Altek - Annual Report 2019 | FinancialReports.eu

Stock Code: 3059

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Altek Corporation

2019

Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw 2018 Annual Report is available at: http://www.altek.com.tw Printed on May 8, 2020

Spokesperson Name: Steven Chen Title: Director Tel: 886-2-8751-6620 E-mail: [email protected]

Deputy Spokesperson Name: Eva Liang Title: Manager Tel: 886-3-578-4567 E-mail: [email protected]

Headquarters Address: No.12, Li-Hsin Rd., Hsinchu, Taiwan, R.O.C. Tel: 886-3-578-4567

Stock Transfer Agent SinoPac Securities Corporation, Stock Transfer Agent Dept. Tel: 886-2-2381-6288 Website: http://www.sinotrade.com.tw

Auditors PricewaterhouseCoopers Accounting Firm Auditors: Mr. Dian-Yi Li and Mr. Kwok-Wah Tsang Address: 5F, No.2, Gong-Ye E. 3rd Rd., Hsinchu, Taiwan, R.O.C. Tel.: 886-3-578-0205 Website: http://www.pwc.tw

Overseas Securities Exchange: N.A.

Corporate Website http://www. altek.com.tw

I. Letter to Shareholders .................................................................................................... 1 II. Company Profile ............................................................................................................ 3 2.1 Date of Incorporation.............................................................................................. 3 2.2 Company History .................................................................................................... 3 III. Corporate Governance Report ...................................................................................... 5 3.1 Organization ........................................................................................................... 5 3.2 Directors and Management Team ........................................................................... 6 3.3 Remuneration of Directors, Supervisors, President, and Vice President ................ 13 3.4 Implementation of Corporate Governance ............................................................ 20 3.5 Information of Audit Fee ...................................................................................... 52 3.6 Information of replacement of CPA ....................................................................... 53 3.7 Altek’s Chairman, President, Chief Financial Officer, or managers in charge of its finance and accounting operations hold any position in the Company’s independent auditing firm or its affiliates in 2018 ...................................................................... 53 3.8 Equity Transfer and Changes in Equity Pledge of Directors, Supervisors, Managers and Shareholders Holding More than 10% of the Shares ....................................... 54 3.9 Relationship among the Top Ten Shareholders ..................................................... 55 3.10 Ownership of Shares in Affiliated Enterprises ...................................................... 56 IV. Capital Overview ........................................................................................................ 57 4.1 Capital and Shares ................................................................................................ 57 4.2 Bonds .................................................................................................................... 61 4.3 Preferred Stock. .................................................................................................... 61 4.4 Global Depository Receipts. .................................................................................. 61 4.5 Employee Stock Options ....................................................................................... 62 4.6 Restricted Employee Shares .................................................................................. 64 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions. ...... 65 4.8 Financing Plans and Implementation..................................................................... 65 V. Operational Highlights................................................................................................. 66 5.1 Business Activities ................................................................................................. 66 5.2 Market and Sales Overview ................................................................................... 71 5.3 Human Resources ................................................................................................. 78

5.4 Environmental Protection Expenditure ................................................................. 78 5.5 Labor Relations ..................................................................................................... 79 5.6 Important Contracts .............................................................................................. 83 VI. Financial Information ................................................................................................. 84 6.1 Five-Year Financial Summary................................................................................. 84 6.2 Five-Year Financial Analysis ................................................................................... 88 6.3 Audit Committee’s Review Report for the Most Recent Year ................................ 92 6.4 Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 ..................................................................................................................... 93 6.5 Separate Financial Statements for the Years Ended December 31, 2018 and 2017 ............................................................................................................................171 6.6 Difficulty in Financial Turnover of the Company and its Affiliated Companies ......172 VII. Review of Financial Conditions, Financial Performance, and Risk Management........173 7.1 Analysis of Financial Status ..................................................................................173 7.2 Analysis of Financial Performance ........................................................................174 7.3 Analysis of Cash Flow ..........................................................................................175 7.4 Major Capital Expenditure Items and Impact on Finance and Business. ...............175 7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year..................................................175 7.6 Analysis of Risk Management ...............................................................................175 7.7 Other Important Items .........................................................................................179 VIII. Special Disclosure ....................................................................................................180 8.1 Profile of Affiliated Companies .............................................................................180 8.2 Private Placement of Securities in the Most Recent Years ....................................187 8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years. ...................................................................................................................187 8.4 Other Mentionable Items. ....................................................................................187 8.5 Any Event Having a Material Impact on Shareholders' Rights and Interests or Securities Prices stipulated in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act .................................................................................187

I. Letter to Shareholders

Dear Shareholders,

The annual business report of2019 and annual business plan overview of 2020 are as follows:

1. Annual Business Report 2019

(1) Business Performance

Over the last year, the change in global political and economic situation are diversified and rapid, such as the China–United States trade war, the rise of state protectionism, geopolitical tensions, and the frequent extreme weather events. In addition, the growth bottlenecks faced by the developed countries, the rapid advances in science and technology, the dramatic changes in consumer behavior and business models of enterprises make the enterprises face various harsh challenges. In recent years, Altek has continued the transformation and upgrade in the digital imaging field and the optimization of its product structure. However, due to the impact such as the replacement of old and new products and the delay in the launch schedule for the new products of customers, the consolidated revenue in 2019 is NT$ 6.2 billion that is significantly reduced compared to that inthe year of 2018. However, the consolidated gross profit margin is increased to 16%, the net profit after tax is NT$84,308,000, and the earnings per share is NT$0.31.

(2) Analysis of Financial Revenue and Expenditure and Profitability

Please refer to the attached financial statements for the financial status for the Year 2019.

(3) Research and development Status

The Company and its subsidiaries invest a total of NT$ 787,765,000 in research and development expenses for the Year 2019, mainly for the development of new products and technologies.

2. Annual Business Plan Overview 2020

(1) Management guideline

The Company equips the comprehensive software and hardware system integration, chip development and algorithm capabilities. In recent years, the Edge Vision AI has been actively deployed by the Company so that it provides customers with one-stop vision AI solutions. Facing the rapid change in technology and fierce competition in the industry, the Company will actively adjust the allocation in various resource, continue to strengthen the product efficiency, improve the innovation capabilities in technology and incubate the excellent talents, and accelerate the commercialization schedule. In

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addition, the production and sales and supply chain management is strengthened, the manufacturing quality and production efficiency are improved to maintain the high flexibility in the customized production model and maintain the cost competitiveness. Meanwhile, various systems and processes are strengthened to improve the operational efficiency.

(2) Status Prospects for Production and Sales

In 2020, the Company will continue to cooperate with international companies, such as Qualcomm, Microsoft, Amazon to provide the Edge Vision AI solutions for various industries, and to continually launch the new products, such as commercial and home AI security control systems, vision chips, 3D sensing solutions, and multi-lens camera module solutions so that the technological capabilities and strategic cooperation relationship will be steadily transformed into the driver of long-run growth. On the other hand, the growth of products such as blood glucose meters, insulin injection systems and disposable endoscopes of the medical electronics business will be also steady this year.

Prospect for the future. In addition to the continuous investment in the core technology in smart image and system integration capabilities to strengthen the technological energy and competitive ability of the Company, the management team and all employees will make constant efforts to continually overcome various operational challenges, enhance the executive force, and strengthen the growth force and profitability so that the higher value for shareholders is created continually. Thanks again to all shareholders for your long-term support for the Company and the Company wishes to extend our heartfelt thanks to our shareholders.

Chairman & CEO

Alex Hsia

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II. Company Profile

2.1 Date of Incorporation

December 24, 1996.

2.2 Company History

1996 Founded as “Asia Imagination corporation” to engage in the design, production and sales of digital cameras.
1997 Renamed as “Altek Corporation” and established its first corporate headquarters located in 3F, No. 10 Li-Hsin Road, Science-Based Industrial Park, Hsinchu City, Taiwan.
1998 Introduced Taiwan’s first 1.0 million pixels autofocus fixed lens digital camera.
2002 Listed on the Taiwan Stock Exchange. 2003 Issued convertible bonds of US$60,000 thousands and listed on Luxembourg Stock Exchange.
2006 Published domestic convertible bonds of NT$1,500,000 thousand and listed on Taiwan Stock Exchange.
2007 Monthly DSC shipment achieved two million units, ranked No.1 in the digital camera ODM market with the 10% market share
2008 Introduced the world's first GPS digital camera. 2010 The first smartphone/camera featuring communication, triple zooming lens and 12.2 million pixels received CommunicAsia’s Award of Ten Best Products in Singapore Telecom Show. Established the new headquarters at No.12, Li-Hsin Road, ScienceBased Industrial Park, Hsinchu City, Taiwan.
2013 Transforming itself to an image solution provider with focuses on smartphone camera and consumer image products.
2014 Image signal processor and dual-camera solutions were applied to flagship smartphones of global manufacturers. Completed the capital decrease of NT$1,182,475 thousands.
2015 More customers in China and India launched more smart phones with Altek imaging solutions.
2016 Altek in-depth computing chips were applied to dual-camera smartphones and tablets of global manufacturers.
2017 State-of-the-art 3D-Depth Sensing Chip AL6100 debuted at CES 2018. Altek became the first ODM to deliver reference designs based on the Qualcomm Vision Intelligence Platform.

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2018

The vision AI solution, developed in collaboration with Microsoft, was presented at Microsoft WinHEC Taipei 2018.

IPC603, a commercial intelligence surveillance camera prototype, was unveiled at Amazon's annual conference to support its AWS (Amazon Web Services) in the Amazon Cloud.

Completed the development of insulin injection system and started the shipment.

2019

Cooperated with Qualcomm to demonstrate the latest smart security solutions of AIoT, and publish jointly "Qualcomm Vision Intelligence Platform" at ISC West.

The AI BOX edge AI computing box imported FaceMe® facial recognition engine, global cloud service certification of Amazon (AWS) and Microsoft (Azure) that can support multiple IP cameras (ONVIF Camera).

Launched the industry-leading artificial intelligence chip with highefficiency, low-power consumption and completed the milestones of cross-generational transformation.

The medical electronics business won the 6th Taiwan “National Industrial Innovation Award - Team Category, Innovative Trailblazer” for the “Design, Development and Manufacturing of High-end Medical Product”.

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- - - - - -
Remark (Note 9)
None None None None None
April 14, 2020 Relation
- -
Name None None None None None
- -
Degrees of Kinship
Executives, Directors or Supervisors Who Are Spouses or within Two Title None None None None None
Jasper
Other
Position
Executive Director of Altek (Kunshan) Co., Ltd. - None - Independent Director of eGalax_EMPIA Technology Inc. President, Gold Management Co., Ltd -
- -
Experience (Education) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
0.00 - 0.00 - 0.00 0.00 0.00
%
(Note 1)
0 - 0 - 0 0 0
Shareholding by Nominee Arrangement
Shares
0.34 - 0.00 - 0.00 0.00 0.00
%
(Note 1)
- 0 - 0 0 0
Current Children
Shareholding of Spouse or Minor Shares 943,051
0.32 4.99 0.05 4.99 0.00 0.00 0.00
%
(Note 1) (Note 3)
0 0 0
Current
Shareholding
Shares 897,934 140,000
13,956,100 13,956,100
0.28 5.09 0.05 5.09 0.01 0.00 0.00
%
(Note 1) (Note 3)
Shareholding when Elected 757,934 140,000 20,000 0 0
Shares
13,946,100 13,946,100
Date First
Elected
1996.12.20 2014. 06.19 2014. 06.19 2014. 06.19 2017.06.16 2017.06.16 2017.06.16
Term (Years) 3 years 3 years 3 years 3 years 3 years 3 years 3 years
Date
Elected
2017.06.16 2017.06.16 2019.10.01 2017.06.16 2017.06.16 2017.06.16 2017.06.16
Male Male Male
Gender Female Female
Name
Alex Hsia Yitsang International Co., Ltd. Representative: Simon Law Yitsang International Co., Ltd. Representative: Belle Liang Sophia Chen Ching Jen Hu
Origin R.O.C R.O.C Macao R.O.C R.O.C R.O.C R.O.C
Nationality/ Country of
Title
Chairman Director Director Director Independent Director
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Title Nationality/ Country of Origin Name Gender Date Elected Term (Years) Date First Elected Shareholding when Elected Current Shareholding Current Shareholding of Spouse or Minor Children Shareholding by Nominee Arrangement Experience (Education) Other Position Executives, Directors or Supervisors Who Are Spouses or within Two Degrees of Kinship Remark Shares % (Note 1) Shares % (Note 1) Shares % (Note 1) Shares % (Note 1) Title Name Relation	Independent Director R.O.C Ying Chih Hsieh Female 2017.06.16 3 years 2017.06.16 0 0.00 0 0.00 0 0.00 0 0.00 (Note 7) Executive Director of First Wealth Management Limited, Hong Kong Branch None None None -	-	Note 1: Shareholding when elected is calculated based on 273,908,825 shares issued on June 16, 2017.Current shareholding is calculated based on 279,587,325 shares issued on April 14, 2020. Note 2: Alex Hsia: M.A. of Electronics Engineering, UCS; Vice President of Microtek Co. Note 3: Yitsang International Co., Ltd. reassigned Simon Law as the representative director on Oct. 01, 2019. Major academic and experience: University of California, Berkeley, USA and Design Manager of Xerox Corporation. Note 4: Belle Liang: MBA of Finance, National Taiwan University; Special Assistant to Chairman of THSR Corporation. Note 5: Sophia Chen: Bachelor of Rutgers University, State University of New Jersey; President of Gold Jasper Management Co., Ltd. Note 6: Ching Jen Hu: M.A. of Mechanical Engineering, University of California; Senior Vice President of Etron Technology Inc, President of LED BU of Walsin Lihwa Corp. Note 7: Ying Chih Hsieh: MBA of The University of Dallas; President of Taiwan Securities Co., Ltd. Hong Kong Branch, Vice President of Securities, SinoPac Holdings Note 8: Mori Shorei: Researcher of Faculty of Engineering, University of Tokyo; Director of Fuji Film Corp. Japan Note 9: Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto must be disclosed: In order to maintain operational effectiveness and efficiency, the Chairman of the Board of Directors also serves as the President (Chief Executive Officer). Hence, it is necessary to maintain this model. More than half of the board of directors of the Company have not served as employees or managers, and the function of the board has been strengthened and monitored. In the future, depending on actual requirements, the general manager position will be held by a professional manager or the number of independent directors will be increased.
		None
		None
		None
		-
		(Note 8)
		0.00
		0
		0.00
		0
		0.00
		0
		0.00
		0
		2017.06.16
		3 years
		2017.06.16
		Male
		Mori Shorei
		Japan
		Independent Director

B. Director that is an institutional shareholder, its main shareholders
(1) Major shareholders of the institutional shareholders

April 14, 2020

(1) Major shareholders of the institutional shareholders April 14, 2020	(1) Major shareholders of the institutional shareholders April 14, 2020
Name of Institutional Shareholders Major Shareholders
Yitsang International Co., Ltd.	Jingcai International Investment Co., Ltd. (74.74%) and BaiyingCo.,Ltd.(24.97%)

(2) Major shareholders of Altek’s Major Institutional Shareholders

April 14, 2020

(2) Major shareholders of Altek’s Major Institutional Shareholders April 14,2020	(2) Major shareholders of Altek’s Major Institutional Shareholders April 14,2020
Name of Institutional Shareholders Major Shareholders
Jingcai International Investment Co., Ltd. Yun-Hsing Lin and other shareholders (100%)
Baiying Co., Ltd.	Jade Star Investment Co., Ltd (100%)

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April 14, 2020	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience Independence Criteria (Note 1) Number of Other Public	Criteria Name Companies in Which the Individual is Concurrently Serving as an Independent Director An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who Has Passed a National Examination and Been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10 11 12	Chairman Alex Hsia � � � � � � � � � � � 0	Director Simon Law � � � � � � � � � � � � 0	Director Belle Liang � � � � � � � � � � 1	Director Sophia Chen � � � � � � � � � � � � 0	Independent Director Ching Jen Hu � � � � � � � � � � � � � 0	Independent Director Ying Chih Hsieh � � � � � � � � � � � � � 0	0	Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. 1. Not an employee of the company or any of its affiliates. 2. Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. 3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the
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									Independent Director Mori Shorei

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April 14, 2020	Title Nationality/ Country of Origin Name Gender Date Effective Shareholding Spouse & Minor Shareholding Shareholding by Nominee Arrangement Education/Experience Other Position Managers who are Spouses or within Two Degrees of Kinship Remark Shares % (Note 1) Shares % (Note 1) Shares % (Note 1) Title Name Relation	CEO R.O.C. Alex Hsia Male 1996.12.28 897,934 0.33 943,051 0.34 0 0.00 M.S. of Electronics Engineering, UCLA; V.P. of Microtek Co. Executive Director of Altek System (Kunshan) Co., Ltd. None None None (Note 2)	SVP R.O.C. Rick Han Male 2019.01.01 21,747 0.01 0 0.00 0 0.00 B.A. of Electronics, National Taiwan University of Science and Technology ; V.P. of Ulead Co. None None None None -	VP R.O.C. Vincent Kao Male 2014.11.10 1,747 0.00 0 0.00 0 0.00 B.A. of International Trade, National Taiwan University; Deputy of A.V.P., of Teco Image System Director of Altek Japan None None None -	VP R.O.C. Kenny Li Male 2014.11.10 0 0.00 0 0.00 0 0.00 M.S. of Telecommunications Engineering, National Chiao Tung University; Special Assistant of Quanta Computer None None None None -	VP R.O.C. Belle Liang Female 2017.01.25 0 0.00 0 0.00 0 0.00 MBA of Finance, National Taiwan University; Special Assistant to Chairman of THSR Corporation. Independent Director of eGalax_eMPIA Technology Inc. None None None -	-
							None
							None
							None
							None
							Ph.D of Electrical and Computer Engineering,National Chiao Tung University Technical Manager of Aiptek International Inc.
							0.00
							0
							0.00
							442
							0.00
							4,537
							2019.05.13
							Male
							Kevin Chen
							R.O.C.
							VP

Title Nationality/ Country of Origin Name Gender Date Effective Shareholding Spouse & Minor Shareholding Shareholding by Nominee Arrangement Education/Experience Other Position Managers who are Spouses or within Two Degrees of Kinship Remark Shares % (Note 1) Shares % (Note 1) Shares % (Note 1) Title Name Relation	VP R.O.C. CC Lee Female 2019.11.01 0 0.00 0 0.00 0 0.00 EMBA Master and Ph.D Candidate of National Taipei University of Technology; Assistant Manager of China Development Industrial Bank. None None None None -	VP R.O.C. Leo Tseng Male 2020.03.02 0 0.00 7,000 0.00 0 0.00 Graduated from mechnical department of Nanya Institute of Technology; Mechanical Engineer of Getac Technology Corporation. None None None None -		Note 1: Shareholding percentage is calculated based on 279,587,325 shares issued on April 14, 2020. Note 2: Where the President or person of an equivalent post (the highest-level manager) and Chairman of the Board of Directors are the same person, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto must be disclosed: In order to maintain operational effectiveness and efficiency, the Chairman of the Board of Directors also serves as the President (Chief Executive Officer). Hence, it is necessary to maintain this model. More than half of the board of directors of the Company have not served as employees or managers, and the function of the board has been strengthened and monitored. In the future, depending on actual requirements, the general manager position will be held by a professional manager or the number of independent directors will be increased.
			None
			None
			None
			None
			B.A. of Accounting, National Chung Hsing University; Finance Director and Spokesperson of Tera Xtal Technology Co., Ltd.
			0.00
			0
			0.00
			0
			0.00
			0
			2018.02.14
			Female
			Peggy Hsu
			R.O.C.
			Accounting Officer

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6.46
All Companies in the Consolidated Financial
(%) Statements
The Company 6.46
280
Unit: NT$ thousand; Dec. 31, 2019
All Companies in the Consolidated Financial Statements
280
Allowances (D)
The Company
2,163
All Companies in the Consolidated Financial Statements
Bonus to
2,163
Directors (C) (Note 1)
The Company
0
Remuneration of Directors
All Companies in the Consolidated Financial Statements
0
Severance Pay (B)
The
Company
3,000
All Companies in the Consolidated Financial Statements
3,000
Base Compensation (A)
The Company
Name Alex Hsia Co., Ltd. Somin Law Belle Liang Sophia Chen Ching Jen Hu Mori Shorei
Ying Chih Hsieh
Yitsang International
Title
Chairman Director Director Director Director Director Director Director
Representative Representative Independent Independent Independent
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Title Name Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total Remuneration (A+B+C+D) to Net Income (%) Remuneration from invested companies except for those companies in the consolidated statement Salary, Bonuses and Allowances (E) (Note 2) Severance Pay (F) Employees’ Profit Sharing Bonus (G) (Note 1) The Company All Companies in the Consolidated Financial Statements The Company All Companies in the Consolidated Financial Statements The Company All Companies in the Consolidated Financial Statements The Company All Companies in the Consolidated Financial Statements Cash Stock Cash Stock Chairman Alex Hsia	Director Yitsang International Co., Ltd.	Representative Director Simon Law	Representative Director Belle Liang	10,833 15,666 189 189 0 0 0 0 19.53 25.26 0 Director Sophia Chen Independent Director Ching Jen Hu	Independent Director Ying Chih Hsieh	Independent Director Mori Shorei	1.Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: The remuneration of independent directors of the Company is conducted in accordance with the “Regulations governing the Remuneration of directors and members of other functions Committees” of the Company. Independent directors only receive the transportation allowance and quarterly fixed remuneration and do not participate in the distribution of directors ’remuneration. 2.In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recent year to compensate directors for their services,such as being independent contractors:None. Note 1: Employees’ Profit Sharing Bonus is estimated and will be reviewed by the remuneration committee and approved by the board of directors. Note2: Salary, bonuses and allowances include employee stock option certificates and restricted stock award shares recognized by share-based payment in accordance with IFRS2. Note3:The representative of Yitsang International Co., Ltd. reassigned Simon Law as the director on Oct. 01, 2019.

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- - 8
Alex Hsia
Statements Belle Liang
Companies in the
Consolidated Financial
Total of (A+B+C+D+E+F+G) Yitsang International Co., Ltd., Simon Law, Sophia Chen Ching Jen Hu, Ying Chih Hsieh, Mori Shorei
- Belle Liang � - - 8
The Company
Alex Hsia
Yitsang International Co., Ltd., Simon Law, Sophia Chen Ching Jen Hu, Ying Chih Hsieh, Mori Shorei
Name of Directors
- - - - 8
Statements
Companies in the
Consolidated Financial
Alex Hsia, Yitsang International Co., Ltd., Simon Law, Belle Liang, Sophia Chen Ching Jen Hu, Ying Chih Hsieh, Mori Shorei
Total of (A+B+C+D)
- - - - 8
The Company
Alex Hsia, Yitsang International Co., Ltd., Simon Law, Belle Liang, Sophia Chen Ching Jen Hu, Ying Chih Hsieh, Mori Shorei
Total
Range of Remuneration
Less thanNT$ 1,000,000 NT$1,000,000 ~ NT$1,999,999 NT$2,000,000 ~ NT$3,499,999 NT$3,500,000 ~ NT$4,999,999 NT$5,000,000 ~ NT$9,999,999 More than NT$10,000,000
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Remuneration from invested companies except for those companies in the consolidated statement 0
Companies in the Consolidated Financial Statements 34.43
Ratio of Total Compensation
Unit: NT$ thousand; Dec. 31, 2019 29.95
(A+B+C+D) to Net Income (%)
The Company
0
Stock
Cash 0
Companies in the Consolidated Financial Statements
0
(D) (Note 3)
Stock
0
Employees’ Profit Sharing Bonus
The Company Cash
2,600
Companies in the Consolidated Financial Statements
Bonuses and Allowances (C)
2,600
The
Company
613
Severance Pay (B) Companies in the Consolidated Financial Statements 613
The
Company
25,814
Companies in the Consolidated Financial Statements
Salary (A) (Note 2)
The Company 22,033
Name Alex Hsia Rick Han Vincent Kao Kenny Li Belle Liang Kevin Chen CC Lee
Title CEO SVP VP VP VP VP VP
(Note 1) (Note 1)
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0.00%
Belle Liang Net Income (%)
�
Ratio of Total Amount to
- 7 Unit: NT$ thousand; Dec. 31, 2019
CC Lee Kevin Chen Kenny Li Vincent Kao Alex Hsia 0
�
Financial Statements
Companies in the Consolidated
Rick Han
Total
0
Name of President and Vice President
Belle Liang
�
Employee Bonus in Cash
0
Vincent Kao - - 7
CC Lee Kevin Chen Kenny Li �
The Company
Rick Han
�
Employee Bonus in Stock
Alex Hsia
Name CC Lee
Alex Hsia Rick Han Kenny Li
Vincent Kao Belle Liang Kevin Chen
Total
Range of Remuneration
Title CEO SVP VP VP VP VP VP
3.3.3 Employees’ Profit -Sharing Bonus Paid to Management Team
Less thanNT$ 1,000,000 NT$1,000,000 ~ NT$1,999,999 NT$2,000,000 ~ NT$3,499,999 NT$3,500,000 ~ NT$4,999,999 NT$5,000,000 ~ NT$9,999,999 More than NT$10,000,000
Note : Employees’ Profit-Sharing Bonus paid to management team is estimated.
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	Directors 24.21% 34.07% 36.41% 40.89% President and Vice Presidents Note 1: Remuneration of Directors were not including Note 2: Employees’ Profit-Sharing Bonus paid to management team is estimated and will be reviewed by the remuneration committee and approved by the board of directors. Explanation: (1).The directors remunerated according to the Company Articles and profits. (2).The remunerations of the directors, President and Vice Presidents were reviewed and passed by the remuneration committee and the board of directors. (3).The remunerations received by the Director's concurrent employee and President and Vice Presidents includes the salary costs recognized by IFRS2 "Share-based payment".	Directors 24.21% 34.07% 36.41% 40.89% President and Vice Presidents Note 1: Remuneration of Directors were not including Note 2: Employees’ Profit-Sharing Bonus paid to management team is estimated and will be reviewed by the remuneration committee and approved by the board of directors. Explanation: (1).The directors remunerated according to the Company Articles and profits. (2).The remunerations of the directors, President and Vice Presidents were reviewed and passed by the remuneration committee and the board of directors. (3).The remunerations received by the Director's concurrent employee and President and Vice Presidents includes the salary costs recognized by IFRS2 "Share-based payment".
Title The Company Companies in the Consolidated Financial Statements The Company Companies in the Consolidated Financial Statements	Directors 24.21% 34.07% 36.41% 40.89% President and Vice Presidents
		President and Vice Presidents

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Directors and Independent Directors Payment Policy for President and Vice Presidents Compensation Policy for Directors Remuneration Policy for Directors and Independent Directors Allowance Policy for Directors	(1) Altek has set up the Remuneration Committee to evaluate the individual performance and enact the policies, standards and portfolios for the payments. (2) The payment portfolios include salary, bonus and compensation. The payment will be distributed according to the individual experience, contribution and performance as well as the liability burdened with reference to the normal standard of the industry.
	The Company may pay the allowance with reference to the normal standard of the industry and subject to the attendance rate.
	The remuneration is paid for the services Directors provided to the Company subject to Article 21 of the Articles of Incorporation. The remuneration is measured based on the personal achievements, contribution and participation made to the business operation with reference to the normal standard of the industry.
	According to the Articles of Incorporation, if the Company has earnings after the annual final accounts, after making up losses of the previous years, no more than 2% of balance of the earnings shall be distributed as compensation to the Directors.

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3.4 Implementation of Corporate Governance

3.4.1 Board of Directors

A total of 4 meetings of the Board of Directors were held in 2019.

The attendances of director were as follows:

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Attendance in Attendance
Title Name By Proxy Note
Person Rate (%)
Chairman Alex Hsia 4 0 100% �
Discharged on
Sep. 30, 2019.
Yitsang International Co., Ltd.
3 0 100% The meeting shall
Representative: David Lin
be attended:
3 times.
Director
Incharged on
Oct. 01, 2019.
Yitsang International Co., Ltd.
1 0 100% The meeting shall
Representative: Simon Law
be attended:
1 time.
Director Yitsang International Co., Ltd. 4 0 100% �
Representative: Belle Liang
Director Sophia Chen 4 0 100% �
Independent Ching Jen Hu 4 0 100% �
Director
Independent Ying Chih Hsieh 4 0 100% �
Director
Independent
Mori Shorei 4 0 100% �
Director
Other mentionable items:
1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all
independent directors’ opinions and the company’s response should be specified:
(1) Matters referred to in Article 14-3 of the Securities and Exchange Act.
Any Independent
Director had
Date of Board of Directors Resolutions Dissenting opinion
or qualified
opinions
Approved to amend the Procedures of Acquisition
None
or Disposal of Assets.
Approved to amend the Regulations Governing
2019.03.15 Loaning of Funds and Making of None
9 [th] meeting of Endorsements/Guarantees.
Approved the issuance of new common shares in
the 8 [th] Board
private placement and/or issuance of domestic or None
overseas convertible bonds in private placement.
Approved the issuance of Restricted Stock Awards
None
("RSA").
Stop the issuance of new common shares in
2019.05.10
private placement and/or issuance of domestic or
10 [th] meeting of oversea convertible bonds in private placement None
the 8 [th] Board approved by 2018 shareholder’s meeting.
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Approved the CPAs’ appointment and remuneration.	Approved the CPAs’ appointment and remuneration.	None
2019.11.04 Approved the personel changed of internal audit officer. None
12thmeeting of Approved the cancellation of restricted shares
the 8thBoard issued for employees' bonus through capital None
reduction.
(2)Other matters involving objections or expressed	reservations by independent directors that were recorded
or stated in writing that require a resolution by the board of directors: None.
2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion,
causes for avoidance and voting should be specified: Directors abstained from voting and participating in
discussions about their remuneration.
Date of Board of Directors Directors’ Name	Resolutions	Reason for Recusal Participation in Voting
Alex Hsia Sophia Chen Yitsang International Co., Ltd. Representative: David Lin and Belle Liang	Approved to distribute the compensation of 2018 directors.
2019.08.12 11thmeeting of the 8thBoard Alex Hsia Yitsang International Co., Ltd. Representative: David Lin and Belle Liang Yitsang International Co., Ltd. Representative: David Lin	Related to conflict of interests Did not participate in discussion or voting. Approved the compensation of directors and managers Resolved the new restricted employee shares in 2018 and the employee roster and quantity and issurance of new shares of the new restricted employee shares in 2019 for those who are allocated in the first time.
3. TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, scope of evaluation,
evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of
Directors,and to fill out “Implementation Status of Board Evaluations.”
Evaluation cycle Evaluation period Scope of evaluation Evaluation method		Evaluation item
Once a year evaluation of the Board	of entrusting	Altek's Directors perform self-
Board Directors	external	assessment of the overall board
performance and	professional	operation with decision-making
between January individual	institutions	effectiveness of the Company,
1, 2019 and directors		professional functions, internal
December 31,		control and corporate social
2019		responsibility are evaluated by
		self-assessment and appointed
		external institutions. The results
		are consolidated by the general
		affair unit for the Board of
		Directors Meetings and
		submitted to the board of
		directors. Accordingto the

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results of the overall assessment in the year of 2019, the overall operation of the board of directors of Altek is still considered to be sound and in line with corporate governance.

Measures taken to strengthen the functionality of the board: The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the board in carrying out its various duties. (1)The company has established the audit committee to assist the board of directors in performing its supervisory duties.
(2)The company has established the remuneration committee to regularly evalute and determine the remuneration of directors and managers, and regularly review the performance evaluationthe of the directors and manager officiers and policies, systems, standards and structure of remuneration.

3.4.2 Audit Committee:

A total of 4 meetings of the Audit Committee were held in 2019.

The attendances of Independent director were as follows:

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Attendance in
Title Name By Proxy Attendance Rate (%) Note
Person
Independent Director Ching Jen Hu 4 0 100% �
Independent Director Ying Chih Hsieh 4 0 100% �
Independent Director Mori Shorei 4 0 100% �
Other mentionable items:
1. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the
Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified:
(1) Matters referred to in Article 14-5 of the Securities and Exchange Act.
Any Audit Committee
had Dissenting
Date of Board of Directors Resolutions
opinion or qualified
opinions
Approved the effectiveness statement of the 2017
None
internal control system.
Approved to amend the Procedures of Acquisition or
None
Disposal of Assets.
2019.03.15 Approved to amend the Regulations Governing
9 [th] meeting of Loaning of Funds and Making of None
the 8 [th] Board Endorsements/Guarantees.
Approved the issuance of new common shares in
private placement and/or issuance of domestic or None
overseas convertible bonds in private placement.
Approved the issuance of Restricted Stock Awards
None
("RSA").
Stop the issuance of new common shares in private
2019.05.10
placement and/or issuance of domestic or oversea
10 [th] meeting of None
convertible bonds in private placement approved by
the 8 [th] Board
2018 shareholder’s meeting.
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Approved the CPAs’ appointment and remuneration. None
2019.11.04 Approved the personel changed of internal audit officer. None
12 [th] meeting of
Approved the cancellation of restricted shares issued for
the 8 [th] Board None
employees' bonus through capital reduction.
(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of
all directors: None.
2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names,
contents of motion, causes for avoidance and voting should be specified: None
3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g. the
material items, methods and results of audits of corporate finance or operations, etc.)
(1) Other than submitting the audit reports to the independent directors every month, the Chief internal Auditor
also reports to the Audit Committee in each quarter’s meeting according to the annual audit plan and actual
implementation.
(2) CPAs attends Board of directors and communicates and interacts with independent directors on issues relating
to the review or check of financial reports or on issues related to finance, taxation or internal control.
(3) The independent directors can contact with internal audit and CPAs directly, and the communication is in good
condition.
Communications of Independent Directors with Internal Audit Supervisor and CPAs in 2019:
Date of Audit Committee Issue Result
2019.03.15 Submitted to the Board of
Report and communication of internal audit
8 [rd] meeting of the 1 [st] Directors after review and
business for the 4 [th] quarter of 2018
Audit Committee approval
2019.05.10 Submitted to the Board of
Report and communication of internal audit
9 [th] meeting of the 1 [st] Directors after review and
business for the 1 [st] quarter of 2019
Audit Committee approval
2019.08.12 Submitted to the Board of
Report and communication of internal audit
10 [th] meeting of the 1 [st] Directors after review and
business for the 2 [nd] quarter of 2019
Audit Committee approval
2019.11.04 Submitted to the Board of
Report and communication of internal audit
11 [th] meeting of the 1 [st] Directors after review and
business for the 3 [rd] quarter of 2019
Audit Committee approval
Communications of Independent Directors with CPAs in 2019:
Date of Board of
Issue Result
Directors
The accountant attended the
The accountant explained the 2018
Board of Directors in person,
2019.03.15 consolidated and individual financial reports
and answered the questions
8 [rd] meeting of the 1 [st] and communicated with the Independent
raised by the Independent
Directors.
Directors.
The accountant attended the
The accountant explained the consolidated
Board of Directors in person,
2019.05.10 financial reports for the 1st quarter of 2019
and answered the questions
9 [th] meeting of the 1 [st] and communicated with the Independent
raised by the Independent
Directors.
Directors.
The accountant attended the
The accountant explained the consolidated
Board of Directors in person,
2019.08.12 financial reports for the 2nd quarter of 2019
and answered the questions
10 [th] meeting of the 1 [st] and communicated with the Independent
raised by the Independent
Directors.
Directors.
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	2019.11.04 11thmeeting of the 1st	The accountant explained the consolidated financial reports for the 3rd quarter of 2019 and communicated with the Independent Directors.	The accountant attended the Board of Directors in person, and answered the questions raised by the Independent Directors.

3.4.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

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Deviations from “the
Status of Operation
Corporate Governance
Best-Practice Principles
Assessment Item
for TWSE/TPEx Listed
Yes No Summary
Companies” and
Reasons
1. Does the company V 1. The Board of Directors has None.
establish and disclose the established the Code of Best
Corporate Governance Practice. All operations are
Best-Practice Principles performance in accordance with
based on “Corporate the Code. Up to now, there is no
Governance Best-Practice significant difference.
Principles for TWSE/TPEx
Listed Companies”?
2. Shareholding Structure &
Shareholders’ Rights
(1)Does Company have V (1) Altek has set up the spokesperson None.
Internal Operation and deputy spokesperson to
Procedures for handling handle shareholders’ suggestions
shareholders’ suggestions, or concerns. Altek has entrusted
concerns, disputes and the Stock Transfer Agent and has
litigation matters. If yes, set up the website to handle
has these procedures been shareholders’ suggestions or
implemented accordingly? disputes.
(2)Does Company possess a V (2) In addition analysis the None.
list of major shareholders shareholder status base on
and beneficial owners of shareholder list after book
these major shareholders? clousure stating date, Altek handle
a list of major shareholders and
ultimate controllers. Altek
reported the changes in the data in
accordance with related laws.
(3) Has the Company built and V (3) Altek and its affiliates perform the None.
executed a risk operations and financial affairs
management system and independently. Altek has set up
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Assessment Item	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary
“firewall” between the Company and its affiliates?	the written regulations to control financial and operational information.
(4) Has the Company established internal rules prohibiting insider trading on undisclosed information?	V (4) Altek has set up the procedures for handling material Inside Information to avoid the improper leakage of information and to establish proper information handling and disclosure mechanisms, so as to ensure the consistence and correctness of publication. The regulations are disclosed on the Company’s website. None.
3. Composition and Responsibilities of the Board of Directors
(1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly?	V	(1) A.Altek has specified in the “Code of Best Practice for Corporate Governance” that the composition of the board of directors should be considered diversified. B.The implementation of the board diversity policy of Altek is as follows: a.There are three females of seven directors. b.There is one Japanese of seven directors c.Among the directors, Alex Hsia and Mori shorei are specialized in business management, leadership decision-making and industry knowledge; Sophia Chen is specialized in business	None.

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Assessment Item	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary
	management, leadership decision- making and financial accounting� Ying Chih Hsieh and Belle Liang are specialized in financial accounting. Simon Law and Ching Jen Hu are specialized in industrial knowledge. C.Altek has fully implemented the board diversity policy.
(2) Other than the Compensation Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees?	V (2) Altek has established the Compensation Committee and the Audit Committee. Other functional committees will be set up based on the scale of operations and business needs. Same as explanation.
(3) Has the Company established methodology for evaluating the performance of its Board of Directors, on an annual basis?	V (3) Altek has published the Rule of Performance Assessment of Board of Directors, Altek's directors perform self-assessment every year and report to the Board, and the 2018 performance appraisal of the Board of Directors has been submitted to the Board of Directors on March 15, 2019. Please refer to 3.3.1 Board of Directors for the assessment. None.
(4) Does the Company regularly evaluate its external auditors’ independence?	V	(4) Altek regularly assesses the CPA’s independence each year in accordance with the principles of “Integrity, Objectivity and Independence” in the Bulletin No.10 of “The Norm of Professional Ethics for Certified Public Accountant of the Republic of China” issued by the National Federation of Certified Public Accountant Associations of the	None.

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Assessment Item	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Status of Operation Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary
	Republic of China (NFCPAAROC) to verify whether the CPA is a Company’s director, shareholder or employee and confirm whether the CPA is a non-stakeholder, and then reports the assessment results to the Board of Directors. The results of the last two years were submitted on March 15, 2019 and March 20, 2020 respectively.
4. Does the company appoint a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders' meetings, and producing minutes of board meetings and shareholders' meetings)?	V		Altek appointed Finance Division as the full-time corporate governance unit to tackle corporate governance affairs, protect shareholders' rights and strengthen the functions of the Board of Directors. Our corporate governance personnel have 9 years of experience in handling stock affairs for the publicly traded company. Their duties include mainly providing information required by the Directors to execute their business, organizing board meetings and shareholders’ meetings, producing minutes of board meetings and shareholders’ meetings, and conducting corporate registration and registration amendment. In 2018, Altek's corporate governance-related affairs were handled and executed in accordance with laws. The main implementations are as follows: 1. Assisting Directors and Independent Directors in performing their duties: (1)Board members are regularly	None.

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informed of the latest laws and regulations related to the Company's business areas and corporate governance. (2) Independent Directors conduct financial business-related communications with internal audit supervisors and accountants in accordance with the Corporate Governance BestPractice Principles. 2. Assisting in the Board of Directors and shareholders' meeting procedures and resolutions: (1) Following laws and regulations and implementing internal and internal control - planning appropriate corporate system and organizational structure to promote board independence and corporate transparency. (2) Preparing and setting an agenda before the board meeting, and informing all the Directors 7 days prior to the meeting so that they can learn about the contents of the relevant proposals; if the content of the proposal is related to the interested parties and should be appropriately avoided, a reminder will be given and the minutes of the board meeting will be completed within 20 days after the meeting. (3) After the meeting, major news release of important resolutions made by the Board will be inspected, ensuring that the

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----- Start of picture text -----

Deviations from “the
Status of Operation
Corporate Governance
Best-Practice Principles
Assessment Item
for TWSE/TPEx Listed
Yes No Summary
Companies” and
Reasons
information is legal and correct
so as to protect the investor's
information equality on
transaction.
(4) Revising various measures to
report to the Board in
accordance with the latest laws
and regulations of the
competent authority and the
actual operational needs of the
Company.
(5) Handling the pre-registration of
the date of the shareholders'
meeting according to law;
producing the meeting notice,
annual report, meeting
handbook, and proceedings in
the statutory time limit; handling
registration changes when the
company's articles of
incorporation are amended or
the directors are re-elected.
5. Has the Company V Depending on different situations, None.
established a means of Altek appoints the spokesperson,
communicating with its deputy spokesperson, or stock transfer
Stakeholders (including but unit to communicate with
not limited to shareholders,
stakeholders. The contact information
employees, customers,
of the spokesperson, deputy
suppliers, etc.) or created a
spokesperson, and related business
Stakeholders Section on its
units is disclosed on the Company’s
Company website? Does
website.
the Company respond to
stakeholders’ questions on
corporate responsibilities?
6. Has the Company V Altek has appointed Sinopac Securities None.
appointed a professional to handle related affairs.
registrar for its
Shareholders’ Meetings?
7. Information Disclosure
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----- Start of picture text -----

Deviations from “the
Status of Operation
Corporate Governance
Best-Practice Principles
Assessment Item
for TWSE/TPEx Listed
Yes No Summary
Companies” and
Reasons
(1) Has the Company V (1) Altek has established a corporate None.
established a corporate website (http://www.altek.com.tw)
website to disclose to disclose information regarding its
information regarding its financials, business and corporate
financials, business and governance status.
corporate governance
status?
(2) Does the Company use V (2) Altek maintains a multi-language None.
other information website (Traditional Chinese,
disclosure channels (e.g. Simplified Chinese and English),
maintaining an English- designates the staff to handle
language website, information collection and
designating staff to handle disclosure, and appoints the
information collection and spokesperson. Altek also sets up its
disclosure, appointing news contact and investor contact
spokespersons, webcasting information on the website to
investor conference etc.)? provide the latest news and
channels of communication.
(3) Does the company V (3)The annual and quarterly financial All are handled within
announce and report reports and monthly operation the prescribed time
annual financial status of the Company are limit.
statements within two published and declared within the
months after the end of prescribed time limit. However, the
each fiscal year, and annual financial report cannot be
announce and report Q1, published in advance.
Q2, and Q3 financial
statements, as well as
monthly operation results,
before the prescribed time
limit?
8.Has the Company disclosed V For more information on employee None.
other information to rights, employee wellness, investor
facilitate a better relations, supplier relations, rights of
understanding of its stakeholders, directors’ training
corporate governance records, and purchasing insurance for
practices (e.g. including but directors, please refer to Page 44~46.
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----- Start of picture text -----

Deviations from “the
Status of Operation
Corporate Governance
Best-Practice Principles
Assessment Item
for TWSE/TPEx Listed
Yes No Summary
Companies” and
Reasons
not limited to employee
rights, employee wellness,
investor relations, supplier
relations, rights of
stakeholders, directors’
training records, the
implementation of risk
management policies and
risk evaluation measures,
the implementation of
customer relations policies,
and purchasing insurance
for directors)?
9.The improvement status for the result of Corporate Governance Evaluation announced by Taiwan Stock
Exchange
Evaluation indicators Priorities and measures
Does the company set up a special (part-time) unit to The Company works on the description of the
promote corporate social responsibility and operation and implementation of the special (part-
corporate integrity management and to explain the time) units (such as member composition
operation and implementation of the said unit in the introduction, work plan and management) and
annual report and company website and report to reports to the Board of Directors on a regular basis.
the Board of Directors on a regular basis?
The Company works on some specific practices to
Does the company's website or annual report
implement the integrity management policy and the
disclose the integrity management policies
program to prevent dishonest behaviors, such as the
formulated and specify specific practices and integrity of business education and training
programs to prevent dishonesty? (including at least course topic, hours and number of
participants) and other specific measures.
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Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience Independence Criteria (Note 1) Number of Other Public	Title Criteria Name Companies in Which the Individual is Concurrently Serving as a Remuneration Committee Member An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who Has Passed a National Examination and Been Awarded a Certificate in a Profession Necessary for the Business of the Company Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company 1 2 3 4 5 6 7 8 9 10	Independent Director Ying Chih Hsieh � � � � � � � � � � � 0	Independent Director Ching Jen Hu � � � � � � � � � � � 0	0	Note 1: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office. (1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent. (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs. (5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently
				�
				�
				�
				�
				�
				�
				�
				�
				�
				�
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				Mori Shorei
				Independent Director

-32-

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was as follows:	Title Name Attendance in Person By Proxy Attendance Rate (%) Note	Convener Ying Chih Hsieh 2 0 100% �	Committee Member Ching Jen Hu 2 0 100% �	Committee Member Mori Shorei 2 0 100% �	Other mentionable items: 1. If the Board of Directors declines to adopt or modifies a recommendation of the Remuneration Committee, it should specify the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the Company’s response to the Remuneration Committee’s opinion (e.g., the remuneration passed by the Board of Directors exceeds the recommendation of the Remuneration Committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the Remuneration Committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None. 3. Discussion from the Remuneration Committee, resolutions, and ways the Company handled opinions from committee members: (1) 3rdmeeting of the 3rdremuneration committee on Mar. 5, 2019: Approved to distribute the compensation of 2018 directors and employees: Approved as proposed and reported to the Board of Directors for resolution. (2) 5th meeting of the 3rdremuneration committee on Aug. 12, 2019: Approved to distribute the compensation of 2018 directors: Approved as proposed and reported to the Board of Directors for resolution. Approved to distribute the compensation of directors and managers: Approved as proposed and reported to the Board of Directors for resolution. Approved the issuance of Restricted Stock Awards ("RSA") to managers: Approved as proposed and reported to the Board of Directors for resolution.

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3.4.5 Social Responsibility Implementation Status as Required by the Taiwan Financial Supervisory Commission

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Deviations from “the
Corporate Social
Implementation Status
Responsibility Best-
Assessment Item Practice Principles for
TWSE/TPEx Listed
Yes No Summary Companies” and
Reasons
1.Does the company assess ESG risks V Altek has established theCorporate In the future, the
associated with its operations based on Social Responsibility (CSR) Code of preparation schedule
the principle of materiality, and establish Practice and pays close attention to will be gradually
related risk management policies or the development and changes of planned.
strategies? international CSR systems.
2. Does the company establish exclusively V The “CEO Office” is the Company’s None.
(or concurrently) dedicated first-line
dedicated CSR unit for promoting
managers authorized by the board to be
corporate social responsibility.
in charge of proposing the corporate
Chaired by our CEO Alex Hsia, it
social responsibility policies and
makes proposals and implements
reporting to the board?
CSR policies or systems, and reports
to the Board of Directors as needed.
The specific promotion plans
and duties include:
1. Social care: Altek upholds the
principle of giving back to the
society, and our objects of care
range from child and adolescent
welfare, welfare for the elderly,
welfare for the disabled, women's
welfare, and social assistance to
community development, social
work, volunteer service, and
community development.
2. Charitable donations: Altek
Charitable Foundation has been
cooperating with various public
welfare organizations for
charitable donations and activities
over the years.
3. Arts and culture activities: Altek
participates in and sponsor
various arts and cultural activities.
4. Environmental conservation: The
Company incorporates the
concept of environmental
3. Environmentally Sustainable
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Deviations from “the
Corporate Social
Implementation Status
Responsibility Best-
Assessment Item Practice Principles for
TWSE/TPEx Listed
Yes No Summary Companies” and
Reasons
Development
(1) Does the company establish proper V Altek mainly provides customers None.
environmental management systems with imaging solutions, which cause
based on the characteristics of their no waste or pollution. All products
industries? are manufactured and sold in
accordance with environmental laws
and regulations. In addition to
obtaining ISO certification, Altek is
the green partner of its customers.
(2) Does the company endeavor to utilize V (2) None.
all resources more efficiently and use A. The Group adopts the ERP system
renewable materials which have low and electronic approval system to
impact on the environment? reduce printed mails and official
letters. The messages and policies
are announced via E-mail to
reduce paper consumption.
B.The expansion of the production
line of the Company for the Year
2019 increased the electricity
consumption. After the energy-
saving measures are continually
implemented, the electricity
consumption was 2,043KW (K), an
increase of 71KW (K) compared to
1,972KW (K) in 2018.
C. The operation adjustment to the
employee restaurant of the
Company was made in 2019, so
that the volume of natural gas is
8.0KG (K), an increase of 1KG (K)
compared with 7.0KG (K) in 2018.
(3) Does the company evaluate the V (3) Altek implements energy-saving None.
potential risks and opportunities in policies and green procurement
climate change with regard to the voluntarily and continuously pays
present and future of its business, close attention to its impact on
and take appropriate action to environmental changes and sets
counter climate change issues? up strategies for environmental
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Deviations from “the
Corporate Social
Implementation Status
Responsibility Best-
Assessment Item Practice Principles for
TWSE/TPEx Listed
Yes No Summary Companies” and
Reasons
protection.
(4) Does the company take inventory of V (4) None.
its greenhouse gas emissions, water A. Altek's carbon emissions in 2018
consumption, and total weight of were 1,109KG (K), which was
waste in the last two years, and lower than 1,196KG (K) in 2017;
implement policies on energy carbon reduction rate is 7.3%.
efficiency and carbon dioxide Altek continued to save energy
reduction, greenhouse gas reduction, and reduce carbon, in order to do
water reduction, or waste its best to protect the
management? environment's social
responsibility.
B.The Company's water consumption
in 2019 was 24.5 tons (K), and the
water saving ratio was 9.9% in
comparison with 27.2 tons (K)
consumed in 2018.
C.The Company's wastewater
discharge in 2019 was 19.6 tons
(K), and the discharge reduction
ratio was 10% in comparison with
21.8 tons (K) produced in 2018.
4. Social issues
(1) Does the company formulate V (1)Altek follows the regulations of None.
appropriate management policies Labor Standards Act and adheres
and procedures according to relevant to international human rights
regulations and the International Bill conventions to execute related
of Human Rights? operations, attaching importance
to labor and human rights and
implementing human resources
management policies without
discrimination of gender,
ethnicity, age, marital status,
family status, etc., installing the
employee mailbox, and providing
generous employee benefits.
(2) Does the company have reasonable V (2)The employee mailbox is set up as None.
employee benefit measures a channel of communication
(including salaries, leave, and other ([email protected]) between
benefits), and do business the Company and employees.
performance or results reflect on
employee salaries?
(3) Does the Company provide V (3)Altek holds the employee health None.
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Assessment Item	Implementation Status Deviations from “the Corporate Social Responsibility Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Implementation Status Deviations from “the Corporate Social Responsibility Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary	Implementation Status Deviations from “the Corporate Social Responsibility Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary
employees with a safe and healthy working environment, with regular safety and health training?	check, occupational safety and health seminars, and fire management training annually to improve the safety and health performance. Altek also organizes various training programs to improve employees’ response to emergency and awareness of occupational safety.
(4) Has the Company established a mechanism for regular communication with employees and use reasonable measures to notify employees of operational changes which may cause significant impact to employees?	V (4)Altek has established the Working Rules based on the Labor Standards Act and reported to the Science Park Bureau. Altek also holds employee communication meetings from time to time to facilitate communication. Subsidiaries in mainland China have established mechanisms for communication with employees based on local laws and labor contracts. None.
(5)Do the company's products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented?)?	V (5)As Altek’s customers are international manufacturers, Altek provides products and services in accordance with related international regulations and standards. The Customer Service Department has been established to provide immediate services for customers. None.
(6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so, describe the results.	V	(6) Altek establishes long-term partnerships with suppliers in the supply chain. According to the Supplier Management Procedures and the Regulations Governing Management of Environmental Substances, Altek requests its partners to abide by related international laws and regulations, the requirements of the world’s top manufacturers (RoHS,and REACH annex 17),and	None.

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Deviations from “the
Corporate Social
Implementation Status
Responsibility Best-
Assessment Item Practice Principles for
TWSE/TPEx Listed
Yes No Summary Companies” and
Reasons
the commitment to corporate
social responsibility, so as to
facilitate environmental
protection, labor rights and
ethics, health and safety, risk
management, and the code of
ethics.
5. Does the company reference V The Company has not yet prepared In the future, the
internationally accepted reporting the corporate social responsibility preparation schedule
standards or guidelines, and prepare report. will be gradually
reports that disclose non-financial planned.
information of the company, such as
corporate social responsibility reports?
Do the reports above obtain assurance
from a third party verification unit?
5. If the company has established its corporate social responsibility code of practice according to “Listed
Companies Corporate Social Responsibility Code of Practice,” please describe the operational status and
differences.
Altek has established the Corporate Social Responsibility (CSR) Code of Practice and has disclosed the Code on
the website. We will implement the corporate social responsibility gradually to promote economic, social, and
environmental balance and development.
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Other important information to facilitate better understanding of the company’s implementation of corporate social responsibility:

The Charitable Trust, Altek Corporation Charitable Foundation, adheres to the philosophy of "Take from society, Give back to society", effectively applies the group resources back to society, actively involves the welfare business, and implements the corporate social responsibility. It is proposed to plan the two main axes, social assistance medical charity and children and youth welfare donations, in the Year 2019 respectively, so that the Company takes the continuous action to immediately assist more small-scaled social welfare organizations and disadvantaged groups, will continually carry forward and promote the charity philosophy in the future, shall exercise the corporate social responsibility with due care, devotes itself on the creation of the common good of society.

1.The matter initiates from “Social Assistance and Medical Welfare” to assist the "Taiwan Health Foundation" in the matters related to the promotion of the prevention and treatment of diseases, the improvement of the national health and the encouragement of medical research, and to continually combine the caring power of social assistance so that the purpose of improving national health and social welfare can be achieved.

2.The other matter initiates from the "Children and Youth Welfare", through donating the "Squash Rackets Association of Chinese Taipei" to sponsor the economically disadvantaged children funds and resources for the squash sports events, infrastructure and training for being cultivated and through the joint participation and promotion of charity funds to devote its effort on the development of children and youth squash in Taiwan.

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3.4.6 Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial Supervisory Commission

Supervisory Commission
Assessment Item	Implementation Status Deviations from “the Corporate Social Responsibility Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Summary
1. Establishment of ethical corporate managementpolicies andprograms
(1) Does the company have a Board- approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of suchpolicy?	V (1) The Board of Directors and management perform their duties in good faith based on integrity and honesty. The related policy or system will be established depending on business needs or laws or regulations. None.
(2) Does the company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? V (2) Altek has established “Procedures for Ethical Management and Guidelines for Conduct” to prevent infidelity. Established the appeal method and if there is any violation, will be punished in accordance with the rule of rewards and penalties. None.
(3) Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?	V	(3) Altek has established the Procedures for Acquisition or Disposal of Assets and the Procedures for Lending Funds to Other Parties and Endorsement & Guarantee against activities associated with high risks of unethical conduct. The accounting and internal control systems have also been established for internal auditors to check the compliance	None.

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Deviations from “the
Implementation Status
Corporate Social
Responsibility Best-
Assessment Item Practice Principles for
Yes No Summary TWSE/TPEx Listed
Companies” and
Reasons
and prevent unethical conduct.
2.Fulfill operations integrity policy
(1) Does the company evaluate business V (1) Altek performs such operations in None.
partners’ ethical records and include accordance with related laws and
ethics-related clauses in business regulations.
contracts?
(2) Does the company have a unit V (2) The “CEO Office” is the None.
responsible for ethical corporate Company’s full-time unit
management on a full-time basis under dedicated to promoting
the Board of Directors which reports corporate integrity management.
the ethical corporate management It is led by the Chairman& CEO
policy and programs against unethical Alex Hsia, and the internal audit
conduct regularly (at least once a year) personnel are charged with the
to the Board of Directors while duties to regularly review
overseeing such operations? corporate integrity management
policies, prevent and supervise
the implementation, promote
corporate integrity management,
and report to the Board of
Directors as needed.
(3) Does the company establish policies to V (3) Altek’s departments perform such None.
prevent conflicts of interest and operations based on their
provide appropriate communication responsibilities and report to the
channels, and implement it? head of the department through
e-mail.
(4) Does the company have effective V (4) Altek has established effective None.
accounting and internal control accounting and internal control
systems in place to implement ethical systems that are audited by
corporate management? Does the internal auditors or CPA
internal audit unit follow the results of periodically. The internal audit
unethical conduct risk assessments and results will be reported to the
devise audit plans to audit the systems Audit Committee and the Board
accordingly to prevent unethical of Directors.
conduct, or hire outside accountants to
perform the audits?
(5)Does the company regularly hold V (5) Altek provides training programs None.
internal and external educational on its operating principles from
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Deviations from “the
Implementation Status
Corporate Social
Responsibility Best-
Assessment Item Practice Principles for
Yes No Summary TWSE/TPEx Listed
Companies” and
Reasons
trainings on operational integrity? time to time.
Courses related to integrity
management held in 2019:
Practice about the laws related
to labor matters:
Hours: 1.5
Date: Dec. 19, 2019
3. Operation of the integrity channel
(1) Does the company establish both a V (1) Employees may report to the None.
reward/punishment system and an head of unit or CEO directly via e-
integrity hotline? Can the accused be mail.
reached by an appropriate person for
follow-up?
(2) Does the company have in place V (2) Altek has set up a reporting None.
standard operating procedures for mailbox and holds related
investigating accusation cases, as well documents and data confidential.
as follow-up actions and relevant post- If employees find any violation of
investigation confidentiality measures? ethical corporate management,
they may report to internal Audit
Office. If the violation is verified
to be true, violators will be
punished in accordance with
related internal polices or laws.
(3) Does the company provide proper V (3) Altek holds the entire reporting None.
whistleblower protection? procedures confidential to
prevent a complainant from
retaliation for his/her filing a
complaint.
4.Strengthening information disclosure
(1) Does the company disclose its ethical V The rules had been disclosed on None.
corporate management policies and company’s website and Market
the results of its implementation on Observation Post System.
the company’s website and
MOPS?
5. If the company has established corporate governance policies based on TSE Corporate Conduct and Ethics Best
Practice Principles, please describe any discrepancy between the policies and their implementation: None.
6. Other important information to facilitate better understanding of the company’s corporate conduct and ethics
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3.4.7 Corporate Governance Guidelines and Regulations

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Major Internal Policies Disclosed at
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Major Internal Policies	Disclosed at	Disclosed at

Article of Incorporation Rules of Procedure for shareholders Meeting Rules for Election of Directors Rules for Procedure for Board od Directors Meetings Audit Committee Charter Regulations Governing the Acquisition and Disposal of Assets Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees Procedures for Handling Matreial Inside Information Remuneration Committee Charter Corporate Governance Best Practice Principles Corporate Social Responsibility Best Practice Principles Rules Governing the Scope of Powers of Independent Directors Self-Evaluation of the Board of Directors Ethical Corporate Management Best Practice Principles Ethical Corporate Management Policies and Prevention Programs		Market Observation Post System/Corporate Governance: http://mops.twse.com.tw/mops/web/index Altek’s Website/Investors: http://www.altek.com.tw/zh-tw/finance/detail/8

3.4.8 Other Important Information Regarding Corporate Governance

A. Employees’ rights and cares

Based on the people-oriented management, Altek fully respects and cares for employees through providing employees’ benefits, training programs, and a better working environment; the pension system is implemented based on the Labor Pension Act and the Labor Standards Act to protect employees’ rights. The group insurance policies for employees and their family members are also planned. The employee health check is held on a regular basis.

B. Investor Service

The investor service department is set up and its contact information is disclosed on Altek’s website. The investor relation department is responsible to handle shareholders’ suggestions and respond to investors’ questions.

C. Supplier relation

Altek maintains a good relationship with suppliers and takes measures to reduce carbon dioxide emissions. According to the Supplier Management Procedures and the Regulations Governing Management of Environmental Substances, Altek requests its partners to abide by related international laws and regulations, the requirements of the world’s top manufacturers (RoHS, REACH, and GP) � RoHS and REACH annex 17 for environmental protection and hygiene and the commitment to corporate social responsibility, so as to facilitate environmental protection, labor rights and ethics, health and safety, risk management, and the code of ethics.

D. Communication channels for interested parties

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Interested parties Communication channels
˙CEO talk ˙Labor-management meeting ˙Health check
Employee
˙Disaster prevention drill ˙Education &training
˙Confidential complaint
˙Regular meeting ̇Satisfaction survey ̇Supplier seminar
Client
˙Inspection ˙Online communication platform
̇Review meeting ̇Inspection ̇Supplier management
Supplier
system ˙̇Complaint mailbox
Investor ̇ Shareholders meeting ˙Investor Conference
Media ˙Press conference ̇Press release
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hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours
hours 3 hours 3 hours 3 hours 6 hours
course Discussion on Intellectual Property Rights- From Trade Secrets Corporate Governance and the latest Legal and Regulatory Reform The latest amendments to the company law and corresponding practices Multi-angle trade accounting treatment and tax verification
course The whistling is implemented for the fraud detection Application Principle for 5G Internet of Things Discussion on Intellectual Property Rights- From Trade Secrets Corporate Governance and the latest Legal and Regulatory Reform Strategic Analysis of Financial Information Anti-Money Laundering and Counter-Terrorism Financing Analysis on the Protection of Intellectual Property and Trade Secrets of Company Operation Practice for Independent Director and Audit Committee Research and Analysis on the Malpractice of Enterprise Mergers and Acquisitions The Development of Anti-tax Avoidance and Enterprise Response Measures
Period April 30, 2020~April 30, 2021
Institute Securities and Futures Institute Accounting Research and Development Foundation of the Republic of China The Allied Association for Science Park Industries
Insured Amount US$10 million
Institute Securities and Futures Institute Securities and Futures Institute Securities and Futures Institute Chinese National Association of Industry and Commerce, Taiwan Securities and Futures Institute
Date 2019.12.19 2019.01.15 2019.10.16
Date 2019.11.12 2019.12.19 2019.11.14 2019.11.21 2019.11.13 2019.11.14 2019.11.05
Insurance Company Chubb
Name Belle Liang Peggy Hsu
Name Sophia Chen Belle Liang Ching Jen Hu Ying Chih Hsieh Mori Shorei
Title Director Director Independent Director Independent Director Independent Director Insured All directors Title Financial Officer Accounting Officer
E. Liability Insurance for directors and independent directors F. Managers’ participation in training courses on corporate governance in 2018
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3.4.9 Internal Control Systems

A. Internal Control Declaration

Altek Corporation
Internal Control Declaration Date: March 20, 2020
The declaration of the internal control system from January 1, 2019 to December 31, 2019 is made below based on the result of self-inspection. 1. The Company acknowledges that establishing, implementing, and maintain the internal control system is the responsibility of the Company’s Board of Directors and management. The Company has established the internal control system for the purpose of properly assuring the achievements of operational efficacy and efficiency (including profits, performance, and guarantee of asset safety) and reporting that reflect reliability, timeliness, and transparency as well as compliance.
1. The internal control system has its congenital limitations; the effective internal control system, regardless how perfectly it is designed, may only provide proper assurance for the achievements of the above three goals; in addition, due to changes in the environment and the situation, the effectiveness of the internal control system may change as well. The Company’s internal control system is designed with a self-monitoring mechanism. Once a flaw is identified, the Company will take corrective actions immediately.
1. The Company determines whether the design and implementation of the internal control system are effective based on the items stipulated in the Regulations Governing Establishment of Internal Control Systems by Public Companies (the Regulations). Items adopted by the Regulations are five components of the internal control system based on the control process: 1. Control environment; 2. Risk assessment; 3. Control operation; 4. Information and communication; and 5. Monitoring operation. Each component contains several items. For more information on the foregoing items, please refer to the Regulations.
1. The Company has adopted the abovementioned items that determine the effectiveness of the design and implementation of the internal control system.
1. Based on the result of evaluation mentioned above, the design and implementation of the internal control system (including supervision and management of the Company’s subsidiaries) as of December 31, 2018, such as the level of achievement of operational efficacy and efficiency and reporting that reflect reliability, timeliness, and transparency as well as compliance, are considered effective and properly assure the achievement of the above goals.
1. The Declaration will constitute the major content of the Company’s annual report and prospectus and be disclosed. Any falseness or concealment of the abovementioned content will involve legal responsibilities stipulated in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
1. The Declaration has been approved by the Board of Directors on March 20, 2020. All attended directors agreed on the contents of the Declaration. Altek Corporation Chairman & CEO: Alex Hsia

B. CPA’s Audit Report on the Company’s Internal Control System to be disclosed: N/A.

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3.4.10 Punishments, Major Defects, and Improvements of Violation of the Company’s Internal Control System: None.

3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

A. Resolutions of 2019 general shareholders’ meeting:

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Item Major Resolutions Implementation
Approval of the 2018 business report and Performed in accordance with relevant laws and
1
financial statements. regulations.
Approval of the distribution of 2018
2 Completed on Oct. 21, 2019.
earnings by cash.
Approved to amend the Articles of Performed in accordance with relevant laws and
3 Incorporation. regulations.
Approved to amend the Procedures of Performed in accordance with relevant laws and
4
Acquisition or Disposal of Assets. regulations.
Approved to amend the Regulations
Performed in accordance with relevant laws and
5 Governing Loaning of Funds and Making of
regulations.
Endorsements/Guarantees.
Approved to amend the Procedures of Performed in accordance with relevant laws and
6
Election of Directors. regulations.
Approval of the issuance of new common The Fund Raising has yet been executed and it will be
shares in private placement and/or issuance due on June 12, 2020. The Board of directors held on
7
of domestic or overseas convertible bonds Apr. 24, 2020 has resolved to cease the Fund Raising in
in private placement. the remaining period.
Approval of the issuance of Restricted Stock Performed in accordance with relevant laws and
8
Awards. regulations.
Approval of the subsidiary, Altek
Semiconductor (Cayman) Co., Ltd.’s It will be handled according to the operation
9
application for listing of securities in the requirements of the Company and market conditions.
overseas securities market.
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B. Resolutions of 2019 board meeting:

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Item Major Resolutions Implementation
1.Approved to distribute the compensation of Reported at the 2019 shareholders'
2018 employees and directors. Meeting.
2.Approved the 2018 annual business report and Recognized at the 2019 shareholders'
financial report. Meeting.
3. Approved to distribute 2018 earnings. Recognized through the 2019
shareholders' meeting.
4.Approved the effectiveness statement of the
Implemented by resolution.
2019.03.15 2018 internal control system.
9 [th] meeting of 5.Approved to the business plan in 2019. Implemented by resolution.
8 [th] Board 6.Approved to amend the Articles of
Implemented by resolution.
Incorporation.
7.Approved to amend the Procedures of
Acquisition or Disposal of Assets. Implemented by resolution.
8. Approved to amend the Regulations Governing
Loaning of Funds and Making of Implemented by resolution.
Endorsements/Guarantees.
9. Approved to amend the Procedures of Election
Implemented by resolution.
of Directors.
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Item Major Resolutions Implementation
10. Approval of the issuance of new common The Fund Raising has yet been executed
shares in private placement and/or issuance of and it will be due on June 12, 2020. The
domestic or overseas convertible bonds in private Board of directors held on Apr. 24, 2020
placement. has resolved to cease the Fund Raising in
the remaining period.
11. Approved the issuance of Restricted Stock
Implemented by resolution.
Awards ("RSA").
12. Approval of the subsidiary, Altek
It will be handled according to the
Semiconductor (Cayman) Co., Ltd.’s application
operation requirements of the Company
for listing of securities in the overseas securities
and market conditions.
market
13. Approved the convening of the 2019
Implemented by resolution.
shareholders' meeting.
1. Approved to amend the Corporate Governance
Implemented by resolution.
Principles of Practice.
2. Approved to amend the Peer Evaluation of
Implemented by resolution.
Board of directors.
3. Approved to amend the Audit Committee
Implemented by resolution.
Charter.
2019.05.10
4. Approved to establish the standard operational
10 [th] meeting protocol for responding to requests from Implemented by resolution.
of 8 [th] Board
directors.
5. Stop the issuance of new common shares in
private placement and/or issuance of domestic or
Implemented by resolution.
oversea convertible bonds in private placement
approved by 2018 shareholder’s meeting.
6. Approved the CPAs’ remuneration. Implemented by resolution.
1. Approved the distribution of directors’
Implemented by resolution
compensation.
2. Approved the remuneration of directors and Implemented by resolution
managers.
2019.08.12 3. Resolved the new restricted employee shares in
11 [th] meeting 2018 and 2019 and the employee roster and
of 8 [th] Board quantity and issurance of new shares of the new Implemented by resolution
restricted employee shares in 2019 for those who
are allocated in the 1st time.
4.Approved to amend Compensation Committee Implemented by resolution
Charter.
1.Approved to distribute the compensation of
Implemented by resolution
2018 employees and directors.
2019.11.04
12 [th] meeting 2.Approved the 2018 annual business report and
Implemented by resolution
of 8 [th] Board financial report.
3. Approved to distribute 2018 earnings. Implemented by resolution
2020.01.20
Approved to repurchased buy-back shares and
13 [th] meeting transfer to employees of 1 [st] in 2020. Implemented by resolution
of 8 [th] Board
Resolved the new restricted employee shares in
2020.01.31 2018 and 2019 and the employee roster and
14 [th] meeting quantity and issurance of new shares of the new Implemented by resolution
of 8 [th] Board restricted employee shares in 2019 for those who
are allocated in the 2nd time.
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Item Major Resolutions Implementation
1. Approved the effectiveness statement of the
2019 internal control system. Implemented by resolution
2.Approved to distribute the compensation of Listed in the 2019 shareholders'
2019 employees and directors. meeting report.
3.Approved the 2019 annual business report and Listed in the 2019 shareholders'
financial report. meeting recognize.
4. Approved to distribute 2019 earnings. Listed in the 2019 shareholders'
meeting recognize.
5. Approved to amend the Articles of Has been approved by the Board of
Incorporation. Directors; it will take effect after the
2020 shareholder resolution is passed,
and the new Articles of Incorporation
will officially apply to relevant operations
by then.
6.Approved to amend the Rules of Procedure for Has been approved by the Board of
Shareholders Meetings. Directors; it will take effect after the
2020 shareholder resolution is passed,
and the new Articles of Incorporation
will officially apply to relevant operations
2020.03.20
by then.
15 [th] meeting
7. Approval of the issuance of new common
of 8 [th] Board
shares in private placement and/or issuance of Listed in the 2020 shareholders'
domestic or overseas convertible bonds in private meeting discuss.
placement.
8.Approved to elect the board members for the 9th Listed in the 2020 shareholders'
term meeting elect.
9.Approved to release the prohibition on directors Listed in the 2020 shareholders'
from participation in competitive Business meeting discuss.
10. Approved the convening of the 2020
Implemented by resolution
shareholders' meeting
11. Approved to the business plan in 2020. Implemented by resolution
12. Approved to change the CPA. Implemented by resolution
13. Approved to amend the 1st Rules on Transfer
Repurchased Shares to Employees for 2020. Implemented by resolution
14. Approved to amend the Audit Committee
Implemented by resolution
Charter.
15. Approved to amend Rules of Procedure for
Board of Directors Meetings. Implemented by resolution
16. Approved to repurchased buy-back shares and
Implemented by resolution
transfer to employees of 10 [th] .
1.Stop the issuance of new common shares in
private placement and/or issuance of domestic or
Implemented by resolution
oversea convertible bonds in private placement
approved by 2019 shareholder’s meeting.
2.Resolved the qualification review of candidates
for directors (including independent directors) Listed in the 2020 shareholders'
2020.04.24
and for independent directors recommended and meeting elect.
16 [th] meeting listed by the Board of Directors.
of 8 [th] Board
3.Resolved the qualification review of candidates
for directors (including independent directors) Listed in the 2020 shareholders'
and for independent directors recommended and Meeting discuss.
listed by the Board of Directors.
4.Resolved the new restricted employee shares in
Implemented by resolution
2018 and 2019 and the employee roster and
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Item Major Resolutions Implementation	Item Major Resolutions Implementation	Item Major Resolutions Implementation
	quantity and issurance of new shares of the new restricted employee shares in 2019 for those who are allocated in the 3rd time.

3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None.
3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D

Heads of Accounting, Finance, Internal Audit and R&D	Heads of Accounting, Finance, Internal Audit and R&D	Heads of Accounting, Finance, Internal Audit and R&D	Heads of Accounting, Finance, Internal Audit and R&D	Heads of Accounting, Finance, Internal Audit and R&D
Title Name Date Effective Date of Resignation/Dismissal Reason for Resignation/Dismissal
Internal Audit Officer	Eva Liang	2016.08.12	2020.01.01	Position adjustment

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3.5 Information of Audit Fee

3.5.1 Payment to the Audit:

Accounting Firm Name of CPA Period Covered by CPA’s Audit Note	Accounting Firm Name of CPA Period Covered by CPA’s Audit Note	Accounting Firm Name of CPA Period Covered by CPA’s Audit Note	Accounting Firm Name of CPA Period Covered by CPA’s Audit Note	Accounting Firm Name of CPA Period Covered by CPA’s Audit Note
PricewaterhouseCoopers	Dian-Yi Li	Kwok-wah Tsang	2018.01.01� 2018.12.31	�

Unit: NT$

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Range Non-audit
Audit Fee Total
item Fee
1 Under NT$ 2,000,000 V
2 NT$2,000,00 ~ NT$3,999,999
3 NT$4,000,00 ~ NT$5,999,999 V V
4 NT$6,000,00 ~ NT$7,999,999
5 NT$8,000,00 ~ NT$9,999,999
6 NT$10,000,000 ~
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3.5.2Non-audit fee paid to auditors, the audit firm and its affiliates accounted for more than onefourth of total audit fee, should disclose the details:

Unit: NT$ thousand

			Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand	Unit: NT$ thousand
Accounting Firm	Name of CPA Audit Fee		Non-audit Fee Period Covered by CPA’s Audit System of Design Company Registration Human Resources Others (Note) Subtotal
	Dian-Yi Li
Pricewater- houseCoopers	Kwok- wah Tsang	4,130	0	130	0	1,733	1,863	2019.01.01~ 2019.12.31

Note: Consulting fee and Transfer Pricing Research Report.

3.5.3 Replaced the audit firm and the audit fee paid to the new audit firm was less than the payment of previous year: Not applicable.
3.5.4 Audit fee reduced more than 15% year over year: None.

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3.6 Information of replacement of CPA: N/A
3.7 Altek’s Chairman, President, CFO, or managers in charge of its finance and accounting operations hold any position in the Company’s independent auditing firm or its affiliates in 2019: None.

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3.8 Equity Transfer and Changes in Equity Pledge of Directors, Managers and Shareholders Holding More than 10% of the Shares

3.8.1 Changes in shareholdings of directors, managers and major shareholders

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2019.01.01~2019.12.31 2020.01.01~2020.04.14
Title Name Holding Pledged Holding Pledged
Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Chairman &
Alex Hsia 150,000 0 0 0
CEO
Yitsang International
Director 0 0 0 0
Co., Ltd.
Yitsang International
Co., Ltd.
Director 0 0 0 0
Representative:
Simon Law (Note 1)
Yitsang International
Co., Ltd.
Director &VP 0 0 0 0
Representative:
Belle Liang
Director Sophia Chen 0 0 0 0
Independent
Ching Jen Hu 0 0 0 0
Director
Independent
Ying Chih Hsieh 0 0 0 0
Director
Independent
Mori Shorei 0 0 0 0
Director
SVP Rick Han 21,000 0 0 0
VP Vincent Kao 0 0 0 0
VP Kenny Li 0 0 0 0
VP Kevin Chen (Note 2) 0 0 0 0
VP CC Lee (Note 3) 0 0 0 0
VP Leo Tseng (Note 4) NA NA 0 0
Accounting
Peggy Hsu 0 0 0 0
Officer
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Note 1: Simon Law was assigned by Yitsang International Co., Ltd. as director representative on Oct.01, 2019. Note 2: Kevin Chen was incharge as VP on May 13, 2019; the information disclosed above is from on duty date.

Note 3: CC Lee was incharge as VP on Nov. 01, 2019; the information disclosed above is from on duty date. Note 4: Leo Tseng was incharge as VP on Mar. 02, 2020; the information disclosed above is from on duty date.

3.8.2 Shares Trading with Related Parties: None.

3.8.3 Shares Pledge with Related Parties: None.

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3.9 Relationship among the Top Ten Shareholders

April 14, 2020

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Name and Relationship
Shareholding between the Company’s
Spouse’s/Minor’s
Current Shareholding by Nominee Top Ten Shareholders, or
Name Shareholding
Arrangement Spouses or Relatives Remark
within Two Degrees
Shares % Shares % Shares % Name Relationship
Tung-Hsin Investment 14,075,000 5.03 0 0.00 0 0.00 None None -
Corp.
Representative: Tong-
Yi Chang 0 0.00 0 0.00 0 0.00 None None -
Yitsang International
13,956,100 4.99 0 0.00 0 0.00 None None -
Co., Ltd.
Representative: Yun-
Hsing Lin 0 0.00 0 0.00 0 0.00 None None -
Altek Corporation 8,000,000 2.86 0 0.00 0 0.00 None None -
Li Yongqing is
entrusted with the
7,543,000 2.70 0 0.00 0 0.00 None None -
designated trust asset
account of Li Jianxing
Citi (Taiwan)
Commercial Bank is
entrusted with the
custody of the 5,539,000 1.98 0 0.00 0 0.00 None None -
investment account
of the Norwegian
Central Bank
Standard Chartered
Bank in custody fo 3,511,001 1.26 0 0.00 0 0.00 None None -
KGI
American JPMorgan
Chase Bank Taipei
Branch is entrusted
with the custody of
the advanced Star
International Fund's 3,416,823 1.22 0 0.00 0 0.00 None None -
series of funds, the
advanced aggregate
international stock
index fund
investment account
Unique Technology
Co., Ltd. 3,097,304 1.11 0 0.00 0 0.00 None None -
Representative �
Chin Fu Liu 715 0.00 0 0.00 0 0.00 None None -
JPMorgan Chase Bank
N.A., Taipei Branch in
custody for Vanguard
Total International 2,882,000 1.03 0 0.00 0 0.00 None None -
Stock Index Fund, a
series of Vanguard
Star Funds
Restricted Stock
Awards of Altek
2,850,000 1.02 0 0.00 0 0.00 None None -
Custodial Account in
SinoPac Securities
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3.10 Ownership of Shares in Affiliated Enterprises

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December 31, 2019
Direct or Indirect
Ownership by the Ownership by
Total Ownership
Company Directors, Supervisors,
Affiliated Enterprises
Managers
Shares % Shares % Shares %
Altek Japan Corporation 1,000 100.00 0 0.00 1,000 100.00
Altek International Investment Co., Ltd. 87,769,559 100.00 0 0.00 87,769,559 100.00
Altek International Trading Co., Ltd. 0 0.00 3,000,000 100.00 3,000,000 100.00
Altek Lab Inc. 0 0.00 11,311,875 100.00 11,311,875 100.00
Altek Imaging Technology (Cayman) Co., Ltd. 0 0.00 15,092,410 100.00 15,092,410 100.00
Altek Precision (Kunshan) Co., Ltd. 0 0.00 (Note) 100.00 (Note) 100.00
Leading Tech. Co., Ltd. 0 0.00 45,000,000 100.00 45,000,000 100.00
Altek (Kunshan) Co., Ltd. 0 0.00 (Note) 100.00 (Note) 100.00
Toptek Investment Cayman Co., Ltd. 0 0.00 1,400,000 100.00 1,400,000 100.00
Altek EMS (Kunshan) Co., Ltd. 0 0.00 (Note) 100.00 (Note) 100.00
Altek Trading (Cayman) Co., Ltd. 0 0.00 8,500,000 100.00 8,500,000 100.00
Altek Trading (Shanghai) Co., Ltd. 0 0.00 (Note) 100.00 (Note) 100.00
Altek Optical Technology (Cayman) Co., Ltd. 0 0.00 11,200,000 100.00 11,200,000 100.00
Altek Optical (Kunshan) Co., Ltd. 0 0.00 (Note) 100.00 (Note) 100.00
Altek Semiconductor (Cayman) Co., Ltd. 0 0.00 20,000,000 50.00 20,000,000 50.00
Altek Semiconductor Corp. 0 0.00 10,000,000 50.00 10,000,000 50.00
Altek Semiconductor (Shanghai) Co., Ltd. 0 0.00 (Note) 50.00 (Note) 50.00
Altek Optical (Cayman) Co., Ltd. 0 0.00 4,800,241 100.00 4,800,241 100.00
Altek International Holding (BVI) Co., Ltd. 12,865,921 100.00 0 0.00 12,865,921 100.00
Altek Biotechnology Holding (Cayman) Co., Ltd. 0 0.00 12,865,921 100.00 12,865,921 100.00
Altek Biotechnology Corp. 0 0.00 40,100,000 100.00 40,100,000 100.00
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Note : No share was issued.

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IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Issued Shares

Unit: Share; NT$ thousand

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Authorized Capital Paid-in Capital Remark
Month/ Par Capital
Year Value Increased by
Shares Amount Shares Amount Source of Capital Other
Assets Other
than Cash
2014.02 10 500,000,000 5,000,000 385,265,321 3,852,653 [Cancellation of ] None -
Treasury Stock
2014.08 10 500,000,000 5,000,000 394,158,321 3,941,583 Execution of ESOP None -
2014.10 10 500,000,000 5,000,000 275,910,825 2,759,108 Cash Capital Reduction None -
2014.10 10 500,000,000 5,000,000 270,135,825 2,701,358 [Cancellation of ] None -
Treasury Stock
2015.05 10 500,000,000 5,000,000 270,253,825 2,702,538 Execution of ESOP None -
2015.12 10 500,000,000 5,000,000 272,693,825 2,726,938 Issuance of RSA None -
2016.03 10 500,000,000 5,000,000 273,883,825 2,738,838 Issuance of RSA None -
2016.05 10 500,000,000 5,000,000 274,253,825 2,742,538 Issuance of RSA None -
2016.08 10 500,000,000 5,000,000 274,063,825 2,740,638 Cancellation of Issued RSA None -
2017.04 10 500,000,000 5,000,000 273,908,825 2,739,088 Cancellation of Issued RSA None -
2017.08 10 500,000,000 5,000,000 273,738,825 2,737,388 Cancellation of Issued RSA None -
2017.11 10 500,000,000 5,000,000 273,818,825 2,738,188 [Cancellation of Issued RSA & ] None -
Execution of ESOP
2018.04 10 500,000,000 5,000,000 273,788,825 2,737,888 Cancellation of Issued RSA None -
2018.05 10 500,000,000 5,000,000 273,728,825 2,737,288 Cancellation of Issued RSA None -
2018.08 10 500,000,000 5,000,000 273,928,825 2,739,288 Execution of ESOP None -
2018.11 10 500,000,000 5,000,000 274,011,325 2,740,113 [Cancellation of Issued RSA & ] None -
Execution of ESOP
2019.09 10 500,000,000 5,000,000 275,461,325 2,754,613 Issuance of RSA None -
2019.11 10 500,000,000 5,000,000 275,361,325 2,753,613 Cancellation of Issued RSA None -
2020.03 10 500,000,000 5,000,000 279,587,325 2,795,873 Issuance of RSA None -
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April 14, 2020; unit: Share

	April 14, 2020; unit: Share	April 14, 2020; unit: Share	April 14, 2020; unit: Share	April 14, 2020; unit: Share
Type of Share Common shares	Authorized Capital Remark Issued Shares Un-issued Shares Total Shares
	279,587,325	220,412,675	500,000,000	Listed stock

Note : Issued shares include 8,000 thousand treasury shares held by Altek.

B.Information for Shelf Registration: N/A.

4.1.2 Status of Shareholders

April 14,2020	April 14,2020	April 14,2020	April 14,2020	April 14,2020	April 14,2020	April 14,2020
Item Government Agencies Financial Institutions Other Juridical Persons Domestic Natural Persons Foreign Institutions & Natural Persons Total
Number of Shareholders 0 3 154 48,880 113 49,150
Shareholding (shares) 0 35,700 56,984,612 187,240,607 35,326,406 279,587,325
Percentage	0.00	0.01	20.38	66.97	12.64	100.00

4.1.3 Shareholding Distribution Status

A. Common Shares

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April 14, 2020
Number of Shareholding
Class of Shareholding Percentage (%)
Shareholders (Shares)
1 � 999 22,265 3,162,684 1.13
1,000 � 5,000 20,140 44,059,024 15.76
5,001 � 10,000 3,550 28,189,656 10.08
10,001 � 15,000 1,058 13,541,866 4.84
15,001 � 20,000 673 12,539,717 4.49
20,001 � 30,000 560 14,434,100 5.16
30,001 � 50,000 425 17,181,187 6.15
50,001 � 100,000 277 19,908,041 7.12
100,001 � 200,000 108 15,032,214 5.38
200,001 � 400,000 48 12,937,651 4.63
400,001 � 600,000 14 6,704,252 2.40
600,001 � 800,000 9 6,174,286 2.21
800,001 � 1,000,000 2 1,771,206 0.63
1,000,001 or above 21 83,951,441 30.03
Total 49,150 279,587,325 100.00
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B. Preferred Shares: None.

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4.1.4 List of Major Shareholders

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April 14, 2020
Shares
Shareholding (Shares) Percentage
Shareholder's Name
Tung-Hsin Investment Corp. 14,075,000 5.03
Yitsang International Co., Ltd. 13,956,100 4.99
Altek Corporation 8,000,000 2.86
Li Yongqing is entrusted with the designated trust asset
7,543,000 2.70
account of Li Jianxing
Citi (Taiwan) Commercial Bank is entrusted with the
custody of the investment account of the Norwegian 5,539,000 1.98
Central Bank
Standard Chartered Bank in custody fo KGI 3,511,001 1.26
American JPMorgan Chase Bank Taipei Branch is
entrusted with the custody of the advanced Star
International Fund's series of funds, the advanced 3,416,823 1.22
aggregate international stock index fund investment
account
Unique Technology Co., Ltd. 3,097,304 1.11
JPMorgan Chase Bank N.A., Taipei Branch in custody for
Vanguard Total International Stock Index Fund, a series 2,882,000 1.03
of Vanguard Star Funds
Restricted Stock Awards of Altek Custodial Account in
2,850,000 1.02
SinoPac Securities
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4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

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Year 2020
2018 2019
Item (as of March 31)
Highest Market Price 44.90 30.20 24.35
Market Price
Lowest Market Price 18.90 22.30 14.70
per Share
Average Market Price 30.69 25.32 20.38
Net Worth Before Distribution 32.80 31.39 32.32
per Share After Distribution 32.30 30.88 �
Weighted Average Shares
Earnings per 270,389 273,838 272,075
(thousand shares)
Share
Earnings Per Share 0.48 0.31 0.12
Cash Dividends 0.50 0.50(Note1) �
Stock � � � �
Dividends
Dividends � � � �
per Share
Accumulated Undistributed Dividends � � �
Price/Earnings Ratio 63.94 81.68 �
(Note 2)
Return on
Investment Price/Dividend Ratio 61.38 50.64 �
(Note 3)
Cash Dividend Yield Rate (Note 4) 1.63 1.97 �
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-59-

Note 1: As of the date of this Annual Report, the earnings distribution of the Company for the Year 2019, in addition to the cash dividends resolved by the board of directors on March 20, 2019, the rest will be handled in accordance with the relevant regulations after the resolution of shareholders ’meeting on June 12, 2020 is made.

Note 2: Price / Earnings Ratio = Average Market Price / Earnings per Share.

Note 3: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share.

Note 4: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price.

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

Based on the Article of Incorporation, the amount of dividend distributed shall consider the surplus earnings of the year, the accumulated surplus earnings of the previous years and the capital structure as well as the future operation demand. The policy of dividend distribution will take funding demand and dilution of surplus earnings per share into account, and both the stock dividend as well as the cash dividend will be distributed together. The ratio of cash dividend distributed will not be lower than twenty percent (20%) of the total dividend distributed of the year.

B. Proposed Distribution of Dividend

Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$
Date for BoDs to Approve Shareholders’ Meeting
Year Distribution of Dividend Cash Dividend Capital Surplus (in Cash) Share Dividend
2019	2020.03.20	NT$139,793,663 (NT$0.5 per share)	0 (NT$0 per share)	0 (NT$0 per share)

Note: The ratio of distribution per share is calculated based on the outstanding stock on March 11, 2020. It is 279,587,325 shares in total.
C. Major Change in the Dividend Policy: None.
4.1.7 Impact of Stock Dividend on Business Performance and Earnings per Share: N/A.

4.1.8 Employee Bonus and Directors' Remuneration

A. Information Relating to Employee Bonus and Directors’ Remuneration in the Articles of Incorporation
- (1) 10 %~20% as a bonus for employees.
- (2) Not exceeding 2% as compensation for directors.
B. The Estimated Basis for Calculating the Employee Bonus and Directors’ Remuneration: None.
C. Profit Distribution for Employee Bonus and Directors’ Remuneration for 2018 Approved in Board of Directors Meeting
- (1)The proposal of retained earnings distribution has been approved by the Board of Directors on March 20, 2020, and the compensation for the employees is NT$16,220,178 and the compensation for the directors is NT$2,162,690. It’s proposed to distribute the compensation by cash after the approval of the general shareholders’ meeting. The proposed amount of the compensation for the employees, directors is the same as the estimated amount of recognition fees of the year.
- (2)The Ratio of Employees’ Remuneration by Stock to Net Income after Tax and Employees’ emuneration in Individual inancial Statements: N/A.
D. Information of 2018 Earnings Set Aside for Employee Bonus and Directors’ Remuneration: None.

-60-

4.1.9 Buyback of Treasury Stock

A. Repurchases already completed

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As of Apr.14,2020
The 9 [th] Batch
Treasury stocks: Batch Order
( 1 [st] of 2020)
Purpose of buy-back Transfer to employees
Timeframe of buy-back 2020/2/3-2020/3/19
Price range NT$20-28
Class, quantity of shares
Comon 8,000,000 shares
repurchased
Value of shares repurchased
NT$145,952,950
(in NT$ thousands)
Quantity of repurchased shares
as a percentage of total shares 100%
to be repurchased (%)
Shares sold/transferred 0share
Accumulated number of
8,000,000 �
company shares held
Percentage of total company
2.86%
shares held (%)
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B. Any repurchase still in progress

B. Any repurchase still in progress	B. Any repurchase still in progress
As of Apr.14,2020
Treasurystocks: Batch Order The 10thBatch
Purpose of buy-back Transfer to employees
Type of shares repurchased Comon Shares
Limit on the total value of shares repurchased NT$5,308,674,240
Period for share repurchase 2020/3/23-2020/5/22
Quantity of shares to be repurchased 8,000,000 shares
Price range NT$18-25
Class, quantity of shares repurchased Comon 400,000 shares
Value of shares repurchased (in NT$thousands) 7,401,450�
Quantity of repurchased shares as a percentage of total shares to be repurchased(%)	0.14%

Note: The book closure date for the shareholders' meeting 2020 is April 9, 2020. The number of the shares already repurchased disclosed in the above table refers to the shares purchased by the Company between April 10, 2020 and April 14, 2020.

4.2 Bonds: None.

4.3 Preferred Stock: None.

4.4 Global Depository Receipts: None.

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4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options

April 14, 2020; unit: NT$

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Type of Stock Option 3rd Tranche
Approval Date 2011.06.08
Issue Date 2011.10.28 2012.03.21
Units Issued
3,000 3,000
(Thousand Shares)
Shares of Stock Options to Be Issued as a
Percentage of Outstanding Shares 0.77% 0.76%
(Note 1)
Duration 2011.10.28~2020.12.31 2012.03.21~2020.12.31
Conversion Measures Issuing new shares Issuing new shares
2 years after issued: could exercise 40% of total outstanding shares;
Conditional Conversion
3 years after issued: could exercise 70% of total outstanding shares;
Periods and Percentages
4 years after issued: could exercise 100% of total outstanding shares;
Converted Shares
600 1,054
(Thousand Shares)
Exercised Amount
16,572 26,441
(NT$ Thousand)
Number of Shares Yet to Be Converted
860 781
(Thousand Shares)
Adjusted Exercise Price for Those who
29.4 29.3
Have Yet to Exercise Their Rights (NT$)
Unexercised Shares as a
Percentage of Total Issued Shares 0.31% 0.28%
(Note 2)
Attract and retain professionals, improve employees’ coherence and
Impact on Shareholders’ Equity sense of belonging, and create the interests of the Company and
shareholders.
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Note 1: Calculated according to issued shares on date of issuing the ESOP.

Note 2: Calculated according to issued shares on April 14, 2020 (279,587,325 shares).

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4.5.2 List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock Options April 14, 2020; unit: thousand shares; NT$ thousand	Stock Exercised Unexercised	Title Name Number of Stock Options Options as a Percentage of Shares Issued (Note 1) Number of Shares Converted Strike Price (NT$) (Note 3) Amount (NT$ Thousand) Converted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Converted Strike Price (NT$) (Note 4) Amount (NT$ Thousand) Converted Shares as a Percentage of Shares Issued (Note 1)	CEO Alex Hsia	Management 740 0.26 296 23.9~30.7 8,434 0.10% 444 29.3~29.4 13,039 0.16% SVP Rick Han VP Vincent Kao	VP Kenny Li	0.41%	Note 1: Calculated according to issued shares on April 14, 2020 (279,587,325 shares). Note 2: Top ten employees with stock options are: Sheng-De Shi (resigned), Chieh-Sheng Lin, Tsung Han Lin(resigned), Qin-Guo Li, Bo-Keng Wu, Hung-Lung Chou, Cheng- Ta Yang, Shui-Lin Chen, Kuo-Chang Chen, Meng-Lin Lo. (Arrange in last name’s alphabetical order) Note 3: The subscription price upon execution shall be disclosed. Note 4: The subscription price adjusted based on the issue regulations shall be disclosed.
						33,804
						29.3~29.4
						1,151
						0.25%
						19,665
						23.9~30.7
						709
						0.67%
						1,860
						(Note 2)
						Top 10 Employees

4.6 Restricted Employee Shares

4.6.1 Issuance of New Restricted Employee Shares

April 14, 2020; unit: NT$

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Type of New Restricted
Issuance of 2018 Issuance of 2019
Employee Shares
Date of Effective Registration 2019.05.27 2019.07.04
Issue Date 2019.08.29 、 2020.02.25
Number of New Restricted Employee
2,826 2,850
Shares Issued (Thousand Shares)
Issued Price (NT$) NT$0 NT$0
New Restricted Employee Shares as a
1.01% 1.02%
Percentage of Shares Issued (Note )
If the employees are still on duty and the personal performance
of the year are at least B plus or more than B plus as well as the
employee has followed the relevant working rules of the
Vesting Conditions of New Restricted Company, the ratio for the employees to acquire new restricted
Employee Shares employee shares is as follows:
One year after issuance: 40% of acquired shares;
Two years after issuance: 30% of acquired shares;
Three years after issuance: 30% of acquired shares.
1. If the employees have acquired new restricted employee shares before
the fulfillment of the conditions, new restricted employee shares are
Restricted Rights of New Restricted not able to sell, pledge, transfer, offer as a gift, set the mortgage or
Employee Shares dispose in some other ways.
2. The attendance of shareholders’ meeting, voting rights and some other
rights of shareholders will be managed by the trust custodian institution.
Custody Status of New Restricted Trust custodian institution will take care of the shares before the fulfillment
Employee Shares of duration mentioned above.
Except the trust custodian limitation mentioned above, the rights of the
Measures to be Taken When Vesting
new restricted employee shares are all the same as the issued common
Conditions Are Not Met
shares of the Company.
Number of New Restricted Employee
Shares that Have Been Redeemed or 100 0
Bought Back (Thousand Shares)
Number of Released New Restricted
0 0
Employee Shares (Thousand Shares)
Number of Unreleased New
2,726 2,850
Restricted Shares (Thousand Shares)
Ratio of Unreleased New Restricted
Shares to Total Issued Shares (%) 0.98% 1.02%
(Note 1)
Impact on Possible Dilution of The influence on the Company’s EPS is limited, hence there’s no material
Shareholdings impact on the shareholder’s equity.
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Note : Calculated according to issued shares on April 14, 2020 (279,587,325 shares).

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April 14, 2020; unit: Thousand shares; NT$ thousand	New Released Unreleased	Title Name Number of New Restricted Shares Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Released Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Unreleased Restricted Shares as a Percentage of Shares Issued (Note 1) Managers CEO Alex Hsia 1,000 0.36% 0 0 0 0.00% 1,000 0 0 0.36% SVP Rick Han VP Vincent Kao VP Kenny Li VP Belle Liang VP Kevin Chen VP CC Lee	Title Name Number of New Restricted Shares Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Released Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Unreleased Restricted Shares as a Percentage of Shares Issued (Note 1) Managers CEO Alex Hsia 1,000 0.36% 0 0 0 0.00% 1,000 0 0 0.36% SVP Rick Han VP Vincent Kao VP Kenny Li VP Belle Liang VP Kevin Chen VP CC Lee	VP Leo Tseng VP Peggy Hsu	Top 10 Employees (Note 2) 1,400 0.50% 0 0 0 0.00% 1,400 0 0 0.50% Note 1: Calculated according to issued shares on April 14, 2020 (279,587,325 shares). Note 2: Top ten employees with new restricted employee shares are: Jia-Tzung Chiang, Chieh-Sheng Lin, Jung-Cheng Chou, Hung-Lung Chou, Chin-Cheng Chiou, Bo-Keng Wu, Tsu-Yu Hsia, Shih-Hsueh Chen, Kuo-Chang Chen, Shih-Chang Chia, Cheng-Ta Yang, Yung-Fei Chien.(Arrange in last name’s alphabetical order) 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None. 4.8 Financing Plans and Implementation: None
		Title Name Number of New Restricted Shares Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Released Restricted Shares as a Percentage of Shares Issued (Note 1) Number of Shares Issued Price (NT$) Amount (NT$ Thousands) Unreleased Restricted Shares as a Percentage of Shares Issued (Note 1)	CEO Alex Hsia

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V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Main Business Operations

Altek Corporation, founded in 1996, has been deeply involved in the imaging field for more than 25 years. In the past, the Company was one of the top three digital camera manufacturers in the world, and it actively deploys the artificial intelligence vision technology (Vision AI) in recent years. The core technology of Altek Corporation is the visual imaging technology, the internal integration of vision and algorithms and comprehensive software and hardware integration services for chips developed independently, providing a one-stop visual AI solution for hardware manufacturing. The application fields of products include in addition to multi-lens camera modules, in-vehicle system and chip design (ASIC). In recent years, the Company has also stepped into AIoT (Artificial Intelligence Internet of Things), smart cars, medical imaging, 3D sensing and AI (artificial intelligence) chip technology.

B. Revenue Distribution

artificial intelligence) chip technology. . Revenue Distribution	artificial intelligence) chip technology. . Revenue Distribution	artificial intelligence) chip technology. . Revenue Distribution
Unit: NT$ thousand
Major Divisions Total Sales in Year 2019 (%) of Sales
Digital Imaging-related Applications	6,189,352	100.00%

C. New Product Development

(1)The deep learning AI solution with ultra-low power consumption.

(2)Internet of Vehicles AI DMS (Driver Monitoring System)

(3)Internet of Vehicles AI Dash Cam (artificial intelligence Dashcam).

(4)Robot Anti-Collision 3D Sensing Camera.

(5)3D Depth Sensing Camera for AR / VR Virtual Reality.

(6)Medical Surgical High-Precision Endoscopes for single use and Image Processing Systems.

(7)AI network camera system supported by AI computing capabilities. It is applied in AIoT

(artificial intelligence Internet of Things), distance learning and commercial applications, and is supported by cloud integration applications.

(8)AI BOX edge AI computing box supports 8-way ONVIF camera and cloud integration

application.

(9)Image Processing Algorithm Solution for Smart Phone with ultra-wide-angle lens. 5.1.2 Industry Overview

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A. Current Status, Development and Competition

As a digital imaging solution provider, Altek is aware that with the changes in consumer habits, digital imaging has long been indispensable for everyone's daily life. In the past, digital imaging was mainly used in cameras and video cameras that emphasized image quality. Today, with the increasing demand for smart home, personal safety, driving safety, precision medical treatment, and the development of IoT and big data, vision intelligence has become a trend. As artificial intelligence (AI) technology has reached maturity, the AI recognition technology with deep learning function has gradually reversed the traditional security control industry, and its innovative applications have expanded to the retail, manufacturing, medical and other markets, which is regarded as the next new blue ocean.

According to the prediction made by Frost & Sullivan, there will be about 50 billion networking devices in the world by 2025, including wearable devices, smart homes, smart factories, smart cities, and other applications of IoT, and due to the huge amount of data received by the IoT devices, cloud computing will be unable to meet the needs of today, so Edge Computing will come into being. Another reason for the birth of Edge Computing is that speed of conventional cloud computing fails to satisfy some of the emerging applications such as augmented reality (AR) and virtual reality (VR), in-vehicle networking, and smart factory IoT 4.0., considering such applications require extremely high bandwidth and immediacy. In addition, it has also been reported over the past year that cloud data centers get hacked resulting in data theft and leaks of trade secret information, which caused enterprises and consumers to have concerns about the security and privacy of cloud computing. As a result, " Edge Computing " has become the buzz word in the IT industry in recent years, and major manufacturers, such as Amazon and Microsoft, have successively launched products and technical solutions corresponding to Edge Computing.

Altek has been constantly transforming and upgrading in recent years and successfully expanded our business scope into Edge Vision AI, 3D sensing module and other solutions. In this industry, Altek is one of the few companies that are capable of providing multi-domain customers, from upstream to downstream, with integrated solutions such as IP licensing, algorithms software, chip design, dual (multi) lens camera module, 3D sensing module, and ODM for system products. However, as the importance of digital imaging is increasing, it also attracts other competitors. Besides independent algorithm companies and chip developers, large-scale brands also started

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to develop their own technologies.

B. Relevance of Upstream, Midstream, and Downstream

The application of digital imaging products is diversified, and it is gradually developing towards multi-lens and 3D sensing. Some end products, such as smart phones, are equipped with photographing feature because of camera lens modules. The following

figure illustrates how the digital imaging industry operates in overall:

==> picture [415 x 167] intentionally omitted <==

C. Product Development Trend

With the evolution of consumer lifestyle, digital imaging has already penetrated into everyone's daily life. From smart phones owned by individuals to cars found in every household, and from home and business surveillance to professional medical diagnosis, digital imaging is everywhere and its applications are springing up. The overall product trend is changed from viewing function that emphasized image quality in the early days to sensing that can make intelligent judgment of various facets such as shape, volume, color, moving speed and distance. Altek is the leader of AI visual imaging and plays the eyes of AloT (Artificial

Intelligence Internet of Things). To respond the upcoming 5G widespread will promote the key technology of AIoT popularization. In the Internet of Vehicles section, AIoT will be applied to products related to AI DMS & AI Dash Cam.5.1.3 Research and Development.

In terms of Cloud and Edge computing and the "edge layout, VR / AR / XR killer application key-3D sensing technology” of three giants, Altek AI BOX, Azure and AWS , Altek independently develops key technologies of the AI chip edge computing with ultra-lowconsumption and that of the 3D sensing, applying the Altek AI CAM

and smartphone camera modules and algorithms that enables the AloT to realize the

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application specific scenarios on the smartphones, smart homes and smart factories. Research and Development Expenses

Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Item 2019 2020 (as of March 31)
Total R&D Expense 787,765 206,933
% to Revenue	13%	19%

B. Technologies or Products Developed

(1)The deep learning AI solution with ultra-low power consumption.

(2)Internet of Vehicles AI DMS (Driver Monitoring System)

(3)Internet of Vehicles AI Dash Cam (artificial intelligence Dashcam).
(4)Robot Anti-Collision 3D Sensing Camera.
(5)3D Depth Sensing Camera for AR / VR Virtual Reality.

(6)Medical Surgical High-Precision Endoscopes for single use and Image Processing Systems.

(7)AI network camera system supported by AI computing capabilities. It is applied in AIoT artificial intelligence Internet of Things), distance learning and commercial applications, and is supported by cloud integration applications.

(8)AI BOX edge AI computing box supports 8-way ONVIF camera and cloud integration

application.

(9)Image Processing Algorithm Solution for Smart Phone with ultra-wide-angle lens. 5.1.2 Industry Overview
C. Ongoing Research and Development Projects and Expenses

In addition to developing extended products, Altek will constantly pay close attention to the industrial trend and increase the investment in technologies and applications with potential for development. If there is no significant change, it is estimated that the annual consolidated R&D expenses will account for more than 8% of the consolidated turnover. The major R&D projects and progress for 2020 are described as follows:

the industrial trend and increase the investment in technologies and applications ith potential for development. If there is no significant change, it is estimated that e annual consolidated R&D expenses will account for more than 8% of the nsolidated turnover. The major R&D projects and progress for 2020 are described follows:	the industrial trend and increase the investment in technologies and applications ith potential for development. If there is no significant change, it is estimated that e annual consolidated R&D expenses will account for more than 8% of the nsolidated turnover. The major R&D projects and progress for 2020 are described follows:
OngoingR&D Project Expected Completion time
The New Generation of Smart Phone with AI ISP image processing chip and algorithm. Before the end of Q3, 2021
The New Generation of 3D High-Precision and Long-Range 3D Sensing Depth Chip and 3D Sensing Cameras.	Before the end of 2021

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==> picture [382 x 268] intentionally omitted <==

----- Start of picture text -----

Ongoing R&D Project Expected Completion time
The New Generation of Medical surgical
high-precision endoscopes for single use Before the end of Q2, 2021
and image processing systems.
AI vision imaging (Vision AI) medical
Before the end of Q2, 2022
endoscope.
The deep learning AI chip with ultra-low
Before the end of Q3, 2021
power consumption.
AI camera, equipped with the new
generation of Qualcomm visual intelligence
Before the end of 2020
platform, integrated Google TensorFlow lite
AI framework
AI integration modules are applied in smart
Before the end of 2020
homes, smart offices and smart vehicles.
The New Generation of Internet of Vehicles
Before the end of Q1, 2021
AI DMS (Driver Monitoring System)
----- End of picture text -----

5.1.4 Long-term and Short-term Development
A. Short-term Business Development Plan
(1) Strengthen partnership with existing customers, ensure product quality and delivery, and expand product lines
(2) Cooperate with international manufactures through strategic alliances to jointly develop new globalcustomers
(3) Build visibility and reputation by participating actively in major exhibitions
(4) Deeply cooperate with the supply chains to develop cost-effective solutions
B. Mid and Long-term Business Development Plan
(1) Continue to innovate and develop more competitive new- generation products
(2) Strengthen strategic alliances with top manufacturers worldwide to develop various business opportunities
(3) Develop advanced products and technologies to increase differentiation and barriers to entry
(4) Strengthen strategies for international development and increase market visibility and market share
(5) Recruit and retain outstanding talents actively to reserve the capacity for product research and business development

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5.2 Market and Sales Overview

5.2.1 Market Analysis

A. Major Sales Region

In 2019, Altek’s major sales region is Asia, accounting for 57% of the consolidated sales, followed by Europe (20%) and North America (23%).

B. Market Share

Altek offers a full range of digital imaging solutions (including IP licensing, algorithm software, chip design, dual (multi-) lens camera modules, and ODM for system products), and there is no data available to estimate the market share by now.

C.Market Supply/Demand and Growth in the Future

Due to the increasing importance of digital imaging, it has attracted competitors suchas algorithm software companies and chip developers to join the market and top brands to develop their own technologies. On the other hand, the authorities in China are supporting their local manufacturers, so the competition among the suppliers of key components such as chips, software and lens modules, is also intense. In the future, Altek has to not only make continuous improvement in product specifications and technology, but increase competitiveness in technical services and cost control as well.

According to the report of Topology Research Institute in March 2018, 3D sensing technology will not

only shine on smart phones, but will also be gradually introduced into notebooks, TVs, game consoles, drones, autonomous driving, and home automation. From strengthening biometrics, enhancing AR effects to dynamic tracking, it brings more possibilities and business opportunities. The total production of smart phones equipped with 3D sensing modules in 2018 is 197 million sets, of which the output value of sensing modules is estimated to be around USD 5.12 billion. It is estimated that the overall output value will reach USD 10.85 billion by 2020, and the compound growth rate will be 45.6% from 2018 to 2020. Looking ahead, the overall digital imaging products will continue to maintain strong growth momentum.

D. Competitive Niche

(1) In-depth algorithm software

Altek has invested in in-depth algorithm software for many years and obtained various patents in Taiwan, China, and the U.S. Our in-depth imaging technology has won recognition and cooperation from mobile phone manufacturers in China, American semiconductors and major technology manufacturers.

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(2) Imaging chips

Altek’s chip design team has developed more than 10 generation imaging chips successfully, including the 3D sensing depth chips commissioned by the US semiconductor manufacturers, and more than 200 million end products have been equipped with our imaging chips.

(3) Optical processing technology and system integration

Altek has developed and produced cameras for international customers for over 20 years. Having been the world’s largest DSC ODM and owning an optical team, Altek provides customized design with strong technical development, system integration and mass production capabilities.

(4) Complete digital imaging solution

Altek offers one-stop shopping customized service and quickly responds to customers’ needs, from product development to mass production, in a timely manner. Altek effectively assists customers to get ahead of the market.

E. Advantages, Disadvantages and Countermeasures for Prospects
(1) Advantages
- a. Digital imaging is playing an increasingly important role in various fields, so the industry outlook is promising.
- b. The digital image is developing towards 3D sensing and AI in vision applications, and the technical level is improved. Altek’s depth images computing technology is in the leading position in the industry and owns excellent competitiveness.
- c. Altek offers a full range of digital imaging solutions and assists customers, from product development to mass production, to lead in the market in a timely manner.
(2) Disadvantages and Countermeasures
- a. With the ever-changing development of technology, requirements for specifications and functions are getting higher and higher, causing the pressure to cut down prices from time to time and shorter life cycles of products.

Countermeasure:

Altek will actively recruit and retain outstanding talents, enhance its capacities for product R&D and market resilience, and actively develop new technologies and new products with longer life cycles and higher barriers to entry.

b. Intense industrycompetition

As the importance of digital images is increasing, it also attracts other competitors to join the market. In addition to some major European and American manufacturers, China is fostering its local enterprises at the same time, making the competition much more intense.

Countermeasure:

Altek will develop advanced products and technologies to increase differentiation and barriers to entry.

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5.2.2 Purpose and Production Process of Major Products

A. Digital Imaging Chip

(1) Major purpose

Digital imaging chips can be applied to general consumer products, smartphone imaging, safety control products, automotive electronics and medical electronics. They have features such as face detection/tracking, face recognition, anti-shake, lens compensation, etc., and will be equipped with deep learning capacities to provide a combination of entry-level to high-end multi-image chips.

(2) Production process

The process of developing each chip from design to finished product is as follows:

==> picture [386 x 112] intentionally omitted <==

----- Start of picture text -----

Lead frame
Wafer
or substrate
CAD Wafer Wafer Packaging
CAE Design Mask manufac- testing Packaging & testing
turing
----- End of picture text -----

a. Design procedure

The IC design process is based on product specifications, and the design engineer will convert the circuits into drawings for mass production by means of CAD and other auxiliary tools, which then will be produced by the wafer foundry.

==> picture [318 x 37] intentionally omitted <==

----- Start of picture text -----

Computer
Circuit Circuit Layout CAD
data/tape
design simulation
----- End of picture text -----

b. Mask procedure

Circuits completed by IC designers are saved in tapes through database and delivered to the mask manufacturers. The production process composes of four stages: Glass Process, Cr Film Coating, Resist Coating and Shipping. Completed masks will be delivered to the wafer foundry for production.

c. Wafer production procedure

Wafer manufacturing is entrusted to professional foundries. After being taken offline, wafers are processed through etching, photo, thin film, and diffusion process areas in the module with masks to complete the fabrication. Completed wafers will be electrically tested, and qualified wafers will then be delivered.

d. Wafer testing procedure

Wafer testing is required for the finished wafer, which mainly tests whether the electrical function is normal, and wafers of good quality or of poor quality will be marked respectively.

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e. Packaging procedure

The good-quality tested wafers will be sent for IC packaging. The packaging procedure is as follows:

==> picture [345 x 74] intentionally omitted <==

----- Start of picture text -----

Label Cut Mount Wire Plastic
closures
Stamp
Electroplating Dam-bar/desmear Packaging Deliver
/tin
----- End of picture text -----

B. Dual(Multi)-camera Module

(1) Major purpose

They can be built-in camera modules for smart phones, tablets, surveillance cameras, cars and other devices.

(2) Production process

==> picture [418 x 89] intentionally omitted <==

----- Start of picture text -----

Software /
Camera Dispense firmware Focusing Calibration Quality Packaging/
module integration testing Deliver
----- End of picture text -----

C. Digital Imaging Solution

(1) Major purpose

Images recording, information sharing on social media, webcast, virtual reality, face recognition, security monitoring, etc.

(2) Production process

==> picture [345 x 237] intentionally omitted <==

----- Start of picture text -----

Specification and functional testing Deliver
Production tool integration Packaging
Module integration Environmental reliability test
Assembly Digital imaging processing
Software/firmware integration Structures & electronic reliability
integration
74
----- End of picture text -----

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5.2.3 Major Suppliers

Altek has maintained a good relationship with major suppliers to control sources of materials, shorten delivery, improve material quality, and reduce risks. Altek also reaches an agreement with major suppliers and according the market supply and demand to review price in order to establish safe inventory for the optimization of quality, delivery, and costs.

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Unit: NT$ thousand	2018 2019 2020 (as of March 31)	Name Amount Percentage (%) Relation with Issuer Name Amount Percentage (%) Relation with Issuer Name Amount Percentage (%) Relation with Issuer	A 767,142 8.55 None A 578,020 12.15 None A 78,141 11.47 None	B 1,190,992 13.28 None B 43,169 0.91 None B 0 � None	C 984,913 10.98 None C 36,075 0.76 None C 0 � None	Other 6,026,799 67.19 None Other 4,098,585 86.18 None Other 603,113 88.53 None	�	The reason for the change: Altek is actively transforming and developing new suppliers by investing in new products.
							100.00
							681,254
							Total
							�
							100.00
							4,755,849
							Total
							�
							100.00
							8,969,846
							Total

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Unit: NT$ thousand	2018 2019 2020 (as of March 31)	Name Amount Percentage (%) Relation with Issuer Name Amount Percentage (%) Relation with Issuer Name Amount Percentage (%) Relation with Issuer	a 2,298,888 20.54 None a 2,260,160 36.52 None a 267,041 23.98 None	b 1,206,049 10.77 None b 1,456,770 23.54 None b 264,566 23.75 None	c 2,896 0.03 None c 824,539 13.32 None c 228,335 20.50 None	d 3,037,506 27.14 None d 105,865 1.71 None d � � None	e 1,182,959 10.57 None e 44,461 0.72 None e � � None	Other 3,465,271 30.95 None Other 1,497,557 24.19 None Other 353,801 31.77 None	�
									100.00
									1,113,743
									Total
									�
									100.00
									6,189,352
									Total
									�
									100.00
									11,193,569
									Total

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5.2.5 Production in the Last Two Years

Unit: Thousand; NT$ thousand

Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand
Year 2018 2019
Output Major Products Capacity Quantity Value Capacity Quantity Value
Digital Imaging-related Applications	38,500	30,833	9,617,495	7,200	5,177	5,078,508

Note: Due to variety kinds of products in various forms and the various sizes, the comparison in quantity has no significant meanings.

5.2.6 Shipments and Sales in the Last Two Years

Unit: Thousand; NT$ thousand

	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand	Unit: Thousand; NT$ thousand
Year	2018 2019
Shipments	Local Export Local Export
& Sales Major Products	Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Digital Imaging-related Applications	150	106,987	30,915	11,086,582	13	46,824	5,024	6,142,528

Note: Due to variety kinds of products in various forms and the various sizes, the comparison in quantity has no significant meanings.

5.3 Human Resources

==> picture [414 x 180] intentionally omitted <==

----- Start of picture text -----

Year 2018 2019 March 31, 2020
Direct and Indirect 443 424 423
Number of
Management 6 8 9
Employees
Total 449 432 432
Average Age 42.0 40.8 41.7
Average Years of Service 8.6 7.6 8.1
Ph.D. 3.7 3.7 3.9
Master 60.8 58.2 57.1
Education (%) Bachelor’s Degree 33.3 35.6 36.5
Senior High School 1.8 2.3 2.3
Below Senior High School 0.4 0.2 0.2
----- End of picture text -----

5.4 Environmental Protection Expenditure

5.4.1 Total Losses and Penalties

The loss or penalty caused by environmental pollution during the latest year and up to

the printing date of this annual report: None.

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5.4.2 Countermeasures and Possible Expenditure

Altek is a high-tech company located in Hsinchu Science Park, consuming very limited

pollution. Altek strictly obeys environmental protection regulations. No environmental

protection and safety penalty occurred from Altek and its subsidiaries.

5.5 Labor Relations

5.5.1 Implementation and Maintenance of Employee Benefits, Training, and Pension System

and Labor Agreements

A. Employee benefits

Since its establishment, Altek has implemented the people-oriented management by valuing and caring for employees and continuously providing comprehensive benefits based on the Labor Pension Act and the Labor Standards Act.

Altek employees enjoy a comprehensive benefits package and annualsick and maternity leave terms and flexible vacation rights that are significantly above the standard set in the Labor Law. Employees enjoy coverage under national Labor and Health Insurance schemes as well as group insurance coverage – well above Labor Law requirements.

Employees work flexible hours that fit in with their priorities and needs. Altek schedules regular employee health check and provides special monetary disbursements for weddings, births, hospitalization and funerals. Altek employees are also entitled to join in annually organized company outings, sports events and athletic competitions.

Special gifts or ‘red envelopes’ find their way to every employee to help celebrate his or her birthday. Special birthday discounts and awards are also provided by specially designated retailers.

B. Employee Training

Talents are the most important assets of the Company. Thus, developing employees’ knowledge and skills through properly planned resources and improving their productivity is the crucial task for the Company. Altek arranges annual training plans to address the professional needs of its employees, the professional skills training targets of management and the overall strategic objectives of the organization. Training for individuals, jobs and the organization strikes an optimal balance that gives every employee a tailored training schedule that is solid, well-rounded and targeted on enhancing and expanding skill sets. To provide better training quality, a feedback survey is conducted for the reference to subsequent training planning. Meanwhile, Altek also encourages employees to participate in external training programs, such as seminars, professional courses, and advanced study, by providing subsidies, so as to expand employees’ self-development and work potential.

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The number of training programs held in 2019 totaled 2,298 hours, with 779 trainees and at the cost of NT$331,805. The results of training programs are shown below:

Unit: NT$

==> picture [365 x 149] intentionally omitted <==

----- Start of picture text -----

Number of
Item Hours Expense
Trainees
Professional Training 189 319
Employee Safety and Health
148 444
Training
Quality Training 67 67
331,805
Generic Training 307 985
New Employee Orientation 47 235
External Training 21 248
Total 779 2,298
----- End of picture text -----

Training programs are divided into:

(1) Professional Training

Professional training courses are held to improve employee’s’ professional skills, productivity, and performance.

(2) Employee Safety and Health Training

Employee safety and health training courses are held in accordance with national industrial safety and health regulations to safeguard employees’ health and safety at workplaces.

(3) Quality Training

The quality training courses are held to improve all employees’ awareness of quality and promote the provision of products of the best quality that meets customers’ needs.

(4) Generic Training

The generic training courses are held to improve employees’ language and computer skills and develop their potentials for the purpose of achieving the Company’s overall business objectives.

(5) New Employee Orientation

The new employee orientation is held by Human Resource Division to help new recruits adapt to the Company’s systems, environment, and information security.

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C. Pension System

The pension system is implemented in accordance with the Labor Pension Act and the Labor Standards Act. The labor retirement reserve is appropriated monthly. The pension systems of subsidiaries are implemented according to related local laws and regulations.

Pension System Old System New System	Pension System Old System New System	Pension System Old System New System
Applicable Law Labor Standards Act Labor Pension Act
Method of Appropriation 2% of the monthly salary is appropriated and deposited in the Bank of Taiwan in the name of the Supervisory Committee of Business Entities’ Labor Retirement Reserve. At least 6% of the monthly salary is appropriated to the employee’s personal account in Bureau of Labor Insurance, Ministry of Labor.
Amount of Appropriation	The balance of the labor retirement reserve is NT$43,470 thousand.	The pension recognized in 2019 was NT$12,564 thousand.

D. Labor Agreement

The Company and its subsidiaries have established mechanisms and channels of regular communication with employees and hold employee communication meetings from time to time to ensure smooth communication. No labor-related dispute occurs.

The Company has established the Working Rules based on the Labor Standards Act and the Working Rules have been approved by the Hsinchu Science Park Bureau.

E. Code of Conduct or Code of Ethics

(1) Employees shall work in accordance with the Company’s policies and regulations,

abide by supervisors’ proper guidance, and have strong willingness to work and deliver good quality; supervisors shall provide guidance for employees in a cordial

manner. Employees shall report their duties to their superiors.

(2) Employees shall hold an active, gregarious, and enterprising attitude toward work

with a proactive point of view. Employees shall perform their duties reliably

without any delay or procrastination. During working hours, employees are not

allowed to leave their posts without permission.

(3) Employees shall take self-esteem, self-respect, and self-discipline seriously, act

honestly, thriftily, and politely, and show respect to others.

(4) Employees are not allowed to browse documents, letters, technologies, and

business that are not under their management without permission.

(5) Employees shall not disclose, tell, deliver, or transfer, or publish or release trade

secrets known or held by themselves at their posts; without the Company’s written consent, employees are not allowed to operate or participate in business of their own or any third party that is related or similar to the Company’s business. Rights

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and liabilities of employment and confidentiality are governed by the Company’s Employment Contract and Confidentiality Contract separately. (6) Employees shall not accept rebate or other illegal benefits due to convenience of duties or take advantage of their duties to make profit for themselves or others. (7) Employees shall not disclose confidential information on personal salaries on purpose or inquire about salaries of others.

(8) Employees shall not bring ammunition, swords, and guns, dangerous goods, contraband or objects irrelevant to the public goods of production to the workplaces or carry away any public goods from the Company without permission. (9) Employees shall keep the workplace and the surroundings safe and clean in accordance with the occupational safety and health laws and regulations and the Company’s policies and prevent burglary, fire, or other natural disasters from happening.

F. Safeguard for the Workplace and Employees’ Safety

(1) Environmental improvement and maintenance of environmental conditions The maintenance of the facilities and equipment at the workplace will be designed from time to time to create a comfortable and safe working environment. (2) Safety training

The training course on fire and emergency drills will be carried out annually to minimize the loss of property in case of emergency.

(3) Health management

Cleaning, disinfection, and garbage recycling are carried out at the workplace to avoid the growth of mosquitos and bacteria.

(4) Environment and safety management: The visitor needs the ID card issued by the company in order to access the control door. The security guard will check the ID card then the visitor is able to enter the Company.

5.5.2 Loss Caused by Labor-related Disputes, Estimations and Countermeasures: None.

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5.6 Important Contracts

==> picture [441 x 29] intentionally omitted <==

----- Start of picture text -----

Agreement Counterparty Period Major Contents Restrictions
----- End of picture text -----

Agreement	Counterparty	Period	Major Contents	Restrictions

Land Lease	Hsinchu Science Park Bureau, Ministry of Science and Technology	2019.08.01~ 2027.12.31	Renting Scientific Park Land	Need to comply with related management Regulations; In the middle of 2019, the lease has been replaced by the official new version lease agreement (the expiration period of the lease remains the same)

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VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed Balance Sheet

A. Consolidated Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousand

==> picture [473 x 441] intentionally omitted <==

----- Start of picture text -----

Year March 31, 2020
2015 2016 2017 2018 2019
Item (Note 1)
Current Assets 9,649,516 10,051,522 10,213,502 11,685,441 9,242,393 8,047,925
Property, Plant and
5,211,143 4,657,848 4,426,156 4,146,896 3,899,427 3,844,312
Equipment
Intangible Assets 93,713 92,917 121,538 100,142 153,541 189,835
Other Assets 445,806 424,845 287,775 337,991 790,073 1,806,881
Total Assets 15,400,178 15,227,132 15,048,971 16,270,470 14,085,434 13,888,953
Before
Current Distribution 5,117,961 5,613,869 5,042,892 5,420,670 4,157,293 4,233,704
Liabilities After
Distribution 5,386,241 5,829,465 5,178,070 5,557,675 4,297,087 4,233,704
Non-current Liabilities 653,365 580,270 520,854 1,188,219 711,415 717,662
Before
Total Distribution 5,771,326 6,194,139 5,563,746 6,608,889 4,868,708 4,951,366
Liabilities After
Distribution 6,039,606 6,409,735 5,698,924 6,745,894 5,008,502 4,951,366
Share Capital 2,726,938 2,739,788 2,738,188 2,740,113 2,753,613 2,795,873
Before
Capital Distribution 1,975,772 1,862,914 2,256,692 2,262,397 2,280,487 2,334,580
Reserve After
Distribution 1,841,632 1,862,914 2,256,692 2,262,397 2,280,487 2,334,580
Before
Retained Distribution 4,536,749 4,462,922 4,259,236 4,278,647 4,224,806 4,116,476
Earnings
Distribution 4,402,609 4,247,326 4,124,058 4,141,642 4,085,012 4,116,476
Other Equity Interest 414,647 (25,521) (302,339) (294,938) (615,359) (706,809)
Treasury Stock (129,393) (129,393) (96,138) � � (146,136)
Equity Before
9,524,713 8,910,710 8,855,639 8,986,219 8,643,547 8,393,984
Attributable Distribution
to Owners After
of Distribution 9,256,433 8,695,114 8,720,461 8,849,214 8,503,753 8,393,984
the Parent
Non-controlling Interests 104,139 122,283 629,586 675,362 573,179 543,603
Before
Distribution 9,628,852 9,032,993 9,485,225 9,661,581 9,216,726 8,937,587
Total Equity
After
Distribution 9,360,572 8,817,397 9,350,047 9,524,576 9,076,932 8,937,587
----- End of picture text -----

Note 1: The annual financial statements have been audited by CPAs; financial statements as of March 31, 2020 have been reviewed by CPAs.

Note 2: As of the date of this Annual Report, the earnings distribution of the Company for the Year 2019, in addition to the cash dividends resolved by the board of directors on March 20, 2019, the rest will be handled in accordance with the relevant regulations after the resolution of shareholders ’meeting on June 12, 2020 is made.

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B. Individual Condensed Balance Sheet – Based on IFRS

Unit: NT$ thousand

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Year 2015 2016 2017 2018 2019
Item
Current Assets 3,342,969 2,545,463 1,710,815 1,620,586 1,490,928
Property, Plant and Equipment 2,151,402 2,133,095 2,179,758 2,141,996 2,098,771
Intangible Assets 3,866 2,505 1,754 1,943 1,182
Other Assets 10,217,278 9,766,424 9,630,848 9,771,378 9,522,625
Total Assets 15,715,515 14,447,487 13,523,175 13,535,903 13,113,506
Before
5,544,812 4,989,428 4,195,351 3,425,543 3,847,649
Distribution
Current Liabilities
After
5,813,092 5,205,024 4,330,529 3,562,548 3,987,443
Distribution
Non-current Liabilities 645,990 547,349 472,185 1,124,141 622,310
Before
6,190,802 5,536,777 4,667,536 4,549,684 4,469,959
Distribution
Total Liabilities
After
6,459,082 5,752,373 4,802,714 4,686,689 4,609,753
Distribution
Share Capital 2,726,938 2,739,788 2,738,188 2,740,113 2,753,613
Before
1,975,772 1,862,914 2,256,692 2,262,397 2,280,487
Distribution
Capital Reserve
After
1,841,632 1,862,914 2,256,692 2,262,397 2,280,487
Distribution
Before
4,536,749 4,462,922 4,259,236 4,278,647 4,224,806
Retained Distribution
Earnings After
4,402,609 4,247,326 4,124,058 4,141,642 4,085,012
Distribution
Other Equity Interest 414,647 (25,521) (302,339) (294,938) (615,359)
－－
Treasury Stock (129,393) (129,393) (96,138)
Before
9,524,713 8,910,710 8,855,639 8,986,219 8,643,547
Total shareholders’ Distribution
Equity After
9,256,433 8,695,114 8,720,461 8,849,214 8,503,753
Distribution
----- End of picture text -----

Note 1: The financial data have been audited by CPAs.

in accordance with the relevant regulations after the resolution of shareholders ’meeting on June 12, 2020 is made. Note3:Altek made a simple merger with its subsidiary, Altek Autotronics, on June 30, 2017. The foregoing transaction belongs to the structural reorganization within the Group, where Altek Autotronics should be considered to be possessed by Altek from the very beginning and was consolidated. The 2017 individual financial statements were retrospectively renumbered when Altek prepared the 2018 individual financial statements. The 2017 financial ratio was calculated based on the reconstructed one.

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6.1.2 Condensed Statement of Comprehensive Income/Condensed Statement of Income

A. Consolidated Condensed Statement of Comprehensive Income–Based on IFRS

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Unit: NT$ thousand
Year March 31,
2015 2016 2017 2018 2019
Item 2020
Operating Revenue 12,492,029 11,577,046 10,552,773 11,193,569 6,189,352 1,113,743
Gross Profit from
1,568,786 1,555,744 1,435,042 1,318,548 1,014,415 269,783
Operations
Net Operating Income
226,351 45,759 159,446 91,257 (156,670) (30,012)
(Loss)
Non-operating Income
56,160 144,816 (21,884) 209,763 188,092 41,784
and Expense
Income (Loss) before Tax 282,511 190,575 137,562 301,020 31,422 11,772
Income (Loss) for
274,380 100,108 49,587 173,150 (3,853) (1,466)
Continued Operations
Income (Loss) from
Discontinued � � � � � �
Operations
Net Income (Loss) 274,380 100,108 49,587 173,150 (3,853) (1,466)
Other Comprehensive
(11,764) (438,440) (326,910) 27,123 (314,268) (7,314)
Income (Income after Tax)
Total Comprehensive
262,616 (338,332) (277,323) 200,273 (318,121) (8,780)
Income
Net Income Attributable
273,643 53,800 13,402 130,562 84,308 31,464
to Owners of the Parent
Net Income Attributable
to 737 46,308 36,185 42,588 (88,161) (32,930)
Non-controlling Interests
Comprehensive Income
Attributable to 265,898 (382,446) (306,223) 144,490 (215,938) 20,796
Owners of the Parent
Comprehensive Income
Attributable to (3,282) 44,114 28,900 55,783 (102,183) (29,576)
Non-controlling Interests
Earnings (Loss) per Share
1.02 0.20 0.05 0.48 0.31 0.12
(NT$)
----- End of picture text -----

Note: The annual financial statements have been audited by CPAs; financial statements as of March 31, 2020 have been reviewed by CPAs.

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B. Individual Condensed Statement of Comprehensive Income–Based on IFRS

Unit: NT$ thousand

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Year
2015 2016 2017 2018 2019
Item
Operating Revenue 9,153,080 4,239,343 4,459,078 3,902,992 3,967,656
Gross Profit from Operations 1,011,509 686,164 438,319 434,572 386,420
Net Operating Income (Loss) 177,508 (327) (193,822) (96,122) (115,844)
Non-operating Income and
72,180 72,282 211,304 260,519 205,596
Expense
Income (Loss) before Tax 249,688 71,955 17,482 164,397 89,752
Income (Loss) for Continued
273,643 53,800 13,402 130,562 84,308
Operations
Income (Loss) from Discontinued � � � � �
Operations
Net Income (Loss) 273,643 53,800 13,402 130,562 84,308
Other Comprehensive Income
(7,745) (436,246) (319,625) 13,928 (300,246)
(Income after Tax)
Total Comprehensive Income 265,898 (382,446) (306,223) 144,490 (215,938)
Earnings (Loss) per Share (NT$) 1.02 0.20 0.05 0.48 0.31
----- End of picture text -----

Note 1: The financial data have been audited by CPAs.

Note 2: Altek made a simple merger with its subsidiary, Altek Autotronics, on June 30, 2017. The foregoing transaction belongs to the structural reorganization within the Group, where Altek Autotronics should be considered to be possessed by Altek from the very beginning and was consolidated. The 2017 individual financial statements were retrospectively renumbered when Altek prepared the 2018 individual financial statements. The 2017 financial ratio was calculated based on the reconstructed one.

6.1.3 Auditors’ Opinions from 2015 to 2019

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Year CPA Accounting Firm Audit Opinion
2015 Yu-Kuan Lin and Dian-Yi Li (Note) PricewaterhouseCoopers Unqualified opinion
2016 Dian-Yi Li and Yu-Kuan Lin PricewaterhouseCoopers Unqualified opinion
2017 Dian-Yi Li and Yu-Kuan Lin PricewaterhouseCoopers Unqualified opinion
2018 Kwok-wah Tsang and (Note) PricewaterhouseCoopers Unqualified opinion
2019 Dian-Yi Li and Kwok-wah Tsang PricewaterhouseCoopers Unqualified opinion
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Note: CPAs have been changed based on the job rotation of PricewaterhouseCoopers.

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6.2 Five-Year Financial Analysis

A. Consolidated Financial Analysis – Based on IFRS

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Year March 31,
2015 2016 2017 2018 2019
Item 2020
Debt Ratio 37.48 40.68 36.97 40.62 34.57 35.65
Financial
Structure (%) Ratio of Long-term Capital to 197.19 206.39 226.07 261.64 254.61 251.16
Property, Plant and Equipment
Current Ratio (%) 188.30 179.05 202.53 215.57 222.32 190.09
Solvency (%) Quick Ratio (%) 165.33 149.10 175.91 195.49 192.66 163.53
Interest Earned Ratio (Times) 14.88 8.39 6.12 13.93 2.35 3.45
Accounts Receivable Turnover
5.30 4.57 4.08 3.61 2.61 5.43
(Times)
Average Collection Period 68.86 79.86 89.46 101.10 139.84 67.22
Inventory Turnover (Times) 8.36 6.88 6.46 8.65 4.82 3.18
Operating Accounts Payable Turnover
4.08 4.14 4.01 3.91 2.62 4.16
Performance (Times)
Average Days in Sales 43.66 53.05 56.50 42.19 75.72 114.78
Property, Plant and Equipment
2.31 2.35 2.32 2.61 1.54 0.29
Turnover (Times)
Total Assets Turnover (Times) 0.80 0.76 0.70 0.71 0.41 0.08
Return on Total Assets (%) 1.86 0.80 0.47 1.24 0.11 0.03
Return on Stockholders' Equity
2.84 1.07 0.54 1.81 (0.04) (0.02)
(%)
Profitability Pre-tax Income to Paid-in 10.36 6.96 5.02 10.99 1.14 0.42
Capital (%)
Profit Ratio (%) 2.20 0.86 0.47 1.55 (0.06) (0.13)
Earnings per Share (NT$) 1.02 0.20 0.05 0.48 0.31 0.12
Cash Flow Ratio (%) 6.16 � 16.29 12.98 24.78 �
Cash Flow Cash Flow Adequacy Ratio (%) 62.43 � 36.79 114.82 95.71 101.47
Cash Reinvestment Ratio (%) 0.36 � 4.96 4.40 7.61 �
Operating Leverage 10.88 44.05 11.65 18.57 � �
Leverage
Financial Leverage 1.10 2.33 1.20 1.39 0.86 0.83
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The 20% changes in various financial ratios in recent two years: 1. Increase in the interest protection ratio: mainly due to the decrease of operating revenue in 2019. 2. The decrease in accounts receivable turnover ratio and the increase in average collection period are: mainly due to the decrease of operating revenue in 2019 3. Profitability ratios and the increase in earnings per share: mainly due to the decrease of operating cost in 2019. 4. The decrease in property, plant, and equipment (PP&E) turnover ratio (times) and total asset turnover ratio (times) is: mainly due to the decrease of operating revenue in 2019.

Increase in cash flow adequacy ratio: mainly due to the decrease of net income in 2019.
Increase in operating and financial leverage: manly due to the increase of net cash inflow from operating activitiesn 2019 and the decrease of current liabilities in 2019.
The decrease in cash flow adequacy ratio is: mainly caused by the decrease in net cash inflow from operating activities in the last five years.
The increase in cash reinvestment ratio is : mainly due to the increase in net cash inflow from operating activities in 2019.
9.The decrease in operating leverage and financial leverage are : mainly due to the decrease of operating revenue in 2019.

Note: The annual financial information has been audited by the accountants, and the financial information for the first quarter of 2020 was reviewed by the accountants.

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B. Individual Financial Analysis – Based on IFRS

Item	Year 2015 2016 2017 2018 2019
	Debt Ratio 39.39 38.32 34.52 33.61 34.09
Financial Structure (%) Ratio of Long-term Capital to Property, Plant and Equipment 472.75 443.40 427.93 472.01 441.49
Solvency (%)	Current Ratio(%) 60.29 51.02 40.78 47.31 38.75
	Quick Ratio(%) 60.12 49.91 40.30 46.78 36.25
	Interest Earned Ratio (Times) 13.27 3.80 1.64 8.10 4.84
Operating	Accounts Receivable Turnover (Times) 5.30 3.48 5.31 5.25 6.25
	Average Collection Period 68.86 104.89 68.74 69.52 58.40
	InventoryTurnover(Times) 413.87 57.29 87.23 129.94 54.89
	Accounts Payable Turnover(Times) 2.36 1.30 2.07 2.22 2.69
Performance	Average Days in Sales 0.88 6.37 4.18 2.81 6.65
	Property, Plant and Equipment Turnover (Times) 4.21 1.98 2.07 1.81 1.87
	Total Assets Turnover (Times) 0.58 0.28 0.32 0.29 0.30
Profitability	Return on Total Assets(%) 1.83 0.50 0.25 1.12 0.78
	Return on Stockholders' Equity (%) 2.85 0.58 0.15 1.46 0.96
	Pre-tax Income to Paid-in Capital(%) 9.16 2.63 0.64 6.00 3.26
	Profit Ratio(%) 2.99 1.27 0.30 3.35 2.12
	Earnings per Share (NT$) 1.02 0.20 0.05 0.48 0.31
	Cash Flow Ratio (%) 7.04 � � � 1.48
Cash Flow	Cash Flow AdequacyRatio(%) � � � 27.99 �
	Cash Reinvestment Ratio(%) 1.15 � � � �
Leverage	OperatingLeverage 5.23 � � � �
	Financial Leverage 1.13 0.01 0.88 0.79 0.82
The 20% changes in various financial ratios in recent two years:

1. Decrease in the quick ratio ratio: mainly due to the decrease of account receiveble in 2019.
2. Decrease in interest earned ratio: mainly due to the decrease of net profit before income tax in 2019.
3. Decrease in inventory turnover and increase in average days in sales: mainly due to the increase of inventory in 2019.
4. Increase in accounts payable turnover ratio: ainly due to the decrease of account payable in 2019.
5. Decrease in each item of profitability and earnings per share: mainly due to the decrease of net income in 2019.
6. Increase in cash flow ratio: mainly due to the increase in net cash inflow from operating activities in 2019.
7. Decrease in cash flow adequacy ratio: The decrease in cash flow adequacy ratio is: mainly caused by the decrease in
net cash inflow from operating activities in the last five years.

Note 1: Annual financial information is certified by accountants

Note 2: Altek made a simple merger with its subsidiary, Altek Autotronics, on June 30, 2017. The foregoing transaction belongs to the structural reorganization within the Group, where Altek Autotronics should be considered to be possessed by Altek from the very beginning and was consolidated. The 2017 individual financial statements were retrospectively renumbered when Altek prepared the 2018 individual financial statements. The 2017 financial ratio was calculated based on the reconstructed one.

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International Financial Reporting Standards (IFRS)

Formula for Financial Ratios:

Financial Structure
(1) Debt Ratio � Total Liabilities � Total Assets.
(2) Ratio of Long-term Capital to Property, Plant and Equipment � (Total Shareholders’ Equity � Non-current Liabilities) � Net Property, Plant and Equipment.
Solvency
(1) Current Ratio � Current Assets � Current Liabilities.
(2) Quick Ratio � (Current Assets � Inventory � Prepaid Expenses) � Current Liabilities.
(3) Interest Earned Ratio � Net Profit before Income Tax and Interest Expenses � Current Interest Expenses.
Operating Performance
(1) Accounts Receivable Turnover (including Accounts Receivable and Notes Receivable arising from Business) � Net Sales � Average Accounts Receivable Balance (including Accounts Receivable and Notes Receivable arising from Business) in Each Period.

(2) Average Collection Period � 365 � Accounts Receivable Turnover.

(3) Inventory Turnover � Cost of Sales � Average Inventory.
(4) Accounts Payable Turnover (including Accounts Payable and Notes Payable arising from Business) � Cost of Sales � Average Accounts Payable Balance (including Accounts Payable and Notes Payable arising from Business) in Each Period.
(5) Average Days in Sales � 365 � Inventory Turnover.
(6) Property, Plant and Equipment Turnover � Net Sales � Net Average Property, Plant and Equipment.
(7) Total Assets Turnover � Net Sales � Average Total Assets.
Profitability
(1) Return on Total Assets �� Net Income � Interest Expenses×(1 � Tax Rate) �� Average Total Assets.
(2) Return on Stockholders' Equity � Net Income � Average Total Shareholders’ Equity.
(3) Profit Ratio � Net Income � Net Sales.
�
(4) Earnings per Share (Profits and Losses Attributable to the Owners of the Parent Company Preferred Dividend) � Weighted Average Number of Shares Issued.
Cash Flow
(1) Cash Flow Ratio � Net Cash Flow from Operating Activities � Current Liabilities.
(2) Cash Flow Adequacy Ratio � Net Cash Flow from Operating Activities over the Last Five Years � (Capital Expenditures � Increase in Inventory � Cash Dividend) over the Last Five Years.
(3) Cash Reinvestment Ratio � (Net Cash Flow from Operating Activities � Cash Dividends) � (Gross Property, Plant and Equipment � Long-term Investment � Other Non-current Assets � Working Capital).
Leverage

� � (1) Operating Leverage (Net Operating Income Variable Operating Costs and Expenses) � Operating Income.

�
(2) Financial Leverage Operating Income � (Operating Income Interest Expenses).

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6.3 Audit Committee’s Review Report for the Most Recent Year

Audit Committee’s Review Report

To: The 2020 Annual General Shareholders’ Meeting

The Board of Directors has prepared the Company’s 2019 Business Report, Financial Statements and proposal for allocation of earnings. The CPA firm of PricewaterhouseCoopers was retained to audit Altek’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Altek Corporation. According to relevant requirements of the Securities Exchange Act and the Company Law, we hereby submit this report.

Altek Corporation

Chairman of the Audit Committee Ching Jen Hu

March 20, 2020

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6.4 Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR 19000242 (In Thousands of New Taiwan Dollars)

To the Board of Directors and Shareholders of ALTEK CORPORATION

Opinion

We have audited the accompanying consolidated balance sheets of ALTEK CORPORATION AND SUBSIDIARIES (the “Group”) as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Allowance for inventory valuation losses

Description

Please refer to Note 4(14) for description of accounting policy on inventory valuation. Please refer to Note 5(2) for accounting estimates and assumption uncertainty in relation to inventory valuation. Please refer to Note 6(6) for description of allowance for inventory valuation losses.

The Group is primarily engaged in manufacturing and sales of digital image application products. As the Group is in a rapidly changing industry and the short life cycle of electronic products and the highly competitive nature of the market, there is a higher risk of incurring inventory valuation losses or having obsolete inventory. The Group measures inventories sold at the lower of cost and net realisable value. For inventory that is over a certain age and individually identified obsolete or damaged inventory, the Group recognises losses at net realisable value. Aforementioned allowance for inventory valuation losses mainly arises from individually identified obsolete or damaged inventory. Since the value of inventories is significant, involves various types of inventory, and the individual identification of inventory usually involves management judgement which is an area that also needs to be assessed using our judgement during the audit process. Thus, we identified valuation of allowance for inventory losses as one of the key audit matters.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

A. Obtained an understanding and assessed the provision policy on inventory valuation losses.
B. Obtained the statement of individually identified obsolete inventory prepared by management and checked the accuracy of stock age analysis report and relevant information.

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C. Checked the accuracy of net realisable value of inventory, assessed the consistency between valuation of market value decline and its provision policy, and assessed the reasonableness of allowance for valuation losses determined by the Group.

Timing of sales revenue recognition

Description

Please refer to Note 4(30) for accounting policies of revenue recognition. The Company and its subsidiaries’ revenue mainly arises from export sales and the cash amounts are material. As the sales terms vary from customers who are located in Mainland China, Europe and America, the terms in customer orders and contracts needs to be properly assessed. Since this involves judgement in the determination of timing of control transfer, we consider the timing of revenue recognition as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

A. Assessed the appropriation of policies on sales revenue recognition.
B. Assessed and tested the design of internal controls that are relevant to sales revenue recognition and the effectiveness of execution.
C. Performed cutoff test on sales revenue in specific period around balance sheet date.
D. Performed confirmation and substantive test on the balance of accounts receivable at the end of period to confirm accounts receivable and that relevant sales revenue have been recorded in the proper period.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Altek Corporation as at and for the years ended December 31, 2019 and 2018.

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Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Li, Tien-Yi Tsang, Kwok-Wah For and on behalf of PricewaterhouseCoopers, Taiwan March 20, 2020

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

-98-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Assets	December31,2019 AMOUNT % � �� �� �� � � � �� � �� � �� � �� � �� � �� � �� �� �� � �� � �� � � � �� �� �� � �� � �� � �� � �� � �� �� � �� ��	December31,2018	December31,2018
	AMOUNT � �� �� � �� �� �� �� �� �� �� �� �� �� � �� �� �� �� �� �� �� � ��	AMOUNT � �� �� �� �� �� �� �� �� �� �� �� �� � �� �� � �� �� �� �� �� � ��	%
Current assets 1100 Cash and cash equivalents 1136 Current financial assets at amortised cost, net 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Current Assets Non-current assets 1510 Non-current financial assets at fair value through profit or loss 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1550 Investments accounted for using equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets, net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets			�� � � �� � � � � �
			��
			� � � � �� � � � � �
			��
			��

(Continued)

-99-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December31,2019 December31,2018 Notes AMOUNT % AMOUNT % 6(12) � �� �� � �� �� 6(13) �� � � � �� � � � �� � �� � �� � �� �� �� � �� � �� � �� � 6(17) �� � �� � �� � � � �� � �� � �� �� �� �� 6(14) � � �� � 6(17) �� � �� � 6(28) �� � �� � �� � � � �� � �� � �� � �� � �� �� �� �� 6(18) �� �� �� �� 6(19) �� �� �� �� 6(20) �� �� �� � �� � �� � �� �� �� �� 6(21) � �� �� �� �� �� �� �� �� �� � �� � �� �� �� �� 11 � �� �� � �� ��
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2250 Provisions for liabilities - current 2280 Current lease liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2540 Long-term borrowings 2550 Provisions for liabilities - noncurrent 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant subsequent event 3X2X Total liabilities and equity

Liabilities and Equity

December31,2019
December31,2018
Notes
AMOUNT
%
AMOUNT
%
6(12)
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6(13)
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6(17)
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6(14)
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6(17)
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6(28)
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6(18)
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6(20)
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6(21)
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11
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Current liabilities
2100
Short-term borrowings
2110
Short-term notes and bills payable
2130
Current contract liabilities
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2250
Provisions for liabilities - current
2280
Current lease liabilities
2300
Other current liabilities
21XX
Current Liabilities
Non-current liabilities
2540
Long-term borrowings
2550
Provisions for liabilities - noncurrent
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2600
Other non-current liabilities
25XX
Non-current liabilities
2XXX
Total Liabilities
Equity attributable to owners of
parent
Share capital
3110
Common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
31XX
Equity attributable to owners of
the parent
36XX
Non-controlling interest
3XXX
Total equity
Significant subsequent event
3X2X
Total liabilities and equity

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

-100-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Year ended December 31 2019 2018 Notes AMOUNT % AMOUNT % 6(22) � �� �� � �� �� 6(6)(26)(27) � �� �� �� �� �� �� �� �� 6(26)(27) � �� �� �� � � �� �� �� � � �� �� �� � 12(2) �� �� �� � � �� �� �� �� � �� �� �� � 6(23) �� � �� � 6(24) �� � �� � 6(25) � �� �� �� � �� � �� � �� � �� � 6(28) � �� �� �� � � �� � � �� �
4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gains (losses) 6000 Total operating expenses 6900 Operating (loss) profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 (Loss) profit for the year

Items

Year ended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
%
6(22)
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6(6)(26)(27)
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12(2)
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4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Expected credit gains (losses)
6000
Total operating expenses
6900
Operating (loss) profit
Non-operating income and
expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income
and expenses
7900
Profit before income tax
7950
Income tax expense
8200
(Loss) profit for the year

(Continued)

-101-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Year ended December 31 2019 2018 Notes AMOUNT % AMOUNT % 6(15) � �� � � �� � 6(3) � �� �� �� � 6(28) �� �� �� � � �� �� �� � � �� �� �� � 6(28) �� � �� � � �� �� �� � � �� �� �� � � �� �� �� � � �� � � �� � � �� �� �� � � �� � � �� � � �� �� �� � � �� �� �� � � �� �� �� � 6(29) � �� �� 6(29) � �� ��
Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Other comprehensive income, before tax, actuarial gains (losses) on defined benefit plans 8316 Unrealised gains from financial assets measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Currency translation differences of foreign operations 8399 Income tax relating to the components of other comprehensive income 8360 Components of other comprehensive (loss) income that will be reclassified to profit or loss 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive (loss) income for the year Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Profit (loss) for the year Comprehensive (loss) income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total comprehensive income (loss) for the year 9750 Basic earnings per share 9850 Diluted earnings per share

Items

Year ended December 31
2019
2018
Notes
AMOUNT
%
AMOUNT
%
6(15)
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6(28)
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6(28)
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Other comprehensive income
Components of other
comprehensive income that will
not be reclassified to profit or
loss
8311
Other comprehensive income,
before tax, actuarial gains
(losses) on defined benefit plans
8316
Unrealised gains from financial
assets measured at fair value
through other comprehensive
income
8349
Income tax related to
components of other
comprehensive income that will
not be reclassified to profit or
loss
8310
Components of other
comprehensive income that
will not be reclassified to
profit or loss
Components of other
comprehensive income that will
be reclassified to profit or loss
8361
Currency translation differences
of foreign operations
8399
Income tax relating to the
components of other
comprehensive income
8360
Components of other
comprehensive (loss) income
that will be reclassified to
profit or loss
8300
Total other comprehensive (loss)
income for the year
8500
Total comprehensive (loss)
income for the year
Profit (loss), attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Profit (loss) for the year
Comprehensive (loss) income
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Total comprehensive income
(loss) for the year
9750
Basic earnings per share
9850
Diluted earnings per share

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

-102-

									Total equity		��	�		��	��		��	��		�	�	� ��	��		�	��	� ��	��		��	� ��		� ��	� ��		�	�	� ��	��	�		�	��
								Non-controlling	interest		� ��	�		��	��		��	��		�	�	�	�		�	�	��	� ��		� ��	��		��	��		�	�	�	�	�		�	� ��
																											�				�		�	�
									Total		��	�		��	��		��	��		�	�	� ��	��		�	��	�	��		��	��		� ��	� ��		�	�	� ��	��	�		�	��
								Treasury	stocks		��	�		� ��	�		�	�		�	�	�	�		�	��	�	� �		� �	�		�	�		�	�	�	�	�		�	� �
ALTEK CORPORATION AND SUBSIDIARIES	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018	(Expressed in thousands of New Taiwan dollars)	Equity attributable to owners of the parent	Retained earnings Other equity interest	Currency	translation	Unappropriated differences of	Legal reserve Special reserve retained earnings foreign operations Others		�� � �� � �� �� �� �� ��	� � �� � � ��		�� �� �� � �� � ��	� � �� � �		� � �� �� � ��	� � �� �� � ��		�� � � �� � �	� �� � �� � �	� � � �� � �	� � � � ��		� � � � ��	� � � � �	� � � � �	�� � �� � �� �� �� �� ��		�� � �� � �� �� �� �� ��	� � �� � �		� � � �� � �� � ��	� � �� � �� � ��		�� � � �� � �	� �� � �� � �	� � � �� � �	� � � � ��	� � � � � ��		� � � � ��	�� � �� � �� �� �� ��
								Additional paid-in	capital		��	�		��	�		�	�		�	�	�	��		� ��	��	�	��		��	�		�	�		�	�	�	�	��		� ��	��
									Common stock		��	�		��	�		�	�		�	�	�	��		� ��	�	�	��		��	�		�	�		�	�	�	�	��		� ��	��
									Notes			6(21)				6(21)			6(20)				6(16)(18)(19)(21)	6(16)(18)(19)(21)								6(21)			6(20)				6(16)(21)	6(16)(18)(19)(21)	6(16)(18)(19)(21)
										2018	Balance at January 1, 2018	Effects of retrospective application	Equity at beginning of period after	adjustments	Profit for the year	Other comprehensive income (loss)	for the year	Total comprehensive income (loss)	Appropriation of 2017 earnings	Legal reserve	Special reserve	Cash dividends	Share-based payment transactions	Retirement of employee restricted	shares	Treasury stock sold to employees	Non-controlling interest	Balance at December 31, 2018	2019	Balance at January 1, 2019	Profit (loss) for the year	Other comprehensive income (loss)	for the year	Total comprehensive income (loss)	Appropriation of 2018 earnings	Legal reserve	Special reserve	Cash dividends	Share-based payment transactions	Restricted stock	Retirement of employee restricted	shares	Balance at December 31, 2019

-103-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Amortisation
Expected credit (gains) losses
Net gain on financial assets at fair value through
profit or loss
Interest expense
Interest income
Dividend income
Share-based payment compensation cost
Reversal of impairment loss on investments
accounted for under the equity method
(Gain) loss on disposal of property, plant and
equipment
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit
or loss
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Current contract liabilities
Notes payable
Accounts payable
Other payables
Provisions for liabilities
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

Notes
2019
2018
�
��
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6(8)(9)(10)(26)
��
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6(11)(26)
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12(2)
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��
6(2)(24)
�
��
��
6(25)
��
��
6(23)
�
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6(23)
�
��
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6(16)(27)
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��
6(24)
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6(24)
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(Continued)

-104-

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost
Proceeds from capital reduction of investments
accounted for under the equity method
Proceeds from capital reduction of financial assets
at fair value through profit or loss
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Increase in intangible assets
Acquisition of investment property
Increase in deposits received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Proceeds from issuance of short-term notes and bills
payable
Repayment of short-term notes and bills payable
Increase in long-term borrowings
Repayment of long-term borrowings
Increase (decrease) in deposits-in
Repayment of lease liabilities principal
Cash dividends for capital surplus
Employee stock options exercised
Treasury shares sold to employees
Net cash flows (used in) from financing
activities
Effect of exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2019
2018
��
��
��
��
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6(31)
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6(31)
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6(20)
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6(1)
��
��
6(1)
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��

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

-105-

ALTEK CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

Altek Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the development, manufacturing and sale of digital image technology application, and related export and import trade.

The Company was listed in the Taiwan Stock Exchange on December 24, 2002, as approved by the TaiTz (91) Letter No. 024976 of the former Securities and Futures Commission, Ministry of Finance, R.O.C., dated September 27, 2002.

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 March 20, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	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 the Group’s financial condition and financial performance based on the Group’s assessment. IFRS 16, ‘Leases’

A. IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a ‘right-of-use asset’ and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for

-106-

those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ and ‘lease liability’ by $107,196 on January 1, 2019.
C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
(a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
(b)The accounting for operating leases whose period will end before December 31, 2019 are treated as short-term leases and accordingly, rent expense of $8,475 was recognised in 2019.
(c) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.
(d) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate range from 1.1% to 1.25%.
E. The Group recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

(2)

Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by
Operating lease commitments disclosed by applying IAS 17 as at
December 31, 2018
44,230
$ Less: Short-term leases
425)
(
Add: Adjustments as a result of a different treatment of
extension and termination options
83,294
Total lease contracts amount recognised as lease liabilities by applying
IFRS 16 on January 1, 2019
127,099
Incremental borrowing interest rate at the date of
initial application
1.1%~1.25%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16
107,196
$

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(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:

endorsed by the FSC are as follows:
NewStandards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IAS 1, ‘Classification of liabilities as current or non-current’	To be determined by International Accounting Standards Board January 1, 2021 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the consolidated financial statements for the year ended December 31, 2019, except for the compliance statement, basis of preparations, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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  - (b) Financial assets at fair value through other comprehensive income.

  - (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
- (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
- (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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Ownership (%)	Name of Investor Name of Subsidiaries Main Business Activities December 31, 2019 December 31, 2018 Note	Altek Corporation Altek International Investment Co., Ltd. Investments 100 100 -	" Altek Japan Corporation Sales of optical instruments 100 100 -	" Altek Investment Co., Ltd. Investments - 100 Note 3	" Altek International Holding (BVI) Co.,Ltd. Investments 100 100 -	Altek International Investment Co., Ltd. Altek Lab Inc. Design service 100 100 -	" Altek Optical (Cayman) Co., Ltd. Investments 100 100 -	" Altek Semiconductor (Cayman) Co., Ltd. Investments 50 50 -	" Altek International Trading Co.,Ltd Investments and general business operations 100 - Note 4	Note 1 Altek (Kunshan) Co., Ltd. Manufacture and sales of digital still camera and its 100 100 -	accessories	Note 1 Altek EMS (Kunshan) Co., Ltd. Manufacture and sales of related engineering services 100 100 -	Note 1 Altek Precision (Kunshan) Co., Ltd. Manufacture and sales of digital camera parts 100 100 -	Note 1 Altek Trading (Shanghai) Limited Wholesale, import and export of related electronic and 100 100 -	their associated accessories	Note 2 Altek Biotechnology Corporation Research and development, manufacture and sales of 100 100 -	medical electronic equipments	Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor Corporation Research design and sales of ASIC 100 100 -	" Altek Semiconductor (Shanghai) Co., Ltd. Research design and sales of imaging technologies, 100 100 -	electronic software and hardware	Note 1 Altek Optical Technology (Kunshan) Co., Manufacture and sales of related electronic services 100 100 -	Ltd. and its accessories and optical components	Note 1: Invested by Leading Tech. Co., Ltd., Toptek Investment Cayman Co., Ltd., Altek Imaging Technology (Cayman) Co., Ltd., Altek Trading (Cayman) Co., Ltd., Altek Optical Technology (Cayman) Co., Ltd.,	which are wholly owned by Altek International Investment Co., Ltd.	Note 2: Invested by Altek Biotechnology Holding (Cayman) Co., Ltd., which is wholly owned by Altek International Holding (BVI) Co., Ltd.	Note 3: The dissolution and liquidation of Altek Investment Co., Ltd. was resolved by the Board of Directors on December 17, 2018. Moreover, the liquidation was completed as approved by the court on April 25, 2019.	Note 4: Invested by Altek International Investment Co., Ltd. and established on July, 2019.

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C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments 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.
(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional and the Group’s presentation currency.

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

iii. All resulting exchange differences are recognised in other comprehensive income.

(b) When the foreign operation partially disposed of or sold is an associate or joint arrangement, exchange differences that were recorded in other comprehensive income are proportionately

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reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate or joint arrangement after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangement, such transactions should be accounted for as disposal of all interest in these foreign operations.

(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(d) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

(5) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
The Group classifies all assets that do not meet the above criteria as non-current assets.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

The Group classifies all liabilities that do not meet the above criteria as non-current liabilities.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in

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operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise 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 recognised and derecognised using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:
The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(9) Financial assets at amortised cost

The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(10) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Impairment of financial assets

For financial assets at amortised cost at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration

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all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that does not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(12) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.
(13) Leasing arrangements (lessor) operating leases
Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.
(14) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.
(15) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

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D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(16) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives.

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Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 3 ~ 40 years Machinery and equipment 3 ~ 10 years Utility equipment 3 ~ 6 years Other equipment 2 ~ 11 years

(17) Leasing arrangements (lessee) � right-of-use assets/ lease liabilities

Effective 2019

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability
(b) Any initial direct costs incurred by the lessee

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

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(18) Operating leases (lessee)

Applicable in 2018

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

(19) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10 ~ 35 years.

(20) Intangible assets

Computer software, reticle and patent right is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 ~ 5 years.

(21) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(22) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred.

(23) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The Group initially measures notes and accounts payable at fair value and subsequently amortises the interest expense in profit or loss over the period of circulation using the effective interest method.

(24) Provisions

Provisions (warranties) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date.

(25) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected

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to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
- ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognised immediately in profit or loss.
C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

D. Employees’ compensation and directors’ remuneration
Employees’ compensation and directors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

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- (26) Employee share based payment

A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.
B. Restricted stocks:
- (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period.
- (b) For restricted stocks where those stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Group recognises the fair value of the dividends received by the employees who are expected to resign during the vesting period as compensation cost at the date of dividends declared.
- (c) For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Group and the Group must refund their payments on the stocks, the Group recognises the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognises the payments from the employees who are expected to be eventually vested with the stocks in ’capital surplus – others’.
(27) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the

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consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

(28) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(29) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities.

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(30) Revenue recognition

A. Sales of goods
(a) The Group manufactures and sells digital image technology application products. Sales are recognised when control of the products has transferred, being when the products are delivered to the buyer, the buyer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
(b) Revenue from these sales is recognised based on the price specified in the contract, net of the value-added tax, sales return, volume discounts, sales discounts and allowances.
(c) The Group’s obligation to provide a repair for faulty products under the standard warranty terms is recognised as a provision.
(d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Technical service revenue

The Group provides technical support services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is determined based on the number of delivered report relative to the total number of committed report.

C. Royalty income
(a) The Group entered into a contract with a customer to grant a licence of patented technology to the customer. Given the licence is distinct from other promised goods or services in the contract, the Group recognises the revenue from licencing when the licence transfer to a customer either at a point in time or over time based on the nature of the licence granted. The nature of the Group’s promise in granting a licence is a promise to provide a right to access the Group’s intellectual property if the Group undertakes activities that significantly affect the patents to which the customer has rights, the customer is affected by the Group’s activities and those activities do not result in the transfer of a good or a service to the customer as they occur. The royalties are recognised as revenue on a straight-line basis throughout the licencing period. In case the abovementioned conditions are not met, the nature of the Group’s promise in granting a licence is a promise to provide a right to use the Group’s intellectual property and therefore the revenue is recognised when transferring the licence to a customer at a point in time.

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(b) Some contracts require a usage-based royalty in exchange for a licence of intellectual property. The Group recognises revenue when the performance obligation has been satisfied and the subsequent usage occurs. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

(31) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group’s chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(a) Critical judgements in applying the Group’s accounting policies

None.

(b) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2019, the carrying amount of inventories was $1,038,629.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
0 Cash on hand revolving funds Checking accounts and demand deposits Time deposits Total	December 31,2019 901 $ 252,974 6,412,180 6,666,055 $	December 31,2018
		1,070 $ 933,058 5,560,889
		6,495,017 $

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.

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(2) Financial assets at fair value through profit or loss

Items Non-current items: Financial assets mandatorily measured at fair value through profit or loss Unlisted stocks Valuation adjustment Total	December 31,2019 December 31,2018 10,312 $ 12,731 $ 29,844 10,952 40,156 $ 23,683 $

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

loss are listed below:
Equity instruments Beneficiary certificates Total	2019 16,710 $ - 16,710 $	2018
		16,998 $ 3,020
		20,018 $

B. The Group’s has no financial assets at fair value through profit or loss as at December 31, 2019 and 2018 pledged to others.

(3) Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Unlisted stocks Valuation adjustment Total		December 31,2019		December 31,2018
		148,132 $ 97,488) ( 50,644 $		150,124 $ 35,616) ( 114,508 $

A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $50,644 and $ 114,508 as at December 31, 2019 and 2018, respectively.
B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income amounted to ($61,872) and ($12,016) as at December 31, 2019 and 2018, respectively.
C. As at December 31, 2019 and 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 $50,644 and $114,508, respectively.
D. The Group’s has no financial assets at fair value through profit or loss as at December 31, 2019 and 2018 pledged to others.

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(4) Financial assets at amortised cost

Financial assets at amortised cost
A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are liste below: B. The Group has no financial assets at amortised cost pledged to others. Notes and accounts receivable Items December 31,2019 December 31,2018 Current items: Time deposit with maturity from three months to one year 371,900 $ 261,228 $ Non-current items: Time deposit with maturity over one year 365,285 $ - $ 2019 2018 Interest income 17,989 $ 1,242 $ December 31,2019 December 31,2018 Notes receivable - $ 1,387,222 $ Accounts receivable 923,301 2,430,654 Less: Allowance for uncollectible accounts 5,282) ( 15,879) ( 918,019 $ 2,414,775 $	December 31,2018
	261,228 $
	- $
		$	1,242
			December 31,2018 1,387,222 $ 2,430,654 15,879) ( 2,414,775 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:
B. The Group has no financial assets at amortised cost pledged to others.
(5) Notes and accounts receivable
A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

is as follows:
Not past due Up to 30 days 31 to 90 days 91 to 180 days 180 to 360 days over 361 days	December	Accounts receivable 31,2019	December	Accounts receivable 31,2018
	Notes receivable		Notes receivable
	- $ - - - - - - $	874,130 $ 38,011 2,798 3,568 337 4,457 923,301 $	1,387,222 $ - - - - - 1,387,222 $	2,146,832 $ 67,351 174,273 29,761 6,222 6,215 2,430,654 $

The above ageing analysis was based on past due date.

B. As of December 31, 2019 and 2018, accounts receivable and notes receivable were all from contracts with customers.
C. The Group has no notes and accounts receivable pledged to others.
D. As at December 31, 2019 and 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 Group’s notes and accounts receivable was $0 and $1,387,222, $918,019 and $2,414,775, respectively.

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E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(6) Inventories

ventories
				December 31,2019
					Allowance for
		Cost			valuation loss		Book value
Raw materials	$	627,464	($		34,134)	$	593,330
Work in progress		180,747	(		5,317)		175,430
Finished goods		285,494	(		15,625)		269,869
Total	$	1,093,705	($		55,076)	$	1,038,629
				December 31,2018
					Allowance for
		Cost			valuation loss		Book value
Raw materials	$	688,388	($		34,641)	$	653,747
Work in progress		95,968	(		7,558)		88,410
Finished goods		268,788	(		11,733)		257,055
Total	$	1,053,144	($		53,932)	$	999,212
The cost of inventories recognised as expense for the period:
		For the	year ended			For	the year ended
		December			31,2019	December 31,2018
Cost of goods sold		$			5,173,793 $		9,884,670
Loss on decline(Gain on reversal of)
in market value					1,144 (		9,649)
Total		$			5,174,937 $		9,875,021

The cost of inventories recognised as expense for the period:

For the year 2018, the Group reversed from a previous inventory write-down and accounted for as reduction of cost of goods sold because inventory that has been appropriated as loss on decline in market value was partially sold.

(7) Investments accounted for using equity method

Investments accounted for using equity method
JinJing Optical Technology Co., Ltd. Less: Accumulated impairment loss		December 31,2019		December 31,2018
		- $ - - $		44,524 $ 17,756) ( 26,768 $

A. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

As of December 31, 2019 and 2018, the carrying amount of the Group’s individually immaterial associates amounted to $0 and $26,768, respectively.

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Profit for the period from continuing operations Other comprehensive income, net of tax Total comprehensive income		For the year ended December 31,2019		For the year ended December 31,2018
		51 $ - 51 $		113,661 $ - 113,661 $

B. The dissolution and liquidation of JinJing Optical Technology Co., Ltd. was resolved by the Board of Directors on October 8, 2019. Moreover, the liquidation was completed on October 24, 2019.

�Blank below �

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			Total		5,505,116 $	2,128,771) (	3,376,345 $	3,376,345 $	17,617	2,154) (	-	181,851) (	74,263) (	3,135,694 $		5,177,350 $	2,041,656) (	3,135,694 $
			Others		461,630 $	442,704) (	18,926 $	18,926 $	1,439	80) (	382	10,061) (	213) (	10,393 $		406,631 $	396,238) (	10,393 $
Construction in	progress and	prepayment for	equipment		10,459 $	-	10,459 $	10,459 $	4,055	-	10,459) (	-	154) (	3,901 $		3,901 $	-	3,901 $
			Test equipment		157,605 $	151,959) (	5,646 $	5,646 $	2,630	53) (	983	3,296) (	60) (	5,850 $		153,649 $	147,799) (	5,850 $
			Machinery		1,089,739 $	768,358) (	321,381 $	321,381 $	6,958	2,021) (	-	80,811) (	9,633) (	235,874 $		901,360 $	665,486) (	235,874 $
		Buildings and	structures		3,316,999 $	765,750) (	2,551,249 $	2,551,249 $	2,535	-	9,094	87,683) (	64,203) (	2,410,992 $		3,243,125 $	832,133) (	2,410,992 $
			Land	At January 1	Cost 468,684 $	Accumulated depreciation -	468,684 $	Opening net book amount 468,684 $	Additions -	Disposals -	Reclassifications -	Depreciation charge -	Net exchange differences -	Closing net book amount 468,684 $	At December 31	Cost 468,684 $	Accumulated depreciation -	468,684 $

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Construction in	progress and	Buildings and prepayment for	Land structures Machinery Test equipment equipment Others Total	At January 1	Cost 468,684 $ 3,353,156 $ 1,366,032 $ 170,311 $ - $ 533,260 $ 5,891,443 $	Accumulated depreciation - 685,644) ( 903,610) ( 158,744) ( - 494,657) ( 2,242,655) (	468,684 $ 2,667,512 $ 462,422 $ 11,567 $ - $ 38,603 $ 3,648,788 $	Opening net book amount 468,684 $ 2,667,512 $ 462,422 $ 11,567 $ - $ 38,603 $ 3,648,788 $	Additions - 1,910 - 1,513 10,466 4,373 18,262	Disposals - - 41,997) ( 848) ( - 344) ( 43,189) (	Reclassifications - - - - - 278) ( 278) (	Depreciation charge - 88,761) ( 93,536) ( 6,539) ( - 23,243) ( 212,079) (	Net exchange differences - 29,412) ( 5,508) ( 47) ( 7) ( 185) ( 35,159) (	Closing net book amount 468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $	At December 31	Cost 468,684 $ 3,316,999 $ 1,089,739 $ 157,605 $ 10,459 $ 461,630 $ 5,505,116 $	Accumulated depreciation - 765,750) ( 768,358) ( 151,959) ( - 442,704) ( 2,128,771) (	468,684 $ 2,551,249 $ 321,381 $ 5,646 $ 10,459 $ 18,926 $ 3,376,345 $	A. For the years ended December 31, 2019 and 2018, there was no capitalisation of borrowing interests attributable to the property, plant and equipment.	B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

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� (9) Leasing arrangements lessee

Effective 2019

A. The Group leases various assets including land, buildings, business vehicles. Rental contracts are typically made for periods of 1 to 49 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. Short-term leases with a lease term of 12 months or less comprise of leases for printers.
C. The carrying amount of the depreciation charge are as follows:

Land Buildings Transportation equipment (Business vehicles)		December 31,2019 Carryingamount $ 123,882 3,264 4,804 131,950 $	For the year ended December 31,2019
			Depreciation charge
			$ 4,040 1,777 2,417 8,234 $

D. For the year ended December 31, 2019, the additions to right-of-use assets were $2,191.
E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	For the year ended December 31,2019
	$ 1,170 8,475 114 $9,759

F. For the year ended December 31, 2019, the Group’s total cash outflow for leases were $16,555. G. Extension and termination options

In determining the lease term, the Group takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

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(10) Investment property

Investment property
At January 1 Cost Accumulated depreciation At January 1 Depreciation charge At December 31 At December 31 Cost Accumulated depreciation At January 1 Cost Accumulated depreciation At January 1 Depreciation charge At December 31 At December 31 Cost Accumulated depreciation		2019	Total 819,242 $ 48,691) ( 770,551 $ 770,551 $ 6,818) ( 763,733 $ 819,242 $ 55,509) ( 763,733 $ Total 819,242 $ 41,874) ( 777,368 $ 777,368 $ 6,817) ( 770,551 $ 819,242 $ 48,691) ( 770,551 $
	Land 573,532 $ - 573,532 $ 573,532 $ - 573,532 $ 573,532 $ - 573,532 $	Buildings and structures 245,710 $ 48,691) ( 197,019 $ 197,019 $ 6,818) ( 190,201 $ 245,710 $ 55,509) ( 190,201 $ 2018
	Land 573,532 $ - 573,532 $ 573,532 $ - 573,532 $ 573,532 $ - 573,532 $	Buildings and structures 245,710 $ 41,874) ( 203,836 $ 203,836 $ 6,817) ( 197,019 $ 245,710 $ 48,691) ( 197,019 $

A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the year		For the year ended December 31,2019		For the year ended December 31,2018
		26,127 $ 8,250 $		26,127 $ 8,220 $

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B. The fair value of the investment property held by the Group as at December 31, 2019 and 2018 all amounted to $870,022, which were valued by independent valuers. Valuations were made using the comparative method and income approach to perform evaluation capitalization.
C. There was no capitalization of borrowing interests attributable to investment property.
D. Information about the investment property that was pledged to others as collaterals is provided in Note 8.

(11) Intangible assets

			2019			2018
At January 1
Cost	$		168,707	$		165,921
Accumulated amortisation	(		68,565)	(		44,383)
	$		100,142	$		121,538
At January 1	$		100,142	$		121,538
Additions			84,378			4,398
Amortisation charge	(		29,352)	(		27,878)
Net exchange differences	(		1,627)			2,084
At December 31	$		153,541	$		100,142
At December 31
Cost	$		245,090	$		168,707
Accumulated amortisation	(		91,549)	(		68,565)
	$		153,541	$		100,142
A. Details of amortisation on intangible assets are as			follows:
			For the year ended			For the year ended
		December 31,2019			December 31,2018
Operating costs		$	170		$	2,507
Operating expense			29,182			25,371
		$	29,352		$	27,878

B. The Group has no intangible assets pledged to others.

(12) Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Unsecured borrowings Type of borrowings Bank borrowings Unsecured borrowings	December 31,2019 2,200,000 $ December 31,2018 1,760,000 $	Interest rate range 0.9% ~1% Interest rate range 1% ~1.0758%	Collateral
			None Collateral
			None

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(13) Short-term notes and bills payable

Short-term notes and bills payable
Commercial paper payable Less: Discount on short-term notes and bills payable Interest rate ranges	December 31,2019 230,000 $ 38) ( 229,962 $ 0.997%	December 31,2018
		- $ -
		- $
		-

- (14) Long term borrowings

As at December 31, 2019 : None.

Type of borrowings Secured borrowings Less: Current portion	Borrowing period and repayment term	Interest rate range 1.1%~1.25%	Collateral Yes (Note)	December 31,2018
	Borrowing period is from August 24, 2018 to May 8, 2021. Revolving credit facility.			600,000 $ -
				600,000 $

During the terms of the unsecured borrowing, in accordance with the unsecured borrowing agreements contracted with bank, the Group is required to maintain the consolidated net value over $8 billion and the debt ratio under 100% based on the annual consolidated financial statements and the semi-annual consolidated financial statements.

Note: Information about collateral for long-term borrowings is provided in Note 8.

(15) Pensions

A. (a)The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, 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 Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Group contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

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(b) The amounts recognised in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability	December 31,2019	December 31,2018
	52,536) ($ 43,470 9,066) ($	49,943) ($ 42,370 7,573) ($

Movements in net defined benefit liabilities are as follows:	es are as follows:	es are as follows:
Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability At January 1 49,943) ($ 42,370 $ 7,573) ($ Interest (expense) income 499) ( 424 75) ( 50,442) ( 42,794 7,648) ( Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - 1,498 1,498 Change in financial assumptions 1,492) ( - 1,492) ( Experience adjustments 1,436) ( - 1,436) ( 2,928) ( 1,498 1,430) ( Pension fund contribution - 12 12 Paid pension 834 834) ( - At December 31 52,536) ($ 43,470 $ 9,066) ($ 2019 Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability At January 1 48,728) ($ 40,554 $ 8,174) ($ Interest (expense) income 536) ( 446 90) ( 49,264) ( 41,000 8,264) ( Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - 1,361 1,361 Change in financial assumptions 500) ( - 500) ( Experience adjustments 179) ( - 179) ( 679) ( 1,361 682 Pension fund contribution - 9 9 At December 31 49,943) ($ 42,370 $ 7,573) ($ 2018			2019		Net defined benefit liability 7,573) ($ 75) ( 7,648) ( 1,498 1,492) ( 1,436) ( 1,430) ( 12 - 9,066) ($
	Present value of defined benefit obligations		Fair value of plan assets
			$	42,370 424 42,794 1,498 - - 1,498 12 834) 43,470 2018



			(
			$

		Present value of defined benefit obligations		Fair value of plan assets		Net defined benefit liability
		48,728) ($ 536) ( 49,264) ( - 500) ( 179) ( 679) ( - 49,943) ($		40,554 $ 446		8,174) ($ 90) ( 8,264) ( 1,361 500) ( 179) ( 682 9 7,573) ($
				41,000
				1,361 - -
				1,361
				9
				42,370 $

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Group’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2019 and 2018 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(f) The principal actuarial assumptions used were as follows:

he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:	he principal actuarial assumptions used were as follows:
Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows: For the year ended December 31,2019 For the year ended December 31,2019 Discount rate 0.70% 1.00% Future salary increases 3.00% 3.00% Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25% December 31, 2019 Effect on present value of defined benefit obligations 1,248) ($ 1,294 $ 1,150 $ 1,117) ($ December 31, 2018 Effect on present value of defined benefit obligations 1,235) ($ 1,282 $ 1,130 $ 1,096) ($ Discount rate Future salaryincreases
	Increase 0.25%		Decrease 0.25%		Increase 0.25%		Decrease 0.25%
	( (	1,248) $ 1,235) $		1,294 $ 1,282 $		1,150 $ 1,130 $	( (	1,117) $ 1,096) $

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The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(g) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 amount to $12.
(h) As of December 31, 2019, the weighted average duration of the retirement plan is 10 years. The analysis of timing of the future pension payment was as follows:

Within 1 year 2-5 years Over 5 years	7,977 $ 6,552 14,377
	28,906 $

B�(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018, were $28,907 and $28,919, respectively, under the above pension scheme.
(b) The foreign subsidiaries provided defined contribution plans for its employees. Pursuant to local regulations, such employees and the subsidiaries each make contributions based on a certain percentage based of the salaries and wages to the pension funds. The subsidiaries had recognised pension costs of $19,597 and $26,227 for the years ended December 31, 2019 and 2018, respectively.

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(16) Share-based payment

A. For the years ended December 31, 2019 and 2018, the Group’s share-based payment arrangements were as follows:

Type of arrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Employee stock options " First time issuance of restricted shares to employees (2015-1) " " First time issuance of restricted shares to employees (2018-1) First time issuance of restricted shares to employees (2019-1) Treasury stock transferred to employees	October 28, 2011 March 21, 2012 November 13, 2015 March 18, 2016 May 5, 2016 August 12, 2019 August 12, 2019 March 23,2018	3,000 3,000 2,440 1,190 370 630 820 3,433	9.2 years 8.9 years 3 years 3 years 3 years 3 years 3 years -	Note 1 Note 1 Note 2, Note 3 Note 2, Note 3 Note 2, Note 3 Note 3, Note 4 Note 3, Note 4 Vested immediately

Note 1: 2 years’ service vest 40%, 3 years’ service vest 70%, 4 years’ service vest 100%.
Note 2: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 2 years and 3 years and who achieved the performance requirement. The vested ratio is 50% and 50%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.
Note 3: The restricted shares were issued at no consideration to the Company’s existing employees whose service years have reached 1 year, 2 years and 3 years and who achieved the performance requirement. The vested ratio is 40%, 30% and 30%, respectively. If employees who are entitled to receive restricted stocks do not meet the vesting conditions, the Company will redeem at no consideration and retire those shares.
Note 4:The stocks and dividends distributed to employees during the vesting period shall be given by the Company at no consideration. Employees are not required to return the stocks and dividends if they resign during the vesting period.
B. Details of the share-based payment arrangements are as follows:
(a) For the years ended December 31, 2019 and 2018, the information on the share options and the weighted number of average exercise price of compensation plan employee stock options are as follows:

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		For the	year ended	year ended		For the	year ended	year ended
		December 31,2019				December 31,2019
			Weighted-average				Weighted-average
				exercise price				exercise price
		No. of options	(in dollars)(Note)			No. of options	(in dollars)(Note)
Options outstanding at
beginning of the period		1,941	$	30.61		2,453	$	30.62
Option expired	(	240)		-	(	192)		-
Options exercised		-		-	(	320)		30.70
Options outstanding at end
of the period		1,701		29.81		1,941		30.61
Options exercisable at end
of the period		1,701		29.81		1,941		30.61
Approved and not yet
issued options at the end
of the period		-				-

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

(b) No stock options were exercised during the year ended December 31, 2019. The weightedaverage stock price of stock options at exercise dates for the year ended December 31, 2018 was $31.31.
(c) The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue dateapproved	Expiry date	December	Exercise price (in dollars) (Note) $ 29.90 $ 29.70 31,2019	December 31,2018
		No. of shares (in thousands) 920 781		Exercise price No. of shares (in dollars) (in thousands) (Note) 1,100 $ 30.70 841 $ 30.50
October 28, 2011 March 21, 2012	December 31, 2020 December 31, 2020

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.
(d) The fair value of stock options granted is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price (in dollars)	Exercise price (Note) (in dollars)	Expected price volatility	Expected option life	Expected dividends	Risk- free interest rate	Fair value per unit (in dollars)
Employee stock options "	October 28, 2011 March 21, 2012	$ 30.65 27.85	29.90 $ 29.70	30.27% 33.54%	5 years 4.9 years	1.4% 1.4%	1.18% 1.08%	7.42 $ 7.35

Note: The exercise price of stock options was adjusted based on the cash dividends, stock dividends and cash capital reduction per share distributed.

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C. Restricted shares to employees:

(a)The information on restricted shares to employees is as follows:

		For the year ended		For the year ended
		December 31, 2019		December 31, 2018
		(share in thousands)		(share in thousands)
Shares ungranted beginning balance		715		3,435
Given at period		1,450
Shares granted	(	715)	(	2,592)
Restricted shares forfeited - retired	(	100)	(	128)
Shares ungranted ending balance		1,350		715

(b) As of December 31, 2019, the Company collected 100 thousand shares of restricted shares because certain employees did not meet the vesting condition, and the change of registration has been completed.

D. The weighted average exercise price was 27.64 NT dollar of treasury stock transferred to employees for the year ended December 31, 2018.
E. Expenses incurred on share-based payment transactions are shown below:

(17)	Provisions Equity-settled At January 1, 2019 Additional provisions Reversed during the period Exchange differences At December 31, 2019 Current Non-current	For the year ended For the year ended December 31,2019 December 31,2018 10,271 $ 16,841 $ For the year ended December 31,2019 Warranty 148,493 $ 29,697 35,813) ( 14 142,391 $ December 31,2019 December 31,2018 5,823 $ 35,378 $ 136,568 $ 113,115 $	For the year ended For the year ended December 31,2019 December 31,2018 10,271 $ 16,841 $ For the year ended December 31,2019 Warranty 148,493 $ 29,697 35,813) ( 14 142,391 $ December 31,2019 December 31,2018 5,823 $ 35,378 $ 136,568 $ 113,115 $	For the year ended For the year ended December 31,2019 December 31,2018 10,271 $ 16,841 $ For the year ended December 31,2019 Warranty 148,493 $ 29,697 35,813) ( 14 142,391 $ December 31,2019 December 31,2018 5,823 $ 35,378 $ 136,568 $ 113,115 $
		$


				35,378 $
				113,115 $

The Group gives warranties on digital image technology application products sold. Provision for warranty is estimated based on historical warranty data of digital image technology application products.

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(18) Share capital

As of December 30, 2019, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock, and the paid-in capital was $2,753,613 with a par value of $10 (in dollars) per share.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Employee stock options exercised Treasury stock sold to employees Establish employee restricted shares Retired restricted shares to employees that did not meet the vesting conditions At December 31	(Expressed in thousands of shares) 2019 2018 274,011 270,386 - 320 - 3,433 1,450 - 100) ( 128) ( 275,361 274,011

(19) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1 Issuance of restricted shares to employees Employee restricted share granted Retirement of employee restricted shares At December 31				2019			Total 2,262,397 $ 19,430 $ - 1,340) ( 2,280,487 $
	Share premium 1,802,659 $ - 11,873 - 1,814,532 $	Employee stock options 49,102 $ - - - 49,102 $	Difference between consideration and carrying amount of subsidiaries acquired or disposed 1,534 $ - - - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ - - - 395,774 $	Proceeds from sales of treasury Restricted shares to shares employees 1,455 $ 11,873 $ - 19,430 - 11,873) ( - 1,340) ( 1,455 $ 18,090 $

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2018

			2018
At January 1 Employee stock options exercised Treasury stock sold to employees Employee restricted share granted Retirement of employee restricted shares At December 31	Share Employee stock premium options 1,750,223 $ 51,476 $ 8,998 2,374) ( - - 43,438 - - - 1,802,659 $ 49,102 $	Difference between consideration and carrying amount of subsidiaries acquired or disposed 1,534 $ - - - - 1,534 $	Changes in ownership interests in subsidiaries 395,774 $ - - - - 395,774 $	Proceeds from sales of treasury Restricted shares to shares employees 209 $ 57,476 $ - - 1,246 - - 43,438) ( - 2,165) ( 1,455 $ 11,873 $	Total
					2,256,692 $ 6,624 1,246 - 2,165) (
					2,262,397 $

(20) Retained earnings

A. According to the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall be set aside in accordance with the rules set forth in the Securities and Exchange Act, and distributing the remaining amount as common stockholders’ dividends in accordance with the resolution adopted by the Board of Directors and approved at the stockholders’ meeting.
B. The amount of dividends appropriated is based on the Company’s current year’s net income and prior years’ retained earnings, taking into account the Company’s financial structure and future operating plans. The distribution ratio of cash dividends to stock dividends is based on the Company’s funding status, diluted earnings per share and other factors. According to the dividend policy adopted by the Board of Directors, cash dividends shall account for at least 20% of the total dividends distributed. Dividends appropriation shall be resolved by the stockholders at the stockholders’ meeting.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.
D. (a) 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 included in the distributable earnings.

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(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
E. The appropriation of 2018 and 2017 earnings had been resolved at the stockholders’ meeting on June 13, 2019, and June 15, 2018, respectively. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per share Amount (in NT dollars) 13,057 $ 10,099 137,005 0.5 $ 160,161 $ 2018	2017	2017
	Amount 13,057 $ 10,099 137,005 160,161 $	Amount 1,340 $ 283,124 135,178 419,642 $	Dividends per share (in NT dollars)
			0.5 $

The appropriation of 2018 and 2017 earnings were the same as that approved by the Board of Directors on March 15, 2019 and March 23, 2018, respectively.

F. The appropriation of 2019 earnings had been resolved at the stockholders’ meeting on March 20, 2019. Details are summarized below:

Legal reserve Special reserve Cash dividends	2019	2019
	Amount 8,316 $ 156,646 139,794 304,756 $	Dividends per share (in NT dollars)
		0.5 $

Above-mentioned appropriation of 2019 earnings is yet to be resolved by the shareholders.

F. For the information relating to employees’ compensation and directors’ remuneration, please refer to Note 6(27).

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(21) Other equity items

					2019	2019
					Unrealized
		Foreign currency			losses on				Unearned
			translation		valuation			compensation			Total
At January 1	($		256,833)	($	36,390)		($		1,715)	($	294,938)
Valuation adjustment			-	(	61,600)				-	(	61,600)
Currency translation differences:
-Group	(		237,502)			-			-	(	237,502)
Issuance of restricted shares			-			-	(		33,930)	(	33,930)
to employees
Retirement of restricted shares			-			-			2,340		2,340
to employees
Share-based payment transactions			-			-			10,271		10,271
At December 31	($		494,335)	($	97,990)		($		23,034)	($	615,359)
					2018
					Unrealized
		Foreign currency			losses on				Unearned
			translation		valuation			compensation			Total
At January 1	($		283,124)	$		-	($		19,215)	($	302,339)
Effects of retrospective
application			-	(	23,600)				-	(	23,600)
After adjustment	(		283,124)	(	23,600)		(		19,215)	(	325,939)
Valuation adjustment			-	(	12,790)				-	(	12,790)
Currency translation differences:
-Group			26,291			-			-		26,291
Retirement of restricted shares			-			-			3,440		3,440
to employees
Share-based payment transactions			-			-			14,060		14,060
At December 31	($		256,833)	($	36,390)		($		1,715)	($	294,938)

(22) Operating revenue

Revenue from contracts with customers	For the year ended December 31,2019 6,189,352 $	For the year ended December 31,2018
		11,193,569 $

Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions:

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(23)	Other income For the year ended December 31,2019 Asia Europe America Taiwan Total Revenue from external customer contracts 3,508,238 $ 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ Timing of revenue recognition At a point in time 3,415,594 $ 1,226,724 $ 1,407,566 $ 46,824 $ 6,096,708 $ Over time 92,644 - - - 92,644 Total 3,508,238 $ 1,226,724 $ 1,407,566 $ 46,824 $ 6,189,352 $ For the year ended December 31,2018 Asia Europe America Taiwan Total Revenue from external customer contracts 9,181,159 $ 1,401,530 $ 503,893 $ 106,987 $ 11,193,569 $ Timing of revenue recognition At a point in time 9,173,464 $ 1,401,530 $ 503,893 $ 106,987 $ 11,185,874 $ Over time 7,695 - - - 7,695 Total 9,181,159 $ 1,401,530 $ 503,893 $ 106,987 $ 11,193,569 $ For the year ended For the year ended December 31,2019 December 31,2018 Interest income: Interest income from bank deposits 125,984 $ 122,476 $ Interest income from financial assets at amortised cost 17,989 1,242 Others 26 27 Interest income subtotal 143,999 123,745 Rental revenue 31,479 37,832 Dividend income 763 915 Other income - others 13,603 22,241 Total 189,844 $ 184,733 $	Total 6,189,352 $ 6,096,708 $ 92,644 6,189,352 $ Total
		11,193,569 $
		11,185,874 $ 7,695
		11,193,569 $

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(24) Other gains and losses

Finance costs
Expenses by nature
Employee benefit expenses
Gains (losses) on disposal of property, plant and
equipment
Net currency exchange gains
Net gains on financial assets at fair value
through profit
Reversal of impairment loss of investments
accounted for under equity method
Other expenses

Total
Interest expense :
Bank loan
Lease liabilities
Other
Employee benefit expenses
Depreciation charges on property, plant and
equipment
Depreciation charges on investment property
Depreciation charges on right-of-use assets
Amortisation charges on intangible assets
Wages and salaries
Labour and health insurance fees
Pension costs
Other personnel expenses
Total

For the year ended
For the year ended
December 31,2019
December 31,2018
1,922
$ 1,358)
($ 5,737
9,606
16,710
20,018
649
26,272
1,067)
(
4,011)
(
23,951
$ 50,527
$ For the year ended
For the year ended
December 31,2019
December 31,2018
23,774
$ 24,050
$ 1,170
-
759
1,447
25,703
$ 25,497
$ For the year ended
For the year ended
December 31,2019
December 31,2018
1,102,313
$ 1,290,984
$ 181,851
212,079
8,234
-
6,818
6,817
29,352
27,878
For the year ended
For the year ended
December 31,2019
December 31,2018
969,326
$ 1,139,385
$ 52,122
54,960
48,579
55,236
32,286
41,403
1,102,313
$ 1,290,984
$

(25) Finance costs

(26) Expenses by nature

(27) Employee benefit expenses

A. According to the Articles of Incorporation of the Company, when distributing earnings, the Company shall distribute compensation to the employees and pay remuneration to the directors that account for 10% to 20% and no higher than 2%, respectively, of distributable profit of the

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current period. If a company has accumulated deficit, earnings should be channeled to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Employees of subsidiaries that the Company holds more than 50% shareholding are entitled to receive aforementioned stock or cash.

Abovementioned distributable profit of the current period refers to the pre-tax profit before deduction of employees’ compensation and directors’ remuneration. A company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributed as employees’ compensation and directors’ remuneration; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $16,220 and $29,710, respectively; directors’ remuneration was accrued at $2,163 and $3,961, respectively. The aforementioned amounts were recognised in salary expenses.

Employees’ compensation and directors’ remuneration for 2018 amounting to $29,710 and $3,961, respectively, as resolved at the meeting of Board of Directors were in agreement with those amounts recognised in the 2018 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(28) Income tax

A. Income tax expense

(a) Components of income tax expense:

Current tax: Current tax on profits for the period Charge on unassigned retained earning Tax paid outside of the territory of the Republic of China Adjustments in respect of prior years Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense	For the year ended For the year ended December 31,2019 December 31,2018 47,675 $ 71,130 $ 4,759 8,337 1,026 28,154 22,105) ( 16,782) ( 31,355 90,839 3,920 25,870) ( - 62,901 3,920 37,031 35,275 $ 127,870 $

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(b) The income tax charged to other comprehensive income is as follows:

				For the year ended				For the year ended
			December 31,2019				December 31,2018
Changes in fair value of financial assets at
fair value through other comprehensive
income		($		272)			$	774
Translation differences of foreign operations		(		59,375)			(	6,219)
Benefit obligations revaluation		(		286)				136
Impact of change in tax rate					-			119
		($		59,933)			($	5,190)
Reconciliation between income tax expense and		accounting profit
		For the year ended					For the year ended
	December 31,2019					December 31,2018
Tax calculated based on profit before
tax and statutory tax rate	$			33,409	$			122,645
Expenses disallowed by tax regulation	(			7,538)	(			41,454)
Tax on undistributed earnings				4,759				8,337
Change in assessment of realisation of
deferred tax assets				4,683	(			40,981)
Effect from investment tax credits	(			9,022)	(			12,403)
Loss deducted not recognised as
deferred tax assets				30,063				-
Prior year income tax overestimation	(			22,105)	(			16,782)
Effect of different tax rates in countries
in which the group operates				1,026				45,607
Effect from changes in tax regulation				-				62,901
Income tax expense				35,275				127,870

B. Reconciliation between income tax expense and accounting profit

C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

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2019

	January1	Recognised in profit or loss	Recognised in profit or loss	Recognised in profit or loss
45,464 $ 34,717 235 - 22,280 102,696 $ 444,069) ($ 1,429) ( 1,563) ( 447,061) ($ 344,365) ($
	January1		Recognised in profit or loss	Recognised in other comprehensive income December 31 - $ 45,464 $ 6,219 34,717 - 235 - 22,280 6,219 $ 102,696 $ - $ 444,069) ($ 255) ( 1,429) ( 774) ( 1,563) ( 1,029) ($ 447,061) ($ 5,190 $ 344,365) ($
39,167 $ 28,498 - 14,750 82,415 $ 390,872) ($ 1,113) ( 2,954) ( 394,939) ($ 312,524) ($		6,297 $ - 235 7,530 14,062 $ 53,197) ($ 61) ( 2,165 51,093) ($ 37,031) ($

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D. Details of the amount the Company is entitled as investment tax credit and unrecognised deferred tax assets are as follows:

tax assets are as follows:
Qualifyingitems		December 31,2019
	Unused tax credits		Unrecognised deferred tax assets	Expiry year
Research and development Research and development Qualifyingitems	14,469 $ 2,840 17,309 $	6,418 $ - 6,418 $ December 31,2018		2020 2021
	Unused tax credits		Unrecognised deferred tax assets	Expiry year
Research and development Research and development	12,213 $ 14,348 26,561 $		4,281 $ - 4,281 $	2019 2020

E. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2019

Year incurred		Amount filed/ assessed		Unused amount	Unrecognised deferred tax assets - $ 150,316 150,316 $	Unrecognised deferred tax assets - $ 150,316 150,316 $	Expiry year
2018 2019		18,382 $ 187,895 206,277 $		14,173 $ 187,895 202,068 $		- $ 150,316 150,316 $	2028 2029

F. The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows: None.
G. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.
H. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February 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.

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(29) Earnings per share

Earnings per share
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 Restricted shares to employees Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 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 Restricted shares to employees Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For	theyear ended December 31,2019
	Amount after tax 84,308 $ 84,308 $ 84,308 $ For	Weighted average number of ordinary shares outstanding Earnings per share (share in thousands) (in dollars) 273,838 0.31 $ 170 894 274,902 0.31 $ theyear ended December 31,2018	Earnings per share (in dollars)
			0.31 $
			0.31 $
	Amount after tax 130,562 $ 130,562 $ 130,562 $	Weighted average number of ordinary shares outstanding (share in thousands) 270,389 1,660 1,228 273,277	Earnings per share (in dollars)
			0.48 $
			0.48 $

(30) Operating leases

Prior to 2018

A. The Group leased part of the Taipei office building with operating leases. Contingent rents of $26,127 were recognised for these leases in profit or loss for the year ended December 31, 2018. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

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		December 31,2018
	Not more than 1 year $	28,921
	More than 1 year but not more than 5 years	9,640
	$	38,561
B.	The Group leases land, office buildings and company cars for operational needs under non-
	cancellable operating lease agreements. These lease terms are between	2018 and 2027. Most of
	the lease agreements are renewable at the market price at the end of the	lease period. The future
	aggregate minimum lease payments receivable under non-cancellable	operating leases are as
	follows:

follows:
Not more than 1 year More than 1 year but not more than 5 years Over 5 years	December 31,2018
	8,333 $ 20,810 15,087
	44,230 $

(31) Supplemental cash flow information

A. Investing activities with partial cash payments

Acquisitions of property, plant, and equipment Add: Property and equipment and construction billings payable at beginning of year Less: Property and equipment and construction billings payable at end of year Cash paid Acquisitions of intangible assets Add: Payable at beginning of year Less: Payable at end of year Cash paid	For the year ended December 31,2019 17,617 $ 1,229 898) ( 17,948 $ For the year ended December 31,2019 84,378 $ 1,234 - 85,612 $	For the year ended December 31,2018
		18,262 $ 12,340 1,229) (
		29,373 $
		For the year ended December 31,2018
		4,398 $ 4,763 1,234) (
		7,927 $

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(32) Changes in liabilities from financing activities

Short-term borrowings	Short-term notes and bills payable	Long-term borrowings	Long-term borrowings	Guarantee deposits received	Lease liabilities	Lease liabilities	Total
							2,487,666 $ 61,661 700) ( 4,466 2,553,093 $ Total 2,244,720 134,547 244) 1,447 2,380,470
		$

2,021,000 $ 261,000) ( - - 1,760,000 $	199,797 $ 201,244) ( - 1,447 - $		- $ 600,000 - - 600,000 $	23,923 $ 3,209) ( 244) ( - 20,470 $	$ ( $
						$

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship: None.

(2) Significant transactions and balances with related parties:

No significant related party transactions.

(3) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Share-based payments Total	For the year ended December 31,2019 37,151 $ 783 3,019 40,953 $	For the year ended December 31,2018
		32,351 $ 616 4,461
		37,428 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset	Purpose Long-term borrowings Long-term borrowings	Book value	Book value
		December 31,2019 745,589 $ 763,733 1,509,322 $	December 31,2018 746,621 $ 770,551 1,517,172 $
Land, buildings and structures Investment acquisition

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

None.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENT

(1) On December 22, 2015, the Company filed a civil complaint against HTC Corporation with the Taiwan Taipei District Court, alleging HTC Corporation’s default in relation to the agreed upon Manufacturing and Supply Agreement. As of January 8, 2020, the case had reached a settlement and a payment of $88,000 (tax included) was received.
(2) The purchase of treasury shares was approved by the Board of Directors’ resolution dated January 31, 2020 and March 20, 2020,each amounting to 8,000 thousand shares. The former had executed on March 19, 2020. All of the treasury shares will be reissued to employees.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going 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, return capital or issue new shares to achieve the optimal capital structure.

(2) Financial instruments

A. Financial instruments by category

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Financial assets Financial assets measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost Cash and cash equivalents Current financial assets at amortised cost Notes receivable Accounts receivable Other accounts receivable Guarantee deposit paid Financial liabilities Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other accounts payable Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities	December31,2019 40,156 $ 50,644 $ 6,666,055 $ 737,185 - 918,019 42,095 40,466 8,403,820 $ December 31,2019 2,200,000 $ 229,962 4,316 1,010,670 424,512 - 20,326 3,889,786 $ 102,805 $	December31,2018
		23,683 $
		114,508 $
		6,495,017 $ 261,288 1,387,222 2,414,775 31,712 38,525
		10,628,539 $
		December31,2018
		1,760,000 $ - 1,049,446 1,878,509 415,658 600,000 20,470
		5,724,083 $
		- $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimize any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are used to hedge certain exchange rate risk, and interest rate swaps are used to fix variable future cash flows. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides

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written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Exchange rate risk arises from future commercial transactions and recognised assets and liabilities.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and RMB expenditures. Forward foreign exchange contracts are adopted to minimize the volatility of the exchange rate affecting cost of forecast inventory purchases.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.
iv. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

	December 31,2019	December 31,2019	December 31,2019	December 31,2019
Foreign Currency Amount (In thousands) 56,893 USD 61,047 USD 53,500 USD 29,564 USD	Exchange Rate 29.980 6.9762 29.980 6.9762	Book Value (NTD) 1,705,652 $ 1,830,189 1,603,930 $ 886,329	SensitivityAnalysis
			Effect on Extent of Profit or Variation (Loss) 1% 17,057 $ 1% 18,302 1% 16,039) ($ 1% 8,863) (	Effect on Other Comprehensive Income(Loss)
				- $ - - $ -

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December 31, 2018

Sensitivity Analysis

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD USD:RMB Non-monetary items USD:NTD Financial liabilities Monetary items USD:NTD USD:RMB	Foreign Currency Amount (In thousands) 62,373 USD 41,445 USD 872 USD 61,532 USD 32,014 USD	Exchange Rate 30.715 6.8632 30.715 30.715 6.8632	Book Value (NTD) 1,915,787 $ 1,272,983 26,768 $ 1,889,955 $ 983,310	Effect on Extent of Profit or Variation (Loss) 1% 19,158 $ 1% 12,730 1% - $ 1% 18,900) ($ 1% 9,833) (	Effect on Other Comprehensive Income(Loss)
					- $ - 268 $ - $ -

v. Total exchange gain, including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2019 and 2018 amounted to $5,737 and $9,606, respectively.

Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise shares issued by the domestic companies.The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $4,016 and $2,368, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $5,064 and $11,451, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

Interest risk arises from the changes of market interest rate causing fluctuation in financial instruments’ fair value or cash received and paid in the future.

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The Group raised short-term and long-term borrowings at fixed rates during the years ended December 31, 2019 and 2018, and thus had no significant cash flow interest rate risk.

(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
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 for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
iii. The Group measured internal operating procedures, past experience of trading customers, and actual transaction status. If the contract payments were past due over 90 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. If the contract payments were past due over 360 days based on the term, the default has occurred.
iv. 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 to cause a default.
v. The Group classifies customers’ accounts receivable and notes receivable in accordance with customer types. The Group applies the simplified approach using loss provision matrix to estimate expected credit loss under the provision matrix basis.
vi. The Group used the forecastability to adjust historical and timely information to access the default possibility of accounts receivable and notes receivable. On December 31, 2019 and 2018, respectively, the provision matrix is as follows:

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Up to 90 days past due At December 31,2019 Expected loss rate 0.02%~0.03% Total book value 914,939 $ Loss allowance 189 $ Up to 90 days past due At December 31,2018 Expected loss rate 0% Total book value 3,775,678 $ Loss allowance - $	Up to 90 days past due	91~180 days past due	181 to 360 days past due	Upto 361 days	Total
		15%~20% 3,568 $ 535 $ 91~180 days past due	30%~40% 337 $ 101 $ 181 to 360 days past due	100% 4,457 $ 4,457 $ Upto 361 days	923,301 $ 5,282 $ Total
		20% 29,761 $ 4,375 $	50% 6,222 $ 5,289 $	100% 6,215 $ 6,215 $	3,817,876 $ 15,879 $

vii. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable and notes receivable are as follows:


	Accounts receivable
	Accounts receivable
8,747 $ - 7,262 33) ( 97) ( 15,879 $		- $ - - - - - $

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities. Such forecasting takes

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into consideration the Group’s debt financing plans, and compliance with internal balance sheet ratio targets.

ii. Surplus cash held by the operating entities over and above the balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts.

iii.The Group has following undrawn borrowing facilities:

	�December31,2019	�December31,2019	December31,2018	December31,2018
Fixed rate:
Expiring within one year	$	2,814,000	$	3,425,060
Expiring beyond one year		1,200,000		600,000
	$	4,014,000	$	4,025,060

iv.The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2019 Non-derivative financial liabilities: Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Lease liabilities Guarantee deposits received December 31, 2018 Non-derivative financial liabilities: Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings (including current portion) Guarantee deposits received	Less than 1year 2,200,000 $ 229,962 4,316 1,010,670 424,512 8,632 - Less than 1year 1,760,000 $ 1,049,446 1,878,509 415,658 - -	Over 1year
		- $ - - - - 112,904 20,326 Over 1year
		- $ - - - 600,000 20,470

(3) Fair value estimation

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

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Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset 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 is included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(10).
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:
(a) The related information of natures of the assets is as follows:

December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Unlisted stocks Financial assets at fair value through other comprehensive income Unlisted stocks	Level 1 - $ - - $ Level 1 - $ - - $	Level 2 - $ - - $ Level 2 - $ 60,515 60,515 $	Level 3 40,156 $ 50,644 90,800 $ Level 3 23,683 $ 53,993 77,676 $	Total
				40,156 $ 50,644
				90,800 $
				Total
				23,683 $ 114,508
				138,191 $

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(b) The methods and assumptions the Group used to measure fair value are as follows:
i.The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Open-end fund Market quoted price Net asset value

  - ii.Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date�

iii.The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs.
D. For the years ended December 31, 2019 and 2018, there was no transfer between Level 1 and Level 2.
E. The following chart is the movement of Level 3 for the years ended December 31, 2019 and 2018:

		Derivative	Derivative	equity
		2019		2018
At January 1	$	77,676	$	61,611
Gains recognised in profit or loss		16,710		16,998
Gains and losses recognised in other comprehensive income	(	1,357)		3,369
Disposals during the period	(	237)		-
Capital reduction in the period		-	(	3,915)
Effect of exchange rate changes	(	1,992)	(	887)
At December 31	$	90,800	$	77,176

F. For the years ended December 31, 2019 and 2018, there was no transfer of Level 3.
G. Accounting Department segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

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H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

value measurement:
Financial assets at fair value through profit or loss Unlisted shares Financial assets at fair value through comprehensive income Unlisted shares Financial assets at fair value through profit or loss Unlisted shares Financial assets at fair value through comprehensive income Unlisted shares	Fair value at December 31, 2019	Valuation technique	Significant unobservable input	Relationship of inputs to fair value
	40,156 $ 50,644 Fair value at December 31, 2018	Market comparable companies Net asset value Valuation technique	Price to earnings ratio multiple, price to book ratio multiple,discount for lack of marketability, control premium Not applicable Significant unobservable input	The higher the multiple and control premium, the higher the fair value Not applicable Relationship of inputs to fair value
	23,683 $ 53,993	Market comparable companies Net asset value	Price to earnings ratio multiple, price to book ratio multiple,discount for lack of marketability, control premium Not applicable	The higher the multiple and control premium, the higher the fair value Not applicable

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) : Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
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 related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 4.
I. Trading in derivative financial instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6.

(3) Information on investments in Mainland China

A. The related information of investments in Mainland China: Please refer to table 5.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area:

For the significant purchases, sales, accounts payable and accounts receivable transactions between the Company and the investee companies in Mainland China through its subsidiaries, please refer to table 3 ~ table 5.

14. SEGMENT INFORMATION

(1) General information

The Group mainly operates in one segment. The Chief Operating Decision-Maker reviews the Group’s reporting to assess performance and allocate resources. The Group mainly has a single reportable segment.

(2) Measurement of segment information

The Group evaluates performance based on profit or loss by using sales revenue and operation profit measurements. The accounting policies of the Group's operating segments are the same as the significant accounting policies summarized in Note 4.

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(3) Information about segment profit or loss, assets and liabilities

The Group has a single reportable segment. The revenue from external customers, the related gain or loss, and the assets correspond with the consolidated revenue, consolidated operating income, and consolidated assets.

(4) Reconciliation for segment income (loss)

The amounts provided to the chief operating decision-maker with respect to department assets, liabilities and profit are measured in a manner consistent with that of the financial statements.

(5) Information on products and services

The revenue from external customers are mainly derived from the sales of digital related products and related export and import trade.

(6) Geographical information

Geographical information for the years ended December 31, 2019 and 2018 is as follows:

Asia Europe America Taiwan	Revenue Non-current assets 3,508,238 $ 1,898,765 $ 1,226,724 - 1,407,566 - 46,824 2,286,153 6,189,352 $ 4,184,918 $ Year ended December 31,2019	Revenue Non-current assets 3,508,238 $ 1,898,765 $ 1,226,724 - 1,407,566 - 46,824 2,286,153 6,189,352 $ 4,184,918 $ Year ended December 31,2019	Revenue Non-current assets 9,181,159 $ 2,068,891 $ 1,401,530 - 503,893 106,987 2,178,147 11,193,569 $ 4,247,038 $ Year ended December 31, 2018	Revenue Non-current assets 9,181,159 $ 2,068,891 $ 1,401,530 - 503,893 106,987 2,178,147 11,193,569 $ 4,247,038 $ Year ended December 31, 2018	Revenue Non-current assets 9,181,159 $ 2,068,891 $ 1,401,530 - 503,893 106,987 2,178,147 11,193,569 $ 4,247,038 $ Year ended December 31, 2018
	Revenue 3,508,238 $ 1,226,724 1,407,566 46,824 6,189,352 $		Revenue 9,181,159 $ 1,401,530 503,893 106,987 11,193,569 $
					2,068,891 $ - 2,178,147 4,247,038 $

Note: Financial instruments and deferred income tax assets are excluded from Non-current assets.

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2019 and 2018 is as follows:

A B C D E	Revenue	Revenue
	Year ended December 31,2019 2,260,160 $ 1,456,770 824,539 105,865 44,461	Year ended December 31,2018
		2,298,888 $ 1,206,049 2,896 3,037,506 1,182,959

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==> picture [133 x 727] intentionally omitted <==

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Table 2
Number of shares
Book value
Ownership (%)
Fair value
Securities held by
Marketable securities
Relationship with the
securities issuer
General
ledger account
As of December 31, 2019
December 31, 2019
Expressed in thousands of NTD
(Except as otherwise indicated)

Altek Corporation
Gianta Co., Ltd. - Common stock
Director
Financial assets at fair value
through profit or loss
- non-current
762,876
40,156
$ 14.55%
40,156
$ "
Hua-chuang Automobile Information
Technical Center Co., Ltd. - Common
stock
None
Financial assets measured at
fair value through other
comprehensive income
- non-current
5,660,000
-
1.72%
-
Altek (Kunshan) Co., Ltd.
Guangdong Kingding Optical Technology
Co., Ltd.
None
"
1,200,000
6,540
6.45%
6,540
"
CPEC Huachuang Private Equity
(Kunshan) Enterprise (Limited
Partnership)
None
"
N/A
44,104
(Note)
44,104

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Table 3
Purchases
(sales)
Amount
Percentage of
total purchases
(sales)
Credit term
Unit price
Credit term
Balance
Percentage of
total notes/accounts
receivable (payable)
Purchaser/seller
Counterparty
Relationship with the
counterparty
Transaction
Differences in transaction terms
compared to third party
transactions
Notes/accounts
receivable (payable)
Expressed in thousands of NTD
(Except as otherwise indicated)
For the year ended December 31, 2019

Altek Corporation
Altek International
Investment Co., Ltd.
Parent and affiliated
company
Purchases
1,558,856
$ 43%
Net 120 days
Approximately
the same price
with third
parties
Note
617,867)
($ 49%
"
Altek International
Trading Co., Ltd.
"
Purchases
1,820,440
51%
"
"
"
610,159)
(
48%
Altek International
Investment Co., Ltd.
Altek (Kunshan) Co., Ltd.
"
Purchases
2,277,151
100%
Net 75 days
"
"
60,290)
(
100%
Altek International
Trading Co., Ltd.
"
The same ultimate
parent company
Purchases
2,511,439
100%
"
"
"
922,788)
(
100%
Altek Biotechnology
Corporation
Altek International
Investment Co., Ltd.
"
Purchases
683,038
55%
"
"
"
3,929)
(
2%
"
Altek International
Trading Co., Ltd.
"
Purchases
553,885
45%
"
"
"
246,582)
(
98%
Altek (Kunshan) Co., Ltd.
Altek International
Trading Co., Ltd.
"
Purchases
134,634
3%
"
"
"
-
0%
Altek Semiconductor
(Shanghai) Co., Ltd.
Altek (Kunshan) Co., Ltd.
"
Purchases
133,496
100%
"
"
"
-
0%
Note: The payment term with third parties was net 60~120 days.

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Table 4 Amount Action taken Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Creditor Counterparty Relationship with the counterparty Balance as at December 31, 2019 Turnover rate Overdue receivables December 31, 2019 Expressed in thousands of NTD (Except as otherwise indicated)	Altek International Investment Co., Ltd. Altek Corporation Parent company 617,867 $ 0.86 - $ N/A 573,945 $ - $ Altek International Trading Co., Ltd. " " 610,159 6.84 - N/A 485,116 - " Altek Biotechnology Corporation The same ultimate parent company 246,582 5.02 - N/A 224,296 - Altek (Kunshan) Co., Ltd. Altek International Trading Co., Ltd. " 922,788 5.74 - N/A 886,209 -

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Table 5
General ledger account
Amount
Transaction terms
Percentage of consolidated total operating
revenues or total assets (Note 2)
Company name
Counterparty
Relationship
(Note 1)
Transaction
Expressed in thousands of NTD
(Except as otherwise indicated)

Altek Corporation
Altek International Investment Co., Ltd.
(1)
Purchases
1,558,856
$ Net 120 days
25%
"
"
(1)
Accounts payable
617,867
"
4%
"
Altek International Trading Co., Ltd.
(1)
Purchases
1,820,440
"
29%
"
"
(1)
Accounts payable
610,159
"
4%
Altek International Investment Co., Ltd.
Altek (Kunshan) Co., Ltd.
(3)
Purchases
2,277,151
Net 75 days
37%
"
"
(3)
Accounts payable
60,290
"
0%
Altek International Trading Co., Ltd.
"
(3)
Purchases
2,511,439
"
41%
"
"
(3)
Accounts payable
922,788
"
7%
Altek Semiconductor Corporation
Altek International Investment Co., Ltd.
(3)
Sales
19,023
"
0%
"
Altek International Trading Co., Ltd.
(3)
Sales
9,915
"
0%
"
"
(3)
Purchases
6,483
Net 120 days
0%
"
"
(3)
Accounts receivable
6,239
"
0%
"
Altek Semiconductor (Shanghai) Co., Ltd.
(3)
Royalty income
10,188
Net 75 days
0%
Altek Biotechnology Corporation
Altek International Investment Co., Ltd.
(3)
Purchases
683,038
"
11%
"
"
(3)
Accounts receivable
3,929
"
0%
"
Altek International Trading Co., Ltd.
(3)
Purchases
553,885
9%
"
"
(3)
Accounts receivable
246,582
"
2%
Altek (Kunshan) Co., Ltd.
Altek International Investment Co., Ltd.
(3)
Purchases
79,817
"
1%
"
Altek International Trading Co., Ltd.
(3)
Purchases
134,634
"
2%
Altek Trading (Shanghai) Limited
Altek (Kunshan) Co., Ltd.
(3)
Purchases
73,886
"
1%
"
"
(3)
Accounts receivable
5,807
"
0%
Altek Semiconductor (Shanghai) Co., Ltd.
"
(3)
Purchases
133,496
"
2%
Note 1: Relationship between transaction and counterparty is classified into the following categories:
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary.

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Table 6
Balance
as at December 31,
2019
Balance
as at December 31,
2018
Number of shares
Ownership (%)
Book value
Investee
Location
Main business activities
Initial investment amount
Shares held as at December 31, 2019
Net profit (loss) of
the investee
for the year ended
December 31, 2019
Investment income(loss)
recognised by the Company
for the year ended
December 31, 2019
Information on investees
For the year ended December 31, 2019
Expressed in thousands of NTD
(Except as otherwise indicated)
Footnote
Investor

Altek Corporation
Altek International
Investment Co., Ltd.
British Virgin
Islands
Investment
2,882,512
$ 2,910,046
$ 87,769,559
100
8,473,120
$ 20,013)
($ 20,524)
($ Note 1
"
Altek Japan Corporation
Japan
Sale of optical optical instruments
2,869
2,869
1,000
100
11,428
18
18
"
Altek Investment Co.,
Ltd.
Republic of China Investment
-
50,000
-
-
-
1)
(
1)
(
Note 2
"
Altek International
Holding (BVI) Co, Ltd.
British Virgin
Islands
Investment
415,376
415,376
12,865,921
100
750,479
162,061
162,061
Altek International
Investment Co., Ltd.
Altek Lab Inc.
U.S.A.
Design service
110,318
110,318
11,311,875
100
62,295
1,740
1,740
"
JinJing Optical
Technology Co., ltd.
Samoa
Investment
-
104,930
-
-
-
51
-
Note 4
"
Altek Semiconductor
(Cayman) Co., Ltd.
Cayman Islands
Investment
184,294
184,294
20,000,000
50
572,535
176,323)
(
86,852)
(
"
Altek International
Trading Co,. Ltd
Republic of
Seychelles
Investment and general business
operations
89,940
-
3,000,000
100
76,415
13,947)
(
13,947)
(
Note 3
Altek Semiconductor
(Cayman) Co., Ltd.
Altek Semiconductor
Corporation
Republic of China Research design and sales of ASIC
200,000
200,000
20,000,000
100
94,393
202,165)
(
101,083)
(
Altek Biotechnology
Holding (Cayman)
Co., Ltd.
Altek Biotechnology
Corporation
Republic of China Research and development,
manufacture and sales of
medical electronic equipments
415,376
415,376
40,100,000
100
678,889
162,564
162,564
Note 1: The difference between the profit or loss of the investee for the current period and the investment profit or loss recognized in the current period is the unrealized profit and loss adjustments for countercurrent transactions between subsidiaries.
Note 2: The dissolution and liquidation of Altek Investment Co., Ltd. was resolved by the Board of Directors on December 17, 2018. Moreover, the liquidation was completed as approved by the court on April 25, 2019.
Note 4: The dissolution and liquidation of JinJing Optical Technology Co., Ltd. was resolved by the Board of Directors on October 8, 2019. Moreover, the liquidation was completed on October 24, 2019.
Note 3: Invest and held by Altek Investment International Co,.Ltd at July 2019.

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Table 7 Remitted to Mainland China Remitted back to Taiwan Accumulated amount of investment income remitted back to Taiwan as of December 31, 2019 Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2019 Accumulated amount of remittance from Taiwan toMainland China as of December 31, 2019 Net profit (loss) of investee for the year ended December 31, 2019 Ownership held by the Company (direct or indirect) Investment income (loss) recognised by the Company for the year ended December 31, 2019 Book value of investments in Mainland China as of December 31, 2019 Altek Corporation and subsidiaries Information on investments in Mainland China For the year ended December 31, 2019 Expressed in thousands of NTD (Except as otherwise indicated) Paid-in capital Investment method �Note 1� Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2019 Investee in Mainland China Main business activities	Altek (Kunshan) Co., Ltd. (Note 2) Manufacture and sale of digital still cameras and its accessories 1,487,008 $ 2 1,349,100 $ - $ - $ 1,349,100 $ 58,162 $ 100 58,162 $ 3,922,488 $ - $ Altek EMS (Kunshan) Co., Ltd. (Note 3) Manufacture and sale of related engineering services 149,900 2 272,308 - - 272,308 19,639 100 19,639 757,627 - Altek Trading (Shanghai) Limited Wholesale, import and export of digital cameras, digital video cameras and their associated accessories 254,830 2 254,830 - - 254,830 10,921 100 10,921 296,538 - Altek Precision (Kunshan) Co., Ltd. Design, manufacture and sales of digital camera parts 413,724 2 413,724 - - 413,724 2,670 100 2,670 146,845 - Altek Optical Technology (Kunshan) Co., Ltd. Manufacture and sales of digital camera and its accessories and optical components 335,776 2 335,776 - - 335,776 1,668) ( 100 1,668) ( 6,036 - Altek Semiconductor (Shanghai) Co., Ltd. Research design and sales of imaging technologies, electronic software and hardware 44,970 2 - - - - 6,507 50 3,254 125,456 - 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,which then investeed in the investee in Mainland China. (3)Others. Note 2: Including retained earnings capitalized of US$4,600 (In thousand of US dollars). Note 3: Including retained earnings capitalized of US$3,600 (In thousand of US dollars). Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA Company name Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2019 Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Note:According to “REGULATIONS GOVERNING THE APPROVAL OF INVESTMENT OR TECHNICAL IN MAINLAND CHINA”on August 29, 2008, Altek Corporation obtained the approval from the Industrial Development Bureau of Ministry of Economics Affairs issued to Headquarters, so there is no need to compute the ceiling amount of the Company. Altek Corporation 2,625,738 $ 2,898,916 $ - $

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6.5 Separate Financial Statements for the Years Ended December 31, 2019 and 2018

Please refer to page 136~196 of the 2019 Chinese Annual Report.

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6.6 Difficulty in Financial Turnover of the Company and its Affiliated Companies: None

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VII. Review of Financial Conditions, Financial Performance, and Risk Management

7.1 Analysis of Financial Status IFRS & Consolidated Base

Unit: NT$ thousand

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Year Difference
December 31, 2018 December 31, 2019
Item Amount %
Current Assets 11,685,441 9,242,393 (2,443,048) (20.91)
Property, Plant and
4,146,896 3,899,427 (247,469) (5.97)
Equipment
Intangible Assets 100,142 153,541 53,399 53.32
Other Assets 337,991 790,073 452,082 133.76
Total Assets 16,270,470 14,085,434 (2,185,036) (13.43)
Current Liabilities 5,420,670 4,157,293 (1,263,377) (23.31)
Non-current Liabilities 1,188,219 711,415 (476,804) (40.13)
Total Liabilities 6,608,889 4,868,708 (1,740,181) (26.33)
Share Capital 2,740,113 2,753,613 13,500 0.49
Capital Reserve 2,262,397 2,280,487 18,090 0.80
Retained Earnings 4,278,647 4,224,806 (53,841) (1.26)
Other Equity Interest (294,938) (615,359) (320,421) 108.64
Non-controlling
675,362 573,179 (102,183) (15.13)
Interests
Total Shareholders’ Equity 9,661,581 9,216,726 (444,855) (4.60)
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7.1.1 Analysis of the percentage of change exceeding 20%
A The decrease in current assets is mainly due to the decrease in operation revenue resulting in the decrease in account receivables...
B. The increase in intangible assets is mainly due to the development of new projects to increase the cost of masks and IP authorization.
C. The increase in other assets is mainly due to the increase in financial asset that is measured at amortized cost.
D. The non-current liabilities decrease is mainly due to the repayment of long-term loans.
E. The current liabilities decrease mainly due to the decrease in operation revenue resulting in the decrease in account receivables.
F. The decreased in total liabilities is mainly due to the decrease in account payables and the repayment of long-term loans.
G. The decrease in other equities is mainly due to the decrease in the exchange difference in coversion of the financial statements of foreign operations agencies.
7.1.2 Effect of changes on the Company’s financial condition: No significant effect.
7.1.3 Future response actions: N/A.

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7.2 Analysis of Financial Performance IFRS & Consolidated Base

Unit: NT$ thousand

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Amount of
Year Percentage of
2018 2017 Increase
Item Change (%)
(Decrease)
Operating Revenue 11,193,569 6,189,352 (5,004,217) (44.71)
Cost of Sales 9,875,021 5,174,937 (4,700,084) (47.60)
Gross Profit from Operations 1,318,548 1,014,415 (304,133) (23.07)
Operating Expenses 1,227,291 1,171,085 (56,206) (4.58)
Net Operating Income (Loss) 91,257 (156,670) (247,927) (271.68)
Non-operating Income and Expenses 209,763 188,092 (21,671) (10.33)
Income before Tax 301,020 31,422 (269,598) (89.56)
Income Tax Expense 127,870 35,275 (92,595) (72.41)
Income after Tax 173,150 (3,853) (177,003) (102.23)
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7.2.1 Analysis of the percentage of change exceeding 20%

Decrease in operating revenue, cost of sales, gross profit from operations and net

income are mainly due to group transformation and adjustment of product mix.

7.2.2 Potential effects on the company’s future business finance brought about by expected sales volume and its reference and the countermeasures
Altek cooperates with major domestic and foreign companies to provide edge vision AI solutions for various industries. This year, Altek is expected to launch commercial and home AI security control systems, new generation webcam, 3D sensing solutions and other products. In the field of medical electronics, there are already products such as blood glucose meters, insulin injection systems and disposable endoscopes, which will grow steadily this year. In the future, Altek will constantly work on the field of smart imaging and enhance the value of our solutions by mastering core technologies and system integration capabilities to improve the company's technical energy and competitiveness.

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7.3Analysis of Cash Flow
7.3.1 Analysis of changes in cash flow in 2018

Unit: NT$ thousand

Analysis of Cash Flow 7.3.1 Analysis of changes in cash flow in 2018	Analysis of Cash Flow 7.3.1 Analysis of changes in cash flow in 2018	Analysis of Cash Flow 7.3.1 Analysis of changes in cash flow in 2018	Analysis of Cash Flow 7.3.1 Analysis of changes in cash flow in 2018	Unit: NT$thousand	Unit: NT$thousand
Cash and Cash Equivalents, Beginning of Year Net Cash Flow from Operating Activities Cash Inflows Cash Surplus (Deficit)				Leverage of Cash Deficit
(a) (b) (c) (a)+(b)+(c)				Investment Plan Financing Plan
6,495,017	1,030,109	(859,071)	6,666,055	`－`	`－`

A. Operating activities: Net cash inflows from the business cycle.
B. Investment activities: Net cash outflow from time deposits of more than 3 months.
C. Financing activities: Net cash inflows from long-term bank borrowing.
7.3.2 The Improvement Program of Liquidity Insufficiency
- Altek has no lack of liquidity. The financing activities will be organized based on the business needs.
7.3.3 Analysis of cash flow for the coming year: According to the balance of cash and the cash flows from operating activities, Altek has conducted prudent assessments, plans and controls related operating and investment cash expenses. The mandate is that Altek presupposes maintaining stable cash liquidity.
7.4 Major Capital Expenditure Items and Impact on Finance and Business: None.
7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year

Altek’s investments in joint ventures are mostly strategic. For some non-core investments or the transfer investments that have completed the phased tasks, Altek will gradually dispose of shares or withdraw from them.

7.6 Analysis of Risk Management
7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures
A.the change of interest rate:

Altek’s financial status is good, and it has close relationship with the banks for a long time. We will be able to obtain better interest rate conditions to meet the needs of its operations, regularly assess the status of the cost of funding and pay attention to the trend of market interest rates, so it is estimated that the fluctuations of interest rate will have no major impact to us.

B. Change of Exchange rate:

Altek's purchases and sales of goods major quoted by the currency in US dollars, through the balance of assets and liabilities, will be able to significantly reduce exchange rate risk and achieve a neutral hedge effect.

According to the procedures for acquisition or disposal of derivatives stipulated in the Procedures for Acquisition or Disposal of Assets, Altek collects information on interest rates and foreign exchange rates on a daily basis and refers to the opinions of experts in foreign exchange to reduce the effect of changes in foreign exchange rates on profit.

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Altek's quotations for customers and suppliers are adjusted by the market rates, and inflation has little effect for Altek. However, Altek will commit to the transformation of better production process and continue to save money to meet the uncertainty of inflation.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

Altek did not engage in any high-risk or high-leveraged investments or any lending or endorsement to others. Altek has established the Procedures for Lending Funds to Other Parties and Endorsement & Guarantee and the Procedures for Acquisition or Disposal of Assets (including regulations for derivative transactions). The loans are mainly to the subsidiaries and 100% owned subsidiaries of the Company.

7.6.3 Future Research & Development Projects and Corresponding Budget

Please refer to page 69~70 “Ongoing Research and Development Projects and Expenses”

7.6.4 Effects of and Response to Changes in Major Policies and Laws Relating to Corporate Finance and Sales

Altek consistently pays close attention to any changes in local and foreign policies and makes appropriate amendments to our systems when necessary. Changes in related laws have not had a significant impact on our operations.

7.6.5 Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales

The rapid development of science and technology and the application and service innovation have led to dramatic changes in consumer behavior and business models. Altek will pay close attention to market demand and trends, constantly invest in research and development resources, and improve organizational efficiency to enhance the company's competitiveness.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures Altek adheres to the principle of integrity in running business, and no risky incidents that affect the corporate image have been reported in the most recent year and as of the printing date of the annual report.
7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans Altek has no plans for mergers and acquisitions in the near future.
7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans
In order to reduce the impact of tariff of the China-US trade war, the Company establishes the MIT factory in Taiwan in 2019. In the future, the factory expansion will

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depend on the actual operation requirements, which will disperse the risks of the

mainland production base.

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration
A. Purchase

In addition to maintaining a good relationship with major suppliers, Altek has consistently worked to diversify its supplier base in order to reduce the concentration of purchase. For example, due to the recent impact of the pandemic situation, the suppliers located outside mainland regions are actively explored to avoid the risk of supply interruption.

B. Sales

Altek provides a wide variety of products, and our customers can be found in Europe, the United States, Japan, China and other areas, so there is no risk of sales oncentration. In addition to constantly strengthen the relationship with existing customers, Altek will strive to find more new customers in the future.

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10% As of the date of this Annual Report, there have been no major transfers of shares.
7.6.11 Effects of, Risks Relating to and Response to the Changes in Management Rights There was no change in management rights.

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7.6.12 Litigation or Non-litigation Matters

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Start of
Case Fact in Dispute Amount of Subject Major Litigant Current Progress
Litigation
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7.6.12 Litigation or Non-litigation Matters	7.6.12 Litigation or Non-litigation Matters	7.6.12 Litigation or Non-litigation Matters	7.6.12 Litigation or Non-litigation Matters	7.6.12 Litigation or Non-litigation Matters	7.6.12 Litigation or Non-litigation Matters
Case Fact in Dispute Amount of Subject Start of Litigation Major Litigant Current Progress

Civil complaint against HTC Corporation	HTC Corporation’s default in the agreed upon Manufacturing and Supply Agreement	US$11,126 thousand against HTC Corporation	2015.12.22	HTC Corporation	Both parties reached a settlement in the lawsuit, and the original record of the court settlement was received in January 2020. (the conditions of the settlement shall remain in confidential in accoradnace with the agreement and shall not be disclosed)

7.6.13 Other Major Risks:

A complete network and computer system security protection mechanism has been installed in the company's information system to ensure the company's R&D, operations,manufacturing, and accounting will not be affected by the external environment factors, including:

A. During the pandemic prevention period, the cloud video and remote connections is increased to provide an instant communication platform for employee teamwork, to maintain the efficiency and productivity of the original communication, and the enterprise operations are not interrupted during such period.
B. The information emergency response plan is established providing the rapid responds that can be taken for any emergency event, so that the information system and data of enterprises have the best protection measures, and the risk is reduced to the minimum level, and a simulation exercise is conducted annually to ensure the system backup mechanism meeting the expectations.
C. Outbound and received email backup: The external email is perfectly archived for future access to reduce operational risks. There is also a complete security privilege control to ensure privacy and legality of data usage, as well as traceable access records.
D. Anti-virus and network security threat protection: The latest anti-virus software is regularly updated to the computer, and a network anti-intrusion mechanism is established to block network attacks to reduce operational risks.
E. Strengthening the application of SAP, PLM, BPM and cloud IaaS, Paas, Saas, integration of software and hardware drives the turnover and profits of the Company.

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F. Due to the new hacker attacks beyond the old one advancing with time, we still cannot guarantee that any third-party conducts the cyber attacks paralyzing the systems, and any malicious hackers implants the computer viruses, destructive software or ransomware into the network system of the Company for asking for ransoms or snooping the confidential information. As of the date of the annual report, the Company has not found any material cyber attacks or incidents that have or may have a significant adverse impact on the business and operations of the Company, and have not been involved in any legal matters or regulatory investigations related to this instance.
7.7 Other Important Items: None.

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Division of Work
Buying and selling of electronic components Business investment Business operation and investment Design Service Holding company indirectly investing in mainland China Component supplier Holding company indirectly investing in mainland China Manufacturing and sales of digital imaging production Holding company indirectly investing in mainland China Component supplier Holding company indirectly investing in mainland China Import/export of electronic products Holding company indirectly investing in mainland China
Unit: NT$ (foreign currency) thousand; December 31, 2019 Main Business or Production
Buying and selling of electronic components Business investment Business operation and investment Design Service Business operation and investment Production/sales of plastic and metal parts Business operation and investment Production services for digital imaging applications Business operation and investment Production/sales of electronic product components Business operation and investment Wholesale and import/export of electronic products and accessories and package products Business operation and investment
10,000 87,770 3,000 1,005 15,092 13,800 45,000 49,600 1,400 5,000 8,500 8,500 11,200
JPY
Paid-in Capital USD USD USD USD USD USD USD USD USD USD USD USD
Japan U.S.A.
Address
Seychelles
Cayman Islands Kunshan, China Cayman Islands Kunshan, China Cayman Islands Kunshan, China Cayman Islands Shanghai, China Cayman Islands
British Virgin Islands
July 5, 2005 May 14,2019 July 15, 2000 April 19, 2005 May 15, 2002 July 23, 2001 March 3, 2004 March 3, 2004 June 7, 2005
Date of Establishment February 2, 2000 October 27, 2010 December 7, 2005 November 21, 2011
Name of Company Altek Japan Corporation Altek International Investment Co., Ltd. Altek International Trading Co., Ltd. Altek Lab Inc. Altek Imaging Technology (Cayman) Co., Ltd. Altek Precision (Kunshan) Co., Ltd. Leading Tech. Co., Ltd. Altek (Kunshan) Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Trading(Shanghai) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd.
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Division of Work
Production/sales of electronic product components Holding company indirectly investing in subsidiaries in Taiwan Development and design of integrated circuits with special applications Imaging technology and electronic hardware and software development and sales Holding company indirectly investing in mainland China Holding company indirectly investing in subsidiaries in Taiwan Holding company indirectly investing in subsidiaries in Taiwan R&D of medical electronic equipment
Main Business or Production
Production/sales of electronic product components Business operation and investment R&D and sales of integrated circuits with special applications Imaging technology and electronic hardware and software development and sales Business operation and investment Business operation and investment Business operation and investment R&D, manufacturing, and sales of medical electronic equipment
11,200 100 200,000 1,500 4,800 12,866 12,866 401,000
Paid-in Capital USD USD NTD USD USD USD USD NTD
Address
Kunshan, China Cayman Islands Shanghai, China Cayman Islands Cayman Islands
Hsinchu City, Taiwan British Virgin Islands Hsinchu City, Taiwan
May 19, 2006 May 17, 2016 May 23, 2016
Date of Establishment November 21, 2011 November 26, 2009 November 26, 2009 November 21, 2016 December 11, 2014
Name of Company
8.1.4 The Same Shareholders of Companies Controlled by or Subordinate to the Company: None.
Altek Optical (Kunshan) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor Corp. Altek Semiconductor(Shanghai) Co., Ltd. Altek Optical (Cayman) Co., Ltd. Altek International Holding (BVI) Co., Ltd. Altek Biotechnology Holding (Cayman) Co., Ltd. Altek Biotechnology Corp.
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Ratio 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Shareholding
N/A N/A N/A N/A
December 31, 2019
1,000
Shareholding
87,769,559 3,000,000 11,311,875 15,092,410 45,000,000 1,400,000 8,500,000 11,200,000
Number of Shares
Alex Hsia David Lin Vincent Kao Sophia Chen Alex Hsia Alex Hsia Alex Hsia Alex Hsia Alex Hsia Steven Su Alex Hsia Alex Hsia Steve Chou Alex Hsia Alex Hsia Belle Liang Alex Hsia Alex Hsia Steven Su Alex Hsia
Corporate Representative
Name or Representative
Name
Co., Ltd. Co., Ltd.
Altek Corporation Altek Corporation Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. (Cayman) Co., Ltd. Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek International Investment Co., Ltd. Altek International Investment Co., Ltd.
Altek Imaging Technology Leading Tech. Co., Ltd. Altek Trading (Cayman)
Toptek Investment Cayman
Title
Chairman Director Director Supervisor Director Director Director Director Supervisor Director Supervisor Director Supervisor Director Supervisor Director
Executive Director Executive Director Executive Director Executive Director
Name of Company
Altek Japan Corporation Altek International Investment Co., Ltd. Altek International Trading Co., Ltd. Altek Lab Inc. Altek Imaging Technology (Cayman) Co., Ltd. Altek Precision (Kunshan) Co., Ltd. Leading Tech. Co., Ltd. Altek (Kunshan) Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Trading(Shanghai) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd.
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50.00% 50.00% 50.00%
Ratio 100.00% 100.00% 100.00% 100.00% 100.00%
Shareholding
N/A N/A
Shareholding
20,000,000 10,000,000 4,800,241 12,865,921 12,865,921 40,100,000
Number of Shares
Alex Hsia Belle Liang Alex Hsia Jye-Sheng Lin Tat On Lo Alex Hsia Alex Hsia Jonathan Shaw Alex Hsia Alex Hsia Alex Hsia Alex Hsia Jason Lin David Lin Sophia Chen
Corporate Representative
Name or Representative
Name
Co., Ltd.
(Cayman) Co., Ltd. Altek International Investment Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek International Investment Co., Ltd. Altek Corporation Altek Biotechnology (Cayman) Co., Ltd.
Altek Optical Technology
Altek International Holding
Title
Supervisor Chairman Director Director Chairman Supervisor Director Director Director Chairman Director Director Supervisor
Executive Director Executive Director
Name of Company
Altek Optical (Kunshan) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor Corp. Altek Semiconductor(Shanghai) Co., Ltd. Altek Optical (Cayman) Co., Ltd. Altek International Holding BVI Co., Ltd. Altek Biotechnology Holding(Cayman) Co., Ltd. Altek Biotechnology Corp.
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41,407 282,643 2,549 2,078 4,898 4,898 130,837 130,837 25,273 25,271 9,891 9,891 201 202 38,237 94,393 4,185 0 25,033 24,976 678,889
Net Value
JPY USD USD USD USD USD USD USD USD USD USD USD USD USD USD NTD USD USD USD USD NTD
87 2,153 31,237 43 0 1 0 36,697 0 5 0 285 0 24 0 300,699 300 0 0 0 616,760
Total Liabilities
JPY USD USD USD USD USD USD USD USD USD USD USD USD USD USD NTD USD USD USD USD NTD
41,494 284,796 33,786 2,121 4,898 4,899 130,837 167,534 25,273 25,276 9,891 10,176 201 226 38,237 395,092 4,485 0 25,033 24,976 1,295,649
Total Assets
JPY USD USD USD USD USD USD USD USD USD USD USD USD USD USD NTD USD USD USD USD NTD
10,000 87,770 3,000 1,005 15,092 13,800 45,000 49,600 1,400 5,000 8,500 8,500 11,200 11,200 100 200,000 1,500 4,800 12,866 12,866 401,000
Capital
JPY USD USD USD USD USD USD USD USD USD USD USD USD USD USD NTD USD USD USD USD NTD
Name of Company
information will not be disclosed. The current investment gain and loss has been disclosed in the notes of the financial statements.
Altek Japan Corporation Altek International Investment Co., Ltd. Altek International Trading Co., Ltd. Altek Lab Inc. Altek Imaging Technology (Cayman) Co., Ltd. Altek Precision (Kunshan) Co., Ltd. Leading Tech. Co., Ltd. Altek (Kunshan) Co., Ltd. Toptek Investment Cayman Co., Ltd. Altek EMS (Kunshan) Co., Ltd. Altek Trading (Cayman) Co., Ltd. Altek Trading(Shanghai) Co., Ltd. Altek Optical Technology (Cayman) Co., Ltd. Altek Optical (Kunshan) Co., Ltd. Altek Semiconductor (Cayman) Co., Ltd. Altek Semiconductor Corp. Altek Semiconductor(Shanghai) Co., Ltd. Altek Optical (Cayman) Co., Ltd. Altek International Holding (BVI) Co., Ltd. Altek Biotechnology Holding (Cayman) Co., Ltd. Altek Biotechnology Corp.
Note: Altek is the headquarters of the Group. Operating revenue and operating income of subsidiaries are trade secrets. To protect shareholders’ equity, such
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8.1.7 Declaration of Consolidated Financial Statements of Affiliated Companies

Altek Corporation

Declaration of Consolidated Financial Statements of Affiliated Companies

In 2019 (January 1, 2019 to December 31, 2019), companies that shall be included in the consolidated financial statements of affiliated companies in accordance with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same companies that shall be included in the consolidated financial statements of the parent company and subsidiaries in accordance with IFRS 10. In addition, the related information that shall be disclosed in the consolidated financial statements of affiliated companies has been disclosed in the abovementioned consolidated financial statements of the parent company and subsidiaries. Accordingly, the consolidated financial statements of affiliated companies are not compiled separately. Sincerely,

Altek Corporation Chairman: Alex Hsia March 20, 2020

8.1.8 Affiliation Report

Altek is not the affiliated company of other companies as stipulated in “Chapter VI-I Affiliated Enterprises” of the Company Act, so no affiliation report is compiled.

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8.2 Private Placement of Securities in the Most Recent Years

To invest the high-end technologies, enrich working capital, repay borrowings, reinforce financial structures, invite strategic investors and support the Company’s development funding needs, the 15[th] meeting of 8[th] Board of Directors approved raising funds through private placement within the limit of 60,000,000 common shares, and will proposed to the 2019 shareholders meeting.

8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: None
8.4 Other Mentionable Items: None
8.5 Any Event Having a Material Impact on Shareholders' Rights and Interests or Securities Prices stipulated in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act: None

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AI assistant

Altek — Annual Report 2019

52290_rns_2020-06-30_fd92b8c0-15a8-4d58-a9b5-d645a10583b3.pdf

Altek Corporation

2019

Annual Report

Notice to readers

Contents

I. Letter to Shareholders

Dear Shareholders,

1. Annual Business Report 2019

2. Annual Business Plan Overview 2020

(2) Status Prospects for Production and Sales

II. Company Profile

2.1 Date of Incorporation

2.2 Company History

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors

3.4.2 Audit Committee:

3.4.6 Corporate Conduct and Ethics Implementation as Required by the Taiwan Financial Supervisory Commission

3.4.7 Corporate Governance Guidelines and Regulations

3.4.8 Other Important Information Regarding Corporate Governance

A. Employees’ rights and cares

3.4.9 Internal Control Systems

A. Internal Control Declaration

3.4.10 Punishments, Major Defects, and Improvements of Violation of the Company’s Internal Control System: None.

3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

B. Resolutions of 2019 board meeting:

3.5 Information of Audit Fee

3.5.1 Payment to the Audit:

3.8 Equity Transfer and Changes in Equity Pledge of Directors, Managers and Shareholders Holding More than 10% of the Shares

3.8.1 Changes in shareholdings of directors, managers and major shareholders

3.9 Relationship among the Top Ten Shareholders

3.10 Ownership of Shares in Affiliated Enterprises

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

4.1.2 Status of Shareholders

4.1.3 Shareholding Distribution Status

4.1.4 List of Major Shareholders

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

4.1.6 Dividend Policy and Implementation Status

4.1.8 Employee Bonus and Directors' Remuneration

4.1.9 Buyback of Treasury Stock

A. Repurchases already completed

4.2 Bonds: None.

4.3 Preferred Stock: None.

4.4 Global Depository Receipts: None.

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Options

4.6 Restricted Employee Shares

4.6.1 Issuance of New Restricted Employee Shares

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Main Business Operations

B. Revenue Distribution

C. New Product Development

A. Current Status, Development and Competition

5.2 Market and Sales Overview

5.2.1 Market Analysis

A. Major Sales Region

B. Market Share

D. Competitive Niche

(2) Imaging chips

Countermeasure:

Countermeasure:

5.2.2 Purpose and Production Process of Major Products

A. Digital Imaging Chip

(2) Production process

a. Design procedure

b. Mask procedure

c. Wafer production procedure

d. Wafer testing procedure

e. Packaging procedure

B. Dual(Multi)-camera Module

(2) Production process

C. Digital Imaging Solution

(2) Production process

5.2.3 Major Suppliers

Altek Annual Report 2019