TRANSCEND INFORMATION, INC. AND
SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS AND
REVIEW REPORT OF INDEPENDENTACCOUNTANTSSEPTEMBER 30, 2018 AND 2017

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)(The consolidated balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)
Assets

September 30, 2018
AMOUNT%

Notes

December 31, 2017
AMOUNT%

September 30, 2017
AMOUNT%

Current assets
Cash and cash equivalents

6(1)

$

1,144,675

5

400,163$3,645,914

16

2

-

6,973,918

33

-

$

1,974,741

9

-

-

-

-

-

-

-

-

738,8773

747,565

3

2,079

-

5,862

-

1,025

-

2,486,933

12

2,499,773

11

3,008,731

14

84,947-

114,3461

160,3711

Financial assets at fair value through 6(2)profit or loss - current
Current financial assets at amortised 6(3)cost, net
Investment in debt instrument

12(4)without active market - current
Notes receivable, net

6(4)Accounts receivable, net

6(4) and12(4)Other receivables

7

Inventories, net

6(5)4,151,298

20

5,241,150

23

5,661,895

25

Other current financial assets

12(4)

-

-

6,899,661

30

7,185,981

32

44,024-

44,210-62,350-15,288,037

72

19,189,793

84

18,802,659

84

167,059

1

-

-

-

-

-

-

68,874-

114,215-

163,5661

173,1221

178,190182,627,730

12

2,706,923

12

2,662,943

12

6(9)

2,626,001

12

269,4621

271,0401

105,630

1

133,9541

118,7831

160,8301

228,3531

295,1561

5,850,816

28

3,580,688

16

3,640,327

16

21,138,853

100

22,770,481

100

22,442,986

100

Other current assets, others
Current Assets
Non-current assets
Non-current financial assets at fair

6(6)value through other comprehensive
incomeAvailable-for-sale financial assets -12(4)non-current
Investments accounted for using

6(7)equity method
Property, plant and equipment, net

Investment property, net

6(8), 7 andDeferred tax assets
Other non-current assets

6(10)Non-current Assets
Total Assets$(Continued)

~3~

$

$

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)(The consolidated balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)
Liabilities and Equity

September 30, 2018
AMOUNT%

Notes

December 31, 2017
AMOUNT%

September 30, 2017
AMOUNT%

Current liabilities
$

200

-

5

1,678,030

7

37,454-55,021-

1

347,6192

347,836

2

-

-

233

-

-

-

Current tax liabilities

24,273-412,3452

278,902

1

Other current liabilities

19,553-31,414-29,918-Current Liabilities

1,324,996

6

2,066,617

92,389,907

10

180,5721

158,4631

138,155

1

53,055-

47,106-50,321-

233,627

1

205,5691

188,476

1

1,558,623

7

2,272,186

10

2,578,383

11

4,307,617

21

4,307,617

19

4,307,617

19

4,605,233

22

4,691,385

20

4,691,385

21

Legal reserve

4,302,782

20

4,037,210

18

4,037,210

18

Special reserve47,247-

145,6891

145,6891

6,389,939

30

7,363,641

32

6,765,61030

82,908)-19,864,603

89

22,442,986

100

Notes payable
Accounts payable
Accounts payable - related parties

7

Other payables
Other payables - related parties--

930,157

$

-

-

5

1,237,552

59,760-291,253$

Non-current liabilities
Deferred tax liabilities
Other non-current liabilities

6(11)Non-current Liabilities
Total Liabilities
Equity attributable to owners ofparent6(12)Share capital
Common stock6(13)Capital surplus
Capital surplus

6(14)Retained earnings

Unappropriated retained earnings
6(15)Other equity interest(

Other equity interest

72,588)

Total Equity- (19,580,230

93

21,138,853

100

47,247)- (20,498,295

90

22,770,481

100

Significant contingent liabilities and 9
unrecognized contract commitments
Total Liabilities and Equity

$

$

$

The accompanying notes are an integral part of these consolidated financial statements.

~4~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except earnings per share amounts)(UNAUDITED)
Three months ended September 30
2018
2017
Items

Notes

AMOUNT

Operating Revenue

6(16), 7 and 12(5)$ 4,431,313

Operating Costs

6(5)(19) and 7(

AMOUNT%AMOUNT%AMOUNT%

100 $ 5,460,980

100 $ 13,642,598

100 $ 16,147,227

100

3,568,865)(

80)(

4,092,177)(75)( 10,846,995)(

80)( 11,854,838)(74)

862,44820

1,368,803

25

20

26

Gross Profit
Operating Expenses%

Nine months ended September 30
2018
2017

2,795,603

4,292,389

6(19)Sales and marketing expenses(

221,732)(5)(

252,304)(

4)(

708,624)(

5)(

784,715)(5)

Administrative expenses(

74,963)(

2)(

98,852)(

2)(

252,529)(2)(

249,331)(

1)

Research and development expenses(

39,274)(

1)(

43,985)(

1)(

128,156)(1)(

134,358)(

1)

14

-

- (

82)

Impairment loss (impairment gain and reversal of impairment

6(4)loss) determined in accordance with IFRS 9(

Total operating expenses
Operating Profit

-

-

-

-

335,955)(

8)(

395,141)(7)(

1,089,391)(

8)(

1,168,404)(

7)

526,49312

973,66218

1,706,212

12

3,123,985

19

Non-operating Income and Expenses
Other income

6(17)55,1481

39,419-143,437

1

124,731

1

Other gains and losses

6(18)32,645

1 (54,646)(

1)

278,4172 (

575,753)(

3)

Net gain from derecognizing financial assets measured at6(3)amortised cost

3,974

-

-

-

12,246---

Finance costs

-

- (

2)

-

-

- (

294)

-

5,942)- (67,242)(

1)(

11,720)- (103,790)(1)

85,825

2 (82,471)(

2)

422,3803 (

555,106)(3)

612,318

14

891,191

16

2,128,592

123,669)(3)(

180,760)(3)(

488,649

11 $

710,431

13 $ 1,691,307

Share of loss of associates and joint ventures accounted for

6(7)

(

under equity method
Total non-operating income and expenses
Profit before Income Tax
Income tax expense
Profit for the Period

6(20)

(
$

(Continued)~5~437,285)(15
3)(

2,568,879
508,791)(

12 $ 2,060,088

16
3)
13

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except earnings per share amounts)(UNAUDITED)

Items
Other Comprehensive Income (Loss)
Components of other comprehensive income (loss) that will
not be reclassified to profit or loss
Unrealized loss on financial assets at fair value through othercomprehensive income
Share of other comprehensive income of associates and joint
ventures accounted for under equity method, components ofother comprehensive income (loss) that will not be reclassified
to profit or loss
Components of other comprehensive income (loss) that will
be reclassified to profit or loss
Exchange differences on translation of foreign financial
statements
Unrealized gain on available-for-sale financial assets
Income tax related to components of other comprehensive
income (loss) that will be reclassified to profit or loss
Other comprehensive income (loss) for the period

Three months ended September 30
2018
2017
AMOUNT%AMOUNT

Notes

Nine months ended September 30
2018
2017
AMOUNT%AMOUNT%%

6(6)(15)

- $

-

- ($

2,142)

- $

-

-

-

-

-

2,164

- (

630)

-

54,724)(-

1)-

26,86350,399- (1

31,030)-- (-28,232)
86,214-($

10,94548,070)(- (1) $4,567)
72,695

1 ($

6,206
24,802)- $4,799
62,151-

Total Comprehensive Income$

440,57910 $

783,126

14 $ 1,666,505

12 $ 2,122,239

13

Net profit attributable to:
Owners of parent$

488,649

11 $

710,431

13 $ 1,691,307

12 $ 2,060,088

13Comprehensive income attributable to:
Owners of parent$

440,57910 $

783,126

14 $ 1,666,505

12 $ 2,122,239

13

Earnings Per Share
Basic earnings per share
Diluted earnings per share($

4,291)-

6(15)(
6(15) and 12(4)6(15)(20)

6(21)

$

1.13 $

1.65 $

3.93 $

4.78$

1.13 $

1.65 $

3.92 $

4.78

The accompanying notes are an integral part of these consolidated financial statements.
~6~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan Dollars)(UNAUDITED)
Equity attributable to owners of the parent
Retained earnings

Capital surplus

Notes
Nine months ended September 30, 2017
Balance at January 1, 2017
Net income for the period
Other comprehensive income (loss) 6(15)Total comprehensive income
Appropriation and distribution of 2016 6(14)earnings
Legal reserve
Special reserve
Cash dividends
Cash payment from capital surplus
6(14)Balance at September 30, 2017
Nine months ended September 30, 2018
Balance at January 1, 2018
Effects of retrospective application and 12(4)retrospective restatement
Balance after restatement at January 1,
2018
Net income for the period
Other comprehensive income (loss) 6(15)Total comprehensive income
Appropriation and distribution of 2017 6(14)earnings
Legal reserve
Cash dividends
Reversal of special reserve
Cash payment from capital surplus
6(14)Net loss on disposal of financial assets 6(6)(15)
at fair value through othercomprehensive income
Balance at September 30, 2018

Common stock

Additional paid-in
capitalDonated assets
received

Net assets frommerger

$ 4,307,617-$ 4,759,841-$$$ 4,307,617(
107,690 )$ 4,652,151$ 4,307,617$ 4,652,151--

4,307,617-

4,652,151-$ 4,307,617(

Special reserve

35,128-$ 3,748,946-$

288,264$ 4,037,210

Unappropriatedretained earnings

21,691-$ 7,595,294($
2,060,088(
630 ) (
2,059,458(

42,214 )23,433 )23,433 )((($123,998
145,689

288,264 )
123,998 )2,476,880 )$ 6,765,610($

65,647 )$145,689$ 7,393,641

67,262 )

$

4,106

$

35,128

$

4,106

$

35,128$ 4,037,210

-

-

-

-

-

4,106
-

35,128-4,037,210-

145,689-

7,393,641
1,691,307
2,164
1,693,471--

265,572-((
98,442 )-265,572 )2,498,418 )
98,442-35,128$ 4,302,782

86,152 )$ 4,565,999

4,106
-

Legal reserve

$

4,106

$

(

$

47,247

(

($

(
(
(

31,625 )$ 6,389,939($

The accompanying notes are an integral part of these consolidated financial statements.

~7~

Other equity interest
Unrealized gain or
Exchangeloss on financial
differences on
assets at fair value Unrealized gain ortranslation ofthrough otherloss on availableforeign financial
comprehensive
for-sale financial
statements
incomeassets$-($103,475 )
86,214
86,214$ 20,326,934
2,060,088
62,1512,122,239

$

-

($

( 2,476,880 )(
107,690 )17,261 ) $ 19,864,603

$

-

$

20,015(9,985 ) (9,985 )
2,142 )
2,142 )

-

-

-

-

$

31,625
19,498$ 20,528,295

20,015 ) (67,262 ) (24,824 ) (24,824 ) (92,086 )Total equity$-

30,000 )20,498,295
1,691,307(
24,802 )
1,666,505((

2,498,418 )
86,152 )$ 19,580,230

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan Dollars)(UNAUDITED)
Nine months ended September 30
Notes
CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net gain on financial assets at fair value through profit or loss
Share of loss of associates and joint ventures accounted for using equity method
Expected credit loss/(Gain on reversal of bad debts)
Loss on disposal of investments
Gain on disposal of property, plant and equipment
Depreciation
Interest income
Interest expense
Dividend income
Changes in operating assets and liabilities
Changes in operating assets
Financial assets mandatorily measured at fair value through profit or loss
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivable - related parties
Inventories
Other current assets, others
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at amortised cost
Decrease in other current financial assets
Proceeds from disposal of investment in debt instrument without active markets
Acquisition of investment in debt instrument without active markets
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive
incomeAcquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of investment property
Decrease (increase) in other non-current financial assets
Net cash flows (used in) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIESCash dividends paid (including cash payment from capital surplus )Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

2018

$

6(2)(18)
6(7)
6(4)
12(4)
6(18)
6(19)
6(17)

(

6(18)

(

2017

2,128,592

321 )
11,72082
1,475 )
158,543
121,327 )3,558 )(((

399,842 )3,783
12,22429,444168 )
1,089,852
186(

307,395 )
22,30656,366 )233 )11,861 )
5,949
2,560,135
3,558
121,450
768,717 )
1,916,426

(
(
(
(

(

4,739,309 )
5,403,454
105,480 )(($2,568,879

103,7906,251 )
69,796
5,147 )
154,898
111,074 )294
8,973 )

(
(
(
(

4,323
159,607 )21,3698,380 )
7,183 )
495,074 )
25,961 )

(
(
(
(
(

200
62,236 )6,803
42,697 )
14,497 )
26,412 )
1,956,860
8,973
112,885294 )
391,914 )
1,686,510

(
(
(
(

(
(

81,783
1,516,609
1,614,173
1,995,443 )
-

(

6(6)
6(8)
6(8)
6(9)

5,152
103,731 )
19,0902,365,030 )
67,523
1,818,331 )

(
(
(

6(14)

(
(
(
(
$

The accompanying notes are an integral part of these consolidated financial statements.

~8~2,584,570 )2,584,570 )
14,764 )2,501,239 )
3,645,914
1,144,675

98,301 )
9,884
90,906 )1,037,799

(

(

(
(
(

$

2,584,570 )2,584,570 )
7,668 )
132,071
1,842,670
1,974,741

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSSEPTEMBER 30, 2018 AND 2017
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,EXCEPT AS OTHERWISE INDICATED)(UNAUDITED)
1. HISTORY AND ORGANIZATION
Transcend Information, Inc. (the “Company”) was incorporated under the provisions of the Company
Law of the Republic of China (R.O.C.) in August 1989. The main activities of the Company and its
subsidiaries (collectively referred herein as the “Group”) are manufacturing, processing and the sale ofcomputer software and hardware, peripheral equipment and other computer components. The Securities
and Futures Commission of the Republic of China had approved the Company’s shares to be listed on
the Taiwan Stock Exchange and the shares started trading on May 3, 2001.
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
November 8, 2018.
3. APPLICAT ION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS(1) Effect of the adoption of new issuances of or amendments to International Financial ReportingStandards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:
Effective date byInternational Accounting
New Standards, Interpretations and Amendments
Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share-based
January 1, 2018
payment transactions’Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with
January 1, 2018
IFRS 4, Insurance contracts’
January 1, 2018
IFRS 9, ‘Financial instruments’
January 1, 2018
IFRS 15, ‘Revenue from contracts with customers’
Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue fromJanuary 1, 2018
contracts with customers’
Amendments to IAS 7, ‘Disclosure initiative’
January 1, 2017
Amendments to IAS 12, ‘Recognition of deferred tax assets for
January 1, 2017
unrealised losses’
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 toJanuary 1, 2018
IFRS 1, ‘First-time adoption of International Financial ReportingStandards’~9~New Standards, Interpretations and Amendments

Effective date byInternational AccountingStandards Board

Annual improvements to IFRSs 2014-2016 cycle- Amendments to
IFRS 12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle- Amendments to
IAS 28, ‘Investments in associates and joint ventures’January 1, 2017
January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to theGroup’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 asset atfair value through profit or loss, financial asset measured at fair value through othercomprehensive income or financial asset at amortised cost. Equity instruments would beclassified as financial asset at fair value through profit or loss, unless an entity makes anirrevocable election at inception to present subsequent changes in the fair value of aninvestment in an equity instrument that is not held for trading in other comprehensive income.
(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 or lifetime expected credit losses (interest revenue would be calculatedon the gross carrying amount of the asset before impairment losses occurred); or if the
instrument 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
Group 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 Group has elected not to restate prior period financial statements using the modified
retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018,
please refer to Notes 12(4)B and C.
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. According to IFRS 15, revenue is recognizedwhen a customer obtains control of promised goods or services. A customer obtains control ofgoods or services when a customer has the ability to direct the use of, and obtain substantiallyall of the remaining benefits from, the asset.
The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer ofpromised 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 separate performance obligations in the contract(s)Step 3: Determine the transaction price.

~10~

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 anentity to disclose sufficient information to enable users of financial statements to understandthe 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 and recognized thecumulative effect of initial application as retained earnings at January 1, 2018, using themodified retrospective approach under IFRS 15.
(3) Amendments to IAS 7, ‘Disclosure initiative’
This amendment requires that an entity shall provide more disclosures related to changes inliabilities arising from financing activities, including both changes arising from cash flows andnon-cash changes.
The Group expects to provide additional disclosure to explain the changes in liabilities arisingfrom financing activities.
(4) Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealized losses’
These amendments clarify the recognition of deferred tax assets for unrealized losses, and theyclarify several of the general principles underlying the accounting for deferred tax assets. The
amendments clarify that a deductible temporary difference exists whenever an asset is measured
at fair value and that fair value is below the asset’s tax base. When an entity assesses whether
taxable profits will be available against which it can utilize a deductible temporary difference, it
considers a deductible temporary difference in combination with all of its other deductible
temporary differences unless there are tax law restrictions, and the tax deduction resulting from
temporary differences is excluded from estimated future taxable profits.
(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:

New Standards, Interpretations and Amendments
Amendments to IFRS 9, ‘Prepayment features with negativecompensation’
IFRS 16, ‘Leases’
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’
Amendments to IAS 28, ‘Long-term interests in associates andjoint ventures’
IFRIC 23, ‘Uncertainty over income tax treatments’
Annual improvements to IFRSs 2015-2017 cycle

Effective date byInternational AccountingStandards Board
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019
January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to theGroup’s financial condition and financial performance based on the Group’s assessment.

~11~

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 withterms 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.
In the first quarter of 2018, the Group reported to the Board of Directors that IFRS 16 has no material
impact to the Group.
The Group expects to recognize the lease contract of lessees in line with IFRS 16. However, theGroup does not intend to restate the financial statements of prior period, and the effects will be
adjusted on January 1, 2019.
(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:

New Standards, Interpretations and Amendments
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition ofMaterial’
Amendments to IFRS 3, ‘Definition of a business’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution ofassets between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’

Effective date byInternational AccountingStandards Board
January 1, 2020
January 1, 2020
To be determined byInternational AccountingStandards Board
January 1, 2021

Except for the following, the above standards and interpretations have no significant impact to theGroup’s financial condition and financial performance based on the Group’s assessment.
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its
associate or joint venture’
The amendments resolve a current inconsistency between IFRS 10 and IAS 28. The gain or loss
resulting from a transaction that involves sales or contribution of assets between an investor and its
associates or joint ventures is recognized either in full or partially depending on the nature of theassets sold or contributed:
A. If sales or contributions of assets constitute a ‘business’, the full gain or loss is recognized;
B. If sales or contributions of assets do not constitute a ‘business’, the partial gain or loss isrecognized only to the extent of unrelated investors’ interests in the associate or joint venture.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies adopted are consistent with Note 4 in the consolidated financial
statements for the year ended December 31, 2017, except for the compliance statement, basis ofpreparations, basis of consolidation and additional policies as set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.

~12~

(1) Compliance statement
A. The consolidated financial statements of the Group have been prepared in accordance with the“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and theInternational Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.
B. These consolidated financial statements are to be read in conjunction with the consolidated
financial statements for the year ended December 31, 2017.
(2) Basis of preparation
A. Except for the following items, the consolidated financial statements have been prepared under
the historical cost convention:(a) Financial assets 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 lesspresent value of defined benefit obligations.
B. The preparation of financial statements in conformity with International Financial ReportingStandards, 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 processof applying the Group’s accounting policies. The areas involving a higher degree of judgement orcomplexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified
retrospective approach whereby the cumulative impact of the adoption was recognized as retained
earnings or other equity interest as of January 1, 2018 and the financial statements for the third
quarter of 2017 was not restated. The financial statements for the third quarter of 2017 wereprepared 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:
Basis for preparation of these consolidated financial statements is the same as that for the
preparation of the consolidated financial statements as of and for the year ended December 31,
2017.

~13~

B. Subsidiaries included in the consolidated financial statements:
Ownership (%)
Name ofInvestor
Transcend
Taiwan〞〞〞Name of
Subsidiary
Saffire Investment Ltd.
(Saffire)

Main Business
Activities
Investment holding company

September
30, 2018
100

December31, 2017
100

Transcend Japan Inc.
(Transcend Japan)

Wholesaler and import ofcomputer memory modules
and peripheral products
Wholesaler and import ofcomputer memory modules
and peripheral products
Wholesaler and import ofcomputer memory modules
and peripheral products
Investment holding company

100

100

100

100

100

100

Note

100

100

100

〞

100

100

100

100

100

100

Note

100

100

100

〞

100

100

100

〞

100

100

100

Note

100

100

100

〞

Transcend Information
Inc. (Transcend USA)
Transcend Korea Inc.
(Transcend Korea)

SaffireMemhiro Pte. Ltd.
Investment Ltd. (Memhiro)
Memhiro Pte.
Ltd.

〞
〞
〞
〞

Transcend Information
Europe B.V. (Transcend
Europe)Transcend Information
Trading GmbH, Hamburg(Transcend Germany)
Transcend Information(Shanghai), Ltd.
(Transcend Shanghai)Transtech Trading(Shanghai) Co., Ltd.
(Transtech Shanghai)Transcend Information(Hong Kong), Ltd.
(Transcend Hong Kong)

Wholesaler and import ofcomputer memory modules
and peripheral products
Wholesaler and import ofcomputer memory modules
and peripheral products
Manufacturer and seller ofcomputer memory modules,
storage products and disks
Wholesaler, agent, import andexport and retailer of computer
memory modules, storage
products and computercomponents
Wholesaler and import ofcomputer memory modules
and peripheral products

September
30, 2017 Description
100

Note : The financial statements of insignificant subsidiary as of and for the nine months ended
September 30, 2018 were not reviewed by independent accountants.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustment for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

~14~(4) Financial assets at fair value through profit or loss
Effective 2018
A. Financial assets at fair value through profit or loss are financial assets that are not measured atamortised 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 arerecognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial liabilities at fair value. All relatedtransaction 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.
(5) Financial assets at fair value through other comprehensive income
Effective 2018
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 initialrecognition 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. (Irrevocable election isseparately classified, and needs to be disclosed when there is various election).
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 thederecognition 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 theGroup and the amount of the dividend can be measured reliably.
(6) Financial assets at amortised cost
Effective 2018
A. Financial assets at amortised 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 amortised cost are recognized andderecognized 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.
(7) 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.

~15~(8) Financial assets impairment
For debt instruments measured at fair value through other comprehensive income and financial assets
at amortised cost including accounts receivable that have a significant financing component, at eachreporting 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 theimpairment 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 or contract assets that do not contain asignificant financing component, the Group recognizes the impairment provision for lifetime ECLs.
(9) Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to receive the cash flows fromthe financial asset expire.
(10) Revenue recognition
A. Sales of goods(1) The Group manufactures and sells computer software and hardware, computer peripheral
equipment, and computer component products. When the right of control is transferred tothe customer, sales revenue is recognized. Delivery occurs when the products have been
shipped to the specific location, the risks of obsolescence and loss have been transferred tothe 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 beensatisfied.
(2) Sales revenue was recognized based on contract price net of sales return, volume discounts
and estimated sales discounts. The goods are often sold with volume discounts based on
aggregate sales over a one month period. Accumulated experience is used to estimate andprovide for the sales discounts and allowances, using the expected value method, andrevenue 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 andrecognized as allowance for sales discounts. No element of financing is deemed present as
the sales are made with a credit term of 30-60 days after monthly billing, which is consistent
with market practice.
(3) A receivable is recognized when the goods are delivered as this is the point in time that theconsideration is unconditional because only the passage of time is required before thepayment is due.
B. Incremental costs of obtaining a contract
Given that the contractual period lasts less than one year, the Group recognizes the incremental
costs of obtaining a contract as an expense when incurred although the Group expects to recoverthose costs.
5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTIONUNCERTAINTY
There was no significant change during this period. Please refer to Note 5 in the consolidated financial
statements for the year ended December 31, 2017 for related information.

~16~

6. DETAILS OF SIGNIFICANT ACCOUNTS(1) Cash and cash equivalents

Cash on hand and petty cash
Checking accounts and demand
deposits
Total

September 30, 2018 December 31, 2017 September 30, 2017
$
979 $
693 $
1,059

$

1,143,696
1,144,675 $3,645,221
3,645,914 $

1,973,682
1,974,741

A. The Group transacts 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 Group has no cash and cash equivalents pledged to others.
(2) Financial assets at fair value through profit or loss
Effective 2018

Items

September 30, 2018

Current items:
Financial assets mandatorily
measured at fair value throughprofit or loss
Beneficiary certificates
Valuation adjustment$

399,977
186
400,163$

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit orloss are listed below:

Financial assets mandatorily measured atfair value through profit or loss
Beneficiary certificatesThree months ended
September 30, 2018

Nine months ended
September 30, 2018

$

$

321

B. The Group has no financial assets at fair value through profit or loss pledged to others.

~17~

321

(3) Financial assets at amortised cost
Effective 2018
Items

September 30, 2018

Current items:
Time deposits with original maturityof more than three months
Bonds with repurchase agreement
Financial products$

6,410,689$

549,921
13,308
6,973,918

A. Amounts recognized in profit or loss in relation to financial assets at amortised cost are listed
below:
Three months ended
September 30, 2018$
43,6383,974$
47,612

Interest income
Gains on disposal

Nine months ended
September 30, 2018$
114,500
12,246$
126,746

B. For the three months and nine months ended September 30, 2018, the Group sold bonds with
repurchase agreement and obtained gain on disposal in the amount of $3,974 and $12,246,
respectively.
C. The Group has no financial assets at amortised cost pledged to others as collateral.
D. The Group used the forecastability of Taiwan Institute of Economic Research boom observation
report to adjust historical and timely information to assess the default possibility of debt
instrument on September 30, 2018, and considered guarantee for repurchase agreement held by
the Group to estimate expected credit loss. The Group does not expect material credit loss after
assessment.
E. The Group transacts time deposits with reputable domestic and foreign banks, the counterparty ofthe debt instrument investment is Yuanta Asset Management Limited and the financial products
were transacted with Fubon Bank（China）Co., Ltd. The Group’s counterparties of transactions
have good credit quality, and the impairment loss are assessed using a 12-month expected credit
loss approach.
F. Information on investment in debt instruments without active markets and time deposits withoriginal maturity of more than three months as of December 31, 2017 and September 30, 2017 isprovided in Note 12(4).

~18~

(4) Notes and accounts receivable
Notes receivable
Accounts receivable
Less: Provision for sales discounts
and allowances
Loss allowance

September 30, 2018 December 31, 2017 September 30, 2017$
2,079 $
5,862 $
1,025
September 30, 2018 December 31, 2017 September 30, 2017
3,163,526$
2,614,131 $2,639,912 $(
102,653) (116,210) (130,241)($

24,545) (2,486,933 $

23,929) (2,499,773 $

24,554)
3,008,731

A. The ageing analysis of accounts receivable and notes receivable is as follows:

September 30, 2018
Accounts receivable
Notes receivable$
2,140,053 $
2,079
319,213
14,34911,561
26,302
2,079$
2,511,478 $Not past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 181 days

December 31, 2017
Accounts receivable
Notes receivable$
2,006,395 $
5,862
477,941
6,905
3,719
28,742
5,862$
2,523,702 $Not past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 181 days

September 30, 2017
Accounts receivable
Notes receivable$
2,686,786 $
1,025
310,293
8,524
1,117
26,565
1,025$
3,033,285 $Not past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 181 days

The above ageing analysis was based on past due date.
B. The Group has credit insurance that covers accounts receivable of its major customers. Should
bad debt occur, the Group will receive 90% of the losses resulting from non-payment.

~19~

C. As at September 30, 2018, December 31, 2017 and September 30, 2017, without taking into
account any collateral held or other credit enhancements, the maximum exposure to credit risk inrespect of the amount that best represents the Group’s notes receivable were $2,079, $5,862 and$1,025; the maximum exposure to credit risk in respect of the amount that best represents theGroup’s accounts receivable were $2,486,933, $2,499,773 and $3,008,731, respectively.
D. The Group classifies customers’ accounts receivable in accordance with the credit rating of thecustomer. The Group applies the simplified approach to estimate expected credit loss under theprovision matrix basis.
E. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered,after initiating recourse procedures. However, the Group will continue executing the recourse
procedures to secure their rights. On September 30, 2018, the Group has no written-off financial
assets that are still under recourse procedures.
F. The Group used historical and timely information to assess the loss rate of accounts receivable.
On September 30, 2018, the provision matrix is as follows:

September 30, 2018
Expected loss rate
Total book value

Notpast due

Up to 1-180 days
past dueOver 181 days
past due

0.003%~0.6%$
2,140,053

0.02%~65%$
345,12375%~100%$
26,302Total$

2,511,478

G. The balance of allowance for loss and movements in relation to the Group applying the simplified
approach to provide loss allowance for accounts receivable and notes receivable are as follows:
2018
Accounts receivable
Notes receivable$
23,929 $23,92982534$
24,545 $At January 1_IAS 39
Adjustments under new standards
At January 1_IFRS 9
Provision for impairment
Effect of exchange rate changes
At September 30

H. The Group does not hold any collateral as security.
(5) Inventories

Raw materials
Work in progress
Finished goods
Total

$

$

September 30, 2018
Allowance for
Costvaluation loss
Book value
2,576,836 ($
56,248) $2,520,588
617,507 (4,519)
612,9881,029,050 (
11,328)1,017,722
4,223,393 ($
72,095) $4,151,298~20~-

Raw materials
Work in progress
Finished goods
Total

Raw materials
Work in progress
Finished goods
Total

$

$

$

$

December 31, 2017
Allowance for
Costvaluation loss
Book value
3,081,401 ($23,064) $3,058,337
574,309 (1,133)
573,176
1,619,886 (
10,249)1,609,637
5,275,596 ($
34,446) $5,241,150
September 30, 2017
Allowance for
Costvaluation loss
Book value
3,411,367 ($
21,159) $3,390,208
996,210 (
2,193)
994,017
11,172)
1,277,670
1,288,842 (
5,696,419 ($
34,524) $5,661,895

A. The cost of inventories recognized as expense for the period:

Three months ended September 30,
2018
2017
Cost of goods soldRevenue from disposal of scraps
Loss on decline in (gain on reversal of)market value of inventory$($

Cost of goods soldRevenue from disposal of scraps
Loss on decline in (gain on reversal of)market value of inventory$($

3,567,336 $
15,404) (4,119,639
16,883)

16,933 (3,568,865 $

10,579)4,092,177

Nine months ended September 30,
2018
2017
10,835,124 $
11,965,091
25,778) (98,864)37,649 (10,846,995 $

11,389)11,854,838

The gain on reversal of decline in market value of inventory for the three months and nine months
ended September 30, 2017 was due to the Group’s disposal of slow-moving inventory.
B. No inventories were pledged to others.

~21~(6) Financial assets at fair value through other comprehensive income
Effective 2018
Items

September 30, 2018

Non-current items：
Equity instruments
Listed stocks
OthersSubtotal
Valuation adjustments
Total

$

146,436
1,125
147,561
19,498167,059$

A. The Group has elected to classify equity investments that are considered to be strategic
investments as financial assets at fair value through other comprehensive income. The fair valueof such investments amounted to $167,059 as at September 30, 2018.
B. For the nine months ended September 30, 2018, the Group disposed of equity investments whose
fair value was $1,980, accumulated loss on disposal was transferred into retained earnings in theamount of $31,625.
C. For the three months and nine months ended September 30, 2018, the Group’s cost recovery ofequity instruments were both $3,172.
D. Amounts recognized in profit or loss and other comprehensive income in relation to the financial
assets at fair value through other comprehensive income are listed below:
Three months ended
September 30, 2018
Equity instruments at fair value through othercomprehensive income
Fair value change recognized in other($comprehensive income
Cumulative losses reclassified to retained$
earnings due to derecognition
Dividend income recognized in profit or loss
Held at end of period$
Derecognised during the period$

Nine months ended
September 30, 2018

4,291) $

2,142

- ($

31,625)

3,558
3,558

$
$

3,558
3,558

E. As at September 30, 2018, without taking into account any collateral held or other credit
enhancements, the maximum exposure to credit risk in respect of the amount that best represents
the financial assets at fair value through other comprehensive income held by the Group was$167,059.
F. The Group has no financial assets at fair value through other comprehensive income pledged toothers as collateral.
G. Information on available-for-sale financial assets as of December 31, 2017 and September 30,
2017 is provided in Note 12(4).
~22~

(7) Investments accounted for using equity method
Investee Company
Taiwan IC Packaging Corp.

September 30, 2018 December 31, 2017 September 30, 2017$
163,566 $173,122 $
178,190

A. The basic information of the associate that is material to the Group is as follows:

AssociatenameTaiwan IC
Packaging
Corp.

Principal
place ofbusiness
TaiwanShareholding ratio
September
30, 2018

December31, 2017

September
30, 2017

Nature ofrelationship12.74%

12.73%

12.72%

Note

Method ofmeasurement
EquitymethodNote: Taiwan IC Packaging Corp. is engaged in IC packaging and testing and is the upstream
supplier in the IT and semiconductor industries. In order to reach synergy of vertical
integration, Taiwan IC Packaging Corp. processes the raw materials provided by the Group
into relevant semi-finished goods.
B. The summarized financial information of the associate that is material to the Group is as follows:
Balance sheet

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total net assets

Taiwan IC Packaging Corp.
September 30, 2018 December 31, 2017 September 30, 2017$
1,066,338 $
1,189,868 $
1,298,332
1,509,487
1,546,981
1,514,352(
304,132) (332,000) (389,235)(
4,348) (26,944) (26,458)$2,267,345 $
2,377,905 $
2,396,991

Share in associate's net assets
Net equity differences$

288,893 $
125,327) (163,566 $($302,648 $
129,526) (173,122 $

304,556
126,366)
178,190

Statement of comprehensive income$

Revenue
Loss for the period from continuing
operations
Total comprehensive loss
Dividends received from associates

($
($
$

~23~

Taiwan IC Packaging Corp.
Three months ended September 30,
2018
2017
309,902 $362,559
46,683) ($46,683) ($- $529,295)
529,295)-

$

Revenue
Loss for the period from continuing
operations
Total comprehensive loss
Dividends received from associates

($
($
$

Taiwan IC Packaging Corp.
Nine months ended September 30,
2018
2017
1,044,149
983,947 $
111,043) ($111,043) ($- $821,470)
821,470)-

C. Share of loss of associates accounted for using the equity method is as follows:

Investee Company
Taiwan IC Packaging Corp.

Investee Company
Taiwan IC Packaging Corp.

($

Three months ended September 30,
2018
2017
5,942) ($67,242)($Nine months ended September 30,
2018
2017
103,790)
11,720) ($D. The Group’s investment in Taiwan IC Packaging Corporation has quoted market price. The fairvalue of Taiwan IC Packaging Corporation was $241,346, $291,876 and $324,537 as of September
30, 2018, December 31, 2017 and September 30, 2017, respectively.

~24~

(8) Property, plant and equipment
Land
At January 1, 2018
Cost
Accumulated depreciation

$
$

2018
Opening net book amount
Additions (including transfers)
Disposals
Depreciation charge
Net exchange differences
Closing net book amountAt September 30, 2018
Cost
Accumulated depreciation

$

$

$
$

Buildings andstructures

Machinery

VehiclesOfficeEquipment

OthersTotal

722,543 $ 2,611,665 $- (969,017) (722,543 $ 1,642,648 $

629,436 $
333,006) (296,430 $

11,780 $4,843) (6,937 $

39,427 $28,789) (10,638 $77,178 $ 4,092,029
49,451) ( 1,385,106)
27,727 $ 2,706,923

722,543 $ 1,642,648 $
33,363- (- (81,719) (2,461 (
15,534)
725,004 $ 1,578,758 $

296,430 $
53,63816,565) (59,121) (389 (274,771 $6,937 $
14,810132) (
2,460) (162) (
18,993 $10,638 $
1,782242) (
2,316) (105) (
9,757 $

27,727 $ 2,706,923
138
103,731676) (
17,615)
6,066) (151,682)676) (
13,627)
20,447 $ 2,627,730

725,004 $ 2,611,612 $- ( 1,032,854) (725,004 $ 1,578,758 $

468,979 $
194,208) (274,771 $23,216 $4,223) (18,993 $38,122 $28,365) (9,757 $

63,147 $ 3,930,080
42,700) ( 1,302,350)
20,447 $ 2,627,730

~25~

Land
At January 1, 2017
Cost
Accumulated depreciation

$
$

2017
Opening net book amount
Additions (including transfers)
Disposals
Depreciation charge
Net exchange differences
Closing net book amountAt September 30, 2017
Cost
Accumulated depreciation

$

(
$

$
$

Buildings andstructures

Machinery

VehiclesOfficeEquipment

OthersTotal

728,741 $ 2,668,305 $- (906,674) (728,741 $ 1,761,631 $

678,618 $
460,554) (218,064 $6,354 $
5,490) (864 $41,055 $30,317) (10,738 $65,023 $ 4,188,096
44,851) ( 1,447,886)
20,172 $ 2,740,210

728,741 $ 1,761,631 $
4,169
- (
- (
81,496) (3,990) (14,733) (724,751 $ 1,669,571 $

218,064 $
75,1434,642)
60,464) (2,215) (225,886 $

864 $
- (
226) (28) (610 $10,738 $2,191
95)
1,961) (27) (10,846 $20,172 $ 2,740,210
16,79898,301- (4,737)
5,493) (149,640)
198) (
21,191)
31,279 $ 2,662,943

724,751 $ 2,613,440 $943,869) (- (724,751 $ 1,669,571 $

568,688 $342,802) (225,886 $5,264 $
4,654) (610 $38,938 $28,092) (10,846 $78,437 $ 4,029,518
47,158) ( 1,366,575)
31,279 $ 2,662,943

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

~26~

(9) Investment property

Buildings andstructuresLand
At January 1, 2018
Cost
Accumulated depreciation andimpairment
2018
Opening net book amount
Additions
Depreciation charge
Net exchange differences
Closing net book amountAt September 30, 2018
Cost
Accumulated depreciation andimpairment$

137,037$$

358,074- (137,037 $

88,612) (132,425 $

88,612)
269,462$

137,037 $2,131,689- (- (2,268,726 $

132,425 $
233,341
6,861) (1,630) (357,275 $

269,462
2,365,030
6,861)
1,630)
2,626,001$

2,268,726

451,584$

2,720,310$- (2,268,726 $

94,309) (357,275 $

94,309)2,626,001$$$

Buildings andstructuresLand
At January 1, 2017
Cost
Accumulated depreciation andimpairment
2017
Opening net book amount
Depreciation charge
Net exchange differences
Closing net book amountAt September 30, 2017
Cost
Accumulated depreciation andimpairment$

137,037$

221,037

Total$

359,464- (137,037 $82,148) (140,279 $82,148)277,316$

137,037 $- (- (137,037 $

140,279 $5,258) (1,018) (134,003 $277,316
5,258)
1,018)
271,040$

137,037

220,733$

357,770$- (137,037 $

86,730) (134,003 $86,730)271,040

$

~27~

$

$

222,427

Total

A. On April 17, 2018, the Board of Directors resolved to purchase an office building located at Xinhu
3rd Rd., Neihu Dist., Taipei City, with a total contract price of $2,370,000 (including business tax).
In May 2018, all the payments have been settled by the Group and the transfer of the building has
been completed.
B. Rental income from the investment property and direct operating expenses arising frominvestment property are shown below:

Rental income from investment property
Direct operating expenses arising frominvestment property that generated
rental income
Direct operating expenses arising frominvestment property that did not generaterental income

Rental income from investment property
Direct operating expenses arising frominvestment property that generated
rental income
Direct operating expenses arising frominvestment property that did not generaterental income$

Three months ended September 30,
2018
2017
10,686 $
4,706

$

2,687

$

1,553

$

213

$

213

$

Nine months ended September 30,
2018
2017
22,110 $13,657

$

6,222

$

4,619

$

639

$

639

C. The fair value of the investment property held by the Group was $4,648,782, $1,701,941 and$1,701,192 as of September 30, 2018, December 31, 2017 and September 30, 2017, respectively,
which was based on the transaction prices of similar properties in the same area.
D. No investment property was pledged to others.
(10) Other non-current assets

Long-term prepaid rents
Guarantee deposits paid
Prepayments for business facilities
Others

September 30, 2018 December 31, 2017 September 30, 2017$
93,169 $97,843 $98,19332,617
31,63830,399147,479
24,442
81,374
12,82016,51917,846$
160,830 $
228,353 $295,156

In May 2005, the Group signed a land-use right contract with the People's Republic of China for theuse of land with a term of 50 years. All rentals had been paid on the contract date. The Group
recognized rental expenses of $645, $651, $1,974 and $1,929 for the three months and nine months
ended September 30, 2018 and 2017, respectively.

~28~

(11) Pensions
A. Defined benefit 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 chose to continue
to be subject to the pension mechanism under the Law. Under the defined benefit plan, twounits 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 numberof 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 the Bank of Taiwan, thetrustee, 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
aforementioned method to the employees expected to qualify for retirement in the following
year, the Company will make contributions to cover the deficit by next March.
(b) For the aforementioned pension plan, the Group recognized pension costs of $166, $189,$498 and $566 for the three months and nine months ended September 30, 2018 and 2017,
respectively.
(c) Expected contributions to the defined benefit pension plans of the Company for the year
ending December 31, 2018 amounts to $1,608.
B. Defined contribution plans.
(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 lumpsum upon termination of employment.
(b) Transcend Shanghai, Transtech Shanghai and Transcend Hong Kong have defined
contribution plans. Monthly contributions to an independent fund administered by thegovernment in accordance with the pension regulations in the People’s Republic of China(PRC) are based on certain percentage of employees' monthly salaries and wages, ranging
from 12.5% to 22%. Other than the monthly contributions, the Group has no further
obligations.
(c) Transcend Japan, Transcend Korea, Transcend USA, Transcend Europe and Transcend
Germany have defined contribution plans. Monthly contributions are based on a certain
percentage of employees’ monthly salaries and wages and are recognized as pension costs
accordingly. Other than the monthly contributions, the Group has no further obligations.
(d) The pension costs under defined contribution pension plans of the Company for the threemonths and nine months ended September 30, 2018 and 2017 were $10,941, $11,788,$33,576 and $35,025, respectively.

~29~

(12) Share capital
As of September 30, 2018, the Company’s authorized capital was $5,000,000, consisting of 500,000
thousand shares of ordinary stock (including 25,000 thousand shares reserved for employee stock
options). Paid-in capital was $4,307,617, the number of outstanding shares for the nine months
ended September 30, 2018 and 2017 was both 430,762 thousand shares with par value of $10 per
share at the beginning and the end of the period.
(13) Capital surplus
Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of parvalue on issuance of common stocks and donations can be used to cover accumulated deficit or toissue new stocks or cash to shareholders in proportion to their share ownership, provided that theCompany has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires thatthe amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Capital surplus shall not be used to cover accumulated deficit unless the legal
reserve is insufficient.
(14) Retained earnings
A. In accordance with the Company’s Articles of Incorporation, the current year’s earnings, if any,
shall first be used to pay all taxes and to offset prior years’ operating losses and then 10% of theremaining amount shall be set aside as legal reserve. The Company shall also set aside special
reserve in accordance with the regulations. On the premise that there is no effect on the
Company’s normal operations and no violation of regulations, the Company shall reserve certain
amount for maintaining stability of dividends. The remainder, if any, is distributable earnings tobe appropriated as resolved by stockholders at the stockholders’ meeting.
B. The Company distributes dividends taking into consideration the Company's economic
environment, growth phases, future demands of funds, long-term financial planning and the cash
flow needs of stockholders. Cash dividends shall account for at least 5% of the total dividend
distributed.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders inproportion 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 theirshare ownership is permitted, provided that the distribution of the reserve is limited to the portionin excess of 25% of the Company’s paid-in capital.
D. In accordance with the regulations, the Company shall set aside special reserve from the debit
balance on other equity items at the balance sheet date before distributing earnings. When debit
balance on other equity items is reversed subsequently, the reversed amount could be includedin the distributable earnings.

~30~

E. The cash appropriation of earnings and cash payment from capital surplus for the years ended
December 31, 2017 and 2016 have been resolved at the shareholders’ meeting on June 14, 2018
and June 16, 2017, respectively. Details are summarized below:

Legal reserve
Special reserve
Cash dividends
Total

Year ended December 31, 2017
Dividends
per share
Amount(in dollars)$
265,5722,498,418 $
5.80$
2,763,990

Year ended December 31, 2016
Dividends
per share
Amount(in dollars)$
288,264
123,998
2,476,880 $
5.75$
2,889,142

Cash payment
per share(in dollars)

Cash payment
per share(in dollars)

AmountCash payment from$
capital surplus

86,152$0.20

Amount$107,690$

0.25

Actual distribution of retained earnings of 2017 and 2016 is in agreement with the amounts
resolved at the stockholders’ meeting.
F. Please refer to Note 6(19) for the information relating to employees’ compensation and directors’
remuneration.
(15) Other equity items

Balance after restatement at
January 1, 2018
Revaluation – gross
Revaluation transferred toretained earnings – grossCurrency translation differences
Effect from income tax
At September 30, 2018

Exchangedifferences
Unrealized gain
on translation
or lossof foreign
on valuation
financial statements($
9,985) ($67,262) ($(2,142)
31,625$- (19,498 ($

~31~

Total
77,247)- (-2,142)
31,62531,030) (6,206
92,086) ($31,030)6,206
72,588)

Exchange
Unrealized gain
differences
or loss on
on translation
available-for-saleof foreign
financial assets
financial statements($
103,475) ($42,214) ($86,214-

At January 1, 2017
Change in unrealized gains orlosses for available-for-salefinancial assets
Currency translation differences
Effect from income tax
At September 30, 2017

- (17,261) ($

($

Total
145,689)
86,21428,232) (4,799
65,647) ($28,232)
4,799
82,908)(16) Operating revenue

Three months ended
September 30, 2018$
4,431,313

Sales revenue

Nine months ended
September 30, 2018$
13,642,598

A. Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods at a point in time in the following major
product categories:
Three months ended
September 30, 2018
Revenue from externalcustomer contracts

Industry
product

NAND
FLASH
flash memory

1,804,921$$

812,984

DRAM
memorymoduleStrategy
products$

806,028$

NAND
Nine months ended
September 30, 2018
Revenue from externalcustomer contracts

Industry
product

FLASH
flash memory

5,989,564$$

2,582,886

1,007,380

Total$

4,431,313

DRAM
Strategy
products$

2,683,923

memorymodule$2,386,225

Total$ 13,642,598

B. Contract assets and liabilities
The Group has no revenue-related contract assets and liabilities.
C. Related disclosures for the three months and nine months ended September 30, 2017 operating
revenue are provided in Note 12(5).

~32~

(17) Other income

Interest income
Rental income
Total

$
$

Interest income
Rental income
Total

$
$

Three months ended September 30,
2018
2017
44,462 $34,713
10,686
4,706
55,148 $39,419Nine months ended September 30,
2018
2017
121,327 $111,074
22,11013,657
143,437 $
124,731(18) Other gains and losses

Gain on disposal of financial assets
Loss on disposal of investments
Gain on disposal of property, plant andequipment
Net gain on financial assets at fair value
through profitor loss
Net currency exchange gain (loss)
Dividend income
Others
Total$

Three months ended September 30,
2018
2017
- $
3,717
- (
46,330)
1,419
5,994
321

$

Gain on disposal of financial assets
Loss on disposal of investments
Gain on disposal of property, plantand equipment
Net gain on financial assets at fair value
through profitor loss
Net currency exchange gain (loss)
Dividend income
OthersTotal$

22,400 (
3,558
4,947
32,645 ($~33~

33,785)
8,973
6,785
54,646)Nine months ended September 30,
2017
2018
- $
7,642
- (
69,796)
1,475
5,147
321

$

-

259,592 (3,558
13,471
278,417 ($546,918)
8,973
19,199575,753)

(19) Expenses by nature

Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses
Depreciation on property, plant andequipment (including investment property)

Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses
Depreciation on property, plant andequipment (including investment property)$$

Three months ended September 30,
2018
2017
291,795 $354,923
31,31235,517
11,107
11,977
15,171
16,08752,642
48,351

Nine months ended September 30,
2017
2018
955,553 $1,062,098
98,436109,974
34,07435,591
46,15050,053
158,543
154,898

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profitof the current year, after covering accumulated losses, shall be distributed as employees’
compensation and directors’ remuneration. The ratio shall not be lower than 1% for employees’
compensation and shall not be higher than 0.2% for directors’ and supervisors’ remuneration.
B. For the three months and nine months ended September 30, 2018 and 2017, employees’
compensation was accrued at $6,407, $9,435, $22,280 and $27,114, respectively; while directors’
remuneration was accrued at $897, $1,397, $3,119 and $3,872, respectively. The aforementioned
amounts were recognized in salary expenses.
For the nine months ended September 30, 2018, the employees’ compensation and directors’ andsupervisors’ remuneration were estimated and accrued based on 1% and 0.2% of distributableprofit of current year as of the end of reporting period.
The difference between employees’ compensation and directors’ remuneration as resolved by the
Board of Directors and the amount recognized in the 2017 financial statements by $1,499 and$445 have been adjusted in the profit or loss of 2018.
Information about employees’ compensation and directors’ remuneration of the Company asapproved at the meeting of Board of Directors and resolved by the stockholders at their meeting
will be posted in the “Market Observation Post System” at the website of the Taiwan Stock
Exchange.

~34~

(20) Income tax
A. Income tax expense(a) Components of income tax expense:
Three months ended September 30,
2018
2017
Current tax:
Current tax on profits for the period
Total current tax
Deferred tax:
Origination and reversal of temporary
differences
Impact of change in tax rate
Total deferred tax
Income tax expense$

129,004
129,004$

174,266
174,266(

5,335)

6,494(

5,335)
123,669 $6,494
180,760$

Nine months ended September 30,
2018
2017
Current tax:
Current tax on profits for the period
Prior year income tax (overestimation)
underestimation
Total current tax
Deferred tax:
Origination and reversal of temporary
differences
Impact of change in tax rate
Total deferred tax
Income tax expense$($

380,999$535,893353)
380,646

38,785
574,678

51,620 (65,887)

5,019
56,639 (437,285 $

65,887)508,791(b) The income tax relating to components of other comprehensive income is as follows:

Exchange differences on translation offoreign financial statements
Impact of change in tax rate

($

($

~35~

Three months ended September 30,
2018
2017
10,945) $4,567
10,945) $4,567

Exchange differences on translation offoreign financial statements
Impact of change in tax rate($

Nine months ended September 30,
2018
2017
10,018) ($4,799)
4,799)

3,812
6,206) ($($B. As of September 30, 2018, the Company’s income tax returns through 2014 have been assessed
and approved by the Tax Authority.
C. Under the amendments to the Income Tax Act which was promulgated by the President of the
Republic of China in February, 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.
(21) Earnings per share

Three months ended September 30, 2018
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares$

488,649

430,762$

488,649

430,762-318

488,649

431,080

$

~36~

$

1.13

$

1.13

Nine months ended September 30, 2018
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares$

1,691,307

430,762$

1,691,307

430,762-553

1,691,307

431,315

$

$

3.93

$

3.92

Three months ended September 30, 2017
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares$

710,431430,762$

710,431430,762-313

710,431431,075

$

~37~

$

1.65

$

1.65

Nine months ended September 30, 2017
Weighted-average
outstanding
Earnings
common shares
per share
Profit after tax(in thousands)(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary shares$

2,060,088

430,762$2,060,088

430,762-501

2,060,088

431,263

$

$

4.78

$

4.78

(22) Operating leases
A. The Group leases land, houses and buildings, which are partially recognized as investment
property, to others under non-cancellable operating lease agreements. Rental revenue of $10,686,$4,706, $22,110 and $13,657 were recognized for these leases in profit or loss for the threemonths and nine months ended September 30, 2018 and 2017, respectively. The leases forbuildings have terms expiring between 2020 and 2021, and all these lease agreements are notrenewable at the end of the lease period. The future aggregate minimum lease payments
receivable under non-cancellable operating leases are as follows:

Not later than one year
Later than one year but
not later than five years

September 30, 2018 December 31, 2017 September 30, 2017$
43,485 $19,314 $19,283$70,670114,155 $

42,74162,055 $47,516
66,799B. On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won
Chin and Cheng Chuan, to build a new plant on the leased land. The lease has a term of 10 years
from April 10, 2009 to April 9, 2019. The annual rental payment is $35,633 (exclusive of tax),
which was determined based on the average rent of land near the leased land shown in theappraisal report issued by CCIS Real Estate Joint Appraisers Firm. Rent was paid on the contract
date and becomes payable on the same date each following year until the end of the lease. For
the three months and nine months ended September 30, 2018 and 2017, the rental expense were
$8,908, $8,908, $26,725 and $26,725, respectively. The future aggregate minimum lease
payments payable under non-cancellable operating leases are as follows:~38~

Not later than one year
Later than one year but
not later than five years

September 30, 2018 December 31, 2017 September 30, 2017$
21,825 $37,415 $37,415
21,825$$

12,472
49,887 $21,82559,240

7. RELATED PARTY TRANSACTIONS(1) Names of related parties and relationshipNames of related parties
Taiwan IC Packaging Corporation
Alcor Micro Corporation (Note A)
Hitron Tech. Inc. (Note B)
Won ChinCheng Chuan

Relationship with the Group
Associate accounted for using equity method
Other related party
Other related party
Major stockholder
Major stockholder

Note A: In April 2017, the Company resigned as a member of the Board of Directors of thecounterparty which is no longer a related party of the Group from then on.
Note B: In June 2017, the Company resigned as a member of the Board of Directors of thecounterparty which is no longer a related party of the Group from then on.
(2) Significant transactions and balances with related parties
A. Operating revenue
Three months ended September 30,
2018
2017
Sales
Associates accounted for using equity
methodOther related parties

$

331

$

331

$

19

$

19

Nine months ended September 30,
2018
2017
Sales
Associates accounted for using equity
methodOther related parties

$

699

$

699

$

116

$

161,776
161,892

The sales prices charged to related parties are approximate to those charged to third parties. The
credit term to Taiwan IC Packaging Corporation and Hitron Tech. Inc. are collected on delivery
and 30 days after receipt of goods. The credit term to third parties is 30 to 60 days after monthly
billings.

~39~

B. Purchases
Three months ended September 30,
2018
2017
Purchases of goods
Associates accounted for using equity
methodOther related parties$

87,757$87,757$72,734$72,734

Nine months ended September 30,
2017
2018
Purchases of goods
Associates accounted for using equity
methodOther related parties$

202,778$

202,778$

184,986$

10,193
195,179

The purchase prices charged by related parties are approximate to those charged by third parties.
The credit term from Taiwan IC Packaging Corporation and Alcor Micro Corporation are both 30
days after monthly billings. The credit term from third parties is 30 to 45 days after monthly
billings.
C. Payables to related parties
September 30, 2018 December 31, 2017 September 30, 2017
Accounts payable
Associates accounted for using
equity method$

59,760$37,454$55,021The payables to related parties arise mainly from purchase transactions and are due 30 days after
the date of purchase. The payables bear no interest.
D. Property transactions(a) In June 2018, the Group sold equipment and consumables to an associate accounted for using
equity method, Taiwan IC Packaging Corporation, at a price of $570 and $388 respectively,
and accounted as gain on disposal of property in the amount of $0 and as non-operating incomein the amount of $388. As of September 30, 2018, the Group has collected the proceeds.
(b) For the nine months ended September 30, 2017, the Group sold equipment to an associateaccounted for using equity method, Taiwan IC Packaging Corporation, in the amount of $7,183(including business tax), and recognized gain on disposal of property, plant and equipment of$5,993. As of September 30, 2017, other receivables amounted to $7,183.
E. Lease contracts
On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won Chin
and Cheng Chuan, to build a new plant on the leased land. Please refer to Note 6(22) for details.

~40~

(3) Key management compensation
Three months ended September 30,
2018
2017
Salaries and other employee benefits$

Salaries and other employee benefits

$

6,556

$

7,224

Nine months ended September 30,
2018
2017
21,093 $21,683

8. PLEDGED ASSETSThe Group’s assets pledged as collateral are as follows:Book value
Pledged of assets
Property, plant andequipment

September 30, 2018 December 31, 2017 September 30, 2017$

149,216$

147,873$

Pledge purpose
Collaterals for generalcredit limit granted by
151,100 financial institutions

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACTCOMMITMENTS
As of September 30, 2018, except for the provision of endorsements and guarantees mentioned in Note13(1) B and the lease contract described in Notes 6(22) and 7, there are no other significant commitments.
10. SIGNIFICANT DISASTER LOSS
None.
11. SIGNIFICANT EVENTS AFTER BALANCE SHEET DATE
None.
12. OTHERS(1) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as agoing concern in order to provide returns for shareholders and to maintain an optimal capital
structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue newshares or sell assets to reduce debt. The Group’s own funds are currently sufficient, daily operations
can create stable cash inflows, and there are no significant capital expenditure plans in the short term.
Except for obtaining loans to reduce the exchange rate exposure, the Group has sufficient funds tocover its own needs. Debt financing is not desirable and not necessary.

~41~

(2) Financial instruments
A. Financial instruments by category

September 30, 2018 December 31, 2017 September 30, 2017
Financial assets
Financial assets mandatorily$
measured at fair value
through profit or loss
Financial assets at fair value
through other comprehensive
incomeAvailable-for-sale financial assets
Financial assets at amortised cost
Cash and cash equivalents
Financial assets at amortised
cost
Investments in debt
instruments without
active market
Notes receivable
Accounts receivable
Other receivables
Refundable deposits
Other current financial assets$

400,163

$

-

$

-

167,059---

68,874

114,215

1,144,675
6,973,918

3,645,914-

1,974,741--

738,877

747,565

2,079
2,486,933
84,94730,39911,290,173

5,862
2,499,773
114,346
32,617
6,899,661
14,005,924

1,025
3,008,731
160,371
31,6387,185,981
13,224,267$$

September 30, 2018 December 31, 2017 September 30, 2017
Financial liabilities
Financial liabilities at amortised
cost
Notes payable
Accounts payable
Other payables$$

989,917291,253
1,281,170$$

1,275,006
347,852
1,622,858

$

$

200
1,733,051
347,836
2,081,087

B. Financial risk management policies
There is no significant change in this period. Please refer to Note 12 in the consolidated financial
statements for the year ended December 31, 2017 for the related information.

~42~

C. Significant financial risks and degrees of financial risks
There is no significant change except for the following information. Please refer to Note 12 in
the consolidated financial statements for the year ended December 31, 2017 for the related
information.
(a) Market risk
Foreign exchange risk
i. The Group operates internationally and is exposed to exchange rate risk arising from thetransactions of the Company and its subsidiaries used in various functional currency,
primarily with respect to the USD. Exchange rate risk arises from future commercial
transactions and recognized assets and liabilities.
ii. The Group’s businesses involve some non-functional currency operations (the Company’sfunctional currency: NTD; the subsidiaries’ functional currencies: JPY, KRW, USD, EUR,
GBP and RMB, etc.). The information on assets and liabilities denominated in foreign
currencies whose values would be materially affected by the exchange rate fluctuations is
as follows:

Financial assets

Financial liabilities

Financial assets

Financial liabilities

Foreign
Currency
USD：NTD
JPY：NTD
EUR：NTD
USD：EUR
USD：HKD
USD：JPY
GBP：EUR
USD：NTD

September 30, 2018
Foreign
Currency
AmountExchange rate$283,732
30.5300
1,382,927
0.26923,480
35.4800
3,296
0.86051,078
7.8262695
113.4101
631
1.1246$
22,68030.5300

Book value$
8,662,338
372,284
123,470
100,627
32,911
21,21825,177$
692,420

Foreign
Currency
USD：NTD
JPY：NTD
EUR：NTD
GBP：NTD
USD：EUR
USD：HKD
USD：NTD

December 31, 2017
Foreign
Currency
AmountExchange rate$
297,42929.7600
2,165,791
0.2642
14,74735.5700
1,079
40.1100
3,052
0.83671,989
7.8186$
34,79029.7600

Book value$
8,851,487
572,202524,551
43,27990,82859,193$
1,035,350~43~

Financial assets

Financial liabilities

Foreign
Currency
USD：NTD
EUR：NTD
JPY：NTD
GBP：NTDHKD：NTD
USD：EUR
USD：HKD
USD：JPY
USD：NTD

September 30, 2017
Foreign
Currency
AmountExchange rate$
297,31030.2600
12,83135.7500
1,500,133
0.2691628
40.5600
6,500
3.87303,622
0.84651,775
7.8125
1,633
112.3596$
48,89930.2600

Book value$
8,996,601
458,708
403,686
25,472
25,175
109,60253,712
49,415$
1,479,684

The total exchange (loss) gain, including realized and unrealized arising from significant
foreign exchange variation on the monetary items held by the Group for the three months
and nine months ended September 30, 2018 and 2017, amounted to $22,400, ($33,785),$259,592 and ($546,918) respectively.
Sensitivity analysis relating to foreign exchange rate risks is primarily for financial reporting
period-end date of foreign currency monetary item. If the New Taiwan Dollar exchange rate
to the U.S. Dollar increases or decreases by 1%, the Group’s net income will decrease or
increase by $79,699 and $75,169 for the nine months ended September 30, 2018 and 2017,
respectively.
Cash flow and fair value interest rate risk
i. The Group’s principal interest-bearing assets are cash and cash equivalents and financial
assets at amortised cost. Cash and cash equivalents are due within twelve months.
Financial assets at amortised cost are maintained at fixed rates. Therefore, it is assessedthat there is no significant cash flow interest rate risk.
ii. The Group has not used any financial instruments to hedge its interest rate risk.
(b) Credit risk
Effective 2018i.

Credit risk refers to the risk of financial loss to the Group arising from default by theclients 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 theagreed terms, and the contract cash flows of debt instruments stated at amortised cost.

ii. The Group manages their credit risk taking into consideration the entire group’s concern.
According to the Group’s credit policy, each local entity in the Group is responsible formanaging 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 thecredit quality of the customers, taking into account their financial position, pastexperience and other factors. Individual risk limits are set based on internal or externalratings in accordance with limits set by the Board of Directors. The utilisation of credit
limits is regularly monitored.

~44~

iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract
payments are past due over 90 days.
iv. The Group adopts following assumptions under IFRS 9 to assess whether there has beena significant increase in credit risk on that instrument since initial recognition:(i) If the contract payments were past due over 30 days based on the terms, there has
been a significant increase in credit risk on that instrument since initial recognition.
(ii) For investments in bonds that are traded over the counter, if any external credit rating
agency rates these bonds as investment grade, the credit risk of these financial assets
is low.
v. If the credit rating grade of an investment target degrades two scales, there has been asignificant increase in credit risk on that instrument since initial recognition.
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) The disappearance of an active market for that financial asset because of financial
difficulties;(iii) Default or delinquency in interest or principal repayments;(iv) Adverse changes in national or regional economic conditions that are expected tocause a default.
vii. For details of credit risk in relation to accounts receivable and notes receivable, pleaserefer to Note 6(4).
viii.For details of credit risk in relation to debt instrument investment measured at amortisedcost, please refer to Note 6(3).
ix. Credit risk information for the nine months ended September 30, 2017 is provided in
Note 12(4).
(3) Fair value information
A. The different levels that the inputs to valuation techniques are used to measure fair value offinancial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that theentity can access at the measurement date. A market is regarded as active where amarket in which transactions for the asset or liability take place with sufficientfrequency and volume to provide pricing information on an ongoing basis. The fairvalue of the Group’s investment in listed stocks and beneficiary certificates is includedin Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment
in equity investment without active market and investment property is included in
Level 3.

~45~

B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value
Except for those listed in the table below, the carrying amounts of cash and cash equivalents,
financial assets at amortised cost, notes receivable, accounts receivable, other receivables, notes
payable, accounts payable and other payables are approximate to their fair values.
D. The related information of financial and non-financial instruments measured at fair value by levelon the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

September 30, 2018
AssetsRecurring fair value measurements
Financial assets at fair value throughprofit or loss
Beneficiary certificates
Financial assets at fair value
through other comprehensive income
Equity securities

December 31, 2017
AssetsRecurring fair value measurements
Available-for-sale financial assets
Equity securities
September 30, 2017
AssetsRecurring fair value measurements
Available-for-sale financial assets
Equity securities

Level 1$ 400,163

165,934$ 566,097

Level 2

$

-

$

-

Level 1

$ 67,749$-$ 400,163

$

1,125
1,125

167,059$ 567,222

Level 3-$

Level 2

$

Total

$

Level 2

Level 1

$ 113,090

Level 3

1,125
Level 3

-

$

1,125

Total

$ 68,874
Total$ 114,215

E. The fair value of financial instruments traded in active markets is based on quoted market prices
at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency,
and those prices represent actual and regularly occurring market transactions on an arm‘s length
basis. The quoted market price used for financial assets held by the Group is the closing priceand net value. These instruments are included in level 1. Instruments included in level 1 comprise
primarily listed stocks and beneficiary certificates classified as financial assets at fair value
through other comprehensive income and financial assets at fair value through profit or loss.
F. If one or more of the significant inputs is not based on observable market data, the instrument isincluded in level 3.
G. The financial instruments of Level 3 had no changes for the nine months ended September 30,
2018 and 2017.

~46~

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017
A. For significant accounting policies for the nine months ended September 30, 2017, please refer
to Note 4 of the consolidated financial statements for the year ended December 31, 2017.
B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017,
IAS 39, to January 1, IFRS 9, were as follows:(a) Under IAS 39, because the cash flows of debt instruments, which were classified as: bonds
with repurchase agreement without active markets and time deposits with original maturityof more than three months, amounting to $738,877, and $6,899,661, respectively, met thecondition that it is intended to settle the principal and interest on the outstanding principalbalance, they were reclassified as "financial assets at amortised cost" amounting to$7,638,538 on initial application of IFRS 9.
(b) Under IAS 39, because the equity instruments, which were classified as: available-for-salefinancial assets amounting to $68,874, were not held for the purpose of trading, they werereclassified as "financial assets at fair value through other comprehensive income (equity
instruments)" amounting to $68,874, and adjusted relevant impairment loss by increasing
retained earnings and decreasing other equity interest in both amounts of $30,000 on initial
application of IFRS 9.
C. The reconciliation of allowance for impairment from December 31, 2017 , as these are impaired
under IAS 39, to January 1, 2018, as these are expected to be impaired under IFRS 9, has nomaterial impact.
D. As of December 31, 2017 and September 30, 2017 and for the nine months ended September 30,
2017, the significant accounts are as follows:(a) Available-for-sale financial assets
Items
Non-current items:
Listed stocks
OthersSubtotal
Valuatoin adjustment ofavailable-for-sale financial assets
Accumulated impairment
Total

December 31, 2017$($

47,734
31,12578,859September 30, 2017$

130,351
31,125
161,476

20,015 (30,000) (68,874 $17,261)
30,000)114,215

The Group recognized $50,399 and $86,214 in other comprehensive income for fair valuechange and reclassified $46,330 and $69,796 from equity to loss for the three months and thenine months ended September 30, 2017, respectively.

~47~

(b) Investments in debt instruments without active markets
Items

December 31, 2017

Current items:
Bonds with repurchase agreement$

738,877

September 30, 2017$

747,565

i. For the three months and nine months ended September 30, 2017, the Group recognized$3,717 and $7,642 in gain on disposal of financial assets in profit or loss, respectively.
ii. As of September 30, 2017, no investments in debt instruments without active markets
were pledged to others.
(c) Other financial assets
December 31, 2017
Time deposits with original maturityof more than three months$

6,899,661

September 30, 2017$

7,185,981

E. As of September 30, 2017 and for the nine months ended September 30, 2017, the informationof credit risk are as follows:(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clientsor counterparties of financial instruments on the contract obligations. According to theGroup’s credit policy, each local entity in the Group is responsible for managing andanalyzing 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 thecustomers, 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 Board of Directors. The utilisation of credit limits is regularly monitored. Credit
risk arises from cash and cash equivalents, and deposits with banks and financial institutions,as well as credit exposures to customers, including outstanding receivables.
(b) For the nine months ended September 30, 2017, no credit limits were exceeded during thereporting periods, and management does not expect any significant losses from nonperformance by these counterparties.
(c) The credit quality of accounts receivable that were neither past due nor impaired was in thefollowing categories based on the Group’s Credit Quality Control Policy:

December 31, 2017$
885,338
1,121,057$
2,006,395

Group 1
Group 2September 30, 2017$
1,072,221
1,614,565$
2,686,786

Group 1: Customers with credit line under $20,000, after a comprehensive consideration ofrevenues, capital, and operational performance.
Group 2: Customers with credit line over $20,000, after a comprehensive consideration ofrevenues, capital, and operational performance.

~48~

(d) The ageing analysis of financial assets that were past due but not impaired is as follows:
December 31, 2017$477,941
6,905
3,719
4,813
$
493,378

Up to 30 days
31 to 90 days
91 to 180 days
Over 181 days

September 30, 2017$
310,293
8,524
1,117
2,011
$
321,945(e) For the nine months ended September 30, 2017, movements on the Group’s provision for
impairment of accounts receivable are as follows:

At January 1
Reversal of impairment
Net exchange differences
At September 30

$
(
(
$

Individual
provision
32,450 $6,251)
1,645)
24,554 $

2017
Group
provision
- $
- (
- (
- $

Total
32,4506,251)
1,645)
24,554(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in2017
A. For significant accounting policies on revenue recognition for the nine months ended September
30, 2017, please refer to Note 4 of the consolidated financial statements for the year ended
December 31, 2017.
B. The revenue recognized by using above accounting policies for the three months and nine months
ended September 30, 2017 are as follows:

Three months ended
September 30, 2017$
5,460,980

Sales revenue

Nine months ended
September 30, 2017$16,147,227

C. There was no effect on current balance sheet and comprehensive income statement items if theGroup continues adopting above accounting policies.
13. SUPPLEMENTARY DISCLOSURES(1) Significant transactions information
A. Loans to others: None.
B. Provision of endorsements and guarantees to others: Please refer to table 1.
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 NT$300 million or
20% of the Company’s paid-in capital: Please refer to table 3.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: Pleaserefer to table 4.
~49~

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to relate parties reaching NT$100 million or 20% of theCompany’s paid-in capital or more: Please refer to table 5.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:
Please refer to table 6.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 7.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland
China)：Please refer to table 8.
(3) Information on investments in Mainland China
A. Basic information: Please refer to table 9.
B. Significant transactions, either directly or indirectly through a third area, with investee companies
in the Mainland Area: None.
14. SEGMENT INFORMATION(1) General information
The Group operates business only in a single industry, the Chairman of the Board of Directors who
allocates resources and assesses performance of the Group as a whole, has identified that the Grouphas only one reportable operating segment.
(2) Segment information
The segment information provided to the Chief Operating Decision-Maker for the reportablesegments is as follows:

Segment revenue
Segment income

Segment revenue
Segment income$$

Three months ended September 30,
2018
2017
4,431,313 $
5,460,980
488,649 $
710,431$$

Nine months ended September 30,
2018
2017
16,147,227
13,642,598 $
1,691,307 $2,060,088(3) Reconciliation for segment income (loss)
Sales between segments are carried out at arm’s length. The revenue from external customers
reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in thestatement of comprehensive income.

~50~

Transcend Information, Inc.
Provision of endorsements and guarantees to others
Nine months ended September 30, 2018
Table 1

Expressed in thousands of NTD(Except as otherwise indicated)

Party being
endorsed/guaranteed

Number(Note 1)0Endorser/guarantor

Company name

Transcend Transcend Japan
TaiwanInc.

Limit onendorsements/
guarantees
provided for asingle party(Note 3)

Relationshipwith theendorser/guarantor(Note 2)
2$

3,916,046

Maximum
outstanding
endorsement/
guarantee
amount as of
September 30,
2018 (Note 4)

Outstanding
endorsement/
guarantee
amount at
September 30,
2018 (Note 5)

Ratio ofaccumulated
Investment
endorsement/
incomeProvision ofguarantee(loss) recognized endorsements/ Provision ofProvision ofAmount of amount to net by the Company guarantees by endorsements/ endorsements/
endorsements/ asset value offor the nineparentguarantees by guarantees to
Actual amount guarantees
the endorser/
months ended
company to subsidiary to
the party indrawn down
secured withguarantor
September 30,
subsidiaryparentMainland(Note 6)collateralcompany
2018 (Note 7)(Note 8)company
China
Footnote$
554,600 $538,400 $(JPY 2,000,000) (JPY 2,000,000)

-

-

3

$

7,832,092

Y(In thousands)(In thousands)
Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:(a)The Company is ‘0’.
(b)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories; fill in the number of category each case belongs to:(a)Having business relationship(b)The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(c)The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(d)The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.
(e)Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.
(f)Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(g)Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.
Note 3: Not exceeding 20% of the Company's net asset value. ($19,580,230*20%=$3,916,046)
Note 4: The maximum outstanding endorsement/guarantee amount during and as of September 30, 2018 is JPY$2,000,000 (In thousands).
Note 5: The amount was approved by the Board of Directors.
Note 6: The actual amount of endorsement drawn down is $0.
Note 7: Not exceeding 40% of the Company's net asset value. ($19,580,230*40%=$7,832,092)
Note 8: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

Table 1, Page 1

-

-

-

Transcend Information, Inc.
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)
Nine months ended September 30, 2018
Table 2

Expressed in thousands of NTD(Except as otherwise indicated)
As of September 30, 2018

Securities held by
Transcend Taiwan

Marketable securities(Note 1)
StocksHitron Tech. Inc.

Dramexchange Tech Inc.
Fubon Financial Holding
Co., Ltd. Preferred Shares B
Beneficiary certificates
Taishin 1699 Money Market
Fund

Transcend Information(Shanghai), Ltd

Bonds
Yuanta Asset Management
Limited - bond with
repurchase agreement rated
as investment-grade bonds
by S&P
Financial products
Financial products ofFubon Bank (China)

Relationship with thesecurities issuer (Note 2)

Generalledger account-Non-current financial
assets at fair value throughother comprehensive income"

2,762,188"

1,758,000-

Book value(Note 3)

Number of shares$

60,816

Ownership (%)

58,6961

1,125
107,238$

167,059

Footnote(Note 4)

Fair value$

58,696

-

1

1,125

-

-

107,238--

Current financial assets atfair value through profit orloss

29,663,029$

400,163-

400,163--

Current financial assets at
amortised cost-$

549,921

-

-

-

-

Current financial assets at
amortised cost-$

13,308---Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 ‘Financial instruments’.
Note 2: Leave the column blank if the issuer of marketable securities is non-related party.
Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for themarketable securities not measured at fair value.
Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Table 2, Page 1

Transcend Information, Inc.
Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital
Nine months ended September 30, 2018
Table 3

Expressed in thousands of NTD(Except as otherwise indicated)

Investor
Transcend
TaiwanMarketablesecurities（Note 1）

Generalledgeraccount

Taishin 1699 Current
Money Market financial
Fund
assets at fairvaluethrough
profit or loss

Addition（Note 3）

Balance as atJanuary 1, 2018

Counterparty（Note 2）

Relationshipwiththe investor（Note 2）

Number ofshares---Number ofsharesAmount
$-51,913,270 $Disposal（Note 3）

Amount700,000

Number ofsharesSelling price

22,250,241 $

300,158 $Balance as at
September 30, 2018

Book value

Gain (loss) on
disposal

300,023 $135

Number ofshares
29,663,029 $Amount399,977

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.
Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.
Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.
Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity
attributable to owners of the parent in the calculation.

Table 3, Page 1

Transcend Information, Inc.
Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more
Nine months ended September 30, 2018
Table 4

Expressed in thousands of NTD(Except as otherwise indicated)
If the counterparty is a related party, information as tothe last transaction of the real estate is disclosed below:

Real estate
acquired by

Real estate
acquiredDate of the
event

Transaction
amountStatus ofpayment

Transcend
TaiwanBuilding
located at
Xinhu 3rd
Rd., Neihu
Dist., Taipei
City

2018/4/17$2,370,000

SettledCounterparty
Lih Pao
Construction
Co., Ltd.
Pao JuanDevelopment
Enterprise
Co.,Ltd.
Peng Cheng
Construction
Co., Ltd.

Relationship
Relationship Original owner who between the original
with thesold the real estate toowner and theDate of the original
counterparty
the counterparty
acquirertransaction
-

N/A

N/A

N/A

AmountN/A

Basis orreference usedin setting theprice

Based on the
For futureappraisal reports operation
issued by CCIS
Real Estate Joint
Appraisers Firmand Sinyi Real
EstateAppraisers Firmin the amounts
of $2,582,235
and $2,507,124,
respectively

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate acquired should be appraised pursuant to the regulations.
Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capitalshall be replaced by 10% of equity attributable to owners of the parent in the calculation.
Note 3: Date of the event referred to herein is the date of contract signing date, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm
the counterparty and the monetary amount of the transaction, whichever is earlier.

Table 4, Page 1

Reason for
acquisition ofreal estate andstatus of the realOtherestatecommitments
NoneTranscend Information, Inc.
Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more
Nine months ended September 30, 2018
Table 5

Expressed in thousands of NTD(Except as otherwise indicated)
Differences in transaction terms comparedto third party transactions
Notes/accounts receivable (payable)

Transaction

Purchaser/seller

Counterparty

Relationship with thecounterparty

Transcend Taiwan

Transcend Japan Inc.

The Company's subsidiary

Sales

Transcend Information
Europe B.V.
Transcend Information, Inc.
Transtech Trading(Shanghai) Co., Ltd.
Transcend Korea Inc.
Transcend Information(H.K) Ltd.
Transcend Information
Trading GmbH, Hamburg
Transcend Information
Trading GmbH, Hamburg

Subsidiary of Memhiro

Taiwan IC Packaging
Corporation

Associate accounted for using (Purchase) (equity method

"
"
"
"
"
"
Transcend
Information
Europe B.V.
Transcend Taiwan

Sales(purchases)

Percentage of
total sales(purchases)

Amount$Credit term

Unit price

947,5207"

647,927

5

The Company's subsidiary
Subsidiary of Memhiro""

507,690
570,503

4
4

"
"

"
"

The Company's subsidiary
Subsidiary of Memhiro""

339,180
191,265

3
1""

Subsidiary of Memhiro"

476,506

4

Controlled by the same
ultimate parent company"

147,54419

202,778) (3)

Credit term

120 days after No significant 30 to 60 days aftermonthly billings
difference monthly billings to third
parties"""

Balance239,93110-

17,033

1-""

39,872
183,444

2
8

-

"
"

"
"

1,829
42,261

0.1
2

-

"

"

"

21,0351-30 days after
delivery"

7 to 60 days after delivery
to third parties

4,522

5

-

59,760) (4)-

30 days afterNo significant 30 to 45 days aftermonthly billings
difference monthly billings to third
parties$

Percentage of
total notes/accounts
receivable (payable) Footnote(

Note 1:The Company’s sales to subsidiaries were equivalent to subsidiaries' purchases from the Company; accordingly, the Company did not disclose the information on subsidiaries’ purchases from the Company.

Table 5, Page 1

Transcend Information, Inc.
Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more
Nine months ended September 30, 2018
Table 6

Expressed in thousands of NTD(Except as otherwise indicated)

Creditor
Transcend Taiwan"
Transcend Information(Shanghai), Ltd.

Counterparty

Relationshipwith the counterparty

Transcend Japan Inc.

Subsidiary of theCompany

Transtech Trading (shanghai)Co., Ltd.
Transcend Taiwan

Subsidiary of
MemhiroUltimate parent
company

Balance as at
September 30, 2018$

Turnover rate

Amount239,9314.58

183,444489,955

Table 6,Page 1

Amount collected
subsequent to thebalance sheet date

Overdue receivables$

Action taken

Allowance for
doubtful accounts-- $114,410

$

-

3.61

-

-

70,976--

489,955---

Transcend Information, Inc.
Significant inter-company transactions during the reporting periods
Nine months ended September 30, 2018
Table 7

Expressed in thousands of NTD(Except as otherwise indicated)
Transaction

Number(Note 1)Company name0

Transcend Taiwan

"

"

"
"
"
"
"

"
"
"
"
"

"
"
"
1

"
"
"
Transcend Information Europe B. V.

Relationship(Note 2)

General ledger accountTranscend Japan Inc.

1

Sales

Transcend Information
Europe B. V.
Transcend Information, Inc.
Transtech Trading (Shanghai) Co., Ltd.
Transcend Korea Inc.
Transcend Information (H.K) Ltd.
Transcend Information Trading GmbH,
Hamburg
Transcend Japan Inc.
Transtech Trading (Shanghai) Co., Ltd.
Transcend Information (Shanghai), Ltd.
Transcend Information Trading GmbH,
Hamburg

"

"

"
"
"
"
"
"
"
"
3

Counterparty

Amount$Transaction terms

7

647,927

There is no significant difference inunit price from those to third parties.
"

"
"
"
"
"

507,690
570,503339,180
191,265
476,506

"
"
"
"
"

4
4
2
1
3

Accounts Receivable"
Accounts Payable
Sales

239,931
183,444489,955)
147,544

120 days after monthly billings""(
There is no significant difference inunit price from those to third parties.

1
1
2)
1

(

947,520

Percentage of consolidated total
operating revenues or total assets(Note 3)

(Individual transactions not exceeding 1% of the consolidated total revenue and total assets are not disclosed.)
Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:(a) Parent company is "0".
(b) Subsidiaries were numbered from 1.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between
subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction;
for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):(a) Parent company to subsidiary.
(b) Subsidiary to parent company.
(c) Subsidiary to subsidiaries.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on
accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Table 7, Page 1

5Transcend Information, Inc.
Information on investees
Nine months ended September 30, 2018
Table 8

Expressed in thousands of NTD(Except as otherwise indicated)

Initial investment amount

Investor
Transcend Taiwan

Saffire Investment Ltd.
Memhiro Pte Ltd.

Ownership(%)

1,202,418

36,600,000

100

89,103

89,1036,400

Wholesaler of computer
memory modules andperipheral products

38,592

38,592

Korea

Wholesaler of computer
memory modules andperipheral products

6,132

TaiwanPackaging of Semi-conductors

Singapore Investments holding company

Location

Main business activities

Saffire Investment Ltd.

B.V.I.

Investments holding company

Transcend Japan Inc.

Japan

Wholesaler of computer
memory modules andperipheral products

Transcend Information,
Inc.

UnitedStates ofAmericaTranscend Korea Inc.

Taiwan IC Packaging
Corp.
Memhiro Pte Ltd.

Transcend Information
Trading GmbH,
Hamburg
Transcend Information(H.K.) Ltd.

Balance as at
December31, 2017

Number ofsharesInvesteeTranscend Information
Europe B.V.

Balance as at
September
30, 2018

Shares held as at September 30, 2018$

1,202,418$

Book value

Footnote

1,786,646 ($29,035) ($17,092)

Note 2

100

244,633

25,17725,178Note 2625,000

100

181,595

8,346

8,346

Note 2

6,132

40,000100

60,787

6,597

6,598

Note 2354,666

354,666

51,842,975

12.74

163,566 (

111,043) (11,720)Note 5

1,156,920

1,156,920

55,132,000

100

1,756,872 (

29,544) (29,544)Note 3

Netherlands Wholesaler of computer
memory modules andperipheral products
Germany Wholesaler of computer
memory modules andperipheral products

1,693

1,693

100

100

213,529 (4,084) (4,065)

Note 4

2,288

2,288

-

100

119,934

23,04423,044Note 4

Hong Kong Wholesaler of computer
memory modules andperipheral products

7,636

7,636

2,000,000

100

20,233

9,184

9,184

Note 4Note 1: The Company does not directly recognize the investment income (loss) except for the subsidiaries directly held.
Note 2: Subsidiaries of the Company.
Note 3: Subsidiary of Saffire.
Note 4: Subsidiaries of Memhiro.
Note 5: Please refer to Note 6 (7).
Table 8, Page 1$

Net profit (loss)of the investee
for nine months
ended September
30, 2018

Investment income(loss) recognizedby the Company
for the nine months
ended September
30, 2018（Note 1）

Transcend Information, Inc.
Information on investments in Mainland China
Nine months ended September 30, 2018
Table 9

Expressed in thousands of NTD(Except as otherwise indicated)

Amount remitted from
Taiwan to Mainland China/
Amount remitted backto Taiwan for thenine months ended
September 30, 2018

Investee in
Mainland China

Main business activities

Transcend
Manufacturer and seller ofInformation
computer memory modules,(Shanghai), Ltd. storage products and disks
Transtech
Trading(Shanghai) Co.,Ltd.

Company name
Transcend
Information(Shanghai), Ltd.
Transtech
Trading(Shanghai) Co.,
Ltd.

Investment
method（Note 1）

Paid-in capital$

Wholesaler, agent, import
andexport and retailer ofcomputer memory modules,
storage products andcomputer components

1,134,178(2)

16,310(2)

Accumulated amount ofremittance from Taiwan to
Mainland China as of
September 30, 2018

Investment
Ceiling onamount approved investments inby the Investment Mainland China
Commission of
imposed by thethe Ministry of
Investment
Economic Affairs Commission of(MOEA)
MOEA$

1,134,178$

1,134,178$

1,150,488$

1,150,488

16,310$-$11,748,138

16,310

Accumulated
Accumulated
Investment income
amount ofamountOwnership (loss) recognizedremittance fromof remittanceheld byby the Company
Book value of
Taiwan tofrom Taiwan to Net income ofthefor the nineinvestments in
Mainland China
Mainland China
investee as
Company
months ended
Mainland China
as of January
Remitted toRemitted back as of September of September (direct or
September 30,
as of September
1, 2018
Mainland China
to Taiwan
30, 2018
30, 2018
indirect)2018 (Note 2)
30, 2018

Accumulated
amountof investment
incomeremitted backto Taiwan asof September
30, 2018$$

1,134,178--

16,310--$-Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company in the third area (Memhiro Pte Ltd.), which then invested in Mainland China.
(3) Others.
Note 2: The recognition basis of gain and loss on investment was the financial statements which were not reviewed by independent accountant.
Note 3: The numbers in this table are expressed in New Taiwan Dollars
Table 9, Page 1

1,134,178 ($

61,551)

100

16,310

3,457

100

($

61,330) $1,352,679

3,457

28,431

1,464,028-

Footnote--