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Stock Code: 3481
Innolux Corporation 2018 Annual Report
Notice to readers This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail. Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Innolux Annual Report is available at: http://www.innolux.com Printed on April 30, 2019
A. Spokesperson & Deputy Spokesperson information. Spokesperson Name: Chu-Hsiang Yang Title: President&COO Tel: 886-37-586000 E-mail: [email protected]
Deputy Spokesperson Name: Chien-Lang Lo Title: General Director Tel: 886-37-586000 E-mail: [email protected]
B Headquarters, Branches and Plant.
Headquarters: No.160, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000
Branch: No.21 Zidong Road, Fenghuali, Xinshi District, Tainan City Tel: 886-6- 5889998
Plant
Fab T1: No.160, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000
Fab T2: No.168, Kesyue Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586000
Fab T3: No. 12, Kejung Road, Jhunan Township, Miaoli County, Hsinchu Science Park Tel: 886-37- 586393
Fab A: No.1, Ciye Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051881
Fab B: No.2, Sect. 2, Huansi Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051889
Fab C: No.12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Tel: 886-6-5051880
Fab D: No.3, Sect. 1, Huansi Road, Sinshih District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051888
Fab F: No.11, Luke 10th Road, Kaohsiung City, Southern Taiwan Science Park Tel: 886-7-6278888
Fab L6: No.11, Luke 10th Road, Kaohsiung City, Southern Taiwan Science Park Tel: 886-6-6278888
STSP Touch Fab : No.12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051880
Touch Module Fab : No. 12, Nanke 8th Road, Shanhua District, Tainan City, Southern Taiwan Science Park Tel: 886-6-5051880
C. Stock Transfer Agent Grand Fortune Securities Co., Ltd. Address: 6th Floor, No.6, Sec. 1 Zhongxiao W Rd., Zhongzheng Dist., Taipei City 10041, Taiwan Website: http://www.gfortune.com.tw Tel: 886-2-23711658
D. Auditors PricewaterhouseCoopers Auditors: Han-Chi Wu, Liang Hua-Ling Address: 27th Floor, 333 Keelung Rd, Sec. 1, Taipei, Taiwan Website: http://www.pwc.tw Tel.: 886-2-27296666
E. Overseas Securities Exchange: None
F. Corporate Website: http://www.innolux.com
Contents
I. Letter to Shareholders .............................................................................................................. 1
II. Company Profile ....................................................................................................................... 3 2.1 Date of Incorporation: ..................................................................................................... 3 2.2 Company History .............................................................................................................. 3
III. Corporate Governance Report ................................................................................................ 9 3.1 Organization ...................................................................................................................... 9 3.2 Directors and Management Team ................................................................................... 11 3.3 Remuneration of Directors, President, and Vice President ............................................. 19 3.4 Implementation of Corporate Governance ...................................................................... 25 3.5 Information Regarding the Company’s Audit Fee and Independence ............................ 52 3.6 Replacement of CPA: ...................................................................................................... 53 3.7 The Company’s chairman, general manager, or any managerial officer in charge of
finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: ................................................ 53
3.8 Changes in Shareholding of Directors, Managers and Major Shareholders ................... 54 3.9 Relationship among the Top Ten Shareholders ............................................................... 55 3.10 Ownership of Shares in Affiliated Enterprises ................................................................ 56
IV. Capital Overview .................................................................................................................... 57 4.1 Capital and Shares ........................................................................................................... 57 4.2 Bonds ............................................................................................................................... 63 4.3 Preferred Shares: . ........................................................................................................... 63 4.4 Global Depository Receipts: ........................................................................................... 63 4.5 Employee Stock Options: ................................................................................................ 63 4.6 Issuance of New Restricted Employee Shares: ............................................................... 63 4.7 Status of New Share Issuance in Connection with Mergers and Acquisitions: . ............ 63 4.8 Financing Plans and Implementation:. ............................................................................ 63
V. Operational Highlights ........................................................................................................... 64 5.1 Business Activities .......................................................................................................... 64 5.2 Market and Sales Overview ............................................................................................ 73 5.3 Human Resources ............................................................................................................ 80 5.4 Environmental Protection Expenditures ......................................................................... 80 5.5 Labor Relations ............................................................................................................... 80 5.6 Important Contracts ......................................................................................................... 84
VI. Financial Information ............................................................................................................ 86 6.1 Five-Year Financial Summary......................................................................................... 86 6.2 Five-Year Financial Analysis .......................................................................................... 91 6.3 Audit Committee Report in the Most Recent Year ......................................................... 95 6.4 Consolidated Financial Statements for the Years Ended December 31, 2017 and
2016, and Independent Auditors’ Report ......................................................................... 96 6.5 Financial Statements for the Years Ended December 31, 2017 and 2016, and
Independent Auditors’ Report ......................................................................................... 96 6.6 Disclosure of the Impact on Company’s Financial Status Due to Financial
Difficulties: . ................................................................................................................... 96
VII. Review of Financial Conditions, Operating Results, and Risk Management ................... 97 7.1 Analysis of Financial Status ............................................................................................ 97 7.2 Analysis of Financial Performance ................................................................................. 98 7.3 Analysis of Cash Flow .................................................................................................... 98 7.4 Major Capital Expenditure Items .................................................................................... 99 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement
Plans and the Investment Plans for the Coming Year ..................................................... 99 7.6 Analysis of Risk Management ........................................................................................ 99 7.7 Other Important Matters: ............................................................................................... 103
VIII. Special Disclosure ................................................................................................................. 104 8.1 Summary of Affiliated Companies ................................................................................ 104 8.2 Private Placement Securities in the Most Recent Years: ............................................... 118 8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent
Years: ............................................................................................................................. 118 8.4 Special Notes: ................................................................................................................ 118
IX. Materially might affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, such situations shall be listed one by one: .......... 118
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I.Letter to Shareholders
1.1 2018 Operating Report
2018 has been a choppy year for the panel industry. In the first half of the year, the market suffered from the
excessive supply of brands in the second half of 2017. The abundance of supply suppressed price increases. The
third quarter has always been the peak season for panel sales. With the shortage of panel components and the
high demand in the end market, the downstream brands actively purchased panels, resulting in a reverse trend in
sales in the third quarter. In the fourth quarter, due to the adjustment of inventories, panel prices took a slight
downturn.
The company's operating results in 2018 remained profitable. The consolidated revenue for this year was
NT$279.4 billion, and the net profit after tax was NT$2.2 billion. It has been profitable for 6 consecutive years
with an EPS of NT$0.22.
Facing the continuous opening of capacity in new panel factories in mainland China, the market is expecting a
long-term oversupply and a chaotic outlook. Encountering the inevitable impact on the panel industry, the
company actively adjusts its business strategies, advances its technologies and develops new application fields
with a view to entering high-end product markets and developing emerging markets. With the improvement in
technical quality, the Company will find its new blue-sea, and maximize profits for the company and
shareholders.
Looking forward to the future, the management team and all the employees are dedicated to and spare no
efforts to bring greater benefit to the shareholders.
(I) Result of Business Plan
In 2018 our consolidated revenue was NT$ 279,376,115 thousands, which decrease NT$49,798,286
thousands or 15% by compared with the 2017 yearly revenue of NT$ 329,174,401 thousands. In 2018 our
annual profit after tax which belonged to mother company was NT$2,222,762 thousands, and the annual
earnings per share is NT$0.22.
(II) Budget Implementation
No financial forecast disclosed for 2018, therefore not applicable to disclose budget implementation.
(III) Financial Analysis from 2017 to 2018
Item 2017 2018
Finacial Structure
Analysis
Debt to Asset Ratio (%) 36.29 38.10
Long-term Capital to property, plant and equipment (%) 128.12 141.15
Debt-paying ability
Current Ratio (%) 120.19 141.12
Quick Ratio (%) 96.12 113.81
Times Interest Earned (Times) 53.16 12.59
Profitability
Return on Assets (%) 9.57 0.64
Return on Shareholders’ equity (%) 15.10 0.86
Operating Income to Paid-in Capital Ratio (%) 47.25 4.86
Pre-tax Income to Paid-in Capital Ratio (%) 49.18 6.60
Net Margin (%) 11.25 0.80
Basic after-tax EPS (NT$) 3.72 0.22
(IV) Research and development
The company's display technology development continues to focus on developing customers' ideal
product specifications, expanding the market, increasing the company's competitiveness and building a
friendly environment. The product development objectives include environmentally friendly materials,
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power-saving, high resolution, high saturation, thin and light models, narrow frame, high dynamics, touch,
wide viewing angle, and comprehensive service system integration, to achieve remarkable performance.
In order to strengthen the company's competitive advantages and long-term prospects, we are actively
investing in new technologies and R&D of new products, such as flexible displays, IGZO, AMOLED
(active-matrix organic light-emitting diode), AM Mini LED, MicroLED (micro-light emitting diode), touch
integration technology, wide color gamut displays, and medium-large size touch panels, and have achieved
considerable results, which have helped the company to stand out from the fiercely competitive industrial
environment and achieve good results.
For large-size TFT-LCD products, besides continuous development towards larger size, energy saving,
high image quality (4K and 8K) and narrow frames, the company’s development of LCD TVs also
emphasizes enhancing competitiveness of whole machine manufacturing. The company’s development of
LCD screens addresses e-sports and narrow borders, and the future development of notebook computers
emphasizes on low power consumption, IGZO, narrow frames and thin and lightweight models. In addition,
the company is also developing for new applications of panels, proactively expanding the scope of public
displays, commercial displays and special applications. We hope to provide consumers with more diverse
products to upgrade existing product lines.
For the medium-small sized panels, due to the booming development of the automotive market,
smartphones and watch applications, and the maturity of touch technology, more and more manufacturers
are investing in the next generation of technologies such as AMOLED or flexible panels, becoming the
fastest growing and most diverse product category. Looking forward to 2019, new technologies including
flexible, free shape laser cutting, fingerprint on display and Sound on Panel will be the trend for
medium-small sized panels.
1.2 Business Plan for 2019
(I) Added-values:
CBU sales, providing complete user experience for customers to create added value.
(II) Diversification:
1. Strengthen technology potentials, actively develop next-generation display technology, expand the
applications in diverse products, and extend the value chain from the core to the periphery.
2. Focus on technology foresight and innovative business plans.
3. Raise PE-values, to increase shareholder EPS.
(III) Platformization:
With INX4.0+ as the platform for internet industry, combining hardware and software, integrating real
and virtual, connecting the six major flows to open up technology platforms and penetrability of intelligent
manufacturing platforms, promote intelligent manufacturing and strengthen resource integration, reduce
costs and exert synergy.
In 2019, the Company will continue to focus on panel technology, with technology research as its foundation
and smart manufacturing as the basis. It will extend to added value, diversification and platformization, and
adjust its operational structure with AI, build important intelligent internet projects for the panel industry, and
improve in a tough competitive environment that enhances excellent operational performance. Shareholders are
kindly requested to continue to give us support and encouragement. Finally, I wish you all good health and good
luck, thank you.
Chairman: Jin-Yang Hung Manager: Chu-Hsiang Yang Chief Accountant: Chin-Yuan Chang
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II. Company Profile
2.1 Date of Incorporation: January 14 2003
2.2 Company History
January 2003 Inception and registration of the Company
March 2003 Invested in a subsidiary, Innolux Holding Ltd.
May 2003 Ground breaking ceremony for the TFT and Color Filter Plant In Jhunan
August 2003 The TFT and Color Filter Plant In Jhunan commenced construction
March 2004 Entered into a 7-year NT$20 billion syndicated loan contract with a syndicate including Bank of
Communications
June 2004 Machinery installation started in the TFT factory and Color Filter Plant In Jhunan
September 2004 Birth of the first TFT-LCD panel
October 2004 Invested in Innocom Technology (Shenzhen) Ltd. in China
January 2005 Public issuance of the Company’s shares approved by the Financial Supervisory Commission
February 2005 Invested in Innolux Corporation Ltd. in the U.S.
March 2005 Obtained ISO 9001 certification
Granted the “2005 Outstanding Award in Makingthe Science Park Green by Planting Trees” by the
Science Park Administration
July 2005 Registered as an emerging stock on the GreTai Securities Market
Obtained ISO 14001 and OHSAS 18001 certifications
August 2005 Ranked 51st nationwide in actual import/export performance in 2004
Granted the Excellent Award in Import/Export Performance by the Ministry of Economic Affairs and
Bureau of Foreign Trade
November 2005 Recognized as an outstanding waste disposal model factory by the Environmental Protection
Administration, Executive Yuan
December 2005 Recognized as an Occupational Safety and Health Administration Voluntary
Protection Unit by the Council of Labor Affairs, Executive Yuan
October 2006 Shares became listed on the Taiwan Stock Exchange on 24 October
November 2006 The Board passed the resolution of merging with Jemitek Electronics Corp. on 21 November
March 2007 Completed merger with Jemitek Electronics Corp.
June 2007 Invested in InnoJoy Investment Corporation
August 2007 Invested in InnoFun Investment Corporation
November 2007 Global Deposit Receipts became listed on the London Stock Exchange on 7 November
June 2008 Topping out ceremony for the sixth generation factory of the Company
July 2008 Granted the “Outstanding Award in Making Green by Planting Trees” by the Science Park
Administration
Recognized as one of the TOP 10 Leading Companies among the “Taiwan Technology Top 100”
Ranked sixth among Deloitte Technology FAST50 Taiwan in terms of profit growth
September 2008 Entered into a 5-year NT$24 billion and US$200 million syndicated loan contract with a syndicate of
20 banks including Mega International Commercial Bank
Selected as one of the 12 units in the national industrial group by the Water Assessment Programme
organized by the Ministry of Economic Affairs
October 2008 Received the Bronze Award of the National QCC Competition from the Corporate Synergy
Development Center of the Industrial Development Bureau, Ministry of Economic Affairs
Granted the 2008 Excellence Award in Recycling and Reducing Waste Production by the
Environmental Protection Administration, Executive Yuan
November 2008 Recognized as a nationwide friendly workplace in 2008 by the Council of Labor Affairs, Executive
Yuan
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December 2008 Granted the 2008 Outstanding Water Conservation Award by the Water Resources Agency, Ministry
of Economic Affairs
Honored with the "2008 Taiwan CSR Awards-Silver Award" by the Taiwan Institute for Sustainable
Energy
February 2009 Innolux Display’s Fab T1 passed and obtained the Taiwan Occupational Safety and Health
Management System (TOSHMS) certification
April 2009 Innolux Display’s Fab T1 was granted the excellent award in achieving zero work accident hours by
the Council of Labor Affairs
May 2009 Innolux Display’s Fab T2 obtained ISO 9001/ISO 14001/OHSAS 18001/QC 080000 4-in-1
management system certification
June 2009 Granted the 2008 excellent personnel award by the National Labor Safety and Health Partnership of
the Council of Labor Affairs
September 2009 Issued the 2008 Sustainability Report of Innolux Display
Innolux Display’s Fab T0, T1, and T2 obtained the TS 16949 quality system certification
October 2009 Innolux Display announced a merger with TPO Displays Corp.
Honored with the “Energy Conservation Outstanding Innovation Award” by the Bureau of Energy,
Ministry of Economic Affairs
November 2009 Innolux Display announced a merger with Chi Mei Optoelectronics Corporation
Entered into an NT$48 billion syndicated credit facility with a syndicate of 19 banks including Mega
International Commercial Bank
Received two Bronze Awards of the National QCC Competition from the Corporate Synergy
Development Center of the Industrial Development Bureau, Ministry of Economic Affairs
Granted the excellent award in low carbon production and waste reduction by the Industrial
Development Bureau, Ministry of Economic Affairs
December 2009 Innolux Display was honored with the "2009 Taiwan CSR Awards-Bronze Award" for its 2008
Sustainability Report by the Taiwan Institute for Sustainable Energy
Received the outstanding award in the “2009 Outstanding Energy Saving Companies Selection” from
the Science Park Administration
Recognized as the Best Managed Company in Taiwan by Asiamoney
Granted the excellence award in environmental protection by the Science Park Administration
January 2010 Obtained “Labeling of Energy Saving Action” from the Environmental Protection Administration
February 2010 Granted the excellent award for outstanding achievement on training and management for
occupational health by the Council of Labor Affairs, Executive Yuan
March 2010 Completed the merger with Chi Mei Optoelectronics and TPO Displays
Innolux Display renamed as Chimei Innolux
Granted the outstanding performance award in occupational safety and health on the occasion of the
2009 Nationwide Occupational Safety and Health Week, held by the Council of Labor Affairs,
Executive Yuan
May 2010 Winner of Taiwan's Environmental Protection Administration's 2009 Enterprise Green Procurement
Performance Award Recognized as an outstanding unit in achieving zero work accident hours by the
Council of Labor Affairs, Executive Yuan
June 2010 18.5-inch LCD panel is awarded 2009 FPD green quality certification
42-inch 120Hz+ MEMC is awarded the best integrated LCD panel at the Taiwan Gold Panel Awards
2010 with the 13 th Annual Outstanding Optoelectronics Product Awards
September 2010 Awarded the Outstanding Energy Conservation Award by the Department of Energy, Ministry of
Economic Affairs
October 2010 Passed DNV third-party independent verification for its 18.5-inch LCD flat panel monitor
(M185B1-L02), making CMI the first panel maker to receive a supply chain “water footprint”
verification statement, Granted “the Excellent Environmental Protection Award” by the Science Park
Administration
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November 2010 Granted the 2010 excellence award in recycling and reducing waste production by the Environmental
Protection Administration
Completed the merger with Chi Mei Energy
December 2010 Granted “the 2010 Outstanding Energy Saving Award” by the Science Park Administration
Granted “the Excellent Award in Low-Carbon Management” by the Science Park Administration
Granted “the 2010 Outstanding Award in Making Green by Planting Trees” by the Science Park
Administration
January 2011 Became the first manufacturer to obtain “water footprint” verification for its product supply-chain
with regard to its desktop LCD monitors and LCD TVs
Feburary 2011 Honor Light Services Limited revoked
March 2011 2.65-inch and 5.3-inch Memory-In-Display (Midis) technology, which was a new energy-saving panel
technology, obtained the Best Paper Award of the 17th IDW (International Display Workshops), Japan
April 2011 Honored with the 2011 Taiwan Excellence Gold Awards for its ultra-thin 13.3-inch HD notebook
display module
May 2011 Kobe site was awarded the Best Safety & Hygiene Company by the Safety Management Committee
of Kobe, Japan.
Chi Mei Energy Netherlands revoked
June 2011 Won the Outstanding Photonics Product Award 2011 for its 21.5-inch PCT (Projected Capacitive
Touch) display module by the Photonics Industry & Technology Development Association (PIDA).
Honored with the “2011 Contribution to Job Creation” award by the Ministry of Economic Affairs
and Council of Labor Affairs, Executive Yuan
August 2011 Ranked third among the “2010 Outstanding Export Growth Companies” by the Bureau of Foreign
Trade, Ministry of Economic Affairs
September 2011 Granted the 2010 Enterprise Green Procurement Performance Award by the Environmental Protection
Administration, Executive Yuan
October 2011 STSP Branch was honored with the “Jin-Jhan Award” by the Council of Labor Affairs, Executive
Yuan.
Honored with “National Industrial Safety and Health Award” by the Council of Labor Affairs,
Executive Yuan
April 2012 Entered into the Joint Debt Restructuring Agreement with the syndicate
June 2012 Won the Outstanding Photonics Product Award 2012 for its 50-inch 3D Direct-Type LED panel by the
PIDA.
August 2012 Honored with the “Taiwan Excellence Silver Award” for its 23.6-inch USB super energy-saving LCD
screen
September 2012 Recognized as an outstanding unit for hiring disabled persons by surpassing the target
Granted the 2011 Enterprise Green Procurement Performance Award by the Environmental Protection
Administration, Executive Yuan and the only panel factory granted the award for four consecutive
years and fulfilling its responsibility of a sustainable environmental protection enterprise
Chi Mei Optoelectronics UK Limited revoked
December 2012 Changed its name to “群創光電股份有限公司” with the English name of “Innolux Corporation”
January 2013 Global depository receipts listed and traded on the Luxembourg Stock Exchange on 23 January
Merger of the subsidiaries InnoJoy Investment Corporation and InnoFun Investment Corporation, in
which InnoJoy Investment Corporation was the surviving company
Eastern Vision Co., Ltd. liquidated
March 2013 Toptch Trading Limited liquidated
Dragon Flame Industrial Ltd. liquidated
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April 2013 Nanhai Plant took the lead in obtaining the first MFCA material flow cost accounting certification in
the world
The Company’s 65-inch 4K2K TV module was awarded the 21st “Taiwan Excellence Gold Award”
The Company’s 4.3-inch active organic light emitting display (TRUEOLED) was awarded the 21st
“Taiwan Excellence Silver Award”
The Company's 50-inch ultra-high resolution (4K2K) thin narrow frame LCD TV module was
awarded the 21st "Taiwan Excellence Award"
The Company’s 30-inch six million pixel medical monitor was awarded the 21st "Taiwan Excellence
Award"
The Company’s 5-inch Full HD LCD panel module was awarded the 21st "Taiwan Excellence Award"
The Company’s 3.4-inch active organic light emitting display was awarded the 21st "Taiwan
Excellence Award"
June 2013 The Company's 65-inch ultra-high resolution thin narrow frame LCD TV module was recognized by
the 16th “Annual Outstanding Optoelectronics Products Awards”
Granted the first “National Environmental Education Award – Excellence Award for Private
Enterprises Group” by the Environmental Protection Administration
Innocom Technology (Jiashan) Co., Ltd. liquidated
September 2013 Ningbo Chi Mei Electronics Ltd. renamed as Ningbo Innolux Optoelectronics Ltd.
Nanhai Chi Mei Optoelectronics Ltd. renamed as Ningbo Innolux Technology Ltd.
Ningbo Chi Hsin Electrics Ltd. renamed as Ningbo Innolux Display Ltd.
Ningbo Chi Mei Logistics Corp renamed as Ningbo Innolux Logistics Ltd.
October 2013 The Company’s “Intelligent Automation” team was granted the “Annual Innovative Pilot Award” of
the Industry Innovation Award for theone-stop touch innovative operating model by the Ministry of
Economic Affairs
Foshan Chi Mei Logistics Co., Ltd. renamed as Foshan Innolux Logistics Co., Ltd. TPO Displays
(Nanjing) Ltd. renamed as Nanjing Innolux Optoelectronics Ltd.
November 2013 Awarded the 2013 Green Building Gold Mark by the Ministry of Economic Affairs
Awarded the “Premium” honor of the 2013 Taiwan CSR Awards
Full Lucky Investment Limited liquidated
December 2013 Selected as an outstanding water saving unit for 2013 by the Water Resources Agency of the Ministry
of Economic Affairs
Dongguan Chi Hsin Electrics Ltd. liquidated
TPO Displays (Shanghai) Ltd. renamed as Shanghai Innolux Optoelectronics Ltd.
Global Deposit Receipts listed on the London Stock Exchange delisted
January 2014 Plant T1 and Plant B, D, TOC, F (Tainan) awarded Health Promotion Label of Healthy Workplace
Certification
Ningbo site awarded Safe Standard Level 2 Corporation
Chi Mei Optoelecttonics (Singapore) Pte. Ltd. liquidated
Sonic Trading Limited liquidated
Innocom Technology (Xiamen) Co., Ltd. liquidated
Merger of Nanhai Chi Mei Electronics Ltd. and Nanhai Chi Mei Optoelectronics Ltd., in which
Nanhai Chi Mei Electronics Ltd. was the surviving company
February 2014 Foshan site awarded as an Advanced Corporation in Promotion of Environmental Protection in
Si-shan town
Ningbo site awarded as an Advanced Corporation in Safe Production and Workplace in Ningbo City
2013
March 2014 Honored with the Healthy Corporation Award for the 2014 Southern Science Park Ecological and
Humanistic Marathon
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April 2014 Nanhai Chi Mei Electronics Ltd. renamed as Foshan Innolux Optoelectronics Ltd.
Honored with the Taiwan Excellence Sliver Award for its 65-inch ultra-high-analytic 3D TV panel
Awarded a certificate of recognition for offering disability employment opportunities to realize
corporate social responsibilities by the Southern Taiwan Science Park Administration, Ministry of
Science and Technology
Innolux’s 28-inch 4K2K and 23.6-inch touch panel won the“Taiwan Excellence Silver Award”
September 2014 Chi Mei Optoelectronics USA, Inc. renamed as Innolux Optoelectronics USA, Inc.
TPO Displays USA Inc. renamed as Innolux Technology USA Inc.
October 2014 TPO Displays Japan K.K. renamed as Innolux Technology Japan Co.,Ltd.
November 2014 Chi Mei Optoelectronics Europe B.V. renamed as Innolux Optoelectronics Europe B.V.
TPO Displays (Shinepal) Ltd. renamed as Nanjing Innolux Technology Ltd.
Chi Mei Optoelectronics Japan Co., Ltd. renamed as Innolux Optoelectronics Japan Co.,Ltd.
TPO Displays Hong Kong Ltd renamed as Innolux Hong Kong Ltd.
December 2014 Health Management Award and Nutrition Health Award by the Health Promotion Administration
Granted 2014 Taiwan Sustainable Development Awards by National Council for Sustainable
Development
TPO Displays Hong Kong Holding Ltd. renamed as Innolux Optoelectronics Hong Kong Holding
Ltd.
TPO Hong Kong Holding Ltd. renamed as Innolux Hong Kong Holding Ltd.
TPO Displays Europe B.V. renamed as Innolux Technology Europe B.V.
February 2015 Signed an agreement for a syndicated credit line of NT$68.5B with Bank of Taiwan and 15 other
banks Innocon Technology(Chengdu) Co., Ltd. revoked
March 2015 The company terminated the debt restructuring negotiation and canceled the debt negotiations
Honored with the Enterprise Innovation Award of Excellence
April 2015 The Company’s 100% high color saturation 4K2K TV module was awarded the 21st “Taiwan
Excellence Gold Award”
Awarded a certificate of recognition for social responsibilities by the Global Views
July 2015 Innolux as an outstanding import/export company honored The Best Contribution Award of the
MOEA's Award for International Trade 2015
August 2015 Foshan Innolux Optoelectronics Ltd was awarded International Carbon-Value Award in China
September 2015 Innolux named to Dow Jones Sustainability World Index
October 2015 Awarded the Outstanding Energy Conservation Award 2015 by the Department of Energy, Ministry of
Economic Affairs
Completed the merger with Chi Mei EL corporation
November 2015 Inception and registration of Ningbo Innolux Electronics Ltd
Innolux marked 100 in disclosure score and listed as CDLI (Carbon Disclosure Leadership Index) 2nd
year in a row in CDP.
Innolux honored 2015 Taiwan Corporate Sustainability Report Award-Gold Award.
Gold union investments Limited liquidated
Awarded the MOL TTQS Silver award
June 2016 Ningbo site was awarded an Outstanding Foreign Company Contribution Award by China Zhejiang
Invesetment and Trade Symposium.
July 2016 Awarded Award for International Trade for consecutive 6 years and Target Market Contribution
Award, the only multiple winner in 2016
Fab 8 awarded "Best Performance in Water-Saving Unit" by the Water Resources Agency, Ministry of
Economic Affairs.
October 2016 Fab3 and T2 plant passed the Green Factory-Clean Production Certification of Industrial
Development Bureau, Ministry of Economic Affairs.
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November 2016 Awarded Taiwan Corporate Sustainability Awards-- Corporate Sustainability Report Golden Awards
of ICT group.
Awarded Taiwan Corporate Sustainability Awards--Sustainable Water Management Awards for its
outstanding water management performance
December 2016 Innolux was granted the Innovative Product Awards by Hsinchu Science Park for its automotive
display technologies: S Shape Display, 1-axis Curve Display, Curve with Touch Display
Merger of the subsidiaries Ningbo Innolux Display Ltd. and Ningbo Innolux Technology Ltd., in
which Ningbo Innolux Display Ltd. was the surviving company
Feburary 2017 Honored with Taiwan Excellence Achievement Award and Taiwan Excellence Gold Award
Asiaward Investment Limited liquidated
Ningbo Innolux Logistics Limited liquidated
March 2017 Main Dynasty Investment Limited liquidated
Sun Dynasty Development Limited liquidated
August 2017 Innolux ranks the 19th of the Large Enterprise Group in "2017 Common Wealth Magazine's Coporate
Citizenship Award"competition
September 2017 Best China Investments Limited liquidated
Magic Sun Limited liquidated Mega Chance Investments Limited liquidated
October 2017 Merger of the subsidiaries Nanjing Innolux Optoelectronics Ltd. and Kunpal Optoelectronics Ltd., in
which Nanjing Innolux Optoelectronics Ltd. was the surviving company
December 2017 Merger of the subsidiaries Innolux Optoelectronics Japan Co., Ltd and Innolux Technology Japan Co.,
Ltd in which Innolux Optoelectronics Japan Co., Ltd was the surviving company and change the
company name into Innolux Japan Co. Ltd
Merger of the subsidiaries Innolux Technology Europe B.V. and Innolux Optoelectronics Eurpoe B.V.
in which Innolux Technology Europe B.V. was the surviving company and change the company name
into Innolux Europe B.V.
February 2018 Merger of the subsidiaries Innolux Optoelectronics USA, Inc. and Innolux Technology USA, Inc. and
Innolux Corporation, in which Innolux Optoelectronics USA, Inc. was the surviving company and
change the company name into Innolux USA, Inc.
August 2018 Innolux 3D touch phone won Taiwan Outstanding Product Award
September 2018 Innolux named DJSI World and DJSI Emerging Markets Index 2018
Innolux Optoelectronics Germany GmbH liquidated
October 2018 VAP Optoelectromics (NanJing) Corp liquidated
November 2018 Innolux Tainan Fab 3 awarded EEWH-EC
Innolux awarded 2018 Taiwan Excellence Gold with DST 3D Touch technology
Innolux awarded 2018 Taiwan Corporate Sustainability TOP 50 Awards
January 2019 Golden Achiever International Limited liquidated
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III. Corporate Governance Report 3.1 Organization
3.1.1 Organization Chart
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3.1.2 Major Corporate Functions
Department Functions
President’s Office Manage the businesses of the Company according to the resolutions passed by the
shareholders’ meetings and the Board of directors
Auditor's Office
Responsible for assessing the soundness of the internal control system and all the
standards, checking whether the internal control system is operating effectively on a
continual basis, measuring the operating results of the departments and providing
improvement recommendations for efficient operation.
Mobile Device Center Responsible for the sales, marketing, and product development of LCD wireless
communication and audio-visual systems as well as production of panel production.
AII Product Center Responsible for market development,customers service and development,test new
technologis and new processes of AII products.
TV Product Center Responsible for market development,customers service and development,test new
technologis and new processes of TV products.
Technology Development Center Develop, improve, verify, and test new technologies and new processes.
LCD Panel Manufacturing Center Responsible for the production of large-size LCD panel products.
Module Manufacturing Center Responsible for the production of LCD module products.
Quality Management Center
Responsible for the quality management of the Company,providing the best and the
most efficient quality management services (including quality control, product
quality guarantee, quality system, and documentary management); and promoting
the concept of total quality control.
Business Management Center
Responsible for the operation and management, industrial engineering and
information system of the Company,profits and losses of cost accounting, business
strategy consultation, work-flow efficiency improvement, capacity expansion
planning, production efficiency enhancement, hardware and software infrastructure,
and information system construction.
Strategic Procurement Center
Responsible for the overall procurement strategy of the Company, strategic planning
of important parts and components, material preparation for the introduction of
products and standardized cost management.
Human Resources Management
Center
Responsible for overall human resources policy, promotion of talent selection,
education, deployment and retention, employee communications, general
administration and corporate social responsibilities, etc.
Finance & Accounting Center
Coordinate the capital operating system of the Company, provide financial and
accounting information, manage investment plans and risk aversion, and manage
overall financial, investment, stock, accounting, and tax matters.
Environmental & Safety Division
Responsible for handling company-wide issues including environmental protection,
occupational safety, damage prevention, and risk control of the factories, staff
health management and workplace improvement, and greenhouse gas reduction;
implementing and managing the environmental safety and health policies of the
Company.
Legal Affair Responsible for drafting and reviewing contracts; providing business-related legal
consultation services.
- 11 -
3.2
Dir
ecto
rs a
nd
Man
agem
ent
Tea
m
3.2.
1 D
irec
tors
Apr
il 22
, 201
9;Sh
ares
Title
Nationality/ Place of
Incorporation
Nam
e (N
ote
1)
Gender
Dat
e E
lect
ed
(Not
e2)
Term (Y)
Dat
e F
irst
E
lect
ed
Sha
reho
ldin
g w
hen
Ele
cted
Cur
rent
S
hare
hold
ing
Spo
use
&
Min
or
Sha
reho
ldin
g
Sha
reho
ldin
g by
Nom
inee
Arr
ange
men
tE
xper
ienc
e (E
duca
tion
) O
ther
P
osit
ion
Exe
cuti
ves,
Dir
ecto
rs
who
are
spo
uses
or
wit
hin
two
degr
ees
of k
insh
ip
Shar
es
％Sh
ares
％
Shar
es
％S
hare s
％
Tit
leN
ame
Rel
atio
n
Cha
irm
an
TW
Ji
alia
n In
vest
men
t C
o., L
td.
－
2016
/6/2
43
2012
/6/2
910
,672
,661
0.11
10,6
72,6
610.
11－
－
－
－
－
－
－－
－
TW
R
epre
sent
ativ
e :
Ji
n-Y
ang
Hun
g M
20
18/6
/21
N.A
. －
－
－－
－
－
－
MB
A, C
olum
bia
Uni
vers
ity,
U
SA
Dep
artm
ent o
f B
usin
ess
Adm
inis
trat
ion,
S
peci
al A
ssis
tant
to C
hair
man
, In
nolu
x C
orpo
rati
on
Ass
ocia
te V
ice
Pre
side
nt,
Fox
conn
Gro
up
Pre
side
nt, T
CC
Int
erna
tion
al
Hol
ding
s L
imit
ed
Man
agin
g D
irec
tor,
BN
P P
arib
as A
sset
Man
agem
ent
Exe
cuti
ve D
irec
tor,
Gol
dman
S
achs
Gro
up, I
nc
Not
e 3
－－
－
Vic
e C
hair
man
TW
I-
Che
n In
vest
men
t Ltd
. －
2016
/6/2
43
2004
/5/1
927
,535
,972
0.28
27,5
35,9
720.
28－
－
－
－
－
－
－－
－
TW
R
epre
sent
ativ
e :
C
hih-
Hun
g Sh
iao
M
2018
/10/
15N
.A.
－46
0,48
0－
3,60
0,00
00.
04－
－
B.S
., In
dust
rial
Eng
inee
ring
, T
ungh
ai U
nive
rsit
y G
ener
al M
anag
er, I
nnol
ux
Cor
pora
tion
P
lant
Dir
ecto
r, A
U O
ptro
nics
C
orp.
D
eput
y P
lant
Dir
ecto
r, U
nipa
c O
ptoe
lect
roni
cs C
orp.
S
uper
viso
r, C
ente
r fo
r M
easu
rem
ent S
tand
ards
(C
MS
),
Indu
stri
al T
echn
olog
y R
esea
rch
Inst
itut
e
Not
e 4
- 12 -
Title
Nationality/ Place of
Incorporation
Nam
e (N
ote
1)
Gender
Dat
e E
lect
ed
(Not
e2)
Term (Y)
Dat
e F
irst
E
lect
ed
Sha
reho
ldin
g w
hen
Ele
cted
Cur
rent
S
hare
hold
ing
Spo
use
&
Min
or
Sha
reho
ldin
g
Sha
reho
ldin
g by
Nom
inee
Arr
ange
men
tE
xper
ienc
e (E
duca
tion
) O
ther
P
osit
ion
Exe
cuti
ves,
Dir
ecto
rs
who
are
spo
uses
or
wit
hin
two
degr
ees
of k
insh
ip
Shar
es
％Sh
ares
％
Shar
es
％S
hare s
％
Tit
leN
ame
Rel
atio
n
Inst
itutio
nal
Dir
ecto
r
TW
H
yiel
d V
entu
re
Cap
ital C
o., L
td
－
2016
/6/2
43
2002
/11/
2117
6,31
1,21
91.
7717
6,31
1,21
91.
77－
－
－
－
－
－
－－
－
TW
R
epre
sent
ativ
e :
Te-T
sai H
uang
M
20
02/1
1/21
N
.A.
－21
2,61
9－
－
－－
－
Gra
duat
ed fr
om N
atio
nal
Chi
ao T
ung
Uni
vers
ity
Man
ager
, Phi
lips
Taiw
an L
td.
CFO
, Van
guar
d In
tern
atio
nal
Sem
icon
duct
or C
orpo
ratio
n C
FO, F
oxco
nn P
reci
sion
C
ompo
nent
s C
o., L
td.
Not
e 5
－－
－
Inst
itutio
nal
Dir
ecto
r
TW
In
nolu
x E
duca
tion
Foun
datio
n
－
2016
/6/2
43
2016
/6/2
459
4,31
00.
0159
4,31
00.
01－
－
－
－
－
－
－－
－
TW
R
epre
sent
ativ
e :
Chi
n-L
ung
Ting
M
20
16/6
/24
N.A
. －
1,08
7,06
30.
01－
－
－
－
M.S
., G
radu
ate
Inst
itute
of
Ele
ctro
nics
Eng
inee
ring
, N
atio
nal T
aiw
an U
nive
rsity
E
xecu
tive
V P
,Inn
olux
Cor
pV
ice
Pres
iden
t, C
hi M
ei
Opt
oele
ctro
nics
Cor
pora
tion
Cha
irm
an ,G
IO
Opt
oele
ctro
nics
Cor
p.
Cha
irm
an ,D
oubl
e st
ar In
c.
Man
ager
, Uni
pac
Opt
oele
ctro
nics
Cor
p.
Not
e 6
－－
－
Inde
pend
ent
Dir
ecto
r T
W
Chi
-Chi
a H
sieh
M
20
16/6
/24
3 20
13/6
/19
－
－－
－
－
－－
－
Ph
. D o
f Mec
hani
cal
Eng
inee
ring
, San
ta C
lara
U
nive
rsity
, USA
N
ote
7－
－
－
Inde
pend
ent
Dir
ecto
r T
W
Bo-
Bo
Wan
g M
20
16/6
/24
3 20
12/6
/29
－
－－
－
－
－－
－
Ph
. D o
f Com
pute
r Sci
ence
, U
CL
A
－
－－
－
Inde
pend
ent
Dir
ecto
r H
K
Stan
ley
Yuk
Lun
Y
im
M
2016
/6/2
43
2013
/6/1
9－
－
－
－－
－
－
－
A f
ound
er a
nd E
xecu
tive
Dir
ecto
r of
S.A
.S.
Dra
gon
Hol
ding
Lim
ited
Not
e 8
－－
－
Not
e 1:
Exi
stin
g D
irec
tors
as
of th
e da
te o
f th
e an
nual
rep
ort.
Not
e 2:
The
7 te
rms
of B
OD
mem
bers
ree
lect
ed o
n 20
16/6
/24
and
effe
ctiv
e on
201
6/7/
1.
Not
e 3:
CE
O o
f In
nolu
x C
orpo
rati
on
Con
curr
ently
as
chai
rman
of
the
boar
d:
Yua
n C
hi I
nves
tmen
t Co.
, Ltd
.(St
atut
ory
repr
esen
tati
ve)
Con
curr
entl
y as
dir
ecto
r:
- 13 -
Inno
lux
Hol
ding
Ltd
.,Inn
olux
Hon
g K
ong
Hol
ding
Ltd
.,Inn
olux
Hon
g K
ong
Lim
ited
, Inn
olux
Opt
oele
ctro
nics
Hon
g K
ong
Hol
ding
Ltd
., K
eyw
ay I
nves
tmen
t Man
agem
ent L
td.,
Lan
dmar
k In
tern
atio
nal L
td.,
Lea
dtek
Glo
bal G
roup
Ltd
., op
poly
Opt
oele
ctro
nics
(B
.V.I
.) L
td.,
Topp
oly
Opt
oele
ctro
nics
(C
aym
an)
Ltd
., In
noJo
y In
vest
men
t Cor
pora
tion
(St
atut
ory
repr
esen
tati
ve),
FI
Med
ical
Dev
ice
Man
ufac
turi
ng C
o. (
Sta
tuto
ry r
epre
sent
ativ
e)
Not
e 4:
Con
curr
ently
as
chai
rman
of
the
boar
d:
Inno
Joy
Inve
stm
ent C
orpo
rati
on (
Sta
tuto
ry r
epre
sent
ativ
e)
Con
curr
entl
y as
dir
ecto
r:
Inno
lux
Opt
oele
ctro
nics
Ind
ia P
riva
te、
Inno
lux
Opt
oele
ctro
nics
Mal
aysi
a S
DN
. BH
D、
Lak
ers
Tra
ding
Ltd
.,Roc
kets
Hol
ding
Ltd
.,Sta
nfor
d D
evel
opm
ents
Ltd
.,Sun
s H
oldi
ng L
td.,W
arri
ors
Tech
nolo
gy I
nves
tmen
ts L
td, Y
uan
Chi
inve
stm
ent c
o., L
td (
Sta
tuto
ry r
epre
sent
ativ
e)
Not
e 5:
Con
curr
ently
as
chai
rman
of
the
boar
d:
Hyi
eld
Ven
ture
Cap
ital
Co.
, Ltd
. (S
tatu
tory
rep
rese
ntat
ive)
, Hon
gfu
(She
nzhe
n) E
quit
y In
vest
men
t Fun
d M
anag
emen
t Co.
, Ltd
. C
oncu
rren
tly
as d
irec
tor:
F
lyin
g E
agle
Sys
tem
s, I
nc.,
Fox
conn
(F
ar E
ast)
Lim
ited
(Cay
man
), F
oxco
nn (
Far
Eas
t) L
imit
ed(H
K),
Fox
teq
Hol
ding
s In
c., F
oxte
q In
tegr
atio
n,In
c.,H
CM
Int
erna
tion
al C
ompa
ny, R
ich
Dre
ams
Net
wor
k Te
chno
logy
Lim
ited
,Tal
ent S
ky H
oldi
ngs
Lim
ited
,TM
J Te
chno
logy
Co.
, Ltd
., C
heng
du T
iger
Tes
co E
-Com
mer
ce C
o.,L
td,H
enan
Chu
ng Y
uan
fina
nce
man
agem
ent L
imit
ed, H
enan
C
hung
Yua
n R
enta
l Lim
ited
, Hen
an C
hung
Yua
n F
inan
cing
gua
rant
ees
Lim
ited
, Jus
da S
uppl
y C
hain
Man
agem
ent C
o., L
td.,
She
nzhe
n Ji
ncha
ngzh
i Tec
hnol
ogy
Co.
, Ltd
., F
uxun
tong
Tra
ding
, Sh
enZ
hen,
She
nzhe
n Fu
Ron
g In
clus
ive
Fina
nce
Co.
, Ltd
, FuR
uei I
nter
nati
onal
Inv
estm
ent,S
hang
Hai
Chi
aMin
g Fi
nanc
e an
d R
enta
l Lim
ited
,Zhe
ngzh
ou A
irpo
rt E
cono
mic
Com
preh
ensi
ve
Exp
erim
enta
l Zon
e C
hung
Yua
n M
icro
fina
nce
Lim
ited
.,Zhe
ngzh
ou A
irpo
rt E
cono
my
Zon
e oc
cupa
tion
al tr
aini
ng s
choo
l,Hun
gChi
Int
erna
tion
al I
nves
tmen
t (S
tatu
tory
rep
rese
ntat
ive)
, Hun
gChi
au
Inte
rnat
iona
l Inv
estm
ent,;
and
Pao
Shi
n In
tern
atio
nal I
nves
tmen
t Co.
, Ltd
. (S
tatu
tory
rep
rese
ntat
ive)
C
oncu
rren
tly a
s ex
ecut
ive
dire
ctor
: H
ong
Din
g M
anag
emen
t Con
sult
ant (
She
nzhe
n) C
o., L
td.
Con
curr
entl
y as
sup
ervi
sor:
H
ungJ
ing
Inte
rnat
iona
l Inv
estm
ent (
Sta
tuto
ry r
epre
sent
ativ
e), L
iYi I
nter
nati
onal
Inv
estm
ent (
Sta
tuto
ry r
epre
sent
ativ
e), H
ungY
uan
Inte
rnat
iona
l Inv
estm
ent (
Sta
tuto
ry r
epre
sent
ativ
e), a
nd
Pan
-Int
erna
tion
al.
Not
e 6:
Con
curr
ently
as
chai
rman
of
the
boar
d:
GIO
Opt
oele
ctro
nics
Cor
p., ,
Dou
ble
Sta
r In
c. S
henz
hen
Pix
inL
ED
Tec
hnol
ogy
Co.
,Ltd
., C
arU
X T
echn
olog
y In
c. (
Sta
tuto
ry r
epre
sent
ativ
e)
Con
curr
entl
y as
dir
ecto
r:
Inno
lux
Japa
n C
o., L
td, I
nnol
ux O
ptoe
lect
roni
cs I
ndia
Pri
vate
Ltd
. Inn
olux
Opt
oele
ctro
nics
Mal
aysi
a S
DN
. BH
D.,
Inno
lux
Opt
oele
ctro
nics
Phi
lipp
ines
Cor
p.,
Inno
lux
Sin
gapo
re H
oldi
ng P
te. L
td.,
N
ote
7:C
oncu
rren
tly a
s ch
airm
an o
f th
e bo
ard:
M
icro
elec
tron
ics
Tech
nolo
gy I
nc. I
QE
Tai
wan
Cor
pora
tion
, Jup
iter
Net
wor
k C
orp.
, Wel
ltop
Tec
hnol
ogy
Co.
Ltd
, Jup
iter
Tec
hnol
ogy
(Wux
i) C
o., L
td.
C
oncu
rren
tly
as in
depe
nden
t dir
ecto
r: A
cBel
Pol
ytec
h In
c.
Con
curr
entl
y as
dir
ecto
r:
Adv
ance
d W
irel
ess
Sem
icon
duct
or C
ompa
ny, B
righ
t Led
Ele
ctro
nics
Cor
p., K
obri
te T
aiw
an C
orpo
rati
on (
Sta
tuto
ry r
epre
sent
ativ
e), S
asso
n C
apit
al (
Stat
utor
y re
pres
enta
tive
), K
opin
Cor
pora
tion
In
c., T
’Cem
ent(
Stat
utor
y re
pres
enta
tive
), B
righ
t Cry
stal
Com
pany
Lim
ited
, KoB
rite
Cor
p.
Not
e 8
:A f
ound
er a
nd E
xecu
tive
Dir
ecto
r of
S.A
.S. D
rago
n H
oldi
ng L
imit
ed, a
mem
ber
of J
usti
ces
of P
eace
in th
e G
over
nmen
t of
the
Hon
g K
ong
Spec
ial A
dmin
istr
ativ
e R
egio
n, th
e de
puty
cha
irm
an
of H
ong
Kon
g E
lect
roni
c In
dust
ry A
ssoc
iati
on, a
per
man
ent H
onor
ary
Pre
side
nt o
f H
ong
Kon
g T
rade
Ser
vice
s C
ounc
il,th
e ch
airm
an o
f D
istr
ict F
ight
Cri
me
Com
mit
tee,
Tsue
n W
an D
istr
ict
Off
ice;
a c
ouns
elor
for
Cou
cil o
f Yan
Cha
i Hos
pita
l,Cha
irm
an o
f Yan
Cha
i Hos
pita
l SU
S K
inde
rgar
ten,
a co
mm
itte
e m
embe
r of
Pol
itica
l Con
sulta
tive
Con
fere
nce
Sha
ngha
i and
Yun
fu C
omm
itte
e of
HK
mem
bers
; and
a h
onoa
ry m
embe
r of
Jun
ior
Pol
ice
Cal
l Com
mit
tee,
Tsu
en W
an D
istr
ict.V
ice
Pre
side
nt o
f th
e P
rim
e M
inis
ters
Ass
ocia
tion
of
Yan
Cha
i Hos
pita、
Cha
ir o
f Ts
uen
Wan
D
istr
ict C
ivic
Edu
cati
on C
omm
itte
e, H
onor
con
sult
ant o
f H
ong
Kon
g H
ung
Hom
Com
mer
ce &
Ind
ustr
y A
ssoc
iati
ons
Ltd
.、D
irec
tor
of H
ong
Kon
g P
enin
sula
Lio
ns C
ounc
il
- 14 -
Major shareholders of the institutional shareholders
April 22, 2019 Name of Institutional shareholders Major shareholders
Jialian Investment Co.,Ltd. Super Venture Investments Limited, Samoa（100%）
Hyield Venture Capital Co., Ltd. Hon Hai Precision Components Co., Ltd. (97.95%),
Pao Shin International Investment Co., Ltd. (2.05%)
I-Chen Investment Ltd. Company Objective Developments Limited, Samoa (100%)
Innolux Education Foundation N.A.
Major shareholders of the Company’s major institutional shareholders
April 22, 2019
Name of Institutional Shareholders Major shareholders
Super Venture Investments Limited, Samoa Diamond Luck Enterprises Ltd（100%）
Hon Hai Precision Ind. Co., Ltd. (Note)
Terry Tai-Ming Gou (9.63%),
CTBC Terry Tai-Ming Gou Trust account (2.89%),
Citi Managed Government of Singapore Investment accounts (1.89%),
Standard Chartered hosting Vatican Gardner emerging market equity
index fund account (1.35%),
JPMorgan Managed Advanced Stars advanced aggregate International
Equity Index(1.32%),
Citigroup hosting Hon Hai Precision Ind. Co. Ltd. Depositary Receipts
account (1.30%),
Cathay Life Insurance Co.,Ltd. (1.24%),
Fubon Life Insurance Co., Ltd. (1.24%),
Citi Bank hosted Norges Bank Investment account(1.19%),
Standard Chartered Hosting Fidelity light called Trust: Fidelity Low of
shares of the Fund (1.05%)
Pao Shin International Investment Co., Ltd. Hon Hai Precision Industry Co., Ltd. (100%)
Company Objective Developments Limited,
Samoa Perfect Impulse Investments Limited（100%）
Note: The information is derived from the close of registrar information of the company dated 23 April 2019.
- 15 -
Pro
fess
iona
l qu
alif
icat
ion
s an
d in
dep
end
ence
an
alys
is o
f d
irec
tors
Cri
teri
a
Nam
e
Mee
t One
of
the
Fol
low
ing
Pro
fess
iona
l Qua
lifi
cati
on R
equi
rem
ents
, Tog
ethe
r w
ith a
t Lea
st
Fiv
e Y
ears
of
Wor
k E
xper
ienc
e In
depe
nden
ce C
rite
ria
(Not
e)
Num
ber
of O
ther
P
ubli
c C
ompa
nies
in
Whi
ch th
e In
divi
dual
is
Con
curr
entl
y Se
rvin
g as
an
Inde
pend
ent
Dir
ecto
r
An
Inst
ruct
or o
r H
ighe
r P
osit
ion
in a
Dep
artm
ent o
f C
omm
erce
, L
aw, F
inan
ce, A
ccou
ntin
g, o
r O
ther
Aca
dem
ic D
epar
tmen
t R
elat
ed to
the
Bus
ines
s N
eeds
of
the
Com
pany
in a
Pub
lic o
r P
riva
te J
unio
r C
olle
ge, C
olle
ge
or U
nive
rsit
y
A J
udge
, Pub
lic
Pro
secu
tor,
Att
orne
y, C
erti
fied
Pub
lic
Acc
ount
ant,
or O
ther
Pro
fess
iona
l or
Tec
hnic
al S
peci
alis
t Who
has
P
asse
d a
Nat
iona
l Exa
min
atio
n an
d be
en A
war
ded
a C
erti
fica
te in
a
Pro
fess
ion
Nec
essa
ry f
or th
e B
usin
ess
of th
e C
ompa
ny
Hav
e W
ork
Exp
erie
nce
in th
e A
reas
of
Com
mer
ce,
Law
, Fin
ance
, or
Acc
ount
ing,
or
Oth
erw
ise
Nec
essa
ry
for
the
Bus
ines
s of
the
Com
pany
12
34
56
78
910
Jial
ian
Inve
stm
ent C
o., L
td.
Jin-
Yan
g H
ung
－
－
V
－
－V
VV
VV
VV
－－
I-C
hen
Inve
stm
ent L
td.
Chi
h-H
ung
Shi
ao
－
－
V
－－
VV
VV
VV
V－
－
Hyi
eld
Ven
ture
Cap
ital
Co.
, Ltd
Te
-Tsa
i Hua
ng
－
－
V
VV
VV
VV
VV
V－
－
I-C
hen
Inve
stm
ent L
td.
Chu
ang-
Yi C
hiu
－
－
V
VV
VV
VV
VV
V－
－
Inno
lux
Edu
cati
on F
ound
atio
n C
hin-
Lun
g T
ing
－
－
V
－－
VV
VV
VV
V－
－
Chi
-Chi
a H
sieh
－
－
V
V
VV
VV
VV
VV
V1
Bo-
Bo
Wan
g －
－
V
V
VV
VV
VV
VV
V－
Sta
nley
Yuk
Lun
Yim
－
－
V
V
VV
VV
VV
VV
V－
Not
e：P
leas
e tic
k th
e co
rres
pond
ing
boxe
s if
dir
ecto
rs h
ave
been
any
of
the
foll
owin
g du
ring
the
two
year
s pr
ior
to b
eing
ele
cted
or
duri
ng th
e te
rm o
f of
fice
. 1.
Not
an
empl
oyee
of
the
Com
pany
or
any
of it
s af
filia
tes.
2.
Not
a d
irec
tor
or s
uper
viso
r of
the
Com
pany
or
any
of it
s af
filia
tes.
The
sam
e do
es n
ot a
pply
, how
ever
, in
case
s w
here
the
pers
on is
an
inde
pend
ent d
irec
tor
of th
e C
ompa
ny,
its p
aren
t com
pany
, or
any
subs
idia
ry in
whi
ch th
e C
ompa
ny h
olds
, dir
ectly
or
indi
rect
ly, m
ore
than
50%
of
the
votin
g sh
ares
. 3.
Not
a n
atur
al-p
erso
n sh
areh
olde
r w
ho h
olds
sha
res,
toge
ther
with
thos
e he
ld b
y th
e pe
rson
’s s
pous
e, m
inor
chi
ldre
n, o
r he
ld b
y th
e pe
rson
und
er s
omeo
ne e
lse'
s na
me(
s), i
n an
agg
rega
te a
mou
nt o
f 1%
or
mor
e of
the
tota
l num
ber
of o
utst
andi
ng s
hare
s of
the
Com
pany
or
rank
ing
in th
e to
p 10
in h
oldi
ngs.
4.
Not
a s
pous
e, r
elat
ive
with
in th
e se
cond
deg
ree
of k
insh
ip, o
r lin
eal r
elat
ive
with
in th
e fi
fth
degr
ee o
f ki
nshi
p, o
f an
y of
the
pers
ons
in th
e pr
eced
ing
thre
e su
bpar
agra
phs.
5.
Not
a d
irec
tor,
supe
rvis
or, o
r em
ploy
ee o
f a
corp
orat
e sh
areh
olde
r th
at d
irec
tly h
olds
5%
or
mor
e of
the
tota
l num
ber
of o
utst
andi
ng s
hare
s of
the
Com
pany
or
that
hol
ds
shar
es r
anki
ng in
the
top
five
in h
oldi
ngs.
6.
Not
a d
irec
tor,
supe
rvis
or, o
ffic
er, o
r sh
areh
olde
r ho
ldin
g 5%
or
mor
e of
the
shar
es o
f a
spec
ifie
d co
mpa
ny o
r in
stit
utio
n th
at h
as a
fin
anci
al o
r bu
sine
ss r
elat
ions
hip
with
the
Com
pany
. 7.
Not
a p
rofe
ssio
nal i
ndiv
idua
l or
an o
wne
r, pa
rtne
r, di
rect
or, s
uper
viso
r, or
off
icer
of
a so
le p
ropr
ieto
rshi
p, p
artn
ersh
ip, c
ompa
ny, o
r in
stit
utio
n th
at p
rovi
des
com
mer
cial
, le
gal,
fina
ncia
l, ac
coun
ting
serv
ices
, or
cons
ulta
tion
to th
e C
ompa
ny o
r to
any
aff
iliat
e of
the
Com
pany
, or
a sp
ouse
ther
eof.
8.
Not
hav
ing
a m
arita
l rel
atio
nshi
p, o
r a
rela
tive
with
in th
e se
cond
deg
ree
of k
insh
ip to
any
oth
er d
irec
tor
of th
e C
ompa
ny.
9.N
ot b
een
a pe
rson
of
any
cond
ition
s de
fine
d in
Art
icle
30
of th
e C
ompa
ny L
aw.
10.N
ot a
gov
ernm
enta
l, ju
ridi
cal p
erso
n, o
r its
rep
rese
ntat
ive
as d
efin
ed in
Art
icle
27
of th
e C
ompa
ny L
aw
- 16 -
3.2.
2 M
anag
emen
t T
eam
A
pril
22,
201
9
Tit
le
Nationality
Nam
e N
ote
1
Gender
Dat
e E
ffec
tive
S
hare
hold
ing
Spo
use
& M
inor
S
hare
hold
ing
Sha
reho
ldin
g by
Nom
inee
A
rran
gem
ent
Exp
erie
nce
(Edu
cati
on)
Oth
er
Pos
itio
n
Man
ager
s w
ho a
re
Spo
uses
or
Wit
hin
Two
Deg
rees
of
Kin
ship
Sh
ares
％
Sh
ares
％
Sh
ares
％
Tit
leN
ame
Rel
atio
n
Cha
irm
an
&C
EO
T
WJi
n-Y
ang
Hun
g M
20
18/6
/21
－
－
－
－
－
－
MB
A, C
olum
bia
Uni
vers
ity, U
SA
Dep
artm
ent o
f B
usin
ess
Adm
inis
trat
ion,
Sp
ecia
l Ass
ista
nt to
Cha
irm
an, I
nnol
ux
Cor
pora
tion
A
ssoc
iate
Vic
e Pr
esid
ent,
Fox
conn
Gro
up
Pre
side
nt, T
CC
Int
erna
tion
al H
oldi
ngs
Lim
ited
M
anag
ing
Dir
ecto
r, B
NP
Par
ibas
Ass
et
Man
agem
ent
Exe
cuti
ve D
irec
tor,
Gol
dman
Sac
hs G
roup
, Inc
E
xecu
tive
Dir
ecto
r, C
redi
t Sui
sse
Fir
st
Bos
ton(
CS
FB
)
Not
e 2
－－
－
Pres
iden
t &
CO
O
TW
Chu
-Hsi
ang
Yan
g M
20
10/3
/18
(Not
e3)
925,
585
0.01
7,95
3－
－
－
M.S
., C
hem
ical
Eng
inee
ring
, Nat
iona
l Cen
tral
U
nive
rsit
y V
ice
Pre
side
nt ,I
nnol
ux C
orpo
rati
on
Dir
ceto
c, C
hi M
ei O
ptoe
lect
roni
cs C
orpo
ratio
n D
eput
y S
ecti
on M
anag
er, C
hung
hwa
Pic
ture
T
ubes
, Ltd
.
Not
e 3
－－
－
Vic
e P
resi
dent
T
WY
ao-T
ong
Che
n M
20
10/3
/18
1,68
9,64
40.
0216
,422
－
－
－
Mas
ter
of E
MB
A, S
un Y
at-s
en U
nive
rsit
y M
anag
er, H
itac
hi E
lect
roni
cs C
o., L
td.
－
－－
－
Vic
e P
resi
dent
T
WH
ung-
Wen
Yan
g M
20
07/6
/132
0,76
9－
29
,501
－
－
－
M.S
., C
hem
ical
Eng
inee
ring
, Nat
iona
l Che
ng
Kun
g U
nive
rsit
y P
lant
Dir
ecto
r, Si
ntek
Pho
tron
ic C
orp
Dep
uty
Pla
nt D
irec
tor,
AU
Opt
roni
cs C
orp.
M
anag
er, U
nipa
c O
ptoe
lect
roni
cs C
orp.
Not
e 4
－－
－
Vic
e Pr
esid
ent
TW
Chi
h-M
ing
Che
n M
20
10/3
/18
47,1
93－
86
3－
－
－
Gra
duat
ed f
rom
Met
allu
rgy
and
Mat
eria
ls S
cien
ce
Res
earc
h In
stit
ute
of N
atio
nal C
heng
Kun
g U
nive
rsit
y E
ngin
eer,
Shy
en S
heng
Fua
t Ste
el &
Iro
n W
orks
C
o., L
td
Sen
ior
Eng
inee
r, U
nipa
c O
ptoe
lect
roni
cs C
orp.
－
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WK
e-Y
i Kao
M
20
10/3
/18
607,
488
0.01
－
－
－
－
M.S
., C
hem
ical
Eng
inee
ring
, Uni
vers
ity
of
Flor
ida
(U.S
.A.)
A
ssis
tant
Man
ager
, Uni
pac
Opt
oele
ctro
nics
Cor
p.－
－
－
－
Ass
ista
nt V
ice
Pres
iden
t T
WTa
i-C
hi P
an
M
2010
/3/1
888
6,88
00.
0158
,680
－
－
－
Gra
duat
ed in
Ele
ctri
cal E
ngin
eeri
ng o
f N
atio
nal
Che
ng K
ung
Uni
vers
ity
Ass
ista
nt M
anag
er, U
nipa
c O
ptoe
lect
roni
cs C
orp.
－
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WK
uo-H
siun
g K
uo
M
2010
/3/1
871
4,10
00.
0129
5,54
0－
－
－
B
.S.,
Mec
hani
cal E
ngin
eeri
ng, W
ased
a U
nive
rsit
y,
Japa
n N
ote
5 －
－
－
- 17 -
Tit
le
Nationality
Nam
e N
ote
1
Gender
Dat
e E
ffec
tive
S
hare
hold
ing
Spo
use
& M
inor
S
hare
hold
ing
Sha
reho
ldin
g by
Nom
inee
A
rran
gem
ent
Exp
erie
nce
(Edu
cati
on)
Oth
er
Pos
itio
n
Man
ager
s w
ho a
re
Spo
uses
or
Wit
hin
Two
Deg
rees
of
Kin
ship
Sh
ares
％
Sh
ares
％
Sh
ares
％
Tit
leN
ame
Rel
atio
n
Ass
ista
nt V
ice
Pres
iden
t T
WC
hung
-Kua
ng
Wei
M
20
10/3
/18
114,
395
－
－
－
－
－
Ph.
D, I
nsti
tute
of
Pho
toni
cs, N
atio
nal C
T
Uni
vers
ity
Ele
ctro
nics
Res
earc
h L
abor
ator
ies,
Ind
ustr
ial
Tech
nolo
gy R
esea
rch
Inst
itut
e
－
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WJi
a-P
ang
Pan
g M
20
10/1
1/8
2,44
5,08
90.
02－
－
－
－
Ph.
D, E
lect
roni
cs E
ngin
eeri
ng, U
nive
rsit
y of
To
kyo,
Jap
an
Dep
uty
Dir
ecto
r of
TF
T M
anuf
actu
ring
Pla
nt, A
U
Opt
roni
cs C
orp.
－
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WY
u S
hui K
uo
M
2014
/12/
116
0,00
0－
－
－
－
－
Mas
ter
of M
echa
nica
l Eng
inee
ring
, Yua
n Z
e U
nive
rsit
y A
ssoc
iate
Pre
side
nt o
f E
ntir
e Te
chno
logy
Co.
Ltd
.M
anag
er o
f AU
Opt
roni
cs C
orp.
A
ssoc
iate
Man
ager
of
Pro
disc
Coo
rdin
ator
Of
Rit
ek C
orpo
ratio
n
－
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WZ
heng
-Xia
Kuo
M
20
13/9
/23
499,
802
0.01
25,0
00－
－
－
Bac
helo
r of
Ind
ustr
ial E
ngin
eeri
ng a
nd
Man
agem
ent,
Nat
iona
l Chi
ao T
ung
Uni
vers
ity
Per
son-
in-c
harg
e of
BU
, GIO
Opt
oele
ctro
nics
C
orp.
M
anag
er o
f C
hi M
ei L
ight
ing
Tech
nolo
gy
Cor
pora
tion
Dir
ecto
r of
A
mpo
wer
H
oldi
ng
Ltd
.
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WT
ien-
Jen
Lin
M
20
13/9
/23
1,04
3,55
40.
0121
8,92
2－
－
－
Mas
ter
of E
lect
rica
l Eng
inee
ring
, Nat
iona
l Tai
wan
U
nive
rsit
y A
dvis
or to
Gen
eral
Man
ager
's O
ffic
e, U
nity
Opt
o Te
chno
logy
Co.
, Ltd
. D
irec
tor
of H
ead
Off
ice
of P
rodu
ct D
evel
opm
ent,
Chi
Mei
Lig
htin
g Te
chno
logy
Cor
pora
tion
Not
e 6
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WQ
ing-
Hui
Lin
M
20
15/1
2/25
273,
039
－
－
－
－
－
Mas
ter o
f ins
titut
e of
sci
ence
eng
inee
ring
, Nat
iona
l C
entr
al U
nive
rsity
R
&D
Dir
ecto
r, C
hung
hwa
Pic
ture
Tub
es, L
td.
Not
e 7
－－
－
Ass
ista
nt V
ice
Pres
iden
t T
WJu
n-Y
i Yu
M
2015
/12/
2510
9,53
7－
－
－
－
－
M
aste
r of I
ndus
tria
l Eng
inee
ring
,Tex
as T
ech
Uni
vers
ity
Prod
uctio
n M
anag
er o
f AU
Opt
roni
cs C
orp.
N
ote
8 －
－
－
Ass
ista
nt V
ice
Pres
iden
t T
WK
en-j
ung
Hsu
M
20
19/1
/1－
－
－
－
－
－
Mas
ter o
f Sci
ence
, Uni
vers
ity o
f Min
ing,
Met
allu
rgy
and
Mat
eria
ls S
cien
ce
Wan
g H
ong
Ele
ctro
nics
(sto
ck) c
ompa
ny e
ngin
eer
Chi
ef M
anag
er o
f Chi
Mei
Ele
ctro
nics
Co.
, Ltd
. G
roup
Opt
oele
ctro
nics
Co.
, Ltd
. D
eput
y G
ener
al M
anag
er o
f Hon
Hai
Pre
cisi
on C
o.,
Ltd
.
－
－－
－
- 18 -
Tit
le
Nationality
Nam
e N
ote
1
Gender
Dat
e E
ffec
tive
S
hare
hold
ing
Spo
use
& M
inor
S
hare
hold
ing
Sha
reho
ldin
g by
Nom
inee
A
rran
gem
ent
Exp
erie
nce
(Edu
cati
on)
Oth
er
Pos
itio
n
Man
ager
s w
ho a
re
Spo
uses
or
Wit
hin
Two
Deg
rees
of
Kin
ship
Sh
ares
％
Sh
ares
％
Sh
ares
％
Tit
leN
ame
Rel
atio
n
Fin
ance
S
uper
viso
r T
WC
hien
-Lan
g L
o M
20
14/5
/714
7,43
1－
19
8－
－
－
Mas
ter
of B
usin
ess
Adm
inis
trat
ion,
Bar
uch
Col
lege
, Col
lege
of
the
Cit
y of
New
Yor
k A
ssit
ant m
anag
er o
f S
umit
omo
Mit
sui B
anki
ng
Cor
pora
tion
. D
eput
y m
anag
er o
f H
SB
C
Ban
k di
rect
or o
f To
kyo-
Mit
subi
shi U
FJ.
Not
e 9
－－
－
Acc
ount
S
uper
viso
r T
WC
hin-
Yua
n C
hang
M
20
09/1
/921
9,19
2－
－
－
－
－
Mas
ter
of B
usin
ess
Adm
inis
trat
ion,
Nat
iona
l C
heng
chi U
nive
rsit
y V
ice
Pres
iden
t of
Fina
nce,
Xia
men
Ove
rsea
s C
hine
se E
lect
roni
c C
o., L
td.
CF
O, I
nfor
mat
ion
Pro
duct
Bus
ines
s G
roup
, B
EN
Q
Not
e 10
－－
－
Not
e 1:
Exi
stin
g M
anag
ers
as o
f th
e pr
inte
d da
te o
f th
e an
nual
rep
ort.
Not
e 2:
CE
O o
f In
nolu
x C
orpo
rati
on
Con
curr
ently
as
chai
rman
of
the
boar
d: Y
uan
Chi
Inv
estm
ent C
o., L
td.(
Sta
tuto
ry r
epre
sent
ativ
e)
Con
curr
entl
y as
dir
ecto
r: I
nnol
ux H
oldi
ng L
td.,I
nnol
ux H
ong
Kon
g H
oldi
ng L
td.,I
nnol
ux H
ong
Kon
g L
imit
ed, I
nnol
ux O
ptoe
lect
roni
cs H
ong
Kon
g H
oldi
ng L
td.,
Key
way
Inv
estm
ent
Man
agem
ent L
td.,
Lan
dmar
k In
tern
atio
nal L
td.,
Lea
dtek
Glo
bal G
roup
Ltd
., op
poly
Opt
oele
ctro
nics
(B
.V.I
.) L
td.,
Topp
oly
Opt
oele
ctro
nics
(C
aym
an)
Ltd
., In
noJo
y In
vest
men
t Cor
pora
tion
(S
tatu
tory
rep
rese
ntat
ive)
, FI
Med
ical
Dev
ice
Man
ufac
turi
ng C
o. (
Sta
tuto
ry r
epre
sent
ativ
e)
Not
e 3:
Pro
mot
ed to
Pre
side
nt a
nd C
OO
on
2018
/10/
15
Con
curr
entl
y as
cha
irm
an o
f th
e bo
ard:
Inn
oCar
e O
ptoe
lect
roni
cs C
orpo
rati
on(S
tatu
tory
rep
rese
ntat
ive)
C
oncu
rren
tly
as d
irec
tor:
Inn
olux
Jap
an C
o.,L
td.,
Chi
Lin
Opt
oele
ctro
nics
. (S
tatu
tory
rep
rese
ntat
ive)
,FI
Med
ical
Dev
ice
Man
ufac
turi
ng C
o. (
Sta
tuto
ry r
epre
sent
ativ
e), C
arU
X T
echn
olog
y In
c.
(Sta
tuto
ry r
epre
sent
ativ
e)
Not
e 4:
Con
curr
entl
y as
dir
ecto
r: C
arU
X T
echn
olog
y In
c. (
Sta
tuto
ry r
epre
sent
ativ
e), C
heng
Mei
mat
eria
ls T
echn
olog
y C
orpo
rati
on (
Stat
utor
y re
pres
enta
tive
) N
ote
5: C
oncu
rren
tly
as c
hair
man
of
the
boar
d: N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.,
Nin
gbo
Inno
lux
Dis
play
Ltd
. C
oncu
rren
tly
as d
irec
tor:
Chi
Mei
Fro
zen
Foo
d C
o., L
td.
Not
e 6:
Inn
olux
Tec
hnol
ogy
Ger
man
y G
mbH
, Inn
olux
Eur
ope
B.V
. N
ote
7: C
oncu
rren
tly
as c
hair
man
of
the
boar
d: F
osha
n In
nolu
x O
ptoe
lect
roni
cs L
td.,
Fos
han
Inno
lux
Log
isti
cs C
o.
Not
e 8:
Con
curr
entl
y as
cha
irm
an o
f th
e bo
ard:
Bri
ght I
nfor
mat
ion
Hol
ding
Ltd
., In
nolu
x H
ong
Kon
g H
oldi
ng L
imit
ed, I
nnol
ux O
ptoe
lect
roni
cs H
ong
Kon
g H
oldi
ng L
td.,
Sha
ngha
i Inn
olux
O
ptoe
lect
roni
cs L
td.,
Fos
han
Inno
lux
Opt
oele
ctro
nics
Ltd
, Nan
jing
Inn
olux
Opt
oele
ctro
nics
Ltd
., In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, Ltd
. N
ote
9: C
oncu
rren
tly
as d
irec
tor:
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
., N
ingb
o In
nolu
x D
ispl
ay L
td.,
Inno
Joy
Inve
stm
ent C
orpo
ratio
n (S
tatu
tory
rep
rese
ntat
ive)
, Yua
n C
hi I
nves
tmen
t Co.
, Ltd
. (S
tatu
tory
rep
rese
ntat
ive)
N
ote
10:C
oncu
rren
tly
as d
irec
tor:
Inn
ocom
Tec
hnol
ogy
(She
nzhe
n) C
o., L
td.,
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
., N
anji
ng I
nnol
ux T
echn
olog
y L
td.,
, Sha
ngha
i Inn
olux
Opt
oele
ctro
nics
Ltd
., In
noC
are
Opt
oele
ctro
nics
Cor
pora
tion
(Sta
tuto
ry r
epre
sent
ativ
e)
Con
curr
entl
y as
sup
ervi
sor:
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
., N
ingb
o In
nolu
x D
ispl
ay L
td.,
Inno
lux
Japa
n C
o., L
td.,
Fos
han
Inno
lux
Opt
oele
ctro
nics
Ltd
., F
osha
n In
nolu
x L
ogis
tics
Co.
, L
td.,
Inno
Joy
Inve
stm
ent C
orpo
rati
on (
Sta
tuto
ry r
epre
sent
ativ
e)
- 19 -
3.3
Rem
un
erat
ion
of
Dir
ecto
rs,
Pre
sid
ent,
an
d V
ice
Pre
sid
ent
3.3.
1 R
emu
nera
tion
of
Dir
ecto
rs
Uni
t: N
T$;
Sha
res:
thou
sand
s
Tit
le
Nam
e (N
ote
1)
Rem
uner
atio
n R
atio
of
Tota
l R
emun
erat
ion
(A+
B+
C+
D)
to
Net
Inc
ome
(%)(
Not
e8)
Rel
evan
t Rem
uner
atio
n R
ecei
ved
by D
irec
tors
Who
are
A
lso
Em
ploy
ees
Rat
io o
f To
tal
Com
pens
atio
n (A
+B
+C
+D
+E
+F
+G
) to
Net
In
com
e (%
)(N
ote8
)
Compensation Paid to Directors from an Invested Company Other than the
Company’s Subsidiary
Bas
e C
ompe
nsat
ion
(A)
(Not
e 2)
Sev
eran
ce
Pay
(B
)
Dir
ecto
rs
Com
pens
atio
n (C
) (N
ote
3)
All
owan
ces
(D)
(Not
e 4)
Sal
ary,
B
onus
es, a
nd
All
owan
ces
(E)
(Not
e 5)
Sev
eran
ce
Pay
(F
) (N
ote
6)
Em
ploy
ees
Com
pens
atio
n (G
) (N
ote
7)
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The
co
mpa
ny
All
co
mpa
nies
in
the
fina
ncia
l re
port
The company
All companies in the financial
report
Cas
hS
tock
Cas
hS
tock
Cha
irm
an
Jial
ian
Inve
stm
ent C
o., L
td.
6,30
06,
300
——
4,
528
4,52
837
037
0 0.
50%
0.
50%
61,4
9761
,497
197
197
3,22
5—
3,22
5—
3.42
%3.
42%
—
Jyh-
Cha
u W
ang(
Not
e 9)
Jin-
Yan
g H
ung(
Not
e 9)
Vic
e C
hair
man
I-C
hen
Inve
stm
ent L
td.
Chu
ang-
Yi C
hiu(
Not
e 10
)
Chi
h-H
ung
Shi
ao(N
ote
10)
Inst
itut
iona
l dir
ecto
rH
yiel
d V
entu
re C
apit
al C
o., L
td
Te-T
sai H
uang
Inst
itut
iona
l dir
ecto
rIn
nolu
x E
duca
tion
Fou
ndat
ion
Chi
n-L
ung
Tin
g
Inde
pend
ent D
irec
tor
Chi
-Chi
a H
sieh
Inde
pend
ent D
irec
tor
Bo-
Bo
Wan
g
Inde
pend
ent D
irec
tor
Sta
nley
Yuk
Lun
Yim
Not
e 1:
Exi
stin
g D
irec
tors
as
of th
e da
te 2
018.
N
ote
2: R
efer
s to
dir
ecto
rs’ r
emun
erat
ion
paid
in 2
018.
N
ote
3: T
he p
ropo
sal o
f 20
18 p
rofi
t dis
trib
utio
n ha
s re
solv
ed b
y th
e bo
ard
of d
irec
tor.
Not
e 4:
Ref
ers
to th
e re
leva
nt s
ervi
ce e
xecu
tion
fee
s of
dir
ecto
rs in
201
8.
Not
e 5:
Ref
ers
to th
e sa
lari
es, b
onus
es a
nd s
peci
al d
isbu
rsem
ent,
etc.
rec
eive
d as
em
ploy
ees
by d
irec
tors
in 2
018.
N
ote
6: R
efer
s to
the
amou
nts
tran
sfer
red
to g
over
nmen
t aut
hori
ties
in 2
018.
N
ote
7: T
he p
ropo
sal o
f 20
18 p
rofi
t dis
trib
utio
n ha
s re
solv
ed b
y th
e bo
ard
of d
irec
tor.
Not
e 8:
Rat
io o
f to
tal n
et in
com
e (A
lone
).
Not
e 9:
Jia
lian
Inv
estm
ent C
o., L
td. r
e-pr
esen
ted
the
repr
esen
tati
ve a
t Jun
e.20
201
8, a
nd w
as r
eass
igne
d by
Mr.
Jyh-
Cha
u W
ang
as M
r. Ji
n-Y
ang
Hun
g. D
irec
tor
Jin-
Yan
g H
ung
was
ele
cted
as
the
chai
rman
of
the
boar
d by
the
boar
d of
dir
ecto
rs a
t Jun
e.20
201
8,
Not
e10:
I-C
hen
Inve
stm
ent L
td.w
as r
e-pr
esen
ted
at O
ct 1
5, 2
018
and
was
reo
rgan
ized
by
Mr.
Chu
ang-
Yi C
hiu
as M
r. C
hih-
Hun
g S
hiao
. Dir
ecto
r C
hih-
Hun
g S
hiao
was
ele
cted
as
Vic
e C
hair
man
by
the
Boa
rd o
f D
irec
tors
at O
ct 1
5, 2
018
- 20 -
Ran
ge o
f R
emun
erat
ion
tabl
e
Ran
ge o
f R
emun
erat
ion
Nam
e of
Dir
ecto
rs
Tota
l of
(A+
B+
C+
D)
Tota
l of
(A+
B+
C+
D+
E+
F+
G)
The
com
pany
A
ll c
ompa
nies
in th
e fi
nanc
ial
repo
rt
The
com
pany
A
ll c
ompa
nies
in th
e fi
nanc
ial
repo
rt
Und
er N
T$
2,00
0,00
0
Jial
ian
Inve
stm
ent C
o., L
td.
Jyh-
Cha
u W
ang,
Ji
n-Y
ang
Hun
g H
yiel
d V
entu
re C
apita
l Co.
, Ltd
Te
-Tsa
i Hua
ng,
I-C
hen
Inve
stm
ent L
td,
Chu
ang-
Yi C
hiu,
C
hih-
Hun
g S
hiao
In
nolu
x E
duca
tion
Fou
ndat
ion
Chi
n-L
ung
Tin
g,
Chi
-Chi
a H
sieh
, B
o-B
o W
ang,
St
anle
y Y
uk L
un Y
im
Jial
ian
Inve
stm
ent C
o., L
td.
Jyh-
Cha
u W
ang,
Ji
n-Y
ang
Hun
g H
yiel
d V
entu
re C
apita
l Co.
, Ltd
Te
-Tsa
i Hua
ng,
I-C
hen
Inve
stm
ent L
td,
Chu
ang-
Yi C
hiu,
C
hih-
Hun
g S
hiao
In
nolu
x E
duca
tion
Fou
ndat
ion
Chi
n-L
ung
Tin
g,
Chi
-Chi
a H
sieh
, B
o-B
o W
ang,
St
anle
y Y
uk L
un Y
im
Jial
ian
Inve
stm
ent C
o., L
td.
Hyi
eld
Ven
ture
Cap
ital C
o., L
td
Te-T
sai H
uang
, I-
Che
n In
vest
men
t Ltd
, C
huan
g-Y
i Chi
u,
Inno
lux
Edu
catio
n F
ound
atio
n C
hi-C
hia
Hsi
eh,
Bo-
Bo
Wan
g,
Stan
ley
Yuk
Lun
Yim
Jial
ian
Inve
stm
ent C
o., L
td.
Hyi
eld
Ven
ture
Cap
ital C
o., L
td
Te-T
sai H
uang
, I-
Che
n In
vest
men
t Ltd
, C
huan
g-Y
i Chi
u,
Inno
lux
Edu
catio
n F
ound
atio
n C
hi-C
hia
Hsi
eh,
Bo-
Bo
Wan
g,
Stan
ley
Yuk
Lun
Yim
NT
$2,0
00,0
00 ~
NT
$5,0
00,0
00
NT
$5,0
00,0
00 ~
NT
$10,
000,
000
NT
$10,
000,
000
~ N
T$1
5,00
0,00
0
Jy
h-C
hau
Wan
g,
Jin-
Yan
g H
ung
Jyh-
Cha
u W
ang,
Ji
n-Y
ang
Hun
g
NT
$15,
000,
000
~ N
T$3
0,00
0,00
0
C
hin-
Lun
g T
ing
Chi
h-H
ung
Shi
ao
Chi
n-L
ung
Tin
g C
hih-
Hun
g S
hiao
N
T$3
0,00
0,00
0 ~
NT
$50,
000,
000
NT
$50,
000,
000
~ N
T$1
00,0
00,0
00
Ove
r N
T$1
00,0
00,0
00
Tota
l 13
13
13
13
- 21 -
3.3.
2 R
emu
ner
atio
n o
f th
e P
resi
den
t an
d V
ice
Pre
sid
ents
U
nit:
NT
$ th
ousa
nds
Tit
le
Nam
e
(Not
e 1)
Sal
ary
(A)
(Not
e 2)
S
ever
ance
Pay
(B
) (
Not
e 3)
Bon
uses
and
A
llow
ance
s (C
)
(Not
e 4)
E
mpl
oyee
Com
pens
atio
n (D
)(N
ote
5)
Rat
io o
f To
tal C
ompe
nsat
ion
(A+
B+
C+
D)
to N
et I
ncom
e (%
)(N
ote
6)
Compensation Paid to the President and Vice
Presidents from an Invested Company Other
than the Company’s Subsidiary
The company
All companies in the financial
report
The company
All companies in the financial
report
The company
All companies in the financial
report
The
com
pany
A
ll c
ompa
nies
in th
e fi
nanc
ial r
epor
t
The company
All companies in the financial
report C
ash
Sto
ck
Cas
h S
tock
Cha
irm
an&
CE
O
Jyh-
Cha
u W
ang(
Not
e 7)
34,1
06
34,1
06
819
819
71,2
4471
,244
5,
895
—
5,89
5 —
5.
04%
5.
04%
—
Jin-
Yan
g H
ung(
Not
e 8)
Pres
iden
t&
CO
O
Chi
h-H
ung
Hsi
ao(N
ote9
)
Chu
-Hsi
ang
Yan
g(N
ote1
0)
Exc
utiv
e V
ice
Pres
iden
t
Chi
n-L
ung
T
ing(
Not
e11)
Vic
e Pr
esid
ent
Yao
-Ton
g C
hen
Vic
e Pr
esid
ent
Hun
g-W
en
Yan
g
Vic
e Pr
esid
ent
Chi
h-M
ing
Che
n
Not
e 1:
Exi
stin
g M
anag
emen
t as
of th
e da
te o
f 20
18.
Not
e 2:
Ref
ers
to r
emun
erat
ion
paid
in 2
018.
N
ote
3: R
efer
s to
am
ount
s tr
ansf
erre
d to
gov
ernm
ent a
utho
riti
es in
201
8.
Not
e 4:
Ref
ers
to th
e bo
nuse
s, s
peci
al d
isbu
rsem
ent.
Not
e 5:
The
pro
posa
l of
2018
pro
fit d
istr
ibut
ion
has
reso
lved
by
the
boar
d of
dir
ecto
r. N
ote
6: R
atio
of
tota
l net
inco
me
(Alo
ne).
N
ote
7: D
ism
issa
l on2
018/
6/20
N
ote
8:P
rom
oted
to C
hair
man
& C
EO
on
2018
/6/2
1 N
ote9
: Dis
mis
sal o
n 20
18/1
0/15
N
ote
10: P
rom
oted
on
2018
/10/
16
Not
e 11
: Dis
mis
sal o
n201
9/3/
1
- 22 -
Ran
ge o
f R
emun
erat
ion
tabl
e
Ran
ge o
f R
emun
erat
ion
N
ame
of P
resi
dent
and
Vic
e P
resi
dent
The
com
pany
A
ll co
mpa
nies
in th
e fi
nanc
ial r
epor
tU
nder
NT
$ 2,
000,
000
NT
$2,0
00,0
00 ~
NT
$5,0
00,0
00
NT
$5,0
00,0
00 ~
NT
$10,
000,
000
Yao
-Ton
g C
hen
, Y
ao-T
ong
Che
n ,
NT
$10,
000,
000
~ N
T$1
5,00
0,00
0
Jyh-
Cha
u W
ang
Jin-
Yan
g H
ung
Hun
g-W
en Y
ang,
C
hih-
Min
g C
hen
Jyh-
Cha
u W
ang
Jin-
Yan
g H
ung
Hun
g-W
en Y
ang,
C
hih-
Min
g C
hen
NT
$15,
000,
000
~ N
T$3
0,00
0,00
0 C
hih-
Hun
g H
siao
, C
hin-
Lun
g T
ing
Chu
-Hsi
ang
Yan
g ,
Chi
h-H
ung
Hsi
ao,
Chi
n-L
ung
Tin
g C
hu-H
sian
g Y
ang
, N
T$3
0,00
0,00
0 ~
NT
$50,
000,
000
NT
$50,
000,
000
~ N
T$1
00,0
00,0
00
Ove
r N
T$1
00,0
00,0
00
Tota
l 8
8
- 23 -
3.3.3 Names of managerial officers who received employees’ bonuses in the preceding year and the distribution
Unit: NT$ thousands as of April 30, 2019
Title Name
(Note 1)
Employee Compensation
- in Stock (Fair Market Value)
Employee Compensation
- in Cash (Note 2)
Total
Ratio of Total Amount to Net
Income(%) (Note 3)
Executive O
fficers
Chairman&CEO Jyh-Chau Wang(Note4)
- 11,183 11,183 0.50%
Jin-Yang Hung(Note5)
President&COO Chih-Hung Hsiao(Note6)
Chu-Hsiang Yang(Note7)Excutive Vice President
Chin-Lung Ting(Note8)
Vice President Yao-Tong Chen
Vice President Hung-Wen Yang
Vice President Chih-Ming Chen Associate Vice President
Ke-Yi Kao
Associate Vice President
Tai-Chi Pan
Associate Vice President
Kuo-Hsiung Kuo
Associate Vice President
Chung-Kuang Wei
Associate Vice President
Jia-Pang Pang
Associate Vice President
Yu-Shui Kuo
Associate Vice President
Zheng-Xia Kuo
Associate Vice President
Tien-Jen Lin
Associate Vice President
Qing-Hui Lin
Associate Vice President
Jun-Yi Yu
Associate Vice President
Mao-Sheng Hung(Note9)
Finance Supervisor
Chien-Lang Lo
Accounting Supervisor
Chin-Yuan Chang
Note 1: Refers to current managerial officers as of the printing date of 2018. Note 2: The proposal of 2017 profit distribution has resolved by the Board of director. Note 3: Ratio of Total Amount to Net Income of alone. Note 4: Dismissal on 2018/06/20 Note 5: Promoted to Chairman & CEO on 2018/6/21 Note 6: Dismissal on 2018/10/15 Note 7: Promoted on 2018/10/16 Note 8: Dismissal on 2019/3/1 Note 9: Promoted on 2018/8/31
- 24 -
3.3.4 Comparison of Remuneration for Directors, Presidents, and Vice Presidents in the Most Recent Two Fiscal
Years and Remuneration Policy for Directors, Supervisors, Presidents, and Vice Presidents
A.The ratio of total remuneration paid by the company and by all companies included in the consolidated
financial statements for the most recent two fiscal years to directors, presidents, and vice presidents of the
Company to the net income.
Year
Item
Ratio of total remuneration paid to directors, supervisors, presidents, and vice
presidents to net income
2017 2018 (Note 1)
The company
Companies in the
consolidated financial
statements
The company
Companies in the
consolidated financial
statements
Directors 0.35 0.35 3.42 3.42
Presidents&Vice
Presidents 0.48 0.48 5.04 5.04
Note 1: The proposal of 2018 profit distribution has resolved by the Board of director.
The remuneration payment policy of the Company is determined in accordance with the actual profit of the
Company for the year and the ratio as required under the Articles of Association of the Company for
distribution as remuneration to directors and supervisors and as bonuses to employees. For payments made to
presidents and vice presidents, different levels of remuneration are set after considering their job positions,
responsibilities undertaken, job achievements and contributions made to company operations, and with
reference to industry standards, the remuneration payment policy is considered to be reasonable.
B.The policies, standards, and portfolios for the payment of remuneration, the procedures for determining
remuneration, and the correlation with business performance.
Remuneration of presidents and vice presidents includes salaries, bonuses, special disbursements, employee
bonus, employee stock options, and new shares with restrictive rights of employees, etc. which are determined
after considering the nature of work, responsibilities, job positions, and duties undertaken and with reference to
industry standards of similar job positions.
All the bonus and performance approved by Compensation Committee and Board meeting. It also considers
future risks and the company business operation and the rule “Full Incentives for Managerial Officers” followed
and amendment from time to time.
- 25 -
3.4 Implementation of Corporate Governance
3.4.1 Board of Directors
A total of 6 meetings of the Board of Directors were held in the previous(2018)period. Director attendance was as follows:
Title Name Attendance in Person
By Proxy
Attendance Rate (%)
Remarks
Chairman Jialian Investment Co., Ltd.
Jyh-Chau Wang 3 － 100.00% 2018/06/20 Resignation
Chairman Jialian Investment Co., Ltd.
Jin-Yang Hung 3 － 100.00%
2018/06/21 Assign
Vice Chairman
I-Chen Investment Ltd. Chih-Hung Shiao
2 － 100.00% 2018/10/15
Assign
Director I-Chen Investment Ltd.
Chuang-Yi Chiu 4 1 80.00% 2018/10/15 Resignation
Director Hyield Venture Capital Co.,
Ltd Te-Tsai Huang
5 1 83.33% －
Director Innolux Education Foundation
Chin-Lung Ting 4 － 66.67% －
Independent Director
Chi-Chia Hsieh 6 － 100.00% －
Independent Director
Bo-Bo Wang 6 － 100.00% －
Independent Director
Stanley Yuk Lun Yim 5 1 83.33% －
Other mentionable items:
1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified:
(1) Matters referred to in Article 14-3 of the Securities and Exchange Act.
Total 7 meetings of the BOD were held in the period from 2018 to the date of the annual report printed, all the resolutions pleaese refer the Page 50 to Page 51 and there is no independent opinions remained of the meeting.
(2)Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors.：None.
2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:
Date Name Contents of motions Causes for avoidance Voting
7-10 2018/02/09
Chin-Lung Ting
The Company plans to increase the shares of the Japanese subsidiary, Innolux Japan Co., Ltd., by contribution in kind of the equity of Innolux Technology USA Inc. and Innolux Corporation.
The board member and manager have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the Rules and Procedures for Meeting of the Board of Directors
Did not for the disucssion
Jyh-Chau Wang Chin-Lung Ting
The Compensation Committee is proposing manager bonus for the year of 2017
The board member and manager have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the Rules and Procedures for Meeting of the Board of Directors
Did not for the disucssion
7-11 Jyh-Chau The Compensation Committee The board member and manager Did not for the
- 26 -
2018/05/07 Wang Chin-Lung Ting
is proposing the manager bonus for the 2017
have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the Rules and Procedures for Meeting of the Board of Directors
disucssion
7-15 2018/10/31
Chih-Hung Shiao
The Compensation Committee is proposing Director salary structure adjustment
The board member and manager have a vital interest in the items on the agenda, therefore they avoided participating in the voting process in accordance with the Rules and Procedures for Meeting of the Board of Directors
Did not for the disucssion
3. Measures taken to strengthen the functionality of the Board: (1) The Board of Directors shall director the company’s strategy, adivise the management team, responsible to
shareholders, and compliance with relevant laws and regulations and the management of the existing or potential risks of the Company.
(2) The Compnay has set up a Audit Committee on July 1,2016 for assisting the Board in the effectiveness of the implementation of the internal control system, the fair presentation of the financial reports, independence, and performance of the certificated public accountants, the compliance with relevant laws and regulations and the management of the existing or potential risks of the Company. Please see page 27-28 for the detail of the Audit Committee’s operation.
(3) The Compnay has set up compenstation Committee on Augest 25, 2011 and set up standard for the Directors and managers. The Compensation Committee is also in charged of making regular review of performance of the Director and managers, and the related remuneration policy, system, standard, and structure. Please see page 36-37 for the detail of the Compensation Committee’s operation
(4) The Company has re-elected its Board Director on 24 June, 2016. The new Board is made of 7 board members, including 3 independent directors’ fors strengthening the Board function and Corporate Governance.
(5) The Board members continuing education extending beyond the scope of the professional expertise of the directors, and to select courses encompassing corporate governance related topics such as finance, risk management, business, commerce, legal affairs, accounting, and corporate social responsibility, or courses relating to internal control systems or liability for financial reports. Please see page 46 for the detail of the status of Directors ' participation in corporate governance related courses and trainings.
4. Attendance of Independent directors at Board Meetings
Board Meeting Independent Director
Chi-Chia Hsieh
Independent Director
Bo-Bo Wang
Independent Director Stanley
Yuk Lun Yim
7-10 2018/02/09 Attend in person Attend in person Attend in person
7-11 2018/05/07 Attend in person Attend in person Proxy
7-12 2018/06/20 Attend in person Attend in person Attend in person
7-13 2018/07/27 Attend in person Attend in person Attend in person
7-14 2018/10/15 Attend in person Attend in person Attend in person
7-15 2018/10/31 Attend in person Attend in person Attend in person
- 27 -
3.4.2 Audit Committee
A total of 4 Audit Committee meeting were held in the previous (2018) period. The attendance of the independent directors was as follows:
Title Name Attendance in
Person
By
Proxy
Attendance
Rate Remarks
Independent Director Chi-Chia Hsieh 4 － 100.00% －
Independent Director Bo-Bo Wang 4 － 100.00% －
Independent Director Stanley Yuk Lun Yim 3 1 75.00% －
Other mentionable items:
1.If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the
Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified:
(1) Matters referred to in Article 14-5 of the Securities and Exchange Act.
Board
Meeting Contents of the case and follow-up Resolution
Audit Committee
opinions and
follow up
7-10
2018/02/09
The Company intends to recognise the impairment of
financial assets measured by the provision for sale and
reclassify the unrealized losses of financial assets
previously included in other comprehensive gains and
losses to other benefits and losses.
The company’s independent financial statements and
consolidated financial statements
Restructuring and consolidation of the corporate
structure of the US subsidiary, intending to increase the
capital of the Japanese subsidiary
Passed the Accountant assessment of the independence
and appropriateness
Declaration of the Company’s internal control system
2017.
Approved by
Audit
Committee
Approved by all
Independent
directors
7-11
2018/05/07
Prepare and compile Innolux’s Business Report for 2017
Draft of Innolux’s Dividend Remittance for 2017
Proposal to process domestic capital increase by cash to
issue common shares, to issue new shares as a result of
cash capital increase for sponsoring issuance of GDR.
Proposals to conduct private placement of ordinary
share/preferred share capital increase by cash or private
placement of foreign or domestic convertible corporate
bonds.
The company intends to participate in the cash increase
of subsidiary Innolux Singapore Holding Pte.Ltd.
Approved by
Audit
Committee
Approved by all
Independent
directors
7-13
2018/07/27 The company’s consolidated financial statements
Approved by
Audit
Committee
Approved by all
Independent
directors
7-15
2018/10/31
Innolux Hong Kong Holding Limited, a subsidiary of the
Company, intends to increase its investment in the
company Innolux Hong Kong Limited
The company intends to increase its subsidiary Innolux
Singapore Holding Pte.Ltd.
Passed the Audit Plan of 2019
Approved by
Audit
Committee
Approved by all
Independent
directors
- 28 -
(2)Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all
directors：None.
2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of
motion, causes for avoidance and voting should be specified: None
3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the
material items, methods and results of audits of corporate finance or operations, etc.)
(1)Communication between independent directors and internal auditors: The head of Internal Audit send the audit
and follow-up reports monthly and presents the findings of all audit reports in the quarterly meetings of the Audit
Committee. If material unusual matters occur during the auditing process, the head of Internal Audit will report to
the members of the Audit Committee immediately.
(2)The major matters of the communications between independent directors and internal auditors
Date Descriptions of the major matters Resolution
2018/01/25 Audit Report Findings December 2017 review by Independent Directors. No objection
2018/02/09
Audit Committee
1. The findings of the internal audit reports for the fourth quarter of 2017
2. Statement of Internal Control System for 2017
1. No objection
2. After the review
and approval,
report to the board
of directors
2018/02/23 Audit Report Findings January 2018 review by Independent Directors. No objection
2018/03/22 Audit Report Findings February 2018 review by Independent Directors. No objection
2018/04/24 Audit Report Findings March 2018 review by Independent Directors. No objection
2018/05/07
Audit Committee The findings of the internal audit reports for the first quarter of 2018 No objection
2018/05/25 Audit Report Findings April 2018 review by Independent Directors. No objection
2018/06/22 Audit Report Findings May 2018 review by Independent Directors. No objection
2018/07/19 Audit Report Findings June 2018 review by Independent Directors. No objection
2018/07/27
Audit Committee The findings of the internal audit reports for the second quarter of 2017 No objection
2018/08/24 Audit Report Findings July 2018 review by Independent Directors. No objection
2018/09/27 Audit Report Findings August 2018 review by Independent Directors. No objection
2018/10/19 Audit Report Findings September 2018 review by Independent
Directors. No objection
2018.10.31
Audit Committee The findings of the internal audit reports for the third quarter of 2018 No objection
2018/11/23 Audit Report Findings October 2018 review by Independent Directors. No objection
2018/12/20 Audit Report Findings November 2018 review by Independent Directors. No objection
(3) Communication between independent directors and independent auditors: The Company CPAs have presented
the findings or the comments for the quarterly corporate financial reports, as well as those matters
communication of which is required by law, in the regular quarterly meetings of the Audit Committee.
(4) The major matters of the communications between independent directors and independent auditors
Date Descriptions of the major matters Resolution
2018/02/09
Audit Committee
The findings of the audits on the Company’s financial results for 2017 No objection
2018/05/07
Audit Committee
The findings of the review on the Company’s financial results for the Q1 ended
March 31, 2018 No objection
2018/07/27
Audit Committee
The findings of the review on the Company’s financial results for the Q2 ended
June 30, 2018 No objection
2018/10/31
Audit Committee
1. The findings of the review on the Company’s financial results for the Q3
ended September 30, 2018
2. The findings of the audits on the Company’s Key Audit. Matters, KAM
No objection
- 29 -
3.4.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed Companies”
Evaluation Item
Implementation Status Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
1.Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?
V The Company has enacted Corporate Governance Best-Practice Principles and disclosed on the official website and M.O.P.S. in addition to protect the rights and interests of shareholders, strengthen the powers of the board of directors, respect the rights and interests of stakeholders and enhance information transparency.The INX’s Corporatie Govermance Best-Practice Principles”please refer to INX official website.
No significant difference compared to corporate governance practice principles
2.Shareholding structure & shareholders’ rights (1)Does the company establish
an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure?
(2)Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?
(3)Does the company establish
and execute the risk management and firewall system within its conglomerate structure?
(4)Does the company establish internal rules against insiders trading with undisclosed information?
V
V
V
V
(1)The Company has enacted Operating
Procedures for Management over Major Internal Information and has, besides, set up spokesman and acting spokesman to take charge of proposals or disputes from shareholders.
(2)The Company is in a position to dominate
the name lists of the key shareholders and the terminal controllers of the key shareholders and has duly input such information to public into the Market Observation Post System (MOPS) promulgated
(3)The Company has duly enacted the Regulations Governing Transaction with Related Parties, Regulations Governing Supervision over Subsidiaries and has, besides, set up relevant departments with sound mechanisms to evaluate and monitor potential risks with affiliated enterprises.
(4)The Company has duly ancted the Operating Procedures for Management over Major Internal Information and further in accordance with the Company’s internal control system, enacted Operating Procedures to Prevent Inside Trading and for Management over Major Information to ben inside personnel from buying, selling negotiable securities by taking advantage of the information which has not yet been made public in the market.
No significant difference compared to corporate governance practice principles
3.Composition and Responsibilities of the Board of Directors (1)Does the Board develop and
implement a diversified policy for the composition of its members?
V
(1) The Company's Code of Corporate
Governance strengthens the functions of the Board of Directors and formulates a diversified approach. The nomination and selection of the board of directors of the company is in accordance with the
No significant difference compared to corporate governance practice principles
- 30 -
Evaluation Item
Implementation Status Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(2)Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?
(3)Does the company establish a standard to measure the performance of the Board, and implement it annually?
(4)Does the company regularly evaluate the independence of CPAs?
V
V
V
provisions of the company's articles of association. In addition to assessing the qualifications of each candidate's academic experience, and taking into account the opinions of interested parties, the company's election rules and corporate governance code are adhered to. To ensure the diversity and independence of the board of directors. The board of directors of the company generally has the knowledge, skills and literacy necessary to perform their duties. Diversified policy for the composition of its Board of director members please refer page 34 note 1of annual report.
(2)The Company has set up the Audit Committee and Remuneration Committee, the Company’s independent director’s serve as the Committee members. For more details regarding the business performance of the Company’s Audit and Remuneration Committee, please refer to page 27-28&36-37 of this Annual Report. The Company, nevertheless, has not yet set up committee of other functions to date.
(3)The Company has not yet conducted self-evaluation of the Company’s board of directors, functional committees and individual directors.
(4)The Company’s board of directors evaluates the CPA’s independence on a regular basis, say, on an annual basis, and retains creditworthy CPA(s) to certify financial statements. The CPA(s) so retained has (have) been free of any interested party involvement and has (have) independent as the strict requirements.The evaluate the independence of CPAs please refer page 34 note 2of annual report.
4.Does the company set up a corporate governance unit or appoint personnel responsible for corporate governance matters (including but not limited to providing information for directors to perform their functions, handling work related to meetings of the board of directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’ meetings)?
V The company's corporate governance affairs are supervised by financial directors who have been in charge of financial, shareholder and corporate governance related matters for more than three years, and the shareholder units are responsible for carrying out various corporate governance related matters. The terms of reference include handling matters relating to meetings of the board of directors and shareholders' meetings, making directors' and shareholders' meetings, assisting directors in continuing and continuing education, providing information required for directors to conduct business, assisting directors in complying with laws and regulations, and other articles of association or contract Set up matters, etc. The detail of completed item in 2018 list as below, and is reported to the Board of
No significant difference compared to corporate governance practice principles
- 31 -
Evaluation Item
Implementation Status Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
Directors for the first quarter of 2019: 1. The company held 6 Board meeting, 4 Audit
committee meeting and 3 Remuneration Committee Meetings in 2018, the average attendance rate up to 88.10%、91.67%、
88.89%. 2. All the members of Board of directors have
participated in corporate governance related courses.
3. The independent directors are in compliance with the “not suitable for the directors (including independent directors) or supervisors of more than five listed companies).
4. The company maintains D&O insurance for its Directors and key officers and report to the Board meeting.
5. The company held a meeting irregular for Accountants, Independent Direcotrs and Internal auditor to discuss and enhanced internal audit control system. Please refer to page 28 of annual report and our website (http://www.innolux.com) for communication.
6. The Agenda and meeting materials of Borad meeting mail/send to all directors 7 days before of the board meeting and finished the meeting minutes in 20 days after the meeting.
7. Booking the date of AGM, prepare meeting notice, hand book and minutes of AGM all comply with the listed company rules in Taiwan.
8. The company sets up the accountant of the accounting supervisor and prepares the relevant accounting personnel of the financial report, and completes the course of further study according to the regulations.
5.Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?
V The company offers a variety of features including employees, investor services, customers and supplier area, sales services, product inquiries, media communications and NGOs, reporting and so forth in order to communicate and respond to stakeholders‘needs and expectations by strengthening communications with stakeholders and thereby meeting their expectations. The issues of stakeholders please refer the annual report page 35 note 3.
No significant difference compared to corporate governance practice principles
6.Does the company appoint a professional shareholder service agency to deal with shareholder affairs?
V The company has appointed a professional agency to handle shareholder related services for the company.
No significant difference compared to corporate governance practice principles
- 32 -
Evaluation Item
Implementation Status Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
7.Information Disclosure (1)Does the company have a
corporate website to disclose both financial standings and the status of corporate governance?
(2)Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?
V
V
(1)Through the company’s website
(http://www.innolux.com) with Chinese and English versions, we provide financial, business, and corporate governance information and keep updating.
(2)The company’s English website announces information and our Public Relations department, Stock department and the related department responsible for collecting and disclosing the related information also set up positions for its spokesperson in accordance with the regulations and the company provides Investor Conference report on the official website.
No significant difference compared to corporate governance practice principles
8.Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors)? (1)Employee's Rights: Please refer to page 80 “5.5 Labor Relations” of the annual report (2)Employee Care
The company attaches great importance to the balance of physical and mental health of employees, in addition to holding a balance of physical and mental activities, it also sets up various physical and mental balance facilities. Through the establishment of the Staff Welfare Committee, the Taiwan factory organizes various leisure and cultural activities, promotes community activities and constructs a website of the Staff Welfare Association, so that employees can balance their health and life while working.
In order to improve employees' health awareness, we conduct regular health checkups and provide employee health consultations every year. In addition, in order to ensure the well-being of female employees, and in accordance with the labor regulations of the locality of the factory, the implementation of the maternity leave pay allowance, the strengthening of the fetus rest and the family care leave, etc., for the female employees of pregnancy, implement the health risk assessment, adjust the work as needed, Under the principle of maternity protection and employment equal rights, create a friendly working environment for female employees. In addition, the staff group has also introduced an unlimited supply of organic vegetables, no red meat every 2 days, taking care of the health of employees, and reducing carbon emissions by reducing red meat intake.
(3)Maintaining good relations and interactions with investors, suppliers, and interested parties. According to different interested groups, Innolux has established multiple and unobstructed communication
channels, such as investors’ service on company’s webpage, suppliers zone, business service and product consulting, media communications, so that we can keep communicating and getting feedback from those interests groups’ needs and expectations. 1. Employees: we set up a direct employee line, mobilization meeting, Innolux mailbox, interactive factory
meeting (Labor-Management Meeting, the Employee Welfare Committee, management interview, Industrial Safety), employee questionnaires (group meals, activities, training), and opinion collection mail box.
2. Investors: the company treats our shareholders with the principle of fairness and openness. We call the shareholders meetings according to the Company Act and other related laws every year, encourage stockholders to actively participate in the stockholders meeting with proposals and questions.
3. Customers: we have salespeople and customer service units to reply to customers’ demands effectively, establish a CRM system, monitor the progress of handling issues, field audits and questionnaire feedback, and customers’ satisfaction survey.
4. Suppliers: setting up an interactive platform for supplier purchasing and procurement management, and a buyer and procurement management department to host ad quality meetings monthly / quoterly with other departments and suppliers.
5. Communities: Having departments or individuals to be responsible for the communications with community residents, visit the district officers and residents from time to time, caring, and being kind to the neighbors.
6. Non-governmental organizations: participating the professional seminars host by NGOs, listening to the suggestions from outsiders, keep tracking with the industrial changes, become the reference of CSR policy
- 33 -
Evaluation Item
Implementation Status Deviations from “the Corporate Governance
Best-Practice Principles for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
planning, organizing projects that supporting weakness and promoting environmental protection. (4)Directors Profession Enhancement Status
The company ’s Directors have both professional background and practical experience. The company arranges further studies for Directors and every year. For the latest further study updates please refer to page 46 of this annual report.
(5)Risk Management The company has established a risk management system to regularly monitor the related financial risks,
regulation risks, climate change risks, water resource risks, supplier chain risks, information safety risks, and the environment, safety, and health risks. The company followed IS022301 to set up Business Impact Analysis, BIA and Risk Assessment, RA for an emergency response and executes process.
(6)The implementation of customer policy 1.The customer satisfaction service
The Company continued to improve the project activities and deepen the application of "INNOLUX Intelligent Portal - Smart Platform". The information network with dense structure of design, purchase, production and sales structure includes timely and accurate data collection, logical and rigorous data analysis and abnormality. Automatic early warning system, timely correction and audit, effectiveness feedback, etc., in order to strengthen organizational competitiveness and improve customer satisfaction, and in products and services, the company also attaches importance to customer information confidentiality and privacy.
2.Customer satisfaction Through customer voice (VOC) systems, annual customer satisfaction surveys, non-scheduled customers and
quality audits, master customer response issues to quickly understand customer needs, thereby improving service quality and enhancing company competitiveness through a series of The "Continuously Improvement Project", a project platform that effectively integrates company resources, achieves an improvement in quality, technology and service performance, and is specifically reflected in the slight increase in customer satisfaction.
(7)The company implements and maintains D&O insurance for its Directors and key officers by the company The company maintains D&O insurance for its Directors and key officers
9.Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.
The Company governance of the company was ranked among the top 6%~20% in the last 5years. It has set up its "Company governance guidelines" according to the revised Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies by the Taiwan Stock Exchange Corporation (TWSE). The company has been working hard on sustainable economy, environment, and society and fulfilling long-term and sustainable responsibility to individual stakeholders and the whole society based on business core value of honesty and integrity.
The areas that require immediate improvement are described below:
Evaluation Indicators Priority items to be improved and measures
the company's board performance appraisal method or procedure been approved by the board of directors and has been self-assessed at least once a year, and the results of the evaluation are disclosed on the company's website or annual report?
The company will report to the board of directors to determine the board's performance evaluation methods or procedures, and perform self-assessment at least once a year, and at the same time disclose the results of the evaluation on the company's website or annual report.
The company's board performance appraisal method or procedure been approved by the board of directors, and it is determined that the external evaluation will be executed at least every three years, and the evaluation will be carried out according to the time limit set by the method, and the implementation and evaluation results will be disclosed on the company website or annual report?
The Company will report to the Board of Directors to determine the performance appraisal methods or procedures of the Board of Directors, and specify that the external evaluation will be executed at least every three years, and the evaluation will be carried out according to the time limit set by the method, and the implementation and evaluation results will be disclosed on the company website or annual report.
- 34 -
Not
e1:
Boa
rd D
iver
sity
Pol
icy
The
Com
pany
has
ena
cted
the
Cor
pora
te G
over
nanc
e P
rinc
iple
s; th
e co
mpo
sitio
n of
the
boar
d of
dir
ecto
rs s
hall
be d
eter
min
ed b
y ta
king
div
ersi
ty in
to c
onsi
dera
tion.
It i
s ad
visa
ble
that
dir
ecto
rs c
oncu
rren
tly
serv
ing
as c
ompa
ny o
ffic
ers
not e
xcee
d on
e-th
ird
of th
e to
tal n
umbe
r of
the
boar
d m
embe
rs, a
nd th
at a
n ap
prop
riat
e po
licy
on d
iver
sity
bas
ed o
n th
e
com
pany
's b
usin
ess
oper
atio
ns, o
pera
ting
dyna
mic
s, a
nd d
evel
opm
ent n
eeds
be
form
ulat
ed a
nd in
clud
e. T
he B
oard
Div
ersi
ty P
olic
y as
fol
low
:
Item
N
ame
Gen
der
Ope
ratio
nal
Judg
men
ts
Man
agem
ent
Adm
inis
trat
ion
Acc
ount
ing
&
Fin
anci
al
anal
ysis
Bus
ines
s &
E
cono
mic
s C
risi
s M
anag
emen
tK
now
ledg
e of
th
e in
dust
ry
Inte
rnat
iona
l m
arke
t pe
rspe
ctiv
e
Abi
lity
to le
ad
and
to m
ake
polic
y de
cisi
ons
Jin-
Yan
g H
ung
Mal
e V
V
V
V
V
V
V
V
Chi
h-H
ung
Shi
ao
Mal
e V
V
V
V
V
V
V
V
Te-T
sai H
uang
M
ale
V
V
V
V
V
V
V
V
Chi
n-L
ung
Tin
g M
ale
V
V
V
V
V
V
V
V
Chi
-Chi
a H
sieh
M
ale
V
V
V
V
V
V
V
V
Bo-
Bo
Wan
g M
ale
V
V
V
V
V
V
V
V
Yuk
-Lun
Yim
M
ale
V
V
V
V
V
V
V
V
Not
e2:
Th
e in
dep
end
ence
of
CPA
s
Item
R
esu
lts
1 N
o m
ajor
fin
anci
al in
tere
sted
rel
atio
nshi
p w
ith th
e cl
ient
V
Yes
N
o
2 A
void
ing
any
impr
oper
rel
atio
nshi
p w
ith th
e cl
ient
V
Yes
N
o
3 T
he a
ccou
ntan
t sho
uld
supe
rvis
e th
eir
assi
stan
ts to
str
ictly
com
ply
with
hon
esty
, jus
tice
and
inde
pend
ence
V
Yes
N
o
4 T
he a
ccou
ntan
t is
proh
ibite
d fr
om a
uditi
ng c
ertif
icat
ion
for
the
com
pany
’s f
inan
cial
rep
ort w
here
he/
she
serv
ed in
with
in th
e pr
evio
us tw
o ye
ars
V Y
es
No
5 T
he a
ccou
ntan
t’s
iden
tific
atio
n is
for
bidd
en to
be
infr
inge
d by
ano
ther
indi
vidu
al
V Y
es
No
6 T
he a
ccou
ntan
t doe
s no
t hol
d an
y sh
ares
in th
e co
mpa
ny o
r in
its
subs
idia
ries
V
Yes
N
o
7 T
he a
ccou
ntan
t doe
s no
t ow
e an
y de
bt to
the
com
pany
or
its s
ubsi
diar
ies
V Y
es
No
8 T
he a
ccou
ntan
t is
not i
n an
y jo
int i
nves
tmen
t or
bene
fit-
shar
ing
rela
tions
hip
with
the
com
pany
or
its s
ubsi
diar
ies
V Y
es
No
9 T
he a
ccou
ntan
t is
not e
mpl
oyed
and
pai
d re
gula
rily
by
the
com
pany
or
its s
ubsi
diar
ies
V Y
es
No
10
The
acc
ount
ant d
oes
not r
ecei
ve a
ny c
omm
issi
on w
hich
is o
ccup
atio
nal-
rela
ted
V Y
es
No
11
The
acc
ount
ant i
s su
bjec
t to
disc
iplin
ary
actio
ns d
oes
not o
ver
7 ye
ars
or r
etur
ning
doe
s no
t les
s th
an 2
yea
rs
V Y
es
No
12
The
acc
ount
ant a
udit
exp
erie
nce
obta
in th
e E
lect
roni
c in
dust
ry
V Y
es
No
- 35 -
Not
e3:
Th
e is
sues
of
stak
ehol
der
s
Sta
keho
lder
C
once
rned
issu
esM
ajor
Com
mun
icat
ion
Cha
nnel
Em
ploy
ees
Com
pens
atio
n an
d be
nefi
ts
Fin
anci
al p
erfo
rman
ces
R
ecru
itm
ent a
nd s
taff
ing
T
rain
ing
and
deve
lopm
ent
1. C
omm
unic
atio
n ho
tline
678
85, m
ailb
ox a
nd d
isab
ility
car
e gr
oup.
2.
Lab
or-m
anag
emen
t mee
ting
, Mee
ting
with
the
Exe
cutiv
es.
3. D
L in
terv
iew
, sem
inar
s fo
r di
sabi
lity
grou
p an
d ne
w e
mpl
oyee
s.
4. I
nnol
ux M
onth
ly.
5.
Sat
isfa
ctio
n su
rvey
. C
onta
ct p
erso
n: M
s. L
iu/h
r.jn@
inno
lux.
com
/037
-586
000#
6465
0 C
onta
ct p
erso
n:M
s. C
heng
/hr.t
n@in
nolu
x.co
m/0
6-50
5188
8#47
285
Cus
tom
ers
Pro
duct
qua
lity
and
cust
omer
sat
isfa
ctio
nS
usta
inab
le s
uppl
y ch
ain
man
agem
ent
Gre
enho
use
gas
emis
sion
and
car
bon
man
agem
ent
Gre
en p
rodu
ct m
anag
emen
t
1. V
OC
(V
oice
of
Cus
tom
er)
syst
em.
2. I
NN
OL
UX
Int
ellig
ent P
orta
l for
imm
edia
te in
tera
ctio
n w
ith th
e cu
stom
ers.
3.
Top
man
agem
ent m
eetin
g.
4. C
usto
mer
sat
isfa
ctio
n su
rvey
and
ana
nlys
is.
5. C
usto
mer
aud
it or
que
stio
nnai
re.
6. D
esig
nate
d ac
coun
t ser
vice
for
imm
edia
te r
espo
nse.
C
onta
ct p
erso
n: M
s. H
uang
/sal
es@
inno
lux.
com
/06-
5051
888#
4485
6S
hare
hold
ers/
in
vest
ors
Fin
anci
al p
erfo
rman
ces
Cor
pora
te g
over
nanc
e R
ecru
itm
ent a
nd s
taff
ing
Sus
tain
able
sup
ply
chai
n m
anag
emen
t
1. A
nnua
l rep
ort.
2. S
hare
hold
ers’
mee
ting.
3.
Inv
esto
rs’ h
otlin
e an
d m
ailb
ox.
4. P
artic
ipat
ion
in s
emin
ars
held
by
loca
l and
ove
rsea
s in
vest
men
t age
ncie
s.
5. I
nter
view
with
the
anal
ysts
C
onta
ct p
erso
n:
IR:M
s. C
hen/
ir@
inno
lux.
com
/ 06
-505
3760
#471
54
Sha
reho
lder
s:M
s. C
hen/
ir@
inno
lux.
com
//037
-586
000#
6358
8S
uppl
iers
S
usta
inab
le s
uppl
y ch
ain
man
agem
ent
Gre
en p
rodu
ct m
anag
emen
t Po
llutio
n co
ntro
l
1. P
rocu
rem
ent s
trat
egy
mee
ting
. 2.
Sup
plie
r co
mm
unic
atio
n m
eetin
g.
3. M
ater
ial q
ualit
y m
eetin
g.
4. A
nnua
l sup
plie
rs’ m
eetin
g.
5. S
uppl
iers
’ not
ice.
S
RM
(Su
pplie
r R
elat
ions
hip
Man
agem
ent)
An
inte
ract
ive
plat
form
for
info
rmat
ion
exch
ange
bet
wee
n pu
rcha
sing
/mat
eria
l con
trol
uni
ts a
nd s
uppl
iers
--
Cov
ers
purc
hasi
ng o
pera
tions
, suc
h as
pur
chas
e or
ders
, de
liver
y da
tes,
invo
icin
g, p
aym
ent i
nqui
ries
, etc
. and
incl
udes
an
elec
tron
ic s
igna
ture
sys
tem
to e
nsur
e th
at
the
sign
ing
of o
nlin
e do
cum
ents
is le
gally
bin
ding
for
bot
h pa
rtie
s.M
edia
F
inan
cial
per
form
ance
s R
ecru
itm
ent a
nd s
taff
ing
Cor
pora
te g
over
nanc
e W
ater
man
agem
ent
1. D
esig
nate
d m
edia
mai
lbox
and
hot
line.
2. P
ress
rel
ease
. 3.
Pre
ss c
onfe
renc
e C
onta
ct p
erso
n:M
s.C
heng
/pr@
inno
lux.
com
/037
-586
000#
6295
9N
GO
s C
omm
unity
par
ticip
atio
n an
d so
cial
cha
rity
D
isab
ility
em
ploy
men
t Po
llutio
n co
ntro
l O
ccup
atio
nal h
ealth
and
saf
ety
1. C
olla
bora
tion
with
NG
Os
to h
old
CS
R p
roje
cts.
2. N
GO
s fu
ndin
g.
3. I
nvite
NG
Os
to ta
ke p
art i
n se
min
ars.
C
onta
ct p
erso
n:M
s.Ta
i/csr
@in
nolu
x.co
m/0
6-50
5188
8#47
050
- 36 -
3.4.
4 C
omp
osit
ion
, Res
pon
sib
iliti
es a
nd
Op
erat
ion
s of
th
e R
emu
ner
atio
n C
omm
itte
e
A.P
rofe
ssio
nal Q
ualif
icat
ions
and
Ind
epen
denc
e A
naly
sis
of R
emun
erat
ion
Com
mit
tee
Mem
bers
Cri
teri
a
Nam
e (N
ote
1)
Mee
t One
of
the
Fol
low
ing
Pro
fess
iona
l Qua
lific
atio
n R
equi
rem
ents
, Tog
ethe
r w
ith a
t Lea
st
Fiv
e Y
ears
of
Wor
k E
xper
ienc
e In
depe
nden
ce C
rite
ria(
Not
e 2)
Num
ber
of O
ther
P
ubli
c C
ompa
nies
in
Whi
ch th
e In
divi
dual
is
Con
curr
entl
y S
ervi
ng
as a
n R
emun
erat
ion
Com
mit
tee
Mem
ber
An
Inst
ruct
or o
r H
ighe
r P
ositi
on
in a
Dep
artm
ent o
f C
omm
erce
, L
aw, F
inan
ce, A
ccou
ntin
g, o
r O
ther
Aca
dem
ic D
epar
tmen
t R
elat
ed to
the
Bus
ines
s N
eeds
of
the
Com
pany
in a
Pub
lic
or
Pri
vate
Jun
ior
Col
lege
, Col
lege
or
Uni
vers
ity
A J
udge
, Pub
lic P
rose
cuto
r, A
ttor
ney,
Cer
tifie
d P
ubli
c A
ccou
ntan
t, or
Oth
er P
rofe
ssio
nal
or T
echn
ical
Spe
cial
ist W
ho h
as
Pas
sed
a N
atio
nal E
xam
inat
ion
and
been
Aw
arde
d a
Cer
tific
ate
in
a P
rofe
ssio
n N
eces
sary
for
the
Bus
ines
s of
the
Com
pany
Has
wor
k ex
peri
ence
in
the
area
s of
com
mer
ce,
law
, fin
ance
, or
acco
unti
ng, o
r ot
herw
ise
nece
ssar
y fo
r th
e bu
sine
ss o
f th
e C
ompa
ny
12
34
56
78
Inde
pend
ent
Dir
ecto
r C
hi-C
hia
Hsi
eh
－
－
V
VV
VV
VV
VV
1
Inde
pend
ent D
irec
tor
Bo-
Bo
Wan
g －
－
V
V
VV
VV
VV
V－
Inde
pend
ent D
irec
tor
Sta
nley
Yuk
Lun
Y
im
－
－
V
VV
VV
VV
VV
－
Not
e 1:
Dir
ecto
r; I
ndep
ende
nt D
irec
tor
or o
ther
s.
Not
e 2:
If C
ompe
nsat
ion
Com
mit
tee
Mem
bers
, dur
ing
the
two
year
s be
fore
bei
ng e
lect
ed o
r du
ring
the
term
of
offi
ce, m
eet a
ny o
f th
e fo
llow
ing
situ
atio
ns, p
leas
e ti
ck th
e ap
prop
riat
e co
rres
pond
ing
boxe
s:
1.
Not
an
empl
oyee
of
the
com
pany
or
any
of it
s af
fili
ates
; 2.
N
ot a
dir
ecto
r or
sup
ervi
sor
of th
e co
mpa
ny o
r an
y of
its
affi
liate
s. T
he s
ame
does
not
app
ly, h
owev
er, i
n ca
ses
whe
re th
e pe
rson
is a
n in
depe
nden
t dir
ecto
r of
the
com
pany
, its
pa
rent
com
pany
, or
any
subs
idia
ry in
whi
ch th
e co
mpa
ny h
olds
, dir
ectl
y or
indi
rect
ly, m
ore
than
50
perc
ent o
f th
e vo
ting
sha
res;
3.
N
ot a
nat
ural
-per
son
shar
ehol
der
who
hol
ds s
hare
s, to
geth
er w
ith
thos
e he
ld b
y th
e pe
rson
’s s
pous
e, m
inor
chi
ldre
n, o
r he
ld b
y th
e pe
rson
und
er s
omeo
ne e
lse’
s na
me(
s), i
n an
ag
greg
ate
amou
nt o
f on
e pe
rcen
t or
mor
e of
the
tota
l num
ber
of is
sued
sha
res
of th
e co
mpa
ny o
r ra
nkin
g as
one
of
its
top
ten
shar
ehol
ders
; 4.
N
ot a
spo
use,
rel
ativ
e w
ithi
n th
e se
cond
deg
ree
of k
insh
ip, o
r lin
eal r
elat
ive
wit
hin
the
thir
d de
gree
of
kins
hip
of a
ny o
f th
e ab
ove
pers
ons
in th
e pr
eced
ing
thre
e su
bpar
agra
phs;
5.
N
ot a
dir
ecto
r, su
perv
isor
, or
empl
oyee
of
a co
rpor
ate/
inst
itut
iona
l sha
reho
lder
that
dir
ectl
y ho
lds
five
per
cent
or
mor
e of
the
tota
l num
ber
of is
sued
sha
res
of th
e co
mpa
ny o
r ra
nkin
g as
one
of
its
top
five
sha
reho
lder
s;
6.
Not
a d
irec
tor,
supe
rvis
or, o
ffic
er, o
r sh
areh
olde
r ho
ldin
g fi
ve p
erce
nt o
r m
ore
of th
e sh
ares
of
a sp
ecif
ied
com
pany
or
inst
ituti
on th
at h
as a
fin
anci
al o
r bu
sine
ss r
elat
ions
hip
wit
h th
e co
mpa
ny;
7.
Not
a p
rofe
ssio
nal i
ndiv
idua
l or
an o
wne
r, pa
rtne
r, di
rect
or, s
uper
viso
r, or
off
icer
of
a so
le p
ropr
ieto
rshi
p, p
artn
ersh
ip, c
ompa
ny, o
r in
stit
utio
n th
at p
rovi
des
com
mer
cial
, leg
al,
fina
ncia
l, ac
coun
ting
ser
vice
s, o
r co
nsul
tati
on to
the
com
pany
or
to a
ny a
ffil
iate
of
the
com
pany
, or
a sp
ouse
ther
eof;
8.
H
as n
ot b
een
a pe
rson
und
er a
ny c
ondi
tion
s de
fine
d in
Art
icle
30
of th
e C
ompa
ny L
aw.
- 37 -
B.A
tten
danc
e of
Mem
bers
at R
emun
erat
ion
Com
mit
tee
Mee
ting
s
Mr.
Chi
-Chi
a H
sieh
, Cha
irm
an o
f th
e C
ompe
nsat
ion
Com
mit
tee,
con
vene
d 3
regu
lar
mee
tings
in 2
018.
The
Com
mit
tee
mem
bers
’ atte
ndan
ce s
tatu
s is
as
foll
ows:
Tit
le
Nam
e A
tten
danc
e in
Per
son
(B)
By
Pro
xyA
tten
danc
e ra
te (
%)
R
emar
ks
Cha
ir
Chi
-Chi
a H
sieh
3
－
100.
00%
－
Mem
ber
Bo-
Bo
Wan
g 3
－
100.
00%
－
Mem
ber
Stan
ley
Yuk
Lun
Yim
2
1 66
.67%
－
Not
e : S
cope
of
dutie
s of
the
Rem
uner
atio
n C
omm
itte
e
1. P
erio
dica
lly r
evie
win
g th
is C
hart
er a
nd m
akin
g re
com
men
datio
ns f
or a
men
dmen
ts.
2. E
stab
lishi
ng a
nd p
erio
dica
lly r
evie
win
g th
e an
nual
and
long
-ter
m p
erfo
rman
ce g
oals
for
the
dire
ctor
s an
d m
anag
eria
l off
icer
s of
this
Cor
pora
tion
and
the
polic
ies,
sys
tem
s,
stan
dard
s, a
nd s
truc
ture
for
thei
r co
mpe
nsat
ion.
3. P
erio
dica
lly a
sses
sing
the
degr
ee to
whi
ch p
erfo
rman
ce g
oals
for
the
dire
ctor
s an
d m
anag
eria
l off
icer
s of
this
Cor
pora
tion
have
bee
n ac
hiev
ed, a
nd s
ettin
g th
e ty
pes
and
amou
nts
of th
eir
indi
vidu
al c
ompe
nsat
ion.
Ann
otat
ion:
1.T
here
was
no
reco
mm
enda
tion
of th
e C
ompe
nsat
ion
Com
mit
tee
whi
ch w
as n
ot a
dopt
ed o
r w
as m
odif
ied
by th
e B
oard
of
Dir
ecto
rs in
201
8.
2.T
here
wer
e no
wri
tten
or o
ther
wis
e re
cord
ed r
esol
utio
ns o
n w
hich
a m
embe
r of
the
Com
pens
atio
n C
omm
itte
e ha
d a
diss
entin
g op
inio
n or
qua
lifie
d op
inio
n.
- 38 -
3.4.
5 C
orp
orat
e S
ocia
l Res
pon
sib
ility
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Cor
pora
te
Soc
ial R
espo
nsib
ilit
y B
est-
Pra
ctic
e
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Y
esN
oA
bstr
act E
xpla
natio
n
1.C
orpo
rate
Gov
erna
nce
Impl
emen
tati
on
(1)D
oes
the
com
pany
dec
lare
its
corp
orat
e
soci
al r
espo
nsib
ility
pol
icy
and
exam
ine
the
resu
lts o
f th
e im
plem
enta
tion?
V
(1)
The
com
pany
has
est
ablis
hed
rele
vant
CS
R p
olic
ies
thou
gh C
SR
pol
icie
s an
d
appr
oved
by
Boa
rd o
f D
irec
tor
mee
ting,
the
com
pnay
ena
cted
rel
evan
t pol
icie
s
and
guid
elin
es h
ave
also
bee
n m
ade
avai
labl
e on
the
com
pany
’s w
ebsi
te a
s a
decl
arat
ion
of I
nnol
ux’s
com
mit
tmen
t and
obl
igat
ion
to f
ulfi
lling
its
corp
orat
e
soci
al r
espo
nsib
ilit
ies.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to C
orpo
rate
Soc
ial R
espo
nsib
ility
(2)D
oes
the
com
pany
pro
vide
edu
catio
nal
trai
ning
on
corp
orat
e so
cial
res
pons
ibili
ty
on a
reg
ular
bas
is?
V
(2)I
n th
e or
ient
atio
n tr
aini
ng f
or n
ew e
mpl
oyee
s, T
he c
ompa
ny C
ode
of C
ondu
ct
trai
ning
has
bee
n in
corp
orat
ed a
s a
com
pone
nt.
In a
dditi
on, t
he c
ompa
ny h
as a
lso
inco
rpor
ated
con
cept
s of
CS
R b
y em
phas
izin
g
valu
es s
uch
as la
bor
righ
ts in
the
trai
ning
s fo
r as
sem
bly
line
fore
man
and
supe
rvis
ors.
(3)D
oes
the
com
pany
est
abli
sh e
xclu
sive
ly
(or
conc
urre
ntly
) de
dica
ted
firs
t-li
ne
man
ager
s au
thor
ized
by
the
boar
d to
be
in
char
ge o
f pr
opos
ing
the
corp
orat
e so
cial
resp
onsi
bilit
y po
licie
s an
d re
port
ing
to th
e
boar
d?
V
(3)
The
com
pany
set
s up
the
corp
orat
e so
cial
res
pons
ibili
ty d
epar
tmen
t, as
the
corp
orat
e so
cial
res
pons
ibili
ty s
peci
al p
rom
otio
n or
gani
zatio
n, c
oord
inat
ing
the
com
pany
's c
orpo
rate
soc
ial r
espo
nsib
ility
and
sus
tain
able
dev
elop
men
t dir
ectio
n
and
goal
s. A
nd e
stab
lish
a C
orpo
rate
Soc
ial R
espo
nsib
ility
Com
mit
tee
to
form
ulat
e co
rpor
ate
soci
al r
espo
nsib
ility
pol
icie
s an
d sh
ort-
, med
ium
- an
d
long
-ter
m s
trat
egie
s. T
hrou
gh q
uart
erly
com
mit
tees
and
ann
ual m
anag
emen
t
revi
ew m
eetin
gs, e
xam
ine
the
risk
opp
ortu
nitie
s an
d th
eir
corr
espo
ndin
g
man
agem
ent i
n co
rpor
ate
gove
rnan
ce, e
nvir
onm
ent a
nd s
ocie
ty. I
n O
ctob
er,
2018
, we
repo
rted
to th
e B
oard
of
Dir
ecto
rs o
n th
e an
nual
impl
emen
tatio
n
resu
lts o
f C
SR
and
the
new
ann
ual w
ork
plan
, rev
iew
ed th
e im
plem
enta
tion
of
CS
R p
olic
ies
and
impl
emen
tatio
n gu
idel
ines
, and
urg
ed a
nd a
ssis
ted
the
man
agem
ent t
eam
to im
plem
ent C
SR
thro
ugh
the
Boa
rd o
f D
irec
tors
to p
rom
ote
sust
aina
ble
perf
orm
ance
.
- 39 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Cor
pora
te
Soc
ial R
espo
nsib
ilit
y B
est-
Pra
ctic
e
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Y
esN
oA
bstr
act E
xpla
natio
n
(4)D
oes
the
com
pany
dec
lare
a r
easo
nabl
e
sala
ry r
emun
erat
ion
polic
y, a
nd in
tegr
ate
the
empl
oyee
per
form
ance
app
rais
al
syst
em w
ith
its
corp
orat
e so
cial
resp
onsi
bilit
y po
licy,
as
wel
l as
esta
blis
h
an e
ffec
tive
rew
ard
and
disc
iplin
ary
syst
em?
V
(4)T
he c
ompa
ny p
rovi
des
mar
ket-
com
peti
tive
over
all c
ompe
nsat
ion
to a
ttrac
t and
reta
in o
utst
andi
ng ta
lent
s, p
artic
ipat
e in
mar
ket r
esea
rch
on a
reg
ular
bas
is to
cond
uct a
rev
iew
of
com
pens
atio
n po
licie
s, a
nd p
ay a
ttent
ion
to th
e ex
tern
al
com
peti
tive
ness
of
sala
ry a
nd b
enef
its
and
base
d on
the
posi
tion
of
empl
oyee
s,
acad
emic
bac
kgro
und,
pro
fess
iona
l yea
rs a
nd m
arke
t sta
ndar
ds. S
uch
com
preh
ensi
ve c
onsi
dera
tions
ach
ieve
inte
rnal
fai
rnes
s. T
he C
ompa
ny h
as
form
ulat
ed a
cor
pora
te s
ocia
l res
pons
ibili
ty p
olic
y an
d fo
rmul
ated
gui
delin
es f
or
the
impl
emen
tatio
n of
the
Cor
pora
te S
ocia
l Res
pons
ibili
ty C
ode
of C
ondu
ct,
whi
ch s
tate
s th
at c
ompl
ianc
e w
ith
loca
l law
s an
d re
gula
tions
is e
ngag
ed in
oper
atio
nal a
ctiv
itie
s, a
nd e
stab
lish
es a
n ef
fect
ive
corp
orat
e go
vern
ance
stru
ctur
e an
d re
leva
nt e
thic
al s
tand
ards
in a
ccor
danc
e w
ith th
e la
w, t
hrou
gh
educ
atio
n an
d in
tern
al p
rom
otio
n. S
tren
gthe
n em
ploy
ee a
war
enes
s of
com
plia
nce.
If
empl
oyee
s vi
olat
e th
e la
w, l
abor
saf
ety
regu
latio
ns o
r re
gula
tions
,
labo
r co
ntra
cts,
and
var
ious
eth
ical
beh
avio
rs o
f th
e co
mpa
ny, t
hey
will
be
disc
iplin
ed a
ccor
ding
to r
elev
ant l
aws
and
regu
latio
ns, a
nd w
ill b
e re
ason
ably
refl
ecte
d in
the
resu
lts
of e
mpl
oyee
per
form
ance
eva
luat
ion.
2.Su
stai
nabl
e E
nvir
onm
ent D
evel
opm
ent
(1)D
oes
the
com
pany
end
eavo
r to
util
ize
all
reso
urce
s m
ore
effi
cien
tly
and
use
rene
wab
le m
ater
ials
whi
ch h
ave
low
impa
ct o
n th
e en
viro
nmen
t?
V
(1
)Inn
olux
has
not
onl
y re
duce
d its
dis
char
ge o
f co
ntam
inan
ts f
rom
the
sour
ce b
ut
also
red
uced
the
quan
tity
of p
ollu
tant
s in
its
was
te w
ater
dis
char
ge to
incr
ease
its
recy
clin
g ra
te b
y m
achi
ne d
eisi
gn a
nd T
echn
olog
y pr
omot
ion.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to C
orpo
rate
Soc
ial R
espo
nsib
ility
(2)D
oes
the
com
pany
est
abli
sh p
rope
r
envi
ronm
enta
l man
agem
ent s
yste
ms
base
d
on th
e ch
arac
teri
stic
s of
thei
r in
dust
ries
?
V
(2)T
he c
ompa
ny h
as b
een
activ
ely
prom
otin
g re
leva
nt E
HS
man
agem
ent s
yste
ms
such
as
the
ISO
140
01, O
HS
AS
1800
1 an
d so
for
th in
ord
er to
fac
ilita
te a
posi
tive
cycl
e of
gra
dual
impr
ovem
ent f
or g
reen
sus
tain
abili
ty a
nd s
afet
y
cultu
re.
(3)D
oes
the
com
pany
mon
itor
the
impa
ct o
f
clim
ate
chan
ge o
n its
ope
ratio
ns a
nd
cond
uct g
reen
hous
e ga
s in
spec
tions
, as
wel
l as
esta
blis
h co
mpa
ny s
trat
egie
s fo
r
ener
gy c
onse
rvat
ion
and
carb
on r
educ
tion?
V
(3)
The
com
pany
has
com
plet
ed it
s G
HG
inve
ntor
y an
d 3r
d pa
rty
audi
t as
pres
crib
ed b
y IS
O 1
4064
-1. I
nnol
ux h
as n
ot o
nly
man
aged
its
GH
G e
mis
sion
info
rmat
ion
thro
ugh
a G
HG
Inf
orm
atio
n P
latf
orm
but
als
o ac
tivel
y pa
rtic
ipat
ed
in th
e in
tern
atio
nal C
arbo
n D
iscl
osur
e P
roje
ct (
CD
P).
Inn
olux
sco
red
B f
or
disc
losu
re in
201
7 at
lead
ersh
ip le
vel .
- 40 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Cor
pora
te
Soc
ial R
espo
nsib
ilit
y B
est-
Pra
ctic
e
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Y
esN
oA
bstr
act E
xpla
natio
n
3.Pr
eser
ving
Pub
lic W
elfa
re
(1)D
oes
the
com
pany
for
mul
ate
appr
opri
ate
man
agem
ent p
olic
ies
and
proc
edur
es
acco
rdin
g to
rel
evan
t reg
ulat
ions
and
the
Inte
rnat
iona
l Bill
of
Hum
an R
ight
s?
V
(1
)The
com
pany
mak
es a
n ef
fort
to a
dher
e to
per
tinen
t reg
ulat
ions
pre
scri
bed
in th
e
Lab
or S
tand
ards
Act
. In
addi
tion,
spe
cifi
c re
gula
tions
on
labo
r ri
ghts
hav
e al
so
been
est
abli
shed
in a
ccor
danc
e w
ith
the
Cod
e, w
hich
sta
tes
that
em
ploy
ees
shal
l
be f
ree
from
har
rass
men
ts o
r di
scri
min
atio
ns f
or r
easo
ns in
clud
ing
race
.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to C
orpo
rate
Soc
ial R
espo
nsib
ility
(2)H
as th
e co
mpa
ny s
et u
p an
em
ploy
ee
hotli
ne o
r gr
ieva
nce
mec
hani
sm to
han
dle
com
plai
nts
with
app
ropr
iate
sol
utio
ns?
V
(2)I
nnol
ux h
as e
stab
lishe
d a
num
ber
of c
hann
els
for
empl
oyee
s fi
ling
com
plai
nts,
incl
udin
g „C
omm
unic
atio
n H
otlin
e“, „
Em
ploy
ee C
omm
unic
atio
n E
mai
l“ a
nd
„Sug
gest
ion
Box
“ th
at h
ave
been
set
up a
t var
ious
fac
ilit
ies
for
empl
oyee
s to
voic
e th
eir
opin
ions
/thou
ghts
with
/with
out s
tatin
g th
eir
nam
es.
(3)
Doe
s th
e co
mpa
ny p
rovi
de a
hea
lthy
and
safe
wor
king
env
iron
men
t and
org
aniz
e
trai
ning
on
heal
th a
nd s
afet
y fo
r its
empl
oyee
s on
a r
egul
ar b
asis
?
V
(3)T
he c
ompa
ny h
as a
lso
esta
blis
hed
its E
HS
uni
t to
take
cha
rge
of o
pera
tions
incl
udin
g lo
ss a
nd r
isk
aver
sion
, EH
S m
anag
emen
t, em
ploy
ee e
duca
tion
and
obta
ined
OH
SAS1
8001
.
(4)D
oes
the
com
pany
set
up a
com
mun
icat
ion
chan
nel w
ith e
mpl
oyee
s on
a r
egul
ar b
asis
,
as w
ell a
s re
ason
ably
info
rm e
mpl
oyee
s of
any
sign
ific
ant c
hang
es in
ope
ratio
ns th
at
may
hav
e an
impa
ct o
n th
em?
V
(4)B
y es
tabl
ishi
ng c
ompr
ehen
sive
cha
nnel
s of
com
mun
icat
ion
and
conv
enin
g
labo
r-m
anag
emen
t mee
ting
s an
d em
ploy
ee w
elfa
re c
omm
itee
mee
ting
s on
a
quar
terl
y ba
sis,
rep
rese
ntat
ives
of
man
agem
ent (
cons
istin
g of
sen
ior-
rank
ing
supe
rvis
ors)
and
labo
r re
pres
enta
tives
(el
ecte
d by
em
ploy
ees)
are
abl
e to
eng
age
in d
irec
t, bi
-lat
eral
com
mun
icat
ions
. Wit
h re
gard
s to
the
notic
e of
labo
r co
ntra
ct
term
inat
ion,
rel
evan
t not
ific
atio
n pr
oced
ures
are
ful
ly c
ompl
iant
wit
h pe
rtin
ent
regu
latio
ns.
(5)D
oes
the
com
pany
pro
vide
its
empl
oyee
s
wit
h ca
reer
dev
elop
men
t and
trai
ning
sess
ions
?
V
(5)
The
com
pany
adh
eres
to th
e be
lief
that
tale
nts
are
the
corn
erst
one
of th
e
com
pany
's d
evel
opm
ent,
deve
lops
the
“Con
cept
ual T
ime
and
Spa
ce
Dev
elop
men
t Con
cept
Map
”, a
nd p
rovi
des
rela
tive
educ
atio
n an
d tr
aini
ng
acco
rdin
g to
the
requ
ired
wor
k ca
paci
ty o
f th
e po
siti
on (
post
) to
enh
ance
the
prof
essi
onal
com
pete
nce
of th
e em
ploy
ees.
In
addi
tion,
the
posi
tion
cert
ific
atio
n
was
pro
mot
ed a
nd c
onti
nued
to b
e pr
omot
ed a
ccor
ding
to th
e ne
eds
of th
e un
it.
The
blu
epri
nt f
or e
ngin
eeri
ng c
ours
e tr
aini
ng h
as b
een
com
plet
ed. I
n ad
ditio
n, in
orde
r to
impr
ove
the
over
all s
oft p
ower
of
the
man
agem
ent t
eam
, the
man
agem
ent t
rain
ing
cour
se is
bas
ed o
n th
e IN
X C
ertif
icat
ion
Blu
epri
nt to
enha
nce
man
agem
ent k
now
ledg
e an
d im
prov
e m
anag
emen
t cap
abili
ties.
Mor
e
- 41 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Cor
pora
te
Soc
ial R
espo
nsib
ilit
y B
est-
Pra
ctic
e
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Y
esN
oA
bstr
act E
xpla
natio
n
Eng
lish
and
Japa
nese
cou
rses
will
be
offe
red
to im
prov
e th
e la
ngua
ge s
kills
of
the
staf
f, a
nd th
e IN
X w
ork
situ
atio
n w
ill b
e in
tegr
ated
into
the
cour
se m
ater
ials
.
Thr
ough
pra
ctic
al e
xerc
ises
, the
lear
ning
eff
ect w
ill b
e ac
hiev
ed.
(6)D
oes
the
com
pany
est
ablis
h an
y co
nsum
er
prot
ecti
on m
echa
nism
s an
d ap
peal
ing
proc
edur
es r
egar
ding
res
earc
h
deve
lopm
ent,
purc
hasi
ng, p
rodu
cing
, ope
ratin
g an
d se
rvic
e?
V
(6)
The
com
pany
has
est
ablis
hed
oper
atin
g pr
inci
ples
that
are
cus
tom
er-o
rien
ted
and
thro
ugh
mea
ns o
f te
leph
one
call
s, e
mai
l exc
hang
es a
nd f
ace-
to-f
ace
mee
tings
, we
are
able
to h
ave
solid
gra
sp o
f cu
stom
ers‘
need
s so
as
to f
orm
ulat
e
impr
ovem
ent s
trat
egie
s to
res
pond
to c
usto
mer
s in
a ti
mel
y m
anne
r.
(7)D
oes
the
com
pany
adv
erti
se a
nd la
bel i
ts
good
s an
d se
rvic
es a
ccor
ding
to r
elev
ant
regu
latio
ns a
nd in
tern
atio
nal s
tand
ards
?
V
(7)P
rodu
ct s
afet
y ha
s al
way
s be
en th
e m
ost i
mpo
rtan
t con
side
ratio
n fo
r co
nsum
ers.
And
as
such
, saf
e pr
oduc
t des
ign
and
a se
ries
of
safe
ty s
peci
fica
tion
accr
edit
atio
ns h
ave
been
inco
rpor
ated
at t
he e
arly
sta
ge o
f pr
oedu
ct d
esig
n to
ensu
re th
e sa
fety
of
cons
umer
s. I
nnol
ux h
as ta
ken
the
initi
ativ
e to
app
ly f
or
inte
rnat
iona
l sta
ndar
d ac
cred
itati
on la
bels
for
its
LC
D p
anel
s in
ord
er to
hel
p
cons
umer
s id
enti
fy s
afe
prod
ucts
at a
gla
nce.
(8)D
oes
the
com
pany
eva
luat
e th
e re
cord
s of
supp
liers
’ im
pact
on
the
envi
ronm
ent a
nd
soci
ety
befo
re ta
king
on
busi
ness
part
ners
hips
?
V
(8)W
ith r
egar
ds to
new
sup
plie
rs, I
nnol
ux w
ill r
efer
to r
elev
ant g
uide
lines
on
soci
al/e
cono
mic
/env
iron
men
tal a
nd s
uppl
y ch
ain
asse
ssm
ent a
long
with
adeq
uate
ris
k ev
alua
tion
to s
cree
n ca
ndid
ates
bef
ore
choo
sing
off
icia
l sup
plie
rs.
Sup
plie
rs w
ith a
ctua
l/pot
entia
l fla
ws
in o
pera
tion
that
hav
e fa
iled
to s
how
effe
ctiv
e im
prov
emen
t des
pite
not
ific
atio
n an
d gu
idan
ce f
rom
Inn
olux
wou
ld b
e
incl
uded
in th
e lis
t of
forb
idde
n/re
stri
cted
sup
plie
rs.
(9)D
o th
e co
ntra
cts
betw
een
the
com
pany
and
its m
ajor
sup
plie
rs in
clud
e te
rmin
atio
n
clau
ses
whi
ch c
ome
into
for
ce o
nce
the
supp
liers
bre
ach
the
corp
orat
e so
cial
resp
onsi
bilit
y po
licy
and
caus
e ap
prec
iabl
e
impa
ct o
n th
e en
viro
nmen
t and
soc
iety
?
V
(9)
The
com
pany
res
erve
s th
e ri
ght t
o ha
lt pa
ymen
t/im
med
iate
ly te
rmin
ate
or
resc
ind
any
cont
ract
of
tran
sact
ion/
orde
r an
d re
voke
the
unde
rsig
ned
vend
or o
r
its a
ffili
ated
bus
ines
ses‘
qual
ific
atio
n as
an
auth
oriz
ed s
uppl
ier.
Inn
olux
wou
ld
also
be
entit
led
to f
ile f
or c
ompe
nsat
ion
for
any
loss
es in
curr
ed o
n th
e
com
pany
’s p
art.
- 42 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Cor
pora
te
Soc
ial R
espo
nsib
ilit
y B
est-
Pra
ctic
e
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Y
esN
oA
bstr
act E
xpla
natio
n
4.E
nhan
cing
Inf
orm
atio
n D
iscl
osur
e
Doe
s th
e co
mpa
ny d
iscl
ose
rele
vant
and
reli
able
info
rmat
ion
rega
rdin
g it
s co
rpor
ate
soci
al r
espo
nsib
ility
on
its w
ebsi
te a
nd th
e
Mar
ket O
bser
vati
on P
ost S
yste
m (
MO
PS)
?
V
T
he c
ompa
ny h
as e
stab
lishe
d a
Cor
pora
te S
ocia
l Res
pons
ibili
ties
sect
ion
on it
s
offi
cial
web
site
and
ann
ounc
ed in
form
atio
n m
ater
ials
on
MO
PS
for
ref
eren
ce.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to C
orpo
rate
Soc
ial R
espo
nsib
ility
5.If
the
Com
pany
has
est
ablis
hed
the
corp
orat
e so
cial
res
pons
ibili
ty p
rinc
iple
s ba
sed
on “
the
Cor
pora
te S
ocia
l Res
pons
ibili
ty B
est-
Pra
ctic
e P
rinc
iple
s fo
r T
WS
E/T
PE
x L
iste
d
Com
pani
es”,
ple
ase
desc
ribe
any
dis
crep
ancy
bet
wee
n th
e P
rinc
iple
s an
d th
eir
impl
emen
tatio
n:
The
Com
pany
has
ena
cted
est
ablis
hed
„Inn
olux
Cor
pora
te C
ode
of C
ondu
ct a
nd C
SR
Man
agem
ent H
andb
ook“
as
a w
orki
ng g
uide
line
that
pre
scri
bes
the
philo
soph
ies
and
beha
vior
s th
at a
re e
xpec
ted
of a
ll In
nolu
x em
ploy
ees
acoo
rdin
g to
Cor
pora
te S
ocia
l Res
pons
ibili
ty B
est P
ract
ice
Pri
ncip
les
for
TW
SE
/GT
SM
Lis
ted
Com
pani
es a
nd Responsible
Business A
lliance(RBA).
The
cod
e of
con
duct
ser
ves
as a
rem
inde
r th
at in
the
face
of
diff
eren
t cha
llen
ges
from
com
peit
iton
s, n
o on
e sh
all e
ngag
e in
am
oral
or
illeg
al b
usin
ess
activ
ities
for
the
sake
of
com
pany
pro
fit o
r gr
owth
and
that
eve
ryon
e at
Inn
olux
mus
t ado
pt h
ighe
r st
anda
rds
of s
elf-
expe
ctat
ion
in o
rder
to c
reat
e gr
eate
r va
lues
to c
ontr
ibut
e to
the
soci
ety.
Usi
ng to
ols
such
as
PC s
tart
up s
cree
n, p
oste
rs a
nd r
elev
ant p
rom
otio
nal p
latf
orm
s, I
nnol
ux h
as d
isse
min
ated
the
cont
ents
of
the
code
of
cond
uct a
nd in
corp
orat
ed C
SR
and
empl
oyee
cod
e of
con
duct
cou
rses
in th
e ne
w e
mpl
oyee
ori
enta
tions
.
6.O
ther
impo
rtan
t inf
orm
atio
n to
fac
ilit
ate
bett
er u
nder
stan
ding
of
the
com
pany
’s c
orpo
rate
soc
ial r
espo
nsib
ility
pra
ctic
es:
Uph
oldi
ng th
e co
ncep
t of
co-p
rosp
erity
in c
orpo
rate
soc
ial r
espo
nsib
ilit
y an
d m
anag
emen
t str
ateg
ies,
Inn
olux
Cor
pora
tion
and
Inn
olux
Edu
catio
n Fo
unda
tion
join
tly p
rom
ote
com
mun
ity
part
icip
atio
n an
d so
cial
car
e, w
ith p
hila
nthr
opic
car
e an
d en
viro
nmen
tal e
duca
tion
as
the
mai
n ax
es, t
here
by a
chie
ving
the
syne
rgis
tic e
ffec
ts o
f su
stai
nabl
e
man
agem
ent.
(1)
Cha
rity
Car
e: D
ream
-com
e-tr
ue C
hris
tmas
gif
t act
ivit
ies,
The
com
pany
rec
ruite
d M
iaol
i and
Tai
nan’
s w
eak
and
part
ial s
choo
l chi
ldre
n’s
wis
h ca
rds
to h
elp
scho
olch
ildre
n’s
Chr
istm
as d
ream
s, a
nd r
aise
d ab
out 1
,300
gif
ts. T
he g
uard
ian
of lo
ve. W
arm
hea
rt b
reak
fast
act
iviti
es: T
he c
ompa
ny r
aise
d a
tota
l of
815,
977
yuan
, pro
vidi
ng 2
04 c
hild
ren
with
a w
eak
diet
for
one
sem
este
r, h
elpi
ng a
tota
l of
Mia
oli (
71 p
erso
n-ti
mes
) an
d T
aina
n (1
33 p
erso
n-ti
mes
) di
sadv
anta
ged
scho
olch
ildre
n to
go
to s
choo
l.
(2)
Env
iron
men
tal E
duca
tion:
Gui
de to
the
orig
inal
eco
logi
cal b
ase-
cam
pus
prom
otio
n pl
an: L
uzhu
Nat
ive
Bas
e, a
tota
l of
14 n
ativ
e ba
se to
urs
wer
e he
ld, w
ith a
tota
l of
358
stud
ents
par
ticip
atin
g to
und
erst
and
the
impa
ct o
f na
tive
plan
ts o
n T
aiw
an's
eco
logy
.
Env
iron
men
tall
y-fr
iend
ly X
iaoj
ianb
ing
Sum
mer
Cam
p: I
n ad
diti
on to
the
chil
dren
of
the
com
pany
's c
olle
ague
s, a
tota
l of
20 s
choo
lchi
ldre
n fr
om th
e M
iaol
i Pea
ce C
lub
and
the
Tai
nan
Fam
ily
Sup
port
Cen
ter
wer
e al
so s
pons
ored
to p
artic
ipat
e in
the
sum
mer
cam
p. A
tota
l of
100
stud
ents
par
ticip
ated
.
In te
rms
of th
e co
mpa
ny’s
per
form
ance
in c
orpo
rate
soc
ial r
espo
nsib
ility
, in
addi
tion
to r
elea
sing
rep
orts
, rel
evan
t inf
orm
atio
n is
als
o re
leas
ed th
roug
h th
e co
mpa
ny w
ebsi
te
and
publ
ic in
form
atio
n ob
serv
ator
y.
7.A
cle
ar s
tate
men
t sha
ll be
mad
e be
low
if th
e co
rpor
ate
soci
al r
espo
nsib
ility
rep
orts
wer
e ve
rifi
ed b
y ex
tern
al c
ertif
icat
ion
inst
itutio
ns：
Inno
lux’
s C
SR
Rep
ort f
or 2
018
has
been
ver
ifie
d by
3rd
par
ty in
stitu
te B
SI
for
full
com
plia
nce
with
the
AA
1000
AS
(A
ccou
ntA
bilit
y 10
00 A
ssur
ance
Sta
ndar
d) in
Cat
egor
y II
hig
h
assu
ranc
e le
vel a
nd G
RI
G4’
s re
quir
emen
t for
com
preh
ensi
ve d
iscl
osur
e.
- 43 -
3.4.
6 E
thic
al C
orp
orat
e M
anag
emen
t
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Eth
ical
C
orpo
rate
Man
agem
ent
Bes
t-P
ract
ice
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Yes
No
Abs
trac
t Illu
stra
tion
1.E
stab
lish
men
t of
ethi
cal c
orpo
rate
m
anag
emen
t pol
icie
s an
d pr
ogra
ms
(1)D
oes
the
com
pany
dec
lare
its
ethi
cal
corp
orat
e m
anag
emen
t pol
icie
s an
d pr
oced
ures
in it
s gu
idel
ines
and
ext
erna
l do
cum
ents
, as
wel
l as
the
com
mit
men
t fr
om it
s bo
ard
to im
plem
ent t
he p
olic
ies?
V
(1)
The
com
pany
has
est
abli
shed
Cor
pora
te C
ondu
ct a
nd E
thic
s an
d ha
s cl
earl
y la
id o
ut th
e m
anag
emen
t’s
philo
soph
y of
hon
est m
anag
emen
t als
o in
the
CS
R
Man
agem
ent H
andb
ook,
Cod
e of
Eth
ics
for
Dir
ecto
rs a
nd O
ffic
ers,
Cod
e of
M
oral
Con
duct
and
„Sup
plie
r C
orpo
rate
Soc
ial R
espo
nsib
ility
Cod
e of
Con
duct
O
pera
ting
Sta
ndar
d. T
hese
doc
umen
tatio
ns s
tric
tly r
equi
re a
ll em
ploy
ees
to
adhe
re to
the
com
pany
’s p
olic
ies
on h
ones
ty. A
dditi
onal
ly, I
nnol
ux’s
hon
est
man
agem
ent p
olic
y an
d im
plem
enta
tions
by
the
boar
d an
d m
anag
emen
t are
du
ly d
iscl
osed
in b
oth
the
annu
al r
epor
t and
CS
R r
epor
t.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to I
nteg
rity
Ope
ratio
n P
ract
ice
Pri
ncip
les
(2)D
oes
the
com
pany
est
ablis
h po
licie
s to
pr
even
t une
thic
al c
ondu
ct w
ith c
lear
st
atem
ents
reg
ardi
ng r
elev
ant p
roce
dure
s,
guid
elin
es o
f co
nduc
t, pu
nish
men
t for
vi
olat
ion,
rul
es o
f ap
peal
, and
the
com
mit
men
t to
impl
emen
t the
pol
icie
s?
V
(2
) T
he c
ompa
ny h
as e
stab
lishe
d cl
earl
y de
fine
d re
gula
tions
for
app
ropr
iate
be
havi
ors
in th
e E
thic
al C
orpo
rate
Man
agem
ent B
est P
ract
ice
Pri
ncip
les,
Cod
e of
Eth
ics
for
Dir
ecto
rs a
nd O
ffic
ers,
Cor
pora
te C
ondu
ct a
nd E
thic
s, S
uppl
ier
Cor
pora
te S
ocia
l Res
pons
ibili
ty C
ode
of C
ondu
ct O
pera
ting
Sta
ndar
d, w
hich
st
ates
that
any
act
of
viol
atio
n sh
all b
e su
bjec
ted
to c
orre
spon
ding
pun
itive
ac
tion
s in
acc
orda
nce
wit
h pe
rtin
ent r
egul
atio
ns a
nd w
ork
regu
latio
ns. I
n ad
ditio
n, I
nnol
ux h
as e
stab
lishe
d re
leva
nt s
yste
ms
for
lodi
ng c
ompl
aint
s as
a
mea
ns f
or o
ffen
ding
em
ploy
ees
to s
eek
aid
also
sta
tes
in th
e In
nolu
x M
anag
emen
t Sta
ndar
ds f
or C
orru
ptio
n C
ase
Inve
stig
atio
n
(3)
Doe
s th
e co
mpa
ny e
stab
lish
app
ropr
iate
pr
ecau
tions
aga
inst
hig
h-po
tent
ial
unet
hica
l con
duct
s or
list
ed a
ctiv
ities
st
ated
in A
rtic
le 2
, Par
agra
ph 7
of
the
Eth
ical
Cor
pora
te M
anag
emen
t B
est-
Pra
ctic
e P
rinc
iple
s fo
r T
WS
E/T
PE
x L
iste
d C
ompa
nies
?
V
(3
) T
he c
ompa
ny h
as e
stab
lishe
d cl
earl
y de
fine
d re
gula
tions
and
ann
ounc
ed o
n th
e of
fici
al w
ebsi
te a
nd in
tern
al w
ebsi
te f
or e
mpl
oyee
s to
stu
dies
and
fol
low
, if
ther
e th
e co
mpa
ny s
peci
fica
tion
sho
uld
any
Inno
lux
empl
oyee
be
foun
d to
take
pa
rt in
any
act
of
dish
ones
ty, t
he o
ffen
ding
em
ploy
ee s
hall
rec
eive
co
rres
pond
ing
disc
iplin
ary
actio
ns. S
houl
d sa
id e
mpl
oyee
be
foun
d to
be
invo
lved
in in
cide
nts
of c
orru
ptio
n, r
ecei
ving
bri
bery
/com
mis
sion
, the
ft,
mis
appr
opri
ate/
embe
zzle
com
pany
pro
pert
y to
res
ult i
n lo
ss o
f pr
oper
ty/s
igni
fica
nt d
amag
e to
the
com
pany
’s r
eput
atio
n w
ould
fac
e di
smis
sal.
Shou
ld a
ny s
uppl
ier
be f
ound
to v
iola
te th
e co
mm
itm
ent t
o ho
nest
y an
d in
tegr
ity
(inc
ludi
ng th
e of
feri
ng/a
ccep
tanc
e of
bri
bery
, off
erin
g il
lega
l pol
itic
al
cont
ribu
tions
and
so
fort
h), I
nnol
ux w
ould
rev
oke
the
supp
lier’
s st
atus
as
a qu
alif
ied
supp
lier
and
ceas
e al
l col
labo
rati
on w
ith
said
sup
plie
r.
- 44 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Eth
ical
C
orpo
rate
Man
agem
ent
Bes
t-P
ract
ice
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Yes
No
Abs
trac
t Illu
stra
tion
2.F
ulfi
ll op
erat
ions
inte
grity
pol
icy
(1)D
oes
the
com
pany
eva
luat
e bu
sine
ss
part
ners
’ eth
ical
rec
ords
and
incl
ude
ethi
cs-r
elat
ed c
laus
es in
bus
ines
s co
ntra
cts?
V
(1)T
he c
ompa
ny r
eque
st f
or g
loba
l sup
plie
rs h
as a
coo
pera
tion
rela
tion
ship
to
follo
w th
e S
uppl
ier
CS
R C
ode
of C
ondu
ct O
pera
ting
Sta
ndar
ds a
nd s
ign
the
Sup
plie
r's U
nder
taki
ng a
bout
the
Cod
e of
Con
duct
Int
egri
ty, t
he c
ompa
ny
requ
est s
uppl
iers
to g
uara
ntee
that
they
will
ref
rain
fro
m b
ribe
s or
off
erin
g to
br
ibe
Inno
lux'
s em
ploy
ees.
Sup
plie
rs s
hall
also
not
off
er b
ribe
s or
ben
efits
to
polit
ical
par
ties
or c
andi
date
s.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to I
nteg
rity
Ope
ratio
n P
ract
ice
Pri
ncip
les
(2)D
oes
the
com
pany
est
abli
sh a
n ex
clus
ivel
y (o
r co
ncur
rent
ly)
dedi
cate
d un
it su
perv
ised
by
the
Boa
rd to
be
in
char
ge o
f co
rpor
ate
inte
grit
y?
V
(2
)The
com
pany
has
not
yet
est
ablis
hed
a de
sign
ated
uni
t or
pers
onne
l in
char
ge o
f pr
omot
ing
corp
orat
e et
hica
l man
agem
ent f
or th
e ti
me
bein
g. I
n ac
cord
ance
wit
h th
e ph
iloso
phy
of C
orpo
rate
Int
egri
ty P
ract
ice
Pri
ncip
les
of I
nnol
ux,
neve
rthe
less
, the
Com
pany
has
est
ablis
hed
an I
nteg
rity
Com
mit
tee,
whi
ch is
di
rect
ly r
epor
t to
Cha
irm
an to
inve
stig
atio
n an
y co
ntra
ry o
f in
tegr
ity m
atte
rs.
(3)D
oes
the
com
pany
est
ablis
h po
licie
s to
pr
even
t con
flic
ts o
f in
tere
st a
nd p
rovi
de
appr
opri
ate
com
mun
icat
ion
chan
nels
, and
im
plem
ent i
t?
(4)H
as th
e co
mpa
ny e
stab
lishe
d ef
fect
ive
syst
ems
for
both
acc
ount
ing
and
inte
rnal
co
ntro
l to
faci
lita
te e
thic
al c
orpo
rate
m
anag
emen
t, an
d ar
e th
ey a
udite
d by
ei
ther
inte
rnal
aud
itor
s or
CPA
s on
a
regu
lar
basi
s?
V
V
(3
)The
com
pany
cle
arly
mak
es r
ules
abo
ut p
reve
ntin
g co
nflic
ts o
f in
tere
st in
the
Cod
e of
Con
duct
. If
ther
e is
any
vio
latio
n, th
e co
mpa
ny a
lso
prov
ides
a p
rope
r w
ay to
rep
ort,
incl
udin
g a
Mai
lbox
for
Rep
ortin
g (s
peak
-up@
inno
lux.
com
) an
d st
aff
com
plai
nt m
ailb
oxes
for
em
ploy
ees
imm
idet
ed r
epor
t the
cas
e an
d al
so
fini
shed
que
stio
nnai
re f
or a
nnua
l bas
is.
(4)B
ased
on
the
annu
al a
udit
pla
n ap
prov
ed b
y th
e B
oard
of
Dir
ecto
rs, p
erfo
rm th
e in
tern
al a
udit'
s fi
eldw
ork
audi
ting
or r
evie
w d
epen
ding
on
the
risk
. Rep
ort o
f th
e au
dit r
esul
ts o
n a
regu
lar
basi
s to
ens
ure
that
the
boar
d an
d m
anag
ers
are
awar
e of
the
leve
l of
goal
ach
ieve
men
t in
the
fiel
ds o
f op
erat
iona
l res
ults
and
ef
fici
ency
, fin
anci
al r
epor
ts a
re r
elia
ble,
and
the
com
pany
com
plie
s w
ith th
e re
leva
nt d
ecre
es.
(5)D
oes
the
com
pany
reg
ular
ly h
old
inte
rnal
an
d ex
tern
al e
duca
tion
al tr
aini
ngs
on
oper
atio
nal i
nteg
rity
?
V
(5
)We
have
mad
e al
l of
our
vari
ous
poli
cies
ava
ilab
le th
roug
h ea
sy a
cces
s on
our
in
tran
et a
nd r
equi
re a
ll em
ploy
ees
to b
e tr
aine
d fo
r on
e ho
ur o
n co
rpor
ate
soci
al
resp
onsi
bilit
y, th
ere
are
13,4
13 e
mpl
oyee
s be
en tr
aine
d in
201
8, a
lso
prom
oted
vi
a in
tern
al c
ompu
ter
boot
scr
eens
, new
slet
ters
, and
pos
ters
to e
nhan
ce th
e st
aff’
s un
ders
tand
ing
of th
ese
polic
ies.
We
also
req
uire
our
sta
keho
lder
s, s
uch
as o
ur s
uppl
iers
and
ven
dors
, to
acce
pt a
nd a
bide
by
the
inte
grit
y po
licy
.
3.O
pera
tion
of th
e in
tegr
ity c
hann
el
(1)D
oes
the
com
pany
est
ablis
h bo
th a
re
war
d/pu
nish
men
t sys
tem
and
an
inte
grity
hot
line?
Can
the
accu
sed
be
reac
hed
by a
n ap
prop
riat
e pe
rson
for
V
(1
)Inn
olux
has
impl
emen
ted
a M
ailb
ox f
or R
epor
ting
and
staf
f co
mpl
aint
m
ailb
oxes
to e
ncou
rage
em
ploy
ees
and
rela
ted
peop
le to
rep
ort e
vide
nce.
For
an
ti-in
tegr
ity a
nd a
nti-
corr
uptio
n in
cide
nts,
inve
stig
ator
s w
ill c
ondu
ct
conf
iden
tial f
actu
al in
vest
igat
ions
. The
inve
stig
atio
n re
port
s ar
e su
bmit
ted
to
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to I
nteg
rity
Ope
ratio
n P
ract
ice
Pri
ncip
les
- 45 -
Eva
luat
ion
Item
Impl
emen
tati
on S
tatu
s D
evia
tions
fro
m “
the
Eth
ical
C
orpo
rate
Man
agem
ent
Bes
t-P
ract
ice
Pri
ncip
les
for
TW
SE
/TP
Ex
Lis
ted
Com
pani
es”
and
Rea
sons
Yes
No
Abs
trac
t Illu
stra
tion
follo
w-u
p?
the
Inte
grity
Com
mis
sion
for
res
olut
ion
and
pena
lties
are
impo
sed
inte
rnal
ly o
r th
e in
cide
nt is
pro
secu
ted.
(2
)Doe
s th
e co
mpa
ny e
stab
lish
stan
dard
op
erat
ing
proc
edur
es f
or c
onfi
dent
ial
repo
rtin
g on
inve
stig
atin
g ac
cusa
tion
case
s?
(3)D
oes
the
com
pany
pro
vide
pro
per
whi
stle
blow
er p
rote
ctio
n?
V
V
(2
)Inn
olux
Cor
pora
tion
ratif
ied
the
Inno
lux
Man
agem
ent S
tand
ards
for
Cor
rupt
ion
Cas
e In
vest
igat
ion
as th
e in
vest
igat
ion
stan
dard
for
inci
dent
s an
d re
late
d co
nfid
entia
lity
syst
ems.
(3
)The
com
pany
des
igne
d a
conf
iden
tialit
y sy
stem
to p
rote
ct th
e in
form
ants
and
lis
ted
it in
the
Cod
e of
Con
duct
; the
com
pany
will
pro
tect
em
ploy
ees
from
any
re
veng
e du
e to
rep
ortin
g an
inci
dent
.
4.S
tren
gthe
ning
info
rmat
ion
disc
losu
re
Doe
s th
e co
mpa
ny d
iscl
ose
its
ethi
cal
corp
orat
e m
anag
emen
t pol
icie
s an
d th
e re
sults
of
its im
plem
enta
tion
on th
e co
mpa
ny’s
web
site
and
MO
PS
?
V
T
he c
ompa
ny d
iscl
oses
the
Cod
e of
Con
duct
on
the
Com
pany
’s o
ffic
ial w
ebsi
te
and
Taiw
an S
tock
Exc
hang
e's
Mar
ket O
bser
vati
on P
ost S
yste
m. I
t als
o di
sclo
ses
rela
ted
info
rmat
ion
abou
t ope
ratio
nal i
nteg
rity
and
impl
emen
ts r
esul
ts in
the
offi
cial
web
site
and
cor
pora
te s
ocia
l res
pons
ibili
ty r
epor
t.
No
sign
ific
ant d
iffe
renc
e co
mpa
red
to I
nteg
rity
Ope
ratio
n P
ract
ice
Pri
ncip
les
5.If
the
com
pany
has
est
ablis
hed
the
ethi
cal c
orpo
rate
man
agem
ent p
olic
ies
base
d on
the
Eth
ical
Cor
pora
te M
anag
emen
t Bes
t-Pr
actic
e P
rinc
iple
s fo
r T
WS
E/T
PE
x L
iste
d C
ompa
nies
, ple
ase
desc
ribe
any
dis
crep
ancy
bet
wee
n th
e po
licie
s an
d th
eir
impl
emen
tati
on.
The
Com
pany
has
ena
cted
Cor
pora
te I
nteg
rity
Pra
ctic
e P
rinc
iple
s of
Inn
olux
app
rove
d by
Boa
rd o
f di
rect
or m
eetin
g an
d di
sclo
se o
n th
e of
fici
al w
ebsi
te a
nd M
.O.P
.S.T
here
is n
ot
conf
orm
ity
with
the
inte
grity
ope
ratio
n pr
actic
e pr
icei
ples
. 6.
Oth
er im
port
ant i
nfor
mat
ion
to f
acil
itat
e a
bett
er u
nder
stan
ding
of
the
com
pany
’s e
thic
al c
orpo
rate
man
agem
ent p
olic
ies
(e.g
., re
view
and
am
end
its p
olic
ies)
.:
1.In
ord
er to
ens
ure
full
com
plia
nce
to th
e co
mpa
ny’s
pol
icie
s fo
r ho
nest
man
agem
ent,
all n
ewco
mer
s ar
e re
quir
ed to
sig
n a
Hon
esty
, Int
egri
ty &
IP
Pro
tect
ion
Agr
eem
ent a
nd
supp
liers
ove
r th
e w
orld
that
col
labo
rate
with
Inn
olux
to s
ign
the
Ven
dor
Com
mit
men
t in
the
hope
s of
hel
ping
all
empl
oyee
s an
d co
llabo
ratin
g pa
rtne
rs o
f In
nolu
x to
und
erst
and
and
resp
ect t
he c
ompa
ny’s
mor
al s
tand
ards
. In
addi
tion,
the
com
pany
has
als
o be
en d
isse
min
atin
g re
leva
nt c
once
pts
via
wor
ksta
tion
star
tup
scre
ens
alon
g w
ith r
outin
e pu
blic
atio
n of
lega
l-af
fair
s &
IP
new
slet
ters
con
tain
ing
rele
vant
lega
l iss
ues
so th
at H
ones
ty a
nd I
nteg
rity
wou
ld b
ecom
e th
e co
re o
f In
nolu
x’s
fund
amen
tal c
orpo
rate
cul
ture
. 2.
The
Com
pany
con
duct
s bu
sine
ss e
thic
s re
gula
tion
risk
ass
essm
ent o
n a
year
ly b
asis
to m
onito
r th
e co
mpa
ny’s
man
agem
ent o
f bu
sine
ss e
thic
s th
roug
h in
tern
al c
ontr
ol w
hils
t ve
rify
ing
and
upda
ting
pert
inen
t reg
ulat
ions
on
busi
ness
eth
ics.
- 46 -
3.4.7 Corporate Governance Guidelines and Regulations
Please refer to the Company’s website at www. innolux.com,and the page 25-51 of annual report. 3.4.8 Other Important Information Regarding Corporate Governance
1. Standard operating procedures for the handling of vital internal information: Innolux has established its „Vital
Internal Information Handling Procedure“ that clearly regulates the handling of important internal information.
Relevant procedures have been submitted to the board for approval and internal announcements have been
made in the company along with relevant trainings for all employees.
2. Status of Directors ' participation in corporate governance related courses and trainings as of the deadline of
annual report publication
Title Name Date Sponsoring Organization Course Hours
Chairman
Jialian Investment Co., Ltd. Jin-Yang Hung
Jul 27 2018
Corporate Operation Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Sep 19 2018
Taiwan Corporate Governance Association
The 14th International Forum on Corporate Governance
6
Oct 31 2018
Corporate Operation Association
Amendments to the provisions of the company law
3
Vice Chairman
I-Chen Investment Ltd. Chih-Hung Shiao
Oct 31 2018
Corporate Operation Association
Amendments to the provisions of the company law
3
Dec 19 2018
Securities & Futures Institute
Tips for directors and supervisors to interpret financial information
3
Dec 20 2018
Money laundering prevention and legal compliance
3
Discussion on the Legal Responsibility of Directors and Supervisors in Financial Reports
3
Director
Hyield venture Capital Co., Ltd. Te-Tsai Huang
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Director
Innolux Education Foundation Chin-Lung Ting
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Independent Director
Chi-Chia Hsieh
Jul 27 2018
Corporate Operation Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 25 2018
Taiwan Corporate Governance Association
How to detect and prevent corporate fraud and big data analysis application practice (1)
3
How to detect and prevent corporate fraud and big data analysis application practice (2)
3
Taiwan's new opportunity for US-China trade conflict
3
International and Cross-Strait Anti-tax Avoidance New System Analysis
3
Oct 31 Corporate Operation Amendments to the provisions of the 3
- 47 -
Title Name Date Sponsoring Organization Course Hours
2018 Association company law
Independent Director
Bo-Bo Wang
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Independent Director
Stanley Yuk Lun Yim
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
3. Status of managers‘participation in corporate governance related courses and trainings as of the deadline of
annual report publication
Title Name Date Sponsoring Organization Course Hours
Chairman &CEO
Jin-Yang Hung
Jul 27 2018
Corporate Operation Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Sep 19 2018
Taiwan Corporate Governance Association
The 14th International Forum on Corporate Governance
6
Oct 31 2018
Corporate Operation Association
Amendments to the provisions of the company law
3
President &COO
Chu-Hsiang Yang
May 7 2018
Innolux Corporation
Summary of business secrets and anti-corruption policies
0.42
Aug 13 2018
Antitrust Law 0.5
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Excutive Vice
President Chin-Lung Ting
May 7 2018
Innolux Corporation
Summary of business secrets and anti-corruption policies
0.42
Aug 13 2018
Antitrust Law 0.5
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Vice President
Yao-Tong Chen Hung-Wen YangChih-Ming Chen
May 7 2018
Innolux Corporation Summary of business secrets and anti-corruption policies
0.42
Aug 13 2018
Innolux Corporation Antitrust Law 0.5
Jul 27 2018
Corporate Operation Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Corporate Operation Association
Amendments to the provisions of the company law
3
- 48 -
Title Name Date Sponsoring Organization Course Hours
Finance Supervisor
Chien-Lang Lo
May 7 2018
Innolux Corporation
Summary of business secrets and anti-corruption policies
0.42
Aug 13 2018
Antitrust Law 0.5
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
Accounting Supervisor
Chin-Yuan Chang
May 7 2018
Innolux Corporation
Summary of business secrets and anti-corruption policies
0.42
Aug 13 2018
Antitrust Law 0.5
Jul 27 2018 Corporate Operation
Association
How to determine the structure of corporate mergers and acquisitions and case analysis
3
Oct 31 2018
Amendments to the provisions of the company law
3
4. Certification Details of Employees Whose Jobs are Related to the Release of the Company’s Financial
Information
Certification Number of Employees
Finance&Accounting Internal Audit Certified Public Accountant (CPA) 1
Certified Internal Auditor (CIA) - 2 Chartered Financial Analyst (CFA) 1 - Financial Risk Manager (FRM) 1 - Senior Securities Specialist 8 - Securities Specialist 6 - Internal controller test of SFI 2 -
- 49 -
3.4.9 Internal Control System
1. Statement of internal control system
Innolux Corporation
Statement of Internal Controls
Date: Feb 14, 2019 According to the examination on internal control systems done by the Company itself in 2018, we hereby state as follows:
I. The Company’s board of directors and management team understand their responsibilities of developing, implementing and maintaining the Company’s internal control system, and such a system has been established. The purpose of establishing the internal control system is to reasonably assure the following objectives: The effectiveness and efficiency of business operation (including earnings, operation performance, and the safeguard of company assets); The reliability of the financial and related reports; and The compliance of the relevant laws/regulations and company policies;
II. Due to the innate limitations in designing a faultless internal control system, this system can only assure that the reasonableness of the above three objectives has been fairly achieved. In addition, the effectiveness of the internal control system may change over time due to the change of the business environment or situation. Since the Company’s internal control system has included a self-examination capability, the Company will make immediate corrections when errors are detected.
III. The evaluation of effectiveness of the internal control system design and implementation is made in accordance with the “Guidelines for the Establishment of Internal Control Systems by Public Companies” (the Guidelines). The Guidelines are made to examine the following five factors during the management and control process: (1) control environment, (2) risk assessment and response, (3) control activities, (4) information and communication, and (5) supervision. Each factor also includes several items. Details of each factor can be found in the Guidelines.
IV. The Company has examined the effectiveness of each respected area in the internal control system based on the Guidelines.
V. The examination results indicated that the Company’s internal control system (including subsidiary governance) dated December 31, 2017 had effectively assured that the following objectives had been reasonably achieved during the assessing period: The degree of effectiveness and efficiency of business operation; The reliability of the financial and related reports; The compliance of the relevant laws/regulations and company policies
VI. This Statement is a significant part of the Company’s annual report and prospectus available to the general public. If it contains false information or omits any material content, the Company is in violation of Article 20, Article 32, Article 171, and Article 174 set forth in the Taiwan’s Securities and Exchange Act.
VII. The Company hereby declares that this statement had been approved by the Board of Directors on Feb 14, 2019. Among the 7 attending Directors(including entrusted to attend 1 person), no one raised any objection to the contents of this statement.
Innolux Corporation Chairman: Jin-Yang Hung General Manager: Chu-Hsiang Yang
2. Hire an accountant to audit the Company’s internal control system and disclose the audit report
made by accountants: None.
- 50 -
3.4.10 Lawful punishment inflicted on the Company, and/or disciplinary action taken by the Company against
its employees for violating internal regulations in the latest year and up to the printing date of this
Annual Report); important errors committed; and correction and improvement procedures: None.
3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings
1. Important resolutions and implementation made by the Shareholders’ Meeting by the end of 2018
(1) Adoption of the 2017 Business Report and Financial Statements
Status of execution: Resolution carried
Implementation Status: Fully implemented in accordance with the resolutions
(2) Adoption of the Proposal for Distribution of 2017 Profits
Status of execution: Resolution carried
Implementation Status: Fully implemented in accordance with the resolutions
(3) Resolution to revise Articles of Incorporation of Innolux Corporation.
Status of execution: Resolution carried
Implementation Status: Fully implemented in accordance with the resolutions and approve by the SIPA also upload to official website.
(4) Carried the resolution to process domestic capital increase by cash to issue common shares, to issue new shares as a result of cash capital increase for sponsoring issuance of GDR.
Status of execution: Resolution carried and the Board has been authorized to conduct fund raising but there is no any shares issued in the latest year and up to the printing date of this Annual Report.
(5) Carried the resolution to process capital increase in cash to conduct private placement of ordinary shares/preferred shares or private placement of foreign or domestic convertible corporate bonds.
Status of execution: Resolution carried and the Board has been authorized to conduct fund raising but there is no any shares issued in the latest year and up to the printing date of this Annual Report.
2.Important resolutions by the Board for 2018 prior to the deadline of annual report publication
Date Major resolutions
7-10
Board Meeting
Feb 9, 2018
The Compensation Committee is proposing employee and directrs bonus for the year of 2016
To reclassify the unrealized loss under other comprehensive income of available-for-sale
financial assets to the line item ”other gains and losses” amounting
The Company’s individual financial statements and consolidated financial statements, 2017.
Passed the Accountant assessment of the independence and appropriateness
The Company’s Business Plan 2018.
Proposal for the capital expenditures for the Company in 2018.
Amendment to part of the provisions of the“Articles of Incorporation”
Proposal to convene the Company’s regular shareholders meeting 2018.
Declaration of the Company’s internal control system 2017.
Proposal for execution of short-term loan agreements with financial institutions.
M&A of subsidiary USA and capital increase subsidiary in Japan.
Submittal of the“Full Incentives for Managerial Officers 2017”.
7-11
Board Meeting
May 7, 2018
Prepare and compile Innolux’s Business Report of the company for 2017.
Draft of Innolux’s Dividend Remittance for 2017.
Proposal to process domestic capital increase by cash to issue common shares,to issue new
shares as a result of cash capital increase for sponsoring issuance of GDR
Proposals to conduct private placement of ordinary share/preferred share capital increase by
cash or private placement of foreign or domestic convertible corporate bonds
The Company will not continue process the private placement approved by AGM of 2016
New proposals at the 2018 Annual Meeting of Shareholders
The company intends to participate in the cash increase of subsidiary Innolux Singapore Holding
- 51 -
Date Major resolutions
Pte.Ltd.
Proposal for execution of short-term loan agreements with financial institutions
The Compensation Committee is proposing manager bonus for the year of 2017
7-12
Board Meeting
Jun 20, 2018
Proposed to sign a bank amount contract with a financial institution
Election of the chairman
7-13
Board Meeting
July 27, 2018
The Company’s consolidated financial statements, Q2 2017.
Proposal for execution of short-term loan agreements with financial institutions.
7-14
Board Meeting
Oct 15, 2018
The general manager of the company and the manager of Shugu branch
Election of the vice chairman
7-15
Board Meeting
Oct 31, 2018
The Company’s audit plan of 2019.
Innolux Hong Kong Holding Limited, a subsidiary of the Company, intends to increase its
investment in Suno Innolux Hong Kong Limited
The company intends to increase its subsidiary Innolux Singapore Holding Pte.Ltd.
Proposal for execution of short-term loan agreements with financial institutions.
Suggestions on the monthly fixed salary structure adjustment of the directors of the company
The company's directors, managers salary adjustment recommendations
7-16
Board Meeting
Feb 14, 2019
The Company’s Business Plan 2019.
Proposal for the capital expenditures for the Company in 2019.
The Compensation Committee is proposing employee and directrs bonus for the year of 2018
The Company’s individual financial statements and consolidated financial statements, 2018.
Passed the Accountant assessment of the independence and appropriateness
Amendment to part of the provisions of the“Articles of Incorporation”
Proposal to process domestic capital increase by cash to issue common shares,to issue new
shares as a result of cash capital increase for sponsoring issuance of GDR
Full re-election of directors of the company
Proposal to convene the Company’s regular shareholders meeting 2018.
Declaration of the Company’s internal control system 2018.
Proposed revision of the company's corporate governance code of practice
Proposal for execution of short-term loan agreements with financial institutions.
Reporting the remuneration of the company's 107-year functional committee member
Submittal of the“Full Incentives for Managerial Officers 2018”.
3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to
Important Resolutions Passed by the Board of Directors :None
3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads
of Accounting, Finance, Internal Audit and R&D
Title Name Date of Appointment Date of TerminationReasons for Resignation or
Dismissal
Chairman Jyh-Chau Wang 2016/5/12 2018/6/20 Resignation
President Chih-Hung Shiao 2017/3/16 2018/10/15 Job adjustment
- 52 -
3.5 Information Regarding the Company’s Audit Fee and Independence
Accounting Firm Name of CPA Period Covered by CPA’s Audit Remarks
Pricewaterhousecoopers Wu, Han-Chi Liang Hua-Ling Jan 1, 2018- Dec 31, 2018 -
Unit: NT$ thousands
Fee Items
Fee Range Audit Fee Non-Audit Fee Total
1 Under NT$ 2,000,000
2 NT$2,000,001 ~ NT$4,000,000
3 NT$4,000,001 ~ NT$6,000,000
4 NT$6,000,001 ~ NT$8,000,000
5 NT$8,000,001 ~ NT$10,000,000
6 Over NT$100,000,000 V V V
3.5.1 Non-audit fee paid to auditors, the audit firm and its affiliates accounted for more than one-fourth of
total audits Fees should disclosure the audit fee and non-audit fee amount and non-audit service content
Audit Fee: NT$ Thousands
Accounting
Firm Name of CPA
Audit
Fee
Non-Audit Fee Period
Covered by
CPA’s Audit
Rem
arks
System
Design
Company
Registration
Human
resourceOthers Subtotal
Pricewaterho
usecoopers
Han-Chi Wu
Liang Hua-Ling 17,680 - 2,995 - 15,255 18,250
Jan 1, 2018
to
Dec 31, 2018
Note
Note: Investment in R&D for established oversea subsidiary. 3.5.2 Replaced the audit firm and the audit fee paid to the new audit firm was less than the payment of the
previous year: None
3.5.3 Audit fee reduced more than 15% year over year, required to disclose the reduced amount, proportion,
and reason: None
- 53 -
3.6 Replacement of CPA:
3.6.1 About predecessor CPA
Date of change Feb 9, 2018
Reason for Replacement
Due to accounting firm’s job rotation in accordance to relevant regulations, the
CPA Wu Han-Chi & Hsu, Sheng-Chung replaced by Wu, Han-Chi & Liang,
Hua-Ling since Q1 2018.
Descriptions whether the Company
terminated or the CPA did not
accept the appointment
Parties
Status CPA The company
Termination of appointment － －
No longer accepted
(continued) appointment － －
Other than unqualified issues in the
audit reports within last two years None
Differences with the Company
Yes
－ Accounting principles or practices
－ Disclosure of Financial Statements
－ Audit scope or steps
－ Others
None V
Descriptions
Other Revealed Matters (Required
to be disclosed by Accounting
Standards Article 20 section 2 first
paragraph item 4)
None
3.6.2 About the Successor CPA:
Accounting Firm Pricewaterhousecoopers
Name of CPA Wu, Han-Chi & Liang, Hua-Ling
Date of appointment Feb 9, 2018
Consulting results regarding accounting methods or
accounting principles to specific transactions or
opinions on the financial statements before
appointment
None
Successor CPA written disagreements to former CPA None
3.6.3 Reply of the Previous Accountant: N/A
3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: None
- 54 -
3.8 Changes in Shareholding of Directors, Managers and Major Shareholders
3.8.1 Changes in Shareholding of Directors, Managers and Major Shareholders.
Unit: Per share
Title Name (Note 1)
2018 As of Apr. 30, 2019 Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Holding Increase
(Decrease)
Pledged Holding Increase
(Decrease)
Chairman Jialian investment Co., Ltd — — — —
Jin-Yang Hung — — — —
Vice chairman I-Chen investment Ltd. — — — —
Chih-Hung Shiao (10,000) — — —
Institutional Director Hyield Venture Capital Co., Ltd
— — — —
Te-Tsai Huang — — — —
Institutional Director Innolux ducation Foundation
— — — —
Chin-Lung Ting — — — —
Independent Director Chi-Chia Hsieh — — — —
Independent Director Bo-Bo Wang — — — —
Independent Director Stanley Yuk Lun Yim — — — —
President&COO Chu-Hsiang Yang — — — —
Vice President Yao-Tong Chen — — — —
Vice President Hung-Wen Yang — — — —
Vice President Chih-Ming Chen (53,000) — — —
Associate Vice President
Ke-Yi Kao — — — —
Associate Vice President
Tai-Chi Pan — — — —
Associate Vice President
Kuo-Hsiung Kuo — — — —
Associate Vice President
Chung-Kuang Wei (333,000) — — —
Associate Vice President
Jia-Pang Pang — — — —
Associate Vice President
Yu Shui Kuo — — — —
Associate Vice President
Zheng-Xia Kuo — — — —
Associate Vice President
Tien-Jen Lin (81,000) — (45,000) —
Associate Vice President
Qing-Hui Lin (18,000) — — —
Associate Vice President
Jun-Yi Yu — — — —
Associate Vice President Gwng- Rong Hsu — — — —
Finance Supervisor Chien-Lang Lo — — — —
Accounting Supervisor Chin-Yuan Chang — — — —
Note 1: Refers to current managerial officers as of the printing date of the annual report 3.8.2 Shares Trading with Related Parties：None
3.8.3 Shares Pledge with Related Parties：None
- 55 -
3.9 Relationship among the Top Ten Shareholders
Name Current
Shareholding Spouse’s/minor’s
Shareholding
Shareholding by Nominee
Arrangement
Name and Relationship Between the Company’s Top Ten
Shareholders, or Spouses or Relatives Within Two Degrees
Remarks
Shares % Shares % Shares % Name Relationship
Chimei Corporation 570,929,561 5.74% － － － － N.A. N.A.
Representative: Hsu Chun-hua
－ － － － － － N.A. N.A.
Terry Gou 197,746,000 1.96% － － － － Hon Hai Precision Ind. Co., Ltd.
Chairman
Hyield Venture Capital Co., Ltd
176,311,219 1.77% － － － － Hon Hai Precision Ind. Co., Ltd.
Subsidiary of Hon Hai Precision Ind. Co., Ltd.
Representative: Te-Tsai Huang
212,619 － － － － － N.A. N.A.
Hon Hai Precision Ind. Co., Ltd.
147,965,363 1.49% － － － －
Terry Gou Chairman
Hyield Venture Capital Co., Ltd
Subsidiary of Hon Hai Precision Ind. Co., Ltd.
Representative: Terry Gou
197,746,000 1.96% － － － － Hon Hai Precision Ind. Co., Ltd.
Chairman
JPMorgan Managed Advanced Stars advanced aggregate International Equity Index
137,362,024 1.38% － － － － N.A. N.A.
JPMorgan hosting Sanskrit Vanguard Emerging Markets Equity Index Fund account
132,419,952 1.33% － － － － N.A. N.A.
Foxconn Technology Co., Ltd.
127,556,349 1.28% － － － －
Hyield Venture Capital Co., Ltd
Chairman
Hon Hai Precision Ind. Co., Ltd.
Investing Company
Hua Zhu Investment Co.,
Ltd Parent Company
Representative: Hung, Chih-Chien
62,372 － － － － － N.A. N.A.
Hua Zhu Investment Co., Ltd
121,036,800 1.22% － － － － Foxconn
Technology Co., Ltd.
Subsidiary companies
Representative: Lu,Hsu-Tung
－ － － － － － N.A. N.A.
Citibank Bank of taiwan Managed Secondary Emerging Markets Evaluation Fund Account
114,247,544 1.15% － － － － N.A. N.A.
Compal Electronics, Inc.
109,227,335 1.10% － － － － N.A. N.A.
Representative: Hsu, Sheng-Hsiung
3,107,754 0.03% － － － － N.A. N.A.
- 56 -
3.10 Ownership of Shares in Affiliated Enterprises
Unit: Shares:12/31/2018
Affiliated Enterprises
Ownership by the Company
Direct or Indirect Ownership by
Directors/Managers Total Ownership
Shares % Shares % Shares %
Bright Information Holding Ltd. 4,910,000 100 — — 4,910,000 100
Golden Achiever International Limited 40,250 100 — — 40,250 100
Innolux Europe B.V. — — 375,810 100 375,810 100
Innolux Holding Ltd. 180,568,185 100 — — 180,568,185 100
Innolux Hong Kong Holding Limited 1,158,844,000 100 — — 1,158,844,000 100
Innolux Hong Kong Limited — — 35,000,000 100 35,000,000 100
Innolux Japan Co., Ltd. 98 54 82 46 180 100Innolux Optoelectronics Hong Kong Holding Ltd.
— — 162,897,802 100 162,897,802 100
Innolux Optoelectronics India Private Limited — — 39,500,000 100 39,500,000 100
Innolux Optoelectronics Malaysia SDN. BHD. — — 16,000,000 100 16,000,000 100
Innolux Optoelectronics Philippines CORP. — — 5,000,000 100 5,000,000 100
Innolux Singapore Holding Pte. Ltd. 25,400,000 100 — — 25,400,000 100
Innolux Technology Germany GmbH — — 100,000 100 100,000 100
Innolux USA Inc. — — 12,842 100 12,842 100
Keyway Investment Management Limited 1,656,410 100 — — 1,656,410 100
Lakers Trading Ltd. — — 1 100 1 100
Landmark International Ltd. 709,450,000 100 — — 709,450,000 100
Leadtek Global Group Limited 50,000,000 100 — — 50,000,000 100
Nets Trading Ltd. — — 900,001 100 900,001 100
Rockets Holding Ltd. — — 160,504,550 100 160,504,550 100
Stanford Developments Ltd. — — 164,000,000 100 164,000,000 100
Suns Holding Ltd. — — 18,177,052 100 18,177,052 100
Toppoly Optoelectronics (B.V.I.) Ltd. 146,847,000 100 — — 146,847,000 100
Toppoly Optoelectronics (Cayman) Ltd. — — 146,817,000 100 146,817,000 100
Warriors Technology Investments Ltd. — — 18,177,052 100 18,177,052 100
Shanghai Innolux Optoelectronics Ltd. — — — 100 —- 100
Yuan Chi investment co., Ltd — 100 — — — 100
Foshan Innolux Flnet Electronics Ltd. — — — 100 — 100
Foshan Innolux Optoelectronics Ltd. — — — 100 — 100
Foshan Innolux Logistics Ltd. — — — 100 — 100
Nanjing Innolux Technology Ltd. — — — 100 — 100
Nanjing Innolux Optoelectronics Ltd. — — — 100 — 100Innolux Automations and Intelligence Systems (ShenZhen) Co.,Ltd. — — — 49 — 49
Shenzhen PixinLED Technology Co.,Ltd. — — — 100 — 100
InnoJoy Investment Corp. 167,405,392 100 — — 167,405,392 100
Innocom Technology (Shenzhen) Co., LTD — — — 100 — 100
Ningbo Innolux Flnet Electronics Ltd. — — — 100 — 100
Ningbo Innolux Electronics Ltd. — — — 100 — 100
Ningbo Innolux Optoelectronics Co., LTD — — — 100 — 100
Ningbo Innolux Display LTD — — — 100 — 100
- 57 -
IV. Capital Overview
4.1 Capital and Shares
4.1.1 Source of Capital
A. Type of Stock
Unit:Shares 4/22/2019
Share Type
Authorized Capital
Remarks Outstanding Un-issued Shares
Total Issued Shares Unlisted Total Shares
Common Shares 9,952,071,977 — 9,952,071,977 547,928,023 10,500,000,000
B. Issued Shares
Unit: Shares Thousand ; NT Thousand
Month/ Year
Par Value
Authorized Capital Paid-in Capital Remark
Shares Amount Shares Amount Sources of Capital Capital Increased by Assets Other
than Cash Other
2003.01 — 120,000 1,200,000 35,000 350,000 Created at inception None 2003.01.14
Yuan-Shang-Zih No. 0920001669
2003.05 10 120,000 1,200,000 100,000 1,000,00065 million shares from cash capital increase
None 2003.05.30
Yuan-Shang-Zih No. 0920013164
2003.10 10 1,000,000 10,000,000 300,000 3,000,000200 million shares from cash capital increase
None 2003.11.07
Yuan-Shang-Zih No. 0920030835
2004.04 10 1,000,000 10,000,000 900,000 9,000,000600 million shares from cash capital increase
None 2004.05.24
Yuan-Shang-Zih No. 0930013914
2004.09 12 2,500,000 25,000,000 1,500,000 15,000,000600 million shares from cash capital increase
None 2004.10.26
Yuan-Shang-Zih No. 9300030355
2005.06 14 2,500,000 25,000,000 2,100,000 21,000,000600 million shares from cash capital increase
None 2005.07.22
Yuan-Shang-Zih No. 0940019992
2006.01 — 2,500,000 25,000,000 2,106,624 21,066,2406.624 million new shares issued upon the exercise of employee stock options
None 2006.02.13
Yuan-Shang-Zih No. 0950002674
2006.04 — 2,500,000 25,000,000 2,111,856 21,118,5605.232 million new shares issued upon the exercise of employee stock options
None 2006.05.09
Yuan-Shang-Zih No. 0950011150
2006.09 — 2,500,000 25,000,000 2,112,129 21,121,290273 thousand new shares issued upon the exercise of employee stock options
None 2006.10.16
Yuan-Shang-Zih No. 0950026853
2006.10 41 3,300,000 33,000,000 2,312,129 23,121,290200 million shares from cash capital increase
None 2006.12.04
Yuan-Shang-Zih No. 0950032417
2007.01 — 3,300,000 33,000,000 2,326,056 23,260,56013.927 million new shares issued upon the exercise of employee stock options
None 2007.02.09
Yuan-Shang-Zih No. 0960003715
2007.03 — 3,300,000 33,000,000 2,331,706 23,317,0625.650 million shares from capital increase in connection with merger
None 2007.05.30
Yuan-Shang-Zih No. 0960014540
2007.04 — 3,300,000 33,000,000 2,331,761 23,317,61255 thousand new shares issued upon the exercise of employee stock options
None 2007.05.31
Yuan-Shang-Zih No. 0960014605
2007.08 — 3,300,000 33,000,000 2,340,765 23,407,6529.004 million new shares issued upon the exercise of employee stock options
None 2007.08.30
Yuan-Shang-Zih No. 0960023196
2007.09 — 3,300,000 33,000,000 2,442,155 24,421,550101.390 million shares from capital increase through capitalization of retained earnings
None 2007.09.19
Yuan-Shang-Zih No. 0960025459
2007.10 — 3,300,000 33,000,000 2,442,372 24,423,720 217 thousand new shares issued upon the exercise of employee stock options
None 2007.10.29
Yuan-Shang-Zih No. 0960029080
- 58 -
Month/ Year
Par Value
Authorized Capital Paid-in Capital Remark
Shares Amount Shares Amount Sources of Capital Capital Increased by Assets Other
than Cash Other
2007.11 146 3,300,000 33,000,000 2,742,372 27,423,720 300 million shares from cash capital increase to participate in the issuance of overseas depositary receipts
None 2007.12.10
Yuan-Shang-Zih No. 0960033616
2008.02 — 3,300,000 33,000,000 2,751,026 27,510,2608.654 million new shares issued upon the exercise of employee stock options
None 2008.02.12
Yuan-Shang-Zih No. 0970003364
2008.05 — 3,300,000 33,000,000 2,757,583 27,575,8306.557 million new shares issued upon the exercise of employee stock options
None 2008.05.14
Yuan-Shang-Zih No. 0970012623
2008.08 — 3,300,000 33,000,000 2,770,270 27,702,70012.687 million new shares issued upon the exercise of employee stock options
None 2008.08.21
Yuan-Shang-Zih No. 0970023231
2008.09 — 4,500,000 45,000,000 3,112,297 31,122,970342.027 million shares from capital increase through capitalization of retained earnings
None 2008.09.09
Yuan-Shang-Zih No. 0970025445
2008.11 — 4,500,000 45,000,000 3,113,147 31,131,470850 thousand new shares issued upon the exercise of employee stock options
None 2008.11.18
Yuan-Shang-Zih No. 0970032346
2009.03 — 4,500,000 45,000,000 3,123,695 32,236,95010.548 million new shares issued upon the exercise of employee stock options
None 2009.03.02
Yuan-Shang-Zih No. 0980005613
2009.05 — 4,500,000 45,000,000 3,128,546 31,285,4604.851 million new shares issued upon the exercise of employee stock options
None 2009.05.18
Yuan-Shang-Zih No. 0980013470
2009.07 — 4,500,000 45,000,000 3,138,537 31,385,3709.991 million new shares issued upon the exercise of employee stock options
None 2009.07.23
Yuan-Shang-Zih No. 0980020313
2009.09 — 4,500,000 45,000,000 3,243,122 32,431,222104.585 million shares from capital increase through capitalization of retained earnings
None 2009.09.07
Yuan-Shang-Zih No. 0980024824
2009.11 — 4,500,000 45,000,000 3,244,596 32,445,9601.474 million new shares issued upon the exercise of employee stock options
None 2009.11.19
Yuan-Shang-Zih No. 0980032198
2010.02 — 4,500,000 45,000,000 3,254,841 32,548,41010.245 million new shares issued upon the exercise of employee stock options
None 2010.02.12
Yuan-Shang-Zih No. 0990004357
2010.03 — 10,500,000 105,000,000 8,032,930 80,329,300
4,778,089,000 common stocks from capital increase in connection with merger; private placement of 731.707 million preferred shares
None 2010.03.30
Yuan-Shang-Zih No. 0990008717
2010.04 — 10,500,000 105,000,000 8,040,837 80,408,3707.907 million new shares issued upon the exercise of employee stock options
None 2010.04.29
Yuan-Shang-Zih No. 0990011506
2010.08 — 10,500,000 105,000,000 8,043,497 80,434,9702.660 million new shares issued upon the exercise of employee stock options
None 2010.08.26
Yuan-Shang-Zih No. 0990025097
2010.11 — 10,500,000 105,000,000 7,311,789 73,117,890Reduced capital by 731.707 million shares through private placement of preferred shares
None 2010.11.11
Yuan-Shang-Zih No. 0990033742
2011. 01 — 10,500,000 105,000,000 7,311,809 73,118,09020 thousand new shares issued upon the exercise of employee stock options
None 2011.01.03
Yuan-Shang-Zih No. 1000000178
2011. 03 — 10,500,000 105,000,000 7,312,674 73,126,740865 thousand new shares issued upon the exercise of employee stock options
None 2011.03.25
Yuan-Shang-Zih No. 1000007874
2011.05 — 10,500,000 105,000,000 7,312,804 73,128,040130 thousand new shares issued upon the exercise of employee stock options
None 2011.05.04
Yuan-Shang-Zih No. 1000012352
2011.07 — 10,500,000 105,000,000 7,312,904 73,129,040100 thousand new shares issued upon the exercise of employee stock options
None 2011.07.26
Yuan-Shang-Zih No. 1000021596
2011.11 — 10,500,000 105,000,000 7,312,970 73,129,70866 thousand new shares issued upon the exercise of employee stock options
None 2011.11.28
Yuan-Shang-Zih No. 1000035175
2012.10 9 10,500,000 105,000,000 7,912,970 79,129,700600 million shares from cash capital increase
None 2012.10.15
Yuan-Shang-Zih No. 1010031831
2013.02 12.98 10,500,000 105,000,000 9,037,970 90,379,7001.125 billion shares from cash capital increase to participate in the issuance of overseas depositary receipts
None 2013.02.18
Yuan-Shang-Zih No. 1020005087
- 59 -
Month/ Year
Par Value
Authorized Capital Paid-in Capital Remark
Shares Amount Shares Amount Sources of Capital Capital Increased by Assets Other
than Cash Other
2013.02 5/- 10,500,000 105,000,000 9,100,272 91,002,720
Issuance of 31,151,000 new shares with restricted employee rights at positive consideration Issuance of 31,151,000 new shares with restricted employee rights at nil consideration
None 2013.02.21
Yuan-Shang-Zih No. 1020005099
2013.04 5/- 10,500,000 105,000,000 9,101,960 91,019,600
Issuance of 844,000 new shares with restricted employee rights at positive consideration Issuance of 844,000 new shares with restricted employee rights at nil consideration
None 2013.04.16
Yuan-Shang-Zih No. 1020010954
2013.08 — 10,500,000 105,000,000 9,101,670 91,016,700Capital reduced by 290,000 new shares with restricted employee rights None
2013.08.23 Yuan-Shang-Zih No. 1020025484
2013.11 — 10,500,000 105,000,000 9,100,892 91,008,920Capital reduced by 778,000 new shares with restricted employee rights None
2013.11.27 Yuan-Shang-Zih No. 1020036156
2013.12 5/- 10,500,000 105,000,000 9,109,428 91,094,280
Issuance of 4,268,000 new shares with restricted employee rights at positive consideration Issuance of 4,268,000 new shares with restricted employee rights at nil consideration
None 2013.12.27
Yuan-Shang-Zih No. 1020040096
2014.04 —- 10,500,000 105,000,000 9,106,457 91,064,570Capital reduced by 2,970,000 new shares with restricted employee rights None
2014.04.10 Zhu-Shang-Zih No.1030009955
2014.09 12.5 10,500,000 105,000,000 9,956,457 99,564,570850 million shares from cash capital increase
None 2014.09.05
Zhu-Shang-Zih No.1030026932
2014.09 — 10,500,000 105,000,000 9,955,407 99,554,070Capital reduced by 1,049,000 new shares with restricted employee rights
None 2014.09.05
Zhu-Shang-Zih No.1030026932
2014.11 — 10,500,000 105,000,000 9,954,536 99,545,360Capital reduced by 871,000 new shares with restricted employee rights
None 2014.11.19
Zhu-Shang-Zih No.1030033761
2015.03 — 10,500,000 105,000,000 9,954,224 99,542,240Capital reduced by 312,000 new shares with restricted employee rights
None 2015.03.17
Zhu-Shang-Zih No.1040007082
2015.05 — 10,500,000 105,000,000 9,953,797 99,537,970Capital reduced by 417,000 new shares with restricted employee rights
None 2015.05.20
Zhu-Shang-Zih No.1040013755
2015.08 — 10,500,000 105,000,000 9,953,583 99,535,830Capital reduced by 214,000 new shares with restricted employee rights
None 2015.08.19
Zhu-Shang-Zih No.1040023797
2015.11 — 10,500,000 105,000,000 9,953,237 99,532,370Capital reduced by 345,000 new shares with restricted employee rights
None 2015.11.18
Zhu-Shang-Zih No.1040033254
2016.02 — 10,500,000 105,000,000 9,952,682 99,526,820Capital reduced by 555,600 new shares with restricted employee rights
None 2016.02.26
Zhu-Shang-Zih No.1050004985
2016.05 — 10,500,000 105,000,000 9,952,351 99,523,510Capital reduced by 330,000 new shares with restricted employee rights
None 2016.05.23
Zhu-Shang-Zih No.1050013777
2016.08 — 10,500,000 105,000,000 9,952,210 99,522,100Capital reduced by 141,000 new shares with restricted employee rights
None 2016.08.16
Zhu-Shang-Zih No.1050022641
2016.11 — 10,500,000 105,000,000 9,952,149 99,521,490Capital reduced by 62,000 new shares with restricted employee rights
None 2016.11.15
Zhu-Shang-Zih No.1050031553
2017.03 — 10,500,000 105,000,000 9,952,078 99,520,780Capital reduced by 70,000 new shares with restricted employee rights
None 2017.03.03
Zhu-Shang-Zih No.1060005404
2017.05 — 10,500,000 105,000,000 9,952,072 99,520,720Capital reduced by 6,000 new shares with restricted employee rights
None 2017.05.26
Zhu-Shang-Zih No.1060014186
C. Information for Shelf Registration: None
- 60 -
4.1.2 Status of Shareholders
As of 04/22/2019
Item Government
Agencies Financial
InstitutionsOther Juridical
Person
Domestic Natural Persons
Foreign Institutions &
Natural Persons
Total
Number of Shareholders 7 38 524 342,016 1,104 343,689
Shareholding (shares) 107,173,171 82,605,862 1,974,161,415 4,179,759,878 3,608,371,651 9,952,071,977
Percentage 1.08% 0.83% 19.84% 42.00% 36.25% 100%
4.1.3 Shareholding Distribution Status
A. Common Shares
As of 04/22/2019
Class of Shareholding (Shares) Number of Shareholders Shareholding (Shares) Percentage
1 ~ 999 80,746 25,039,519 0.25%
1,000 ~ 5,000 154,495 371,857,994 3.74%
5,001 ~ 10,000 46,402 369,020,000 3.71%
10,001 ~ 15,000 16,183 203,039,706 2.04%
15,001 ~ 20,000 12,513 233,783,412 2.35%
20,001 ~ 30,000 10,928 281,525,323 2.83%
30,001 ~ 50,000 9,260 375,758,862 3.77%
50,001 ~ 100,000 7,086 516,016,759 5.19%
100,001 ~ 200,000 3,116 447,200,146 4.49%
200,001 ~ 400,000 1,474 416,166,193 4.18%
400,001 ~ 600,000 476 235,582,664 2.37%
600,001 ~ 800,000 211 146,375,618 1.47%
800,001 ~ 1,000,000 134 122,378,817 1.23%
1,000,001 or over 665 6,208,326,964 62.38%
Total 343,689 9,952,071,977 100.00%
4.1.4 List of Major Shareholders
As of 04/22/2019
Shareholder's Name Shareholding
Shares Percentage
Chimei Corporation 570,929,561 5.74%
Terry Guo 194,746,000 1.96%
Hyield Venture Capital Co., Ltd 176,311,219 1.77%
Hon Hai Precision Ind. Co., Ltd. 147,965,363 1.49%
JPMorgan Managed Advanced Stars advanced aggregate International
Equity Index 137,362,024 1.38%
JPMorgan hosting Sanskrit Vanguard Emerging Markets Equity Index
Fund account 132,419,952 1.33%
Foxconn Technology Co., Ltd. 127,556,349 1.28%
Hua Zhu Investment Co., Ltd 121,036,800 1.22%
Citibank Bank of taiwan Managed Secondary Emerging Markets
Evaluation Fund Account 114,247,544 1.15%
Compal Electronics, Inc. 109,227,335 1.10%
- 61 -
4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share
Unit: NT$ Thousand share Year
Item 2017 2018 As of 03/31/2019
Market Price per Share
Highest Market Price 16.65 14.75 10.60
Lowest Market Price 11.65 9.01 9.48
Average Market Price 13.65 11.42 10.04
Net Worth per Share
Before Distribution 26.56 25.62 25.46
After Distribution — — －
Earnings per Share
Weighted Average Shares (thousand shares)
9,952,051 9,952,072 9,952,072
Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share
3.72 0.22 (0.37)
Dividends per Share
Cash Dividends 0.8 0.06(Note) N.A.
Stock Dividends
Dividends from Retained Earnings
－ － －
Dividends from Capital Surplus
－ － －
Accumulated Undistributed Dividends
None None None
Return on Investment
Price/Earnings Ratio 3.67 51.91 N.A.
Price/Dividend Ratio 17.06 190.33 N.A.
Cash Dividend Yield Rate 5.86% 0.53% N.A.
Note: 2018Distribution of Dividends already gets approval from the Board of Directors, subject to shareholders’ approval in Annual General Shareholders’ Meeting.
4.1.6 Dividend Policy and Implementation Status
A. Dividend Policy
The annual net profits of final accounts of the Company shall make up for loss first, shall secondly
appropriate 10% of profit as legal reserve (however, if legal reserve reaches the total capital amount shall not
apply), to make an appropriation of another sum as special reserve or make an reversal of special reserve in
accordance with laws and regulation, to distribute dividend for special/preferred shares, and to add into the
profit not yet distributed before, the allocation proposal shall be prepared by the board of directors and be
submitted to and resolved by the shareholders’ meeting.
The Company is an emerging company of growing rapidly, capital intensive business, and is at the stage of
stable growth, in order to match up the long-term financial plan of the Company in the future, investment
environment and business competition situation, the allocation of dividends shall consider the future capital
expenditure budget and capital requirement of the Company, and allocation proposal shall be prepared by the
board of director, and then shall be allocated after a resolution adopted by shareholders’ meeting. However, for
the allocation of shareholders’ dividends, the stock dividends shall not exceed two-thirds of distributable
dividends in that current year.
B. Proposed Distribution of Dividend
The Board adopted a proposal in May 9 2018 for profit distribution as follows: Cash Dividends to Common
Shareholders from retained earnings: NT$ 0.06Per share). The proposal is subject to shareholders’ approval at
the 2019Annual Shareholders’ Meeting.
C. Significant changes of Dividend policy: None.
- 62 -
4.1.7 Effect of 2018 Share Dividends to Operating Performance and EPS.
No financial forecast disclosed for 2019 therefore not applicable.
4.1.8 Compensation of Employees and Directors
A. Information Relating to EmployeeS’ and Directors’ and Remuneration in the Articles of Incorporation
The annual budgeted net income of the Company shall be distributed in the following order:
To pay not less than 5% of the net income as employees’ bonuses and which less than 0.1% shall be paid as
remuneration to directors after recover loss.
A company may, by a resolution adopted by a majority vote at a meeting of audit committee attended by
one-two of the total number of independent directors and board of directors two-thirds of the total number of
directors, have the profit distributable as employees’ compensation in the preceding two paragraphs distributed
in the form of shares or in cash; and in addition thereto a report of such distribution shall be submitted to the
shareholders’ meeting.
The scope of employee shall be entitled to dividend & bonus may include the qualified employees of
affillated companies, the board of directors is authorized to determine the related rules.
B. Estimate Foundation of Employee and Directors’ Remuneration
The company has an amount equivalent to a certain percentage of the current net earnings (net income
before tax before deducting the remuneration to employees and the remuneration to directors) minus the
accumulated losses estimated and appropriated as remuneration to employees and remuneration to directors,
which will be reported as operating cost or operating expense. The remuneration to employees paid with stock
is with the number of shares calculated in accordance with the closing price of common stock in the day prior
to the resolution reached by the board of directors. If there is any change in the estimated stock share to be
distributed after the publication of the financial report in the following year, it is to be treated as changes in
accounting estimates and with the effect of such change recognized in the profit and loss of the following year.
C. Profit Distribution of 2018Approved in Board of Directors Meeting for Employee and Directors’
Remuneration
(1) For the remuneration to employees and remuneration to directors paid in cash or with stock shares: If such
distribution amount is different from the estimated amount recognized, the amount of difference, root cause,
and accounting treatment should be disclosed as follows:
It was resolved in the company’s board meeting on Feb 14 2018 to have the remuneration to employees
paid in cash for an amount of NT$294,289,205 and the remuneration to directors for an amount of
NT$4,5287,526.
The estimated remuneration to employees and the estimated remuneration to directors referred to above is
no different from the estimated expense in 2018
(2) The amount of remuneration to employees paid with stock shares and its ratio to the net income and total
employee remuneration in the current proprietary or individual financial report:
The company has not had stock shares distributed as remuneration to employees in the current year;
therefore, it is not applicable.
D. Information of 2017Earnings Set Aside to Employee Bonus and Directors’ Remuneration:
Distribution of 2017Earnings (NT$Thousand)
Directors' Remuneration $48,260
Employee Remuneration $3,136,952
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There was no difference between the actual distribution of employees and directors' compensation in the
previous year and the amount of recognition.
4.1.9 Buyback of Common Stock: None
4.2 Bonds
4.2.1 Corporate Bonds: None.
4.2.2 Convertible Bonds: None.
4.2.3 Exchangeable Bonds: None.
4.2.4 Shelf Registration for Issuing Bonds: None.
4.2.5 Corporate Bond with Warrants: None.
4.2.6 Private placement of Corporate Bonds: None.
4.3 Preferred Shares: None.
4.4 Global Depository Receipts: None.
4.5 Employee Stock Options: None.
4.6 Issuance of New Restricted Employee Shares: None.
4.7 Status of New Share Issuance in Connection with Mergers and Acquisitions: None.
4.8 Financing Plans and Implementation: None.
- 64 -
V. Operational Highlights 5.1 Business Activities
5.1.1 Business Scope
1. Main areas of business operations
The combined operating revenue of the Company is derived from TFT-LCD Flat Panel Displays and its
main commodities include large-sized and small-to-medium-sized TFT-LCD related products. Large-sized
products are generally applied to Liquid Crystal Displays, Billboards, Desktop Monitors, and notebooks.
Small-to-medium-sized products are used to manufacture tablet computers, portable audio players, GPS for
automobiles, aviation, smart home and mobile phones, while various types of touch-control panels could be
selected. Besides, for the purpose of special usage, the Company also provides products used for medical,
industrial, and educational purposes. Given that the business of the Company covers the entire world and the
size mix of panels is complete, the Company is a comprehensive LCD provider.
2. Revenue distribution
Unit: NT$ thousand
Major Divisions Total Sales in Year 2018 (%) of total sales TFT-LCD 279,376,115 100%
Total 279,376,115 100%
3. Main products
The Company’s main products are TFT-LCD panels and touch-control modules and TV machine OEM.
The products lines cover small, medium, and large sized panels mainly for a wide range of applications, such
as LCD televisions, desktop monitors, notebook computers, mobile phones, portable audio players, automobile
accessories, medical, industrial, aeronautic, and educational products. The whole machine OEM uses the LCD
TV as the main axis to assist the TV brand's OEM manufacturing and realize the company's vision from the
panel to the whole machine.
4. New products development
The Company is planning to develop new commodities with its main focus on flat display-related products,
while continuing to delve into key products such as Mobile Phone Panels, automobile display Panels,
Notebook Computer Panels, Desktop Monitor Panels, and large-sized LCD Television Panels. Meanwhile, the
Company will continue expanding the product scale and product application and development of
capacitor-based touch-control panels. The company also continues to invest in smart home applications,
electronic tags, smart watches, VR / AR, large public displays, automotive displays, medical displays, LCD
antennas and other non-consumer applications.
5.1.2 Industry Overview
1. Current situation and development of industry
Owing to excellent product properties and improving costs and image quality, TFT-LCD has become the
mainstream of various kinds of flat displays in recent years. The application coverage of TFT-LCD is
extensive, of which, large-sized products are being applied to the manufacturing of LCD Televisions, Desktop
Monitors and Notebook Computers while small-to-medium-sized products are being applied to Flat Panel
Computers, portable audio players, and GPS for automobiles and mobile phones. Large-sized TFT-LCD
products will move towards the goals of energy-saving, better images, Wide viewing angle and narrower
frames, thereby offering an incentive to consumers to upgrade replace the existing product lines. As the
applications of smart phones become more and more popular and the touch-control technology is gradually
- 65 -
mature, small-to-medium sized products will become the fastest growing category with the most diverse
products in recent years. With the continuous improvement of LCD panel technology, products in emerging
fields such as medical, aerospace, AR/VR and electronic tags have also gradually seized applications.
The Company adopts the forward–backward integration manufacturing model in response to the
development of TFT-LCD Industry, and comprehensively arranges the early phrase glass of every product
generation and the later phrase of all-sized modules and integrates IDM product lines, including 3.5 generation,
4.5 generation, 5 generation, 5.5 generation, 6 generation, 7.5 generation, 8.5 generation and 8.6 generation
TFT-LCD plants, 2.5 generation, 4.5 generation, and 5 generation touch-control sensor plants and production
lines and later phrase module plants for IDM products such as later phrase product lines, Light Guide
Plate/Backlight modules, PCB manufacture, assembly and pressing type paints, and upgraded automatic
product line,The production capacity and scale of every production line are comprehensive and flexible,
matching a-Si, p-Si, LTPS, Oxide, OLED processing and VA, AAS, TN Fringe field Switching and automatic
product line, therefore all-sized products can be produced effectively.
2. Association of upstream, mid-stream, and downstream industries
The Company is an IDM product manufacturer which covers the upstream TFT-LCD Panel production
and the downstream System Assembly, the association diagram of upstream, mid-stream and downstream
industries which the Company belongs to are shown below:
Glass Panel Reticle ITO Conduct
Colour Filter
LCD Panel
Driving IC PCB Backit Modules
LCM Modules
LCD Monitor LCD TVs NB Mobile, PDA Others
LCD
Polarized INXs’ p
roducts
Up stream
Middle
stream
Downstream
Consumers
- 66 -
3. Development trend of products
TFT-LCD has a low energy consumption rate, small size, low weight, and low radiation features. Japan,
Korea, and Taiwan have actively invested in the production technology for many years, and the technology is
getting mature. Now it is widely applied to flat panel displays; especially for notebooks and desktop displays,
most of them using TFT-LCD. In the home appliance market, flat screen TVs are the mainstream. The future
developing trend of these products are listed below:
(i) Mobile Computers (Notebooks & Tablets)
Due to fair prices and computational efficiency increasing substantially, rapid growth in sales of
mobile computers has already become the biggest sales scale under the personal computer category. As
the market expands, manufacturers keep releasing differentiation product lines aiming to stimulate
different user demands. The design direction focuses on mobility, word processing, and audio
performance to meet the needs of every type of customer for market segmentation. LCD panels also
have differences in size and resolution. The smallest size is the Tablet; the main market is customers who
focus more on personalization and entertainment. Emphasizing small size, light and easily carried
features and more focus on entertainment needs. Therefore everything is moving toward a panel with a
wide viewing angle.
Nearly years high end tablets not only have improved computational efficiency and completeness of
software function, in the same time there has been more focus on the customer’s visual sensibility about
high screen resolution. The demand of high end tablets has increased significantly due to large size with
narrow border, stylus pen and more high resolution products continuing to be released.
For many computer users, a keyboard is still the main input device, and notebooks coming with a
physical keyboard still have a considerable market. Facing the rise of tablets, personal computer
manufacturers have also started to import new design concepts in notebooks, such as transformer books
that can switch between two different modes of tablet and notebook at any time, E-sports notebooks with
high-end performance, high refresh rate, high response speed and high color saturation, notebooks with a
360-degree angle, and dual-screen notebooks with main screen and touch screen Wait for new products
to be launched.even table mode can connecting with keyboard directly become a notebook, functional
transform notebook are gradually becoming the mainstream design of 10-inch to 13-inch notebooks.
Ultra-thin, wide viewing angle, narrow border ,high colour,low consumption and touch function are also
becoming important factors. As for those customers with high document requirements and lower mobile
requirements, the bigger screen goes with FHD resolution to provide better webpage browsing and
visual entertainment experience. 13-inch to 16-inch products are mainstream applications. As for those
who emphasize video and audio effects or use the product to replace desktop products, they go with
bigger than 15-inch, low energy consumption, and wide color gamut panels to present better color
expression.
In terms of panel specifications, the aspect ratio of 16:9 is the largest mainstream product available
today. The penetration rate of IPS wide viewing angle has increased year by year. More than one-half of
the products have wide viewing angle specifications, and the narrow frame is the fastest growing. The
new specification trend, another 16:10 or 3:2 multi-tasking notebook, has also become another issue of
design differences. Due to the light and fashionable design trend, the thin and narrow frame panel design
has gradually become a must-have point for the product.
(ii) LCD Monitor
LCD monitors mainly go with desktops; two mainstream markets are office use and personal video
and audio entertainment use. For office use LCD monitors, generally sales are for computers hosted by
brand manufacturers and product structure is relatively simple and of moderate cost to fit the budget of
enterprise and government organizations. For personal video and audio entertainment product, due to
more focus on video and audio purposes, recently the proportion narrow border of the product equipped
with wide viewing angle technology has gradually increased. Meanwhile due to customers increasing
- 67 -
demand for high quality products, we are expecting QHD and UHD high resolution products to be
released on the market, will become the mainstream of the high end market gradually.
About size, due to an increase in the manufacturing efficiency and efficiency of product design
structure, the price of TFT-LCD products is dropping and accelerating market demand for a transfer to
the bigger size. For office use types, a gradual transfer from 18.5-inch and 19.5-inch and 21.5-inch to
23.8-inch etc.; the average size is bigger for personal video and audio entertainment products, 23.8-inch,
27-inch and 32-inch units will gradually increase their proportion. With an aspect ratio of 21:9 and
Matching surface design,, the ultra-wide screen is designed to increase the productivity of the
commercial market through double-screen multiprocessing, expand the visual horizons to enhance visual
enjoyment, and promote the scale of high-end markets in 2018.
Except for standard LCD monitors, All-In-One (AIO) which is an integrated design of the desktop
host and monitor. Because of advantages in functionality saving space , the product is winning customers.
As the Windows 10 operating system penetration rate increases, it accompanies the All-in-One product
with touch function and accessories design adding greater entertainment function. It also shows a new
appearance for the market of LCD monitors.
Amid booming digital gaming marketing and changing public opinion about the electronic gaming
sports, along with their races, communities and media coverage, that are fast growing into professional
and official sports. Differing from the 6-year life cycle of computer products, gamers are getting new
devices in only 2-3 years on average, let alone their high-end hardware specifications and much higher
costs. Leading computer brands are rushing into this market with second brands or series of gaming
exclusive desktop and notebook devices designed with gamer specific requirements and configurations
in mind. Electronic gaming grade components, including advanced and high-reliability mainboard,
memory, independent graphic cards and displays with high refresh rate, are powerful magnets to gamer
consumer groups.
(iii) LCD TV
In recent years, LCD TVs fast popularization due to each manufacturer developing G7 and G8
capacity, goes with the improvement of each phase of production technology. It not only has become
customers’ first choice when buying a new TV, but also has stimulated the traditional TV refresh cycle.
Meanwhile, when the market is warming up and products becomes popular. Innolux is the pioneer of
providing differentiated large size models (especially 50-inch, 58-inch and 65-inch, 75-inch, 85-inch,
100-inch), dedicated to effectively improving the technology of each product to significantly increase the
panel’s added value, gain customers’ brand recognition, and market segmentation, and increase the
market share of large sizes. At the same time, we provide the services of the whole machine, so that the
panel manufacturing can be assembled in one machine, providing one-stop overall service.
With the trend of high-resolution mobile display devices, consumers are meeting the demand for
high-definition TVs. In the second half of 2017, 4K2K ultra-high resolution products were launched,
which is the fastest manufacturer and the highest market share in the industry. The company is leading
the industry to promote ultra-high resolution 8K4K (7680x 4320) with high color saturation (NTSC
>100%) panel, is expected to grab the market in the first half of 2019. In terms of technology, the
company proposed in the 20K2K LCD TV module in 2018 that the Mega-Zone achieves pixel-level
regional dimming control with dual panels, which enhances the display quality of the dark state and deep
black performance to improve the visibility of the screen. With the development of 8K high-definition
transmission protocol, 5G signal transmission standard, high-efficiency video coding and multimedia
transmission interface specifications, the penetration rate of 8K4K image specifications will continue to
increase in 2010. Various manufacturers have successively launched 8K4K-level photographic
equipment, and cooperated with audio and video media to launch 8K movies and broadcast programs.
The subsequent 8K4K has become a must-have specification for large-size TVs, and with the new
transmission specifications of 5G, it will create 8K+5G future life.
- 68 -
On the design of panel appearance, the company provides ultra-narrow frames (<5mm) and ultra-thin
design (thickness <4mm) using on products over 40-inch, integrate paint design on appearance to make
client rapid input and mass production. End customers not only enjoy the real 4K image, also provide the
real high quality of excellent vision and sensual experience. Innolux provide client and customer
comprehensive and high competitive TV panel by innovation continually, and continue to lead the
market trend and become lead firm of the industry.
(iv) Medium and small size panel
Before 2008, no matter technology or shipment, panel manufacturer of Japan always the leader of
medium and small size panel industry; after 2009, Taiwan manufacturer shipment started to exceed
Japan and Korea, became the leader of medium and small size panel industry instead. As the competition
is more and more intense, panel manufacturer of medium and small size started to produce by higher
generation factory. From 2011, even some panel manufacturer started to mass produce mobile phone
panel by higher than G6 factory. However, industry competition of medium and small panel not only at
price competition, but also at market demands of higher resolution, higher definition panel, and full
screen and customize surface design. It drives medium and small panel manufacturer to be more
enhancement in technical part. Since 2013, not only wide viewing angle technology is sharp competitive
edge for manufacturers, each manufacturer release high resolution product continually. By a-si realize
high cost-effective in over 5-inch screen of FHD resolution and by LTPS provide WQHD resolution in
over 5.5-inch screen. In 2017, except keep improving resolution in 4-inch to 6-inch screen and also
compete in lighter, thinner, narrow frames and lower energy consumption products.
The company is advancing product competitiveness with embedded and integrated touch control
technology along with enhanced product design flexibility and Time-to-Market strength to provide
customers with services integrating high performance and ultra-thin and touch control LCD modules.
This is followed by R&D efforts in a series of next generation panel technologies including profile
cutting, wearable devices, organic light emitting displays (OLED) and flexible panels aiming at products
with high added value in addition to price competition. The goal is to distantiate itself from competitors
with advanced technology and to staying sustainable in the industry.
In 2019, for the year of rapid penetration of mobile phone comprehensive screens, Innolux also
quickly adjusted production lines and specifications, and developed and produced competitive
full-screen products to attack the market, and invested in new applications such as profile cutting and
wearable devices. Investing in the development of next-generation panel technologies such as
Mini-LEDs and flexible panels, and developing more niche high value-added products in addition to
price competition, in order to use technology to expand the gap with competitors and continue to operate
in the industry
4. Market competition situation
In competition of the industry, in order of countries input in TFT-LCD, countries are China ,South Korea,
Taiwan, and Japan. Korea has large-scale investment in two big corporate groups Samsung and LG. Due to
domestic support on their own brand, they lead in production volume and production value recent years.
Taiwan’s manufacturers based on complete supply chain integration and high production efficiency, the market
share is hot pursuit subsequently after Korea manufacturer. The main manufacturers are Innolux and AU
Optronics, etc. Japan manufacturers’ market share decrease gradually due to production cost and decreased in
new factory investment plan, transfer to high end mobile display and ultra-big TV market. When we look at
China, due to huge domestic demand, it attracts government’s support and factory’s input. Recently BOE,
ChinaStar and CLP group step into generation G8 and higher production and starting the competition. The
growing China, due to the government's high-tech policy, the support of the domestic demand market, and the
high subsidies from the central and local governments, have prompted mainland panel makers to invest heavily.
In recent years, BOE, ChinaStar and China Light and Power Group (CEC) ) The government's resources have
entered the ranks of G8.5, G8.6 and G10.5, and the competition in the panel industry has become more and
more intense.
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5.1.3 Research and Development
1. Technical Level and Research Development
We keep helping clients to intensify product competitiveness, fit market demand, and be friendly to the
environment as our main objective of display technique development. About the development, it mainly
includes environment protection materials, electronic saving and low power consumption, high pixel, high
chroma, thin, narrow frame, high dynamic displays, touch, wide viewing angle, curve and all-around system
services integration. We already have obtained remarkable achievements. These results of technical
development are applying to TV, desktop monitor, Notebook, Tablet, Cell Phone, Medical, Industrial Display
and automobile. Moreover, the integrated development on the touch components and panels of more advanced
techniques and portable and wearable product applications are the key points of our future product design and
development.
2. Facts of research & development:
With incessant efforts, the Company has insistently invested significant human resources, resources and
funds in research & development to continually upgrade the quality of products, technology & know-how of
new manufacturing process and application for new products. The Company would like to depict performance
in research & development through three aspects below:
(1) In the aspect of upgrade of product quality:
Including the technology & know-how for broad visual angle, high solution, low energy consumption,
thin thickness, high hue, dyamic image, high dynamic range, narrow frames, new touch panel and soft
display manufacture process
(2) New material technical process:
Including Oxide, In-Cell Touch Technique, Copper Manufacture Procedure, COA(Color Filter on
Array), Photo-Alignment, Horizontal Electronic Field High Transparency and High Contract Positive
Magnetic Susceptibility, Reducing Mask and Automotive wide temperature range display material
technique, material development and production process for curved touch control display.
(3) In the aspect of new product application:
The up-to-date technology & know-how developed by the Company have been put into volume
production one after another and applied onto a good number of products, including notably general cell
phones, cameras, MPD, electronic paper, tablets, notebooks, desk monitors, AIO, television, medical
treatment services, vehicular carriage, aerospace, smart home and touch panel and the like, in the
dimensions ranging from 1.36” to 100” TFT-LCD products. In the days and years ahead, we shall
continually invest in the research & development oriented human resources and fund to develop more and
more TFT-LCD display and monitor products of added dimensions, application ranges, thinner, more
environmental protection friendly and high efficiency to live up to the future trends in application and
satisfy customers in varied ranges.
3. The consolidated research & development costs invested in the latest year as of the Annual Report date.
Unit: NT$ thousand
Item 2018 March 31,2019
R & D expense 12,135,478 3,014,309
Net Revenue 279,376,115 59,924,024
Percentage of revenue 4.34% 5.03%
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4. Successful development technical or product
The company’s develop technical and products for each direction are listed below.
(1) TV:
A. The first company of the world develop 23.6-inch/40-inch/50-inch/58-inch the best cutting efficiency size in G5.5/G6/G7.5/G8.5 generation factory, we creating market differentiation and improve add-value of product.
B. Introduce 4Kx2K ultra high definition and high resolution TV display, the product line is complete, product size from 40-inch to 100-inch, providing higher quality TV image and better product competitiveness, lead 4K TV industry going to fast development and trend.
C. Introduce new size 40-inch/50-inch/58-inch/65-inch/75-inch/85-inch/100-inch TV display, overall arrangement in big size application, creating more differentiation product than competitors.
D. Develop high chroma technique, increasing to over 130% sRGB colour range and without increase energy consumption, not only increase the performance of display, but also make customers feeling more about the value-added of big size TV product. It has successfully developed a high-efficiency BT.2020 90% technology without Cd / Pb and other heavy metal materials, which can reduce the image distortion, caused by the adjustment of color and faithfully present all real-world images.
E. Develop new MEMC improvement technique, apparent improving dynamic quality and integrate IC, increase dynamic picture quality and integrated technique.
F. Develop and mass produce a series of over 50-inch thin TV model (<9mm), providing artistic and fashion appearance model to clients.
G. Develop 0.5mm thin glass and apply to TV display, reduce glass usage and cost. Whole series big size TV import and mass production successfully.
H. Develop Narrow border modul(<5MM) successfully.
I. Develop Inno Module model, combine narrow frames and front and back appearance, provide clients high competitive module and reduce assembled time and cost. In 2017, our production lines for all sorts of panels were complete and comprehensive and were in an excellent position to enable customers to enjoy the excitements of one-stop shopping.
J. Mass producer of 65-inch/75-inch large 8K4K (7680X4320) panels with the highest resolution in the world
(2) Monitors:
A. Release whole series wide viewing angle VA/AAS desktop monitor panel and with high brightness, high contrast, high saturation, not only increase product quality and value, but also provide client the best choice of high end monitor LCD panel.
B. Develop several model of globally new Inno-touch monitor and AIO personal computer, by integrate touch as multi-function use can reduce module thickness to become light, increase touch functional can close to end customers’ need.
C. Release 28-inch and 32-inch 4K2K monitor panel, panel monitor can have higher resolution visual enjoyment, for the market of gaming, provide highly response time,not only increase product value, but also provide client the best choice of high end monitor LCD panel.
D. Launched a 21.5-inch adjustable anti-spy display panel, designed a one-button switch to change the viewing angle, and quickly switch between general mode and anti-peep mode, which is suitable for high confidentiality needs of business people, government agencies, etc. to improve information security protection.
(3) Notebook:
A. Release whole series light-weight notebook panel, the thickness of whole series of notebook (11.6-inch/12.5-inch/13.3-inch/14-inch/15.6-inch/17.3-inch) is only 2.0mm, show light feature and provide the solution of notebook carry.
B. Interface technical of Notebook panel is totally from LVDS to eDP. It can connect to high resolution trend, also can save space to help thinner design of the system and lower the energy consumption.
C. Release whole series FHD AAS wide viewing angle notebook panel and goes with Low
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Power-consumption & Wide Color Gamut to increase color range but not increase energy consumption to increase visual performance.
D. Develop TOD technical on notebook panel, through touch integration, notebook not only can be thinner but also can reduce produce process of the module and simplify the complexity of new product.
E. Launched a full range of narrow-bezel notebook panels to achieve a high-screen share of the overall design trend, meet the narrow-side in the standard product specifications of VESA, but also continue to publish the ultimate product design, micro-frame design to expand the horizon.
F. Developed a 15.6-inch high-speed responsive low-blue, colorless, biased, gaming panel, using Innolux's LED chip design patented to effectively reduce 70% of the blue light. The product was certified by TUV Low German Blu-Ray to relieve eye fatigue and allow long-term use of electricity. Improving players have more comfortable enjoyment.
(4) Small/Medium:
A. Develop a-Si high resolution smart phone panel, resolution can reach above 400ppi, in high yield and stable processes. The product successfully built advantage.
B. Develop LTPS QHD panel of frames narrow than 0.45mm and a-Si FHD 0.6mm, reduce the size of the panel module to fit the narrow frames demand from smart phone and tablet user, increase the design freedom of portable device display appearance.
C. Adopt less power hungry design to lower power consumption by the panel drive chip. Optimize panel production process and material with high color saturation, high transmittance color photo-resistor to ramp up panel efficiency and product competitiveness with balanced low power consumption and production costs.
D. Leading the industry by launching a series of Touch On Display (TOD) integrated touch control devices. Coupled with modular and compact design and good optical performance, this company is providing customers with comprehensive and full range touch control integration services with vertically integrated LCD panels and touch control production.
E. Apply the newly developed Touch In Display (TID) integrated touch control technology in a-Si HD and LTPS FHD panel for mobile phones and stay ahead in a-Si WXGA and WUXGA for tablets. This company is integrating touch control drives and display chips with Touch & Display Driver Integration (TDDI) structure to pioneer the compact and high performance niche product markets.
F. Deep Sensing Technology using a special electrode design to simulate 3D multi-finger-touch tactile sensation, combined with dual advantages of capacitive touch and resistance, highly identification surpasses 2D touch.
G. Successfully developed a full-screen, borderless, 6-inch wide color touch mobile panel. Through miniaturization of the drive lines, precise control of the plastic frame and cutting accuracy and design appearance of the glass achieves visual effects without borders, and the module surface is actively miniaturized, ultra-thin and lightweight. Increased specification advantage is extremely high.
(5) Touch Panel:
The company already develops several touch technique solutions (including InnoTouch, TOD, TID,
Hybrid, Total Solution):
A. New type Inno-touch technique is integrated touch panel and induction glass technology. The
advantage is able to simplified production process and provides economic touch panel option. The
technology can goes with multiple size panels; meets the new development trend of affordable
electronic product toward to touch function.
B. Touch On Display (TOD): Through TOD technique can make portable device have light performance
effectively, also with well optical performance and increase portable electronics competitiveness. Not
only medium and small size smart phone and tablet apply and mass production, but also apply to
bigger size notebook products.
C. Touch In Display (TID) & Hybrid : Not only have TOD technical advantage, the company develop
TID Hybrid technical to make it even more lighter, and high touch sensibility technique apply to
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portable product can improve the users’ experience about portable electronic product.
D. Provide more completeness Touch Total Solution: Through highly vertical integration of streamlined
production, we may provide client complete and all-round touch integration service. Not only shorten
the process and time of production and delivery, but also help client to enter the market, make better
arrangement and configuration at capacity and resource of panel and touch. Equip with integrated
InnoTouch, TOD, TID Hybrid product and process technical to serve customers.
(6) Special Application
Release 21.3-inch to 30-inch (AAS; 5/6/10/14 MegaPixel) medical LCD display, with high resolution,
high brightness, high contrast, adopt 10 bits drive new technology and high efficiency LED BL, to make
the image more delicate and medical personnel can make more precise judgment. Big size public display
75-inch/ 85-inch present natural high color gamut and give consideration to both indoor and outdoor
environment,85-inch UHD also support portrait. Also first release horizon LCD display (bar type) presents
multiple sizes can fit for multiple environments.
In 2018, a 100-inch high-luminosity quantum dot public display module was introduced to replace the
traditional four-panel 55-inch panel mosaic to present the visual effects of a large-scale video wall, which
is widely used in large-size billboards.
5.1.4 Long- and Short-Term Business Development Plans
a) Short-Term
In the short-run, we shall devote ourselves profoundly toward televisions, notebooks, tablet computers, cell
phones, monitors oriented to vehicles, medical treatment services and industries. Continually we shall help
customers pep up competitive edge through our pround monitor technology & know-how, live up to the
market and environment-friendly demands. About the development, it mainly includes environment protection
materials, electronic saving and low power consumption, high pixel, high chroma, thin, narrow frame, high
dynamic displays, touch, wide viewing angle, and all-around system services integration. We already have
obtained remarkable achievements. Meanwhile, we shall spare no effort to profoundly team up with customers
in strategic alliance to solidify our firm foundation in the panel supply chains also create the happy win-win
aspects through the teamwork.
b) Long-Term
Long-term development: Other than the efforts to do research & development for up-to-date monitors,
strengthen manufacturing process to optimize the productivity. For the emerging of new model monitor
know-how, we shall invest appropriate resources, cultivate autonomous development capability, like the
embedded touch know-how, super narrow frames, super thin design, super high solution, curved plate design,
soft disply and niche oriented application products and the like. Through such efforts, we hope to set up the
optimal strategic deployment in the brand new monitor application regions. Meanwhile, we shall further stress
value chian integration and development of products high added values, to make our products more
competitive in both pricing and specifications to provide customers with added solutions and services and to
provide terminal end consumers with added excitements in visual enjoyment.
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5.2 Market and Sales Overview
5.2.1 Market Analysis
1. Main products selling area
Unit；NT$thousand；%
Area Amount of Sales 2018 % Domestic sales 75,494,192 27.06%
Foreign sales
China 48,206,617 16.26% HongKong 79,813,964 28.57%
Europe 11,444,728 4.10% America 10,775,116 3.86%
Other Area 53,541,498 19.15% Total amount of F/S 203,781,923 72.94%
Total 279,376,115 100.00%
2. Market Share
According to the statistic of IHS research report, until 2018, the market of the company’s big size panel
shipment is13.6%, which is the second-largest supplier of the world LCD panel industry. Based on application
product shipment quantity distinction, global market share of LCD display panel is 18.2%, maintains world’s
third ranking performance; global market share of LCD TV panel is 15.3%, world’s third ranking performance;
global market share of notebook (not including tablet) is 21.7% which is the world’s third ranking, global
market share of tablet is 12% which is the world’s third ranking, global market share of car panel is 11% which
is the world’s fifth ranking. The market share of smart phone is 4%.Overall, under the tough economic
environment, strong market competition; the company still maintains nice performance in the market .
3. The supply and demand situation and growth of the future market
Due to the outstanding product feature and the continuous improvement of cost and quality, TFT-LCD
already become the mainstream of flat display and the sales will keep growth as the improvement of
application level and penetration. According to the estimation of IHS, the global shipment of big size (over
9-inch) TFT-LCD panel will be 782 million chips in 2019.
If analyzing market size of several main application level, about LCD TV part, as new size development and
new technical input and plus new capacity growth stable, global shipment of LCD TV will be 221 million in
2018 and average size increase an1.2- inch each year and might reacg 224 million in 2019. About LCD monitor,
the shipment is 138 million and will slightly decline in 2019, but as the demand increased of big size and high
resolution product, the penetration rate of high value product will increase gradually. About mobile PC
(including notebook and tablet), due to the tablet is not popular after 2015, the shipment is 317 million in 2018
and the forecast will decline to 303 million in 2019.
Data Source: iHS
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According to the estimation from IHS, global shipment of medium and small size panel will be 295 million
in 2018, decrease 2.5% compared with 2017. The shipment will be 304 million in 2019 and annual increased
3%. According to the estimation from IHS Markit,Cell phone shipment reach 152 million in 2018 and the
forecast will increase to 151 million in 2019. In recent years, smart phones have shown a slowdown in demand,
mainly due to the high price of high-end mobile phones and the lack of trendy technology to attract consumers
to change their opportunities, but low-end smart phones still maintain sales in emerging markets. It is expected
that in the beginning of 108 years, with the gradual popularization of 5G new generation communication
network equipment, it will prompt the smart phone to set off a wave of exchanges. As well-developed of
Internet and smart phone rapid growth in emerging countries market, it will keep driving the demand of cell
phone’s panel; the overall cell phone panel and internet products shipment is going to grow continually and will
be the main growth power of middle and small size panel.
Data Source: IHS Markit
The goable economic anabiosised gradually from depression, competition amidst the industries, expansion
and competition by newly joining competitors amidst products and technology & know-how that have been
developed and changed in each and every passing day, the TFT-LCD products would be subject to high level
circulation uncertainty. In the face of the mounting cutthroat competition, we shall launch overall upgrade of all
substances to deal with all sorts of challenges.
We shall boost marketing by means of improved operating efficiency, refined management, product
development, customer services, technical research & development and such efforts. In turn, we will be able
to intensify gross profit in sales, cost control to further intensify competitive edge.
Continued investment in research & development to suffice technical talents, improve product design and
application of materials. We shall proceed with research & development of advanced and improved
manufacturing process and new generation monitor technology & know-how so as to create added lead in
know-how of products and production costs.
With wholehearted efforts, we shall deploy integrated product lines for new products. The products
manufactured by our Company cover televisions, computers, mobile devices, vehicles- and medical
treatment oriented products. We provide varied modes to sell panels, whole machines, touch integration and
the like. Through such efforts, we virtually bring down the potential risks of fluctuation with single
products.
We intensify integration of supply chains to stay in close teamwork with suppliers to deepen deployment of
strategic customers, strengthen responsiveness toward supply and demand fluctuation and, meanwhile, boost
approval-level from customers.
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4. Niches in competition.
(1) Business model:
Since we launched the three-in-one merger, we have continually demonstrated the integrated concerted
performance (synergy). Through the business policies with “leadership with know-how and quality,
boosting of production efficiency and quality”, we have enhanced the operating efficiency by leaps and
bounds and gradually open the new aspects amidst the cutthroat competition.
(2) Vertical and horizontal integration:
In an attempt to strengthen integration of our products, boost cost competitiveness, demonstrate
maximum possible benefit in supply chain management, other than production of TFT-LCD panel modules,
we dominate a significant ratio of design and manufacture of parts & components, including LED panels,
color filter, light guide plate, Backlight Module, PCBA and such structure pieces which could be
manufactured inside our home factory or overseas subsidiaries.Meanwhile delopement automatic product
line to decrease the human resource and upgrade the product design. Thanks to such high leve vertical
integration, we have taken advantage in lowering costs, prompt response to assure top level quality.
(3) Portfolios of our products:
The principal products of the Company include notably the TFT-LCD panel modules primarily including:
Large size like LED TV, desktop monitor and laptop plate; mid-small size like mobile phone, tablet PC,
automotive display. Various products with advanced wide viewing angle and high resolution manufacturing
techology. We satisfied every level of your needs.
(4) Our advantages in costs:
Through the hands-on experiences accumulated by TFT-LCD manufacturers at home and abroad, we
could conserve quite a few time which is normally indispensable to try & err. In procurement of machinery
& equipment, the hands-on experiences accumulated by the suppliers in installation could help us conserve
partially the costs. Further coupled with the aforementioned advantages in the unique operation mode and
vertical integration, we well outperform horizontal trades in terms of costs required for production.
(5) Concerted performance (synergy) in marketing:
The company has diversified products and good marketing channels, which can be quickly integrated
with world-class customers. For world-class brand manufacturers, the company also provides rapid design,
timely delivery, machine manufacturing and global services. Integrated services give customers the
convenience of a one-time purchase.
(6) Customize
The company provides customers customized products with good R&D and design capabilities, modular
manufacturing, excellent supply chain management, vertical integration management and manufacturing
cost advantages.
Looking back on 2018, the company's product line of various sizes of panels is more complete, and it can
also provide customers with services from panel manufacturing to complete machine OEM. Whether in
terms of capacity scale, design capability, quality yield, supply operation management and financial stability,
there is a further improvement. In addition, the Company continued to strengthen its in-depth cooperation
with customers in product design and supply chain management to continuously improve customer
satisfaction and thereby increase the market share of the company's panel products. In 2018, the company's
shipments are strong, and the business policy is clearly seen to achieve results. In the future, the products
will continue to be optimized, the quality will be improved, and customers will be more satisfied.
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5. Advantage and disadvantage of long term development and reaction strategy
(1) Advantage:
A. Keep developing new product applications
The rapid development of wireless communication technology and cloud computing has enabled the
interoperability and integration of content in the fields of TV, personal computer, tablet computer, mobile
phone and smart home. The new life style of "5G+8K" has developed into various manufacturers.
Strategic focus. Cloud streaming services surround people's lives, and flat-panel displays as information
interfaces are even more important. The more refined the content of the information, the higher the
requirements of consumer size, resolution, viewing angle and lightweight design, and the unit value of
TFT-LCD products, bringing new applications and demand growth. The mainstream product of the
world's major TV brand factories is "Smart TV", which shows the signal that cloud applications will
begin to enter the TV field quickly. The 8K4K ultra-high resolution LCD TV launched in the second half
of 2018 provides consumers with a higher level of visual enjoyment. With the construction and
popularization of 5G equipment, the future 8K4K ultra-high resolution will be an essential specification
in mid-to-high-end products.
Regarding to the LCD monitors,because the market is more matured, the main product appeals in
recent years are elements such as e-sports, high image quality and narrow borders, prompting consumers
to upgrade their existing product lines. In terms of notebook computers, the new market drivers come
from new operating system upgrades, energy saving, e-sports, narrow borders and Always Connect PC,
which stimulate consumer demand, while tablet PCs are aimed at educating the market to improve
Shipment of size panels. In terms of small and medium-sized panels, the popularity and functionality of
smart phones have become more diversified, making smart phones penetrate high-end products into
general consumer products, and as prices have fallen, they have become the preferred choice for mobile
devices in emerging regions. In the future, the innovation of 5G wireless communication and the
popularization of the portable screen will enable the future shipment of smart phones to continue to be
bullish; due to the continuous large-scale of smart phone panels, and for wide viewing angle, high
resolution, light weight and energy saving , color performance and other requirements are relatively high,
so its profit is also relatively good, in order to boost the revenue of mobile phone panel shipments
B. Stable customer base
Our major customers are global consumer electronics companies, which have important stands in TV,
PC and mobile communication industry globally. Moreover, because the trends on integration of
consumer electronics and personal computers are obvious, the market will still be dominated by the
international big companies, and develops with the direction of “the big ones get bigger”. Therefore, in
the company’s perspective, we not only can grow our revenue rapidly, the market share of us is also
expected to keep increasing with our major customer basis.
Under the synthesized effects of the three factors: rise of production line completion, stronger
customer base, keep developing new customers in newly developed market on the current customer
basis.
C. Globalized strategy
Innolux has been recognized as the best LCD panel supplier in all aspects, and had been setting up
global strategy aggressively. Now we have production base of post-production LCD panel module and
monitor in Shenzhen，Ningbo, Foshan, Nanjing in China, and we also have delivery hubs in major cities
in Asia, Europe, and America, so that we can achieve “deliver just in time” object and strengthen the
long term cooperative relationship with customers.
D. Vertical integration in depth
Innolux has been working in TFT-LCD industry for a long time, and we have the professional
knowledge and managing capability in LCD panel, module, mechanism, and optical components’ R&D,
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production, and selling. We are more cost-effective and have better capability to service the customers
timely than unitary TFT-LCD factory.
(2) Disadvantage and Reaction Strategy
A. The balance of supply and demand is hard to keep due to the intense competition in this industry.
LCD panel industry’s economy cycle is more obvious than other industry and the balance of supply
and demand is more difficult to maintain because the high capital intensity and long establishment time.
Other competitors in China and Korea are planning to build up next generation panel factories and the
rising production capability in China since 2012 also brought competition to the industry. Innolux has
3.5th generation, 4th generation, 4.5th generation, 5th generation, 6th generation, 7.5th generation, 8.5th
generation and 8.6th generation production lines, which can produce all sizes of LCD panels and touch
panels. The production capability is the fourth largest panel manufacturer. We try to produce the best
combination of products and adjust the production allocation according to market supply-demand
condition, so that we can optimize the use our production capacity.
B. The complicated technology and patent portfolio
The design and production of TFT-LCD requires highly professional technology. All companies that in
this industry are aggressively making their portfolio in technology and patent applications. To avoid the
violation of patent rights in the production process, Innolux has been developing our own patents and
technology since the beginning of this company. We recruited domestic and international talents to join
the research team, and evaluate the feasibility of getting the usage rights of some key technology from
foreign companies at the same time. Regarding to intellectual poverty, we not only aggressively conduct
R&D and the patent applications, we also keep strong legal support team to protect our intellectual
poverty.
C. The global economy influences demand and supply
International Monetary Fund estimates that the global economy will be slow and highly uncertain. The
developed countries' economies will be flat or declining, affected by the Sino-US trade war, the Brexit,
the South American currency oscillation, and the sluggish domestic demand. Consumers are expecting a
conservative outlook but are still strong in emerging markets where world economic growth is increasing.
Although the geopolitical tensions have not improved, the need to develop emerging markets has
become the target of consumer electronics brands. Regional or global economic fluctuations will have a
major impact on consumer demand, which in turn will affect the supply of liquid crystal display products.
The Company continues to optimize its products and technologies to provide products with competitive
cost and specifications, and to cooperate with upstream and downstream partners in the supply chain to
promote the market to reduce the adverse situation of external demand fluctuations.
5.2.2 Production Procedures of Main Products
1. Major Products and Their Main Uses
(1) TFT-LCD
TFT-LCD products are display application for digital information delivery, its wide application including
information display equipment for business and industry, computer, telecom related and consumer
electronics display equipment, etc. As the development of integrated digital age 3C market, the main area of
TFT-LCD product are:
Information Technology, IT: such as Desktop monitor and Notebooks, etc.
LCD TV
Communications and Consumer Electronics: Mobile phone, digital camera, digital video, digital photo
frame, automotive display, portable DVD player, portable game console, tablet , smart home and other
high mobility and portable electronic products application.
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Special application: medical display, Avionics display, automotive display and other touch panel
application.
(2) Touch Panel business
Small size (below 7 inch) products mainly apply to smart phone, multimedia player, GPS and digital
camera, etc.
Medium size (7 inch to 19 inch) products mainly apply to tablet, eBook, Ultrabook, notebook, etc.
Large size (above 20 inch) products mainly apply to All-in-one computer (AIO), Public Information
Display, etc.
2. Major Products and Their Production Processes
(1) Three Steps in the TFT-LCD Production Process:
In the Array or TFT Process mentioned in the preceding paragraph, injection and washing for glass
baseplates→gate metallic layer sputtered coating→gatemetallic layer lithography→Semiconductor layer
continued filming→Semiconductor lithography→source/drain film-forming→source/ drain medal
sputtered coating→source/drain lithography→Protection film manufacturing process→Protection film
lithography→Transparent conducting layer sputtered coating transparent conducting layer
lithography→thin film transistor electrical analysis→thin film transistor completion.
Cell or LCD Process: The Cell process fits the Array substrate to a color-filter substrate; liquid crystal is
then inserted between the two substrate layers.
Module Assembly or LCM Process: taking the panel from the Cell process and bonding the assembling
backlights, IC and frame and other components to make the Open cell, module and system and other
types based on clients’ demand.
(2) Touch Panel business
Sensor Process: Use Semiconductor Litho process to put sensor on the glass.
Lamination & FPC Bonding Process:
Touch panel modules and LCD/LCM assembling process (TP & LCD/LCM Direct Bonding & Advanced
Direct Bonding): A.TP & LCM: taking LCM as the baseplates to be attached to the touch panel modules
for overall combination. B.TP & LCD: LCD(Open-Cell) as the baseplates to be attached to the touch
panel modules for overall combination before being assembled with Back Light modules(BLM).
5.2.3 Supply Status of Main Materials
Major Raw Materials Source of Supply Supply Situation
Driver IC Supplier U, Supplier Z, Supplier O Good
Glass Supplier P, Supplier S, Supplier X, Supplier Q Good
Polarizer Supplier W, Supplier T, Supplier R, Supplier V Good
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5.2.4 Major Suppliers and Clients
A. Major Clients Information for the Last Two Calendar Years
Unit：NT Thousand$
Item 2017 2018
Company Name
Amount Percent Relation
with IssuerCompany
Name Amount Percent
Relation with Issuer
1 Customer A 50,784,810 15.36 None Customer A 28,944,033 10.36 None2 Others 278,599,591 84.64 None Others 250,432,082 89.64 None
Net Total Supplies
329,174,401 100.00 － Net Total Supplies
279,376,115 100.00 －
B. Major Suppliers Information for the Last Two Calendar Years
Unit：NT Thousand$
Item 2017 2018
Company Name
Amount Percent Relation
with IssuerCompany
Name Amount Percent
Relation with Issuer
1 Others 177,515,840 100.00 None Others 166,638,578 100.00 None Net Sales 177,515,840 100.00 － Net Sales 166,638,578 100.00 －
5.2.5 Production in the Last Two Years
Unit: NT Thousand$ Year
Output
Major Products
2017 2018
Capacity Quantity Amount Capacity Quantity Amount
TFT-LCD 370,000 344,026 256,000,000 405,000 368,119 252,000,000
Total 370,000 344,026 256,000,000 405,000 368,119 252,000,000
5.2.6 Shipments and Sales over the Last Two Years
Unit：NT Thousand$ Year
Shipments & Sales
Major Product
2017 2018 Local Export Local Export
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
TFT-LCD 108,791 115,922,366 278,172 213,252,035 94,947 75,594,192 303,549 203,781,923
Total 108,791 115,922,366 278,172 213,252,035 94,947 75,594,192 303,549 203,781,923
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5.3 Human Resources
Year 2017 2018 As of 4/30/2019
Number of Employees
Manager 2,662 2,702 2,733
IDL 12,690 12,902 12,883
DL 45,047 43,950 40,812
Total 60,339 59,554 56,428
Average Age 31.34 31.94 32.35
Average Years of Service 5.04 5.35 5.7
Education
Ph. D. 0.13% 0.14% 0.14%
Masters 9.12% 9.58% 10.05%
Bachelor’s Degree 70.75% 68.20% 67.27%
Senior High School 15.40% 15.55% 15.37%
Below Senior High School 4.60% 6.54% 6.82%
Total 100% 100% 100%
5.4 Environmental Protection Expenditures
The company has disclosed the reactions and the total lost (including compensations) and the possible
expenses (including the costs of reactions haven’t been taken, estimated amounts of punishments and
compensations. We also explain the reason if there is any cost we couldn’t estimate.) of environmental pollutions：
None
5.5 Labor Relations
5.5.1 List any employee benefit plans, continuing education, training, retirement systems, and the status of their
implementation, and the status of labor-management agreements and measures for preserving employees'
rights and interests.
1. Employee welfare and the situation of implementation
(1) Besides the basic monthly salary, we also provide Luna Festival, dragon boat festival and New Year bonus,
and proper performance bonus according to the company operation revenue.
(2) Our Employees have the labor insurance, citizen health insurance, and group insurance from the very first
day of employment.
(3) We have employee restaurants in all factories, and provide meal substitutes according to the company
rules.
(4) With the concepts of energy, comfortable life, and happiness, we built the employee’s center, which
provides leisure and exercise functions to release our employees’ mental and physical stress.
(5) We set up the employee welfare committee to be responsible for welfare planning and execution,
including club activities, exercise periods, earth environmental day, family day, coherence activities,
public lecture, special discounts and festival substitutes, wedding or other special events, and
emergencies.
(6) We provide health promotion and a mental consulting plan to take care of employees’ mental and physical
health.
(7) Strengthening the concepts of sustainable management: we hire mentally or physically ill employees and
insist on environmental protection and being responsible for social welfare.
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(8) We integrate and continuously improve the system, process and plan of talents development.
(9) We provide internal and external trainings, such as professional studies, headquarter training, oversea
training to develop employees’ professional knowledge and skills.
(10) Comprehensive certification development framework, based on the professional positions and
management functions certification to promote quality, green products, and regulatory courses vertically;
also, to promote departmental training horizontally in order to achieve the company’s objectives and to
provide the diversified education and training network needed by the organization.
(11) With the development of technology as the root and smart manufacturing as the foundation, we will
promote Innolux 4.0, build on the concept of industrial Internet, and enhance and focus on the intelligent
thinking of integrated personnel.
2. Retirement structure and the situation of implement
(1) Retirement structure and the situation of implement.
(2) We hire actuary to evaluate our employees’ retirement preparation fund and issue the evaluation report
according to the IAS19R financial principles.
(3) We transfer 2%~15% monthly salary to retirement preparation every month.
(4) We will conduct the new retirement structure according to the laws from Jul 1, 2005.
3. Labor and management settlement
The rights and obligations of our labor and management follow the rules of our company operation. The
relations between labor and management are good without and dispute settlements.
In order to maintain mutual communications and interactions, we have communicating meetings such as
labor-management meeting, the Employee welfare union meeting and mobilization meetings etc., issuing INX
digital news, establishing employee communication mailbox to listen and solve employees’ opinions and
thoughts.
4. Working environment and individual safety protection
(1) Safety and Health organization and operation
The company has an environmental safety office to be in charge of all safety and health risks in
company operation management, and to integrate the safety and health departments in all factories. The
environmental safety office reports to the factory manager, related departments and the soviet in “factory
fields’ safety and environmental protection committee” every season.In 2018, there are 717 participants at
39% attend the meeting in Taiwan and 143 participants at 28% in Mainland China.
Analysis and Statistics of Occupational Hazards
The company enhances the efficiency of environmental safety and hygiene related information
conveyed within the organization through its electronic system that manages the environmental safety and
hygiene management system and database. Through the electronic system, Hazard Identification and Risk
Assessment System, Operation Safety Observation System, and Work Safety Analysis are linked. In
addition, the “Horizontal System” is simultaneously adopted to horizontally launch corrective measures for
preventing exceptional events to overseas plants in order to prevent recurrences of anomalies. Starting in
2016, the action-based and intelligent environmental safety and hygiene management system underwent
development, and management indicators for plant environmental safety and hygiene management and risk
management were established in order to enhance the ability to manage environmental safety and hygiene
management and risk management operation status, as well as grasping the trends of change.
Through the incident management system the company analyzes the statistics and causes of incidents
including traffic accidents and near miss. With reports and surveys generated, the system would announce
improvements in hazard prevention, as well as accident reviews and improvements. It also ensures parallel
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deployment across plants to prevent re-occurrence of incidents. Over 2018 the Disabling Frequency Rate
(FR) and Severity Rate (SR) both decreased 4% and 17%, respectively compared to 2017 .
Through the execution of management plans, equipment safety protection in the respective plants has
been improved, while process automation is promoted in order to reduce operational hazards and human
hazards incurred by staff and equipment interfaces. Additionally, engineering risk assessment, hazard
prevention, and other improvement projects are promoted. At the same time, improvement proposal and
horizontal launch items will be actively promoted to enhance the plant performance rating item weights to
encourage employees to participate.
The Company will continuing maintain and improvement the goal to decrease of Lost Workday Case
and Restrictive Workday Case.
Business Continuity Management
The company has been providing ESH management and training to vendors. A structure is in place for
hazard identification, risk assessment and emergency response for high-risk operations. Irregular meetings
are conducted with contractors for two-way communication and coordination and doing PDCA if the
accident happened.
The Contractor accident rate pointed at 0.47 and (IR) at 0.09 slightly increase in 2018 compared with
0.31 and 0.06 in 2017, but work-related fatalities rate pointed at 0, (LDR) at 2 in 2018 which is lower than
2017.
ESH Training
Employees are the most valuable asset. Training is an investment that never depreciates. ESH training is
the basis for the promotion and practical implementation of our ESH management. We make long-term
investments in human and material resources according to the hazard profile of each plant.
We plan, design and deliver training to the staff regarding ESH knowledge and skills, such as handling
chemicals, dangerous machinery and equipment, injury prevention, machinery safety, fire safety
management, and plant safety management. We also monitor and control the training quality and
effectiveness. In 2018, 4,040 ESH training sessions were held, for a total of 271,695 participants. On
average, employees joined over 5 training sessions per person per year.
(2) Loss Prevention Management Projects
Overall risk checks in each plant were completed in 2014. The checking results were classified and
continued to be listed for the annual KPI improvement execution. In order to strengthen the reliability of
the security protection systems of importation production facilities and the plants in the Greater China
(including plants in Taiwan and China) the Subject Matter Audit, SMA was launched during 2015~2016.
In 2017~2018, the China Plant Loss Prevention Risk and Security Management Audit and various disaster
mitigation strengthening projects were executed to implement the risk management system and strengthen
corporate risk constitution.
From 2014 to 2017, we completed the overall risk investigation of all factories, the subject-type audit of
the reliability of production equipment and safety facilities, the risk prevention and security management
audit, and various damage prevention and reduction projects. In the spirit of innovation, sustainable
development and sustainable operation of the company, in 2018, it will carry out cross-checks on new
plant expansion, new process changes, fire and natural disaster risks, promote fire prevention and natural
disaster reduction projects, and continuously increase the risk management standards for damage
prevention. Strengthen comprehensive risk management to enhance corporate risk appetite and resilience.
Prevention of manmade disasters
Due to musculoskeletal disorders percentage increase this few years, prevention of company as below:
A. Identification and analysis of the risk of job-specific processes of a systematic, resource and continuous
improvement mode execution.
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B. Occupational Safety and Health Act will trigger repetitive operations, such as pre-musculoskeletal
diseases Anti concept implanted "hazard identification and risk assessment norms" to implement career
In order to effectively prevent and control concepts, health management must be through hazard
awareness, assessment and control improvement.
Disease prevention and management of workload
The company aims to effectively prevent abnormal workloads from causing diseases and ensure the
safety and health of employees as follow:
A. Ensure that employees’ working hours, rest, and vacation conditions are in line with local labor
regulations.
B.The health management system was implemented, including annual regular health checkups, risk case
identification and management, anomaly tracking management, mental health management, matching
work, fitness adjustment, etc.
C.Active promotion of cardiovascular disease and stress management-related preventive education and
dissemination on the rules of working hours, knowledge of preventing workplace fatigue related
diseases, and health management strategies to employees through various ways.
Management of Female Health Protection
In order to ensure the well-being of female employees and protect their health, Innolux Corporation,
taking into consideration the impact of gender differences and pregnancy on health risks, has implemented
maternal health protection activities and management, including:
A. In conjunction with the local labor laws, parental leave allowance is implemented, miscarriage
prevention leave and family care leave rights are reinforced, related health protection measures are
established, internal standard operating procedures are set up. For pregnant female employees, health
risk assessments are implemented, hazard control and risk communication are carried out, and work
adjustments are made as needed.
B. Health guidance during pregnancy and breastfeeding is provided to pregnant employees. Rest areas and
breastfeeding rooms are provided to create a friendly working environment for female employees,
taking into account the principles of maternity protection and gender equality in employment.
(3) Recruitment and Staffing
The company’s goal is to employ qualified personnel to create the best possible performance. Our
company cares about diversity and equal opportunity. We do not allow employment discrimination based
on race, color, age, gender, sexual orientation, ethnicity, disability, pregnancy, religion, political affiliation,
union membership, and marital status or otherwise. In our day-to-day operations, this means that we
monitor and manage our human resources consciously. We analyze and improve turnover patterns. We
build a labor force with a balanced structure, which was also integrated into our recruiting policy.
(4) Zero Distance Communication
The company emphasizes harmonious labor relations. To this end, we convene quarterly meetings with
the labor-capital committee and the Employee Welfare Committee. High-level managers from the capital
side and grassroots level representatives from the labor side engage in two-way face-to-face
communications, to exchange views in an open atmosphere. We also have built a full range of
communication channels, which employees can use under their names or anonymously. The Employee
Care Hotline, the Employee Care Mailbox, and the opinion box help employees to find quick solutions to
their problems.
Workplace Free from Sexual Harassment
To protect employees from sexual harassment, Innolux adopted the 'Sexual Harassment Prevention,
Complaint and Management Procedures for Taiwan site' to effectively prevent and deal with sexual
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harassment. Investigation of sexual harassment is conducted in a non-public fashion to protect the privacy
of the parties involved. Everyday protection from sexual harassment is promoted through the start-up
screens of computers to build a friendly workplace and eliminate sexual harassment.
EAPs Employee Assistance Programs
Employees are company's most important asset. Innolux understands how difficulties may affect an
individual’s work and life. Therefore, Innolux takes a systematic and embedded approach to offer
appropriate professional resources, such as employee communications, psychological counseling, and
healthcare, in an effort to reduce the impact that problems may have on our employees' work and lives.
We hope to enable our employees to work with a fit body and a healthy mind and improve productivity.
5.5.2 List any loss sustained as a result of labor disputes in the most recent fiscal year, and during the current
fiscal year up to the date of printing of the annual report, disclose an estimate of losses incurred to date or
likely to be incurred in the future, and indicate mitigation measures being or to be taken. If the loss cannot
be reasonably estimated, make a statement to that effect.
The Company and its subsidiaries have recently and until the annual report dated, and the estimated cost of
labor disputes is NT$320 Thousand. (payment of salary, confirmation of employment relationship, payment of
occupational disaster compensation, etc.) As the lawsuit is a case judgment, the actual expenses will be treated
according to the judgment of the court, but the amount of the dispute involved is not material and has no
significant impact on the company's finances and business.
5.6 Important Contracts
Agreement Counterparty Period Major Contents Restrictions
Lease Agreement of the Land
Science-based Industrial Park Administration
Feb 2001- Dec 2020
Lease of land for Chunan Base of Hsinchu Science Park in Miaoli County (Plant No. I)
Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land
Science-based Industrial Park Administration
May 28, 2003 - Dec 31, 2022
Leasehold of land Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land
Science-based Industrial Park Administration
Feb 2004 - Dec 2023
Lease of land for Chunan Base of Hsinchu Science Park in Miaoli County (Plant No. II)
Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land
Science-based Industrial Park Administration
Apr 6, 2004 – Dec 31, 2023
Leasehold of land Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land
Science-based Industrial Park Administration
Dec 1, 2007 – Dec 31, 2026
T2 Leasehold of land oriented for factory
Pursuant to the terms and conditions set forth under the Agreement
Lease Agreement of the Land
South Taiwan Science-based Industrial Park Administration
Mar 9, 2015 - Mar 8, 2035
Leasehold of land Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement
Chung Lin Construction Co., Ltd.
Feb 2001 till expiry of warranty period
FAB I Project of Civil Engineering Construction
Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement
Hu Tzu Construction Co., Ltd.
Jul 2005 till expiry of warranty period
FAB II Newly constructed project
Pursuant to the terms and conditions set forth under the Agreement
Engineering Project Agreement
Cheng Teh Fireproof Industrial Co., Ltd.
Sep 2005 till expiry of warranty period
New construction of Plant No. II, award of the fire prevention project contract
Pursuant to the terms and conditions set forth under the Agreement
Equipment Purchase
Hon Hai Precision Ind. Co., Ltd.
Nov 29, 2017 till expiry of warranty period
Machinery equipment Pursuant to the terms and conditions set forth under the Agreement
Syndicated Loans Bank of Taiwan and bank Mar 12, 2015 - 1. To be used by the Loanee to Pursuant to the terms
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Agreement Counterparty Period Major Contents Restrictions groups Mar 12, 2020 reimburse, under the
syndicated accord, the mid-term and long-term syndicated loans, for all fund required for the outstanding balance of principal as mentioned above.
2. In the amount of NT$68.5 billion
and conditions set forth under the Agreement
Syndicated Loans Bank of Taiwan,CTBC and bank groups
Sep 6,2016-Dec 6,2021
1.To be used to reimburse the mid-term loan
2. In the amount of NT$35 billion
Pursuant to the terms and conditions set forth under the Agreement
Syndicated Loans Bank of CTBC,TFC and bank groups
Jul 16 2018~Jul 16 2023
1. To be used to reimburse the mid-term loan
2. In the amount of NT$43.75 billion
3. Medium-term guarantee loan for 5 years (subject to 2 years under the joint credit agreement)
Pursuant to the terms and conditions set forth under the Agreement
Patent authorization
Foreign Company A Jun 17, 2013 – Jun 30, 2018
3D Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
Patent authorization
Foreign Company B Jan 1, 2015 – Dec 31, 2020
IPS Relevant patents Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing Multinational Enterprise C.
June 28, 2010– Dec 31, 2019
IPS Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing Multinational Enterprise D
Jul 2, 2012 – Jul 2, 2022
Display of the relevant cross-patent licensing within the regions.
Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing Multinational Enterprise E
Jul 1, 2013 – Jul 1, 2023
LCD Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
Patent authorization
Multinational Enterprise F
Jan 1, 2013 – Dec 31, 2019
LCD Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
Patent authorization
Multinational Enterprise G
Sept 5, 2013 – Sept 5, 2018
LCD Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
Cross-licensing Multinational Enterprise H
Oct. 1, 2017– Sep.30, 2022
LCD Relevant technology & know-how
Pursuant to the terms and conditions set forth under the Agreement
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VI. Financial Information
6.1 Five-Year Financial Summary
6.1.1 Condensed Balance Sheet
1. Consolidated Condensed Balance Sheet
Unit: NT Thousand Year
Item
Financial Summary for The Last Five Years (Note1) As of the printing date of this annual
report 2014 2015 2016 2017 2018
Current assets 189,380,812 138,866,987 126,998,131 158,529,955 169,734,116 154,948,024Property, Plant and Equipment
233,609,843 199,482,740 201,360,858 220,864,627 206,617,960 206,117,747
Intangible assets 20,219,137 19,342,856 18,446,321 17,910,908 17,681,485 17,644,827Other assets 39,306,763 29,749,753 24,674,238 17,553,268 17,886,043 25,803,461Total assets 482,516,555 387,442,336 371,479,548 414,858,758 411,919,604 404,514,059
Current liabilities
Before distribution
199,135,498 110,471,463 116,165,904 131,894,172 120,274,676 114,276,803
After distribution
206,082,686 112,461,273 117,161,108 139,855,829 Note2 －
Non current liabilities 54,209,621 44,706,150 29,307,281 18,639,538 36,654,223 36,834,291
Total liabilities
Before distribution
253,345,119 155,177,613 145,473,185 150,533,710 156,928,899 151,111,094
After distribution
260,292,307 157,167,423 146,468,389 158,495,367 Note2 －
Equity attributable to shareholders of the parent
227,690,063 232,264,723 226,006,363 264,325,048 254,990,705 253,402,965
Capital stock 99,545,364 99,532,372 99,521,488 99,520,720 99,520,720 99,520,720Capital surplus 99,584,369 99,643,564 99,647,810 99,646,919 99,648,115 99,648,129
Retained earnings
Before distribution
26,632,674 30,338,450 30,255,869 66,248,130 60,485,333 56,760,538
After distribution
19,685,486 28,348,640 29,260,665 58,286,473 Note2 －
Other equity interest 1,927,656 2,750,337 (3,418,804) (1,090,721) (4,663,463) (2,526,422)Treasury stock － － － － － －
Non controlling interest 1,481,373 － － － － －
Total equity
Before distribution
229,171,436 232,264,723 226,006,363 264,325,048 254,990,705 253,402,965
After distribution
222,224,248 230,274,913 225,011,159 256,363,391 Note2 －
Note 1: Financial summary for the last five years audited and certified by accountants. Note 2: Pending on approval of shareholders at Annual General Shareholders’ Meeting
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2. Consolidated Condensed Statement of Comprehensive Income
Unit: NT Thousand
Year
Item
Financial Summary for The Last Five Years (Note1) As of the printing date of this annual
report 2014 2015 2016 2017
2018 (Note2)
Operating revenue 428,661,898 364,132,984 287,089,277 329,174,401 279,376,115 59,924,024Gross profit 50,385,001 46,640,105 26,088,491 68,738,677 26,813,558 875,304Income from operations 28,173,396 22,430,709 6,413,249 47,022,209 4,835,296 (4,607,411)Non-operating income and expenses
(5,639,056) (7,571,522) (1,421,129) 1,918,980 1,734,134 975,732
Income before tax 22,534,340 14,859,187 4,992,120 48,941,189 6,569,430 (3,631,679)Net income (Loss) 21,676,908 10,814,141 1,870,687 37,028,609 2,222,762 (3,724,795)Profit (loss) from discontinued operations
－ － － － － －
Net income (Loss) 21,676,908 10,814,141 1,870,687 37,028,609 2,222,762 (3,724,795)Other comprehensive income (income after tax)
3,159,493 507,196 (6,152,001) 2,286,939 (3,596,644) 2,137,041
Total comprehensive income
24,836,401 11,321,337 (4,281,314) 39,315,548 (1,373,882) (1,587,754)
Net income attributable to shareholders of the parent
21,676,759 10,815,594 1,870,687 37,028,609 2,222,762 (3,724,795)
Net income attributable to non-controlling interest
149 (1,453) － － － －
Comprehensive income attributable to Shareholders of the parent
24,844,853 11,352,532 (4,281,314) 39,315,548 (1,373,882) (1,587,754)
Comprehensive income, attributable to non-controlling interests
(8,452) (31,195) － － － －
Earnings per share 2.31 1.09 0.19 3.72 0.22 (0.37) Note 1: Financial summary for the last five years audited and certified by accountants. Note 2: Pending on approval of shareholders at Annual General Shareholders’ Meeting
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3. Alone Balance Sheet
Unit: NT Thousand
Year
Item
Financial Summary for The Last Five Years (Note1)
2014 2015 2016 2017 2018
Current assets 162,875,147 111,926,408 103,003,830 129,298,905 149,336,693
Property, Plant and Equipment 192,599,182 163,921,697 170,150,592 191,778,224 176,216,141
Intangible assets 20,127,184 19,264,025 18,375,538 17,681,078 17,599,664
Other assets 106,252,898 102,927,491 97,564,329 91,173,093 95,105,109
Total assets 481,854,411 398,039,621 389,094,289 429,931,300 438,257,607
Current
liabilities
Before distribution 205,189,126 121,257,442 133,926,912 147,100,829 146,751,492
After distribution 212,136,314 123,247,252 134,922,116 155,062,486 Note2
Non current liabilities 48,975,222 44,517,456 29,161,014 18,505,423 36,515,410
Total
liabilities
Before distribution 254,164,348 165,774,898 163,087,926 165,606,252 183,266,902
After distribution 261,111,536 167,764,708 164,083,130 173,567,909 Note2
Equity attributable to
shareholders of the parent 227,690,063 232,264,723 226,006,363 264,325,048 254,990,705
Capital stock 99,545,364 99,532,372 99,521,488 99,520,720 99,520,720
Capital surplus 99,584,369 99,643,564 99,647,810 99,646,919 99,648,115
Retained
earnings
Before distribution 26,632,674 30,338,450 30,255,869 66,248,130 60,485,333
After distribution 19,685,486 28,348,640 29,260,665 58,286,473 Note2
Other equity interest 1,927,656 2,750,337 (3,418,804) (1,090,721) (4,663,463)
Treasury stock － － － － －
Non controlling interest － － － － －
Total
equity
Before distribution 227,690,063 232,264,723 226,006,363 264,325,048 254,990,705
After distribution 220,742,875 230,274,913 225,011,159 256,363,391 Note2
Note 1: Financial summary for the last five years audited and certified by accountants. Note 2: Pending on approval of shareholders at Annual General Shareholders’ Meeting
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4. Alone Statement of Comprehensive Income
Unit: NT Thousand
Year
Item
Financial Summary for The Last Five Years (Note1)
2014 2015 2016 2017 2018(Note2)
Operating revenue 426,005,033 360,638,133 285,695,113 323,687,952 278,407,555
Gross profit 36,395,248 33,712,246 14,853,964 57,451,834 18,005,702
Income from operations 20,439,440 15,826,909 513,079 40,633,793 356,315
Non-operating income and expenses 1,238,394 (2,017,968) 3,147,845 4,441,800 3,872,395
Income before tax 21,677,834 13,808,941 3,660,924 45,075,593 4,228,710
Net income (Loss) 21,676,759 10,815,594 1,870,687 37,028,609 2,222,762
Profit (loss) from discontinued
operations － － － － －
Net income (Loss) 21,676,759 10,815,594 1,870,687 37,028,609 2,222,762
Other comprehensive income
(income after tax) 3,168,094 536,938 (6,152,001) 2,286,939 (3,596,644)
Total comprehensive income 24,844,853 11,352,532 (4,281,314) 39,315,548 (1,373,882)
Net income attributable to shareholders
of the parent 21,676,759 10,815,594 1,870,687 37,028,609 2,222,762
Net income attributable to
non-controlling interest － － － － －
Comprehensive income attributable to
Shareholders of the parent 24,844,853 11,352,532 (4,281,314) 39,315,548 (1,373,882)
Comprehensive income attributable to
non-controlling interest － － － － －
Earnings per share 2.31 1.09 0.19 3.72 0.22
Note 1: Financial summary for the last five years audited and certified by accountants. Note 2: Pending on approval of shareholders at Annual General Shareholders’ Meeting
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6.1.2 CPA Name and Audit Opinions of the Last 5 Years
Year Accounting Firm CPA Auditing Opinion
2014 PricewaterhouseCoopers Wu Han-Chi & Hsu Sheng-Chung- Unqualified-modified wording
2015 PricewaterhouseCoopers Wu Han-Chi & Hsu Sheng-Chung Unqualified wording
2016 PricewaterhouseCoopers Wu Han-Chi & Hsu Sheng-Chung Unqualified wording 2017 PricewaterhouseCoopers Wu Han-Chi & Hsu Sheng-Chung Unqualified wording 2018 PricewaterhouseCoopers Wu Han-Chi & Liang, Hua-Ling Unqualified wording
6.1.3 If there was change/replacement of the CPA within the most recent 5 fiscal years, explanation made by the
company’s previous and current CPA over the causes for such change/replacement shall be set forth.
Year Former CPA's Name Current CPA's Name Reason
2014 Hsiao Chun-Yuan & Wu Han-Chi Wu Han-Chi & Hsu Sheng-Chung Unqualified-modified wording
2015 None
2016 None
2017 None
2018 Wu Han-Chi & Hsu Sheng-Chung Wu Han-Chi & Liang, ua-Ling Unqualified-modified wording
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6.2 Five-Year Financial Analysis
1. Consolidated Financial Analysis
Year(Note 1)
Item
Financial Analysis for the Last Five Years As of the printing date of
this annual report
2014 2015 2016 2017 2018
Financial structure(%)
Debt Ratio 52.50 40.05 39.16 36.29 38.10 37.36Ratio of long-term capital to property, plant and equipment
121.31 138.84 126.79 128.12 141.15 136.30
Solvency(%)
Current ratio 95.10 125.70 109.32 120.19 141.12 135.59
Quick ratio 77.41 97.37 87.84 96.12 113.81 104.60
Interest earned ratio(times) 7.28 9.68 6.71 53.16 12.59 (12.41)
Operating performance
Accounts receivable turnover(times)
5.88 5.68 4.97 5.32 5.13 5.29
Average collection period 62 64 73 69 71 69
Inventory turnover(times) 8.41 9.29 9.02 8.91 7.69 6.95Accounts payable turnover (times)
4.90 4.52 4.45 4.72 4.66 4.47
Average days in sales 43 39 40 41 47 53Property, plant and equipment turnover(times)
1.69 1.68 1.43 1.56 1.31 1.14
Total assets turnover (times) 0.87 0.84 0.76 0.84 0.68 0.15
Profitability
Return on total assets(%) 4.98 2.81 0.68 9.57 0.64 (0.85)Return on stockholders' equity(%)
10.23 4.69 0.82 15.10 0.86 (1.47)
Pre-tax income to paid-in capital(%)
22.64 14.93 5.02 49.18 6.60 (3.65)
Profit ratio(%) 5.06 2.97 0.65 11.25 0.80 (6.22)
Earnings per share(NT$) 2.31 1.09 0.19 3.72 0.22 (0.37)
Cash flow
Cash flow ratio(%) 52.33 73.38 28.75 62.66 43.72 3.41
Cash flow adequacy ratio(%) 129.39 226.97 235.82 236.36 187.54 143.36
Cash reinvestment ratio(%) 14.58 9.86 4.12 10.02 5.22 0.46
Leverage Operating leverage 3.02 3.35 7.78 1.97 10.13 －
Financial leverage 1.15 1.08 1.16 1.02 1.13 － Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.) 1. Decrease in interest coverage ratio: The main profit in 2018 is significantly lower than that in 2017. 2. Declining ratios of profitability: The main profit of 2018 is significantly lower than that of 2017. 3. Decline in cash flow ratios: Mainly due to the decrease in net cash inflows from operating activities during the
period. 4. Increased operating leverage: The main operating profit is reduced. Note 1: Financial summary for the last five years audited and certified by accountants. Note 2: Financial Ratio Formula
1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property,
plant and equipment, net 2. Liquidity analysis
(1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales /
Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover
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(3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating
costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets
4. Return on investment analysis (1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted
average outstanding shares 5. Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense +
Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property,
plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital) 6. Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income (2) Financial leverage = Operating income / (Operating income – Interest expenses)
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2. Financial Analysis -Alone
Year
Item
Financial analysis in the past five years(Note 1)
2014 2015 2016 2017 2018
Financial structure(%)
Debt Ratio 52.75 41.65 41.91 38.52 41.82Ratio of long-term capital to property, plant and equipment
143.65 168.85 149.97 147.48 165.43
Solvency(%) Current ratio 79.38 92.30 76.91 87.90 101.76Quick ratio 65.50 71.48 62.14 69.93 83.01Interest earned ratio(times) 8.23 9.59 5.40 49.02 8.47
Operating performance
Accounts receivable turnover(times) 6.03 5.82 5.20 5.90 5.77Average collection period 61 63 70 62 63Inventory turnover(times) 10.78 11.61 11.47 11.00 9.28Accounts payable turnover(times) 3.39 3.40 3.55 3.47 3.19Average days in sales 34 31 32 33 39Property, plant and equipment turnover(times)
2.00 2.02 1.71 1.79 1.51
Total assets turnover(times) 0.87 0.82 0.73 0.79 0.64
Profitability
Return on total assets(%) 4.95 2.76 0.65 9.19 0.62Return on stockholders' equity(%) 10.30 4.70 0.82 15.10 0.86Pre-tax income to paid-in capital(%) 21.78 13.87 3.68 45.29 4.25Profit ratio(%) 5.09 3.00 0.65 11.44 0.80Earnings per share(NT$) 2.31 1.09 0.19 3.72 0.22
Cash flow Cash flow ratio(%) 44.53 39.11 24.06 55.59 34.02Cash flow adequacy ratio(%) 153.66 214.96 203.85 215.66 174.92Cash reinvestment ratio(%) 14.02 5.79 4.25 10.55 5.22
Leverage Operating leverage 3.63 4.12 79.9 2.04 118.97Financial leverage 1.17 1.11 － 1.02 －
Analysis of financial ratio change in the last two years. (If the difference does not exceed 20%, the analysis is not required.) 1. Decrease in interest coverage ratio: The main profit in 2018 is significantly lower than that in 2017. 2. Declining ratios of profitability: The main profit of 2018 is significantly lower than that of 2017. 3. Decrease in cash flow ratio and cash reinvestment ratio: Mainly due to the decrease in net cash inflow from
operating activities in 2018. 4. Increased operating leverage: The main operating profit is reduced. 5. Increased financial leverage: The main business benefits are reduced. Note 1: Financial summary for the last five years audited and certified by accountants. Note 2:Financial Ratio Formula
1. Financial Structure analysis (1) Debt ratio= Total Liabilities / Total Assets (2) Long-term funds to property, plant and equipment = (Total equity + Non-current liabilities ) / Property,
plant and equipment, net 2. Liquidity analysis
(1) Current ratio = Current assets / Current liability (2) Quick ratio = (Current Assets - Inventories - Prepaid expenses) / Current liability (3) Times interest earned = Profit Before Credit for Income Tax / Current interest expense
3. Operating performance analysis (1) Average collection turnover(Including Accounts Receivable and Notes Receivable from operation) = Sales /
Average trade receivables (2) Days to collect accounts receivable = 365 / Average collection turnover (3) Average inventory turnover = Cost of goods sold / Average inventories (4) Average payment turnover (Including Accounts Payable and Notes Payable from operation) = operating
costs / Average trade payables (5) Average days to sell inventory = 365 / Average inventory turnover (6) Property, plant and equipment turnover = Sales / Average property, plant and equipment, net (7) Total assets turnover = Sales / Average total assets
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4. Return on investment analysis (1) Rate of return on assets = [Profit + Interest expense X (1 - Tax rate)] / Average assets (2) Rate of return on equity = Profit / Average total Equity (3) Profit to sales = Profit / Sales (4) Earnings per share = (Equity attributable to owners of parent - Dividend-preferred stock ) / Weighted
average outstanding shares 5. Cash flow
(1) Cash flow ratio = Net cash provided by operating activities / Current liability (2) Cash flow adequacy ratio = 5-year net cash provided by operating activities / 5-year (Capital expense +
Increase in inventories + Cash dividend) (3) Cash flow reinvestment ratio = (Net cash provided by operating activities - Cash dividend) - (Property,
plant and equipment, net + Long-term investments + Other non-current assets + Operating Capital) 6. Leverage
(1) Operating Leverage= (Net sales – Variable cost) / Operating income (2) Financial leverage = Operating income / (Operating income – Interest expenses)
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6.3 Audit Committee Report in the Most Recent Year
Audit Committee Report
The Board of Directors has duly submitted the 2018 operating report, financial statements, and
table of profit distribution. The financial statements has been duly reviewed and approved by CPAs of
PwC Taiwan with the issuance of Independent Auditor’s Report.
The Audit Committee have completed the audit and review, and had found nothing inconsistent
with any of the above. Therefore, I issue this audit report for acknowledgment in accordance with
Securities and Exchange Act and the Company Act. For your approval.
To
General Shareholders Meeting of the Company in 2019
Audit Committee
Chair: Chi-Chia Hsieh
Date: May 9, 2019
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6.4 Consolidated Financial Statements for the Years Ended December 31, 2017 and 2016, and Independent Auditors’ Report
Please refer to page 119 of the annual report.
6.5 Financial Statements for the Years Ended December 31, 2017 and 2016, and
Independent Auditors’ Report
Please refer to page 207 of the annual report.
6.6 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties: None
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VII.Review of Financial Conditions, Operating Results, and Risk Management
7.1 Analysis of Financial Status
Unit: NT Thousand
Year
Item 2017 2018
Difference
Amount %
Current Assets 158,529,955 169,734,116 11,204,161 7.07
Fixed Assets 220,864,627 206,617,960 (14,246,667) (6.45)
Intangible assets 17,910,908 17,681,485 (229,423) (1.28)
Other Assets 17,553,268 17,886,043 332,775 1.90
Total Assets 414,858,758 411,919,604 (2,939,154) (0.71)
Current Liabilities 131,894,172 120,274,676 (11,619,496) (8.81)
OtherLiabilities-non-current(1) 18,639,538 36,654,223 18,014,685 96.65
Total Liabilities 150,533,710 156,928,899 6,395,189 4.25
Capital stock 99,520,720 99,520,720 0 0.00
Capital surplus 99,646,919 99,648,115 1,196 0.00
Retained Earnings 66,248,130 60,485,333 (5,762,797) (8.7)
Other equity(2) (1,090,721) (4,663,463) (3,572,742) 327.56
Non controlling equity － － － －
Total Stockholders' Equity 264,325,048 254,990,705 (9,334,343) (3.53)
Analysis of changes in financial ratios:
1. The main reason is the increase in long-term borrowings during the year.
2. The main reason is the decrease in the unrealized gains and losses of financial assets measured at fair value through
other comprehensive gains and losses and the conversion differences in the financial statements of foreign operating
institutions.
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7.2 Analysis of Financial Performance
Unit: NT Thousand
Year
Item 2017 2018
Difference
Amount %
Gross Sales 329,174,401 279,376,115 (49,798,286) (15.13)
Cost of Sales 260,435,724 252,562,557 (7,873,167) (3.02)
Gross Profit(1) 68,738,677 26,813,558 (41,925,119) (60.99)
Operating Expenses 21,716,468 21,978,262 261,794 1.21
Operating Income(2) 47,022,209 4,835,296 (42,186,913) (89.72)
Non-operating Income and Expenses 1,918,980 1,734,134 (184,846) (9.63)
Income Before Tax(3) 48,941,189 6,569,430 (42,371,759) (86.58)
Tax Benefit (Expense)(4) 11,912,580 4,346,668 (7,565,912) (63.51)
Net income(5) 37,028,609 2,222,762 (34,805,847) (94.00)
Other comprehensive income(6) 2,286,939 (3,596,644) (5,883,583) (257.27)
Total comprehensive income(7) 39,315,548 (1,373,882) (40,689,430) (103.49)
Analysis of changes in financial ratios:
1. The fluctuation of the main industry's business climate, market demand and price changes, resulting in a decline in
operating margins.
2. The main operating profit decreased.
3. The main business net profit decreased.
4. The main operating profit decreased, resulting in a decrease in income tax expenses estimated based on profitability
during the year.
5. Mainly due to the decrease in net profit before tax.
6. The main reason is that the equity instrument investment measured at fair value through other comprehensive gains
and losses has not realized the evaluation of profit or loss and the decrease in the estimated profit and loss of the
provision for sale of financial assets.
7. Mainly due to the decrease in net profit for the period and other comprehensive gains and losses for the period.
7.3 Analysis of Cash Flow
7.3.1 Cash Flow Analysis for the Current Year
Unit: NT Thousand
Year Items
2018 Analysis
Net cash provided by operating activities 52,579,619
Net cash provided mainly due to depreciation and reasonable control for operating cycle.
Net cash used in investing activities (99,036,816)Mainly used for capital expenditures and buying financial instruments.
Net cash used in financing activities 14,605,502 Mainly due to the increase in bank loans and the distribution of cash dividends.
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7.3.2 Cash Flow Analysis for the Coming Year
Unit: NT Thousand
Estimated Cash and
Cash Equivalents,
Beginning of Year
(1)
Estimated Net Cash
Flow from
Operating Activities
(2)
Estimated Cash
Outflow (Inflow)
(3)
Cash Surplus
(Deficit)
(1)+(2)+(3)
Leverage of Cash Surplus
(Deficit)
Investment Plan Financing Plan
33,847,000 28,482,000 26,799,000 35,530,000 － －
2019 Analysis of changes in cash flow
Operating Activities: Net Cash inflow due to expected the company continuously optimize cost strutruct..
Investing Activities: Net cash outflow due to overcome difficulties continuously and capital expenditure for new
techniques
Financing Activities: Net cash inflow mainly due to bank loan drawdown.
Remedy Actions for Cash Shortfall: None
7.4 Major Capital Expenditure Items
The company's 2018 annual capital expenditure, it mainly consists of wide viewing angle technology,
automotive profile/curvature technology, high precision/machine module line, automation upgrade, yield quality
improvement, LTPS equipment purchase, new product and new technology (Mini-LED). ) and Green Energy
Environmental Protection, etc., the actual capital expenditure is about NT$46,702,767. It will help the company's
revenue growth and profit improvement in 2019.
7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement
Plans and the Investment Plans for the Coming Year
In terms of outward investment, the Company focused on the up- and down-streams of TFT-LCD industries to
assure effective vertical itnegration as the final objectives. Given the worsening fluctuation of panel industry and
the mature development of the industrial chains, the Company held a policy of being increasingly conservative.
Other than the effortswe try to refrain from investing toward the businesses irrelevant to the Company’s principal
business, the Company disposed non-core investment and investment insignificant in strategies.
In the future, we will cooperate with the Group's overall investment planning and make the most appropriate
use of resources.
In the consolidated financial report of the Company in 2018, the investment gain recognized in equity method
came to NT$443,869 thousand, thanks primarily to the upturn of the overall economy where the business
performance of the invested businesses turned better. Some outward investments appeared at a loss. Overall, the
performance with the Company’s outward reinvestments have been well up to our expectation and have been
continually integrated with our business development.
7.6 Analysis of Risk Management
7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and
Future Response Measures
1. Interest rate
In 2018, the global economy grew moderately. Among them, the US job market is thriving, and has
encouraged customer momentum. The economy in the Euro area showed slight recovery, but that in Mainland
China was weak. The impacts of the global economic expansion began to slow down in Q4. The Brexit
Agreement, the rising political risk between Italy and Germany, intensifying conflicts of the US-China trade
on the economy is expected to emerge gradually, adding uncertainty.The Directorate-General of Budget,
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Accounting and Statistics predicts that the economic growth rate (yoy) in 2019 to be 2.41%, which is 0.25%
lower than the annual economic growth rate of 2.66% in 2018. Considering the uncertainties in the global
economic outlook, the domestic economic recovery is moderate, the output gap is still negative, and the
current inflationary pressure and future inflation expectations are moderate. Under the premise that the
financial conditions are getting tighter, the real interest rates in the major economies are considered
appropriate, the central bank will maintain the current policy interest rate and the M2 currency growth target
range, and continue an easy money policy.
2. Foreign exchange rates
(1) To prevent a potential disadvantage to the foreign currencies in input, ouput, investment and financing
activities to the Company’s assets, liabilities values, operating results due to fluctuation in exchange rates,
the Company, in due time, would undertake forward foreign exchange to evade potential risks in
fluctuation in exchange rates.
(2) The Company adopted Natural Hedge in principle to evade exchange rate risks by taking the revenues
from sales in foreign currencies to pay off required foreign currencies. We, therefore, only undertook the
hedge transaction aiming at the positions of net assets or liabilities in foreign currencies.
(3) In the Company, over 90% of the operating revenues came from U. S. Dollars and other foreign currencies.
For capital expenditures and manufacturing costs, the primary demand for foreign currencies came from
U. S. Dollars and Japanese yen. Any unfavorable significant change in exchange rate would lead to a
passive impact upon the financial profit and/or loss.
3. Inflation
In the second half of 2018, due to climate stability, low food prices, and oil price easing measures to ease
the upward pressure on CPI; although basic wages rose in 2019, but with the end of the tobacco tax effect and
the decline in international oil prices, the forecast CPI rose less than In 2018 (up 0.96%), the inflation outlook
is still moderate. The high-speed inflation and deflation would interfere with the efficiency in the markets;
discourage investment, consumption, savings and such behaviors. To prevent potential impact on the negative
aspect from high speed inflation which would, in turn, dampen investment, consumption and savings, the
communications has tried by all means of lower various costs to enhance competitive edge and would be
closely watchful the change in the supply and demand in the market, to flexbly adjust product portfolio to
closely live up to actual demand in the market.
7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk,
High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions
1. The Company had not engaged in highly risky and high financial leverage investment. Exactly as required
by the Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan and the laws and
ordinances concerned, we have set up wholesome financial and operating grounds in the managerial
regulations and operating procedures, including “Procedures to Engage in Transaction and Disposal of
Derivatives”, “Procedures for Loaning of Funds to Others” and “Operating Procedures of
Endorsements/Guarantees”.
2. In an attempt to control potential risks in finance, we hold a very wholesome and conservative principle in
derivative financial instruments to primarily evade the potential risks of the exchange rates in the substantial
positions incurred by input, output and financing activities. In the days and years ahead, we shall stick to such
same principle to coordinate with the trends of exchange rates and interest rates as well as the Company’s
business operation, we shall adjust the financial risk management in real time in accordance with laws and
ordinances concerned, internal managerial rule and operating procedures.
7.6.3 Future Research & Development Projects and Corresponding Budget
The company's future technology development continues to be in the field of display applications. Mainly wide
viewing angle TFT LCD display technology to improve the contrast and color of TFT LCD large viewing angle;
high transmittance to improve the optical utilization of display; Mega Zone, Mini-LED technology to improve
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the color saturation, brightness and contrast; TFT LCD module technology with thin and narrow frame for
display panel; continuous improvement with high resolution, high brightness, wide temperature and low energy
consumption technology; endeavor to develop high-end technologies such as naked-eye stereo display, Privacy,
Mirco-LED, etc. - LCD new field applications; embedded integrated touch technology (TOD, TID, Hybrid),
bonding process technology and automated assembly technology. The company's research and development
expenditure in 2018 is NT$12,135,478. In 2019, the company expects to invest another R&D fee of NT$13.5
billion. However, it will adjust and adjust according to the global market conditions and actual operating
conditions, and continue to maintain its leading edge in technological development.
7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales
As of the Annual Report’s publication date, there has been no adversely impact on financial or business due to
any policy and law changed. All the Company’s teammates would be closely watchful of potential changes in
major policies and laws and ordinances concerned at home and abroad and set up legal personnel to help such
issues. Through such efforts, we shall be able to take right countermeasures in real-time to minimize the potential
impact upon the Company’s financial standing which might be incurred by major policies at home and abroad
and change in laws.
7.6.5 Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and
Sales
1. Technology Change
The TFT-LCD industry is challenged by the constantly upgraded know-how and new products while the
mainstream products are being replaced by new generation at a quickening pace. Should we fail to deal with
the impact incurred by the change in science and technology that would be an impact upon the business and
financial standing on the seamy sides. Since the Company first came into being, we have spared no effort to
accumulate the technical capability of TFT-LCD displays to deal with the impact incurred by the change in
science and technology. Other than investment in high level research & development toward high display
quality, high solution, broad vision angles, high open rates, quick response, thin and light designs, narrow
frames, ultra energy conservaton,flexible display and such technology & know-how, we have, as wll, tried to
develop low temperature LTPS,Oxide and organic lighting display OLED and such technology & know-how
to assure firm competitive edge and effective growth in the Company’s business and financial standing.
2. Industry Change
TFT-LCD features high economic cycle and drastic fluctuation. Any sort of economic trend drop might lead
to a shock to the Company’s business operation on the seamy side. Here at the Company, all our teammates
would be closely watchful of fluctuation that might hit the Company ito passive aspect and work out sound
countermeasures beforehand. In terms of financial operation, we adopt sound and stable financial operation to
deal with potential fluctuation in the businesses.
7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s
Response Measures
Faithful law compliance, focus on shareholders’ equity represents the very bounden duties to the Company’s
management. In case of a contingence, the Company’s ranking department head would serve as the emergency
convener to immediately set up the Crisis Task Force ti defuse the crisis forthwith. As of the Annual Report’s
publication date, there has been no event that adversely impact in Innolux’s corporate image and impact on
corporate risk management.
7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans
At the moment, the Company has no plan to launch a merger with another enterprise. Toward potential
strategic investment or vertical integration, and the cost benefit and the potential risk so arising, the Company’s
management would conduct appropriate evaluation and evasion as appropriate.
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7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans
In order to expand the layout of LTPS technology, the company purchased equipment from Luzhu LTPS Plant
from Hon Hai with a total amount of approximately NT$31.4 billion in Nov 2017. The expected benefits are:
1.Increase the revenue of small and medium-sized businesses revenue to balance the proportion of TV products
and make each size of product line more balanced.
2.After the LTPS equipment purchased from Hon Hai, the global area occupancy rate is expected to increase from
2% to 8%.
3.LTPS is an important foundation for OLED, miniLED, and uLED technologies, and increasing LTPS
production capacity will contribute to the development of high-end mobile phone technology.
The expansion and addition of the new generation of factory buildings are all subject to the professional
feasibility assessment of the relevant technical team.
7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive
Customer Concentration
There is no risk associated with excessive customer concentration, due to the plenty production line and the
main customers are international brand manufacturers. Innolux’s usually have two or more suppliers for main
material. Therefore there is no risk associated with excessive concentration of purchasing. We will keep
developing new products and new customers in the future and seeking for the better quality and the lower cost
of purchase sources to reduce the risk of excessive customer concentration or excessive purchasing
concentration.
7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by
Directors or Shareholders with Shareholdings of over 10%
As of the date of this Annual Report, there were no such risks for Innolux.
7.6.11 Effects of, Risks Relating to and Response to Changes in Management Rights
As of the date of this Annual Report, there were no such risks for Innolux.
7.6.12 Litigation or Non-litigation Matters
1. The lawsuits, non-contentious cases, administrative litigation that are decided by the court or still in
proceeding in recent years until this report was issued.
(1) Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi Mei
Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics USA Inc.
were investigated by the United States (the “U.S.”) Department of Justice in December 2006 for alleged
violation of the anti-trust laws. In December 2009, the Company reached a plea agreement with the
Department of Justice of the U.S. and paid off the fines. Later, Brazil government initiated an
investigation case against the Company. The investigation is still ongoing and the Company has been
cooperative with the investigation. As for civil lawsuits filed by some state governments in the U.S.,
downstream panel makers, and customers, the Company had reached settlement agreement individually.
The company’s subsidiary in U.S. received a civil complaint from the government of Puerto Rico in
September 2018, claiming that the company, together with other defendants of Taiwan, Japan and South
Korea panel factories, had unjustified enrichment from the TFT-LCD pricing collaborations in 2006 and
requested monetary compensation. The U.S. subsidiary of the company has appointed a lawyer to handle
the lawsuit.
(2) Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and American
subsidiaries with the United States District Court for the District of East Texas on April 25, 2011,
alleging infringement of its patent. The administrative law judge has ruled a summary judgment for the
lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding judge has confirmed the
summary judgment in January 2014. Eidos has filed a complaint in February 2014.
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In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In March
2015, the CAFC overruled the decision rendered by the district court and ordered a retrial. In June 2017,
the jury determined that some products of the Company and American subsidiaries constituted direct
infringement of patent and ordered an infringement compensation for Eidos. On March 5, 2018, the court
made first instance judgement and the Company had appealled. However, the results of the litigation are
uncertain and are dependent on the future litigation progress. The Company does not expect that the
lawsuit would have a material adverse effect on the Company’s financial position or results of operations
in the short-term.
(3) On July 10, 2018, Vista Peak Ventures, LLC filed four complaints against the Company in the United
States District Court for the Eastern District of Texas, alleging the infringement of several of its patents.
Currently no court date has been set. The Company has engaged outside legal counsels to handle this
lawsuit. Since the final results of the litigation are dependent on future litigation progress and are
uncertain, the Company does not expect that the lawsuit will have a material adverse effect on its
financial position or results of operations in the short term.
2. Board members, monitors, CEO, responsible person in fact, shareholders and their companies holding more
than 10% shares that involved in lawsuits, non-contentious cases, administrative litigation that were decided
by the court or still in proceeding in recent years until this report was issued and might cause major influence
on Innolux stockholder's equity and securities price: None.
7.6.13 Other Major Risks:
Information Security Risk and Countermeasures
The Company is committed to protecting the confidential information of the company, our clients, suppliers,
and employees, as well as company intellectual property which is the key of the competitive advantage. This is
to ensure the overall benefit of the company, our clients, employee, and shareholders, and to maintain company
competitiveness.
The Company has an information software operation system and an information security disaster recovery
mechanism to regulate the control of information assets such as computer mainframes, database systems,
application software systems and personal computers, operational information, personal privacy information,
and others on the company's information service system. The Company also established guidelines pursuant to
the Information Security Management System (ISMS) to ensure the three targets, including confidentiality,
integrity and availability of information, and to strengthen information security management, established a
secure and reliable electronic information operation environment, and established an emergency response
mechanisms that conducts timely notification and adoption of countermeasures when the Company’s
information system and operational information encounter an information security breach to recover to normal
operation in the shortest possible time in order to ensure the sustainable operation of the company's business.
The Company has established a private corporate mobile messaging platform (INX MApp) to prevent security
risks when employees use public communication software. This platform also increases the overall information
communication efficiency and safety and achieves the objects of rapid response and decision-making for
work-on-the-go. The Company also regularly educates employees on information security concepts through the
boot-up promotion platform and reduce the risk of phishing emails through the use of email source verification
mechanisms.
7.7 Other Important Matters: None.
- 104 -
VIII
.Sp
ecia
l Dis
clo
sure
8.1
Su
mm
ary
of
Aff
iliat
ed C
om
pan
ies
- 111 -
8.1.2 Innolux Subsidiaries
December 31, 2018
Company Date of
Incorporation Address Capital Stock Business Activities
Bright Information Holding Ltd.
Nov 26, 2008
Unit 2602-03, 26/F., BEA Tower, Millennium City 5, 418 Kwun Tong Road, Kowloon, Hong Kong.
USD 4,910,000 Controlling Company
Golden Achiever International Limited
Sept 30, 2005 Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands
USD 40,250 Controlling Company
Innolux Europe B.V. Mar 8, 2006 Stationstraat 39G, 6411NK, Heerlen, The Netherlands
EUR 3,006,480
Controlling Company of Researching, developing and Testing
Innolux Holding Ltd. Feb 28, 2002 Offshore Chambers, P.O. Box,217, Apia, Samoa
USD 191,927,258.89 Controlling Company
Innolux Hong Kong Holding Limited
Dec 14, 2005 Unit 2003, 20/F., Millennium City 3, 370 Kwun Tong Road, Kowloon, Hong Kong
HKD 1,441,092,339.08 Controlling Company
Innolux Hong Kong Limited
Feb 15, 2006 Unit 2003, 20/F., Millennium City 3, 370 Kwun Tong Road, Kowloon, Hong Kong
HKD 453,342,352.18 Entrepot trade company
Innolux Japan Co., Ltd. Aug 20, 1991
8F, kowa kawasaki-nishiguchi Bldg., 66-2 horikawa-cho, Saiwai-ku, Kawasaki-City, Kanagawa 212-0013, Japan
JPY988,274,575 Operating TFT-LCD development, manufacture and sales
Innolux Optoelectronics Hong Kong Holding Ltd.
Nov 16, 2001 Unit 2003, 20/F., Millennium City 3, 370 Kwun Tong Road, Kowloon, Hong Kong.
HKD 162,897,802 Controlling Company
Innolux Optoelectronics India Private Limited
Mar 07,2018
4, Chandan Niwas (Old), 1st Floor,, M.V. Road, Andheri East, Mumbai, Mumbai City, Maharashtra, India, 400069
INR$395,000,000 Distribution company
Innolux Optoelectronics Malaysia SDN. BHD.
Nov 06,2017
No 9-1, Jalan Putra Mahkota 7/4A, Putra Heights, 47650 Subang Jaya, Selangor Darul Ehsan, Malaysia
MYR$16,000,000 Manufacturing and distribution company
Innolux Optoelectronics Philippines CORP.
Jun 26,2017
Km 23 West Service Road, South Superhighway, Alabang, Muntinlupa City, 1770, Philippines
PHP$50,000,000 Manufacturing and distribution company
Innolux Singapore Holding Pte. Ltd.
June 28,2017 6 TEMASEK BOULEVARD, #09-05, SUNTEC TOWER FOUR, SINGAPORE (038986)
USD$25,400,000 Controlling Company
Innolux Technology Germany GmbH
Feb 17, 2006 Kaiserswerther Strasse 115,D-40880 Ratingen, Germany
EUR 100,000 Testing & Maintenance Company
Innolux USA, INC. May 9, 2002 101 Metro Drive Suite 510,San Jose,CA95110, U.S.A
USD 11,842,010 Operating electronics parts and computer display sale
Keyway Investment Management Limited
Mar 30, 2005 Portcullis TrustNet Chambers, P.O Box 1225, Apia, Samoa
USD 1,656,410 Controlling Company
Lakers Trading Ltd. Jun 4, 2004 Offshore Chambers, P.O. Box,217, Apia, Samoa
USD 1 Entrepot trade company
Landmark International Ltd.
Apr 24, 2003 Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa
USD 709,450,000 Controlling Company
- 112 -
Company Date of
Incorporation Address Capital Stock Business Activities
Leadtek Global Group Limited
Mar 30, 2005
Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake's Highway, P.O. Box 3444, Road Town, VG1110, Tortola, British Virgin Islands
USD 50,000,000 Entrepot trade company
Nets Trading Ltd. May 2, 2008 Offshore Chambers, P.O. Box 217, Apia, Samoa
USD900,001 General Investment Industry
Rockets Holding Ltd. Dec 18, 2002 Offshore Chambers, P.O. Box,217, Apia, Samoa
USD 171,669,290 Controlling Company
Stanford Developments Ltd.
Aug 12, 1999 Offshore Chambers, P.O. Box,217, Apia, Samoa
USD 164,000,000 Controlling Company
Suns Holding Ltd. Dec 18, 2006 Offshore Chambers, P.O. Box,217, Apia, Samoa
USD 18,177,052 Controlling Company
Toppoly Optoelectronics (B.V.I.) Ltd.
Jul 17, 2001
P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola , British Virgin Islands
USD 146,847,000 Controlling Company
Toppoly Optoelectronics (Cayman) Ltd.
Jul 17, 2001
Grand Pavilion, Hibiscus Way, 802 West Bay Road, P. O. Box 31119, KY1-1205, Cayman Islands
USD 146,817,000 Controlling Company
Warriors Technology Investments Ltd.
Jan 3, 2007 Offshore Chambers, P.O. Box,217, Apia, Samoa
US$18,177,052 Investment activities
Shanghai Innolux Optoelectronics Ltd.
Jan 9, 2006
No. 272-2, Ba Sheng Road, New Customs, Wai Gao Qiao Free Trade Zone, 200131 Pudong, Shanghai, China
USD 21,000,000
Manufacturing & selling LCD back end module related technologies and products.
Yuan Chi investment co., Ltd
Jul 6, 2005 No.8, Zhongxin Rd., Xinshi Dist., Tainan City 74148, Taiwan (R.O.C.)
NTD 2,100,000,000 Investment activities
Foshan Innolux Flnet Electronics Ltd.
Oct 24, 2016
No. 18 dorm B Xingye North Rd., Foshan Science & Technology Industry Garden, Foshan, Guangdong, 528325, China
CNY 1,000,000 Goods Sale
Foshan Innolux Optoelectronics Ltd.
Apr 21, 2006
Xingye North Rd., Foshan Science & Technology Industry Garden, Foshan, Guangdong, 528325, China
USD 383,000,000
Manufacturing & selling LCD back end module related technologies and products.
Foshan Innolux Logistics Ltd.
Jul 17, 2008 North Factory, Xingye Rd., Nanhai Economic Zone, Foshan, Guangdong, 528325, China
USD 1,500,000 Storage services
Nanjing Innolux Technology Ltd.
Oct 24, 2007
No. 93, Fu Cheng West Road, Jiangning Economic and Technical Development Zone, Nanjing, China
USD 2,100,000 Business of display and related product.
Nanjing Innolux Optoelectronics Ltd.
May 23, 2001
No. 93, Fu Cheng West Road, Jiangning Economic and Technical Development Zone, Nanjing, China
USD 146,000,000
Manufacturing & selling LCD back end module related technologies and products.
Innolux Automations and Intelligence Systems (ShenZhen) Co.,Ltd.
Apr 10,2018
38th Floor, United Headquarters Building, High-tech Zone, 63 Xuefu Road, Yuehai Street, Nanshan District, Shenzhen
CNY$1,000,000 Software development and sales
Shenzhen PixinLED Technology Co.,Ltd.
Mar 30,2018
5K, Block B, No. 8, Donghuan 2nd Road, Fukang Community, Longhua Street, Longhua District, Shenzhen, China
CNY$10,000,000 Mini LED R&D and sales
- 113 -
Company Date of
Incorporation Address Capital Stock Business Activities
InnoJoy Investment Corp.
Jun 26, 2007 No.8, Zhongxin Rd., Xinshi Dist., Tainan City 74148, Taiwan (R.O.C.)
NTD1,674,053,920 Investment activities
Innocom Technology (Shenzhen) Co., LTD
Jun 24, 2004
1F, Zone 4, G2 Zone 2F A region, 3F, 4F and 5F Foxconn Technology Industrial Park E, Bao'an District, Shenzhen City, Guangdong Province, China
USD 164,000,000
Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Flnet Electronics Ltd.
Oct 17, 2016 No.8, Cao E River Rd., Ningbo Bonded Zone Building 2 1f
CNY 1,000,000 Goods Sales
Ningbo Innolux Electronics Ltd.
Nov 04,2015 No.8, Cao E River Rd., Ningbo Bonded Zone Building 2 2F
CNY 30,000,000
Selling LCD back end module related technologies and products.
Ningbo Innolux Optoelectronics Co., LTD
Dec 14, 2004 No.16, YangZi River North Rd., Ningbo Export Processing Zone, 315800, China
USD 310,000,000
Manufacturing & selling LCD back end module related technologies and products.
Ningbo Innolux Display LTD
Dec 05, 2006 No.8, Cao E River Rd., Ningbo Bonded Zone
USD 160,000,000
Manufacturing & selling LCD back end module related technologies and products.
8.1.3 Shareholders in Common of INX and Its Subsidiaries with Deemed Control and Subordination: None.
8.1.4 Business Scope of INX and Its Subsidiaries:
The company and its subsidiary operating business include the development, manufacture, after service and
sale of TFT-LCD.
By the layout of globalization, combine the distribution of Taiwan and China production base; provide
downstream manufacturer or panel module manufacturer to have high flexibility supply capacity.
There are a small number of affiliated companies are setting investment business as operating scope, to
strength vertical integration and strategy investment and coordinate the company’s future operation.
- 114 -
8.1.5 Rosters of Directors, Supervisors, and Presidents of INX’s Subsidiaries:
As of 12/31/20187
Company Title Name Shareholding
Shares % (Investment
Holding)
Bright Information Holding Ltd. Director Jyh- Chau Wang — 100%
Director Chao-Hsien Liu — 100%
Director Jun-Yi Yu — 100%
Golden Achiever International Limited
Director Chao-Hsien Liu — 100%
Innolux Europe B.V.
Director Tien-Jen Lin — 100%
Director van Riel, Lucien Franciscus Henricus
— 100%
Director Lut-ing Yang — 100%
Innolux Holding Ltd. Director Jin-Yang Hung — 100%
Innolux Hong Kong Holding Limited Director Jin-Yang Hung — 100%
Director Chao-Hsien Liu — 100%
Director Jun-Yi Yu — 100%
Innolux Hong Kong Limited Director Jin-Yang Hung — 100%
Director Pei-Yu Lu — 100%
Director Rou-Li Cheng — 100%
Innolux Japan Co., Ltd.
Director Makoto Kaneda — 100%
Director Chu-Hsiang Yang — 100%
Director Ching-Lung Ting — 100%
Supervisor Kida Masukichi — 100%
Supervisor Jun-Hao Peng — 100%
Supervisor Chin-Yuan Chang — 100%
Innolux Optoelectronics Hong Kong Holding Ltd.
Director Jin-Yang Hung — 100%
Director Shu-Mei He — 100%
Director Jun-Yi Yu — 100%
Innolux Optoelectronics India Private Limited
Director Chin-Lung Ting — 100%
Director Cheng-Chung Chiang — 100%
Director Dave Uday Girishbhai — 100%
Innolux Optpelectronics Malaysia SDN. BHD.
Director Chin-Lung Ting — 100%
Director Zheng-Zhong,Jiang — 100%
Director Lee Kit Ming — 100%
Innolux Optoelectronics Philippines Corp.
Director Chin-Lung Ting — 100%
Director Cheng-Chung Chiang — 100%
Director Cherrylyn T. Singzon — 100%
Innolux Singapore Holding Pte. Ltd. Director Chin-Lung Ting — 100%
Director Cheng-Chung Chiang — 100%
Director Tan Sze Lian Celine — 100%
Innolux Technology Germany GmbH
Director Tien-Jen Lin — 100%
Director van Riel, Lucien Franciscus Henricus
— 100%
Director Adrianus Gosuinus Marie Kersten — 100%
Innolux USA, INC. Director Junichi Ishi — 100%
Director Kanada Makoto — 100%
Director Sato Takahiro — 100%
Keyway Investment Management Limited
Director Jin-Yang Hung — 100%
Lakers Trading Ltd. Director Chih-Hung Hsiao — 100%
- 115 -
Company Title Name Shareholding
Shares % (Investment
Holding)
Landmark International Ltd. Director Jin-Yang Hung — 100%
Leadtek Global Group Limited Director Jin-Yang Hung — 100%
Nets Trading Ltd. Director Xi-Xiang Hsu — 100%
Rockets Holding Ltd. Director Chih-Hung Hsiao — 100%
Stanford Developments Ltd. Director Chih-Hung Hsiao — 100%
Suns Holding Ltd. Director Chih-Hung Hsiao — 100%
Toppoly Optoelectronics (B.V.I.) Ltd. Director Jin-Yang Hung — 100%
Toppoly Optoelectronics (Cayman) Ltd.
Director Jin-Yang Hung — 100%
Warriors Technology Investments Ltd.
Director Chih-Hung Hsiao — 100%
Shanghai Innolux Optoelectronics Ltd Chairman Zhi-Yuan Tsai — 100%
Director Chin-Yuan Chang — 100%
Director Jun-Yi Yu — 100%
Yuan Chi investment co., Ltd
ChairmanInnolux Corporation Representative - Jin-Yang Hung
— 100%
Director Innolux Corporation Representative – Chien-Lang Lo
— 100%
Director Innolux Corporation Representative - Chih-Hung Hsiao
— 100%
Foshan Innolux Flnet Electronics Ltd. Chairman Hai-Jun Lee — 100%
Supervisor Hua-Rui Lin — 100%
Foshan Innolux Optoelectronics Ltd.
Chairman Qing-Hui Lin — 100%
Director Xiao-Min Quyang — 100%
Director Jun-Yi Yu — 100%
Supervisor Chin-Yuan Chang — 100%
Foshan Innolux Logistics Ltd.
Chairman Qing-Hui Lin — 100%
Director Qiong Gu — 100%
Director Ai-Qun Wang — 100%
Supervisor Chin-Yuan Chang — 100%
Nanjing Innolux Technology Ltd.
Chairman Shi-Xian Hsu — 100%
Director Chin-Yuan Chang — 100%
Director Chih-Chiang Lu — 100%
Supervisor Kun Ma — 100%
Nanjing Innolux Optoelectronics Ltd.
Chairman Shi-Xian Hsu — 100%
Director Chin-Yuan Chang — 100%
Director Jun-Yi Yu — 100%
Supervisor Kun Ma — 100%
Innolux Automations and Intelligence Systems (ShenZhen) Co.,Ltd.
Chairman Li-Zong Hsien — 49%
Supervisor Hua-Rui Lin — 49%
Shenzhen PixinLED Technology Co.,Ltd.
Chairman Chin-Lung Ting — 100%
Supervisor Hua-Rui Lin — 100%
InnoJoy Investment Corp
ChairmanINX Representative - Chih-Hung Hsiao
167,405,392 100%
Director INX Representative - Jin-Yang Hung
167,405,392 100%
Director INX Representative - Chien-Lang Lo
167,405,392 100%
Supervisor INX Representative - 167,405,392 100%
- 116 -
Company Title Name Shareholding
Shares % (Investment
Holding)Chin-Yuan Chang
Innocom Technology (Shenzhen) Co., LTD
Chairman Cheng-Chung Chiang — 100%
Director Jun-Yi Yu — 100%
Director Chin-Yuan Chang — 100%
Ningbo Innolux Flnet Electronics Ltd. Chairman Jia-Lin Chen — 100%
Supervisor Kun Ma — 100%
Ningbo Innolux Electronics Ltd. Chairman Chih-Sheng,Li — 100%
Director Chao-Hsien Liu — 100%
Ningbo Innolux Optoelectronics Co., LTD
Chairman Kuo-Hsiung Kuo — 100%
Director Chien-Lang Lo — 100%
Director Cheng-Chung Chiang — 100%
Supervisor Chin-Yuan Chang — 100%
Ningbo Innolux Display LTD
Chairman Kuo-Hsiung Kuo — 100%
Director Chien-Lang Lo — 100%
Director Cheng-Chung Chiang — 100%
Supervisor Chin-Yuan Chang — 100%
- 117 -
8.1.6 Operational Highlights of INX Subsidiaries
Unit: NT$ thousands, 12/31/2018
Company Capital Stock
Assets Liabilities Net WorthNet
Revenue
Income (Loss) from
Operation
Net Income (Loss)
Basic Earnings
(Loss) Per Share
Bright Information Holding Ltd.
150,811 — — — — — 484 0.10
Golden Archiever International Limited
1,236 27,255 — 27,255 — (1) (6,180) (153.54)
Innolux Corporation — — — — — (316) (312) — Innolux Europe B.V. 105,828 853,969 169,977 683,992 1,044,890 70,235 84,949 226.04Innolux Holding Ltd. 5,895,046 17,885,878 — 17,885,878 — — 182,225 1.01Innolux Hong Kong Holding Limited
5,650,523 5,641,266 — 5,641,266 — — 576,248 0.50
Innolux Hong Kong Limited
1,777,555 12,239,458 11,735,018 504,440 34,279,974 341,214 292,656 8.36
Innolux Japan Co., Ltd. 274,937 4,311,396 628,648 3,682,748 2,682,720 24,735 2,095 11,638.35Innolux Optoelectronics Hong Kong Holding Ltd.
638,722 1,557,546 — 1,557,546 — — 190,912 1.17
Innolux Optoelectronics India Private Limited
173,366 167,806 15,406 152,400 — 25,559 (21,429) (0.54)
Innolux Optpelectronics Malaysia SDN. BHD.
118,248 119,190 530 118,660 — (882) 424 0.03
Innolux Optoelectronics Philippines Corp.
29,130 28,447 49 28,398 — (1,002) (767) (0.15)
Innolux Singapore Holding Pte. Ltd.
780,161 740,984 255 740,729 — (976) (21,324) (0.84)
Innolux Technology Germany GmbH
3,520 100,987 28,907 72,080 38,513 4,677 10,767 107.67
Innolux Technology USA Inc.
— — — — 47,213 1,557 1,847 —
Innolux USA, Inc. 363,727 5,418,841 4,752,819 666,022 5,245,603 21,490 19,772 1,539.64Keyway Investment Management Limited
50,877 82,110 — 82,110 — — 4,611 2.78
Lakers Trading Ltd. — 25,292,566 25,058,561 234,005 43,331,627 7,004 — — Landmark International Ltd.
21,790,757 44,597,800 — 44,597,800 — — 1,156,390 1.63
Leadtek Global Group Limited
1,535,750 23,375,982 21,840,232 1,535,750 20,095,581 1,376,226 495,227 9.9
Nets Trading Ltd. 27,644 28,260 — 28,260 — — (1,528) (1.7)Rockets Holding Ltd. 5,272,822 11,755,619 — 11,755,619 — — 27,224 0.17Stanford Developments Ltd.
5,037,260 11,727,222 — 11,727,222 — — 28,751 0.18
Suns Holding Ltd. 558,308 5,896,175 — 5,896,175 — — 155,001 8.53Toppoly Optoelectronics (B.V.I.) Ltd.
4,510,406 6,506,291 — 6,506,291 — — 143,267 0.98
Toppoly Optoelectronics (Cayman) Ltd.
4,509,484 6,505,932 — 6,50,932 — — 143,267 0.98
Warriors Technology Investments Ltd.
558,308 5,896,173 — 5,896,173 — — 155,001 8.53
Shanghai Innolux Optoelectronics Ltd.
645,045 5,393,819 3,836,273 1,557,546 8,894,852 181,219 190,912 —
Yuan Chi investment co., Ltd
2,100,000 875,040 253 874,787 — (273) 29,317 —
Foshan Innolux Flnet Electronics Ltd.
4,475 6,213, 216 5,997 20,676 482 263 —
- 118 -
Company Capital Stock
Assets Liabilities Net WorthNet
Revenue
Income (Loss) from
Operation
Net Income (Loss)
Basic Earnings
(Loss) Per Share
Foshan Innolux Optoelectronics Ltd.
11,763,845 49,146,054 28,585,930 20,287,124 66,804,730 111,882 (174,637) —
Foshan Innolux Logistics Ltd.
46,073 82,560 5,293 77,267 40,481 3,633 4,589 —
Nanjing Innolux Technology Ltd.
64,502 845,445 294,371 551,074 1,437,938 3,388 3,384 —
Nanjing Innolux Optoelectronics Ltd.
4,484,390 14,383,120 8,428,283 5,954,837 18,772,730 351,434 139,883 —
Shenzhen PixinLED Technology Co.,Ltd.
44,735 43,243 333 42,910 — (2,306) (1,879) —
InnoJoy Investment Corp. 1,674,054 1,303,727 149 1,303,578 — (227) (123,535) (0.74)Innocom Technology (Shenzhen) Co., LTD
5,037,260 12,283,023 555,853 11,727,170 249,759 5,153 28,751 —
Ningbo Innolux Flnet Electronics Ltd.
4,475 9,615 590 9,025 16,594 (800) 1,630 —
Ningbo Innolux Electronics Ltd.
134,259 533,724 72,886 460,838 380,340 107,257 97,411 —
Ningbo Innolux Optoelectronics Co., LTD
9,521,650 35,281,479 15,380,618 19,900,861 44,781,665 1,129,867 910,710 —
Ningbo Innolux Display LTD
4,914,400 14,291,392 9,788,145 4,503,247 24,934,978 722,010 417,960 —
8.2 Private Placement Securities in the Most Recent Years:
It has been approved by the Annual General Shareholders' Meeting held on 20 June, 2018 to authorize the
Board of Directors, within the limit of 950,000,000 common shares, depending on the market conditions and the
Company's capital needs, to choose appropriate timing and one or more fund raising instruments to issue new
common shares for cash to sponsor issuance of new common shares/ Preferred Stock for cash in private
placement and/or overseas or domestic convertible bonds in private placement in accordance with the applicable
laws and regulations.In consideration of the capital market situation, the Company will not continue with the
above private placement.
8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: None.
8.4 Special Notes: None.
IX. Materially might affect shareholders' equity or the price of the company's
securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, such situations shall be listed one by one: None.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Innolux Corporation and subsidiaries
Opinion
We have audited the accompanying consolidated balance sheets of Innolux Corporation (the
“Company”) and its subsidiaries as at December 31, 2018 and 2017, and the related consolidated
statements of comprehensive income, of changes in equity and of cash flows for the years then ended,
and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Company and its subsidiaries as at December 31,
2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years
then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by
Securities Issuers” and International Financial Reporting Standards, International Accounting Standards,
IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.
Basis for opinion
We 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 (ROC GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of Financial Statements section of our report. We are
independent of the Company and its subsidiaries in accordance with the Code of Professional Ethics for
Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements as a whole and, in forming our opinion thereon, we do not provide
a separate opinion on these matters.
- 119 -
The key audit matters in relation to the financial statements for the year ended December 31, 2018 are
outlined as follows:
Inventory valuation
Description
The industry is characterised in its significant fluctuations closely in connection with the economic
environment. As the technology evolves rapidly, the Group’s existing products may become obsolete
when the customers demand for new products or the Group fails to compete with the evolutionary
production approach. The abovementioned factors thus affect the sales amount ultimately. The Group
has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and
the cost has been written down to the net realizable value. For details of inventory, please refer to Note
6(6). As the amounts of inventories are material, the types of inventories vary, and the estimation of net
realizable value for individually obsolete or damaged inventories is dependent upon significant
management judgement, we consider inventory valuation a key audit matter.
How our audit addressed the matter
We assessed whether the accounting policies on the provision for the loss on decline in value and
obsoleteness of inventory are reasonable and in accordance with the accounting principles, as well as
whether they are applied consistently. We examined inventory aging report and assessed the
reasonableness of provision for the loss on slow-moving inventory. We also assessed the reasonableness
of net realizable value and the appropriateness of valuation basis.
Valuation and impairment of goodwill and property, plant and equipment
Description
For details of the impairment valuation of goodwill and property, plant and equipment, please refer to
Notes 6(8) and 6(10).
Innolux Corporation estimates future cash flows based on appropriate discount rates. In determining
whether goodwill and property, plant and equipment may be impaired, the recoverable amount of the
cash generating unit is measured based on how assets are utilized, duration years of assets and projected
income and expenses in the future. The estimate involves several assumptions such as determination of
discount rates, expected growth rate and future financial projections. As these estimates are dependent
upon significant management judgement, we consider management’s assessment of impairment of
goodwill and property, plant and equipment a key audit matter.
- 120 -
How our audit addressed the matter
We assessed the key assumptions used by management in estimating expected future cash flows,
including the reasonableness of expected operating revenue, gross profit, changes in expenses, and the
basic assumptions applied in expected future cash flows. We also examined the parameters of discount
rates, including the risk-free rate of return on equity capital, the risk factor of the industry and the rate
of return on similar investments in the market.
Other matter – Parent company only financial reports
We have audited and expressed an unqualified opinion on the parent company only financial statements
of Innolux Co., Ltd. as at and for the years ended December 31, 2018 and 2017.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the “Regulations Governing the Preparation of Financial Reports by
Securities Issuers” and International Financial Reporting Standards, International Accounting Standards,
IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission,
and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing the Group’s
financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.
- 121 -
As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
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 auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
- 122 -
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
PricewaterhouseCoopers, Taiwan
February 14, 2019
------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.
- 123 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Assets Notes December 31, 2018 December 31, 2017
Current Assets
1100 Cash and cash equivalents 6(1) $ 33,847,328 $ 65,988,955
1110 Financial assets at fair value
through profit or loss - current
6(2)
398,913 405,060
1136 Financial assets at amortized cost
- current
6(4)
51,426,053 -
1170 Accounts receivable, net 6(5) 45,064,157 41,322,705
1180 Accounts receivable, net - related
parties
7
4,449,977 17,727,082
1200 Other receivables 7 1,489,260 1,212,164
130X Inventory 6(6) 30,856,552 30,259,021
1410 Prepayments 1,993,152 1,487,832
1479 Other current assets 8 208,724 127,136
11XX Total current assets 169,734,116 158,529,955
Non-current assets
1510 Financial assets at fair value
through profit or loss - non-
current
6(2)
1,599,869 257,676
1517 Financial assets at fair value
through other comprehensive
income - non-current
6(3)
3,834,376 -
1523 Available-for-sale financial assets
- non-current
12(4)
- 6,555,189
1550 Investments accounted for under
equity method
6(7)
1,802,921 1,491,139
1600 Property, plant and equipment 6(8), 7 and 8 206,617,960 220,864,627
1760 Investment property, net 6(9) 551,970 562,697
1780 Intangible assets 6(10) and 8 17,681,485 17,910,908
1840 Deferred income tax assets 6(25) 7,223,864 6,348,761
1990 Other non-current assets 6(8) and 8 2,873,043 2,337,806
15XX Total non-current assets 242,185,488 256,328,803
1XXX Total assets $ 411,919,604 $ 414,858,758
(Continued)
- 124 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
The accompanying notes are an integral part of these consolidated financial
statements.
Liabilities and Equity Notes December 31, 2018 December 31, 2017
Current Liabilities
2120 Financial liabilities at fair value
through profit or loss - current
6(2)
$ 23,779 $ 52,500
2170 Accounts payable 52,350,845 50,876,500
2180 Accounts payable - related parties 7 2,652,127 2,565,010
2200 Other payables 6(11) and 7 32,581,609 58,897,804
2230 Current income tax liabilities 6(25) 5,593,063 1,891,188
2250 Provisions - current 6(14) and 9 6,782,914 5,460,862
2320 Long-term liabilities, current
portion
6(12)
16,194,486 10,951,114
2399 Other current liabilities 4,095,853 1,199,194
21XX Total current liabilities 120,274,676 131,894,172
Non-current liabilities
2540 Long-term borrowings 6(12) 35,142,090 17,287,788
2570 Deferred income tax liabilities 6(25) 880,013 734,423
2600 Other non-current liabilities 6(13) 632,120 617,327
25XX Total non-current liabilities 36,654,223 18,639,538
2XXX Total liabilities 156,928,899 150,533,710
Equity attributable to owners of
the parent
3110 Share capital - common stock 6(15) 99,520,720 99,520,720
3200 Capital surplus 6(16) 99,648,115 99,646,919
Retained earnings 6(17)
3310 Legal reserve 7,648,437 3,945,576
3320 Special reserve 1,090,721 3,418,804
3350 Unappropriated retained earnings 51,746,175 58,883,750
3400 Other equity interest 6(18) ( 4,663,463 ) ( 1,090,721 )
3XXX Total equity 254,990,705 264,325,048
3X2X Total liabilities and equity $ 411,919,604 $ 414,858,758
- 125 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)
Items Notes 2018 2017
4000 Sales revenue 6(19) and 7 $ 279,376,115 $ 329,174,401
5000 Operating costs 6(6)(23) and 7 ( 252,562,557 ) ( 260,435,724 )
5900 Net operating margin 26,813,558 68,738,677
Operating expenses 6(24)
6100 Selling expenses ( 3,071,282 ) ( 1,942,594 )
6200 General and administrative
expenses ( 6,771,502 ) ( 6,857,153 )
6300 Research and development
expenses ( 12,135,478 ) ( 12,916,721 )
6000 Total operating expenses ( 21,978,262 ) ( 21,716,468 )
6900 Operating profit 4,835,296 47,022,209
Non-operating income and
expenses
7010 Other income 6(20) 3,025,467 2,528,814
7020 Other gains and losses 6(21) ( 1,168,235 ) ( 154,188 )
7050 Finance costs 6(22) ( 566,967 ) ( 730,500 )
7060 Share of profit/(loss) of
associates and joint ventures
accounted for under equity
method
6(7)
443,869 274,854
7000 Total non-operating income
and expenses 1,734,134 1,918,980
7900 Profit before income tax 6,569,430 48,941,189
7950 Income tax expense 6(25) ( 4,346,668 ) ( 11,912,580 )
8200 Profit for the year $ 2,222,762 $ 37,028,609
(Continued)
- 126 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)
The accompanying notes are an integral part of these consolidated financial statements.
Items Notes 2018 2017
Other comprehensive (loss) income (net) Components of other comprehensive loss that will not be reclassified to profit or loss
8311 Remeasurement of defined benefit obligations
6(13) ( $ 29,878 ) ( $ 49,571 )
8316 Unrealized gains (losses) on financial assets at fair value through other comprehensive income
6(18)
( 2,828,816 ) - 8349 Income tax related to
components of other comprehensive income that will not be reclassified to profit or loss
6(25)
5,976 8,427 8310 Components of other
comprehensive loss that will not be reclassified to profit or loss ( 2,852,718 ) ( 41,144 )
Components of other comprehensive (loss) income that will be reclassified to profit or loss
8361 Financial statements translation differences of foreign operations
6(18) ( 828,563 ) ( 1,643,264 )
8362 Unrealized gain on valuation of available-for-sale financial assets
6(18)
- 4,322,008 8370 Share of other comprehensive
income (loss) of associates and joint ventures accounted for under equity method
6(18)
84,637 ( 33,551 ) 8399 Income tax relating to the
components of other comprehensive loss that will be reclassified to profit or loss
6(25)
- ( 317,110 ) 8360 Components of other
comprehensive (loss) income that will be reclassified to profit or loss ( 743,926 ) 2,328,083
8300 Other comprehensive (loss) income for the year, net of tax ( $ 3,596,644 ) $ 2,286,939
8500 Total comprehensive (loss) income for the year ( $ 1,373,882 ) $ 39,315,548
Profit (loss) attributable to: 8610 Owners of the parent $ 2,222,762 $ 37,028,609
Other comprehensive (loss) income attributable to:
8710 Owners of the parent ( $ 1,373,882 ) $ 39,315,548
Earnings per share (in dollars) 6(26) 9750 Basic earnings per share $ 0.22 $ 3.72
9850 Diluted earnings per share $ 0.22 $ 3.63
- 127 -
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- 128 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Notes 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax $ 6,569,430 $ 48,941,189
Adjustments
Adjustments to reconcile profit (loss)
Depreciation and amortization 6(23) 35,878,131 33,564,048
Net loss on financial assets or liabilities at fair
value through profit or loss 301,253 -
Expected credit loss 100,233 -
Share of loss of associates and joint ventures
accounted for under equity method
6(7)
( 443,869 ) ( 274,854 )
Gain from disposal of investments 6(21) ( 968 ) ( 2,483,645 )
Loss on disposal of property, plant and
equipment
6(21)
267,509 597,261
Impairment loss 6(21) - 3,120,824
Interest expense 6(22) 566,967 730,500
Interest income 6(20) ( 991,116 ) ( 472,331 )
Dividend income 6(20) ( 236,574 ) ( 151,677 )
Unrealized foreign exchange loss (gain) 149,778 ( 4,725 )
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value
through profit or loss - current ( 22,574 ) ( 1,486,042 )
Accounts receivable ( 1,514,778 ) 11,532,927
Accounts receivable - related parties 13,277,320 ( 6,127,723 )
Other receivables ( 214,028 ) 845,803
Inventories ( 597,531 ) ( 6,857,293 )
Prepayments ( 505,320 ) 64,541
Other current assets ( 55,873 ) 23,807
Changes in operating liabilities
Accounts payable 1,474,345 ( 998,805 )
Accounts payable - related parties 87,117 ( 2,555,225 )
Other payables ( 1,755,666 ) 6,975,259
Provisions - current 1,322,052 1,695,628
Other current liabilities 370,916 ( 221,458 )
Other non-current liabilities ( 78,805 ) 16,688
Cash inflow generated from operations 53,947,949 86,474,697
Cash paid for income tax ( 1,368,330 ) ( 3,832,038 )
Net cash flows from operating activities 52,579,619 82,642,659
(Continued)
- 129 -
INNOLUX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Notes 2018 2017
The accompanying notes are an integral part of these consolidated financial statements.
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets or liabilities at fair
value through profit or loss - non-current ( $ 172,555 ) $ -
Acquisition of investments in equity instruments
measured at fair value through other
comprehensive income ( 1,568,983 ) -
Acquisition of financial assets at amortized cost ( 51,592,853 ) -
Acquisition of available-for-sale financial assets - ( 122,755 )
Proceeds from disposal of available-for-sale
financial assets - 2,907,052
Proceeds from capital reduction of available-for-
sale financial assets - 145,575
Increase in investment accounted for under equity
method ( 93,443 ) -
Proceeds from disposal of investment accounted for
under equity method 28,928 -
Increase in other financial assets ( 376,107 ) ( 45,381 )
Acquisition of property, plant and equipment 6(27) ( 46,702,767 ) ( 25,016,706 )
Proceeds from disposal of property, plant and
equipment 32,249 263,357
Acquisition of intangible assets 6(10) ( 72,614 ) ( 327,760 )
Decrease (increase) in other non-current assets 6,777 ( 2,404 )
Interest received 928,781 448,903
Dividends received 545,771 418,010
Net cash flows used in investing activities ( 99,036,816 ) ( 21,332,109 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings - ( 11,579,025 )
Increase in long-term borrowings 34,000,000 -
Payment of long-term borrowings ( 10,960,000 ) ( 16,440,000 )
Interest paid ( 472,841 ) ( 588,511 )
Cash dividends paid 6(17) ( 7,961,657 ) ( 995,204 )
Net cash flows from (used in) financing
activities 14,605,502 ( 29,602,740 )
Effect of changes in foreign currency exchange ( 289,932 ) ( 1,103,694 )
Net (decrease) increase in cash and cash equivalents ( 32,141,627 ) 30,604,116
Cash and cash equivalents at beginning of year 65,988,955 35,384,839
Cash and cash equivalents at end of year $ 33,847,328 $ 65,988,955
- 130 -
INNOLUX CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)
1. HISTORY AND ORGANIZATION
(1) Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for
Establishment and Administration of Science Parks in Republic of China (R.O.C.). The Company
was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company
merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18,
2010, with the Company as the surviving entity.
(2) The Company and its subsidiaries (the “Group”) engage in the research, development, design,
manufacture and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low
temperature poly-silicon TFT-LCD.
2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These consolidated financial statements were authorized for issuance by the Board of Directors on
February 14, 2019.
3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting
Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share-based
payment transactions’
January 1, 2018
Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with
IFRS 4 Insurance contracts’
January 1, 2018
IFRS 9, ‘Financial instruments’ January 1, 2018
IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018
Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from
contracts with customers’
January 1, 2018
Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealized losses’
January 1, 2017
Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018
IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018
- 131 -
Except for the following, the above standards and interpretations have no significant impact to the
Group’s financial condition and financial performance based on the Group’s assessment.
A. IFRS 9, ‘Financial instruments’
(a) Classification of debt instruments is driven by the entity’s business model and the contractual
cash flow characteristics of the financial assets, which would be classified as financial assets
at fair value through profit or loss, financial assets measured at fair value through other
comprehensive income or financial assets measured at amortized cost. Equity instruments
would be classified as financial assets at fair value through profit or loss, unless an entity
makes an irrevocable election at inception to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument that is not held
for trading.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’
approach. An entity assesses at each balance sheet date whether there has been a significant
increase in credit risk on that instrument since initial recognition to recognize 12-month
expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the
gross carrying amount of the asset before impairment losses occurred); or if the instrument
that has objective evidence of impairment, interest revenue after the impairment would be
calculated on the book value of net carrying amount (i.e. net of credit allowance). The
Company shall always measure the loss allowance at an amount equal to lifetime expected
credit losses for trade receivables that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely
with an entity’s risk management strategy. Risk components of non-financial items and a group
of items can be designated as hedged items. The standard relaxes the requirements for hedge
effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’;
while its risk management objective remains unchanged, an entity shall rebalance the hedged
item or the hedging instrument for the purpose of maintaining the hedge ratio.
(d) The Group has elected not to restate prior period financial statements using the modified
retrospective approach under IFRS 9. The significant effect of applying the new standards as
of January 1, 2018 are summarized as below:
i. In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the
amount of $5,086,506, and made an irrevocable election at initial recognition on equity
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
1, ‘First-time adoption of International Financial Reporting Standards’
January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
12, ‘Disclosure of interests in other entities’
January 1, 2017
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS
28, ‘Investments in associates and joint ventures’
January 1, 2018
- 132 -
instruments not held for dealing or trading purpose, by increasing financial assets at fair
value through other comprehensive income in the amount of $5,086,506. There was no
effect on retained earnings and other equity interest.
ii. In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the
amount of $1,468,683 by increasing financial assets at fair value through profit or loss in
the amount of $1,468,683. There was no effect on retained earnings and other equity
interest.
B. IFRS 15, ‘Revenue from contracts with customers’ and amendments
(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’,
IAS 18, ‘Revenue’, and relevant interpretations and SICs. According to IFRS 15, revenue is
recognized when a customer obtains control of goods or services. A customer obtains control
of goods or services when a customer has the ability to direct the use of, and obtain
substantially all of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. An entity recognizes
revenue in accordance with that core principle by applying the following steps:
Step 1: Identify contracts with customer.
Step 2: Identify performance obligations in the contract(s).
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price.
Step 5: Recognize revenue when the performance obligation is satisfied.
Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an
entity to disclose sufficient information to enable users of financial statements to understand
the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts
with customers.
(b) The Group has elected not to restate prior period financial statements using the modified
retrospective approach under IFRS 15. The significant effects of applying the new standards
as of January 1, 2018 are summarized as below:
Presentation of assets and liabilities in relation to contracts with customers
In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in
the balance sheet as follows:
Under IFRS 15, liabilities in relation to expected volume discounts and refunds to customers
are recognized as refund liabilities, but were previously presented as accounts receivable-
allowance for sales returns and discounts in the balance sheet. As of January 1, 2018, the
balance amounted to $2,327,123.
- 133 -
C. Amendments to IAS 7, ‘Disclosure initiative’
This amendment requires that an entity shall provide more disclosures related to changes in
liabilities arising from financing activities, including both changes arising from cash flows and
non-cash changes.
The Group expects to provide additional disclosure to explain the changes in liabilities arising
from financing activities.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by
the Group
New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as
follows:
Except for the following, the above standards and interpretations have no significant impact to the
Group’s financial condition and financial performance based on the Group’s assessment.
IFRS 16, ‘Leases’
IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard
requires lessees to recognize a ‘right-of-use asset’ and a lease liability (except for those leases with
terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors,
which is to classify their leases as either finance leases or operating leases and account for those two
types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
The Group expects to recognize the lease contract of lessees in line with IFRS 16. However, the
Group intends not to restate the financial statements of prior period (collectively referred herein as
the “modified retrospective approach”). On January 1, 2019, it is expected that right-of-use asset
and lease liability will be increased by $7,029,771 and $6,180,682, and retained earnings stay the
same.
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative
compensation’
January 1, 2019
IFRS 16, ‘Leases’ January 1, 2019
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint
ventures’
January 1, 2019
IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle January 1, 2019
- 134 -
(3) IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as
endorsed by the FSC are as follows:
The above standards and interpretations have no significant impact to the Group’s financial condition
and financial performance based on the Group’s assessment.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the periods presented, unless
otherwise stated.
(1) Compliance statement
The consolidated financial statements of the Group have been prepared in accordance with the
“Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International
Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC
Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).
(2) Basis of preparation
A. Except for the following items, these consolidated financial statements have been prepared under
the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through
profit or loss.
(b) Financial assets at fair value through other comprehensive income/available-for-sale financial
assets measured at fair value.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less
present value of defined benefit obligations.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgment in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed in Note 5.
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of
Material’
January 1, 2020
Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
To be determined by
International Accounting
Standards Board
IFRS 17, ‘Insurance contracts’ January 1, 2021
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C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified
retrospective approach. There was no cumulative impact of the adoption on retained earnings or
other equity as of January 1, 2018 and the financial statements for the year ended December 31,
2017 was not restated. The financial statements for the year ended December 31, 2017 were
prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International
Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related
financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant
accounting policies and details of significant accounts.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are
all entities (including structured entities) controlled by the Group. The Group controls an entity
when the Group is exposed, or has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. Consolidation
of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases
when the Group loses control of the subsidiaries.
(b) Significant inter-company transactions, balances and unrealized gains or losses on transactions
between companies within the Group are eliminated. Accounting policies of subsidiaries have
been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners
of the parent and to the non-controlling interests. Total comprehensive income is attributed to
the owners of the parent and to the non-controlling interests even if this results in the non-
controlling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing
control of the subsidiary (transactions with non-controlling interests) are accounted for as
equity transactions, i.e. transactions with owners in their capacity as owners. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of
the consideration paid or received is recognized directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained
in the former subsidiary at its fair value. Any difference between fair value and carrying amount
is recognized in profit or loss. All amounts previously recognized in other comprehensive
income in relation to the subsidiary would be reclassified to profit or loss when the related
assets or liabilities are disposed of.
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B. Subsidiaries included in the consolidated financial statements:
Main
Business December December
Name of Investor Name of Subsidiary Activities 31, 2018 31, 2017 Description
Innolux Corporation Bright Information Holding Ltd. Investment holdings 100 100 -
Golden Achiever International
Limited
Investment holdings 100 100 -
Innolux Holding Limited Investment holdings 100 100 -
Keyway Investment
Management Limited
Investment holdings 100 100 -
Landmark International Ltd. Investment holdings 100 100 -
Toppoly Optoelectronics
(B.V.I.) Ltd.
Investment holdings 100 100 -
Innolux Hong Kong Holding
Limited
Investment holdings 100 100 -
Leadtek Global Group Limited Distribution
company
100 100 -
Yuan Chi Investment Co., Ltd. Investment
company
100 100 -
InnoJoy Investment Corporation Investment
company
100 100 -
Innolux Japan Co., Ltd.
(Formerly name: Innolux
Optoelectronics
Japan Co., Ltd.)
Investment, R&D.
manufacturing and
distribution
company
54 49 (c)
Innolux Corporation Distribution
company
- 100 (c)
Innolux Technology USA Inc. Distribution
company
- 100 (c)
Innolux Singapore Holding Pte.
Ltd.
Investment holdings 100 100 -
Golden Achiever
International Limited
VAP Optoelectronics (Nanjing)
Corp.
Processing company - 100 (e)
Innolux Holding
Limited
Rockets Holding Ltd. Investment holdings 100 100 -
Suns Holding Ltd. Investment holdings 100 100 -
Lakers Trading Ltd. Distribution
company
100 100 -
Keyway Investment
Management Limited
Foshan Innolux Logistics Ltd. Warehousing
company
100 100 -
Landmark
International Ltd.
Ningbo Innolux Optoelectronics
Ltd.
Processing company 100 100 -
Foshan Innolux Optoelectronics
Ltd.
Processing company 100 100 -
Ningbo Innolux Display Ltd. Processing company 100 100 -
Toppoly
Optoelectronics
(B.V.I.) Ltd.
Toppoly Optoelectronics
(Cayman) Ltd.
Investment holdings 100 100 -
Ownership (%)
- 137 -
Main
Business December December
Name of Investor Name of Subsidiary Activities 31, 2018 31, 2017 Description
Ownership (%)
Innolux Hong Kong
Holding Limited
Innolux Optoelectronics
Hong Kong Holding Limited
Investment holdings 100 100 -
Innolux Hong Kong Limited Distribution
company
100 100 -
Innolux Europe B.V.
(Formerly name: Innolux
Technology Europe B.V.)
Investment,
distribution, and
R&D testing
company
100 100 -
Innolux Japan Co., Ltd. Investment, R&D.
manufacturing and
distribution
company
46 51 -
Innolux Japan Co.,
Ltd.
Innolux USA, Inc.
(Formerly name: Innolux
Optoelectronics USA, Inc.)
Distribution
company
100 100 (c)
Innolux Singapore
Holding Pte. Ltd.
Innolux Optoelectronics India
Private Limited
Distribution
company
100 - (b)
Innolux Optoelectronics
Philippines Corp.
Manufacturing and
distribution
company
100 - (b)
Innolux Optoelectronics
Malaysia SDN. BHD.
Manufacturing and
distribution
company
100 - (b)
Rockets Holding Ltd. Stanford Developments Ltd. Investment holdings 100 100 -
Nets Trading Ltd. Investment
company
100 100 -
Suns Holding Ltd. Warriors Technology
Investments Ltd.
Investment
company
100 100 -
Toppoly
Optoelectronics
(Cayman) Ltd.
Nanjing Innolux Technology
Ltd.
Distribution
company
100 100 -
Nanjing Innolux
Optoelectronics Ltd.
Processing company 100 100 -
Innolux
Optoelectronics Hong
Kong Holding
Limited
Shanghai Innolux
Optoelectronics Ltd.
Processing company 100 100 -
Innolux Europe B.V. Innolux Technology Germany
GmbH
Testing and
maintenance
company
100 100 -
Innolux Optoelectronics
Germany GmbH
After sales service
company
- 100 (a)
Stanford
Developments Ltd.
Innocom Technology
(Shenzhen) Co., Ltd.
Processing company 100 100 -
Ningbo Innolux
Display Ltd.
Ningbo Innolux Electornics Ltd. Distribution
company
100 100 -
Ningbo Innolux
Optoelectronics Ltd.
Ningbo Innolux Flent
Electornics Ltd.
Distribution
company
100 100 -
- 138 -
(a) In the third quarter of 2018, Innolux Optoelectronics Germany Gmbh had completed
liquidation and dissolution.
(b) Innolux Optoelectronics India Private Limited, Innolux Optoelectronics Philippines Corp. and
Innolux Optoelectronics Malaysia SDN. BHD was established in the first quarter of 2018 and
was included in the consolidated financial statements since the date of establishment.
(c) The Company’s wholly-owned subsidiary, Innolux Japan Co., Ltd., issued new shares to obtain
the equity share of Innolux Corporation and Innolux Technology USA Inc. which also are
wholly owned by the Company. Innolux Optoelectronics USA, Inc., the directly wholly-owned
subsidiary of Innolux Japan Co., Ltd., issued new share to Innolux Japan Co., Ltd. and obtained
the equity share of Innolux Corporation and Innolux Technology USA Inc., and merged with
these companies. Innolux Optoelectronics USA, Inc. was the surviving company. The effective
date was February 28, 2018, and was accounted as reorganization. Innolux Optoelectronics
USA, Inc. was renamed Innolux USA, Inc on March 2018.
(d) Shenzhen PixinLED Technology Co., Ltd. was established in the first quarter of 2018 and was
included in the consolidated financial statement since the date of establishment.
(e) In the fourth quarter of 2018, VAP Optoelectronics (Nanjing) Corp. had completed liquidation
and dissolution.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. The restrictions on fund remittance from subsidiaries to the parent company: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.
(4) Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the “functional
currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the
Company’s functional and the Group’s presentation currency.
A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions are
recognized in profit or loss in the period in which they arise, except when deferred in other
comprehensive income statements as qualifying cash flow hedge.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-
translated at the exchange rates prevailing at the balance sheet date. Exchange differences
arising upon re-translation at the balance sheet date are recognized in profit or loss.
Main
Business December December
Name of Investor Name of Subsidiary Activities 31, 2018 31, 2017 Description
Ownership (%)
Foshan Innolux
Optoelectronics Ltd.
Foshan Innolux Flent
Electornics Ltd.
Distribution
company
100 100 -
Innocom Technology
(Shenzhen) Co.,
LTD.
Shenzhen PixinLED
Technology Co., LTD.
R&D and
distribution
company
100 - (d)
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(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value
through profit or loss are re-translated at the exchange rates prevailing at the balance sheet
date; their translation differences are recognized in profit or loss. Non-monetary assets and
liabilities denominated in foreign currencies held at fair value through other comprehensive
income are re-translated at the exchange rates prevailing at the balance sheet date; their
translation differences are recognized in other comprehensive income. However, non-
monetary assets and liabilities denominated in foreign currencies that are not measured at fair
value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income
within ‘other gains and losses’.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a
functional currency different from the presentation currency are translated into the
presentation currency as follows:
i. Assets and liabilities for each balance sheet presented are translated at the spot exchange
rate at the date of that balance sheet;
ii. Income and expenses for each statement of comprehensive income are translated at
average exchange rates of that period; and
iii. All resulting exchange differences are recognized in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences
that were recorded in other comprehensive income are proportionately reclassified to profit or
loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest
in the former foreign associate after losing significant influence over the former foreign
associate, such transactions should be accounted for as disposal of all interest in these foreign
operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange
differences that were recorded in other comprehensive income are proportionately transferred
to the non-controlling interest in this foreign operation. In addition, even when the Group
retains partial interest in the former foreign subsidiary after losing control of the former foreign
subsidiary, such transactions should be accounted for as disposal of all interest in the foreign
operation.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are
classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realized, or are intended to be
sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realized within twelve months from the balance sheet date;
- 140 -
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are
to be exchanged or used to settle liabilities more than twelve months after the balance sheet
date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they
are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than
twelve months after the balance sheet date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
(6) Cash equivalents
Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known
amounts of cash and subject to an insignificant risk of changes in value. Time deposits and bonds
sold under repurchase agreement that meet the definition above and are held for the purpose of
meeting short-term cash commitments in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at
amortized cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are
recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognizes the
transaction costs in profit or loss. The Group subsequently measures the financial assets at fair
value, and recognizes the gain or loss in profit or loss.
D. The Group recognizes the dividend income when the right to receive payment is established, future
economic benefits associated with the dividend will flow to the Group and the amount of the
dividend can be measured reliably.
(8) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities
which are not held for trading, and for which the Group has made an irrevocable election at initial
recognition to recognize changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive
income are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs.
The Group subsequently measures the financial assets at fair value:
The changes in fair value of equity investments that were recognized in other comprehensive
income are reclassified to retained earnings and are not reclassified to profit or loss following the
- 141 -
derecognition of the investment. Dividends are recognized as revenue when the right to receive
payment is established, future economic benefits associated with the dividend will flow to the
Group and the amount of the dividend can be measured reliably.
(9) Financial assets at amortized cost
A. Financial assets at amortized cost are those that meet all of the following criteria:
(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and
derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs.
Interest income from these financial assets is included in finance income using the effective
interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or
impaired.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity
period and are measured at initial investment amount as the effect of discounting is immaterial.
(10) Accounts and notes receivable
A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange
for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured
at initial invoice amount as the effect of discounting is immaterial.
C. The Group’s operating pattern of accounts receivable that are expected to be factored is for the
purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently
measured at fair value, with any changes in fair value recognized in other comprehensive income.
(11) Impairment of financial assets
For accounts receivable that have a significant financing component, at each reporting date, the
Group recognizes the impairment provision for 12 months expected credit losses if there has not
been a significant increase in credit risk since initial recognition or recognizes the impairment
provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial
recognition after taking into consideration all reasonable and verifiable information that includes
forecasts. On the other hand, for accounts receivable that do not contain a significant financing
component, the Group recognizes the impairment provision for lifetime ECLs.
(12) Derecognition of financial assets
The Group derecognizes a financial asset when one of the following conditions is met:
A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the
Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however,
the Group has not retained control of the financial asset.
- 142 -
(13) Operating leases (lessor)
Lease income from an operating lease (net of any incentives given to the lessee) is recognized in
profit or loss on a straight-line basis over the lease term.
(14) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the
weighted-average method. The cost of finished goods and work in progress comprises raw materials,
direct labour, other direct costs and related production overheads (allocated based on normal
operating capacity). It excludes borrowing costs. The item by item approach is used in applying the
lower of cost and net realizable value. Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated cost of completion and applicable variable selling
expenses.
(15) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In
general, it is presumed that the investor has significant influence, if an investor holds, directly or
indirectly 20 per cent or more of the voting power of the investee. Investments in associates are
accounted for using the equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or
loss, and its share of post-acquisition movements in other comprehensive income is recognized
in other comprehensive income. When the Group’s share of losses in an associate equals or
exceeds its interest in the associate, the Group does not recognize further losses, unless it has
incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive
income of the associate and such changes do not affect the Group’s ownership percentage of the
associate, the Group recognizes change in ownership interests in the associate in ‘capital surplus’
in proportion to its ownership.
D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent
of the Group’s interest in the associates. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been adjusted where necessary to ensure consistency with the policies adopted
by the Group.
(16) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the
construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognized. All other repairs and maintenance are charged to profit or loss
during the financial period in which they are incurred.
- 143 -
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated
using the straight-line method to allocate their cost over their estimated useful lives. Each part of
an item of property, plant, and equipment with a cost that is significant in relation to the total cost
of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each financial year-end. If expectations for the assets’ residual values and useful
lives differ from previous estimates or the patterns of consumption of the assets’ future economic
benefits embodied in the assets have changed significantly, any change is accounted for as a
change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and
Errors’, from the date of the change. The estimated useful lives of property, plant and equipment
are as follows:
Buildings and structures 2~51 years
Machinery and equipment 5~11 years
Other equipment 2~6 years
(17) Investment property
An investment property is stated initially at its cost and measured subsequently using the cost model.
Except for land, investment property is depreciated on a straight-line basis over its estimated useful
life of 25 ~ 50 years.
(18) Intangible assets
A. Goodwill arises in a business combination accounted for by applying the acquisition method.
B. Patent, royalties and other intangible assets are amortized on a straight-line basis over their
estimated useful lives of 2 ~ 10 years.
(19) Impairment of non-financial assets
A. The Group assesses at each balance sheet date the recoverable amounts of those assets where
there is an indication that they are impaired. An impairment loss is recognized for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the
circumstances or reasons for recognizing impairment loss for an asset in prior years no longer
exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal
should not be more than what the depreciated or amortized historical cost would have been if the
impairment had not been recognized.
B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and
intangible assets that have not yet been available for use are evaluated periodically. An
impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not
be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to each of the cash-generating units, or groups of cash-generating units, that is/are expected to
- 144 -
benefit from the synergies of the business combination. Each unit or group of units to which the
goodwill is allocated represents the lowest level within the entity at which the goodwill is
monitored for internal management purposes. Goodwill is monitored at the operating segment
level.
(20) Borrowings
A. Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized
initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognized in profit or loss over the period of the borrowings using the effective interest
method.
B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to
the extent that it is probable that some or all of the facility will be drawn down. In this case, the
fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for
liquidity services and amortized over the period of the facility to which it relates.
(21) Notes and accounts payable
A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes
payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at
initial invoice amount as the effect of discounting is immaterial.
(22) Financial liabilities at fair value through profit or loss
A. Financial liabilities are classified in this category of held for trading if acquired principally for
the purpose of repurchasing in the short-term. Derivatives are also categorized as financial
liabilities held for trading unless they are designated as hedges.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related
transaction costs are recognized in profit or loss. The Group subsequently measures these
financial liabilities at fair value with any gain or loss recognized in profit or loss.
C. If the credit risk results in fair value changes in financial liabilities designated as at fair value
through profit or loss, they are recognized in other comprehensive income in the circumstances
other than avoiding accounting mismatch or recognizing in profit or loss for loan commitments
or financial guarantee contracts.
(23) Provisions
Provisions (including warranties, litigation, etc.) are recognized when the Group has a present legal
or constructive obligation as a result of past events, and it is probable that an outflow of economic
resources will be required to settle the obligation and the amount of the obligation can be reliably
estimated. Provisions are measured at the present value of the expenditures expected to be required
to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate
that reflects the current market assessments of the time value of money and the risks specific to the
- 145 -
obligation. When discounting is used, the increase in the provision due to passage of time is
recognized as interest expense. Provisions are not recognized for future operating losses.
(24) Employee benefits
A. Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits expected
to be paid in respect of service rendered by employees in a period and should be recognized as
expense in that period when the employees render service.
B. Pensions
(a) Defined contribution plans
For defined contribution plans, the contributions are recognized as pension expense when they
are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a
cash refund or a reduction in the future payments.
(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of
pension benefits that employees will receive on retirement for their services with the Group
in current period or prior periods. The liability recognized in the balance sheet in respect
of defined benefit pension plans is the present value of the defined benefit obligation at the
balance sheet date less the fair value of plan assets. The net defined benefit obligation is
calculated annually by independent actuaries using the projected unit credit method. The
rate used to discount is determined by using interest rates of government bonds (at the
balance sheet date) that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating to the terms of the related pension
liability.
ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive
income in the period in which they arise and are recorded as retained earnings.
C. Employees’ compensation and directors’ remuneration
Employees’ compensation and directors’ remuneration are recognized as expense and liability,
provided that such recognition is required under legal or constructive obligation and those
amounts can be reliably estimated. Any difference between the resolved amounts and the
subsequently actual distributed amounts is accounted for as changes in estimates.
(25) Employee share-based payment
Restricted stocks:
A. Restricted stocks issued to employees are measured at the fair value of the equity instruments
granted at the grant date, and are recognized as compensation cost over the vesting period.
B. For restricted stocks where employees have to pay to acquire those stocks, if employees resign
during the vesting period, they must return the stocks to the Group and the Group must refund
their payments on the stocks. The Group recognizes the payments from the employees who are
expected to resign during the vesting period as liabilities at the grant date, and recognizes the
- 146 -
payments from the employees who are expected to be eventually vested with the stocks in ’capital
surplus – others’.
(26) Income taxes
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or
loss, except to the extent that it relates to items recognized in other comprehensive income or
items recognized directly in equity, in which cases the tax is recognized in other comprehensive
income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the Company and its subsidiaries operate
and generate taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in accordance with applicable tax regulations. It establishes provisions
where appropriate based on the amounts expected to be paid to the tax authorities. An additional
tax is levied on the unappropriated retained earnings and is recorded as income tax expense in
the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the balance sheet date and are expected to apply when the
related deferred tax asset is realized or the deferred tax liability is settled.
D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilized. At each balance sheet
date, unrecognized and recognized deferred tax assets are reassessed.
E. A deferred tax asset shall be recognized for the carryforward of unused tax credits result ing from
research and development expenditures to the extent that it is possible that future taxable profit
will be available against which the unused tax credits can be utilized.
(27) Revenue recognition
A. The Group is primarily engaged in manufacture and sale of TFT-LCD panel products. The Group
recognizes revenue when the right of control is transferred to the customer when the products are
delivered to customer and the Group has no unperformed obligation that could affect customer
acceptance of the product. Delivery occurs when the products have been shipped to the specific
location, the risks of obsolescence and loss have been transferred to the customer, and either the
customer has accepted the products in accordance with the sales contract, or the Group has
objective evidence that all criteria for acceptance have been satisfied.
B. Sales revenue is calculated based on the contract price, net of volume discounts and sales returns
and discounts. Revenue from these sales is recognized based on the price specified in the contract,
net of the estimated volume discounts/ sales discounts and allowances. Accumulated experience
is used to estimate and provide for the volume discounts, sales discounts and allowances, using
the expected value method, and revenue is only recognized to the extent that it is highly probable
- 147 -
that a significant reversal will not occur. The estimation is subject to an assessment at each
reporting date. A refund liability is recognized for expected volume discounts, sales discounts
and allowances payable to customers in relation to sales made until the end of the reporting
period. No element of financing is deemed present as the sales are made, which is consistent with
market practice.
C. A receivable is recognized when the goods are delivered as this is the point in time that the
consideration is unconditional because only the passage of time is required before the payment
is due.
(28) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments.
5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION
UNCERTAINTY
The preparation of these consolidated financial statements requires management to make critical
judgements in applying the Group’s accounting policies and make critical assumptions and estimates
concerning future events. Assumptions and estimates may differ from the actual results and are
continually evaluated and adjusted based on historical experience and other factors. For the information
of critical accounting judgements, estimates and key sources of assumption uncertainty is addressed
below:
(1) Critical accounting estimates and assumptions
The Group makes estimates and assumptions based on the expectation of future events that are
believed to be reasonable under the circumstances at the end of the reporting period. The resulting
accounting estimates might be different from the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are addressed below:
A. Impairment assessment of goodwill
The impairment assessment of goodwill relies on the Group’s subjective judgement, including
identifying cash-generating units, allocating assets and liabilities as well as goodwill to related
cash-generating units, and determining the recoverable amounts of related cash-generating units.
Please refer to Note 6(10) for the information of goodwill impairment.
B. Impairment assessment of tangible and intangible assets (excluding goodwill)
The Group assesses impairment based on its subjective judgement and determines the separate
cash flows of a specific group of assets, useful lives of assets and the future possible income and
expenses arising from the assets depending on how assets are utilized and industrial
characteristics. Any changes of economic circumstances or estimates due to the change of Group
strategy might cause material impairment on assets in the future. Please refer to Notes 6(8) and
6(10) for the information of impairment assessment impairment.
- 148 -
C. Evaluation of inventories
As inventories are stated at the lower of cost and net realizable value, the Group must determine
the net realizable value of inventories on balance sheet date using judgements and estimates. Due
to the rapid technology innovation, the Group evaluates the amounts of normal inventory
consumption, obsolete inventories or inventories without market selling value on balance sheet
date, and writes down the cost of inventories to the net realizable value. Such an evaluation of
inventories is principally based on the demand for the products within the specified period in the
future. Therefore, there might be material changes to the evaluation.
6. DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents
A. The Group associates with a variety of financial institutions all with high credit quality to disperse
credit risk, so it expects that the probability of counterparty default is remote.
B. The above time deposits and bonds with repurchase agreement expire in 3 months and risks of
changes in their values are remote.
(2) Financial assets and liabilities at fair value through profit or loss
December 31, 2018 December 31, 2017
Cash on hand, checking accounts and demand deposits 14,148,462$ 37,758,696$
Time deposits 19,698,866 27,562,983
33,847,328 65,321,679
Cash equivalents - repurchase bonds - 667,276
33,847,328$ 65,988,955$
Assets December 31, 2018
Current items
Financial assets mandatorily measured at fair value through profit or loss
Forward foreign exchange contracts 398,913$
Non-current items
Financial assets mandatorily measured at fair value through profit or loss
Listed stocks 1,221,135$
Unlisted stocks 343,175
Convertible bonds 35,559
1,599,869$
Liabilities December 31, 2018
Current items
Financial liabilities held for trading
Forward foreign exchange contracts 16,644$
Forward exchange swap contracts 7,135
23,779$
- 149 -
A. The non-hedging derivative financial assets and liabilities transaction information are as follows:
The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import
and export proceeds in foreign currency. However, these forward foreign exchange contracts are
primarily for the requirement of capital management and not accounted for using hedge
accounting.
B. Information on financial assets and liabilities at fair value through profit or loss as of December
31, 2017 is provided in Note 12(4).
(3) Financial assets at fair value through other comprehensive income
A. The Group has elected to classify equity instruments that are considered to be strategic investments
as financial assets at fair value through other comprehensive income.
B. For information about that the Group recognized other comprehensive income for fair value change
for the year ended December 31, 2018, Please refer to Note 6(18) “Other equity”.
C. Information on available-for-sale financial assets as of December 31, 2017 is provided in Note
12(4).
Derivative financial assets and liabilities Contract Period
Current items
Forward foreign exchange contracts USD (sell) 398,000$ 2018/10-2019/3
JPY (buy) 44,416,685 2018/10-2019/3
Forward foreign exchange contracts EUR (sell) 35,000 2018/11-2019/2
HKD (buy) 312,329 2018/11-2019/2
Forward foreign exchange contracts EUR (sell) 10,000 2018/11-2019/2
JPY (buy) 1,288,425 2018/11-2019/2
Forward foreign exchange contracts USD (sell) 900,000 2018/10-2019/3
RMB (buy) 6,241,751 2018/10-2019/3
Forward exchange swap contracts USD (sell) 225,000 2018/12-2019/1
TWD (buy) 6,905,790 2018/12-2019/1
December 31, 2018
Contract Amount
(Notional Principal)
(in thousands)
December 31, 2018
Non-current items
Equity instruments
Listed stocks 2,661,075$
Emerging stocks and unlisted stocks 1,173,301
3,834,376$
- 150 -
(4) Financial assets at amortized cost
The Group recognized $200,018 of interest income arising from the financial assets at amortized cost
for the year ended December 31, 2018.
(5) Notes receivable and accounts receivable
A. The aging analysis of accounts receivable and notes receivable is as follows:
The above aging analysis was based on past due date.
B. Information relating to credit risk of accounts receivable is provided in Note 12(2).
(6) Inventories
For the years ended December 31, 2018 and 2017, the Company and Subsidiaries recognized cost of
goods sold for inventories that have been sold at $252,621,898 and $260,371,976 and recognized net
inventory gain (loss) at $59,340 and ($63,748) due to write down (reversal) of cost of scrap
inventories to net realizable value, respectively.
December 31, 2018
Current items
Time deposits with maturity over three months 51,426,053$
December 31, 2018 December 31, 2017
Notes receivable 25,132$ 27,641$
Accounts receivable 45,248,754 43,731,467
45,273,886 43,759,108
Less: Allowance for sales returns and discounts - 2,326,907)(
Allowance for uncollectible accounts 209,729)( 109,496)(
45,064,157$ 41,322,705$
December 31, 2018 December 31, 2017
Not past due 44,209,582$ 40,242,878$
Up to 60 days 1,003,472 3,321,622
61 to 180 days 54,125 193,350
Over 180 days 6,707 1,258
45,273,886$ 43,759,108$
December 31, 2018 December 31, 2017
Raw materials and supplies 4,768,663$ 3,921,134$
Work in progress 14,071,053 13,754,503
Finished goods 12,016,836 12,583,384
30,856,552$ 30,259,021$
- 151 -
(7) Investments accounted for under the equity method
The operating results of the Group’s share in all individually immaterial associates are summarized
below:
(8) Property, plant and equipment
December 31, 2018 December 31, 2017
Ampower Holding Ltd. 956,577$ 853,016$
FI Medical Device Manufacturing Co., Ltd. 655,827 525,926
Others 190,517 112,197
1,802,921$ 1,491,139$
2018 2017
Profit for the year from continuing operations 443,869$ 274,854$
Other comprehensive income (loss) - net of tax 84,637 33,551)(
Total comprehensive income 528,506$ 241,303$
Years ended December 31,
Transfer, net
exchange
differences
At January 1 Additions Disposals and others At December 31
Cost:
Land 3,852,792$ -$ -$ -$ 3,852,792$
Buildings 196,417,863 342,354 209,999)( 2,971,063 199,521,281
Machinery and equipment 496,794,502 1,590,240 3,999,317)( 16,264,353 510,649,778
Other equipment 39,761,461 71,244 2,183,162)( 5,649,152 43,298,695
736,826,618 2,003,838 6,392,478)( 24,884,568 757,322,546
Accumulated depreciation
and impairment:
Buildings 114,356,774)( 8,762,007)( 201,616 13,218 122,903,947)(
Machinery and equipment 384,279,016)( 22,108,105)( 3,749,549 502,652)( 403,140,224)(
Other equipment 33,205,003)( 4,505,027)( 2,141,540 780,254)( 36,348,744)(
531,840,793)( 35,375,139)( 6,092,705 1,269,688)( 562,392,915)(
Unfinished construction and
equipment under acceptance 15,878,802 20,300,569 - 24,491,042)( 11,688,329
220,864,627$ 206,617,960$
2018
- 152 -
A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of
the interest rates for such capitalization are as follows:
B. For the year ended December 31, 2018, the Group has no amount of borrowing costs capitalized.
C. Information about the property, plant and equipment that were pledged to others as collateral is
provided in Note 8.
D. As of December 31, 2018 and 2017, the prepayments for business facilities which have not yet
entered the factory (shown as ‘other non-current assets’) amounted to $1,559,446 and $1,423,391,
respectively.
E. Information on impairment assessments is provided in Note 6 (10).
(9) Investment property
Transfer, net
exchange
differences
At January 1 Additions Disposals and others At December 31
Cost:
Land 3,852,792$ -$ -$ -$ 3,852,792$
Buildings 193,290,765 561,168 340,514)( 2,906,444 196,417,863
Machinery and equipment 438,234,703 29,244,575 7,438,732)( 36,753,956 496,794,502
Other equipment 36,511,450 473,132 1,199,395)( 3,976,274 39,761,461
671,889,710 30,278,875 8,978,641)( 43,636,674 736,826,618
Accumulated depreciation
and impairment:
Buildings 105,693,860)( 9,118,112)( 286,562 168,636 114,356,774)( Machinery and equipment 371,358,748)( 19,086,064)( 6,777,534 611,738)( 384,279,016)( Other equipment 29,890,362)( 4,162,139)( 1,151,295 303,797)( 33,205,003)(
506,942,970)( 32,366,315)( 8,215,391 746,899)( 531,840,793)(
Unfinished construction and
equipment under acceptance 36,414,118 23,779,405 105,943)( 44,208,778)( 15,878,802
201,360,858$ 220,864,627$
2017
Year ended December 31, 2017
Capitalized amount 203,902$
Range of the interest rates for capitalization 2.15%~2.41%
At January 1 Additions At December 31
Cost:
Land 188,247$ -$ 188,247$
Buildings 439,228 - 439,228
627,475 - 627,475
Accumulated depreciation:
Buildings 64,778)( 10,727)( 75,505)(
562,697$ 10,727)($ 551,970$
2018
- 153 -
The fair value of the investment property held by the Group as at December 31, 2018 and 2017 was
$1,660,504 and $1,423,964, respectively. The amounts mentioned above represent valuation results
of comparative method based on market trading information categorized within Level 3 in the fair
value hierarchy.
(10) Intangible assets
A. Intangible assets are goodwill, payments for TFT-LCD related technology and royalty.
At January 1 Additions At December 31
Cost:
Land 188,247$ -$ 188,247$
Buildings 439,228 - 439,228
627,475 - 627,475
Accumulated depreciation:
Buildings 54,050)( 10,728)( 64,778)(
573,425$ 10,728)($ 562,697$
2017
Transfer, net
exchange
differences
At January 1 Additions Disposals and others At December 31
Cost:
Patents and royalty 8,154,685$ -$ -$ -$ 8,154,685$
Goodwill 17,096,628 - - - 17,096,628
Others 5,005,156 72,614 21,237)( 190,664 5,247,197
30,256,469 72,614 21,237)( 190,664 30,498,510
Accumulated amortization
and impairment:
Patents and royalty 8,143,082)( 4,285)( - - 8,147,367)(
Others 4,202,479)( 487,980)( 21,237 436)( 4,669,658)(
12,345,561)( 492,265)( 21,237 436)( 12,817,025)(
17,910,908$ 419,651)($ -$ 190,228$ 17,681,485$
2018
- 154 -
B. Details of amortization of intangible assets are as follows:
C. The Group performed impairment analysis for recoverable amount of the goodwill at each
reporting date and used the value in use as the basis for calculation of the recoverable amount.
The value in use was calculated based on the estimated present value of future cash flows for
five years, which was discounted at the discount rate of 9.08% for the year ended December 31,
2018, to reflect the specific risks of the related cash generating units. The future cash flows were
estimated based on the future revenue, gross profit, and other operating costs each year. Based
on the evaluation above, the Group did not recognize impairment loss on goodwill for the year
ended December 31, 2018.
(11) Other payables
Transfer, net
exchange
differences
At January 1 Additions Disposals and others At December 31
Cost:
Patents and royalty 8,154,685$ -$ -$ -$ 8,154,685$
Goodwill 17,096,628 - - - 17,096,628
Others 4,417,732 327,760 55,492)( 315,156 5,005,156
29,669,045 327,760 55,492)( 315,156 30,256,469
Accumulated amortization
and impairment:
Patents and royalty 7,528,072)( 615,010)( - - 8,143,082)(
Others 3,694,652)( 571,995)( 55,492 8,676 4,202,479)(
11,222,724)( 1,187,005)( 55,492 8,676 12,345,561)(
18,446,321$ 859,245)($ -$ 323,832$ 17,910,908$
2017
2018 2017
Operating costs 355,874$ 1,051,664$
Operating expenses 136,391 135,341
492,265$ 1,187,005$
Years ended December 31,
December 31, 2018 December 31, 2017
Other personnel expenses 10,642,647$ 13,116,498$
Payable on machinery and equipment 7,982,978 32,381,338
Repairs and maintenance expense payable 2,625,869 2,568,063
Utilities expense payable 1,093,497 1,070,308
Other payables 10,236,618 9,761,597
32,581,609$ 58,897,804$
- 155 -
(12) Long-term borrowings
A. Please refer to Note 8 for the information on assets pledged as collateral for long-term
borrowings.
B. In the third quarter of 2017, the Company applied to extend the expiry date for 2 years pursuant
to the NT$68.5 billion syndicated loan agreement. On August 2, 2017, the Company was
informed of the banks’ unanimous consent.
C. The syndicated loan agreements specified that the Company shall meet covenants on current ratio,
liability ratio, interest coverage, and tangible net equity, based on the Company’s annual
consolidated financial statements audited by independent auditors. The Company’s financial
ratios on the consolidated financial statements for the years ended December 31, 2018 and 2017
are in compliance with the covenants on the syndicated loan agreement.
D. For repayment of borrowings from financial institutions and financing mid-term working capital
fund, the Board of Directors approved the signing of a syndicated loan with financial institution
in the amount of NT$43.75 billion on June 20, 2018.
(13) Pensions
A. Defined benefit pension plan
(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance
with the Labor Standards Law, covering all regular employees’ service years prior to the
enforcement of the Labor Pension Act on July 1, 2005, and service years thereafter of
employees who choose to continue to be subject to the pension mechanism under the Law.
Under the defined benefit pension plan, two units are accrued for each year of service for the
first 15 years and one unit for each additional year thereafter, subject to a maximum of 45
units. Pension benefits are based on the number of units accrued and the average monthly
salaries and wages of the last 6 months prior to retirement. The Company and its domestic
subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries
and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name
of the independent retirement fund committee. Also, the Company and its domestic
subsidiaries would assess the balance in the aforementioned labor pension reserve account
Type of loans Period December 31, 2018 December 31, 2017
Syndicated bank loans 2015/3/12
~2021/12/6
51,440,000$ 28,400,000$
Less:
Administrative expenses charged
by syndicated banks 103,424)( 161,098)(
Current portion (includes
administrative expenses) 16,194,486)( 10,951,114)(
35,142,090$ 17,287,788$
Range of interest rates 1.74%~1.96% 1.75%~2.06%
- 156 -
by December 31, every year. If the account balance is insufficient to pay the pension
calculated by the aforementioned method to the employees expected to qualify for retirement
in the following year, the Company and its domestic subsidiaries will make contributions for
the deficit by next March.
(b) The amounts recognized in the balance sheet are as follows:
(c) Movements in net defined benefit liabilities are as follows:
December 31, 2018 December 31, 2017
Present value of defined benefit obligations 2,000,113$ 1,902,852$
Fair value of plan assets 1,686,545)( 1,548,769)(
Net defined benefit liability 313,568$ 354,083$
Present value of
defined benefit Fair value Net defined
obligations of plan assets benefit liability
Year ended December
31, 2018
Balance at January 1 1,902,852$ 1,548,769$ 354,083$
Current service cost 5,749 - 5,749 Interest expense / income 28,468 23,157 5,311
34,217 23,157 11,060
Remeasurements:
Experience adjustments 69,773 39,895 29,878 Benefits paid 6,729)( 6,729)( -
63,044 33,166 29,878
Contribution for the year - 81,453 81,453)(
Balance at December 31 2,000,113$ 1,686,545$ 313,568$
Present value of
defined benefit Fair value Net defined
obligations of plan assets benefit liability
Year ended December
31, 2017
Balance at January 1 1,827,687$ 1,534,864$ 292,823$
Current service cost 6,711 - 6,711 Interest expense / income 31,071 26,093 4,978
37,782 26,093 11,689
Remeasurements:
Experience adjustments 49,488 83)( 49,571 Benefits paid 12,105)( 12,105)( -
37,383 12,188)( 49,571
Balance at December 31 1,902,852$ 1,548,769$ 354,083$
- 157 -
(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic
subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment
and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and
Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund
includes deposit in domestic or foreign financial institutions, investment in domestic or
foreign listed, over-the-counter, or private placement equity securities, investment in
domestic or foreign real estate securitization products, etc.). With regard to the utilization of
the Fund, its minimum earnings in the annual distributions on the final financial statements
shall be no less than the earnings attainable from the amounts accrued from two-year time
deposits with the interest rates offered by local banks. If the earnings is less than
aforementioned rates, government shall make payment for the deficit after being authorized
by the Regulator. The Company and domestic subsidiaries have no right to participate in
managing and operating that fund and hence the Company and domestic subsidiaries are
unable to disclose the classification of plan assets fair value in accordance with IAS 19
paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and
2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the
government.
(e) The principal actuarial assumptions used were as follows:
Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience
Mortality Table.
Because the main actuarial assumption changed, the present value of defined benefit
obligation is affected. The analysis was as follows:
2018 2017
Discount rate 1.25% 1.50%
Future salary increases 1.50% 1.50%
Years ended December 31,
Increase Decrease Increase Decrease
0.25% 0.25% 0.25% 0.25%
December 31, 2018
Effect on present value of
defined benefit obligation 74,991)($ 78,684$ 78,288$ 74,991)($
Increase Decrease Increase Decrease
0.25% 0.25% 0.25% 0.25%
December 31, 2017
Effect on present value of
defined benefit obligation 74,882)($ 78,699$ 78,501$ 75,063)($
Discount rate Future salary increases
Discount rate Future salary increases
- 158 -
The sensitivity analysis above is based on one assumption which changed while the other
conditions remain unchanged. In practice, more than one assumption may change all at once.
The method of analysing sensitivity and the method of calculating net pension liability in the
balance sheet are the same. The methods and types of assumptions used in preparing the
sensitivity analysis did not change compared to the previous period.
(f) As of December 31, 2018, the weighted average duration of the retirement plan is 15 years.
B. Defined contribution pension plan
(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined
contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),
covering all regular employees with R.O.C. nationality. Under the New Plan, the Company
contributes monthly an amount based on 6% of the employees’ monthly salaries and wages
to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits
accrued are paid monthly or in lump sum upon termination of employment.
(b) The subsidiaries in Mainland China have defined contribution plans. Monthly contributions
to an independent fund administered by the government in accordance with the pension
regulations in the People’s Republic of China (PRC) are based on certain percentages of
employees’ monthly salaries and wages.
C. The pension costs under the defined contribution pension plans of the Group for the years ended
December 31, 2018 and 2017 were $1,929,402 and $1,921,461, respectively.
(14) Provisions-current
A. Warranty
The Group provides warranty on TFT-LCD panel products sold. Provision for warranty is
estimated based on historical warranty data of TFT-LCD panel products.
B. Litigation and others
Litigation and other provisions for the Group are related to patents of TFT-LCD panel products
and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).
(15) Share capital
As of December 31, 2018, the Company’s authorized and outstanding capital were $105,000,000
and $99,520,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from
shares issued have been collected.
Movements in the number of the Company’s ordinary shares outstanding are as follows:
Warranty Litigation and others Total
At January 1, 2018 2,691,162$ 2,769,700$ 5,460,862$
Additions during the year 2,156,000 240,000 2,396,000
Used during the year 1,073,948)( - 1,073,948)(
At December 31, 2018 3,773,214$ 3,009,700$ 6,782,914$
- 159 -
A. The Board of Directors of the Company resolved to increase capital for cash by issuing the GDR
which had been completed in January 2013. The Company issued 1,125,000 thousand shares of
common stock for cash, with a unit of GDR representing 10 shares of common stock at the
Luxembourg Stock Exchange which raised a total of $14,519,051, net of issuance cost. The
Company has terminated the contracts in relation to the circulation of GDR and its account of
the depositary bank in order to lower administrative costs in accordance with the resolution by
the Board of Directors on July 26, 2017. As of December 31, 2018, the Company has no unit of
GDR outstanding.
B. The Company adopted a resolution in 2013 to issue restricted shares to employees, consisting of
36,263 thousand shares without consideration and 36,263 thousand shares with consideration
(the price for subscription is $5 (in dollars) per share). Until the vesting conditions are met by
employees, those shares are restricted with regard to transfer of voting rights, dividend and other
rights. For the years ended December 31, 2018 and 2017, the Company has retired 0 and 77
thousand shares of unvested restricted stocks to employees, respectively, and decreased capital
in accordance with related regulation.
(16) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par
value on issuance of common stocks and donations can be used to cover accumulated deficit or to
issue new stocks or cash to shareholders in proportion to their share ownership, provided that the
Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that
the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-
in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital
reserve can be used to cover the accumulated deficit.
2018 2017
Number of ordinary Number of ordinary
shares (in thousands) shares (in thousands)
At January 1 9,952,072 9,952,149
Cancellation of restricted stock to employees - 77)(
At December 31 9,952,072 9,952,072
Share of profit (loss)
of associates
accounted for under
Share premium equity method Total
At January 1 99,614,690$ 32,229$ 99,646,919$
Recognition of change in equity
of associates in proportion
to the Group's ownership - 1,196 1,196
At December 31 99,614,690$ 33,425$ 99,648,115$
2018
- 160 -
(17) Retained earnings
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be
offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal
reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed
after setting aside or reversing a special reserve according to related regulations. The
appropriation of the remaining amount along with the unappropriated earnings from previous
years shall be proposed by the Board of Directors and resolved by the shareholders. The
Company is in an emerging industry which is growing rapidly, and has a capital intensive
business. The Company is at the stage of stable growth. In line with the Company’s long-term
financial plan in the future, investment environment and business competition situation, the
appropriation of dividends shall be proposed by the Board of Directors and resolved by the
shareholders, taking into account the future capital expenditure budget and capital requirement
of the Company. However, the stock dividends distributed to shareholders shall not exceed two-
thirds of distributable dividends in current period.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in
proportion to their share ownership, the legal reserve shall not be used for any other purpose.
The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their
share ownership is permitted, provided that the balance of the reserve exceeds 25% of the
Company’s paid-in capital.
C. The details of the appropriation of 2017 and 2016 net income which was approved at the
stockholders’ meeting in June 2018 and 2017, respectively, are as follows:
Share of profit (loss)
of associates Restricted
accounted for under stock to
Share premium equity method employees Total
At January 1 99,614,516$ 33,888$ 594)($ 99,647,810$
Cancellation of restricted stock to
employees - - 768 768
Vested restricted stock to employees 174 - 174)( -
Recognition of change in equity
of associates in proportion
to the Group's ownership - 1,659)( - 1,659)(
At December 31 99,614,690$ 32,229$ -$ 99,646,919$
2017
Dividends per Dividends per
Amount share (in dollars) Amount share (in dollars)
Legal reserve 3,702,861$ 187,069$
(Reversal) Provision
of special reserve 2,328,083)( 3,418,804
Cash dividends 7,961,657 0.80$ 995,204 0.10$
9,336,435$ 4,601,077$
Years ended December 31,
2017 2016
- 161 -
D. For the information relating to employees’ compensation and directors’ remuneration, please
refer to Note 6(24).
(18) Other equity items
(19) Operating income
The Group derives revenue from the transfer of goods at a point in time.
Financial assets
at fair value
Available- through other
Currency for-sale comprehensive
translation investments income Total
At January 1 5,717,223)($ 4,626,502$ -$ 1,090,721)($
Effect of modified retrospective
approach under IFRS 9 - 4,626,502)( 4,626,502 -
Balance after retropective
adjustment 5,717,223)( - 4,626,502 1,090,721)(
Revaluation - gross - - 2,828,816)( 2,828,816)(
Currency translation differences 828,563)( - - 828,563)( Share of other comprehensive income
of associates 84,637 - - 84,637
At December 31 6,461,149)($ -$ 1,797,686$ 4,663,463)($
2018
Available-
Currency for-sale
translation investments Total
At January 1 4,040,408)($ 621,604$ 3,418,804)($
Revaluation of available-for-sale
investments - gross - 3,675,370 3,675,370
Revaluation transfer of available-for-
sale investment - gross - 646,638 646,638
Currency translation differences 1,643,264)( - 1,643,264)(
Share of other comprehensive loss
of associates 33,551)( - 33,551)(
Effect of income tax - 317,110)( 317,110)(
At December 31 5,717,223)($ 4,626,502$ 1,090,721)($
2017
2018 2017
TFT-LCD products 279,376,115$ 329,174,401$
Years ended December 31,
- 162 -
(20) Other income
(21) Other gains and losses
(22) Finance costs
(23) Expenses by nature
2018 2017
Interest income
Interest income from bank deposits 791,098$ 472,331$
Interest income from financial assets at
amortized cost 200,018 -
991,116 472,331
Dividends revenue 236,574 151,677
Rental revenue 163,043 137,037
Other income 1,634,734 1,767,769
3,025,467$ 2,528,814$
Years ended December 31,
2018 2017
Net (loss) gain on financial assets and liabilities
at fair value through profit or loss
1,766,189)($ 1,987,818$
Net currency exchange gain (loss) 1,320,427 2,134,155)(
Gain on disposal of investments 968 2,483,645
Loss on disposal of property, plant and equipment 267,508)( 597,261)(
Impairment loss - 3,120,824)(
Net disaster gain - 2,051,579
Other losses 455,933)( 824,990)(
1,168,235)($ 154,188)($
Years ended December 31,
2018 2017
Interest expense:
Bank borrowings 565,826$ 730,468$
Others 1,141 32
566,967$ 730,500$
Years ended December 31,
2018 2017
Employee benefit expense:
Salaries and other short-term employee benefits 37,767,899$ 45,506,559$
Post-employment benefits 1,940,462 1,933,150
Depreciation 35,385,866 32,377,043
Amortization 492,265 1,187,005
75,586,492$ 81,003,757$
Years ended December 31,
- 163 -
(24) Employees’ compensation and directors’ remuneration
A. According to the Articles of Incorporation of the Company, a ratio of profit of the current year
distributable, after covering accumulated losses, shall be distributed as employees' compensation
and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation
and shall not be higher than 0.1% for directors’ remuneration.
B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at
$294,289 and $3,136,952, respectively; while directors’ remuneration was accrued at $4,528 and
$48,261, respectively. The aforementioned amounts were recognized in expenses.
The expenses recognized for 2018 were accrued based on the earnings of current year. The
employees’ compensation and directors’ remuneration were $294,289 and $4,528 in the form of
cash, respectively, as resolved by the Board of Directors on February 14, 2019. The accrued
amounts were in agreement with the amount of recorded expense for the year ended December
31, 2018.
The employees’ compensation and directors’ remuneration for the year ended December 31, 2017
were $3,136,952 and $48,261, respectively, and were estimated based on the profit of current
year. The employees’ compensation will be distributed in the form of cash. The Board of
Directors resolved to distribute employees’ compensation and directors’ remuneration in the
amount of $3,136,952 and $48,261, respectively, in the form of cash. The actual distributed
amount were in consistent with the amounts recognized as expense in 2017.
Information about employees’ compensation and directors’ remuneration of the Company as
resolved by the Board of Directors will be posted in the “Market Observation Post System” at
the website of the Taiwan Stock Exchange.
(25) Income tax
A. Income tax expense
(a) Components of income tax expense:
(b) The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
2018 2017
Current tax:
Current tax on profit for the year 2,246,381$ 3,886,976$
Tax on undistributed surplus earnings 2,704,311 -
Prior year income tax under (over) estimation 119,513 76,547)(
Total current tax 5,070,205 3,810,429
Deferred tax:
Origination and reversal of temporary
differences 245,749 8,102,151
Impact of change in tax rate 969,286)( -
Income tax expense 4,346,668$ 11,912,580$
Years ended December 31,
- 164 -
B. Reconciliation between income tax expense and accounting profit:
C. Amounts of deferred tax assets or liabilities as a result of temporary differences and loss
carryforward are as follows:
2018 2017
Fair value of available-for-sale financial assets -$ 317,110$
Remeasurements of defined benefit
obligatrons 5,976)( 8,427)(
5,976)($ 308,683$
Years ended December 31,
2018 2017
Tax calculated based on profit before tax and 3,029,631$ 11,532,189$
statutory tax rate
Effects from items disallowed by tax regulation 445,094)( 477,430)(
Prior year income tax overestimation 119,513 76,547)(
Effect from changes in tax regulation 969,286)( -
Additional 10% tax on undistributed earnings 2,704,311 -
Separate taxation 89,783 -
Change in assessment of realization of deferred
tax assets 182,190)( 934,368
Tax expense 4,346,668$ 11,912,580$
Years ended December 31,
Recognized
Recognized in other
in profit comprehensive
January 1 or loss income December 31
Temporary differences:
- Deferred tax assets:
Sales returns and discount provisions 429,340$ 46,385$ -$ 475,725$
Accrued royalties and warranty provisions 1,095,009 444,298 - 1,539,307
Unrealized exchange loss - 162,222 - 162,222
Unrealized loss on financial instruments 430,539 80,707 - 511,246
Prior year expense carryforward 3,480 112 - 3,592
Loss carryforward 3,752,755 74,393 - 3,827,148
Others 637,638 61,010 5,976 704,624
6,348,761$ 869,127$ 5,976$ 7,223,864$
- Deferred tax liabilities:
Unrealized exchange (gain) loss 41,713)($ 41,713$ -$ -$
Amortization charges on goodwill 641,795)( 210,163)( - 851,958)(
Others 50,915)( 22,860 - 28,055)(
734,423)($ 145,590)($ -$ 880,013)($
5,614,338$ 723,537$ 5,976$ 6,343,851$
2018
- 165 -
D. Expiration dates of unused loss carryforward and amounts of unrecognized deferred tax assets
are as follows:
Recognized
Recognized in other
in profit comprehensive
January 1 or loss income December 31
Temporary differences:
- Deferred tax assets:
Sales returns and discount provisions 270,483$ 158,857$ -$ 429,340$
Accrued royalties and warranty provisions 731,844 363,165 - 1,095,009 Unrealized loss (gain) on
financial instruments 470,394 277,255 317,110)( 430,539
Prior year expense carryforward 3,772 292)( - 3,480
Loss carryforward 12,619,814 8,867,059)( - 3,752,755
Others 601,836 27,375 8,427 637,638
14,698,143$ 8,040,699)($ 308,683)($ 6,348,761$
- Deferred tax liabilities:
Unrealized exchange (gain) loss 113,545)($ 71,832$ -$ 41,713)($
Amortization charges on goodwill 559,426)( 82,369)( - 641,795)(
Others - 50,915)( - 50,915)(
672,971)($ 61,452)($ -$ 734,423)($
14,025,172$ 8,102,151)($ 308,683)($ 5,614,338$
2017
Amount Unrecognized
Year filed / Unused deferred Usable
incurred assessed amount tax assets until year
2011 Assessed 23,793,756$ 17,120,565$ 2021
2012 Assessed 42,643,231 30,530,343 2022
2016 Assessed 1,051,680 756,727 2026
67,488,667$ 48,407,635$
Amount Unrecognized
Year filed / Unused deferred Usable
incurred assessed amount tax assets until year
2011 Assessed 26,496,656$ 18,260,810$ 2021
2012 Assessed 42,898,003 29,564,194 2022
2016 Filed 1,282,669 883,982 2026
70,677,328$ 48,708,986$
December 31, 2018
December 31, 2017
- 166 -
E. The amounts of deductible temporary differences that were not recognized as deferred tax assets
are as follows:
F. The Company has not recognized taxable temporary differences associated with investment in
subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2017, the amounts of
temporary differences unrecognized as deferred tax liabilities were $30,554,931 and
$31,293,045, respectively.
G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax
Authority.
H. Under the amendments to the Income Tax Act which was promulgated by the President of the
Republic of China in February 7, 2018, the Company’s applicable income tax rate was raised
from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the
change in income tax rate.
(26) Earnings per share
December 31, 2018 December 31, 2017
Deductible temporary differences 51,258,623$ 51,673,594$
2018 2017
Basic earnings per share
Profit attributable to ordinary shareholders of
the parent
2,222,762$ 37,028,609$
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,952,072 9,952,051
Basic earnings per share (in dollars) 0.22$ 3.72$
Diluted earnings per share
Profit attributable to ordinary shareholders of
the parent 2,222,762$ 37,028,609$
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,952,072 9,952,051
Assumed conversion of all dilutive potential
ordinary shares:
-Employees’ compensation 65,645 259,625
-Restricted stocks - 22
10,017,717 10,211,698
Diluted earnings per share (in dollars) 0.22$ 3.63$
Years ended December 31,
- 167 -
(27) Supplemental cash flow information
Investing activities with partial cash payments:
(28) Changes in liabilities from financing activities
For the year ended December 31, 2018, all changes in liabilities from financing activities are changes
in cash flow from financing activities. Please refer to consolidated statements of cash flows.
7. RELATED PARTY TRANSACTIONS
(1) Names and relationship of related parties
(2) Significant related party transactions
A. Operating revenue
The collection period was 30~120 days upon delivery or on a monthly-closing basis to related
parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related
parties above were not significantly different from those of sales to third parties.
B. Purchases of goods
2018 2017
Purchase of property, plant and equipment 22,304,407$ 54,058,280$
Add: Opening balance of payable on equipment 32,381,338 3,339,764
Less: Ending balance of payable on equipment 7,982,978)( 32,381,338)(
Cash paid during the year 46,702,767$ 25,016,706$
Years ended December 31,
Names of related parties Relationship with the Group
Hon Hai Precision Industry Co., Ltd. and its subsidiaries Other related party
Chi Lin Optoelectronics Co., Ltd. and its subsidiaries Other related party
FI Medical Device Manufacturing Co., Ltd. Associate
GIO Optoelectronics Corp. Associate
Fu Lian Net International (Hong Kong) Limited Other related party
Panxian FuguiKang Precision electronic Ltd. Other related party
Chongqing Fuyusheng Electronics Technology Co.,Ltd. Other related party
2018 2017
Sales of goods:
Other related parties 18,631,752$ 48,858,191$
Associates 23,687 37,115
18,655,439$ 48,895,306$
Years ended December 31,
2018 2017
Purchases of goods:
Other related parties 5,403,092$ 12,518,080$
Associates 1,579,096 1,341,203
6,982,188$ 13,859,283$
Years ended December 31,
- 168 -
The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-
related parties after delivery or on a monthly-closing basis. The purchase prices and the payment
terms from related parties above were not materially different from those of purchases from third
parties.
C. Receivables from related parties
(a) The receivables from related parties arise mainly from sales transactions. The receivables are
due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no
interest.
(b) The abovementioned receivables from related parties that exceed normal granting periods were
transferred under ‘Other receivables – related parties’.
D. Other receivables from related parties
E. Payables to related parties
December 31, 2018 December 31, 2017
Accounts receivable:
Other related parties
- Nanjing Hongfusharp Precision
Electronics Co., Ltd.
175,236$ 7,617,857$
- Others 4,911,939 10,086,180
Associates 47,881 25,463
5,135,056 17,729,500
Less: Transferred other receivable 685,079)( 2,418)(
4,449,977$ 17,727,082$
December 31, 2018 December 31, 2017
Other receivables:
Accounts receivables transferred to other receivables
- Other related parties
- Fu Lian Net International (Hong Kong) Limited 369,837$ -$ - Panxian FuguiKang Precision electronic Ltd. 178,663 -
- Chongqing Fuyusheng Electronics Technology
Co., Ltd. 136,555 - - Others 24 2,418 Other receivables
- Other related parties 9,832 13,001 - Associates 7,820 2,547
702,731$ 17,966$
December 31, 2018 December 31, 2017
Accounts payable:
Other related parties 2,382,269$ 2,371,033$
Associates 269,858 193,977
2,652,127$ 2,565,010$
- 169 -
The payables to related parties arise mainly from purchase transactions and are due 30~120 days
after the date of purchase. The payables bear no interest.
F. Property transactions
Purchase of property
(a) Acquisition of property, plant and equipment:
(b) Period-end balances arising from purchases of property (shown as “Other payables”):
Sale of property
(a) Proceeds from sale of property and gain on disposal:
(b) Period-end balances arising from sale of property (shown as ‘other receivables’)
(3) Key management compensation
2018 2017
Other related parties
- Hon Hai Precision Industry Co., Ltd. 469$ 31,456,795$
- Others 47,448 42,459
Associates 2,458 -
50,375$ 31,499,254$
Years ended December 31,
December 31, 2018 December 31, 2017
Other related parties
- Hon Hai Precision Industry Co., Ltd. 2,225,585$ 26,609,511$
- Others 378 1,974
2,225,963$ 26,611,485$
Disposal Gain on Disposal Gain on
proceeds disposal proceeds disposal
Other related parties 804$ 91$ 716$ 34$
Year ended December 31, 2018 Year ended December 31, 2017
December 31, 2018 December 31, 2017
Other related parties 269$ -$
2018 2017
Salaries and other short-term employee benefits 252,050$ 130,223$
Post-employment benefit 789 432
252,839$ 130,655$
Years ended December 31,
- 170 -
8. PLEDGED ASSETS
The Group’s assets pledged as collateral are as follows:
9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT
COMMITMENTS
(1) Contingencies－Significant Litigations
A. Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi
Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics
USA Inc. were investigated by the United States (the “U.S.”) Department of Justice in December
2006 for alleged violation of the anti-trust laws. In December 2009, the Company reached a plea
agreement with the Department of Justice of the U.S. and paid off the fines. Later, Brazil
government initiated an investigation case against the Company. The investigation is still ongoing
and the Company has been cooperative with the investigation. As for civil lawsuits filed by some
state governments in the U.S., downstream panel makers, and customers, the Company had
reached settlement agreement individually.
The company’s subsidiary in U.S. received a civil complaint from the government of Puerto Rico
in September 2018, claiming that the company, together with other defendants of Taiwan, Japan
and South Korea panel factories, had unjustified enrichment from the TFT-LCD pricing
collaborations in 2006 and requested monetary compensation. The U.S. subsidiary of the company
has appointed a lawyer to handle the lawsuit.
B. Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and
American subsidiaries with the United States District Court for the District of East Texas on April
25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary
judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding
judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in
February 2014.
In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In
March 2015, the CAFC overruled the decision rendered by the district court and ordered a retrial.
In June 2017, the jury determined that some products of the Company and American subsidiaries
Pledged asset December 31, 2018 December 31, 2017 Purpose
Other current assets
-Time deposits 77,849$ 1,594$ Tariff and credit card guarantee
Property, plant and equipment 111,162,901 70,966,784 Long-term loans
Intangible assets 1,122 7,446 Long-term loans
Other non-current assets
-Time deposits
- 722
Guarantee for contract
and performance bond
-Refundable deposits 368,194 - Guarantee for litigation
111,610,066$ 70,976,546$
Book value
- 171 -
constituted direct infringement of patent and ordered an infringement compensation for Eidos. On
March 5, 2018, the court made first instance judgement and the Company had appealled. However,
the results of the litigation are uncertain and are dependent on the future litigation progress. The
Company does not expect that the lawsuit would have a material adverse effect on the Company’s
financial position or results of operations in the short-term.
C. On July 10, 2018, Vista Peak Ventures, LLC filed four complaints against the Company in the
United States District Court for the Eastern District of Texas, alleging the infringement of several
of its patents. Currently no court date has been set. The Company has engaged outside legal
counsels to handle this lawsuit. Since the final results of the litigation are dependent on future
litigation progress and are uncertain, the Company does not expect that the lawsuit will have a
material adverse effect on its financial position or results of operations in the short term.
D. The Company had assessed and recognized related losses and liabilities as shown in ‘provisions-
current’ for the aforementioned investigation relating to anti-trust laws and patent litigation.
(2) Commitments
A. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
B. Operating lease commitments
The Group leases plant, land and warehouses under non-cancellable operating lease agreements.
The majority of lease agreements are renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating leases are as
follows:
C. Outstanding letters of credit
The outstanding letters of credit for the purchase of property, plant and equipment are as follows:
10. SIGNIFICANT DISASTER LOSS
The Company’s partial inventories and buildings were damaged due to the earthquake which occurred
in Kaohsiung, Taiwan on February 6, 2016. The Company has conducted a disaster assessment and a
conservative estimation on insurance claim to assess possible disaster loss. The insurance claim had
been paid as of September 30, 2017. The Company accrued gain of $755,413 after offsetting the loss
with insurance claim.
December 31, 2018 December 31, 2017
Property, plant and equipment 22,914,278$ 18,794,836$
December 31, 2018 December 31, 2017
Not later than one year 581,550$ 579,498$
Later than one year but not later than five years 1,635,763 1,943,547
Later than five years 991,604 541,101
3,208,917$ 3,064,146$
December 31, 2018 December 31, 2017
Outstanding letters of credit 445,458$ 45,687$
- 172 -
11. SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE
None.
12. OTHERS
(1) Capital management
The Company’s objectives are to maintain an optimal capital structure, and constructively reduce
the debt ratio and the cost of capital in order to maximize shareholders’ equity.
(2) Financial instruments
A. Financial instruments by category
For information of the Group’s financial assets (financial assets at fair value through profit or
loss, financial assets at fair value through other comprehensive income, available-for-sale
financial assets, financial assets at amortized cost, cash and cash equivalents, accounts receivable
(including related parties) and other receivables) and financial liability (financial liabilities at fair
value through profit or loss, accounts payable (including related parties), other payables and long-
term borrowings (including current portion)), please refer to Note 6 and consolidated balance
sheets.
B. Risk management policies
(a) The Company’s and its subsidiaries’ activities expose it to a variety of financial risks: market
risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity
risk. The Group’s overall risk management programme focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Group’s financial
position and financial performance. The Group uses derivative financial instruments to hedge
certain risk exposures (see Notes 6(2)).
(b) Risk management is carried out by the treasury department under policies approved by the
board of directors. The Company’s and its subsidiaries’ treasury identifies, evaluates and
hedges financial risks in close cooperation with the Company’s and its subsidiaries’ operating
units. The Board provides principles for overall risk management, as well as policies covering
specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of
derivative financial instruments and non-derivative financial instruments, and investment by
excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk
Foreign exchange risk
i. The Group operates internationally and is exposed to foreign exchange risk arising from
the transactions of the company and its subsidiaries used in various functional currency,
primarily with respect to the USD and RMB. Foreign exchange risk arises from future
commercial transactions, recognized assets and liabilities and net investments in foreign
operations.
- 173 -
ii. Management has set up a policy to require group companies to manage their foreign
exchange risk against their functional currency. The group companies are required to
hedge their entire foreign exchange risk exposure via the Company’s treasury
departments. To manage their foreign exchange risk arising from future commercial
transactions and recognized assets and liabilities, entities in the Company use forward
foreign exchange contracts. Foreign exchange risk arises when future commercial
transactions or recognized assets or liabilities are denominated in a currency that is not
the entity’s functional currency.
iii. The Group’s businesses involve some non-functional currency operations (the
Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’
functional currency: RMB). Based on the simulations performed, the impact on post-tax
profit of a 1% exchange rate fluctuation would be an increase of $412,558 and $278,159
for the years ended December 31, 2018 and 2017, respectively. The information on assets
and liabilities denominated in foreign currencies whose values would be materially
affected by the exchange rate fluctuations is as follows:
Note: Exchange rate represents the amount of NT dollars for which one foreign currency
could be exchanged.
iv. Total exchange gain (loss), including realized and unrealized arising from significant
foreign exchange variation on the monetary items held by the Group for the years ended
December 31, 2018 and 2017 amounted to $1,320,427 and ($2,134,155), respectively.
Price risk
i. The Group is exposed to equity securities price risk because of investments held by the
Group and classified on the consolidated balance sheet as financial assets at fair value
through profit or loss, financial assets at fair value through other comprehensive income
and available-for-sale financial assets. To manage its price risk arising from investments
Foreign Foreign
Currency Exchange Currency Exchange
Amount Rate Book Value Amount Rate Book Value
(In Thousands) (Note) (NTD) (In Thousands) (Note) (NTD)Financial
assets Monetary items
USD 5,960,855$ 30.72 183,117,466$ 5,323,715$ 29.76 158,433,758$
JPY 8,247,993 0.28 2,309,438 8,017,851 0.26 2,084,641
EUR 48,137 35.20 1,694,422 53,720 35.57 1,910,820
Non-monetary items
USD 2,576,131$ 30.72 79,138,744$ 2,595,104$ 29.76 77,230,295$
HKD 180,600 3.92 707,952 184,669 3.81 703,589
JPY 13,237,769 0.28 3,706,575 5,662,973 0.26 1,472,373
USD 4,311,235$ 30.72 132,441,139$ 4,108,667$ 29.76 122,273,930$
JPY 46,306,961 0.28 12,965,949 41,168,652 0.26 10,703,850
EUR 13,025 35.20 458,480 45,980 35.57 1,635,509
December 31, 2018 December 31, 2017
Financial liabilities
Monetary items
- 174 -
in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is
done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise domestic listed and unlisted
stocks. The prices of equity securities would change due to the change of the future value
of investee companies. If the prices of these equity securities had increased/decreased by
20% with all other variables held constant, post-tax profit for the years ended December
31, 2018 and 2017 would have increased/decreased by $312,862 and $51,535,
respectively; other comprehensive gains and losses would have increased/decreased by
$766,875 and $1,311,038, respectively.
Cash flow and fair value interest rate risk
i. The Group’s main interest rate risk arises from long-term borrowings with variable rates,
which expose the Group to cash flow interest rate risk. During the years ended December
31, 2018 and 2017, the Group’s borrowings at variable rate were denominated in the
NTD.
ii. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are
simulated taking into consideration refinancing, renewal of existing positions, alternative
financing and hedging. Based on these scenarios, the Group calculates the impact on
profit and loss of a defined interest rate shift. For each simulation, the same interest rate
shift is used for all currencies. The scenarios are run only for liabilities that represent the
major interest-bearing positions.
iii. If the borrowing interest rate of NTD had increased/decreased by 0.25% with all other
variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017
would have decreased/increased by $128,600 and $71,000, respectively. The main factor
is that changes in interest expense result in floating-rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the
clients or counterparties of financial instruments on the contract obligations. The main
factor is that counterparties could not repay in full the accounts receivable based on the
agreed terms, and the contract cash flows.
ii. According to the Group’s credit policy, each local entity in the Group is responsible for
managing and analysing the credit risk for each of their new clients before standard
payment and delivery terms and conditions are offered. Internal risk control assesses the
credit quality of the customers, taking into account their financial position, past
experience and other factors. Individual risk limits are set based on internal or external
ratings in accordance with limits set by the managements. The utilization of credit limits
is regularly monitored.
iii. The Group adopts following assumption under IFRS 9 to assess whether there has been a
significant increase in credit risk on that instrument since initial recognition:
If the contract payments are past due over 30 days based on the terms, there has been a
- 175 -
significant increase in credit risk on that instrument since initial recognition.
iv. The Group adopts the assumptions under IFRS 9, the default occurs when the contract
payments are past due over 90 days.
v. The Group classifies customer’s accounts receivable in accordance with credit rating of
customer, credit risk on trade and customer types. The Group applies the simplified
approach using provision matrix to estimate expected credit loss under the provision
matrix basis.
vi. The following indicators are used to determine whether the credit impairment of debt
instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial
reorganization due to their financial difficulties;
(ii) Default or delinquency in interest or principal repayments;
(iii) Adverse changes in national or regional economic conditions that are expected to
cause a default.
vii. The Group uses the forecastability to adjust historical and timely information to assess
the default possibility of accounts receivable.
According to abovementioned consideration and information, the Group does not expect
any significant default possibility of accounts receivable.
viii. Movements in relation to the Group applying the simplified approach to provide loss
allowance for accounts receivable are as follows:
ix. The Group did not recognize significant impairment provision in accordance with 12
months expected credit losses, because the Group’s financial assets/loans to others and
receivables at amortized cost all with low credit risk.
x. Credit risk information of 2017 is provided in Note 12(4).
(c) Liquidity risk
i. Group treasury monitors rolling forecasts of the Company’s and its subsidiaries’ liquidity
2018
Accounts receivable
At January 1_IAS 39 109,496$
Adjustments under new standards -
At January 1_IFRS 9 109,496
Provision 100,357
Write-offs 124)(
At December 31 209,729$
2017
Accounts receivable
At January 1 109,501$
Effect of exchange rate changes 5)(
At December 31 109,496$
- 176 -
requirements to ensure it has sufficient cash to meet operational needs while maintaining
sufficient headroom on its undrawn committed borrowing facilities (Note 6(13)) at all
times so that the Group does not breach borrowing limits or covenants (where applicable)
on any of its borrowing facilities. Such forecasting takes into consideration the
Company’s and its subsidiaries’ debt financing plans, covenant compliance, compliance
with internal balance sheet ratio targets and external regulatory or legal requirements.
ii. Surplus cash held by the operating entities over and above balance required for working
capital management are transferred to the Group’s treasury. Group treasury invests
surplus cash in interest bearing savings accounts, time deposits, money market deposits
and marketable securities. The Group chooses instruments that are with appropriate
maturities or sufficient liquidity to provide sufficient headroom as determined by the
abovementioned forecasts. These are expected to readily generate cash inflows for
managing liquidity risk.
iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled
or gross-settled derivative financial liabilities into relevant maturity groupings based on
the remaining period at the balance sheet date to the contractual maturity date for non-
derivative financial liabilities and to the expected maturity date for derivative financial
liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Except for the above, the non-derivative and derivative financial liabilities of the Group
are all due within one year.
(3) Fair value estimation
A. The different levels that the inputs to valuation techniques are used to measure fair value of
financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date. A market is regarded as active where a market
in which transactions for the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis. The fair value of the
Group’s investment in listed stocks is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly. The fair value of the Group’s investment in
derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment
in equity investment without active market is included in Level 3.
Less than Between 1 Between 3
December 31, 2018 1 year and 3 years and 5 years Total
Long-term borrowings
(including current portion)
16,210,000$ 35,230,000$ -$ 51,440,000$
Non-derivative financial liabilities
Less than Between 1 Between 3
December 31, 2017 1 year and 3 years and 5 years Total
Long-term borrowings
(including current portion)
10,960,000$ 16,890,000$ 550,000$ 28,400,000$
- 177 -
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value
The carrying amounts of cash and cash equivalents, accounts receivable, other receivables,
financial assets at amortized cost, accounts payable, other payables and long-term borrowings
(including current portion) are approximate to their fair values.
D. The related information of financial and non-financial instruments measured at fair value by level
on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:
(a) The related information of natures of the assets and liabilities is as follows:
December 31, 2018 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Equity securities 1,221,135$ -$ 343,175$ 1,564,310$
Forward exchange contracts - 398,913 - 398,913
Convertible bonds - - 35,559 35,559
Financial assets at fair value
through other comprehensive
income - - - -
Equity securities 2,661,075 - 1,173,301 3,834,376
3,882,210$ 398,913$ 1,552,035$ 5,833,158$
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
Forward exchange contracts -$ 16,644$ -$ 16,644$
Forward exchange swap contracts - 7,135 - 7,135
-$ 23,779$ -$ 23,779$
December 31, 2017 Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value
through profit or loss
Equity securities 257,676$ -$ -$ 257,676$
Forward exchange contracts - 328,170 - 328,170
Forward exchange swap contracts - 76,890 - 76,890
Available-for-sale financial assets
Equity securities 6,241,465 - 313,724 6,555,189
6,499,141$ 405,060$ 313,724$ 7,217,925$
Recurring fair value measurements
- 178 -
(b) The methods and assumptions the Group used to measure fair value are as follows:
i. The instruments the Group used market quoted prices as their fair values (that is, Level
1) are listed below by characteristics:
ii. Except for financial instruments with active markets, the fair value of other financial
instruments is measured by using valuation techniques or by reference to counterparty
quotes. The fair value of financial instruments measured by using valuation techniques
can be referred to current fair value of instruments with similar terms and characteristics
in substance, discounted cash flow method or other valuation methods, including
calculated by applying model using market information available at the consolidated
balance sheet date.
iii. When assessing non-standard and low-complexity financial instruments, for example,
foreign exchange swap contracts, the Group adopts valuation technique that is widely
used by market participants. The inputs used in the valuation method to measure these
financial instruments are normally observable in the market.
iv. The valuation of derivative financial instruments is based on valuation model widely
accepted by market participants, such as present value techniques and option pricing
models. Forward exchange contracts and foreign exchange swap contracts are usually
valued based on the current forward exchange rate.
v. The output of valuation model is an estimated value and the valuation technique may not
be able to capture all relevant factors of the Group’s financial and non-financial
instruments. Therefore, the estimated value derived using valuation model is adjusted
accordingly with additional inputs, for example, model risk or liquidity risk and etc. In
accordance with the Group’s management policies and relevant control procedures
relating to the valuation models used for fair value measurement, management believes
adjustment to valuation is necessary in order to reasonably represent the fair value of
financial and non-financial instruments at the consolidated balance sheet. The inputs and
pricing information used during valuation are carefully assessed and adjusted based on
current market conditions.
vi. The Group takes into account adjustments for credit risks to measure the fair value of
financial and non-financial instruments to reflect credit risk of the counterparty and the
Group’s credit quality.
December 31, 2017 Level 1 Level 2 Level 3 Total
Liabilities
Financial liabilities at fair value
through profit or loss
Forward exchange contracts -$ 52,500$ -$ 52,500$
Recurring fair value measurements
Listed shares Emerging stocks Corporate bond
Market quoted price Closing price Last transaction price Weighted average quoted price
- 179 -
E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and
Level 2.
F. The following table presents the changes in level 3 instruments as at December 31, 2018 and
2017:
G. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level
3.
H. Investment management segment is in charge of valuation procedures for fair value
measurements being categorized within Level 3, which is to verify independent fair value of
financial instruments. Such assessment is to ensure the valuation results are reasonable by
applying independent information to make results close to current market conditions, confirming
the resource of information is independent, reliable and in line with other resources and
represented as the exercisable price, and frequently calibrating valuation model, performing
back-testing, updating inputs used to the valuation model and making any other necessary
adjustments to the fair value.
Investment management segment set up valuation policies, valuation processes, and rules for
measuring fair value of financial instruments and ensure compliance with the related
requirements in IFRS.
Equity securities Hybrid instrument Total
At January 1 313,724$ -$ 313,724$ Gains and losses
recognized in profit
or loss 114,507)( 4,755 109,752)(
Gains and losses
recognized in other
comprehensive income 217,789)( - 217,789)(
Acquired in the period 1,532,689 30,955 1,563,644
Effect on exchange rate
changes 2,359 151)( 2,208
At December 31 1,516,476$ 35,559$ 1,552,035$
2018
2017
Equity securities
At January 1 242,351$
Gains and losses recognized in profit or loss 490,901)(
Gains and losses recognized in other
comprehensive income 585,094
Acquired in the period 122,755
Effect on exchange rate changes 145,575)(
At December 31 313,724$
- 180 -
I. The following is the qualitative information of significant unobservable inputs and sensitivity
analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair
value measurement:
J. The Group has carefully assessed the valuation models and assumptions used to measure fair
value. However, use of different valuation models or assumptions may result in different
measurement. The following is the effect of profit or loss or of other comprehensive income from
financial assets and liabilities categorized within Level 3 if the inputs used to valuation models
have changed:
Fair value at
December
31, 2018
Valuation
technique
Significant
unobservable input
Range
(weighted
average)
Relationship of
inputs to fair value
Non-derivative
equity instrument:
Unlisted shares 1,490,390$ Market
comparable
companies
Price to earnings ratio
multiple, price to sales
ratio multiple, price to
book ratio multiple
0.58~41.52
(5.06)
The higher the
multiple, the higher
the fair value
Discount for lack of
marketability
30%~70%
(33%)
The higher the
discount for lack of
marketability, the
lower the fair value Venture capital
shares
Private equity
fund investment
26,086 Net asset
value
Not applicable Not
applicable
Not applicable
Hybrid instrument:
Convertible bond 35,559 Discounted
cash flow
method and
Option
pricing model
Volatility and Discount
rate
2.5%~46.7%
(24.6%)
The higher the
volatility, the higher
the fair value; The
higher the discount
rate, the lower the
fair value
Fair value at
December
31, 2017
Valuation
technique
Significant
unobservable input
Range
(weighted
average)
Relationship of
inputs to fair value
Non-derivative
equity instrument:
Unlisted shares 286,940$ Market
comparable
companies
Price to earnings ratio
multiple, price to sales
ratio multiple, price to
book ratio multiple
1.26~61.93
(26.49)
The higher the
multiple, the higher
the fair value
Discount for lack of
marketability
30%~70%
(51%)
The higher the
discount for lack of
marketability, the
lower the fair value Venture capital
shares
Private equity
fund investment
26,784 Net asset
value
Not applicable Not
applicable
Not applicable
- 181 -
(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017
A. Summary of significant accounting policies adopted in 2017:
(a) Financial assets at fair value through profit or loss
i. They are financial assets held for trading or financial assets designated as at fair value
through profit or loss on initial recognition. Financial assets are classified in this category
of held for trading if acquired principally for the purpose of selling in the short-term.
Derivatives are also categorised as financial assets held for trading unless they are
designated as hedges. Financial assets that meet one of the following criteria are designated
as at fair value through profit or loss on initial recognition:
(i) Hybrid (combined) contracts; or
(ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(iii) They are managed and their performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy.
ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss
are recognized and derecognized using trade date accounting.
iii. Financial assets at fair value through profit or loss are initially recognized at fair value.
Related transaction costs are expensed in profit or loss. These financial liabilities are
subsequently remeasured and stated at fair value, and any changes in the fair value of these
financial assets are recognized in profit or loss.
(b) Available-for-sale financial assets
i. Available-for-sale financial assets are non-derivatives that are designated in this category.
ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized
and derecognized using trade date accounting.
iii. Available-for-sale financial assets are initially recognized at fair value plus transaction
costs. These financial assets are subsequently remeasured and stated at fair value, and any
changes in the fair value of these financial assets are recognized in other comprehensive
income.
Favourable Unfavourable Favourable Unfavourable
Financial assets Input Change change change change change
Equity instrument $1,516,476 ± 1% $ 3,432 ($ 3,432) $ 11,733 ($ 11,733)
Hybrid instrument 35,559 ± 1% 356 ( 356) - -
Favourable Unfavourable Favourable Unfavourable
Financial assets Input Change change change change change
Equity instrument $ 313,724 ± 1% $ - $ - $ 3,137 ($ 3,137)
comprehensive income
Recognized in profit or loss
Recognized in other
comprehensive income
December 31, 2018
December 31, 2017
Recognized in other
comprehensive income
Recognized in other
- 182 -
(c) Loans and receivables
Accounts receivable are loans and receivables originated by the entity. They are created by
the entity by selling goods or providing services to customers in the ordinary course of
business. Accounts receivable are initially recognized at fair value and subsequently
measured at amortized cost using the effective interest method, less provision for impairment.
However, short-term accounts receivable without bearing interest are subsequently measured
at initial invoice amount as the effect of discounting is immaterial.
(d) Impairment of financial assets
i. The Group assesses at each balance sheet date whether there is objective evidence that a
financial asset or a group of financial assets is impaired as a result of one or more events
that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
ii. The criteria that the Group uses to determine whether there is objective evidence of an
impairment loss is as follows:
(i) Significant financial difficulty of the issuer or debtor;
(ii) A breach of contract, such as a default or delinquency in interest or principal payments;
(iii) Information about significant changes with an adverse effect that have taken place in
the technology, market, economic or legal environment in which the issuer operates,
and indicates that the cost of the investment in the equity instrument may not be
recovered; or
(iv) A significant or prolonged decline in the fair value of an investment in an equity
instrument below its cost.
iii. When the Group assesses that there has been objective evidence of impairment and an
impairment loss has occurred, accounting for impairment is made as follows according to
the category of financial assets:
(i) Financial assets measured at amortized cost
The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate, and is recognized in profit or loss. If, in
a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment loss was recognized,
the previously recognized impairment loss is reversed through profit or loss to the extent
that the carrying amount of the asset does not exceed its amortized cost that would have
been at the date of reversal had the impairment loss not been recognized previously.
Impairment loss is recognized and reversed by adjusting the carrying amount of the asset
through the use of an impairment allowance account.
- 183 -
(ii) Available-for-sale financial assets
The amount of the impairment loss is measured as the difference between the asset’s
acquisition cost (less any principal repayment and amortization) and current fair value,
less any impairment loss on that financial asset previously recognized in profit or loss,
and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a
subsequent period, the fair value of an investment in a debt instrument increases, and
the increase can be related objectively to an event occurring after the impairment loss
was recognized, such impairment loss is reversed through profit or loss. Impairment loss
of an investment in an equity instrument recognized in profit or loss shall not be reversed
through profit or loss. Impairment loss is recognized and reversed by adjusting the
carrying amount of the asset through the use of an impairment allowance account.
B. For details of the reconciliations of carrying amount of financial assets transferred from
December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, please refer to Note 3(1).
C. As of December 31, 2017 and for the year ended December 31, 2017, the details of significant
accounting items are as follows:
(a) Financial assets and liabilities at fair value through profit or loss
i. For the year ended December 31, 2017, the Group recognized net profit of $1,987,818 in
the abovementioned financial instruments.
Assets December 31, 2017
Current items
Financial assets held for trading
Forward foreign exchange contracts 328,170$
Forward exchange swap contracts 76,890
405,060$
Non-current items
Financial assets held for trading
Stock-Advanced Optoelectronic
Technology Inc. 48,040$
Valuation adjustment 209,636
257,676$
Liabilities December 31, 2017
Current items
Financial liabilities held for trading
Forward foreign exchange contracts 52,500$
Forward exchange swap contracts -
52,500$
- 184 -
ii. The non-hedging derivative financial assets and liabilities transaction are as follows:
The Group entered into the forward foreign exchange contracts to hedge exchange rate risk
of price and foreign currency amount position of import and export. However, these forward
foreign exchange contracts are used to satisfy capital needs and are not accounted for under
hedge accounting.
(b) Available-for-sale financial assets
i. The Group recognized comprehensive income for fair value change and reclassified from
equity to profit or loss for year ended December 31, 2017. Please refer to Note 6(19).
ii. For the year ended December 31, 2017, the Company and its subsidiary assessed that
investment value of certain investee companies was impaired and recognized impairment
loss of $3,120,824 which was listed as ‘other gains and losses’.
D. Information on credit risk as of December 31, 2017 and for the year ended December 31, 2017
is as follows:
(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients
or counterparties of financial instruments on the contract obligations. According to the
Group’s credit policy, each local entity in the Group is responsible for managing and
analyzing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Customer credit quality is assessed via internal risk control,
Derivative financial Contract
assets and liabilities period
Current items
Forward foreign USD (sell) 400,000$ 2017/10-2018/3
exchange contracts JPY (buy) 44,934,619 2017/10-2018/3
Forward foreign EUR (sell) 15,800 2017/10-2018/2
exchange contracts USD (buy) 18,841 2017/10-2018/2
Forward foreign EUR (sell) 34,200 2017/10-2018/3
exchange contracts JPY (buy) 4,554,765 2017/10-2018/3
Forward foreign HKD (sell) 371,732 2017/12-2018/2
exchange contracts EUR (buy) 40,000 2017/12-2018/2
Forward foreign USD (sell) 430,000 2017/7-2018/2
exchange contracts RMB (buy) 2,870,455 2017/7-2018/2
Forward foreign USD (sell) 410,000 2017/12-2018/1
swap contracts TWD (buy) 12,289,569 2017/12-2018/1
December 31, 2017
Contract amount
(Notional principal) (in thousands)
December 31, 2017
Non-current items
Listed stocks 5,969,565$
Emerging and unlisted stocks 585,624
6,555,189$
- 185 -
considering customer financial position, past experience and other factors. Individual risk
limits are set by the board of directors based on internal or external ratings. The utilization of
credit limits is regularly monitored. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, as well as
credit exposures to wholesale and retail customers, including outstanding receivables.
Because the Company's and its subsidiaries’ counterparties and executor are banks with good
credit standing and financial institutions and government with investment grade or above,
there is no significant default. Therefore, there is no significant credit risk.
(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting
periods, and management does not expect any significant losses from non-performance by
these counterparties.
(c) On December 31, 2017, the aging analysis of accounts receivable that were past due but not
impaired is as follows:
(d) Movement analysis of accounts receivable that were impaired is as follows:
i. As of December 31, 2017, the Group accrued accounts receivable that were impaired and
recognized $109,496, respectively.
ii. Movement on allowance for bad debts for impairment loss on individual provision is as
follows:
(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in
2017
A. The significant accounting policies applied on revenue recognition for the year ended December
31, 2017 are set out below.
The Group manufactures and sells TFT-LCD panel products Revenue is measured at the fair
value of the consideration received or receivable taking into account of value-added tax, returns,
rebates and discounts for the sale of goods to external customers in the ordinary course of the
Group’s activities.
B. There is no effect on single account of the statement of comprehensive income, if the Group
continues applying abovementioned accounting policy in the 2018. Under IFRS 15, refund
liabilities are presented as accounts receivable-allowance for sales return and discounts in the
December 31, 2017
Up to 60 days 3,321,622$
61 to 180 days 193,350
Over 181 days 1,258
3,516,230$
2017
At January 1 109,501$
Net exchange differences 5)(
At December 31 109,496$
- 186 -
previous reporting period. As of December 31, 2018, the effect from changes in accounting
policy was $2,081,707.
13. SUPPLEMENTARY DISCLOSURES
(1) Significant transactions information
A. Loans to others: Please refer to Table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates
and joint ventures): Please refer to Table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or
20% of the Company’s paid-in capital: Please refer to Table 3.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in
capital or more: Please refer to Table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please
refer to Table 5.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note
6(2).
J. Significant inter-company transactions during the reporting period: Please refer to Table 6.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland
China): Please refer to Table 7.
(3) Information on investments in Mainland China
A. Basic information: Please refer to Table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee
companies in the Mainland Area: Please refer to Table 1, 4, 5 and 6.
14. SEGMENT INFORMATION
(1) General information
The Group is primarily engaged in research, development, manufacture, and sale of TFT LCD. The
chief operating decision-maker considered the business from a perspective of product size of TFT
LCD. TFT LCD products are currently classified into big size and small-medium size. Because the
Group met the criteria for combining the segment information of big size and small-medium size
TFT LCD departments, the Group disclosed only one reportable operating segment for all TFT LCD
products.
The Group’s operating segment information was prepared in accordance with the Group’s
accounting policies. The chief operating decision-maker allocated resources and assesses
performance of the operating segments primarily based on the operating revenue and profit (loss)
before tax and discontinued operations of individual operating segment.
- 187 -
(2) Segment information
The segment information provided to the chief operating decision-maker for the reportable segments
is as follows:
(3) Reconciliation for segment income
In current period, the revenue and income or loss before tax of reportable operating segment are
consistent with those of continuing operations.
(4) Information on products
Revenue from external customers is mainly from sale of TFT-LCD products, the sales amount is in
agreement with operating revenue.
(5) Geographical information
Geographical information for the years ended December 31, 2018 and 2017 is as follows:
(6) Major customer information
The individual sales to the Group’s customers that exceed 10% of the sales in the statements of
comprehensive income for the years ended December 31, 2018 and 2017 are set forth below:
2018 2017
TFT LCD TFT LCD
Segment revenue 279,376,115$ 329,174,401$
Segment income 6,569,430$ 48,941,189$
Depreciation and amortization 35,878,131$ 33,564,048$
Capital expenditure-property, plant
and equipment 46,702,767$ 25,016,706$
Segment assets 411,919,604$ 414,858,758$
Years ended December 31,
Revenue Non-current assets Revenue Non-current assets
Taiwan 75,594,192$ 196,073,680$ 115,922,366$ 211,482,604$
Hong Kong 79,813,964 - 75,037,923 108
China 48,206,617 31,236,727 68,728,719 29,891,298
Singapore 14,362,284 - 17,892,659 -
Europe 11,444,728 38,722 11,408,208 24,951
US 10,775,116 736 8,022,386 612
Others 39,179,214 6,399 32,162,140 275,743
Total 279,376,115$ 227,356,264$ 329,174,401$ 241,675,316$
Years ended December 31,
2018 2017
Sale amount Percentage of sales Sale amount Percentage of sales
Company A 28,944,033$ 10% 50,574,810$ 15%
Years ended December 31,
2018 2017
- 188 -
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Opt
oele
ctro
nics
Ltd
.O
ther
rece
ivab
les
Rel
ated
parti
es1,
790,
120
1,34
2,59
01,
342,
590
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ort-t
erm
finan
cing
-O
pera
ting
supp
ort
--
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4,99
0,70
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4,99
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1In
noco
m T
echn
olog
y(S
henz
hen)
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d.
Nan
jing
Inno
lux
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oele
ctro
nics
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ther
rece
ivab
les
Rel
ated
parti
es3,
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240
2,86
4,19
22,
864,
192
2.00
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ort-t
erm
finan
cing
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pera
ting
supp
ort
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2N
anjn
g In
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chno
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anjin
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nolu
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ptoe
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td.
Oth
erre
ceiv
able
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elat
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223,
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--
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ort-t
erm
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cing
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pera
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nolu
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SA In
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ther
rece
ivab
les
Rel
ated
parti
es30
7,15
030
7,15
030
7,15
01.
81%
~2.7
6%Sh
ort-t
erm
finan
cing
-O
pera
ting
supp
ort
--
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4,99
0,70
525
4,99
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4In
nolu
x Eu
rope
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.In
nolu
x H
ong
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gLi
mite
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ther
rece
ivab
les
Rel
ated
parti
es1,
336,
960
1,33
6,96
011
9,74
41.
818%
~1.8
22%
Shor
t-ter
mfin
anci
ng-
Ope
ratin
gsu
ppor
t-
--
254,
990,
705
254,
990,
705
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4In
nolu
x Eu
rope
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.La
kers
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ding
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ther
rece
ivab
les
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ated
parti
es45
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45,7
6045
,760
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.822
%Sh
ort-t
erm
finan
cing
-O
pera
ting
supp
ort
--
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4,99
0,70
525
4,99
0,70
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5In
nolu
x Ja
pan
Co.
,Lt
d.Le
adte
k G
loba
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roup
Lim
ited
Oth
erre
ceiv
able
sR
elat
edpa
rties
2,14
2,14
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142,
140
2,14
2,14
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Shor
t-ter
mfin
anci
ng-
Ope
ratin
gsu
ppor
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--
254,
990,
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254,
990,
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A
6W
arrio
rs T
echn
olog
yIn
vest
men
ts L
td.
Lake
rs T
radi
ng L
td.
Oth
erre
ceiv
able
sR
elat
edpa
rties
3,30
8,02
33,
308,
023
3,30
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00%
Shor
t-ter
mfin
anci
ng-
Ope
ratin
gsu
ppor
t-
--
254,
990,
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254,
990,
705
A
7B
right
Info
rmat
ion
Hol
ding
Ltd
.La
kers
Tra
ding
Ltd
.O
ther
rece
ivab
les
Rel
ated
parti
es98
,884
--
0.00
%Sh
ort-t
erm
finan
cing
-O
pera
ting
supp
ort
--
-25
4,99
0,70
525
4,99
0,70
5A
Not
e A
: The
Com
pany
- In
nolu
x C
orpo
ratio
n 1
.For
loan
s obt
aine
d fo
r sho
rt-te
rm fi
nanc
ing,
fina
ncia
l lim
it on
loan
s gra
nted
to a
sing
le p
arty
shal
l not
exc
eed
10%
of t
he c
ompa
ny’s
net
equ
ity, b
ased
on
the
mos
t rec
ent a
udite
d fin
anci
al st
atem
ents
of t
he c
ompa
ny.
2.T
he fi
nanc
ial l
imit
on lo
ans g
rant
ed sh
all n
ot e
xcee
d 40
% o
f the
com
pany
’s n
et e
quity
. If i
t is f
or sh
ort-t
erm
cap
ital n
eeds
, the
lim
it sh
all n
ot e
xcee
d 30
% o
f the
com
pany
’s n
et e
quity
. 3
.The
pol
icy
for l
oans
gra
nted
to d
irect
or i
ndire
ct w
holly
-ow
ned
over
seas
subs
idia
ries i
s as f
ollo
ws:
for s
hort-
term
cap
ital n
eeds
, fin
anci
al li
mit
shal
l not
be
belo
w th
e 40
% re
quire
men
t, bu
t sho
uld
not e
xcee
d 10
0% o
f the
com
pany
’s n
et e
quity
.
Max
imum
outs
tand
ing
bala
nce
durin
gth
e ye
ar e
nded
Dec
embe
r 31,
2018
Bal
ance
as a
tD
ecem
ber 3
1,20
18A
ctua
l am
ount
draw
n do
wn
No.
Cre
dito
rB
orro
wer
Gen
eral
ledg
erac
coun
t
Is a
rela
ted
party
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Loan
s to
othe
rsFo
r the
yea
r end
ed D
ecem
ber 3
1, 2
018
Tabl
e 1
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Col
late
ral
Lim
it on
loan
sgr
ante
d to
asi
ngle
par
tyC
eilin
g on
tota
llo
ans g
rant
edFo
otno
teIn
tere
stra
teN
atur
e of
loan
Am
ount
of
trans
actio
nsw
ith th
ebo
rrow
er
Rea
son
for
shor
t-ter
mfin
anci
ng
Allo
wan
cefo
run
colle
ctib
leac
coun
ts
- 189 -
Secu
ritie
s hel
d by
Mar
keta
ble
secu
ritie
sG
ener
al le
dger
acc
ount
Num
ber o
f sha
res
Boo
k va
lue
Ow
ners
hip
(%)
Fair
valu
eFo
otno
te
Com
mon
stoc
k (N
ote)
Inno
lux
Cor
pora
tion
Ava
nStra
te In
c.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss90
0,00
0 $
2
9,03
41
$
29,
034
Inno
lux
Cor
pora
tion
TPV
Tec
hnol
ogy
Lim
ited
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
15
0,50
0,00
070
8,13
36
708,
133
Inno
lux
Cor
pora
tion
Chi
Lin
Opt
oele
ctro
nics
Co.
, Ltd
.O
ther
rela
ted
party
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss17
,792
,552
65,2
4719
65,2
47
Inno
lux
Cor
pora
tion
Epis
tar C
orpo
ratio
nN
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss89
,072
2,28
0 -
2,28
0
Inno
lux
Cor
pora
tion
Che
ng M
ei M
ater
ials
Tec
hnol
ogy
Cor
pora
tion
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
44,7
41,3
0539
3,72
37
393,
723
Inno
lux
Cor
pora
tion
Alli
ed M
ater
ial T
echn
olog
y C
orp.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
1,20
9-
--
Inno
lux
Cor
pora
tion
VIZ
IO. I
nc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e92
7,45
21,
111,
388
41,
111,
388
Yua
n C
hi In
vest
men
t Co.
, Ltd
.Tr
illio
n Sc
ienc
e, In
c.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss1,
439,
180
-2
-
Inno
Joy
Inve
stm
ent C
orpo
ratio
nA
dvan
ced
Opt
oele
ctro
nic
Tech
nolo
gy, I
nc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
6,96
4,22
211
6,99
95
116,
999
Inno
Joy
Inve
stm
ent C
orpo
ratio
neC
hem
solu
tions
Cor
p.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hot
her c
ompr
ehen
sive
inco
me
2,75
0,00
061
,913
561
,913
Inno
Joy
Inve
stm
ent C
orpo
ratio
nEP
ILED
S C
o., L
td.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e7,
347,
144
114,
615
711
4,61
5
Inno
Joy
Inve
stm
ent C
orpo
ratio
nFi
tipow
er In
tegr
ated
Tec
hnol
ogy
Inc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e10
,000
,000
369,
000
636
9,00
0
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.(
)N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss-
137,
932
-13
7,93
2
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.O
ED H
oldi
ng L
td.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
16,0
00,0
003,
984
63,
984
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.O
bsid
ian
Sens
ors,
Inc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
414,
136
80,8
9213
80,8
92
As o
f Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Hol
ding
of m
arke
tabl
e se
curit
ies a
t the
end
of t
he y
ear (
not i
nclu
ding
subs
idia
ries,
asso
ciat
es a
nd jo
int v
entu
res)
Dec
embe
r 31,
201
8Ta
ble
2Ex
pres
sed
in th
ousa
nds o
f NTD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Rel
atio
nshi
pw
ith th
ese
curit
ies i
ssue
r
- 190 -
Secu
ritie
s hel
d by
Mar
keta
ble
secu
ritie
sG
ener
al le
dger
acc
ount
Num
ber o
f sha
res
Boo
k va
lue
Ow
ners
hip
(%)
Fair
valu
eFo
otno
te
As o
f Dec
embe
r 31,
201
8R
elat
ions
hip
with
the
secu
ritie
s iss
uer
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.G
ener
al In
terfa
ce S
olut
ion
(GIS
)H
oldi
ng L
imite
dN
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hot
her c
ompr
ehen
sive
inco
me
24,1
94,0
00 $
2
,177
,460
7 $
2
,177
,460
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.K
ymet
a Co
rpor
atio
n’s c
onve
rtibl
e bo
nds
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
-35
,559
-35
,559
Net
s tra
ding
Ltd
.Pi
lotT
ech
Glo
bal F
und
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
9026
,086
-26
,086
Not
e: E
xcep
t as o
ther
wis
e in
dica
ted,
mar
keta
ble
secu
ritie
s in
the
tabl
e ar
e al
l sto
cks.
- 191 -
Num
ber o
f sh
ares
Am
ount
Num
ber o
f sh
ares
Am
ount
Num
ber o
f sh
ares
Selli
ngpr
ice
Boo
k va
lue
Gai
n (lo
ss)
on d
ispo
sal
Num
ber o
fsh
ares
Am
ount
Inno
lux
Cor
pora
tion
VIZ
IO, I
nc.
(Sto
cks)
Fina
ncia
l ass
ets a
t fai
rva
lue
thro
ugh
othe
rco
mpr
ehen
sive
inco
me
Not
app
licab
leN
ot a
pplic
able
- $
-
927
,452
$
1,3
41,0
89-
$
- $
-
$
-
927,
452
$
1,1
11,3
88
Not
e 1:
Mar
keta
ble
secu
ritie
s in
the
tabl
e re
fer t
o st
ocks
, bon
ds, b
enef
icia
ry c
ertif
icat
es a
nd o
ther
rela
ted
deriv
ativ
e se
curit
ies.
Not
e 2:
Fill
in th
e co
lum
ns th
e co
unte
rpar
ty a
nd re
latio
nshi
p if
secu
ritie
s are
acc
ount
ed fo
r und
er th
e eq
uity
met
hod;
oth
erw
ise
leav
e th
e co
lum
ns b
lank
.
Not
e 3:
Agg
rega
te p
urch
ases
and
sale
s am
ount
s sho
uld
be c
alcu
late
d se
para
tely
at t
heir
mar
ket v
alue
s to
verif
y w
heth
er th
ey in
divi
dual
ly re
ach
NT$
300
mill
ion
or 2
0% o
f pai
d-in
cap
ital o
r mor
e.
Not
e 4:
Incl
udin
g th
e am
ount
of u
nrea
lized
gai
n or
loss
on
finan
cial
ass
ets a
t fai
r val
ue th
roug
h ot
her c
ompr
ehen
sive
inco
me.
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Acq
uisi
tion
or sa
le o
f the
sam
e se
curit
y w
ith th
e ac
cum
ulat
ed c
ost e
xcee
ding
$30
0 m
illio
n or
20%
of t
he C
ompa
ny's
paid
-in c
apita
l
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 3
Expr
esse
d in
thou
sand
s of N
TD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Add
ition
(Not
e 3)
Dis
posa
l (N
ote
3)
Bal
ance
as a
t D
ecem
ber 3
1, 2
018
(Not
e 4)
Inve
stor
Mar
keta
ble
secu
ritie
sN
ote
1G
ener
alle
dger
acc
ount
Cou
nter
party
Not
e 2
Rel
atio
nshi
p w
ith th
e in
vest
orN
ote
2
Bal
ance
as a
tJa
nuar
y 1,
201
8 (N
ote
4)
- 192 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Inno
lux
Cor
pora
tion
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Sale
s8,
410,
840
$
3
60-9
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
2,29
6,58
8$
5
Inno
lux
Cor
pora
tion
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s6,
742,
174
260
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Indu
stry
(Yan
tai)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sale
s2,
348,
341
160
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
35,6
60-
Inno
lux
Cor
pora
tion
Hon
gfut
ai P
reci
sion
Ele
ctro
ns(Y
anta
i) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s2,
286,
215
190
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
856,
109
2
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o., L
td.
A su
bsid
iary
of t
he C
ompa
nySa
les
2,23
1,81
21
45-6
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
442,
839
1
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s1,
620,
352
160
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Ele
ctro
nics
(Cho
ngqi
ng) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s1,
221,
312
-45
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
303,
950
1
Inno
lux
Cor
pora
tion
Gui
zhou
Fuz
hika
ng E
lect
roni
cC
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s64
6,01
7-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e17
6,48
5-
Inno
lux
Cor
pora
tion
Inno
lux
USA
Inc.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s4,
861,
172
245
-60
days
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e3,
490,
227
7
Inno
lux
Cor
pora
tion
Com
petit
ion
Team
Tec
hnol
ogy
(Indi
a) P
rivat
e Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sale
s34
8,71
2-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e11
4,38
1-
Inno
lux
Cor
pora
tion
Nin
gbo
Inno
lux
Dis
play
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
rySa
les
168,
298
-90
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
18,5
74)
(
-
Inno
lux
Cor
pora
tion
Shen
zhen
Fug
ui P
reci
sion
Indu
stria
l Co.
, LTD
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s39
2,17
4-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e34
,189
-
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Purc
hase
s or s
ales
of g
oods
from
or t
o re
late
d pa
rties
reac
hing
$10
0 m
illio
n or
20%
of p
aid-
in c
apita
l or m
ore
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 4
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
- 193 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Inno
lux
Cor
pora
tion
CO
MPE
TITI
ON
TEA
MIR
ELA
ND
LIM
ITED
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s36
7,43
0$
-45
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
100,
589
$
-
Inno
lux
Cor
pora
tion
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s13
6,74
5-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e-
-
Inno
lux
Cor
pora
tion
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s52
1,62
8-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e-
-
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Indu
stry
(Wuh
an) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s21
2,12
2-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e39
,062
-
Inno
lux
Cor
pora
tion
Futa
ijing
Pre
cisi
on E
lect
roni
cs(B
eijin
g) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s43
6,61
0-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e15
6,00
8-
Inno
lux
Cor
pora
tion
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.A
n in
dire
ct w
holly
-ow
ned
subs
idia
rySa
les
181,
822
-90
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
261,
048
1
Inno
lux
Cor
pora
tion
Inno
lux
Euro
pe B
.V.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s14
1,15
6-
30-6
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
21,5
75-
Inno
lux
Cor
pora
tion
FI M
edic
al D
evic
e M
anuf
actu
ring
Co.
, Ltd
.In
vest
ee a
ccou
nted
for u
nder
the
equi
ty m
etho
dPu
rcha
ses
1,44
0,29
11
30 d
ays a
fter
acce
ptan
ceSi
ngle
purc
hase
sta
rget
, no
basi
sfo
r com
paris
on
No
mat
eria
ldi
ffere
nce
243,
324)
(
-
Inno
lux
Cor
pora
tion
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s1,
049,
275
-60
-90
days
afte
rac
cept
ance
Sing
lepu
rcha
ses
targ
et, n
o ba
sis
for c
ompa
rison
No
mat
eria
ldi
ffere
nce
879,
733)
(
1
Inno
lux
Cor
pora
tion
Gio
Opt
oele
ctro
nics
Cor
p.In
vest
ee a
ccou
nted
for u
nder
the
equi
ty m
etho
dPu
rcha
ses
134,
045
-60
day
s afte
rac
cept
ance
Sing
lepu
rcha
ses
targ
et, n
o ba
sis
for c
ompa
rison
No
mat
eria
ldi
ffere
nce
24,7
80)
(
-
Inno
lux
Cor
pora
tion
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngex
pens
e43
,150
,307
1760
-90
days
Cos
t plu
sN
o m
ater
ial
diffe
renc
e26
,199
,180
)(
29
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngex
pens
e21
,811
,648
860
-90
days
Cos
t plu
sN
o m
ater
ial
diffe
renc
e10
,521
,167
)(
12
Inno
lux
Cor
pora
tion
Lead
tek
Glo
bal G
roup
Lim
ited
A su
bsid
iary
of t
he C
ompa
nyPr
oces
sing
expe
nse
20,1
51,8
538
60-9
0 da
ysC
ost p
lus
No
mat
eria
ldi
ffere
nce
24,5
87,8
30)
(
28
- 194 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngre
venu
e24
,608
,412
$
76
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
15,6
20,3
80$
90
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.Le
adte
k G
loba
l Gro
up L
imite
dA
subs
idia
ry o
f the
Com
pany
Proc
essi
ngre
venu
e18
,803
,923
8060
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
19,6
93,6
6096
Nin
gbo
Inno
lux
Dis
play
Ltd.
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngre
venu
e18
,671
,622
100
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
4,85
3,36
210
0
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
.In
nolu
x H
ong
Kon
g Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
14,8
77,4
5210
060
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
7,83
0,73
010
0
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd
.In
nolu
x H
ong
Kon
g Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
6,49
5,39
191
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
2,11
1,63
083
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
NA
NJI
NG
HO
NG
FUSH
AR
PPR
ECIS
ION
ELE
CTR
ON
ICS
CO
., LT
D.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s1,
566,
904
290
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
153,
374
1
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.N
ingb
o In
nolu
x D
ispl
ay L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s4,
741,
622
1160
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
830,
326
3
Inno
lux
Hon
g K
ong
Lim
ited
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s1,
209,
099
460
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
201,
279
2
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Prem
ier I
mag
e Te
chno
logy
(Chi
na) L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s19
0,86
2-
90 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
11,2
61-
Lake
rs T
radi
ng L
td.
Nin
gbo
Inno
lux
Elec
troni
cs L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s24
3,17
31
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
39,2
75-
Nan
jng
Inno
lux
Tech
nolo
gy L
td.
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s17
2,06
812
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
183,
339
51
Inno
com
Tec
hnol
ogy
(She
nzhe
n) C
o., L
TDLa
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
249,
759
100
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
897,
132
100
- 195 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Inno
lux
Euro
pe B
.V.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
899,
754
$
86
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
232,
063
$
94
Inno
lux
Japa
n C
o.,L
td.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
159,
406
660
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Japa
n C
o., L
td.
Inno
lux
Cor
pora
tion
A su
bsid
iary
of t
he C
ompa
nySe
rvic
ere
venu
e11
5,09
94
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
68,0
7712
Inno
lux
USA
Inc.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
104,
731
260
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
28,5
071
Nin
gbo
Inno
lux
Dis
play
Ltd.
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s1,
723,
501
790
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
571,
058)
(
9
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
rPu
rcha
ses
825,
348
290
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
274,
881)
(
2
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
ongf
ujin
Pre
cisi
on In
dust
ry(S
henz
hen)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Purc
hase
s55
9,32
71
90 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
185,
942)
(
2
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s82
5,18
81
90 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
392,
531)
(
2
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
rPu
rcha
ses
144,
326
190
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
16,8
65)
(
-
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Prem
ier I
mag
e Te
chno
logy
(Chi
na) L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Purc
hase
s15
2,34
7-
60 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
22,7
86)
(
-
- 196 -
Tabl
e 5
Am
ount
Act
ion
take
nIn
nolu
x C
orpo
ratio
nH
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
r $
2
,296
,588
2.78
$
42,
546
Subs
eque
nt c
olle
ctio
n $
5
09,5
93 $
-
Inno
lux
Cor
pora
tion
Hon
gFuT
ai P
reci
sion
Ele
ctro
nics
(Yan
Tai)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
856,
109
2.16
--
176,
066
-
Inno
lux
Cor
pora
tion
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry26
1,04
80.
34-
--
-
Inno
lux
Cor
pora
tion
Hon
fujin
Pre
cisi
on E
lect
roni
cs(C
hong
qing
) Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
303,
950
3.27
107,
879
Subs
eque
nt c
olle
ctio
n27
,402
-
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o.,L
td.
A su
bsid
iary
of t
he C
ompa
ny44
2,83
96.
7313
,820
Subs
eque
nt c
olle
ctio
n-
-
Inno
lux
Cor
pora
tion
Inno
lux
USA
Inc.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
3,49
0,22
72.
752,
425,
136
Subs
eque
nt c
olle
ctio
n1,
202,
953
-
Inno
lux
Cor
pora
tion
Futa
ijing
Pre
cisi
on E
lect
roni
cs(B
eijin
g) C
o., L
td.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
156,
008
5.60
--
77,3
50-
Inno
lux
Cor
pora
tion
Gui
zhou
Fuz
hika
ng E
lect
roni
c C
o.,
Ltd.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
176,
485
1.47
6,72
3Su
bseq
uent
col
lect
ion
72,7
86-
Inno
lux
Cor
pora
tion
Com
petit
ion
Team
Tec
hnol
ogy
(Indi
a) P
rivat
e Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
114,
381
3.11
--
26,5
14-
Inno
lux
Cor
pora
tion
CO
MPE
TITI
ON
TEA
M IR
ELA
ND
LIM
ITED
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
100,
589
2.35
29,5
44Su
bseq
uent
col
lect
ion
24,7
08-
Inno
lux
Cor
pora
tion
Fu L
ian
Net
Inte
rnat
iona
l (H
ong
An
indi
rect
who
lly-o
wne
d36
9,83
7-
369,
837
Subs
eque
nt c
olle
ctio
n-
-K
ong)
Lim
ited
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
Lead
tek
Glo
bal G
roup
Lim
ited
A su
bsid
iary
of t
he C
ompa
ny19
,693
,660
1.03
12,3
00,6
71Su
bseq
uent
col
lect
ion
4,30
8,21
7-
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.La
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry15
,620
,380
2.68
3,47
3,51
4Su
bseq
uent
col
lect
ion
5,68
2,56
9-
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
7,83
0,73
02.
05-
-1,
823,
997
-
Nin
gbo
Inno
lux
Dis
play
Ltd
.La
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry4.
519,
688,
600
Subs
eque
nt c
olle
ctio
n2,
170,
332
-
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Rec
eiva
bles
from
rela
ted
parti
es re
achi
ng $
100
mill
ion
or 2
0% o
f pai
d-in
cap
ital o
r mor
eD
ecem
ber 3
1, 2
018
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Am
ount
col
lect
edsu
bseq
uent
to th
eba
lanc
e sh
eet d
ate
Allo
wan
ce fo
r d
oubt
ful a
ccou
nts
Cre
dito
rC
ount
erpa
rtyR
elat
ions
hip
with
the
coun
terp
arty
Bal
ance
as a
tD
ecem
ber 3
1, 2
018
Turn
over
rate
Ove
rdue
rece
ivab
les
4,85
3,36
2
- 197 -
Am
ount
Act
ion
take
n
Am
ount
col
lect
edsu
bseq
uent
to th
eba
lanc
e sh
eet d
ate
Allo
wan
ce fo
r d
oubt
ful a
ccou
nts
Cre
dito
rC
ount
erpa
rtyR
elat
ions
hip
with
the
coun
terp
arty
Bal
ance
as a
tD
ecem
ber 3
1, 2
018
Turn
over
rate
Ove
rdue
rece
ivab
les
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.N
AN
JIN
G H
ON
GFU
SHA
RP
PREC
ISIO
N E
LEC
TRO
NIC
S C
O.,
LTD
.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
$
153
,374
0.40
$
126
,187
Subs
eque
nt c
olle
ctio
n $
-
$
-
An
indi
rect
who
lly-o
wne
d17
8,66
3-
178,
663
Subs
eque
nt c
olle
ctio
n80
,555
-su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Cho
ngqi
ng F
uyus
heng
Ele
ctro
nics
An
indi
rect
who
lly-o
wne
d13
6,55
5-
136,
555
Subs
eque
nt c
olle
ctio
n-
-Te
chno
logy
Co.
, Ltd
.su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
2,11
1,63
03.
0862
1,84
4Su
bseq
uent
col
lect
ion
1,04
4,47
6-
Inno
com
Tec
hnol
ogy
(She
nzhe
n)C
o., L
TDLa
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry89
7,13
20.
2884
6,83
2Su
bseq
uent
col
lect
ion
--
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
Nin
gbo
Inno
lux
Dis
play
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry83
0,32
65.
65-
-43
2,17
6-
Inno
lux
Hon
g K
ong
Lim
ited
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
201,
279
4.68
--
113,
994
-
Inno
lux
Euro
pe B
.V.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
232,
063
6.54
--
216,
190
-
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
183,
339
1.88
--
88-
Not
e: O
verd
ue re
ceiv
able
s tra
nsfe
rred
to o
ther
rece
ivab
les.
Panx
ian
Fugu
iKan
g Pr
ecis
ion
elec
troni
c Lt
d.Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd.
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.
- 198 -
Gen
eral
ledg
er a
ccou
ntA
mou
ntTr
ansa
ctio
n te
rms
(Not
e C
)
Perc
enta
ge o
f con
solid
ated
tota
lop
erat
ing
reve
nues
or t
otal
asse
ts
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Sale
s6,
742,
174
$
-2
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Proc
essi
ng e
xpen
se43
,150
,307
-
15
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Acc
rued
exp
ense
s26
,199
,180
)(
-
6
0In
nolu
x C
orpo
ratio
nIn
nolu
x Ja
pan
Co.
,Ltd
.1
Sale
s2,
231,
812
-
1
0In
nolu
x C
orpo
ratio
nIn
nolu
x Ja
pan
Co.
,Ltd
.1
Acc
ount
s rec
eiva
ble
442,
839
-
-
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Sale
s1,
620,
352
-
1
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Proc
essi
ng e
xpen
se21
,811
,648
-
8
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Acc
rued
exp
ense
s10
,521
,167
)(
-
3
0In
nolu
x C
orpo
ratio
nN
ingb
o In
nolu
x D
ispl
ay L
td.
1Sa
les
168,
298
-
-
0In
nolu
x C
orpo
ratio
nN
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
1Sa
les
521,
628
-
-
0In
nolu
x C
orpo
ratio
nLe
adte
k G
loba
l Gro
up L
imite
d1
Proc
essi
ng e
xpen
se20
,151
,853
-
7
0In
nolu
x C
orpo
ratio
nLe
adte
k G
loba
l Gro
up L
imite
d1
Acc
rued
exp
ense
s24
,587
,830
)(
-
6
0In
nolu
x C
orpo
ratio
nFo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.1
Sale
s18
1,82
2
--
0In
nolu
x C
orpo
ratio
nFo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.1
Acc
ount
s rec
eiva
ble
261,
048
-
-
0In
nolu
x C
orpo
ratio
nN
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
1Sa
les
136,
745
-
-
0In
nolu
x C
orpo
ratio
nIn
nolu
x U
SA In
c.1
Sale
s4,
861,
172
-
2
0In
nolu
x C
orpo
ratio
nIn
nolu
x U
SA In
c.1
Acc
ount
s rec
eiva
ble
3,49
0,22
7
-1
0In
nolu
x C
orpo
ratio
nIn
nolu
x Eu
rope
B.V
.1
Sale
s14
1,15
6
--
1Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.La
kers
Tra
ding
Ltd
.3
Proc
essi
ng re
venu
e24
,608
,412
-
9
1Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.La
kers
Tra
ding
Ltd
.3
Acc
ount
s rec
eiva
ble
15,6
20,3
80
-4
2N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Lead
tek
Glo
bal G
roup
Lim
ited
3Pr
oces
sing
reve
nue
18,8
03,9
23
-7
2N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Lead
tek
Glo
bal G
roup
Lim
ited
3A
ccou
nts r
ecei
vabl
e19
,693
,660
-
5
3N
ingb
o In
nolu
x D
ispl
ay L
td.
Lake
rs T
radi
ng L
td.
3Pr
oces
sing
reve
nue
18,6
71,6
22
-7
3N
ingb
o In
nolu
x D
ispl
ay L
td.
Lake
rs T
radi
ng L
td.
3A
ccou
nts r
ecei
vabl
e4,
853,
362
-
1
4N
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3Pr
oces
sing
reve
nue
14,8
77,4
52
-5
4N
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3A
ccou
nts r
ecei
vabl
e7,
830,
730
-
2
5Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3Pr
oces
sing
reve
nue
6,49
5,39
1
-2
5Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3A
ccou
nts r
ecei
vabl
e2,
111,
630
-
1
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Sign
ifica
nt in
ter-c
ompa
ny tr
ansa
ctio
ns d
urin
g th
e re
porti
ng p
erio
dFo
r the
yea
r end
ed D
ecem
ber 3
1, 2
018
Tabl
e 6
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Num
ber
(Not
e A
)C
ompa
ny n
ame
Cou
nter
party
Rel
atio
nshi
p(N
ote
B)
Tran
sact
ion
(Not
e D
)
- 199 -
Gen
eral
ledg
er a
ccou
ntA
mou
ntTr
ansa
ctio
n te
rms
(Not
e C
)
Perc
enta
ge o
f con
solid
ated
tota
lop
erat
ing
reve
nues
or t
otal
asse
tsN
umbe
r(N
ote
A)
Com
pany
nam
eC
ount
erpa
rtyR
elat
ions
hip
(Not
e B
)
Tran
sact
ion
(Not
e D
)
6N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Nin
gbo
Inno
lux
Dis
play
Ltd
.3
Sale
s4,
741,
622
$
-2
6N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Nin
gbo
Inno
lux
Dis
play
Ltd
.3
Acc
ount
s rec
eiva
ble
830,
326
-
-
7In
nolu
x H
ong
Kon
g Li
mite
dN
anjin
g In
nolu
x Te
chno
logy
Ltd
.3
Sale
s1,
209,
099
-
-
7In
nolu
x H
ong
Kon
g Li
mite
dN
anjin
g In
nolu
x Te
chno
logy
Ltd
.3
Acc
ount
s rec
eiva
ble
201,
279
-
-
8In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
Lake
rs T
radi
ng L
td.
3Pr
oces
sing
reve
nue
249,
759
-
-
8In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
Lake
rs T
radi
ng L
td.
3A
ccou
nts r
ecei
vabl
e89
7,13
2
--
9In
nolu
x Eu
rope
B.V
.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
899,
754
-
-
9In
nolu
x Eu
rope
B.V
.In
nolu
x C
orpo
ratio
n3
Acc
ount
s rec
eiva
ble
232,
063
-
-
10N
anjin
g In
nolu
x Te
chno
logy
Ltd
.Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
3Sa
les
172,
068
-
10N
anjin
g In
nolu
x Te
chno
logy
Ltd
.Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
3A
ccou
nt re
ceiv
able
s18
3,33
9
-
11La
kers
Tra
ding
Ltd
.N
ingb
o In
nolu
x El
ectro
nics
Ltd
.3
Sale
s24
3,17
3
--
12In
nolu
x Ja
pan
Co.
,Ltd
.In
nolu
x H
ong
Kon
g Li
mite
d3
Serv
ice
reve
nue
159,
406
-
-
13In
nolu
x Ja
pan
Co.
, Ltd
.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
115,
099
-
-
14In
nolu
x U
SA In
c.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
104,
731
-
-
Not
e A
:Th
e in
form
atio
n of
tran
sact
ions
bet
wee
n th
e C
ompa
ny a
nd th
e co
nsol
idat
ed su
bsid
iarie
s sho
uld
be n
oted
in “
Num
ber”
col
umn.
(1) N
umbe
r 0 re
pres
ents
the
pare
nt c
ompa
ny.
(2) T
he su
bsid
iarie
s are
num
bere
d in
ord
er fr
om n
umbe
r 1.
Not
e B
:1
refe
rs to
the
pare
nt c
ompa
ny to
the
subs
idia
ry.
3 re
fers
to th
e su
bsid
iary
to th
e su
bsid
iary
.N
ote
C:
Exce
pt fo
r no
com
para
ble
trans
actio
ns fr
om re
late
d pa
rties
, sal
es p
rices
wer
e si
mila
r to
non-
rela
ted
parti
es tr
ansa
ctio
ns a
nd th
e co
llect
ion
perio
d w
as 3
0~12
0 da
ys; t
he p
urch
ases
from
rela
ted
parti
es w
ere
at m
arke
tpr
ices
and
pay
men
t ter
m w
as 3
0~12
0 da
ys u
pon
rece
ipt o
f goo
ds.
Not
e D
:A
mou
nt d
iscl
osur
e st
anda
rd: p
urch
ases
, sal
es a
nd re
ceiv
able
s fro
m re
late
d pa
rties
in e
xces
s of $
100
mill
ion
or 2
0% o
f cap
ital.
- 200 -
Bal
ance
as a
tD
ecem
ber 3
1,20
18
Bal
ance
as a
tD
ecem
ber 3
1,20
17N
umbe
r of s
hare
sO
wne
rshi
p(%
)B
ook
valu
eIn
nolu
x C
orpo
ratio
nB
right
Info
rmat
ion
Hol
ding
Ltd
.H
ong
Kon
gIn
vest
men
t hol
ding
s $
-
$
119
,724
4,91
0,00
010
0-
$
484
$
484
$
Inno
lux
Cor
pora
tion
Gol
den
Ach
ieve
r Int
erna
tiona
lLi
mite
dB
VI
Inve
stm
ent h
oldi
ngs
119,
106
119,
106
40,2
5010
027
,255
6,18
0)(
6,
180)
(
Inno
lux
Cor
pora
tion
Inno
lux
Hol
ding
Lim
ited
Sam
oaIn
vest
men
t hol
ding
s
6,1
92,6
79
6,1
92,6
79
180
,568
,185
100
17,8
85,8
7818
2,22
518
2,22
5
Inno
lux
Cor
pora
tion
Key
way
Inve
stm
ent
Man
agem
ent L
imite
dSa
moa
Inve
stm
ent h
oldi
ngs
62,1
9762
,197
1,65
6,41
010
082
,110
4,61
14,
611
Inno
lux
Cor
pora
tion
Land
mar
k In
tern
atio
nal L
td.
Sam
oaIn
vest
men
t hol
ding
s
3
3,43
8,54
2
3
3,43
8,54
2
709
,450
,000
100
44,5
97,8
001,
156,
390
1,22
2,76
3
Inno
lux
Cor
pora
tion
Topp
oly
Opt
oele
ctro
nics
(B.V
.I.) L
td.
BV
IIn
vest
men
t hol
ding
s
3,6
74,1
15
3,6
74,1
15
146
,847
,000
100
6,50
6,29
114
3,26
714
3,29
6
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Hon
g K
ong
Inve
stm
ent h
oldi
ngs
3
,231
,275
1
,889
,115
1,1
58,8
44,0
0010
05,
641,
266
576,
248
581,
946
Inno
lux
Cor
pora
tion
Inno
lux
Sing
apor
e H
oldi
ng P
te.
Ltd.
Sing
apor
eIn
vest
men
t hol
ding
s75
4,94
3
-25
,400
,000
100
740,
729
21,3
24)
(
21,3
24)
(
Inno
lux
Cor
pora
tion
Lead
tek
Glo
bal G
roup
Lim
ited
BV
ID
istri
buto
r com
pany
--
50,0
00,0
0010
01,
535,
750
495,
227
495,
227
Inno
lux
Cor
pora
tion
Yua
n C
hi In
vest
men
t Co.
, Ltd
.Ta
iwan
Inve
stm
ent c
ompa
ny
1,2
17,2
35
1,2
17,2
35-
100
874,
787
29,3
1729
,317
Inno
lux
Cor
pora
tion
Inno
Joy
Inve
stm
ent C
orpo
ratio
nTa
iwan
Inve
stm
ent c
ompa
ny
1,6
74,0
54
1,6
74,0
54
167
,405
,392
100
1,30
3,57
812
3,53
5)(
12
3,53
5)(
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o., L
td.
Japa
nH
oldi
ngs,
R&
D,
man
ufac
turin
g an
dD
istri
buto
r com
pany
1,68
2,57
11,
335,
486
9854
2,00
4,88
82,
095
1,14
1
Inno
lux
Cor
pora
tion
Inno
lux
Cor
pora
tion
USA
Dis
tribu
tor c
ompa
ny -
90,8
45 -
--
312)
(
312)
(
Inno
lux
Cor
pora
tion
Inno
lux
Tech
nolo
gy U
SA In
c.U
SAD
istri
buto
r com
pany
-35
4,26
2 -
--
1,84
71,
847
Inno
lux
Cor
pora
tion
iZ3D
, Inc
.U
SAR
esea
rch
and
deve
lopm
ent
and
sale
of 3
D fl
at m
onito
r-
-4,
333
35-
--
Inno
lux
Cor
pora
tion
Chi
Mei
Lig
htin
g Te
chno
logy
Cor
pora
tion
Taiw
anM
anuf
actu
ring
of e
lect
roni
ceq
uipm
ent a
nd li
ghtin
geq
uipm
ent
819,
312
819,
312
78,1
95,8
5633
--
-
Info
rmat
ion
on in
vest
ees
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 7
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Net
pro
fit (l
oss)
of th
e in
vest
ee fo
rth
e ye
ar e
nded
Dec
embe
r 31,
2018
Inve
stm
ent i
ncom
e(lo
ss) r
ecog
nize
d by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
8Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ssac
tiviti
es
Initi
al in
vest
men
t am
ount
Shar
es h
eld
as a
t Dec
embe
r 31,
201
8
- 201 -
Bal
ance
as a
tD
ecem
ber 3
1,20
18
Bal
ance
as a
tD
ecem
ber 3
1,20
17N
umbe
r of s
hare
sO
wne
rshi
p(%
)B
ook
valu
e
Net
pro
fit (l
oss)
of th
e in
vest
ee fo
rth
e ye
ar e
nded
Dec
embe
r 31,
2018
Inve
stm
ent i
ncom
e(lo
ss) r
ecog
nize
d by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
8Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ssac
tiviti
es
Initi
al in
vest
men
t am
ount
Shar
es h
eld
as a
t Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
Am
pow
er H
oldi
ng L
td.
Cay
man
Inve
stm
ent h
oldi
ngs
$
1,7
17,7
14 $
1
,717
,714
14,0
62,5
0050
956,
577
$
40,9
34$
20
,467
$
Inno
lux
Cor
pora
tion
FI M
edic
al D
evic
eM
anuf
actu
ring
Co.
, Ltd
.Ta
iwan
Prod
uctio
n an
d se
lling
of
the
abso
rptio
n fo
r med
ical
elem
ent
73,5
0073
,500
7,35
0,00
049
655,
827
891,
803
436,
983
Inno
lux
Cor
pora
tion
GIO
Opt
oele
ctro
nics
Cor
p.Ta
iwan
Sale
s and
man
ufac
ture
of
TFT-
LCD
par
ts a
ndco
mpo
nent
s
800,
892
800,
892
10,4
94,0
0124
115,
610
23,7
825,
674
Inno
lux
Cor
pora
tion
eLux
, Inc
.U
SAR
&D
of M
icro
LED
tech
nolo
gy91
,155
-30
0,00
038
74,1
3580
,583
)(
16
,955
)(
Inno
lux
Hol
ding
Lim
ited
Roc
kets
Hol
ding
Ltd
.Sa
moa
Inve
stm
ent h
oldi
ngs
5
,222
,180
5
,222
,180
1
60,5
04,5
5010
011
,755
,619
27,2
2427
,224
Inno
lux
Hol
ding
Lim
ited
Suns
Hol
ding
Ltd
.Sa
moa
Inve
stm
ent h
oldi
ngs
555,
422
555,
422
18,1
77,0
5210
05,
896,
175
155,
001
155,
001
Inno
lux
Hol
ding
Lim
ited
Lake
rs T
radi
ng L
td.
Sam
oaD
istri
buto
r com
pany
--
110
023
4,00
5-
-
Topp
oly
Opt
oele
ctro
nics
(B.V
.I.)
Ltd.
Topp
oly
Opt
oele
ctro
nics
(Cay
man
) Ltd
.C
aym
anIn
vest
men
t hol
ding
s
3,6
50,1
92
3,6
50,1
92
146
,817
,000
100
6,50
5,93
214
3,26
714
3,29
6
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Inno
lux
Opt
oele
ctro
nics
Hon
gK
ong
Hol
ding
Lim
ited
Hon
g K
ong
Inve
stm
ent h
oldi
ngs
--
1
62,8
97,8
0210
01,
557,
546
190,
912
190,
912
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Inno
lux
Hon
g K
ong
Lim
ited
Hon
g K
ong
Dis
tribu
tor c
ompa
ny-
-35
,000
,000
100
504,
440
292,
656
292,
656
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Inno
lux
Euro
pe B
.V.
Net
herla
nds
Hol
ding
, R&
D te
stin
g an
dD
istri
buto
r com
pany
1
,994
,102
3
,209
,158
375,
810
100
683,
992
84,9
4984
,949
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Inno
lux
Japa
n C
o.,L
td.
Japa
nH
oldi
ngs,
R&
D,
man
ufac
turin
g an
dD
istri
buto
r com
pany
1
,815
,603
1
,815
,603
8246
1,67
7,86
02,
095
954
Inno
lux
Japa
n C
o.,L
td.
Inno
lux
USA
, Inc
.U
SASe
lling
of e
lect
roni
ceq
uipm
ent a
nd c
ompu
ter
mon
itors
369,
092
2,40
012
,842
100
666,
022
19,7
7219
,772
Roc
kets
Hol
ding
Ltd
.St
anfo
rd D
evel
opm
ents
Ltd
.Sa
moa
Inve
stm
ent h
oldi
ngs
5
,391
,125
5
,391
,125
1
64,0
00,0
0010
011
,727
,222
28,7
5128
,751
Roc
kets
Hol
ding
Ltd
.N
ets T
radi
ng L
td.
Sam
oaIn
vest
men
t com
pany
27,4
7727
,477
900,
001
100
28,2
601,
528)
(
1,52
8)(
Suns
Hol
ding
Ltd
.W
arrio
rs T
echn
olog
yIn
vest
men
ts L
td.
Sam
oaIn
vest
men
t com
pany
555,
422
555,
422
18,1
77,0
5210
05,
896,
173
155,
001
155,
001
Inno
lux
Euro
pe B
.V.
Inno
lux
Tech
nolo
gy G
erm
any
Gm
bHG
erm
any
Test
ing
and
mai
nten
ance
com
pany
33,7
3533
,735
100,
000
100
72,0
8010
,767
10,7
67
Inno
lux
Sing
apor
eH
oldi
ng P
te. L
td.
Inno
lux
Opt
oele
ctro
nics
Indi
aPr
ivat
e Li
mite
dIn
dia
Dis
tribu
tor c
ompa
ny17
6,99
7
-39
,500
,000
100
152,
400
21,4
29)
(
21,4
29)
(
Inno
lux
Sing
apor
eH
oldi
ng P
te. L
td.
Inno
lux
Opt
oele
ctro
nics
Phili
ppin
es C
orp.
Phili
ppin
esM
anuf
actu
rer a
nddi
strib
utor
28,7
33
-5,
000,
000
100
28,3
9876
7)(
76
7)(
- 202 -
Bal
ance
as a
tD
ecem
ber 3
1,20
18
Bal
ance
as a
tD
ecem
ber 3
1,20
17N
umbe
r of s
hare
sO
wne
rshi
p(%
)B
ook
valu
e
Net
pro
fit (l
oss)
of th
e in
vest
ee fo
rth
e ye
ar e
nded
Dec
embe
r 31,
2018
Inve
stm
ent i
ncom
e(lo
ss) r
ecog
nize
d by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
8Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ssac
tiviti
es
Initi
al in
vest
men
t am
ount
Shar
es h
eld
as a
t Dec
embe
r 31,
201
8
Inno
lux
Sing
apor
eH
oldi
ng P
te. L
td.
Inno
lux
Opt
oele
ctro
nics
Mal
aysi
a SD
N. B
HD
.M
alay
sia
Man
ufac
ture
r and
dist
ribut
or $
1
21,1
79
-16
,000
,000
100
118,
660
$
424
$
424
$
Yua
n C
hi In
vest
men
tC
o., L
td.
Chi
Mei
Lig
htin
g Te
chno
logy
Cor
pora
tion
Taiw
anM
anuf
actu
ring
of e
lect
roni
ceq
uipm
ent a
nd li
ghtin
geq
uipm
ent
263,
812
263,
812
19,6
73,4
028
--
-
Yua
n C
hi In
vest
men
tC
o., L
td.
GIO
Opt
oele
ctro
nics
Cor
p.Ta
iwan
Man
ufac
turin
g an
d se
lling
of c
ompo
nent
s of T
FT-L
CD
6,88
16,
881
77,2
35-
851
23,7
8218
- 203 -
Rem
itted
toM
ainl
and
Chi
na
Rem
itted
back
toTa
iwan
Inno
com
Tec
hnol
ogy
(She
nzhe
n) C
o., L
TDM
anuf
actu
ring
and
selli
ng o
f LC
Dba
cken
d m
odul
e an
d re
late
dco
mpo
nent
s
$
5,0
37,2
602
$
3,8
98,0
94 $
-
$
- $
3
,898
,094
$
28,
751
100
$
28,
751
$
11,
727,
170
$
1,1
39,1
662.
1
OED
Com
pany
Man
ufac
turin
g an
d se
lling
of
elec
troni
c pa
per
287,
802
261
,430
--
61,4
30(
66,
219)
4-
6,92
0-
2.2
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.M
anuf
actu
ring
and
selli
ng o
f LC
Dba
cken
d m
odul
e an
d re
late
dco
mpo
nent
s
9
,521
,650
222
6,21
8-
-22
6,21
8
910
,710
100
9
10,7
10
19,9
00,8
61
5,3
02,4
822.
3
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Man
ufac
turin
g an
d se
lling
of L
CD
back
end
mod
ule
and
rela
ted
com
pone
nts
11,
763,
845
2
1
1,76
3,84
5-
-
1
1,76
3,84
5(
174
,637
)10
0(
172
,283
)
20,1
92,5
33-
2.3
Nin
gbo
Inno
lux
Dis
play
Ltd.
Man
ufac
turin
g an
d se
lling
of L
CD
back
end
mod
ule
and
rela
ted
com
pone
nts
4
,914
,400
2
4,9
14,4
00-
-
4,9
14,4
00
417
,960
100
4
17,9
60
4,5
03,2
47-
2.3
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
Purc
hase
s and
sale
s of m
onito
r-re
late
d co
mpo
nent
s com
pany
64,5
022
64,5
02-
-64
,502
3,38
410
03,
384
551,
074
-2.
4
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
.M
anuf
actu
ring
and
selli
ng o
f LC
Dba
cken
d m
odul
e an
d re
late
dco
mpo
nent
s
4
,484
,390
2
4,4
24,0
53-
-
4,4
24,0
53
139
,883
100
1
39,8
83
5,9
54,8
37-
2.4
2.8
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd
.M
anuf
actu
ring
and
selli
ng o
f LC
Dba
cken
d m
odul
e an
d re
late
dco
mpo
nent
s
645,
015
2-
--
-
190
,912
100
1
90,9
12
1,5
57,5
46-
2.5
Fosh
an In
nolu
x Lo
gist
ics
Ltd.
War
ehou
sing
serv
ices
46,0
732
46,0
73-
-46
,073
4,58
910
04,
589
77,2
67-
2.6
Am
link
(Sha
ngha
i) Lt
d.M
anuf
actu
ring
and
selli
ng o
fpo
wer
supp
ly, m
odem
, AD
SL, a
ndot
her I
T eq
uipm
ents
245,
720
230
7,15
0-
-30
7,15
0-
50-
191,
778
-2.
7
Am
ount
rem
itted
from
Taiw
an to
Mai
nlan
dC
hina
/Am
ount
rem
itted
back
to T
aiw
an fo
r the
yea
ren
ded
Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
and
Subs
idia
ries
Info
rmat
ion
on in
vest
men
ts in
Mai
nlan
d C
hina
For t
he y
ear e
nded
Dec
embe
r 31,
201
8Ta
ble
8Ex
pres
sed
in th
ousa
nds o
f NTD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Inve
stee
in M
ainl
and
Chi
na M
ain
busi
ness
act
iviti
esPa
id-in
cap
ital
(Not
e A
)
Inve
stm
ent
met
hod
(Not
e C
)
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Jan
uary
1,
2018
Foot
note
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
Net
inco
me
ofin
vest
ee fo
r the
year
end
edD
ecem
ber 3
1,20
18
Ow
ners
hip
held
by
the
Com
pany
(dire
ct o
rin
dire
ct)
Inve
stm
ent
inco
me
(loss
)re
cogn
ized
by
the
Com
pany
for t
he y
ear
ende
dD
ecem
ber 3
1,20
18 (N
ote
B)
Boo
k va
lue
ofin
vest
men
ts in
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
Acc
umul
ated
amou
nt o
fin
vest
men
tin
com
e re
mitt
edba
ck to
Tai
wan
as o
f Dec
embe
r31
, 201
8
- 204 -
Rem
itted
toM
ainl
and
Chi
na
Rem
itted
back
toTa
iwan
Inte
rfac
e O
ptoe
lect
roni
cs(S
henz
hen)
Co.
, Ltd
.D
evel
opm
ent o
f new
type
of f
lat
pane
l dis
play
, mon
itor a
ndpe
riphe
rals,
pro
duct
ion
and
man
agem
ent,
and
offe
r of a
fter-
sale
s ser
vice
$
2,9
54,7
832
$
414
,653
$
- $
-
$
414
,653
$
490
,966
7 $
-
$
2,1
77,4
60 $
-
2.2
Nin
gbo
Inno
lux
Elec
troni
cs L
td.
R&
D, M
anuf
actu
ring
and
selli
ngof
LC
D b
acke
nd m
odul
e an
dre
late
d co
mpo
nent
s
134,
259
3-
--
-97
,411
100
97,4
1146
0,83
8-
3.1
Fosh
an In
nolu
x Fl
net
Elec
troni
cs L
td.
Com
mod
ity a
genc
y4,
475
3-
--
-26
310
026
35,
997
-3.
2
Nin
gbo
Inno
lux
Flne
tEl
ectro
nics
Ltd
.C
omm
odity
age
ncy
4,47
53
--
--
1,63
010
01,
630
9,02
5-
3.2
Shen
zhen
Pix
inLE
DTe
chno
logy
Co.
, Ltd
.D
evel
opm
ent a
nd se
lling
of M
INI
LED
44,7
533
--
--
( 1
,879
)10
0(
1,8
79)
42,9
10-
3.3
Inno
lux
Aut
omat
ions
and
Inte
llige
nce
Syst
ems
(She
nZhe
n) C
o., L
td.
Dev
elop
men
t and
selli
ng o
fso
ftwar
e4,
475
3-
--
-(
4,7
30)
49(
2,3
18)
( 8
0)-
3.3
Am
ount
rem
itted
from
Taiw
an to
Mai
nlan
dC
hina
/Am
ount
rem
itted
back
to T
aiw
an fo
r the
yea
ren
ded
Dec
embe
r 31,
201
8
Inve
stee
in M
ainl
and
Chi
na M
ain
busi
ness
act
iviti
esPa
id-in
cap
ital
(Not
e A
)
Inve
stm
ent
met
hod
(Not
e C
)
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Jan
uary
1,
2018
Acc
umul
ated
amou
nt o
fin
vest
men
tin
com
e re
mitt
edba
ck to
Tai
wan
as o
f Dec
embe
r31
, 201
8Fo
otno
te
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
Net
inco
me
ofin
vest
ee fo
r the
year
end
edD
ecem
ber 3
1,20
18
Ow
ners
hip
held
by
the
Com
pany
(dire
ct o
rin
dire
ct)
Inve
stm
ent
inco
me
(loss
)re
cogn
ized
by
the
Com
pany
for t
he y
ear
ende
dD
ecem
ber 3
1,20
18 (N
ote
B)
Boo
k va
lue
ofin
vest
men
ts in
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
- 205 -
Cei
ling
on in
vest
men
ts in
Mai
nlan
d C
hina
:
Com
pany
nam
e
Acc
umul
ated
am
ount
of r
emitt
ance
from
Tai
wan
to M
ainl
and
Chi
na a
sof
Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
27,6
20,5
64$
Not
e A
: The
rele
vant
figu
res w
ere
liste
d in
NT$
. Whe
re fo
reig
n cu
rren
cies
wer
e in
volv
ed, t
he fi
gure
s wer
e co
nver
ted
to N
T$ u
sing
exc
hang
e ra
te.
Not
e B
: Pro
fit o
r los
s rec
ogni
zed
for t
he y
ear e
nded
Dec
embe
r 31,
201
8 w
as a
udite
d by
inde
pend
ent a
ccou
ntan
ts.
Not
e C
: The
inve
stm
ent m
etho
ds a
re a
s fol
low
s:1.
Dire
ctly
inve
stin
g in
Mai
nlan
d C
hina
.2.
Thr
ough
inve
stin
g in
com
pani
es in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
1. T
hrou
gh in
vest
ing
in S
tanf
ord
Dev
elop
men
ts L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.2.
Thr
ough
inve
stin
g in
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
. in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
3. T
hrou
gh in
vest
ing
in L
andm
ark
Inte
rnat
iona
l Ltd
. in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
4. T
hrou
gh in
vest
ing
in T
oppo
ly O
ptoe
lect
roni
cs (C
aym
an) L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.5.
Thr
ough
inve
stin
g in
Inno
lux
Opt
oele
ctro
nics
Hon
g K
ong
Hol
ding
Lim
ited
in th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.6.
Thr
ough
inve
stin
g in
Key
way
Inve
stm
ent M
anag
emen
t Lim
ited
in th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.7.
Thr
ough
inve
stin
g in
Am
pow
er H
oldi
ng L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.8.
Nan
jing
Inno
loux
Opt
oele
ctor
nics
Ltd
. acq
uire
d K
unpa
l Opt
oele
ctro
nics
Ltd
. by
mer
ger,
whi
ch w
as a
ppro
ved
by th
e In
vest
men
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
in N
ovem
ber 2
017.
3. O
ther
s.3.
1. T
he c
ompa
ny in
vest
ed in
the
com
pany
via
inve
stee
com
pany
in M
ainl
and
Chi
na, N
ingb
o In
nolu
x D
ispl
ay L
td. E
xcep
t for
the
inve
stm
ent v
ia th
e ho
ldin
g co
mpa
nies
in M
ainl
and
Chi
na, o
ther
inve
stm
ents
shal
l be
not
appr
oved
by
Inve
stmen
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
.3.
2 T
he c
ompa
ny in
vest
ed v
ia F
osha
n In
nolu
x O
ptoe
lect
roni
cs L
td. a
nd N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td. w
hich
are
the
com
pany
inve
stm
ent e
ntiti
es in
Mai
nlan
d C
hina
to in
vest
in F
osha
n In
nolu
x Fl
net E
lect
roni
cs L
td.
and
Nin
gbo
Inno
lux
Flne
t Ele
ctro
nics
Ltd
. Ex
cept
for t
he in
vest
men
t via
the
hold
ing
com
pani
es in
Mai
nlan
d C
hina
, ot
her i
nves
tmen
ts sh
all b
e no
t app
rove
d by
Inve
stmen
t Com
mis
sion
of th
e M
inis
try o
f Eco
nom
ic A
ffairs
.3.
3.Th
e co
mpa
ny in
vest
ed v
ia In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
, whi
ch a
re th
e co
mpa
ny in
vest
men
t ent
ities
in M
ainl
and
Chi
na to
inve
st in
She
nzhe
n Pi
xinL
ED T
echn
olog
y C
o.,L
td.,
Inno
lux
Aut
omat
ions
and
Inte
llige
nce
Syst
ems (
Shen
Zhen
) Co.
, Ltd
. Exc
ept f
or th
e in
vest
men
t via
the
hold
ing
com
pani
es in
Mai
nlan
d C
hina
, ot
her i
nves
tmen
ts sh
all b
e no
t app
rove
d by
Inve
stmen
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
.N
ote
D: I
n ac
cord
ance
with
“R
ules
Gov
erni
ng A
pplic
atio
ns fo
r Inv
estm
ent o
r Tec
hnic
al C
oope
ratio
n in
Mai
nlan
d C
hina
”, th
e C
ompa
ny h
as o
btai
ned
the
certi
ficat
e of
bei
ng q
ualif
ied
for o
pera
ting
head
quar
ters
, iss
ued
by th
e In
dust
rial D
evel
opm
ent
B
urea
u of
the
Min
istry
of E
cono
mic
Affa
irs, t
he c
eilin
g am
ount
of t
he in
vest
men
t in
Mai
nlan
d C
hina
is n
ot a
pplic
able
to th
e C
ompa
ny.
I. Th
e am
ount
app
rove
d by
the
Inve
stm
ent C
omm
issi
on o
f Min
istry
of E
cono
mic
Affa
irs (M
OEA
) is U
SD 1
0,30
0 th
ousa
nd, V
ap O
ptoe
lect
roni
cs (N
anJi
ng) C
orp.
has
fini
shed
liqu
idat
ion
in O
ctob
er 2
018
but n
ot a
pply
the
canc
ella
tion
of
inv
estm
ent w
ith In
vest
men
t Com
mis
sion
of M
OEA
yet
.
Inve
stm
ent a
mou
nt a
ppro
ved
by th
e In
vest
men
tC
omm
issi
on o
f the
Min
istry
of E
cono
mic
Affa
irs (M
OEA
)
36,8
25,1
18$
Cei
ling
on in
vest
men
ts in
Mai
nlan
d C
hina
impo
sed
by th
eIn
vest
men
t Com
mis
sion
of
MO
EA
(Not
e D
)
- 206 -
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Innolux Corporation:
Opinion
We have audited the accompanying parent company only balance sheets of Innolux Corporation (the
“Company”) as at December 31, 2018 and 2017, and the related parent company only statements of
comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the
parent company only financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying parent company only financial statements present fairly, in all material
respects, the parent company only financial position of the Company as at December 31, 2018 and 2017,
and its parent company only financial performance and its parent company only cash flows for the years
then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by
Securities Issuers”.
Basis for opinion
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of Parent Company Only Financial Statements section of our
report. We are independent of the Company in accordance with the Code of Professional Ethics for
Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the parent company only financial statements of the current period. These matters were
addressed in the context of our audit of the parent company only financial statements as a whole and, in
forming our opinion thereon, we do not provide a separate opinion on these matters.
- 207 -
The key audit matters in relation to the financial statements for the year ended December 31, 2018 are
outlined as follows:
Inventory valuation
Description
The industry is characterised in its significant fluctuations closely in connection with the economic
environment. As the technology evolves rapidly, the Company’s existing products may become obsolete
when the customers demand for new products or the Company fails to compete with the evolutionary
production approach. The abovementioned factors thus affect the sales amount ultimately. The Company
has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and
the cost has been written down to the net realizable value. For details of inventory, please refer to Note
6(6). As the amounts of inventories are material, the types of inventories vary, and the estimation of net
realizable value for individually obsolete or damaged inventories is dependent upon significant
management judgement, we consider inventory valuation a key audit matter.
How our audit addressed the matter
We assessed whether the accounting policies on the provision for the loss on decline in value and
obsoleteness of inventory are reasonable and in accordance with the accounting principles, as well as
whether they are applied consistently. We examined inventory aging report and assessed the
reasonableness of provision for the loss on slow-moving inventory. We also assessed the reasonableness
of net realizable value and the appropriateness of valuation basis.
Valuation and impairment of goodwill and property, plant and equipment
Description
For details of the impairment valuation of goodwill and property, plant and equipment, please refer to
Notes 6(8) and 6(10).
Innolux Corporation estimates future cash flows based on appropriate discount rates. In determining
whether goodwill and property, plant and equipment may be impaired, the recoverable amount of the
cash generating unit is measured based on how assets are utilised, duration years of assets and projected
income and expenses in the future. The estimate involves several assumptions such as determination of
discount rates, expected growth rate and future financial projections. As these estimates are dependent
upon significant management judgement, we consider management’s assessment of impairment of
goodwill and property, plant and equipment a key audit matter.
- 208 -
How our audit addressed the matter
We assessed the key assumptions used by management in estimating expected future cash flows,
including the reasonableness of expected operating revenue, gross profit, changes in expenses, and the
basic assumptions applied in expected future cash flows. We also examined the parameters of discount
rates, including the risk-free rate of return on equity capital, the risk factor of the industry and the rate
of return on similar investments in the market.
Responsibilities of management and those charged with governance for the parent
company only financial statements
Management is responsible for the preparation and fair presentation of the parent company only financial
statements in accordance with the “Regulations Governing the Preparation of Financial Reports by
Securities Issuers”, and for such internal control as management determines is necessary to enable the
preparation of parent company only financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the parent company only financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing the
Company’s financial reporting process.
Auditor’s responsibilities for the audit of the parent company only financial statements
Our objectives are to obtain reasonable assurance about whether the parent company only financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these parent company only financial statements.
- 209 -
As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the parent company only financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the parent company only financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the parent company only financial
statements, including the disclosures, and whether the parent company only financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the parent company only financial
statements. We are responsible for the direction, supervision and performance of the Company audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
- 210 -
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the parent company only financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
PricewaterhouseCoopers, Taiwan
February 14, 2019
------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.
- 211 -
INNOLUX CORPORATION PARENT COMPANY ONLY BALANCE SHEETS
DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Assets Notes December 31, 2018 December 31, 2017
Current assets
1100 Cash and cash equivalents 6(1) $ 23,269,922 $ 53,532,826
1110 Financial assets at fair value
through profit or loss - current
6(2)
160,172 106,634
1136 Financial assets at amortized cost
- current
6(4)
49,779,150 -
1170 Accounts receivable, net 6(5) 39,176,537 39,078,322
1180 Accounts receivable, net - related
parties
7
8,447,974 9,483,133
1200 Other receivables 595,079 636,591
1210 Other receivables - related parties 7 393,518 28,791
130X Inventory 6(6) 26,805,645 25,381,254
1410 Prepayments 706,270 1,050,467
1479 Other current assets 2,426 887
11XX Total current assets 149,336,693 129,298,905
Non-current assets
1510 Financial assets at fair value
through profit or loss - non-
current
6(2)
1,198,417 -
1517 Financial assets at fair value
through other comprehensive
income - non-current
6(3)
1,111,388 -
1523 Available-for-sale financial assets
- non-current
12(4)
- 1,308,207
1550 Investments accounted for under
equity method
6(7)
83,002,481 81,614,542
1600 Property, plant and equipment 6(8), 7 and 8 176,216,141 191,778,224
1760 Investment property, net 6(9) 551,970 562,697
1780 Intangible assets 6(10) and 8 17,599,664 17,681,078
1840 Deferred income tax assets 6(25) 7,166,754 6,227,042
1990 Other non-current assets 6(8) and 8 2,074,099 1,460,605
15XX Total non-current assets 288,920,914 300,632,395
1XXX Total assets $ 438,257,607 $ 429,931,300
(Continued)
- 212 -
INNOLUX CORPORATION PARENT COMPANY ONLY BALANCE SHEETS
DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
The accompanying notes are an integral part of these parent company only financial
statements.
Liabilities and Equity Notes December 31, 2018 December 31, 2017
Current liabilities
2120 Financial liabilities at fair value
through profit or loss - current
6(2)
$ 19,899 $ 52,500
2170 Accounts payable 26,777,128 29,023,773
2180 Accounts payable - related parties 7 62,465,508 44,859,800
2200 Other payables 6(11) and 7 28,693,227 55,797,132
2230 Current income tax liabilities 6(25) 2,634,659 -
2250 Provisions - current 6(14) and 9 6,782,914 5,460,862
2320 Long-term liabilities, current
portion
6(12)
16,194,486 10,951,114
2399 Other current liabilities 3,183,671 955,648
21XX Total current liabilities 146,751,492 147,100,829
Non-current liabilities
2540 Long-term borrowings 6(12) 35,142,090 17,287,788
2570 Deferred income tax liabilities 6(25) 880,013 734,423
2670 Other non-current liabilities 6(13) 493,307 483,212
25XX Total non-current liabilities 36,515,410 18,505,423
2XXX Total liabilities 183,266,902 165,606,252
Equity
3110 Share capital - common stock 6(15) 99,520,720 99,520,720
3200 Capital surplus 6(16) 99,648,115 99,646,919
Retained earnings 6(17)
3310 Legal reserve 7,648,437 3,945,576
3320 Special reserve 1,090,721 3,418,804
3350 Unappropriated retained earnings 51,746,175 58,883,750
3400 Other equity interest 6(18) ( 4,663,463 ) ( 1,090,721 )
3XXX Total equity 254,990,705 264,325,048
3X2X Total liabilities and equity $ 438,257,607 $ 429,931,300
- 213 -
INNOLUX CORPORATION
PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)
The accompanying notes are an integral part of these parent company only financial statements.
Items Notes 2018 2017
4000 Sales revenue 6(19) and 7 $ 278,407,555 $ 323,687,952
5000 Operating costs 6(6)(23) and 7 ( 260,401,853 ) ( 266,236,118 )
5900 Net operating margin 18,005,702 57,451,834
Operating expenses 6(23) and 7
6100 Selling expenses ( 1,654,671 ) ( 980,494 )
6200 General and administrative expenses ( 4,700,630 ) ( 3,635,529 )
6300 Research and development expenses ( 11,294,086 ) ( 12,202,018 )
6000 Total operating expenses ( 17,649,387 ) ( 16,818,041 )
6900 Operating profit 356,315 40,633,793
Non-operating income and expenses
7010 Other income 6(20) 2,232,724 2,410,518
7020 Other gains and losses 6(21) ( 752,123 ) ( 1,236,027 )
7050 Finance costs 6(22) ( 565,881 ) ( 730,497 )
7070 Share of profit of subsidiaries, associates
and joint ventures accounted for under
equity method 2,957,675 3,997,806
7000 Total non-operating income and
expenses 3,872,395 4,441,800
7900 Profit before income tax 4,228,710 45,075,593
7950 Income tax expense 6(25) ( 2,005,948 ) ( 8,046,984 )
8200 Profit for the year $ 2,222,762 $ 37,028,609
Other comprehensive (loss) income (net)
Components of other comprehensive loss
that will not be reclassified to profit or loss
8311 Remeasurement of defined benefit
obligations
6(13)
( $ 29,878 ) ( $ 49,571 )
8316 Unrealized losses on financial assets at
fair value through other comprehensive
income
6(18)
( 229,701 ) -
8330 Share of other comprehensive loss of
subsidiaries, associates and joint ventures
accounted for under equity method
6(18)
( 2,599,115 ) -
8349 Income tax related to components of other
comprehensive income that will not be
reclassified to profit or loss
6(25)
5,976 8,427
8310 Components of other comprehensive
loss that will not be reclassified to
profit or loss ( 2,852,718 ) ( 41,144 )
Components of other comprehensive (loss)
income that will be reclassified to profit or
loss
8361 Financial statements translation
differences of foreign operations
6(18)
( 828,563 ) ( 1,643,264 )
8362 Unrealized gain on valuation of available-
for-sale financial assets
6(18)
- 2,855,347
8380 Share of other comprehensive income of
subsidiaries, associates and joint ventures
accounted for under equity method
6(18)
84,637 1,433,110
8399 Income tax relating to the components of
other comprehensive loss that will be
reclassified
6(25)
- ( 317,110 )
8360 Components of other comprehensive
(loss) income that will be reclassified
to profit or loss ( 743,926 ) 2,328,083
8300 Other comprehensive (loss) income for the
year, net of tax ( $ 3,596,644 ) $ 2,286,939
8500 Total comprehensive (loss) income for the
year ( $ 1,373,882 ) $ 39,315,548
Earnings per share (in dollars) 6(26)
9750 Basic earnings per share $ 0.22 $ 3.72
9850 Diluted earnings per share $ 0.22 $ 3.63
- 214 -
INN
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- 215 -
INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Notes 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax $ 4,228,710 $ 45,075,593
Adjustments
Adjustments to reconcile profit (loss)
Depreciation and amortization 6(23) 31,969,539 29,669,396
Net loss on financial assets or liabilities at fair
value through profit or loss 109,790 -
Expected credit loss 100,000 -
Share of profit of subsidiaries and associates
accounted for under equity method ( 2,957,675 ) ( 3,997,806 )
Loss on disposal of investments 6(21) 10,533 -
Loss on disposal of property, plant and
equipment
6(21)
18,641 32,859
Impairment loss 6(21) - 3,049,547
Interest income 6(20) ( 775,096 ) ( 301,764 )
Dividend income 6(20) ( 5,838 ) ( 22,678 )
Interest expense 6(22) 565,881 730,497
Unrealized foreign exchange loss (gain) 149,778 ( 4,725 )
Changes in operating assets and liabilities
Changes in operating assets
Financial assets /liabilities at fair value
through profit or loss - current ( 86,139 ) ( 724,808 )
Accounts receivable 2,128,692 11,615,189
Accounts receivable - related parties 1,038,736 715,881
Other receivables 124,760 554,181
Inventories ( 1,424,391 ) ( 6,483,338 )
Prepayments 344,197 ( 171,957 )
Other current assets ( 1,539 ) 34,910
Changes in operating liabilities
Accounts payable ( 2,246,645 ) ( 226,252 )
Accounts payable - related parties 17,605,708 ( 5,460,614 )
Other payables ( 1,751,921 ) 6,665,654
Provisions - current 1,322,052 1,695,628
Other current liabilities ( 301,082 ) ( 169,330 )
Other non-current liabilities ( 83,503 ) 28,840
Cash inflow generated from operations 50,083,188 82,304,903
Cash paid for income tax ( 159,435 ) ( 536,988 )
Net cash flows from operating activities 49,923,753 81,767,915
(Continued)
- 216 -
INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars)
Notes 2018 2017
The accompanying notes are an integral part of these parent company only financial
statements.
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other receivables - related
parties ( $ 364,727 ) $ 3,625
Acquisition of investments in equity instruments
measured at fair value through other
comprehensive income ( 1,341,089 ) -
Acquisition of financial assets at amortized cost ( 49,945,950 ) -
Proceeds from capital reduction of available-for-
sale financial assets - 145,575
Increase in investment accounted for under equity
method ( 2,188,258 ) -
Proceeds from capital reduction of investments
accounted for under equity method 96,421 1,790,881
(Increase) decrease in other financial assets ( 350,449 ) 30
Acquisition of property, plant and equipment 6(27) ( 41,713,067 ) ( 22,321,235 )
Proceeds from disposal of property, plant and
equipment 34,691 293,308
Acquisition of intangible assets 6(10) ( 28,240 ) ( 106,781 )
Increase in other non-current assets ( 177 ) ( 319 )
Interest received 692,581 295,245
Dividends received 315,020 339,710
Net cash flows used in investing activities ( 94,793,244 ) ( 19,559,961 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings - ( 11,579,025 )
Increase in long-term borrowings 34,000,000 -
Payment of long-term borrowings ( 10,960,000 ) ( 16,440,000 )
Cash dividends paid 6(17) ( 7,961,657 ) ( 995,204 )
Interest paid ( 471,756 ) ( 588,508 )
Net cash flows from (used in) financing
activities 14,606,587 ( 29,602,737 )
Net (decrease) increase in cash and cash equivalents ( 30,262,904 ) 32,605,217
Cash and cash equivalents at beginning of year 53,532,826 20,927,609
Cash and cash equivalents at end of year $ 23,269,922 $ 53,532,826
- 217 -
INNOLUX CORPORATION
NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)
1. HISTORY AND ORGANIZATION
(1) Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for
Establishment and Administration of Science Parks in the Republic of China (R.O.C.). The Company
was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company
merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010,
with the Company as the surviving entity.
(2) The Company engages in the research, development, design, manufacture, and sales of TFT-LCD
panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.
2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY
FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These parent company only financial statements were authorized for issuance by the Board of Directors
on February 14, 2019.
3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting
Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share-based
payment transactions’
January 1, 2018
Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with
IFRS 4 Insurance contracts’
January 1, 2018
IFRS 9, ‘Financial instruments’ January 1, 2018
IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018
Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from
contracts with customers’
January 1, 2018
Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealized losses’
January 1, 2017
Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018
IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
1, ‘First-time adoption of International Financial Reporting Standards’
January 1, 2018
- 218 -
Except for the following, the above standards and interpretations have no significant impact to the
Company’s financial condition and financial performance based on the Company’s assessment.
A. IFRS 9, ‘Financial instruments’
(a) Classification of debt instruments is driven by the entity’s business model and the contractual
cash flow characteristics of the financial assets, which would be classified as financial assets
at fair value through profit or loss, financial assets measured at fair value through other
comprehensive income or financial assets measured at amortized cost. Equity instruments
would be classified as financial assets at fair value through profit or loss, unless an entity
makes an irrevocable election at inception to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument that is not held
for trading.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’
approach. An entity assesses at each balance sheet date whether there has been a significant
increase in credit risk on that instrument since initial recognition to recognize 12-month
expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the
gross carrying amount of the asset before impairment losses occurred); or if the instrument
that has objective evidence of impairment, interest revenue after the impairment would be
calculated on the book value of net carrying amount (i.e. net of credit allowance). The
Company shall always measure the loss allowance at an amount equal to lifetime expected
credit losses for trade receivables that do not contain a significant financing component.
(c) The amended general hedge accounting requirements align hedge accounting more closely
with an entity’s risk management strategy. Risk components of non-financial items and a group
of items can be designated as hedged items. The standard relaxes the requirements for hedge
effectiveness, removing the 80-125% bright line, and introduces the concept of ‘rebalancing’;
while its risk management objective remains unchanged, an entity shall rebalance the hedged
item or the hedging instrument for the purpose of maintaining the hedge ratio.
(d) The Company has elected not to restate prior period financial statements using the modified
retrospective approach under IFRS 9. The significant effect of applying the new standards as
of January 1, 2018 are summarized as below:
In accordance with IFRS 9, the Company reclassified available-for-sale financial assets in the
amount of $1,308,207 by increasing financial assets at fair value through profit or loss in the
amount of $1,308,207. There was no effect on retained earnings and other equity interest.
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS
12, ‘Disclosure of interests in other entities’
January 1, 2017
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS
28, ‘Investments in associates and joint ventures’
January 1, 2018
- 219 -
B. IFRS 15, ‘Revenue from contracts with customers’ and amendments
(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction Contracts’,
IAS 18, ‘Revenue’, and relevant interpretations and SICs. According to IFRS 15, revenue is
recognized when a customer obtains control of goods or services. A customer obtains control
of goods or services when a customer has the ability to direct the use of, and obtain
substantially all of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. An entity recognizes
revenue in accordance with that core principle by applying the following steps:
Step 1: Identify contracts with customer.
Step 2: Identify performance obligations in the contract(s).
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price.
Step 5: Recognize revenue when the performance obligation is satisfied.
Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an
entity to disclose sufficient information to enable users of financial statements to understand
the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts
with customers.
(b) The Company has elected not to restate prior period financial statements using the modified
retrospective approach under IFRS 15. The significant effects of applying the new standards
as of January 1, 2018 are summarized as below:
Presentation of assets and liabilities in relation to contracts with customers
In line with IFRS 15 requirements, the Company changed the presentation of certain accounts
in the balance sheet as follows:
Under IFRS 15, liabilities in relation to expected volume discounts and refunds to customers
are recognized as refund liabilities, but were previously presented as accounts receivable-
allowance for sales returns and discounts in the balance sheet. As of January 1, 2018, the
balance amounted to $2,330,484.
C. Amendments to IAS 7, ‘Disclosure initiative’
This amendment requires that an entity shall provide more disclosures related to changes in
liabilities arising from financing activities, including both changes arising from cash flows and
non-cash changes.
The Company expects to provide additional disclosure to explain the changes in liabilities arising
from financing activities.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by
the Company
New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as
follows:
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Except for the following, the above standards and interpretations have no significant impact to the
Company’s financial condition and financial performance based on the Company’s assessment.
IFRS 16, ‘Leases’
IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard
requires lessees to recognize a ‘right-of-use asset’ and a lease liability (except for those leases with
terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors,
which is to classify their leases as either finance leases or operating leases and account for those two
types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.
The Company expects to recognize the lease contract of lessees in line with IFRS 16. However, the
Company intends not to restate the financial statements of prior period (collectively referred herein
as the “modified retrospective approach”). On January 1, 2019, it is expected that right-of-use
asset and lease liability will be increased by $6,140,546 and $6,140,546, and retained earnings stay
the same.
(3) IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as
endorsed by the FSC are as follows:
The above standards and interpretations have no significant impact to the Company’s financial
condition and financial performance based on the Company’s assessment.
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative
compensation’
January 1, 2019
IFRS 16, ‘Leases’ January 1, 2019
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint
ventures’
January 1, 2019
IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle January 1, 2019
New Standards, Interpretations and Amendments
Effective Date by
International Accounting
Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of
Material’
January 1, 2020
Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
To be determined by
International Accounting
Standards Board
IFRS 17, ‘Insurance contracts’ January 1, 2021
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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these parent company only financial
statements are set out below. These policies have been consistently applied to all the periods presented,
unless otherwise stated.
(1) Compliance statement
These parent company only financial statements are prepared by the Company in accordance with the
“Rules Governing the Preparation of Financial Statements by Securities Issuers.
(2) Basis of preparation
A. Except for the following items, these parent company only financial statements have been prepared
under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through
profit or loss.
(b) Financial assets at fair value through other comprehensive income/available-for-sale financial
assets measured at fair value.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less
present value of defined benefit obligations.
B. The preparation of financial statements in conformity with International Financial Reporting
Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as
endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process
of applying the Company’s accounting policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the parent company
only financial statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply
modified retrospective approach. There was no cumulative impact of the adoption on retained
earnings or other equity as of January 1, 2018 and the financial statements for the year ended
December 31, 2017 was not restated. The financial statements for the year ended December 31,
2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’),
International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’)
and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of
significant accounting policies and details of significant accounts.
(3) Foreign currency translation
Items included in the financial statements are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”). The parent company only
financial statements are presented in NTD, which is the Company’s functional and presentation
currency.
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A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement of such transactions are
recognized in profit or loss in the period in which they arise, except when deferred in other
comprehensive income as qualifying cash flow hedges.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-
translated at the exchange rates prevailing at the balance sheet date. Exchange differences
arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value
through profit or loss are re-translated at the exchange rates prevailing at the balance sheet
date; their translation differences are recognized in profit or loss. Non-monetary assets and
liabilities denominated in foreign currencies held at fair value through other comprehensive
income are re-translated at the exchange rates prevailing at the balance sheet date; their
translation differences are recognized in other comprehensive income. However, non-
monetary assets and liabilities denominated in foreign currencies that are not measured at fair
value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income
under “other gains and losses”.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a
functional currency different from the presentation currency are translated into the
presentation currency as follows:
i. Assets and liabilities for each balance sheet presented are translated at the spot exchange
rate at the date of that balance sheet;
ii. Income and expenses for each statement of comprehensive income are translated at average
exchange rates of that period; and
iii. All resulting exchange differences are recognized in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences
that were recorded in other comprehensive income are proportionately reclassified to profit or
loss as part of the gain or loss on sale. In addition, even with the Company retains partial
interest in the former foreign associate after losing significant influence over the former
foreign associate, such transactions should be accounted for as disposal of all interest in these
foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange
differences that were recorded in other comprehensive income are proportionately transferred
to the non-controlling interest in this foreign operation. In addition, even when the Company
retains partial interest in the former foreign subsidiary after losing control of the former foreign
subsidiary, such transactions should be accounted for as disposal of all interest in the foreign
operation.
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(4) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are
classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realized, or are intended to be
sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realized within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to
be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they
are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than
twelve months after the balance sheet date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.
(5) Cash equivalents
Cash equivalents refer to short-term highly liquid investments that are readily convertible to known
amount of cash and subject to an insignificant risk of changes in value. Time deposits that meet the
definition above and are held for the purpose of meeting short-term cash commitment in operations
are classified as cash equivalents.
(6) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at
amortized cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are
recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value and recognizes the
transaction costs in profit or loss. The Company subsequently measures the financial assets at fair
value, and recognizes the gain or loss in profit or loss.
D. The Company recognizes the dividend income when the right to receive payment is established,
future economic benefits associated with the dividend will flow to the Company and the amount
of the dividend can be measured reliably.
(7) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities
which are not held for trading, and for which the Company has made an irrevocable election at
initial recognition to recognize changes in fair value in other comprehensive income.
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B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive
income are recognized and derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction
costs. The Company subsequently measures the financial assets at fair value:
The changes in fair value of equity investments that were recognized in other comprehensive
income are reclassified to retained earnings and are not reclassified to profit or loss following the
derecognition of the investment. Dividends are recognized as revenue when the right to receive
payment is established, future economic benefits associated with the dividend will flow to the
Company and the amount of the dividend can be measured reliably.
(8) Financial assets at amortized cost
A. Financial assets at amortized cost are those that meet all of the following criteria:
(a) The objective of the Company’s business model is achieved by collecting contractual cash
flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and
derecognized using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction
costs. Interest income from these financial assets is included in finance income using the effective
interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or
impaired.
D. The Company’s time deposits which do not fall under cash equivalents are those with a short
maturity period and are measured at initial investment amount as the effect of discounting is
immaterial.
(9) Accounts and notes receivable
A. Accounts and notes receivable entitle the Company a legal right to receive consideration in
exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured
at initial invoice amount as the effect of discounting is immaterial.
C. The Company’s operating pattern of accounts receivable that are expected to be factored is for the
purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently
measured at fair value, with any changes in fair value recognized in other comprehensive income.
(10) Impairment of financial assets
For accounts receivable that have a significant financing component, at each reporting date, the
Company recognizes the impairment provision for 12 months expected credit losses if there has not
been a significant increase in credit risk since initial recognition or recognizes the impairment
provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial
recognition after taking into consideration all reasonable and verifiable information that includes
forecasts. On the other hand, for accounts receivable that do not contain a significant financing
component, the Company recognizes the impairment provision for lifetime ECLs.
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(11) Derecognition of financial assets
The Company derecognizes a financial asset when one of the following conditions is met:
A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the
Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however,
the Company has not retained control of the financial asset.
(12) Operating leases (lessor)
Lease income from an operating lease (net of any incentives given to the lessee) is recognized in
profit or loss on a straight-line basis over the lease term.
(13) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the
weighted-average method. The cost of finished goods and work in progress comprises raw materials,
direct labour, other direct costs and related production overheads (allocated based on normal
operating capacity). It excludes borrowing costs. The item by item approach is used in applying the
lower of cost and net realizable value. Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated cost of completion and applicable variable selling
expenses.
(14) Investments accounted for under the equity method / subsidiaries / associates
A. Subsidiaries are all entities (including structured entities) controlled by the Company. The
Company controls an entity when the Company is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power
over the entity.
B. Inter-company transactions, balances and unrealized gains or losses on transactions between
companies within the Company are eliminated. Accounting policies of subsidiaries have been
adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company's share of its subsidiaries' post-acquisition profits or losses is recognized in profit
or loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income. When the Company’s share of losses in a
subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize
losses proportionate to its ownership.
D. Associates are all entities over which the Company has significant influence but not control. In
general, it is presumed that the investor has significant influence, if an investor holds, directly
or indirectly 20 percent or more of the voting power of the investee. Investments in associates
are accounted for using the equity method and are initially recognized at cost.
E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit
or loss, and its share of post-acquisition movements in other comprehensive income is
recognized in other comprehensive income. When the Company’s share of losses in an associate
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equals or exceeds its interest in the associate, the Company does not recognize further losses,
unless it has incurred legal or constructive obligations or made payments on behalf of the
associate.
F. When changes in an associate’s equity are not recognized in profit or loss or other comprehensive
income of the associate and such changes do not affect the Company’s ownership percentage of
the associate, the Company recognizes all the change in equity in “capital surplus” in proportion
to its ownership.
G. Unrealized gains on transactions between the Company and its associates are eliminated to the
extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Accounting policies
of associates have been adjusted where necessary to ensure consistency with the policies adopted
by the Company.
H. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities
Issuers,” profit (loss) of the current period and other comprehensive income in the parent
company only financial statements shall equal to the amount attributable to owners of the parent
in the financial statements prepared with basis for consolidation. Owners’ equity in the parent
company only financial statements shall equal to equity attributable to owners of the parent in
the financial statements prepared with basis for consolidation.
(15) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the
construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss
when incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are
depreciated using the straight-line method to allocate their cost over their estimated useful lives.
Each part of an item of property, plant, and equipment with a cost that is significant in relation
to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful
lives differ from previous estimates or the patterns of consumption of the assets’ future economic
benefits embodied in the assets have changed significantly, any change is accounted for as a
change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and
Errors”, from the date of the change. The estimated useful lives of property, plant and equipment
are as follows:
Buildings and structures 3~51years
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Machinery and equipment 5~9 years
Other equipment 2~6 years
(16) Investment property
An investment property is stated initially at its cost and measured subsequently using the cost model.
Except for land, investment property is depreciated on a straight-line basis over its estimated useful
life of 25 ~ 50 years.
(17) Intangible assets
A. Goodwill arises in a business combination accounted for by applying the acquisition method.
B. Patent, royalties and other intangible assets are amortized on a straight-line basis over their
estimated useful lives of 2 ~ 10 years.
(18) Impairment of non-financial assets
A. The Company assesses at each balance sheet date the recoverable amounts of those assets where
there is an indication that they are impaired. An impairment loss is recognized for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when
the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer
exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal
should not be more than what the depreciated or amortized historical cost would have been if
the impairment had not been recognized.
B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and
intangible assets that have not yet been available for use shall be evaluated periodically. An
impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall
not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated
to each of the cash-generating units, or groups of cash-generating units, that is/are expected to
benefit from the synergies of the business combination. Each unit or group of units to which the
goodwill is allocated represents the lowest level within the entity at which the goodwill is
monitored for internal management purposes. Goodwill is monitored at the operating segment
level.
(19) Borrowings
A. Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized
initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortized cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognized in profit or loss over the period of the borrowings using the effective interest
method.
B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to
the extent that it is probable that some or all of the facility will be drawn down. In this case, the
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fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for
liquidity services and amortized over the period of the facility to which it relates.
(20) Notes and accounts payable
A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes
payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured
at initial invoice amount as the effect of discounting is immaterial.
(21) Financial liabilities at fair value through profit or loss
A. Financial liabilities are classified in this category of held for trading if acquired principally for
the purpose of repurchasing in the short-term. Derivatives are also categorized as financial
liabilities held for trading unless they are designated as hedges.
B. At initial recognition, the Company measures the financial liabilities at fair value. All related
transaction costs are recognized in profit or loss. The Company subsequently measures these
financial liabilities at fair value with any gain or loss recognized in profit or loss.
C. If the credit risk results in fair value changes in financial liabilities designated as at fair value
through profit or loss, they are recognized in other comprehensive income in the circumstances
other than avoiding accounting mismatch or recognizing in profit or loss for loan commitments
or financial guarantee contracts.
(22) Provisions
Provisions (including warranties, litigations, etc.) are recognized when the Company has a present
legal or constructive obligation as a result of past events, and it is probable that an outflow of
economic resources will be required to settle the obligation and the amount of the obligation can be
reliably estimated. Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation on the balance sheet date, which is discounted using a pre-tax
discount rate that reflects the current market assessments of the time value of money and the risks
specific to the obligation. When discounting is used, the increase in the provision due to passage of
time is recognized as interest expense. Provisions are not recognized for future operating losses.
(23) Employee benefits
A. Short-term employee benefits
Short-term employee benefits are measured at the undiscounted amount of the benefits expected
to be paid in respect of service rendered by employees in a period and should be recognized as
expense in that period when the employees render service.
B. Pensions
(a) Defined contribution plans
For defined contribution plans, the contributions are recognized as pension expense when
they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent
of a cash refund or a reduction in the future payments.
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(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of
pension benefits that employees will receive on retirement for their services with the
Group in current period or prior periods. The liability recognized in the balance sheet in
respect of defined benefit pension plans is the present value of the defined benefit
obligation at the balance sheet date less the fair value of plan assets. The net defined
benefit obligation is calculated annually by independent actuaries using the projected unit
credit method. The rate used to discount is determined by using interest rates of
government bonds (at the balance sheet date) that are denominated in the currency in
which the benefits will be paid, and that have terms to maturity approximating to the terms
of the related pension liability.
ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive
income in the period in which they arise and are recorded as retained earnings.
C. Employees’ compensation and directors’ remuneration
Employees’ compensation and directors’ remuneration are recognized as expense and liability,
provided that such recognition is required under legal or constructive obligation and those
amounts can be reliably estimated. Any difference between the resolved amounts and the
subsequently actual distributed amounts is accounted for as changes in estimates.
(24) Employee share-based payment
Restricted stocks:
A. Restricted stocks issued to employees are measured at the fair value of the equity instruments
granted at the grant date, and are recognized as compensation cost over the vesting period.
B. For restricted stocks where employees have to pay to acquire those stocks, if employees resign
during the vesting period, they must return the stocks to the Company and the Company must
refund their payments on the stocks. The Company recognizes the payments from the employees
who are expected to resign during the vesting period as liabilities at the grant date, and
recognizes the payments from the employees who are expected to be eventually vested with the
stocks in “capital surplus – others”.
(25) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or
loss, except to the extent that it relates to items recognized in other comprehensive income or
items recognized directly in equity, in which cases the tax is recognized in other comprehensive
income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the Company operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect
to situations in accordance with applicable tax regulations. It establishes provisions where
appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is
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levied on the unappropriated retained earnings and is recorded as income tax expense in the year
the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the parent
company only balance sheet. Deferred tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realized or the deferred tax liability is settled.
D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilized. At each balance sheet
date, unrecognized and recognized deferred tax assets are reassessed.
E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from
research and development expenditures to the extent that it is possible that future taxable profit
will be available against which the unused tax credits can be utilised.
(26) Revenue recognition
A. The Company is primarily engaged in manufacture and sale of TFT-LCD panel products. The
Company recognizes revenue when the right of control is transferred to the customer when the
products are delivered to customer and the Company has no unperformed obligation that could
affect customer acceptance of the product. Delivery occurs when the products have been shipped
to the specific location, the risks of obsolescence and loss have been transferred to the customer,
and either the customer has accepted the products in accordance with the sales contract, or the
Company has objective evidence that all criteria for acceptance have been satisfied.
B. Sales revenue is calculated based on the contract price, net of volume discounts and sales returns
and discounts. Revenue from these sales is recognized based on the price specified in the contract,
net of the estimated volume discounts/ sales discounts and allowances. Accumulated experience
is used to estimate and provide for the volume discounts, sales discounts and allowances, using
the expected value method, and revenue is only recognized to the extent that it is highly probable
that a significant reversal will not occur. The estimation is subject to an assessment at each
reporting date. A refund liability is recognized for expected volume discounts, sales discounts
and allowances payable to customers in relation to sales made until the end of the reporting
period. No element of financing is deemed present as the sales are made, which is consistent
with market practice.
C. A receivable is recognized when the goods are delivered as this is the point in time that the
consideration is unconditional because only the passage of time is required before the payment
is due.
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5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION
UNCERTAINTY
The preparation of these parent company only financial statements requires management to make critical
judgements in applying the Company’s accounting policies and make critical assumptions and estimates
concerning future events. Assumptions and estimates may differ from the actual results and are
continually evaluated and adjusted based on historical experience and other factors. For the information
of critical accounting judgements, estimates and key sources of assumption uncertainty is addressed
below:
(1) Critical accounting estimates and assumptions
The Company makes estimates and assumptions based on the expectation of future events that are
believed to be reasonable under the circumstances at the end of the reporting period. The resulting
accounting estimates might be different from the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are addressed below:
A. Impairment assessment of goodwill
The impairment assessment of goodwill relies on the Company’s subjective judgement, including
identifying cash-generating units, allocating assets and liabilities as well as goodwill to related
cash-generating units, and determining the recoverable amounts of related cash-generating units.
Please refer to Note 6(10) for the information on goodwill impairment.
B. Impairment assessment of tangible and intangible assets (excluding goodwill)
The Company assesses impairment based on its subjective judgement and determines the separate
cash flows of a specific group of assets, useful lives of assets and the future possible income and
expenses arising from the assets depending on how assets are utilized and industrial
characteristics. Any changes of economic circumstances or estimates due to the change of
Company strategy might cause material impairment on assets in the future.
C. Evaluation of inventories
As inventories are stated at the lower of cost and net realizable value, the Company must determine
the net realizable value of inventories on balance sheet date using judgements and estimates. Due
to the rapid technology innovation, the Company evaluates the amounts of normal inventory
consumption, obsolete inventories or inventories without market selling value on balance sheet
date, and writes down the cost of inventories to the net realizable value. Such an evaluation of
inventories is principally based on the demand for the products within the specified period in the
future. Therefore, there might be material changes to the evaluation.
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6. DETAILS OF SIGNIFICANT ACCOUNTS
(1) Cash and cash equivalents
A. The Company associates with a variety of financial institutions all with high credit quality to
disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The above time deposits expire in 3 months and risks of changes in their values are remote.
(2) Financial assets and liabilities at fair value through profit or loss
A. The non-hedging derivative financial assets and liabilities transaction information are as follows:
December 31, 2018 December 31, 2017
Cash on hand, demand deposits and checking accounts 9,219,672$ 35,676,826$
Time deposits 14,050,250 17,856,000
23,269,922$ 53,532,826$
Assets December 31, 2018
Current items
Financial assets mandatorily measured at fair value through profit or loss
Forward foreign exchange contracts 160,172$
Non-current items
Financial assets mandatorily measured at fair value through profit or loss
Listed stocks 1,104,136$
Unlisted stocks 94,281 1,198,417$
Liabilities
Current items
Financial liabilities held for trading
Forward foreign exchange contracts $ 12,764
Forward exchange swap contracts 7,135
$ 19,899
Derivative financial assets and liabilities Contract Period
Current items
Forward foreign exchange contracts USD (sell) 398,000$ 2018/10~2019/3
JPY (buy) 44,416,685 2018/10~2019/3
Forward foreign exchange contracts EUR (sell) 35,000 2018/11~2019/2
HKD (buy) 312,329 2018/11~2019/2
Forward foreign exchange contracts EUR (sell) 10,000 2018/11~2019/2
JPY (buy) 1,288,425 2018/11~2019/2
Forward foreign swap contracts USD (sell) 225,000 2018/12~2019/1
TWD (buy) 6,905,790 2018/12~2019/1
December 31, 2018
Contract Amount
(Notional Principal)
(in thousands)
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The Company entered into forward foreign exchange contracts to hedge exchange rate risk of
import and export proceeds in foreign currency. However, these forward foreign exchange
contracts are primarily for the requirement of capital management and not accounted for using
hedge accounting.
B. Information on financial assets and liabilities at fair value through profit or loss as of December
31, 2017 is provided in Note 12(4).
(3) Financial assets at fair value through other comprehensive income
A. The Company has elected to classify equity instruments that are considered to be strategic
investments as financial assets at fair value through other comprehensive income.
B. For information about that the Company recognized other comprehensive income for fair value
change for the year ended December 31, 2018, Please refer to Note 6(18) “Other equity”.
C. Information on available-for-sale financial assets as of December 31, 2017 is provided in Note
12(4).
(4) Financial assets at amortized cost
The Company recognized $ 198,475 of interest income arising from the financial assets at amortized
cost for the year ended December 31, 2018.
(5) Notes receivable and accounts receivable
A. The aging analysis of accounts receivable and notes receivable is as follows:
The above aging analysis was based on past due date.
B. Information relating to credit risk of accounts receivable is provided in Note 12(2).
December 31, 2018
Non-current items
Equity instruments
Unlisted stocks 1,111,388$
December 31, 2018
Current items
Time deposits with maturity over three months 49,779,150$
December 31, 2018 December 31, 2017
Accounts receivable 39,385,910$ 41,514,602$
Less: Allowance for sales returns and discounts - 2,326,907)(
Allowance for uncollectible accounts 209,373)( 109,373)(
39,176,537$ 39,078,322$
December 31, 2018 December 31, 2017
Not past due 38,424,398 38,055,483
Up to 60 days 908,075 3,279,209
61 to 180 days 51,005 178,662
Over 181 days 2,432 1,248
39,385,910$ 41,514,602$
- 234 -
(6) Inventories
For the years ended December 31, 2018 and 2017, the Company recognized cost of goods sold for
inventories that have been sold at $260,305,200 and $266,366,821 and recognized net inventory loss
(gain) at $96,653 and ($130,703) due to write down (reversal) of cost of scrap inventories to net
realizable value, respectively.
(7) Investments accounted for under the equity method
A. The Company’s subsidiaries
Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated
financial statements as of and for the year ended December 31, 2018.
B. The Company’s associates
The operating results of the Company’s share in all individually immaterial associates are
summarized below:
December 31, 2018 December 31, 2017
Raw materials and supplies 3,340,352$ 2,538,870$
Work in progress 13,624,800 11,006,624
Finished goods 9,840,493 11,835,760
26,805,645$ 25,381,254$
December 31, 2018 December 31, 2017
Subsidiaries:
Landmark International Ltd. 44,597,800$ 44,160,820$
Innolux Holding Limited 17,885,878 20,423,738
Toppoly Optoelectronics (B.V.I.) Ltd. 6,506,291 6,476,884
Innolux Hong Kong Holding Limited 5,641,266 3,797,279
Innolux Japan Co., Ltd. 2,004,888 1,496,157
Leadtek Global Group Limited 1,535,750 999,166
InnoJoy Investment Corporation 1,303,578 1,381,380
Yuan Chi Investment Co., Ltd. 874,787 843,311
Innolux Singapore Holding Pte. Ltd. 740,729 -
Others 109,365 545,511
Associates:
Ampower Holding Ltd. 956,577 853,016
FI Medical Device Manufacturing Co., Ltd. 655,827 525,926
Others 189,745 111,354
83,002,481$ 81,614,542$
2018 2017
Profit for the year from continuing operations 446,169$ 361,688$
Other comprehensive income - net of tax 82,523 31,085)(
Total comprehensive income 528,692$ 330,603$
Years ended December 31,
- 235 -
(8) Property, plant and equipment
A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of
the interest rates for such capitalization are as follows:
B. For the year ended December 31, 2018, the Company has no amount of borrowing costs
capitalized.
C. Information about the property, plant and equipment that were pledged to others as collateral is
provided in Note 8.
At January 1 Additions Disposals Transfer At December 31
Cost:
Land 3,852,792$ -$ -$ -$ 3,852,792$
Buildings 171,007,237 339,202 7,671)( 3,145,196 174,483,964
Machinery and equipment 450,919,643 1,497,909 2,570,973)( 13,289,607 463,136,186
Other equipment 33,667,082 9,745 1,759,594)( 4,797,694 36,714,927
659,446,754 1,846,856 4,338,238)( 21,232,497 678,187,869
Accumulated depreciation
and impairment:
Buildings 101,952,303)( 7,587,008)( 7,229 195,450)( 109,727,532)(
Machinery and equipment 352,625,651)( 20,209,374)( 2,518,922 1,034,592)( 371,350,695)(
Other equipment 28,402,910)( 3,863,463)( 1,758,756 899,083)( 31,406,700)(
482,980,864)( 31,659,845)( 4,284,907 2,129,125)( 512,484,927)(
Unfinished construction
and equipment under
acceptance 15,312,334 14,676,410 - 19,475,545)( 10,513,199
191,778,224$ 176,216,141$
2018
At January 1 Additions Disposals Transfer At December 31
Cost:
Land 3,852,792$ -$ -$ -$ 3,852,792$
Buildings 167,383,261 558,932 268,401)( 3,333,445 171,007,237
Machinery and equipment 389,370,558 29,241,530 3,496,686)( 35,804,241 450,919,643
Other equipment 30,215,454 454,839 745,518)( 3,742,307 33,667,082
590,822,065 30,255,301 4,510,605)( 42,879,993 659,446,754
Accumulated depreciation
and impairment:
Buildings 94,176,798)( 7,966,324)( 246,887 56,068)( 101,952,303)(
Machinery and equipment 337,036,893)( 17,269,387)( 3,183,935 1,503,306)( 352,625,651)(
Other equipment 25,243,481)( 3,497,636)( 745,251 407,044)( 28,402,910)(
456,457,172)( 28,733,347)( 4,176,073 1,966,418)( 482,980,864)( Unfinished construction
and equipment under
acceptance 35,785,699 21,043,881 - 41,517,246)( 15,312,334
170,150,592$ 191,778,224$
2017
Years ended December 31, 2017
Capitalised amount 203,902$
Range of the interest rates for capitalisation 2.15%~2.41%
- 236 -
D. As of December 31, 2018 and 2017, the prepayments for business facilities which have not yet
entered the factory (shown as ‘other non-current assets’) amounted to $1,559,446 and $1,376,587,
respectively.
E. Information on impairment assessments is provided in Note 6 (10).
(9) Investment property
The fair value of the investment property held by the Company as at December 31, 2018 and 2017
was $1,660,504 and $1,423,964, respectively. The amounts mentioned above represent valuation
results of comparative method based on market trading information categorized within Level 3 in the
fair value hierarchy.
(10) Intangible assets
A. Intangible assets are goodwill, payments for TFT-LCD related technology and royalty.
At January 1 Additions At December 31
Cost:
Land 188,247$ -$ 188,247$ Buildings 439,228 - 439,228
627,475 - 627,475
Accumulated depreciation
and impairment:
Buildings 64,778)( 10,727)( 75,505)(
562,697$ 551,970$
At January 1 Additions At December 31
Cost:
Land 188,247$ -$ 188,247$ Buildings 439,228 - 439,228
627,475 - 627,475
Accumulated depreciation
and impairment:
Buildings 54,050)( 10,728)( 64,778)(
573,425$ 562,697$
2018
2017
At January 1 Additions Disposals Transfer At December 31
Cost:
Patents and royalty 8,154,685$ -$ -$ -$ 8,154,685$
Goodwill 17,096,628 - - - 17,096,628
Others 4,279,750 28,240 18,852)( 182,810 4,471,948
29,531,063 28,240 18,852)( 182,810 29,723,261
Accumulated amortization
and impairment:
Patents and royalty 8,143,080)( 4,285)( - - 8,147,365)(
Others 3,706,905)( 294,682)( 18,852 6,503 3,976,232)(
11,849,985)( 298,967)( 18,852 6,503 12,123,597)(
17,681,078$ 17,599,664$
2018
- 237 -
B. Details of amortization on intangible assets are as follows:
C. The Company performed impairment analysis for recoverable amount of the goodwill at each
reporting date and used the value in use as the basis for calculation of the recoverable amount.
The value in use was calculated based on the estimated present value of future cash flows for
five years, which was discounted at the discount rate of 9.08% for the year ended December 31,
2018, to reflect the specific risks of the related cash generating units. The future cash flows were
estimated based on the future revenue, gross profit, and other operating costs each year. Based
on the evaluation above, the Company did not recognize impairment loss on goodwill for the
year ended December 31, 2018.
(11) Other payables
At January 1 Additions Disposals Transfer At December 31
Cost:
Patents and royalty 8,154,685$ -$ -$ -$ 8,154,685$
Goodwill 17,096,628 - - - 17,096,628
Others 4,104,226 106,781 55,337)( 124,080 4,279,750
29,355,539 106,781 55,337)( 124,080 29,531,063
Accumulated amortization
and impairment:
Patents and royalty 7,528,070)( 615,010)( - - 8,143,080)(
Others 3,451,931)( 310,311)( 55,337 - 3,706,905)(
10,980,001)( 925,321)( 55,337 - 11,849,985)(
18,375,538$ 17,681,078$
2017
2018 2017
Operating costs 176,122$ 807,530$
Operating expenses 122,845 117,791
298,967$ 925,321$
Years ended December 31,
December 31, 2018 December 31, 2017
Other personnel expenses 8,996,357 11,217,517 Payable on machinery and equipment 6,897,044$ 32,086,845$ Repairs and maintenance expense payable 2,230,301 2,274,668 Processing fee payable 1,763,585 1,498,772 Utilities expense payable 1,040,452 1,018,773 Other payables 7,765,488 7,700,557
28,693,227$ 55,797,132$
- 238 -
(12) Long-term borrowings
A. Please refer to Note 8 for the information on assets pledged as collateral for long-term
borrowings.
B. In the third quarter of 2017, the Company applied to extend the expiry date for 2 years pursuant
to the NT$68.5 billion syndicated loan agreement. On August 2, 2017, the Company was
informed of the banks’ unanimous consent.
C. The syndicated loan agreements specified that the Company shall meet covenants on current
ratio, liability ratio, interest coverage, and tangible net equity, based on the Company’s annual
consolidated financial statements audited by independent auditors. The Company’s financial
ratios on the consolidated financial statements for the years ended December 31, 2018 and 2017
are in compliance with the covenants on the syndicated loan agreement.
D. For repayment of borrowings from financial institutions and financing mid-term working capital
fund, the Board of Directors approved the signing of a syndicated loan with financial institution
in the amount of NT$43.75 billion on June 20, 2018.
(13) Pensions
A. Defined benefit pension plan
(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law,
covering all regular employees’ service years prior to the enforcement of the Labor Pension
Act on July 1, 2005, and service years thereafter of employees who choose to continue to be
subject to the pension mechanism under the Law. Under the defined benefit pension plan,
two units are accrued for each year of service for the first 15 years and one unit for each
additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on
the number of units accrued and the average monthly salaries and wages of the last 6 months
prior to retirement. The Company contributes monthly an amount equal to 2% of the
employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan,
the trustee, under the name of the independent retirement fund committee. Also, the Company
would assess the balance in the aforementioned labor pension reserve account by December
31, every year. If the account balance is insufficient to pay the pension calculated by the
Type of borrowings Period December 31, 2018 December 31, 2017
Syndicated bank loans 2015/3/12
~2021/12/6
51,440,000$ 28,400,000$
Less:
Administrative expenses charged
by syndicated banks 103,424)( 161,098)(
Current portion (includes
administrative expenses) 16,194,486)( 10,951,114)(
35,142,090$ 17,287,788$
Range of interest rates 1.74%~1.96% 1.75%~2.06%
- 239 -
aforementioned method to the employees expected to qualify for retirement in the following
year, the Company will make contributions for the deficit by next March.
(b) The amounts recognized in the balance sheet are as follows:
(c) Movements in net defined benefit liabilities are as follows:
(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit
pension plan in accordance with the Fund’s annual investment and utilization plan and the
“Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement
Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign
financial institutions, investment in domestic or foreign listed, over-the-counter, or private
December 31, 2018 December 31, 2017
Present value of defined benefit obligation 2,000,113$ 1,902,852$
Fair value of plan assets 1,686,545)( 1,548,769)(
Net defined benefit liability 313,568$ 354,083$
Present value of
defined benefit Fair value of Net defined
obligation plan assets benefit liability
Year ended December 31, 2018
Balance at January 1 1,902,852$ 1,548,769$ 354,083$
Current service cost 5,749 - 5,749
Interest expense/income 28,468 23,157 5,311
34,217 23,157 11,060
Remeasurements:
Experience adjustments 69,773 39,895 29,878
Benefits paid 6,729)( 6,729)( -
63,044 33,166 29,878
Contribution for the year - 81,453 81,453)(
Balance at December 31 2,000,113$ 1,686,545$ 313,568$
Present value of
defined benefit Fair value of Net defined
obligation plan assets benefit liability
Year ended December 31, 2017
Balance at January 1 1,827,687$ 1,534,864$ 292,823$
Current service cost 6,711 - 6,711
Interest expense/income 31,071 26,093 4,978
37,782 26,093 11,689
Remeasurements:
Experience adjustments 49,488 83)( 49,571
Benefits paid 12,105)( 12,105)( -
37,383 12,188)( 49,571
Balance at December 31 1,902,852$ 1,548,769$ 354,083$
- 240 -
placement equity securities, investment in domestic or foreign real estate securitization
products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual
distributions on the final financial statements shall be no less than the earnings attainable from
the amounts accrued from two-year time deposits with the interest rates offered by local banks.
If the earnings is less than aforementioned rates, government shall make payment for the
deficit after being authorized by the Regulator. The Company has no right to participate in
managing and operating that fund and hence the Company is unable to disclose the
classification of plan assets fair value in accordance with IAS 19 paragraph 142. The
composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the
Annual Labor Retirement Fund Utilization Report announced by the government.
(e) The principal actuarial assumptions used were as follows:
Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience
Mortality Table.
Because the main actuarial assumption changed, the present value of defined benefit
obligation is affected. The analysis was as follows:
The sensitivity analysis above is based on one assumption which changed while the other
conditions remain unchanged. In practice, more than one assumption may change all at once.
The method of analysing sensitivity and the method of calculating net pension liability in the
balance sheet are the same. The methods and types of assumptions used in preparing the
sensitivity analysis did not change compared to the previous period.
(f) As of December 31, 2018, the weighted average duration of that retirement plan is 15 years.
2018 2017
Discount rate 1.25% 1.50%
Future salary increases 1.50% 1.50%
Years ended December 31,
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2018
Effect on present value
of defined benefit
obligation 74,991)($ 78,684$ 78,288$ 74,991)($
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2017
Effect on present value
of defined benefit
obligation 74,882)($ 78,699$ 78,501$ 75,063)($
Discount rate Future salary increases
Discount rate Future salary increases
- 241 -
B. Defined contribution pension plan
(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the
“New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with
R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based
on 6% of the employees’ monthly salaries and wages to the employees’ individual pension
accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump
sum upon termination of employment.
(b) The pension costs under the defined contribution pension plans of the Company for the years
ended December 31, 2018 and 2017 were $965,174 and $979,319, respectively.
(14) Provisions-current
A. Warranty
The Company provides warranty on TFT-LCD panel products sold. Provision for warranty is
estimated based on historical warranty data of TFT-LCD panel products.
B. Litigation and others
Litigation and other provision for the Company are related to patents of TFT-LCD panel products
and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).
(15) Share capital
As of December 31, 2018, the Company’s authorized and outstanding capital were $105,000,000
and $99,520,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from
shares issued have been collected.
Movements in the number of the Company’s ordinary shares outstanding are as follows:
A. The Board of Directors of the Company resolved to increase capital for cash by issuing the GDR
which had been completed in January 2013. The Company issued 1,125,000 thousand shares of
common stock for cash, with a unit of GDR representing 10 shares of common stock at the
Luxembourg Stock Exchange which raised a total of $14,519,051, net of issuance cost. The
Company has terminated the contracts in relation to the circulation of GDR and its account of
the depositary bank in order to lower administrative costs in accordance with the resolution by
Warranty Litigation and others Total
At January 1, 2018 2,691,162$ 2,769,700$ 5,460,862$
Additions during the year 2,156,000 240,000 2,396,000
Used during the year 1,073,948)( - 1,073,948)(
At December 31, 2018 3,773,214$ 3,009,700$ 6,782,914$
2018 2017
Number of ordinary Number of ordinary
shares (in thousands) shares (in thousands)
At January 1 9,952,072 9,952,149
Cancellation of restricted stock to employees - 77)(
At December 31 9,952,072 9,952,072
- 242 -
the Board of Directors on July 26, 2017. As of December 31, 2018, the Company has no unit of
GDR outstanding.
B. The Company adopted a resolution in 2013 to issue restricted shares to employees, consisting of
36,263 thousand shares without consideration and 36,263 thousand shares with consideration
(the price for subscription is $5 (in dollars) per share). Until the vesting conditions are met by
employees, those shares are restricted with regard to transfer of voting rights, dividend and other
rights. For the years ended December 31, 2018 and 2017, the Company has retired 0 and 77
thousand shares of unvested restricted stocks to employees, respectively, and decreased capital
in accordance with related regulation.
(16) Capital surplus
Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par
value on issuance of common stocks and donations can be used to cover accumulated deficit or to
issue new stocks or cash to shareholders in proportion to their share ownership, provided that the
Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that
the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-
in capital each year. Accumulated deficit shall first be covered by retained earnings before the capital
reserve can be used to cover the accumulated deficit.
Share of profit (loss)
of associates
accounted for
Share premium under equity method Total
At January 1 99,614,690$ 32,229$ 99,646,919$
Recognition of change in equity of
associates in proportion to the
Company's ownership - 1,196 1,196
At December 31 99,614,690$ 33,425$ 99,648,115$
2018
Share of profit (loss)
of associates Restricted
accounted for stock to
Share premium under equity method employees Total
At January 1 99,614,516$ 33,888$ 594)($ 99,647,810$
Cancellation of restricted stock to
employees - - 768 768
Vested restricted stock to employees 174 - 174)( -
Recognition of change in equity of
associates in proportion to the
Company's ownership - 1,659)( - 1,659)(
At December 31 99,614,690$ 32,229$ -$ 99,646,919$
2017
- 243 -
(17) Retained earnings
A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be
offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal
reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed
after setting aside or reversing a special reserve according to related regulations. The
appropriation of the remaining amount along with the unappropriated earnings from previous
years shall be proposed by the Board of Directors and resolved by the shareholders. The
Company is in an emerging industry which is growing rapidly, and has a capital intensive
business. The Company is at the stage of stable growth. In line with the Company’s long-term
financial plan in the future, investment environment and business competition situation, the
appropriation of dividends shall be proposed by the Board of Directors and resolved by the
shareholders, taking into account the future capital expenditure budget and capital requirement
of the Company. However, the stock dividends distributed to shareholders shall not exceed two-
thirds of distributable dividends in current period.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in
proportion to their share ownership, the legal reserve shall not be used for any other purpose.
The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their
share ownership is permitted, provided that the balance of the reserve exceeds 25% of the
Company’s paid-in capital.
C. The details of the appropriations of 2017 and 2016 net income which was approved at the
stockholders’ meeting in June 2018 and 2017, respectively, are as follows:
D. For the information relating to employees’ compensation and directors’ remuneration, please
refer to Note 6(24).
Dividends per Dividends per
Amount share (in dollars) Amount share (in dollars)
Legal reserve 3,702,861$ 187,069$ (Reversal) Provision
of special reserve 2,328,083)( 3,418,804
Cash dividends 7,961,657 0.80$ 995,204 0.10$
9,336,435$ 4,601,077$
Years ended December 31,
2017 2016
- 244 -
(18) Other equity items
(19) Operating income
The Company derives revenue from the transfer of goods at a point in time.
Financial assets
at fair value
Available- through other
Currency for-sale comprehensive
translation investments income Total
At January 1 5,717,223)($ 4,626,502$ -$ 1,090,721)($
Effect of modified retrospective
approach under IFRS 9 - 4,626,502)( 4,626,502 -
Balance after retropective
adjustment 5,717,223)( - 4,626,502 1,090,721)(
Revaluation - gross - - 229,701)( 229,701)(
Currency translation differences 828,563)( - - 828,563)(
Share of other comprehensive loss
of subsidiaries and associates 84,637 - 2,599,115)( 2,514,478)(
At December 31 6,461,149)($ -$ 1,797,686$ 4,663,463)($
2018
Available-
Currency for-sale
translation investments Total
At January 1 4,040,408)($ 621,604$ 3,418,804)($
Revaluation of available-for-sale
investments - gross - 194,200)( 194,200)(
Revaluation transfer of
available-for-sale investment - gross - 3,049,547 3,049,547
Currency translation differences 1,643,264)( - 1,643,264)(
Share of other comprehensive loss
of subsidiaries and associates 33,551)( 1,466,661 1,433,110
Effect of income tax - 317,110)( 317,110)(
At December 31 5,717,223)($ 4,626,502$ 1,090,721)($
2017
2018 2017
TFT-LCD products 278,407,555$ 323,687,952$
Years ended December 31,
- 245 -
(20) Other income
(21) Other gains and losses
(22) Finance costs
2018 2017
Interest income
Interest income from bank deposits 576,621$ 301,764$ Interest income from financial assets at
amortized cost 198,475 -
775,096 301,764
Rental revenue 151,140 124,405 Dividend income 5,838 22,678 Service income 281,066 635,100 Other income 1,019,584 1,326,571
2,232,724$ 2,410,518$
Years ended December 31,
2018 2017
Net (loss) gain on financial assets and liabilities at
fair value through profit or loss 652,845)($ 86,192$
Net currency exchange loss 81,620)( 1,019,872)(
Loss on disposal of property, plant and equipment 18,641)( 32,859)(
Loss on disposal of investments 10,533)( -
Impairment loss - 3,049,547)(
Net disaster gain - 2,051,579
Others 11,516 728,480
752,123)($ 1,236,027)($
Years ended December 31,
2018 2017
Interest expense:
Bank borrowings 564,740$ 730,468$
Others 1,141 29
565,881$ 730,497$
Years ended December 31,
- 246 -
(23) Expenses by nature
(24) Employees’ compensation and directors’ remuneration
A. According to the Articles of Incorporation, of the Company, a ratio of profit of the current year
distributable, after covering accumulated losses, shall be distributed as employees' compensation
and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation
and shall not be higher than 0.1% for directors’ remuneration.
B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at
$294,289 and $3,136,952, respectively; while directors’ remuneration was accrued at $4,528 and
$48,261, respectively. The aforementioned amounts were recognized in expenses.
The expenses recognized for 2018 were accrued based on the earnings of current year. The
employees’ compensation and directors’ remuneration were $294,289 and $4,528 in the form of
cash, respectively, as resolved by the Board of Directors on February 14, 2019. The accrued
amounts were in agreement with the amount of recorded expense for the year ended December
31, 2018.
The employees’ compensation and directors’ remuneration for the year ended December 31,
2017 were $3,136,952 and $48,261, respectively, and were estimated based on the profit of
current year. The employees’ compensation will be distributed in the form of cash. The Board of
Directors resolved to distribute employees’ compensation and directors’ remuneration in the
amount of $3,136,952 and $48,261, respectively, in the form of cash. The actual distributed
amount were in consistent with the amounts recognized as expense in 2017.
Information about employees’ compensation and directors’ remuneration of the Company as
resolved by the Board of Directors will be posted in the “Market Observation Post System” at
the website of the Taiwan Stock Exchange.
2018 2017
Employee benefit expense:
Salaries and other short-term employee benefits 26,364,308$ 33,307,647$
Post-employment benefits 976,234 991,008
Depreciation 31,670,572 28,744,075
Amortization 298,967 925,321
59,310,081$ 63,968,051$
Years ended December 31,
- 247 -
(25) Income tax
A. Income tax expense
(a) Components of income tax expense:
(b) The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
B. Reconciliation between income tax expense and accounting profit:
2018 2017
Current tax:
Current tax on profit for the year 89,783$ -$
Tax on undistributed surplus earnings 2,704,311 - Prior year income tax
(overestimation) underestimation - 40,266)(
Total current tax 2,794,094 40,266)(
Deferred tax:
Origination and reversal of temporary
differences 181,140 8,087,250
Impact of change in tax rate 969,286)( -
Income tax expense 2,005,948$ 8,046,984$
Years ended December 31,
2018 2017
Fair value of available-for-sale financial assets -$ 317,110$
Remeasurement of defined benefit obligation 5,976)( 8,427)(
5,976)($ 308,683$
Years ended December 31,
2018 2017
Tax calculated based on profit before tax and
statutory tax rate 845,742$ 7,662,851$
Effects from items disallowed by tax regulation 439,559)( 500,004)(
Prior year income tax (overestimation)
underestimation - 40,266)(
Impact of change in tax rate 969,286)( -
Additional 10% tax on undistributed earnings 2,704,311 -
Separate taxation 89,783 -
Change in assessment of realization of deferred
tax assets 225,043)( 924,403
Tax expense 2,005,948$ 8,046,984$
Years ended December 31,
- 248 -
C. Amounts of deferred tax assets or liabilities as a result of temporary differences and loss
carryforward are as follows:
Recognized
in other
Recognized in comprehensive
January 1 profit or loss income December 31
Temporary differences:
-Deferred tax assets:
Sales returns and discount provisions 429,340$ 46,385$ -$ 475,725$
Accrued royalties and
warranty provisions 1,095,009 444,298 - 1,539,307
Unrealized exchange loss - 162,222 - 162,222
Unrealized loss on
financial instruments 430,539 80,707 - 511,246
Loss carryforward 3,634,812 138,818 - 3,773,630
Others 637,342 61,306 5,976 704,624
6,227,042$ 933,736$ 5,976$ 7,166,754$
-Deferred tax liabilities:
Unrealized exchange (gain) loss 41,713)($ 41,713$ -$ -$
Amortization charges on goodwill 641,795)( 210,163)( - 851,958)(
Others 50,915)( 22,860 - 28,055)(
734,423)($ 145,590)($ -$ 880,013)($
5,492,619$ 788,146$ 5,976$ 6,286,741$
2018
Recognized
in other
Recognized in comprehensive
January 1 profit or loss income December 31
Temporary differences:
-Deferred tax assets:
Sales returns and discount provisions 270,483$ 158,857$ -$ 429,340$ Accrued royalties and
warranty provisions 731,844 363,165 - 1,095,009 Unrealized loss (gain) on
financial instruments 470,394 277,255 317,110)( 430,539
Loss carryforward 12,486,251 8,851,439)( - 3,634,812
Others 602,551 26,364 8,427 637,342
14,561,523$ 8,025,798)($ 308,683)($ 6,227,042$
-Deferred tax liabilities:
Unrealized exchange (gain) loss 113,545)($ 71,832$ -$ 41,713)($
Amortization charges on goodwill 559,426)( 82,369)( - 641,795)(
Others - 50,915)( - 50,915)(
672,971)($ 61,452)($ -$ 734,423)($
13,888,552$ 8,087,250)($ 308,683)($ 5,492,619$
2017
- 249 -
D. Expiration dates of unused loss carryforward and amounts of unrecognized deferred tax assets
are as follows:
E. The amounts of deductible temporary differences that were not recognized as deferred tax assets
are as follows:
F. The Company has not recognized taxable temporary differences associated with investment in
subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2017, the amounts of
temporary differences unrecognized as deferred tax liabilities were $30,554,931 and $31,293,045,
respectively.
G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax
Authority.
H. Under the amendments to the Income Tax Act which was promulgated by the President of the
Republic of China in February 7, 2018, the Company’s applicable income tax rate was raised
from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the
change in income tax rate.
Unrecognized
Amount filed deferred Usable
Year incurred / assessed Unused amount tax assets until year
2011 Assessed 23,793,756$ 17,120,565$ 2021
2012 Assessed 42,430,348 30,530,343 2022
2016 Assessed 1,051,680 756,727 2026
67,275,784$ 48,407,635$
December 31, 2018
Unrecognized
Amount filed deferred Usable
Year incurred / assessed Unused amount tax assets until year
2011 Assessed 26,496,656$ 18,427,518$ 2021
2012 Assessed 42,430,348 29,508,856 2022
2016 Filed 1,282,669 892,052 2026
70,209,673$ 48,828,426$
December 31, 2017
December 31, 2018 December 31, 2017
Deductible temporary differences 51,258,623$ 51,793,034$
- 250 -
(26) Earnings per share
(27) Supplemental cash flow information
Investing activities with partial cash payments:
(28) Changes in liabilities from financing activities
For the year ended December 31, 2018, all changes in liabilities from financing activities are
changes in cash flow from financing activities. Please refer to consolidated statements of cash flows.
2018 2017
Basic earnings per share
Profit attributable to ordinary shareholders of the
parent 2,222,762$ 37,028,609$
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,952,072 9,952,051
Basic earnings per share (in dollar) 0.22$ 3.72$
Diluted earnings per share
Profit attributable to ordinary shareholders of the
parent 2,222,762$ 37,028,609$
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,952,072 9,952,051
Assumed conversion of all dilutive potential
ordinary shares:
-Employees’ compensation 65,645 259,625
-Restricted stocks - 22
10,017,717 10,211,698
Diluted earnings per share (in dollar) 0.22$ 3.63$
Years ended December 31,
2018 2017
Purchase of property, plant and equipment 16,523,266$ 51,299,182$
Add: Opening balance of payable on equipment 32,086,845 3,108,898
Less: Ending balance of payable on equipment 6,897,044)( 32,086,845)(
Cash paid during the year 41,713,067$ 22,321,235$
Years ended December 31,
- 251 -
7. RELATED PARTY TRANSACTIONS
(1) Names and relationship of related parties
For the more information about the Company and other subsidiaries, please refer to Note 4(3) of the
consolidated financial report for the year ended December 31, 2018.
(2) Significant related party transactions
A. Operating revenue
The collection period was 30~120 days upon delivery or on a monthly-closing basis to related
parties, and 30~90 days to non-related parties. The sales prices and the trading terms to related
parties above were not significantly different from those of sales to third parties.
B. Purchases of goods
The payment term was 30~120 days to related parties after delivery, and 30~180 days to non-related
parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms
from related parties above were not materially different from those of purchases from third parties.
Names of related parties Relationship with the Company
Hon Hai Precision Industry Co., Ltd. and its subsidiaries Other related party
Chi Lin Optoelectronics Co., Ltd. and its subsidiaries Other related party
FI Medical Device Manufacturing Co., Ltd. Associate
GIO Optoelectronics Corp. Associate
Leadtek Global Group Limited The Company’s subsidiary
Lakers Trading Ltd. The Company’s subsidiary
Innolux Hong Kong Limited The Company’s subsidiary
Foshan Innolux Optoelectronics Ltd. The Company’s subsidiary
Fu Lian Net International (Hong Kong) Limited Other related party
2018 2017
Sales of goods:
Other related parties 16,937,496$ 34,304,366$
Subsidiaries 16,678,133 19,877,722
Associates 23,687 37,115
33,639,316$ 54,219,203$
Years ended December 31,
2018 2017
Purchases of goods:
Other related parties 1,058,325$ 6,465,106$
Associates 1,574,337 1,337,016
Subsidiaries 47,861 101,332
2,680,523$ 7,903,454$
Years ended December 31,
- 252 -
C. Consigned processing
(a) Consigned processing
(b) Balance of consigned processing at the end of year (shown as “Other payables”)
The Company subcontracted the processing of products of associates in Mainland China. The
processing fees were mainly charged based on cost plus method.
D. Service revenue (Shown as “other revenue”)
E. Service expense (Shown as “manufacturing costs and operating expenses”)
2018 2017
Processing expense:
Subsidiaries
- Lakers Trading Ltd. 43,150,307$ 33,657,805$
- Others 41,963,501 40,954,669
85,113,808$ 74,612,474$
Years ended December 31,
December 31, 2018 December 31, 2017
Payables to related parties:
Subsidiaries 1,744,458$ 1,476,966$
Other related parties - 8
1,744,458$ 1,476,974$
2018 2017
Service revenue:
Subsidiaries
- Foshan Innolux Optoelectronics Ltd. 226,349$ 585,639$
Associates 54,717 49,461
281,066$ 635,100$
Years ended December 31,
2018 2017
Service expense:
Subsidiaries 1,176,802$ 165,350$
Years ended December 31,
- 253 -
F. Receivables from related parties:
(a) The receivables from related parties arise mainly from sales transactions. The receivables are
due 30~120 days after the date of sale. The receivables are unsecured in nature and bear no
interest.
(b) The above receivables from related parties that exceed normal granting periods were
transferred to ‘Other receivables – related parties’.
G. Other receivables from related parties
H. Payables to related parties:
December 31, 2018 December 31, 2017
Accounts receivable:
Other related parties 4,570,504$ 8,128,274$ Subsidiaries 4,199,450 1,343,412 Associates 47,881 25,552
8,817,835 9,497,238 Less: Transfer to other receivables 369,861)( 10,528)(
Allowance for sales returns and discounts - 3,577)( 8,447,974$ 9,483,133$
December 31, 2018 December 31, 2017
Other receivables:
Accounts receivables transferred to
other receivables
Other related parties
- Fu Lian Net International (Hong Kong) Limited 369,837$ -$
- Others 24 2,418
Subsidiaries 8,110
Other receivables
Other related parties 8,252 9,038
Subsidiaries 7,585 6,678
Associates 7,820 2,547
393,518$ 28,791$
December 31, 2018 December 31, 2017
Accounts payable:
Subsidiaries
- Leadtek Global Group Limited 24,587,830$ 21,080,569$
- Lakers Trading Ltd. 26,199,180 13,089,589
- Innolux Hong Kong Limited 10,521,167 9,158,742
- Others 4,128 3,439
Other related parties 885,099 1,334,266
Associates 268,104 193,195
62,465,508$ 44,859,800$
- 254 -
The payables to related parties arise mainly from purchase and consigned processing transactions
and are due 30~120 days after the date of purchase. The payables bear no interest.
I. Property transactions
Purchase of property
(a) Acquisition of property, plant and equipment:
(b) Period-end balances arising from purchases of property (shown as “Other payables”):
(3) Key management compensation
8. PLEDGED ASSETS
The Company’s assets pledged as collateral are as follows:
2018 2017
Subsidiaries 17,062$ 38,536$
Other related parties
- Hon Hai Precision Industry Co., Ltd. 469 31,456,795
- Others 16,493 20,360
Associates 2,458 -
36,482$ 31,515,691$
Years ended December 31,
December 31, 2018 December 31, 2017
Subsidiaries 10,811$ 28,246$
Other related parties
- Hon Hai Precision Industry Co., Ltd. 2,225,585 26,609,511
- Others 378 113
2,236,774$ 26,637,870$
2018 2017
Salaries and other short-term employee benefits 252,050$ 130,223$
Post-employment benefits 789 432
252,839$ 130,655$
Years ended December 31,
Pledged asset December 31, 2018 December 31, 2017 Purpose
Property, plant and equipment 111,162,901$ 70,966,784$ Long-term loans
Intangible assets 1,122 7,446 Long-term loans
Other non-current assets
- Time deposits
- 722 Guarantee for contract and
performance bond
- Refundable deposits 368,194 - Guarantee for litigation
111,532,217$ 70,974,952$
Book value
- 255 -
9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT
COMMITMENTS
(1) Contingencies－Significant Litigations
A. Chi Mei Optoelectronics Corporation (the “CMO”), Chi Mei Optoelectronics Japan Co., Ltd., Chi
Mei Optoelectronics UK Ltd., Chi Mei Optoelectronics Europe B.V., and Chi Mei Optoelectronics
USA Inc. were investigated by the United States (the “U.S.”) Department of Justice in December
2006 for alleged violation of the anti-trust laws. In December 2009, the Company reached a plea
agreement with the Department of Justice of the U.S. and paid off the fines. Later, Brazil
government initiated an investigation case against the Company. The investigation is still ongoing
and the Company has been cooperative with the investigation. As for civil lawsuits filed by some
state governments in the U.S., downstream panel makers, and customers, the Company had
reached settlement agreement individually.
The company’s subsidiary in U.S. received a civil complaint from the government of Puerto Rico
in September 2018, claiming that the company, together with other defendants of Taiwan, Japan
and South Korea panel factories, had unjustified enrichment from the TFT-LCD pricing
collaborations in 2006 and requested monetary compensation. The U.S. subsidiary of the
company has appointed a lawyer to handle the lawsuit.
B. Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and
American subsidiaries with the United States District Court for the District of East Texas on April
25, 2011, alleging infringement of its patent. The administrative law judge has ruled a summary
judgment for the lawsuit in December 2013 rendering Eidos’ patent as invalid, and the presiding
judge has confirmed the summary judgment in January 2014. Eidos has filed a complaint in
February 2014.
In February 2014, Eidos appealed to the US Court of Appeals for the Federal Circuit (CAFC). In
March 2015, the CAFC overruled the decision rendered by the district court and ordered a retrial.
In June 2017, the jury determined that some products of the Company and American subsidiaries
constituted direct infringement of patent and ordered an infringement compensation for Eidos.
On March 5, 2018, the court made first instance judgement and the Company had appealled.
However, the results of the litigation are uncertain and are dependent on the future litigation
progress. The Company does not expect that the lawsuit would have a material adverse effect on
the Company’s financial position or results of operations in the short-term.
C. On July 10, 2018, Vista Peak Ventures, LLC filed four complaints against the Company in the
United States District Court for the Eastern District of Texas, alleging the infringement of several
of its patents. Currently no court date has been set. The Company has engaged outside legal
counsels to handle this lawsuit. Since the final results of the litigation are dependent on future
litigation progress and are uncertain, the Company does not expect that the lawsuit will have a
material adverse effect on its financial position or results of operations in the short term.
- 256 -
D. The Company had assessed and recognized related losses and liabilities as shown in ‘provisions-
current’ for the aforementioned investigation relating to anti-trust laws and patent litigation.
(2) Commitments
A. Capital expenditure contracted for at the balance sheet date but not yet incurred are as follows:
B. Operating lease commitments
The Company leases plant, land and warehouses under non-cancellable operating lease agreements.
The majority of lease agreements are renewable at the end of the lease period at market rate. The
future aggregate minimum lease payments under non-cancellable operating leases are as follows:
C. Outstanding letters of credit
The outstanding letters of credit for the purchase of property, plant and equipment are as follows:
10. SIGNIFICANT DISASTER LOSS
The Company’s partial inventories and buildings were damaged due to the earthquake which occurred
in Kaohsiung, Taiwan on February 6, 2016. The Company has conducted a disaster assessment and a
conservative estimation on insurance claim to assess possible disaster loss. The insurance claim had
been paid as of September 30, 2017. The Company accrued gain of $755,413 after offsetting the loss
with insurance claim.
11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE
None.
12. OTHERS
(1) Capital management
The Company’s objectives are to maintain an optimal capital structure, and constructively reduce
the debt ratio and the cost of capital in order to maximize shareholders' equity.
(2) Financial instruments
A. Financial instruments by category
For information of the Company’s financial assets (financial assets at fair value through profit or
loss, financial assets at fair value through other comprehensive income, available-for-sale
financial assets, financial assets at amortized cost, cash and cash equivalents, accounts receivable
(including related parties) and other receivables) and financial liability (financial liabilities at fair
value through profit or loss, accounts payable (including related parties), other payables and long-
December 31, 2018 December 31, 2017
Property, plant and equipment 22,970,896$ 18,878,215$
December 31, 2018 December 31, 2017
Not later than one year 562,476$ 549,625$
Later than one year but not later than five years 1,613,610 1,854,909
Later than five years 991,604 529,173
3,167,690$ 2,933,707$
December 31, 2018 December 31, 2017
Outstanding letters of credit 445,458$ 45,687$
- 257 -
term borrowings (including current portion)), please refer to Note 6 and parent company only
balance sheets.
B. Financial risk management policies
(a) The Company’s activities expose it to a variety of financial risks: market risk (including
foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The
Company’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimize potential adverse effects on the Company’s financial position
and financial performance. The Company uses derivative financial instruments to hedge
certain risk exposures (see Notes 6(2)).
(b) Risk management is carried out by the treasury department under policies approved by the
board of directors. The Company’s treasury identifies, evaluates and hedges financial risks
in close cooperation with the Company’s operating units. The Board provides principles for
overall risk management, as well as policies covering specific areas and matters, such as
foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments
and non-derivative financial instruments, and investment by excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk
Foreign exchange risk
a) The Company operates internationally and is exposed to foreign exchange risk arising
from the transactions of the company used in various functional currency, primarily with
respect to the USD and RMB. Foreign exchange risk arises from future commercial
transactions, recognized assets and liabilities and net investments in foreign operations.
b) Management has set up a policy to require group companies to manage their foreign
exchange risk against their functional currency. The group companies are required to
hedge their entire foreign exchange risk exposure via the Company’s treasury departments.
To manage their foreign exchange risk arising from future commercial transactions and
recognized assets and liabilities, entities in the Company use forward foreign exchange
contracts. Foreign exchange risk arises when future commercial transactions or
recognized assets or liabilities are denominated in a currency that is not the entity’s
functional currency.
c) The Company’s businesses involve some non-functional currency operations (the
Company’s functional currency: NTD). Based on the simulations performed, the impact
on post-tax profit of a 1% exchange rate fluctuation would be an increase of $79,359 and
$131,606 for the years ended December 31, 2018 and 2017, respectively. The information
on assets and liabilities denominated in foreign currencies whose values would be
materially affected by the exchange rate fluctuations is as follows:
- 258 -
Note: Exchange rate represents the amount of NT dollars for which one foreign currency
could be exchanged.
d) Total exchange loss including realized and unrealized arising from significant foreign
exchange variation on the monetary items held by the Company for the years ended
December 31, 2018 and 2017 amounted to $81,620 and $1,019,872, respectively.
Price risk
a) The Company is exposed to equity securities price risk because of investments held by the
Company and classified on t the parent company only balance sheet as financial assets at
fair value through profit or loss, financial assets at fair value through other comprehensive
income and available-for-sale financial assets. To manage its price risk arising from
investments in equity securities, the Company diversifies its portfolio. Diversification of
the portfolio is done in accordance with the limits set by the Company.
b) The Company’s investments in equity securities comprise domestic listed and unlisted
stocks. The prices of equity securities would change due to the change of the future value
of investee companies. If the prices of these equity securities had increased/decreased by
20% with all other variables held constant, post-tax profit for the years ended December
31, 2018 and 2017 would have increased/decreased by $239,683 and $0, respectively;
other comprehensive gains and losses would have increased/decreased by $222,278 and
$261,641, respectively.
Cash flow and fair value interest rate risk
a) The Company’s main interest rate risk arises from long-term borrowings with variable
rates, which expose the Company’ to cash flow interest rate risk. During the years ended
December 31, 2018 and 2017, the Company’s borrowings at variable rate were
denominated in the NTD.
Foreign Foreign
Currency Exchange Currency Exchange
Amount Rate Book Value Amount Rate Book Value
(In Thousands) (Note) (NTD) (In Thousands) (Note) (NTD)
Financial asstes
Monetary items
USD 3,062,192$ 30.72 94,070,538$ 2,652,560$ 29.76 78,940,186$
JPY 522,141 0.28 146,199 291,999 0.26 75,920
EUR 8,814 35.20 310,253 52,375 35.57 1,862,979
Non-monetary
items
USD 2,576,131$ 30.72 79,138,744$ 2,595,104$ 29.76 77,230,295$
HKD 180,600 3.92 707,952 184,669 3.81 703,589
JPY 13,237,769 0.28 3,706,575 5,662,973 0.26 1,472,373
Monetary items
USD 2,457,126$ 30.72 75,482,911$ 1,978,955$ 29.76 58,893,701$
JPY 38,470,287 0.28 10,771,680 33,272,514 0.26 8,650,854
EUR 9,561 35.20 336,547 4,889 35.57 173,902
December 31, 2018 December 31, 2017
Financial liabilities
- 259 -
b) The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios
are simulated taking into consideration refinancing, renewal of existing positions,
alternative financing and hedging. Based on these scenarios, the Company calculates the
impact on profit and loss of a defined interest rate shift. For each simulation, the same
interest rate shift is used for all currencies. The scenarios are run only for liabilities that
represent the major interest-bearing positions.
c) If the borrowing interest rate of NTD had increased/decreased by 0.25% with all other
variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017
would have decreased/increased by $128,600 and $71,000, respectively. The main factor
is that changes in interest expense result in floating-rate borrowings.
(b) Credit risk
a) Credit risk refers to the risk of financial loss to the Company arising from default by the
clients or counterparties of financial instruments on the contract obligations. The main
factor is that counterparties could not repay in full the accounts receivable based on the
agreed terms, and the contract cash flows.
b) According to the Company’s credit policy, each local entity in the Company is responsible
for managing and analyzing the credit risk for each of their new clients before standard
payment and delivery terms and conditions are offered. Internal risk control assesses the
credit quality of the customers, taking into account their financial position, past experience
and other factors. Individual risk limits are set based on internal or external ratings in
accordance with limits set by the managements. The utilization of credit limits is regularly
monitored.
c) The Company adopts following assumption under IFRS 9 to assess whether there has been
a significant increase in credit risk on that instrument since initial recognition: If the
contract payments are past due over 30 days based on the terms, there has been a
significant increase in credit risk on that instrument since initial recognition.
d) The Company adopts the assumptions under IFRS 9, the default occurs when the contract
payments are past due over 90 days.
e) The Company classifies customer’s accounts receivable in accordance with credit rating
of customer, credit risk on trade and customer types. The Company applies the simplified
approach using provision matrix to estimate expected credit loss under the provision
matrix basis.
f) The following indicators are used to determine whether the credit impairment of debt
instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial
reorganization due to their financial difficulties;
(ii) Default or delinquency in interest or principal repayments;
(iii) Adverse changes in national or regional economic conditions that are expected to
cause a default.
g) The Company uses the forecastability to adjust historical and timely information to assess
the default possibility of accounts receivable.
According to abovementioned consideration and information, the Company does not
expect any significant default possibility of accounts receivable.
- 260 -
h) Movements in relation to the Company applying the simplified approach to provide loss
allowance for accounts receivable are as follows:
i) The Company did not recognize significant impairment provision in accordance with 12
months expected credit losses, because the Company’s financial assets/loans to others and
receivables at amortized cost all with low credit risk.
j) Credit risk information of 2017 is provided in Note 12(4).
(c) Liquidity risk
a) Company treasury monitors rolling forecasts of the Company’s liquidity requirements to
ensure it has sufficient cash to meet operational needs while maintaining sufficient
headroom on its undrawn committed borrowing facilities at all times so that the Company
does not breach borrowing limits or covenants (where applicable) on any of its borrowing
facilities. Such forecasting takes into consideration the Company’s debt financing plans,
covenant compliance, compliance with internal balance sheet ratio targets and external
regulatory or legal requirements.
b) Surplus cash held by the operating entities over and above balance required for working
capital management are transferred to the Company’s treasury. Company treasury invests
surplus cash in interest bearing savings accounts, time deposits, money market deposits
and marketable securities. The Company chooses instruments that are with appropriate
maturities or sufficient liquidity to provide sufficient headroom as determined by the
abovementioned forecasts. These are expected to readily generate cash inflows for
managing liquidity risk.
c) The table below analyzes the Company’s non-derivative financial liabilities and net-
settled or gross-settled derivative financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date
for non-derivative financial liabilities and to the expected maturity date for derivative
financial liabilities. The amounts disclosed in the table are the contractual undiscounted
cash flows.
2018
Accounts receivable
At January 1_IAS 39 109,373$
Adjustments under new standards -
At January 1_IFRS 9 109,373
Provision 100,000
At December 31 209,373$
2017
Accounts receivable
At January 1 (As December 31) 109,373$
- 261 -
Except for the above, the non-derivative and derivative financial liabilities of the Company
are all due within one year.
(3) Fair value estimation
A. The different levels that the inputs to valuation techniques are used to measure fair value of
financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date. A market is regarded as active where a
market in which transactions for the asset or liability take place with sufficient
frequency and volume to provide pricing information on an ongoing basis. The fair
value of the Company’s investment in listed stocks and on-the-run bonds is included in
Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly. The fair value of the Company’s investment in
derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s
investment in equity investment without active market is included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value
The carrying amounts of cash and cash equivalents, accounts receivable, other receivables,
financial assets at amortized cost, accounts payable, other payables and long-term borrowings
(including current portion) are approximate to their fair values.
D. The related information of financial and non-financial instruments measured at fair value by level
on the basis of the nature, characteristics and risks of the assets and liabilities at December 31,
2018 and 2017 is as follows:
(a) The related information of natures of the assets and liabilities is as follows:
Less than Between 1 Between 3
December 31, 2018 1 year and 3 years and 5 years Total
Long-term borrowings
(including current portion)
16,210,000$ 35,230,000$ -$ 51,440,000$
Less than Between 1 Between 3
December 31, 2017 1 year and 3 years and 5 years Total
Long-term borrowings
(including current portion)
10,960,000$ 16,890,000$ 550,000$ 28,400,000$
Non-derivative financial liabilities:
- 262 -
(b) The methods and assumptions the Company used to measure fair value are as follows:
i. The instruments the Company used market quoted prices as their fair values (that is, Level
1) are listed below by characteristics:
ii. Except for financial instruments with active markets, the fair value of other financial
instruments is measured by using valuation techniques or by reference to counterparty
quotes. The fair value of financial instruments measured by using valuation techniques
can be referred to current fair value of instruments with similar terms and characteristics
December 31, 2018 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Equity securities 1,104,136$ -$ 94,281$ 1,198,417$
Forward exchange contracts - 160,172 - 160,172
Financial assets at fair value
through other comprehensive
income
Equity securities - - 1,111,388 1,111,388
1,104,136$ 160,172$ 1,205,669$ 2,469,977$
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
Forward exchange contracts -$ 12,764$ -$ 12,764$
Forward exchange swap contracts - 7,135 - 7,135
-$ 19,899$ -$ 19,899$
December 31, 2017 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Forward exchange contracts -$ 29,744$ -$ 29,744$
Forward exchange swap contracts - 76,890 - 76,890
Available-for-sale financial assets
Equity securities 1,154,959 - 153,248 1,308,207
1,154,959$ 106,634$ 153,248$ 1,414,841$
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
Forward exchange contracts -$ 52,500$ -$ 52,500$
Listed shares Emerging stocks Corporate bond
Market quoted price Closing price Last transaction price Weighted average quoted price
- 263 -
in substance, discounted cash flow method or other valuation methods, including
calculated by applying model using market information available at the parent company
only balance sheet date.
iii. When assessing non-standard and low-complexity financial instruments, for example,
foreign exchange swap contracts, the Company adopts valuation technique that is widely
used by market participants. The inputs used in the valuation method to measure these
financial instruments are normally observable in the market.
iv. The valuation of derivative financial instruments is based on valuation model widely
accepted by market participants, such as present value techniques and option pricing
models. Forward exchange contracts and foreign exchange swap contracts are usually
valued based on the current forward exchange rate.
v. The output of valuation model is an estimated value and the valuation technique may not
be able to capture all relevant factors of the Company’s financial and non-financial
instruments. Therefore, the estimated value derived using valuation model is adjusted
accordingly with additional inputs, for example, model risk or liquidity risk and etc. In
accordance with the Company’s management policies and relevant control procedures
relating to the valuation models used for fair value measurement, management believes
adjustment to valuation is necessary in order to reasonably represent the fair value of
financial and non-financial instruments at the parent company only balance sheet. The
inputs and pricing information used during valuation are carefully assessed and adjusted
based on current market conditions.
vi. The Company takes into account adjustments for credit risks to measure the fair value of
financial and non-financial instruments to reflect credit risk of the counterparty and the
Company’s credit quality.
E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and
Level 2.
F. The following table presents the changes in level 3 instruments as at December 31, 2018 and 2017:
G. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level
3.
2018 2017
At January 1 153,248$ 209,174$
Gains and losses recognized in profit or loss 58,967)( 420,832)( Gains and losses recognized in other
comprehensive income 229,701)( 510,481
Acquired in the period 1,341,089 -
Proceeds from capital reduction - 145,575)(
At December 31 1,205,669$ 153,248$
Equity securities
- 264 -
H. Investment management segment is in charge of valuation procedures for fair value
measurements being categorized within Level 3, which is to verify independent fair value of
financial instruments. Such assessment is to ensure the valuation results are reasonable by
applying independent information to make results close to current market conditions, confirming
the resource of information is independent, reliable and in line with other resources and
represented as the exercisable price, and frequently calibrating valuation model, performing
back-testing, updating inputs used to the valuation model and making any other necessary
adjustments to the fair value.
Investment management segment set up valuation policies, valuation processes and rules for
measuring fair value of financial instruments and ensure compliance with the related
requirements in IFRS.
I. The following is the qualitative information of significant unobservable inputs and sensitivity
analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair
value measurement:
J. The Company has carefully assessed the valuation models and assumptions used to measure fair
value. However, use of different valuation models or assumptions may result in different
measurement. The following is the effect of profit or loss or of other comprehensive income from
Fair value Range
at December Valuation Significant (Weighted Relationship of
31, 2018 technique unobservable input average) inputs to fair value
Non-derivative
equity instrument:
Unlisted shares 1,205,669$ Market
comparable
companies
price to sales ratio
multiple, price to
book ratio multiple
0.58~1.46
(0.62)
The higher the
multiple, the higher
the fair value
Discount for lack of
marketability
30%~50%
(19%)
The higher the
discount for lack of
marketability, the
lower the fair value
Fair value Range
at December Valuation Significant (Weighted Relationship of
31, 2017 technique unobservable input average) inputs to fair value
Non-derivative
equity instrument:
Unlisted shares 153,248$ Market
comparable
companies
Price to earnings
ratio multiple, price
to sales ratio
multiple, price to
book ratio multiple
1.26~1.64
(0.78)
The higher the
multiple, the higher
the fair value
Discount for lack of
marketability
30%~50%
(24%)
The higher the
discount for lack of
marketability, the
lower the fair value
- 265 -
financial assets and liabilities categorized within Level 3 if the inputs used to valuation models
have changed:
(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017
A. Summary of significant accounting policies adopted in 2017:
(a) Financial assets at fair value through profit or loss
i. They are financial assets held for trading or financial assets designated as at fair value
through profit or loss on initial recognition. Financial assets are classified in this category
of held for trading if acquired principally for the purpose of selling in the short-term.
Derivatives are also categorized as financial assets held for trading unless they are
designated as hedges. Financial assets that meet one of the following criteria are designated
as at fair value through profit or loss on initial recognition:
(i) Hybrid (combined) contracts; or
(ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(iii) They are managed and their performance is evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy.
ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss
are recognized and derecognized using trade date accounting.
iii. Financial assets at fair value through profit or loss are initially recognized at fair value.
Related transaction costs are expensed in profit or loss. These financial assets are
subsequently remeasured and stated at fair value, and any changes in the fair value of these
financial assets are recognized in profit or loss.
(b) Available-for-sale financial assets
i. Available-for-sale financial assets are non-derivatives that are designated in this category.
ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized
and derecognized using trade date accounting.
iii. Available-for-sale financial assets are initially recognized at fair value plus transaction costs.
These financial assets are subsequently remeasured and stated at fair value, and any changes
in the fair value of these financial assets are recognized in other comprehensive income.
Favourable Unfavourable Favourable Unfavourable
Financial assets Input Change change change change change
Equity instrument 1,205,669$ ± 1% 943$ 943)($ 11,114$ 11,114)($
Favourable Unfavourable Favourable Unfavourable
Financial assets Input Change change change change change
Equity instrument 153,248$ ± 1% -$ -$ 1,532$ 1,532)($
Recognized in other
December 31, 2018
December 31, 2017
comprehensive incomeRecognized in profit or loss
- 266 -
(c) Loans and receivables
Accounts receivable are loans and receivables originated by the entity. They are created by the
entity by selling goods or providing services to customers in the ordinary course of business.
Accounts receivable are initially recognized at fair value and subsequently measured at
amortized cost using the effective interest method, less provision for impairment. However,
short-term accounts receivable without bearing interest are subsequently measured at initial
invoice amount as the effect of discounting is immaterial.
(d) Impairment of financial assets
i. The Company assesses at each balance sheet date whether there is objective evidence that a
financial asset or a group of financial assets is impaired as a result of one or more events
that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
ii. The criteria that the Company uses to determine whether there is objective evidence of an
impairment loss is as follows:
(i) Significant financial difficulty of the issuer or debtor;
(ii) A breach of contract, such as a default or delinquency in interest or principal payments;
(iii) Information about significant changes with an adverse effect that have taken place in
the technology, market, economic or legal environment in which the issuer operates,
and indicates that the cost of the investment in the equity instrument may not be
recovered; or
(iv) A significant or prolonged decline in the fair value of an investment in an equity
instrument below its cost.
iii. When the Company assesses that there has been objective evidence of impairment and an
impairment loss has occurred, accounting for impairment is made as follows according to
the category of financial assets:
(i) Financial assets measured at amortized cost
The amount of the impairment loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate, and is recognized in profit or loss. If, in
a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment loss was recognized,
the previously recognized impairment loss is reversed through profit or loss to the
extent that the carrying amount of the asset does not exceed its amortized cost that
would have been at the date of reversal had the impairment loss not been recognized
previously. Impairment loss is recognized and reversed by adjusting the carrying
amount of the asset through the use of an impairment allowance account.
- 267 -
(ii) Available-for-sale financial assets
The amount of the impairment loss is measured as the difference between the asset’s
acquisition cost (less any principal repayment and amortization) and current fair value,
less any impairment loss on that financial asset previously recognized in profit or loss,
and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a
subsequent period, the fair value of an investment in a debt instrument increases, and
the increase can be related objectively to an event occurring after the impairment loss
was recognized, such impairment loss is reversed through profit or loss. Impairment
loss of an investment in an equity instrument recognized in profit or loss shall not be
reversed through profit or loss. Impairment loss is recognized and reversed by adjusting
the carrying amount of the asset through the use of an impairment allowance account.
B. For details of the reconciliations of carrying amount of financial assets transferred from
December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, please refer to Note 3(1).
C. As of December 31, 2017 and for the year ended December 31, 2017, the details of significant
accounting items are as follows:
(a) Financial assets and liabilities at fair value through profit or loss
(i) For the year ended December 31, 2017, the Company recognized net gain of $89,192 in
the abovementioned financial instruments.
Assets December 31, 2017
Current items
Financial assets held for trading
Forward foreign exchange contracts 29,744$
Forward exchange swap contracts 76,890
106,634$
Liabilities December 31, 2017
Current items
Financial liabilities held for trading
Forward foreign exchange contracts 52,500$
- 268 -
(ii) The non-hedging derivative financial assets and liabilities transaction information are as
follows:
The Company entered into forward foreign exchange contracts to hedge exchange rate risk
of import and export proceeds in foreign currency. However, these forward foreign exchange
contracts are primarily for the requirement of capital management and not accounted for
using hedge accounting.
(b) Available-for-sale financial assets
(i) The Company recognized comprehensive income for fair value change and reclassified
from equity to profit or loss for year ended December 31, 2017. Please refer to Note 6(18).
(ii) For the year ended December 31, 2017, the Company assessed that investment value of
certain investee companies was impaired and recognized impairment loss of $3,049,547
which was listed as ‘other gains and losses’.
D. Information on credit risk as of December 31, 2017 and for the year ended December 31, 2017
is as follows:
(a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients
or counterparties of financial instruments on the contract obligations. According to the
Company’s credit policy, each local entity in the Company is responsible for managing and
analyzing the credit risk for each of their new clients before standard payment and delivery
terms and conditions are offered. Customer credit quality is assessed via internal risk control,
considering customer financial position, past experience and other factors. Individual risk
limits are set by the board of directors based on internal or external ratings. The utilization of
Derivative financial assets and liabilities Contract Period
Current items
Forward foreign exchange contracts USD (sell) 400,000$ 2017/10~2018/3
JPY (buy) 44,934,619 2017/10~2018/3
Forward foreign exchange contracts EUR (sell) 15,800 2017/10~2018/2
USD (buy) 18,841 2017/10~2018/2
Forward foreign exchange contracts EUR (sell) 34,200 2017/10~2018/3
JPY (buy) 4,554,765 2017/10~2018/3
Forward foreign swap contracts USD (sell) 410,000 2017/12~2018/1
TWD (buy) 12,289,569 2017/12~2018/1
(Notional Principal)
(in thousands)
December 31, 2017
Contract Amount
Items December 31, 2017
Non-current items
Listed stocks 1,154,959$
Emerging and unlisted stocks 153,248
1,308,207$
- 269 -
credit limits is regularly monitored. Major credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial institutions, including
outstanding receivables. Because the Company's counterparties and executor are banks with
good credit standing and financial institutions and government with investment grade or
above, there is no significant default. Therefore, there is no significant credit risk.
(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting
periods, and management does not expect any significant losses from non-performance by
these counterparties.
(c) On December 31, 2017, the aging analysis of accounts receivable that were past due but not
impaired is as follows:
C. Movement analysis of accounts receivable that were impaired is as follows:
(a) As of December 31, 2017, the Company’s accounts receivable that were impaired and
recognized $109,373.
(b) Movement on allowance for bad debts for impairment loss based on individual provision is
as follows:
(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in
2017
A. The significant accounting policies applied on revenue recognition for the year ended December
31, 2017 are set out below.
The Company manufactures and sells TFT-LCD panels. Revenue is measured at the fair value of
the consideration received or receivable taking into account value-added tax, returns, rebates, and
discounts for the sale of goods to external customers in the ordinary course of the Company’s
activities.
B. There is no effect on single account of the statement of comprehensive income, if the Company
continues applying abovementioned accounting policy in the 2018. Under IFRS 15, refund
liabilities are presented as accounts receivable-allowance for sales return and discounts in the
previous reporting period. As of December 31, 2018, the effect from changes in accounting policy
was $2,081,707.
December 31, 2017
Up to 60 days 3,279,209$
61 to 180 days 178,662
Over 181 days 1,248
3,459,119$
2017
At January 1 109,373$
Allowance for bad debts - write-offs -
At December 31 109,373$
- 270 -
13. SUPPLEMENTARY DISCLOSURES
(1) Significant transactions information
A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates
and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or
20% of the Company’s paid-in capital: Please refer to table 3.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in
capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please
refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes
6(2).
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland
China): Please refer to table 7.
(3) Information on investments in Mainland China
A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee
companies in the Mainland Area: Please refer to Table 1, 4, 5 and 6.
14. SEGMENT INFORMATION
None.
- 271 -
Item
Val
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Not
e A
: The
Com
pany
- In
nolu
x C
orpo
ratio
n 1
.For
loan
s obt
aine
d fo
r sho
rt-te
rm fi
nanc
ing,
fina
ncia
l lim
it on
loan
s gra
nted
to a
sing
le p
arty
shal
l not
exc
eed
10%
of t
he c
ompa
ny’s
net
equ
ity, b
ased
on
the
mos
t rec
ent a
udite
d fin
anci
al st
atem
ents
of t
he c
ompa
ny.
2.T
he fi
nanc
ial l
imit
on lo
ans g
rant
ed sh
all n
ot e
xcee
d 40
% o
f the
com
pany
’s n
et e
quity
. If i
t is f
or sh
ort-t
erm
cap
ital n
eeds
, the
lim
it sh
all n
ot e
xcee
d 30
% o
f the
com
pany
’s n
et e
quity
. 3
.The
pol
icy
for l
oans
gra
nted
to d
irect
or i
ndire
ct w
holly
-ow
ned
over
seas
subs
idia
ries i
s as f
ollo
ws:
for s
hort-
term
cap
ital n
eeds
, fin
anci
al li
mit
shal
l not
be
belo
w th
e 40
% re
quire
men
t, bu
t sho
uld
not e
xcee
d 10
0% o
f the
com
pany
’s n
et e
quity
.
Max
imum
outs
tand
ing
bala
nce
durin
gth
e ye
ar e
nded
Dec
embe
r 31,
2018
Bal
ance
as a
tD
ecem
ber 3
1,20
18A
ctua
l am
ount
draw
n do
wn
No.
Cre
dito
rB
orro
wer
Gen
eral
ledg
erac
coun
t
Is a
rela
ted
party
Inno
lux
Cor
pora
tion
Loan
s to
othe
rsFo
r the
yea
r end
ed D
ecem
ber 3
1, 2
018
Tabl
e 1
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Col
late
ral
Lim
it on
loan
sgr
ante
d to
asi
ngle
par
tyC
eilin
g on
tota
llo
ans g
rant
edFo
otno
teIn
tere
stra
teN
atur
e of
loan
Am
ount
of
trans
actio
nsw
ith th
ebo
rrow
er
Rea
son
for
shor
t-ter
mfin
anci
ng
Allo
wan
cefo
run
colle
ctib
leac
coun
ts
- 272 -
Secu
ritie
s hel
d by
Mar
keta
ble
secu
ritie
sG
ener
al le
dger
acc
ount
Num
ber o
f sha
res
Boo
k va
lue
Ow
ners
hip
(%)
Fair
valu
eFo
otno
te
Com
mon
stoc
k (N
ote)
Inno
lux
Cor
pora
tion
Ava
nStra
te In
c.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss90
0,00
0 $
2
9,03
41
$
29,
034
Inno
lux
Cor
pora
tion
TPV
Tec
hnol
ogy
Lim
ited
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
15
0,50
0,00
070
8,13
36
708,
133
Inno
lux
Cor
pora
tion
Chi
Lin
Opt
oele
ctro
nics
Co.
, Ltd
.O
ther
rela
ted
party
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss17
,792
,552
65,2
4719
65,2
47
Inno
lux
Cor
pora
tion
Epis
tar C
orpo
ratio
nN
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss89
,072
2,28
0 -
2,28
0
Inno
lux
Cor
pora
tion
Che
ng M
ei M
ater
ials
Tec
hnol
ogy
Cor
pora
tion
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
44,7
41,3
0539
3,72
37
393,
723
Inno
lux
Cor
pora
tion
Alli
ed M
ater
ial T
echn
olog
y C
orp.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
1,20
9-
--
Inno
lux
Cor
pora
tion
VIZ
IO. I
nc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e92
7,45
21,
111,
388
41,
111,
388
Yua
n C
hi In
vest
men
t Co.
, Ltd
.Tr
illio
n Sc
ienc
e, In
c.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss1,
439,
180
-2
-
Inno
Joy
Inve
stm
ent C
orpo
ratio
nA
dvan
ced
Opt
oele
ctro
nic
Tech
nolo
gy, I
nc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
6,96
4,22
211
6,99
95
116,
999
Inno
Joy
Inve
stm
ent C
orpo
ratio
neC
hem
solu
tions
Cor
p.N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hot
her c
ompr
ehen
sive
inco
me
2,75
0,00
061
,913
561
,913
Inno
Joy
Inve
stm
ent C
orpo
ratio
nEP
ILED
S C
o., L
td.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e7,
347,
144
114,
615
711
4,61
5
Inno
Joy
Inve
stm
ent C
orpo
ratio
nFi
tipow
er In
tegr
ated
Tec
hnol
ogy
Inc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
othe
r com
preh
ensi
ve in
com
e10
,000
,000
369,
000
636
9,00
0
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.(
)N
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hpr
ofit
or lo
ss-
137,
932
-13
7,93
2
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.O
ED H
oldi
ng L
td.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
16,0
00,0
003,
984
63,
984
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.O
bsid
ian
Sens
ors,
Inc.
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
414,
136
80,8
9213
80,8
92
As o
f Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
Hol
ding
of m
arke
tabl
e se
curit
ies a
t the
end
of t
he y
ear (
not i
nclu
ding
subs
idia
ries,
asso
ciat
es a
nd jo
int v
entu
res)
Dec
embe
r 31,
201
8Ta
ble
2Ex
pres
sed
in th
ousa
nds o
f NTD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Rel
atio
nshi
pw
ith th
ese
curit
ies i
ssue
r
- 273 -
Secu
ritie
s hel
d by
Mar
keta
ble
secu
ritie
sG
ener
al le
dger
acc
ount
Num
ber o
f sha
res
Boo
k va
lue
Ow
ners
hip
(%)
Fair
valu
eFo
otno
te
As o
f Dec
embe
r 31,
201
8R
elat
ions
hip
with
the
secu
ritie
s iss
uer
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.G
ener
al In
terfa
ce S
olut
ion
(GIS
)H
oldi
ng L
imite
dN
one
Fina
ncia
l ass
ets a
t fai
r val
ue th
roug
hot
her c
ompr
ehen
sive
inco
me
24,1
94,0
00 $
2
,177
,460
7 $
2
,177
,460
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
.K
ymet
a Co
rpor
atio
n’s c
onve
rtibl
e bo
nds
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
-35
,559
-35
,559
Net
s tra
ding
Ltd
.Pi
lotT
ech
Glo
bal F
und
Non
eFi
nanc
ial a
sset
s at f
air v
alue
thro
ugh
prof
it or
loss
9026
,086
-26
,086
Not
e: E
xcep
t as o
ther
wis
e in
dica
ted,
mar
keta
ble
secu
ritie
s in
the
tabl
e ar
e al
l sto
cks.
- 274 -
Num
ber o
f sh
ares
Am
ount
Num
ber o
f sh
ares
Am
ount
Num
ber o
f sh
ares
Selli
ngpr
ice
Boo
k va
lue
Gai
n (lo
ss)
on d
ispo
sal
Num
ber o
fsh
ares
Am
ount
Inno
lux
Cor
pora
tion
VIZ
IO, I
nc.
(Sto
cks)
Fina
ncia
l ass
ets a
t fai
rva
lue
thro
ugh
othe
rco
mpr
ehen
sive
inco
me
Not
app
licab
leN
ot a
pplic
able
- $
-
927
,452
$
1,3
41,0
89-
$
- $
-
$
-
927,
452
$
1,1
11,3
88
Not
e 1:
Mar
keta
ble
secu
ritie
s in
the
tabl
e re
fer t
o st
ocks
, bon
ds, b
enef
icia
ry c
ertif
icat
es a
nd o
ther
rela
ted
deriv
ativ
e se
curit
ies.
Not
e 2:
Fill
in th
e co
lum
ns th
e co
unte
rpar
ty a
nd re
latio
nshi
p if
secu
ritie
s are
acc
ount
ed fo
r und
er th
e eq
uity
met
hod;
oth
erw
ise
leav
e th
e co
lum
ns b
lank
.
Not
e 3:
Agg
rega
te p
urch
ases
and
sale
s am
ount
s sho
uld
be c
alcu
late
d se
para
tely
at t
heir
mar
ket v
alue
s to
verif
y w
heth
er th
ey in
divi
dual
ly re
ach
NT$
300
mill
ion
or 2
0% o
f pai
d-in
cap
ital o
r mor
e.
Not
e 4:
Incl
udin
g th
e am
ount
of u
nrea
lized
gai
n or
loss
on
finan
cial
ass
ets a
t fai
r val
ue th
roug
h ot
her c
ompr
ehen
sive
inco
me.
Inno
lux
Cor
pora
tion
Acq
uisi
tion
or sa
le o
f the
sam
e se
curit
y w
ith th
e ac
cum
ulat
ed c
ost e
xcee
ding
$30
0 m
illio
n or
20%
of t
he C
ompa
ny's
paid
-in c
apita
l
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 3
Expr
esse
d in
thou
sand
s of N
TD
(Exc
ept a
s oth
erw
ise
indi
cate
d)
Add
ition
(Not
e 3)
Dis
posa
l (N
ote
3)
Bal
ance
as a
t D
ecem
ber 3
1, 2
018
(Not
e 4)
Inve
stor
Mar
keta
ble
secu
ritie
sN
ote
1G
ener
alle
dger
acc
ount
Cou
nter
party
Not
e 2
Rel
atio
nshi
p w
ith th
e in
vest
orN
ote
2
Bal
ance
as a
tJa
nuar
y 1,
201
8 (N
ote
4)
- 275 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Inno
lux
Cor
pora
tion
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Sale
s8,
410,
840
$
3
60-9
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
2,29
6,58
8$
5
Inno
lux
Cor
pora
tion
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s6,
742,
174
260
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Indu
stry
(Yan
tai)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sale
s2,
348,
341
160
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
35,6
60-
Inno
lux
Cor
pora
tion
Hon
gfut
ai P
reci
sion
Ele
ctro
ns(Y
anta
i) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s2,
286,
215
190
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
856,
109
2
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o., L
td.
A su
bsid
iary
of t
he C
ompa
nySa
les
2,23
1,81
21
45-6
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
442,
839
1
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s1,
620,
352
160
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Ele
ctro
nics
(Cho
ngqi
ng) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s1,
221,
312
-45
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
303,
950
1
Inno
lux
Cor
pora
tion
Gui
zhou
Fuz
hika
ng E
lect
roni
cC
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s64
6,01
7-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e17
6,48
5-
Inno
lux
Cor
pora
tion
Inno
lux
USA
Inc.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s4,
861,
172
245
-60
days
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e3,
490,
227
7
Inno
lux
Cor
pora
tion
Com
petit
ion
Team
Tec
hnol
ogy
(Indi
a) P
rivat
e Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sale
s34
8,71
2-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e11
4,38
1-
Inno
lux
Cor
pora
tion
Nin
gbo
Inno
lux
Dis
play
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
rySa
les
168,
298
-90
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
18,5
74)
(
-
Inno
lux
Cor
pora
tion
Shen
zhen
Fug
ui P
reci
sion
Indu
stria
l Co.
, LTD
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s39
2,17
4-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e34
,189
-
Inno
lux
Cor
pora
tion
Purc
hase
s or s
ales
of g
oods
from
or t
o re
late
d pa
rties
reac
hing
$10
0 m
illio
n or
20%
of p
aid-
in c
apita
l or m
ore
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 4
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
- 276 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Inno
lux
Cor
pora
tion
CO
MPE
TITI
ON
TEA
MIR
ELA
ND
LIM
ITED
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s36
7,43
0$
-45
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
100,
589
$
-
Inno
lux
Cor
pora
tion
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s13
6,74
5-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e-
-
Inno
lux
Cor
pora
tion
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s52
1,62
8-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e-
-
Inno
lux
Cor
pora
tion
Hon
gfuj
in P
reci
sion
Indu
stry
(Wuh
an) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s21
2,12
2-
90 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e39
,062
-
Inno
lux
Cor
pora
tion
Futa
ijing
Pre
cisi
on E
lect
roni
cs(B
eijin
g) C
o., L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s43
6,61
0-
60 d
ays
Sim
ilar w
ithge
nera
l sal
esN
o m
ater
ial
diffe
renc
e15
6,00
8-
Inno
lux
Cor
pora
tion
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.A
n in
dire
ct w
holly
-ow
ned
subs
idia
rySa
les
181,
822
-90
day
sSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
261,
048
1
Inno
lux
Cor
pora
tion
Inno
lux
Euro
pe B
.V.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s14
1,15
6-
30-6
0 da
ysSi
mila
r with
gene
ral s
ales
No
mat
eria
ldi
ffere
nce
21,5
75-
Inno
lux
Cor
pora
tion
FI M
edic
al D
evic
e M
anuf
actu
ring
Co.
, Ltd
.In
vest
ee a
ccou
nted
for u
nder
the
equi
ty m
etho
dPu
rcha
ses
1,44
0,29
11
30 d
ays a
fter
acce
ptan
ceSi
ngle
purc
hase
sta
rget
, no
basi
sfo
r com
paris
on
No
mat
eria
ldi
ffere
nce
243,
324)
(
-
Inno
lux
Cor
pora
tion
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s1,
049,
275
-60
-90
days
afte
rac
cept
ance
Sing
lepu
rcha
ses
targ
et, n
o ba
sis
for c
ompa
rison
No
mat
eria
ldi
ffere
nce
879,
733)
(
1
Inno
lux
Cor
pora
tion
Gio
Opt
oele
ctro
nics
Cor
p.In
vest
ee a
ccou
nted
for u
nder
the
equi
ty m
etho
dPu
rcha
ses
134,
045
-60
day
s afte
rac
cept
ance
Sing
lepu
rcha
ses
targ
et, n
o ba
sis
for c
ompa
rison
No
mat
eria
ldi
ffere
nce
24,7
80)
(
-
Inno
lux
Cor
pora
tion
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngex
pens
e43
,150
,307
1760
-90
days
Cos
t plu
sN
o m
ater
ial
diffe
renc
e26
,199
,180
)(
29
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngex
pens
e21
,811
,648
860
-90
days
Cos
t plu
sN
o m
ater
ial
diffe
renc
e10
,521
,167
)(
12
Inno
lux
Cor
pora
tion
Lead
tek
Glo
bal G
roup
Lim
ited
A su
bsid
iary
of t
he C
ompa
nyPr
oces
sing
expe
nse
20,1
51,8
538
60-9
0 da
ysC
ost p
lus
No
mat
eria
ldi
ffere
nce
24,5
87,8
30)
(
28
- 277 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngre
venu
e24
,608
,412
$
76
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
15,6
20,3
80$
90
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.Le
adte
k G
loba
l Gro
up L
imite
dA
subs
idia
ry o
f the
Com
pany
Proc
essi
ngre
venu
e18
,803
,923
8060
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
19,6
93,6
6096
Nin
gbo
Inno
lux
Dis
play
Ltd.
Lake
rs T
radi
ng L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Proc
essi
ngre
venu
e18
,671
,622
100
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
4,85
3,36
210
0
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
.In
nolu
x H
ong
Kon
g Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
14,8
77,4
5210
060
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
7,83
0,73
010
0
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd
.In
nolu
x H
ong
Kon
g Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
6,49
5,39
191
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
2,11
1,63
083
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
NA
NJI
NG
HO
NG
FUSH
AR
PPR
ECIS
ION
ELE
CTR
ON
ICS
CO
., LT
D.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s1,
566,
904
290
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
153,
374
1
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.N
ingb
o In
nolu
x D
ispl
ay L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s4,
741,
622
1160
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
830,
326
3
Inno
lux
Hon
g K
ong
Lim
ited
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s1,
209,
099
460
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
201,
279
2
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Prem
ier I
mag
e Te
chno
logy
(Chi
na) L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Sale
s19
0,86
2-
90 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
11,2
61-
Lake
rs T
radi
ng L
td.
Nin
gbo
Inno
lux
Elec
troni
cs L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s24
3,17
31
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
39,2
75-
Nan
jng
Inno
lux
Tech
nolo
gy L
td.
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Sale
s17
2,06
812
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
183,
339
51
Inno
com
Tec
hnol
ogy
(She
nzhe
n) C
o., L
TDLa
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryPr
oces
sing
reve
nue
249,
759
100
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
897,
132
100
- 278 -
Purc
hase
s(s
ales
)A
mou
nt
Perc
enta
ge o
fto
tal p
urch
ases
(sal
es)
Cre
dit t
erm
Uni
t pric
e C
redi
t ter
m B
alan
ce
Perc
enta
ge o
f tot
alno
tes/
acco
unts
rece
ivab
le (p
ayab
le)
Foot
note
Purc
hase
r/sel
ler
Cou
nter
party
Rel
atio
nshi
p w
ith th
e co
unte
rpar
ty
Tran
sact
ion
Diff
eren
ces i
n tra
nsac
tion
term
s com
pare
d to
third
par
tytra
nsac
tions
Not
es/a
ccou
nts r
ecei
vabl
e (p
ayab
le)
Inno
lux
Euro
pe B
.V.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
899,
754
$
86
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
232,
063
$
94
Inno
lux
Japa
n C
o.,L
td.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
159,
406
660
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
--
Inno
lux
Japa
n C
o., L
td.
Inno
lux
Cor
pora
tion
A su
bsid
iary
of t
he C
ompa
nySe
rvic
ere
venu
e11
5,09
94
60 d
ays
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
68,0
7712
Inno
lux
USA
Inc.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
d su
bsid
iary
Serv
ice
reve
nue
104,
731
260
day
sSi
mila
r with
gene
ral
trans
actio
ns
No
mat
eria
ldi
ffere
nce
28,5
071
Nin
gbo
Inno
lux
Dis
play
Ltd.
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s1,
723,
501
790
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
571,
058)
(
9
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
rPu
rcha
ses
825,
348
290
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
274,
881)
(
2
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
ongf
ujin
Pre
cisi
on In
dust
ry(S
henz
hen)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ryof
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Purc
hase
s55
9,32
71
90 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
185,
942)
(
2
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Hon
Hai
Pre
cisi
on In
dust
ry C
o.,
Ltd.
Sam
e m
ajor
stoc
khol
der
Purc
hase
s82
5,18
81
90 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
392,
531)
(
2
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd
.H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
rPu
rcha
ses
144,
326
190
day
s afte
rgo
ods a
resh
ippe
d
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
16,8
65)
(
-
Fosh
an In
nolu
xO
ptoe
lect
roni
cs L
td.
Prem
ier I
mag
e Te
chno
logy
(Chi
na) L
td.
An
indi
rect
who
lly-o
wne
d su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.
Purc
hase
s15
2,34
7-
60 d
ays a
fter
good
s are
ship
ped
Sim
ilar w
ithge
nera
ltra
nsac
tions
No
mat
eria
ldi
ffere
nce
22,7
86)
(
-
- 279 -
Tabl
e 5
Am
ount
Act
ion
take
nIn
nolu
x C
orpo
ratio
nH
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.Sa
me
maj
or st
ockh
olde
r $
2
,296
,588
2.78
$
42,
546
Subs
eque
nt c
olle
ctio
n $
5
09,5
93 $
-
Inno
lux
Cor
pora
tion
Hon
gFuT
ai P
reci
sion
Ele
ctro
nics
(Yan
Tai)
Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
856,
109
2.16
--
176,
066
-
Inno
lux
Cor
pora
tion
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry26
1,04
80.
34-
--
-
Inno
lux
Cor
pora
tion
Hon
fujin
Pre
cisi
on E
lect
roni
cs(C
hong
qing
) Co.
, Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
303,
950
3.27
107,
879
Subs
eque
nt c
olle
ctio
n27
,402
-
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o.,L
td.
A su
bsid
iary
of t
he C
ompa
ny44
2,83
96.
7313
,820
Subs
eque
nt c
olle
ctio
n-
-
Inno
lux
Cor
pora
tion
Inno
lux
USA
Inc.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
3,49
0,22
72.
752,
425,
136
Subs
eque
nt c
olle
ctio
n1,
202,
953
-
Inno
lux
Cor
pora
tion
Futa
ijing
Pre
cisi
on E
lect
roni
cs(B
eijin
g) C
o., L
td.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
156,
008
5.60
--
77,3
50-
Inno
lux
Cor
pora
tion
Gui
zhou
Fuz
hika
ng E
lect
roni
c C
o.,
Ltd.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
176,
485
1.47
6,72
3Su
bseq
uent
col
lect
ion
72,7
86-
Inno
lux
Cor
pora
tion
Com
petit
ion
Team
Tec
hnol
ogy
(Indi
a) P
rivat
e Li
mite
dA
n in
dire
ct w
holly
-ow
ned
subs
idia
ry o
f Hon
Hai
Pre
cisi
onIn
dust
ry C
o., L
td.
114,
381
3.11
--
26,5
14-
Inno
lux
Cor
pora
tion
CO
MPE
TITI
ON
TEA
M IR
ELA
ND
LIM
ITED
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
100,
589
2.35
29,5
44Su
bseq
uent
col
lect
ion
24,7
08-
Inno
lux
Cor
pora
tion
Fu L
ian
Net
Inte
rnat
iona
l (H
ong
An
indi
rect
who
lly-o
wne
d36
9,83
7-
369,
837
Subs
eque
nt c
olle
ctio
n-
-K
ong)
Lim
ited
of H
on H
ai P
reci
sion
Indu
stry
Co.
,Lt
d.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
Lead
tek
Glo
bal G
roup
Lim
ited
A su
bsid
iary
of t
he C
ompa
ny19
,693
,660
1.03
12,3
00,6
71Su
bseq
uent
col
lect
ion
4,30
8,21
7-
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.La
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry15
,620
,380
2.68
3,47
3,51
4Su
bseq
uent
col
lect
ion
5,68
2,56
9-
Nan
jing
Inno
lux
Opt
oele
ctro
nics
Ltd.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
7,83
0,73
02.
05-
-1,
823,
997
-
Nin
gbo
Inno
lux
Dis
play
Ltd
.La
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry4.
519,
688,
600
Subs
eque
nt c
olle
ctio
n2,
170,
332
-
Inno
lux
Cor
pora
tion
Rec
eiva
bles
from
rela
ted
parti
es re
achi
ng $
100
mill
ion
or 2
0% o
f pai
d-in
cap
ital o
r mor
eD
ecem
ber 3
1, 2
018
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Am
ount
col
lect
edsu
bseq
uent
to th
eba
lanc
e sh
eet d
ate
Allo
wan
ce fo
r d
oubt
ful a
ccou
nts
Cre
dito
rC
ount
erpa
rtyR
elat
ions
hip
with
the
coun
terp
arty
Bal
ance
as a
tD
ecem
ber 3
1, 2
018
Turn
over
rate
Ove
rdue
rece
ivab
les
4,85
3,36
2
- 280 -
Am
ount
Act
ion
take
n
Am
ount
col
lect
edsu
bseq
uent
to th
eba
lanc
e sh
eet d
ate
Allo
wan
ce fo
r d
oubt
ful a
ccou
nts
Cre
dito
rC
ount
erpa
rtyR
elat
ions
hip
with
the
coun
terp
arty
Bal
ance
as a
tD
ecem
ber 3
1, 2
018
Turn
over
rate
Ove
rdue
rece
ivab
les
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.N
AN
JIN
G H
ON
GFU
SHA
RP
PREC
ISIO
N E
LEC
TRO
NIC
S C
O.,
LTD
.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.
$
153
,374
0.40
$
126
,187
Subs
eque
nt c
olle
ctio
n $
-
$
-
An
indi
rect
who
lly-o
wne
d17
8,66
3-
178,
663
Subs
eque
nt c
olle
ctio
n80
,555
-su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Cho
ngqi
ng F
uyus
heng
Ele
ctro
nics
An
indi
rect
who
lly-o
wne
d13
6,55
5-
136,
555
Subs
eque
nt c
olle
ctio
n-
-Te
chno
logy
Co.
, Ltd
.su
bsid
iary
of H
on H
ai P
reci
sion
Indu
stry
Co.
, Ltd
.(S
how
n as
oth
erre
ceiv
able
s) (N
ote)
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
Inno
lux
Hon
g K
ong
Lim
ited
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
2,11
1,63
03.
0862
1,84
4Su
bseq
uent
col
lect
ion
1,04
4,47
6-
Inno
com
Tec
hnol
ogy
(She
nzhe
n)C
o., L
TDLa
kers
Tra
ding
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry89
7,13
20.
2884
6,83
2Su
bseq
uent
col
lect
ion
--
Nin
gbo
Inno
lux
Opt
oele
ctro
nics
Ltd.
Nin
gbo
Inno
lux
Dis
play
Ltd
.A
n in
dire
ct w
holly
-ow
ned
subs
idia
ry83
0,32
65.
65-
-43
2,17
6-
Inno
lux
Hon
g K
ong
Lim
ited
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
201,
279
4.68
--
113,
994
-
Inno
lux
Euro
pe B
.V.
Inno
lux
Cor
pora
tion
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
232,
063
6.54
--
216,
190
-
Nan
jing
Inno
lux
Tech
nolo
gy L
td.
Shan
ghai
Inno
lux
Opt
oele
ctro
nics
Ltd.
An
indi
rect
who
lly-o
wne
dsu
bsid
iary
183,
339
1.88
--
88-
Not
e: O
verd
ue re
ceiv
able
s tra
nsfe
rred
to o
ther
rece
ivab
les.
Panx
ian
Fugu
iKan
g Pr
ecis
ion
elec
troni
c Lt
d.Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd.
Fosh
an In
nolu
x O
ptoe
lect
roni
csLt
d.
- 281 -
Gen
eral
ledg
er a
ccou
ntA
mou
ntTr
ansa
ctio
n te
rms
(Not
e C
)
Perc
enta
ge o
f con
solid
ated
tota
lop
erat
ing
reve
nues
or t
otal
asse
ts
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Sale
s6,
742,
174
$
-2
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Proc
essi
ng e
xpen
se43
,150
,307
-
15
0In
nolu
x C
orpo
ratio
nLa
kers
Tra
ding
Ltd
.1
Acc
rued
exp
ense
s26
,199
,180
)(
-
6
0In
nolu
x C
orpo
ratio
nIn
nolu
x Ja
pan
Co.
,Ltd
.1
Sale
s2,
231,
812
-
1
0In
nolu
x C
orpo
ratio
nIn
nolu
x Ja
pan
Co.
,Ltd
.1
Acc
ount
s rec
eiva
ble
442,
839
-
-
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Sale
s1,
620,
352
-
1
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Proc
essi
ng e
xpen
se21
,811
,648
-
8
0In
nolu
x C
orpo
ratio
nIn
nolu
x H
ong
Kon
g Li
mite
d1
Acc
rued
exp
ense
s10
,521
,167
)(
-
3
0In
nolu
x C
orpo
ratio
nN
ingb
o In
nolu
x D
ispl
ay L
td.
1Sa
les
168,
298
-
-
0In
nolu
x C
orpo
ratio
nN
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
1Sa
les
521,
628
-
-
0In
nolu
x C
orpo
ratio
nLe
adte
k G
loba
l Gro
up L
imite
d1
Proc
essi
ng e
xpen
se20
,151
,853
-
7
0In
nolu
x C
orpo
ratio
nLe
adte
k G
loba
l Gro
up L
imite
d1
Acc
rued
exp
ense
s24
,587
,830
)(
-
6
0In
nolu
x C
orpo
ratio
nFo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.1
Sale
s18
1,82
2
--
0In
nolu
x C
orpo
ratio
nFo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.1
Acc
ount
s rec
eiva
ble
261,
048
-
-
0In
nolu
x C
orpo
ratio
nN
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
1Sa
les
136,
745
-
-
0In
nolu
x C
orpo
ratio
nIn
nolu
x U
SA In
c.1
Sale
s4,
861,
172
-
2
0In
nolu
x C
orpo
ratio
nIn
nolu
x U
SA In
c.1
Acc
ount
s rec
eiva
ble
3,49
0,22
7
-1
0In
nolu
x C
orpo
ratio
nIn
nolu
x Eu
rope
B.V
.1
Sale
s14
1,15
6
--
1Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.La
kers
Tra
ding
Ltd
.3
Proc
essi
ng re
venu
e24
,608
,412
-
9
1Fo
shan
Inno
lux
Opt
oele
ctro
nics
Ltd
.La
kers
Tra
ding
Ltd
.3
Acc
ount
s rec
eiva
ble
15,6
20,3
80
-4
2N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Lead
tek
Glo
bal G
roup
Lim
ited
3Pr
oces
sing
reve
nue
18,8
03,9
23
-7
2N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Lead
tek
Glo
bal G
roup
Lim
ited
3A
ccou
nts r
ecei
vabl
e19
,693
,660
-
5
3N
ingb
o In
nolu
x D
ispl
ay L
td.
Lake
rs T
radi
ng L
td.
3Pr
oces
sing
reve
nue
18,6
71,6
22
-7
3N
ingb
o In
nolu
x D
ispl
ay L
td.
Lake
rs T
radi
ng L
td.
3A
ccou
nts r
ecei
vabl
e4,
853,
362
-
1
4N
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3Pr
oces
sing
reve
nue
14,8
77,4
52
-5
4N
anjin
g In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3A
ccou
nts r
ecei
vabl
e7,
830,
730
-
2
5Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3Pr
oces
sing
reve
nue
6,49
5,39
1
-2
5Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
Inno
lux
Hon
g K
ong
Lim
ited
3A
ccou
nts r
ecei
vabl
e2,
111,
630
-
1
Inno
lux
Cor
pora
tion
Sign
ifica
nt in
ter-c
ompa
ny tr
ansa
ctio
ns d
urin
g th
e re
porti
ng p
erio
dFo
r the
yea
r end
ed D
ecem
ber 3
1, 2
018
Tabl
e 6
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Num
ber
(Not
e A
)C
ompa
ny n
ame
Cou
nter
party
Rel
atio
nshi
p(N
ote
B)
Tran
sact
ion
(Not
e D
)
- 282 -
Gen
eral
ledg
er a
ccou
ntA
mou
ntTr
ansa
ctio
n te
rms
(Not
e C
)
Perc
enta
ge o
f con
solid
ated
tota
lop
erat
ing
reve
nues
or t
otal
asse
tsN
umbe
r(N
ote
A)
Com
pany
nam
eC
ount
erpa
rtyR
elat
ions
hip
(Not
e B
)
Tran
sact
ion
(Not
e D
)
6N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Nin
gbo
Inno
lux
Dis
play
Ltd
.3
Sale
s4,
741,
622
$
-2
6N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td.
Nin
gbo
Inno
lux
Dis
play
Ltd
.3
Acc
ount
s rec
eiva
ble
830,
326
-
-
7In
nolu
x H
ong
Kon
g Li
mite
dN
anjin
g In
nolu
x Te
chno
logy
Ltd
.3
Sale
s1,
209,
099
-
-
7In
nolu
x H
ong
Kon
g Li
mite
dN
anjin
g In
nolu
x Te
chno
logy
Ltd
.3
Acc
ount
s rec
eiva
ble
201,
279
-
-
8In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
Lake
rs T
radi
ng L
td.
3Pr
oces
sing
reve
nue
249,
759
-
-
8In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
Lake
rs T
radi
ng L
td.
3A
ccou
nts r
ecei
vabl
e89
7,13
2
--
9In
nolu
x Eu
rope
B.V
.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
899,
754
-
-
9In
nolu
x Eu
rope
B.V
.In
nolu
x C
orpo
ratio
n3
Acc
ount
s rec
eiva
ble
232,
063
-
-
10N
anjin
g In
nolu
x Te
chno
logy
Ltd
.Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
3Sa
les
172,
068
-
10N
anjin
g In
nolu
x Te
chno
logy
Ltd
.Sh
angh
ai In
nolu
x O
ptoe
lect
roni
cs L
td.
3A
ccou
nt re
ceiv
able
s18
3,33
9
-
11La
kers
Tra
ding
Ltd
.N
ingb
o In
nolu
x El
ectro
nics
Ltd
.3
Sale
s24
3,17
3
--
12In
nolu
x Ja
pan
Co.
,Ltd
.In
nolu
x H
ong
Kon
g Li
mite
d3
Serv
ice
reve
nue
159,
406
-
-
13In
nolu
x Ja
pan
Co.
, Ltd
.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
115,
099
-
-
14In
nolu
x U
SA In
c.In
nolu
x C
orpo
ratio
n3
Serv
ice
reve
nue
104,
731
-
-
Not
e A
:Th
e in
form
atio
n of
tran
sact
ions
bet
wee
n th
e C
ompa
ny a
nd th
e co
nsol
idat
ed su
bsid
iarie
s sho
uld
be n
oted
in “
Num
ber”
col
umn.
(1) N
umbe
r 0 re
pres
ents
the
pare
nt c
ompa
ny.
(2) T
he su
bsid
iarie
s are
num
bere
d in
ord
er fr
om n
umbe
r 1.
Not
e B
:1
refe
rs to
the
pare
nt c
ompa
ny to
the
subs
idia
ry.
3 re
fers
to th
e su
bsid
iary
to th
e su
bsid
iary
.N
ote
C:
Exce
pt fo
r no
com
para
ble
trans
actio
ns fr
om re
late
d pa
rties
, sal
es p
rices
wer
e si
mila
r to
non-
rela
ted
parti
es tr
ansa
ctio
ns a
nd th
e co
llect
ion
perio
d w
as 3
0~12
0 da
ys; t
he p
urch
ases
from
rela
ted
parti
es w
ere
at m
arke
tpr
ices
and
pay
men
t ter
m w
as 3
0~12
0 da
ys u
pon
rece
ipt o
f goo
ds.
Not
e D
:A
mou
nt d
iscl
osur
e st
anda
rd: p
urch
ases
, sal
es a
nd re
ceiv
able
s fro
m re
late
d pa
rties
in e
xces
s of $
100
mill
ion
or 2
0% o
f cap
ital.
- 283 -
Bal
ance
as a
tD
ecem
ber 3
1,20
18
Bal
ance
as a
tD
ecem
ber 3
1,20
17N
umbe
r of s
hare
sO
wne
rshi
p(%
)B
ook
valu
eIn
nolu
x C
orpo
ratio
nB
right
Info
rmat
ion
Hol
ding
Ltd
.H
ong
Kon
gIn
vest
men
t hol
ding
s $
-
$
119
,724
4,91
0,00
010
0-
$
484
$
484
$
Inno
lux
Cor
pora
tion
Gol
den
Ach
ieve
r Int
erna
tiona
lLi
mite
dB
VI
Inve
stm
ent h
oldi
ngs
119,
106
119,
106
40,2
5010
027
,255
6,18
0)(
6,
180)
(
Inno
lux
Cor
pora
tion
Inno
lux
Hol
ding
Lim
ited
Sam
oaIn
vest
men
t hol
ding
s
6,1
92,6
79
6,1
92,6
79
180
,568
,185
100
17,8
85,8
7818
2,22
518
2,22
5
Inno
lux
Cor
pora
tion
Key
way
Inve
stm
ent
Man
agem
ent L
imite
dSa
moa
Inve
stm
ent h
oldi
ngs
62,1
9762
,197
1,65
6,41
010
082
,110
4,61
14,
611
Inno
lux
Cor
pora
tion
Land
mar
k In
tern
atio
nal L
td.
Sam
oaIn
vest
men
t hol
ding
s
3
3,43
8,54
2
3
3,43
8,54
2
709
,450
,000
100
44,5
97,8
001,
156,
390
1,22
2,76
3
Inno
lux
Cor
pora
tion
Topp
oly
Opt
oele
ctro
nics
(B.V
.I.) L
td.
BV
IIn
vest
men
t hol
ding
s
3,6
74,1
15
3,6
74,1
15
146
,847
,000
100
6,50
6,29
114
3,26
714
3,29
6
Inno
lux
Cor
pora
tion
Inno
lux
Hon
g K
ong
Hol
ding
Lim
ited
Hon
g K
ong
Inve
stm
ent h
oldi
ngs
3
,231
,275
1
,889
,115
1,1
58,8
44,0
0010
05,
641,
266
576,
248
581,
946
Inno
lux
Cor
pora
tion
Inno
lux
Sing
apor
e H
oldi
ng P
te.
Ltd.
Sing
apor
eIn
vest
men
t hol
ding
s75
4,94
3
-25
,400
,000
100
740,
729
21,3
24)
(
21,3
24)
(
Inno
lux
Cor
pora
tion
Lead
tek
Glo
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roup
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ited
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ID
istri
buto
r com
pany
--
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00,0
0010
01,
535,
750
495,
227
495,
227
Inno
lux
Cor
pora
tion
Yua
n C
hi In
vest
men
t Co.
, Ltd
.Ta
iwan
Inve
stm
ent c
ompa
ny
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100
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Joy
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ent C
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iwan
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ent c
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ny
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167
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5)(
12
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5)(
Inno
lux
Cor
pora
tion
Inno
lux
Japa
n C
o., L
td.
Japa
nH
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ngs,
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D,
man
ufac
turin
g an
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istri
buto
r com
pany
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095
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lux
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tion
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lux
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tion
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tor c
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lux
Cor
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tion
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lux
Tech
nolo
gy U
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pany
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--
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lux
Cor
pora
tion
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, Inc
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SAR
esea
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deve
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at m
onito
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--
Inno
lux
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pora
tion
Chi
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Lig
htin
g Te
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pora
tion
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anuf
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ring
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ceq
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ent
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312
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-
Info
rmat
ion
on in
vest
ees
For t
he y
ear e
nded
Dec
embe
r 31,
201
8
Tabl
e 7
Expr
esse
d in
thou
sand
s of N
TD(E
xcep
t as o
ther
wis
e in
dica
ted)
Inno
lux
Cor
pora
tion
Net
pro
fit (l
oss)
of th
e in
vest
ee fo
rth
e ye
ar e
nded
Dec
embe
r 31,
2018
Inve
stm
ent i
ncom
e(lo
ss) r
ecog
nize
d by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
8Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ssac
tiviti
es
Initi
al in
vest
men
t am
ount
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es h
eld
as a
t Dec
embe
r 31,
201
8
- 284 -
Bal
ance
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ber 3
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18
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ance
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ber 3
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p(%
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e
Net
pro
fit (l
oss)
of th
e in
vest
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rth
e ye
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nded
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embe
r 31,
2018
Inve
stm
ent i
ncom
e(lo
ss) r
ecog
nize
d by
the
Com
pany
for t
heye
ar e
nded
Dec
embe
r 31,
201
8Fo
otno
te In
vest
orIn
vest
ee L
ocat
ion
Mai
n bu
sine
ssac
tiviti
es
Initi
al in
vest
men
t am
ount
Shar
es h
eld
as a
t Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
Am
pow
er H
oldi
ng L
td.
Cay
man
Inve
stm
ent h
oldi
ngs
$
1,7
17,7
14 $
1
,717
,714
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62,5
0050
956,
577
$
40,9
34$
20
,467
$
Inno
lux
Cor
pora
tion
FI M
edic
al D
evic
eM
anuf
actu
ring
Co.
, Ltd
.Ta
iwan
Prod
uctio
n an
d se
lling
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the
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rptio
n fo
r med
ical
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ent
73,5
0073
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049
655,
827
891,
803
436,
983
Inno
lux
Cor
pora
tion
GIO
Opt
oele
ctro
nics
Cor
p.Ta
iwan
Sale
s and
man
ufac
ture
of
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ts a
ndco
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nent
s
800,
892
800,
892
10,4
94,0
0124
115,
610
23,7
825,
674
Inno
lux
Cor
pora
tion
eLux
, Inc
.U
SAR
&D
of M
icro
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gy91
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Inno
lux
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ding
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ited
Roc
kets
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ding
Ltd
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moa
Inve
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ent h
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ngs
5
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5
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1
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lux
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ding
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ited
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ding
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moa
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ent h
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ngs
555,
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lux
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ding
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ited
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rs T
radi
ng L
td.
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oaD
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pany
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man
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vest
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t hol
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g K
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lux
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557,
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190,
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lux
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g K
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g K
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tor c
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lux
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g K
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lux
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pe B
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84,9
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g K
ong
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ding
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ited
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lux
Japa
n C
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td.
Japa
nH
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ngs,
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turin
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pany
1
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095
954
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lux
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n C
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td.
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lux
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, Inc
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lling
of e
lect
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ceq
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nd c
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ter
mon
itors
369,
092
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012
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7219
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28,7
5128
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ets T
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ng L
td.
Sam
oaIn
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pany
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t com
pany
555,
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896,
173
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lux
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lux
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any
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72,0
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67
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lux
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apor
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ng P
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td.
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lux
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lux
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apor
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oldi
ng P
te. L
td.
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lux
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nize
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pany
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nded
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embe
r 31,
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otno
te In
vest
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vest
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ocat
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n bu
sine
ssac
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Initi
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vest
men
t am
ount
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embe
r 31,
201
8
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lux
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apor
eH
oldi
ng P
te. L
td.
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lux
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nics
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aysi
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660
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424
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n C
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vest
men
tC
o., L
td.
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chno
logy
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pora
tion
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anuf
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ring
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lect
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ceq
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812
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n C
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td.
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iwan
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ufac
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itted
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ainl
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na
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itted
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td.
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ule
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pone
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1
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lux
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play
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ufac
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lling
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CD
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ted
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jing
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lux
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gy L
td.
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4
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anuf
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and
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lux
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anuf
actu
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aiw
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embe
r 31,
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Inno
lux
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pora
tion
Info
rmat
ion
on in
vest
men
ts in
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nlan
d C
hina
For t
he y
ear e
nded
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embe
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201
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ent
met
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Acc
umul
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amou
nt o
fre
mitt
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from
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f Jan
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Foot
note
Acc
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amou
nt o
fre
mitt
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from
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nlan
d C
hina
as o
f Dec
embe
r31
, 201
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Net
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vest
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r the
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end
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1,20
18
Ow
ners
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held
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pany
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Inve
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k va
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ts in
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nlan
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f Dec
embe
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, 201
8
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amou
nt o
fin
vest
men
tin
com
e re
mitt
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wan
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f Dec
embe
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itted
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na
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itted
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ptoe
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cs(S
henz
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lux
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td.
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td.
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2
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lux
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omm
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Co.
, Ltd
.D
evel
opm
ent a
nd se
lling
of M
INI
LED
44,7
533
--
--
( 1
,879
)10
0(
1,8
79)
42,9
10-
3.3
Inno
lux
Aut
omat
ions
and
Inte
llige
nce
Syst
ems
(She
nZhe
n) C
o., L
td.
Dev
elop
men
t and
selli
ng o
fso
ftwar
e4,
475
3-
--
-(
4,7
30)
49(
2,3
18)
( 8
0)-
3.3
Am
ount
rem
itted
from
Taiw
an to
Mai
nlan
dC
hina
/Am
ount
rem
itted
back
to T
aiw
an fo
r the
yea
ren
ded
Dec
embe
r 31,
201
8
Inve
stee
in M
ainl
and
Chi
na M
ain
busi
ness
act
iviti
esPa
id-in
cap
ital
(Not
e A
)
Inve
stm
ent
met
hod
(Not
e C
)
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Jan
uary
1,
2018
Acc
umul
ated
amou
nt o
fin
vest
men
tin
com
e re
mitt
edba
ck to
Tai
wan
as o
f Dec
embe
r31
, 201
8Fo
otno
te
Acc
umul
ated
amou
nt o
fre
mitt
ance
from
Taiw
an to
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
Net
inco
me
ofin
vest
ee fo
r the
year
end
edD
ecem
ber 3
1,20
18
Ow
ners
hip
held
by
the
Com
pany
(dire
ct o
rin
dire
ct)
Inve
stm
ent
inco
me
(loss
)re
cogn
ized
by
the
Com
pany
for t
he y
ear
ende
dD
ecem
ber 3
1,20
18 (N
ote
B)
Boo
k va
lue
ofin
vest
men
ts in
Mai
nlan
d C
hina
as o
f Dec
embe
r31
, 201
8
- 288 -
Cei
ling
on in
vest
men
ts in
Mai
nlan
d C
hina
:
Com
pany
nam
e
Acc
umul
ated
am
ount
of r
emitt
ance
from
Tai
wan
to M
ainl
and
Chi
na a
sof
Dec
embe
r 31,
201
8
Inno
lux
Cor
pora
tion
27,6
20,5
64$
Not
e A
: The
rele
vant
figu
res w
ere
liste
d in
NT$
. Whe
re fo
reig
n cu
rren
cies
wer
e in
volv
ed, t
he fi
gure
s wer
e co
nver
ted
to N
T$ u
sing
exc
hang
e ra
te.
Not
e B
: Pro
fit o
r los
s rec
ogni
zed
for t
he y
ear e
nded
Dec
embe
r 31,
201
8 w
as a
udite
d by
inde
pend
ent a
ccou
ntan
ts.
Not
e C
: The
inve
stm
ent m
etho
ds a
re a
s fol
low
s:1.
Dire
ctly
inve
stin
g in
Mai
nlan
d C
hina
.2.
Thr
ough
inve
stin
g in
com
pani
es in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
1. T
hrou
gh in
vest
ing
in S
tanf
ord
Dev
elop
men
ts L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.2.
Thr
ough
inve
stin
g in
War
riors
Tec
hnol
ogy
Inve
stm
ents
Ltd
. in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
3. T
hrou
gh in
vest
ing
in L
andm
ark
Inte
rnat
iona
l Ltd
. in
the
third
are
a, w
hich
then
inve
sted
in th
e in
vest
ee in
Mai
nlan
d C
hina
.2.
4. T
hrou
gh in
vest
ing
in T
oppo
ly O
ptoe
lect
roni
cs (C
aym
an) L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.5.
Thr
ough
inve
stin
g in
Inno
lux
Opt
oele
ctro
nics
Hon
g K
ong
Hol
ding
Lim
ited
in th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.6.
Thr
ough
inve
stin
g in
Key
way
Inve
stm
ent M
anag
emen
t Lim
ited
in th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.7.
Thr
ough
inve
stin
g in
Am
pow
er H
oldi
ng L
td. i
n th
e th
ird a
rea,
whi
ch th
en in
vest
ed in
the
inve
stee
in M
ainl
and
Chi
na.
2.8.
Nan
jing
Inno
loux
Opt
oele
ctor
nics
Ltd
. acq
uire
d K
unpa
l Opt
oele
ctro
nics
Ltd
. by
mer
ger,
whi
ch w
as a
ppro
ved
by th
e In
vest
men
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
in N
ovem
ber 2
017.
3. O
ther
s.3.
1. T
he c
ompa
ny in
vest
ed in
the
com
pany
via
inve
stee
com
pany
in M
ainl
and
Chi
na, N
ingb
o In
nolu
x D
ispl
ay L
td. E
xcep
t for
the
inve
stm
ent v
ia th
e ho
ldin
g co
mpa
nies
in M
ainl
and
Chi
na, o
ther
inve
stm
ents
shal
l be
not
appr
oved
by
Inve
stmen
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
.3.
2 T
he c
ompa
ny in
vest
ed v
ia F
osha
n In
nolu
x O
ptoe
lect
roni
cs L
td. a
nd N
ingb
o In
nolu
x O
ptoe
lect
roni
cs L
td. w
hich
are
the
com
pany
inve
stm
ent e
ntiti
es in
Mai
nlan
d C
hina
to in
vest
in F
osha
n In
nolu
x Fl
net E
lect
roni
cs L
td.
and
Nin
gbo
Inno
lux
Flne
t Ele
ctro
nics
Ltd
. Ex
cept
for t
he in
vest
men
t via
the
hold
ing
com
pani
es in
Mai
nlan
d C
hina
, ot
her i
nves
tmen
ts sh
all b
e no
t app
rove
d by
Inve
stmen
t Com
mis
sion
of th
e M
inis
try o
f Eco
nom
ic A
ffairs
.3.
3.Th
e co
mpa
ny in
vest
ed v
ia In
noco
m T
echn
olog
y (S
henz
hen)
Co.
, LTD
, whi
ch a
re th
e co
mpa
ny in
vest
men
t ent
ities
in M
ainl
and
Chi
na to
inve
st in
She
nzhe
n Pi
xinL
ED T
echn
olog
y C
o.,L
td.,
Inno
lux
Aut
omat
ions
and
Inte
llige
nce
Syst
ems (
Shen
Zhen
) Co.
, Ltd
. Exc
ept f
or th
e in
vest
men
t via
the
hold
ing
com
pani
es in
Mai
nlan
d C
hina
, ot
her i
nves
tmen
ts sh
all b
e no
t app
rove
d by
Inve
stmen
t Com
mis
sion
of t
he M
inis
try o
f Eco
nom
ic A
ffairs
.N
ote
D: I
n ac
cord
ance
with
“R
ules
Gov
erni
ng A
pplic
atio
ns fo
r Inv
estm
ent o
r Tec
hnic
al C
oope
ratio
n in
Mai
nlan
d C
hina
”, th
e C
ompa
ny h
as o
btai
ned
the
certi
ficat
e of
bei
ng q
ualif
ied
for o
pera
ting
head
quar
ters
, iss
ued
by th
e In
dust
rial D
evel
opm
ent
B
urea
u of
the
Min
istry
of E
cono
mic
Affa
irs, t
he c
eilin
g am
ount
of t
he in
vest
men
t in
Mai
nlan
d C
hina
is n
ot a
pplic
able
to th
e C
ompa
ny.
I. Th
e am
ount
app
rove
d by
the
Inve
stm
ent C
omm
issi
on o
f Min
istry
of E
cono
mic
Affa
irs (M
OEA
) is U
SD 1
0,30
0 th
ousa
nd, V
ap O
ptoe
lect
roni
cs (N
anJi
ng) C
orp.
has
fini
shed
liqu
idat
ion
in O
ctob
er 2
018
but n
ot a
pply
the
canc
ella
tion
of
inv
estm
ent w
ith In
vest
men
t Com
mis
sion
of M
OEA
yet
.
Inve
stm
ent a
mou
nt a
ppro
ved
by th
e In
vest
men
tC
omm
issi
on o
f the
Min
istry
of E
cono
mic
Affa
irs (M
OEA
)
36,8
25,1
18$
Cei
ling
on in
vest
men
ts in
Mai
nlan
d C
hina
impo
sed
by th
eIn
vest
men
t Com
mis
sion
of
MO
EA
(Not
e D
)
- 289 -
Innolux Corporation Chairman: Jin-Yang Hung
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