RITEK — Audit Report / Information 2018

Nov 14, 2018

RITEK CORPORATION

Individual 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 30316 R.O.C Phone:(03)598-5696

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RITEK CORPORATION

Individual 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	Independent auditors’ report	3-7
4	Balance sheet	8-9
5	Statements of comprehensive income	10
6	Statements of changes in equity	11
7	Statements of cashflows	12
8	Notes to Individual financial statement
	(1) Company History	13
	(2) Date and Procedure Passing the Financial Statements	13
	(3) Application of Newly-Issued and Revised Criteria and Interpretations	13-24
	(4) Summary Statement of Major Accounting Policies	24-52
	(5) Major sources of uncertainty in significant accounting judgments,	52-53
	estimates and assumptions
	(6) Description of important accounting items	53-87
	(7) Interested party transactions	87-95
	(8) Pledged assets	96-97
	(9) Material contingent liabilities and unrecognized contractual commitments	97
	(10) Major disaster losses	97
	(11) Major subsequent matters	98
	(12) Miscellaneous	98-115
	(13)Note disclosures	116-129
9	Important accounting chart	130-144

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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, 2018 and 2017, and the related statements of comprehensive income, changes in stockholders’ equity, cash flows and notes to individual financial statements (including the summary of significant accounting policies) for the period from January 1 to December 31, 2018 and 2017. These financial statements are the responsibility of the Company’s management.

In our opinion, based on our audit results and audit reports of other independent auditors (please refer to other matters section), the individual financial statements referred to first paragraph present fairly, in all material respects, the financial position of RITEK Corporation as of December 31, 2018 and 2017, and the results of its financial performance and its cash flows for the years then ended in conformity with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We planned and conducted our audits in accordance with 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 the Consolidated Financial Statements section of our report. We are independent of the Company in accordance the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion

Key Audit Matters

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

Impairment of non-financial assets

The amount of consolidated property, plant and equipment of RITEK Corporation was NT$3,068,645 thousands as of December 31, 2018, accounting for around 21% of total assets.

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Since RITEK Corporation and its subsidiaries had operation loss in 2018, showing that the assets may have impairment. With features of highly hypothesis and estimation of impairment over non-financial assets, we decide to take impairment of non-financial assets as key audit matter.

Our audit procedures include (but not limitation to) following audit procedures: evaluate the sign of impairment on cash generation unit identified by of management, measure recoverable amount of assets or cash generation unit, the higher one of fair value deducted by disposition costs and its use value as recoverable amount, refer to the Company’s historical information and other external industrial analysis, evaluate the reasonableness of major assumptions and discount rates as basis of such impairment tests, evaluate 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 regarding the impairment loss of non-financial assets. Please refer to note 4 and 5 of individual financial statements.

Revenue recognition

RITEK Corporation recognized revenue NT$4,994,319 thousands in 2018. The major sources of income were manufacturing and sales of disc and green energy products (solar power module/LED/ battery related products) such optical information services and products. The build to order was adopted for transactions. Different terms of transactions were involved due to industrial features and customer demands. Therefore, the judgment is required to determine performance obligations and the criteria of satisfaction. Accordingly, the identification of revenue recognition is the key audit matter.

Our audit procedures include (but not limitation to) following audit procedures: evaluate the appropriateness of accounting policies made by management aiming at revenue recognition, understand the transaction flow of revenue recognition procedures against the performance obligations identified, test the effectiveness of internal control design and implementation in related with the revenue recognition as satisfactory to the performance obligations, conduct analytical procedures aiming at the sales price, sales volume, costs and gross margin and implement analytical procedures aiming at top ten customers, select sample for tests of transaction details and review the trading conditions and related sales receipts in the order to ensure the appropriateness of revenue recognition as satisfactory to performance obligations, conduct revenue cutoff test in certain period before and after the balance sheet date and check relevant certificates to ensure that the revenue is recognized in period as appropriate, review huge sales return after the balance sheet date to investigate and understand its reason and nature, carry out ordinary journal tests.

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

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Other matters- referring to the audit of other certified public accountant

The financial statements of some investees included in the individual financial statements of RITEK Corporation were audited by other certified public accountants. Therefore, in our opinions of preceding individual financial statements, the amounts listed in the financial statements of such investees were based on the audit reports of other CPAs. The investment on investees under equity method as of December 31, 2018 and 2017 were NT$933,001,000 and NT$759,753,000 respectively, accounting for 6% and 5% of total assets. The profit and loss of subsidiaries, affiliates and venture capital recognized under equity method in the period from January 1 to December 31, 2018 and 2017 were NT$ 36,953,000 and NT$ 96,935,000 respectively, accounting for 3% and 5 % of consolidated net loss before income tax. The other comprehensive income of subsidiaries, affiliates and venture capital recognized under equity method in the period from January 1 to December 31, 2018 and 2017 were NT$ 34,887,000 and NT$ 66,912,000 respectively, accounting for 26% and 21% of net other comprehensive income.

Responsibilities of Management and those Charged With Governance for The Individual Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of individual 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 to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate RITEK Corporation or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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also:

1. Identify and assess the risks of material misstatement of the individual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of RITEK Corporation to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the individual 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 to cease to continue as a going concern.

5. 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 manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the individual 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, among other matters, the planned scope and timing of the audit and significant audit findings (including any significant deficiencies in internal control that we identify during our audit).

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

From the matters communicated with those charged with governance, we determine those matters

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

Earnest & Young

Financial Report of Public Company as Approved by 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

Balance Sheet

December 31, 2018 and December 31, 2017

Unit: NT$1000

					Unit: NT$1000	Unit: NT$1000
Assets			December 31, 2018		December 31, 2017
Code	Accounts	Notes	Amount	％	Amount	％
1100 1110 1136 1147 1150 1170 1180 1200 1210 130x 1410 1470 11xx 1517 1523 1550 1600 1760 1780 1840 1900 1942 1970 15xx 1xxx	Current assets Cash and cash equivalents Net notes receivable Net accounts receivable Other receivables Other receivables-related parties Inventory Advance payment 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 receivables-related parties Other long-term investments Total non-current assets Total assets Financial assets at fair value through profit or 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 other comprehensive profit and loss-Non- current Available-for-sale financial assets-noncurrent	VI.1 VI.2 VI.6 and VIII VI.7 and VI.23 VI.8, VI.23 and VIII VI.8, VI.23 and VII VI.23 VII VI.9 6.22 and 7 VI.3 and VIII VI.4 and VIII VI.10 and VIII VI.11 and VIII VI.12 and VIII VI.13 VI.28 VI.14 VII	$585,551 42,512 53,674 - 2,840 608,428 781,368 12,680 5,938 1,282,485 12,810 5,409	4 - - - - 4 5 - - 9 - - 22 - - 54 21 - - 1 - 2 - 78 100	$797,157 41,651 - 54,605 12,489 557,543 264,365 21,499 7,816 1,281,043 32,070 2,439	5 - - - - 4 2 - - 8 - - 19 - 1 55 21 - - 2 - 2 - 81 100
			3,393,695		3,072,677
			67,496 - 8,118,881 3,068,645 53,600 16,295 60,414 44,675 276,630 189		- 156,047 8,634,253 3,351,126 56,598 24,159 218,541 56,271 289,761 189
			11,706,825		12,786,945
			$15,100,520		$15,859,622

(Please refer to the notes to individual financial statements)

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

Chief Account: Shih, Gu-Fu

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Balance Sheet (continued)

RITEK CORPORATION

December 31, 2018 and December 31, 2017

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 2300 2320 2355 21xx 2540 2570 2613 2640 2670 25xx 2xxx 3100 3110 3200 3300 3350 3400 3500 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 Other current liabilities Lease payable-current Total current liabilities Non-current liabilities Long-term loans Deferred tax liabilities Lease payable-noncurrent Other non-current liabilities Total non-current liabilities Total liabilities Owner's equity Capital stock Common stock Capital surplus Retained earnings Loss to be made up Other owner's equity Treasury shares Total owner's equity Total liabilities and owner's equity Financial liabilities at fair value through profit or loss-current Long-term liabilities maturing within one year or one operating cycle Net defined benefit liabilities-noncurrent	VI.15 and VIII VI.16 VI.17 VII VII VII VI.22 and VII VI.18 and VIII VI.19 and VII VI.18 and VIII VI.28 VI.19 and VII VI.20 VI.21 VI.21 VI.21 VI.21	$1,402,136 224,827 - 64,484 234,044 454,916 35,907 701,959 117,650 784,531 11,032	9 1 - - 2 3 - 5 1 5 - 26 11 - 1 1 - 13 39 85 7 (24) (7) - 61 100	$948,479 249,785 5,192 69,048 262,771 539,787 41,721 426,299 167,566 564,481 11,009	6 2 - - 2 3 - 3 1 3 - 20 12 - 1 1 - 14 34 111 6 (30) (6) (15) 66 100
			4,031,486		3,286,138
			1,663,669 5,915 110,223 116,354 3,123		1,907,714 - 121,256 125,016 2,654
			1,899,284		2,156,640
			5,930,770		5,442,778
			12,841,579 950,835 (3,583,955) (1,038,709) -		17,667,921 937,005 (4,826,342) (932,826) (2,428,914)
			9,169,750		10,416,844
			$15,100,520		$15,859,622

(Please refer to the notes to individual financial statements)

CChief Account: Shih, Gu-Fu

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

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RITEK CORPORATION

Statement of Comprehensive Income

From January 1 to December 31 of 2018 and 2017

Unit: NT$1000

					Unit: NT$1000	Unit: NT$1000
Code	Accounts	Notes	The year of 2018		The year of 2017
			Amount	%	Amount	%
4000 5000 5900 5920 5950 6000 6100 6200 6300 6450 6900 7000 7010 7020 7050 7055 7070 7900 7950 8200 8300 8310 8311 8316 8330 8349 8360 8362 8380 8399 8500 9750	Operating income Operating costs Operating gross loss Realized sales benefit (loss) Net operating gross loss Operating expenses Selling expenses General and administration expenses Research and development expenses Expected credit impairment benefits Total operating expenses Operating loss Other income Other profit and loss Financial costs Total non-operating income and expenditure Net loss before tax Income tax expense Net loss for the year Other comprehensive gain and loss Remeasurements of defined benefit plans Share of other comprehensive gain(loss) of subsidiary, associates and joint ventures accounted for using equity method-items that will not be reclassified subsequently to profit or loss Income tax relating to the items that will not be reclassified subsequently to profit or loss Unrealized gain(loss) on available-for-sale financial assets Income tax relating to the items that may be reclassified subsequently to profit or loss Loss per share (NT$) Basic loss per share Net loss for the year Non-operating income and expenditure Expected credit impairment loss Items that will not be reclassified subsequently to profit or loss Share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method Items that may be reclassified subsequently to profit or loss Share of other comprehensive gain(loss) of subsidiary, associates and joint ventures accounted for using equity method-items that may be reclassified subsequently to profit or loss Other comprehensive income for the year (net of income tax) Total comprehensive income for the year Unrealized loss on equity instrument investment at fair value through other comprehensive gain(loss)	VI.22 and VII VI.9,VI.25 and VII VI.25 and VII VI.23 VI.26 VI.24 VI.23 VI.10 VI.28 VI.27 VI.10 VI.28 VI.29	$4,994,319 5,105,590	100 102	$5,222,080 5,687,017	100 109
			(111,271) (31,777)	(2) (1)	(464,937) 15,662	(9) -
			(143,048) 209,599 133,737 92,996 (12,331)	(3) 4 3 2 -	(449,275) 235,537 132,195 84,671 -	(9) 4 2 2 -
			424,001	9	452,403	8
			(567,049)	(12)	(901,678)	(17)
			48,715 22,786 (89,032) (10) (544,191)	1 1 (2) - (11)	58,819 (85,329) (86,886) - (1,092,973)	1 (1) (2) - (21)
			(561,732)	(11)	(1,206,369)	(23)
			(1,128,781) (164,042)	(23) (3)	(2,108,047) (322,408)	(40) (6)
			(1,292,823)	(26)	(2,430,455)	(46)
			(848) (45,139) (53,514) - - (34,316) -	- (1) (1) - - (1) -	(13,673) - (5,056) - (10,519) (292,551) -	- - - - - (6) -
			(133,817)	(3)	(321,799)	(6)
			$(1,426,640)	(29)	$(2,752,254)	(52)
			$(1.01)		$(1.92)

(Please refer to the notes to individual financial statements)

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

Chief Account: Shih, Gu-Fu

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RITEK CORPORATION

Statements of changes in equity From January 1 to December 31 of 2018 and 2017

								Unit: NT$1000
Item	Capital stock	Capital surplus	Loss to be covered		Other equity		Treasury shares	Total equity
				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	3XXX
Other changes in capital surplus Changes in associated and joint ventures accounted for using equity method Balance at December 31, 2017 Changes in associated and joint ventures accounted for using equity method Capital reduction to cover losses Balance at December 31, 2018 Total comprehensive income/loss for 2018 Balance at January 1, 2017 Balance at January 1, 2018 Net loss for the year ended December 31, 2017 Other comprehensive income/loss for the year ended December 31, 2017 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 Effect of retrospective application and retrospective restatement Balance at January 1, 2018 as restated Net loss for 2018 Other comprehensive income/loss for 2018 Disposal of the parent company's shares by subsidiary, as treasury shares Other changes in capital surplus Actual acquisition or disposal of shares in subsidiaries Changes in equity to subsidiary Dispose of equity instruments measured at fair value through other comprehensive profit(loss) Total comprehensive income/loss for the year ended December 31, 2017	$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)
	-	-	(2,449,184)	(210,011)	-	(93,059)	-	(2,752,254)
	- -	(16,455) 114,052 (55,137)	(135,945) - -	- - -	- - -	- - -	159,914 - -	7,514 114,052 (55,137)
	$17,667,921	$937,005	$(4,826,342)	$(594,719)	$-	$(338,107)	$(2,428,914)	$10,416,844
	$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)
	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)
	-	-	(1,293,264)	(34,316)	(99,060)	-	-	(1,426,640)
	(4,826,342) - - - -	- - 13,083 747 -	4,826,342 (2,261,829) - - (103,024)	- - - - -	- - - - 103,024	- - - - -	- 2,428,914 - - -	- 167,085 13,083 747 -
	$12,841,579	$950,835	$(3,583,955)	$(629,035)	$(409,674)	$-	$-	$9,169,750

(Please refer to the notes to individual financial statements)

Chairman: Yeh, Chwei-Jing

Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

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RITEK CORPORATION Statements of Cash Flow

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
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 Realized sales loss/profit Decrease/increase of notes receivable Decrease/increase of accounts receivable Decrease of other receivables Decrease/increase of inventory Decrease/increase of advance payment Increase of other current assets Decrease of notes payable Increase/decrease of accounts payable Increase/decrease of other payables Decrease of other current liabilities Decrease of net defined benefit liabilities Cash outflow from operating activities Interest received Interest paid Income tax refunded/paid Net cash outflow from operating activities Cash flow from operating activities: Share of loss/profit of subsidiaries, associates and joint ventures accounted for using equity method Gain on disposal of scrapped real estate, plant and equipment and non-current assets to be sold Changes in operating assets and liabilities: Increase of available-for-sale financial assets Increase of financial assets mandatorily measured at fair value through profit or loss	$(1,128,781) 464,362 51,404 89,032 (7,078) (4,600) 544,191 (16,092) 31,777 - (6,053) 9,649 (567,888) 10,195 (1,442) 19,260 (2,978) (33,291) (90,685) 258,596 (49,916) (9,510)	$(2,108,047) 613,072 79,910 86,886 (12,343) (1,933) 1,092,973 (17,028) (15,662) (3,988) - (9,705) 300,122 18,548 51,174 (25,008) (1,584) (43,993) 38,889 (30,893) (223,441) (10,452)	Dividends received Cash flow from financing activities: Increase in short-term borrowings Repayments of long-term borrowings Cash and cash equivalents at the beginning of the year YEAR Cash and cash equivalents at the end of the year Cash returned of capital reduction of invested company accounted for using equity method Net cash inflow/outflow from investment activities Increase/decrease in short-term bills payable Increase/decrease of other non-current liabilities Net cash inflow/outflow from financing activities Decrease in cash and cash equivalents Disposal of non-current available-for-sale assets Acquisition of real estate, plant and equipment Disposal of real estate, plant and equipment Decrease of long-term receivables-related parties Increase of other non-current assets Cash flow from investment activities: Dispose of financial assets at fair value through other comprehensive Disposal of financial assets at amortization cost Acquisition of debt investments with no active market Acquisition of equity-method investments	$31,924 931 - (61,466) 78,397 - (186,389) 7,437 13,131 (31,944) 46,438	$- - (4,420) (154,958) 18,041 830,000 (163,477) 18,227 194,173 (41,134) 20,154
				(101,541)	716,606
				453,657 (24,958) (23,995) 469	29,673 19,841 (773,176) (4,560)
				405,173	(728,222)
				(211,606) 797,157	(310,624) 1,107,781
				$585,551	$797,157
	(439,848) 7,086 (82,978) 502	(222,503) 12,316 (88,445) (376)
	(515,238)	(299,008)

(Please refer to the notes to individual financial statements)

Manager: Yeh, Chwei-Jing Chief Account: Shih, Gu-Fu

Chairman: Yeh, Chwei-Jing

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RITEK CORPORATION

Notes to Individual Financial Statements

January 1 to December 31, 2018 And January 1 to December 31, 2017

(Unless otherwise stated, the unit shall be in NT$ 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

Individual Financial Statements of 2018 and 2017 of the Company 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 Company 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 Company:

• (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 Company, 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 1, 2018), and selects the retroactive application of the

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

contracts that have not been completed on January 1, 2018.

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

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

• B. Before January 1, 2018, the Company 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 Company transfers the committed commodity to the client and meets the contract performance obligation, so the application of IFRS 15 has no influence to the recognition of commodity sales revenue of the Company; however, some contracts shall collect partial consideration in advance from the client when signing the contract, and the Company 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 Company, 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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 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	IAS 39	IFRS 9	IFRS 9
Measurement type	Book amount	Measurement type	Book amount
Measurement at fair value through the	$41,651	Measurement at fair value through the	$41,651
profit or loss		profit or loss
Measurement at fair value through		Measurement at fair value through	156,047
other comprehensive profit or loss		other comprehensive profit or loss
Financial assets available for sale	156,047
Measurement of amortized cost		Measurement of amortized cost	1,713,971
Loans and receivables (including	1,713,971	(including the cash and cash
the cash and cash equivalent, bill		equivalent, bill receivable, account
receivable, account receivable,		receivable, financial assets and
debt instrument investment		other receivable measured at
without active market and other		amortized cost)
receivables)
Total	$1,911,669	Total	$1,911,669

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			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	$41,651	Measurement at fair value through the profit	$41,651	$-	$-	$-	$-
		or loss
Financial assets available for sale (Note 2)	156,047	Measurement at fair value through other	156,047	-	-	-	-
		comprehensive profit or loss (equity
		instrument)
Subtotal	197,698
Loans and receivables (Note 3)
Cash and cash equivalent	795,654	Cash and cash equivalent	795,654	-	-	-	-
Debt instrument investment without active	54,605	Financial assets measured at amortized cost	54,605	-	-	-	-
market
Bill receivable	12,489	Bill receivable	12,489	-	-	-	-
Account receivable (including the interested	821,908	Account receivable (including the interested	821,908	-	-	-	-
party)		party)
Other receivables (including the interested	29,315	Other receivables (including the interested	29,315	-	-	-	-
party)		party)
Subtotal	1,713,971
Total	$1,911,669 Total		$1,911,669	$-	$-	$- $-

15

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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, 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 comprehensive profit or loss. On the first application date, it shall be reclassified from the financial assets available for sale to the financial assets measured by fair value through other comprehensive profit or loss in the amount of NT$ 156,047,000. Other relevant information is as follows.

• (a) The stock of listed and unlisted companies of NT$156,047,000 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.

• In accordance with IAS 39, if the Company 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

16

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 no difference, so the book amount was not affected on January 1, 2018, and only the debt instrument investment without active market of NT$ 54,605,000 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 Company 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 Company selects to postpone the application of this interpretation from January 1, 2018, and this accounting principle change does not significantly affect the Company's recognition and measurement.

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

Financial activities of the Company related to the liabilities shall increase the regulation information from the beginning to the end of the period, and relevant

17

RITEK CORPORATION Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

disclosure refers to Note XII.

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

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

18

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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.

19

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Company and described below, the newly issued or revised criteria or interpretations shall have no significant impact on the Company.

(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 Company is as follows:

• A. For the definition of lease, the Company 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 Company 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 Company 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.

(a) Classified as the operating lease

The Company 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 right-of-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

20

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• ii. Lease liability amount, but this amount shall be adjusted for all prepaid or payable lease payments relating to the lease (those recognized in the balance sheet before January 1, 2019).

The above application of IFRS 16 has no significant impact on the rightof-use asset and lease liability of the Company on January 1, 2019.

• (b) Classified as the financial lease

The Company is expected that when applying IAS 17 on January 1, 2019, the lease classified as financial lease, which is the lease asset of NT$118,520,000 and the lease payable of NT$121,255,000 as measured by IAS 17 before that date, shall be reclassified to the right-of-use asset of NT$ 118,520,000 and lease liability of NT$ 121,255,000.

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

• Up to the date of approval of the financial statements, the Company 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

21

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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:

22

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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) and (4) of newly released or revised criteria or interpretations, the Company temporarily is unable to reasonably estimate the influence of foregoing criteria or interpretations to the Company, and the rest newly issued or revised criteria or interpretations has no significant impact to the Company.

23

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

IV. Summary Statement of Major Accounting Policies

1. Compliance declaration

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

2. Preparation basis

The Company prepares the Individual Financial Statements in accordance with the Security Issuer Financial Reporting Standards. According to Article 21 of Security Issuer Financial Reporting Standards, the current profit or loss and other comprehensive profit or loss of the Individual Financial Statements and the current profit or loss and other comprehensive profit or loss of the Consolidated Financial Statements, which belong to the apportionment amount shared by the owner of the parent company, shall be the same. In addition, the owner's equity of Individual Financial Statements shall be the same as that of the parent company in the Consolidated Financial Statements. Therefore, the investment to subsidiaries in Individual Financial Statements is expressed as "investment in equity method" and will make necessary evaluation and adjustment.

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

3. Foreign currency transaction

Individual financial statements of the Company are expressed in the Company’s functional currency NT$.

Transactions in foreign currencies 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

24

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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.

4. Conversion of financial statements in foreign currency

The assets and liabilities of every foreign operating institute of the Company 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

25

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Company 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.

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.

26

RITEK CORPORATION Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

6. 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).

7. Financial instruments

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

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 Company shall adopt the accounting treatment on the trading day.

27

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Based on the following two items, the Company 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

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

28

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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

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

29

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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 Company shall adopt the accounting treatment on the trading day.

The financial assets of the Company 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.

30

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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).

31

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Company 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 Company measures the expected credit losses in the following ways:

• 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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

or created credit impairment.

• C. For the account receivable or contract assets generated by the exchange within the scope of IFRS 15, the Company 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 Company 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 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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

difficulties.

For the loans and receivables, the Company 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.

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 Company shall be derecognized if:

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• 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.

• (4) Financial liability and equity instrument

Classification of liability or equity

The liabilities and equity instruments issued by the Company 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 Company's remaining equity after all liabilities have been deducted from the assets of the Company.

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

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RITEK CORPORATION Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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).

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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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

8. Derivative instruments

The derivative instruments held or issued by the Company 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,

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

9. 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 Company 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.

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

10. 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:

Raw materials – adopting the moving 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.

11. Investment by equity method

The Company shall make necessary evaluation and adjustment on the investment of its subsidiaries in accordance with the provisions of Article 21 of Security Issuer Financial Reporting Standards by expressing "investment by equity method". In order to make the current profit or loss and other comprehensive profit or loss of Individual Financial Statements be equal to the owner’s apportionment amount of the parent company in the compilation of consolidated financial statements based on current profit or loss and other comprehensive profit or loss; and the owner's equity of Individual Financial Statements is the same as that of the parent company in Consolidated Financial Statements. This adjustment is mainly made considering the difference in the handling of the investment in subsidiary in Consolidated Financial Statements in accordance with IFRS 10 'Consolidated Financial Statements' and the application of IFRS to Individual Statements at different reporting levels, and the debit or credit items such as "investment by equity method", " profit or loss share of subsidiary, affiliated enterprises and joint venture by equity method " or " other

40

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

comprehensive profit or loss share of subsidiary, affiliated enterprises and joint venture by equity method".

The Company'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 Company 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 Company 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 Company's shareholding ratio, the Company 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.

Where the Company 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 Company'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.

41

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Company.

The Company 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 Company 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 Company shall determine relevant use value based on the following estimation:

• (1) the present value share of estimated future cash flow generated by the Company'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.

In case of loss of significant impact on affiliated enterprises or joint control to joint ventures, the Company 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 Company shall continue to apply the equity method without remeasuring the retained equity.

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

12. 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 Company 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 10~45 years Machinery equipment 5~11 years Transportation equipment 5~8 years Office equipment 3~8 years Miscellaneous equipment 3~11 years Leased asset 3~10 years

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.

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

13. 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 10~45 years (main structure of the building of 45 years, decoration of 10~15 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 Company shall transfer in or transfer out the investment property according to the actual use of the assets.

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 Company will transfer into the property as the investment property or transfer out from investment property.

14. Lease

The Company as the lessee

The financial lease is to transfer almost all the risks and rewards related to the

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

ownership of lease target to the Company, 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 Company 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 Company as the leaser

The lease in which the Company 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.

15. 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.

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

Patent right

Patent rights are the rights legally acquired and purchased.

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

Durable years Applied amortization method Internal generated or externally acquired	Patent right
	10 years Amortizing during the patent period in the straight-line method Externally acquired

16. Impairment of non-financial assets

At the end of each reporting period, the Company assesses whether there are signs of impairment in all assets applicable to IAS 36 "Asset impairment". Where there is

46

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

evidence of impairment or the impairment test of any asset is required on the annual basis, the Company 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 Company evaluates the assets other than the goodwill for any sign that previously recognized impairment losses may have disappeared or decreased. If such sign exists, the Company 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 impairment loss and the number of recovery of continuously operated unit are recognized as the profit and loss.

17. Treasury stock

The acquisition of the Company's stock (treasury stock) by the Company 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.

18. Revenue recognition

Accounting treatments after January 1, 2018 are as below:

Revenues of the Company and from Contracts with Customers are mainly the sales of goods, and the accounting treatments are described below:

Sales of goods

The Company manufactures and sells goods, and recognizes the revenue when transporting the goods to the client and the client has its control (namely, the client leads the use of the goods and acquires almost all of the remaining benefit capacity

47

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

of the goods); the main products are the optical information service products as CD 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 Company’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. In some other part of the sales of goods, the Company firstly collects the consideration from the client, and undertake the obligation to transfer the goods, so it is recognized as the contract liabilities.

The transfer of the Company'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 Company 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.

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

48

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

interest revenue is recognized as the profit or loss.

Dividend revenue

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

19. 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.

20. Retirement benefit plan

The Company’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, therefore, it is not listed in the individual financial statements.

For the retirement benefit plan of defined contribution plan, the Company shall pay in the employee pension contribution rate per month, which shall not be less than 6% of the employee's monthly salary. The amount of contribution shall be recognized as the current expense.

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

49

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Company 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.

21. 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 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

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RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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

51

RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

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

When the Company 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.

1. Judgment

No.

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

52

RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

flow estimate is in accordance with the budget over the next decade, and does not include the future major investment which has not been promised by the Company, or to strengthen the asset performance of cash generating unit. The recoverable amount is vulnerable to the discount rate 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 and cash equivalent
Cash on hand Current deposit and cheque deposit Fixed-term deposit Total	December 31, 2018	December 31, 2017
	$830 574,721 10,000	$1,503 794,254 1,400
	$585,551	$797,157

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

Force to measure at fair value through profit or loss: Stock Fund Total	December 31, 2018	December 31, 2017(Note)
	$12,471 30,041
	$42,512

53

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Current Non-current Total Held for trading: Non-derivative financial assets Stock Fund Total Current Non-current Total	$42,512 -	December 31, 2017
	$42,512
	December 31, 2018(Note)
		$21,359 20,292
		$41,651
		$41,651 -
		$41,651

Note: The Company 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 Company'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	December 31, 2018	December 31, 2017(Note)
	$67,496 -
	$67,496

54

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Current Non-current Total	$- 67,496
	$67,496

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

The Company 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.

The Company 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
		$156,047
		$- 156,047
		$156,047

Note: The Company 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	December 31, 2018	December 31, 2017(Note)
	$53,674

55

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Current Non-current Total	$53,674 -
	$53,674

Note: The Company 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.

6. Investment on debt instrument without active market

Restricted bank deposit Current Non-current Total	December 31, 2018(Note)	December 31, 2017
		$54,605
		$54,605 -
		$54,605

Note: The Company 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 Company shall refer to Note VIII.

7. Bill receivable

Bill receivable – arising from operation Less: reserve for loss Total	December 31, 2018	December 31, 2017
	$2,840 -	$12,489 -
	$2,840	$12,489

There is no guarantee to the bill receivable provided by the Company.

56

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

The Company 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.

8. 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
	$727,528 (119,100)	$727,543 (170,000)
	608,428	557,543
	781,368 -	264,365 -
	781,368	264,365
	$1,389,796	$821,908

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

The credit period to the client is usually 30 to 150 days. The Company 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	$90,332 32,507	$130,570 39,430
	$47,161	$122,839	$170,000

57

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

As of December 31, 2017, the Company 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 Company does not hold any collateral for such accounts receivable.

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

December 31, 2017	Not overdue And no impairmen t	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
	$652,596	$87,221	$28,685	$15,166	$15,379	$22,861	$821,908

9. Inventory

Raw material Semi-finished goods and goods in process Finished goods Commodity inventory In-transit inventory Total	December 31, 2018	December 31, 2017
	$290,005 753,778 146,087 14,943 77,672	$249,364 737,309 190,047 13,271 91,052
	$1,282,485	$1,281,043

The inventory cost recognized as expense by the Company in 2018 is NT$ 5,105,590,000, 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$ 102,562,000.

The inventory cost recognized as expense by the Company in 2017 was NT$ 5,687,017,000, including the recognized loss from falling price of inventory of NT$ 20,308,000.

58

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

There is no guarantee to inventory provided by the Company.

10. Investment by equity method

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

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: Zhongfu Investment Co., Ltd. Zhongyuan International Venture Capital Co., Ltd. Ritdisplay CORPORATION U-TECH MEDIA CORPORATION. Prorit CORPORATION. AimCore Technology Co., Ltd. PVNEXT CORPORATION. RITEDIA CORPORATION Ritcare CORPORATION. Heli Energy Co., Ltd. Ritfast CORPORATION. Affluence International Co., Ltd. (B.V.I.) Ritek Group Inc. (Cayman) Max Online Ltd. (B.V.I.) Score High Group Ltd. (B.V.I.) ART Management Ltd. (B.V.I.) Ritrax Corporation Ltd. Sky Chance International Corp. Investment to affiliated enterprises: GoldenRiver Investment International Corp. Finesil Technology Co., Ltd. Total	$246,448 462,978 602,521 394,524 923,594 459,878 27,749 7,741 61,292 986 53,895 619,098 283,672 1,760,584 1,554,739 496,050 83,351 37,325 7,414 35,042	100.00 100.00 46.24 22.26 85.87 21.27 43.12 100.00 100.00 100.00 34.84 100.00 100.00 100.00 100.00 100.00 7.46 100.00 23.14 48.93	$118,471 438,992 448,579 410,768 888,450 467,012 55,590 7,585 37,402 985 57,690 640,334 324,145 2,238,963 1,809,168 542,364 94,157 47,027 6,571 -	100.00 100.00 46.24 22.26 85.87 21.27 43.12 100.00 100.00 100.00 50.68 100.00 100.00 100.00 100.00 100.00 7.46 100.00 23.14 -
	$8,118,881		$8,634,253

59

RITEK CORPORATION Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• (1) Investment to subsidiary

The investment to subsidiary in the Individual Financial Statements is expressed in the “investment by equity method”, with necessary evaluation adjustment.

• (2) Investment to affiliated enterprises

The Company's investment in affiliated enterprises is not material to the Company. The aggregate book amounts of the affiliated enterprises invested by the Company as at December 31, 2018 and December 31, 2017 are respectively NT$ 42,456,000 and NT$ 6,571,000, 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
	$(7,355) -	$1,792 -
	$(7,355)	$1,792

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.

• (3) The provided guarantee to above equity investment shall refer to Note VIII.

60

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

11. Property, plant and equipment

Cost: January 1, 2018 Adding Disposal Transfer December 31, 2018 January 1, 2017 Adding Disposal 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 and structures	Machinery equipment	Other equipment	Construction in progress and Equipment to be tested	Total
	$966,548 - - -	$3,124,463 - (5,457) 43,754	$3,525,845 - (38,299) 279,344	$247,454 - (4,694) 2,210	$154,433 186,389 - (325,308)	$8,018,743 186,389 (48,450) -
	$966,548	$3,162,760	$3,766,890	$244,970	$15,514	$8,156,682
	$966,548 - - -	$3,334,781 - (104,771) (105,547)	$5,978,351 - (2,481,201) 28,695	$280,637 - (41,798) 8,615	$33,877 163,477 - (42,921)	$10,594,194 163,477 (2,627,770) (111,158)
	$966,548	$3,124,463	$3,525,845	$247,454	$154,433	$8,018,743
	$- - - -	$1,904,482 67,656 (5,236) -	$2,669,884 375,005 (31,015) -	$93,251 18,703 (4,693) -	$- - - -	$4,667,617 461,364 (40,944) -
	$-	$1,966,902	$3,013,874	$107,261	$-	$5,088,037
	$- - - -	$1,976,439 72,115 (92,923) (51,149)	$4,629,081 519,141 (2,478,183) (155)	$113,046 21,816 (41,611) -	$- - - -	$6,718,566 613,072 (2,612,717) (51,304)
	$-	$1,904,482	$2,669,884	$93,251	$-	$4,667,617
	$966,548	$1,195,858	$753,016	$137,709	$15,514	$3,068,645
	$966,548	$1,219,981	$855,961	$154,203	$154,433	$3,351,126

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

61

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

12. Investment property

Cost: January 1, 2018 Adding – from subsequent expense Disposal December 31, 2018 January 1, 2017 Adding – from subsequent expense Transfer December 31, 2017 Depreciation and impairment: January 1, 2018 Current depreciation Disposal December 31, 2018 January 1, 2017 Current depreciation Disposal Transfer December 31, 2017 Net book amount: December 31, 2018 December 31, 2017 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		Buildings
			$107,747 - -
			$107,747
			$- - 107,747
			$107,747
			$51,149 2,998 -
			$54,147
			$- - - 51,149
			$51,149
			$53,600
			$56,598
			2017 $9,317 (2,929) - $6,388
	$11,490 (2,998) -
	$8,492

The guarantee to investment property provided by the Company shall refer to Note VIII.

62

RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

The investment property held by the Company 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 Company was NT$ 332,879,000 on December 31, 2018 and December 31, 2017, respectively. The fair value mentioned above 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.

13. Intangible asset

Cost: January 1, 2018 Adding – acquiring separately December 31, 2018 January 1, 2017 Adding – acquiring separately December 31, 2017 Amortization and impairment: January 1, 2018 Amortization December 31, 2018 January 1, 2017 Amortization December 31, 2017 Net book amount: December 31, 2018 December 31, 2017	Patent right
	$193,138 -
	$193,138
	$193,138 -
	$193,138
	$168,979 7,864
	$176,843
	$159,154 9,825
	$168,979
	$16,295
	$24,159

Amortization amount recognized as intangible asset Operating cost and operating expense	as below: 2018	2017
	$7,864	$9,825

63

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

14. Other non-current assets

Other prepaid repair costs Refundable deposit Total	December 31, 2018	December 31, 2017
	$44,069 606	$53,365 2,906
	$44,675	$56,271

Up to December 31, 2018 and December 31, 2017, the unused short-term borrowing limits of the Company are respectively NT$ 330,256,000 and NT$ 955,434,000.

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

15. Short-term borrowing

Borrowing by financial institutions Interest rate range (%)	December 31, 2018	December 31, 2017
	$1,402,136	$948,479
	1.1063~4.4456	1.1038~3.2699

Up to December 31, 2018 and December 31, 2017, the unused short-term borrowing limits of the Company are respectively NT$ 330,256,000 and NT$ 955,434,000.

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

16. 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 (%)	$225,000 (173)	$250,000 (215)
	$224,827	$249,785
	0.5970~0.8120	0.4500~0.6500

64

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

17. 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

18. Long-term borrowing

Borrowing by financial institutions Less: Long-term borrowing maturing within one year or one business cycle Total Interest rate range (%)	December 31, 2018	December 31, 2017
	$2,448,200 (784,531)	$2,472,195 (564,481)
	$1,663,669	$1,907,714
	1.8780~2.6400	1.8780~2.6400

• (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.

65

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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

• (3) The Company’s financial ratio on December 31, 2018 has met the aforementioned bank loan contract provisions.

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

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

19. Lease payable

Part of the Company's machinery equipment items are held in the form of financial leasing. Such lease agreement contains the lessee's purchase option. The future minimum lease payment and the adjustment of financial lease’s present value are listed as follows:

66

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Less than one year More than one year but less than five years More than five years Total minimum rental payment Less: Financial cost Present value of minimum lease payment Current Non-current Total	December 31,2018	December 31,2018	December 31,2017	December 31,2017
	Minimum payment	Present value ofpayment	Minimum payment	Present value ofpayment
	$11,280 45,120 66,270	$11,032 44,365 65,858	$11,280 45,120 77,550	$11,009 44,271 76,985
	122,670 (1,415)	$121,255	133,950 (1,685)	$132,265
	$121,255		$132,265
	$11,032 110,223		$11,009 121,256
	$121,255		$132,265

20. Retirement benefit plan

Defined contribution plan

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

The Company confirmed and recognized transfer program costs in 2018 and 2017 are NT$24,634,000 and NT$29,228,000, respectively.

Defined benefit plan

The employee pension plan established by the Company 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

67

RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

for each year of service more than 15 years, provided that the maximum accumulative base number shall be 45. The Company 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 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$12,264,000 for the next year.

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

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

68

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Current service cost Net interest of net defined benefit liability (asset) Previous service cost Total	2018	2017
	$742 2,012 -	$760 2,071 -
	$2,754	$2,831

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 Other non-current liability – net defined benefit liability (asset) column number	December 31,2018	December 31,2017
	$327,784 211,430	$338,235 213,219
	$116,354	$125,016

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 actuarialprofit or loss	Present value of defined benefit obligation	Fair value of plan asset $212,416 - 3,946 - 216,362 -	Net defined benefit liability (asset)
	$334,211 760 6,016 -		$121,795 760 2,070 -
	340,987		124,625
	-		-

69

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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, 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	- 11,803 -	- - (1,870) (1,870) (14,555) 13,282 - 213,219 - 3,738 - 216,957 - - - 5,006 5,006 (22,797) 12,264 - $211,430	- 11,803 1,870
	11,803		13,673
	(14,555) - -		- (13,282) -
	338,235 742 5,750 -		125,016 742 2,012 -
	344,727		127,770
	- 4,183 1,671 -		- 4,183 1,671 (5,006)
	5,854		848
	(22,797) - -		- (12,264) -
	$327,784		$116,354

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%

70

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Every significant actuarial assumption sensitivity analysis:

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
	$- 22,050 22,133 -	$20,211 - - 20,482	$- 25,790 25,876 -	$23,484 - - 23,786

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.

71

RITEK CORPORATION Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

(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

72

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

(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.

73

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 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.

22. Operating revenue

Revenue from Contracts with Customers Revenue from sales of goods	2018	2017
	$4,994,319	$5,222,080

Note: The Company 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

January 1 to December 31, 2018

Sales of goods

2018

$4,994,319

74

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Revenue recognition time and place: In certain time and place	$4,994,319

• (2) Contract balance

A. Contract liability – current

Sales of goods	Beginning balance	Ending balance	Difference
	$163,817	$114,238	$(49,579)

From January 1 to December 31, 2018, the contract liability balance of the Company decreases sharply due to majority performance obligations have been met, in which, NT$ 163,817,000 is the beginning balance and recognized as revenue in current period.

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

No.

23. Expected credit impairment loss

Operating expense – expected credit impairment interest Bill receivable Account receivable Non-operating revenue and expense – expected credit impairment loss Other receivables Total	2018	2017(Note)
	$- (12,331) 10
	$(12,321)

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

75

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Credit risk related information shall refer to Note XII.

The Company'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$ 2,840,000 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$ 18,618,000. Among them, the 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
	$866,490 0%	$172,539 1%	$136,630 2%	$103,790 5%	$72,349 10%	$157,098 20~100%	$1,508,896 119,100
	-	1,725	2,733	5,190	7,235	102,217
	$866,490	$170,814	$133,897	$98,600	$65,114	$54,881	$1,389,796

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

Bill Account Other receivable receivable receivables

76

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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	$- -	$170,000 -	$990 -
	- - - -	170,000 (12,331) (38,569) -	990 10 - -
	$-	$119,100	$1,000

24. Operating lease

• (1) The Company as the lessee

The Company has entered into the commercial lease contract with the average term of one year and no right to renew the lease. There are no restrictions on the Company in this contract.

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 Total Operating lease recognized expense is as below: Minimum rental payment	December 31, 2018	December 31, 2017
	$- -	$- -
	$-	$-
	2018	2017
	$8,525	$16,593

• (2) The Company as the leaser

The Company enters into the commercial property lease contract with the remaining years between one and four years. All lease contracts contain the

77

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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 Total	December 31, 2018	December 31, 2017
	$16,460 31,564	$11,253 23,291
	$48,024	$34,544

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

Nature\Function		2018	2018
	Operating cost	Operating expense	Non-operating expense	Total
Staff welfare expense
Salaryexpense	$444,140	$131,245	$-	$575,385
Labor insurance expense	47,268	9,482	-	56,750
Pension expense	21,232	6,156	-	27,388
Director remuneration	-	700	-	700
Other staff welfare expense	2,081	320	-	2,401
Depreciation expense	411,769	37,544	15,049	464,362
Amortization expense	41,115	10,289	-	51,404

78

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Nature\Function	2017	2017	2017	2017
	Operating cost	Operating expense	Non-operating expense	Total
Staff welfare expense
Salaryexpense	$513,687	$122,655	$-	$636,342
Labor insurance expense	52,266	11,765	-	64,031
Pension expense	25,733	6,326	-	32,059
Director remuneration	-	655	-	655
Other staff welfare expense	2,211	327	-	2,538
Depreciation expense	562,599	33,781	16,692	613,072
Amortization expense	70,261	9,649	-	79,910

Note: The number of employees of the Company in 2018 and on December 31, 2017 is respectively 940 and 1,076 persons, in which the number of directors not as employee is 4 persons.

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.

79

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

26. Non-operating revenue and expense

• (1) Other revenue

Interest revenue (Note) Rental revenue Dividend revenue Other revenue – others Total	2018	2017
	$7,078 13,740 4,600 23,297	$12,343 10,659 1,933 33,884
	$48,715	$58,819

Note: The Company 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

Profit from disposal of property, plant and equipment Net foreign currency exchange profit (loss) Financial assets / (liability) profit / (loss) measured at fair value through profit or loss (Note) Miscellaneous expense Total	2018	2017
	$16,092 18,979 1,586 (13,871)	$17,028 (86,842) (1,297) (14,218)
	$22,786	$(85,329)

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.

80

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• (3) Financial cost

Bank loan interest Other interests Total financial cost	2018	2017
	$(88,741) (291)	$(86,574) (312)
	$(89,032)	$(86,886)

1. 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 Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method Items possible to be reclassified to profit or loss in the future: Shares of other comprehensive profit or	Current incurrence	Current reclassification adjustment	Other comprehensive profit or loss	Income tax benefit (expense)	After-tax amount
	$(848) (45,139) (53,514) (34,316)	$- - - -	$(848) (45,139) (53,514) (34,316)	$- - - -	$(848) (45,139) (53,514) (34,316)

81

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

loss of subsidiary, affiliated enterprises and joint venture recognized by equity method Total
	$(133,817)	$-	$(133,817)	$-	$(133,817)

Components of other comprehensive profit or loss in 2017 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 Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method Items possible to be reclassified to profit or loss in the future: 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
	$(13,673) (5,056) (10,519) (292,551)	$- - - -	$(13,673) (5,056) (10,519) (292,551)	$- - - -	$(13,673) (5,056) (10,519) (292,551)
	$(321,799)	$-	$(321,799)	$-	$(321,799)

82

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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%.

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 $- Current income tax of previous year adjusted in current period - Deferred income tax expense (benefit): Deferred income tax expenses related to original generation of temporary difference and its recovery (benefit) 18,395 Deferred income tax related to original generation and recovery of tax loss and income tax deduction 184,213 Deferred income tax related to tax rate change or new tax levy (38,566) Income tax expense $164,042 Income tax recognized as other comprehensive profit or loss 2018 Deferred income tax expense (benefit): Defined benefit plan remeasurement amount $-	2018	2017
	$- - 18,395 184,213 (38,566)	$- (1) (15,424) 337,833 -
	$164,042	$322,408
		2017
Deferred income tax expense (benefit): Defined benefit plan remeasurement amount
	$-	$-

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

83

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Net profit (loss) before tax from continuously operated entity Income tax calculated by statutory income tax rate 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 Adjustment in current year of current income tax of previous year Total income tax expense recognized as profit or loss	2018	2017
	$(1,128,781)	$(2,108,047)
	$(225,756) (36,977) - 426,775 -	$(358,368) (11,373) 618 691,532 (1)
	$164,042	$322,408

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

2018

2018
Temporary difference Net profit or loss of unrealized foreign currency exchange Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus	Beginning balance	Recognized as profit or loss	Recognized as other comprehensi ve profit or loss	Ending balance
	$6,009 27,361 17,183 8,833	$(11,924) (6,364) 7,245 3,128	$- - - -	$(5,915) 20,997 24,428 11,961

84

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Unrealized fire loss Unused tax loss 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 2017 Temporary difference Net profit or loss of unrealized foreign currency exchange Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus Unrealized fire loss Unused tax loss Deferred income tax (expense) / benefit Deferred income tax asset / (liability) net amount Information expressed in balance sheet as below: Deferred income tax asset	2,574 156,581	454 (156,581)	- -		3,028 -
	$218,541	$(164,042)	$-		$54,499
		Recognized as profit or loss	Recognized as other comprehen sive profit or loss
	$218,541				$60,414
	$-				$(5,915)
	Beginning balance				Ending balance $6,009 27,361 17,183 8,833 2,574 156,581 $218,541 $218,541
	$4,088 20,224 11,327 8,323 2,574 494,414	$1,921 7,137 5,856 510 - (337,833)	$- - - - - -
	$540,950	$(322,409)	$-
	$540,950

85

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• • Deferred income tax liability $ $

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

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	$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	$- 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
		$20,302,767	$22,930,573

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 Company was respectively NT$ 5,296,476,000 and NT$ 5,198,639,000.

Income tax declaration approval condition

The profit-making enterprise income tax of the Company has been checked to 2016 by taxation authority.

28. 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.

86

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

As the Company does not issue the dilutive potential ordinary shares, there is no need for the Company to dilute the amount of the basic earnings (loss) 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)

The Company 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.

VII. Interested party transactions

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

Interested party name and relationship

Interested party name Zhongfu Investment Co., Ltd. (Zhongfu)

Zhongyuan International Venture Capital Co., Ltd. (Zhongyuan) Ritdisplay Corporation. (Ritdisplay)

U-tech Media Corporation. (U-Tech)

Prorit Corporation. (Prorit)

AimCore Technology Co., Ltd. (AimCore)

PVNext Corporation. (PVNext)

Relationship with the Group The Company adopts the equity method to evaluate the invested company

The Company adopts the equity method to evaluate the invested company The Company adopts the equity method to evaluate the invested company

The Company adopts the equity method to evaluate the invested company The Company adopts the equity method to evaluate the invested company The Company adopts the equity method to evaluate the invested company The Company adopts the equity method

87

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Interested party name Relationship with the Group to evaluate the invested company Ritcare Corporation. (Ritcare) The Company adopts the equity method to evaluate the invested company Ritfast Corporation. (Ritfast) The Company adopts the equity method to evaluate the invested company Kunshan Hutek Co., Ltd. (Hutek) The Company is the ultimate holding company of the company Kunshan Kunlai Trade Co., Ltd. (Kunlai) The Company is the ultimate holding company of the company Kunshan Protek Co. Ltd (Kunshan Protek) The Company is the ultimate holding company of the company FANG HIS CORPORATION The Company is the ultimate holding company of the company American Army Club of Dollars Cultural The Company is the ultimate holding and Creative Industry Company company of the company Cashido Corporation (Cashido) Affiliated enterprise of the Group Echem Hightech Co., Ltd. (Echem) Affiliated enterprise of the Group Finesil Technology Inc. (Finesil) Affiliated enterprise of the Group O-View Technology Co., Ltd. (O-View) The subsidiary is the director of corporate juridical person of the company Ritek Foundation (Ritek) The same person with the Chairman of the Company Max Online Ltd. (B.V.I.) (Max Online) The Company adopts the equity method to evaluate the invested company Ritek Vietnam Company., Ltd. (RVC) The Company is the ultimate holding company of the company Advanced Media Inc. (AMI) The Company is the ultimate holding company of the company Conrexx Technology B.V. (Conrexx) The Company is the ultimate holding company of the company Team Diy Hardware Sdn. BHD. (Team The Company is the ultimate holding DIY) company of the company Ritek Latin America, Inc. The Company is the ultimate holding company of the company RiTS Solar B.V. Affiliated enterprise of the Group

88

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Major transaction between the interested parties

1. Sales

Sales
The Company’s subsidiary AMI Max Online Conrexx Kunlai Other Subtotal The Company’s affiliated enterprises Other interested party Total	2018	2017
	$399,827 260,675 365,922 195,568 90,190	$439,444 261,956 273,643 228,921 42,467
	1,312,182	1,246,431
	95 4	1,802 -
	$1,312,281	$1,248,233

• (1) The selling price of the Company to the interested parties is negotiated in accordance with the general market conditions; if the interested parties are the domestic company, the collection term shall be similar to the domestic client, to receive the payment in 90 to 150 days.

• (2) The sales of goods between the Company and its subsidiaries in accordance with the provisions of Letter TCZ (6) No. 00747 on March 18, 1998 have been treated by consigned processing accounting instead of treated as sales. Thus, relevant items and amounts have been reduced as follows:

Sales revenue Sales cost	2018	2017
	$1,000,952 1,000,952	$416,070 416,070

As of December 31, 2018 and December 31, 2017, the above consigned processing related account receivable and payable of NT$ 324,135,000 and NT$ 393,540,000 have been offset and expressed in net amount.

89

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

2. Purchase

The Company’s subsidiary RVC Prorit Other Subtotal The Company’s affiliated enterprises Other interested party Total	2018	2017
	$822,676 162,260 23,708	$1,140,687 200,054 31,427
	1,008,644	1,372,168
	14,986 59	24,468 133
	$1,023,689	$1,396,769

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

3. Account receivable - interested party

The Company’s subsidiary RVC Max Online Kunlai Other Subtotal The Company’s affiliated enterprises Total Less: Reserve for loss Net amount	December 31, 2018	December 31, 2017
	$600,988 93,022 18,618 68,709	$112,106 - 98,481 53,778
	781,337	264,365
	31	-
	781,368 -	264,365 -
	$781,368	$264,365

90

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

4. Other receivable - interested party

The Company’s subsidiary RVC Ritdisplay AimCore Other Subtotal The Company’s affiliated enterprises Total	December 31, 2018	December 31, 2017
	$2,084 2,596 809 417	$3,342 2,121 1,109 1,238
	5,906	7,810
	32	6
	$5,938	$7,816

5. Notes payable and other notes payable - interested party

The Company’s subsidiary Prorit The Company’s affiliated enterprises Other interested party Total	December 31, 2018	December 31, 2017
	$231,207 2,837 -	$250,394 12,194 183
	$234,044	$262,771

91

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

6. Account payable - interested party

The Company’s subsidiary Prorit Hutek Other Subtotal The Company’s affiliated enterprises Other interested party O-View Total Lease payable The Company’s subsidiary - AimCore Less: Financial cost Total Current Non-current	December 31, 2018	December 31, 2017
	$15,086 13,760 1,310	$23,347 13,557 2,008
	30,156	38,912
	1,275 4,476	2,803 6
	$35,907	$41,721
	December 31, 2018	December 31, 2017
	$122,670 (1,415)	$133,950 (1,685)
	$121,255	$132,265
	$11,032	$11,009
	$110,223	$121,256

7. Lease payable

92

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

8. Capital loan and interested party

• (1) Long-term receivables

The Company’s subsidiary RVC PVnext Ritfast Total	December 31, 2018	December 31, 2017
	$168,630 108,000 -	$160,461 89,300 40,000
	$276,630	$289,761

(2) Interest revenue

The Company’s subsidiary RVC PVnext Ritfast Total	2018	2017
	$3,226 1,889 464	$4,469 4,947 1,613
	$5,579	$11,029

For the capital loan and conditional recovery of the subsidiary, depending on the capital turnover of the subsidiary, the interest rate ranges in 2018 and 2017 are 2.93%~4.4316% and 2.93%~2.935% respectively; please refer to Note XIII Schedule 1 for relevant instructions. No collateral is provided for the above financing.

9. Contract liability

The Company’s subsidiary AMI Ritdisplay	December 31, 2018	December 31, 2017
	$64,454 -	$71,865 24,008

93

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Other Total 10. Lease Operating lease - rental payment The Company’s subsidiary U-Tech Other Subtotal The Company’s affiliated enterprises Finesil Total Operating lease – rental revenue The Company’s subsidiary	-	14,459
	$64,454	$110,332
	2018	2017
	$- 214	$9,360 200
	214	9,560
	1,752	-
	$1,966	$9,560
	2018	2017
	$-	$84

11. Endorsement

Up to 2018 and December 31, 2017, the endorsement amount of interested party of the Company is as below:

The Company’s subsidiary	December 31, 2018	December 31, 2017
	$965,398	$738,006

1. Property transaction

(1) 2018

• A. The Company purchases the property, plant and equipment from the following interested party:

94

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Interested party name	Property name	Purchasing price
The Company’s subsidiary The Company’s affiliated enterprises Other interested party Total	Machinery equipment and relevant equipment Machinery equipment and relevant equipment Machinery equipment and relevant equipment	$28 639 4,450
		$5,117

• B. The Company sells the property, plant and equipment to the following interested party:

Interested party name	Property name	Disposal price	Disposal benefit
The Company’s subsidiary	Machinery equipment	$2,565	$885

• C. Disposal profit or loss from above transactions has been removed according to IFRS and IAS.

(2) 2017

• A. The Company purchases the property, plant and equipment from the following interested party:

Interested party name	Property name	Purchasing price
The Company’s affiliated enterprises Other interested party Total	Machinery equipment and relevant equipment Machinery equipment and relevant equipment	$754 86
		$840

95

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• B. The Company sells the property, plant and equipment to the following interested party:

Interested party name	Property name	Disposal price	Disposal benefit
The Company’s subsidiary	Machinery equipment	$1,104	$87

• C. The Company acquired the share of Laiyang Science and Technology Co., Ltd. from Ritdisplay Corporation in December 2017, totally 5,575,000 shares, in the acquisition price of NT$ 56,419,000. As of December 31, 2017, the Company has paid the above transaction price in full.

• D. Disposal profit or loss from above transactions has been removed according to IFRS and IAS.

13. Reward to main management of the Company

Short-term staff welfare Benefit after retirement Total	2018	2017
	$12,734 699	$12,224 715
	$13,433	$12,939

96

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

VIII. Pledged asset

The Company has the following asset as the pledge:

Item Financial assets measured at fair value through other comprehensive profit or loss Investment to debt instrument without active market Account receivable Financial assets measured at amortized cost Financial assets available for sale Investment by equity method Property, plant and equipment – land Property, plant and equipment – depreciable asset Investment property Total	Book amount December 31, 2018 December 31, 2017 $61,955 (Note) (Note) $54,605 310,230 463,397 53,674 (Note) (Note) 113,100 860,832 671,858 951,077 951,077 1,356,806 1,172,118 53,600 56,598 $3,648,174 $3,482,753	Secured liability
	December 31, 2018 $61,955 (Note) 310,230 53,674 (Note) 860,832 951,077 1,356,806 53,600 $3,648,174
		Bank loan Bank loan, bond, lease and performance bond Bank loan Bank loan, bond, lease and performance bond Bank loan and subsidiary loan endorsement guarantee Bank loan and subsidiary loan endorsement guarantee Bank loan Bank loan Bank loan

Note: The Company adopts IFRS 9 after January 1, 2018, and chooses not to

97

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

recompile the comparison period in accordance with IFRS 9 interim provisions.

IX. Material contingent liabilities and unrecognized contractual commitments

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

Currency US dollar Japanese yen	Amount(unit: NT$1,000)
	$1,598 25,115

1. The guarantee notes issued by the Company for the purchase of machinery equipment, long-term loans, credit loans for raw materials, lawsuits and issuance of commercial promissory notes are respectively NT$ 201,050,000. 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 of the Company due to customs and performance guarantee shall be NT$ 15,500,000 guaranteed by the bank.

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

Prepayments for equipment	Total contractprice	Paid amount	Unpaid amount
	NT$ 29,113	NT$ 17,200	NT$ 11,913

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. X. Major disaster losses

No.

98

Notes to Individual Financial Statements (Continued)

RITEK CORPORATION

(Unless otherwise stated, the unit shall be in NT$ 1,000)

XI. Major subsequent matters

No.

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 at amortized cost: Cash and cash equivalent (excluding the cash on hand) Financial assets measured at amortized cost Bill receivable Account receivable (including interested party) 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	December 31, 2018	December 31,2017
	(Note) $42,512	$41,651 (Note)
	42,512	41,651
	67,496	(Note)
	(Note)	156,047
	584,721 53,674 2,840 1,389,796 18,618	(Note) (Note) (Note) (Note) (Note)
	2,049,649	(Note)
	(Note) (Note) (Note) (Note)	795,654 54,605 12,489 821,908

99

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

party) Other account receivable (including the interested party) Subtotal Total Financial liabilities 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) Lease payable (including the current and non-current) Subtotal Financial liabilities measured at fair value through profit or loss: Held for trading Total	December 31, 2018 December 31,2017 (Note) 29,315 (Note) 1,713,971 $2,159,657 $1,911,669 December 31, 2018 December 31, 2017 $1,626,963 $1,198,264 789,351 913,327 701,959 426,299 2,448,200 2,472,195 121,255 132,265 5,687,728 5,142,350 - 5,192 $5,687,728 $5,147,542	December 31, 2018	December 31, 2018	December 31,2017
		(Note)		29,315
		(Note)		1,713,971
		$2,159,657		$1,911,669
			$1,198,264 913,327 426,299 2,472,195 132,265
			5,142,350
			5,192
			$5,147,542

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

100

RITEK CORPORATION

Notes to Individual Financial Statements (Continued) (Unless otherwise stated, the unit shall be in NT$ 1,000)

The Company 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 Company shall indeed comply with relevant regulations for financial risk management.

3. Market risk

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

Partial currency types of foreign currency receivable and foreign currency payable of the Company 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 Company did not hedge against it.

101

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

The sensitivity analysis of the Company'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 Company's profit or loss and equity. The Company'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 Company in 2018 and 2017 will decrease/increase by NT$ 8,768,000 and NT$ 6,616,000 respectively.

• (2) When NT$ vs. JPY appreciates/depreciates by 1%, the profit or loss of the Company in 2018 and 2017 will increase/decrease by NT$ 516,000 and NT$ 859,000 respectively.

• (3) When NT$ vs. EUR appreciates/depreciates by 1%, the profit or loss of the Company in 2018 and 2017 will decrease/increase by NT$ 1,257,000 and NT$ 1,814,000 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 Company's interest rate risk mainly comes from the variable rate investment classified to loans and receivables, fixed rate borrowing, and variable rate borrowing.

The Company 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

102

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

ten basis points, the profit or loss of the Company in 2018 and 2017 will reduce/increase NT$ 4,196,000 and NT$ 3,748,000.

Equity price risk

The Company holds the listed and unlisted equity securities, whose fair value will be affected by uncertainty of future value of such investment target. The Company held listed and unlisted equity securities are respectively contained in the category of held for trading and available for sale. The Company 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 Company, 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 (held for trading in 2017), when the price of such equity securities increase/decrease by 1%, the profit or loss of the Company will increase/decrease by NT$ 425,000 and NT$ 365,000 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 Company in 2017 shall be affected by NT$ 1,464,000; 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 Company in 2018 is NT$ 675,000.

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.

1. Credit risk management

103

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Credit risk refers to the risk of financial loss arising from the failure of counterparty to perform its obligations under the contract. The Company'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 Company’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 Company’s internal rating standards and other factors. The Company 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 client accounts receivable occupy 76% and 62% of the Company's accounts receivable balance respectively, and the credit concentrated risk of the rest accounts receivable is relatively insignificant.

The accounting department of the Company 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 Company 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, so there are no significant credit risks.

The Company adopts IFRS 9 to evaluate credit losses after January 1, 2018, in addition to accounts receivable in term of expected credit loss to measure the reserve for losses; for the rest of the profit or loss measure at fair value not through debt instrument investment, its original purchase is on the premise of lower credit risk, to assess whether the credit risk is significantly increased at each balance sheet day after the original recognition, to determine the method to measure the reserve for loss and its loss ratio.

The Company will also write off the financial assets when it assesses that it is not reasonably expected to recover (such as when the issuer or debtor has material financial difficulties or is bankrupt).

104

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

To increase the debt instruments credit risk investment, the Company will dispose such investment in proper time to reduce the credit losses. When adopting IFRS 9 to evaluate the expected credit losses, the evaluation forwardlooking information (to be obtained without excessive cost or input) still includes the overall economy information and industry information, and it shall adjust the loss rate when the forward-looking information will have further significant impact.

5. Liquidity risk management

The Company maintains the financial flexibility through the cash and cash equivalent, liquid securities and bank loan contract. The table below is the summary of the Company’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

liabilities

December 31, 2018 Loan Short-term notes payable Account payable Lease payable December 31, 2017 Loan Short-term notes payable Account payable	Less than oneyear	Two to three years	Four to five years	More than fiveyears	Total
	$829,165 225,000 1,491,310 11,280 Less than oneyear	$1,460,425 - - 22,560 Two to three years	$230,781 - - 22,560 Four to five years	$- - - 66,270 More than fiveyears	$2,520,371 225,000 1,491,310 122,670 Total
	$1,565,638 250,000 1,339,626	$1,876,209 - -	$76,732 - -	$- - -	$3,518,579 250,000 1,339,626

105

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Lease payable Derivative	11,280 financial	22,560 Two to three years	22,560 Four to five years	77,550 More than fiveyears	133,950 Total
liabilities December 31, 2017 Inflow Outflow Net amount	Less than oneyear
	$127,293 (132,485)	$- -	$- -	$- -	$127,293 (132,485)
	$(5,192)	$-	$-	$-	$(5,192)

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

1. Liability adjustment from financing activity

2018 liability adjustment information:

January 1, 2018 Cash flow December 31, 2018	Short-term borrowing	Short-term notes and bills payable	Long-term loan (including due within oneyear)	Other non- current liability	Total liability from financing activity
	$948,479 453,657	$249,785 (24,958)	$2,472,195 (23,995)	$2,654 469	$3,673,113 405,173
	$1,402,136	$224,827	$2,448,200	$3,123	$4,078,286

2017 liability adjustment information:

No need to apply.

7. 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

106

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

transaction on the measurement day. The methods and assumptions used by the Company 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.

• 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 is close to the fair value.

107

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• (3) Fair value information of Financial Instruments

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

8. Derivative instruments

As of December 31, 2018 and December 31, 2017, the Company has the following information about derivative 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.

Item Name Period December 31, 2017 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).

108

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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.

(2) Fair value measurement level information

The company 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:	Level 1	Level 2	Level 3	Total
	$12,471 30,041 67,496 Level 1	$- - - Level 2	$- - - Level 3	$12,471 30,041 67,496 Total

109

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

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
	$21,359 20,292 146,395	$- - -	$- - 9,652	$21,359 20,292 156,047

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

The assets and liabilities measured by the Company'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 Company'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	Measured at fair value through other comprehensive profit or loss
	Stock
	$9,652 -
	9,652 1,836 - -

110

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

2018 transfer-out to investment by 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
	(11,488)
	$-
	$18,104 (8,452) - - -
	$9,652

In the above total profit (loss) recognized in the profit or loss, the profit (loss) related to the held asset as of December 31, 2018 and December 31, 2017 is respectively NT$ 1,837,000 and NT$ (8,452,000).

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 Company's fair value hierarchy as measured by the repeatable fair value are listed in the following table:

December 31, 2018: No. December 31, 2017:

Assessment technique	Major unobservable input value	Quantized information	Relationship between input value and fair value	Sensitivity analysis value relationship between input value and fair value

Financial

111

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

assets: Available for sale Stock Market Lack of 30% The higher the When the percentage method liquidity degree of of lack of fluidity discount illiquidity is, the increases (decreases) lower the fair 1%, the equity to the value estimates Company shall decrease / increase NT$ 96,000

Evaluation process of Level 3 fair value measurement

Investment department of the Company 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 by equity method (refer to Note VI.10) Investment property (refer to Note VI.12) December 31, 2017	Level 1	Level 2	Level 3	Total
	$2,767,942 -	$- -	$- 332,879	$2,767,942 332,879

Level 1 Level 2 Level 3 Total

112

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

Asset only disclosing the fair value: Investment by equity method (refer to Note VI.10) $2,768,246 $- $- $2,768,246 Investment property (refer to - - Note VI.12) 332,879 332,879

1. Information of foreign currency financial assets and liability of the Company with significant influence:

Financial assets	Amount unit: NT$1,000 December 31,2018	Amount unit: NT$1,000 December 31,2018	Amount unit: NT$1,000 December 31,2018
	Foreign currency	Exchange rate	NT$
Monetary item: USD JPY EUR CNY Non-monetary item: USD GBP Financial liabilities
Monetary item: USD JPY CNY Financial assets
	Foreign currency	Exchange rate	NT$
	$51,226 114,751 5,138 1,387	29.7150 0.2623 35.3400 4.5420	$1,522,168 30,099 181,578 6,301
Monetary item: USD JPY EUR CNY Non-monetary item:

113

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

USD	375	29.7150	11,145
GBP	2,361	39.8800	94,157
Financial liabilities
Monetary item:
USD	29,237	29.8150	871,707
JPY	435,699	0.2663	116,027
EUR	5	35.7400	182

Due to the variety of the Company'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 Company in 2018 and 2017 were NT$ 18,979,000 and NT$ (86,842,000) 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 Company is to maintain the sound credit rating and good capital ratio, to support the operation of the Company and the maximization of shareholders' equity. The Company 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.

XII. Note disclosures

1. Relevant information of major transactions

• (1) Fund loan and others: refer to Schedule 1.

• (2) Endorsement for others: refer to Schedule 2.

• (3) Held the negotiable security at the end of the period (excluding the investment subsidiary, affiliated enterprises and joint venture control part): refer to Schedule 3.

114

RITEK CORPORATION

Notes to Individual Financial Statements (Continued)

(Unless otherwise stated, the unit shall be in NT$ 1,000)

• (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.

• (5) Acquired property amount reaching NT$ 300 million or more than 20% of paid-in capital: No.

• (6) Disposed property amount reaching NT$ 300 million or more than 20% of paid-in capital: No.

• (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.

• (8) Amount receivable of interested party reaching NT$ 100 million or more than 20% of paid-in capital: refer to Schedule 6.

• (9) Engaging in derivative instrument transaction: refer to Note XII.

• Invested company name, location… related information (excluding the Mainland China invested company): Schedule 7.

• Mainland China investment information: refer to Schedule 8.

115

Parent Company Only financial statements of RITEK CORPORATION. (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.

116

Parent Company Only financial statements of RITEK CORPORATION. (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.

117

Parent Company Only financial statements of RITEK CORPORATION. (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

118

Parent Company Only financial statements of RITEK CORPORATION. (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

119

Parent Company Only financial statements of RITEK CORPORATION. (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

120

Parent Company Only financial statements of RITEK CORPORATION. (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.

121

Parent Company Only financial statements of RITEK CORPORATION. (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.

122

Parent Company Only financial statements of RITEK CORPORATION. (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 〃 〃 〃 〃 〃 〃 -	$- - - - - - - -	$- - - - - - - -

123

Parent Company Only financial statements of RITEK CORPORATION. (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

124

Parent Company Only financial statements of RITEK CORPORATION. (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)

125

Parent Company Only financial statements of RITEK CORPORATION. (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8：

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.

126

Parent Company Only financial statements of RITEK CORPORATION. (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.

127

Parent Company Only financial statements of RITEK CORPORATION. (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-2: AimCore Technology 1. Information

on investment in Mainland

Unit: NT$ 1000

~~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)

128

Parent Company Only financial statements of RITEK CORPORATION. (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.

129

RITEK CORPORATION

1. Detailed Statement of Cash and Cash Equivalents

31-Dec-18

		Unit: NTD/Foreign currency1,000	Unit: NTD/Foreign currency1,000	Unit: NTD/Foreign currency1,000	Unit: NTD/Foreign currency1,000
Item		Summary			Amount
Cash on hand Deposit in bank Demand deposits Foreign currency deposits USD JPY EUR AUD HKD GBP CHF RMB Fixed deposit Cash in transit USD Total		Amount in original currency 9,772 12,683 3,597 101 609 5 156 1,337 Amount in original currency 347	Exchange rate 30.66 0.28 34.95 21.54 3.89 38.69 31.08 4.45 Exchange rate 30.66		$829 119,697 299,607 3,505 125,701 2,169 2,373 185 4,841 5,944 10,000 10,700 $585,551

130

RITEK Technology Co., Ltd.

1. Detailed statements of notes receivable and accounts receivable, net

31-Dec-18

31-Dec-18	31-Dec-18	31-Dec-18
			Unit: NTD 1,000
Name of customers	Summary		Amount	Notes
Notes receivable A Company B Company C Company Others Total Accounts receivable A Company B Company C Company Others Total Minus: allowance for damage Net amount	Payment for goods 〃 〃 〃 Payment for goods 〃 〃 〃		$1,671 535 361 273 $2,840 $98,558 93,621 40,160 495,189 727,528 (119,100) $608,428	(Those accounting for less than 5% of the balance of this accounts) (Those accounting for less than 5% of the balance of this accounts)

Note: please refer to Notes 8 for details of the providing guarantee.

131

RITEK CORPORATION

3. Detailed statement of inventory

31-Dec-18

Unit: NTD 1,000

		31-Dec-18	31-Dec-18	31-Dec-18	Unit: NTD 1,000
Item		Amount			Notes
		Cost		Net realizable value
Raw materials and supplies Semi-finished products and work in-process Finished products Inventory of merchandise Inventory in transit Total Minus: Provision for inventory depreciation and slow-moving losses Net amount		$404,988 819,426 160,263 16,764 81,406 1,482,847 (200,362) $1,282,485		$290,005 753,778 146,087 14,943 77,672 $1,282,485	Please refer to the inventory description in Note 4 for the accounting method of the Net realizable value

132

RITEK CORPORATION

1. Detailed change statement of financial assets at fair value through other comprehensive gain and loss-noncurrent From January 1 to December 31, 2018

Unit: NTD 1,000

Invested company	Beginning balance	Beginning balance	Increase in currentperiod	Increase in currentperiod	Decrease in currentperiod	Decrease in currentperiod	Evaluation adjustment	Reclassify to long-term	Endingbalance	Endingbalance	Provision of guarantee or pledge	Notes
	Number of shares or sheets	Fair value	Number of shares or sheets	Amount	Number of shares or sheets	Amount	Amount	Amount	Number of shares or sheets	Fair value
Stocks GIGASTORAGE CORPORATION and so on (Those with balance of investment less than NT $100,000,000） Total	-	$156,047	-	$-	-	$(31,924)	$(45,139) $(45,139)	$(11,488)	-	$67,496	Note 8
		$156,047		$-		$(31,924)		$(11,488)		$67,496

133

RITEK CORPORATION

1. Details of investment changes accounted for using equity method (domestic) From January 1 to December 31, 2018

Unit: NTD 1,000

Name	Beginningbalance	Beginningbalance	Incre	ase in currentperiod	ase in currentperiod	Decre	ase in currentperiod	ase in currentperiod	Endingbalance	Endingbalance		Market price or net equityvalue	Market price or net equityvalue	Provision of guarantee or pledge	Notes
	Number of shares (in thousands)	Amount	Number of shares (in thousands)	Amount		Number of shares (in thousands)	Amount		Number of shares (in thousands)	Shareholdin gratio	Amount	Unitprice	Totalprice
Zhongfu Investment Co., Ltd. Zhongyuan International Venture Investment Co., Ltd. RiTdisplay Corporation U-Tech Media Corporation Prorit Corporation AimCore Technology PVNEXT Corporation RiteDia Corporation Ricare corporation Holi Energy Company Limited Rifast Corporation Finesil Technology Inc. Subtotal	105,851 40,391 19,437 32,489 269,031 14,564 36,048 10,000 5,100 100 5,575 -	$118,471 438,992 448,579 410,768 888,450 467,012 55,590 7,585 37,402 985 57,690 -	8,358 3,000 1,648 2,609	$1,675 1,762,787 19,944 666,127 175,268 - 44,439 52,054 13,315 156 30,000 1 796 31,466 11,488	Note 1 Note 9 Note 1 Note 9 Note 1 Note 2 Note 1 Note 1 Note 1 Note 1 Note 4 Note 1 Note 1 Note 4 Note 5	9,000	$1,636,485 662,085 7,720 13,606 41,189 19,494 16,910 11,711 8,738 27,841 - 6,110 4,591 7,912	Note 1 Note 1 Note 1 Note 3 Note 1 Note 3 Note 1 Note 1 Note 3 Note 1 Note 10 Note 1 Note 1 Note 1	105,851 40,391 27,795 32,489 269,031 14,564 36,048 1,000 8,100 100 5,575 4,257	100.00% 100.00% 46.24% 22.26% 85.87% 21.27% 43.12% 100.00% 100.00% 100.00% 34.84% 48.93%	$246,448 462,978 602,521 394,524 923,594 459,878 27,749 7,741 61,292 986 53,895 35,042	$2.58 11.40 24.49 15.09 3.49 38.12 0.28 7.75 7.57 9.86 9.67 8.23	$273,560 460,309 680,661 490,432 939,144 580,097 10,166 7,751 61,292 986 53,895 35,042	None 〞 〞 Note 6 Note 7 Note 8 None 〞 〞 〞 〞 〞
		2,931,524		2,809,516			2,464,392				3,276,648

ote 1: Amount accounted for using equity method. Note 2: Distribution of stock dividends. Note 3: Distribution of cash dividends. Note 4: Capital increase/acquisition for this year.

Note 5: Transfers from financial assets at fair value through other comprehensive gain and loss.

Note 6: Partial shareholdings provided as guarantee for bank borrowings and endorsement of subsidiaries, with an amount of NT $266,956,000. Note 7: Partial shareholdings provided as guarantee for bank borrowings and endorsement of subsidiaries, with an amount of NT $205,983,000. Note 8: Partial shareholdings provided as guarantee for bank borrowings and endorsement of subsidiaries, with an amount of NT $387,893,000. Note 9: Holding of the parent company's shares by subsidiary, as treasury shares adjustment Note 10: Reduction of capital to cover loss.

134

RITEK CORPORATION

5.1 Details of investment changes accounted for using equity method (overseas)

From January 1 to December 31, 2018

Unit: NTD 1,000

Name	Beginningbalance	Beginningbalance	Increase in currentperiod ~~Number~~	Increase in currentperiod ~~Number~~	Increase in currentperiod ~~Number~~	Decrease in currentperiod	Decrease in currentperiod	Decrease in currentperiod	Endingbalance	Endingbalance	Endingbalance	Market price or net equityvalue	Market price or net equityvalue	Provision of guarantee orpledge	Notes
	Number of shares (in thousands)	Amount	of shares (in thousands )	Amount		Number of shares (in thousands)	Amount		Number of shares (in thousands)	Shareholdin gratio	Amount	Unit price	Totalprice
Affluence International Co. Ltd. (B.V.I.) Ritek Group Inc. (Cayman) Max Online Ltd. Score High Group Ltd.(B.V.I.) ART Management Ltd. (B.V.I.) Ritrax Corporation Ltd. (U.K.) Sky Chance International Corp. GoldenRiver Investment Subtotal Total	34,648 60,404 158,942 171,737 26,652 179 2,100 378	$640,334 324,145 2,238,963 1,809,168 542,364 94,157 47,027 6,571		12,391 9,296 843	Note 1 Note 1 Note 1	2,649	$21,236 40,473 399,983 78,396 266,820 55,610 10,806 9,702	Note 1 Note 1 Note 1 Note 2 Note 1 Note 1 Note 1 Note 1	34,648 60,404 156,293 171,737 26,652 179 2,100 378	100.00% 100.00% 100.00% 100.00% 100.00% 7.46% 100.00% 23.14%	$619,098 283,672 1,760,584 1,554,739 496,050 83,351 37,325 7,414	$17.87 4.59 10.96 9.08 15.92 60.20 17.77 72.93	$619,098 276,955 1,713,699 1,559,451 424,440 10,779 37,325 27,570	None 〞 〞 〞 〞 〞 〞 〞
		5,702,729		22,530			883,026				4,842,233
		$8,634,253		$2,832,046			$3,347,418				$8,118,881

Note 1: Amount accounted for using equity method. Note 2: Cash returned from capital reduction.

Note 3: Adjustments for changes in shareholding ratio. Note 2: Refund of pre-paid shares. Note 5: Distribution of cash dividends. Note 6: sold in this year.

135

RITEK CORPORATION 6. Detailed statement of short-term borrowings 31-Dec-18

		31-Dec-18	31-Dec-18	31-Dec-18	31-Dec-18	31-Dec-18	31-Dec-18
		Unit: NTD/Foreign currency1,000
Type of borrowings	Description	Endingbalance	Term of contract	Interest rate range	Financing quota	Pledge or guarantee	Notes
Bank borrowings Taishin International Bank HUA NAN BANK JihSun Bank Far Eastern International Bank Chang Hwa Bank Hsinchu Branch of TCB Shanghai chung kang branch	Operating revolving fund A/R Purchase Operating revolving fund Operating revolving fund Operating revolving fund Operating revolving fund L/C maturity borrowings Operating revolving fund Operating revolving fund L/C maturity borrowings L/C maturity borrowings Total	$76,000 14,000 100,000 62,000 96,000 211,500 4,429 109,889 50,111 433,678 244,529 $1,402,136	Within one year 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Note 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	$300,000 100,000 100,000 120,000 100,000 225,000 100,000 US$20,000 250,000 160,000	Please refer to Note 8 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃

Note: Interest rate range is 1.1063%~4.4456%

136

RITEK CORPORATION

1. Detailed statement of notes payable and accounts payable 31-Dec-18

Unit: NTD 1,000

Name of customers	Summary		Amount	Notes
Notes payable A Company B Company C Company D Company E Company F Company Others Total Accounts payable A Company A Company B Company C Company Others Total	Payment for goods 〃 〃 〃 〃 〃 (those accounting for less than 5% of the balance of this account) Payment for goods Payment for goods 〃 〃 Payment for goods (those accounting for less than 5% of the balance of this account)		$7,947 6,245 5,417 3,882 3,677 3,518 33,798 $64,484 $0 $91,431 48,901 34,226 280,358 $454,916

137

RITEK CORPORATION

1. Detailed statement of long-term borrowings 31-Dec-18

Unit: NTD 1,000

Creditor	Summary	Amount of borrowings	Term of contract	Interest rate(%)	Pledge or guarantee	Notes
SHANGHAI COMMERCIAL & SAVINGS BANK SHANGHAI COMMERCIAL & SAVINGS BANK SHANGHAI COMMERCIAL & SAVINGS BANK SHANGHAI COMMERCIAL & SAVINGS BANK Yuanta Bank Taishin International Bank Taishin International Bank King’s Town Bank King's Town Bank Taiwan Cooperative Bank Taiwan Cooperative Bank Total Minus: Long-term borrowings due within one year Net amount	Principal repayment in one lump upon maturity. Average monthly amortization of principal and interest according to the annuity method From August 29, 2014, the first year is the grace period, and from the second to the fifth year, the principal and interest will be amortized monthly in 48 installments according to the annuity method. From April 28, 2016, the first year is the grace period, and from the second to the fifth year, the principal and interest will be amortized monthly in 48 installments according to the annuity method. The first year is the grace period, and from the second to the fifth year, the principal and interest will be amortized monthly in 16 installments according to the annuity method. Pay interest monthly and repay the principal at a fixed amount of NT$12.5 million per quarter. The remaining will be paid off when it matures. Pay interest monthly and repay the principal at a fixed amount of NT$3,038,320 per quarter (including principal and interest). Pay interest monthly and repay the principal at a fixed amount of NT$12.5 million per quarter. The remaining will be paid off when it matures. The bank loan will be repaid in equal semiannual installments ($50,000 thousand per installment for the first to fifth installments), the last installment of $250,000 thousand will be paid on the due date. The first year is the grace period, and from the second to the fifth year, the principal and interest will be amortized monthly in 16 installments according to the annuity method. The bank loan will be in equal three-month installments, with a decreased amount of NT$ 9 million for every installment. The remaining will be paid off when it matures.	$29,660 20,730 112,500 200,000 400,000 691,000 320,000 125,000 175,000 145,612 228,698	103.08.29~108.09.29 August 29, 2014 ~ September 29, 2019 105.04.28~108.04.29 April 28, 2016-April 29, 2019 106.07.18~111.07.18 July 18, 2017 ~ July 18, 2022 107.11.14~112.11.14 November 14, 2018 ~ November 14, 2023 106.09.15~109.09.15 September 15, 2017 ~ September 15, 2020 107.08.31~109.08.31 August 31, 2018 ~ August 31, 2020 107.09.07-108.12.31 September 07, 2018- December 31, 2019 106.06.19~108.06.19 June 19, 2017 ~ June 19, 2019 107.06.28~109.06.28 June 28, 2018 ~ June 28, 2020 107.02.22~112.02.22 February 22, 2018 ~ February 22, 2023 107.08.31~112.08.31 August 31, 2018 ~ August 31, 2023	Note 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞	See Note 8 for details 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞
		2,448,200 (784,531)
		$1,663,669

Note: Interest rate1.8780%~2.6400%

138

RITEK CORPORATION

1. Detailed statement of operating revenue For the year of 2018

Unit: NTD 1,000

				Unit: NTD 1,000
Item	Summary		Amount	Notes
Operating revenue Minus: Sales returns and Net operating revenue	Storage media and other products		$5,022,566 (28,247) $4,994,319

139

RITEK CORPORATION

1. Detailed statement of operating cost For the year of 2018

Unit: NTD 1,000

For the year of 2018	Unit: NTD 1,000	Unit: NTD 1,000
Item	Amount
	Subtotal	Total
Manufacturing business Opening inventory Plus: Purchased inventory of this period Transferred in Minus: Transferred out Closing inventory Raw materials consumed in the current period Opening material inventory Plus: Purchased inventory of this period Transferred in Minus: Transferred out Materials sold Closing material inventory Materials consumed in current period Direct labour costs overhead Manufacture cost Plus: Opening work in process Purchase in current period Minus: Transferred out Semi-finished products sold Closing inventory of work in process Cost of finished products Plus: Opening finished products Purchase in current period Minus: Transferred out Closing finished products Cost of production and marketing-Optical information products Trading business Opening inventory Plus: purchased inventory of this period Transferred in Minus: Transferred out Closing inventory Cost of goods sold Loss from inventory depreciation Net operating cost	$250,364 1,490,277 (250,710) (319,775) 84,154 436,815 0 (138,040) (85,213) 908,545 359,886 (78,454) (819,426) 220,770 761,459 (2,471) (160,263) 120,133 803,400 333,790 (494) (98,170)	$1,170,156 297,716 309,957 1,081,618 2,859,447 370,551 3,229,998 819,495 4,049,493 1,158,659 (102,562) $5,105,590

140

RITEK CORPORATION

1. Detailed statement of manufacturing cost For the year of 2018

Unit: NTD 1,000

Item	Summary		Amount	Notes
Depreciation and depletion Salaries Utility fee Repair charge Processing fee Others Total	Including overtime pay, pension, meals and employee benefits (those accounting for less than 5% of the balance of this item)		$411,769 190,206 163,989 74,035 68,597 173,022 $1,081,618

141

RITEK CORPORATION

1. Detailed statement of selling expenses For the year of 2018

For the year of 2018	For the year of 2018	For the year of 2018
			Unit: NTD 1,000
Item	Summary		Amount	Notes
Salaries Transportation fee Premium Travelling expenses Others Total	Including overtime pay, pension, meals and employee benefits those accounting for less than 5% of the balance of this item)		$41,254 70,564 57,611 10,629 29,541 $209,599

142

RITEK CORPORATION

1. Detailed statement of administration expense For the year of 2018

Unit: NTD 1,000

Item	Summary		Amount	Notes
Salaries Utility fee Depreciation and depletion Labor cost Various amortization Others Total	Including overtime pay, pension, meals and employee benefits (those accounting for less than 5% of the balance of this item)		$73,014 10,968 17,229 8,493 6,860 17,173 $133,737

143

RITEK CORPORATION

1. Detailed statement of research expenditure For the year of 2018

Unit: NTD 1,000

Item	Summary		Amount	Notes
Salaries Repair fee Depreciation and depletion Utility fee Others Total	Including overtime pay, pension, meals and employee benefits those accounting for less than 5% of the balance of this item)		$24,153 19,963 19,351 5,286 24,243 $92,996

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