RITEK - Audit Report / Information 2019

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, 2019 and 2018, and the related statements of comprehensive income, changes in stockholders’ equity, cash flows, and notes to consolidate financial statements (including the summary of significant accounting policies) for the period from January 1 to December 31, 2019 and 2018. These financial statements are the responsibility of the Company’s management.

In our opinion, based on our audit results and the audit reports of other independent auditors (please refer to the other matters section), the financial statements referred to in the first paragraph accurately present, in all material respects, the financial position of RITEK Corporation and its subsidiaries as of December 31, 2019 and 2018, and the results of its financial performance and its cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Accounting Standards, International Financial Reporting Standards, and IFRIC Interpretations as approved by the Financial Supervisory Commission.

Basis for Opinion

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

Key Audit Matters

Key audit matters refer to those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ending December 31, 2019. These matters are addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon; we do not provide a separate opinion on these matters.

Judgment on consolidated entities

According to IFRS 10, regardless of the nature of an investment, the investor shall determine if it is the parent company by examining whether it controls the investee. Since RITEK Corporation and its subsidiaries hold the shares of partial consolidated entities less than 50%, the material judgment of RITEK Corporation toward the control over such consolidated entities in the consolidated financial statements would affect the presentation and preparation results of its consolidated financial statements. Therefore, we have determined the judgment on the control power over consolidated entities with less than 50% shareholding as the key audit matter.

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

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

Impairment of non-financial assets

The amount of consolidated property, plants, and equipment of RITEK Corporation and its subsidiaries was NT$ 10,264,640,000 as of December 31, 2019, accounting for around 49% of total consolidated assets. Since RITEK Corporation and its subsidiaries had operation loss in 2019, the assets may have impairment. With significant hypothesis and estimation of impairment of nonfinancial assets, we decided to consider impairment of non-financial assets as a key audit matter.

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

We also evaluate the disclosure of RITEK Corporation and its subsidiaries regarding the impairment loss of non-financial assets. Please refer to notes 4, 5 and 6 of the consolidated financial statements.

Revenue recognition

RITEK Corporation and its subsidiaries recognized a consolidated revenue of NT$ 7,779,123,000 in 2019. The major sources of income were manufacturing and sales of disc, OLED, ITO glass, and green energy products (solar power module/LED/ battery related products), as well as optical information services and products. The build to order method was adopted for transactions. Different transactions terms were involved due to industrial features and customer demands. Therefore, a judgment is required to determine the performance obligations and satisfaction criteria. Therefore, the identification of revenue recognition is a key audit matter.

Our audit procedures include but are not limited to the following: evaluating the appropriateness of the accounting policies made by management aimed at revenue recognition, understanding the transaction flow of revenue recognition procedures against the performance obligations identified, testing the effectiveness of the internal control design and implementation in relation with revenue recognition as satisfactory to the performance obligations, conducting analytical procedures aimed at the sales price, sales volume, costs, and gross margin and implementing analytical procedures aimed at the top ten customers, selecting samples for testing

transaction details and reviewing the trading conditions and related sales receipts in order to ensure the appropriateness of revenue recognition as satisfactory to performance obligations, conducting revenue cutoff tests in certain periods before and after the balance sheet date and checking relevant certificates to ensure that the revenue is recognized in the appropriate period, reviewing huge sales returns after the balance sheet date to investigate and understand its reason and nature, and carrying out ordinary journal tests.

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

Other matters referring to the audit of other certified public accountants

The financial statements of some subsidiaries included in the consolidated financial statements of RITEK Corporation and its subsidiaries were audited by other certified public accountants. Therefore, in our opinions of the preceding consolidated financial statements, the amounts listed in the financial statements of such subsidiaries were based on the audit reports of other CPAs. The total assets of such subsidiaries as of December 31, 2019 and December 31, 2018 were NT$ 2,516,864,000 and NT$ 3,493,747,000 respectively, accounting for 12% and 15% of the total consolidated assets. The sales revenues in the period from January 1 to December 31, 2019 and 2018 were NT$ 726,241,000 and NT$ 982,059,000 respectively, accounting for 9% and 10% of the consolidated sales revenue. Meanwhile, among the investees in the preceding consolidated financial statements, the financial statements of some investees were audited by other certified public accountants. Therefore, in our opinions of the preceding consolidated financial statements, the amounts listed in the financial statements of such investees were based on the audit reports of other CPAs. The investment amounts on such investees under the equity method as of December 31, 2019 and 2018 were NT$ 38,925,000 and NT$ 139,788,000, respectively, accounting for 0% and 1% of the total consolidated assets. The profit and loss of affiliates and venture capital recognized under the equity method in the period from January 1 to December 31, 2019 and 2018 were NT$ 4,101,000 and (NT$ 5,150,000) respectively, accounting for 0% and 0% of the consolidated net loss before income tax. The other comprehensive income of affiliates and venture capital recognized under the equity method in the period from January 1 to December 31, 2019 and 2018 was (NT$ 602,000) and NT$ 844,000 respectively, accounting for 0% and 0% of the consolidated net other comprehensive income.

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

Management is responsible for preparing and fairly presenting the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, as well as for such internal control that it deems necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the ability of RITEK Corporation and its subsidiaries to continue as an ongoing concern, disclosing matters related to ongoing concerns as necessary and using the ongoing concern basis of accounting unless management either intends to liquidate RITEK Corporation and its subsidiaries or cease operations or has no realistic alternative but to do so.

Those charged with the governance of RITEK Corporation (including the audit committee) and its subsidiaries are responsible for overseeing the financial reporting process.

Auditors’ Responsibilities for Auditing the Consolidated Financial Statements

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

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

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

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

We also provide those charged with governance with a statement that we have complied with

relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to influence our independence (including relevant safeguards).

From the matters communicated with those charged with governance, we determined those matters that were of the greatest significance in the audit of the consolidated financial statements of RITEK Corporation and its subsidiaries for the year ending December 31, 2019 as the key audit matters. We describe these matters in our auditors’ report unless the law or regulations preclude public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Others

RITEK Corporation has prepared the 2019 and 2018 individual financial statements, and we have issued the unqualified auditor’s report, including other matters for your reference.

Earnest & Young Financial Report of a Public Company as Approved by the Competent Authority Audit File No.:

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

(100) Jing-Guan-Cheng (Shan) No. 1000002854

Hsu, Jung-Huang

CPA:

Tu, Chia-Ling

March 27, 2020

RITEK Technology Co., Ltd. and Its Subsidiaries

Consolidated Balance Sheet

December 31, 2019 and December 31, 2018

Unit: NT$1000

					Unit: NT$1000	Unit: NT$1000
Assets			December 31, 2019		December 31, 2018
Code	Accounts	Notes	Amount	％	Amount	％
1100 1110 1120 1136 1150 1170 1175 1180 1197 130x 1470 11xx 1510 1517 1535 1550 1600 1755 1760 1780 1840 1900 1935 194D 1970 15xx 1xxx	Current assets Cash and cash equivalents Net notes receivable Net accounts receivable Lease payment receivables Net of finance lease receivables Inventory Other current assets Total current assets Non-current assets Investments accounted for using equity method Property, plant and equipment right-of-use asset Net investment property Intangible assets Deferred tax assets Other non-current assets Long-term lease payment receivables Net of long-term finance lease receivables Other long-term investments Total non-current assets Total assets Financial assets at fair value through other comprehensive profit and loss-Non-current Financial assets measured at amortized cost-noncurrent Financial assets at fair value through other comprehensive profit and loss-current Financial assets measured at amortized cost-current Net accounts receivable-related parties Financial assets at fair value through profit or loss-Noncurrent Financial assets at fair value through profit or loss-current	VI.1 VI.2 VI.3 VI.4 and VIII VI.5 andVI.21 VI.6, VI.21 and VIII VI.7, VI.21 and VIII VI.6, VI.21 and VII VI.7, VI.21 aand VIII VI.8 VI.21 and VI.26 VI.2 VI.3 and VIII VI.4 and VIII VI.9 VI.10 and VIII VI.22 VI.11 and VIII VI.12 and VI.14 VI.26 VI.13 and VIII VI.7, VI.21 and VIII VI.7, VI.21 and VIII	$4,045,515 212,648 26,237 118,857 28,905 1,120,613 - 7,258 1,997 2,133,518 434,596 8,130,144 109,936 506,348 163,413 38,925 10,264,640 313,279 343,461 590,530 382,527 65,387 - 46,611 189 12,825,246 $20,955,390	19 1 - 1 - 6 - - - 10 2 39 1 2 1 - 49 1 2 3 2 - - - - 61 100	$3,497,738 100,513 6,815 89,429 9,031 1,577,172 1,840 32 - 2,778,797 425,441 8,486,808 174,533 335,080 35,301 139,788 12,509,656 - 346,423 868,581 455,203 294,788 48,425 - 189 15,207,967 $23,694,775	15 - - - - 7 - - - 12 2 36 1 1 - 1 53 - 1 4 2 1 - - - 64 100

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

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

Chief Account: Shih, Gu-Fu

RITEK Technology Co., Ltd. and Its Subsidiaries

Consolidated Balance Sheet

December 31, 2019 and December 31, 2018

Unit: NT$1000

					Unit: NT$1000	Unit: NT$1000
Liabilities and Equity			December 31, 2019		December 31, 2018
Code	Accounts	Notes	Amount	％	Amount	％
2100 2110 2120 2150 2160 2170 2180 2200 2230 2280 2300 2320 21xx 2540 2570 2580 2640 2670 25xx 2xxx 31xx 3100 3110 3200 3300 3350 3400 36xx 3xxx	Current liabilities Short-term borrowings Short-term notes and bills payable Notes payable Notes payable-related parties Accounts payable Accounts payable-related parties Other payables Current income tax liability Lease liabilities－current Other current liabilities Total current liabilities Non-current liabilities Long-term loans Deferred tax liabilities Lease liabilities－noncurrent Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to owners of the parent Capital stock Common stock Capital surplus Retained earnings Loss to be made up Other owner's equity Non-controlling interests Total owner's equity Total liabilities and owner's equity Long-term liabilities maturing within one year or one operating cycle Net defined benefit liabilities-noncurrent Financial liabilities at fair value through profit or loss-current	VI.15 and VIII VI.16 and VIII VII VII VI.26 VI.22 VI.20 VI.17 and VIII VI.17 and VIII VI.26 VI.22 VI.18 VI.19 VI.19 VI.19 VI.19	$1,744,767 78,883 11,845 50,920 - 657,308 899 631,227 16,399 39,098 105,733 1,172,211 4,509,290 4,814,255 35,517 196,789 168,243 63,045 5,277,849 9,787,139 12,841,579 1,129,918 (5,904,783) (1,059,203) 4,160,740 11,168,251 $20,955,390	8 1 - - - 3 - 3 - - 1 6 22 23 - 1 1 - 25 47 61 5 (28) (5) 20 53 100	$2,119,882 250,979 - 73,061 2,837 1,046,412 7,574 795,930 25,507 - 85,059 1,368,912 5,776,153 4,465,060 36,336 - 154,278 55,484 4,711,158 10,487,311 12,841,579 950,835 (3,583,955) (1,038,709) 4,037,714 13,207,464 $23,694,775	9 1 - - - 5 - 3 - - - 6 24 19 - - 1 - 20 44 54 4 (15) (4) 17 56 100

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

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

Chief Account: Shih, Gu-Fu

RITEK Technology Co., Ltd. and Its Subsidiaries

Consolidated Statements of Comprehensive Income

From January 1 to December 31 of 2019 and 2018

Unit: NT$1000

					Unit: NT$1000	Unit: NT$1000
Code	Accouts	Notes	9 December 31,	2019	December 31, 2018
			Amount	%	Amount	%
4000 5000 5900 6000 6100 6200 6300 6450 6900 7000 7010 7020 7050 7055 7060 7900 7950 8200 8300 8310 8311 8316 8349 8360 8361 8370 8399 8500 8600 8610 8620 8700 8710 8720 9750	Operating income VI.20 and VII Operating costs VI.8, 23 and VII Operating gross profit Operating expenses VI.3 and VII Selling expenses General and administration expenses Research and development expenses Expected credit impairment benefits VI.21 Total operating expenses Operating loss VI.24 Other income Other profit and loss Financial costs VI.21 VI.9 Total non-operating income and expenditure Net loss before tax VI.26 Income tax expense Net loss for the year VI.25 Other comprehensive gain and loss Remeasurements of defined benefit plans Income tax relating to the items that will not be reclassified subsequently to profit or loss VI.26 Items that may be reclassified subsequently to profit or loss Share of other comprehensive gain(loss) of associates and joinVI.9 Share of (loss) -items that may be reclassified subsequently to porfit or loss Income tax relating to the items that may be reclassified subVI.26 Other comprehensive income for the year (net of income tax) Total comprehensive income for the year Net profit (loss) attributable to : Owners of parent company Non-controlling interests The total comprehensive profit(loss) attributable to : Owners of parent company Non-controlling interests Loss per share (NT$) VI.27 Basic loss per share Net loss for the year Exchange difference on translation of financial statements of foreign operations Non-operating income and expenditure Expected credit impairment loss Share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method Unrealized loss on equity instrument investment at fair value through other comprehensive gain(loss)		$7,779,123 7,240,537 538,586 512,162 763,224 182,507 56,716 1,514,609 (976,023) 273,977 (1,592,857) (179,399) - 4,101 (1,494,178) (2,470,201) (101,281) (2,571,482) (26,800) (70,218) - (95,612) (602) 1,847 (191,385) $(2,762,867) $(2,254,907) (316,575) $(2,571,482) $(2,611,735) (151,132) $(2,762,867) $(1.76)	100 93 7 7 10 2 1 19 (12) 4 (20) (2) - - (18) (30) (1) (31) - (1) - - - - (1) (32)	$9,358,661 8,811,059 547,602 597,718 814,855 180,177 (13,389) 1,579,361 (1,031,759) 258,092 (121,180) (153,131) (10) (5,150) (21,379) (1,053,138) (181,364) (1,234,502) (317) (146,994) - (48,330) 844 2,312 (192,485) $(1,426,987) $(1,292,823) 58,321 $(1,234,502) $(1,426,640) (347) $(1,426,987) $(1.01)	100 94
						6
						6 9 2 -
						17
						(11)
						3 (1) (2) - -
						-
						(11) (2)
						(13)
						- (2) - - - -
						(2)
						(15)

(Please refer to the notes to the Consolidated F			inancial Statements)

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

Chief Account: Shih, Gu-F

RITEK Technology Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

From January 1 to December 31 of 2019 and 2018

(Review only without audit under general accepted audit standards)

Unit: NT$1000

										Unit: NT$1000
Item			Equityattributable to own		ers of theparent				Non-controlling interest	Total equity
	Capital stock	Capital surplus	Loss to be covered		Other equity		Treasury shares	Total
				Exchange difference on translation of financial statements of foreign operations	Unrealized gains(losses) on financial assets at fair value through other comprehensive income	Unrealized gains(losses) on available-for-sale financial assets
	3100	3200	3350	3410	3420	3425	3500	31XX	36XX	3XXX
Balance as of January 1, 2018 Effects of retroactive application and retroactive restate Balance after restatement as of January 1, 2018 Change in other capital surplus Change in associates and joint venture recognized by Net loss in 2018 Other comprehensive income in 2018 Total comprehensive income Capital reduction for covering loss The shares of parent company disposed by a subsidiary The shares of subsidiary actually acquired or disposed Change in the ownership of subsidiary The disposal of equity instrument measured at fair value Changes in equity of non-controlling equity Balance as of December 31, 2019 Balance as of January 1, 2019 Net loss in 2019 Other comprehensive income in 2019 Total comprehensive income Capital reduction for covering loss The shares of parent company disposed by a subsidiary The shares of subsidiary actually acquired or disposed Change in the ownership of subsidiary The disposal of equity instrument measured at fair value Changes in equity of non-controlling equity Balance as of December 31, 2019	$17,667,921 m -	$937,005 -	$(4,826,342) 74,721	$(594,719) -	$- (413,638)	$(338,107) 338,107	$(2,428,914) -	$10,416,844 (810)	$4,154,110 (4,955)	$14,570,954 (5,765) 14,565,189 (559) (1,234,502) (192,485) (1,426,987) - 167,085 (12,170) - - (85,094) $13,207,464 $13,207,464 (2,571,482) (191,385) (2,762,867) - - 209,838 517,634 - (3,818) $11,168,251
	17,667,921 u - - -	937,005 - - -	(4,751,621) (559) (1,292,823) (441)	(594,719) - - (34,316)	(413,638) - - (99,060)	- - - -	(2,428,914) - - -	10,416,034 (559) (1,292,823) (133,817)	4,149,155 - 58,321 (58,668)
	-	-	(1,293,264)	(34,316)	(99,060)	-	-	(1,426,640)	(347)
	(4,826,342) a - - - - -	- - 13,083 747 - -	4,826,342 (2,261,829) - - (103,024) -	- - - - - -	- - - - 103,024 -	- - - - - -	- 2,428,914 - - - -	- 167,085 13,083 747 - -	- - (25,253) (747) - (85,094)
	$12,841,579	$950,835	$(3,583,955)	$(629,035)	$(409,674)	$-	$-	$9,169,750	$4,037,714
	$12,841,579 - -	$950,835 - -	$(3,583,955) (2,254,907) (17,185)	$(629,035) - (75,055)	$(409,674) - 51,987	$- - -	$- - -	$9,169,750 (2,254,907) (40,253)	$4,037,714 (316,575) (151,132)
	-	-	(2,272,092)	(75,055)	51,987	-	-	(2,295,160)	(467,707)
	- a - - - - -	- - 1,503 177,580 - -	- - (46,162) (2,574) -	- - - - - -	- - - - 2,574 -	- - - - - -	- - - - - -	- - 1,503 131,418 - -	- - 208,335 386,216 - (3,818)
	$12,841,579	$1,129,918	$(5,904,783)	$(704,090)	$(355,113)	$-	$-	$7,007,511	$4,160,740

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

Chairman: Yeh, Chwei-Jing

Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

RITEK Technology Co., Ltd. and Its Subsidiaries Consolidated Statements of Cash Flows

From January 1 to December 31 of 2019 and 2018

					Unit: NT$1000
Item	2019	2018	Item	2019	2018
	Amount	Amount		Amount	Amount
Cash flow from operating activities: Net loss before income tax for this year Adjustments: Items of gains, expenses and losses: Depreciation expenses and other losses Amortization expenses and other expenses Interest expenses Interest revenue Dividend income Loss (benefit) from disposal of investments Loss of impairment of non-financial assets Bargain purchase gains Changes in operating assets and liabilities Increase of available-for-sale financial assets Decrease (increase) of notes receivable Decrease (increase) of accounts receivable Decrease in lease receivables Decrease ( increase) of inventory Decrease (increase) of other current assets Decrease of notes payable Increase (decrease) of accounts payable decrease of other payables Decrease of other current liabilities Decrease of net defined benefit liabilities Increase of net defined benefit liabilities Interest received Interest paid Income tax paid Net cash (outflow) inflow from operating activities Increase (decrease) in available-for-sale financial liabilities Loss (Profit) from disposing and scrapping real estate, plant and equipment Share of loss/profit of subsidiaries, associates and joint ventures accounted for	$(2,470,201) 1,655,153 112,661 179,399 (44,576) (16,583) (5,717) 17,238 (23,453) 1,362,187 - (47,538) (6,563) 545,065 - 756,289 22,246 11,845 (44,250) (421,937) (236,843) (36,452) (12,835) 1,295,135 44,522 (187,210) (29,872) 1,122,575	Cash flow from investment activities: $(1,053,138) Acquisition of financial assets at fair value through other comprehensive gain (loss) Disposal of financial assets at fair value through other comprehensive gain (loss) 1,491,917 Acquisition of financial assets at amortization cost 124,288 153,131 Disposal of equity-method investments (21,445) (38,572) Disposal of subsidiaries 5,150 Acquisition of investments using the equity method (74) Disposal of investments using the equity method 177 Acquisition of intangible assets 9,423 Cash inflow due to Consolidation (19,359) Rents Receivable Other non-current assets 77,960 Dividends received 9,505 Net cash inflow/outflow from investment activities (57,845) 411 (576,056) Cash flow from financing activities: 217,221 Increase in short-term borrowings (5,192) Increase (decrease) in short-term bills payable (47,188) Borrowing (repaying) long-term loans (260,258) Increase of other non-current liabilities (81,364) Other non-current liabilities (42,595) Disposal of treasury stock (9,344) Acquisition of equity in subsidiaries (123,247) 20,841 Changes in non-controlling interests (145,288) Net cash inflow (outflow) from financing activities (47,525) (295,219) Current increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Disposal of equity in subsidiary (no loss of control) Effect of exchange rate changes on cash and cash equivalents Cash returned of capital reduction of financial assets at fair value through other Acquisition of equity-method investments Acquisition of subsidiaries (deducting the cash obtained)		$(198,740) 8,002 40,850 (33,740) (30,000) 75,746 - - (637,316) 48,363 (614) 169,182 1,657 40,807 16,758 (499,045) (458,393) (172,096) 36,137 (16,853) 7,555 - (51,205) 261,043 397,157 3,345 (79,098) 547,777 3,497,738 $4,045,515	$- 49,384 10,759 (18,039) (31,466) 3,780 (461,474) (32) (1,159,934) 8,707 - - - 249,282 38,572 (1,310,461) 614,347 (25,547) 578,783 - 6,632 167,085 (84,820) 72,650 (93,033) 1,236,097 (17,734) (387,317) 3,885,055 $3,497,738

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

Chairman: Yeh, Chwei-Jing

Manager: Yeh, Chwei-Jing

Chief Account: Shih, Gu-Fu

RITEK Corporation and Subsidiaries Notes to Consolidated Financial Statements January 1 to December 31, 2019 And January 1 to December 31, 2018

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

I. Company History

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

II. Date and Procedure Passing the Financial Statements

Consolidated Financial Statements of 2019 and 2018 of the Group and subsidiaries (hereinafter referred to as the Group) were passed and issued by the Board of Directors on March 27, 2020.

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

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

The Group has adopted the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations or Interpretation Notice (IFRIC) approved by Financial Supervisory Commission (hereinafter referred to as FSC) in the accounting years from January 1, 2019; except for the following new criteria and corrective and influential interpretations, the rest first applications have no great influence to the Group:

(1) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, Interpretations15 “Operating Leases-Incentives” and Interpretations 27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group follows the transitional regulations of IFRS 16 and applies the guidance of IFRS 16 from January 1, 2019. The effects of applying IFRS 16 for the first time are explained as follows:

A. The applicable accounting policy interpretations of the Group from January 1, 2019 and before January 1, 2019 refer to Note IV.
B. Definition of lease: the Group selects not to reassess whether contracts in place are (or contain) a lease. Contracts identified as not containing a lease under IAS 17 and IFRIC 4 are not applicable to IFRS 16. That is, the Group only assesses whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. As comparing to IFRS 17, IFRS 16 considers the contracts are (or contain) a lease if the contract has transferred the control power of identified assets over a period of time to exchange consideration. The Group assesses that the definition applicable to new lease have no material effects to the evaluation whether contracts are (or contain) a lease in majority conditions.
C. The Group as a lessee: The Group applies IFRS 16 retrospectively with the cumulative effect of the initial application recognized as adjustment of retained earnings (or other equity, if applicable) at the date of initial application but does not restate comparative information.
(a) Leases previously classified as operating leases
- Leases agreements classified as operating leases under IAS 17 are measured at the present value of the remaining lease payments (discounted using the lessee’s incremental borrowing rate on January 1, 2019). Meanwhile, right-of-use assets are measured at one of following amounts on basis of individual lease:
- i. The book value of such right-of-use asset is equal to the amount as applicable to IFRS 16 since the beginning date but discounted using the lessee’s incremental borrowing rate on January 1, 2019; or
- ii. The amount of lease liabilities, however, all prepaid or accrual lease payment amount in related with leases shall be adjusted (recognized in balance sheet before January 1, 2019)
  - As of January 1, 2019, the Group did not have material effects caused by application of IFRS 16 abovementioned

The right-of-use assets of the Group were increased NT$ 239,044,000 and lease liabilities were increased NT$ 239,044,000 on January 1, 2019.

On the other hand, the Group reclassified the long-term lease payables

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

103,684,000 recognized as operating lease previously applicable to IAS 17 “Lease” and all relevant rents were paid up on January 1, 2019.

The Group applies transitional regulations of IFRS 16 and applies following practical expedients to measures leases previously classified as operating leases on basis of individual lease.

i. The Group applied a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
ii. The evaluation of whether leases were impaired right before January 1, 2019 was used as alternative measure of impairment review.
iii. The Group accounted for those leases for which the lease term ends on 12 months from January 1, 2019 as short-term leases.
iv. The Group projected status to determine such as lease terms (if the contract contains option for lease extension or termination)
(b) Please refer to note 4, 5 and 6 for the disclosure of lessee related notes added in accordance with IFRS 16.
(c) The effects of initial application of IFRS 16 on January 1, 2019 to financial statements:
i. The weighted average lessee’s incremental borrowing rate used by the Group to calculate lease liabilities recognized on January 1, 2019 was 2.58%.
ii. The difference 47,569,000 between the operating lease discounted by the incremental borrowing rate as of January 1, 2019 applied to IAS 17 on December 31, 2018 and lease liabilities recognized on January 1, 2019 is explained as follows:

The operating lease commitment as of December 31, 2018 disclosed under IAS 17 Discounted using the incremental borrowing rate on January 1, 2019 Less: adjustment made as satisfactory and selection of short-term lease Add/less: Adjustments as a result of a different treatment of extension and purchase options Lease liabilities recognized on January 1, 2019	$254,902
	$205,971 (16,430) 49,503
	$239,044

D. The Group does not make any adjustments for leases in which it is a lessor, but adds the notes in related with lessor only. Please refer to note 4, 5 and 6.
The Group has not adopted the following IASB issued and FSC approved newly issued, revised and amended criteria or interpretations:

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Item	Newly issued/revised/amended criteria or interpretations	IASB issuing and effective date
1	Definition of a Business (amendments to IFRS 3)	January1,2020
2	Definition of Material (amendments to IAS 1 and IAS 8)	January1,2020
3	Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and IFRS 7)	January 1, 2020

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

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) Significant definition (amendment to IAS 1 and 8)

The material information is redefined as: if the decision made by the major users of general financial statements on the basis of such financial statements may be reasonably expected to be affected due to omission, misinterpretation or confusion of information, then such information shall be material. This amendment clarifies that the significance depends on the nature or materiality of information and the business shall evaluate whether the information is material depending on individual or information or other information altogether in financial statements. If it is reasonably anticipated that it will affect major users, the mistakenly expressed information shall be material.

(3) Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and IFRS 7)

The amendment includes several exceptions aiming at the hedge relationship affected by interest rate benchmark reform. If the cash flow timing or amount of hedged items or benchmark of hedge tool is uncertain due to interest rate benchmark reform, then the hedge relationship is affected directly. Therefore, the business shall apply the exceptions for hedge relationship directly affected by interest rate benchmark reform.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

This amendment includes:

A. Highly possible regulations

As evaluating whether the anticipated transaction is highly possible, the business shall assume that the hedged cash flow will remain unchanged in the interest rate benchmark reform
B. Anticipation assessment
As evaluating anticipation, the business shall assume that the hedged items, hedged risks/or basis of hedging tools will remain unchanged Interest Rate Benchmark Reform (amendments to IFRS 9, IAS 39 and IFRS 7)
C. The retroactive assessment of IFRS 39
For hedge relationship directly affected by interest rate benchmark reform, the business is unnecessary to implement the retroactive assessment as stipulated in IFRS 39 (i.e. if the actual result of hedge is between 80% and 125%)

D. The hedge to non-contractual benchmark of interest rate risks, the business may only apply single identification when hedge relationship starts.

This amendment also includes application of exceptions and disclosure of notes in related with this amendment

The newly issued, amended or revised standards or interpretations above are issued by International Accounting Standards Board (IASB) and endorsed by the FSC with effective date starting 2020.

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

Item	Newly issued/revised/amended criteria or interpretations	IASB issuing and effective date
1	Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” – asset sale or investment between the investor and its affiliates orjoint ventures	To be determined by IASB
2	IFRS 17 “Insurance Contracts”	January1,2021
3	Classification of Liabilities as Current or Noncurrent (Amendments to IAS 1)	January 1, 2022

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

A. Future cash flow estimates

B. 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
C. Risk adjustment for non-financial risks

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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:

A. Specific applicable method with direct participation of featured contracts (variable fee method)
B. Simplified method of short-term contracts (premium sharing method)
(3) Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

This is amendment to classification of liabilities from section 69 to section 76 of IAS 1“Expression of Financial Statement” as current or noncurrent

The standards or interpretation above are issued by IASB but not endorsed by FSC. The actual effective date shall be governed by FSC. Except for potential effects of the newly issued or revised standards (1) now in evaluation of the Group which the impacts cannot be reasonably estimated temporarily, all remaining standards or interpretations newly issued or revised are without material impact to the Company.

IV. Summary Statement of Major Accounting Policies

Compliance declaration

Consolidated Financial Statements of 2019 and 2018 of the Group are prepared in accordance with Security Issuer Financial Reporting Standards and effective IFRS, IAS, and IFRIC issued and approved by FSC.

2. Preparation basis

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

Consolidation condition

Preparation principles of consolidated financial statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

(1) the power over the investee (i.e., existing right to give the current ability to lead relevant activities)
(2) the risk or right of change of remuneration arising from the participation of the investee, and
(3) the ability to use its power over the investee to influence the amount of the investor's remuneration

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

(1) contractual agreements with other holders of voting rights of the investee
(2) rights arising from other contractual agreements
(3) voting rights and potential voting rights

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

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

If the Group loses control of its subsidiaries, it shall

(1) derecognize the assets (including the goodwill) and liabilities of the subsidiaries;
(2) derecognize the book amount of any non-controlling equity;
(3) recognize the fair value of the consideration obtained;
(4) recognize the fair value of any investment retained;
(5) recognize any benefit or loss as the current profit or loss;
(6) reclassify the number of items previously recognized as other comprehensive profits and losses of the parent company to the current profits and losses.

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

Investment companyname	Subsidiaryname	Primarybusiness	Percentage of equity held	Percentage of equity held
			2018.12.31	2017.12.31
RITEK and subsidiary RITEK and subsidiary RITEK and subsidiary RITEK RITEK RITEK and subsidiary RITEK and subsidiary RITEK RITEK and U-tech Technology Co., Ltd.	Ritdisplay Corporation U-tech Technology Co., Ltd. PlexBio, Co., Ltd. Chung-Fu Investments Ltd. Chung-Yuan Venture Capital Fund Ltd. AimCore Technology Co., Ltd. PVNEXT Corporation RiteDia Co., Ltd. Ricare Corporation	OLED manufacturing and trading CD manufacturing and selling Plastic precision injection General investment business Venture capital investment business Conductive glass manufacturing and trading Battery manufacturing and trading Lighting equipment manufacturing Management consulting	70.58 39.20 96.50 100.00 100.00 24.76 61.31 100.00 100.00	71.60 35.97 96.50 100.00 100.00 24.61 61.31 100.00 100.00

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Investment companyname	Subsidiaryname	Primarybusiness	Percentage of equity held	Percentage of equity held
			2018.12.31	2017.12.31
Ricare Corporation RITEK RITEK RITEK RITEK RITEK RITEK RITEK and subsidiary RITEK Sky Chance Sky Chance U-Tech U-Tech U-Tech U-Tech and AimCore HouJu RITEK and subsidiary Jade Glory Days PlexBio Arlewood Arlewood	Ricare Co., Ltd. Holi Energy Corporation ART Management Ltd Affluence International Co., Ltd (B.V.I) Max Online Ltd.(B.V.I) Ritek Group Inc. (Cayman) Score High Group Ltd. (B.V.I) Ritrax Corp. Ltd.(U.K.) Sky Chance International Ltd. Team Diy Hardware Sdn. BHD Ritek Latin America Dollars cultural and creative industry company Jade Investment Services Ltd. Havard Industries Co., Ltd. HouJu Energy Development Co., Ltd. Hou Cheng Trading Co., Ltd. Ritfast Corporation Glory Days Services Ltd. U-Tech Media Korea Co., Ltd. Arlewood International Corporation Kunshan Protek Co. Ltd. Prorit Corporation Vietnam Ltd.	Management consulting Energy technology Holding company Holding company Holding company Holding company Holding company Trademark right company Holding company Hardware trading Sales of chemical materials Cultural and creative industry Holding company Property development and trading Renewable energy self-use power generation equipment industry Renewable energy self-use power generation equipment industry Renewable energy self-use power generation equipment industry Holding company CD manufacturing and selling Holding company Plastic precision injection Electronics industry	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 98.72 100.00 98.08 100.00 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 (Note 1) 100.00 100.00 100.00 (Note 4) (Note 4) 97.22 100.00 100.00 100.00 100.00 100.00

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Investment companyname	Subsidiaryname	Primarybusiness	Percentage of equity held	Percentage of equity held
			2018.12.31	2017.12.31
AimCore AimCore ARMOR ART Max Online and Score High Max Online and PVNEXT Corporation Hutek RGI RGI Score High Ritdisplay Corporation Ritdisplay Corporation AimCore RITEK	ARMOR INVESTMENT GROUP CORP. AimEC Corporation AimCore (Yangzhou) Technology Co., Ltd. Advanced Media Inc. Kunshan Hutek Co., Ltd. Ritpower (yangzhou) Co., Ltd Kunshan Ritek Trading Company., Ltd. Conrexx Technology B.V. RME Manufacturing Gmbh. Ritek Vietnam Co., Ltd. Hsin Bao Assets Co. CASHIDO Technology Co., Ltd. Finesil Technology Co., Ltd. Right In Technology Co.	Holding company Conductive glass Conductive glass CD selling CD manufacturing and selling Solar module manufacturing CD selling CD selling CD manufacturing and saleing CD manufacturing and saleing Leasing business Manufacturing and sales of micro bubble systems Manufacturing and sales of chemical materials Electronic Parts and Components Manufacturing	100.00 100.00 100.00 100.00 80.27 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 80.27 100.00 100.00 100.00 100.00

Note 1: Ritek, Aimcore and Plexbio purchased 431,000 shares of RitDisplay and sold total 2,915,000 shares of RitDisplay in 2019. As a result, the shareholding of the Group to RitDisplay decreased 3.79%. In addition, the Group did not subscribe the new shares issued by RitDisplay on January 15, 2019, which also resulted in decrease of shareholding of the Group to RitDisplay for 7.72%
Note 2: RitDisplay and Plexbio sold 8,082 shares of U-tech in 2019, resulting in 5.54% decrease of shareholding of the Group to U-tech
Note 3: U-tech sold 9,000 shares of AimCore in 2019, resulting in 0.02% decrease of shareholding of the Group to U-tech

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Note 4: U-tech purchase 562,000 shares of Formosa Sun Energy in 2019 and the shareholding of the Group is creased to 100.00%
Note 5: RitDisplay newly established Hsin Bao Assets Co. and acquired 100% shares. The registration for establishment had been completed in the same month.
Note 6: The Group acquired majority seats of direction after the election and therefore has physical control power over CASHIDO Technology in April of 2019. In addition, RitDisplay added the investment on CASHIDO Technology in May, August and September 2019 respectively, with total investment amount NT$ 40,996,000. The shareholding ratio of the Group was increased to 78.66%.
Note 7: FINSEL issued the new shares for capital increment in June 2019 and AimCore participated in the subscription and acquired 25.55% shares. Accordingly, the shareholding of the Group was increased to 61.93% after adding original shares held by the Group and therefore the Group has control power over the company. In addition, AimCore purchased 5,335,000 shares of FINSEL from the Group and external shareholders of the Group, resulting in 9.20% increase of shares held by the Group.
Note 8: Formosa Sun Energy purchased the shares of Ritfast Corporation from the Company, U-tech, RitDisplay, Chung-Yuan Venture Capital Fund Ltd., Chung-Fu Investments Ltd. and AimCore upon the resolution of the Board on September 12, 2019. The purchase contract was concluded on September 24, 2019 and it was settled by September 26, 2019 with 15,694 shares acquired while the shareholding ratio of the Group remains the same.
Note 9: Ritfast Corporation increased its capital by issuing 10,000,000 new shares upon the resolution of the Board on behalf of shareholders’ meeting on October 22, 2019. Formosa Sun Energy subscribed partially and the shareholding ratio after the subscription is 98.80%. In addition, Formosa Sun Energy purchase 15,000 shares of Ritfast Corporation and therefore the shareholding ratio is increased to 98.85%
Note 10: The Group has established and acquired 70% equity of Right In Technology Co. in August 2019. The registration for establishment was completed in the same month.
Note 11: AimCore has established and acquired 100% equity of AimEC Corporation (hereinafter the AimEC Corporation) in August 2019. The registration for establishment was completed in the same month.
Note 12: Ricare Co., Ltd. completed the liquidation on third quarter of 2019

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Foreign currency transaction

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

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

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

(1) For the borrowing in foreign currencies incurred to acquire the required assets, if the exchange difference incurred for the borrowing is deemed as the adjustment of interest cost, it shall be part of the Borrowing Cost and capitalized as the asset cost.
(2) The foreign currency item applicable to IFRS 9 "Financial Instruments" 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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

recognized as the profit or loss, any exchange component of such profit or loss shall be recognized as the profit or loss.

5. Conversion of financial statements in foreign currency

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

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

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

Classification criteria for assets and liabilities distinguishing the current and noncurrent

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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

(1) The asset is expected to be realized in its normal business cycle, or it is intended to be sold or consumed.
(2) To hold the asset primarily for trading purposes.
(3) The asset is expected to be realized within 12 months after the reporting period.
(4) Cash or equivalent cash, except where there are restrictions on the exchange of such assets or the use of them for the settlement of liabilities at least 12 months after the reporting period.

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

(1) It is expected to pay off the liability in its normal business cycle.
(2) To hold the liability primarily for trading purposes.
(3) It is expected to repay the liability within 12 months after the reporting period.
(4) The repayment period of the liability cannot be extended unconditionally to at least 12 months after the reporting period. The liability clause, which may lead to the issuance of equity instrument at the option of the counterparty, does not affect the classification.

7. Cash and cash equivalent

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

8. Financial instruments

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

The financial assets and financial liabilities conforming to the applicable scope of IFRS 9 “Financial Instruments”, shall be measured at the fair value in the original

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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

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

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

A. Business model managing the financial assets
B. Cash flow characteristics of financial asset contracts

Financial assets measured at amortized cost

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

A. Business model managing the financial assets: holding the financial assets to collect the contract cash flow
B. Cash flow characteristics of financial asset contracts: the cash flow is entirely for the payment of principal and interest on the outstanding principal amount

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

for damage]. In addition to the column, through the amortization process or when recognizing the impairment profit or loss, the profit or loss shall be recognized in the profit or loss.

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

A. For financial assets of acquired or created credit impairment, multiplying the effective interest rate of credit after adjustment by the amortized cost of financial assets
B. If not the former, but becoming the credit impairment later, multiplying the effective interest rate by the amortized cost of financial assets

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

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

A. Business model managing the financial assets: collecting the contract cash flow and selling the financial assets
B. Cash flow characteristics of financial asset contracts: the cash flow is entirely for the payment of principal and interest on the outstanding principal amount

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

the equity to the profit or loss

C. Interests calculated by the effective interest method (multiplying the effective interest rate by the total book amount of financial assets) or in the following cases, shall be recognized as the profit or loss:
(a) For financial assets of acquired or created credit impairment, multiplying the effective interest rate of credit after adjustment by the amortized cost of financial assets
(b) If not the former, but becoming the credit impairment, multiplying the effective interest rate by the amortized cost of financial assets

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

Financial assets measured at fair value through profit or loss

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

(2) Impairment of financial assets

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

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

A. Unbiased and probability-weighted amounts determined by evaluating the possible outcomes
B. Time value of money
C. Reasonable and verifiable information relating to past events, current situation and forecast of future economic conditions (available on balance sheet date without excessive cost or input)

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

A. Measured at 12 months forecast credit losses: including the financial assets of credit risk not significantly increased from the original recognition, or determined as the low credit risk in the balance sheet day. In addition, also including the allowance for loss measured at the expected credit loss of the duration of the previous reporting period, but no longer meet the requirement after the balance sheet day for the significant increase of credit risk after the original recognition.
B. Measurement of the amount of expected credit loss during the term of existence: including the financial assets, whose credit risk has increased significantly since the original recognition, or the financial assets of acquired or created credit impairment.
C. For the account receivable or contract assets generated by the exchange within the scope of IFRS 15, the Group adopts the amount of expected credit losses during the duration of the existence period to measure the allowance for losses.
D. For lease receivable derived from transactions within the scope of IFRS 16 (IAS 17 before January 1, 2019), the Group measures loss allowances based

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

on lifetime expected credit loss

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

(3) Derecognition of financial assets

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

A. The equity from the cash flow contract of financial assets terminates.
B. Financial assets have been transferred and almost all the risks and rewards of the asset ownership have been transferred to others.
C. The assets have neither transferred nor retained almost all the risks and rewards of the ownership, but the control of the assets has transferred.

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

(4) Financial liability and equity instrument

Classification of liability or equity

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

Equity instrument

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

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

Financial liabilities

Financial liabilities within the scope of IFRS 9 are classified as the financial liabilities measured at fair value through profit or loss or the financial liabilities measured at amortized cost at the time of original recognition.

Financial liabilities measured at fair value through profit or loss

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

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

A. The main purpose for acquisition is to sell in the short term;
B. At the time of the original recognition, it belongs to part of the identifiable portfolio of financial instruments under the consolidation management, and there is evidence that the portfolio is the short-term profit-taking pattern; or
C. It is the derivative instrument (other than the financial guarantee contract or derivative instrument designated and with effective hedge instrument).

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.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Financial liabilities measured at amortized cost

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

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

Derecognition of financial liabilities

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

When the Group and creditors exchange the debt instrument in the significant difference terms, or change all or part of the existing financial liabilities terms and conditions (whether due to financial difficulties or not), to derecognize the original liability and recognize new liability, the difference between the book amount and the paid or payable total price (including the transfer of non-cash assets or assumption of liabilities) shall be recognized in the profit or loss.

(5) Offset of financial asset and liability

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

9. Derivative instruments

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

When the host contract is for non-financial asset or liability and the derivative instruments embedded in the host contract is not closely connected with host contract in term of its economic features and risks and the host contract is not measured at fair value through profit and loss, such embedded instrument shall be deemed as independent derivative instrument.

10. Fair value measurement

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

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

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

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

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

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

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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

11. Inventory

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

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

－ Raw materials Adopting the weighted average method based on actual purchase cost － Finished goods Including the direct raw materials, labour costs and fixed and goods in factory overhead at normal capacity, but excluding the process Borrowing Cost.

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

12. Investment by equity method

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

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

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

13. Property, plant and equipment

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

Depreciation is calculated on the straight-line basis according to the estimated

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

durable years of the following assets:

Buildings and structures 3~55 years (main structure of the building of 46 years, decoration of 10~15 years) Machinery equipment 1～21 years Miscellaneous equipment 1～21 years Right-of-use asset 2～50 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.

14. Investment property

Accounting treatments after January 1, 2019 are as below:

The Group owned investment property is measured at original cost, including transaction costs of acquiring such property. The carrying amount of investment property includes the costs contributed for repair or addition to current investment property, except for general maintenance expenses. After initial recognition, except for properties as satisfactory to the conditions of assets held for sale (or included in the disposition group held for sale) classified in IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, the investment properties are measured at costs. According to the handling of such model in IAS 16 “Property, Plant and Equipment”, if it is held by the lessee as right-of-use property and not held for sale as stipulated in IFRS 5, the IFRS 16 shall be adopted.

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

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

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

Accounting treatments after January 1, 2019 are as below:

The Group owned investment property is measured at original cost, including transaction costs of acquiring such property. The carrying amount of investment property includes the costs contributed for repair or addition to current investment property, except for general maintenance expenses. After initial recognition, the investment properties were measured at costs and followed regulations of IAS 16 “Property, Plant and Equipment”, except for properties as satisfactory to the conditions of assets held for sale (or included in the disposition group held for sale) classified in IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”.

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

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

The investment property is derecognized upon disposal or no longer available for use and no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss is recognized in profit or loss.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group determines to transfer in or transfer out investment property depending on physical purpose of assets.

When the property satisfies or is no longer satisfactory to the definition of investment property and is evidenced for change of purpose, the Group reclassified it as investment property or transfer it from investment property.

15. Lease

Accounting treatments after January 1, 2019 are as below:

Definition of lease:

Aiming at contract entered into after January 1, 2019, the Group assesses whether such contract is (or contain) a lease. If the contract has transferred the control power of identified assets over a period of time to exchange consideration, then such contract is (or contains) a lease. To evaluate whether the contract has transferred the control power of identified assets over a period of time, the Group assesses if following two conditions occur in entire using period:

(1) Acquire almost all rights of economic benefits from identified assets; and
(2) Control the rights of use for identified assets

The Group selects not to reassess whether contracts in place are (or contain) a lease on January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 is applicable to IFRS 16. Contracts identified as not containing a lease under IAS 17 and IFRIC 4 is not applicable to IFRS 16.

For a contract is (or contains) a lease, the Group accounts for each lease components as a single lease and separates them from non-lease components. For a contract that contains a lease component and non-lease component, the Group allocates the consideration of contract to lease components on the basis of single price corresponding to each lease component and sum of single price for non-lease components. The single price corresponding to lease and nonlease components depends on the price collected by the lessor (or similar supplier) to such component (or similar component) respectively. The observable single price is unavailable at all times; the maximized observable information is used to estimate such single price.

The Group as a lessee

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Except for short-term or low value asset lease, the Group recognizes right-ofuse assets and lease liabilities for all leases.

The Group measures lease liabilities based on the present value of lease payables at the commencement date. If the implied interest rate of lease is easily defined, the lease payment is discounted by such interest rate. If such interest rate is uneasily defined, the lessee’s incremental borrowing rate is adopted. The lease payment accrued in lease liabilities, including following payments in related with right-of-use of subject property within the lease period unpaid by the commencement date:

(1) Fixed payment (including physical fixed payment) deducted by any lease incentive collectible;

(2) The variable lease payment depending on certain index or rate (original measurement by using index or rate at the commencement date);

(3) The amount to be paid by the lessee with residual guarantee

(4) The exercise price for purchasing option, if the Group may reasonably assure to exercise such option; and

(5) The fine must be paid for termination of lease, if the lessee will exercise the option for termination of lease during the lease period

Subsequently, lease liabilities are measured at amortized cost. The increased carrying amount of lease liabilities using the effective interest method is to reflect the interest of lease liability; and the lease payment will reduce the carrying amount of lease liabilities.

Right-of-use assets are measured at cost at the commencement date of the lease. The cost of right-of-use assets comprises

(1) The initial measurement of lease liabilities

(2) The lease payments made at or before the commencement date deducted by any lease incentive collected

(3) Any initial direct costs of the lessee; and

(4) The estimate of costs needed to demolish, remove subject assets and restoration of the site, or restore the underlying assets.

Subsequent measurement is calculated as cost less accumulated depreciation and accumulated impairment loss, i.e. cost model is applicable to measure the right-ofuse properties.

If the ownership of subject property will be transferred to the Group upon the expiration of lease period, the right-of-property property will be depreciated from the commencement date until the useful lives of subject property is expired when

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

the costs of right-of-use property reflects that the Group will exercise the call option. Otherwise, the Group will depreciate the right-of-use property from the commencement date until the useful lives or lease period of subject property is expired, which one is earlier.

The Group applies IAS 36 “Assets Impairment” to determine whether the right-ofuse property has been impaired and manage any identified impairment loss Except for qualified and selected short-term leases or low value target asset, the Group recognizes right-of-use assets and lease liabilities in balance sheet and recognizes lease relevant depreciation and interest expenses respectively in comprehensive income statement.

For short-term leases or lease of low value target asset, the lease payments of such leases are recognized as expenses over the term of lease.

The Group as a lessor

The Group divides each lease as operating or financing lease at the commencement date of contract. Leases are classified as financing lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. At the commencement date, the Group recognizes all assets held under financing lease and the net of lease investment is presented as financing lease receivable in balance sheet. For contract comprises lease and non-lease components, the Group allocates the consideration of contract pursuant to IFRS 15.

The Group recognizes lease payment from operating lease as rental income on straight-line or another systematic basis. For variable lease payments that do not depend on an index or a rate are recognized as rental income in the periods in which they are incurred

The accounting handling before January 1, 2019:

The Group as the lessee

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

profit or loss.

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

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

The Group as the leaser

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

The Group as the lessee

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

recognized on the basis of the shorter one in the estimated durable years and the lease term of the asset.

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

The Group as the leaser

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

16. Intangible asset

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

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

Trademark right

Trademark right is the right legally acquired and purchased.

Patent right

Patent right is the right legally acquired and purchased.

Others

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

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

Durable years Applied amortization method Internal generated or externally acquired	Patent right	Franchise	Channel right
	10~20 years Amortizing during the patent right period in the straight-line method Externally acquired	12.5 years Amortizing during the trademark right period in the straight-line method Externally acquired	14.5 years Amortizing during the channel right period in the straight-line method Externally acquired

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

17. Impairment of non-financial assets

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

At the end of each reporting period, the Group evaluates the assets other than the goodwill for any sign that previously recognized impairment losses may have disappeared or decreased. If such sign exists, the Group shall estimate the recoverable amount of the asset or cash generating unit. If the recoverable amount is increased by the change of the estimated service potential of the asset, the impairment will be recovered. However, the book amount after the recovery shall not exceed the book amount deducting the depreciation or amortization of the asset in the condition of not recognizing the impairment loss.

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

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

18. Treasury stock

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

19. Revenue recognition

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

Sales of goods

The Group manufactures and sells goods, and recognizes the revenue when transporting the goods to the customer and the customer has its control (namely, the customer leads the use of the goods and acquires almost all of the remaining benefit capacity of the goods); the main products are the optical information service products as CD, organic light emitting diode (OLED) display, conductive glass and green product (solar module/LED/battery related products), and the revenue is recognized based on the contract stated price.

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

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

20. Borrowing cost

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

21. Retirement benefit plan

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

For the retirement benefit plan of defined contribution plan, The Group and domestic subsidiary 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. Foreign subsidiaries and branches shall allocate according to local specific proportion and recognize as current expenses.

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

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

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

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

result of withdrawals and welfare payments.

22. Income tax

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

Current income tax

The current income tax liabilities (assets) related to the current period and the earlier period shall be measured by the legislative or substantive legislative tax rates and tax laws at the end of the reporting period. The income tax of the current period recognized in other comprehensive profit or loss or directly recognized in the equity item, shall be recognized in other comprehensive profit or loss or the equity, instead of the profit or loss.

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

Deferred income tax

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

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

(1) original recognition of goodwill; or not generated from Business Combinations and not affecting either the accounting profits or the taxable income (loss) in the original recognition of asset or liability at the time of the transaction;
(2) taxable temporary difference generated from the investment in equity of subsidiary, affiliated enterprise and joint arrangements, whose recovery time can be controlled and unlikely to occur in the foreseeable future.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

23. Business merger and goodwill

Acquisition method is adopted for the accounting treatment of business merger. The transfer consideration of business merger, the identifiable assets acquired and the liabilities assumed, are the measured by fair value on the acquisition date. Acquirer for each business merger measures the non-controlling equity at fair value or the

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

relative ratio of acquiree’s identifiable net assets. The acquisition related costs shall be the current expenses and include the management fee.

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

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

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

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

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

Where the disposal includes the cash generating unit of goodwill, the book amount of the disposal includes the goodwill associated with the disposal operation. The

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

disposed goodwill is measured against relative recoverable amount of the disposal operation and the retained portion.

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

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

1. Judgment

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

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

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

2. Estimate and assumption

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

(1) Impairment of non-financial assets

When the book amount of asset or cash generating unit is greater than its recoverable amount, the impairment occurs. Recoverable amount refers to the

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

(2) Inventory

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

VI. Description of important accounting items

1. Cash and cash equivalent

Cash on hand Current deposit and cheque deposit Fixed-term deposit Cash equivalents Total	December 31, 2019	December 31, 2018
	$5,792 2,549,045 1,460,662 30,016	$3,605 2,433,915 1,060,218 -
	$4,045,515	$3,497,738

Financial assets measured at fair value through profit or loss

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Force to measure at fair value through profit or loss: Stock Fund Total Current Non-current Total	December 31, 2019	December 31, 2018
	$132,820 399,765	$101,845 240,050 $341,895 $6,815 335,080 $341,895
	$532,585
	$26,237 506,348
	$532,585

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

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

Equity instrument investment measured at fair value through other comprehensive profit or loss: Stock of listed company Stock of unlisted company Total Current Non-current Total	December 31, 2019	December 31, 2018
	$132,820 399,765	$101,845 240,050 $341,895 $6,815 335,080 $341,895
	$532,585
	$26,237 506,348
	$532,585

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

For investments in equity instruments at FVTOCI, the information regarding the dividends recognized in 2019 and 2018 are as follows:

Investment held as of balance sheet Investment derecognized Dividend income recognized	2019	2018
	$16,583 -	$38,572 -
	$16,583	$38,572

The Group considers selling and derecognizing some investments in equity instruments at FVTOCI in strategic investment consideration, the information regarding the derecognition in 2019 and 2018 is as follows:

The fair value on derecognition date The accumulated gain (loss) on disposal reclassified from other equity to retained earnings	2019	2018
	$8,002 (2,574)	$49,384 (103,024)

4. Financial assets measured at amortized cost

Restricted bank deposit Current Non-current Total	December 31, 2019	December 31, 2018
	$282,270	$124,730
	$118,857 163,413	$89,429 35,301
	$282,270	$124,730

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

5 Notes receivable

Notes receivable – arising from operation(total carrying amount) Less: reserve for loss Total	December 31, 2019	December 31, 2018
	$28,905 -	$9,031 -
	$28,905	$9,031

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

Not collateral is provided for the notes receivable of the Group

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

6 Account receivable and account receivable - interested party

Account receivable (total carrying amount) Less: reserve for loss Subtotal Account receivable - interested party(total carrying amount) Less: reserve for loss Subtotal Total	December 31, 2019	December 31, 2018
	$1,371,954 (251,341)	$1,805,889 (228,717)
	1,120,613	1,577,172
	7,258 -	32 -
	7,258	32
	$1,127,871	$1,577,204

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

The credit period to the customer is usually 30 to 180 days. The total carrying mounts as of December 31, 2019 and 2018 were NT$ 1,379,212,000 and NT$ 1,805,921,000 respectively. Please refer to note VI.21 for loss allowance related information and note XII for credit risks related information.

7. Finance lease receivables

Total lease investment Less than one year More than one year but less than five year Over five years Total Less: unearned finance income Present value of minimum lease payment receivables	2019.12.31	2018.12.31
	$8,531 41,393 53,059	$8,617 33,616 69,184
	102,983 (54,375)	111,417 (61,152)
	$48,608	$50,265

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Finance lease receivables Current Non-current Present value of minimum lease payment receivables	$1,997 46,611	$1,840 48,425
	$48,608	$50,265

The Group has concluded finance lease agreements for renting some equipment. All leases are calculated in New Taiwan Dollar and the average term of finance lease is 20 years. The finance lease receivables are calculated by the discounted net cash flow from anticipated lease operation.

As of December 31, 2019, there were neither overdue nor impaired finance lease receivables upon the evaluation of the Group.

Please refer to note VIII for the collateral provided for finance lease receivables.

8. Inventory

Raw material Semi-finished goods and goods in process Finished goods Commodity inventory In-transit inventory Total	December 31, 2019	December 31, 2018
	$736,730 750,964 268,018 322,008 55,798	$934,007 1,062,452 261,089 364,558 156,691
	$2,133,518	$2,778,797

The inventory costs recognized by the Group as expenses were NT$ 7,123,477,000 and NT$ 8,780,187,000 in 2019 and 2018 respectively, including gain on recovery of inventory price NT$ 8,498,000 and NT$ 81,545,000 in 2019 and 20188.

The gain on recovery of inventory price abovementioned was from some price declined inventory sold or scrapped

9. Investment by equity method

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

Invested companyname	December 31,2019	December 31,2019	December 31,2018	December 31,2018
	Amount	Share- holding Ratio %	Amount	Share- holding Ratio %
Investment to subsidiaries: GoldenRiver	$6,813	23.14	$7,414	23.14

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Luminit	32,112	31.03	-	-
Cashido	-	-	43,541	31.03
Finesil	-	-	35,042	48.93
Echem	-	-	53,791	37.86
Total	$38,925		$139,788

The Group acquired the control power over Cashido Technology Co., Ltd. and FINSEL on second quarter of 2019. The shares recognized by using equity method was remeasured at fair value. Please refer to note IV.3 and VI.28.

The Group participated in the capital increment by cash of Luminit Automotive Technologies in February and September 2019, with investment amount NT$ 30,000,000. The Group has acquired total 1,350,000 shares and 31.03% shareholding of Luminit Automotive Technologies and deemed it as an Associate. The Group sold all the shares of Echem Hightech Co., Ltd. held in June 2019, with price NT$ 75,746,000 and gain on disposal of investment NT$ 23,453,000. (1) Investment in Associates

The Group's investment in affiliated enterprises is not material to the Group. The aggregate book amounts of the affiliated enterprises invested by the Group as of December 31, 2019 and December 31, 2018 are respectively NT$ 38,925,000 and NT$ 139,788,000, 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	2019	2018
	$4,101 (602)	$(5,150) 844
	$3,499	$(4,306)

The above-mentioned investment to affiliated enterprises has no contingent liabilities or capital commitments as of December 31, 2019 and December 31, 2018, and no guarantee has been provided.

10. Property, plant and equipment

2019.12.31 2018.12.31(Note)

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Private use property, plant and equipment Property, plant and equipment for operating lease Total	$10,196,735 67,905
	$10,264,640

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

(1) Private use property, plant and equipment (applicable to IFRS 16))

Land and land improvement	Buildings and structures	Machinery equipment	Other equipment	Construction in progress and Equipment to be tested	Total
$2,111,268 - 86,944 (1,206) - (1,050) (90)	$8,250,920 170 74,890 (42,943) - 76,618 (48,942)	$27,528,680 94,303 33,922 (1,693,463) (37,028) (37,822) (318,142)	$1,960,391 24,087 34,569 (425,348) (12,860) (74,824) (39,311)	$755,575 518,756 - (5,802) - (889,406) (36,694)	$40,606,834 637,316 230,325 (2,168,762) (49,888) (926,484) (443,179)
$2,195,866	$8,310,713	$25,570,450	$1,466,704	$342,429	$37,886,162
$- - - - - - - -	$5,167,920 150,053 53,955 109,410 (35,828) - (43,605) (23,897)	$21,662,230 1,354,607 27,907 1,034,545 (1,761,997) (37,028) (907,150) (250,369)	$1,480,366 73,747 28,677 12,150 (314,738) (12,347) (48,877) (30,304)	$12 - - - - - (12) -	$28,310,528 1,578,408 110,540 1,156,105 (2,112,563) (49,375) (999,644) (304,571)
$-	$5,378,008	$21,122,745	$1,188,674	$-	$27,689,427

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

Net book amount: December 31, 2019

$2,195,866 $2,937,705 $4,447,705 $278,030 $342,429 $10,196,735

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

The Group has reduced the amount of some property, plant and equipment to recoverable amount, resulting in impairment loss NT$ 1,156,105,000 in 2019. The impairment loss is recognized in comprehensive income statement. (2) Property, plant and equipment for operating lease (applicable to IFRS 16)

Buildings and structures	Machinery equipment	Other equipment	Total
$82,578 - - 16,550 (1,005)	$388,930 - 19,714 (290,386) (2,503)	$- - - 1,855 (70)	$471,508 - 19,714 (271,981) (3,578)
$98,123	$115,755	$1,785	$215,663
$23,920 9,163 - 12,769 (696)	$234,238 15,573 5,192 (152,187) (1,653)	$- 375 - 1,113 (49)	$258,158 25,111 5,192 (134,305) (2,398)
$45,156	$101,163	$1,439	$147,758
$52,967	$14,592	$346	$67,905

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

				Equipment to be tested
$2,111,305 - - - - (37)	$8,286,530 6,786 - (24,305) 82,467 (17,980)	$25,599,087 381,703 1,024,476 (701,607) 1,359,931 (134,910)	$2,400,588 8,059 1,200 (43,198) 10,204 (27,532)	$1,696,803 763,386 58,458 (1,280) (1,767,766) 5,974	$40,094,313 1,159,934 1,084,134 (770,390) (315,164) (174,485)
$2,111,268	$8,333,498	$27,528,680	$2,349,321	$755,575	$41,078,342
$- - - - - -	$5,036,212 174,074 - (24,082) 14,166 (8,530)	$21,264,913 1,214,687 9,411 (700,081) (14,981) (111,719)	$1,676,166 91,811 - (33,884) 1,940 (21,429)	$- - 12 - - -	$27,977,291 1,480,572 9,423 (758,047) 1,125 (141,678)
$-	$5,191,840	$21,662,230	$1,714,604	$12	$28,568,686
$2,111,268	$3,141,658	$5,866,450	$634,717	$755,563	$12,509,656

For collateral provided against the property, plant and equipment, please refer to note VIII of notes to consolidated financial statements.

11. Investment property

	Buildings	Total
$55,676 - -	$930,125 - 16,038	$985,801 - 16,038
$55,676	$946,163	$1,001,839
$55,676 -	$934,791 -	$990,467 -

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

-	(6,502)	(6,502)
-	1,836	1,836
$55,676	$930,125	$985,801
$- - -	$639,378 19,000 -	$639,378 19,000 -
$-	$658,378	$658,378
$- - - -	$634,535 11,345 (6,502) -	$634,535 11,345 (6,502) -
$- $55,676	$639,378 $287,785	$639,378
		$343,461
$55,676	$290,747	$346,423
	2019	2018 $62,731 (11,855) - $50,876
	$68,207 (11,798) -
	$56,409

Guarantee to investment property provided by the Group shall refer to Note VIII.

The investment property held by the Group is not measured according to the fair value, but only reveals the information of its fair value, which belongs to Level 3. The fair value of the investment property held by the Group was NT$ 958,545,000 and NT$ 1,030,926,000 on December 31, 2019 and December 31, 2018, respectively. On December 31, 2018, the fair value is combined with the estimate

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

according to the similar target’s recent transaction price of property transaction actual price query in Ministry of the Interior NT$ 867,602,000 and the evaluation of independent external expert NT$ 163,324,000; the determination of fair value is based on market evidence, using the evaluation method of weighted average calculation of income method and comparison method, in which the mainly used input value is the income capitalization rate.

12. Intangible asset

Trademark right	Patent right	Goodwikk	Other intangible asset	Franchise Total
	$493,344 614 - 1,091 -	$476,545 - - - -	$434,978 - - - -	$- $2,325,904 - 614 30,000 30,000 - 1,926 - (5,959)
$915,913	$495,049	$476,545	$434,978	$30,000 $2,352,845
	$493,344 - - - -	$476,545 - - - -	$434,978 - - - -	$- $2,329,078 - - - - - - - (3,174)
$921,037	$493,344	$476,545	$434,978	$- $2,325,904

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Amortization and impairment: $765,792 January 1, 2019 75,097 Amortization 76,217 Impairment (1,908) Transfer $915,198 Influence of exchange rate change $737,997 December 31, 2019 30,528 January 1, 2018 - Amortization (2,733) Impairment $765,792 Transfer Influence of exchange rate change December 31, 2018 $715 $155,245 Net book amount: December 31, 2019 $155,245 December 31, 2018 $186,214	$458,990 9,994 - - $468,984 $445,390	$- - - - $- $-	$232,541 10,367 129,865 - $372,773 $203,621	$- 5,000 - - $5,000 $-	$1,457,323 100,458 206,082 (1,908) $1,761,955 $1,387,008
30,528	13,600	-	28,920	-	73,048
	- - $458,990	- - $-	- - $232,541	- - $-	- (2,733) $1,457,323
$715	$26,065	$476,545	$62,205	$25,000	$590,530
$155,245 $155,245	$34,354 $34,354	$476,545 $476,545	$202,437 $202,437	$-	$868,581 $868,581
$186,214	$47,954	$476,545	$231,357		$942,070

Amortization amount recognized as intangible asset as below:

Operating cost and operating expense	2019	2018
	$100,458	$73,048

The Group has reduced the amount of some intangible assets to recoverable amount, resulting in impairment loss NT$ 209,496,000 in 2019.

13. Other non-current assets

2 2019.12.31 2018.12.31

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

2 2019.12.31 Long-term prepaid rent (Note) Refundable deposit $70,243 Net defined benefit assets - Other non-current assets－other - Total $70,243	2 2019.12.31 Long-term prepaid rent (Note) Refundable deposit $70,243 Net defined benefit assets - Other non-current assets－other - Total $70,243	2018.12.31
	(Note) $70,243 - -	$103,684 54,592 8,575 127,937
	$70,243	$294,788

As of December 31, 2019 and 2018, the long-term prepaid rents were all right-ofproperty of land.

For collateral provided against the other non-current assets, please refer to note VIII of notes to consolidated financial statements.

Goodwill impairment test

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

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

Goodwill	Storage media department	Storage media department
	2019.12.31	2018.12.31
	$476,545	$476,545

Storage media cash generating unit

The recoverable amount of storage media cash generating unit is determined according to the use value, and the use value is calculated from the cash flow forecast of 10-year financial budget estimated by the management level. The cash flow forecast has been updated to reflect relevant product demand change. The cash flow forecast used discount rate in 2019 and December 31, 2018 is 9% and 10%.

Key assumptions used to calculate the use value

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

(1) discount rate

(2) gross profit rate
(3) market share during the budget period; and
(4) revenue growth rate during the extrapolation budget period

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

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

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

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

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

Sensitivity to assumption change

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

15. Short-term borrowing

Borrowing by financial institutions Interest rate range (%)	2019.12.31	2018.12.31
	$1,744,767	$2,119,882
	0.9500~4.8503	1.1063~4.4456

Up to December 31, 2019 and December 31, 2018, the unused short-term borrowing limits of the Group are respectively NT$ 2,053,779,000 and NT$ 1,094,175,000.

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

16. Short-term notes and bills payable

Guarantee agency	2019.12.31	2018.12.31
Commercial paper issued book value Less: Discount on short-term notes and bills payable Net amount Interest rate range (%)	$79,200 (317)	$251,300 (321)
	$78,883	$250,979
	0.7120~2.5380	0.5970~0.8500

For collateral provided against the short-term notes payable, please refer to note VIII of notes to consolidated financial statements.

17. Long-term borrowing

Borrowing by financial institutions Borrowing by non-financial institutions Total Less: Discount on long-term notes payable Long-term borrowing maturing within one year or one business cycle Net amount Interest rate range (%)	2019.12.31	2018.12.31
	$5,990,307 - 5,990,307 (3,841) (1,172,211)	$5,833,833 1,900 5,835,733 (1,761) (1,368,912)
	$4,814,255	$4,465,060
	1.5500~2.8120	1.6000~3.7611

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

B. As of December 31, 2019 and December 31, 2018, the outstanding loan balance of The Group is NT$ 673,000,000 and NT$ 691,000,000 respectively.
(2) The Group signed the three-year NT$ 500 million financing commitment contract with Yuanta Commercial Bank in March 2019. 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$ 10 billion.
B. As of December 31, 2019 and December 31, 2018, the outstanding loan balance of The Group is NT$ 450,000,000 and NT$ 0 respectively.
(3) Subsidiary Ritdisplay Corporation signed the 13-year guarantee financing commitment contract of NT$9.1 billion with joint credit syndicate as Bank of Taiwan in June 2002. The main commitments of above joint credit case are as follows:
A. In addition to the formal replacement of machinery equipment and the sale of inventories, the majority of the guarantor bank's consent shall be required in the event of the sale, transfer, loan, lease or other disposal of all or substantial part of the assets, or in the case of material change of business or undertaking.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

And also, the subsidiary Ritdisplay signed the credit contract of NT$ 1.5 billion with the joint credit syndicate as Bank of Taiwan on July 28, 2016 for the unliquidated balance of participating loan case of NT$ 9.1 billion plus the medium-term operation revolving funds, with the loan period from August 15, 2016 to August 15, 2021, and the payment method is to pay the first installment payment after 6 months from the date of the first use, then every 6 months as one installment, to pay back in 10 installments averagely. The subsidiary Ritdisplay Corporation repaid the amount earlier in February 2019.

B. Financial commitment of joint loan

Maintain the following financial ratios and agreements:

(a) current ratio (current assets/current liabilities): above 80% at the end of 2016 and 2017, above 90% in the first half year of 2018, and above 100% at the end of 2018.
(b) liability ratio (total liability/net tangible value): below 350% at the end of

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

2016, below 250% at the end of 2017, below 200% from 2018 to 2019, and below 150% from 2020.

(c) interest cover ratio [(net profit before tax + depreciation + amortization + interest expense) / interest expense]: above 5 times at the end of 2016 and above 6 times from 2017.
(d) net tangible value (shareholders' equity - intangible asset): above NT$500,000,000 at the end of 2016, and above NT$ 1,000,000,000 from 2017.

The above ratio and standard shall be checked every six months according to the individual financial reports of the year (half year) of the accountant audit (review) visa. The financial ratio as of December 31, 2019 was satisfactory to the regulations of syndicated loan contract granted by united banking group.

C. The outstanding loan balances of above joint credit loans on December 31, 2019 and December 31, 2018 were respectively NT$ 0 and NT$ 973,010,000. Afterward, the loan was repaid earlier in February 2019.
(4) Subsidiary Ritdisplay Corporation signed the 5-year guarantee financing commitment contract of NT$ 1.8 billion with joint credit syndicate as Bank of Taiwan in December 2018.
A. The financial commitment to syndicated loan

Maintain financial ratios and agreements as follows:

(a) Current ratio (current assets/ current liabilities): keep at 100% and above
(b) Debt ratio (total liabilities/tangible net worth): keep under 250%
(c) Interest coverage ratio [(net income before tax + depreciation + amortization+ interest expense)/interest expense]: keep at least 6 times
(d) Tangible net worth (shareholders’ equity – intangible assets): keep at least NT$ 1,000,000,000

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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

(review) visa.

B. The financial ratio as of December 31, 2019 was satisfactory to the regulations of syndicated loan contract granted by preceding Bank of Tiwan such united banking group.
(5) Subsidiary U-tech Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 100,000,000 with joint credit syndicate as Far Eastern International Bank in January 2018. The major commitment for preceding loan are (1) current ratio shall not be not lower than 120%, (2) debt ratio shall not be higher than 100% in consolidated financial statements.
(6) Subsidiary U-tech Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 130,000,000 with joint credit syndicate as CTBC Bank in May 2018. The major commitment for preceding loan are (1) tangible net worth ratio shall not be not lower than 2.15 billion, (2) current ratio shall not be lower than 150%, (3) total liabilities/tangible net worth shall not be higher than 100% in consolidated financial statements.
(7) Subsidiary U-tech Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 150,000,000 with joint credit syndicate as O-Bank in December 2019. The major commitment for preceding loan are (1) tangible net worth ratio shall not be not lower than 2.2 billion, (2) total liabilities/tangible net worth shall not be higher than 100% in consolidated financial statements.
(8) Subsidiary AimCore Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 150,000,000 with joint credit syndicate as Chang Hwa Commercial Bank in June 2014. The major commitment for preceding loan are (1) current ratio shall not be lower than 150%, (2) net income before tax shall be at least 3%, (3) if both financial ratios are satisfactory to the criteria, then the interest rate markup shall be 0.66%; if only one criteria is satisfactory, then the interest rate markup shall be 0.86%; if both ratios are unsatisfactory or without audited financial statements provided, then the interest rate markup will be changed to 1.06%.
(9) Subsidiary AimCore Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 39,000,000 with joint credit syndicate as Chang Hwa Commercial Bank in September 2014. The major commitment for preceding loan are (1) current ratio shall not be lower than 150%, (2) net income before tax shall be at least 3%, (3) if both financial ratios are satisfactory to the criteria, then the interest rate markup shall be 0.86%; if only one criteria is satisfactory, then the interest rate markup shall be 1.06%; if both ratios are unsatisfactory or without audited financial statements provided, then

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

the interest rate markup will be changed to 1.26%.

(10) Subsidiary AimCore Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 163,000,000 with joint credit syndicate as Chang Hwa Commercial Bank in February 2015. The major commitment for preceding loan are (1) current ratio shall not be lower than 150%, (2) net income before tax shall be at least 3%, (3) if both financial ratios are satisfactory to the criteria, then the interest rate markup shall be 0.66%; if only one criteria is satisfactory, then the interest rate markup shall be 0.86%.
(11) Subsidiary AimCore Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 36,000,000 with joint credit syndicate as Chang Hwa Commercial Bank in July 2018. The major commitment for preceding loan are (1) current ratio shall not be lower than 150%, (2) net income before tax shall be at least 3%, (3) if both financial ratios are satisfactory to the criteria, then the interest rate markup shall be 0.74%; if only one criteria is satisfactory, then the interest rate markup shall be 1.06%; if both ratios are unsatisfactory or without audited financial statements provided, then the interest rate markup will be changed to 1.26%.
(12) Subsidiary AimCore Technology Co., Ltd. signed the guarantee financing commitment contract of NT$ 300,000,000 with joint credit syndicate as Chang Hwa Commercial Bank in October 2018. The major commitment for preceding loan are (1) current ratio shall not be lower than 150%, (2) net income before tax shall be at least 3%, (3) if both financial ratios are satisfactory to the criteria, then the interest rate markup shall be 0.54%; if only one criteria is satisfactory, then the interest rate markup shall be 0.86%; if both ratios are unsatisfactory or without audited financial statements provided, then the interest rate markup will be changed to 1.06%.
(13) The remaining loan repayment period starts from 2014 and ends in 2034 by stages.

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

Retirement benefit plan

Defined contribution plan

The Group and domestic subsidiary’s employee retirement method under the “Labor Pensions Rule” is the defined contribution plan. In accordance with the provisions, The Group and domestic subsidiary shall contribute no less than 6% of the

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

employee's monthly salary to the pension fund. In accordance with the employee retirement policy set forth, The Group and domestic subsidiary transfers in 6% of the employee's salary to the personal pension account in the Labor Insurance Bureau every month.

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

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

The Group confirmed and recognized transfer program costs in 2019 and 2018 are NT$ 54,170,000 and NT$ 61,197,000, respectively.

The increased pension expenses for appointed manager of subsidiary Ritdisplay Corporation in 2019 and 2018 were NT$ 4,326,000 and NT$ 6,345,000, respectively.

Defined benefit plan

The employee pension plan established by The Group and domestic subsidiary in accordance with the "Labor Standards Law" is the defined benefit plan, and the payment of the employee pension is calculated based on the base of service experience and the average monthly salary at the time of approved retirement. Two bases shall be given for each year of service less than 15 years (included), and one base shall be given for each year of service more than 15 years, provided that the maximum accumulative base number shall be 45. The Group and domestic subsidiary shall, in accordance with the Labor Standards Law, contribute 2% of the total salary to the pension fund on a monthly basis, which shall be deposited in the special account in the name of the Labor Retirement Reserve Supervision Committee in the Bank of Taiwan. In addition, the Group and domestic subsidiary shall, before the end of each fiscal year, estimate the balance of the aforesaid labor retirement reserve account. If the balance is less than the amount of the aforesaid pension for the workers who are eligible for retirement in the next fiscal year, the Group shall allocate the difference before the end of March of the next fiscal year.

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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 Group 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, 2019, the Company's defined benefit plan is expected to allocate NT$13,237,000 for the next year.

As of December 31, 2019 and December 31, 2018, the weighted average duration of defined benefit plan of the Group is 12 to 14 years and 13 to 16 years respectively.

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

Current service cost Net interest of net defined benefit liability (asset) Previous service cost Total	2019	2018
	$1,134 1,780 -	$892 2,455 -
	$2,914	$3,347

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

Present value of defined benefit obligation Fair value of plan asset Net amount of net defined benefit liability (asset)	2019.12.31	2018.12.31
	$447,343 279,100	$417,454 271,751
	$168,243	$145,703

Information expressed in assets and liabilities is as follows:

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Net defined benefit assets (listed in other non-current assets) Net defined benefit liabilities Net defined benefit liability (asset) adjustment: Present value of defined benefit obligation January 1, 2018 $430,097 Current service cost 1,262 Interest expense (revenue) 6,663 Previous service cost and liquidation profit or loss - Subtotal 438,022 Defined benefit liability /asset remeasurement amount: Demographic assumption change generated actuarial profit or loss 284 Financial assumption change generated actuarial profit or loss 7,591 Experience adjustment (881) Defined benefit asset remeasurement amount - Subtotal 6,994 Benefit of payment (27,562) Employer contribution amount - Effects of Changes in Foreign Exchange Rates - December 31, 2018 $417,454 Current service cost 1,134 Interest expense (revenue) 5,941 Previous service cost and liquidation -	2019.12.31	2018.12.31
	$-	$(8,575)
	$168,243	$154,278
	Fair value of plan asset $273,562 - 4,578 - 278,140 - - - 6,671 6,671 (27,562) 14,502 - $271,751 - 4,161 -	Net defined benefit liability (asset)
$430,097 1,262 6,663 -		$156,535 1,262 2,085 -
438,022		159,882
284 7,591 (881) -		284 7,591 (881) (6,671)
6,994		323
(27,562) - -		- (14,502) -
$417,454 1,134 5,941 -		$145,703 1,134 1,780 -

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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, 2019		275,912 - - - 8,515 8,515 (18,565) 13,238 - $279,100
	424,529		148,617
	879 14,242 26,258 -		879 14,242 26,258 (8,515)
	41,379		32,864
	(18,565) - -		- (13,238) -
	$447,343		$168,243

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

Discount rate Expected salary increasing rate	2019.12.31	2018.12.31
	1.35% 2.00%	1.60% 2.00%

Every significant actuarial assumption sensitivity analysis:

Discount rate increasing 0.5%	2019	2019	2018	2018
	Defined benefit obligation increasing	Defined benefit obligation decreasing	Defined benefit obligation increasing	Defined benefit obligation decreasing
	$-	$25,614	$-	$26,209

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Discount rate	28,305	-	28,705	-
decreasing 0.5%
Expected salary	28,204	-	28,725	-
increasing 0.5%
Expected salary	-	25,791	-	26,485
decreasing 0.5%

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.

19. Equity

(1) Common stock

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

To improve the financial structure, the Group 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 18, 2018 is the capital reduction base day in the shareholder meeting on July 19, 2018.

(2) Capital surplus

Difference between actually acquired or disposed

2019.12.31 2018.12.31 $584,791 $583,288

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

subsidiary equity price and book value Donated assets received Recognizing the change in ownership equity of subsidiary Total	4,937 540,190	4,937 362,610
	$1,129,918	$950,835

According to the law, the capital surplus shall not be used except to cover the Company's losses. When the Group 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

The Subsidiaries sold all the held stocks of the Group in 2018, totally 27,547,000 shares, and total sales price was NT$ 167,085,000, with the difference of NT$ 2,428,914,000 to the book value of NT$ 2,261,829,000, for the debt retained surplus. As of December 31, 2019 and December 31, 2018, there is no treasury stock.

(4) Surplus distribution and dividend policy

The Articles of Association of the Group stipulates that the industrial environment in which the Group is located is changing rapidly and the life cycle of the Group 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 profitseeking 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

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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 Group in the current year.

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

After adopting IFRS, the Group 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 Group does not need to set aside any special surplus reserve due to the first application of IFRS.

Please refer to Note VI. 23 for information on the basis and amount of the appraisal of employee salary and the remuneration of the board of directors.

(5) Non-controlling interest

Beginning balance (according to IAS 39) Influence number for retroactive application and retroactive recompilation	2019	2018
	$4,037,714 -	$4,154,110 (4,955)

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Beginning balance (according to IFRS 9) Current net profit attributed to non-controlling interest Other comprehensive profit or loss attributed to non-controlling interest: Exchange difference of financial statements conversion of foreign operating institutes Unrealized profit or loss of financial assets measured at fair value through other comprehensive profit or loss Actuarial profit or loss of defined benefit plan Actually acquired or sold subsidiary share Cash Dividends New share issued by subsidiary not subscribed according to shareholding ratio Acquiring through business merger Ending balance	2019	2018
	4,037,714 (316,575) (19,312) (122,205) (9,615) 208,335 (120,477) 386,216 116,659	4,149,155 58,321 (10,858) (47,934) 124 (25,253) (93,033) (747) 7,939
	$4,160,740	$4,037,714

20. Operating revenue

Revenue from Contracts with Customers Revenue from sales of goods Other operating revenue Total	2019	2018
	7,427,761 351,362 $7,779,123	$9,236,935 121,726 $9,358,661

Information related to Revenue from Contracts with Customers on 2019 and 2018 is as below:

(1) Revenue subdivision

2019

Storage media	OLED department	Other department	Total

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

department
$5,000,917	$1,706,274	$720,570	$7,427,761
302,807	8,558	39,997	351,362
$5,303,724	1,714,832	$760,567	$7,779,123
$5,303,724	$1,714,832	$760,567	$7,779,123

2018

Storage

	Storage
Sales of goods Others Total Revenue recognition time and place: In certain time and place	media department	OLED department	Other department	Total
	$5,765,647	$2,514,529	$956,759	$9,236,935
	87,526	5,415	28,785	121,726
	$5,853,173	$2,519,944	$985,544	$9,358,661
	$5,853,173	$2,519,944	$985,544	$9,358,661

(2) Contract balance

A. Contract liability – current

Sales of goods	2019.12.31 65,917	2018.12.31	2018.1.1
		$65,334	$108,838

In 2019 and 2018, the contract liability balance of the Group decreases sharply due to majority performance obligations have been met, in which, NT$ 65,334,000 and NT$ 108,838 is the beginning balance and recognized as revenue in current period.

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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

None.

Expected credit impairment loss

Operating expense – expected credit impairment loss Notes receivable Account receivable Rents receivable Finance lease receivable Non-operating revenue and expense – expected credit impairment loss Other receivables Total	2018	2017(Note)

	$56,716 -	$(13,389) 10 $(13,379)
	$56,716

Credit risk related information shall refer to Note XII.

The Group 's receivables (including the bill receivable, account receivable and other receivable) adopts the expected amount of credit loss during the existence term of the Group to measure the reserve for loss. The amount of reserve for loss is estimated at December 31, 2019 and December 31, 2018. The relevant interpretations are as follows:

(1) The total book amount of bill receivable of NT$ 28,905,000 and NT$ 9,031,000 are 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$ 53,582,000 and NT$ 70,547,000. Among them, the reserve for loss measured at 0%~100% of individual expected credit loss rate is NT$ 1,000,000 and NT$ 1,000,000. The remaining total book amount is not overdue and its expected credit loss rate is 0%.

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

(3) The total carrying amounts of finance lease receivables were NT$ 48,608,000 and NT$ 50,265,000. The total carrying amount is not overdue with expected credit loss rate 0%.
(4) 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:

2019.12.31

12.31
Not overdue Within 30 days			Overdue days			Total
		31-60 days	61-90 days	91-120 days	Over 120 days
$886,408 0%	$149,467 1%	$33,068 2%	$10,386 5%	$5,997 10%	$293,886 20%-100%	$1,379,212 251,341
-	1,495	661	519	600	248,066

2018.12.31

Not overdue			Overdue days	Overdue days		Total
	Within 30 days	31-60 days	61-90 days	91-120 days	Over 120 days
$1,246,216 0%	$180,214 1%	$83,205 2%	$30,997 5%	$12,718 10%	$252,571 20~100%	$1,805,921 228,717
-	1,802	1,664	1,550	1,272	222,429
$1,246,216	$178,412	$81,541	$29,447	$11,446	$30,142	$1,577,204

Change information of bill receivable, account receivable and other receivable reserve for loss of the Group on 2019 and 2018 are as below:

2019.1.1 Current increased (recovered) amount Offset for unrecoverable	Bill receivable	Account receivable	Other receivables	Finance lease receivable
	$- - -	$228,717 56,716 (28,834)	$1,000 - -	$- - -

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

- -	1,355 (6,613)	- -	- -
$-	$251,341	$1,000	$-
$- - - -	$285,509 (13,389) (42,863) (540)	$990 10 - -	$- - - -
$-	$228,717	$1,000	$-

22. Operating lease

(1) The Group as the lessee (applicable to IFRS 16 related disclosures)

The Group’s major rental assets are land, house and building and machinery. The terms of contracts are between 1 and 20 years.

The effects of lease to the financial conditions, financial performance and cash flow of the Group are as follows:

A. Amount recognized in balance sheet
(a) Right-of-use assets

Carrying amount of right-of-use assets

Land House and building Machinery Total	2019.12.31	2018.12.31(Note)
	$161,160 32,552 119,567
	$313,279

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

The addition to right-of-use property was NT$ 12,410,000 in 2019.

(b) Lease liabilities

Lease liabilities	2019.12.31	2018.12.31(Note)
	$235,887

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Current $39,098 Non-current 196,789

Please refer to note VI. 24(3) financial cost for the interest expense of lease liabilities in 2019; please refer to note XII liquidity risks management for maturity analysis of lease liabilities as of December 31, 2019

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

B. The amount recognized in comprehensive profit and loss Depreciation of right-of-use assets

Land House and building Machinery Total	2019	2018(note)
	$13,864 11,977 6,795
	$32,636

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

C. The income and expenses of lessee in related with lease activities

Short-term lease expenses Low value assets lease expenses (excluding the short-term low value asset lease expenses ) Variable lease payment excluded from the measurement of lease liabilities	2019	2018(note)
	$25,529 - 1,392

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

D. The cash outflow of lessee in related with lessee and lease activities

The total cash outflow of the Group from lease was NT$ 43,773,000 in 2019

E. Other information regarding lease activities

(a) Variable lease payment

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group has rented some roofs of building for contract of solar power system construction, including the variable lease payment in connected with revenue of selling solar power, in which the variable lease payment amount is connected with the percentage of power sales revenue. Since such variable lease payment is unsatisfactory to the definition of lease payment, it is excluded from the measurement of assets and liabilities. The Group estimates that additional 3,000~25,500 rent will be incurred per additional NT$ 100,000 of power sales revenue.

(b) Option for lease extension and lease termination

Some property lease contracts of the Group contain options for lease extension and least termination. As determining the term of lease, the non-cancellable period of right-of-use for subject assets altogether with the period which the Group is reasonably certain to exercise the option for lease extension and the period which the Group is reasonably certain not to exercise the option for lease termination. Such use of option may maximize the flexibility of management contract. Majority options for lease extension and lease termination contained may only be exercised by the Group.

The Group will reevaluate the term of lease if material event or material change occurs after the commencement date (to the extent controllable by the lessee and will affect the decision of the Group whether to exercise the option excluded in term of lease previously determined or not to exercise the option contained in the term of lease as previously determined)

－
(2) The Group as the leasee operating lease (applicable to IAS 17 related disclosures)

The Group enters into the commercial property lease contract with the remaining years between 1 to 5 years. All lease contracts contain the provisions that can adjust the rent according to the market environment each year.

According to the non-cancelable operating lease contract, the total amount of future minimum lease payments of the lessee as of December 31, 2019 and December 31, 2018 are as follows:

2019.12.31(Note) 2018.12.31

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Less than one year More than one year but less than five years More than five years Total		$45,098 72,413
		137,391
		$254,902

The expenses recognized for operating lease are as follows:

Minimum lease payment	2019(note)	2018
		$20,086

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

(3) The Group as the leaser (applicable to IFRS 16 related disclosures)

Please refer to note VI.11 for disclosure in related with private owned investment property. Since almost all risks and rewards attributed to the subject assets are not transferred, the private owned investment properties are classified as operating lease. Please refer to note VI.10 for property, plant and equipment lent under operating lease applicable to disclosure of IAS 16.

2019 2018(Note) Lease income recognized under operating lease Fixed lease payment and income in related with variable lease payment depending on index or rate $160,127

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

The total amount of undiscounted lease payment to be collected from and remaining years of operating lease contract signed by the Group as of December 31, 2019

, 2019
Less than one year More than one year but less than two years More than two year but less than three years More than three year but less than four years More than four year but less than five years More than five years	2019.12.31	2018.12.31(Note)
	$139,740 100,741 63,634 54,173 50,063 99,602

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Total $507,953

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16.

(4) The Group as a lesser – operating lease (applicable to the disclosure of IAS 17) The Group signs commercial lease contract with remaining term between one and six years, all lease contract include article of rent adjustment based on market environment every year.

According to non-cancellable operating lease contract, the total future minimum lease payment of lessee as of December 31, 2019 and 2018 were as follows:

Less than one year More than one year but less than five years More than five years Total	2019.12.31(Note)	2018.12.31
		$140,693 272,743 83,002
		$496,438

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16

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

Nature\Functi on		2019	2019		2018	2018	2018
	Operating cost	Operating expense	Non- operating expense	Total	Operating cost	Operating expense	Non- operating expense	Total
Staff welfare expense
Salary expense	$925,940	$406,273	$-	$1,332,213	$1,141,135	$398,189	$-	$1,539,324
Labor insurance expense	91,601	27,630	-	119,231	104,577	28,375	-	132,952
Pension expense	38,261	18,901	-	57,162	46,946	23,943	-	70,889
Other staff welfare expense	25,151	14,006	-	39,157	25,199	9,797	-	34,996
Depreciation expense	1,057,829	1,083,386	367,644	204,123	1,655,153	1,057,829	329,585	104,503
Amortization expense	52,700	69,988	37,086	5,587	112,661	52,700	65,320	6,268

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Articles of Association of the Group stipulate that if the Group 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 Group 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 Group is in the state of loss in 2019 and 2018, so it does not list the remuneration of employees and the remuneration of the board of directors.

24. Non-operating revenue and expense

(1) Other revenue

Interest revenue (Note) Rental revenue Dividend revenue Other revenue Total	2019	2018
	$44,576 160,127 16,583 52,691	$21,445 148,245 38,572 49,830
	$273,977	$258,092

(2) Other profits and losses

Net profit (loss) from disposal of property, plant and equipment Profit (loss) from disposal of investment Net foreign currency exchange profit (loss) Miscellaneous expense Financial assets measured at fair value through profit or loss (Note) Profit from buy cheap	2019	2018
	$(17,238) 23,453 (70,499) (245,190) 78,804 -	$74 (177) 80,802 (145,377) (66,438) 19,359

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Impairment loss Total	(1,362,187)	(9,423)
	$(1,592,857)	$(121,180)

Note: this is derived from financial assets mandatorily measured at fair value through profit and loss

(3) Financial cost

Interest of bank and other borrowings Interest of lease obligations Total	2019	2018
	$173,452	$153,131
	5,947	-
	$179,399	$153,131

Note: The Group has adopted IFRS 16 since January 1, 2019 and selects not to restate comparative information pursuant to the transitional regulations of IFRS 16.

25. Components of other comprehensive profit or loss

2019

Items not reclassified to profit or loss: Defined benefit plan remeasurement amount Unrealized evaluation profit or loss of equity instrument investment measured at fair value through other comprehensive profit or loss Items possible to be reclassified to profit or loss in the future:	Current incurrence	Current reclassification adjustment	Other comprehensive profit or loss	Income tax benefit (expense)	After-tax amount
	$(26,800) (70,218)	$- -	$(26,800) (70,218)	$- -	$(26,800) (70,218)

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Exchange difference of financial statements conversion of foreign operating institutes (95,612) Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method (602) Total $(193,232) 2018 Current incurrence Items not reclassified to profit or loss: Defined benefit plan remeasurement amount $(317) Unrealized evaluation profit or loss of equity instrument investment measured at fair value through other comprehensive profit or loss (146,994) Items possible to be reclassified to profit or loss in the future: Exchange difference of financial statements conversion of foreign operating institutes (48,330) Shares of other comprehensive profit or loss of subsidiary, affiliated enterprises and joint venture recognized by equity method 844 Total $(194,797)	- -	(95,612) (602)	1,847 -	(93,765) (602)
$(193,232)	$-	$(193,232)	$1,847	$(191,385)
Current incurrence	Current reclassification adjustment	Other comprehensive profit or loss	Income tax benefit (expense)	After-tax amount
	$- - - -	$(317) (146,994) (48,330) 844	$- - 2,312 -	$(317) (146,994) (46,018) 844
$(194,797)	$-	$(194,797)	$2,312	$(192,485)

Income tax

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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%.

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

Income tax recognized as profit or loss

Current income tax expense: Current income tax payable Current income tax of previous year adjusted in current period Deferred income tax expense: Deferred income tax expenses related to original generation of temporary difference and its recovery Deferred income tax related to original generation and recovery of tax loss and income tax deduction Deferred income tax related to tax rate change or new tax levy Deferred income tax asset offset (recovery of previous offset) Others Income tax expense	2019	2018
	$22,562 5,574 53,070 354,387 - (334,319)	$19,963 304 27,495 246,254 (103,796) (8,856)
	7	-
	$101,281	$181,364

Income tax recognized as other comprehensive profit or loss

Deferred income tax expense (benefit): Exchange difference of financial statements conversion of foreign operating institutes	2019	2018
	$(1,847)	$(2,312)

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

Pre-tax loss from continuous operating entity	2019	2018
	$(2,470,201)	$(1,053,138)

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Tax calculated according to applicable domestic tax rate of income of relevant country Tax-exempt income tax influence number Non-deductible expense income tax influence number in tax declaration Deferred income tax asset / liability income tax influence number Additional 10% income tax levied on undistributed surplus Basic income tax for profit-making business Effect of different tax rates applicable to individuals operating in other tax jurisdictions Adjustment in current year of current income tax of previous year Total income tax expense recognized as profit or loss	(898,931) (25,768) 29,216 971,197 9,956 3,112 6,925 5,574	$(459,262) (56,379) 13,425 665,952 15,871 1,453 - 304
	$101,281	$181,364

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

2019

Temporary difference Profit(loss) of unrealized foreign currency exchange Loss of unrealized foreign currency exchange Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus Unrealized asset depreciation loss Unrealized evaluation gain or loss on financial assets and liabilities Fiscal and tax differences in depreciation	Beginning balance	Recognized as profit or loss	Recognized as other comprehensi ve profit or loss	Combined acquisition Ending balance
	$(14,339) 9,972 21,632 27,764 11,961 3,602 - (21,058)	$11,168 241 (21,296) (25,843) (11,961) - 8 (5,549)	$- - - - - - - -	$- $(3,171) - 10,213 - 336 - 1,921 - - - 3,602 - 8 - (26,607)

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

3,028 3,810 360,358 - - 12,137	(3,028) 866 (20,109) - (3,276) -	- - - 5,075 - 1,847	- - - - - -	- 4,676 340,249 5,075 (3,276) 13,984
	$(78,779)	$6,922	$-
$418,867				$347,010 $382,527
$455,203
$(36,336)				$(35,517)

Temporary difference Profit(loss) of unrealized foreign currency exchange Loss of unrealized foreign currency exchange Bad debt reserve recognition Unrealized profit between the affiliated companies Year-end bonus Unrealized asset depreciation loss Fiscal and tax differences in depreciation Unrealized fire loss	Beginning balance	Recognized as profit or loss	Recognized as other comprehensi ve profit or loss	Combined acquisition Ending balance
	$1,873 13,092 27,628 21,221 8,833 - - 2,574	$(16,212) (3,120) (5,996) 6,543 3,128 3,602 (2,393) 454	$- - - - - - - -	$- $(14,339) - 9,972 - 21,632 - 27,764 - 11,961 - 3,602 (18,665) (21,058) - 3,028

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

2,158 509,113 9,825	1,652 (148,755) -	- - 2,312	- - -	3,810 360,358 12,137
	$(161,097)	$2,312	$(18,665)
$596,317				$418,867 $455,203
$596,317
$-				$(36,336)

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

The Company

Incurrenceyear	Loss amount	Unused	balance
		2019.12.31	2018.12.31
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total	$- 1,258,894 1,913,163 938,408 2,070,277 2,300,611 5,783,839 1,144,980 817,581 704,179 214,935	$- 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
		214,935	-
		$17,146,867	$20,302,767

Subsidiary: U tech Technology Co., Ltd.

Unused balance

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Incurrence year	Loss amount	2019.12.31	2018.12.31	Final deductible year 2019 2020 2021 2023 2024 2027 2028
2009 2010 2011 2013 2014 2017 2018 Total	$112,145 197,635 109,721 - - 3,363 44,682	$- 197,635 109,721 42,790 3,363 44,682 412,285	$112,145 197,635 109,721 42,790 3,363 44,682 -
		$810,476	$510,336

Subsidiary: Ritdisplay

Unused balance

		Unused	balance
Incurrence year	Loss amount	2019.12.31	2018.12.31	Final deductible year 2019 2020 2021 2022 2023 2024 2025 2026 2027
2009 2010 2011 2012 2013 2014 2015 2016 2017 Total	$895,793 465,480 394,751 245,887 547,826 333,184 41,386 39,114 33,564	$- 465,480 394,751 245,887 513,187 333,184 41,386 39,114 33,564	$895,793 465,480 394,751 245,887 513,187 303,602 - - -
		$2,066,553	$2,818,700

Subsidiary: Prorit

Incurrence year	Loss amount	Unused	balance
		2019.12.31	2018.12.31
2009 2010 2011 2012 2013 Total	$169,949 63,372 47,171 48,312 23,547	$- 63,372 47,171 48,312 23,547	$169,949 63,372 47,171 48,312 23,547
		$182,402	$352,351

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Subsidiary: Ritfast Corporation

Incurrence year	Loss amount	Unused	balance	Final deductible year
		December 31, 2018	December 31, 2017
2012 2013 2014 2015 2016 2017 2018 2019 Total	$112,730 133,762 227,601 202,405 168,792 160,906 381,551 101,750	$- 133,762 227,601 202,405 168,792 160,906 381,551 101,750	$112,730 133,762 227,601 202,405 168,792 160,906 381,551 -	2022 2023 2024 2025 2026 2027 2028 2029
		$1,376,767	$1,387,747

Unrecognized deferred income tax asset

As of December 31, 2019 and December 31, 2018, the total amount of deferred income tax asset unrecognized by the Group was respectively NT$ 6,328,031,000 and NT$ 6,962,195,000.

(2) Income tax declaration approval condition

As of December 31, 2019, the income tax declaration approval condition of the Group and domestic subsidiary is as below:

The Group Subsidiary U-Tech Subsidiary AimCore Subsidiary Ritdisplay Subsidiary Prorit	Income tax declaration approval condition
	Approved to 2017 Approved to 2017 Approved to 2017 Approved to 2017 Approved to 2017

27. 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.

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

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

Basic loss per share Net loss attributable to common shareholders of the parent company (NT$ 1,000) Retroactively adjusted weighted average number of ordinary shares of basic loss per share (1,000 shares) Basic loss per share (NT$)	2019	2018
	$(2,254,907)	$(1,292,823)
	1,284,158	1,279,539
	$(1.76)	$(1.01)

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

28. Business merger

- Subsidiary acquisition acquisition of Houju

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

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

Asset Cash and cash equivalents Account receivable Lease payment receivable (including non-current) Other current asset Financial asset measured at fair value through profit and loss -	Fair value in acquisition day
	$59,384 9,993 50,676 57,724 4,493

100

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

non-current Investment by equity method (Note) Property, plant and equipment Other non-current asset Subtotal Liability Short-term borrowing Short-term notes and bills payable Notes payable Other payables Current income tax liability Other current liability Long-term loan (including within one year) Deferred income tax liability Subtotal Identifiable net asset	Fair value in acquisition day
	966 1,084,134 111,664
	1,379,034
	5,000 26,741 1,533 16,098 8,472 283 751,704 18,665
	828,496
	$550,538

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

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

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

Acquisition cash use analysis:
Cash paid consideration	$523,240
Net cash acquired from subsidiary – Houju	(59,384)

101

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Net cash acquired from subsidiary – Houcheng Acquired net cash flow	(974)
	$462,882

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

－ Subsidiary acquisition of Cashido Technology Co., Ltd.

The Group acquired 31.03% shares of Cashido Technology Co., Ltd. at the end of May, 2019, with investment amount NT$ 5,888,000. Since the Group is the single biggest shareholder of and acquired the control power from the date of investment, the financial statements of Cashido Technology have been consolidated in the statements since the control power was acquired.

The non-controlling interest of Cashido Technology Co., Ltd. is measured at the fair value of identifiable net assets of Cashido Technology Co., Ltd. proportionally over the ratio of non-controlling interest.

The fair value of identifiable assets and liabilities of Cashido Technology Co., Ltd. as of the acquisition date were as follows:

Assets: Cash and cash equivalent Notes and accounts receivable Inventory Other current assets Property, plant and equipment Intangible assets Other non-current assets Subtotal Liabilities： Short-term loans Notes and accounts payable Other payables Other current liabilities Subtotal Identifiable net assets	Fair value on acquisition day
	$150,367 35,245 21,050 1,946 4,416 1,926 8,507
	223,457
	$7,000 21,604 53,190 33,644
	115,438
	$108,019

102

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The goodwill of Cashido Technology Co., Ltd. is as follows:

The fair value of equity originally held Add: value of non-controlling interest Less: fair value of identifiable assets Goodwill Cash flow of acquisition Net cash acquired from subsidiary Cash payment Net cash inflow	$32,730 75,289 (108,019)
	$-
	$150,367 -
	$150,367

From the acquisition date to December 31, 2019, the net income of continuing operation unit of Cashido Technology Co., Ltd. was NT$ 7,535,000. If the acquisition was occurred at the beginning of year, then the revenue of continuing operation unit of the Group was NT$ 1,726,827,000 and the net income of continuing operation unit would be NT$ 52,178,000.

－ Subsidiary acquisition of Finesil Technology Co., Ltd.

The Group participated in the capital increment by cash of acquired 25.55% shares of Finesil Technology Co., Ltd. at the end of May, 2019, plus original shareholding of the Group to Finesil Technology Co., Ltd., the total shareholding ratio was increased to 61.93% with control power of the company. Therefore, the financial statements of Finesil Technology Co., Ltd.have been consolidated in the statements since the control power was acquired.

The non-controlling interest of Finesil Technology Co., Ltd. is measured at the fair value of identifiable net assets of Finesil Technology Co., Ltd. proportionally over the ratio of non-controlling interest.

The fair value of identifiable assets and liabilities of Cashido Technology Co., Ltd. as of the acquisition date were as follows

as of the acquisition date were as follows
Assets: Cash and cash equivalent Notes and accounts receivable Inventory Other current assets Property, plant and equipment Other non-current assets Subtotal	Fair value in acquisition day
	$48,711 73,798 89,960 27,627 129,892 2,107
	372,095

103

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Liabilities： Short-term loans Notes and accounts payable Other payables Other current liabilities Long-term loans Other non-current liabilities Subtotal Identifiable net assets The goodwill of Finesil Technology Co., Ltd. is as follows: Consideration price of acquisition The fair value of equity originally held Add: value of non-controlling interest Less: fair value of identifiable assets Goodwill Cash flow of acquisition Net cash acquired from subsidiary Cash payment Net cash inflow	76,278 19,295 28,009 23,482 116,357 6
	263,427
	$108,668
	$29,896 37,402 41,370 (108,668)
	$-
	$48,711 (29,896)
	$18,815

As of December 31, 2019, the net income generated by Finesil Technology from the acquisition date NT$ 11,775,000 If the acquisition was occurred at the beginning of year, then the revenue of continuing operation unit of the Group was NT$ 648,480,000 and the net income of continuing operation unit would be (NT$ 444,066,000).

29. Change of subsidiary ownership equity

Acquiring the subsidiary issued share

The Group additionally acquired 0.02% voting share of AimCore in 2019. The cash consideration paid to non-controlling equity shareholder was NT$ 152,000, and the additional acquired stock equity book amount of AimCore (originally acquired and excluding the goodwill) was NT$ 521,000; the increase (decrease) amount of relevant equity including the non-controlling equity of AimCore was as below:

Cash consideration paid by the Group to non-controlling shareholder

$(152)

104

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Non-controlling equity decreased amount 270 Difference of capital surplus recognized in equity $118

The Group additionally acquired 1.28% voting share of HouJu in 2018. The cash consideration paid to non-controlling equity shareholder was NT$ 6,754,000, and the additional acquired stock equity book amount of HouJu (originally acquired and excluding the goodwill) was NT$ 7,240,000; the increase (decrease) amount of relevant equity including the non-controlling equity of HouJu was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(6,754) 6,907
	$153

The Group additionally acquired 0.64% voting share of Ritdisplay in 2019. The cash consideration paid to non-controlling equity shareholder was NT$ 30,531,000, and the additional acquired stock equity book amount of Ritdisplay (originally acquired and excluding the goodwill) was NT$ 12,862,000; the increase (decrease) amount of relevant equity including the non-controlling equity of Ritdisplay was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(30,531) 13,135
	$(17,396)

The Group additionally acquired 20.55% voting share of CASHIDO in 2019. The cash consideration paid to non-controlling equity shareholder was NT$ 4,031,000, and the additional acquired stock equity book amount of CASHIDO (originally acquired and excluding the goodwill) was NT$ 3,974,000; the increase (decrease) amount of relevant equity including the non-controlling equity of CASHIDO was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(4,031) 4,002
	$(29)

105

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group additionally acquired 9.20% voting share of Finesil in 2019. The cash consideration paid to non-controlling equity shareholder was NT$ 9,736,000, and the additional acquired stock equity book amount of Finesil (originally acquired and excluding the goodwill) was NT$ 11,161,000; the increase (decrease) amount of relevant equity including the non-controlling equity of Finesil was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(9,736) 10,087
	$351

The Group additionally acquired 0.05% voting share of Ritfast Corporation in 2019, resulting in the increase of ownership to 98.85%. The cash consideration paid to non-controlling equity shareholder was NT$ 166,000, and the additional acquired stock equity book amount of Ritfast Corporation (originally acquired and excluding the goodwill) was NT$ 245,705,000; the increase (decrease) amount of relevant equity including the non-controlling equity of Ritfast Corporation was as below:

Cash consideration paid by the Group to non-controlling shareholder Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$(166) 123
	$(43)

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

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

The Group additionally acquired 0.15% voting share of AimCore in 2018. The cash consideration paid to non-controlling equity shareholder was NT$ 1,800,000, and the additional acquired stock equity book amount of AimCore (originally acquired

106

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

and excluding the goodwill) was NT$ 3,430,000; the increase (decrease) amount of relevant equity including the non-controlling equity of AimCore was as below:

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

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

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

Selling the subsidiary share

The Group sold 4.43% voting share of Ritdisplay in 2019. The cash consideration acquired from non-controlling equity shareholder was NT$ 169,736,000, and the sold stock equity book amount of Ritdisplay was NT$ 81,024,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

Cash consideration of the Group acquired from non-controlling shareholder Non-controlling equity increased amount Difference of capital surplus recognized in equity	$169,736 (120,268)
	$49,468

The Group sold 5.54% voting share of U-Tech in 2019. The cash consideration acquired from non-controlling equity shareholder was NT$ 91,307,000, and the sold stock equity book amount of U-Tech was NT$ 125,473,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of U-Tech was as below:

107

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Cash consideration of the Group acquired from non-controlling	$91,307
shareholder
Non-controlling equity increased amount	(122,469)
Difference of capital surplus recognized in equity	$(31,162)

The Group sold 1.64% voting share of Ritdisplay in 2018. The cash consideration acquired from non-controlling equity shareholder was NT$ 72,052,000, and the sold stock equity book amount of Ritdisplay was NT$ 23,277,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

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

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

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

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

The subsidiary Ritdisplay issued the new stock for capital increase on January 15, 2019, and the Group did not subscribe, thus decreased 7.72% stock equity. The Group acquired capital increase cash was NT$ 517,979,000, and the net asset book amount of Ritdisplay (originally acquired and excluding the goodwill) was NT$ 205,680,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritdisplay was as below:

The Group acquired capital increase cash

$517,979

108

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Non-controlling equity book amount (343,529) Difference of capital surplus recognized in equity $174,450

The subsidiary Finesil issued the new stock for capital increase on June 12, 2019, which was subscribed totally by AimCore, additional 25.55% equity was acquired by the Group. The Group acquired capital increase cash was NT$ 29,896,000, and the net asset book amount of Finesil (originally acquired and excluding the goodwill) was NT$ 976,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Finesil was as below:

The Group acquired capital increase cash $- Non-controlling equity book amount 976 Difference of capital surplus recognized in equity $976

The subsidiary HouJu issued the new stock for capital increase on August 30, 2019, and AimCore and U-tech subscribed NT$ 12,053,000 and NT$ 21,947,000 shares respectively. Accordingly, Aimcore increased 4.10% equity and U-tech reduced 4.10% equity. The Group acquired capital increase cash was NT$ 380,800,000, and the net asset book amount of HouJu (originally acquired and excluding the goodwill) was NT$ 339,292,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of HouJu was as below:

The Group acquired capital increase cash $- Non-controlling equity book amount (11,126) Difference of capital surplus recognized in equity $(11,126)

The subsidiary Ricare Corporation issued the new stock for capital increase on September 13, 2019, which was subscribed totally by U-tech. The Group acquired capital increase cash was NT$ 40,000,000, and the net asset book amount of Ricare Corporation (originally acquired and excluding the goodwill) was NT$ 981,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ricare Corporation was as below:

The Group acquired capital increase cash $- Non-controlling equity book amount 981 Difference of capital surplus recognized in equity $981

The subsidiary CASHIDO issued the new stock for capital increase on September 30, 2019, and RitDisplay subscribed 3,140,000 shares and therefore increased

109

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

27.74% equity. The Group acquired capital increase cash was NT$ 23,505,000, and the net asset book amount of CASHIDO (originally acquired and excluding the goodwill) was NT$ 32,877,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of CASHIDO was as below:

The Group acquired capital increase cash $23,505 Non-controlling equity book amount (22,761) Difference of capital surplus recognized in equity $744

The subsidiary Ritfast Corporation issued the new stock for capital increase on October 25, 2019, and the Group subscribed partially, thus decreased 0.72% stock equity. The Group acquired capital increase cash was NT$ 70,000, and the net asset book amount of Ritfast Corporation (originally acquired and excluding the goodwill) was NT$ 247,383,000; the increase (decrease) amount of reduced relevant equity including the non-controlling equity of Ritfast Corporation was as below:

The Group acquired capital increase cash $70 Non-controlling equity book amount (139) Difference of capital surplus recognized in equity $(69)

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

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

Shares transfer among subsidiaries

Zhongchuang Technology Co., Ltd. sold 31.03% equity of Cashido Technology 31.03% to RitDisplay on May 28, 2019. Since the Group still has control power over Cashido Technology, the increase of interest in related with Cashido Technology, including the increase (decrease) of non-controlling interest is as follows:

110

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group paid capital increase cash Non-controlling equity increased amount Difference of capital surplus recognized in equity	$- (10,496)
	$(10,496)

Ritek sold 36.38% equity of Finesil Technology to AimCore on July 1, 2019. Since the Group still has control power over Finesil Technology, the increase of interest in related with Finesil Technology, including the increase (decrease) of non-controlling interest is as follows:

interest is as follows:
The Group paid capital increase cash Non-controlling equity increased amount Difference of capital surplus recognized in equity	$- (1,219)
	$(1,219)

Ritek, U-tech, Aimcor, RitDisplay, Chung-Fu Investments Ltd. and Zhongchuang Technology Co., Ltd. sold 398.08% equity of Ritfast Corporation to Houju on September 26, 2019. Since the Group still has control power over Ritfast Corporation, the increase of interest in related with Ritfast Corporation, including the increase (decrease) of non-controlling interest is as follows:

the increase (decrease) of non-controlling interest is as follows:
The Group paid capital increase cash Non-controlling equity decreased amount Difference of capital surplus recognized in equity	$- 957
	$957

30. Subsidiary with significant non-controlling equity

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

Non-controlling equity held equity ratio:

Subsidiary name	Company and operation located region	2019.12.31	2018.12.31
U-Tech AimCore Ritdisplay	Taiwan Taiwan Taiwan	72.48% 75.34% 50.10%	60.80% 75.24% 29.42%

Accumulative balance of significant non-controlling equity:

U-Tech	2019.12.31	2018.12.31
	$1,523,998	$1,337,168

111

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

AimCore	1,616,196	1,960,121
Ritdisplay	724,973	411,064

Profit (loss) amortized significant non-controlling equity:

U-Tech AimCore Ritdisplay	2019	2018
	$92,633 (354,238) 16,429	$43,238 (16,046) 101,751

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

Profit and loss summary information of 2019:

U-Tech	AimCore	Ritdisplay
$1,020,063	$500,566	$1,672,591
121,074	(454,024)	53,235
$137,037	$454,599	$32,293

Profit and loss summary information of 2018:

U-Tech	AimCore	Ritdisplay
$790,567	$722,072	$2,519,944
62,893	27,066	340,445
$14,198	$12,890	$327,077

Information of asset and liability summary on December 31, 2019:

Current asset Non-current asset Current liability	U-Tech	AimCore	Ritdisplay
	$1,700,747 3,749,890 924,054	$1,069,579 1,790,400 231,526	$1,132,658 2,389,521 892,881

112

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Non-current liability

1,930,773 439,167 790,249

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

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

Cash flow summary information of 2019:

Operating activity Investing activity Financing activity Effects of change in exchange rate Net increase of cash and cash equivalents	U-Tech	AimCore	Ritdisplay
	$340,011 (484,344) 464,264 (5,692) $314,239	$167,134 (175,552) (147,169) (1,948) $(157,535)	$258,285 (70,986) (2,055) - $185,244

Cash flow summary information of 2018:

Operating activity Investing activity Financing activity Net increase (decrease) of cash and cash equivalents	U-Tech	AimCore	Ritdisplay
	$132,771 (474,495) 243,843 $(97,881)	$16,891 (281,366) 233,046 $31,429	$44,539 (86,966) (171,176) $(213,603)

VII. Interested party transactions

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

Interested party name and relationship

113

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Interestedpartyname Echem Hightech Co., Ltd. Cashido Corporation Finesil Technology Inc. Luminit Automotive Technologies O-View Technology Co., Ltd. Ritek Foundation	Relationshipwith the Group
	Affiliated enterprise of the Group (the shares were sold in June 2019) Affiliated enterprise of the Group Affiliated enterprise of the Group Affiliated enterprise of the Group The subsidiary is the director of corporate juridical person of the company The Chairman of RITEK is the same person with a director of the company

VII. Interested party transactions

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

Interested party name and relationship

Interestedpartyname Echem Hightech Co., Ltd. Cashido Corporation Finesil Technology Inc. Luminit Automotive Technologies O-View Technology Co., Ltd. Ritek Foundation	Relationshipwith the Group
	Affiliated enterprise of the Group (shares sold in June 2019) Affiliated enterprise of the Group Affiliated enterprise of the Group Affiliated enterprise of the Group The subsidiary is the director of corporate juridical person of the company The Chairman of RITEK is the same person with a director of the company

Major transaction between the interested parties

Sales

Affiliated enterprise of the Group Luminit Automotive Technologies Echem Hightech Co., Ltd.	2019	2018
	$13,316 -	$- 49

114

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Cashido Corporation Finesil Technology Other interested party Ritek Foundation Total	- - 28,832	470 42 20
	$42,148	$581

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

2. Purchase

Affiliated enterprise of the Group Echem Hightech Co., Ltd. Finesil Technology Inc. Luminit Automotive Technologies Cashido Corporation Subtotal Other interested party O-View Technology Total	2019	2018
	$300 - 1,920 103	$23,487 17,979 - 3,521
	2,323	44,987

	15	59
	$2,338	$45,046

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

3. Account receivable - interested party

Affiliated enterprise of the Group Luminit Automotive Technologies Finesil Technology Inc. Subtotal Other interested party Ritek Foundation Less: Reserve for loss	2019.12.31	2018.12.31
	$5,188 -	$- 32
	5,188	32

	2,070	-
	-	-

115

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

$7,258	$7,258	$32
2019.12.31		2018.12.31
$- 23		$11,519 32
23		11,551

185		2,942
$208		$14,493
2019.12.31		2018.12.31
	$- 2019.12.31	$2,837 2018.12.31
	$- - -	$978 2,051 69
	-	3,098
	899	4,476
	$899	$7,574
	2019	2018

116

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Ritek Foundation $372 $1,186

The term of lease and ways of collecting rent are based on the contract. In general the term of lease if from two to five years and the payment is collected monthly.

8. Reward to main management personnel of the Group

Short-term staff welfare Benefit after retirement Total Refundable deposit Other interested party Ritek Foundation		2109		2018
		$52,124 821		$38,014 820
		$52,945		$38,834
		2019.12.31		2018.12.31
		$-		$30,000

9. Refundable deposit

VIII. Pledged asset

The Group has the following asset as the pledge:

Item Financial assets measured at fair value through other comprehensive profit or loss Account receivable Financial assets measured at amortized cost Rental receivable	Book amount 2019.12.31 2018.12.31 $74,884 $61,955 185,574 310,230 282,270 124,730 (註) 43,487	Secured liability
	2019.12.31 $74,884 185,574 282,270 (註)
		Bank loan Bank loan Bank loan, bond, lease and performance bond Bank loan and performance bond

117

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Item Property, plant and equipment Investment property Long-term prepaid rent - land use right (listed in other non- current assets) Restricted assets (listed in other non-current assets) Finance lease receivables Right-of-use asset Total	Book amount 2019.12.31 2018.12.31 7,404,891 7,262,027 267,819 270,659 (Note) 13,666 - 122,097 48,607 (Note) 12,833 (Note) $8,276,878 $8,208,851	Secured liability
	2019.12.31 7,404,891 267,819 (Note) - 48,607 12,833 $8,276,878
		Short-term notes and bills payable, bank loan and performance bond Bank loan Bank loan Bank loan and performance bond Bank loan and performance bond Bank loan

Note: Note: the Company has adopted IFRS 16 since January 1, 2019 and selects not

to restate comparative information pursuant to the transitional regulations of IFRS 16

In addition, the Group provides part of the held stock of subsidiary U-Tech, AimCore and Prorit on December 31, 2019 and December 31, 2018 for bank loan guarantee.

IX. Material contingent liabilities and unrecognized contractual commitments

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

Currency US dollar Japanese yen New Taiwan dollar	Unit: 1,000 dollars Amount $65 38,425 9,144

118

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The guarantee notes issued by the Group for the purchase of machinery equipment, long-term loans, credit loans for raw materials, lawsuits and issuance of commercial promissory notes are respectively NT$ 2,165,996,000 and US$ 1,260,000. In addition, the Company will collect NT$ 924,723,000 of guaranteed notes from the manufacturers who purchase goods from the Company and provide labor services to the Company.
The guarantee amount by banks to the Group for the loan, imported raw material and national tax bookkeeping is totally NT$ 23,500,000.
The Group has entered into the following contracts for the purchase of fixed assets:

Prepayments for equipment	Total contractprice	Paid amount	Unit: NT$ 1,000 Unpaid amount NT$ $3,182
	NT$ $5,940	NT$ $2,758

The Company has entered into the license agreement with SANDISC, PIONEER, PANASONIC, ONE BLUE and JVC 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.
The premium contracts signed by the subsidiary U-Tech to produce CD-Audio, VIDEO CD DISC and DVD DISCS are listed as below:

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

119

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

contract Company E BD VIDEO DISCS 2011.01.01Sale quantity of products sold in the technology licensing 2022.12.31 specifications set forth in the contract Company F BD VIDEO DISCS 2014.03.12Sale quantity of products sold in the technology licensing 2020.12.31 specifications set forth in the contract

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

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

X. Major disaster losses

None

XI. Major subsequent matters

None

XII. Miscellaneous

Types of Financial Instruments

Financial assets

	2019.12.31	2018.12.31
Financial assets measured at fair value through
profit or loss:
Force to measure at fair value through profit or	$322,584	$275,046
loss
Financial assets measured at fair value through	532,585	341,895

120

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

other comprehensive profit or loss Financial assets measured at amortized cost: Cash and cash equivalent (excluding the cash on hand) Bill receivable Account receivable (including interested party) Rental receivable Other account receivable (including the interested party) Finance lease receivables Subtotal Total Financial liabilities Financial liabilities measured at amortized cost: Force to measure at fair value through profit or loss Financial assets 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 liabilities Subtotal Total	2019.12.31 4,039,723 282,270 28,905 1,127,871 (Note) 52,582 48,608 5,579,959 $6,435,128 2019.12.31 $11,845 1,823,650 709,127 631,227 5,986,466 235,887 9,386,357 $9,398,202	2018.12.31 3,494,133 124,730 9,031 1,577,204 50,265 69,547 (Note)
		5,324,910
		$5,941,815
		2018.12.31 $- 2,370,861 1,129,884 795,930 5,833,972 (Note) 10,130,647 $10,130,647

Note: The Group adopts IFRS 16 after January 1, 2019, and chooses not to recompile the comparison period in accordance with IFRS 9 interim

121

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

provisions.

2. Financial risk management objectives and policies

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

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

3. Market risk

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

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

Exchange rate risk

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

Partial currency types of foreign currency receivable and foreign currency payable of the Group are the same; at this time, the considerable part shall

122

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

(1) When NT$ vs. USD appreciates/depreciates by 1%, the profit or loss of the Group in 2019 and 2018 will decrease/increase by NT$ 57,003,000 and NT$ 17,231,000 respectively.
(2) When NT$ vs. JPY appreciates/depreciates by 1%, the profit or loss of the Group in 2019 and 2018 will increase/decrease by NT$ 1,155,000 and NT$ 492,000 respectively.
(3) When NT$ vs. EUR appreciates/depreciates by 1%, the profit or loss of the Group in 2019 and 2018 will decrease/increase by NT$ 3,415,000 and NT$ 1,444,000 respectively.

Interest rate risk

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

The Group manages the interest rate risk by maintaining appropriate combination of fixed and floating interest rates, supplemented by the interest rate swap

123

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

contract; however, it does not apply the hedge accounting since it does not comply with the hedge accounting requirements.

The sensitivity analysis related to interest rate risk focuses on the critical risk item at the ending day of financial reporting period, including the floating interest rate investment, floating interest rate loan and interest rate swap contract, and assumes to hold for one fiscal year; when the interest rates increase/decrease ten basis points, the profit or loss of the Group in 2019 and 2018 will reduce/increase NT$ 7,528,000 and NT$ 8,080,000.

Equity price risk

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

For the listed equity security forced to measure at fair value through profit or loss, when the price of such equity securities increase/decrease by 1%, the profit or loss of the Group will increase/decrease by NT$ 3,107,000 and NT$ 2,750,000 respectively in 2019 and 2018.

For the listed company stock in equity instrument investment measured at fair value through other comprehensive profit or loss, when the price of these equity securities increases/decreases by 1%, the impact on the equity of the Group in 2018 is NT$ 1,346,000 and NT$ 1,034,000.

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

Credit risk management

124

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(Unless otherwise stated, the amount unit shall be in NTD 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 Group's credit risk is caused by its operating activities (mainly the accounts receivable and bills) and financial activities (mainly the bank deposits and various financial instruments).

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

Up to December 31, 2019 and December 31, 2018, the top ten customer accounts receivable occupy 39% and 39% of the Group's accounts receivable balance respectively, and the credit concentrated risk of the rest accounts receivable is relatively insignificant.

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

The Group adopts IFRS 9 to evaluate the expected credit loss. Except for loss allowance of accounts receivable measured at lifetime expected credit loss in, all remaining investments in debt instruments not measured at fair value through profit and loss shall be in premise of low credit risk when it was purchased and the methods of measuring loss allowance and loss rate will be determined by if the credit risk is increased significantly after the initial recognition valued on each balance sheet date.

Meanwhile, the Group will write off the financial asset when it is reasonably anticipated unrecoverable (e.g. serious financial difficulty of the issuer or debtor, or is already bankrupt)

125

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

The Group will dispose investment on debt instrument with increasing credit risks as appropriate to reduce credit loss. When IFRS 9 is adopted to evaluate credit loss, the forward looking information (available without excess costs or contribution) shall include macroeconomic and industrial information and the loss rate will be further adjusted when the forward-looking information may result in material effects.

Liquidity risk management

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

Non-derivative financial liabilities

2019.12.31 Loan Short-term notes payable Account payable Lease liabilities 2018.12.31 Loan Short-term notes payable Account payable	Less than oneyear	Two to three years	Four to five years	More than fiveyears	Total
	$3,038,985 79,200 1,340,354 31,115 $3,581,082 251,300 1,925,814	$3,492,072 - - 46,145 $2,684,396 - -	$980,088 - - 40,394 $1,267,259 - -	$452,848 - - 147,853 $640,969 - -	$7,963,993 79,200 1,340,354 265,507 $8,173,706 251,300 1,925,814

Liability adjustment from financing activity

2019 liability adjustment information:

126

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

2019.1.1 Acquiring through business merger Cash flow Non-cash flow fluctuations in exchange 108.12.31	Short-term borrowing	Short-term notes and billspayable	Long-term loan (including due within oneyear)	Other non- current liability	Lease liabilities	Total liability from financing activity
	$2,119,882 83,278 (458,393) - -	$250,979 - (172,096) - -	$5,833,972 116,357 36,137 - -	$55,484 6 7,555 - -	$239,044 - (16,853) 13,826 (130)	$8,499,361 199,641 (603,650) 13,826 (130)
	$1,744,767	$78,883	$5,986,466	$63,045	$235,887	$8,109,048

2018 liability adjustment information:

2018.1.1 Acquiring through business merger Cash flow 2018.12.31	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
	$1,500,535 5,000 614,347	$249,785 26,741 (25,547)	$4,503,485 751,704 578,783	$48,852 - 6,632	$6,302,657 783,445 1,174,215
	$2,119,882	$250,979	$5,833,972	$55,484	$8,260,317

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 transaction on the measurement day. The methods and assumptions used by the Group to measure or disclose the fair value of financial assets and financial liabilities are as follows:

A. Book amount of cash and cash equivalent, accounts receivable, accounts payable and other current liabilities is the reasonable approximate value of

127

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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 by the Group is close to the fair value.

(3) Fair value information of Financial Instruments

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

128

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

8. Derivative financial instruments

As of December 31, 2019 and December 31, 2018, the Group has the following information about derivative financial instruments that are not eligible for hedging accounting.

9. Fair value level

(1) Fair value level definition

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

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

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

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

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

(2) Fair value measurement level information

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

December 31, 2019:

Level 1 Level 2 Level 3 Total

129

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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, 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	$137,275 162,746 132,820 Level 1	$22,563 - - Level 2	$- - 399,765 Level 3	$159,838 162,746 532,585 Total
	$205,058 69,988 101,845	$- - -	$- - 240,050	$205,058 69,988 341,895

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

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

Details of changes in Level 3 of repeatable fair value hierarchy

130

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

Where the assets and liabilities measured by the Group 's repeated fair value are at Level 3 of the fair value hierarchy, the adjustment of the balance from the beginning to the end of the period is listed as follows:

January 1, 2019 Total profit (loss) recognized in 2019 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”) 2019 acquisition/issuance 2019 disposal/liquidation Returned stock for capital reduction Transfer-in (transfer-out) to Level 3 December 31, 2019 January 1, 2018(after retroactive adjustment) Total profit (loss) recognized in 2018: Recognized as other comprehensive profit or loss (recognized as “unrealized evaluated profit or loss in financial assets available for sale”) 2018 acquisition/issuance 2018 disposal/liquidation Transfer-in (transfer-out) to Level 3 December 31, 2018	Measured at fair value through other comprehensive profit or loss
	Stock
	$240,050
	25,544 175,021 - (40,850) -
	$399,765
	Measured at fair value through other comprehensive profit or loss $338,031 (75,174) (560) (10,759)
	(11,488)
	$240,050

In the above total profit (loss) recognized in the profit or loss, the loss related to the held asset as of 2019 and 2018 is respectively NT$ 25,544,000 and

131

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

NT$ (75,174,000).

Significant unobservable input information at Level 3 of the fair value hierarchy

The significant unobservable input values of the assets measured by Level 3 of the Group's fair value hierarchy as measured by the repeatable fair value are listed in the following table:

December 31, 2019:

Financial assets: Financial assets measured at fair value through other comprehensive profit and loss Stock Financial assets: Financial assets measured at fair value through other comprehensive profit and loss Stock	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 Market method Lack of liquidity discount 30% The higher the degree of illiquidity is, the lower the fair value estimates When the percentage of lack of fluidity increases (decreases) 1%, the equity to the Group shall decrease / increase NT$ 3,998,000 December 31, 2018: 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 Market method Lack of liquidity discount 30% The higher the degree of illiquidity is, the lower the fair value estimates When the percentage of lack of fluidity increases (decreases) 1%, the equity to the Group shall decrease / increase NT$ 2,401,000	Assessment technique	Assessment technique	Major unobservable input value	Major unobservable input value	Quantized information	Quantized information	Relationship between input value and fair value	Relationship between input value and fair value	Sensitivity analysis value relationship between input value and fair value
	Market method		Lack of liquidity discount		30%		The higher the degree of illiquidity is, the lower the fair value estimates		When the percentage of lack of fluidity increases (decreases) 1%, the equity to the Group shall decrease / increase NT$ 2,401,000

132

RITEK CORPORATION and Subsidiaries Notes to Consolidated Financial Statements

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

Evaluation process of Level 3 fair value measurement

Investment department of the Group is responsible for the fair value verification, through the independent source data to make the evaluation results close to the market status, confirm the data source is independent, reliable, consistent with other resources, and on behalf of the executable prices, and make the analysis for value changes of assets and liabilities in the remeasurement or reassessment according to the Group accounting policies on every reporting day, to ensure that the evaluation result is reasonable.

(3) Fair value hierarchy information not measured at fair value but necessary to be exposed

December 31, 2019:

Level 1 Level 2 Level 3 Total Asset only disclosing the fair value: Investment property (refer to $- $- $958,545 $958,545 Note VI.11) December 31, 2018: Level 1 Level 2 Level 3 Total Asset only disclosing the fair value: Investment property (refer to $- $- $1,030,926 $1,030,926 Note VI.11)

Information of foreign currency financial assets and liability of the Group with significant influence:

Unit: NT$ 1000

luence:	Unit: NT$ 1000
2019.12.31	2018.12.31
Foreign currency Exchange rate NT$	Foreign currency Exchange rate NT$

Financial asset

133

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

Monetary item:
USD	$229,322	29.9560	$6,869,570	$125,353	30.6600	$3,843,323
JPY	648,014	0.2747	178,009	470,438	0.2763	129,982
EUR	10,249	33.4400	342,727	4,133	34.9500	144,448
Non-monetary
item:
USD	242	30.0400	7,264	1,262	30.6600	38,693
Financial
liability
Monetary item:
USD	39,066	30.1160	1,176,512	70,187	30.7600	2,158,952
JPY	224,294	0.2790	62,511	288,285	0.2803	80,806
EUR	36	33.8400	1,218	-	35.3500	-

Due to the variety of the Group's functional currencies, it is not possible to disclose the exchange profits and losses of monetary financial assets and financial liabilities according to the foreign currency of each significant impact. The foreign currency exchange profit (loss) of the Group in 2019 and 2018 were NT$ (70,499,000) and NT$ 80,802,000 respectively.

The above information is disclosed on the basis of foreign currency book amount (converted to functional currency).

11. Capital management

The primary objective of the capital management of the Group is to maintain the sound credit rating and good capital ratio, to support the operation of the Group and the maximization of shareholders' equity. The Group manages and adjusts its capital structure according to the economic situation, and may achieve the purpose of maintaining and adjusting its capital structure by adjusting the dividend payments, returned capital or new shares issuing.

XII. Note disclosures

1. Relevant information of major transactions

134

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

(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: refer to Schedule 3.
(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.
(10) Others: business relation and important transaction condition and amount between the parent company and subsidiary as well as between the subsidiaries: refer to Schedule 9.
Investee related information:

The information regarding investees not in Mainland China over which the Company exercises significant influence, control or control via joint venture directly or indirectly: please see Schedule 6

Mainland China investment information: refer to Schedule 7.

XIV. Department information

For the purpose of management, the Group mainly divides the operating units based

135

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

on the geographical differentiation and business division. After the quantitative threshold test, the Group has the following two reporting operating departments:

Storage media department: engaging in the manufacturing, processing and sales of CD and memory cards.

Organic light emitting diode department: engaging in the manufacturing, processing and trading of OLED.

Other departments: engaging in the import and export trading business and other businesses transferred to investment.

The management level is the operating result of individual supervised business unit, for the decision making of resource allocation and performance evaluation. Department performance is evaluated according to the pre-tax profit and loss, and the accounting policies of reporting department are the same with the important accounting policy summary of the Group. However, the income tax of consolidated financial statements is managed on the basis of the Group, and is not amortized to the operating department.

Transfer pricing between the operating departments is based on the routine transactions similar to those with external third party.

136

1. Information of reporting department profit and loss, asset and liability

2019

Storage media department	OLED department	Reporting department subtotal	Other department	Adjustment and elimination	The Group total
$5,303,724 3,231,577	$1,671,970 621	$6,975,694 3,232,198	$803,429 199,684	$- (3,431,882)	$7,779,123 -
8,535,301	1,672,591	10,207,892	1,003,113	(3,431,882)	7,779,123
$(1,503,044)	$48,489	$(1,454,555)	$(970,194)	$(146,733)	$(2,571,482)

2018

Revenue Revenue from external customer Revenue between departments Total revenues Department loss (profit)	Storage media department $5,853,173 4,624,124	OLED department $2,519,944 -	Reporting department subtotal $8,373,117 4,624,124	Other department $985,544 202,413	Adjustment and elimination $- (4,826,537)	The Group total $9,358,661 -
	$10,477,297 $(1,106,628)	$2,519,944 $346,423	$12,997,241 $(760,205)	$1,187,957 $(339,576)	$(4,826,537) $(134,721)	$9,358,661 $(1,234,502)

The incomes among departments are eliminated for consolidation and are presented in “adjustment and elimination). The details of all other adjustments and eliminations will be disclosed below.

Following table shows information regarding assets and liabilities of operating departments of the Group as of December 31, 2019 and 2018

137

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

Assets of operating department

108.12.31 department assets 107.12.31 department assets	Storage media department	OLED department	Reporting department subtotal	Other department	Adjustment and elimination	The Group total
	$14,742,118	$3,522,179	$18,264,297	$4,869,485	$(2,178,392)	$20,955,390
	$16,153,050	$3,599,163	$19,752,213	$6,219,246	$(2,276,684)	$23,694,775

Liabilities of operating department

108.12.31 department liabilities 107.12.31 department liabilities	Storage media department	OLED department	Reporting department subtotal	Other department	Adjustment and elimination	The Group total
	$9,656,571	$1,683,130	$11,339,701	$1,142,759	$(2,695,321)	$9,787,139
	$9,999,012	$2,179,548	$12,178,560	$1,340,397	$(3,031,646)	$10,487,311

138

Adjustments of reporting department revenue, profit and loss, asset, liability and other significant items
(1) Revenue

Total reporting department revenues Other department revenue Eliminated department revenue The Group revenue	2019	2018
	$10,207,892 960,251 (3,389,020)	$12,997,241 1,187,957 (4,826,537)
	$7,779,123	$9,358,661

(2) Profit and loss

Total reporting department losses Other department loss Reduced department profit Net loss before tax of continuous operating unit Asset Total reporting department assets Other department asset Eliminated department account receivable Other unamortized amount The Group department asset Liability Total reporting department liabilities Other department liability Eliminated department account payable The Group department liability	2019	2018
	$(1,354,878) (968,590) 146,733	$(567,837) (350,580) 134,721
	$(2,470,201)	$(1,053,138)
	2019.12.31	2018.12.31
	$18,264,297 4,869,485 (2,178,392) $20,955,390	$19,752,213 6,219,246 (2,276,684) $23,694,775
	$18,264,297	$19,752,213
	2019.12.31	2018.12.31
	$11,339,701 1,142,759 (2,695,321)	$12,178,560 1,340,397 (3,031,646)
	$9,787,139	$10,487,311

(3) Asset

(4) Liability

(5) Other significant items

139

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

2019

Interest revenue Interest expense Capital expense of non-current asset Depreciation, amortization and other losses Asset impairment (profit recovered)	Reporting department total	Other department	Adjustment	The Group total
	$46,582 172,084 600,279 1,239,747 761,606	$11,998 20,491 37,037 515,410 600,581	$(14,004) (13,176) - 24,596 -	$44,576 179,399 637,316 1,779,753 1,362,187

2018 Interest revenue Interest expense Capital expense of non-current asset Depreciation, amortization and other losses Asset impairment (profit recovered)	Reporting department total	Other department	Adjustment	The Group total
	$24,269 143,319 752,423 1,048,073 9,423	$7,041 16,445 438,831 533,800 -	$(9,865) (6,633) (31,320) 34,332 -	$21,445 153,131 1,159,934 1,616,205 9,423

The adjustment item of capital expense of non-current asset is generated by the building of the general administration office of the Group, and is not included in the information of the department. Other adjustments are not significant.

3. Region classification information

Revenue from external customer:

Taiwan

2019 2018 $2,244,330 $2,351,692

140

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

Asia America Europe Africa Oceania Other regions Total	3,916,434 795,957 500,359 257,850 14,177 50,016	4,515,300 1,247,657 1,085,426 136,387 20,856 1,343
	$7,779,123	$9,358,661

The revenue is classified based on the customer located region.

Non-current asset:

Taiwan Asia Europe America Total	2019.12.31	2018.12.31
	$9,656,086 2,704,366 8,815 457,006	$10,440,189 4,105,881 48,733 613,164
	$12,826,273	$15,207,967

4. Important customer information

There is no sales amount of single customer of the Group in 2019 and 2018 reaching 10% of net amount of operating revenue, thus there is nothing to disclose.

141

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided	Attached table 1: Financings Provided
No.	Financier	Counter-party	Fianacial 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)	Transaction 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 Technology RITEK Technology RITEK Technology RGI Zhongyuan International Venture Capital Co., Ltd. Zhongfu Investment	PVNEXT Corporation RME 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	$111,000 70,224 629,390 84,230 80,000 20,000	$111,000 70,224 449,340 - 70,000 20,000	$111,000 70,224 419,384 - 70,000 18,800	2.750% 1.330% 3.736% 1.330% 2.750% 2.750%	2 2 2 2 2 2	$- - - - - -	Working capital Working capital Working capital Working capital Working capital Working capital	$- - - - - -	None None None None None None	$- - - - - -	$700,751 (Note 2) 〃〃 90,550 (Note 3) 93,195 (Note 4) 53,573 (Note 4)	$1,401,502 (Note 2) 〃〃 90,550 (Note 3) 93,195 (Note 4) 53,573 (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 4: 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.

142

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table 2: Collaterals/Guarantee Provided

No.	Collaterals/Guarantee Provider	Counter-party	Counter-party	Limits on Each Counter-party's Collateral/ Guarantee Amounts (Note	Maximum balance accumulated up to the end of this month	Ending Balance	Actual Amount Drawn Down	Amount of Properties Guaranteed by Collateral	Ratio of Accumulated Amount of Collateral to Net Asset Value of the Latest Financial Statement (%)	Maximum Collateral/ Guarantee Amounts Allowable	Provision of Endorsements by Parent Company to Subsidiary	Provision of Endorsements by Subsidiary to Parent Company	Provision of Endorsements to the Company in China
		Name	Relationshi p (Note 2)
0 0 0 0 0 1 2 3	RITEK Technology 〃〃〃〃 Hutek Corporation U-tech Technology Co., Ltd. AimCore Technology Co., Ltd.	Zhongyuan Venture Capital Zhongfu Investment Bolai Technology Co., Ltd. RVC Laiyang Technology Co., RITEK Technology Dollars cultural and creative industry company Finesil Technology Co.,	2 2 2 2 2 2 2 2	$2,102,253 〃〃〃〃 207,158 345,965 645,996	$150,000 100,000 250,000 468,372 816,200 225,000 60,000 186,500	$100,000 50,000 250,000 293,569 501,400 225,000 50,000 186,500	$66,000 50,000 22,246 114,584 256,358 204,000 3,000 186,499	$100,000 50,000 - - - - - -	1.43 0.71 3.57 4.19 7.16 3.21 0.71 2.66	$3,503,756 〃〃〃〃 345,263 691,931 1,076,661	Y 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 guarantee provided is 30% of the current n The endorsement/guarantee amount of U-tech Technology CO., Ltd. shall not exceed 30% of current net worth of U-tech. Among them, the endorsement/guarantee limit to single enterprise shall not exceed 15% of current net worth The endorsement/guarantee amount of AimCore Technology Co., Ltd. shall not exceed 50% of current net worth of U-tech. Among them, the endorsement/guarantee limit to single enterprise shall not exceed 30% of current net wort 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.

143

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

HoldingCompany	Securities Type and Name	Relationshipwith the HoldingCompany	Financial Statement Account			End of theyear of 2018	End of theyear of 2018
				Shares(1,000 )		Carrying Value	Percentage of Ownership(%)	Fair Value
RITEK Technology Zhongyuan Venture Capital Zhongfu Investment Bolai Technology Co., Ltd. Lai Factory Co., Ltd. AimCore Technology	CTBC Global Dividend Appreciation Fund Inc Yuanta Emerging Asia USD Bond Fund Jih Sun China Strategy A Share Fund Taishin Senior Secured High Yield Bond Fund-A Shin Kong Global Bond Fund USD Capital China Income Balanced Fund Capital Moderate Allocation Fund of Funds MegaPro Biomedical Co., Ltd. Epistar Corp Co., Ltd. Total I-Chiun Precision Industry Co., Ltd. China Television Company, 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 Company, Ltd. Huazhi Venture Capital Co., Ltd. O-View Technology Co., Ltd. Total O-Bank No.1 Real Estate Investment Trust GREEN RICH TECHNOLOGY CO., LTD. Mutual-Tek Inducstries Co., Ltd True Test Technology Inc. Total Han-Win Technology Co.,Ltd. TCB Money Market Fund 株式会社夢のみずうみ社 Hsin Kuang Steel Company Limited Taishin Financial Holding Co., Ltd. Special Stock E	None 〃〃〃〃〃〃〃〃 The chairman of our company is a director of this company None 〃〃〃〃 None 〃〃 None 〃 The subsidiary is the legal supervisor of this The subsidiary is the legal director of this 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 other comprehensive gain and loss-noncurrent 〃〃 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 profit or loss-current Financial assets at fair value through other comprehensive gain and loss-noncurrent		200 100 195 300 15 200 150 705 388 275 188 1,804 2,904 161 1,201 200 217 100 1,820 256 16 726 100 27 87 322 1,521	$12,471 5,685 1,610 942 4,028 6,180 5,372 4,607 1,617	- - - - - - - - - 0.14 0.12 0.41 0.49 0.08 0.01 - - - 5.20 0.17 9.17 3.26 - 0.27 0.12 1.01	$12,471 5,685 1,610 942 4,028 6,180 5,372 4,607 1,617
						$42,512		$42,512
						$2,596 976 17,608 32,671 1,967 11,678		$2,596 976 17,608 32,671 1,967 11,678
						$67,496		$67,496
						$1,734 1,996 856		$1,734 1,996 856
						$4,586		$4,586
						$48,012 1,329 9,308 163		$48,012 1,329 9,308 163
						$58,812		$58,812
						$856		$856
						$95 2,027 1,663		$95 2,027 1,663
						$3,785		$3,785

					496 64
					99 400	$3,079	0.03 0.08	$3,079
						$21,280		$21,280

144

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

Securities Type and Name	Relationshipwith the HoldingCompany	Financial Statement Account		End of theyear of 2018	End of theyear of 2018
			Shares(1,000 )	Carrying Value	Percentage of Ownership(%)	Fair Value
Pancolour Ink Co., Ltd.	〃	〃	3,846	2,898	0.34	2,898
				$24,178		$24,178

145

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 3: Marketable securities held (excluding investment subsidiaries, affiliated enterprises and joint venture control part)

HoldingCompany	Securities Type and Name	Relationshipwith the HoldingCompany	Financial Statement Account		End of theyear of 2018	End of theyear of 2018
				Shares(1,000 )	Carrying Value	Percentage of Ownership(%)	Fair Value
Laibao Technology Co., Ltd. U-tech Technology Co., Ltd. Dollars cultural and creative industry company HouJu Energy Development Co., L Glory Days Services Ltd. HouJu Energy Development Co., L Dollars cultural and creative indust	Jentech Precision Industrial Co., LTD Altek Corporation Netronix, Inc. FSITC Glb Wealthy Nations Bd Acc Total Pancolour Ink Co., Ltd. TCB Taiwan Money Market Fund UPAMC New Asian Technology & Energy Fund Yuanta New ASEAN Balanced Fund UPAMC DynaStrategy Global Multi-Asset Total PAIHO SHIH HOLDINGS CORPORATION Taiwan Name Plate Co., Ltd. Total Chang Hong Energy Co., Ltd. HAN-TA Venture Capital Wanda Venture Capital Co., Ltd. H&QAP Greater China Growth Fund, L.P. Total FINE COLLECTION CORPORATION Bestdisc Technology Corp. Luo Zheng Technology Co., Ltd Total Cathay Taiwan Money Market Fund Legend Crown Investment Ltd. Yuan Yu Energy Co., Ltd. Universe stars Co., Ltd.	None 〃〃〃 None None 〃〃〃 None 〃 None 〃〃〃 None 〃 None None The subsidiary is the legal supervisor 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-current Financial assets at fair value through profit or loss-current 〃〃〃 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-current Financial assets at fair value through other comprehensive gain and loss-noncurrent Financial assets at fair value through other comprehensive gain and loss-noncurrent Financial assets at fair value through other comprehensive gain and loss-noncurrent	20 399 77 200 752 1,000 502 500 1,000 1,926 840 500 952 5,000 - 364 10 840		0.03 0.01 0.24 - 0.79 - - - - 1.42 4.80 0.41 21.55 14.93 2.67 1.50 0.02 9.80
					$802 10,449 3,170 554		$802 10,449 3,170 554
					$14,975		$14,975
					$6,815		$6,815
					$10,146 7,197 4,355 7,772		$10,146 7,197 4,355 7,772
					$29,470		$29,470
					$18,587 25,782		$18,587 25,782
					$44,369		$44,369
					$7,185 27,425 47,248 8,390		$7,185 27,425 47,248 8,390
					$90,248		$90,248
					$- -		(注1) (Note 1) 〃 $90,561
					$90,561

146

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached table 4: Acquisition or disposed of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company's paid-in capital

Company name	Marketable securities type and name	Financial statement account	Counter-party	Relationship	Beginning balance	Beginning balance	Acquisition	Acquisition	Disposal	Disposal	Disposal	Disposal	Ending balance	Ending balance	Notes
					Shares (in thousand)	Amount	Shares (in thousand)	Amount	Shares (in thousand)	SellingPrice	Carrying Cost	Gain (Loss) on Disposal	Shares (in thousand)	Amount
U-tech Technology Co., AimCore Technology	HouJu Energy Development Co., Ltd. HouJu Energy Development Co., Ltd.	Investment accounted for using equity Investment accounted for using equity method	- -	- -	- -	- -	32,468 11,059	390,300 132,940	- -	- -	- -	- -	32,468 11,059	390,300 (Note) 132,940 (Note)	- -

Note: the ending balance is the initial acquisition cost, which has been written off due to the preparation of consolidated financial statements.

147

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 5: Purchase and sale of goods from or to related parties reaching NT$ 100 million or more than 20% of the paid-in capital or more

Purchaser/seller	Counter-party	Relationship with the counter-party		Transaction	Transaction	Transaction	Differences in transaction terms compared to general transactions and reasons	Differences in transaction terms compared to general transactions and reasons	Notes/accounts receivable (payable)	Notes/accounts receivable (payable)
			Purchases(sales)	Amount	Percentage of total purchases(sales	Credit term			Balance	Percentage of total notes/accounts
							Unit price	Credit term
RITEK Technology Kunshan RITEK Laibao Technology Co., Ltd. U-tech Technology Co., Ltd.	AMI Conrexx Kunshan Kunlai Trade Co., Ltd. Total RVC Prorit Corporation Hutek Corporation Hutek Corporation Glory days	The company is the ultimate holding company of this company The company is the ultimate holding company of this company 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 Affiliated subsidiary Others Affiliated subsidiary	(Sales) (Sales) (Sales) (Sales) Purchases Purchases (Sales) Purchases (Sales)	$(258,021) (281,040) (234,592) $(773,653) $1,033,873 110,716 $1,144,589 $(120,157) $270,447 $(157,819)	6 7 6 19 25 3 28 3 7 4	75 days 75 days 60 days 60-90 days 150 days 90-120 days 90 days 90 days	None 〃〃〃〃〃〃 The specifications of purchased products are different and cannot be reasonably compared	None 〃〃〃〃〃〃 30-90 days for non- related parties	$34,896 52,830 74,231 $161,957 $256,680 (219,371) $37,309 $10,901 $(133,103) $-	4 6 8
										18
										27 43
										70
										1
										26
										-
							None

Note: The method of disclosure is based on sales or purchase, and its relative transactions will not be disclosed separately.

148

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 6: Accounts receivable from related parties reaching NT$ 100 million or more than 20% of paid-in capital:

Company name	Related party	Relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequentyear	Allowance for bad debts
					Amount	Action taken
RITEK Technology RITEK Technology RITEK Technology RITEK Technology-Other receivables RITEK Technology RITEK Technology-Long- term receivables RITEK Technology-Long- term receivables Zhongyuan International Venture Capital Co., Ltd. －Long-term receivables Laibao Technology Co., Ltd. RVC Hutek Corporation Hutek Corporation Bolai Technology Co., Bolai Technology Co., Ltd.-Other receivables Hutek Corporation AimCore Technology- Lease payments receivable	Conrexx Max Online RVC RVC Kunshan Hutek Co., Lt PVNEXT Corporation RVC PVNEXT Corporation Hutek Corporation RITEK Technology RITEK Technology Kunshan Hutek Co., Lt RITEK Technology RITEK Technology Laibao Technology Co., Ltd. RITEK Technology	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 company dThe 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 company Invested company accounted for using equity method Subsidiary, Invested company accounted for using equity method Ourcompany dSubsidiary, Invested company accounted for using equity method Parent company Parent company Other related party Parent company	$256,680 111,000 419,384 219,370 266,649 264,249 110,223	- - #DIV/0! - - - - - - - - - - -	$173,049 - - - - - - - - - - -	〃	$- - $- - - - - - - - - - - -	- - $- - - - - - - - - - - - - -
						Collecting based on the financial situation of this company 〃〃〃〃〃〃〃〃〃〃〃〃 -

149

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000
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 Co., Ltd. Zhongchuang AFFLUENCE ART RGI SCORE HIGH Kunshan Hutek Co., Ltd.	Affluence ART GoldenRiver Max Online RGI Ritrax Score High Sky Chance Zhongyuan International Venture Capital Co., Ltd. Zhongfu Investment Co., Ltd. Finesil Technology Co., Ltd. PVNEXT Corporation Heli Energy Co., Ltd. AimCore Technology Co., Ltd. Bolai Technology Co., Ltd. U-tech Technology Co., Ltd. Lai Factory Co., Ltd. Laiyang Technology Co., Ltd. Laibao Technology Co., Ltd. LaiTsuan Technology Co., Ltd. Right In Technology Co. AimCore Technology E-Chemi Technology Co., Ltd. Bolai Technology Co., Ltd. Laiyang Technology Co., Ltd. E-Chemi Technology Co., Ltd. Bolai Technology Co., Ltd. CASHIDO Corporation U-Tech Media Corporation Laiyang Technology Co., Ltd. Ritrax AMI Conrexx Ritrax RME RVC Kunshan Kunlai Trade Co., Ltd.	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 Netherlands Britain Germany Vietnam China	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 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 Electronic industry Trademark rights company Sales of optical discs Sales of optical discs Trademark rights company Sales of optical discs Manufacture and marketing of optical Sales of optical discs	$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 1,006,461 423,780 750,610 185,404 391,800 4,246,235 363,240	$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 1,006,461 423,780 750,610 185,404 391,800 4,246,235 363,240	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 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 40.46 100.00 100.00 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 22,791 618,978 397,249 136,180 133,227 - 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) (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

150

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000
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
Hutek Corporation LaiTsuan Technology Co., Ltd.	Kunshan RITEK CASHIDO Corporation Lilai Optoelectronic Technology Co., Ltd. Team Diy RITEK LATIN AMERICA Arlewood Laibao Technology Co., Ltd. U-tech Technology Co., Ltd. Golden Glue Co., Ltd. Prorit Corporation, Vietnam Ltd. Ricare Co., Ltd. Laiyang Technology Co., Ltd. TaiyangHai Technology Co., U-tech Technology Co., Ltd. Laiyang Technology Co., Ltd. U-tech Technology Co., Ltd. Laibao Technology Co., Ltd. ARMOR INVESTMENT GROUP CORP. HouJu Energy Development Co., Ltd. AimCore(Yangzhou) Technology Co., Ltd. Dollars cultural and creative industry company TaiyangHai Technology Co., Laiyang Technology Co., Ltd. Bolai Technology Co., Ltd. Laibao Technology Co., Ltd. Havard Industries Co., Ltd. HouJu Energy Development Co., Ltd. Jade Investment Services Ltd. Crystal Investment Overseas AimCore Technology Co., Ltd. Houcheng Energy Corporation Glory Days Services Ltd.	China Taiwan China Malaysia America B.V.I. Taiwan Taiwan China Vietnam Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Samoa Taiwan China Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan BVI BVI Taiwan Taiwan BVI	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 Electronic industry Electronic industry Management consulting industry Electronic industry Electronic industry Manufacture and marketing of optical Manufacturing and sales of electronic materials, etc. Manufacture and marketing of optical 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	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	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	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	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	- 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	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
TaiyangHai Technology Co., Ltd.
Sky Chance Bolai Technology Co., Ltd. Arlewood Lai Factory Co., Ltd. Laibao Technology Co., Ltd. AimCore Technology Co., Ltd. ARMOR U-tech Technology Co., Ltd. HouJu Energy Development Co., Ltd. Jade Investment Services Ltd.

151

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000	Attached Table 7: Information on the name and location of the invested company (excludinginvested companies in China) Currency unit: 1,000
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
Glory Days Services Ltd.	U-Tech Media Korea Co., Ltd.	Korea	Manufacture and marketing of optical discs	164,062	164,062	1,156	100.00	165,425	(1,066)

152

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8： 1. Information on investments in China	Attached Table 8： 1. Information on investments in China	Attached Table 8： 1. Information on investments in China	Attached Table 8： 1. Information on investments in China	Attached Table 8： 1. Information on investments in China	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000
Investee in China	Main business activities	Paid-in capital	Investment	Accumulated amount of remittance from Taiwan at the beginning of current year	Amount of investment remitted or recovered during		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) recognised 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 Xinhua Multimedia Development Co., Ltd. Kunshan Hutek Corporation Lilai (Yangzhou) Optoelectronic Technology Co., Ltd.	Blank recording disc, etc 〃 Solar module	USD12,000 USD82,000 USD65,529	Note 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	$- $(338,374) $(241,000)	49.00% 100.00% 65.01%	$- $(338,374) $(156,674)	$- $690,527 $622,645	$- $- $-

Investee in China	Accumulative amount of investment remitted from Taiwan to China at the end of	Investment amount approved by the Investment Commission of the Ministry	Ceiling on investments in China imposed by the Investment Commission of MOEA
Chongqing Xinhua Multimedia Development Co., Ltd. Kunshan Hutek Corporation Lilai (Yangzhou) Optoelectronic Technology Co., Ltd.	USD5,880 USD82,000 USD42,600	USD5,880 USD99,400 USD43,000	$4,204,507

Note 1: Investment method: investing in China through a third area company (MAXONLINE)

The following significant transactions with investee in China directly or indirectly through the third area, with the price, payment terms, unrealized gain(loss):

(1) Purchase (sale) of goods: (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: (5) Other transactions that have a significant impact on the profit(loss) of the current period or the financial situation: None.

153

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-1: TaiyangHai Technology Co., Ltd. 1.Informationon investmentin	Attached Table 8-1: TaiyangHai Technology Co., Ltd. 1.Informationon investmentin	Attached Table 8-1: TaiyangHai Technology Co., Ltd. 1.Informationon investmentin	Attached Table 8-1: TaiyangHai Technology Co., Ltd. 1.Informationon investmentin	Attached Table 8-1: TaiyangHai Technology Co., Ltd. 1.Informationon investmentin	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000	Foreign currencyunit:1,000
Investee in 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
Lilai (Yangzhou) Optoelectronic Technology Co., Ltd.	Solar module	USD65,529	Direct investment	$287,730 USD10,000	$-	$-	$287,730 USD10,000	$(241,000)	15.26%	$(38,221)	$158,427	$-

Investee in China	Accumulative amount of investment remitted from Taiwan to the China at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in China imposed by the Investment Commission of MOEA
Lilai (Yangzhou) Optoelectronic Technology Co., Ltd.	USD10,000	USD10,000	$14,146 (Note1)

Note 1: The amount of investment has exceeded the ceiling on investments in China imposed by the Investment Commission of MOEA due to the continuous loss of PVNEXT Corporation.

154

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued)

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

Attached Table 8-2: AimCore Technology Co., Ltd.

1. Information on in	vestment in China	vestment in China	vestment in China	vestment in China	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000	Currency unit:1,000
Investee in China AimCore (Yangzhou) Technology Co., Ltd.	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
	production and marketing conducting glass	USD6,500	Note 1	$207,588 USD6,500	$-	$-	$207,588 USD6,500	$(36,219)	100.00%	$(36,219)	$75,403	$-

Investee in China	Accumulative amount of investment remitted from Taiwan to China at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in China imposed by the Investment Commission of MOEA
AimCore (Yangzhou) Technology Co., Ltd. USD6,500		USD8,000	$1,291,993

Note 1: Investment method: investing in China through a third area company (ARMOR)

155

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued) (Unless otherwise specified, the unit shall be in NT$ 1,000)

Attached Table 8-3: Bolai Technology Co., Ltd.

1. Information on investment in China	1. Information on investment in China	1. Information on investment in China	1. Information on investment in China	1. Information on investment in China	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	Currency unit:1,000 Remitted Recovere $- $- $1,480,325 $(89,674) 100.00% $(89,674) $287,189 $- 89,674,413 USD45,223 被投資公司本期損益 Current profit (loss) of the invested company Investment income (loss) recognized in the current period Book value of investment at the end of the period Amount of investment remitted or recovered during the currentperiod Accumulated amount of remittance from Taiwan at the end of current year Shareholding ratio of the company's investment (direct or indirect) Investment income remitted back to Taiwan as of the current period	287,188,605 期末投資帳面價值
Investee in 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 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	Recovere
Kunshan Proteck Corporation	Plastic precision injection	USD45,223	Note 1	$1,480,325 USD45,223	$-	$-	$1,480,325 USD45,223	$(89,674)	100.00%	$(89,674)	$287,189	$-
													287,188,605

Investee in China	Accumulative amount of investment remitted from Taiwan to China at the end of this period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investments in China imposed by the Investment Commission of MOEA
Kunshan Proteck Corporation	USD45,223	USD45,223	$- (Note 2)

Note 1: Investment method: investing in China through a third area company (Arlewood)

Note 2: The amount of investment has exceeded the ceiling on investments in China imposed by the Investment Commission of MOEA due to the continuous loss of Prorit Corporation.

156

Notes to the Consolidated Financial Statements of RITEK Technology Co., Ltd. and Its Subsidiaries (Continued)

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

Attached Table 9: Details of the business relations, significant transactions and amounts between the company and its subsidiaries and between the subsidiaries

Number	Company name	Counterpart	Relationship (Note 1)	Transactions	Transactions	Transactions	Transactions
				Accounts	Amount	1 refers to Assets 2 refers to Operating revenue	Percentage of consolidated total operating revenues or total assets (Note 2)
0 0 0 0 0 0 0 0 0 0 1 1 1	RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology RITEK Technology Laibao Technology Co., Laibao Technology Co., Laibao Technology Co.,	AMI Conrexx Kunshan Kunlai Trade Co., Ltd. RVC RVC RVC Bolai Technology Co., Ltd. Bolai Technology Co., Ltd. PVNEXT Corporation AimCore Technology Kunshan Hutek Corporation Kunshan Hutek Corporation Kunshan Hutek Corporation	1 1 1 1 1 1 1 1 1 1 2 2 2	Sales revenue Sales revenue Sales revenue Cost of goods sold Accounts receivable Long-term receivables Cost of goods sold Accounts payable Long-term receivables Lease payable Cost of goods sold Sales revenue Accounts receivable	$258,021 281,040 234,592 1,033,873 256,680 419,384 110,716 475,930 111,000 110,223 270,447 133,103 120,157	2 2 2 2 1 1 2 1 1 1 2 1 2	3% 4% 3% 13% 1% 2% 1% 2% 1% 1% 3% 1% 2%

The disclosure standard requires above NT$100,000,000 for the transaction amount according to the disclosure principle in the attached tables of financial statements.

Note 1: Relationship between transaction company and counterparty is classified into the following two categories:

Parent company to subsidiary
Subsidiary to parent company

Note 2: Regarding percentage of transaction amount to total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

157

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RITEK — Audit Report / Information 2019

52021_rns_2019-11-14_1f7c1c0b-b375-4577-986a-3a304440a8b0.pdf

Independent Auditor’s Report

Opinion

Basis for Opinion

Key Audit Matters

Judgment on consolidated entities

Impairment of non-financial assets

Revenue recognition

Other matters referring to the audit of other certified public accountants

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

Auditors’ Responsibilities for Auditing the Consolidated Financial Statements

Others

RITEK Technology Co., Ltd. and Its Subsidiaries

Consolidated Balance Sheet

RITEK Technology Co., Ltd. and Its Subsidiaries

Consolidated Balance Sheet

RITEK Technology Co., Ltd. and Subsidiaries

Consolidated Statements of Changes in Equity

From January 1 to December 31 of 2019 and 2018

RITEK Technology Co., Ltd. and Its Subsidiaries Consolidated Statements of Cash Flows

RITEK Corporation and Subsidiaries Notes to Consolidated Financial Statements January 1 to December 31, 2019 And January 1 to December 31, 2018

I. Company History

II. Date and Procedure Passing the Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

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

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

Notes to Consolidated Financial Statements

A. Highly possible regulations

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

(2) IFRS 17 “Insurance Contracts”

A. Future cash flow estimates

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

2. Preparation basis

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

5. Conversion of financial statements in foreign currency

7. Cash and cash equivalent

8. Financial instruments

Financial assets measured at amortized cost

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

Financial assets measured at fair value through profit or loss

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

Classification of liability or equity

Equity instrument

Financial liabilities

Financial liabilities measured at fair value through profit or loss

Notes to Consolidated Financial Statements

Financial liabilities measured at amortized cost

Derecognition of financial liabilities

9. Derivative instruments

RITEK CORPORATION and Subsidiaries

Notes to Consolidated Financial Statements

10. Fair value measurement

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

11. Inventory

12. Investment by equity method

RITEK CORPORATION and Subsidiaries

RITEK Audit Report / Information 2019