RITEK — Annual Report 2018

Nov 14, 2018

RITEK CORPORATION

Consolidated Financial Statements for the Years Ended December 31, 2018 and 2017 Independent Auditors’ Report (Stock code 2349)

Address: NO.42 Kuangfu N.rd Hsinchu Industrial Park Taiwan 303 R.O.C Phone:(03)598-5696

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RITEK CORPORATION

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

	Contents	Pages
1	Cover	1
2	Contents	2
3	Representation letter	3
4	Independent auditors’ report	4-9
5	Consolidated Balance sheet	10-11
6	Consolidated Statements of comprehensive income	12
7	Consolidated Statements of changes in equity	13
8	Consolidated Statements of cash flows	14
9	Notes to Consolidated financial statement
	(1) Company History	15
	(2) Date and Procedure Passing the Financial Statements	15
	(3) Application of Newly-Issued and Revised Criteria and Interpretations	15-26
	(4) Summary Statement of Major Accounting Policies	26-60
	(5) Major sources of uncertainty in significant accounting judgments,	60-62
	estimates and assumptions
	(6) Description of important accounting items	62-111
	(7) Interested party transactions	112-114
	(8) Pledged assets	115
	(9) Material contingent liabilities and unrecognized contractual commitments	116-117
	(10) Major disaster losses	117
	(11) Major subsequent matters	118
	(12) Miscellaneous	118-132
	(13)Note disclosures	133
		140-153
	(14)Department information	134-139

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REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of RITEK 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 the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, RITEK CORPORATION and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

RITEK CORPORATION

By Yeh, Chwei-Jin Chairman

March 29, 2019

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Independent Auditor’s Report

The Board of Directors and Shareholders: RITEK Corporation

Opinion

We have audited the accompanying balance sheets of RITEK Corporation as of December 31, 2017 and 2018, and the related statements of comprehensive income, changes in stockholders’ equity, cash flows, and notes to consolidated financial statements (including the summary of significant accounting policies) for the period from January 1 to December 31, 2017 and 2018. These financial statements are the responsibility of the Company’s management.

In our opinion, based on our audit results and the audit reports of other independent auditors (please refer to the other matters section), the financial statements referred to in the first paragraph accurately present, in all material respects, the financial position of RITEK Corporation and its subsidiaries as of December 31, 2017 and 2018, and the results of its financial performance and its cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Accounting Standards, International Financial Reporting Standards, and IFRIC Interpretations as approved by the Financial Supervisory Commission.

Basis for Opinion

We planned and conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Consolidated Financial Statements section of this report. We are independent of the Company, in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities pursuant to these requirements. We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters refer to those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ending December 31, 2018. These matters are addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon; we do not provide a separate opinion on these matters.

Judgment on consolidated entities

According to IFRS 10, regardless of the nature of an investment, the investor shall determine if it is the parent company by examining whether it controls the investee. Since RITEK Corporation and its subsidiaries hold the shares of partial consolidated entities less than 50%, the material judgment of RITEK Corporation toward the control over such

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consolidated entities in the consolidated financial statements would affect the presentation and preparation results of its consolidated financial statements. Therefore, we have determined the judgment on the control power over consolidated entities with less than 50% shareholding as the key audit matter.

Our audit procedures include but are not limited to the following audit procedures: reviewing the group investment structure, checking the change in total shareholding of subsidiaries, evaluating the number and percentage of leading posts in the Board of Directors, verifying proxies with majority votes held directly and indirectly and the evidences of physical strength to influence significant activities, including major managers, etc., to ensure that RITEK Corporation and its subsidiaries have control power over all consolidated entities.

We also evaluate the disclosure of consolidation between RITEK Corporation and its subsidiaries. Please refer to notes 4 and 5 of the consolidated financial statements.

Impairment of non-financial assets

The amount of consolidated property, plants, and equipment of RITEK Corporation and its subsidiaries was NT$12,509,656 thousand as of December 31, 2018. Since RITEK Corporation and its subsidiaries had operation loss in 2018, the assets may have impairment. With significant hypothesis and estimation of impairment of non-financial assets, we decided to consider impairment of non-financial assets as a key audit matter.

Our audit procedures include but are not limited to the following audit procedures: evaluating signs of impairment on cash generation units identified by management, measuring recoverable amounts of assets or cash generation units, with the higher fair value deducted by disposition costs and its usage value as a recoverable amount, referring to the Company’s historical information and other external industrial analysis, evaluating the reasonableness of major assumptions and discount rates as the basis for such impairment tests, and evaluating the key assumptions made by the management for the cash flow forecast (including the revenue growth and gross margin by products) in the future.

We also evaluate the disclosure of RITEK Corporation and its subsidiaries regarding the impairment loss of non-financial assets. Please refer to notes 4 and 5 of the consolidated financial statements.

Revenue recognition

RITEK Corporation and its subsidiaries recognized a consolidated revenue of NT$9,358,661,000 in 2018. The major sources of income were manufacturing and sales of

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disc, OLED, ITO glass, and green energy products (solar power module/LED/ battery related products), as well as optical information services and products. The build to order method was adopted for transactions. Different transactions terms were involved due to industrial features and customer demands. Therefore, a judgment is required to determine the performance obligations and satisfaction criteria. Therefore, the identification of revenue recognition is a key audit matter.

Our audit procedures include but are not limited to the following: evaluating the appropriateness of the accounting policies made by management aimed at revenue recognition, understanding the transaction flow of revenue recognition procedures against the performance obligations identified, testing the effectiveness of the internal control design and implementation in relation with revenue recognition as satisfactory to the performance obligations, conducting analytical procedures aimed at the sales price, sales volume, costs, and gross margin and implementing analytical procedures aimed at the top ten customers, selecting samples for testing transaction details and reviewing the trading conditions and related sales receipts in order to ensure the appropriateness of revenue recognition as satisfactory to performance obligations, conducting revenue cutoff tests in certain periods before and after the balance sheet date and checking relevant certificates to ensure that the revenue is recognized in the appropriate period, reviewing huge sales returns after the balance sheet date to investigate and understand its reason and nature, and carrying out ordinary journal tests.

We also evaluate the disclosure of RITEK Corporation and its subsidiaries regarding revenue recognition. Please refer to notes 4 and 6 of the consolidated financial statements.

Other matters referring to the audit of other certified public accountants

The financial statements of some subsidiaries included in the consolidated financial statements of RITEK Corporation and its subsidiaries were audited by other certified public accountants. Therefore, in our opinions of the preceding consolidated financial statements, the amounts listed in the financial statements of such subsidiaries were based on the audit reports of other CPAs. The total assets of such subsidiaries as of December 31, 2018 and December 31, 2017 were NT$3,493,747,000 and NT$3,316,549,000, respectively, accounting for 15% and 14% of the total consolidated assets. The sales revenues in the period from January 1 to December 31, 2018 and 2017 were NT$982,059,000 and NT$1,049,254,000, respectively, accounting for 10% and 11% of the consolidated sales revenue. Meanwhile, among the investees in the preceding consolidated financial statements, the financial statements of some investees were audited by other certified public accountants. Therefore, in our opinions of the preceding consolidated financial statements, the amounts listed in the financial statements of such investees were based on the audit reports of other CPAs. The investment amounts on such investees under the equity method as of December 31, 2018 and 2017 were NT$139,788,000 and NT$117,162,000, respectively, accounting for 1% and 0% of the total consolidated assets. The profit and loss of affiliates and venture capital recognized under the equity method in the period from January 1 to December 31, 2018 and 2017 were NT$ 5,150,000 and NT$ 20,830,000, respectively, accounting for 0% and 1 % of the consolidated net loss before income tax. The other comprehensive income of affiliates and venture capital recognized under the

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equity method in the period from January 1 to December 31, 2018 and 2017 was NT$ 844,000 and NT$ 2,164,000, respectively, accounting for 0% and 1% of the consolidated net other comprehensive income.

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

Management is responsible for preparing and fairly presenting the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, as well as for such internal control that it deems 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 ability of RITEK Corporation and its subsidiaries to continue as an ongoing concern, disclosing matters related to ongoing concerns as necessary and using the ongoing concern basis of accounting unless management either intends to liquidate RITEK Corporation and its subsidiaries or cease operations or has no realistic alternative but to do so.

Those charged with the governance of RITEK Corporation and its subsidiaries are responsible for overseeing the financial reporting process.

Auditors’ Responsibilities for Auditing 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 refers to a high level of assurance but does not guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when one exists. Misstatements can arise from fraud or error and are considered material if, individually or combined, they can reasonably be expected to influence the economic decisions of users made based on these consolidated financial statements.

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

1. 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 sufficient and appropriate to provide the basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is greater than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of RITEK Corporation and its subsidiaries.

2. Evaluate the appropriateness of the accounting policies used and the reasonableness of the accounting estimates and related disclosures made by management.

3. Draw conclusions about the appropriateness of the management’s use of the ongoing 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 ability of RITEK Corporation and its subsidiaries to continue as an ongoing 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 RITEK Corporation and its subsidiaries to cease to continue as an ongoing concern.

4. Evaluate the overall presentation, structure, and content of the consolidated financial statements (including relevant notes) and whether the consolidated financial statements represent the underlying transactions and events in a fair manner.

5. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding the planned scope and timing of the audit and significant audit findings (including any significant deficiencies in internal control identified during our audit), among other matters.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to influence our independence (including relevant safeguards).

From the matters communicated with those charged with governance, we determined those matters that were of the greatest significance in the audit of the consolidated financial statements of RITEK Corporation and its subsidiaries for the year ending December 31, 2018 as the key audit

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matters. We describe these matters in our auditors’ report unless the law or regulations preclude 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.

Others

RITEK Corporation has prepared the 2018 and 2017 individual financial statements, and we have issued the unqualified auditor’s report, including other matters for your reference.

Earnest & Young

Financial Report of a Public Company as Approved by the Competent Authority

Audit File No.: (91)Tai-Tsai-Cheng (6) No. 144183

(93) Jing-Guan-Cheng VI No. 0930133943

Chang, Chi-Ming

CPA:

Hsu, Jung-Huang

March 29, 2019

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RITEK CORPORATION and Subsidiaries

Consolidated Balance Sheet

December 31, 2018 and December 31, 2017

Unit: NT$1000

								Unit: NT$1000	Unit: NT$1000	Unit: NT$1000
Assets				December 31, 2018				December 31, 2017
Code	Accounts	Notes		Amount		％		Amount		％
1100 1110 1120 1125 1136 1147 1150 1170 1175 1180 130x 1470 11xx 1510 1517 1523 1535 1543 1546 1550 1600 1760 1780 1840 1900 1935 1970 15xx 1xxx	Current assets Cash and cash equivalents Net notes receivable Net accounts receivable Lease payment receivables Inventory Other current assets Total current assets Non-current assets Investments accounted for using equity method Property, plant and equipment Net investment property Intangible assets Deferred tax assets Other non-current assets Long-term lease payment receivables Other long-term investments Total non-current assets Total assets Financial assets at fair value through other comprehensive profit and loss-Non-current Available-for-sale financial assets-noncurrent Financial assets measured at amortized cost-noncurrent Debt instruments investment-Flow in non-active market-noncurrent Financial assets measured by cost-noncurrent Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive profit and loss-current Financial assets measured at amortized cost-current Debt instruments investment-Flow in non-active market-current Net accounts receivable-related parties Financial assets at fair value through profit or loss-Noncurrent Available-for-sale financial assets-noncurrent	VI.1 VI.2 VI.3 VI.4 VI.5 and VIII VI.7 and VIII VI.8 andVI.23 VI.9, VI.23 and VIII VI.9, VI.23 and VIII VI.9, VI.23 and VII VI.10 VI.23 and VII VI.2 VI.3 and VIII VI.4 and VIII VI.5 and VIII VI.6 VI.7 and VIII VI.11 VI.12 and VIII VI.13 and VIII VI.14 VI.28 VI.20 and VIII VI.9 and VIII		$3,497,738 100,513 6,815 - 89,429 - 9,031 1,577,172 1,840 32 2,778,797 425,441 8,486,808 174,533 335,080 - 35,301 - - 139,788 12,509,656 346,423 868,581 455,203 294,788 48,425 189 15,207,967 $23,694,775		15 - - - - - - 7 - - 12 2 36 1 1 - - - - 1 53 1 4 2 1 - - 64 100		$3,885,055 119,687 - 46,637 - 101,791 18,536 1,537,633 - 38 2,237,985 475,639 8,423,001 - - 421,311 - 322,181 4,900 117,162 12,117,022 355,932 942,070 596,317 187,477 - 189 15,064,561 $23,487,562		17 - - - - - - 7 - - 10 2 36 - - 2 - 1 - - 52 2 4 2 1 - - 64 100

(Please refer to the notes to the Consolidated Financial Statements)

Chairman: Yeh, Chwei-Jing Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

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RITEK CORPORATION and Subsidiaries

Consolidated Balance Sheet

December 31, 2018 and December 31, 2017

Unit: NT$1000

								Unit: NT$1000	Unit: NT$1000	Unit: NT$1000
Liabilities and Equity				December 31,2018				December 31,2017
Code	Accounts	Notes		Amount		％		Amount		％
2100 2110 2120 2150 2160 2170 2180 2200 2230 2300 2320 21xx 2540 2570 2640 2670 25xx 2xxx 31xx 3100 3110 3200 3300 3350 3400 3500 36xx 3xxx	Current liabilities Short-term borrowings Short-term notes and bills payable Notes payable Notes payable-related parties Accounts payable Accounts payable-related parties Other payables Current income tax liability Other current liabilities Total current liabilities Non-current liabilities Long-term loans Deferred tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to owners of the parent Capital stock Common stock Capital surplus Retained earnings Loss to be made up Other owner's equity Treasury shares Non-controlling interests Total owner's equity Total liabilities and owner's equity Long-term liabilities maturing within one year or one operating cycle Net defined benefit liabilities-noncurrent Financial liabilities at fair value through profit or loss-current	VI.16 and VIII VI.17 VI.18 VII VII VI.22 VI.19 and VIII VI.19 and VIII VI.28 VI.20 VI.21 VI.21 VI.21 VI.21 VI.21		$2,119,882 250,979 - 73,061 2,837 1,046,412 7,574 795,930 25,507 85,059 1,368,912 5,776,153 4,465,060 36,336 154,278 55,484 4,711,158 10,487,311 12,841,579 950,835 (3,583,955) (1,038,709) - 4,037,714 13,207,464 $23,694,775		9 1 - - - 5 - 3 - - 6 24 19 - 1 - 20 44 54 4 (15) (4) - 17 56 100		$1,500,535 249,785 5,192 109,176 12,377 1,302,044 3,927 848,182 42,377 127,371 1,145,394 5,346,360 3,358,091 - 163,305 48,852 3,570,248 8,916,608 17,667,921 937,005 (4,826,342) (932,826) (2,428,914) 4,154,110 14,570,954 $23,487,562		6 1 - - - 6 - 4 - 1 5 23 14 - 1 - 15 38 75 4 (21) (4) (10) 18 62 100

(Please refer to the notes to the Consolidated Financial Statements)

Chairman: Yeh, Chwei-Jing Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

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RITEK CORPORATION and Subsidiaries

Consolidated Statements of Comprehensive Income

From January 1 to December 31 of 2018 and 2017

Unit: NT$1000

Code	Accouts	Notes	December 31,2018	December 31,2018	December 31,	2017
			Amount	%	Amount	%
4000 5000 5900 6000 6100 6200 6300 6450 6900 7000 7010 7020 7050 7055 7060 7900 7950 8200 8300 8310 8311 8316 8349 8360 8361 8362 8370 8399 8500 8600 8610 8620 8700 8710 8720 9750	Operating income Operating costs Operating gross profit Operating expenses Selling expenses General and administration expenses Research and development expenses Expected credit impairment benefits Total operating expenses Operating loss Other income Other profit and loss Financial costs Total non-operating income and expenditure Net loss before tax Income tax expense Net loss for the year Other comprehensive gain and loss Remeasurements of defined benefit plans Unrealized loss on equity instrument investment at fair value through other comprehensive gain(loss) Income tax relating to the items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Unrealized gain(loss) on available-for-sale financial assets Other comprehensive income for the year (net of income tax) Total comprehensive income for the year Net profit (loss) attributable to : Owners of parent company Non-controlling interests The total comprehensive profit(loss) attributable to : Owners of parent company Non-controlling interests Loss per share (NT$) Basic loss per share Net loss for the year Exchange difference on translation of financial statements of foreign operations Non-operating income and expenditure Expected credit impairment loss Share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method Income tax relating to the items that may be reclassified subsequently to profit or loss Share of other comprehensive gain(loss) of associates and joint ventures accounted for using equity method-items that may be reclassified subsequently to porfit or loss Share of (loss) -items that may be reclassified subsequently to porfit or loss	VI.22 and VII VI.10, 25 and VII VI.25 VI.23 VI.26 VI.24 VI.23 VI.11 VI.28 VI.27 VI.28 VI.11 VI.28 VI.29	$9,358,661 8,811,059 547,602 597,718 814,855 180,177 (13,389) 1,579,361 (1,031,759) 258,092 (121,180) (153,131) (10) (5,150) (21,379) (1,053,138) (181,364) (1,234,502) (317) (146,994) - (48,330) - 844 2,312 (192,485) $(1,426,987) $(1,292,823) 58,321 $(1,234,502) $(1,426,640) (347) $(1,426,987) $(1.01)	100 94 6 6 9 2 - 17 (11) 3 (1) (2) - - - (11) (2) (13) - (2) - - - - - (2) (15)	$9,797,109 9,484,981 312,128 619,796 905,137 163,703 - 1,688,636 (1,376,508) 244,626 (644,645) (143,084) - (20,830) (563,933) (1,940,441) (357,704) (2,298,145) (18,729) - (215,975) (174,485) (2,164) (1,375) (412,728) $(2,710,873) $(2,430,455) 132,310 $(2,298,145) $(2,752,254) 41,381 $(2,710,873) $(1.92)	100 97 3 6 9 2 - 17 (14) 2 (7) (1) - - (6) (20) (4) (24) - - (2) (2) - - (4) (28)

(Please refer to the notes to the Consolidated Financial Statements)

Chairman: Yeh, Chwei-Jing Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

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RITEK CORPORATION and Subsidiaries

Consolidated Statements of Changes in Equity From January 1 to December 31 of 2018 and 2017

Unit: NT$1000

										Unit: NT$1000
Item				Equityattributable t	o owners of theparent				Non-controlling interest	Total equity
	Capital stock	Capital surplus	Loss to be covered		Other equity		Treasury shares	Total
				Exchange difference on translation of financial statements of foreign operations	Unrealized gains(losses) on financial assets at fair value through other comprehensive income	Unrealized gains(losses) on available-for-sale financial assets
	3100	3200	3350	3410	3420	3425	3500	31XX	36XX	3XXX
Other changes in capital surplus Changes in associated and joint ventures accounted for using equity method Net loss of the year of 2017 Non-controlling interests Balance at December 31, 2017 Changes in associated and joint ventures accounted for using equity method Net loss of the year of 2018 Capital reduction to cover losses Balance at December 31, 2018 Changes in non-controlling interests Dispose of equity instruments measured at fair value through other comprehensive profit(loss) Disposal of the parent company's shares by subsidiary, as treasury shares Balance at January 1, 2017 Total comprehensive income(loss) for the year ended December 31, 2018 Total comprehensive income(loss) for the year ended December 31, 2017 Difference between the actual price of acquisition or disposal of subsidiary equity and book value Other comprehensive income(loss) for the year ended December 31, 2017 Other comprehensive income(loss) for the year ended December 31, 2018 Changes in equity to subsidiary Balance at January 1, 2018 Effect of retrospective application and retrospective restatement Balance at January 1, 2018 as restated Other changes in capital surplus Disposal of the parent company's shares by subsidiary, as treasury shares Actual acquisition or disposal of shares in subsidiaries Changes in equity to subsidiary	$17,667,921 - - -	$894,545 - - -	$(2,240,938) (275) (2,430,455) (18,729)	$(384,708) - - (210,011)	$- - - -	$(245,048) - - (93,059)	$(2,588,828) - - -	$13,102,944 (275) (2,430,455) (321,799)	$4,233,326 - 132,310 (90,929)	$17,336,270 (275) (2,298,145) (412,728)
	-	-	(2,449,184)	(210,011)	-	(93,059)	-	(2,752,254)	41,381	(2,710,873)
	- - - -	(16,455) 114,052 (55,137) -	(135,945) - - -	- - - -	- - - -	- - - -	159,914 - - -	7,514 114,052 (55,137) -	- (123,541) 89,908 (86,964)	7,514 (9,489) 34,771 (86,964)
	$17,667,921	$937,005	$(4,826,342)	$(594,719)	$-	$(338,107)	$(2,428,914)	$10,416,844	$4,154,110	$14,570,954
	$17,667,921 -	$937,005 -	$(4,826,342) 74,721	$(594,719) -	$- (413,638)	$(338,107) 338,107	$(2,428,914) -	$10,416,844 (810)	$4,154,110 (4,955)	$14,570,954 (5,765)
	17,667,921 - - -	937,005 - - -	(4,751,621) (559) (1,292,823) (441)	(594,719) - - (34,316)	(413,638) - - (99,060)	- - - -	(2,428,914) - - -	10,416,034 (559) (1,292,823) (133,817)	4,149,155 - 58,321 (58,668)	14,565,189 (559) (1,234,502) (192,485)
	-	-	(1,293,264)	(34,316)	(99,060)	-	-	(1,426,640)	(347)	(1,426,987)
	(4,826,342) - - - - -	- - 13,083 747 - -	4,826,342 (2,261,829) - - (103,024) -	- - - - - -	- - - - 103,024 -	- - - - - -	- 2,428,914 - - - -	- 167,085 13,083 747 - -	- - (25,253) (747) - (85,094)	- 167,085 (12,170) - - (85,094)
	$12,841,579	$950,835	$(3,583,955)	$(629,035)	$(409,674)	$-	$-	$9,169,750	$4,037,714	$13,207,464

(Please refer to the notes to the Consolidated Financial Statements)

Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

Chairman: Yeh, Chwei-Jing

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RITEK CORPORATION and Subsidiaries Consolidated Statements of Cash Flows

From January 1 to December 31 of 2018 and 2017

Unit: NT$1000

					Unit: NT$1000
Item	2018	2017	Item	2018	2017
	Amount	Amount		Amount	Amount
Cash flow from operating activities: Net loss before income tax for this year Adjustments: Items of gains, expenses and losses: Depreciation expenses and other losses Amortization expenses and other expenses Interest expenses Interest revenue Dividend income Loss (benefit) from disposal of investments Loss of impairment of financial assets Loss of impairment of non-financial assets Bargain purchase gains Changes in operating assets and liabilities Increase of available-for-sale financial assets Decrease (increase) of notes receivable Decrease (increase) of accounts receivable Decrease in lease receivables Decrease ( increase) of inventory Decrease (increase) of other current assets Decrease of notes payable Increase (decrease) of accounts payable decrease of other payables Decrease of other current liabilities Decrease of net defined benefit liabilities Increase of net defined benefit liabilities Interest received Interest paid Income tax paid Net cash (outflow) inflow from operating activities Increase (decrease) in available-for-sale financial liabilities Loss (Profit) from disposing and scrapping real estate, plant and equipment Decrease in financial assets mandatorily measured at fair value through profit or loss Share of loss/profit of subsidiaries, associates and joint ventures accounted for using equity	$(1,053,138) 1,491,917 124,288 153,131 (21,445) (38,572) 5,150 (74) 177 - 9,423 (19,359) - 77,960 9,505 (57,845) 411 (576,056) 217,221 (5,192) (47,188) (260,258) (81,364) (42,595) (9,344) (123,247) 20,841 (145,288) (47,525) (295,219)	$(1,940,441) 1,764,966 157,251 143,084 (11,111) (13,613) 20,830 122,924 (267,003) 5,887 398,638 - (7,461) - (3,279) 252,977 - 347,984 (19,916) 5,192 (10,679) 135,655 (102,856) (103,851) (17,055) 858,123 10,846 (144,564) (13,824) 710,581	Cash flow from investment activities: Dispose of financial assets at fair value through other comprehensive gain (loss) Acquisition of financial assets at amortization cost Acquisition of debt investments with no active market Disposal of debt investments with no active market Disposal of subsidiaries Acquisition of equity-method investments Disposal of investments using the equity method Cash returned of capital reduction of invested company accounted for using equity method Disposal of non-current available-for-sale assets Acquisition of real estate, plant and equipment Disposal of real estate, plant and equipment Decrease (Increase) of other non-current assets Dividends received Net cash inflow (outflow) from investment activities Cash flow from financing activities: Increase in short-term borrowings Increase (decrease) in short-term bills payable Borrowing (repaying) long-term loans Increase of other non-current liabilities Disposal of treasury stock Acquisition of equity in subsidiaries Changes in non-controlling interests Net cash inflow (outflow) from financing activities Current increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Disposal of equity in subsidiary (no loss of control) Effect of exchange rate changes on cash and cash equivalents Cash returned of capital reduction of financial assets at fair value through other comprehensive gain and loss Proceeds from disposal of available-for-sale financial assets Acquisition of subsidiaries (deducting the cash obtained)	$49,384 10,759 (18,039) - - - (461,474) (32) (31,466) 3,780 - - (1,159,934) 8,707 249,282 38,572 (1,310,461) 614,347 (25,547) 578,783 6,632 167,085 (84,820) 72,650 (93,033) 1,236,097 (17,734) (387,317) 3,885,055 $3,497,738	$- - - (4,900) 524,305 41,297 - - (7,868) - 16,588 830,000 (1,056,248) 117,279 (18,373) 13,613 455,693 17,365 19,841 (610,564) 5,720 7,514 (105,148) 95,659 (52,193) (621,806) 24,083 568,551 3,316,504 $3,885,055

(Please refer to the notes to the Consolidated Financial Statements)

Chairman: Yeh, Chwei-Jing

Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

14

RITEK Corporation and Subsidiaries Notes to Consolidated Financial Statements January 1 to December 31, 2018 And January 1 to December 31, 2017

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

I. Company History

RITEK CORPORATION (hereinafter referred to as the Company) was established in December 1988, whose main business includes the manufacturing process and material sales and import and export business of the optical information products, memory products and related production equipment (including the peripheral). The Company stock has been listed on the Taiwan Stock Exchange since April 1996, whose domicile and major operating base is located in No. 42, North Kuang-Fu Rd., Hsinchu Industrial Park, Hukou Township, Hsinchu County.

II. Date and Procedure Passing the Financial Statements

Consolidated Financial Statements of 2018 and 2017 of the Company and subsidiaries (hereinafter referred to as the Group) were passed and issued by the Board of Directors on March 29, 2019.

III. Application of Newly-Issued and Revised Criteria and Interpretations

1. Accounting policy changes caused by the first application of International Financial Reporting Standards

The Group has adopted the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations or Interpretation Notice (IFRIC) approved by Financial Supervisory Commission (hereinafter referred to as FSC) in the accounting years from January 1, 2018; except for the following new criteria and corrective and influential interpretations, the rest first applications have no great influence to the Group:

• (1) IFRS 15 “Revenue from Contracts with Customers” (including the interpretation to IFRS 15 “Revenue from Contracts with Customers”)

IFRS 15 replaces IAS 11 “Construction Contracts”, IAS 18 “Revenue”, and related interpretation and interpretation notice; the Group, in accordance with IFRS 15 interim provision, selects to recognize the cumulative effect number of the first application of this criterion on the first application day (namely January

15

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

1, 2018), and selects the retroactive application of the contracts that have not been completed on January 1, 2018.

The Group and the Revenue from Contracts with Customers mainly include the sales of commodity, and relevant recognition influence of IFRS 15 to the Group’s revenue is explained as below:

• A. The applicable accounting policy interpretations of the Group from January 1, 2018 and before January 1, 2018 refer to Note IV.

• B. Before January 1, 2018, the Group recognized the revenue of commodity sales in the delivery of the product; after January 1, 2018, according to IFRS 15, the above-mentioned revenue shall be recognized when the Group transfers the committed commodity to the customer and meets the contract performance obligation, so the application of IFRS 15 has no influence to the recognition of commodity sales revenue of the Group; however, some contracts shall collect partial consideration in advance from the customer when signing the contract, and the Group shall assume to provide the labor service afterwards; before January 1, 2018, the consideration collected in advance was recognized as other current liability; while after January 1, 2018, according to IFRS 15, it shall be recognized as the contract liability. Comparing to the application of IAS 18, the above-mentioned difference has no great influence to other current liability and contract liability of December 31, 2018.

• C. In accordance with IFRS 15, the newly added note disclosures refer to Note IV, Note V and Note VI.

• (2) IFRS 9 “Financial Instruments”

IFRS 9 replaces IAS 39; the Group, in accordance with IFRS 9 interim provision, selects to not recompile the comparison period on the first application day (namely January 1, 2018). The influence of adopting IFRS 9 is explained as below:

• A. It adopts IFRS 9 from January 1, 2018, and it adopted IAS 39 before January 1, 2018; the accounting policy interpretation refers to Note IV.

• B. In accordance with IFRS 9 interim provision, it shall evaluate the business pattern based on the existing fact and condition on January 1, 2018, and

16

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

classify the financial assets to proper category according to IFRS 9; the classification and book amount of financial assets on January 1, 2018 are listed as below:

IAS 39		IFRS 9
Measurement type	Book amount	Measurement type	Book amount
Measurement at fair value through the	$119,687	Measurement at fair value through the	$348,513
profit or loss		profit or loss
Measurement at fair value through		Measurement at fair value through	555,538
other comprehensive profit or loss		other comprehensive profit or loss
Financial assets available for sale	790,129
(including the cost measurement of
NT$ 322,181,000)
Measurement of amortized cost		Measurement of amortized cost	5,557,638
Loans and receivables (including the	5,557,638	(including the cash and cash
cash and cash equivalent, bill		equivalent, bill receivable, account
receivable, account receivable,		receivable, financial assets and
debt instrument investment without		other receivable measured at
active market and other		amortized cost)
receivables)
Total	$6,467,454	Total	$6,461,689

C. When transferring from IAS 39 to IFRS 9 on January 1, 2018, the further information related to the classification change of financial assets and financial liabilities is as below:

IAS 39		IFRS 9	IFRS 9		Retained	Other	Non-
Accounting item	Book	Accounting item	Book	Difference	earnings	equity	controlling
	amount		amount		adjustment	adjustment	equity
							adjustment
Financial assets measured at
fair value through the profit or
loss (Note 1)
Held for trading	$119,687	Measurement at fair value	$119,687	$-	$-	$-	$-
		through the profit or loss
Financial assets available for	467,948	Measurement at fair value	228,826	-	45,025	(45,025)	-
sale (including the original		through the profit or loss
investment cost of
NT$ 322,181,000 and
reported separately in terms
of cost) (Note 2)
	322,181	Measurement at fair value	555,538	(5,765)	29,696	(30,506)	(4,955)
		through other comprehensive
		profit or loss (equity
		instrument)
Subtotal	790,129

17

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Loans and receivables (Note 3)

Loans and receivables (Note 3)
IAS 39			IFRS 9			Retained	Other	Non-
Accounting item	Book		Accounting item	Book	Difference	earnings	equity	controlling
	amount			amount		adjustment	adjustment	equity
								adjustment
Cash and cash equivalent	3,880,607		Cash and cash equivalent	3,880,607	-	-	-	-
Debt instrument investment	106,691		Financial assets measured at	106,691	-	-	-	-
without active market			amortized cost
Bill receivable	18,536		Bill receivable	18,536	-	-	-	-
Account receivable	1,537,671		Account receivable (including	1,537,671	-	-	-	-
(including the interested party)			the interested party)
Other receivables (including	14,133		Other receivables (including	14,133	-	-	-	-
the interestedparty)			the interestedparty)
Subtotal	5,557,638

Note:

1. According to IAS 39, the financial assets held for trading classified as the financial assets measured by fair value through the profit or loss, include the fund investment. Since the flow characteristics of fund cash are not entirely for the payment of principal and the interest of outstanding principal amount; according to IFRS 9, if the financial assets are mandatory to be measured at the fair value through the profit or loss, the reclassification of financial assets mentioned above does not cause the book value difference.

2. According to IAS 39, it is classified as the investment of financial assets available for sale and financial assets measured at cost, including the stock of listed companies and stock of unlisted companies. Relevant information of classification changes is as follows:

3. a. Stock investment (including the stock of listed and unlisted companies)

Assessing based on the existing facts and conditions of January 1, 2018, since such stock investment (which belongs to the equity instrument) is not the investment held for trading, so the investment shall be classified as the financial assets measured by fair value through other

18

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

comprehensive profit or loss. On the first application date, it shall be reclassified from the financial assets available for sale (including the financial asset measured at cost of NT$ 322,181,000) to the financial assets measured by fair value through profit or loss in the amount of NT$ 228,826,000 and the financial assets measured through other comprehensive profit or loss in the amount of NT$ 555,538,000. Other relevant information is as follows.

• (a) The unlisted stock measured at cost in accordance with IAS 39 shall be measured at fair value in addition to not recognized as impairment loss according to IFRS 9. The Group measures the fair value of NT$ 316,416,000 on January 1, 2018; in addition to adjust the book amount of financial assets measured at fair value through other comprehensive profit or loss of NT$ 316,416,000, and the book amount of financial assets measured at fair value through profit and loss of NT$ 0, it also adjusts the retained earnings of NT$ 29,696,000, other equity of NT$ (30,506,000) and noncontrolling interest of NT$ (4,955,000).

• (b) The stock of listed and unlisted companies of NT$228,826,000 measured by fair value does not cause any book amount difference. On the first application date, except to be reclassified to be measured by fair value through other comprehensive profit or loss, only the accounting items in other rights and interests shall be reclassified. The change in fair value of NT$ 45,025,000 previously recognized in other equity shall also be reclassified to the retained earnings.

• In accordance with IAS 39, if the Group is classified as the financial assets held to maturity or the loans and receivables, its cash flow characteristic completely conforms to the payment of the principal and interest of the outstanding principal. Assessing based on the existing facts and conditions of January 1, 2018, since the business pattern belongs to the collection of contract cash flow, which comply with the provision of measurement at amortized cost; in addition, on January 1, 2018, the above-mentioned assets received the impairment assessment according to IFRS 9 and caused

19

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

no difference, so the book amount was not affected on January 1, 2018, and only the debt instrument investment without active market of NT$ 106,691,000 shall be reclassified as the financial assets measured by amortized cost.

• D. Relevant note disclosure according to IFRS 7 and IFRS 9 shall refer to Note IV, Note V, Note VI and Note XII.

• (3) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

When Paragraph 21 and 22 of IAS 21 "Effects of Changes in Foreign Exchange Rates" are applicable, this interpretation specifies to determine the used exchange rate in the original recognition of relevant assets, expenses and losses or profits (or partial), and the original recognition day of non-monetary assets or non-monetary liability generated when the enterprise pays or charges the consideration in advance on the trading day. If there are several advance payments or collections, the enterprise shall determine the trading day of each payment or charge of the advance consideration.

The original foreign currency sales transactions of the Group adopt the exchange rate of trading day recognizing the sales revenue day, to convert into its functional currency records, and recognize as the exchanged profit or loss when writing off the foreign currency advance payment. The Group selects to postpone the application of this interpretation from January 1, 2018, and this accounting principle change does not significantly affect the Group's recognition and measurement.

• (4) Disclosure proposal (amendment to IAS 7 “Statement of Cash Flows”)

Financial activities of the Group related to the liabilities shall increase the regulation information from the beginning to the end of the period, and relevant disclosure refers to Note XII.

1. The Group has not adopted the following IASB issued and FSC approved newly issued, revised and amended criteria or interpretations:

20

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Item	Newly issued/revised/amended criteria or interpretations	IASB issuing and effective date
1	IFRS 16 “Leases”	January1,2019
2	IFRIC 23 “Uncertaintyover Income Tax Treatments”	January1,2019
3	Amendment to IAS 28 “Investments in Associates and Joint Ventures”	January 1, 2019
4	With the characteristic of prepayment of negative compensation (amendment toIFRS 9)	January 1, 2019
5	2015-2017 IFRS improvements	January1,2019
6	Plan revision,reduction or liquidation(amendment toIAS 19)	January1,2019

• (1) IFRS 16 “Leases”

This new criterion requires the lessee to comply with and select the short-term lease or low-value target asset lease, and also adopt the single accounting mode for all the leases, namely to recognize the right-of-use asset and lease liability on the balance sheet, and recognize the lease related depreciation expense and interest charges in the consolidated profit and loss statement. In addition, the lessor leases are still classified as the operating lease and financial lease, but shall provide more disclosure information.

• (2) IFRIC 23 “Uncertainty over Income Tax Treatments”

This interpretation specifies that, when there is the uncertainty over income tax treatments, how to apply the recognition and measurement provision of IAS 12 “Income Tax”.

• (3) Amendment to IAS 28 “Investments in Associates and Joint Ventures”

This amendment clarifies that partial long-term equity constituting the net investment in the affiliate or joint venture of the enterprise shall apply to IFRS 9 prior to the application of IAS 28, and shall apply to IFRS 9 without regard to any adjustment arising from the application of IAS 28.

• (4) With the characteristic of prepayment of negative compensation (amendment to

21

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

IFRS 9)

This amendment allows the financial assets with the characteristic of prepayment (allowing one party to terminate the contract early by paying or receiving reasonable compensation) to be measured by amortized cost or at fair value through other comprehensive profit or loss.

(5) 2015-2017 IFRS improvements

IFRS 3 “Business Combinations”

This amendment clarifies that the enterprise which has joint control over the joint operation shall, upon gaining the control of the business, reassess its prior interest in the joint operation.

IFRS 11 “Joint Arrangements”

This amendment clarifies that the enterprise which involves in the joint operation but has no joint control shall, upon gaining the joint control of the business, not reassess its prior interest in the joint operation.

IAS 12 “Income Tax”

This amendment clarifies that the enterprise shall recognize the income tax consequences of dividends at the same place in respect of past transactions or events previously recognized as the profit or loss or other consolidated gains or interests.

IAS 23 “Borrowing Cost”

This amendment clarifies that the enterprise shall, when the assets are available for its intended use or sale, handle the loan specifically for the purpose of acquiring the assets in the form of general loans.

• (6) Plan revision, reduction or liquidation (amendment to IAS 19)

This amendment clarifies that when determining the changes to benefit plan (e.g. revision, reduction or liquidation, etc.), the enterprise should use the updated assumption to remeasure its net identified benefit liabilities or assets.

The above is the newly issued, revised and amended criteria or interpretations issued by IASB, approved by FSC, and applied from January 1, 2019. Except for the foregoing (1) influence assessed by the Group and described below, the newly issued or revised criteria or interpretations shall have no significant impact on the Group.

22

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

• (1) IFRS 16 “Leases”

IFRS 16 "Leases" replaces IAS 17 "Leases", IFRIC 4 "To determine whether the arrangement includes leasing", IFRIC 15 "Operating lease: incentive", and IFRIC 27 "Assessment of transaction essence involving the legal form of leases. The impact of IFRS 16 on the Group is as follows:

• A. For the definition of lease, the Group applies IFRS 16 interim provision, and select no need to reassess whether the contract belongs to (or contains) leasing on the first application day (namely January 1, 2019). If the Group had identified as leasing contract previously when applying IAS 17 and IFRIC 4, it shall be applicable to IFRS 16; in addition, if identified as not including the lease contract previously when applying IAS 17 and IFRIC 4, it shall not be applicable to IFRS 16.

If the Group is the lessee, it applies IFRS 16 interim provision, choosing not to recompile the comparative information, and recognizing the cumulative impact of the initial application on January 1, 2019, as the initial application date to retain the surplus (or other components of the equity, if applicable) beginning balance adjustment.

Classified as the operating lease

The Group is expected that when applying IAS 17 on January 1, 2019, the lease classified as operating lease shall be measured and recognized as the lease liabilities according to the present value of the remaining lease payment (discounted in the increased loan interest rate of the lessee on January 1, 2019); in addition, on the basis of individual leases, it shall select one of the following amounts to measure and recognize the rightof-use assets:

• i. Book amount of the right-of-use assets, as if applicable to IFRS 16 from the beginning day, but discounted in the increased loan interest rate of the lessee on January 1, 2019; or

• ii. Lease liability amount, but this amount shall be adjusted for all prepaid or payable lease payments relating to the lease (those

23

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

recognized in the balance sheet before January 1, 2019).

On January 1, 2019, the Group is expected to increase the right-of-use assets by NT$ 293,100,000; the lease liability will increase by NT$ 189,416,000; and other non-current assets will be reduced by NT$ 103,684,000.

• B. Newly increasing relevant note disclosure according to IFRS 16 Lessee and Leaser.

• Up to the date of approval of the financial statements, the Group has not adopted the following newly issued, revised and amended criteria or interpretation issued by IASB but not approved by FSC:

Item	Newly issued/revised/amended criteria or interpretations	IASB issuing and effective date
1	Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – asset sale or investment between the investor and its affiliates orjoint ventures	To be determined by IASB
2	IFRS 17 “Insurance Contracts”	January1,2021
3	Definition of business(amendment to IFRS 3)	January1,2020
4	Significant definition(amendment to IAS 1 and 8)	January1,2020

• (1) Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – asset sale or investment between the investor and its affiliates or joint ventures

This plan is to deal with the inconsistency between IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" concerning the loss of control of affiliated enterprises or joint ventures through the investment of subsidiaries. IAS 28 stipulates that when investing the non-monetary assets to exchange for the equity of affiliated enterprises or joint ventures, the share of profit or loss generated shall be written off in accordance with the downstream transaction processing method; while IFRS 10 stipulates that all benefits or losses arising from the loss of control over the subsidiaries shall be recognized. This amendment limits the

24

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

foregoing provision in IAS 28 to the extent that the benefits or losses arising from the sale or investment of business assets as defined in IFRS 3 shall be fully recognized.

This amendment also modifies IFRS 10 so that, in the event that the sale or investment between the investor and its affiliates or joint ventures does not constitute the business subsidiary as defined in IFRS 3, the profit or loss arising therefrom shall be recognized only in the scope of shares not enjoyed by the investor.

(2) IFRS 17 “Insurance Contracts”

This criterion provides the comprehensive model of Insurance Contracts, including all accounting related parts (recognition, measurement, expression and disclosure principles). The core of this criterion is the general model. Under this model, the original recognition measures the Insurance Contracts group by the sum of performance cash flow and contract service margin, in which the performance cash flow includes:

1. Future cash flow estimates

1. Discount rate: reflecting the adjustment of time value of money and the financial risk related to future cash flow (which is not included in the estimated value of future cash flow); and

2. Risk adjustment for non-financial risks

Book amount of the insurance contract group at the end of each reporting period is the sum of the remaining insurance liabilities and claim liabilities incurred.

In addition to the general model, it also provides:

1. Specific applicable method with direct participation of featured contracts (variable fee method)

2. Simplified method of short-term contracts (premium sharing method)

(3) Definition of business (amendment to IFRS 3)

This amendment clarifies the business definition in IFRS 3 "Business Combinations", helps the enterprise to identify the trade is handled in

25

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

accordance with the Business Combinations, or is handled in accordance with the assets gaining method. IFRS 3 continuously adopts the angle of market participants to determine whether the gained events or portfolio are the business, including to specify the minimum business requirements, increase, guide, and assist the enterprises in whether the assessment process is substantial, and reduce the definition for business and output.

(4) Significant definition (amendment to IAS 1 and 8)

Mainly redefined significant information includes: if some items get omitted, misstated or fuzzy in reasonable expectations, it shall affect the main users of general-purpose financial statements to make decisions on the basis of the financial statements. This revision clarifies the materiality will depend on the nature or size of the information, and the enterprise shall determine whether the information is important in the financial statements individually or with other information. If reasonable expectations affect the main users, the misrepresented information is important.

The actual applicable date of above criteria or interpretations issued by IASB but not approved by FSC, shall be subject to FSC regulation; in addition to the potential impact of the current assessment (1), (3) and (4) of newly released or revised criteria or interpretations, the Group temporarily is unable to reasonably estimate the influence of foregoing criteria or interpretations to the Group, and the rest newly issued or revised criteria or interpretations has no significant impact to the Group.

IV. Summary Statement of Major Accounting Policies

1. Compliance declaration

Consolidated Financial Statements of 2018 and 2017 of the Group are prepared in accordance with Security Issuer Financial Reporting Standards and effective IFRS, IAS, and IFRIC issued and approved by FSC.

26

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

2. Preparation basis

Financial Instruments in the Consolidated Financial Statements, as measured by fair value, are prepared at historical cost. Consolidated Financial Statements are in the unit of NT$ 1,000, unless otherwise noted.

3. Consolidation condition

Preparation principles of consolidated financial statements

Control is achieved when the Company is exposed to changes in remuneration or rights to enjoy such changes in remuneration arising from the participation of the investee, and through its power over the investee to influence such remuneration. In particular, the Company only controls the investee if it has the following three control elements:

• (1) the power over the investee (i.e., existing right to give the current ability to lead relevant activities)

• (2) the risk or right of change of remuneration arising from the participation of the investee, and

• (3) the ability to use its power over the investee to influence the amount of the investor's remuneration

Where the Company directly or indirectly holds the voting rights less than a majority of the investee or similar rights, the Company shall consider all relevant facts and circumstances to assess whether it has power over the investee, including:

• (1) contractual agreements with other holders of voting rights of the investee

• (2) rights arising from other contractual agreements

• (3) voting rights and potential voting rights

When the facts and circumstances show that one or more of the three control elements have changed, the Company shall re-evaluate whether it still controls the investee.

The subsidiaries shall be incorporated into the consolidated financial statements from the date of acquisition (i.e., the date on which the Company gains control),

27

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

until the date on which the Company loses control of the subsidiaries. The accounting period and policies of the subsidiary's financial statements shall be consistent with those of the parent company. All intra-group account balances, transactions, unrealized internal gains or losses and dividends due to intra-group transactions shall be eliminated in full.

The change of stock equity in subsidiary shall be treated as the equity matter if the control of the subsidiary is not lost.

The aggregate profit and loss of subsidiary is attributable to the owner of the Company and non-controlling equity, even if the non-controlling equity results in loss balance.

If the Company loses control of its subsidiaries, it shall

(1) derecognize the assets (including the goodwill) and liabilities of the subsidiaries;

(2) derecognize the book amount of any non-controlling equity;

(3) recognize the fair value of the consideration obtained;

(4) recognize the fair value of any investment retained;

(5) recognize any benefit or loss as the current profit or loss;

(6) reclassify the number of items previously recognized as other comprehensive

profits and losses of the parent company to the current profits and losses.

The main body for preparing the consolidated financial statements is as follows:

Investment companyname	Subsidiaryname	Primary business	Percentage of equityheld	Percentage of equityheld
			2018.12.31	2017.12.31
The Company and subsidiary The Company and subsidiary The Company and subsidiary The Company The Company The Company and subsidiary The Company and subsidiary	Ritdisplay Corporation U-Tech Media CORPORATION Prorit CORPORATION Zhongfu Investment Co.,Ltd Zhongyuan International Venture Capital Co., Ltd. AimCore Technology Co., Ltd. PV Next Corporation.	OLED manufacturing and trading CD manufacturing and selling Plastic precision injection General investment business Venture capital investment business Conductive glass manufacturing and trading Battery manufacturing and trading	70.58 39.20 96.50 100.00 100.00 24.76 61.31	71.60 35.97 96.50 100.00 100.00 24.61 61.31

28

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Investment companyname	Subsidiaryname	Primary business	Percentage of equityheld	Percentage of equityheld
			2018.12.31	2017.12.31
The Company The Company RICARE CORPORATION The Company The Company The Company The Company The Company The Company The Company and subsidiary The Company Sky Chance Sky Chance The Company and subsidiary Laiyang U-Tech U-Tech U-Tech U-Tech U-Tech and AimCore HouJu Jade Glory Days PRORIT Arlewood Arlewood AimCore ARMOR	RiteDia Co., Ltd.. RICARE CORPORATION FANG HIS CORPORATION. HOLI ENERGY CORPORATION. ART Management Ltd Affluence International Co., Ltd (B.V.I) Max Online Ltd.(B.V.I) Ritek Group Inc. (Cayman) Score High Group Ltd. (B.V.I) Ritrax Corp. Ltd.(U.K.) Sky Chance International Ltd. Team Diy Hardware Sdn. BHD Ritek Latin America Ritfast Corporation. RiTdisplay Global Corporation Dollars cultural and creative industry company Crystal Investment Overseas Ltd. Jade Investment Services Ltd. Havard Industries Co., Ltd. HouJu Energy Development Co., Ltd. Hou Cheng Trading Co., Ltd. Glory Days Services Ltd. U-Tech Media Korea Co., Ltd. Arlewood International Corporation Kunshan Protek Co. Ltd. Prorit Corporation Vietnam Ltd. ARMOR INVESTMENT GROUP CORP. AimCore (Yangzhou) Technology Co., Ltd.	Lighting equipment manufacturing Management consulting Management consulting Energy technology Holding company Holding company Holding company Holding company Holding company Trademark right company Holding company Hardware trading Sales of chemical materials Touch panel manufacturing Holding company Cultural and creative industry Holding company Holding company Property development and trading Renewable energy self-use power generation equipment industry Renewable energy self-use power generation equipment industry Holding company CD manufacturing and selling Holding company Plastic precision injection Electronics industry Holding company Conductive glass	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 100.00 98.08 (Note 2) 100.00 (Note 3) 100.00 100.00 98.72 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 (Note 1) 97.22 100.00 100.00 100.00 100.00 100.00 (Note 4) (Note 4) 100.00 100.00 100.00 100.00 100.00 100.00 100.00

29

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Investment companyname	Subsidiaryname	Primary business	Percentage of equityheld	Percentage of equityheld
			2018.12.31	2017.12.31
ART Max Online and Score High Max Online and PVnext Hutek RGI RGI Score High	Advanced Media Inc. Kunshan Hutek Co., Ltd. Ritpower (yangzhou) Co., Ltd Kunshan Ritek Trading Company., Ltd. Conrexx Technology B.V. RME Manufacturing Gmbh. Ritek Vietnam Co., Ltd.	CD selling CD manufacturing and selling Solar module manufacturing CD selling CD selling CD manufacturing and selling CD manufacturing and selling	100.00 100.00 80.27 100.00 100.00 100.00 100.00	100.00 100.00 80.27 100.00 100.00 100.00 100.00

Note 1: Subsidiary Sky Chance acquired 100% stock equity of Ritek Latin America in the third quarter of 2018.

Note 2: The subsidiary completed the liquidation in the first quarter of 2018, and returned the investment amount of NT$ 3,887,000.

Note 3: The subsidiary completed the liquidation in the third quarter of 2018.

Note 4: U-Tech and AimCore completed the acquisition of 98.72% stock equity of Houju Energy Development Co., Ltd. on October 12, 2018, and acquired the actual control to Houju Energy Development Co., Ltd.; former subsidiary Houcheng Photoelectricity Co., Ltd. of Houju Energy Development Co., Ltd. was included in the main body of consolidated financial statements preparation.

The Company determines that it has control over U-Tech and AimCore even though it holds less than 50% voting right. Since the date of investment to U-Tech and AimCore, the Company has been the single largest shareholder in U-Tech and AimCore, and the remaining equity in U-Tech and AimCore is widely held by many other shareholders. In the absence of contractual rights, the Company may obtain the power of attorney of majority right to vote, and may appoint the key managers of U-Tech and AimCore capable of leading relevant activities.

30

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

1. Foreign currency transaction

Consolidated financial statements of the Group are expressed in the Company’s functional currency NT$. Each system within the Group determines its own functional currency and measures its financial statements in that functional currency.

Individual transactions in foreign currencies in the Group are converted into the functional currency at the exchange rate of the trading day. In every end day of the reporting period, the foreign currency monetary items are converted by the closing exchange rate of that day; if measuring the foreign currency non-monetary items at the fair value, it shall be converted at the exchange rate of that day measured by the fair value; if measuring the foreign currency non-monetary items at the historical cost, it shall be converted at the exchange rate of original trading day.

Except as described below, the exchange difference arising from the delivery or conversion of monetary items shall be recognized as the profit or loss in the current period:

• (1) For the borrowing in foreign currencies incurred to acquire the required assets, if the exchange difference incurred for the borrowing is deemed as the adjustment of interest cost, it shall be part of the Borrowing Cost and capitalized as the asset cost.

• (2) The foreign currency item applicable to IFRS 9 "Financial Instruments" (before January 1, 2018, IAS 39) shall be treated according to the accounting policy of Financial Instruments.

• (3) For the monetary item as part of the net investment in foreign operating institutes by the reporting entity, the exchange difference generated is initially recognized as other comprehensive profit or loss, and when disposing the net investment, it shall be reclassified from the equity to the profit or loss.

When the profit or loss of non-monetary item is recognized as other comprehensive profit or loss, any exchange component of such profit or loss shall be recognized as

31

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

other comprehensive profit or loss. When the profit or loss of non-monetary item is recognized as the profit or loss, any exchange component of such profit or loss shall be recognized as the profit or loss.

5. Conversion of financial statements in foreign currency

When preparing the consolidated financial statements, the assets and liabilities of every foreign operating institute shall be converted into NT$ at the closing exchange rate of the balance sheet day, and the income and fee loss item shall be converted at the current average exchange rate. The exchange difference due to the conversion shall be recognized as other comprehensive profit or loss, and when disposing the foreign operating institute, those previously recognized as other comprehensive profit or loss shall be accumulated in the equity to form the separate part of the accumulated exchange difference; in the case of the recognition and disposal of the profit or loss, it shall be reclassified from the equity to the profit or loss. When involving in the partial disposal including the loss of control of the subsidiary of the foreign operating institute, and after the partial disposal including the affiliated enterprises or joint arrangements' equity of the foreign operating institute, if the reserved equity are the financial assets of the foreign operating institute, the disposal shall also apply.

If the partial disposal is handled without loss of control including the subsidiaries of foreign operating institute, the accumulated exchange difference recognized in other comprehensive profit or loss shall be recognized to the non-controlling equity of the foreign operating institute in proportion, and shall not be recognized as the profit or loss; under the circumstances that no significant influence is lost or under the joint control, when the partial disposition includes the affiliated enterprises or joint arrangements of the foreign operating institute, the accumulated exchange difference shall be reclassified to the profit or loss in proportion.

When the Group acquires the goodwill from purchasing the foreign operating institute and make adjustment to the fair value of the book amount of its assets and liabilities, it shall be deemed as the assets and liabilities of the foreign operating institute, and shall be reported in its functional currency.

32

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

1. Classification criteria for assets and liabilities distinguishing the current and noncurrent

In any condition below, it shall be classified as the current asset; if not the current asset, it shall be classified as the non-current asset:

• (1) The asset is expected to be realized in its normal business cycle, or it is intended to be sold or consumed.

• (2) To hold the asset primarily for trading purposes.

• (3) The asset is expected to be realized within 12 months after the reporting period.

• (4) Cash or equivalent cash, except where there are restrictions on the exchange of such assets or the use of them for the settlement of liabilities at least 12 months after the reporting period.

In any condition below, it shall be classified as the current liability; if not the current liability, it shall be classified as the non-current liability:

• (1) It is expected to pay off the liability in its normal business cycle.

• (2) To hold the liability primarily for trading purposes.

• (3) It is expected to repay the liability within 12 months after the reporting period.

• (4) The repayment period of the liability cannot be extended unconditionally to at least 12 months after the reporting period. The liability clause, which may lead to the issuance of equity instrument at the option of the counterparty, does not affect the classification.

• Cash and cash equivalent

The cash and cash equivalent are the stock cash, current deposit, and fixed deposit or investment that can be converted into fixed cash at any time, with little risk of value change, in short term, and with highly liquidity (including the fixed deposit within 12 months during the contract period).

8. Financial instruments

The financial assets and financial liabilities shall be recognized when the Group becomes one party of the financial instrument contract.

33

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The financial assets and financial liabilities conforming to the applicable scope of IFRS 9 “Financial Instruments” (before January 1, 2018, IAS 39), shall be measured at the fair value in the original recognition; if directly belonging to the financial assets and financial liabilities (except for classified as the financial assets and financial liabilities measured at fair value through profit or loss) acquired or issued transaction cost, it shall be added or deducted from the fair value of financial assets and financial liabilities.

• (1) Recognition and measurement of financial assets

Accounting treatments after January 1, 2018 are as below:

The recognition and derecognition of all conventionally traded financial assets of the Group shall adopt the accounting treatment on the trading day.

Based on the following two items, the Group classifies the financial assets into the financial assets measured at the subsequent amortized cost, and the financial assets measured at the fair value through other comprehensive profit or loss or at the fair value through profit or loss:

• A. Business model managing the financial assets

• B. Cash flow characteristics of financial asset contracts

Financial assets measured at amortized cost

Financial assets conforming to the following two conditions are measured at the amortized cost and are listed on the balance sheet in the items such as the bill receivable, account receivable, financial assets measured at amortized cost and other receivables:

• A. Business model managing the financial assets: holding the financial assets to collect the contract cash flow

• B. Cash flow characteristics of financial asset contracts: the cash flow is entirely for the payment of principal and interest on the outstanding principal amount

34

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Such financial assets (not including those involving the hedging relationship) are measured at subsequent amortized cost [measuring the amount in the original recognition, deducting the repaid principal, adding or reducing the cumulative amortization of difference between the original amount and the amount due (using the effective interest method), and adjusting the allowance for damage]. In addition to the column, through the amortization process or when recognizing the impairment profit or loss, the profit or loss shall be recognized in the profit or loss.

Interest shall be calculated by the effective interest method (multiplying the effective interest rate by the total book amount of financial assets) or in the following cases, and then it shall be recognized as the profit or loss:

• A. For financial assets of acquired or created credit impairment, multiplying the effective interest rate of credit after adjustment by the amortized cost of financial assets

• B. If not the former, but becoming the credit impairment later, multiplying the effective interest rate by the amortized cost of financial assets

Financial assets measured at fair value through other comprehensive profit or

loss

Financial assets conforming to the following two conditions are measured at the fair value through other comprehensive profit or loss, and are listed on the balance sheet in the financial assets measured at fair value through other comprehensive profit or loss:

• A. Business model managing the financial assets: collecting the contract cash flow and selling the financial assets

• B. Cash flow characteristics of financial asset contracts: the cash flow is entirely for the payment of principal and interest on the outstanding principal amount

35

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Such financial assets related profit or loss recognition are described as below:

• A. Before listing or reclassification, except for the impairment profit or loss and foreign currency exchange profit or loss recognized in the profit or loss, the rest profit or loss shall be recognized as other comprehensive profit or loss

• B. In the case of exception, the accumulated profit or loss previously recognized in other comprehensive profit or loss shall be reclassified and adjusted from the equity to the profit or loss

• C. Interests calculated by the effective interest method (multiplying the effective interest rate by the total book amount of financial assets) or in the following cases, shall be recognized as the profit or loss:

• (a) For financial assets of acquired or created credit impairment, multiplying the effective interest rate of credit after adjustment by the amortized cost of financial assets

• (b) If not the former, but becoming the credit impairment, multiplying the effective interest rate by the amortized cost of financial assets

Furthermore, for the equity instrument within the scope of IFRS 9 and being neither held for transaction nor used with the recognition or consideration by the purchaser in IFRS 3 Business Combinations, at the time of the original recognition, it selects (irrevocably) to list the changes of its subsequent fair value in other comprehensive profit or loss. The amount listed in other comprehensive profit or loss shall not be transferred to the profit or loss (when the equity instruments are disposed, the accumulated amount of other equity items will be included and directly transferred to the retained surplus); in addition, the financial assets measured at fair value through other comprehensive profit or loss are listed in the balance sheet. Investment dividends are recognized in the profit or loss, unless the dividends clearly represent the recovery of partial investment costs.

Financial assets measured at fair value through profit or loss

Except for above conforming to specific conditions and measured at amortized cost or at fair value through other comprehensive profit or loss, the rest financial assets are measured at fair value through profit or loss, and are list on

36

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

the balance sheet in the financial assets at fair value through profit or loss.

Such financial assets shall be measured at fair value, and the profit or loss generated by remeasurement shall be recognized as the profit or loss. Such recognition as the profit or loss shall include any dividends or interest received by such financial assets.

Accounting treatments before January 1, 2018 are as below:

The recognition and derecognition of all conventionally traded financial assets of the Group shall adopt the accounting treatment on the trading day.

The financial assets of the Group are classified into three categories: financial assets measured at fair value through profit or loss, financial assets available for sale, loans and receivables. This classification is determined by the nature and purpose of financial assets when originally recognized.

Financial assets measured at fair value through profit or loss

The financial assets measured at fair value through profit or loss include those held for trading and those appointed to be measured at fair value through profit or loss.

When conforming to one of the following conditions, it is classified as held for trading:

• A. The main purpose is to sell in the short term;

• B. At the time of the original recognition, it is part of identifiable financial instrument portfolio of the consolidation management, and there is evidence that the portfolio is the short-term profit-taking pattern; or

• C. It is the derivative instrument (except the financial guarantee contract or derivative instrument designated as effective hedge instrument).

For the financial instrument contracts containing one or more embedded derivative contracts, the overall mixed (combined) contract can be specified as the financial assets measured at fair value through profit or loss; or when conforming to any information below and can be provided by relevant

37

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

information, it is specified as the "profit or loss as measured at fair value" in the original recognition:

• A. The designation may derecognize or substantially reduce the measurement or recognition inconsistencies; or

• B. A set of financial assets, financial liabilities or both, are managed and evaluated the performance on the fair value basis, in accordance with the written risk management or investment strategy, and the incorporated company provides the information on the investment portfolio to the management, also on the fair value basis.

Such financial assets shall be measured at fair value, and the profit or loss generated by remeasurement shall be recognized as the profit or loss. Such recognition shall be the profit or loss including any dividends or interest received by such financial assets (including those received by investment in the current year).

For such financial assets, if there is no open quotation in the active market and the fair value cannot be measured reliably, the amount after deducting the impairment loss will be measured at the end of the reporting period, and listed on the balance sheet in the financial assets measured at the cost.

Financial assets available for sale

Financial assets available for sale is the non-derivative financial assets, and is designated as the financial assets for sale, or not classified as the financial assets measured at fair value through profit or loss, held to maturity, investment or loan and receivables.

Part of the exchange difference in the change of book amount of monetary financial assets available for sale, the interest revenue of financial assets available for sale calculated in effective interest method and the dividend revenue of equity investment available for sale, are recognized in the profit or loss. The change of book amount of other financial assets available for sale shall be recognized under the equity item before the derecognition of the investment; when derecognizing, the accumulated amount previously recognized under the equity item shall be reclassified to the profit or loss.

38

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

For the equity instrument investment, if there is no open quotation in the active market and the fair value cannot be measured reliably, it will be measured by the amount after deducting the impairment loss at the end of the reporting period, listed on the balance sheet in the financial assets measured at cost.

Loans and receivables

Loans and receivables refer to the financial assets that are not quoted publicly in the active market and the non-derivative financial assets with the fixed or determinable amounts of collection, subject to the following conditions: the holder may not recover nearly all of the original investment due to factors other than not classified as measured at fair value through profit or loss, not designated as available for sale, and not subject to the credit deterioration.

Such financial assets are separately expressed in the balance sheet in the receivables and investment in debt instruments without active market. After the original measurement, the effective interest rate method is adopted to measure the amortized costs deducting the impairment. The calculation of amortized costs takes into account the discount or premium when acquiring and the transaction costs. Amortization under the effective interest rate method is recognized as the profit and loss.

(2) Impairment of financial assets

Accounting treatments after January 1, 2018 are as below:

The Group measures the investment in debt instrument at fair value through other comprehensive profit or loss, and the financial assets at amortized cost, to recognize by the expected credit loss and measure the allowance for loss. The debt instrument investment measured at fair value through other comprehensive profit or loss is to recognize the allowance for loss in other comprehensive profit or loss and bot reduce the investment book amount.

The Group measures the expected credit losses in the following ways:

39

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

• A. Unbiased and probability-weighted amounts determined by evaluating the possible outcomes

• B. Time value of money

• C. Reasonable and verifiable information relating to past events, current situation and forecast of future economic conditions (available on balance sheet date without excessive cost or input)

The method to measure the loss allowance is described as follows:

• A. Measured at 12 months forecast credit losses: including the financial assets of credit risk not significantly increased from the original recognition, or determined as the low credit risk in the balance sheet day. In addition, also including the allowance for loss measured at the expected credit loss of the duration of the previous reporting period, but no longer meet the requirement after the balance sheet day for the significant increase of credit risk after the original recognition.

• B. Measurement of the amount of expected credit loss during the term of existence: including the financial assets, whose credit risk has increased significantly since the original recognition, or the financial assets of acquired or created credit impairment.

• C. For the account receivable or contract assets generated by the exchange within the scope of IFRS 15, the Group adopts the amount of expected credit losses during the duration of the existence period to measure the allowance for losses.

On each balance sheet day, the Group shall compare the default risk changes of financial instruments on the balance sheet day with the original recognition day, to assess whether the credit risk of financial instruments has increased significantly after the original recognition. In addition, the information related to credit risk shall refer to Note XII.

Accounting treatments before January 1, 2018 are as below:

Except to measure the financial assets at fair value through profit or loss, other financial assets are evaluated and impaired on the end of each reporting period; when there is objective evidence that the financial assets are estimated to suffer losses due to single or multiple loss items after the original recognition of

40

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

financial assets and cause the financial assets impairment. The financial assets' book amount is deducted directly from the book amount, except that the receivables are deducted by the allowance account, and the loss is recognized as the profit or loss.

The fair value of equity investment available for sale is considered as the loss item when it is lower than the cost and there is significant or permanent decrease.

Other loss items of financial assets may include:

• A. The issuer or the other party of the transaction has major financial difficulties; or

• B. Breach of contract, such as the delay or non-payment of interest or principal; or

• C. The debtor is likely to go bankrupt or undergo other financial restructuring; or

• D. The active market of financial assets disappears due to the issuer's financial difficulties.

For the loans and receivables, the Group shall firstly individually assess whether there is the objective impairment evidence of significant individual financial assets, and the non-significant financial assets shall take the group assessment. If there is no objective impairment evidence in the individual assessment of financial assets, whether it is significant or not, the financial assets with similar credit risk characteristics shall be classified into one group, and make the impairment assessment in group. If there is the objective impairment evidence, the loss measurement system is determined by the difference between the assets’ book amount and estimated value of future cash flow. The estimated value of future cash flow is discounted in accordance with the original effective interest of the assets; if the loan adopts the floating interest rate, the impairment loss discount rate for the measurement is the current effective interest rate. Interest revenue is based on the reduced asset book amount, and estimated and listed continuously according to the cash flow discount rate adopted to calculate the impairment loss.

41

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

When the accounts receivable is not expected to be collected in the future, the accounts receivable and related allowance should be offset. In the subsequent years after recognized the impairment loss, if the estimated amount of impairment loss is increased or decreased for any incident, it shall adjust the allowance to increase or reduce the previously recognized impairment losses. If recovered after offsetting, this recovery shall be recognized in the profit or loss.

For the equity instrument classified as available for sale, the amount of impairment recognition is based on the accumulated loss measured by the difference between the acquired cost and the current fair value, which deducts the previously recognized loss measurement in the profit or loss, and is reclassified to the profit or loss under the equity. The impairment loss of equity investment shall not be returned through the profit or loss; the fair value increasing after the impairment shall be recognized in the equity directly.

(3) Derecognition of financial assets

The financial assets held by the Group shall be derecognized if:

• A. The equity from the cash flow contract of financial assets terminates.

• B. Financial assets have been transferred and almost all the risks and rewards of the asset ownership have been transferred to others.

• C. The assets have neither transferred nor retained almost all the risks and rewards of the ownership, but the control of the assets has transferred.

When financial assets are derecognized as a whole, the difference between the book amount and the total accumulated profit or loss that has been collected or may be collected and recognized in other comprehensive profit or loss shall be recognized as the profit or loss.

42

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(4) Financial liability and equity instrument

Classification of liability or equity

The liabilities and equity instruments issued by the Group are classified as the financial liability or equity according to the substance of the contract and the definition of financial liabilities and equity instruments.

Equity instrument

The equity instrument means any contract in recognition of the Group's remaining equity after all liabilities have been deducted from the assets of the Group.

Financial liabilities

Financial liabilities within the scope of IFRS 9 (before January 1, 2018, IAS 39) are classified as the financial liabilities measured at fair value through profit or loss or the financial liabilities measured at amortized cost at the time of original recognition.

Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at fair value through profit and loss, include the financial liabilities held for trading and specified financial liabilities measured at fair value through profit and loss.

When one of the following conditions is met, it is classified as held for trading:

• A. The main purpose for acquisition is to sell in the short term;

• B. At the time of the original recognition, it belongs to part of the identifiable portfolio of financial instruments under the consolidation management, and there is evidence that the portfolio is the short-term profit-taking pattern; or

• C. It is the derivative instrument (other than the financial guarantee contract or derivative instrument designated and with effective hedge instrument).

43

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

For containing one or more embedded derivative contracts, the integral mixed (combined) contract can be specified as the financial liabilities measured at fair value by profit or loss; when more relevant information can be provided by conforming to one of the following factors, it is specified as measured at fair value through profit or loss in the original recognition:

• A. The designation may be eliminated or substantially reduced in measurement or recognized inconsistently; or

• B. A set of financial assets, financial liabilities or both, are managed and evaluated on the fair value basis, in accordance with the written risk management or investment strategy, and the information on the investment portfolio is provided to the management of the incorporated company, also on the fair value basis.

The profit or loss arising from the remeasurement of such financial liability shall be recognized as the profit or loss, which includes any interest paid on the financial liability.

Before January 1, 2018, if there was no open quotation in the active market and the fair value of such financial liabilities could not be reliably measured, the financial liabilities shall be measured at cost on the end of the reporting period and presented on the balance sheet.

Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include the payables and loans, which are recognized initially and then measured by the effective interest rate method. When the financial liabilities are derecognized and amortized through the effective interest rate method, the relevant profit and loss and amortization are recognized as the profit or loss.

The calculation of amortized costs takes into account the discount or premium obtained and transaction cost.

Derecognition of financial liabilities

When the obligation of financial liabilities is relieved, cancelled or invalid, it shall derecognize the financial liabilities.

When the Group and creditors exchange the debt instrument in the significant difference terms, or change all or part of the existing financial liabilities terms

44

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

and conditions (whether due to financial difficulties or not), to derecognize the original liability and recognize new liability, the difference between the book amount and the paid or payable total price (including the transfer of non-cash assets or assumption of liabilities) shall be recognized in the profit or loss.

(5) Offset of financial asset and liability

Financial assets and financial liabilities shall be set off against each other and shown on the balance sheet in a net amount only if the recognized amount is currently in the exercise of the legal right of set-off and the intention to deliver the assets on the net amount basis or realize the assets and liquidate the liabilities at the same time.

9. Derivative instruments

The derivative instruments held or issued by the Group are for the purpose of avoiding the exchange rate risks and interest rate risks, and those designated and effectively hedged are reported on the balance sheet as the hedged derivative assets or liabilities; the others not specified and effectively hedged are listed in the financial assets or financial liabilities measured at fair value through profit or loss.

The original recognition of derivative instrument is measured at the fair value on the date of signing the derivative contract, and measured at the fair value later. When the derivative instrument’s fair value is positive, it is the financial asset; when the derivative instrument’s fair value is negative, it is the financial liability. Fair value change of derivative instrument shall be directly recognized as the profit or loss, unless it involves the cash flow hedging or net investment hedging of foreign operating institutes, which is the effective part, it is recognized under the equity.

Before January 1, 2018, when embedded in the main contract, the economic characteristics and risks of the derivative instruments are not closely related with the main contract, and the main contract is not held for trading or specified to be measured at fair value through profit or loss, the embedded derivative instruments shall be regarded as the independent derivative instrument for processing. However, since January 1, 2018, the above rules are still applicable to the main contract of financial liabilities or non-financial assets.

45

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

10. Fair value measurement

Fair value refers to the price that the market participants can charge for the sale of an asset in an orderly transaction or pay for the transfer of a liability on the measurement day. Fair value measurement assumes that the sale of an asset or the transfer of a liability occurs in one of the following markets:

• (1) the principal market for the asset or liability, or

(2) where there is no principal market, in which the asset or liability market is most favourable

The principal or most advantageous market must be available for the group to enter and trade.

The fair value measurement of assets or liabilities uses the assumption when the market participants price the assets or liabilities, which is made based on the economic best interests.

Non-financial assets fair value measurement considers the ability of market participant to generate the economic benefit by using the asset for its maximum and best use or by selling the asset to another market participant for its maximum and best use.

The Group uses the evaluation technique appropriate to relevant situation and with sufficient data available to measure the fair value, and maximizes the use of observable input values and minimizes the use of unobservable input values.

11. Inventory

Inventory is evaluated by the method of lower cost versus net realized value, item by item.

Cost refers to the cost incurred to make the inventory available for sale or production and in place:

46

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Raw materials – adopting the weighted average method based on actual purchase cost

Finished goods and goods in process – including the direct raw materials, labour costs and fixed factory overhead at normal capacity, but excluding the Borrowing Cost.

Net realized value is the balance of the estimated selling price deducting the required cost of completion and sales expenses under normal circumstances.

12. Investment by equity method

The Group's investment in affiliated enterprises shall be treated by the equity method, except for assets for sale. Affiliated enterprises refer to those who are greatly influenced by the Company. Joint ventures refer to the Company has the right to the net assets of the joint arrangements (with joint control).

Under the equity method, the investment in affiliated enterprises or joint ventures listed in the balance sheet, is made in the cost basis plus the amount recognized depending on the shareholding ratio of the Group to the net equity change of affiliated enterprise or joint venture. The book amount of investment to affiliate enterprises or joint ventures and other related long-term equity shall recognize the extra loss and liability after adopting the equity method to reduce to zero, within the scope of legal obligation and constructive obligation or payment for associated enterprises. Where the Group generates the unrealized profit or loss in the transactions with affiliate enterprises or joint ventures, it shall be written off in proportion to its equity in the affiliate enterprises or joint ventures.

When the change in the equity of affiliated enterprise or joint venture is not caused by the profit or loss or other comprehensive profit or loss items and does not affect the Group's shareholding ratio, the Group shall recognize the change in relevant ownership according to the shareholding ratio. Therefore, when handling the capital reserve recognized of the affiliated enterprise or joint venture in the future, it shall be transferred to the profit or loss according to the disposal ratio.

47

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Where the Group does not subscribe for additional shares in the affiliated enterprise or joint venture in accordance with its shareholding ratio, resulting in the change in the investment ratio, and thus the increase or decrease in the Group's net assets held by the affiliated enterprise or joint venture, the increase or decrease shall be adjusted by the "capital reserve" and "investment by equity method". When the investment ratio changes decreasingly, related items previously recognized in other comprehensive profit or loss shall be reclassified to the profit or loss or other appropriate items according to the decrease ratio. When the aforesaid capital reserves are placed in the subsequent disposal of affiliated enterprises or joint ventures, it shall be transferred to the profit or loss according to the disposal ratio.

The financial statements of the affiliated enterprise or joint venture are prepared during the same reporting period as the Group, and are adjusted to align their accounting policies with those of the Group.

The Group shall, at the end of each reporting period, confirm whether there is objective evidence of impairment from the investment to affiliated enterprises or joint ventures pursuant to IAS 28 "Investments in Associates and Joint Ventures" (before January 1, 2018, IAS 39). If there is objective evidence of impairment, the Group shall calculate the amount of impairment based on the difference between the recoverable amount and the book amount of the affiliated enterprise or joint venture in accordance with IAS 36 "Asset Impairment", and recognize the amount in the profit or loss of the affiliated enterprise or joint venture. If the investment use value is adopted for the aforementioned recoverable amount, the Group shall determine relevant use value based on the following estimation:

• (1) the present value share of estimated future cash flow generated by the Group's affiliated enterprises or joint ventures, including the cash flow generated by the operation of the affiliated enterprises or joint ventures and the final disposal income of the investment; or

• (2) the expected received dividends from the investment and the present value of the estimated future cash flows generated from the final disposal of the investment.

The goodwill item of book amount, which constitutes the investment in affiliated enterprise or joint venture, is not separately recognized, so it is not necessary to apply IAS 36 "Asset Impairment" for goodwill impairment test.

48

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

In case of loss of significant impact on affiliated enterprises or joint control to joint ventures, the Group shall measure and recognize the retained investment part at fair value. In the event of the loss of significant influence or joint control, the difference between the book amount of the affiliated enterprise or joint venture and the disposal price added to the fair value of the retained investment shall be deemed as the profit and loss. In addition, when the investment of affiliated enterprise becomes the investment of joint venture, or the investment of joint venture becomes the investment of affiliated enterprise, the Group shall continue to apply the equity method without remeasuring the retained equity.

13. Property, plant and equipment

Property, plant and equipment are recognized based on the acquisition cost, and listed after deducting the accumulative depreciation and accumulative impairment; these costs include the property, plant and equipment disassembly, removal, and recovery cost in the location and the interest necessary to indemnify for the construction in process. If the constitution of property, plant and equipment is significant, it shall separately list the depreciation. When the main items of property, plant and equipment shall be reset on the regular basis, the Group shall deem the item as individual asset and recognize in accordance with the specific durable years and depreciation method respectively. The book amount of the reset part shall be derecognized according to IAS 16 "Property, plant and equipment". If the major maintenance costs meet the recognition conditions, it shall be deemed as the replacement costs and shall be recognized as part of the plant and equipment book amount, and other repair and maintenance expenses shall be recognized as the profit or loss.

Depreciation is calculated on the straight-line basis according to the estimated durable years of the following assets:

Buildings and structures 10~46 years 10~46 years (main structure of the building of 46 years, decoration of 10~15 years) Machinery equipment 5~15 years Miscellaneous equipment 3~21 years

49

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

After the property, plant and equipment item or any important component is originally recognized, if it is disposed of or there is no economic benefit inflow due to the use or disposal in the future, it shall be derecognized and the profit or loss shall be recognized.

The residual value, durable years and depreciation method of the property, plant and equipment are evaluated at the end of each financial year. If the expected value is different from the previous estimate, the change is regarded as the change of accounting estimate.

14. Investment property

Investment property is measured at original cost and includes the trading cost to obtain the asset. The investment property’s book amount includes the cost to repair or add the existing investment property when the cost reaches the recognition conditions, but the ordinary routine maintenance costs are not as part of the cost. After the original recognition, the investment property measurement adopts the cost model, it shall dispose in accordance with IAS 16 “Property, plant and equipment”, except classified as to be sold (or included in the classification of disposal groups to be sold) according to IFRS 5 "Non-current assets to be sold and closed units".

Depreciation is calculated on the straight-line basis according to the estimated durable years of the following assets:

Buildings 10~46 years (main structure of the building of 46 years, decoration of 14~20 years)

In case of disposal or permanent disuse of investment property and not expected to generate the future economic benefits from disposal, it shall be derecognized and the profit or loss shall be recognized.

The Group shall transfer in or transfer out the investment property according to the actual use of the assets.

50

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

When the property conforms to or no longer conforms to the definition of investment property and there is evidence to show the change of use, the Group will transfer into the property as the investment property or transfer out from investment property.

15. Lease

The Group as the lessee

The financial lease is to transfer almost all the risks and rewards related to the ownership of lease target to the Group, and on the lease beginning day, to capitalize the lower one in the lease assets fair value or the minimum lease payment of the present value. Rent payment is apportioned to the cost of financing and leasing liability reduced amount, in which, the financing cost is determined by the remaining liability balance according to the fixed interest rate, and recognized in the profit or loss.

The leased asset is depreciated on the basis of the durable years of the asset, provided that if it is not reasonably possible to determine that the Group will acquire the ownership of the asset at the end of the lease term, the depreciation is recognized on the basis of the shorter one in the estimated durable years and the lease term of the asset.

The lease payment of operating lease shall be recognized as the expense during the lease term in the straight-line method.

The Group as the leaser

The lease in which the Group does not transfer the ownership of the subject matter of the lease to another party shall be classified as the operating lease. The original direct cost incurred by the operating lease is added as the book amount of the leased asset, and is recognized in the lease period on the same basis as the rental revenue. The rental revenue generated in the operating lease is recognised on the straight-line basis according to the lease period. Contingent rent is recognised as the revenue during the rental period.

51

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

16. Intangible asset

Intangible assets obtained separately shall be measured at the cost in the original recognition. The cost of intangible assets acquired through Business Combinations is the fair value on purchasing day. After the original recognition, the book amount of intangible assets is the amount of its costs deducting the accumulative amortization and accumulated impairment. The intangible assets not conforming to the recognition conditions and generated internally shall not be capitalized, and shall be recognized to the profit or loss when incurred.

The durable years of intangible assets can be divided into the limited and indefinite durable years.

The intangible assets with limited durable years are amortized within its durable years, and receive the impairment test when there is the sign of impairment. The amortization period and method for intangible assets with limited durable years shall at least be reviewed at the end of each financial year. If its estimated durable years are different from previous estimates, or the expected consumption pattern of economic benefits in the future has changed, the amortization method or amortization period will be adjusted and deemed as the changes in accounting estimates.

The intangible assets with indefinite durable years shall not be amortized, but shall receive the impairment test in every year in accordance with the individual asset or cash generating unit level. The intangible assets with indefinite durable years shall be evaluated in every period that whether there is any event and circumstance to continue to support the durable years of the asset in the indefinite status. If the durable years is changed from indefinite to limited, the application shall be delayed.

The profit or loss caused by the derecognition of intangible asset shall be recognized to the profit or loss.

Trademark right

Trademark right is the right legally acquired and purchased.

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RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Patent right

Patent right is the right legally acquired and purchased.

Others

Others refer to the channel right. The channel right shall be amortized in reasonable and systematic way according to the service life of the sales channel obtained by the Company in Europe, America and Asia.

The accounting policies of intangible assets of the Group are summarized as below:

Durable years Applied amortization method Internal generated or externally acquired	Patent right	Franchise	Channel right
	10 years Amortizing during the patent right period in the straight-line method Externally acquired	12.5 years Amortizing during the trademark right period in the straight-line method Externally acquired	14.5 years Amortizing during the channel right period in the straight-line method Externally acquired

1. Impairment of non-financial assets

At the end of each reporting period, the Group assesses whether there are signs of impairment in all assets applicable to IAS 36 "Asset impairment". Where there is evidence of impairment or the impairment test of any asset is required on the annual basis, the Group will conduct the test on the individual asset or on the cash generating unit to which the asset belongs. Impairment losses are recognized if the book amount of the asset or the cash generating unit to which the asset belongs is greater than its recoverable amount. The recoverable amount is the higher one of the net fair value or the use value.

At the end of each reporting period, the Group evaluates the assets other than the goodwill for any sign that previously recognized impairment losses may have

53

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

disappeared or decreased. If such sign exists, the Group shall estimate the recoverable amount of the asset or cash generating unit. If the recoverable amount is increased by the change of the estimated service potential of the asset, the impairment will be recovered. However, the book amount after the recovery shall not exceed the book amount deducting the depreciation or amortization of the asset in the condition of not recognizing the impairment loss.

The cash generating unit or group to which the goodwill belongs, with or without evidence of impairment, is subject to the annual impairment test. In the event that the impairment loss is to be recognized as the result of the impairment test, the goodwill shall be deducted firstly, and the balance shall be then apportioned in proportion to the book amount to other assets. The impairment of goodwill, once recognized, shall not be reversed for any reason thereafter.

The impairment loss and the number of recovery of continuously operated unit are recognized as the profit and loss.

18. Treasury stock

The acquisition of the parent company's stock (treasury stock) by the Group and its subsidiaries shall be recognized at the cost of acquisition and as the deduction of the equity. The traded spread of treasury stock is recognized in the equity.

19. Revenue recognition

Accounting treatments after January 1, 2018 are as below:

Revenues of the Group and from Contracts with Customers are mainly the sales of goods and labor service providing, and the accounting treatments are described below:

Sales of goods

The Group manufactures and sells goods, and recognizes the revenue when transporting the goods to the customer and the customer has its control (namely, the customer leads the use of the goods and acquires almost all of the remaining benefit capacity of the goods); the main products are the optical information service

54

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

products as CD, organic light emitting diode (OLED) display, conductive glass and green product (solar module/LED/battery related products), and the revenue is recognized based on the contract stated price.

The trading credit period of the Group’s sales of goods is 30 days to 150 days; in most of the contracts, when the goods transfers the control and with the unconditional right in the consideration charge, it shall recognize the account receivable, which usually has no significant financial component during the short term. If a small part of the contract has the right to transfer the commodities to the customer but still does not have the right to receive the consideration unconditionally, the contract assets shall be recognized. The contract assets shall also be subject to IFRS 9 on the amount of expected credit losses during the duration of the contract.

The transfer of the Group's previous contract liabilities to the revenue is generally less than one year, and does not result in any significant financial component.

Accounting treatments before January 1, 2018 are as below:

Revenue shall be recognized when the economic benefit is likely to flow into the Group and the amount can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The conditions and methods of each revenue recognition are listed as follows:

Sales of goods

Revenue from sales of goods shall be recognized when complying with all the following conditions: the major ownership risks and rewards of the goods have been transferred to the purchaser, there shall be no continued participation in the management of sold goods nor maintaining the effective control, revenue amount can be reliably measured, and trade related economic benefits are likely to flow into the enterprise, and the costs associated with the trade can be measured reliably.

The Group shall apportion the fair value of the consideration received for the goods sold under the customer loyalty plan to the sold goods and the customer loyalty plan. In the apportionment process, the fair value of the goods sold under the customer loyalty plan can be separately referred, to measure the relative

55

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

apportionment amount to the plan. The revenue apportioned to the customer loyalty plan shall be deferred and recognized at the time of exchange.

Interest revenue

For the financial assets measured by the amortized cost (including the loans and receivables and financial assets held to maturity) and financial assets available for sale, the interest revenue is estimated by the effective interest rate method, and the interest revenue is recognized as the profit or loss.

Dividend revenue

When the Group has the right to collect the dividend, it shall recognize the dividend revenue.

20. Borrowing cost

The borrowing costs directly attributable to the acquisition, construction, or production of conforming asset shall be capitalized as part of the cost of that asset. All other borrowing costs are recognized as the expenses for the period of occurrence. Borrowing costs include the interest and other costs incurred in connection with the borrowing.

21. Retirement benefit plan

The Company and domestic subsidiary’s employee retirement procedures are applicable to all the formally employed staff, and the staff pension fund is fully managed by the Labour Retirement Reserve Supervision Committee Board, and deposited in the dedicated pension fund account; the above-mentioned pension is deposited in the name of the Retirement Reserve Supervision Committee, which is completely separated with the Company and domestic subsidiary, therefore, it is not listed in the consolidated financial statements. The retirement measures for employees of foreign subsidiaries and branches are handled in accordance with local laws and regulations.

For the retirement benefit plan of defined contribution plan, the Company and domestic subsidiary shall pay in the employee pension contribution rate per month,

56

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

which shall not be less than 6% of the employee's monthly salary. The amount of contribution shall be recognized as the current expense. Foreign subsidiaries and branches shall allocate according to local specific proportion and recognize as current expenses.

For the retirement benefit plan of defined benefit plan, it shall be listed according to the actuarial report in the end day of the annual report period on the basis of unit welfare law. Net defined benefit liabilities (assets) remeasured amount includes any change in the planned asset rewards and asset upper limit influence number, and deducting the net interest amount contained in the net defined benefit liabilities (assets), as well as the actuarial profit or loss. When the net defined benefit liabilities (assets) remeasurement amount occurs, it shall be listed in other comprehensive profit or loss, and recognized in the reserved surplus. The present value change of defined benefit obligation resulting from the plan modification or reduction of early service cost, shall be recognised as the expense on the earlier date of either:

• (1) when the plan modification or reduction occurs; and

• (2) when the Group recognizes relevant restructuring costs or severance benefits.

Net interest on net defined benefit liabilities (assets) is determined by multiplying the net defined benefit liabilities (assets) by the discount rate, both of which are determined at the beginning of the annual reporting period, with the consideration of any change in the net defined benefit liabilities (assets) during that period as the result of withdrawals and welfare payments.

22. Income tax

Income tax expense (benefit) means the total amount collected in relation to current income tax and deferred income tax included in the determination of current profit and loss.

Current income tax

The current income tax liabilities (assets) related to the current period and the earlier period shall be measured by the legislative or substantive legislative tax rates

57

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

and tax laws at the end of the reporting period. The income tax of the current period recognized in other comprehensive profit or loss or directly recognized in the equity item, shall be recognized in other comprehensive profit or loss or the equity, instead of the profit or loss.

The portion of undistributed surplus plus profit-seeking enterprise income tax shall be listed as the income tax expense on the day of surplus distribution decided by the board of shareholders.

Deferred income tax

The deferred income tax is calculated from the temporary difference between the tax basis for assets and liabilities on the end of the reporting period and its book amount on the balance sheet.

All taxable temporary differences are recognised as the deferred income tax liabilities except for:

• (1) original recognition of goodwill; or not generated from Business Combinations and not affecting either the accounting profits or the taxable income (loss) in the original recognition of asset or liability at the time of the transaction;

• (2) taxable temporary difference generated from the investment in equity of subsidiary, affiliated enterprise and joint arrangements, whose recovery time can be controlled and unlikely to occur in the foreseeable future.

Temporary deductible differences, unused tax losses and unused income tax credits generated deferred income tax assets, are recognised likely within the future tax income, except for the following two conditions:

• (1) transaction with non-business combinations which relates to the deductible temporary difference generated from the original recognition of the assets or liabilities at the time of the transaction with no effect to the accounting profits or the taxable income (loss);

• (2) related to the deductible temporary differences arising from the investment to equity of subsidiaries, affiliated enterprises and joint arrangement, and only probable to recover in the foreseeable future and there is enough tax at the time

58

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

of recovery to recognize the use of the temporary difference.

Deferred income tax assets and liabilities are measured at current tax rate of the expected asset realization or liability liquidation, which is based on the tax rate and tax law enacted or substantially enacted at the end of the reporting period. Deferred income tax asset and liability measurement reflects the tax consequences of the expected recovery of assets or liquidation of the book amount of liabilities on the end of the reporting period. Where the deferred income tax is related to the item that is not included in the profit or loss, it is also not recognized as the profit or loss, and is instead recognized as other comprehensive profit or loss or as the equity in accordance with its relevant transaction. Deferred income tax assets are reviewed and recognized on the end of each reporting period.

Deferred income tax assets and liabilities shall have the statutory enforcement power only in respect of the offset between current income tax assets and current income tax liabilities, and can be offset only when the assets and liabilities of current income tax and the deferred income tax belong to the same tax payer and are related to the income tax levied by the same tax authority.

23. Business merger and goodwill

Acquisition method is adopted for the accounting treatment of business merger. The transfer consideration of business merger, the identifiable assets acquired and the liabilities assumed, are the measured by fair value on the acquisition date. Acquirer for each business merger measures the non-controlling equity at fair value or the relative ratio of acquiree’s identifiable net assets. The acquisition related costs shall be the current expenses and include the management fee.

The Group's acquisition of the business shall be based on the contract conditions, economic conditions and other relevant conditions existing at the date of acquisition, and shall be subject to the appropriate evaluation of the classification and designation of assets and liabilities, including the separation of the financial instruments embedded in the main contracts held by the acquiree.

If the business merger is completed in stages, the acquirer's previously held equity of the acquiree shall be re-measured at the fair value on the acquisition date, and the profits or losses generated shall be recognized as current profits and losses.

59

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Contingent consideration expected to transfer by the acquirer will be recognized at the fair value on the acquisition day. For the contingent consideration regarded as assets or liabilities, the subsequent changes in fair value will be recognized as changes in current profit or loss or other comprehensive income in accordance with IFRS 9 (before January 1, 2018, IAS 39). However, when the contingent consideration is classified as equity, it shall not be remeasured before the final settlement under the equity.

The original measurement of goodwill is the total amount of transferred consideration adding non-controlling equity, exceeding the fair value of identifiable assets and liabilities obtained by the Group; if the consideration is less than the fair value of the net assets obtained, the difference shall be recognized as current profit and loss.

Goodwill, after the original recognition, is measured by cost minus the accumulative impairment. Goodwill arising from the business merger shall be amortized to every cash generating unit of the Group expected to benefit from this merger since the acquisition day, no matter other assets or liabilities of the acquiree attribute to such cash generating units or not. Each unit or unit group amortizing the goodwill represents the minimum level of goodwill supervision for internal management purpose, and is not greater than the operating department before summarizing.

Where the disposal includes the cash generating unit of goodwill, the book amount of the disposal includes the goodwill associated with the disposal operation. The disposed goodwill is measured against relative recoverable amount of the disposal operation and the retained portion.

V. Major sources of uncertainty in significant accounting judgments, estimates and assumptions

When the Group prepares the financial statements, the management shall make the judgments, estimates and assumptions at the end of the reporting period, which shall affect the revenue, expense, reported amount of assets and liabilities and contingent liability disclosure. However, the uncertainty of these significant assumptions and estimates may lead to major adjustment of the book amount of assets or liabilities in the future.

60

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

1. Judgment

In the process of adopting the Group's accounting policies, the management shall make the following judgments that have the most significant impact on the amount recognition of consolidated financial statements:

Judgment on control to subsidiary when not having the majority voting power

When the Company does not hold the majority voting rights of some subsidiaries, it shall consider the comprehensive shareholding ratio of the Group to such company, the board seats, request condition of power of attorney, the great influence of relevant activities and other factors, to judge the control. Please refer to Note IV.

2. Estimate and assumption

Major sources of uncertainty regarding the future estimates and assumptions made at the end of the reporting period carry the significant risk of leading to significant adjustments in the book amounts of assets and liabilities in the next financial year. It is explained as follows:

(1) Impairment of non-financial assets

When the book amount of asset or cash generating unit is greater than its recoverable amount, the impairment occurs. Recoverable amount refers to the fair value deducting the disposal cost and use value, whichever is higher. The calculation of the fair value minus the disposal cost is based on the price that the market participants can collect or transfer the liability to pay on the day of measurement by selling the asset in the orderly transaction, after deducting the incremental cost directly attributable to the disposal asset or cash generating unit. The use value is calculated based on the cash flow discount model. Cash flow estimate is in accordance with the budget over the next decade, and does not include the restructuring not committed by the Group or any significant future investment required to enhance the performance of the cash generating unit under the test. The recoverable amount is vulnerable to the discount rate

61

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

used in the cash flow discount model and the expected future cash flow and growth rate used for the extrapolation purpose.

(2) Inventory

The estimate of net realizable value of the inventory is based on the most reliable evidence of the expected realizable amount of inventory available at the time of the estimate, with the consideration of the destruction of inventory, the obsolescence in whole or in part, or the decline in the selling price. Please refer to Note VI for details.

VI. Description of important accounting items

1. Cash and cash equivalent

Cash on hand Current deposit and cheque deposit Fixed-term deposit Cash equivalents Total	December 31, 2018	December 31, 2017
	$3,605 2,433,915 1,060,218 -	$4,448 3,161,270 661,071 58,266
	$3,497,738	$3,885,055

2. Financial assets measured at fair value through profit or loss

Force to measure at fair value through profit or loss: Stock Fund Total Current Non-current Total	December 31, 2018	December 31, 2017(Note)
	$205,058 69,988
	$275,046
	$100,513 174,533
	$275,046

62

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Held for trading: Non-derivative financial assets Stock Fund Total Current Non-current Total	December 31, 2018(Note)	December 31, 2017
		$48,260 71,427
		$119,687
		$119,687 -
		$119,687

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

There is no guarantee provided for the Group's financial assets measured at fair value through profit and loss.

1. Financial assets measured at fair value through other comprehensive profit or loss

Equity instrument investment measured at fair value through other comprehensive profit or loss: Stock of listed company Stock of unlisted company Total Current Non-current Total	December 31, 2018	December 31, 2017(Note)
	$101,845 240,050
	$341,895
	$6,815 335,080
	$341,895

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

The Group classifies part of financial assets to the financial assets measured at fair value through other comprehensive profit or loss, and please refer to Note VIII for the provided guarantee.

63

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The Group adopts IAS 39 before January 1, 2018 to classify part of financial assets to financial assets available for sale, and please refer to Note VIII for the provided guarantee.

4. Financial assets available for sale

Stock Current Non-current Total	December 31, 2018(Note)	December 31, 2017
		$467,948
		$46,637 421,311
		$467,948

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

5. Financial assets measured at amortized cost

Restricted bank deposit Current Non-current Total	December 31, 2018	December 31, 2017(Note)
	$124,730
	$89,429 35,301
	$124,730

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

The guarantee to financial assets measured at amortized cost provided by the Company shall refer to Note VIII, and credit risk related information shall refer to Note XII.

64

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

6. Financial assets measured by cost

Financial assets available for sale Stock Current Non-current Total	December 31, 2018(Note)	December 31, 2017
		$322,181
		$- 322,181
		$322,181

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

The above unlisted stock investments held by the Group are not measured at fair value, but at cost, because the range of fair value reasonable estimates of the unlisted stock investment held by the Group is significant and it is impossible to reasonably evaluate the probability of various estimates before January 1, 2018, when adopting IAS 39.

There is no guarantee to financial assets measured at cost provided by the Group.

7. Investment on debt instrument without active market

Restricted bank deposit Current Non-current Total	December 31, 2018(Note)	December 31, 2017
		$106,691
		$101,791 4,900
		$106,691

Note: The Group adopts IFRS 9 from January 1, 2018 and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

The guarantee to investment on debt instrument without active market provided by the Group shall refer to Note VIII.

65

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

8. Bill receivable

Bill receivable – arising from operation Less: reserve for loss Total	December 31, 2018	December 31, 2017
	$9,031 -	$18,536 -
	$9,031	$18,536

The Group adopts IFRS 9 to assess the impairment from January 1, 2018, and the reserve for loss related information shall refer to Note VI. 23, and the credit risk related information shall refer to Note XII.

9. Account receivable and account receivable - interested party

Account receivable Less: reserve for loss Subtotal Account receivable - interested party Less: reserve for loss Subtotal Total	December 31, 2018	December 31, 2017
	$1,805,889 (228,717)	$1,823,142 (285,509)
	1,577,172	1,537,633
	32 -	38 -
	32	38
	$1,577,204	$1,537,671

Total investment in lease Less than one year More than one year but less than five years More than five years Total Less: unearned financing profit Present value of minimum lease payment receivable	December 31, 2018	December 31, 2017
	$8,617 33,616 69,184	$- - -
	111,417 (61,152)	- -
	$50,265	$-

66

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Lease receivable Current Non-current Present value of minimum lease payment receivable	December 31, 2018	December 31, 2017
	$1,840 48,425	$- -
	$50,265	$-

The guarantee to account receivable provided by the Company shall refer to Note VIII.

The credit period to the customer is usually 30 to 150 days. The Group adopts IFRS 9 to assess the impairment after January 1, 2018, and the information on reserve for loss of 2018 shall refer to Note VI. 23. The Company adopts IAS 39 to assess the impairment before January 1, 2018, and the bad debt changes and aging analysis information of impairment in accounts receivable and accounts receivable - interested party of 2017 are as follows (the credit risk disclosure shall refer to Note XII):

January 1, 2017 Current incurred (recovered) amount December 31, 2017	Impairment loss of individual assessment	Impairment loss of group assessment	Total
	$40,238 6,923	$199,374 38,974	$239,612 45,897
	$47,161	$238,348	$285,509

As of December 31, 2017, the Group has assessed the impairment loss mainly due to the financial difficulties of the counterparty. The amount recognized is the difference between the book amount of accounts receivable and the present value of the expected recovery amount. The Group does not hold any collateral for such accounts receivable.

Overdue aging analysis of net account receivable and account receivable - interested party as below:

67

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

December 31, 2017	Not overdue And no impairme nt	Account receivable overdue but no impairment	Account receivable overdue but no impairment	Account receivable overdue but no impairment	Account receivable overdue but no impairment	Account receivable overdue but no impairment	Total
		Within 30 days	31-60 days	61-90 days	91-120 days	Over 121 days
	$1,204,726	$253,344	$26,028	$9,755	$2,678	$41,140	$1,537,671

10. Inventory

Raw material Semi-finished goods and goods in process Finished goods Commodity inventory In-transit inventory Total	December 31, 2018	December 31, 2017
	$934,007 1,062,452 261,089 364,558 156,691	$600,316 835,410 268,239 400,183 133,837
	$2,778,797	$2,237,985

The inventory costs recognized as expense by the Group in 2018 and 2017 are respectively NT$ 8,811,059,000 and NT$ 9,484,981,000, including the inventory having been sold or scrapped as a result of partial decline in value in 2018, resulting the inventory decline and benefit recovery of NT$ 81,545,000 and recognized loss from falling price of inventory in 2017 of NT$ 20,662,000.

There is no guarantee to inventory provided by the Group.

11. Investment by equity method

Details of investment by equity method adopted by the Group are as below:

68

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Invested companyname	December 31,2018	December 31,2018	December 31,2017	December 31,2017
	Amount	Share- holding Ratio %	Amount	Share- holding Ratio %
Investment to subsidiaries: Echem Cashido GoldenRiver RiTS Solar Finesil Total	$53,791 43,541 7,414 - 35,042	37.86 31.03 23.14 - 48.93	$59,938 46,707 6,571 3,946 -	37.86 31.03 23.14 49.00 -
	$139,788		$117,162

The Group's investment in affiliated enterprises is not material to the Group. The aggregate book amounts of the affiliated enterprises invested by the Group as of December 31, 2018 and December 31, 2017 are respectively NT$ 139,788,000 and NT$ 117,162,000, and the total financial information is listed as follows according to their shares:

Net profit (loss) in current period Other comprehensive profit (loss) in current period (net of tax) Total comprehensive profit (loss) in current period	2018	2017
	$(5,150) 844	$(20,830) (2,164)
	$(4,306)	$(22,994)

The above-mentioned investment to affiliated enterprises has no contingent liabilities or capital commitments as of December 31, 2018 and December 31, 2017, and no guarantee has been provided.

69

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

12. Property, plant and equipment

Cost: January 1, 2018 Adding Acquiring through business merger Disposal Transfer Influence of exchange rate change December 31, 2018 January 1, 2017 Adding Disposal Transfer Influence of exchange rate change December 31, 2017	Land and land improvement	Buildings and structures	Machinery equipment	Other equipment	Construction in progress and Equipment to be tested	Total
	$2,111,305 - - - - (37)	$8,286,530 6,786 - (24,305) 82,467 (17,980)	$25,599,087 381,703 1,024,476 (701,607) 1,359,931 (134,910)	$2,400,588 8,059 1,200 (43,198) 10,204 (27,532)	$1,696,803 763,386 58,458 (1,280) (1,767,766) 5,974	$40,094,313 1,159,934 1,084,134 (770,390) (315,164) (174,485)
	$2,111,268	$8,333,498	$27,528,680	$2,349,321	$755,575	$41,078,342
	$2,111,157 - - - 148	$8,509,565 1,890 (105,604) (90,705) (28,616)	$29,397,198 106,886 (3,763,874) 158,096 (299,219)	$2,328,288 21,135 (105,569) 37,458 119,276	$1,142,547 926,337 (53,654) (243,792) (74,635)	$43,488,755 1,056,248 (4,028,701) (138,943) (283,046)
	$2,111,305	$8,286,530	$25,599,087	$2,400,588	$1,696,803	$40,094,313

70

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Depreciation and impairment: January 1, 2018 Depreciation and other loss Impairment loss (raised profit) Disposal Transfer Influence of exchange rate change December 31, 2018 January 1, 2017 Depreciation and other loss Impairment loss (raised profit) Disposal Transfer Influence of exchange rate change December 31, 2017 Net book amount: December 31, 2018 December 31, 2017	Land and land improvement	Buildings and structures	Machinery equipment	Other equipment	Construction in progress and Equipment to be tested	Total
	$- - - - - -	$5,036,212 174,074 - (24,082) 14,166 (8,530)	$21,264,913 1,214,687 9,411 (700,081) (14,981) (111,719)	$1,676,166 91,811 - (33,884) 1,940 (21,429)	$- - 12 - - -	$27,977,291 1,480,572 9,423 (758,047) 1,125 (141,678)
	$-	$5,191,840	$21,662,230	$1,714,604	$12	$28,568,686
	$- - - - - -	$4,948,334 182,617 57,981 (93,757) (49,602) (9,361)	$23,214,542 1,470,143 340,642 (3,591,828) 20,385 (188,971)	$1,634,806 103,725 15 (102,913) 52,859 (12,326)	$- - - - - -	$29,797,682 1,756,485 398,638 (3,788,498) 23,642 (210,658)
	$-	$5,036,212	$21,264,913	$1,676,166	$-	$27,977,291
	$2,111,268	$3,141,658	$5,866,450	$634,717	$755,563	$12,509,656
	$2,111,305	$3,250,318	$4,334,174	$724,422	$1,696,803	$12,117,022

In 2018 and 2017, due to the low production capacity of some equipment, the expected cash flow determined the use value as the recoverable amount, and the book value was written down to the recoverable amount, resulting in the impairment losses of NT$ 9,423,000 and NT$ 398,638,000 respectively. The impairment losses

71

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

have been listed in the consolidated income sheet.

The provided guarantee to property, plant and equipment shall refer to Note VIII.

13. Investment property

Cost: January 1, 2018 Disposal Adding – from subsequent expense Transfer December 31, 2018 January 1, 2017 Disposal Adding – from subsequent expense Transfer December 31, 2017 Depreciation and impairment: January 1, 2018 Depreciation Disposal Transfer December 31, 2018 January 1, 2017 Depreciation Disposal Transfer December 31, 2017 Net book amount: December 31, 2018 December 31, 2017	Land	Buildings	Total
	$55,676 - - -	$934,791 (6,502) - 1,836	$990,467 (6,502) - 1,836
	$55,676	$930,125	$985,801
	$55,676 - - -	$832,646 - - 102,145	$888,322 - - 102,145
	$55,676	$934,791	$990,467
	$- - - -	$634,535 11,345 (6,502) -	$634,535 11,345 (6,502) -
	$-	$639,378	$639,378
	$- - - -	$576,452 8,481 - 49,602	$576,452 8,481 - 49,602
	$-	$634,535	$634,535
	$55,676	$290,747	$346,423
	$55,676	$300,256	$355,932

72

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Investment property rental revenue Less: Direct operating expense incurred on investment property generating rental revenue for the current period Direct operating expense incurred on investment property not generating rental revenue for the current period Total	2018	2017
	$62,731 (11,855) -	$59,118 (10,481) -
	$50,876	$48,637

Guarantee to investment property provided by the Group shall refer to Note VIII. The investment property held by the Group is not measured according to the fair value, but only reveals the information of its fair value, which belongs to Level 3. The fair value of the investment property held by the Group was NT$ 1,030,926,000 and NT$ 1,005,873,000 on December 31, 2018 and December 31, 2017, respectively. On December 31, 2018, the fair value is combined with the estimate according to the similar target’s recent transaction price of property transaction actual price query in Ministry of the Interior (NT$ 867,602,000) and the evaluation of independent external expert (NT$ 163,324,000); the determination of fair value is based on market evidence, using the evaluation method of weighted average calculation of income method and comparison method, in which the mainly used input value is the income capitalization rate; the fair value on December 31, 2017 refers to the evaluation of the recent transaction price of similar targets by referring to the real price query of the property transaction of the Ministry of the Interior.

14. Intangible asset

Cost: January 1, 2018 Adding acquiring separately Transfer Acquiring through business merger Influence of exchange rate change December 31, 2018	Trademark right	Patent right	Goodwikk	Other intangible asset	Total
	$924,211 (3,174)	$493,344 -	$476,545 -	$434,978 -	$2,329,078 (3,174)
	$921,037	$493,344	$476,545	$434,978	$2,325,904

73

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

January 1, 2017 Adding acquiring separately Transfer Acquiring through business merger Influence of exchange rate change December 31, 2017 Amortization and impairment: January 1, 2018 Amortization Impairment Transfer Influence of exchange rate change December 31, 2018 January 1, 2017 Amortization Impairment Transfer Influence of exchange rate change December 31, 2017 Net book amount: December 31, 2018 December 31, 2017	Trademark right	Patent right	Goodwikk	Other intangible asset	Total
	$916,595 7,616	$493,344	$476,545	$434,978	$2,321,462 7,616
	$924,211	$493,344	$476,545	$434,978	$2,329,078
	Trademark right	Patent right	Goodwikk	Other intangible asset	Total
	$737,997 30,528 - - (2,733)	$445,390 13,600 - - -	$- - - - -	$203,621 28,920 - - -	$1,387,008 73,048 - - (2,733)
	$765,792	$458,990	$-	$232,541	$1,457,323
	$701,782 30,446 5,769	$429,707 15,683 -	$- - -	$174,702 28,919 -	$1,306,191 75,048 5,769
	$737,997	$445,390	$-	$203,621	$1,387,008
	$155,245	$34,354	$476,545	$202,437	$868,581
	$186,214	$47,954	$476,545	$231,357	$942,070

74

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Amortization amount recognized as intangible asset as below:

Operating cost and operating expense	2018	2017
	$73,048	$75,048

15. Goodwill impairment test

For the purpose of impairment test, the goodwill acquired due to the business merger is mainly apportioned to the cash generating unit of the storage media department.

The book amount of the goodwill apportioned to the cash generating unit is:

Goodwill	Storage media department	Storage media department
	2018.12.31	2017.12.31
	$476,545	$476,545

Storage media cash generating unit

The recoverable amount of storage media cash generating unit is determined according to the use value, and the use value is calculated from the cash flow forecast of 10-year financial budget estimated by the management level. The cash flow forecast has been updated to reflect relevant product demand change. The cash flow forecast used discount rate in 2018 and December 31, 2017 is 10.00%.

Key assumptions used to calculate the use value

The use value calculation of storage media cash generating unit is most sensitive to the following assumptions:

(1) discount rate

• (2) gross profit rate

• (3) market share during the budget period; and

• (4) revenue growth rate during the extrapolation budget period

75

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Discount rate – the discount rate represents the specific risk assessment of market to each cash generating unit at that time (time value of money and related assets individual risk not included in the estimates of cash flow). The discount rate calculation is based on the specific situation of the Group and its operating department, and derived from its weighted average cost of capital (WACC). WACC considers the liability and equity at the same time. The equity cost is derived from the expected investment return of the Group investors, and the liability cost is based on the interest-bearing loan obligated to repay by the Group.

Gross profit rate - the gross profit rate is estimated on the basis of the gross profit rate of the most recent year of the financial budget period and considering the future market trends.

Rise in raw material prices - the estimates are derived from the indicators published by the raw material suppliers and relevant commodity specific data. If the predicted data are acquirable publicly, it could be adopted; otherwise, the actual price fluctuations of raw materials in the past will be used as the indicator of future price fluctuations.

Market share assumptions - these assumptions are important because when the management level estimates the growth rate according to industry data, it shall assess the potential changes in the unit's market share relative to competitors during the budget period. The management level expects the Group's storage media product market share shall be stable during the budget period.

Revenue growth rate estimates - based on historical experience, the average longterm growth rate of the Company's budget has been adjusted with the consideration to the speed of product innovation and the overall economic environment.

Sensitivity to assumption change

With regard to the use value assessment of the cash generating unit of storage media, the management level believes that there is no substantial possibility to change the key assumptions mentioned above, so that the book amount of the unit significantly exceeds its recoverable amount.

76

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

16. Short-term borrowing

Borrowing by financial institutions Interest rate range (%)	December 31, 2018	December 31, 2017
	$2,119,882	$1,500,535
	1.1063~4.4456	1.2000~5.3320

Up to December 31, 2018 and December 31, 2017, the unused short-term borrowing limits of the Group are respectively NT$ 1,094,175,000 and NT$ 1,865,697,000.

The guarantee to short-term borrowing shall refer to Note VIII.

17. Short-term notes and bills payable

Guarantee agency	December 31, 2018	December 31, 2017
Commercial paper issued book value Less: Discount on short-term notes and bills payable Net amount Interest rate range (%)	$251,300 (321)	$250,000 (215)
	$250,979	$249,785
	0.5970~0.8500	0.4500~0.6500

18. Financial liabilities measured at fair value through profit or loss

Held for trading: Derivative instruments not specifying the hedging relationship Forward foreign exchange contract Current Non-current Total	December 31, 2018	December 31, 2017
	$-	$5,192
	$- -	$5,192 -
	$-	$5,192

77

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

19. Long-term borrowing

Borrowing by financial institutions Borrowing by non-financial institutions Total Less: Discount on long-term notes payable Long-term borrowing maturing within one year or one business cycle Net amount Interest rate range (%)	December 31, 2018	December 31, 2017
	$5,833,833 1,900 5,835,733 (1,761) (1,368,912)	$4,500,710 6,080 4,506,790 (3,305) (1,145,394)
	$4,465,060	$3,358,091
	1.6000~3.7611	1.6700~5.9250

• (1) In June 2015, the Company signed the five-year NT$ 1.35 billion guaranteed financing commitment contract with the joint credit granting bank group including Taiwan Cooperative Bank. The main commitments of above joint credit granting case are as follows:

• A. In addition to the formal replacement of machinery equipment and the sale of inventories, the majority of the guarantor bank shall agree to sell, transfer, lend, lease or dispose all or substantial part of the assets, or in the case of material change in the business item or business undertaking.

Total liabilities of Consolidated Financial Statements may not exceed 100% of net tangible value; current assets shall not be less than 100% of current liabilities, and the tangible net value shall not be less than NT$ 20 billion.

• B. As of December 31, 2018 and December 31, 2017, the outstanding loan balance of the Company is NT$ 0 and NT$ 1,199,945,000 respectively.

• (2) The Company signed the two-year NT$ 700 million financing commitment contract with Taishin International Commercial Bank in August 2018. The main commitments of the above credit granting case are as follows:

• A. Total liabilities of Consolidated Financial Statements shall not exceed 100% of net tangible value; current assets shall not be less than 100% of current liabilities, and the tangible net value shall not be less than NT$ 20 billion.

• B. As of December 31, 2018 and December 31, 2017, the outstanding loan

78

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

balance of the Company is NT$ 691,000,000 and NT$ 0 respectively.

• (3) Subsidiary Ritdisplay signed the 13-year guarantee financing commitment contract of NT$9.1 billion with joint credit syndicate as Bank of Taiwan in June 2002. The main commitments of above joint credit case are as follows:

• A. In addition to the formal replacement of machinery equipment and the sale of inventories, the majority of the guarantor bank's consent shall be required in the event of the sale, transfer, loan, lease or other disposal of all or substantial part of the assets, or in the case of material change of business or undertaking.

Subsidiary Ritdisplay signed the joint credit contract supplementary agreement with the joint credit syndicate on June 21, 2013, and the payment terms indicated the first installment payment on December 11, 2014, and every six months as one installment, to pay back in five installments averagely. Within the newly increased grace period, Ritdisplay was exempted for the test to above financial ratio and the tangible net value commitment, and Ritdisplay also agreed to pay compensation calculated on 0.15% of the outstanding principal to the joint credit syndicate at the end of the year.

In addition, the subsidiary Ritdisplay also signed the joint credit contract supplementary agreement with the joint credit syndicate on December 8, 2015; within the newly increased grace period (2011 ~ 2017), Ritdisplay was exempted for the test to above financial ratio commitment, and Ritdisplay also agreed to pay compensation calculated on 0.15% of the outstanding principal to the joint credit syndicate at the end of the year.

And also, the subsidiary Ritdisplay signed the credit contract of NT$ 1.5 billion with the joint credit syndicate as Bank of Taiwan on July 28, 2016 for the unliquidated balance of participating loan case of NT$ 9.1 billion plus the medium-term operation revolving funds, with the loan period from August 15, 2016 to August 15, 2021, and the payment method is to pay the first installment payment after 6 months from the date of the first use, then every 6 months as one installment, to pay back in 10 installments averagely.

79

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

• B. Financial commitment of joint loan

Maintain the following financial ratios and agreements:

• (a) current ratio (current assets/current liabilities): above 80% at the end of 2016 and 2017, above 90% in the first half year of 2018, and above 100% at the end of 2018.

• (b) liability ratio (total liability/net tangible value): below 350% at the end of 2016, below 250% at the end of 2017, below 200% from 2018 to 2019, and below 150% from 2020.

• (c) interest cover ratio [(net profit before tax + depreciation + amortization + interest expense) / interest expense]: above 5 times at the end of 2016 and above 6 times from 2017.

• (d) net tangible value (shareholders' equity - intangible asset): above NT$500,000,000 at the end of 2016, and above NT$ 1,000,000,000 from 2017.

The above ratio and standard shall be checked every six months according to the individual financial reports of the year (half year) of the accountant audit (review) visa.

• C. The outstanding loan balances of above joint credit loans on December 31, 2018 and December 31, 2017 were respectively NT$ 973,010,000 and NT$ 1,065,290,000.

• (4) The subsidiary U-Tech signed the credit and commitment contract of NT$150,000,000 with Wang Daoyin on February 2018. The main commitments in above credit case was that the net tangible value of the consolidated financial statements shall be no less than NT$ 2.2 billion, which shall be reviewed according to the annual and semi-annual consolidated financial statements verified / approved by the accountant.

• (5) The financial ratio of the Group as of December 31, 2018 is in compliance with the aforementioned bank loan contracts.

• (6) The remaining loan repayment period starts from 2014 and ends in 2023 by

80

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

stages.

(7) For the long-term loan guarantee, please refer to Note VIII.

1. Retirement benefit plan

Defined contribution plan

The Company and domestic subsidiary’s employee retirement method under the “Labor Pensions Rule” is the defined contribution plan. In accordance with the provisions, the Company and domestic subsidiary shall contribute no less than 6% of the employee's monthly salary to the pension fund. In accordance with the employee retirement policy set forth, the Company and domestic subsidiary transfers in 6% of the employee's salary to the personal pension account in the Labor Insurance Bureau every month.

Subsidiary within the territory of Mainland China shall draw the pension insurance in certain proportion of the total employee salary in accordance with local government laws and regulations, to pay to each separate special account of employees in relevant government department.

The Group's other foreign subsidiary and branch shall draw the pension contributions to relevant pension management entity in accordance with local laws and regulations.

The Group confirmed and recognized transfer program costs in 2018 and 2017 are NT$61,197,000 and NT$79,194,000, respectively.

The increased pension expenses for appointed manager of subsidiary Ritdisplay in 2018 and 2017 were NT$6,345,000 and NT$6,922,000, respectively.

Defined benefit plan

The employee pension plan established by the Company and domestic subsidiary in accordance with the "Labor Standards Law" is the defined benefit plan, and the payment of the employee pension is calculated based on the base of service experience and the average monthly salary at the time of approved retirement. Two bases shall be given for each year of service less than 15 years (included), and one base shall be given for each year of service more than 15 years, provided that the

81

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

maximum accumulative base number shall be 45. The Company and domestic subsidiary shall, in accordance with the Labor Standards Law, contribute 2% of the total salary to the pension fund on a monthly basis, which shall be deposited in the special account in the name of the Labor Retirement Reserve Supervision Committee in the Bank of Taiwan. In addition, the Company and domestic subsidiary shall, before the end of each fiscal year, estimate the balance of the aforesaid labor retirement reserve account. If the balance is less than the amount of the aforesaid pension for the workers who are eligible for retirement in the next fiscal year, the Company shall allocate the difference before the end of March of the next fiscal year.

The Ministry of Labor allocates the assets according to the income and expenditure custody and operation methods of the labor retirement fund, and the investment of the fund shall be carried out in the form of self-management and entrusted management, as well as adopting the medium and long-term investment strategies in active and passive management. Considering the market, credit, liquidity and other risks, the Labor Department shall set the fund risk limit and control plan, so as to have enough flexibility to achieve the target reward without taking excessive risks. For the use of the fund, the minimum annual income distributed in the final accounts shall not be less than the income calculated on the basis of two-year time deposits of the local bank; in case of any deficiency, it shall be made up by the State Treasury after being approved by the competent authority. Since the Company has no right to participate in the operation and management of the fund, it is unable to disclose the classification of the fair value of the plan assets in accordance with Paragraph 142 of IAS 19. As of December 31, 2018, the Company's defined benefit plan is expected to allocate NT$14,434,000 for the next year.

As of December 31, 2018 and December 31, 2017, the weighted average duration of defined benefit plan of the Group is 13 to 16 years and 14 to 18 years respectively.

The table below summarizes the defined benefit plan and recognizes to the cost of profit or loss:

Current service cost Net interest of net defined benefit liability (asset) Previous service cost Total	2018	2017
	$892 2,455 -	$1,044 2,564 -
	$3,347	$3,608

82

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Present value of defined benefit obligation and fair value of plan asset are adjusted as below:

Present value of defined benefit obligation Fair value of plan asset Net amount of net defined benefit liability (asset)	December 31,2018	December 31,2017
	$417,454 271,751	$430,097 273,562
	$145,703	$156,535

Information expressed in assets and liabilities is as follows:

Net defined benefit assets (listed in other non-current assets) Net defined benefit liabilities	December 31,2018	December 31,2017
	$(8,575)	$(6,770)
	$154,278	$163,305

Net defined benefit liability (asset) adjustment:

January 1, 2017 Current service cost Interest expense (revenue) Previous service cost and liquidation profit or loss Subtotal Defined benefit liability /asset remeasurement amount: Demographic assumption change generated actuarial profit or loss Financial assumption change generated actuarial profit or loss Experience adjustment Defined benefit asset remeasurement amount Subtotal	Present value of defined benefit obligation	Fair value of plan asset $273,395 - 4,947 - 278,342 - - - (2,244) (2,244)	Net defined benefit liability (asset)
	$420,112 1,305 7,249 -		$146,717 1,305 2,302 -
	428,666		150,324
	1,068 7,239 11,267 -		1,068 7,239 11,267 2,244
	19,574		21,818

83

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Benefit of payment Employer contribution amount Effects of Changes in Foreign Exchange Rates December 31, 2017 Current service cost Interest expense (revenue) Previous service cost and liquidation profit or loss Subtotal Defined benefit liability /asset remeasurement amount: Demographic assumption change generated actuarial profit or loss Financial assumption change generated actuarial profit or loss Experience adjustment Defined benefit asset remeasurement amount Subtotal Benefit of payment Employer contribution amount Effects of Changes in Foreign Exchange Rates December 31, 2018	Present value of defined benefit obligation	Fair value of plan asset (18,143) 15,607 - 273,562 - 4,578 - 278,140 - - - 6,671 6,671 (27,562) 14,502 - $271,751	Net defined benefit liability (asset)
	(18,143) - -		- (15,607) -
	430,097 1,262 6,663 -		156,535 1,262 2,085 -
	438,022		159,882
	284 7,591 (881) -		284 7,591 (881) (6,671)
	6,994		323
	(27,562) - -		- (14,502) -
	$417,454		$145,703

The following main assumptions are used to determine the defined benefit plan of the Company:

Discount rate Expected salary increasing rate	December 31, 2018	December 31, 2017
	1.60% 2.00%	1.70% 2.00%

Every significant actuarial assumption sensitivity analysis:

84

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Discount rate increasing 0.5% Discount rate decreasing 0.5% Expected salary increasing 0.5% Expected salary decreasing 0.5%	2018	2018	2017	2017
	Defined benefit obligation increasing	Defined benefit obligation decreasing	Defined benefit obligation increasing	Defined benefit obligation decreasing
	$- 28,705 28,725 -	$26,209 - - 26,485	$- 32,962 33,001 -	$29,933 - - 30,257

Assuming that the other assumptions are unchanged when handling the above sensitivity analysis, if the single actuarial assumption (such as the discount rate or expected salary) has reasonable change, it shall analyze the possible influence of defined benefit obligation. Because some actuarial assumptions are related to each other, single change in the actuarial assumption is rare in practice, thus this analysis has its limits.

The methods and assumptions used in the current sensitivity analysis are not different from those used in the previous analysis.

21. Equity

(1) Common stock

As of December 31, 2018 and December 31, 2017, the paid-in capital of the Company is NT$ 12,841,579,000 and NT$ 17,667,921,000, and par value per share is NT$ 10, totally 1,284,157,900 shares and 1,766,792,130 shares.

To improve the financial structure, the Company decides to reduce the capital and cover the deficit of NT$ 4,826,342,000 in the shareholder meeting on June 12, 2018, and the reduced share number is 482,634,230, in the capital reduction rate of 27.32%, and also decides July 19, 2018 is the capital reduction base day in the shareholder meeting on July 18, 2018.

85

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(2) Capital surplus

Difference between actually acquired or disposed subsidiary equity price and book value Donated assets received Recognizing the change in ownership equity of subsidiary Total	December 31, 2018	December 31, 2017
	$583,288 4,937 362,610	$570,205 4,937 361,863
	$950,835	$937,005

According to the law, the capital surplus shall not be used except to cover the Company's losses. When the Company has no losses, the capital surplus shall be generated from the excess amount of stock issued and the grant as well as the income received, to increase the capital in certain ratio of paid-in capital per year, and the aforesaid capital surplus may also be distributed in cash in proportion to the original shares of the shareholder.

(3) Treasury stock

As of December 31, 2017, the subsidiary Chung Fu Investment Co., Ltd. and Chung Yuan International Venture Capital Co., Ltd. respectively held the Company’s stock of NT$ 1,762,786,000 and NT$ 666,128,000, and the share number was respectively 21,299,000 and 6,248,000. The above-mentioned stock was held for financial operation before the amendment of Corporation Law on November 12, 2001. As of December 31, 2017, the book value of treasury stock was NT$ 2,428,914,000, and the market price was NT$ 128,369,000.

The above subsidiaries sold all the held stocks of the Company in 2018, totally 27,547,000 shares, and total sales price was NT$ 167,085,000, with the difference of NT$ 2,261,829,000 to the book value of NT$ 2,428,914,000, for the debt retained surplus. As of December 31, 2018, there is no treasury stock.

86

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(4) Surplus distribution and dividend policy

The Articles of Association of the Company stipulates that the industrial environment in which the Company is located is changing rapidly and the life cycle of the Company is in the period of rapid growth. Considering the future capital needs of the Company, long-term financial planning and corporate earnings growth, to meet the demand of shareholders to cash inflows, if there is surplus after the Company’s annual final settlement, in addition to pay the profit-seeking enterprise income tax in accordance with the law and make up the losses of the previous year, ten percent should be drawn for the statutory surplus reserves, but when the statutory surplus reserves reached the paid-in capital of the Company, it shall not draw any more, and the rest shall be listed pursuant to applicable laws and regulations or transfer to special surplus reserves, and then its balance shall be firstly dispatched for the special stock dividend. The rest, together with 50 to 100 percent of the undistributed earnings set aside in previous years, will be the shareholders' dividends. The proportion of cash dividends will be determined by the detailed assessment of the Company's earnings growth for the coming year and its capital budget plan within the range no more than one half. The aforesaid ratio of dividend withdrawal and the ratio of cash dividend may be adjusted by the resolution of the board of shareholders according to the actual profit and capital status of the Company in the current year.

The Articles of Association of the Company stipulate that, where the accumulation of the preceding year or the after-tax earnings incurred in the current year are insufficient to set aside the deduction of shareholders' equity, the same amount of special surplus reserve shall be set aside from the undistributed earnings accumulated in the preceding year and deducted prior to the allocation of dividends for shareholders.

After adopting IFRS, the Company released the stipulation Letter JGZF No. 1010012865 in accordance with FSC on April 6, 2012; for the first-time application of IFRS, the unrealized revaluation appreciation and accumulated conversion adjustment benefits of the account are transferred to the retained surplus portion on the conversion day by reason of the application of IFRS 1 "First application of IFRS" exemption item, and the same amount of the special surplus reserve is set aside. Upon the application of IFRS to prepare the financial report, the special surplus reserve shall be set aside at the time of the

87

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

assignment of the distributable surplus, on the basis of the difference between the balance of the special surplus reserve at the time of the first IFRS application and the net amount of other equity deductions. If the balance of any other deduction item of shareholders' equity subsequently turns, the surplus of the recovery portion may be distributed. The Company does not need to set aside any special surplus reserve due to the first application of IFRS.

Please refer to Note VI. 25 for information on the basis and amount of the appraisal of employee salary and the remuneration of the board of directors.

(5) Non-controlling interest

Beginning balance (according to IAS 39) Influence number for retroactive application and retroactive recompilation Beginning balance (according to IFRS 9) Current net profit attributed to non-controlling interest Other comprehensive profit or loss attributed to non-controlling interest: Exchange difference of financial statements conversion of foreign operating institutes Unrealized estimate profit or loss of financial assets available for sale Unrealized profit or loss of financial assets measured at fair value through other comprehensive profit or loss Actuarial profit or loss of defined benefit plan Actually acquired or sold subsidiary share New share issued by subsidiary not subscribed according to shareholding ratio Subsidiary issued cash dividend Subsidiary handled cash capital deduction Acquiring through business merger Ending balance	2018	2017
	$4,154,110 (4,955)	$4,233,326 -
	4,149,155 58,321 (10,858) - (47,934) 124 (25,253) (747) (93,033) - 7,939	4,233,326 132,310 (9,503) (81,426) - - (123,541) 89,908 (41,071) (64,698) 18,805
	$4,037,714	$4,154,110

88

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

22. Operating revenue

Revenue from Contracts with Customers Revenue from sales of goods Other operating revenue Total	2018	2017
	$9,237,006 121,655 $9,358,661	$9,744,047 53,062 $9,797,109

Note: The Group adopts IFRS 15 to handle the Revenue from Contracts with Customers after January 1, 2018, and chooses to recognize the accumulative influence number of first application on January 1, 2018.

Information related to Revenue from Contracts with Customers from January 1 to December 31, 2018 is as below:

(1) Revenue subdivision

2018

Sales of goods Revenue recognition time and place: In certain time and place	Storage media department	OLED department	Other department $985,544 $985,544	Total
	$5,853,173	$2,519,944		$9,358,661
	$5,853,173	$2,519,944		$9,358,661

• (2) Contract balance

• A. Contract liability – current

Sales of goods	Beginning balance $108,838	Ending balance	Difference
		$65,334	$(43,504)

89

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

From January 1 to December 31, 2018, the contract liability balance of the Group decreases sharply due to majority performance obligations have been met, in which, NT$ 108,838,000 is the beginning balance and recognized as revenue in current period.

• (3) Asset recognized from the acquisition or customer contract performance cost

No.

23. Expected credit impairment loss

Operating expense – expected credit impairment interest Account receivable Non-operating revenue and expense – expected credit impairment loss Other receivables Total	2018	2017(Note)
	$(13,389) 10
	$(13,379)

Note: The Group adopts IFRS 9 after January 1, 2018, and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

Credit risk related information shall refer to Note XII.

The Group's receivables (including the bill receivable, account receivable and other receivable) adopts the expected amount of credit loss during the existence term of the Company to measure the reserve for loss. The amount of reserve for loss is estimated at December 31, 2018. The relevant interpretations are as follows:

• (1) The total book amount of bill receivable of NT$ 9,031,000 is not overdue, and the amount of reserve for loss, measured by 0% of the expected credit loss rate, is NT$ 0.

• (2) The total book amount of other receivable is NT$ 99,547,000. Among them, the

90

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

reserve for loss measured at 0%~100% of individual expected credit loss rate is NT$ 1,000,000. The remaining total book amount is not overdue and its expected credit loss rate is 0%.

• (3) Account receivable shall be grouped based on the factors such as the counterparty credit rating, region and industry, and adopts the reserve matrix to measure the reserve for losses. Relevant information is as follows:

Total book amount Loss ratio (%) Expected credit loss during the term of existence Book value	Not overdue			Overdue days	Overdue days		Total
		Within 30 days	31-60 days	61-90 days	91-120 days	Over 120 days
	$1,246,216 0%	$180,214 1%	$83,205 2%	$30,997 5%	$12,718 10%	$252,571 20~100%	$1,805,921 228,717
	-	1,802	1,664	1,550	1,272	222,429
	$1,246,216	$178,412	$81,541	$29,447	$11,446	$30,142	$1,577,204

Change information of bill receivable, account receivable and other receivable reserve for loss of the Group from January 1 to December 31, 2018 is as below:

Beginning balance (according to IAS 39) Beginning retained surplus adjustment Beginning balance (according to IFRS 9) Current increased (recovered) amount Offset for unrecoverable Exchange rate change Ending balance	Bill receivable	Account receivable	Other receivables
	$- -	$285,509 -	$990 -
	- - - -	285,509 (13,389) (42,863) (540)	990 10 - -
	$-	$228,717	$1,000

24. Operating lease

(1) The Group as the lessee

The Group has entered into the commercial lease contract with the average term of one to five year, and all lease contracts contain the terms subject to annual rent adjustments in accordance with market conditions.

91

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

According to the non-cancelable operating lease contract, the future minimum lease payments as of December 31, 2018 and December 31, 2017 are as follows:

Less than one year More than one year but less than five years More than five years Total Operating lease recognized expense is as below: Minimum rental payment	December 31, 2018	December 31, 2017
	$22,806	$1,838
	63,787 117,297	6,720 -
	$203,890	$8,558
	2018	2017
	$20,086	$16,637

• (2) The Group as the leaser

The Company enters into the commercial property lease contract with the remaining years between 1 to 6 years. All lease contracts contain the provisions that can adjust the rent according to the market environment each year.

According to the non-cancelable operating lease contract, the total amount of future minimum lease payments of the lessee as of December 31, 2018 and December 31, 2017 are as follows:

Less than one year More than one year but less than five years More than five years Total	December 31, 2018	December 31, 2017
	$140,693 272,743	$150,545 403,482
	83,002	83,002
	$496,438	$637,029

1. Staff welfare, depreciation and amortization expense function classification summary sheet is as below:

92

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Nature\Function		2018	2018
	Operating cost	Operating expense	Non-operating expense	Total
Staff welfare expense
Salaryexpense	$1,141,135	$398,189	$-	$1,539,324
Labor insurance expense	104,577	28,375	-	132,952
Pension expense	46,946	23,943	-	70,889
Other staff welfare expense	25,199	9,797	-	34,996
Depreciation expense	1,057,829	329,585	104,503	1,491,917
Amortization expense	52,700	65,320	6,268	124,288

Nature\Function	2017	2017	2017	2017
	Operating cost	Operating expense	Non-operating expense	Total
Staff welfare expense
Salaryexpense	$1,204,968	$439,064	$-	$1,644,032
Labor insurance expense	106,316	32,312	-	138,628
Pension expense	50,018	39,706	-	89,724
Other staff welfare expense	24,464	9,207	-	33,671
Depreciation expense	1,212,672	400,996	151,298	1,764,966
Amortization expense	83,022	66,769	7,460	157,251

The Articles of Association of the Company stipulate that if the Company makes profits in the current year, it shall set aside 3-10% as the remuneration for employees and no more than 4% as the remuneration for directors. However, if the Company has accumulated losses, it shall reserve the amount to make up for them firstly. Where the employee remuneration referred to in the preceding paragraph can be paid in cash or stock, the object of the payment may include the employees of the subordinate company who meet certain conditions prescribed by the board of directors. For the information about employee compensation and remuneration approved by the board of directors, please refer to the "Open Information Observation Station" of Taiwan Stock Exchange.

The Company is in the state of loss in 2018 and 2017, so it does not list the remuneration of employees and the remuneration of the board of directors.

93

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

26. Non-operating revenue and expense

(1) Other revenue

Interest revenue (Note) Rental revenue Dividend revenue Other revenue Total	2018	2017
	$21,445 148,245 38,572 49,830	$11,111 140,012 13,613 79,890
	$258,092	$244,626

Note: The Group adopts IFRS 9 after January 1, 2018, and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

(2) Other profits and losses

Net profit (loss) from disposal of property, plant and equipment Net profit (loss) from disposal of investment Net foreign currency exchange profit (loss) Financial assets / (liability) profit / (loss) measured at fair value through profit or loss (Note) Impairment losses on financial assets Impairment losses on non-financial assets Profit from buy cheap Miscellaneous expense Total	2018	2017
	$74 (177) 80,802 (66,438) - (9,423) 19,359 (145,377)	$(122,924) 267,003 (174,890) 1,111 (5,887) (398,638) - (210,420)
	$(121,180)	$(644,645)

Note: From January 1 to December 31, 2018, it generated from forcing to measure the financial assets at fair value through profit or loss, and from January 1 to December 31, 2017, it generated from financial assets / (liability) held for trading.

94

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(3) Financial cost

Interest of bank and other borrowings	2018	2017
	$153,131	$143,084

27. Components of other comprehensive profit or loss

Components of other comprehensive profit or loss in 2018 are as below:

Items not reclassified to profit or loss: Defined benefit plan remeasurement amount Unrealized evaluation profit or loss of equity instrument investment measured at fair value through other comprehensive profit or loss Items possible to be reclassified to profit or loss in the future: Exchange difference of financial statements conversion of foreign operating institutes Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method Total	Current incurrence	Current reclassification adjustment	Other comprehensive profit or loss	Income tax benefit (expense)	After-tax amount
	$(317) (146,994) (48,330) 844	$- - - -	$(317) (146,994) (48,330) 844	$- - 2,312 -	$(317) (146,994) (46,018) 844
	$(194,797)	$-	$(194,797)	$2,312	$(192,485)

Components of other comprehensive profit or loss in 2017 are as below:

95

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Items not reclassified to profit or loss: Defined benefit plan remeasurement amount Items possible to be reclassified to profit or loss in the future: Exchange difference of financial statements conversion of foreign operating institutes Profit or loss of unrealized estimate of financial assets available for sale Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method Total	Current incurrence	Current reclassification adjustment	Other comprehensive profit or loss	Income tax benefit (expense)	After-tax amount
	$(18,729) (210,322) 86,865 (2,164)	$- (5,653) (261,350) -	$(18,729) (215,975) (174,485) (2,164)	$- (1,375) - -	$(18,729) (217,350) (174,485) (2,164)
	$(144,350)	$(267,003)	$(411,353)	$(1,375)	$(412,728)

28. Income tax

In accordance with the revised provisions of the income tax law issued on February 7, 2018, the Company’s income tax rate for profit-seeking enterprises shall be changed from 17% to 20%, and the income tax rate of undistributed surplus for profit-seeking enterprises shall be changed from 10% to 5%.

96

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(1) Major components of income tax expense (benefit) are as below:

Income tax recognized as profit or loss

2018 Current income tax expense: Current income tax payable $19,963 Current income tax of previous year adjusted in current period 304 Deferred income tax expense: Deferred income tax expenses related to original generation of temporary difference and its recovery 27,495 Deferred income tax related to original generation and recovery of tax loss and income tax deduction 246,254 Deferred income tax related to tax rate change or new tax levy (103,796) Deferred income tax asset offset (recovery of previous offset) (8,856) Income tax expense $181,364 Income tax recognized as other comprehensive profit or loss 2018 Deferred income tax expense (benefit): Exchange difference of financial statements conversion of foreign operating institutes $(2,312)	2018	2017
	$19,963 304 27,495 246,254 (103,796) (8,856)	$44,952 (957) (18,429) 332,138 - -
	$181,364	$357,704
		2017
Deferred income tax expense (benefit): Exchange difference of financial statements conversion of foreign operating institutes
	$(2,312)	$1,375

Income tax recognized as other comprehensive profit or loss

The amount of income tax expense and accounting profit multiplied by the applicable income tax rate is adjusted as follows:

97

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Pre-tax loss from continuous operating entity Tax calculated according to applicable domestic tax rate of income of relevant country Tax-exempt income tax influence number Non-deductible expense income tax influence number in tax declaration Deferred income tax asset / liability income tax influence number Additional 10% income tax levied on undistributed surplus Basic income tax for profit-making business Effect of different tax rates applicable to individuals operating in other tax jurisdictions Adjustment in current year of current income tax of previous year Total income tax expense recognized as profit or loss	2018	2017
	$(1,053,138)	$(1,940,441)
	$(459,262) (56,379) 13,425 665,952 15,871 1,453 - 304	$(843,476) (45,950) 26,956 1,176,179 21,231 23,529 192 (957)
	$181,364	$357,704

Deferred income tax asset (liability) balance related to following items:

98

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

2018 Temporary difference Profit of unrealized foreign currency exchange Loss of unrealized foreign currency exchange Unrealized inventory depreciation loss Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus Unrealized asset depreciation loss Fiscal and tax differences in depreciation Unrealized fire loss Net defined benefit liability – non-current Unused tax loss Exchange difference of financial statements conversion of foreign operating institutes Deferred income tax (expense) / benefit Deferred income tax asset / (liability) net amount Information expressed in balance sheet as below: Deferred income tax asset Deferred income tax liability	Beginning balance	Recognized as profit or loss	Recognized as other comprehensiv e profit or loss	Combined acquisition	Ending balance
	$1,873 - 13,092 27,628 21,221 8,833 - - 2,574 2,158 509,113 9,825	$(17,066) 854 (3,120) (5,996) 6,543 3,128 3,602 (2,393) 454 1,652 (148,755) -	$- - - - - - - - - - - 2,312	$- - - - - - - (18,665) - - - -	$(15,193) 854 9,972 21,632 27,764 11,961 3,602 (21,058) 3,028 3,810 360,358 12,137
		$(161,097)	$2,312	$(18,665)
	$596,317				$418,867 $455,203
	$596,317
	$-				$(36,336)

99

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

2017

Temporary difference Profit of unrealized foreign currency exchange Loss of unrealized foreign currency exchange Unrealized inventory depreciation loss Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus Unrealized asset depreciation loss Unrealized fire loss Net defined benefit liability – non- current Unused tax loss Exchange difference of financial statements conversion of foreign operating institutes Deferred income tax (expense) / benefit Deferred income tax asset / (liability) net amount Information expressed in balance sheet as below: Deferred income tax asset Deferred income tax liability	Beginning balance	Recognized as profit or loss	Recognized as other comprehensi ve profit or loss	Ending balance
	$(6,926) 1,728 17,074 20,491 16,663 8,323 4,582 2,574 1,241 834,451 11,200	$8,799 (1,728) (3,982) 7,137 4,558 510 (4,582) - 917 (325,338) -	$- - - - - - - - - - (1,375)	$1,873 - 13,092 27,628 21,221 8,833 - 2,574 2,158 509,113 9,825
		$(313,709)	$(1,375)
	$911,401			$596,317
	$918,327			$596,317
	$(6,926)			$-

100

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Unused tax loss information of the Company is summarized as below:

The Company

The Company
Incurrence year	Loss amount	Unused	balance	Final deductible year
		December 31, 2018	December 31, 2017
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Incurrence year	$3,331,985 3,370,835 1,258,894 1,913,163 938,408 2,070,277 2,300,611 5,783,839 1,144,980 817,581 704,179 Loss amount	$- 3,370,835 1,258,894 1,913,163 938,408 2,070,277 2,300,611 5,783,839 1,144,980 817,581 704,179	$3,331,985 3,370,835 1,258,894 1,913,163 938,408 2,070,277 2,300,611 5,783,839 1,144,980 817,581 -	2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Final deductible year
		$20,302,767	$22,930,573
		Unused	balance
		December 31, 2018	December 31, 2017
2008 2009 2010 2011 2013 2014 Total	$98,530 112,145 197,635 109,721 42,790 3,363	$- 112,145 197,635 109,721 42,790 3,363	$98,530 112,145 197,635 109,721 42,790 3,363	2018 2019 2020 2021 2023 2024
		$465,654	$564,184

101

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Subsidiary: Ritdisplay

Incurrence year	Loss amount	Unused	balance	Final deductible year
		December 31, 2018	December 31, 2017
2008 2009 2010 2011 2012 2013 2014 Total	$1,227,192 895,793 465,480 394,751 245,887 513,187 303,602	$- 895,793 465,480 394,751 245,887 513,187 303,602	$1,227,192 895,793 465,480 394,751 245,887 513,187 303,602	2018 2019 2020 2021 2022 2023 2024
		$2,818,700	$4,045,892

Subsidiary: Prorit

Incurrence year	Loss amount	Unused	balance	Final deductible year
		December 31, 2018	December 31, 2017
2008 2009 2010 2011 2012 2013 Total	$183,976 169,949 63,372 47,171 48,312 23,547	$- 169,949 63,372 47,171 48,312 23,547	$183,976 169,949 63,372 47,171 48,312 23,547	2018 2019 2020 2021 2022 2023
		$352,351	$536,327

Subsidiary: Laiyang

Incurrence year	Loss amount	Unused	balance	Final deductible year
		December 31, 2018	December 31, 2017
2012 2013 2014 2015 2016 2017 2018 Total	$112,730 133,762 227,601 202,405 168,792 160,906 381,551	$112,730 133,762 227,601 202,405 168,792 160,906 381,551	$112,730 133,762 227,601 202,405 168,792 160,906 -	2022 2023 2024 2025 2026 2027 2028
		$1,387,747	$1,006,196

102

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Unrecognized deferred income tax asset

As of December 31, 2018 and December 31, 2017, the total amount of deferred income tax asset unrecognized by the Group was respectively NT$ 6,931,537,000 and NT$ 6,640,136,000.

• (2) Income tax declaration approval condition

As of December 31, 2018, the income tax declaration approval condition of the Company and domestic subsidiary is as below:

The Company Subsidiary U-Tech Subsidiary AimCore Subsidiary Ritdisplay Subsidiary Prorit Subsidiary Laiyang	Income tax declaration approval condition
	Approved to 2016 Approved to 2016 Approved to 2016 Approved to 2016 Approved to 2016 Approved to 2016

29. Loss per share

The amount of the basic earnings (loss) per share shall be calculated by dividing the current net profit (loss) attributable to the holders of the parent company's ordinary shares by the weighted average number of ordinary shares outstanding in the current period.

As the Group does not issue the dilutive potential ordinary shares, there is no need for the Group to dilute the amount of the basic earnings per share.

Basic loss per share Net loss attributable to common shareholders of the parent company (NT$ 1,000) Retroactively adjusted weighted average number of ordinary shares of basic loss per share (1,000 shares) Basic loss per share (NT$)	2018	2017
	$(1,292,823)	$(2,430,455)
	1,279,539	1,264,136
	$(1.01)	$(1.92)

103

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The Group decided to make up the deficit by capital reduction by the resolution of the board of directors on July 18, 2018, to reduce 482,634,230 shares, and the capital reduction base day is July 19, 2018; the deal has significantly changed the final outstanding ordinary shares or potential ordinary shares, and thus the loss per share calculations of current and previous periods are expressed here, so the financial statements are based on the new shares.

30. Business merger

Subsidiary acquisition

In October 2018, the Group acquired 98.72% shares of right to vote of Houju Energy Development Co., Ltd. (hereinafter referred to as Houju). It is an unlisted company engaged in the renewable energy self-use power generation equipment industry. The Group acquired the company because of diversified operation and the use of renewable energy to maintain the earth's sustainable cycle.

The fair value of Subsidiary – Houju’s identifiable asset and liability on the acquisition day is as follows:

Asset Cash and cash equivalents Account receivable Lease payment receivable (including non-current) Other current asset Financial asset measured at fair value through profit and loss - non-current Investment by equity method (Note) Property, plant and equipment Other non-current asset Subtotal Liability Short-term borrowing Short-term notes and bills payable Notes payable Other payables	Fair value in acquisition day
	$59,384 9,993 50,676 57,724 4,493 966 1,084,134 111,664
	1,379,034
	Fair value in acquisition day
	5,000 26,741 1,533 16,098

104

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Current income tax liability Other current liability Long-term loan (including within one year) Deferred income tax liability Subtotal Identifiable net asset	Fair value in acquisition day
	8,472 283 751,704 18,665
	828,496
	$550,538

Note: It is the subsidiary 100% held by Houju - Houcheng Photoelectricity Co., Ltd. (hereinafter referred to as Houcheng). The fair value of Houcheng’s identifiable asset and liability on the acquisition day includes the cash and cash equivalents of NT$ 974,000, other current assets of NT$ 10,000 and other payables of NT$ 18,000.

Amount of buy cheap profit as follows: Acquisition consideration Add: non-controlling equity value Less: identifiable net asset fair value Buy cheap profit	Fair value in acquisition day
	$523,240 7,939 (550,538)
	$(19,359)

The revenue produced by the subsidiary to the Group from the acquisition day is NT$37,636,000 , with the net profit before tax of NT$ 10,781,000. If the merger occurs at the beginning of the year, the revenue of continuous operating unit of the Group shall be NT$ 9,496,160,000, and the net loss of continuous operating unit shall be NT$ 959,632,000.

Acquisition cash use analysis: Cash paid consideration Net cash acquired from subsidiary – Houju Net cash acquired from subsidiary – Houcheng Acquired net cash flow	$523,240 (59,384) (974)
	$462,882

The acquisition consideration of the Group acquiring the subsidiary – Houju is NT$ 523,240,000, in which part of the price has been paid actually in this year. As of December 31, 2018, the unpaid investment price is NT$ 30,000,000, and recognized in other payables.

105

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

31. Change of subsidiary ownership equity

Acquiring the subsidiary issued share

The Group additionally acquired 3.25% voting share of U-Tech in 2018. The cash consideration paid to non-controlling equity shareholder was NT$ 55,508,000, and the additional acquired stock equity book amount of U-Tech (originally acquired and excluding the goodwill) was NT$ 74,041,000; the increase (decrease) amount of relevant equity including the non-controlling equity of U-Tech was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(55,508) 60,402
	$4,894

The Group additionally acquired 0.15% voting share of AimCore in 2018. The cash consideration paid to non-controlling equity shareholder was NT$ 1,800,000, and the additional acquired stock equity book amount of AimCore (originally acquired and excluding the goodwill) was NT$ 3,946,000; the increase (decrease) amount of relevant equity including the non-controlling equity of AimCore was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(2,064) 2,673
	$609

The Group additionally acquired 0.61% voting share of Ritdisplay in 2018. The cash consideration paid to non-controlling equity shareholder was NT$ 27,248,000, and the additional acquired stock equity book amount of Ritdisplay (originally acquired and excluding the goodwill) was NT$ 9,099,000; the increase (decrease) amount of relevant equity including the non-controlling equity of Ritdisplay was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(27,248) 22,863
	$(4,385)

The Group additionally acquired 6.59% voting share of U-Tech in 2017. The cash consideration paid to non-controlling equity shareholder was NT$ 105,148,000, and the additional acquired stock equity book amount of U-Tech (originally acquired

106

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

and excluding the goodwill) was NT$ 149,511,000; the increase (decrease) amount of relevant equity including the non-controlling equity of U-Tech was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(105,148) 149,511
	$44,363

Selling the subsidiary share

The Group sold 1.63% voting share of Ritdisplay in 2018. The cash consideration acquired from non-controlling equity shareholder was NT$ 72,052,000, and the sold stock equity book amount of Ritdisplay was NT$ 23,277,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

Cash consideration of the Group acquired from non-controlling shareholder Non-controlling equity increased amount Difference of capital surplus recognized in equity	$72,052 (60,049)
	$12,003

The Group sold 0.02% voting share of U-Tech in 2018. The cash consideration acquired from non-controlling equity shareholder was NT$ 598,000, and the sold stock equity book amount of U-Tech was NT$ 681,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of U-Tech was as below:

Cash consideration of the Group acquired from non-controlling shareholder Non-controlling equity increased amount Difference of capital surplus recognized in equity	$598 (636)
	$(38)

The Group sold 0.34% voting share of U-Tech in 2017. The cash consideration acquired from non-controlling equity shareholder was NT$ 5,349,000, and the sold stock equity book amount of U-Tech was NT$ 7,633,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of U-Tech was as below:

107

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Cash consideration of the Group acquired from non-controlling shareholder Non-controlling equity increased amount Difference of capital surplus recognized in equity	$5,349 (7,633)
	$(2,284)

The Group sold 2.12% voting share of Ritdisplay in 2017. The cash consideration acquired from non-controlling equity shareholder was NT$ 90,310,000, and the sold stock equity book amount of Ritdisplay was NT$ 18,337,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

Cash consideration of the Group acquired from non-controlling shareholder Non-controlling equity increased amount Difference of capital surplus recognized in equity	$90,310 (18,337)
	$71,973

Subscribing the subsidiary issued new share by capital increase not in shareholding ratio

The special stock of subsidiary Laiyang held by the Group was converted to the common stock on July 24, 2018 according to the issue term, and the Group thus increased 0.86% stock equity. The Group paid capital increase cash was NT$ 49,999,000, and the net asset book amount of Laiyang (originally acquired and excluding the goodwill) was NT$ 154,949,000; the increase (decrease) amount of increased relevant equity including the non-controlling equity of Laiyang was as below:

The Group paid capital increase cash Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$- 747
	$747

The subsidiary Laiyang issued the new stock for capital increase on February 14, 2017 and August 2, 2017, and the Group subscribed in full, thus increased 33.79% stock equity. The Group paid capital increase cash was NT$ 165,000,000 and NT$ 100,000,000 respectively, and the net asset book amount of Laiyang (originally acquired and excluding the goodwill) was NT$ (158,754),000 and NT$ 10,240,000 respectively; the increase (decrease) amount of increased relevant equity including the non-controlling equity of Laiyang was as below:

108

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The Group acquired capital increase cash Non-controlling equity increased amount Difference of capital surplus recognized in equity	$- (59,897)
	$(59,897)

The subsidiary Ritdisplay issued the new stock for capital increase on November 7, 2017, and the Group subscribed partially, thus decreased 0.16% stock equity. The Group acquired capital increase cash was NT$ 34,771,000, and the net asset book amount of Ritdisplay (originally acquired and excluding the goodwill) was NT$ 982,235,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

The Group acquired capital increase cash Non-controlling equity book amount Difference of capital surplus recognized in equity	$34,771 (30,011)
	$4,760

32. Subsidiary with significant non-controlling equity

The financial information of subsidiary with significant non-controlling equity is listed as below:

Non-controlling equity held equity ratio:

Subsidiary name	Company and operation located region	2018.12.31	2017.12.31
U-Tech AimCore Ritdisplay	Taiwan Taiwan Taiwan	60.80% 75.24% 29.42%	64.03% 75.39% 28.40%

Accumulative balance of significant non-controlling equity:

U-Tech AimCore Ritdisplay	2018.12.31	2017.12.31
	$1,337,168 1,960,121 411,064	$1,458,165 1,984,856 311,459

109

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Profit (loss) amortized significant non-controlling equity:

U-Tech AimCore Ritdisplay	2018	2017
	$43,238 (16,046) 101,751	$89,357 35,877 108,521

Dividend paid for significant non-controlling equity:

U-Tech AimCore Ritdisplay	2018	2017
	$53,260 30,937 8,836	$31,875 5,321 3,875

The financial information summary of such subsidiary is provided as below, and this information is based on the amount before elimination between the companies (trading).

Profit and loss summary information of 2018:

Operating revenue Current net profit of continuous operating unit Total comprehensive profit and loss	U-Tech	AimCore	Ritdisplay
	$790,567	$722,072	$2,519,944
	62,893	27,066	340,445
	$14,198	$12,890	$327,077

Profit and loss summary information of 2017:

Operating revenue Current net profit of continuous operating unit Total comprehensive profit and loss	U-Tech	AimCore	Ritdisplay
	$815,563	$984,988	$2,262,373
	128,804	55,512	378,420
	$112,122	$(6,949)	$326,104

110

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Information of asset and liability summary on December 31, 2018:

Current asset Non-current asset Current liability Non-current liability	U-Tech	AimCore	Ritdisplay
	$1,226,400 2,985,716 593,935 1,269,044	$1,193,533 2,009,096 179,206 414,094	$1,172,202 2,476,622 1,110,204 1,069,345

Information of asset and liability summary on December 31, 2017:

Current asset Non-current asset Current liability Non-current liability	U-Tech	AimCore	Ritdisplay
	$1,322,352 1,657,558 428,498 270,530	$1,207,261 1,893,865 307,306 156,967	$1,185,744 2,468,343 1,388,347 1,094,829

Cash flow summary information of 2018:

Operating activity Investing activity Financing activity Net increase (decrease) of cash and cash equivalents	U-Tech	AimCore	Ritdisplay
	$132,771 (474,495) 243,843 (99,042)	$221,406 (285,881) 233,046 167,643	$44,539 (86,966) (171,176) (213,603)

Cash flow summary information of 2017:

Operating activity Investing activity Financing activity Net increase of cash and cash equivalents	U-Tech	AimCore	Ritdisplay
	$91,385 405,070 (123,404) 376,660	$188,971 17,961 (74,392) 132,103	$292,891 (487,677) 482,494 287,708

111

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

VII. Interested party transactions

Interested party traded with the Group during the financial reporting period is as below:

Interested party name and relationship

Interestedpartyname Echem Hightech Co., Ltd. Cashido Corporation RiTS Solar B.V. Finesil Technology Inc. O-View Technology Co., Ltd. Ritek Foundation	Relationshipwith the Group
	Affiliated enterprise of the Group Affiliated enterprise of the Group Affiliated enterprise of the Group Affiliated enterprise of the Group The subsidiary is the director of corporate juridical person of the company The same person with the Chairman of the Company

Major transaction between the interested parties

1. Sales

Affiliated enterprise of the Group Cashido Corporation Echem Hightech Co., Ltd. RiTS Solar B.V. Other Subtotal Other interested party Total	2018	2017
	$470 49 - 42	$59 1,737 1,794 -
	561	3,590
	20	93
	$581	$3,683

The selling price of the Group to the interested parties is negotiated in accordance with the general market conditions; when the Group sells to the affiliated enterprises, the collection term shall be similar to the domestic customer, to receive the payment in 90 to 150 days.

112

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

2. Purchase

Affiliated enterprise of the Group Echem Hightech Co., Ltd. Finesil Technology Inc. RiTS Solar B.V. Other Subtotal Other interested party Total	2018	2017
	$23,487 17,979 - 3,521	$25,029 - 18,871 2,518
	44,987	46,418
	59	133
	$45,046	$46,551

There is no significant difference between the trading conditions of the Group's purchase of goods from affiliated enterprises and the general trading conditions. Payment terms are monthly statement 90-120 days after delivery.

3. Account receivable - interested party

Affiliated enterprise of the Group Finesil Technology Inc. RiTS Solar B.V. Subtotal Less: Reserve for loss Net amount	December 31, 2018	December 31, 2017
	$32 -	$- 38
	32	38
	-	-
	$32	$38

4. Other receivable - interested party

Affiliated enterprise of the Group Cashido Corporation Other Subtotal Other interested party Ritek Foundation Total	December 31, 2018	December 31, 2017
	$11,519 32	$5 -
	11,551	5
	2,942	-
	$14,493	$5

113

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

5. Refundable deposit

Other interested party Ritek Foundation	2018.12.31	2017.12.31
	$30,000	$-

6. Notes payable - interested party

Affiliated enterprise of the Group Echem Hightech Co., Ltd. Other interested party Total	December 31, 2018	December 31, 2017
	$2,837 -	$12,194 183
	$2,837	$12,377

7. Account payable - interested party

Affiliated enterprise of the Group Echem Hightech Co., Ltd. Cashido Corporation Other Subtotal Other interested party O-View Total	December 31, 2018	December 31, 2017
	$2,051 978 69	$3,312 609 -
	3,098	3,921
	4,476	6
	$7,574	$3,927

8. Reward to main management personnel of the Group

Short-term staff welfare Benefit after retirement Total	2018	2017
	$38,014 820	$34,315 955
	$38,834	$35,270

114

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

VIII. Pledged asset

The Group has the following asset as the pledge:

Item Financial assets measured at fair value through other comprehensive profit or loss Financial assets available for sale – non-current Financial assets measured at amortized cost Investment to debt instrument without active market Account receivable Rental receivable Property, plant and equipment Investment property Long-term prepaid rent - land use right (listed in other non-current assets) Restricted assets (listed in other non-current assets) Total	Book amount December 31, 2018 December 31, 2017 $61,955 (Note) (Note) $113,100 124,730 (Note) (Note) 106,691 310,230 463,397 43,487 - 7,262,027 5,595,331 270,659 279,240 13,666 14,038 122,097 - $8,208,851 $6,571,797	Secured liability
	December 31, 2018 $61,955 (Note) 124,730 (Note) 310,230 43,487 7,262,027 270,659 13,666 122,097 $8,208,851
		Bank loan Bank loan and subsidiary loan endorsement guarantee Bank loan, bond, lease and performance bond Bank loan, bond, lease and performance bond Bank loan Bank loan and performance bond Short-term notes and bills payable, bank loan and performance bond Bank loan Bank loan Bank loan and performance bond

Note: The Group adopts IFRS 9 after January 1, 2018, and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

In addition, the Group provides part of the held stock of subsidiary U-Tech, AimCore and Prorit on December 31, 2018 and December 31, 2017 for bank loan guarantee.

115

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

IX. Material contingent liabilities and unrecognized contractual commitments

1. The Group issued letter of credit for imported raw material and machinery equipment but not used yet:

Currency US dollar Japanese yen New Taiwan dollar	Amount(unit: NT$1,000)
	$2,304 25,115 13,877

1. The guarantee notes issued by the Group for the purchase of machinery equipment, long-term loans, credit loans for raw materials, lawsuits and issuance of commercial promissory notes are respectively NT$ 1,039,050,000 and US$ 2,000. In addition, the Company will collect NT$ 988,327,000 of guaranteed notes from the manufacturers who purchase goods from the Company and provide labor services to the Company.

2. The guarantee amount by banks to the Group for the loan, imported raw material and national tax bookkeeping is totally NT$ 26,506,000.

3. The Group has entered into the following contracts for the purchase of fixed assets:

Prepayments for equipment	Total contractprice	Paid amount	Unit: NT$ 1,000 Unpaid amount NT$ 32,628
	NT$ 170,727	NT$ 138,099

1. The Company has entered into the license agreement with SANDISC, PIONEER and ONE BLUE for the disc and memory card related products, and agreed to pay the royalties to each company based on the sales volume of related products during the validity period of the contract of 5 to 10 years.

2. The premium contracts signed by the subsidiary U-Tech to produce CD-Audio, VIDEO CD DISC and DVD DISCS are listed as below:

116

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Object	Item	Contractperiod	Premium calculation method
Company A Company A Company B Company C Company D Company E Company F	DVD DISCS technology licensing CD and DVD DISCS technology cooperation DVD DISCS technology licensing DVD DISCS technology licensing BD VIDEO DISCS technology licensing BD VIDEO DISCS technology licensing BD VIDEO DISCS technology licensing	2001.01.01- 2020.12.31 Since 2007.08.01 2001.06.01- 2022.12.31 2004.07.01- 2029.10.01 2012.12.01- 2022.11.30 2011.01.01- 2022.12.31 2014.03.12- 2020.12.31	Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract Sale quantity of products sold in the specifications set forth in the contract

1. The premium contracts signed by subsidiary Ritdisplay to produce the organic light emitting diode (OLED) product are listed as below:

Object Company A Company B	Item Organic light emitting diode (OLED) Organic light emitting diode (OLED)	Expiring date 2023.12 2021.03	Premium calculation method
			Certain proportion of product sales volume Rated premium

X. Major disaster losses

No.

117

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

XI. Major subsequent matters

1. Subsidiary U-Tech acquired the stock equity of 562,000 shares of Houju Energy Development Co., Ltd. on January 30, 2019 from the individual shareholder of non-interested party, and the shareholding ratio of the Group increased to 100%, in the acquisition price of NT$ 6,754,000, which has been full paid as of the financial report issuing day.

2. Subsidiary Ritdisplay handled the cash capital increase on November 28, 2018 through the decision of the board of directors, to issue 7,520,000 shares, publicly as the listed stocks, with the value of NT$10 per share, and in the way of premium method; the weighted average price of competitive auction was NT$ 72.33 per share and the public subscription price was NT$ 60 per share, with the paid-in capital after the capital increase of NT$ 676,301,000. The above cash capital increase case is effective by declaring in the securities and futures bureau of financial supervision and administration commission on December 10, 2018, and the base date of its capital increase and share subscription is set as January 15, 2019.

XII. Miscellaneous

1. Types of Financial Instruments

Financial assets

Financial assets measured at fair value through profit or loss: Held for trading Force to measure at fair value through profit or loss Subtotal Financial assets measured at fair value through other comprehensive profit or loss Financial assets available for sale Measured at fair value Financial assets measured by cost Subtotal Financial assets measured at amortized cost: Cash and cash equivalent (excluding the cash on hand)	December 31, 2018	December 31,2017
	(Note) $275,046	$119,687 (Note)
	275,046	119,687
	341,895	(Note)
	(Note) (Note)	467,948 322,181
	(Note)	790,129
	3,494,133	(Note)

118

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Financial assets measured at amortized cost Bill receivable Account receivable (including interested party) Rental receivable Other account receivable (including the interested party) Subtotal Loans and receivables: Cash and cash equivalent (excluding the cash on hand) Investment to debt instrument without active market Bill receivable Account receivable (including the interested party) Other account receivable (including the interested party) Subtotal Total Financial liabilities	December 31, 2018	December 31,2017
	124,730 9,031 1,577,204 50,265 46,476	(Note) (Note) (Note) (Note)
	5,301,839	(Note)
	(Note) (Note) (Note) (Note) (Note)	3,880,607 106,691 18,536 1,537,671 14,133
	(Note)	5,557,638
	$5,918,780	$6,467,454

Financial liabilities measured at amortized cost: Short-term borrowing (including the short-term notes and bills payable) Notes payable and accounts payable (including the interested party) Other payables Long-term loan (including due within one year) Subtotal Financial liabilities measured at fair value through profit or loss: Held for trading Total	December 31, 2018 $2,370,861 1,129,884 795,930 5,833,972 10,130,647 - $10,130,647	December 31, 2017
		$1,750,320 1,427,524 848,182 4,503,485
		8,529,511
		5,192
		$8,534,703

119

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

• Note: The Group adopts IFRS 9 after January 1, 2018, and chooses not to recompile the comparison period in accordance with IFRS 9 interim provisions.

2. Financial risk management objectives and policies

The Group's financial risk management objectives are mainly to manage the market risks, credit risks and liquidity risks related to its operating activities. The Group shall identify, measure and manage the aforementioned risks according to the group policies and risk preferences.

The Group has established appropriate policies, procedures and internal controls for the foregoing financial risk management in accordance with the relevant regulations, and the important financial activities shall be subject to be reviewed by the board of directors in accordance with relevant regulations and internal control system. During the implementation of the financial management activities, the Group shall indeed comply with relevant regulations for financial risk management.

3. Market risk

The market risk of the Group is Financial Instruments' fair value or cash flow volatility risk caused by market price changes. Market risks mainly include the exchange rate risk, interest rate risk and other price risks (such as the equity Instruments).

In practice, it is rare for the single risk variable to change independently, and the changes of each risk variable are usually correlated. However, the following risk sensitivity analysis does not consider the interaction effect of related risk variables.

Exchange rate risk

The exchange rate risk of the Group is mainly related to its operating activities (when the currency used for revenue or expense is different from the functional currency of the Group) and the net investment of foreign operating institutes.

120

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Partial currency types of foreign currency receivable and foreign currency payable of the Group are the same; at this time, the considerable part shall produce the natural hedge effect; for part of the foreign currency amount, the forward foreign exchange contracts are used to manage the exchange rate risk; since the natural risk aversion and exchange rate risk management by forward foreign exchange contracts does not conform to the stipulations of the hedge accounting, so the hedge accounting is not adopted; in addition, the net investment of foreign operating institutes is the strategic investment, so the Group did not hedge against it.

The sensitivity analysis of the Group's exchange rate risk mainly focuses on the major foreign currency monetary items on the ending day of the financial reporting period, and its related foreign currency appreciation/depreciation will affect the Group's profit or loss and equity. The Group's exchange rate risk is mainly affected by the exchange rate fluctuations of USD, JPY and EUR, and the sensitivity analysis information is as follows:

• (1) When NT$ vs. USD appreciates/depreciates by 1%, the profit or loss of the Group in 2018 and 2017 will decrease/increase by NT$ 17,231,000 and NT$ 14,866,000 respectively.

• (2) When NT$ vs. JPY appreciates/depreciates by 1%, the profit or loss of the Group in 2018 and 2017 will increase/decrease by NT$ 492,000 and NT$ 1,156,000 respectively.

• (3) When NT$ vs. EUR appreciates/depreciates by 1%, the profit or loss of the Group in 2018 and 2017 will decrease/increase by NT$ 1,444,000 and NT$ 1,830,000 respectively.

Interest rate risk

Interest rate risk refers to the fluctuation risk of Financial Instruments’ fair value or future cash flows due to the market interest rate change, and the Group's interest rate risk mainly comes from the variable rate investment classified to loans and receivables, fixed rate borrowing, and variable rate borrowing.

121

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The Group manages the interest rate risk by maintaining appropriate combination of fixed and floating interest rates, supplemented by the interest rate swap contract; however, it does not apply the hedge accounting since it does not comply with the hedge accounting requirements.

The sensitivity analysis related to interest rate risk focuses on the critical risk item at the ending day of financial reporting period, including the floating interest rate investment, floating interest rate loan and interest rate swap contract, and assumes to hold for one fiscal year; when the interest rates increase/decrease ten basis points, the profit or loss of the Group in 2018 and 2017 will reduce/increase NT$ 8,080,000 and NT$ 6,147,000.

Equity price risk

The Group holds the listed and unlisted equity securities, whose fair value will be affected by uncertainty of future value of such investment target. The Group held listed and unlisted equity securities are respectively contained in the category of held for trading and available for sale. The Group manages the price risk of equity securities through the diversification in the investment and setting limit for investment for single and whole equity securities. The investment portfolio information of equity securities shall be regularly provided to the management of the Group, and the board of directors shall review and approve all investment decisions of equity securities.

For the listed equity security forced to measure at fair value through profit or loss, when the price of such equity securities increase/decrease by 1%, the profit or loss of the Group will increase/decrease by NT$ 2,750,000 and NT$ 1,145,000 respectively in 2018 and 2017.

For the listed equity security held for trading, when the price of such equity securities decreases by 1%, the profit or loss and equity of the Group in 2017 shall be affected by NT$ 4,463,000; if the price of equity securities increases by 1%, it will only affect the equity, and have no impact on the profit or loss.

For the listed company stock in equity instrument investment measured at fair value through other comprehensive profit or loss, when the price of these equity securities increases/decreases by 1%, the impact on the equity of the Group in

122

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

2018 is NT$ 1,034,000.

Please refer to Note XII. 9 for sensitivity analysis information of other equity instruments or derivative instruments linked to equity instruments at fair value Level 3.

4. Credit risk management

Credit risk refers to the risk of financial loss arising from the failure of counterparty to perform its obligations under the contract. The Group's credit risk is caused by its operating activities (mainly the accounts receivable and bills) and financial activities (mainly the bank deposits and various financial instruments).

The Group’s each unit manages the credit risk following the policies, procedures and control of credit risk. All of the counterparty credit risk evaluation system considers the counterparty’s financial situation, rating agencies rating, past history and trading experience, current economic environment and the Group’s internal rating standards and other factors. The Group also uses certain credit enhancement tools in the right time (such as the advance payment and insurance, etc.), in order to reduce the specific counterparty credit risk.

Up to December 31, 2018 and December 31, 2017, the top ten customer accounts receivable occupy 39% and 37% of the Group's accounts receivable balance respectively, and the credit concentrated risk of the rest accounts receivable is relatively insignificant.

The accounting department of the Group manages the credit risks of bank deposits, fixed income securities and other financial instruments in accordance with the Group policy. As the trading objects of the Group are determined by the internal control procedures and are the banks with good credit and financial institutions of high investment grade, corporate organizations and government agencies, which have no significant performance doubt, so there are no significant credit risks.

5. Liquidity risk management

The Group maintains the financial flexibility through the cash and cash equivalent, liquid securities and bank loan contract. The table below is the

123

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

summary of the Group’s financial liability contract stated payment due, which is prepared according to the earliest date that may be required to pay and based on its undiscounted cash flow; the amount listed also includes the contract interest. To pay the interest cash flow at the floating interest rate, the amount of undiscounted interest is derived from the interest rate curve at the end of the reporting period.

Non-derivative

financial

instruments

December 31, 2018 Loan Short-term notes payable Account payable December 31, 2017 Loan Short-term notes payable Account payable Derivative	Less than oneyear	Two to three years	Four to five years	More than fiveyears	Total
	$3,581,082 251,300 1,925,814 Less than oneyear	$2,684,396 - - Two to three years	$1,267,259 - - Four to five years	$640,969 - - More than fiveyears	$8,173,706 251,300 1,925,814 Total
	$2,777,493 250,000 2,275,706 financial Less than oneyear	$2,948,372 - - Two to three years	$483,037 - - Four to five years	$- - - More than fiveyears	$6,208,902 250,000 2,275,706 Total
instruments December 31, 2017 Inflow Outflow Net amount
	$127,293 (132,485)	$- -	$- -	$- -	$127,293 (132,485)
	$(5,192)	$-	$-	$-	$(5,192)

124

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

The disclosure of derivative financial instruments in the above table is expressed as undiscounted net cash flow.

6. Liability adjustment from financing activity

2018 liability adjustment information:

January 1, 2018 Acquiring through business merger Cash flow December 31, 2018	Short-term borrowing	Short-term notes and billspayable	Long-term loan (including due within oneyear)	Other non- current liability	Total liability from financing activity
	$1,500,535 5,000 614,347	$249,785 26,741 (25,547)	$4,503,485 751,704 578,783	$48,852 - 6,632	$6,302,657 783,445 1,174,215
	$2,119,882	$250,979	$5,833,972	$55,484	$8,260,317

2017 liability adjustment information:

No need to apply.

1. Fair value of Financial Instruments

(1) Techniques and assumptions used to evaluate the fair value

Fair value means the price that market participants collect by selling the assets or are required to pay for the transfer of liabilities in the orderly transaction on the measurement day. The methods and assumptions used by the Group to measure or disclose the fair value of financial assets and financial liabilities are as follows:

• A. Book amount of cash and cash equivalent, accounts receivable, accounts payable and other current liabilities is the reasonable approximate value of fair value, which is mainly because this kind of instruments have short maturity period.

125

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

• B. The fair value of financial assets and financial liabilities traded in active markets with standard terms and conditions shall be determined by reference to the market quotation.

• C. The equity instrument without active market shall be measured by the amount after deducting the impairment loss from the cost, because there is no public quotation in active market and the fair value cannot be measured reliably.

• D. For the debt instruments investment, bank borrowings and other noncurrent liabilities without active market, the fair value is determined by counterparty quotation or evaluation technology; the evaluation technique is based on the cash flow discount analysis, and the interest rate and discount rate assumptions are mainly based on the information of similar tools.

• E. The fair value of derivative financial instruments without active market quotation, including non-option derivative financial instruments, are calculated with the cash flow discount analysis based on counterparty quotation or interest rate curve applicable for the existence period; for the option derivative financial instruments, the fair value is calculated by counterparty quotation, appropriate option pricing model or other evaluation methods.

• (2) Fair value of Financial Instruments measured at amortized cost

The book amount of financial assets and financial liabilities measured at amortized cost by the Group is close to the fair value.

• (3) Fair value information of Financial Instruments

The fair value information of Financial Instruments of the Group shall refer to Note XII. 9.

8. Derivative financial instruments

As of December 31, 2018 and December 31, 2017, the Group has the following

126

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

information about derivative financial instruments that are not eligible for hedging accounting and have not yet matured:

Forward foreign exchange contracts are the critical risk part that manage some transactions, but are not designated as hedging instruments. Forward foreign exchange contracts are as follows:

The Company undertakes the contract transaction as below:

December 31, 2018: No.

December 31, 2017: Item Name Period Forward foreign Sales of EUR4,000,000 June 27, 2017 to January 31, 2018 exchange contract

9. Fair value level

(1) Fair value level definition

All assets and liabilities measured or disclosed at fair value are classified into their fair value levels according to the lowest input value of importance to the overall fair value. Input values of each level are as follows:

Level 1: able to acquire the same assets or liabilities on the measurement day in the active market (unadjusted).

Level 2: directly or indirectly observable input values of assets or liabilities, except those included in Level 1.

Level 3: input values of assets or liabilities not observable.

The classification of assets and liabilities recognized on repeatable basis in the financial statements is reassessed on the end of each reporting period to determine whether the fair value level transfer occurs.

127

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

(2) Fair value measurement level information

The Group does not have the assets that are not repeatable as measured by fair value. The fair value level information of repeatable assets and liabilities is listed as follows:

December 31, 2018: Asset measured at fair value: Measured at fair value through profit or loss Financial assets Stock Fund Measured at fair value through other comprehensive profit or loss Equity instrument measured at fair value through other comprehensive profit or loss December 31, 2017: Asset measured at fair value: Financial assets measured at fair value through profit or loss Stock Fund Financial assets available for sale Stock	Level 1	Level 2	Level 3	Total
	$205,058 69,988 101,845 Level 1	$- - - Level 2	$- - 240,050 Level 3	$205,058 69,988 341,895 Total
	$48,260 71,427 446,333	$- - -	$- - 21,615	$48,260 71,427 467,948

128

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Transfer between the first and second levels of the fair value hierarchy

The assets and liabilities measured by the Group's repeated fair value are not transferred between Level 1 and 2 of the fair value hierarchy.

Details of changes in Level 3 of repeatable fair value hierarchy

Where the assets and liabilities measured by the Group 's repeated fair value are at Level 3 of the fair value hierarchy, the adjustment of the balance from the beginning to the end of the period is listed as follows:

January 1, 2018 (according to IAS 39) Influence number of retroactive application and retroactive recompilation January 1, 2018 (according to IFRS 9) Total loss recognized in 2018: Recognized as other comprehensive profit or loss (recognized as “unrealized evaluated profit or loss in equity instrument investment at fair value through other comprehensive profit or loss”) 2018 acquisition/issuance 2018 disposal/liquidation Returned stock for capital reduction Investment transferred out to equity method December 31, 2018 January 1, 2017 Total profit (loss) recognized in 2017: Recognized as other comprehensive profit or loss (recognized as “unrealized evaluated profit or loss in financial assets available for sale”) 2017 acquisition/issuance 2017 disposal/liquidation Transfer-in (transfer-out) to Level 3 December 31, 2017	Measured at fair value through other comprehensive profit or loss
	Stock
	$21,615 316,416
	338,031 (75,174) - (560) (10,759) (11,488)
	$240,050
	$68,136 (46,521) - - -
	$21,615

129

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

In the above total profit (loss) recognized in the profit or loss, the loss related to the held asset as of 2018 and 2017 is respectively NT$ 75,175,000 and NT$ 46,521,000.

Significant unobservable input information at Level 3 of the fair value

hierarchy

The significant unobservable input values of the assets measured by Level 3 of the Group's fair value hierarchy as measured by the repeatable fair value are listed in the following table:

December 31, 2018:

Assessment technique Financial assets: Financial assets measured at fair value through other comprehensive profit and loss Stock Market method December 31, 2017: Assessment technique Financial assets: Available for sale Stock Market method	Assessment technique	Major unobservable input value	Quantized information	Relationship between input value and fair value
		Lack of liquidity discount Major unobservable input value	30% Quantized information	The higher the degree of illiquidity is, the lower the fair value estimates Relationship between input value and fair value
	Market method	Lack of liquidity discount	30%	The higher the degree of illiquidity is, the lower the fair value estimates

December 31, 2017:

130

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Evaluation process of Level 3 fair value measurement

Investment department of the Group is responsible for the fair value verification, through the independent source data to make the evaluation results close to the market status, confirm the data source is independent, reliable, consistent with other resources, and on behalf of the executable prices, and make the analysis for value changes of assets and liabilities in the remeasurement or reassessment according to the Group accounting policies on every reporting day, to ensure that the evaluation result is reasonable.

• (3) Fair value hierarchy information not measured at fair value but necessary to be exposed

December 31, 2018:

Asset only disclosing the fair value: Investment property (refer to Note VI.13) December 31, 2017 Asset only disclosing the fair value: Investment property (refer to Note VI.13)	Level 1	Level 2	Level 3	Total
	$- Level 1	$- Level 2	$1,030,926 Level 3	$1,030,926 Total
	$-	$-	$1,005,873	$1,005,873

1. Information of foreign currency financial assets and liability of the Group with significant influence:

131

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

Financial asset		2018.12.31			2017.12.31
	Foreign currency	Exchange rate	NT$	Foreign currency	Exchange rate	NT$
	$125,353 470,438 4,133 1,262 70,187 288,285 -	30.6600 0.27630 34.9500 30.6600 30.7600 0.28030 35.3500	$3,843,323 129,982 144,448 38,693 2,158,952 80,806 -	$100,013 1,029,870 5,246 154 50,191 580,396 68	29.715 0.2623 35.34 29.715 29.815 0.2633 35.74	$2,971,886 270,135 185,394 4,576 1,496,445 154,559 2,430
Monetary item: USD JPY EUR Non-monetary item: USD Financial liability
Monetary item: USD JPY EUR

Due to the variety of the Group's functional currencies, it is not possible to disclose the exchange profits and losses of monetary financial assets and financial liabilities according to the foreign currency of each significant impact. The foreign currency exchange profit (loss) of the Group in 2018 and 2017 were NT$ 80,802,000 and NT$ (174,890,000) respectively.

The above information is disclosed on the basis of foreign currency book amount (converted to functional currency).

11. Capital management

The primary objective of the capital management of the Group is to maintain the sound credit rating and good capital ratio, to support the operation of the Group and the maximization of shareholders' equity. The Group manages and adjusts its capital structure according to the economic situation, and may achieve the purpose of maintaining and adjusting its capital structure by adjusting the dividend payments, returned capital or new shares issuing.

132

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

XII. Note disclosures

1. Relevant information of major transactions

2. (1) Fund loan and others: refer to Schedule 1.

3. (2) Endorsement for others: refer to Schedule 2.

4. (3) Held the negotiable security at the end of the period: refer to Schedule 3.

5. (4) Accumulated buying or selling of same negotiable security reaching NT$ 300 million or more than 20% of paid-in capital: refer to Schedule 4.

6. (5) Acquired property amount reaching NT$ 300 million or more than 20% of paid-in capital: No.

7. (6) Disposed property amount reaching NT$ 300 million or more than 20% of paid-in capital: No.

8. (7) Amount of purchase and sale with interested party reaching NT$ 100 million or more than 20% of paid-in capital: refer to Schedule 5.

9. (8) Amount receivable of interested party reaching NT$ 100 million or more than 20% of paid-in capital: refer to Schedule 6.

10. (9) Engaging in derivative instrument transaction: refer to Note XII.

11. (10) Others: business relation and important transaction condition and amount between the parent company and subsidiary as well as between the subsidiaries: refer to Schedule 9.

12. Invested company name, location… related information (excluding the Mainland China invested company): Schedule 7.

13. Mainland China investment information: refer to Schedule 8.

133

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 1,000)

XIV. Department information

For the purpose of management, the Group mainly divides the operating units based on the geographical differentiation and business division. After the quantitative threshold test, the Group has the following two reporting operating departments:

Storage media department: engaging in the manufacturing, processing and sales of CD and memory cards.

Organic light emitting diode department: engaging in the manufacturing, processing and trading of OLED.

Other departments: engaging in the import and export trading business and other businesses transferred to investment.

The management level is the operating result of individual supervised business unit, for the decision making of resource allocation and performance evaluation. Department performance is evaluated according to the pre-tax profit and loss, and the accounting policies of reporting department are the same with the important accounting policy summary of the Group. However, the income tax of consolidated financial statements is managed on the basis of the Group, and is not amortized to the operating department.

Transfer pricing between the operating departments is based on the routine transactions similar to those with external third party.

134

1. Information of reporting department profit and loss, asset and liability

2018

Revenue Revenue from external customer Revenue between departments Total revenues Interest expense Depreciation, amortization and other losses Other non-significant cash items: Asset impairment (profit recovered) Department loss (profit) Asset Investment by equity method Non-current asset capital expense Department asset Department liability	Storage media department	OLED department	Reporting department subtotal	Other department	Adjustment and elimination	The Group total
	$5,853,173 4,624,124	$2,519,944 -	$8,373,117 4,624,124	$985,544 202,413	$- (4,826,537)	$9,358,661 -
	$10,477,297	$2,519,944	$12,997,241	$1,187,957	$(4,826,537)	$9,358,661
	$116,491 986,998 9,423 $1,106,628	$26,828 61,075 - $(346,423)	$143,319 1,048,073 9,423 $760,205	$16,445 533,800 - $339,576	$(6,633) 34,332 - $134,721	$153,131 1,616,205 9,423 $1,234,502
	$42,456 403,564 $16,153,050	$- 348,859 $3,599,163	$42,456 752,423 $19,752,213	$97,332 438,831 $6,219,246	$- (31,320) $(2,276,684)	$139,788 1,159,934 $23,694,775
	$9,999,012	$2,179,548	$12,178,560	$1,340,397	$(3,031,646)	$10,487,311

135

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unless otherwise stated, the amount unit shall be in NT$ 1,000)

2017

Revenue Revenue from external customer Revenue between departments Total revenues Interest expense Depreciation, amortization and other losses Other non-significant cash items: Asset impairment (profit recovered) Department loss (profit) Asset Investment by equity method Non-current asset capital expense Department asset Department liability	Storage media department	OLED department	Reporting department subtotal	Other departments	Adjustment and elimination	The Group total
	$6,299,562 3,866,057	$2,262,373 -	$8,561,935 3,866,057	$1,235,174 289,033	$- (4,155,090)	$9,797,109 -
	$10,165,619	$2,262,373	$12,427,992	$1,524,207	$(4,155,090)	$9,797,109
	$113,093 1,212,699 428,130 $2,047,772	$28,391 56,838 3,448 $(379,156)	$141,484 1,269,537 431,578 $1,668,616	$14,430 620,852 (27,053) $653,778	$(12,830) 31,828 - $(24,249)	$(143,084) 1,922,217 404,525 $2,298,145
	$10,517 275,587 $15,120,640	$- 653,701 $3,599,975	$10,517 929,288 $18,720,615	$106,645 198,059 $6,412,024	$- (71,099) $(1,645,077)	$117,162 1,056,248 $23,487,562
	$7,786,647	$2,483,175	$10,269,822	$1,017,865	$(2,371,079)	$8,916,608

136

1. Adjustments of reporting department revenue, profit and loss, asset, liability and other significant items

2. (1) Revenue

Total reporting department revenues Other department revenue Eliminated department revenue The Group revenue	2018	2017
	$12,997,241 1,187,957 (4,826,537)	$12,427,992 1,524,207 (4,155,090)
	$9,358,661	$9,797,109

(2) Profit and loss

Total reporting department losses Other department loss Reduced department profit Net loss before tax of continuous operating unit Asset Total reporting department assets Other department asset Eliminated department account receivable Other unamortized amount The Group department asset Liability Total reporting department liabilities Other department liability Eliminated department account payable The Group department liability	2018	2017
	$567,837 350,580 134,721	$1,316,096 648,594 (24,249)
	$1,053,138	$1,940,441
	2018.12.31	2017.12.31
	$19,752,213 6,219,246 (2,276,684) -	$18,720,615 6,412,024 (1,645,077) -
	$23,694,775	$23,487,562
	2018.12.31	2017.12.31
	$12,178,560 1,340,397 (3,031,646)	$10,269,822 1,017,865 (2,371,079)
	$10,487,311	$8,916,608

(3) Asset

(4) Liability

137

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unless otherwise stated, the amount unit shall be in NT$ 1,000)

(5) Other significant items

2018

Interest revenue Interest expense Capital expense of non-current asset Depreciation, amortization and other losses Asset impairment (profit recovered) 2017 Interest revenue Interest expense Capital expense of non-current asset Depreciation, amortization and other losses Asset impairment (profit recovered)	Reporting department total	Other department	Adjustment	The Group total
	$24,269 143,319 752,423 1,048,073 9,423 Reporting department total	$7,041 16,445 438,831 533,800 - Other department	$(9,865) (6,633) (31,320) 34,332 - Adjustment	$21,445 153,131 1,159,934 1,616,205 9,423 The Group total
	$20,586 141,484 929,288 1,269,537 431,578	$3,332 14,430 198,059 620,852 (27,053)	$(12,807) (12,830) (71,099) 31,828 -	$11,111 143,084 1,056,248 1,922,217 404,525

The adjustment item of capital expense of non-current asset is generated by the building of the general administration office of the Group, and is not included in the information of the department. Other adjustments are not significant.

138

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unless otherwise stated, the amount unit shall be in NT$ 1,000)

3. Region classification information

Revenue from external customer:

Taiwan Asia America Europe Africa Oceania Other regions Total	2018	2017
	$2,351,692 4,515,300 1,247,657 1,085,426 136,387 20,856 1,343	$2,752,905 4,524,912 1,211,541 1,250,149 42,213 14,187 1,202
	$9,358,661	$9,797,109

The revenue is classified based on the customer located region.

Non-current asset:

Taiwan Asia Europe America Total	2018.12.31	2017.12.31
	$10,440,189 4,105,881 48,733 613,164	$9,534,047 4,835,980 57,524 637,010
	$15,207,967	$15,064,561

4. Important customer information

There is no sales amount of single customer of the Group in 2018 and 2017 reaching 10% of net amount of operating revenue, thus there is nothing to disclose.

139

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided
No.	Financier	Counter-party	Financial Statement Account	Related- party	Maximum Balance for the year	Ending Balance Approved by the Board of Directors	Actual Amount Drawn Down Ending Balance	Interest Rate Range	Nature of Financing Provided (Note 1)	Transacti on Amount	Financing Reasons	Allowance for Bad Debt	Collateral		Financial Limit for Each Counter- party	Limit on Financier's Total Financing
													Name	Value
0 0 0 1 2 3	RITEK RITEK RITEK RGI Zhongyuan International Venture Capital Co., Ltd. Zhongfu Investment Co., Ltd.	PVNEXT Corporation Rifast Corporation RVC RME PVNEXT Corporation PVNEXT Corporation	Long-term receivables Long-term receivables Long-term receivables Long-term receivables Long-term receivables Long-term receivables	Yes Yes Yes Yes Yes Yes	$110,000 40,000 486,928 85,917 100,000 10,000	$110,000 - 168,630 84,230 80,000 10,000	$108,000 - 168,630 84,230 80,000 6,200	2.935% 2.935% 4.432% 1.330% 2.935% 2.935%	2 2 2 2 2 2	$- - - - - -	Working capital Working capital Working capital Working capital Working capital Working capital	$- - - - - -	None None None None None None	$- - - - - -	$916,975 (Note 2) 〃 〃 166,173 (Note 3) 93,520 (Note 4) 58,827 (Note 4)	$1,833,950 (Note 2) 〃 〃 166,173 (Note 3) 93,520 (Note 4) 58,827 (Note 4)

Note 1: As for Nature of Financing Provided, 1 refers to business transaction and 2 refers to short-term financing.

Note 2: The maximum financial limit is not more than 20% of the net value of the Company, and the financial limit for each counter-party is not more than 10% of the net value of the Company. Note 3: The maximum financial limit is not more than 60% of the net value of counter-party, and the financial limit for each borrowing company is not more than 60% of the counter-party company. Note 3: The maximum financial limit is not more than 20% of the net value of counter-party, and the financial limit for each borrowing company is not more than 20% of the net value of the Company.

140

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table 2: Collaterals/Guarantee Provided

No.	Collaterals/Gua rantee Provider	Counter-party	Counter-party	Limits on Each Counter- party's Collateral/ Guarantee Amounts (Note 1)	Maximum balance accumulated up to the end of this month	Ending Balance	Actual Amount Drawn Down	Amount of Propertie s Guarante ed by Collatera l	Ratio of Accumulated Amount of Collateral to Net Asset Value of the Latest Financial Statement (%)	Maximum Collateral/ Guarantee Amounts Allowable	Provision of Endorsem ents by Parent Company to Subsidiary	Provision of Endorse ments by Subsidiar y to Parent Company	Provision of Endorsem ents to the Company in Mainland China
		Name	Relatio nship (Note 2)
0 0 0 0 0 0 1 2	RITEK 〃 〃 〃 〃 〃 Hutek Corporation Ritdisplay	Ritdisplay Zhongyuan International Venture Capital Co., Ltd. Zhongfu Investment Co., Prorit RVC Ritfast Ritek Ritfast	2 2 2 2 2 2 3 1	$2,750,925 〃 〃 〃 〃 〃 318,210 440,783	$70,000 100,000 50,000 150,000 380,413 355,600 500,000 240,000	$- 100,000 50,000 150,000 315,798 349,600 250,000 -	$- 70,000 50,000 27,252 176,726 212,346 211,500 -	$- 100,000 50,000 - - - - -	- 1.09 0.55 1.64 3.44 3.81 2.73 -	$4,584,875 〃 〃 〃 〃 〃 530,351 734,638	Y Y Y Y Y Y	Y

Note 1: Based on "Company Operating Procedures of Endorsement and Guarantee”, the total amount of guarantee provided is 50% of the current net value. For each company, the total amount of guaran Note 2: The relationship between the collaterals/guarantee provider and the counter-party is as follows:

(1)The company with business transaction

(2)The Company owns directly or indirectly over 50% ownership of the investee company.

(3)The investee company owns directly or indirectly over 50% ownership of the Company。

(4)The Company owns directly or indirectly over 90% ownership of the investee company.

(5)Companies that guarantee each other in accordance with the provisions of the contract between its peers or co-creators based on the needs of undertaking works.

(6)Company that guaranteed by all the contributing shareholders according to the shareholding ratio due to the joint investment relationship.

(7)In accordance with the consumer protection law, the joint guarantee of performance for the sale contract of pre-sale houses among peers.

141

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

Holding Company	Securities Type and Name	Relationship with the Holding Company	Financial Statement Account		End of theyear of 2018	End of theyear of 2018		Notes
				Shares (1,000)	Carrying Value	Percentage of Ownership (%)	Fair Value
RITEK Zhongyuan International Venture Capital Co., Ltd.	iST Technology Co., Ltd SPDR Health Care Index ETF Fund China Trust Global Stock Income Fund Yuanta Emerging Asia USD Bond Fund Taishin Smart Life Fund Taishin JPMorgan Chase Emerging Markets Nasdaq Biotech IBB ETF Fund Shin Kong Global Bond Fund USD Capital China Income Balanced Fund Total I-Chiun Precision Industry Co., Ltd. China TeleVision Co., Ltd. Giantplus Technology Co., Ltd. Sunplus Technology Co., Ltd. GIGASTORAGE CORPORATION Innolux Display Group Total Asia Pacific Investment Grade Government Bond Index Fund(A) Fuh Hwa China New Economy Balance Fund O-BANK NO. 1 REITs Total Legend Crown Investment Ltd. China TeleVision Co., Ltd. O-View Technology Co., Ltd. Huazhi Venture Capital Co., Ltd. Total	None 〃 〃 〃 〃 〃 〃 〃 〃 The chairman of our company is a director of this None 〃 〃 〃 〃 None 〃 〃 None 〃 The subsidiary is the legal director of this company The subsidiary is the legal director of this company	Financial assets at fair value through profit or loss-current 〃 〃 〃 〃 〃 〃 〃 〃 Financial assets at fair value through other comprehensive gain and loss-noncurrent 〃 〃 〃 〃 〃 Financial assets at fair value through profit or loss-current 〃 〃 Financial assets at fair value through other comprehensive gain and loss-noncurrent 〃 〃 〃	279 2 200 100 450 300 2 15 200 275 188 1,804 2,904 265 1,201 200 217 100 1,820 256 726 16	$12,471 5,685 1,610 942 4,028 6,180 5,372 4,607 1,617 $42,512 $2,596 976 17,608 32,671 1,967 11,678 $67,496 $1,734 1,996 856 $4,586 $48,012 1,329 9,308 163 $58,812	- - - - - - - - - 0.14 0.12 0.41 0.49 0.08 0.01 - - - 5.20 0.17 9.17 3.26	$12,471 5,685 1,610 942 4,028 6,180 5,372 4,607 1,617 $42,512 $2,596 976 17,608 32,671 1,967 11,678 $67,496 $1,734 1,996 856 $4,586 $48,012 1,329 9,308 163 $58,812

142

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

Holding Company	Securities Type and Name	Relationship with the Holding Company	Financial Statement Account		End of theyear of 2018	End of theyear of 2018		Notes
				Shares (1,000)	Carrying Value	Percentage of Ownership (%)	Fair Value
Zhongfu Investment AimCore Ricare Ritdisplay U-tech	O-BANK NO. 1 REITs GREEN RICH TECHNOLOGY CO., LTD. Mutual-Tek Inducstries Co., Ltd True Test Technology Inc. Total Hsin Kuang Steel Company Limited Taishin Financial Holding Co., Ltd. Special Stock E Pan Cai Co., Ltd. Total TCB Money Market Fund HANPIN ELECTRON CO., LTD. Innolux Display Group EPOCH Technology Co., Ltd. WIWYNN CORPORATION Total Pan Cai Co., Ltd TCB Monetary fund UPAMC NEW ASIAN TECHNOLOGY AND ENERGY FUND Yuanta New ASEAN Balance Fund UPAMC DynaStrategy Global Mlt-Asst Total	None None 〃 〃 None None 〃 None None 〃 〃 〃 None None 〃 〃 〃	Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive gain and loss-noncurrent 〃 〃 Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive gain and loss-noncurrent 〃 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 other comprehensive gain and loss-current Financial assets at fair value through profit or loss-current 〃 〃 〃	100 27 87 322 99 400 108 496 27 1,075 80 2 254 1,000 502 500 1,000	$856 $95 2,027 1,663 $3,785 $3,079 $21,280 2,898 $24,178 $5,035 $802 10,449 3,170 554 $14,975 $6,815 $10,146 7,197 4,355 7,772 $29,470	- 0.27 0.12 1.01 0.03 0.08 0.34 - 0.03 0.01 0.24 - 0.79 - - - -	$856 $95 2,027 1,663 $3,785 $3,079 $21,280 2,898 $24,178 $5,035 $802 10,449 3,170 554 $14,975 $6,815 $10,146 7,197 4,355 7,772 $29,470

143

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

Holding Company	Securities Type and Name	Relationship with the Holding Company	Financial Statement Account		End of theyear of 2018	End of theyear of 2018		Notes
				Shares (1,000)	Carrying Value	Percentage of Ownership (%)	Fair Value
U-tech Glory Days Services Ltd.	BIONET CORP. PAIHO SHIH HOLDINGS CORPORATION Genesis Genetics Asia Corp. Taiwan Name Plate Co., Ltd. Hsin Kuang Steel Company Limited Total Chang Hong Co., Ltd. Handa Venture Capital Co., Ltd. Wanda Venture Capital Co., Ltd. H&QAP Greater China Growth Fund, L.P. Total PAIHO SHIH HOLDINGS CORPORATION Taiwan Paiho Co., Ltd Total Legend Crown Investment Ltd.	The subsidiary is the supervisor of the company None 〃 〃 〃 None 〃 〃 〃 None 〃 None	Financial assets at fair value through profit or loss-noncurrent 〃 〃 〃 〃 Financial assets at fair value through other comprehensive gain and loss-noncurrent 〃 〃 〃 Financial assets at fair value through profit or loss-noncurrent 〃 Financial assets at fair value through other comprehensive gain and loss-noncurrent	704 2,626 116 939 280 500 1,614 5,000 - 215 65 3,430	$18,587 106,344 3,188 25,782 8,708 $162,609 $7,185 27,425 47,248 8,390 $90,248 $8,720 3,204 $11,924 $90,561	1.42 0.90 0.48 4.80 0.09 0.41 21.55 14.93 2.67 0.07 0.02 9.80	$18,587 106,344 3,188 25,782 8,708 $162,609 $7,185 27,425 47,248 8,390 $90,248 $8,720 3,204 $11,924 $90,561

144

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital	Attached table4:Acquisitionordisposed ofthe same security withthe accumulated cost exceeding NT$300millionor 20% ofthe Company's paid-incapital
Company name	Marketable securities type and name	Financial statement account	Counter-party	Relations hip	Beginning balance		Acquisition		Disposal				Ending balance		Notes
					Shares (in thousand)	Amount	Shares (in thousand)	Amount	Shares (in thousand)	Selling Price	Carrying Cost	Gain (Loss) on Disposal	Shares (in thousand)	Amount
U-TECH AimCore Technology	HouJu Energy Development Co., Ltd. HouJu Energy Development Co., Ltd.	Investment accounted for using equity method Investment accounted for using equity method	- -	- -	- -	- -	32,468 11,059	390,300 132,940	- -	- -	- -	- -	32,468 11,059	390,300 (注) 132,940 (注)	- -

Note: the ending balance is the initial acquisition cost, which has been written off due to the preparation of consolidated financial statements.

145

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 5: Purchase and sale of goods from or to related parties reaching NT$ 100 million or more than 20% of the paid-in capital or more

Purchaser /seller	Counter- party	Relationship with the counter- party			Transaction	Transaction	Transaction	Differences in transaction terms compared to general transactions and reasons	Differences in transaction terms compared to general transactions and reasons	Notes/accountsreceivable	Notes/accountsreceivable	Notes
			Purchases (sales)		Amount	Percentage of total purchases(sales)	Credit term			Balance	Percentage of total notes/accounts receivable(payable) (%)
								Unit price	Credit term
RITEK Kunshan RITEK RiTdisplay Corporatio	AMI Conrexx Max Online Kunshan RITEK Total RVC Prorit Corporation Kunshan Hutek Kunsha Hutek	The company is the ultimate holding company of this company The company is the ultimate holding company of this company Invested company accounted for using equity method The company is the ultimate holding company of this company The company is the ultimate holding company of this Invested company accounted for using equity method Affiliated subsidiary Others	(Sales) (Sales) (Sales) (Sales) Purchase s Purchase s (Sales) Purchase s		$(399,827) (365,922) (260,675) (195,568) $(1,221,992) $822,676 162,260 $984,936 $(240,455) $395,978	4 4 3 2 13 9 2 11 3 4	75 Day 75 Day 150 Day 60 Day 60~90 Day 150 Day 90~120 Day 90 Day	None 〃 〃 〃 〃 〃 〃 The specificatio ns of	None 〃 〃 〃 〃 〃 〃 30-90 days for non- related parties	$- 32,240 93,022 18,618 $143,880 $600,988 (246,294) $354,694 $994 $(130,818)	- 2 6 1
											9
											38 22
											60
											-
											12

Note: The method of disclosure is based on sales or purchase, and its relative transactions will not be disclosed separately.

146

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:	Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:
Company name	Related party	Relationship	Ending balance	Turnover rate	Overdue		Amounts received in subsequent year	Allowanc e for bad debts
					Amount	Action taken
RITEK CORPORATION RITEK CORPORATION- Long-term receivables RITEK CORPORATION- Long-term receivables Zhongfu Investment-Other receivables Prorit Corporation Prorit Corporation-Other receivables Kunshan Hutek AimCore Technology-Lease payments receivable	RVC PVNEXT Corporation RVC RITEK RITEK RITEK RiTdisplay RITEK	The company is the ultimate holding company Invested company accounted for using equity method The company is the ultimate holding company of this company Parent company Parent company Parent company Other related party Parent company	$600,988 108,000 168,630 179,000 245,610 125,094 133,147 121,256	- - - - - - - -	$335,560 - - - - - - -	Collecting based on the financial situation of this company 〃 〃 〃 〃 〃 〃 -	$- - - - - - - -	$- - - - - - - -

147

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000
Investor Company	Investee Company	Location	Main Business activities	Initial investment amount		Held by the company			Current gain (loss) of the investee	Investment gain (loss) recognized by the company	Notes
				Ending of 2018	Ending of 2017	Number of shares (in thousand)	Shareholding rate %）	Carrying amount
RITEK Technology Zhongfu Investment Zhongchuang AFFLUENCE ART Max Online RGI SCORE HIGH Conrexx	Affluence ART GoldenRiver Max Online RGI Ritrax Score High Sky Chance Zhongyuan Venture Capital Zhongfu Investment FineSil Technology Inc. PV Next Corporation HOLI ENERGY CORPORATION AimCore Technology PRORIT Corporation U-Tech Media Corporation RICARE CORPORATION Ritfast Corporation Ritdisplay Corporation RiteDia Co., Ltd. AimCore Technology RITEK Technology PRORIT Corporation Ritfast Corporation ECHEM HIGHTECH CO., LTD. PRORIT Corporation CASHIDO Corporation U-Tech Media Corporation Ritfast Corporation Ritrax AMI Ritpower (yangzhou) Co., Ltd Chongqing Xinhua Multimedia Development Co., Ltd. Kunshan Hutek Conrexx Ritrax RME RVC Kunshan Hutek RiTS Solar	B.V.I. B.V.I. U.S.A. B.V.I. Cayman Britain B.V.I. Samoa Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Britain USA Mainland China Mainland China Mainland China Netherlands Britain Germany Vietnam Mainland China Netherlands	Investment and holding of various production enterprises Investment and holding of various production enterprises Venture capital investment Investment and holding of various production enterprises Investment and holding of various production enterprises Trademark rights company Investment and holding of various production enterprises Investment and holding of various production enterprises Venture capital investment General investment Manufacturing and sales of chemical materials Manufacturing of electronic components and batteries Energy technology Manufacturing of electronic components Electronic industry Manufacture and marketing of optical discs Management consulting industry Electronic industry Manufacturing and processing of organic light- emitting display Lighting equipment manufacturing Manufacturing of electronic components Manufacturing of silicon wafer and integrated circuit chemical materials Electronic industry Electronic industry Manufacturing of silicon wafer and integrated circuit chemical materials Electronic industry Manufacturing of electronic components Manufacture and marketing of optical discs Electronic industry Trademark rights company Sales of optical discs Solar module manufacturing Manufacture and marketing of optical discs Manufacture and marketing of optical discs Sales of optical discs Trademark rights company Sales of optical discs Manufacture and marketing of optical discs Manufacture and marketing of optical discs Sales of solar energy products	$1,210,982 838,418 13,035 5,171,711 2,271,829 174,716 5,579,771 63,716 2,888,864 2,597,976 42,956 901,200 1,000 157,248 3,123,997 388,917 81,000 56,419 7,834,368 100,000 96,015 56,282 2,545 132,700 37,719 378,112 65,325 75,351 230,180 1,006,461 423,780 1,289,839 183,212 2,118,900 750,610 185,404 391,800 4,246,235 363,240 EUR0	$1,210,982 838,418 13,035 5,250,107 2,271,829 174,716 5,579,771 63,716 2,888,864 2,597,976 - 901,200 1,000 157,248 3,123,997 388,917 51,000 56,419 7,834,368 100,000 96,015 56,282 2,545 132,700 37,719 378,112 76,574 75,351 230,180 1,006,461 423,780 1,289,839 183,212 2,118,900 750,610 185,404 391,800 4,246,235 363,240 EUR353	34,648 26,652 378 156,293 60,404 179 171,737 2,100 40,391 105,851 4,257 36,048 100 14,564 269,031 32,489 8,100 5,575 27,795 1,000 2,288 2,955 283 193 2,021 31,063 2,424 3,778 212 971 6,100 42,600 5,880 70,000 12 1,250 1,000 140,279 12,000 -	100.00 100.00 23.14 100.00 100.00 7.46 100.00 100.00 100.00 100.00 48.93 43.12 100.00 21.27 85.87 22.26 100.00 34.84 46.24 100.00 3.34 22.48 0.09 1.20 15.38 9.91 30.30 2.59 1.32 40.46 100.00 65.01 49.00 85.37 100.00 52.08 100.00 100.00 14.63 -	$619,098 496,050 7,414 1,760,584 283,673 83,351 1,554,739 37,325 462,978 246,448 35,042 27,749 986 459,878 923,594 394,524 61,292 53,895 602,521 7,741 87,152 31,939 963 23,744 21,852 110,262 42,760 77,731 22,791 618,978 397,249 805,288 - 905,521 136,180 133,227 - 1,365,364 155,181 -	$(19,438) (38,002) - (312,296) (27,974) (1,427) (253,633) (9,552) 19,709 (6,983) (17,312) (51,900) 1 (21,303) 47,537 68,677 (6,110) (9,138) 340,578 153 27,066 (16,237) 48,649 (9,138) (16,237) 48,649 26,924 59,749 (9,138) (1,427) (12,954) (250,463) - (146,203) (953) (1,427) (1,811) (214,691) (146,203) -	$(19,438) (38,002) - (357,651) (27,974) (10,474) (261,406) (9,552) 19,709 (6,983) (7,355) (25,896) 1 (4,531) 40,820 15,283 (6,110) (4,591) 159,806 153

148

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Attached Table 7: Information on the name and location of the invested company (excluding invested companies in Mainland China)	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000	Unit: NT$ 1000
Investor Company	Investee Company	Location	Main Business activities	Initial investment amount		Held by the company			Current gain (loss) of the investee	Investment gain (loss) recognized by the company	Notes
				Ending of 2018	Ending of 2017	Number of shares (in thousand)	Shareholding rate %）	Carrying amount
Kunshan Hutek RiteDia Corporation PVNEXT Corporation Sky Chance PRORIT Corporation Arlewood Ricare Co., Ltd. Ritdisplay Corporation AimCore Technology ARMOR U-Tech Media Corporation HouJu Energy Development Co., Ltd. Jade Investment Services Ltd. Glory Days Services Ltd.	Kunshan RITEK CASHIDO Corporation Ritpower (yangzhou) Co., Ltd Team Diy RITEK LATIN AMERICA Arlewood Ritdisplay Corporation U-Tech Media Corporation Kunshan Protek Co. Ltd Prorit Corporation, Vietnam Ltd. FANG HIS CORPORATION Ritdisplay Corporation PVNEXT Corporation U-Tech Media Corporation Ritdisplay Corporation U-Tech Media Corporation Ritdisplay Corporation ARMOR INVESTMENT GROUP CORP. HouJu Energy Development Co., Ltd. AimCore Technology(Yangzhou) Dollars cultural and creative industry company PVNEXT Corporation Ritdisplay Corporation PRORIT Corporation Ritdisplay Corporation Havard Industries Co., Ltd. HouJu Energy Development Co., Ltd. Jade Investment Services Ltd. Crystal Investment Overseas Ltd. AimCore Technology Hou Cheng Trading Co., Ltd. Glory Days Services Ltd. U-Tech Media Korea Co., Ltd.	Mainland China Taiwan Mainland China Malaysia America B.V.I. Taiwan Taiwan Mainland China Vietnam Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Samoa Taiwan Mainland China Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan BVI BVI Taiwan Taiwan BVI Korea	Sales of optical discs Manufacturing of electronic components Solar module manufacturing Trading industry Sales of paint Investment holding Manufacturing and processing of organic light- emitting display Manufacture and marketing of optical discs Electronic industry Electronic industry Management consulting industry Electronic industry Electronic industry Manufacture and marketing of optical discs Manufacturing and sales of electronic materials, etc. Manufacture and marketing of optical discs Electronic industry Investment holding Solar energy Conductive glass Cultural and creative industries Solar cell manufacturing Touch panel manufacturing Electronic industry Manufacturing and processing of organic light- emitting display Real estate development and sale Renewable energy self-use power generation equipment industry Investment holding Investment holding Manufacturing of electronic components Renewable energy self-use power generation equipment industry Investment holding Manufacture and marketing of optical discs	CNY900 4,529 287,730 58,920 4,490 1,850,407 52,888 94,622 USD 45,223 368,611 10,000 200,000 90,000 4,750 89,446 102,573 76,278 207,588 132,940 207,588 145,500 290,000 123,584 23,653 36,111 5,000 390,300 399,051 - 2,064 1,000 479,531 164,062	CNY900 4,800 287,730 58,920 - 1,850,407 52,888 94,622 USD 45,223 368,611 10,000 200,000 90,000 5,143 89,446 47,064 73,083 207,588 - 207,588 120,500 290,000 73,585 23,653 36,111 5,000 - 399,051 455,094 - 1,000 479,531 164,062	1,000 58 10,000 4,080 150 57,412 4,713 8,579 - - 1,000 4,622 3,600 511 46 11,861 4,933 6,500 11,059 - 11,257 11,600 5,046 1,971 4,986 500 32,468 11,685 - 104 100 13,920 1,156	100.00 0.73 15.26 51.00 100.00 100.00 7.84 5.88 100.00 100.00 100.00 28.89 4.31 0.35 0.29 8.12 8.21 100.00 25.08 100.00 100.00 13.88 31.54 0.63 8.29 100.00 73.64 100.00 - 0.15 100.00 100.00 100.00	- 781 158,427 40,568 - 406,928 138,068 129,548 387,922 18,997 1,244 44,691 - 7,711 - 122,624 161,297 115,239 141,085 115,239 98,412 - 48,790 6,744 121,180 4,160 414,200 599,415 - 3,915 949 596,702 165,425	CNY806 26,924 (250,463) (3,497) (609) (3,787) 340,444 68,677 (3,326) (462) (345) (9,138) (51,900) 68,677 (9,138) 59,749 340,444 (18,258) 87,395 (18,258) (3,216) (51,900) (9,138) 48,649 340,444 (504) 87,395 29,981 (128) (21,303) (24) 29,936 (1,066)

149

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8： 1. Information on investments in Mainland China

Attached Table 8：	Attached Table 8：	Attached Table 8：	Attached Table 8：	Attached Table 8：
1. Information on investments in Mainland China					Unit: NT$ 1000
Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan at the beginning of current year	Amount of investment remitted or recovered during the current period		Accumulated amount of remittance from Taiwan at the end of current year	Current profit (loss) of the invested company	Shareholding ratio of the company's investment (direct or indirect)	Investment income (loss) recognized in the current period	Book value of investment at the end of the period	Investment income remitted back to Taiwan as of the current period
					Remitted	Recovered
Chongqing Hsinhua Multimedia Development Co., Ltd. Kunshan Hutek Corporation Ritpower (yangzhou) Co., Ltd	Blank recording disc, etc 〃 Solar module	USD12,000 USD82,000 USD65,529	註1 〃 〃	$205,918 USD5,880 $2,674,127 USD82,000 $1,305,615 USD42,600	$- $- $-	$- $- $-	$205,918 USD5,880 $2,674,127 USD82,000 $1,305,615 USD42,600	$- $(146,203) $(250,463)	49.00% 100.00% 65.01%	$- $(146,203) $(162,826)	$- $1,060,701 $805,288	$- $- $-

Investee in Mainland China	Accumulative amount of investment remitted from Taiwan to the mainland at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Chongqing Xinhua Multimedia Development Co., Ltd. Kunshan Hutek Corporation Ritpower (yangzhou) Co., Ltd	USD5,880 USD82,000 USD42,600	USD5,880 USD99,400 USD43,000	$5,501,850

Note 1: Investment method: investing in Mainland China through a third area company (MAXONLINE)

1. The following significant transactions with investee in Mainland China directly or indirectly through the third area, with the price, payment terms, unrealized gain(loss):

(1) Purchase (sale) of goods: None.

(2) (2) Property transactions: No significant property transactions.

(3) The ending balance of the notes/bills endorsement guarantee/collateral and its purpose: please refer to Attached Table 2 for details.

(4) The maximum balance, ending balance, interest rate range and total interest for the current period of financing: None.

(5) Other transactions that have a significant impact on the profit(loss) of the current period or the financial situation: None.

150

RITEK CORPORATION and Subsidiaries(Continued)

(Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-1: PVNEXT Corporation

Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation	Attached Table 8-1: PVNEXT Corporation
1. Information on investments in Mainland China Information on investment in Mainland Chin Unit: NT$ 1000
Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan at the beginning of current year	Amount of investment remitted or recovered during the current period		Accumulated amount of remittance from Taiwan at the end of current year	Current profit (loss) of the invested company	Shareholding ratio of the company's investment (direct or indirect)	Investment income (loss) recognized in the current period	Book value of investment at the end of the period	Investment income remitted back to Taiwan as of the current period
					Remitted	Recovered
Ritpower (yangzhou) Co., Ltd	Solar module	USD65,529	Direct investment	$287,730 USD10,000	$-	$-	$287,730 USD10,000	$(250,463)	15.26%	$(38,221)	$158,427	$-

Investee in Mainland China	Accumulative amount of investment remitted from Taiwan to the mainland at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Ritpower (yangzhou) Co., Ltd	USD10,000	USD10,000	$14,146 (Note 1 )

Note 1: The amount of investment has exceeded the ceiling on investments in Mainland China imposed by the Investment Commission of MOEA due to the continuous loss of PVNEXT Corporation.

151

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-2: AimCore Technology 1. Information

on investment

Unit: NT$ 1000

in Mainland

~~China~~

1. Information on investment in Mainland ~~China~~												Unit: NT$ 1000
Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan at the beginning of current year	Amount of investment remitted or recovered during the current period		Accumulated amount of remittance from Taiwan at the end of current year	Current profit (loss) of the invested company	Shareholding ratio of the company's investment (direct or indirect)	Investment income (loss) recognized in the current period	Book value of investment at the end of the period	Investment income remitted back to Taiwan as of the current period
					Remitted	Recovered
AimCore Technology Co., Ltd.(Yangzhou	Production and sales of conductive glass	USD6,500	Note1	$207,588 USD6,500	$-	$-	$207,588 USD6,500	$(18,258)	100.00%	$(18,258)	$115,239	$-

Investee in Mainland China	Accumulative amount of investment remitted from Taiwan to the mainland at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
AimCore Technology Co., Ltd.(Yangzhou )	USD6,500	USD8,000	$1,565,597

Note 1: Investment method: investing in Mainland China through a third area company (ARMOR)

152

RITEK CORPORATION and Subsidiaries(Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-3: Prorit Corporation

1. Information on investment in

Unit: NT$ 1000

Mainland China

1. Information on investment in Mainland China												Unit: NT$ 1000
Investee in Mainland ChinaM	ain business activiti	e Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan at the beginning of current year	Amount of investment remitted or recovered duringthe currentperiod		Accumulated amount of remittance from Taiwan at the end of current year	Current profit (loss) of the invested company	Shareholding ratio of the company's investment (direct or indirect)	Investment income (loss) recognized in the current period	Book value of investment at the end of the period	Investment income remitted back to Taiwan as of the current period
					Remitted	Recovered
Kunshan Protek Co. Ltd	Plastic precision injection	USD45,223	Note 1	$1,480,325 USD45,223	$-	$-	$1,480,325 USD45,223	$(3,326)	100.00%	$(3,326)	$387,922	$-

Investee in Mainland China	Accumulative amount of investment remitted from Taiwan to the mainland at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Kunshan Protek Co. Ltd	USD45,223	USD45,223	$642,287 (Note 2)

Note 1: Investment method: investing in Mainland China through a third area company (Arlewood)

Note 2: The amount of investment has exceeded the ceiling on investments in Mainland China imposed by the Investment Commission of MOEA due to the continuous loss of Prorit Corporation.

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