment from Taiwan as of December 31, 2018	511,884 (USD15,654)	Upper Limit on Investment	551,317 (Note 4)
Investment Flows	Inflow	-
	Outflow	-
Accumulated Outflow of	Investment from Taiwan as of January 1, 2018	511,884 (USD15,654)	Investment Amounts Authorized by Investment Commission, MOEA	USD 16,952
	Method of Investment	(Note 1)
	Total Amount of Paid-in Capital	534,081 (USD16,300)
	Main Businesses and Products	Manufacture and sales of LCD	Accumulated Investment in Mainland China as of December 31, 2018	USD 15,654
	Investee Company Name	Data Image (Suzhou) Corporation

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Qisda — Annual Report 2018

52023_rns_2019-07-05_150032a6-e2dc-4311-b3a2-9ddb08761b58.pdf

QISDA 2018 ANNUAL REPORT

Table of Contents

Contact Information

QISDA CORPORATION

INVESTOR RELATIONS CONTACTS

OVERSEAS SECURITY EXCHANGE LISTING

Letter to Shareholders

Company Profile

I. Date of Founding: April 21. 1984

II. Company History:

Corporate Governance

I. Organization

(I) Organizational Structure

(II)Business Scope for Main Department

(I) Director Information

(III) Compensation of Directors, Supervisors, President, and Vice President

1. Compensation to Directors

2. Remuneration of Supervisors:

3. Compensation for President and Vice Presidents

Table of compensation ranges

III. Implementation of Corporate Governance

(I) Operations of the Board of Directors

Other items that shall be recorded:

(II) Operations of the Audit Committee

2. Responsibilities of the Remuneration Committee:

(VI) Implementation of Ethical Management and Implemented Measures:

(X) Status of Implementation of Internal Control System

Date: March 21, 2019

IV. Information on CPA fees

V. Information on replacement of CPAs

(I) Regarding former CPA

(II) Regarding the Succeeding CPA

IX. Shareholdings and Combined Joint Shareholdings of Businesses Invested in by the Company, Company Directors, Supervisors or Executive Officers or Directly or Indirectly Controlled by the Company

Capital and Shares

I. Capital and shares

(II) Shares Type and Shares Outstanding

(III) Shareholder structure

(IV) Distribution of Equity Ownership

(V) List of Major Shareholders

(VII) Dividend Policy and Execution Status

(IX) Compensation for employees and Directors

II. Corporate bond processing

III. Handling of preferred shares (including preferred shares outstanding and in process)

IV. Implementation of Overseas Depository Receipts

V. Employee stock option handling status:

(I) Employee stock option handling status:

(II) Operations of new restricted employee shares:

VII. Implementation status of fund application

Overview of Operations

I. Operational Guidelines

(V) Business Scope

Operation Overview

(1) Business Content/

1. Business Scope

(a) Operation overview

(b) Product category

3. Technology and R&D overview

4. Long- and short-term business development plans

(II) Market, production and sales overview

II. Employee Information

III. Environmental Protection Expenditures

IV. Labor-Management Relations

4. Employee Code of Conduct

VI. Material Contracts

Financial Highlights

Condensed Parent Company Only Balance Sheet

Condensed Parent Company Only Comprehensive Income

II. Financial analysis for the most recent five years

(I) International Financial Reporting Standards - Consolidated Financial Analysis

III. The Audit Committee's Review Report

The Audit Committee's Review Report

Review and Analysis of Financial Position and Financial Performance, and Risk Management

I. Financial position

II. Financial performance

III. Cash flow

IV. Material expenditures of the most recent year and impact on the Company's finances and operations

V. Investment policy for the most recent fiscal year, the main reasons for the profits/losses

Qisda Annual Report 2018